August 30, 2016

Development as colonialism

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This important essay exposes modern ‘development’ as colonialism repackaged and ferociously applied via transnational corporations, compliant local elites and global institutions such as the World Bank and the IMF—all underwritten by the threat of military force.

It was published in The Ecologist Vol. 27 No. 2, March–April 1997. An extended version was published in 2001 as Chapter 1 of The Case Against the the Global Economy by Edward Goldsmith and Jerry Mander. [1]

It is customary to trace the origin of the idea of development to a statement made by President Harry Truman in 1944. [2] Truman may have formulated the idea in a new way – but it is an old idea and the path along which it is leading the countries of the Third World is a well-trodden one.

As Francois Partant, The French banker turned arch-critic of development, has put it:

“The developing nations have discovered for themselves a new mission – to help the Third World advance along the road to development . . . which is nothing more than the road on which the West has guided the rest of humanity for several centuries.” [3]

The thesis of this chapter is that Partant was right. ‘Development’ is just a new word for what Marxists called ‘imperialism’ and what we can loosely refer to as ‘colonialism’ – a more familiar and less loaded term.

A quick look at the situation in the Third World today undoubtedly reveals the disquieting continuity between the colonial era and the era of development. There has been no attempt by the governments of the newly independent countries to re-draw their frontiers. No attempt has been made to restore pre-colonial cultural patterns. With regards the key issue of land use, the colonial pattern has also been maintained.

Randall Baker notes, “Essentially the story is one of continuity”. [4] And the peasants, who as Erich Jacoby writes, “identified the struggle for national independence with the fight for land”, never recovered their land. “National independence simply led to its take-over by a new brand of colonialists”. [5]

If development and colonialism (at least, in its last phase from the 1870s onwards) are the same process under a different name, it is largely that they share the same goal. This goal was explicitly stated by its main promoters. Cecil Rhodes, for instance, declared that

“we must find new lands from which we can easily obtain raw materials and at the same time exploit the cheap slave labour that is available from the natives of the colonies. The colonies would also provide a dumping ground for the surplus goods produced in our factories.” [6]

Lord Lugard said much the same thing, [7] as did Paul-Leroy Beaulieu, author of that influential book De la Colonisation Chez les Peuples Modernes in 1884, and as did Jules Ferry in a speech to the French House of Deputies in July, 1885.

The trouble was that many countries in Asia and elsewhere, were simply not willing to allow Western powers to have access to their markets or to the cheap labour and raw materials they required. Nor were they willing to allow corporations to operate on their territory and undertake large-scale development projects such as road building and mining.

In Asia a small number of states were eventually bullied into complying with Western demands. Thus, in 1855, Siam signed a Treaty with Britain as did Annam with France in 1862. However, China was not interested and two wars had to be fought before it could be persuaded to open its ports to British and French trade. Japan also refused, and only the threat of an American naval bombardment by a fleet under the command of the celebrated Commodore Perry persuaded its government to open its ports to Western trade.

By 1880, as Fieldhouse notes, European powers had obtained access to the markets of most of Asia’s coastal regions, having negotiated special conditions for expatriate residents, such as greater freedom of activity within the countries concerned and the right to build railways and set up enterprises inland. [8]

The trouble was, that, just as is the case today, commercial interests continued to demand ever more comprehensive concessions and often obtained them, creating, in this way, ever more favourable conditions for European corporations.

Throughout the non-industrial world, it was only if such conditions could no longer be enforced, usually when a new nationalist or populist government came to power, that formal annexation was resorted to. As Fieldhouse puts it, “colonialism was not a preference but a last resort”. [9]

D. C. Platt, another contemporary student of nineteenth century colonialism, agrees. For him colonialism was necessary “to establish a legal framework in which capitalist relations could operate”. If there was no formal colonialism in Latin America in the 19th century it is largely that a legal system “which was sufficiently stable for trade to continue was already in existence”. This was not so in Africa where the only way to create the requisite conditions was by establishing colonial control.

Slowly as traditional society disintegrated under the impact of colonialism and the spread of Western values, as the subsistence economy was replaced by the market economy on which the exploding urban population grew increasingly dependent – the task of maintaining the optimum conditions for western trade and penetration became correspondingly easier. As a result, by the middle of the twentieth century, as Fieldhouse notes

“European merchants and investors could operate satisfactorily within the political framework provided by most reconstructed indigenous states as their predecessors would have preferred to operate a century earlier but without facing those problems which had once made formal empire a necessary expedient”. [10]

In other words, formal colonialism came to an end not because the colonial powers had decided to forego the economic advantages it provided but because, in the new conditions, these could now largely be obtained by more politically acceptable and at the same time, as we shall see, more effective methods.

This was probably clear to the foreign policy professionals and heads of large corporations that began meeting in Washington DC in 1939 under the aegis of the US Council on Foreign Relations to discuss how the post-war and post-colonialist world economy could best be shaped in order to satisfy American commercial interests when World War II was over – discussions that eventually led to the notorious Bretton Woods Conference of 1944. [11]

Economic Development was the means for achieving this goal and it was by promoting free trade that it could be maximised. Free trade is alleged to involve competition on ‘a level playing field’, and nothing could seem fairer. However, when the strong confront the weak on a level playing field the result is a foregone conclusion, as it was at Bretton Woods, for at that time the USA totally dominated the world politico-economic scene, the European industrial powers having been ruined by the war, their economies lying in tatters, and Japan having been conquered and humiliated.

We must not forget that a century earlier, it was Britain that was preaching free trade to the rest of the world and for the same reasons. At that time she effectively dominated the world economy. Not only was a quarter of the world’s terrestrial surface under her direct imperial control, not only did her navy control the seas, but the city of London was the world’s financial centre and was capable of financing the industrial expansion that free trade would make possible.

Besides, according to Hobsbawm, [12] she already produced about two thirds of the world’s coal, perhaps about half its iron, five-sevenths of its steel, half of its factory-produced cotton cloth, 40 percent (in value) of its hardware and a little less than one third of its manufactures. Labour in Britain was also cheap and plentiful, for the population had more than trebled since the beginning of the industrial revolution and had accumulated in the cities while there was little social regulation to protect the rights of the workers.

In such unprecedented conditions, Britain was incomparably more ‘competitive’ than her rivals and free trade was clearly the right vehicle for achieving her commercial goals. As George Lichtheim puts it,

“A country whose industries could undersell those of its competitors was favourably placed to preach the universal adoption of free trade, and so it did – to the detriment of those among its rivals who lacked the wit or the power to set up protective barriers behind which they could themselves industrialise at a pace that suited them”.

As a result, Britain between 1860 and 1873, succeeded in creating something not too far removed from what Hobshawm refers to as “an all embracing world system of virtually unrestricted flows of capital, labour and goods”, though clearly on nothing like the scale that is being achieved today with the signature of the GATT Uruguay Round Agreement. Only the US remained systematically protectionist, though it reduced its duties in 1832 to 1860 and again in 1861-65 after the Civil War.

However, by the 1870’s Britain was already losing her competitive edge over her rivals. Partly as a result, British exports declined considerably between 1873 and 1890, and again towards the end of the century. At the same time, between the 1870s and 1890s there were prolonged economic depressions, which also weakened the belief in the effectiveness of free trade. Tariffs were raised in most European countries, especially in the 1890s, though not in Belgium, the Netherlands or Britain.

Companies now found their existing markets reduced by these factors and started looking abroad towards the markets of Africa, Asia, Latin America and the Pacific, which, with the development of faster and more capacious steamships, had become very much more accessible. If free trade did not work, the answer was to take over those countries where goods could be sold at a profit, without having to worry about competition from more efficient European countries. [13] There followed a veritable scramble for colonies. In 1878, 67 percent of the world’s terrestrial area had been colonised by Europeans, but by 1914 the figure had risen to 84.4 percent.

Setting up indigenous élites

The most effective means of opening up markets is undoubtedly to set up a westernised elite hooked on economic development, which it is willing to promote regardless of adverse affects on the lives of the vast majority of its countrymen. This has now been very effectively achieved, and as a result, the interests of Third World government today as Francois Partant notes are, “largely antagonistic to those of the bulk of their countrymen”. [14] They are in fact our representatives in the countries they dominate, probably to the same extent as were the colonial administrators that they have supplanted.

The need to create such an elite was of course well known to the western powers during the colonial era. During the debate in British political circles after the 1857 Indian Mutiny, the main question at issue was whether an anglicised elite favourable to British Commercial interests could be created in time to prevent further uprisings, if not, it was generally conceded, formal occupation would have to be maintained indefinitely. [15]

Of course, the elite must be suitably armed if it is to impose economic development on its countrymen, since this must necessarily lead to the expropriation and impoverishment of most of them. Today, to do this is one of the main objects of our so-called aid programmes, some two thirds of US aid takes the form of ‘security assistance’. This includes military training arms and cash transfers to governments that are regarded as defending American interests. [16]

Even food aid provided by the USA is security related. It falls into two categories: Title 1 and Title 2. Most of it is in the former category and consists of low interest loans to Third World governments “which use their money to buy US food and then sell it on the open market keeping the proceeds”. Such food aid is thus “little more than another transfer of funds to governments considered strategically important”. [17] Food aid falling in the category of Title 2 can also help make countries increasingly dependent on American aid for their very sustenance. U.S. Politicians have openly stated that food must be used as a political weapon, Vice President Hubert Humphrey once declaring that

“If you are looking for a way to get people to lean on you and to be dependent on you, in terms of their co-operation with you, it seems to me that food-dependence would be terrific”. [18]

Most of the governments that have received security aid are military dictatorships, such as those in Nicaragua, El Salvador, Chile, Argentina, Uruguay and Peru in the 60s and 70s. These faced no external threats. It was not to defend themselves against a potential foreign invader that all this security aid was required, but to impose economic development on people whom it had already impoverished and whom it could only still further impoverish.

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Engineering coups d’état

Of course when a government, unfavourable to western commercial interests, somehow succeeds in coming to power, Western governments will go to any ends to remove it from office. Thus in 1954 the United States organised the military overthrow of the government of Guatemala that had nationalised United States owned banana plantations, and it did the same to the government of Jose Goulart in Brazil in the 1960’s.

Goulart had sought to impose a profit remittance law reducing the amount of money foreign corporations could take out of the country. Worse still, he initiated a land reform program which among other things meant taking back control of the country’s mineral resources from western transnational corporations (TNCs). He also gave workers a pay rise, thereby increasing the cost of labour to the transnationals in defiance of IMF instructions.

Needless to say, aid was immediately cut off, and an alliance of the CIA, US investors and Brazil’s land-owning elite engineered a coup d’etat which bought a military junta to power which in effect ran the country until very recently. Again, needless to say, it immediately reversed Goulart’s reforms and reintroduced precisely those conditions that best satisfied US commercial interests.

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Military intervention

During the colonial era, the colonial powers constantly sent in troops to protect compliant regimes against popular revolts. Both France and Britain, for instance, participated in the suppression of the populist Tai Ping rebellion in China, and later the xenophobic Boxer Rebellion, and Britain also sent troops to help the Khedive Ismail put down a nationalist revolt in Egypt.

This the Western powers still do not hesitate to do if there is no other way of achieving their goals. Thus, when President Mba, the dictator of Gabon, was threatened by a military coup, French paratroopers immediately flew in to restore him to power, while the coup leaders were imprisoned in spite of widespread popular demonstrations.

Significantly, the paratroopers remained to protect his successor President Bongo, whom Pierre Pean regards as “the choice of a powerful group of Frenchmen whose influence in Gabon continued after Independence” against any further threats to him and hence to French commercial interests. Neither the UK nor the USA has been any less scrupulous in this respect. [19]

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Killing the domestic economy

If the role of the colonies was to provide a market for the produce of the colonial countries and a source of cheap labour and raw materials for their industries, then it could not, at the same time, provide a market for local produce and a source of labour and raw materials for its own productive enterprises.

This meant in effect that the colonial powers were committed to destroying the domestic economy of the countries they had colonised. This was explicitly admitted by a delegate to the French Association of Industry and Agriculture in March 1899. For him the aim of the colonial power must be:

“to discourage in advance any signs of industrial development in our colonies, to oblige our overseas possessions to look exclusively to the mother country for manufactured products and to fulfil, by force if necessary, their natural function, that of a market reserved by right to the mother country’s industry”. [20]

The favourite method was to tax whatever the colonials particularly liked to consume. In Vietnam it was salt, opium and alcohol, and a minimum level of consumption was set for each region, village leaders being rewarded for exceeding their quotas. In the Sudan it was crops, animals, houses and households that were singled out for taxation. Of course, there is no way in which local people could meet their tax obligations save by agreeing to work in the mines and plantations, or growing cash crops for sale to the colonial masters. [21]

At the same time, every effort was made to destroy indigenous crafts, particularly in the production of textiles. In this way the British destroyed the textile industry in India, which had been the very lifeblood of the village economy throughout the country. In French West Africa in 1905, special levies on all goods which did not come from France, or a region under French control, were imposed, forcing up the price of local products and ruining local artisans and traders.

Economic development after the war, on the other hand, was supposed in theory to help the ex-colonial countries build up their own domestic economies, but by its very nature however, this could not occur. At the very start the latter were forced to re-orientate their production towards exports – what is more towards an exceedingly small range of exports.

A typical example is sugar. Under World Bank influence, vast areas of land in the Third World were converted to the cultivation of sugar cane without any consideration for whether or not a market for the sugar existed abroad. In fact the US has continued to apply very strict quotas on sugar imports, while continuing to subsidise the production of corn syrup and countenancing the increasing use of artificial sweeteners, while the European Union has persisted in subsidising sugar beet production among its member states.

However none of these considerations have prevented the World Bank from encouraging the production of ever more sugar for export. Cynics might maintain that this was the object of the operation in the first place, since after all, it was implicitly at least part of the World Bank’s original brief to encourage the production of cheap resources for the Western market.

At the same time, Third World countries that have sought to diversify their production have immediately been accused of practising ‘import substitution’ – a heinous crime in the eyes of today’s economists, in particular those who are influential within the Bretton Woods institutions. Indeed import substitution is precisely what Third World countries must promise not to undertake if they hope to obtain a structural adjustment loan.

Not surprisingly, as Warden Bello notes when a country is subjected to a structural adjustment programme, its commodity exports tend to rise, but not necessarily its GNP, because of the inevitable contraction of its domestic economy. [22]

When Third World countries have nevertheless succeeded in developing a modest domestic economy, the World Bank and IMF, in league with US government officials and TNCs, have set out systematically to destroy it, a process that could not be better documented, in the case of the Philippines, than by Walden Bello and his colleagues in their book Development Debacle: The World Bank in the Philippines. [23]

This book, based on 800 leaked World Bank documents, shows how that institution, in league with the CIA and other US agencies, set out purposefully to destroy the domestic economy of The Philippines so as to create in that country those conditions that best favoured the interests of TNCs.

To achieve this goal, as Bello and his colleagues show, first meant sacrificing the peasantry which had to be transformed into a rural proletariat. The standard of living of the working class had to be reduced, since, as a Bank spokesman said at the time: “wage restraint” is required to encourage “the growth of employment and investment”, while the local middle class that depended for its very existence on the domestic economy had to be annihilated to make way for a new cosmopolitan middle class dependent on the TNCs and the global economy.

Clearly such a drastic social and economic transformation of an already partly developed country could not be achieved by a democratic government. This was clearly recognised by those who planned this operation, which explains why it was decided to provide Marcos with the funding he required to build up an army capable of imposing such a program by force. As Marcos put it at the time:

“Only an authoritarian system will be able to carry forth the mass consent and to exercise the authority necessary to implement new values, measures and sacrifices” [24]

In essence this is what he did, martial law was declared, and the people were bludgeoned into accepting the transformation of their society, economy and, needless to say, their natural environment.

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