Colonialism and economics

Thande

Donor
Just a vague thought, but:

Some scenarios in which the world wars are avoided have European colonial empires continue to the present day. These are sometimes criticised, usually on the grounds that a movement towards national consciousness and awakening was already on its way in some colonies even before WW1, and guerilla fights for independence might have happened even in a peaceful 20th century.

However, what about another aspect - economics. OTL, supporting colonies was usually an economic drain on the home country and by the 19th century they were rarely profitable; however, by that point empire-building was a popular means of making your nation's name in the world and comparing virtual penis size (which explains why Sweden didn't bother much with colonies, hem hem).

So if we avoid WW1 and the Great Depression, do you think it's plausible that mounting global colonial debt (and perhaps the costs required to suppress independence-minded native freedom fighters/terrorists depending on one's point of view) could have triggered an economic collapse?
 
The problem with this theory is that by the 1930s and 1940s, empires were profitable. Britain was making money off of Africa, while the Dutch were raking in the doug from the East Indies.

The reasons for this tended to relate with, even as economic liberalization occurred in the metropole, the colonial eccnomics were increasingly insulated and used exclusively for the benefits of the home countries. Coupled with growing state power over the major cash crops, mineral products, etc. and you have an easy way to swing a profit.
 
The problem with this theory is that by the 1930s and 1940s, empires were profitable. Britain was making money off of Africa, while the Dutch were raking in the doug from the East Indies.

The reasons for this tended to relate with, even as economic liberalization occurred in the metropole, the colonial eccnomics were increasingly insulated and used exclusively for the benefits of the home countries. Coupled with growing state power over the major cash crops, mineral products, etc. and you have an easy way to swing a profit.

Accounts tend to be, err, contradictory.

It is not really clear that that metropole benefits or specific companies and groups do - particularly as trade with more developed countries/non colonies tends to be a lot more profitable with growing markets.
 
It is not really clear that that metropole benefits or specific companies and groups do - particularly as trade with more developed countries/non colonies tends to be a lot more profitable with growing markets.


The British basically used the Sterling Bloc to squeeze tens of millions of pounds in loans at zero percent interest from Malaysia and Africa in the 1940s and 1950s. Colonial expenditures on the colonies, in comparison, was significantly less.
 
The British basically used the Sterling Bloc to squeeze tens of millions of pounds in loans at zero percent interest from Malaysia and Africa in the 1940s and 1950s. Colonial expenditures on the colonies, in comparison, was significantly less.

But most countries in sterling bloc were a drain. I understood that only Malaya made a consistent surplus.

Also if you start to think about the microeconomics - and how sterling bloc prevented British trade reorienting with Europe, the damage was significant.
 
But most countries in sterling bloc were a drain. I understood that only Malaya made a consistent surplus.

Can you give me a cite for this? I find the Sterling Bloc intersting as a model for British development, and this doesn't square with most of what I've read about it.

Also if you start to think about the microeconomics - and how sterling bloc prevented British trade reorienting with Europe, the damage was significant.

Sure; but that merely means that the empire was less profitable than free trade with developed nations.
 
Burma was also very consistently profitable, as were the Trucial states in Arabia.

If the British manage to gra hold of Mesopotamia and Arabia is some ATL dismemberment of the Ottoman Empire in a no WWI TL, they that will be a massive economic boost, at least to them. Burma+Arabia+Mesopotamia+Nigeria is a large fraction of the world's oil.
 
Economics are the great unforgotten in so much AH.
So many people think more land instantly equals more power like in strategy games. They think it was just a lack of ability or whathaveyou why nations didn't colonise certain areas earlier and all that.

The problem with colonial nations continuing into the 20th century though...hmm...Well its a mixture of economics and home opinion.
That the colonial subjects were yearning for independance and would inevitably run to the hills rifles in hand and crush the evil occupiers is just utter bollocks. If Europeans had free reign to be dastardly then they could stop anything like this. As it was though people at home watched them at all times.

So much of the empire didn't make a profit. But what if it did? Lets assume masses of profitable unobtainium mines in Africa... I'd imagine that the progressive press would have a field day revealing how the evil government oppresses the poor Africans and exploits them for their own gain. Hence public oppinion would turn against the empires.
Its rather the catch-22 situation really. If they're profitable you have to cut them loose as the public won't want you to be seen to be exploiting them, if they're loss makers you'll have to cut them loose as you won't want to be seen to be throwing money away.

The true thing that killed the European empires to my view was the radical shift to the home-left of internal politics in Europe as the working classes became more involved in politics and actually started voting en masse.
Previously the left had been very much a intellectual, altruistic Fabian thing; help the poor peoples of the world to develop up to our level. As time went on it became a little but more BNPish (harsh way of putting it but the only way I can think to); Britain first! Why should we give a damn about the Kuo tribe's poverty when we pitmen here have poverty ourselves?
 
An economic collapse in a smaller country's case, Belgium, Italy, perhaps Portugal could be vulnerable if they spend enough on their colonial holdings.

Problem is, the colonial powers might have the time and the luxury of changing, liberalizing, or otherwise reforming colonial policy in order to bring public debts and revenues under control.

I'm not exactly sure what successful reforms might entail, save perhaps European empires containing multiple versions of modern Singapore, Malaysia, Hong Kong, South Korea and the UAE. If the colonial powers allow for or actively promote such development, they might muddle through well enough financially. The willingness of European metropoles to entertain the idea of encouraging colonial industrial development is a difficult question.
 
Can you give me a cite for this? I find the Sterling Bloc intersting as a model for British development, and this doesn't square with most of what I've read about it.

I will try and take a look at some stuff this evening.
If you pass a good library (being in a top university not improbable) have a look at David Reynold's Britannia Overruled (not a specialist economic text though) or try and look at the Cambridge Economic History of Modern Britain. Which I intend to look at this evening.
 
So if we avoid WW1 and the Great Depression, do you think it's plausible that mounting global colonial debt (and perhaps the costs required to suppress independence-minded native freedom fighters/terrorists depending on one's point of view) could have triggered an economic collapse?

Yes and no.

Or, I think there would be rising colonial debt, which would initially encourage cost cutting on the least profitable areas. The problem is once you start cutting at Empire the ideological framework which maintains it will fall away. The fig leaf of a civilizing mission vanishes once it becomes clear the thing is run entirely in terms of profit and loss. Once that occurs the level a society is willing to pay to maintain Empire will fall, as it would be ethically unacceptable to a large proportion, inspiring further cuts and so on and so forth before it eventually all falls apart.

So it would actually be an ideological/social reason why Empire came to an end, with economics merely being instrumental in getting the process moving. Which is more or less OTL. Certainly there was no economic necessity for departing as swiftly throughout Africa in the 1960's as Britain did; its just that ideologically there was no desire to remain.

Not sure about Wozza's point that the Sterling Bloc preventing Britain re-orientating with Europe as it doesn't really hold up unless you can explain how the Sterling Bloc created de Gaulle's hostility. This is assuming I suppose that re-orientating towards Europe means joining Europe, but comments about free trade make that appear to be the case. Another blow to the argument is just how the Sterling Bloc was not automatically related to Empire. I seem to recall in Britannia Overruled that Britain was still sending a substantial, if declining, portion of its trade to India decades after independence. Presumerably Britain could have joined Europe earlier, but it not doing so surely has more to do with socio-political factors than in economic predictions.

As it was "reorientating" with Europe didn't help matters much, and arguably, like the Sterling Bloc, was incorrectly seen as some panacea to Britain's industry, instead of the much needed reform.
 
Not sure about Wozza's point that the Sterling Bloc preventing Britain re-orientating with Europe as it doesn't really hold up unless you can explain how the Sterling Bloc created de Gaulle's hostility. This is assuming I suppose that re-orientating towards Europe means joining Europe, but comments about free trade make that appear to be the case. Another blow to the argument is just how the Sterling Bloc was not automatically related to Empire. I seem to recall in Britannia Overruled that Britain was still sending a substantial, if declining, portion of its trade to India decades after independence. Presumerably Britain could have joined Europe earlier, but it not doing so surely has more to do with socio-political factors than in economic predictions.

It was a short-hand for quite a complicated process. After the war there was a consumer goods boom - and as Reynolds point out the British expected a raw materials boom. Britain missed much of this boom, for a range of reasons, partly to do with a comparative advantage in the old industries, partly due to Sterling Area and partly due to industrial legacy. This was compounded by Britain's high luxury taxes focussed on a few good which slowed down the emergence of the consumer good industries. In contrast France had more broadly based VAT.

The result was that Britain's trade was still orientated towards second-best options, and the result was slower growth than in Europe.
 
It just occurred to me that the smaller colonial powers might actually be better off. While the Dutch, Belgians, Italians and Portuguese can't afford nearly the level of debt and expenses as the Germans, French, and British, they're much more likely to succeed at colonial reform.

That is to say, they may be more likely to attempt (and succeed at) developing their colonies in the style of an East Asian tiger economy, a la Taiwan and South Korea.

Amsterdam probably can't provide all the investment capital required for hothouse growth in the DEI, and even with savings from the archipelago itself, it's much easier to bring in foreign capital investment in the colony. If the Dutch hold the East Indies through the 70s, they could be doing well from export-led growth in Java.

The trouble might be that a world without the world wars, Depression, etc, might well be one of much higher trade barriers. This is especially so if major European economies are trying to lock in trade within their colonial empires at the expense of foreign trade.
 
Although we can be quite confident that many colonies were loss making for the Imperial governments, I'm unaware of much analysis of their long term profitability if you consider these costs partially investments. If you avoid asset destruction/confiscation during decolonialisation and the fire sales during the World Wars they well turn out profitable.

For later benefits, consider what offshoring could look like if the First Globilisation never ends. The collapse of transport costs associated with containerisation would also serve to make the colonial enterprise much more viable.

Also, rather brutally, the technology of the early 20th century makes colonial "police actions" much cheaper. The arrival of the aeroplane, the armoured car, and the radio would massively reduce the cost and casualties. Without WWI the lack of powerful state sponsors of insurgency would also be very telling.

The arrival of mass media, of radio receivers becoming common could also have interesting impacts. If the colonial powers control that and education, then they might be able to create much more loyal and content polities.
 
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