Nemesis: The Last Days of the American Republic

Malay population, remains the poorest nation in East Asia, the world’s fastest-growing economic region—a direct result of U.S. imperialism. Similarly, impoverished Latin America still struggles to throw off the legacies of American “backyard” neocolonialism.⁸² All this is among the best-known economic information in the world.

According to the apologists for the British Empire, however, such bad economic news cannot be true, because these problems were solved over 150 years ago. Ferguson maintains that “the nineteenth-century [British] empire undeniably pioneered free trade, free capital movements and, with the abolition of slavery, free labor.”⁸³ After the Irish famine (1846-1850) and the Indian Mutiny (1857), the British “recast their empire as an economically liberal project, concerned as much with the integration of global markets as with the security of the British Isles, predicated on the idea that British rule was conferring genuine benefits in the form of free trade, the rule of law, the safeguarding of private property rights and non-corrupt administration, as well as government-guaranteed investments in infrastructure, public health, and (some) education.”⁸⁴

Unfortunately, this argument is an offshoot of the old nineteenth-century Marxist conception that politics are mere superstructural reflections of underlying economic relations, and that a single worldwide economic system is emerging that will usher in an era of unprecedented prosperity and peace for all. As the economic theorist John Gray observes, “It is an irony of history that a view of the world falsified by the Communist collapse should have been adopted, in some of its most misleading aspects, by the victors in the Cold War. Neoliberals, such as Friedman [and Ferguson], have reproduced the weakest features of Marx’s thought—its consistent underestimation of nationalist and religious movements and its unidirectional view of history.”⁸⁵

The idea that the British Empire conferred economic benefits on any groups other than British capitalists is pure ideology, as impervious to challenge by empirical data as former Soviet prime minister Leonid Brezhnev’s Marxism- Leninism or George Bush’s belief that free markets mean the same thing as freedom. At the apex of those who profited from British-style “free trade” at the end of the nineteenth century was the Rothschild Bank, then by far the world’s largest financial institution with total assets of around forty-one million pounds sterling. It profited enormously from the wars—some seventy-two of them—during Queen Victoria’s reign, and financed such exploiters of Africa as Cecil Rhodes.

Ferguson, who wrote a history of the House of Rothschild, knows these things and does not deny them when he turns from imperial panegyrics to history. “In the age before steam power,” he writes, “India had led the world in manual spinning, weaving, and dyeing. The British had first raised tariffs against their products; then demanded free trade when their alternative industrial mode of production had been perfected.”⁸⁶ The result was poverty and dependence for India. As Oxford historian Tapan Raychaudhuri puts it, “Early in the nineteenth century India lost its export trade in manufactures and became a net importer of manufactured goods and a supplier of mainly agricultural products to Britain for the first time in its history. ... In India the favorable terms granted to British exporters and the doctrine of laissez-faire meant that Indian industries received no protection and hardly any encouragement until the mid-1920s, and then only in response to persistent Indian pressure.”⁸⁷ Precisely at the time that the British were preparing India for its poverty-stricken modern fate, two other nations were laying the foundations for their own contemporary status as the world’s first and second most productive nations—the United States, protected from its inception to about 1940 by tariffs on manufactured imports that averaged 44 percent; and Japan, which kept itself free of imperialist domination and copied the economic practices of Britain, the United States, and Germany rather than paying much attention to their economic treatises on free markets.⁸⁸

What we are talking about here is, in Mike Davis’s phrase, “the making of the third world,” the poverty-stricken southern hemisphere that is still very much with us today. “The looms of India and China,” Davis writes, “were defeated not so much by market competition as they were forcibly dismantled by war, invasion, opium, and a Lancashire-imposed system of one-way tariffs.”⁸⁹ In a well-known formulation, the social theorist Karl Polanyi wrote in his seminal work The Great Transformation (1944): “The catastrophe of the native community is a direct result of the rapid and violent disruption of the basic institutions of the victim (whether force is used in the process or not does not seem altogether relevant). These institutions are disrupted by the very fact that a market economy is foisted upon an entirely differently organized community; labor and land are made into commodities, which, again, is only a short formula for the liquidation of every and any cultural institution in an organic society.... Indian masses in the second half of the nineteenth century did not die of hunger because they were exploited by Lancashire; they perished in large numbers because the Indian village community had been demolished.”⁹⁰

Ferguson agrees; it is just that he, like Marx, sees all this chaos as “creative destruction,” the birth pangs of a new world order, Lenin’s famous willingness to break eggs in order to make an omelet. (“But how many eggs must you break,” one wag famously asked, “to make a two-egg omelet?”) “No doubt it is true that, in theory, open international markets would have been preferable to imperialism,” Ferguson argues, “but in practice global free trade was not and is not naturally occurring. The British empire enforced it.”⁹¹

Thomas Friedman similarly acknowledges that contemporary American-sponsored globalization is not a naturally occurring process. American imperialism enforces it: “The most powerful agent pressuring other countries to open their markets for free trade and free investments is Uncle Sam, and America’s global armed forces keep these markets and sea lanes open for this era of globalization, just as the British navy did for the era of globalization in the nineteenth century.”⁹² If Mexican corn farmers are driven out of business by heavily subsidized American growers and then the price of corn makes tortillas unaffordable, that is just the global market at work. But if poor and unemployed Mexicans then try to enter the United States to support their families, that is to be resisted by armed force.

After all their arguments have been deployed, how do analysts like Ferguson and Friedman explain the nineteenth-century poverty of India and China, the several dozen Holocaust-sized famines in both countries while food sat on the docks waiting to be exported, and their current status as “late developers”? Students of communism will not be surprised by the answer. In India, Ferguson argues, the British did not go far enough in enforcing their ideas. “If one leaves aside their fundamentally different resource endowments, the explanation for India’s underperformance compared with, say, Canada lies not in British exploitation but rather in the insufficient scale of British interference in the Indian economy.”⁹³

When Mao Zedong introduced Soviet-style collective farms into China and did not get satisfactory results, he did not abandon them but turned instead to truly gigantic collectives called “communes.” This Great Leap Forward of the late 1950s produced a famine that took some thirty million Chinese lives, a monument to communist extremism similar to the extremes of laissez-faire that the British dogmatically imposed on their conquered territories—and that Ferguson would have preferred to be yet more extreme.

The historical evidence suggests a strong correlation exists between being on the receiving end of imperialism and immiseration. The nations that avoided the fates of India, China, Mexico, and the Philippines did so by throwing off foreign rule early—as did the United States—or by modernizing militarily in order to hold off the imperialists (and ultimately join them)—as did Japan.

Even so, the United States is the heir to the British Empire in at least one sense: it is still peddling the same self-serving ideology that its London predecessors pioneered. In a typical speech from the White House, given on September 17, 2002, President George W. Bush said, “The United States will use this moment of opportunity to extend the benefits of freedom across the globe. We will actively work to bring the hope of democracy, development, free markets, and free trade to every corner of the world. ... Free trade and free markets have proven their ability to lift whole societies out of poverty—so the United States will work with individual nations, entire