Why Didn't the British Empire Industrialize? Mark Koyama Edition
By Garett Jones
Why didn’t 19th and early 20th century empires massively raise productivity per worker in their colonies? Why have the big improvements in productivity almost always happened after the imperialists either left or genuinely turned over power to the locals? This is a topic where Marxian thought naturally overlaps with public choice theory: Battles between elites and masses get fought out across the political and economic arenas.
An example: My excellent Public Choice Center colleague Mark Koyama passes along his summary of the work of Avner Offer, an historian who followed up Adam Smith’s line of thinking that the British Empire gave little benefit to Britain overall. I’m excerpting from Mark’s email to me with his permission:
My recollection of Offer’s argument (as much from discussions with him as from the article and this is my personal slant on his argument) is that one reason why the empire was possible was that it provide[d] a psychic rent to the British population as a whole…..this psychic rent permits greater inequality at home than otherwise would have been tolerable.
Frames of reference matter for debates over inequality: It’s easier to moralize over the CEO who earns hundreds of times more than the average U.S. worker if you neglect the fact that the average U.S. worker earns about a hundred times more than the planet’s bottom billion. But if citizens feel that some of the world’s poorest people are within their polity–even a little–that might make the average worker feel like she doesn’t have it quite so bad.
Empire placed the British working class higher in the British pecking order. For a status-conscious species this matters.
Back to Mark:
What this means is that the British public would be willing to tolerate the empire on the condition precisely that it does not industrialize. Hence British elites might have an incentive to keep India (say) poor even though they could have benefited from allowing it to develop more manufacturing or to educate its workers as that would have allowed them to extract more.
A hypothesis worthy of further reflection. In a world of politics, the words “They’re doing it so they must benefit” isn’t an answer. It’s an object of meditation.