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Wednesday, August 7, 2013

The shift to imperialism

Classical liberalism, whether natural rights or utilitarian, whether English, French or German, was devoted to a foreign policy of peace. Its firm opposition  to war and imperialism was the libertarian, minimal-government corollary in foreign affairs to its minimal-government stance at home. Opposition to big government, high taxes and interventionism abroad was the corollary of the same opposition at home. Even when the classical liberals were not totally consistent exponents of laissez-faire in either domestic or foreign affairs, their basic thrust was in that direction. Peace and free trade were twin policies – reaching the acme of consistency on both counts in the policy positions and agitation of Richard Cobden, John Bright, the Manchester school, and the Anti-Corn Law League.

Among the British classical liberals, non-intervention and anti-imperialism were the dominant tradition. Colonialism and special privileges to investment abroad were properly seen as part of the monopoly privileges and controls imposed by mercantilism, none of which confers advantage – in fact, imposes considerable disadvantage – on the home population. Jeremy Bentham, James Mill and the others were generally solidly anti-imperialist, and advocated that Britain give up its colonies and grant them independence. Bentham originally included India in this emancipation, but was talked out of it by James Mill, a high official in the governing organization of India, the British East India Company. The James Mill exception for India was based on a utilitarian ‘white man's burden’ argument that, even though England was losing economically from governing India, it must continue doing so for the sake of the Indians, who were too savage to be able to govern themselves. In that way, James Mill was able to cast an altruist-utilitarian patina over England's often bloody repression in India and over his own role in that oppression.

Mill also was able to propound his own Ricardian assault on the landlord class. Following the Ricardian doctrine that landlords were useless and nonproductive Mill advocated special taxes on ground rent; being a high official in India, he believed that he was more likely to influence the tax and legal system there. Hence he advocated British nationalization of Indian land, with the state then renting out the land to Indian peasants as long-term tenants; thus, in a pre-George Georgism, the state would absorb all revenues from land rent. In his turn, John Stuart Mill was happy to advocate the same scheme.

Bentham and James Mill also made an exception to their overall anti-imperialism for Ireland, here not indulging in attacks on 'savagery’ but simply asserting that freeing Ireland would be politically impossible. A strange position to take by two theorists usually fearless in advocating unpopular policies! We may speculate, however, an alternative explanation: the English liberal and radical masses, throughout the late eighteenth and nineteenth centuries, were generally laissez-faire-oriented, until the Tories were able to stir up the rabid anti-Catholicism of these dissenter and non-conformist Protestant  evangelicals, and thereby split the liberal ranks. Anti-Catholicism long served as the scourge of British liberalism.

But John Stuart Mill, in this crucial area not very filio-pietistic, was able to help change the face of nineteenth century British liberalism. He was able to take a liberal doctrine generally anti-war and anti-imperialist, though with a few glaring exceptions, and transform it into an apologia for imperialism and foreign conquest. Rather than abandon the empire, as his father and other liberals had urged, John Stuart Mill called for its expansion. Indeed, Mill became the leading force in destroying the philosophic radical party in Parliament in 1838, by splitting their ranks and supporting the violent suppression of the Canadian rebellion of that year.

The younger Mill continued the altruistic argument of his father on India, and expanded it to all other peoples of the Third World. They were all barbarous and needed to be subject to a ‘benevolent’ despotism. He also expanded this hard line to Ireland, lamenting that Ireland could not be entirely crushed under heel because it was legally a part of the United Kingdom. ‘I myself have always been for a good stout despotism, for governing Ireland alike India’, Mill proclaimed. Himself a high official of the East India Company, John Stuart Mill argued that rule over barbarous colonies like India was best entrusted to autonomous public/private bodies of ‘experts’ such as the East India Company, rather than to the vagaries of Parliament and the English public. After the dissolution of the company in 1854, however, Mill saw no problem in Parliament appointing commissions of experts such as himself and delegating rule over India to them.

While John Mill grudgingly agreed that the advanced, white settler colonies had to be allowed their independence, he hoped that they would continue to be governed by Great Britain. For, in contrast to his father and other liberals, Mill believed that colonies conferred positive economic advantages on the home country. For a while, Bentham had succumbed to worries about 'surplus’ capital at home, to be relieved by imperial expansion, but James Mill had succeeded in persuading Bentham otherwise. As an adherent and virtual co-founder of Say's law, the elder Mill had realized that Say's law meant that there would be no ‘gluts’ from overproduction or excess capital; therefore, no colonial or imperial safety valve was necessary. John Stuart Mill, however, was converted to the idea of surplus capital by his old friend Edward Gibbon Wakefield (1796–1862), son of Edward Wakefield, a philosophical radical friend of Bentham and James Mill.

Young Wakefield began the heretical pro-imperialist movement with his Letter from Sydney (1829), written not from Australia, but from an English prison, where he had been convicted for the fraudulent kidnapping of a young heiress. With this tract, Wakefield launched the ‘colonial reformer’ movement, and John Mill proudly proclaimed himself Wakefield's first convert.  Mill was much too committed to Say's law to buy the idea of surplus production desperately needing foreign markets, but he was committed enough to the Ricardian fears of a falling rate of profit to advocate postponing this day by subsidizing the investment of British capital abroad. The worry about 'surplus capital’ that could not be invested at home, should have been put to rest if Mill had been truly committed to Say's law. As for the falling rate of profit, Mill couldn't transcend the Ricardian framework to realize, first, that there is nothing inevitable about a falling rate of profit (i.e. interest), since wages do not inevitably press upon profits; and second, to the extent that profit rates fall over time it is due to falling time-preference rates, and then it is scarcely a tragedy, nor does it cause a depression or stagnation, since this interest or profit rate only reflects the desires and values of the participants in the market. And also, since interest rates are not determined by nor are they inverse to, the stock of capital, there is no guarantee that these rates will be higher abroad than in home countries such as England.

Thus, by being converted to Wakefield's fallacy of the inevitable accumulation of surplus capital in advanced capitalist countries, John Stuart Mill lent his great prestige to the notion that capitalism economically requires empire in order to invest, to get rid of, allegedly surplus savings or capital. In short, Mill was one of the ultimate founders of the Leninist theory of imperialism.
Austrian Perspective on the History of Economic Thought (2 volume set)

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