A People's History of the World: From the Stone Age to the New Millennium (34 page)

The sugar plantations required relatively advanced equipment for milling the cane and refining the juice and bought it from European manufacturers. The trade boosted the shipping and shipbuilding industries which were increasingly important employers of skilled and unskilled labour. Some of the profits which flowed through the trading ports of Liverpool, Bristol and Glasgow were invested in industrial processes connected to the colonial produce or financed new transport links (canals, turnpike roads) to the inland British market.

Slavery did not produce the rise of capitalism, but was produced by it. English industry and agriculture were already displaying a dynamism in the late 17th century, at a time when plantation production in the West Indies and North America existed only in embryo. It was because of this dynamism that the slave trade took off. The demand for colonial produce existed precisely because a dynamic British economy led the consumption of tobacco and sugar to spread downwards from the upper classes to the urban and even rural masses. The looting of colonies and the enslavement of peoples could not alone create such a domestic dynamic—the Spanish and Portuguese economies stagnated despite their colonial empires. The British economy grew because the growing use of free labour at home enabled it to exploit slave labour in the Americas in a new way.

It was also the dynamism of a domestic economy increasingly based on wage labour that enabled British (and to a lesser extent French) slavers to obtain their human cargoes in Africa. Most of the slaves were bought from the upper classes of African coastal states, since the slave traders themselves were too ignorant of the African interior simply to kidnap millions of inland people and transport them long distances to the coast. They got African merchants and rulers to do that, supplying them in return with better quality goods than could be obtained in other ways. But the Africans were not ‘ignorant savages’, despite the racist mythology. They lived in relatively sophisticated, often literate societies, comparable in level to most of those of late medieval Europe. It was only because of the first advances of capitalism that the British economy had begun to surpass that level. A monstrous form of commerce was thus possible in the 18th century which could not have occurred at the time of Leo Africanus (in the early 16th century) when most African and west European states were at a similar level of economic development.

Plantation slavery was a product of the fact that Holland and England had already embarked on capitalist expansion. But it also fed back into capitalism, providing it with powerful boost.

In doing so, slavery played an important role in shaping the world system in which capitalism matured. It helped provide England with the impetus it needed to absorb Scotland (after the Scottish ruling class’s own attempt to establish a colony in Panama, the Darien scheme, fell apart) and to begin, in the second half of the 18th century, to create a new empire in the east through the East India Company’s conquest of Bengal.

The other side of the rise of Britain’s ruling class was the debilitation of much of Africa. The slave trade provided rulers and merchants in coastal regions with access to relatively advanced consumer goods and weapons without having to develop their own industries—indeed, imported goods ‘undercut African industry’.
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A successful state was one which could wage war on others and enslave their peoples. Ruling classes inclined towards peace could only survive by becoming militaristic. When states like Jolof, Benin and Kongo tried to stop their merchants supplying slaves, they found the rulers of other states were gaining in wealth and power by doing so,
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while pre-class societies faced destruction unless new military ruling classes emerged. Those on the coast gained by plundering those inland.

Some historians have claimed the resulting growth of ‘centralised African states’ represented a form of ‘progress’. But this was accompanied by an underlying weakening of the material base of society. Population growth was stunted at precisely the time it surged ahead in Europe and North America.
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In west Africa there was even a decline in population between 1750 and 1850.
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This, in turn, left the African states ill-equipped to resist European colonial invasion at the end of the 19th century. While western Europe moved forward economically, Africa was held back.

In 1771 a former barber and wig maker, Richard Arkwright, opened the world’s first water powered spinning mill at Cromford in Derbyshire. He employed 600 workers, mainly children, who could do the work of ten times that number of hand spinners. In 1775 a Scottish mathematical instrument maker, James Watt, joined forces with the Birmingham engineer Matthew Boulton to produce steam engines which could turn machinery, haul enormous loads and, eventually, propel ships and land vehicles at speeds previously undreamed of. In 1783-84 Henry Cort devised a superior ‘puddling’ method of smelting iron and a rolling mill for processing it.

The way was open, through integrating these inventions and others, to develop a whole new way of producing, based upon steam powered factories employing hundreds or even thousands of people. By the end of the century there were 50 such factories in the Manchester area alone. It was not long before entrepreneurs elsewhere in Europe and across the Atlantic were trying to imitate the new methods. The world of the urban artisans and the rural putting-out system was giving birth to the industrial city.

Just as these changes were beginning to unfold, a Scots professor set out what he saw as the fundamental principles of the new economic system. Today Adam Smith’s
The Wealth of Nations
is usually treated as the bible of conservatism. But when it appeared, it represented a radical challenge to the prevailing order in Europe and to those who still hankered after that order in Britain.

Smith was part of the ‘Scottish Enlightenment’, a group of thinkers which included Adam Ferguson and David Hume. They had been horrified by the attempts of the Stuarts to use the feudal Scottish Highlands to reimpose absolutist monarchy on England, and were determined to supplant what they saw as an old order based on prejudice. This led them to a much closer affinity with the European Enlightenment than most English thinkers of the time. Smith was an admirer of the
Encyclopédie
and friendly with Voltaire, d’Holbach, Helvetius and Rousseau.
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The Wealth of Nations
was part of the Enlightenment attempt to clean the world of feudal ‘irrationality’.

It contrasted modern ways of creating goods to enhance people’s lives (‘the wealth of nations’) with old institutions and methods which prevented these being implemented—what characterised ‘the opulent countries of Europe’ and what prevailed ‘anciently, during the prevalency of the feudal government’.
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It began with a description of a modern pin ‘manufactory’ where a huge increase in the productivity of labour resulted from an elaborate division of labour which had each worker carrying out one small task.

Smith turned the traditional views of where wealth came from upside down. In the early medieval period wealth was seen as lying in land. From the 1500s onwards ‘mercantilist’ notions which focused on wealth in gold and silver were increasingly popular.

Smith challenged both these notions and insisted human labour was the source of wealth. ‘The annual labour of every nation is the fund which originally supplies it with the necessities and conveniences of life,’ he wrote. ‘Labour is the real measure of the exchangeable value of all commodities’.
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That labour could be used in two ways—‘productively’ or ‘unproductively’. ‘Productive’ labour helped create durable products which could be sold, either to be consumed by those engaged in other labour or as ‘capital’ to be used in producing more goods. In either case its output helped to create more output, making ‘the wealth’ of ‘the nation’ expand.

Labour was ‘unproductive’ when it was immediately consumed without helping to create some new commodity. Such was the labour of ‘menial servants’ who waited on people. Once performed, their labour simply disappeared. A man would grow rich by employing many productive labourers: ‘He grows poor by maintaining a multitude of menial servants.’ Just as ‘unproductive’, Smith added, was:

States across Europe in the 18th century provided a host of
sinecures
—well paid appointments involving no real duties—which allowed hangers-on at the courts and in governments to live in luxurious idleness. Smith’s doctrine was an onslaught on them. It was also an onslaught on landowners who lived off rents without investing in agriculture. It was a demand that the developing market system was freed from the burdens that were holding it back. It was a programme for reform in Britain and one that could easily be interpreted as for revolution in Europe.

Smith further argued against any attempts by the state to control trade or conquer other lands. Left to themselves, people would always exchange the goods produced by their own labour for a selection of the best and cheapest goods produced by other people’s labour, he said. Everyone would concentrate on the tasks they were best at, seeking to perform them as efficiently as possible, and no one would have an interest in producing things not wanted by others. The market would coordinate people’s activities in the best possible way.

Attempts by governments to favour their own producers could only lead to people expending more labour than was necessary. Such controls might benefit certain interest groups, but Smith insisted they would reduce the ‘national wealth’. Free trade was the only rational way to proceed.

In a similar way, he argued for the virtues of ‘free’ labour. Slavery might seem an easy way of making profits. But because it prevented the slaves applying their own initiative to their labour, it was more costly in the long run than free labour. ‘A person who can acquire no property can have no other interest but to eat as much and labour as little as possible,’ Smith argued.
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He was extolling the virtues of a pure market system against the feudal and absolutist institutions out of which it was emerging. As Eric Roll explains, his writings ‘represented the interests of a single class…He could have been under no illusion that his main attack was directed against the privileged position of those who were the most formidable obstacles to the further growth of industrial capitalism’.
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Smith’s account of the new system was one sided. British capitalism had not leapfrogged over the rest of Europe simply by peaceful market competition. Slavery had provided some capital. The colonies had provided markets. State expenditures had been high throughout the century and had provided encouragement without which new, profitable and competitive industries would not have emerged. The crutches of colonisation, of slavery and of mercantilism had been necessary for the rise of industrial capitalism, even if it was beginning to feel it no longer needed them.

Countries without a state able to provide such crutches suffered. This was certainly the case with Ireland, whose native capitalists suffered as Westminster parliaments placed restrictions on their trade. It was increasingly true of India, as the officials of the British East India Company pillaged Bengal without providing anything in return. Once British capitalism had established a dominant position, capitalist classes elsewhere would need state support if infant industries were not to be strangled at birth.

Writing when industrial capitalism was in its infancy, Adam Smith could not see that pure market systems display an irrationality of their own. The drive of producers to compete with one another leads, not to an automatic adjustment of output to demand, but to massive upsurges in production (‘booms’) followed by massive drops (‘slumps’) as producers fear they cannot sell products profitably. It was to be another 45 years before Smith’s most important successor, David Ricardo, added a chapter to his
Principles of Political Economy
recognising that the introduction of machinery could worsen the conditions of workers. For Smith to have done this would have been to jump ahead of his time. However, those who want to present Smith’s writings as the final word on capitalism today do not have the same excuse.

Finally, there was a contradiction in Smith’s argument about labour and value which had important implications. Like almost all Enlightenment thinkers, Smith assumed that people with unequal amounts of property are equal in so far as they confront each other in the market. But some of his arguments began to challenge this and to question the degree to which ‘free’ labour is that much more free than slave labour.

Smith’s assertion that labour is the source of all value led him to the conclusion that rent and profit are labour taken from the immediate producer by the landlord or factory owner.

There is not harmony of interest, but a clash between the interests of the masters and the interests of the workers:

The logic of Smith’s argument was to move beyond a critique of the unproductive hangovers from ‘feudalism’, made from the point of view of the industrial capitalists, to a critique of the capitalists themselves—to see them as unproductive parasites, living off profits which come from the labour of workers. It was a logic transmitted, via the writings of Ricardo (who attacked the landowners from the point of view of industrial capitalism), to the first socialist economists of the 1820s and 1830s and to Karl Marx. The weapons which the greatest political economist of the Enlightenment used to fight the old order were then used to fight the new one.

Smith shied away from drawing such conclusions. He was able to do so by mixing his notion that value came from labour with another contrary notion. In this, he said the value of a commodity depended on the combined ‘revenues’ from it of landlord, capitalist and worker. Despite the circularity of the argument (revenues depend on value, but value is the sum of the revenues), this was the idea which was to be taken up by Malthus and the great populariser Jean Baptiste Say and to become the orthodoxy in mainstream economics after the death of Ricardo.

Nevertheless, Smith was the first to portray the central outlines of the new economic system which was emerging. It was a picture which gave British capitalists some idea of where they were going, and the would-be capitalists of other countries some notion of what to copy. It was published just as a century and a quarter of relative social peace was giving way to a new era of revolutionary upheaval. Its ideas were to shape the attitudes of many of the key actors in the new era.