Dublin Opinion

Owen Jones has an interesting article on the legacy of Britain’s Empire:

Consider India, the “jewel in the crown” of the British Empire. At the beginning of the 18th-century – before it was conquered – its share of the world economy was well over a fifth, nearly as large as all of Europe put together. By the time the country won independence, it had dropped to less than 4 per cent. India was treated as a cash cow; the revenues that flowed into London’s Treasury were described by the Earl of Chatham as “the redemption of a nation… a kind of gift from heaven”. By the end of the 19th-century, India was the world’s biggest buyer of British exports and provided highly paid work for British civil servants – all at India’s expense.

However, there is more to it than wheat, as this excerpt from Adam Smith in Bejing in which Giovanni Arrighi highlights the differences between Britain at the end of the 19th Century and the US at the end of the 20th illustrates:

In the preceding section we traced the inflationary character of the latest long downturn to the social and political impossibility of subjecting labor-capital relations in core regions to the discipline of a metallic standard, as they had been during the late nineteenth century. The nature and strength of this social constraint within core regions, however, themselves depend critically on the particular political arrangements that link the core to the peripheries. Nothing illustrates this better than the close connection between Britain’s adherence to the gold standard and its extraction of tribute from the Indian subcontinent.

Britain’s Indian empire was critical in two main respects. First, militarily: in Lord Salisbury’s words, “India was an English barrack in the Oriental Seas from ‘which we may draw any number of troops without paying for them. Funded entirely by the Indian taxpayer, these forces were organized in a European-style colonial army and used regularly in the endless series of wars through which Britain opened up Asia and Africa to Western trade, investment, and Influence.

They were “the iron fist in the velvet glove of Victorian expansionism . . . the major coercive force behind the internationalization of industrial capitalism. As late as 1920, soldiers from India accounted for more than 87 percent of the troops Britain deployed in Iraq to quell a full-scale insurgency against British military occupation. “Perhaps, then, the greatest problem faced by the Anglophone empire of our time is very simple: the United Kingdom had the Indian Army; the United States does not.

Second, and equally important, the infamous Home Charges and the Bank of England’s control over India’s foreign-exchange reserves, jointly turned India into the “pivot” of Britain’s global financial and commercial supremacy. India’s balance-of-payments deficit with Britain, and surplus with all other countries, enabled Britain to settle its deficit on current-account with the rest of the world.

Without India’s forcible contribution to the balance-of-payments of imperial Britain, it would have been impossible for the latter “to use the income from her overseas investment for further investment abroad, and to give back to the international monetary system the liquidity she absorbed as investment income.” Moreover, Indian monetary reserves “provided a large masse de manoeuvre which British monetary authorities could use to supplement their own reserves and to keep London the center of the international monetary system.

In enforcing monetary discipline at home on workers and capitalists alike, Britain’s ruling groups thus faced an altogether different situation to that of US leaders a century later. For one thing, the exercise of world-hegemonic functions-including the endless series of wars fought in the world’s South-did not involve the kind of inflationary pressures that the Vietnam War engendered in the United States. Not only were the wars financed by Indian money but, fought by Indian and other colonial troops, they did not require the kind of social expenditure the US government had to incur in order to contain domestic opposition to escalating casualties.

Costs of war aside, unlike the United States in the late twentieth century, Britain could internalize the benefits (for its metropolitan subjects) and externalize the costs (on its colonial subjects) of the ceaseless “structural adjustments” involved in the subjection of its currency to a metallic standard. Coercive control over the surplus of India’s balance of payments enabled Britain to shift the burdens of its own persistent trade deficits onto Indian taxpayers, workers, and capitalists. In a postcolonial world, in contrast, no such blatant coercion was available.