Capitalism versus Colonialism: Which is better?

Introduction

Market systems, historians believe, came into being at the commencement of the Neolithic age, (12,000 to10,000 BC), when trade specialisation, agricultural improvement, and larger and more organised human settlements led people to engage in trade, barter and exchange of goods and services in progressively organised environments (Grantham & Mackinnon, 1994, P 7 to 52).

With agriculture continuing to be the foremost productive and commercial human activity right up to the occurrence of the Industrial Revolution, most market systems and marketplaces continued to revolve around agricultural produce until the 18th century, even though the opening of the spice routes, European trade with Asia, and European colonisation of the Americas, Africa and Asia, spurred trade in textiles, metals, and other commodities and goods (Grantham & Mackinnon, 1994, P 7 to 52).

Whilst global, especially western political systems, remained feudal at the basic level for hundreds of years, factors like the strengthening of monarchy in the UK, the growth of centralised rule in various European states, the changeover from agriculture to production, the intense political, military, and economic competition and confrontation between European nations and the emergence of economic theories like mercantilism and free markets led to significant political, geographic and economic changes (Lapavitsas, 2003, P 27+).

Capitalism, the dominant modern day economic and social system probably originated during the Muslim Agricultural Revolution between the 8th and 12th centuries AD, when the combination of a stable dinar, the adoption of new business techniques, the formation of trading companies, the creation of economic and operational partnerships, the availability of credit, and development of instruments like bills of exchange led to the creation of a robust monetary economy and to the development of strong markets with easy exchange of goods and services (Lapavitsas, 2003, P 27+).

Even as such tenets of capitalism were being adopted and progressively improved in Europe, the commencement of colonialist adventures in the 15th and 16th centuries by European powers like Spain, Portugal, England, Holland, Germany and France led to the progressive colonisation of the Americas, Africa, and Asia over the next two centuries and probably to the darkest era ever witnessed by the world (Lapavitsas, 2003, P 27+). Millions of people of various colours, creeds and religions were virtually enslaved by the people of a handful of nations; they were deprived of their possessions, crafts, skills and employment, and ruled despotically until the termination of the Second World War led to the emergence of a new global order (Lapavitsas, 2003, P 27+).

Despite colonialism being a product of western nations, who were indeed the originators and champions of capitalism, the economic systems imposed by such nations in their colonies were significantly and ironically different from the ones adopted and followed by them in their homelands; both internally and in trade with other independent states (Smith,1995, P 77 to 122)!! The economic systems and marketplaces of capitalism were essentially based upon concepts of free choice, egalitarianism, equality of opportunity and productive competition, whereas the economies and marketing systems of colonies were determined solely by the advantages that could be secured by the metropoles, (the home or ruling nations); which in turn led to the systematic oppression and deprivation of colonies (Smith, 1995, P 77 to 122).
This study attempts to take up and analyse the differences between capitalist and colonialist marketplaces.

Commentary

Capitalism

Capitalism, whilst it originated during the Islamic Golden Age between the 8th and 12th century A.D. and took root in Europe between the 13th and 16th centuries did not really achieve its predominant economic and social status until the progressive commoditisation of labour, capital and land resulted in the institutionalisation of a widespread labour market in the U.K in the early 1800s (Vanberg, 2001, P 214+).

This period saw the beginning of an era that was characterised by the control and management of significant sections of industry by trusts, financing and holding institutions, as well as by the domination of oligopolistic organisations that earned extraordinary profits (Vanberg, 2001, P 214+). The primary features of capitalistic marketplaces during this period included the formation of huge industrial and trade monopolies, the ownership and control of industries by wealthy financiers who remain separate from production and operations, the growth of a complex banking system, joint stock companies, and large equity markets; major industries like petroleum, telecommunication and rail-roads came under monopolistic domination (Vanberg, 2001, P 214+).

Capitalism per se is seen to encourage economic growth and champion free markets (Vanberg, 2001, P 214+). However, the extent of such freedom is often decided by politics and policy and differs from state to state. The capitalist system is further characterised by the presence of commodities, capital goods and consumer goods, money, which eliminates the cumbersome and awkward process of barter, labour, and production (Vanberg, 2001, P 214+). Whilst capitalism is the predominant economic leitmotif, the capitalist market place has been constantly distinguished by economic depressions, sharp business cycles, the making of impossible fortunes and the happening of great bankruptcies (Vanberg, 2001, P 214+). The 1870s and 80s saw two decades of economic depression. The great depression of the 1930s bankrupted thousands of people and affected the entire capitalist world (Vanberg, 2001, P 214+). The economic depression of 2008 – 2010 again affected nations across the world, created enormous hardships and dissolved thousands of personal fortunes.

Whilst such uncontrollable economic cycles led to the growth of Marxist states in the 1930s, their progressive disintegration in the course of just half a century has again encouraged people to think of capitalism as the most practical, economic and social construct (Lapavitsas, 2003, P 27+).

The capitalist marketplace, regardless of its merits and demerits is essentially characterised by extremely low governmental interference, extensive deregulation, free flow of capital and goods, equality of opportunity and sanctity of contract. It encourages competition, increases efficiency, eliminates and strikes down inefficiency and poor productivity and facilitates the survival of the fittest (Lapavitsas, 2003, P 27+). Notwithstanding such features, the inherent deregulation of the capitalist system also leads to the occurrence of scams, the oppression of the weak and the building of monopolies. Such features have led most countries practicing capitalism and economic neo-liberalism to introduce and implement numerous regulatory features.

Chart 1: Advantages and Disadvantages of Capitalism (Global Awareness UG, 2020, p1)

Colonialism

Colonialism, a system of global expansionism adopted by a few European nations in the 15th and 16th centuries entails the construction and maintenance of colonies in one region or territory by the people of another (Peeters, 2006, P 506+). It specifically calls for the sovereignty over a colony by the colonising nation, which is known as the metropole (Peeters, 2006, P 506+). Colonialism has a long history, with ancient peoples like the Romans, the Greeks and the Egyptians being adept colonisers; the colonialism of recent times, as practiced by the European nations, aimed at making of super-normal profits and political, economic and military expansionism (Peeters, 2006, P 506+). The phenomenon was characterised by the political and legal domination of an alien society, the construction of relationships of political and economic dependence, the exploitation of colonies by imperial powers, and by racial and cultural inequality (Peeters, 2006, P 506+).

Such policies also meant that colonialist powers were fundamentally committed to the destruction of the domestic economies of their colonised countries (Peeters, 2006, P 506+). Destruction was by and large carried out by heavy taxation of whatever local produce the colonised people liked to consume (Peeters, 2006, P 506+). The requirement of local people to meet their increased tax obligations inevitably pushed them to work in the mines, factories, plantations and fields of their colonialist masters (Peeters, 2006, P 506+).

The French levied taxes on all goods that were not of French origin in French West Africa in 1905, thus pushing up the prices of local items and ruining local craftsmen and traders (Smith, 1991, P 81+). The British destroyed India’s textile industry in the 1900s in a very similar manner, converting a huge country that brought textiles from thriving local producers to a market for Liverpool’s textile producing industry (Smith, 1991, P 81+).

Conclusions

Colonialism, whilst being a political economic and social system that was formulated, implemented and developed by inherently capitalistic nations led to the development of marketing systems that were fundamentally very different from that of capitalism.

Capitalism, whilst facilitating the build up of monopolistic economic power because of its predilection for deregulation and minimal political interference, is essentially based upon the concepts of free movement of capital, products and services, freedom of choice and intense and fair competition. The regulatory features of modern day capitalism have arisen especially because of the need to ensure fair practices and eliminate monopolistic and anticompetitive developments.

The colonialist marketplace is on the other hand founded on the basis of creation of advantages for the colonisers and disadvantages for the colonised. The benefits for colonisers are created by the construction of state monopolies, elimination of local markets for local producers, levying of unfair taxes, and numerous other tricks to ensure the complete transfer of economic advantage to the metropole.

Such practices inevitably lead to large scale transfer of wealth, impoverishment of peoples, destruction of local business and trade and widespread deprivation. Whilst colonialism formally came to an end with the close of the second world war, many experts firmly believe that it was merely discarded by the advanced nations because it had become politically incorrect and that the advantages of colonialism could be extended significantly because of the vast differences in economic powers that had developed between the affluent countries and the ex-colonised nations over the last two hundred years.

Such attitudes are clearly discernable in discriminatory trade policies that have been adopted by the developing nations on one pretext or the other for the last fifty years. The irony of capitalist free market economies continuing to engage in neo-colonialism could hardly be greater.

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