Utilitarian free trade killed millions in China and India

An NGO briefing paper traces the disturbingly intimate link between the mass famine-related deaths in late-19th-century India and China and the forcible incorporation of these nations into the economic and political structures of the modern world system.

by Chakravarthi Raghavan

GENEVA: The famines and deaths of 50 million people in India and China at the end of the 19th century, which turned these economies into peripheries of Europe and North America, were the result of the forced opening of these economies to ‘modernity’ and forcible incorporation of their subsistence farmers into the economic and political structures of that era under utilitarian free trade principles and laissez faire.

A briefing paper by a UK advocacy group, The Corner House, says that while worldwide climate phenomena (the ENSO, El Nino and Southern Oscillation effects) that created droughts across a swathe of the tropics (Brazil, Southern Africa, South Asia and China) played a role, the Malthusian explanations of that time or by some later political economists are not borne out.

Millions died - not less than 30 million but perhaps nearer fifty - says the Corner House briefing paper, “not outside the modern world system (of that era), but in the very process of being forcibly incorporated into its economic and political structures ... in the golden era of liberal capitalism (of the 19th century globalization)... murdered by the application of utilitarian free trade principles.”

The briefing paper, “The Origins of the Third World: Markets, States and Climate”, is an edited abstract and based on a book by Mike Davis (2001), Late Victorian Holocausts: El Nino Famines and the Making of the Third World.

It comes at a time when the integration of developing countries and their agriculture and other ‘non-modern’ sectors into global markets through neo-mercantilist ‘free trade’ in goods, services and investments is pursued as an end in itself - at the WTO under the “Doha Development Round”, as well as in the policies pushed by the IMF, World Bank and many parts of the UN system purportedly promoting multilateralism.

Imperial iniquities

The late-19th-century famines in India and China, the briefing paper brings out, were the result of imperial policies. The crucial role of these imperial policies in tackling the extensive climate-caused droughts is contrasted with similar extreme climate events in both countries some 200 years earlier, when the state policies (of the feudal regimes) ensured that far fewer people died.

The briefing paper (as the book itself) also explains how Europe and North America made China and India into “peripheries” in the world economy: by forcibly imposing trade deficits, promoting exports that diminished food security, levying excessive taxes and introducing predatory merchant capital taking control of key revenues and resources, waging war, and decreeing a monetary system (the Gold Standard) that picked the pockets of Asian peasants.

Some of these policies have striking parallels in the contemporary world, where international organizations are being induced to provide (through extra-budgetary resources) technical assistance in various areas to advise developing countries on how to make use of opportunities to get benefits out of globalization.

The famine and subsistence crisis, from 1876-1879, was a disaster of planetary magnitude; drought and famine were reported in Asia (India - now South Asia - China, Java, the Philippines and Korea), Brazil, southern Africa, Algeria and Morocco. The synchronous extreme weather, of the entire tropical monsoon belt plus northern China and Africa, was not suspected till then. There was no historical record till then of famine afflicting so many far-flung lands - the million dead in the Irish famine of 1845-47 had been multiplied tenfold.

However, even before the failure of the monsoons and drought across India was turned into a famine by decisions taken in the palaces of the native rajas (propped by British raj) and the Viceroys, the semi-arid interior of India had been primed for disaster by the worst recession in world trade in the 19th century, beginning 1873, when commodity prices had collapsed, and economic depression had spread misery and ignited discontent across cotton-exporting districts of the Deccan peninsula, where forest enclosures and displacement of gram (pulse crops harvested in spring) by cotton had reduced local food security.

The traditional food security system of household and village grain reserves had been supplanted under the advancing and spreading East India Company rule and the 1857-58 ‘Mutiny’ that brought company rule to an end, to be substituted by British Crown rule.

When the famines took place and local (British) administrators in the provinces recommended deferment of the land tax, the British Viceroy Lord Lytton rejected them out of hand, and insisted there should be no interference with the market (as Adam Smith had advocated a century earlier). A contemporary British historian visiting the areas in 1878 labelled the official famine policy in blunt terms as “murder.”

However, Lytton’s laissez faire  approach was endorsed by all the political parties in Britain and subsequently by the Famine Commission, which said that the doctrine that the poor are entitled to relief in times of famine might lead to the doctrine that they are entitled to relief at all times.

In northwest China at that time (under the dying Qing dynasty), the independent peasant economy and smallholder agriculture, and exchanges within local markets, had been supplanted under imperial bankruptcy and British aggressions. (Britain claimed the right to sell opium, produced by British planters in colonial India, to pay for silk and other Chinese goods, and enforced it through gunboat diplomacy and two wars. And when Britain  established the right forcibly, the Europeans as well as Americans claimed equal rights in China.) The British aggressions  engineered the fiscal crisis in China of that day, and the exactions of Qing rulers, and their use of the army to turn back and massacre peasants fleeing the famine-stricken countryside for the towns, all added to the famine deaths.

The British official line, and that of the British and European historians writing about that period, was that the famines of the 1870s and 1890s were caused by El Nino acting on traditional agrarian misery in India, and the corruption of the Qing rulers in China.

However, when the experience of the late 19th century is compared with events of 1743-44 (where the impact of climate failure in north China is documented in detail) and the highly efficient famine relief efforts of the rulers at that time, it is evident what a state undertaking famine welfare, and the costs of maintaining granaries and irrigation well-systems, achieved. The inability to do so in the 19th century created the famines and deaths of millions.

India under Moghul rule was generally free of famines until the 1770s. Before British rule, the laying of railways and the ‘national markets’ in grain created by it, village food reserves and patrimonial welfare in villages were widespread. Grain prices in surplus areas were insulated from speculation. The state under Moghul rule regarded the protection of peasants as an important and essential obligation. The Moghuls, like the Chinese, relied on embargoes on food exports, anti-speculative price regulation, tax relief and distribution of free food without forced labour - a policy which was anathema to British utilitarianism.

Though the British claimed they had rescued India from famines, an 1878 study in the Journal of the Statistical Society, cited by contemporary Indian historians and which shocked British administrators, brought out that there were 31 serious famines in 120 years of British rule (company rule followed by Crown rule), as against only 17 famines in the entire two previous millennia.

In the late 19th century, the causes of rural subsistency were due to:

*           Forcible incorporation of smallholder production into commodity and financial circuits controlled from overseas that undermined traditional food security. And instead of profiting from exchanges in the market, peasants were forced into progressive deterioration of conditions of production and loss of property titles.

Both in north China and in India there is concrete evidence of falling household wealth and increased fragmentation and alienation of land - whether farmers were directly engaged by foreign capital or producing for domestic markets subject to international competition - commercialization of agriculture went hand in hand with pauperization, without any silver lining of technical change or agrarian capitalism.

*    The integration of tropical agriculture into world markets in the late 19th century was accompanied by dramatic deterioration in the terms of trade.

*     Formal and informal British imperialism, backed by supranational automation of the ‘gold standard’, eroded local fiscal autonomy and impeded state-level development response.

Malthusian views embraced even by economists like Arthur Lewis, studies now show, were wrong. Although the population grew rapidly in India between the 1850s and 1860s, this came to an abrupt halt with the famine catastrophe of 1876. Between 1879 and 1920, there was not a single decade of significant population growth. South Asia’s percentage of world population declined during 1750 to 1900, from 23 to 20%, while that of Europe rose from 17 to 21 percent.

British rule in India freed local political chiefs from their obligation to invest in water systems, but the state did not make up the shortfall. Common lands were transformed into taxable private property or state monopolies - free goods became commodities or contraband.

Despite smug claims about the life-saving benefits of steam transportation and modern grain markets, millions in British India died near railway tracks or grain depots. In China, the rapid decline in state capacity and popular welfare followed in lockstep with the Chinese Empire’s forced ‘opening’ to modernity by Britain and other countries.

“Millions died not outside the modern  world system, but in the very process of  being forcibly  incorporated into its economic and  political structures. They died in the golden age of liberal capitalism, many murdered by application of utilitarian free trade principles. The route to this ‘new world order’ is paved with the bodies of the rural poor.” (SUNS5286)

From Third World Economics No. 300 (16-30 March 2003)