Mercantilism was about government control of the economy. It flourished from the fifteenth to the eighteenth centuries. Nation states sought to strengthen themselves by building up their assets, and to do this they set up systems to maximise exports and minimise imports, both protecting merchants and also taking high taxes and duties from them. England’s great success at this enabled it to build its navy, and then a globe-spanning empire, subsequently importing raw materials from its colonies for transformation and maximum profit at home.
Modern capitalism developed during the mercantile period, and eventually superseded it as the world’s dominant economic system. It is based on ownership of capital as the basis for operation of most aspects of the economic system, ie employment, production, and trade. It comes in many varieties, from state-run capitalism to “laissez-faire” private capitalism – which is pretty much where we are today.
The operation of mercantilism and its successor capitalism have had a number of very important consequences.
Europe’s relative power through the second half of the last millennium enabled it to commandeer resources from much of the rest of world, through what I call “the four great thefts”.
The first has been mentioned above – the theft of raw materials. Under the pretext (when they bothered) of bringing “civilisation” to their dominions, the imperial powers of Europe were able to “asset strip” their dominions and colonies, of everything from precious metals to textiles to food.
By undertaking much of the transformation and processing back home, they were able to benefit from both cheap supply of raw materials and also the extra profits available from adding value to them. The result was what we now call (apparently without irony) the “developed” world.
And from the wealth generated by this, Europe was able to fund the industrial revolution, which both compounded the “development” problem and also directly caused the fourth theft.
The second great theft – land
As Europe became more heavily populated, there were diasporas of population to the “new world”, mainly North and South America. The theft of land by war, or trickery, or just plain squatting, pushed the indigenous populations onto less, and more marginal, land.
While this was happening, the European perception of superiority and hence greater entitlement manifested itself in various ways. In North America they confined the indigenous people to reservations, in Australia they hunted them for sport. The New Zealand Maori were relatively lucky, in already being a trading and technologically sophisticated people when the Europeans began to arrive in large numbers, but acquisitive wars and confiscation of land wore them down. Even now, they are at the bottom of the heap in New Zealand’s social and economic statistics – of wealth, health, and education.
This theft of land, and its appalling consequences for indigenous populations, has been well documented in many countries. Over the last century there has been some reparation done, to a greater or a lesser extent and in various ways, and this work continues. For example, in New Zealand, since 1990, there have been capital payments made and additional acknowledgements and rights offered to Maori iwi (tribal groupings), under “Waitangi Tribunal settlements”.
But, in almost all cases, the value of the reparations is trivial relative to the damage that has been done over centuries, and which continues to affect indigenous populations now.
The external theft of land was of course accompanied by internal theft – the enclosure and privatisation of land which had been held in common for centuries in their own countries.
And the theft of land continues today, sometimes under the guise of “privatisation”, sometimes simply by expropriation. From the movements in the United States to take public lands out of federal control[i], to the granting of land and mining rights to transnational corporations in the name of “economic recovery” in distressed countries such as Greece[ii], to the new practices of “green-grabbing” (where wealthy countries and corporations buy up forest land in other countries as “offsets” for their own pollution[iii]), to the land wars being waged in countries such as Peru[iv], the theft of land from its traditional or common owners by the wealthy and powerful continues.
The true “tragedy of the commons” is not that common property will inevitably be destroyed by selfish consumption (as was postulated – without evidence – by Garrett Hardin[v]). It is that common land and property has been and is being expropriated for private benefit, dispossessing communities and destroying democratic management of the commons.
Some might argue that the first two thefts were the inevitable result of superior technology – that those with the greater firepower simply took what their superiority entitled them to – and we will return to this problem, which I ascribe to social Darwinism, later.
But the third theft could never be argued as inevitable on these grounds. Not even remotely.
The third great theft – liberty
Slavery has occurred in all lands, and throughout recorded history. Although it is now illegal in every country in the world (Mauritius was the last to abolish it, in 2007), there are estimated to be between 20 and 30 million slaves in the world today, or about 0.3% of the total world population[vi].
Having taken land in the Americas, Europeans needed cheap and abundant labour to work it. Poor people from Europe, and then Africa, were brought in as “indentured” labour (to work seven years for their freedom). This was extremely economically effective and, in 1641, slavery of Africans was legalised in North America – African labourers and their families became chattels[vii].
10-12 million Africans were transported to the Americas over 200 years. Only 10% of these went to what became the United States – the rest went to the Caribbean and South America. But just before slavery was abolished in 1865, the black population of the United States was nearly 5 million, of whom 90%, or about 12% of the total population, were slaves.
There are various estimates of the economic value of slavery in the United States, but there is little doubt that having 12% of the population doing core labour in an agriculturally based economy was an economic benefit.
Many other places (for example in the Caribbean) were doing the same, and even worse. So, the third great theft was hardly confined to the United States. And the costs of the Civil War and subsequent events may have made the economic effects a little less positive.
But the social and economic effect on Africa is indisputable. The population of Africa remained fairly stable at about 150 million through the 1700s and up to 1850[viii]. A key part of the reason the population didn’t grow was the export of slaves. Slavery had been endemic within Africa, but it became a huge export industry with the opening up of the Americas. It is impossible to assess whether Africa exported its best and brightest, but there is no doubt that inter-tribal and inter-factional conquests, plus European intervention, led to massive dislocation and loss in Africa.
Slaves were called “black gold” during the 17th and 18th centuries. The fourth theft was based on another form of black gold, which was harnessed towards the end of the great period of slave trading.
The fourth great theft – opportunity
Coal, and then oil, have been the black gold of the last two centuries. The “dark satanic mills” of the industrial revolution have moved from England and Europe steadily west, through the United States to East Asia and now, in Bangladesh and India, they have nearly come full circle. And they are fuelled by coal and oil.
The fourth theft is of the opportunity to create reasonable affluence for the majority of humanity while maintaining a liveable planet.
By being the first to industrialise, and then by exporting dirty production to poorer countries, Europe, the United States and Canada have used more than their fair share of the Earth’s capacity to sustain and regenerate. And they continue to do so, through their current levels of consumption.
The most recent statistics from the Global Footprint Network show that the European Union (EU) and North America have a combined ecological footprint more than twice as high as the world average, and use (ie import) over 80% more biocapacity than they themselves have. It would take nearly 5 Earths to sustain the average North American lifestyle for all humans, and about 3.5 Earths to sustain the average of the North American and EU lifestyles[ix].
Total Ecological Footprint
Biocapacity (Deficit) or Reserve
|EU – 27||504||4.8||2.3||(2.5)||2.8|
|Middle East/Central Asia||396||2.9||1.0||(2.0)||1.7|
Extract from “Country results” table in Global Footprint Network’s 2015 public data package
The Ecological Footprint and Biocapacity columns in the table above are measured in hectares per person. So, for example, Africa currently consumes 1.3 hectares per person, or about what it is capable of producing (its “biocapacity”). At the other extreme of consumption, North America consumes 8.2 hectares per person (over 6 times a much), despite only having the biocapacity to consume 5.0. Latin America and non-EU Europe are the only regions with surplus biocapacity.
The right hand column sums these figures up by calculating how many Earths it would take to sustain each region, and the world as a whole. Only Africa and Asia/Pacific (which however include India and China, and together represent 69% of the world’s population) are currently consuming at a level which is at or near the Earth’s long-term sustainable capacity.
When focussing on climate change, the South American countries call this overconsumption – particularly of energy – “climate debt” – the idea that the North has used more than its share of the useable carbon. But in my view, and based on all of the “four thefts” as outlined above, the affluent world owes the poor world a lot more than just climate debt.
Our affluent world has a moral obligation to share its affluence more widely – to become less affluent if necessary, to live at a more sustainable level of affluence, and to do this by forgiving poor world debt and paying for wider use of more sustainable technologies.
The first three thefts – of resources, land, and liberty – were driven mainly by mercantilism and the rapacity of empires. The fourth theft – of opportunity – is more closely associated with the growth of capitalism, as the drivers of imperial wealth began to give way to the pursuit of private wealth.
The current version of the fourth theft, exporting production to poorer countries to save costs and avoid the environmental and social costs of local production, is a special case of one of the geniuses of modern capitalism – its ability, and its drive, to externalise costs. Chapter 17 examines this in more detail, along with other key features of capitalism as an economic system.
But before that, the next two chapters look at the rise of the United States, and the key features of neoclassical economics respectively.
[i] See “House moves on bills that would allow States to seize millions of acres of public lands”, Climate Progress, 23 Feb 2016
[ii] See “This Changes Everything”, movie and book
[iii] See for example “Land and ocean grabs not the solution to climate change”, Climate Progress, 21 Feb 2016
[iv] See “Peru’s Deadly Environment”, Global Witness, 17 Nov 2014
[v] See “The Value of Nothing”, Raj Patel, Loc 1399