Cooking the Books: Understanding the character of the British Empire

Review of Kristian Niemietz, Imperial Measurement: A cost-benefit analysis of Western colonialism, Institute of Economic Affairs, London, 2024.

Alan Lester

History can never be written neutrally. Different historians will inevitably decide on different questions to explore, select a different array of sources to examine and interpret them inconsistently. There is no such thing as a definitive account. But there are still vital distinctions to be made between more or less credible renditions.

Some historians are more open minded and curious about the past than others, more inclined to tell it like it was. How trustworthy a piece of historical writing is depends to a great extent on its author’s intent. In universities, historical research is subject to certain checks, designed to guard against a cavalier approach and encourage an open-minded, although not uncritical, engagement with the sources. These safeguards are by no means perfect. Things slip through the net and they lead to delays between research and publication that are often unhelpful for public engagement. But they do serve to weed out the ‘findings’ of those approaching history with an obvious axe to grind.

Researchers working for privately funded ‘think tanks’ like the Institute of Economic Affairs (IEA) do not have to abide by any such constraints. This does not necessarily mean that everything they publish is suspect, but it should raise readers’ tendentiousness antennae.

The pro-free market IEA was last in the news for inspiring Liz Truss’ and Kwasi Kwarteng’s infamous mini-budget. Now it is back, this time lending us the benefit of its historical rather than economic analysis. With Truss off prating to Alt-Right American conspiracy theorists, it is now associating with Kemi Badenoch. The Secretary of State for Business and Trade is not only pro-free markets too, but she has been attempting to defend the British Empire from criticism and stave off calls for reparations for a while now.

On 18th April Badenoch made a speech declaring that Britain industrialised without the help of colonial exploitation and owes nothing to anybody. Two weeks later the IEA’s Head of Political Economy, Dr Kristian Niemietz launched this obliging seventy-page booklet claiming that slavery and colonialism made little difference to, and were probably even counterproductive for, Britain’s economic growth.

It was Niemietz’s first foray into colonial history but Badenoch drew important ‘lessons’ from his ‘research’: the ‘UK’s wealth isn’t from white privilege and colonialism’ and that ‘if developing nations do not understand how the West became rich, they cannot follow in its footsteps’. The Times hailed Niemietz an instant expert historian while The Telegraph acclaimed his findings. Imperial Measurement will no doubt continue to be cited as the independently researched historical ‘evidence’ underpinning rebuttals of reparations claims and diminishing the significance of British slavery in general. So how do this booklet’s claims measure up in the light of decades of scholarly research on the relationship between colonialism and British prosperity?

Points of Convergence 

Lets’s start with the points of convergence. Niemietz is right to point out that the economic data sustaining any putative cost-benefit analysis of the British Empire is patchy. The figures we have even for trade and capital investment rates are guestimates. The problems are exacerbated when you try to isolate one source of investment income, such profits from slavery, from all other sources in order to assess its relative contribution to crucial investments.

Many of the individuals and families investing across multiple generations in textile factories, mining and railways had interests in both domestic agriculture and colonial enterprises, and we are unable to conduct the forensic accounting required to follow the trajectories of specific sums of money. Niemietz also gets it right that ‘when the National Trust decided to publish its Interim Report on the Connections between Colonialism and Properties … this was not an exercise in performative “wokery” or self-flagellation. It is part of the history of those estates, and there is nothing wrong with acknowledging that.’

Given that the IEA is often seen as sharing Tufton Street’s shady right-wing think tank ecosystem with Restore Trust, the private company that sustains a steady stream of risible press attacks on the National Trust with its ‘woke scones’, this admission may seem surprising. Niemietz is also refreshingly frank that, whatever its costs and benefits to Britons, and whatever Badenoch might say, ‘colonialism left significant economic and political scars on former colonies’. 

What is Wrong in the Niemietz Thesis 

However, Niemietz is just plain wrong in his main thesis. This is not surprising. Britain’s colonial and domestic administrators, whose job it was to ensure that empire worked for the national benefit, would have been rather stupid to have persisted in colonial loss-making for three hundred years. Sometimes governing officials make economic mistakes, but they do not tend to persist in them that long. I doubt that we will still be searching for Brexit dividends in 2324. The main reason that Niemitez gets it wrong though, is that he is not primarily interested in historical truth. Rather, he is quite explicit about his presentist motivation. He wants to challenge the influence of Black Lives Matter and so-called ‘woke’ culture. 

Niemietz’s argument is that the recent ‘BLM-isation’ and ‘wokification’ of Eric Williams’ book Capitalism and Slavery, first published in the 1940s, has generated a widespread exaggeration and simplification of slavery’s importance in Britain’s economic history. He is explicit that his intention is to challenge the influence of this view, rather than to examine the economic contribution of slavery and colonialism for its own sake. Both the initial allegation of widespread exaggeration and the way that Niemietz tries to counter it are deeply flawed.

Niemietz tries to prove that slavery’s economic influence especially is massively exaggerated nowadays by quoting from politicians, activists and even the BBC. However, all bar one of his selected quotes falls short of providing the evidence he seeks. He caricatures commentators such as one of the ‘Colston Four’ and Sadiq Kahn as saying that slavery and colonialism were the ‘very foundations’ of Britain’s wealth. But even the selected extracts from their speeches and writing actually state merely that they were important contributions. 

It is easier to find oversimplification and exaggeration in Niemietz’s own writings. In The Times he concludes, ‘Ultimately, what made Britain rich was not slavery or empire but the development of liberal institutions such as the rule of law, property rights and entrepreneurship’. None of the ‘woke’ sources cited by Niemietz goes so far as to posit such a zero-sum game between colonialism or such domestic liberal institutions. Even those who want to draw more attention to the previously under-acknowledged role of slavery recognise that it worked hand-in-hand with the development of these institutions, with domestic enterprises such as coal and iron mining and canal and railway building, and with scientific and technological advances. Niemietz’s BLM-woke straw man, however, serves a vital function. If his readers believe that the public massively exaggerates the economic influence of slavery and colonialism, the IEA’s dismissal of any positive influence at all seems less like a scarcely credible proposition, and more like a moderate, counterbalancing, corrective.

In the main part of the booklet, Niemietz proceeds to cherry-pick ‘evidence’ and quotations from outdated sources, seeking consistently to minimise specialist scholars’ assessments of colonialism’s significance. The economic historian upon whose research he depends most is Patrick O’Brien who estimated some forty years ago that colonial activities funded around 15 per cent of the gross capital investment in Britain. While not an insignificant proportion of overall investment (about as much as other significant single sectors), subsequent research has shown that the Atlantic slave economy in the late eighteenth century was especially influential in generating the most strategic investment – that is, in the key sectors driving the Industrial Revolution.

Maxine Berg and Pat Hudson have synthesised this research in their book Slavery, Capitalism and the Industrial Revolution, explaining that ‘the key manufacturing regions of the industrial revolution relied on access to Atlantic port cities, principally Liverpool, London, Glasgow and Bristol, and to the capital and credit that they generated … the qualities of raw cotton from Caribbean plantations aided the product revolution and hastened the great spinning inventions of the jenny, the water frame and the mule. These developments long predated the better-known connection between Lancashire cotton factories and the slave plantations of the American South … Plantation investment and shipping also brought innovation in the mortgage and insurance markets, in multiplex financial transfers and in the expansion of commercial credit that linked provincial merchants, manufacturers and banks with the resources of the London money market’.

Faced with this broad consensus among specialists, Niemietz has to admit that ‘we do not have the expertise to pick a side in [the] debate’ on whether ‘slavery was a “strategic industry” that created positive spill-over benefits for other industries’. Patrick O’Brien, his main source, is still incisive in retirement at the age of 91, however. He had this to say of Niemietz’s booklet: ‘what these people do is use old research as if it is current, if it makes the points they want it to make. This no basis for an impartial assessment.’ 

Misrepresenting Adam Smith and Richard Cobden

Aside from cherry picking the work of specialists, Niemietz leans on the work of two famous contemporaries, Adam Smith and Richard Cobden. Both these critics argued that the empire brought benefits to a few merchants and investors at the expense of most Britons, who were made to pay for the navy and army that maintained their global dominance. They provided exactly the arguments that Niemietz and Badenoch are looking for today.

Niemietz neglects to note though, that their critiques were directed at the mercantilist policies of the eighteenth century, which came to an end in the 1830s-60s. Neither Smith nor Cobden lived to comment on the outcome of the empire’s transformation in scale, orientation and policies thereafter.

The ‘second British Empire’ of ‘free trade’ was entirely different from that of the 1770s when Smith wrote his Wealth of Nations, in part because policy makers responded to Smith’s critique and opened up opportunities for imperial exploitation to a wider range of Britons. One example was the enforcement of ‘free’ trade in opium, grown in British-ruled India and smuggled into China, during the First and Second Opium wars (1839-42 and 1856-60). These were launched not just on behalf of the opium traders but also of Manchester’s textile manufacturers, who demanded that the British government prize open Chinese markets. Using Smith and Cobden to analyse the empire is like completing the analysis of a football match at half time.

No longer based on slavery in the Atlantic and monopolistic East India Company trade and governance in the Indian Ocean, the revived and expanded empire of the late nineteenth and early twentieth century was founded on the indentured servitude of Indian subjects, the mass displacement and appropriation of Indigenous peoples’ lands in North America, Australasia, Southern and Eastern Africa, commercial crop production in Southeast Asia and East Africa and the consolidation of the Raj in India. Within it, British manufacturers had access to markets skewed by invasion, dispossession and gunboat diplomacy well beyond the formal empire. British investors had preferential access, backed by force, to resources such as pasture in Australasia, wheat in North America, diamonds and gold in South Africa, rubber and tin in Malaya, palm oil in Nigeria, sisal in Kenya and oil in the Middle East, with many of today’s most powerful multinational companies having their origins in protective colonial regimes. 

Any relatively impartial cost-benefit analysis of British colonialism would pay a great deal of attention to India especially, whereas Niemietz breezily casts it aside it with the suggestion that Britain might have gained as much in trade with the subcontinent even if it had not colonised it. As Prabir Battacharya notes, India’s contributions to British economic development included ‘the transfer of wealth from India to Britain; the role of the Indian army in furthering British economic, military and political interests; the role of India as a ‘captive’ market for British goods; the role of India’s China trade in furthering British economic development and global influence; and last, but not the least, the role of India as a source of labour for other British tropical colonies.’ 

The most fundamental point is that because Britons governed, rather than merely traded with Indians, they could charge Indians rent and use it to buy their produce. Indian farmers and manufacturers were effectively paying British rulers to take what they produced. The British could then sell that produce overseas, retaining the profit. Nick Robins writes, ‘Crucially, from 1800 onwards the Asian drain began to match the enormous extraction of wealth that Britain had historically achieved from the slave-based sugar plantations of the West Indies. Together, the combined surplus in 1801 was equivalent to over 86 per cent of Britain’s entire capital formation from domestic savings.’ However much we might debate the precise amount of this wealth transfer, it is striking that it is not to be found in Niemietz’s cost-benefit spreadsheet. To continue the football analogy, it is like cooking the books by counting only a Premier League football team’s gate receipts and ignoring their TV fees.

Where Niemietz either lacks the data for his cost-benefit analysis or chooses to ignore it, he fills the gap with speculation, more, one senses, in hope than expectation: ‘Once we subtract the fiscal cost [of maintaining Empire], the net gains may well have been negative’. No wonder Pat Hudson despairs that ‘there is no cost benefit analysis in the book despite its title, no new data, no attempt to go beyond the old and misleading measures and debates, nothing.  Coupled with this, the cherry picking of quotes, the distortion of arguments and the sly elision between several completely separate issues … I get bored reading this stuff because it has no claim to be considered objective or professional history’. 

The urgent question raised by this book has nothing to do with Britain’s economic history. It is a purely political one: how have we reached the point where such a short, superficial and obviously tendentious book is able to attract such serious attention in the British media?