There is a long debate over colonialism, particularly the late-19th-century variant. Most of the literature focuses on long-term effects. So it often loses sight of a simple question: did imperial institutions function basically the same as capitalist institutions in non-colonized places or did they serve to transfer resources to the metropole? That is, did colonialism simply bring areas into the modern world economy (for better or for worse) or did it directly suck resources out of the colonies?
This is not an easy question to answer. In a classic work, for example, Davis and Huttenback showed that British colonial enterprises were less profitable than similar British enterprises at home, in the Dominions, or in the Americas. But profitability tells us little. Imagine that British colonial enterprises had been phenomenally profitable. Would that have meant that they were bad for the colonies? Clearly not! Some other measure is needed.
So here comes Federico Tadei (Universitat de Barcelona) with an obvious measure: did colonial commodity producers receive the same price for their goods as producers elsewhere, accounting for differences in transportation and insurance costs?
In a bit more detail, here is what he does:
- Gather prices at French ports for each commodity between 1898 and 1959. Also gather producer prices (what African farmers received at the farm gate) at African ports. Tadei can do the latter because French African statistics broke port out trade costs from producer prices;
- Construct estimates of trading costs including Atlantic shipping, insurance, inland transportation, port charges, and export taxes;
- Calculate (1) − (2) to get what producer prices should have been under non-predatory institutions;
- Compare (3) to the actual prices received by African farmers;
- Check the results by comparing (1) against producer prices for U.S. cotton and wheat exporters or European settlers in Africa to see if American producers selling to Britain were as disadvantaged as French African producers selling to France;
- Check the results by seeing how much of an increase in world prices is passed on to French African producer prices, plus a few more abstruse checks.
Here is the headline result, as a % of prices:
And here is French Africa compared to the United States for cotton:
Moreover, there is a plausible mechanism for extraction: monoposonistic trading companies and compulsory harvest quotas. The effect of the former is obvious; the effect of the latter was to prompt African producers to grow more than they would have in a competitive market. In addition, poll taxes might have induced African workers to enter the labor market, driving down production costs for African farmers and thereby prompting them to grow more. (Forced labor may have had the same effect, inasmuch as it also drove down costs for African producers.)
What I would like to see is the same method applied to Latin American and Asian producers. Brazil, Ecuador and various Caribbean countries exported cocoa; China exported peanuts; Brazil exported cotton. As for palm oil … well, forget that. (United Fruit introduced it into Guatemala, Panama and Honduras in the 1920s without much success. I was involved in a failed effort to introduce it to Chiapas in 1999.) But it is a way of stress-testing the hypothesis. If producers in Latin America and China faced similar extraction rates, then formal imperialism might not have been the problem.