This week the IEA published Imperial Measurement, a short new book by our own Kristian Niemietz, which asks whether – and to what extent – Britain and other Western powers benefited from colonialism. It is an easy and informative read, and I highly recommend it.
One curious aspect of the contemporary debate about the British Empire is that the ‘decolonisers’ of today sound a lot like the imperialists of old when it comes to economics – in the sense that they are convinced the empire brought huge and lasting economic benefits.
By contrast, classical liberals going back to Adam Smith and Richard Cobden have tended to oppose colonialism, both on moral grounds and because they recognise that while some private interests benefit enormously from imperial exploitation, colonising countries as a whole do not.
We are talking about concentrated benefits and diffuse costs here, an all-too-familiar story when it comes to the abuse of state power. And that’s to say nothing of the very real and lasting harm that the colonies themselves suffered.
Britain’s imperial past might seem an offbeat topic for an IEA publication. But as Hayek pointed out, people’s understanding of history is often central to their views on economics and political philosophy. So it is important that what Kristian calls ‘the Marx-Williams thesis’ – that our prosperity is built on exploitation rather than voluntary exchange – does not go unchallenged.
Many other historical misunderstandings have real-world policy implications. Milton Friedman’s greatest intellectual contribution was to show (with Anna Schwartz) that the Great Depression was less an indictment of capitalist excess, and more a story of disastrous monetary mismanagement. Yet the wrong lessons are still too frequently drawn.
The closer you get to the present day, moreover, the murkier things become. How should we understand the Global Financial Crisis and subsequent Great Recession? What impact has Brexit really had? And how should we think about the coronavirus pandemic and the extraordinary government responses to it?
These are debates that will rumble on for years and probably decades. What we can be sure of is that the dominant narratives that emerge – ‘both when they are right and when they are wrong’ – will have an outsized effect on the climate of economic ideas.
