THE FAILURE OF CAPITALIST AGRICULTURAL TRANSFORMATION TO MEET THE WAGE GOODS AND RAW MATERIALS REQUIREMENTS OF INDUSTRIALIZATION
As B. H. Slicher van Bath7 has documented, in the late feudal period, the population of today’s advanced countries had a very limited and monotonous diet, and cotton clothing was not available for mass wear. Very low agricultural productivity in Europe compared to Asia arose from a multiplicity of factors—a single growing season in their cold temperate lands compared to year-round cropping in tropical Asia, high seed-yield ratio ranging from 0.25 to 0.33 compared to 0.10 in Asia, and the vicious cycle of an intense human food-livestock feed competition in Europe entailing the inability to carry livestock through the barren winter, reducing, in turn, the availability of manures and thus keeping yields low. The consumption basket of European populations improved and diversified dramatically only after colonial expansion and forcible acquisition of access to tropical lands with their relatively higher productivity and highly diverse output vector. Even to this day, the United States, which has three times India’s cultivated area and practices capital-intensive agriculture as a business, ends up producing a smaller volume of agricultural output than India. The near-complete elimination of seasonality, however, is a modern phenomenon: advanced country supermarkets carry the entire range of temperate and tropical products year-round as the giant food transnational companies have been integrating poor peasant farmers in more and more developing countries through contract systems into a global food chain serving advanced countries.
Trade in primary products is an absolute imperative for advanced country populations that rely heavily on imports from warmer lands to provide the physical elements of their high living standards entailing highly diversified consumption baskets far beyond the capacity of local agriculture to supply. It is surely of little use to be a millionaire in Canada if one can never drink coffee, wear cotton clothes, use a teak or mahogany escritoire, or buy flowers in winter. Such trade is far from essential, however, for the majority of developing countries, which can meet all their primary sector requirements from their own lands. Some of these countries that are food-import dependent have been brought to that position only owing to the incessant demands on their best lands to grow export crops.
Economic theory has ignored the heterogeneity of primary resources and productive capacities available to different societies. It has ignored the fact that tropical countries produce a large range of primary products that can never be produced under field conditions in cold temperate advanced countries. Rather, it has said that benefit from free trade always follows from product specialization, according to the principle of comparative cost, and exchange through trade—which is assumed to be voluntarily entered into by both trading partners. To this day, the Ricardian theory of comparative advantage is invoked in northern universities and the WTO to urge developing countries to open their economies to freer trade and investment, promising them large gains from doing so. However, there is a logical fallacy at the heart of Ricardo’s theory with its two-country, two-goods model. The conclusion of mutual benefit from trade depends crucially on his assumption that “both countries produce both goods” in the pretrade situation for only then can the cost of production of the goods, and hence relative cost in each country, at all be defined and compared.
But the assumption “both countries produce both goods” is materially untrue. Say Canada imports coffee from Brazil and exports machinery to it. Since Canada cannot grow coffee, the production cost of coffee in Canada is fictitious; it cannot be defined at all, and hence, relative cost cannot be defined. Let us remember that relative cost is the number of units of coffee that can be produced by withdrawing the labor required to produce one unit of machinery and putting it instead into coffee production. Relative cost has to be calculated for both countries in the pretrade situation and then compared to determine which country has the comparative cost advantage, that is, produces more coffee from the labor transferred from producing a unit less of machinery. Since cost information does not exist for the cold country unable to produce the tropical good, the trade cannot be explained in terms of comparative advantage.
Similarly, Indian economic historians have fallaciously argued that India ceased to export cotton cloth and exported raw cotton while importing its cloth from England, because the latter country’s “comparative cost advantage” lay in cloth production and India’s in raw cotton. Now, relative cost (the amount of cloth producible by transferring the labor going into producing one unit raw cotton to producing cloth instead) could certainly be defined for India that could produce both raw cotton and cotton cloth. But England, with its cold climate, could not produce raw cotton. The “production cost of a unit of raw cotton” is fictitious; it could not be defined for England, so nor could the relative cost (the amount of cloth producible by transferring the labor going into producing one unit raw cotton to producing cloth instead). The precise type of material fallacy involved in Ricardo’s theory is the “converse fallacy of accident” in which a highly specific assumption is made (both countries produce both goods), and from this, a general conclusion of mutual benefit from trade is improperly drawn and applied to all cases, including those where the assumption itself is not satisfied. Ricardo’s fallacy is a variant of Aristotle’s A dicto simpliciter ad dictum secundum quid,8 and the reader who may be interested is referred to my more detailed discussion available elsewhere.9
The entire argument of necessary mutual benefit from specialization and trade is logically incorrect and an exercise in apologetics, an intellectual rationalization of and justification for what actually happened in history. We know that the history of capitalist accumulation starting from its western European centers proceeded in a far less idyllic fashion than is portrayed by the theory of voluntary trade for mutual benefit: it saw the forcible colonial subjugation by a handful of western European nations of the peoples mainly of tropical and subtropical regions; it saw the promotion of slavery and indentured labor for running vast plantation systems producing tropical consumption goods and raw materials to satisfy the requirements of these European industrializing societies. Where slavery did not exist, as in India, the population was taxed heavily, a large part of the tax revenues being used to purchase from the peasant taxpayers primary products for export. The direct link established between the fiscal system and the trade system (taxes paid by peasants being converted to export goods produced by the same peasants) marks the specificity of the exploitative metropolis-colony relationship. The export goods became the commodity equivalent of taxes; their export represented transfer, not normal trade. When these export goods reached the metropolis for direct use as wage goods and raw materials or were reexported to earn foreign exchange, the original colonized producers were not required to be paid anything since they had already been “paid” in their own country out of their own tax contributions. Such costless access to these valuable tropical goods, or transfers, substantially aided the first industrialization in Britain and that country’s rise to dominance as an imperial power. An estimate of transfers from Asia and the West Indies relative to Britain’s GDP during the Industrial Revolution has been attempted by this author.10 The entire imperialist global system of trade and capital flows depended crucially on forced specialization in primary product exports by subjugated populations.
Why was such forcible subjugation and trade at all necessary for capitalist accumulation? Why did today’s formerly colonized developing countries not enter voluntarily into specialization in primary products and their export in exchange for manufactured goods, if indeed it was of great mutual benefit as the standard Ricardian theory argued? The answer lies in the fact that specialization and trade cannot be of mutual benefit and were not of mutual benefit where primary production was concerned. The major adverse impact of specialization is on food production and availability in the tropical country, lowering the level of nutrition and in extreme cases resulting in famine.