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Re: Role of the Colonial Trade in the Industrialization of

by Ricardo Duchesne

02 September 1999 16:10 UTC

As we already had an exchange on Re-Orient in the world history list, 
am just going to elaborate a bit more on O'Brien's argument, 
including some possible ws  responses. 

The next step in O'Brien's argument is to consider the significance 
of the colonial trade for Britain alone, which may be the real test 
in this whole debate, as the upturn in economic growth which Britain 
experienced in the 18th century coincided with a quickened pace of 
expansion  in the foreign trade sector, with the *colonial trade 
growing the fastest*. Thus, if we look at the geography of England's 
trade, we find that, in 1700-01, 62% of English imports came from 
Europe and 82% of its exports went there. Yet, by the end of the 
century, 1797-98,  those figures had dropped, respectively, to 29% 
and 21%. 

On the other hand,  while in 1700 the North American colonies and 
the West Indies accounted for only  20% of English imports, and 11% 
of  exports, by 1797 they acounted, respectively,  for 32% and 57% 
(Thomas and McCloskey, 1981). 

Europe still accounted for most of  England's re-exports throughout 
the 18th century (77% of its re-exports still went to Europe), but these were, 
afterall, re-exports of colonial produce, which England used to pay 
its European imports. Indeed, Deane (1965) has observed that the 
*volume* of  English re-exports rose by 90% from 1700-1750, and that 
without re-exportting such products as sugar, tabacco, cotton, and indigo 
(with their income elastic demand) England would not have been able 
to buy critical raw materials like timber and bar iron from Europe. 
If we add  the fact that, through the 18th century, England changed 
its position from an exporter of grains to a net importer (that in 1772 
only 0.2% of imports were grains, and by 1800 they were 8.7%), as 
well as keeping in mind all those laws controlling the colonial trade to 
the benefit of  England, we  have here as good a case 
as can be made of  a core country accumulating its capital by exploiting, 
through foreign trade, the periphery. 

Yet, according to O'Brien's tentative findings, England;s trade with 
the periphery, and the profits thereof, were still too small a percentage of 
its total economy to explain its expansion through the 18th century. 
Thus, by means of a counterfactual demonstration, he argues that, if 
Britain had not traded with the periphery, its gross annual 
investment expenditures would have decreased by no more than 7%. 
In constructing this counterfactual O'Brien makes the rather 
optimistic assumption that colonial profits were very high and that 
capitalists reinvested 30% of their profits. 

to be continued
> with all due respect O'Brien' 1982 article has received several serioius 
> answers  from scholars including if i may say so my ReOrient book, which 
> O'Brien has praised.
> gunder frank
> On Tue, 31 Aug 1999, Ricardo Duchesne wrote:
> > Date: Tue, 31 Aug 1999 17:20:26 -0400
> > From: Ricardo Duchesne <RDUCHESN@unbsj.ca>
> > To: WORLD SYSTEMS NETWORK <wsn@csf.colorado.edu>
> > Subject: Role of the Colonial Trade in the Industrialization of Europe
> > 
> > The idea that the colonial trade was crucial to the industrialization 
> > of Europe is (still) a commonly accepted claim  among world-system 
> > followers - this, despite the significant statistical evidence 
> > already put forward against this claim. One of the strongest, 
> > empirical challenges goes back to O'Brien's article "European Economic 
> > Development: The Contribution of the Periphery" (EHR 1982), an 
> > well-known article which, notwithstanding Wallerstein's response to 
> > it in the same journal (1983), still awaits a serious answer from ws 
> > scholars.  Among the many claims of this article is the highly 
> > damaging one that, if we agree with  Bairoch's data that commodity 
> > trade between core and periphery amounted to no more than 4% of the 
> > aggregate GNP for Western Europe, and if we assume that core 
> > capitalists made such large profits as 50% on the trade turnover, and 
> > that they re-invested as high as 50% of their profits, the colonial 
> > profits re-invested would have amounted to only 1% og GNP, or 10% of 
> > gross investment.
> > 
> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>                      ANDRE GUNDER FRANK
>                      Visiting Professor        
> University of Miami           &         Florida International University  
> 380 Giralda Ave. Apt 704                Tel: 1-305-648 1906
> Miami - Coral Gables FL                 Fax: 1-305-648 0149
> USA  33134                              e-mail:agfrank@chass.utoronto.ca 
> Personal/Professional Home Page> http://csf.colorado.edu/archive/agfrank/
> My NATO/Kosovo Page> http://csf.colorado.edu/archive/agfrank/nato_kosovo/       
> My professional/personal conclusion is the same as Pogo's - 
>             We have met the enemy, and it is US 
> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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