Re: Role of the Colonial Trade in the Industrialization of

O'Brien makes other, subsidiary, arguments against the idea that the 
colonial trade was central to the industrialization of Europe:

1) it has not yet been shown that the rates of profits which European 
colonialists enjoyed in the periphery were "persistently" above the 
the rates "which they could have earned on feasible investments" in 
their home countries, or in other economies of the world. Citing 
studies on profits from the sugar plantations, he says that, 
over the long run, such earnings were *average*, fluctuating around or below 
10%. He also cites other studies which question the profitability of 
the Navigation Acts.  If I may cite one source discussing a 
particular aspect of these Acts "...The benefit to 
the home country corresponding to the burden on the North American 
colonies was still smaller. In fact, it was itself probably a burden, 
not a benefit. Requiring certain colonial exports and imports to pass 
through Britain had the beneficial effects of reducing the prices of 
such goods to British consumers...The cost to British taxpayers of 
defending and administering the North American colonies was, by 
contrast, .... five times the maximun benefit" (Thomas and McCloskey, 
1981). 

Likewise, even if Europeans had been forced to pay 'free market prices' 
for their colonial products, that would have simply worsened the 
terms of trade *within* this sector, which constituted  a small share 
of total trade and an even smaller, "tiny" share of gross product.

2) What about Deane's claim that the colonial re-exports allowed 
Europe to acquire essential raw materials - never mind profit 
margins? First, O'Brien says that colonial foodstuffs contributed 
marginally to the supplies of calories available to Europeans. 
Second, that without the imported colonial produtcs, Europe would 
merely have experienced, *in the short run*, before substitutions were 
found, "a decline of not more than 3% or 4% in industrial output.