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Fourth International, July-August 1950


David Adam

Downfall of Colonial Empires


From Fourth International, Vol.11 No.4, July-August 1950, pp.111-116.
Transcription & mark-up by Einde O’Callaghan for ETOL.


The great significance of the changes that have taken place since the war in Asia, Latin America and Africa is only being fully realized today. In vast areas of the colonial and semi-colonial world the hold of imperialism has been shaken, and this has acted to undermine the economic structure of Western Europe. The problems of European recovery are so intimately bound up with the question of a new “equilibrium” for the capitalist world that such events as the collapse of Chiang Kai-shek’s China, the anti-imperialist struggles in southeast Asia, the African awakening, the industrialization in parts of South America, and even the measure of independence achieved by the Indian subcontinent and by Indonesia, may be viewed as threatening the very basis of the capitalist system as a whole.

Colonial and semi-colonial areas are an integral part of the capitalist system, even though property relations there frequently remain in the feudal or even more primitive stages of human development. These areas are integrated in the economic structures of advanced capitalist countries as sources of food and raw materials, markets for manufactured goods, and fields for investment.

It would require careful analysis of detailed information of foreign investments and other economic data, very often unavailable, to reveal the full extent of the benefits derived by the economies of the colonial powers – quite apart from the individual monopolies – from the exploitation of colonies and semi-colonies. Nobody can dispute, however, that owing to this exploitation the standard of living in Western Europe generally was higher than would have otherwise been possible; it accounts, to a large extent, for the benefits the capitalist class was able to pass to the working class, or at least to some privileged layers. Events are now pointing up dramatically the fact, so accurately formulated by Lenin, that imperialism gave a handful of very rich countries “the economic possibility of corrupting the upper strata of the proletariat and thereby fosters, gives form to, and strengthens opportunism.”

Thanks to income from foreign investments, as well as shipping earnings, commissions, insurance, etc. Western Europe was able to import far more than it exported, since payment is, in fact, made by debtor countries through export of their products, either directly to the “mother countries” or, for their benefit, to third countries. Interests, dividends, and services amounted before the war to staggering figures. They were estimated by a League of Nations study (Europe’s Trade, Geneva 1941) at $6,400 million in 1928, and $2,790 million in 1935, Britain alone imported in 1938 £377 million more than it exported. This trade deficit, however, was virtually covered by so-called “invisible exports,” of which £200 million were income from overseas investments, and there was no disequilibrium in the balance of payments. In Britain “the rapid and material enhancement of the standard of life,” concedes an authoritative British journal (The World Today, published by the Royal Institute of International Affairs, August 1948), was to an important degree due to the fact that the investment of British capital in Latin America “opened up markets for manufactured products and skilled services in return for cheap and abundant supplies of raw materials and food.” The same holds true, essentially, for investments in Asia.

Britain’s privileged status enabled it prior to the war to import from Europe some $600 million more than it exported to the old continent – the trade deficit being covered by earnings made elsewhere. Now, however, due to its precarious payments position, Britain has been forced to cut to the bone its trade with the continent despite the complaints of such countries as France, some of whose luxury industries formerly relied on this market.

France, Holland and Belgium all profited handsomely from their colonies. The Netherlands drew from the Indonesian islands from 10 to 16 percent of its national income, and the conservative London financial authority The Economist concluded (September 2, 1949) that “without the vast Dutch investments and trading interests in Java and the surrounding islands, the Netherlands standard of living would be cut at least by ten and perhaps by twenty-five percent.” Belgium’s trade deficit – 10 percent of its imports – was covered before the war by income from foreign investments and services. The Belgian Congo is not only a source of dollars as a supplier of radioactive materials to the US; its raw materials such as cotton, copper and zinc furnish the bases for important Belgian export trades.

Until barriers to remittances in the 30’s forced a measure of change, investments in colonies and semi-colonies were, generally speaking, not made in industrial enterprises destined to fill the needs of the native markets, but rather in plantations, mines, communications, etc., which would directly or indirectly facilitate the export of cheap food and raw materials while opening the country as a market for highly priced imported manufactured goods.

Colonies and semi-colonies also served, so to speak, as a bridge linking Europe to the Western Hemisphere. For it is erroneous to believe that Western Europe’s trade deficit with the United States is something new. It existed before the war. Only then Western Europe “earned” dollars especially in Asia and South America, which used to enjoy trade surpluses with the US. Rubber, tin, etc., from southeast Asia, for instance, were sold to the US and the dollars ultimately pocketed by Britain. As a United Nations world survey (January 1948) stated, “the typical under-developed countries – at least outside Europe – were normally net exporters to the US and frequently net importers from Europe (particularly from the United Kingdom).”

Decline of Europe

World War II precipitated the breakdown of the old “equilibrium” between the old imperialist powers and the colonial and semi-colonial world. Western Europe emerged from the war weakened on three fronts – at home through heavy war damage which posed difficult problems of reconstruction; overseas through “disinvestment” and indebtedness; and in relation to the US.

With regard to the disequilibrium between the US and virtually the rest of the world, the recent war is obviously not to blame, though it greatly speeded up and deepened the process. The roots of the disequilibrium must be sought m the developments which led to the substitution of the US for Britain as the principal capitalist country.

After World War II America’s capitalist supremacy became overwhelming; and this country has very little need

for anything – save a few strategic raw materials and secondary foodstuffs – from abroad. Thus, no two-way stream of trade – with numerous secondary and tertiary effects – such as Britain’s smallness and relative barrenness had imposed, is now possible. Food and raw materials can hardly be exchanged for US manufactured and capital goods. This is why the world “dollar shortage” must continue to defy solution.

The second report on the Marshall Plan issued by the Organization for European Economic Cooperation (February 1950) points out that Western Europe’s share in American imports has dropped from close to 50 percent in 1900-13 to little over 10 percent today. American imports from Western Europe, 40 years ago, constituted 2 percent of the US gross national product, as against less than 0.5 percent today.

The OEEC, even after making wholly Utopian assumptions, such as that “the maintenance of the present high level of business activity in the US, a concerted and successful European export drive to America and the drawing in of third markets by competitive trade and investment,” still concedes that Western Europe’s deficit will amount to one billion dollars in 1952. The deficit at present totals some four billion dollars.

The disequilibrium between the US and the rest of the world can be overcome only if the US imports far more, particularly from Western Europe. But as the maturing crisis unfolds in the US, it will not only be increasingly unable to accept any products that may compete with its own, but will be forced to struggle with Europe for foreign markets.

Economic losses due to the war were heavy all over Western Europe and especially in Britain, where damage to property alone was estimated at £1,450 million; shipping losses at £700 million, and depreciation and obsolescence not made good during the war period at £900 million. A total of £3,050 million.

France’s capital losses on account of war damage and depreciation amounted to 1,200 billion francs; the full meaning of this figure is better grasped when one bears in mind that in the decade prior to the war, France’s productive apparatus was nearing decay. The age of its industrial capital equipment, as a whole, was 25 years in 1939, while in Great Britain it was 7-9 and in the US 5-7 years.

While Western Europe’s productive apparatus was thus declining, Germany was meanwhile being obliterated as an independent capitalist rival.

As a result of the reduction in income from overseas investments and other so-called “invisible exports,” the Economic Commission for Europe estimated that Europe’s earnings were lower than before the war by some $2,000 million. Also the process of “disinvestment” was especially drastic in Britain’s case. To finance World War I Britain had been forced to sell about £350-400 million of overseas investments. In World War II, British total overseas investments, estimated at £5,000 million in 1943, were reduced by £1,118 million, while its foreign liabilities – sterling balances and overseas loans – reached the enormous figure of some £3,000 million.

Due to these developments – to which we should add the growth in Europe’s population which makes wartime losses in industrial and agricultural production even heavier per capita – Western Europe became more “export conscious” than ever before. And this in the following framework.

Trade with Eastern Europe, formerly very substantial, is at a standstill due to US pressure. Even if this should change, East-West trade cannot return to the former pattern. Eastern Europe would be a market for capital goods but most probably not for light manufactures.

Countries which had been markets for manufactured goods in exchange for food and raw materials have developed their own industries which they now defend to the detriment of the old industrial powers.

Together with their industrial development, formerly dependent countries have made efforts – which are continuing – to develop merchant fleets in order to save shipping expenses. For example, India and Argentina are trying to become first-rate maritime nations. The US meantime continues to protect American shipping by demanding that 50% of Marshall Plan and other cargoes be carried in American bottoms. This naturally tends to deteriorate even further the position of countries for whom shipping has been a very important source of “invisible” earnings.

Only Belgium – we don’t include Switzerland in this survey – enjoyed after the war a period of relative prosperity, because of a set of unusual circumstances. First, the war damage was slight. Second, Belgium didn’t spend its foreign investments during the war: third, lend-lease consisted of normal exports delivered after the “liberation.” Consequently from the outbreak of the war until 1947, Belgium imported about £400 million more than it exported without a reduction in the country’s gold balances or foreign investments.

Despite the postwar recovery in production, French visible exports amounted in 1948 to only 50% of France’s imports. In 1949 France exported some f 1,400 million while the authorities of the Plan Monet estimate that it must import $1,900 million to keep its productive apparatus rolling at full speed. Since this trade deficit is mostly with the dollar area and will have to be covered as soon as the Marshall Plan ends, just how France is going to succeed in such an export drive is more than difficult to envisage.

But it is particularly in Britain that a sharp drop in living standards is unavoidable if British exports are not increased to the point where they will compensate for the drastic loss in “invisible” income. A measure of success has been achieved in this connection by the British. This success, however, must be viewed in its actual context. The rise in exports was achieved under most favorable world conditions which are rapidly drawing to a close. The sellers’ market is becoming a thing ot the past, while powerful rivals, Germany and Japan, are staging a comeback, naturally with American consent. Moreover, although Britain made progress, however, temporary, toward bridging the “overall” trade gap, the red ink in the dollar account is harder to erase. In 1940 the dollar deficit remained virtually the same as in 1948 (£275 in 1949, £280 in 1948).

In the memorandum submitted by the British Government to the Organization for European Economic Cooperation on plans for the last two Marshall Plan years, some hopes are pinned on a further reduction of dollar imports – which will unquestionably meet the most determined American opposition – but especially on an increase in dollar earnings by the sterling colonial areas. But the sale of these products – rubber, cocoa, jute, wool, tin – hinges on a continued high-gear activity of the American economy. Let us recall that as soon as demand for metals fell in the US in 1949 the Munition Board was directed “to exhaust every possibility of obtaining minerals and materials in the US before making foreign purchases” for the American stockpile. This is a preview of things to come.

Changes in the Colonial World

Western Europe’s enfeeblement makes it all the more important that colonies and semi-colonies be made to play their traditional role. But how?

In South America, Western Europe was dealt heavy blows both by American encroachment and by the industrialization encouraged by war shortages. Also as a supplier of cheap food, as an investment field, and a source of “invisible” income, Latin America’s importance has diminished. Argentina, great exporter of grains and meat, demands – and obtains – higher prices for its products. Rising anti-imperialist feelings, fostered by young national bourgeoisies defending their newly won positions, result in an unfavorable climate for the import of capital. Several South American countries applied the war-accumulated balances of sterling to buy back British owned utilities, especially railroads, one of the main investment items, while obstacles to the remittance of dividends and interests were not removed. Industrialization was not restricted to Latin America. It also occurred in certain countries of Asia. In order to wage the war against its German and Japanese rivals, Britain was forced to encourage industrial development especially in India, while its inability to supply the colonial market as heretofore, opened up new opportunities for home industries.

Though some industrialization did take place, the great bulk of the population in Asia are still peasants – landless plantation peasants or “independent” peasants crushed under the weight of debt and tenancy.

The October Revolution removed from the capitalist system one-sixth of the world. This objective reality of unexampled importance is not affected by the entire subsequent degeneration of the Soviet regime. The removal of China, the most important semi-colonial country, from the imperialist fold constitutes a new and shattering blow to the world capitalist system. “In China before the war,” reads a UN report, “foreign investments controlled practically all the railways, two-thirds of the shipping industry, most of the iron mines and over half of the coal production,” (Salient Features of the World Economic Situation, 1945-47, Lake Success, January 1948, p.77.) This chapter in the history of China has come to a close. Trade relations between China and the West, even if restored, would now be of an altogether different nature.

India’s New Status

India has now become a republican member of the British Commonwealth. To be sure, British “interests” have been assured respectful treatment. Yet the fact that political independence was obtained shows that the relationship between the British imperialists and the native capitalists had changed in favor of the latter. India was for long Britain’s best customer and supplied the rank and file of the Indian army which dominated the whole area from Suez to Hong Kong for decades.” Real independence, however, is far from having been achieved. India’s membership in the Commonwealth doesn’t imply the sharing of advantages. Quite the contrary. The Indian Eastern Economist (November 25, 1949) discussing the recent devaluation of the pound, in a revealing editorial which merits quoting at length, asserts:

We pay higher prices for petroleum, kerosene, wheat and cotton, possibly totaling Rs.30 crores more altogether ... We have gained from the sterling area through the higher prices of jute goods, tea, manganese ore, cotton textiles, hides and skins, vegetable oils and oilseeds and black pepper, apart from lesser things. But it is doubtful if we have gained from the sterling area alone more than Rs.15 crores under all heads ... Hitherto largely because of the relatively stronger bargaining position of Britain and Australia we have been playing a losing hand. But we should not allow ourselves to get the raw end of every deal ... The way things are going against India at the present time makes us seriously wonder whether we are now deriving any benefit from staying in the sterling area. The Government of India must see that constant surrender on every pbint will discredit it thoroughly. It must find means to use its bargaining power in the sterling area to compel reasonable compromise ... The point which must be resisted is unfair dealing inside the sterling-area, that is, the strong exploiting the weak.

Independence, on the other hand, has not brought economic benefits to the masses. Most Indians eke out their living by working the land. The population is rising and agricultural output is unable to keep the pace without radical agrarian reform and industrialization. Thus, India, which before the war exported food, is now forced to import from three to four million tons of grain every year. To face its growing payments deficit, India must increase its exports. Its main export item, however, jute, has been steadily losing ground, especially in the US, to substitutes. On top of that India’s terms of trade have been becoming increasingly unfavorable. While in 1939 one hundred tons of tea bought one ton of imported food, today three hundred tons of tea are needed. India’s industrial development has been substantial, though not so when compared to the needs of the country. Just as elsewhere in Asia, since the population continues to grow while industry and agriculture lag behind – and they can’t help but lag behind until the road to socialism is entered – the standard of living of the masses is bound to fall.

In southeast Asia Indonesia is the largest and most populated country. For three centuries Holland exploited this territory ten times as large as its own. Prior to the war the Dutch were the most important investors in the islands. Their share was 75% of the £350 million total. The remaining 25% was mostly British and American.

Indonesia’s independence is quite relative and more political than economic. Foreign privileges have been maintained. Yet the mere fact that the country is no longer at the complete mercy of the Dutch monopolists is a substantial achievement and still another proof of the loosening of the imperialist vise.

Before the war over one-third of the world’s rubber, one-fourth of its copra and palm oil and fifteen percent of its tin were produced in the Indonesian islands. They are also very rich in oil. This will suffice to give an idea of the loss suffered by Holland.

Disturbances in Malaya – a very important dollar earner – threaten Britain’s efforts at recovery and at the same time deal a blow at the attempts to restore a capitalist economic equilibrium. In Malaya British forces number some 150 thousand and still they are unable to crush the guerrillas. The civil war in Burma, since the country achieved its formal independence, has had the same effect.

In Indo-China, which has been called the key to southeast Asia, France is making desperate efforts to reestablish its rule, with no success to date. The Viet-Nam forces control most of the country and the French puppet, the former Emperor Bao Dai, is unable to start playing his role. France is keeping an army of some 125 thousand men in Indo-China. And the cost of this war runs annually into hundreds of millions of dollars.


Since the European powers are steadily losing ground in Latin America and Asia, they are being urged to “rejuvenate” themselves through the “development” of their Black African territories.

“It is to Africa,” writes an apologist of imperialism, “that Britain must look for that field for investment, source of raw materials and expanding market which she needs in order to survive, and she must win it quickly from the swamps and forest and high-veld of the last continent to be pioneered.” (British Aims in Africa, by Elspeth Huxley, Foreign Affairs, October 1949.)

At present, gold and coal are mined in South Africa and Southern Rhodesia; copper in Northern Rhodesia and the Congo, tin in Nigeria, gold and diamonds in the Gold Coast. As for agricultural production, the colonial power’s have fostered export crops, some of which – palm oil, raw material for soap and cocoa – play a role in world economy.

How are these crops raised? The plantation system predominates in the Belgian Congo. Unilever, the great soap monopoly, produces there palm oil, rubber, cotton, coffee, and tea. Sisal is grown in plantations in Tanganyika and Kenya. In British West Africa, on the other hand, cocoa is raised by Africans on individual farms. Usually this only changes the form of exploitation.

We have mentioned the dislocation in Western Europe’s food trade. British optimists expect Africa to take over the role formerly played by the countries of the New World. A substantial volume of the fats and meat Britain needs could be produced in Africa eventually. But with the exception of its southernmost tip, Africa lacks the preconditions for immediate large-scale investment not only in industry but also in agriculture. Roads, water, urban facilities, etc., etc., are yet to be provided. The Labor government has attempted to use public funds to start colonial schemes. The Overseas Eood Corporation has spent £25 million in an East African peanut raising scheme, which, incidentally, appears to be a failure. Nor will the development of an African market be an easy task; the standard of living of the native population is too low and imperialism itself is the main obstacle to raising it.

Still another barrier blocks the attempts to “open up” Africa, and it is proving to be the most formidable – the new spirit of the African masses. To understand it we must recall some features of imperialist rule on the continent.

The map of Africa shows nothing but the wishes of the imperialist masters and the balance of power between them. Nigeria, Nyasaland, Gold Coast, Kenya and so forth, are merely names of “prefabricated” countries. Their frontiers are arbitrarily drawn, cutting across tribes, languages and customs. Natives have been prevented from earning a living by tilling the soil. Incidents were provoked whenever necessary and punitive expeditions sent to expel them from their land. They have been herded into the so-called reserves while the rest of the land has been set aside for white settlers or mining companies. To cite one example, in 1930, Southern Rhodesia’s Africans, who constitute over 95% of the population – 1,600,000 out of 1,682,000 – were granted by the Land Apportionment Act only 30.3% of the total area of the country.

In 1935 it was officially’disclosed that in Northern, Rhodesia there were villages with 50% of the adult males normally absent, and as a result a local famine had taken place. It is illegal for an African to leave the mine without permission. While he works in the mine – and sometimes he is forced to work ten months out of a year or more – he needs a pass even to move around. If he stays away from the mine longer than he is allowed to, he may be forced to come back and punished. The aim is always the same – to make cheap African labor available for the European.

Colonial Enslavement

Contrary to the claims of the bearers of the “white man’s burden,” the standard of living of the African masses didn’t improve with the arrival of the whites. The places they live in are from any point of view unfit for a human being, and have become worse since the arrival of the whites and not better. “The typical African hut of mud or straw is easily destroyed and renewed,” remarks a candid defender of British imperialism, “and in older days sanitation was maintained by frequent hut-burning. In South Africa both materials for hut-building and labor are now scarce. Overcrowding and landlessness have compelled the southern peoples to live in worse conditions than they once enjoyed.” (Africa Emergent, by W.M. Macmillan)

The record of the hypocritical imperialist barbarians has been written with blood, with Negro blood, on every inch of the African country. But they have had to pay a price – the destruction of the tribal society, which formerly rendered the natives docile.

Now the colonial powers are doing their best to prevent the “westernization” of the African people. To this end British officials have even fostered local languages, the Swahily and Hausa, instead of the more “dangerous” English, among tribes which are not familiar with them. But you can’t have “western” exploitation without “westernization” of the exploited.

The continent the imperialists are turning to is quite different from what they expected. Unions are bing formed in mines and factories. A new restless intelligentsia has arisen. The masses are outgrowing their tribal loyalties, or what is left of them, and are beginning to develop a national consciousness. A native press has been born which cannot help but reflect the, grievances of the exploited.

The foreign imperialists have tried to build a basis of support among the natives. The oppression is so rampant, however, that no African can speak with “understanding” of “the European rulers without disqualifying himself forth with as a leader. The British created a new elite “educated in western fashion to be schoolmasters, doctors, lawyers, engineers, traders, clerks, civil servants – and politicians. The assumption was ... that from the white man’s point of view they would be cooperators, not opponents,” writes Elspeth Huxley. The assumption, however, regrets the same Huxley, has been “exploded.”

Tension is growing in South Africa and Nigeria; in the Gold Coast and Kenya; in Uganda and Tanganyika. British bombers had to be sent over Kenya. In Nigeria, where the anti-imperialist moods are very developed, as a result of a mine strike, in November 1949 the government declared a local state of emergency after the police had killed 19 persons. A new constitution – the second in three years – is meanwhile being discussed. In 1949 railway workers in Nigeria struck after rejecting the awards of an arbitration tribunal.

In the Gold Coast the proposed new constitution is being discussed amid a civil disobedience campaign, strikes and even a boycott of British goods. Under mass pressure, the Gold Coast authorities have promised to replace rapidly most of the Englishmen in high Civil Service jobs with Africans.

The British government tries to hold back the tide by offering the natives fictions of democratic rule. But even the Anglican Bishop of Nyasaland, was reported recently as criticizing the Legislative Council in which he has served six years as “an ornamental democratic facade” for the “essentially oligarchic” rule of the government officials. Incidentally, Nigeria as well as the Gold Coast have elected African majorities in their powerless legislatures. On the other hand, the British colonial authorities have been clamping down on the African press. The British have suspended the Accra Evening News (January 1950) and arrested its editor in the course of new disturbances.

Although some industrial development has taken place in the copper belt and Southern Rhodesia, it is in South Africa – itself not a colony – where it has really become substantial. This has led to a new and momentous fact- – the birth of an African industrial proletariat.

The drift to the cities, which has been taking place for the past 30 years, is proceeding apace. Between 1921 and 1946 the number of natives in the urban areas has increased threefold, from 500,000 to 1,750,000. Thus, the old tribal structure has disappeared in large areas.

As a consequence of the African awakening, the hypocritical policies of Smuts have been replaced with open and brutal repressions by the government of Malan. But it is not only in South Africa that racial theories find a ready echo. In the colonies the policies of the Malan government are looked upon with favor. Dr. Malan believes “that Europeans in every part of Africa should combine together for their own protection.”

In turn, the policies of apartheid (segregation) imposed by the new government are increasing the discontent of the Africans. In the Johannesburg area, over six outbreaks have taken place in the last six months. Mrs. Margaret Ballinger, one of three whites representing the Negroes in the House of Assembly, was reported to have said: “The riots are not an episode but a symptom; not the end but only the beginning.”

Apartheid’s avowed aim is to concentrate the Negroes in their reserves where their tribal life would be “restored.” But this is impossible for South Africa’s industry which depends on African labor. The imperialists and the white supremacists face their old dilemma: they need the African labor force to staff their factories, farms and mines; they dread the consequences of the urbanization and proletarianization of the black masses.

The opportunities of Western European imperialism to “rejuvenate” itself at the expense of the African masses do not appear much brighter than in the rest of the colonial and semi-colonial world.

To sum up. The time when Western Europe, generally speaking, was able to enjoy a higher standard of life thanks to the exploitation of dependent peoples is beginning to draw to a close, opening up a new era, not alone in the history of the colonial peoples but also for the masses in Europe. The class struggle, blunted for decades, especially in Britain, is bound to. become sharp-edged.

Moreover, West European countries are themselves faced with the prospect of becoming dependencies of the United States, a situation by no means unknown in history. Portugal, with its colonies, for example, has been playing this role, in a different context, with regard to Britain. And so the West European countries while continuing to exploit colonies which remain in their possession, the profits thus obtained would end up in American pockets as dividends or payment of interest and principal on loans. At all events, Western Europe’s new status in relation to the US will impel the European bourgeoisies to intensify the exploitation of the masses at home. Thus the collapse of the colonial system has tremendous repercussions in the homelands of the decaying imperialist powers.

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