Free Trade for Others

Every rich country got rich by doing the opposite of what it now tells poor countries to do. This is not a polemical claim; it is economic history, and the most-cited statement of it is by an economist at Cambridge, working from the tariff schedules and industrial policies of the countries in question.¹

This chapter has three parts. First, the historical record on protection and extraction: what was actually done. Second, what happened when decolonising states tried to do it themselves. Third, the men who made sure they could not, and the reason the whole operation had to be conducted in a new vocabulary after 1945.

Part one: what the rich countries actually did

Britain. The Navigation Acts reserved colonial trade for English ships. Woollen exports were promoted and Irish competition suppressed. The Calico Acts of 1700 and 1721 banned the import of Indian cotton textiles (then the best in the world) to protect an infant English industry. Once Lancashire had mechanised and could outcompete anyone, Britain discovered free trade and repealed the Corn Laws in 1846. The sequence is: protect, dominate, then preach openness.

India is the control case. India's share of world manufacturing output has been estimated at around a quarter in 1750 and around 2 per cent by 1900, a deindustrialisation with no parallel. It was not caused by Indian weavers failing to innovate. It was caused by prohibitive duties on Indian cloth entering Britain, free entry for British cloth into India, a land revenue system that extracted cash from cultivators, and the use of Indian tax revenue to buy Indian exports, the mechanism Dadabhai Naoroji called the drain in 1901 and which economic historians still argue about the size of.² Famines ran through the period; the Bengal famine of 1943, with something over two million dead, occurred while rice was being exported and while the War Cabinet declined shipping.

The United States. Alexander Hamilton's Report on Manufactures (1791) is one of the founding documents of industrial protectionism, and the US ran average tariffs on manufactured imports of 35 to 50 per cent through most of the nineteenth century (among the highest in the world) while also seizing a continent and running an economy whose most valuable single asset class, until 1865, was enslaved human beings.

And it never really stopped. The rich world's agricultural subsidies run into the hundreds of billions annually, while poor countries were told through the 1980s and 1990s to remove theirs. Tariff escalation is the clearest tell: raw cocoa enters the EU at or near zero duty, processed cocoa products at a higher rate, and chocolate higher still. The structure ensures that the value-adding step happens in Europe. That is not free trade; it is a policy that a country exporting beans cannot become a country exporting chocolate.

Part two: what happened when the newly independent tried it

The decolonising world of the 1950s and 60s read the same history and drew the obvious conclusion: control your own resources, invest the rent in industry, educate your population. The programme had a name (economic nationalism), and it was, in substance, what Britain, the US, Germany and Japan had all done.

Here is what happened to the governments that tried.

Iran, 1953

Mohammad Mosaddegh, a constitutionalist prime minister, nationalised the Anglo-Iranian Oil Company. AIOC (later BP) had been paying Iran a royalty that was a fraction of its profits and had refused an audit of its books. Britain organised a global embargo on Iranian oil and asked Washington for help. Under Eisenhower, the CIA and MI6 ran Operation TPAJAX: paid crowds, bribed officers, a bought press, and a coup in August 1953 that installed the Shah as an absolute monarch. The CIA formally acknowledged its role in documents declassified in 2013.³

Guatemala, 1954

Jacobo Árbenz, elected in 1950, enacted Decree 900: expropriation of uncultivated land on large estates, with compensation. The largest landowner was the United Fruit Company, which held vast reserves it did not farm. Compensation was offered at the value United Fruit had itself declared for tax purposes, which the company found unacceptably low, having understated it for years.

United Fruit's law firm was Sullivan & Cromwell. John Foster Dulles, US Secretary of State, had been its senior partner. Allen Dulles, Director of Central Intelligence, had been a partner too and had sat on United Fruit's board. In 1954 the CIA ran Operation PBSUCCESS (a fake rebel radio station, a handful of aircraft, and a bluff), and Árbenz resigned. What followed was four decades of military rule and a civil war in which Guatemala's own UN-backed truth commission found the state responsible for 93 per cent of documented violations and concluded that acts of genocide had been committed against Maya communities.⁴

Congo, 1960–61

Patrice Lumumba became prime minister of the newly independent Congo in June 1960, a country whose mineral wealth had produced the Congo Free State of chapter 10 and the uranium for the Hiroshima bomb. Within weeks, mineral-rich Katanga seceded with Belgian corporate and military backing. Lumumba appealed to the UN, then to the Soviet Union; that appeal was the end of him. He was deposed, handed to his enemies in Katanga, and murdered in January 1961 in the presence of Belgian officers.

The US Senate's Church Committee found in 1975 that the CIA had plotted his assassination, with a poison kit dispatched, and that the plot had been authorised at a high level. A Belgian parliamentary commission concluded in 2001 that Belgium bore moral responsibility. Mobutu ruled for thirty-two years, and the mineral concessions continued.⁵

The list continues: Brazil 1964, Indonesia 1965 (a massacre of between half a million and a million people, with the US embassy supplying names), Chile 1973, and the murders of Amílcar Cabral in 1973 and Thomas Sankara in 1987. The pattern is not that every case was identical or that the United States caused everything. It is that the specific policy that triggered intervention was, again and again, an attempt to control domestic resources.

Part three: why the vocabulary had to change

Here is the argument this chronicle regards as the key to the whole postwar period, and it is well documented.

Before 1945, the racial hierarchy could be stated openly: it was in the League Covenant (chapter 14), in immigration statutes, in colonial administration manuals. After 1945 it could not, for three reasons: the Nazis had discredited the vocabulary; colonised populations were organising and had just been armed and trained for a world war; and there was now a rival offer.

That last point is the decisive one. The Soviet Union and the Chinese revolution presented themselves to the colonised world as anti-imperial, and they backed it with training, weapons and scholarships. Whatever one thinks of what they did at home (and this chronicle holds no brief for the gulag, the famines, or the Cultural Revolution), the offer was real, and it forced the West to compete on terrain it had never had to compete on.

The clearest evidence is domestic. Mary Dudziak's work in the State Department archives shows that American segregation had become a first-order foreign policy liability: Soviet outlets publicised every lynching, and diplomats from newly independent African states were being refused service on the road to Washington. The Justice Department's amicus brief in Brown v. Board of Education (1952) argued the point explicitly: that racial discrimination furnished grist for the communist propaganda mills and damaged American prestige abroad.⁶

This is not a claim that the civil rights movement was a Cold War artefact; it was won by people who marched, organised and were beaten and killed for it. It is a claim about why the federal government finally moved: because the competition made overt white supremacy expensive. Remove the competition, and the constraint relaxes, which is the story of chapter 18.

The debt instrument

Coups are conspicuous. The durable mechanism was financial.

When commodity prices collapsed and US interest rates were driven to record highs at the start of the 1980s, indebted countries across Africa and Latin America could not service loans contracted in the 1970s. The IMF and World Bank offered rescheduling on conditions: devalue, cut public spending, privatise, remove tariffs and subsidies, open capital accounts, and export more of whatever you already export.

The result across sub-Saharan Africa and much of Latin America was the "lost decade": user fees introduced for health and schooling, public employment cut, industry exposed to competition it had no chance against, and (the structural core) countries locked into exporting raw materials, which is precisely the position every developed country had used protection to escape.⁷ Meanwhile the countries that actually did industrialise in this period (South Korea, Taiwan, and later China) did so by ignoring most of that advice: directed credit, protected infant industries, capital controls, state-led export discipline.

Forward

Once the Soviet Union collapsed, the competitive pressure that had forced the concessions of the 1950s and 60s disappeared. What replaced anti-communism as the organising story of the American right, and what it did to domestic politics, is chapter 17.

Footnotes

1. Ha-Joon Chang, Kicking Away the Ladder: Development Strategy in Historical Perspective (London: Anthem, 2002); the phrase is Friedrich List's, from Das nationale System der politischen Ökonomie (1841). ↩
2. Dadabhai Naoroji, Poverty and Un-British Rule in India (London, 1901); Paul Bairoch, "International Industrialization Levels from 1750 to 1980," Journal of European Economic History 11 (1982), pp. 269–333, for the manufacturing-share estimates; Utsa Patnaik's much larger drain estimates, in Shubhra Chakrabarti and Utsa Patnaik (eds.), Agrarian and Other Histories (New Delhi: Tulika, 2018), are disputed and should be read alongside Tirthankar Roy's critiques. On 1943, Madhusree Mukerjee, Churchill's Secret War (New York: Basic Books, 2010). ↩
3. Ervand Abrahamian, The Coup: 1953, the CIA, and the Roots of Modern U.S.-Iranian Relations (New York: New Press, 2013); the CIA's internal history by Donald Wilber, released in redacted form, and the 2013 National Security Archive release. ↩
4. Piero Gleijeses, Shattered Hope: The Guatemalan Revolution and the United States, 1944–1954 (Princeton: Princeton University Press, 1991); Stephen Schlesinger and Stephen Kinzer, Bitter Fruit (Cambridge, MA: Harvard University Press, 1982); Comisión para el Esclarecimiento Histórico, Guatemala: Memoria del Silencio (1999). ↩
5. US Senate Select Committee to Study Governmental Operations, Alleged Assassination Plots Involving Foreign Leaders (1975); Ludo De Witte, The Assassination of Lumumba (London: Verso, 2001); Belgian Chamber of Representatives, report of the Lumumba commission (2001). ↩
6. Mary L. Dudziak, Cold War Civil Rights: Race and the Image of American Democracy (Princeton: Princeton University Press, 2000); Brief for the United States as Amicus Curiae, Brown v. Board of Education (December 1952). See also Penny M. Von Eschen, Race Against Empire (Ithaca: Cornell, 1997). ↩
7. Giovanni Andrea Cornia, Richard Jolly and Frances Stewart (eds.), Adjustment with a Human Face (Oxford: Clarendon for UNICEF, 1987); Thandika Mkandawire and Charles Soludo, Our Continent, Our Future (Trenton: Africa World Press, 1999). ↩
8. Jason Hickel, Christian Dorninger, Hanspeter Wieland and Intan Suwandi, "Imperialist appropriation in the world economy," Global Environmental Change 73 (2022), 102467. ↩