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Communist Manifesto (Chapter 1)
The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians' intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.
I don't read as an endorsement of free trade but a description of free trade as a political weapon for the benefit of the "Bourgeois" model of society.

Veblen's description of "business enterprise" and how it dominates economic activity is very similar.

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Fri Apr 8th, 2011 at 09:39:47 AM EST
[ Parent ]
Start with the fact that the heavy artillery of European trade was actually heavy artillery not cheap commodities and you begin to see what's wrong with that passage. Lancashire textiles did not displace Indian textiles because of the efficiencies of the European capitalist economy, rather it was the intervention of British mercenaries and soldiers and the following imposition of ruinous taxes on local production that made the difference. The British opened China to free trade (what we now call drug dealing) with gunboats. If you read Anti-During with that knowledge, you can see why Engels was so angry that Dühring said raw force not the laws of economics drove exploitation.
by rootless2 on Fri Apr 8th, 2011 at 10:00:53 AM EST
[ Parent ]
Rounding up the Calcutta weavers and cutting off their thumbs also disrupted the Indian homespun industry.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Apr 8th, 2011 at 12:04:53 PM EST
[ Parent ]
efficiency isn't free
by rootless2 on Fri Apr 8th, 2011 at 12:19:41 PM EST
[ Parent ]
See? The steam driven weaving mills were superior.

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Fri Apr 8th, 2011 at 01:23:52 PM EST
[ Parent ]
Since the Imperial Raj was built primarily on Indian troops bearing Indian-made arms, the access to the American silver to finance the whole enterprise at more competitive rates than local Indian princes could do also may have played a role.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sun Apr 10th, 2011 at 10:44:04 PM EST
[ Parent ]
Well, the purpose of the Opium Wars was to force the Chinese Empire to allow the British to use Burmese opium to extract gold from China in payment for the opium sold to wealthy landowners.  This was the stuff of popular historical drama in Mao's China.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 11th, 2011 at 12:06:15 AM EST
[ Parent ]
access to the American silver

From whom and by what means? I know the Spanish dollar was de facto currency in the 18th and early 19th centuries in the colonies and the USA.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 11th, 2011 at 12:09:59 AM EST
[ Parent ]
How?

One way...

Near Lima, Drake captured a Spanish ship laden with 25,000 pesos of Peruvian gold, amounting in value to 37,000 ducats of Spanish money (about £7m by modern standards). Drake also discovered news of another ship, Nuestra Señora de la Concepción, which was sailing west towards Manila. It would come to be called the Cacafuego. Drake gave chase and eventually captured the treasure ship which proved their most profitable capture. Aboard Nuestra Señora de la Concepción, Drake found 80 lb (36 kg) of gold, a golden crucifix, jewels, 13 chests full of royals of plate and 26 tons of silver.

...or the other (pdf)

IMPACT OF GOLD AND SILVER IMPORTS
● Increased purchasing power of Spain
● Expansion of demand for goods and services
● Expansion of international trade (gold and silver were accepted all over the world as a means of payment)
● Stimulation of industry throughout Europe (in particular northern Netherlands, England, and France, which competed for Spanish custom)
● Innovations in industries in northern Netherlands, England, and France, leading to rapid development of these countries.


Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Mon Apr 11th, 2011 at 01:14:26 PM EST
[ Parent ]
Great chart in the pdf link. But it doesn't really show where England got silver, especially from the mid 17th century onward. Profits from English slave traders selling slaves to Spanish and Brazilian planters is one possibility. Piracy is another, but is an intermittent and declining source. One of the characteristics of English colonies, especially in the "new world" was the relative absence of significant sources of gold.

Of course, with the relative decline in the purchasing power of gold and silver from 1500 through 1650, export goods could buy more silver than before. But that silver would have to be gotten out of the hands of the merchants who received it, who had to use something to pay those who sold them the goods which they exported.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 11th, 2011 at 02:16:52 PM EST
[ Parent ]
The Spice Traders, the various "East India Companies," took over an existing system where the ruler of the country, e.g. Bandam, where the spice, e.g., nutmeg, grew already held the growers of the spice in economic peonage.  They replaced the ruler with themselves and kept the local system intact.

This resulted in the very nice, for the "East India Companies," situation where they sold the spice in Europe at a 1,000% to 4,000% percent mark-up over cost (purchase, shipping, etc.,) took some of the money and shipped it to, e.g., Bandam, where they paid themselves for the nutmegs they, effectively, stole from the growers.  

Part of the money was used to purchase tea, porcelain, lacquer ware, and other products from the Chinese merchants who arrived at Bandam to purchase nutmegs.  (For instance)  Of those goods, porcelain was the most lucrative; the upper crust went bananas over porcelain ware and would pay through the nose to acquire examples, an exact example of Veblen's conspicuous consumption for exactly the reasons he presented.

One reason the trading companies were able to do this because the European economy was on the up and up and able to support increased manufacturing of goods beyond local demand since the large trading companies could fill their ships with European manufactured goods and sell them in their colonies because the locals there weren't permitted to produce, as they had before, for their local market.

With European manufactured goods being shipped overseas and the steady increase of the amount of silver sloshing around in Europe due to the silver mining the Hartz mountains, the silver strike near Joachimsthal in Bohemia, and the silver flowing from the Spanish mines in the Latin and South Americas the total amount of silver being bid against a much slower rise in available goods led to a slow decline of the former versus the latter.

The supply of gold increased at a much slower rate and, thus, shared in the general price (in silver) rise.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Apr 11th, 2011 at 02:57:55 PM EST
[ Parent ]
But So that silver would have to be was gotten out of the hands of the merchants who received it those who could afford the imported luxury goods, by the BEIC who had to use something used some of the silver to pay for mercenaries in India and elsewhere and used other goods from other places or used English exportsto pay those who sold them the goods which they exported imported from the spice islands or elsewhere..

Sort of like Ollie North's "neat" little scheme to use the proceeds the sale of Columbian drugs to the USA and weapons to Iran to provide arms and money to the Contras. "The System of the World" as it were.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 11th, 2011 at 04:06:40 PM EST
[ Parent ]
Yeah.

I didn't 'Go There' to reduce the length of my comment.

Same old thing repeated endlessly.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Apr 11th, 2011 at 04:19:14 PM EST
[ Parent ]
The silver from Hartz Mountain mines via porcelain, etc. sold to German nobles would be a much more accessible source to English companies than would be the silver from Mexico, and Bolivia. The china porcelain for the Catholic countries more likely came from the Spanish Philippines and the Jesuit Black Ship from Japan, via Acapulco and portage across Mexico.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 11th, 2011 at 04:20:51 PM EST
[ Parent ]
The British East India Company was found smack in the middle (1600) of the period we're discussing.  For a couple of decades they screwed around unsuccessfully trying to oust the Dutch East India Company.  Eventually they decided to plant their butts in India ...

and the rest is history.

The unbelievable profits the BEIC reaped from India was the trigger and sustaining force for the British Empire allowing, among other things, the Brits to conquer more territories with equally lucrative resources.  As an example, ONE 10,990 square kilometer (4,243 sq mi) Caribbean island - Jamaica - returned more yearly profit than ALL of their North American colonies put together.  

The trade in, what we would call basic commodities, was the Oil Wealth of their time.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Apr 11th, 2011 at 04:47:02 PM EST
[ Parent ]
basic commodities...

such as sugar and indigo.

But the BEIC got a leg up after the Dutch became involved in their long struggle with Louis 14th and the English got past the Civil War and Protectorate period. Charles II's Queen Consort, Catherine of Braganza's dowry included the port cities of Tangiers and Bombay and good relations were maintained with the Mughal Emperors from 1612 until the mid 18th century.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 11th, 2011 at 08:09:45 PM EST
[ Parent ]
Out of links, I will have to rely on scetchy recollection. As I was tought, the standard model was something like this:

  • Spain plunders America.
  • England and Netherlands gets a little from pirating Spains silver transports and a lot from producing stuff like wool and selling to wealthy Spainish.
  • Inflation unseats land-owning nobility in favor of new merchant/entrepreneur-class (in particular England, Netherlands was already merchant-dominated).
  • So money landing in England and Netherlands is re-invested in trade.
  • First Netherlands, then England takes over world trade and extracts rent from basically everything.


Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Mon Apr 11th, 2011 at 05:32:36 PM EST
[ Parent ]
That was the consensus and for all I know is still taught as the consensus.  But it's not quite, quite, accurate.

For example, the political leadership of England during most of this period was Monarchy supported by and supported land-based Aristocracy.  While the great merchants gained power during this period they never achieved Decision Making power.  An example of this, was a continuous un-met demand by the merchants for the King to do something about pirates infesting the English Channel.  It was only when the mayor of London fitted out a fleet, out of his own pocket, that piracy faded.  


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Apr 12th, 2011 at 12:48:58 PM EST
[ Parent ]
It does omit the profits from gaining a share of the East and South Asian carry trade. After selling your fine woolens for silver, your big money comes from taking that silver to the East, where it can be used to buy into the trade among the most productive, highest income economies in the world. And you can reap your profits from that trade in the form of goods to send back to Europe to sell for more silver to finance further expansion.

There's a reason why it's "sailing the Seven Seas" rather than "sailing to the Seven Seas" ~ there was a lot of money to be made plying the waters of the Andaman, Java, Banda, Molucca, Celebes, Sulu and South China Seas.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Apr 12th, 2011 at 11:43:35 PM EST
[ Parent ]
From the Spanish, by selling them stuff. That was the purpose of mercentalism, to accumulate silver that could be used to finance entry into the carrying trade among the wealthier nations of South and East Asian.

The Governor and Company of Merchants of London Trading in the East Indies was established around 1600, but with the much greater success of the United East India Company of the Netherlands in the East Indies trade, they became more focused in carrying trade in India and China.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Apr 11th, 2011 at 05:36:55 PM EST
[ Parent ]
Dutch domination of the carry trade was as important as the importation of high-value goods by the East India company.  It was the carry trade that allowed them to cheaply import the ship building materials from, e.g., Sweden, that allowed them to build the ships they required to keep the system chugging along.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Tue Apr 12th, 2011 at 12:55:58 PM EST
[ Parent ]
Which carry trade are you talking about? By the 1700's, European vessels had as much as 10% of the East Asian / South Asian carry trade. That required silver to buy into, since at the time few in the high income countries would have been interested in buying cheap European knockoffs of the products of the higher income nations.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Tue Apr 12th, 2011 at 11:27:00 PM EST
[ Parent ]
Intra-European carry trade.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Wed Apr 13th, 2011 at 07:50:40 PM EST
[ Parent ]
Working from the main event backwards, the inside edge that the European merchants have in the Asian carry trade is access to cheaper silver, which is to say cheaper finance, than local merchants.

So you need ships that can go back and forth between Europe and the Indian Ocean and/or the Seven Seas, bringing silver in, leveraging the silver into trading profits in the Asian carry trade, and skimming some profits as high value merchandise in Europe to go home and raise more silver.

You will lose ships in both long legs, which is a big reason why the active carry trade on both sides is important ~ you have to be able to keep generating profits in the European trading zone to be able to keep skimming profits as silver and sending it over, even if the last ship went down (or was taken out by Javanese pirates), and have to be able to do the same in the Asian trading to be able to keep skimming profits as high quality trade goods and sending it over.

They are complementary, so its hard to say how much strength in the European carry trade support building up strength in the Asian carry trade, and visa versa.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Apr 14th, 2011 at 11:37:16 PM EST
[ Parent ]
The organization and operation of the Dutch East India Company neatly divides into a pre-Jan Pieterszoon Coen era and post Jan Pieterszoon Coen era.  I'm going to 'locate' this comment by ignoring the first.

Coen was a nasty piece of work:

On 30 May 1619, Coen, backed by a force of nineteen ships, stormed Jayakarta driving out the Banten forces; and from the ashes established Batavia as the VOC headquarters. In the 1620s almost the entire native population of the Banda Islands was driven away, starved to death, or killed in an attempt to replace them with Dutch plantations.

but who solved:

A major problem in the European trade with Asia at the time was that the Europeans could offer few goods that Asian consumers wanted, except silver and gold. European traders therefore had to pay for spices with the precious metals, and this was in short supply in Europe, except for Spain and Portugal.

by [VOC = Dutch East India Company]:

... start[ing] an intra-Asiatic trade system, whose profits could be used to finance the spice trade with Europe. In the long run this obviated the need for exports of precious metals from Europe, though at first it required the formation of a large trading-capital fund in the Indies. The VOC reinvested a large share of its profits to this end in the period up to 1630. The VOC traded throughout Asia. Ships coming into Batavia from the Netherlands carried supplies for VOC settlements in Asia. Silver and copper from Japan were used to trade with India and China for silk, cotton, porcelain, and textiles. These products were either traded within Asia for the coveted spices or brought back to Europe.

Simultaneously, the invention of the fluyt lowered the costs of intra-European trade by increasing cargo capacity per-ship.  I know this ship was the backbone of the intra-European trade, I do not remember (it's been a while!) if it was used as a long distance carrier.  For the 'long haul' they used the specially designed Dutch East Indiaman for the 'retour' (there and back again) route.  IIRC, the Dutch used the Chinese Junk in Asia mostly from the fact it was designed for those waters.  How extensively the Junk was used I cannot say.

Anyway, the distribution of goods imported by the DEIC from Asia was wholesaled out to other Dutch merchants and companies - thus the multitude of warehouses in Amsterdam - who then distributed across Europe.  The "odd-job" merchants completed the European side of the trade cycle.  Two important "strangle-points" in this trade was the English Channel (piracy/interdiction) and the Danish Kattegat (transition fees) leading to a couple each of Dutch-English and Dutch-Danish wars.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Apr 15th, 2011 at 01:57:11 PM EST
[ Parent ]
Quite, and you can't do any of that at such a long remove from your home country without silver ~ investing silver into building their position in the Asian carry trade. The Dutch East India company and the British East India company could afford to hire more troops in pursuit of their commercial ends than local traders, because they were originally trading mercenary's pay for goods, rather than trading goods for goods.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sat Apr 16th, 2011 at 01:07:31 PM EST
[ Parent ]

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