The worst news I’ve heard about the COVID-19 pandemic was that it took the life of Deepak Lal, one of the wisest men I’ve known. Aged eighty, he was living in London and already suffering from a slow-acting cancer when the coronavirus proved too much for him. He died on April 30.
Several of Lal’s obituarists called him a “development economist” because that was how he made his name in the 1980s when he wrote a number of pungent criticisms of the socialist economic policies that until then had kept most of the Third World in poverty. In the last two or three decades of his life, however, he became one of the world’s great economic historians, which is his true legacy.
Keith Windschuttle’s column appears in every Quadrant.
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Part of his wisdom was to recognise that, while economics was an important driver of both national and world histories, it was not alone. To understand the real history of any people, their political, cultural and religious lives were even more important. Quadrant readers can get a taste of his abilities from our July-August 2016 edition where he reviews a collection of historical essays by J.B. Kelly on the Middle East and ends up writing one of the most incisive criticisms yet made of recent Western interventions into that disaster zone.
The book of his that impressed me most, and which, even though it doesn’t mention Australia, is the one from which Australians can probably learn most, is In Praise of Empires, a 247-page volume, published in 2004 (Palgrave Macmillan, New York). These days, the concept of imperialism is so offensive to political fashions on university campuses that its title would by now have cost Deepak his professorship at UCLA (as a similar tract actually did in 2017 to Bruce Gilley at Portland State University). Nonetheless, Deepak told me at a conference in Sydney in 2006 that he enjoyed being one of the few Indian-born academics to take such a position when most others who gained places at US and UK universities were renowned for their reliance on post-colonial theory and anti-Western ideology.
Lal wrote his book to argue that most of the major empires in human history have provided long periods of peace and stability in which economic development could flourish. This was true from ancient to medieval times, and from Rome to China. In our own time, he maintains, the world still needs the domination of one global imperial power to keep as much peace as possible and preserve prosperity.
Lal’s book also suggests a new paradigm for understanding modern history. Rather than the story my generation was taught—a modernity full of revolutionaries overthrowing ancien regimes and romantic heroes building ethnic nations on the ruins of old royal dynasties—Lal argues the principal driver of modernity in the world was the British Empire. In the nineteenth century it generated a global empire of free trade, powered by the industrial revolution and enforced by a Royal Navy presence in all oceans. Britain provided direct rule in its formal empire and indirect rule in much of the rest of the world through gunboat diplomacy and economic opportunity. Lal calls this geographic and temporal structure Pax Britannica, the British peace. He also calls it the first Liberal International Economic Order.
From 1815 to 1914, imperialism gave Britain a century of peace at home and it provided the rest of the world with far more order and stability than it would otherwise have had. It was an empire not of plunder but of civil order that kept the channels of commerce free of pirates and predators. Britain did not do this because it wanted to conquer or even to civilise the world. It pursued its own interest to generate export trade and to provide international financial services. The industrial revolution produced a surplus of low-cost, factory-manufactured goods for which Britain sought global markets. The City of London also set out to become the financier to the world, providing short-term credit for trade and long-term credit for investment.
Despite the prevailing anti-colonialist cant that still condemns British imperialism as one of history’s great iniquities—as I write this, the morning press reports students at Sydney University are organising a rally to “dismantle the settler-colonial state system”—the first Liberal International Economic Order was hugely beneficial to all the countries it touched. British investment provided the infrastructure of rail, ports and coaling stations through which comparative advantage could be exploited by local entrepreneurs of many nations.
Imperialism encouraged investors to put their money in developing economies, places that would otherwise have been sites of great risk. Hence when the British Empire was at its peak it was a much greater positive force for international investment in poor countries than any more recent institutions. In 1913 some 63 per cent of foreign direct investment went to developing countries, whereas in 1996 the proportion was only 28 per cent; in 1913, 25 per cent of the world stock of capital was invested in poor countries but by 1997 it was no more than 5 per cent.
After 1918, with Britain crushed by the weight of war debt and debilitated by class warfare at home, Pax Britannica’s days were numbered. The United States emerged from the First World War the most economically and militarily powerful country, and Britain’s natural successor. Had it recognised its own global interests better, Lal says, it would have taken Britain’s place and produced a Pax Americana. Instead, it embraced the Wilsonian idealism of collective security through transnational associations. This model soon failed, and America retreated into isolationism and protectionism. Arguably, Lal writes, the United States’ reluctance to assume the imperial role contributed to many of the disasters of the last century: two world wars, the Great Depression, and the rise and fall of two illiberal creeds, fascism and communism.
Chastened by the experience of international disorder that American isolationism permitted in the interwar years, by the end of the Second World War the US political elite changed tack. It recognised its national interest required a strong maritime power to uphold the balance of power in Europe and to maintain economic and political order in the rest of the world. Its members surreptitiously took up the task of building a US imperium to maintain the Pax which the British were now both unwilling and unable to support.
The US constructed a new Liberal International Economic Order for the post-war world, using transnational institutions to open world markets to trade in goods and the free flow of capital. Initially, a number of Third World countries, under the thrall of the Soviet Union, either stood outside or only half-heartedly joined the new order. But after the debt crisis of the 1980s and the collapse of European communism in 1989, there was a rush to join. The most notable converts were India and China. The only countries that failed to join this newest phase of globalisation were those of Africa and the Middle East, which thereby excluded themselves from this era of economic progress.
Pax Americana will no doubt seem to many to be alien to American political traditions. In the midst of the controversy over his invasion of Iraq in 2003, George W. Bush told a gathering of military veterans that America had no territorial ambitions. “We don’t seek an empire,” he said. “Our nation is committed to freedom for ourselves and for others.”
Lal responds to this by distinguishing two different kinds of empires: those that seek to advance certain enterprises, such as taking plunder or imposing an ideology; and those that do not seek to impose their own objectives, but rather see themselves as a custodian of laws and civil order. The British Empire was the latter kind, a model that is not inconsistent with American traditions, or at least with classical liberal American traditions.
So, what would the world lose from a seriously anti-imperialist US? It would lose the Liberal International Economic Order. Lal argues that such a loss can occur without the United States falling over the kind of precipice that ended the Roman Empire. It could happen gradually within the current framework of democratic politics simply from an American reluctance to fulfil the role and a preference to withdraw into itself, as it did in the interwar period. If this happens, others, especially China or India, may well fill its place.
The problem with this scenario is that neither China nor India has the political traditions and culture required for the task. If either became the world imperium we might still have an International Economic Order, but it would not be classically liberal. Indeed, Lal argues, it would lose the one thing that made it work in the first place, and the one thing that made it a force for good in the world.
Keith Windschuttle is Quadrant‘s editor