What would the TPA have thought of the empire?

By: Kristian Niemietz, editorial director and head of political economy at the Institute of Economic Affairs


In the 18th and 19th centuries, public spending and taxation in Britain were only a fraction of what they are today. The main drivers of current-day government spending, such as healthcare, education, and old-age provision, were still largely private matters. 


But this does not mean that there were no instances of government waste of taxpayers’ money, or of government regulation stifling private initiative. Even back then, there could have been a role for a version of the “Tufton Swamp”, the cluster of free-market think tanks based on and around Tufton Street (which, according to the more febrile corners of social media, secretly pull the strings in Britain behind the scenes). In fact – there sort of was. There was the Anti Corn Law League, a campaign for free trade and lower consumer prices, which one could see as an early predecessor of a Tufton Street think tank.


The leading figures of that movement were also fiercely anti-imperialist – not in the modern, trendy “woke” sense, but in the good old-fashioned classical liberal sense. 


I mention this because in recent years, it has become fashionable again to claim that Britain’s rise as an industrial power was built on slavery, colonial plunder and exploitation. London Mayor Sadiq Khan said that “our nation and city owes a large part of its wealth to its role in the slave trade”, while Observer columnist Will Hutton describes the Empire and slavery as “important drivers of the Industrial Revolution and evolution of our economy”. Meanwhile, an exhibition at Somerset House talks about “the prosperity of Europe in the 18th century, based largely on imperial expansion, exploitation and slavery.” 


The early free-trade liberals had a very different view. They saw the British Empire as an expensive rent-seeking scheme, which enriched a few politically well-connected special interest groups at the expense of the majority of taxpayers and consumers. 


In my new book Imperial Measurement: A Cost-Benefit Analysis of Western Colonialism, published by the Institute of Economic Affairs (IEA), I revisit these old debates in the light of more recent research and data, and find that the liberal anti-imperialists were largely correct. 


Empires do not come cheap. The cost of conquest, the cost of occupation, and the cost of colonial administration, is colossal. Most of that cost, though, was borne by taxpayers. This is why Britain was, by the standards of the time, a high-tax country, with the second-highest tax burden in Europe after the Netherlands. According to one estimate, if British military spending in the second half of the 19th century had been cut to French or German levels, the British tax burden could have been slashed by almost a quarter. 


Colonial enterprises also benefited from tariff protection and trade monopolies. The price of refined sugar, for example, was consistently higher in Britain than across the Channel. Via higher consumer prices and higher taxes, average British families were forced to pay for the upkeep of the Empire. 


But did they not also benefit from it? Did the Empire not open up a large, global market for Britain to buy from and sell to? 


Up to a point, yes. But Britain also traded with plenty of countries and regions that it never colonised, and in some cases, even with the colonies of other European powers. Brazil, for example, was a British trading partner as a Portuguese colony, and later, as an independent republic. And even at the time of the Anglo-German trade rivalry, British investors were able to maintain an active presence in German colonies in Africa. We don’t know what trade relations with, for example, India would have looked like if India had never been a British colony, but it seems safe to say that at least some trade would have happened anyway. 


The idea that it was the Empire which made Britain rich is almost certainly false. It made some people in Britain rich, but it brought little, if any, net benefit for Britain as a whole. 


Indeed, if the TaxPayers’ Alliance had been around at the time, they would probably have railed against “Empire Fat Cats”, and how outrageous it is that hard-working taxpayers are forced to foot the bill for dubious colonial enterprises. 

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