Trashing the planet and hiding the money isn’t a perversion of capitalism. It is capitalism

George Monbiot in The Guardian


‘A few decades after the Portuguese colonised Madeira, in 1420, they developed a system that differed from anything that had gone before.’ Photograph: Thomas Pollin/Getty Images
Wed 6 Oct 2021 13.00 BST


Whenever there’s a leak of documents from the remote islands and obscure jurisdictions where rich people hide their money, such as this week’s release of the Pandora papers, we ask ourselves how such things could happen. How did we end up with a global system that enables great wealth to be transferred offshore, untaxed and hidden from public view? Politicians condemn it as “the unacceptable face of capitalism”. But it’s not. It is the face of capitalism.

Capitalism was arguably born on a remote island. A few decades after the Portuguese colonised Madeira in 1420, they developed a system that differed in some respects from anything that had gone before. By felling the forests after which they named the island (madeira is Portuguese for wood), they created, in this uninhabited sphere, a blank slate – a terra nullius – in which a new economy could be built. Financed by bankers in Genoa and Flanders, they transported enslaved people from Africa to plant and process sugar. They developed an economy in which land, labour and money lost their previous social meaning and became tradable commodities. 

As the geographer Jason Moore points out in the journal Review, a small amount of capital could be used, in these circumstances, to grab a vast amount of natural wealth. On Madeira’s rich soil, using the abundant wood as fuel, slave labour achieved a previously unimaginable productivity. In the 1470s, this tiny island became the world’s biggest producer of sugar.

Madeira’s economy also had another characteristic that distinguished it from what had gone before: the astonishing speed at which it worked through the island’s natural wealth. Sugar production peaked in 1506. By 1525 it had fallen by almost 80%. The major reason, Moore believes, was the exhaustion of accessible supplies of wood: Madeira ran out of madeira.

It took 60kg of wood to refine 1kg of sugar. As wood had to be cut from ever steeper and more remote parts of the island, more slave labour was needed to produce the same amount of sugar. In other words, the productivity of labour collapsed, falling roughly fourfold in 20 years. At about the same time, the forest clearing drove several endemic species to extinction.

In what was to become the classic boom-bust-quit cycle of capitalism, the Portuguese shifted their capital to new frontiers, establishing sugar plantations first on São Tomé, then in Brazil, then in the Caribbean, in each case depleting resources before moving on. As Moore says, the seizure, exhaustion and partial abandonment of new geographical frontiers is central to the model of accumulation that we call capitalism. Ecological and productivity crises like Madeira’s are not perverse outcomes of the system. They are the system.

Madeira soon moved on to other commodities, principally wine. It should come as no surprise that the island is now accused of functioning as a tax haven, and was mentioned in this week’s reporting of the Pandora papers. What else is an ecologically exhausted island, whose economy depended on looting, to do?

In Jane Eyre, published in 1847, Charlotte Brontë attempts to decontaminate Jane’s unexpected fortune. She inherited the money from her uncle, “Mr Eyre of Madeira”; but, St John Rivers informs her, it is now vested in “English funds”. This also has the effect of distancing her capital from Edward Rochester’s, tainted by its association with another depleted sugar island, Jamaica.

But what were, and are, English funds? England, in 1847, was at the centre of an empire whose capitalist endeavours had long eclipsed those of the Portuguese. For three centuries, it had systematically looted other nations: seizing people from Africa and forcing them to work in the Caribbean and North America, draining astonishing wealth from India, and extracting the materials it needed to power its Industrial Revolution through an indentured labour system often scarcely distinguishable from outright slavery. When Jane Eyre was published, Britain had recently concluded its first opium war against China.

Financing this system of world theft required new banking networks. These laid the foundations for the offshore financial system whose gruesome realities were again exposed this week. “English funds” were simply a destination for money made by the world-consuming colonial economy called capitalism.

In the onshoring of Jane’s money, we see the gulf between the reality of the system and the way it presents itself. Almost from the beginning of capitalism, attempts were made to sanitise it. Madeira’s early colonists created an origin myth, which claimed that the island was consumed by a wild fire, lasting for seven years, that cleared much of the forest. But there was no such natural disaster. The fires were set by people. The fire front we call capitalism burned across Madeira before the sparks jumped and set light to other parts of the world.

Capitalism’s fake history was formalised in 1689 by John Locke, in his Second Treatise of Government. “In the beginning all the world was America,” he tells us, a blank slate without people whose wealth was just sitting there, ready to be taken. But unlike Madeira, America was inhabited, and the indigenous people had to be killed or enslaved to create his terra nullius. The right to the world, he claimed, was established through hard work: when a man has “mixed his labour” with natural wealth, he “thereby makes it his property”. But those who laid claim to large amounts of natural wealth did not mix their own labour with it, but that of their slaves. The justifying fairytale capitalism tells about itself – you become rich through hard work and enterprise, adding value to natural wealth – is the greatest propaganda coup in human history.

As Laleh Khalili explains in the London Review of Books, the extractive colonial economy never ended. It continues through commodity traders working with kleptocrats and oligarchs, grabbing poor nations’ resources without payment with the help of clever instruments such as “transfer pricing”. It persists through the use of offshore tax havens and secrecy regimes by corrupt elites, who drain their nation’s wealth then channel it into “English funds”, whose true ownership is hidden by shell companies.

The fire front still rages across the world, burning through people and ecologies. Though the money that ignites it may be hidden, you can see it incinerating every territory that still possesses unexploited natural wealth: the Amazon, west Africa, West Papua. As capital runs out of planet to burn, it turns its attention to the deep ocean floor and starts speculating about shifting into space.

The local ecological disasters that began in Madeira are coalescing into a global one. We are recruited as both consumers and consumed, burning through our life support systems on behalf of oligarchs who keep their money and morality offshore.

When we see the same things happening in places thousands of miles apart, we should stop treating them as isolated phenomena, and recognise the pattern. All the talk of “taming” capitalism and “reforming” capitalism hinges on a mistaken idea of what it is. Capitalism is what we see in the Pandora papers.

Towards a radical new theory of Anglo-American slavery, and vindication of free markets

New evidence coming to light in the National Archives and the Bodleian Library may soon change our entire view of the British slave trade, and the roots of institutional plantation slavery in the Americas.

The Caribbean states, CARICOM, are filing a lawsuit against Britain, Spain, France, Holland and Portugal for slavery reparations Photo: Film Stills

By Ambrose Evans-Pritchard

With luck it will help to vindicate the fathers of liberal government and the free market in the 17th and 18th Centuries, falsely accused until now of abetting - or promoting - the great crime of race-based African slavery.

For academic orthodoxy holds that John Locke and the great Whig thinkers of the Glorious Revolution (1688) helped to design and foster the economic system of hereditary slavery that shaped Atlantic capitalism for a century and a half.

From that it is but a step to dismiss the moral claims of liberalism as so much humbug, to write off all the talk of justice, natural rights, inviolable contracts and government by consent as the self-interested catechism of oppressors. As Samuel Johnson said acidly: "How is it we hear the loudest yelps for liberty among the drivers of negroes?"

Except that this established version of events is not true. It is a near complete inversion of what happened, and this matters in all kinds of ways since the debate over slavery refuses to subside, even though the trade was abolished in 1808 and Empire slaves were freed in 1833.

Indeed, it is coming to the boil again. The Caribbean states, CARICOM, are filing a lawsuit against Britain, Spain, France, Holland and Portugal for slavery reparations. Apologies are not enough, says Ralph Gonsalves, premier of Saint Vincent. "We have to have appropriate recompense." 

It matters too because liberal democracy has been on the back foot in large parts of the world for a decade. China is bidding for global leadership with radically different claims - with allies in Moscow, and followers from Bangkok to Caracas. It seizes eagerly on anything that punctures the moral claims of the West.

Joshua Kurlantzick says in Democracy in Retreat that the "Washington Consensus" we have known for so long is losing ground to an ascendant "Beijing Consensus", the greatest challenge to Western Liberal values since fascism and communism in the 1920s and 1930s.

The banking crash of 2008-2009 has tempted some in China's Politburo to conclude that Leninist planning is superior to Anglo-Saxon markets, and prompted many in Europe to ask whether Capitalisme Sauvage is worth saving at all. They misread events of course. It was governments that caused the crisis: the West by fixing the price of credit too low, the East by amassing reserves and flooding the world with excess capital. But that is not the narrative of the web, or political discourse.

So let us start to set the record straight on one point at least. The archives demonstrate that the Stuart monarchs Charles II and James II systematically drew up laws to enforce and spread hereditary slavery, mimicking the Spanish practice of the day and the "divine right" absolutism of the Habsburg empire.

They did so with relentless focus, stacking the courts to ensure favourable rulings, and carrying out police state sedition trials against opponents, not least because revenues from tobacco and sugar plantations became the chief source of wealth for the crown.

Professor Holly Brewer from the University of Maryland says Charles II was so enamoured with the Royal African Company that he engraved its symbols of elephant and castle on one side of his golden Guinea. "The Stuarts envisaged monarchy and slavery as, literally, two sides of the same coin," she said.

Slavery had not been hereditary in British possessions before. There were African slaves, just as there were indentured white workers, but it was fluid, in a legal grey zone, and judges could not be counted on to enforce the recapture of runaways.

Prof Brewer said the findings she has uncovered in the archives show that Locke fought tooth and nail to reverse this new hereditary structure while on the Board of Trade in the 1690s under William of Orange.

Locke sought the stop linking land grants to the number of imported slaves - 50 acres per head - a "strangely perverted "practice, in his words, intended to ensure a plantation aristocracy built on slaves. He urged that the children of blacks should be "baptized, catechized and bred Christians" so that they could not be denied their civil liberties so lightly.

Locke had been compromised earlier in the 1660s as a young man working for the Stuarts but later became an exile and rebel in Holland. "When he had a position of real power, he tried to undercut the development of slavery in comprehensive ways," she said.

His was the outlook of most liberal thinkers who shaped the American Revolution. It was the view too of Adam Smith, the free market theorist writing later in the 18th Century, also accused of promoting slavery. Smith, in fact, argued that slaverly stifled economic growth and innovation. “It appears from the experience of all ages and nations, I believe, that the work done by freemen comes cheaper in the end than that performed by slaves," he wrote in Wealth of Nations. William Wilberforce cited Smith approvingly to buttress the abolition case.

Locke's efforts to undo Stuart damage came too late. Vested interests were too powerful. Hereditary slavery had become embedded in the economic system of the American and Caribbean colonies. Britain would acquire the notorious "Asiento" at the Treaty of Utrecht in 1713, giving the South Sea Company the contract to supply the Spanish Empire with slaves. The cancer then metastasized.

In my view, the British are a little too cavalier about this saga, thinking the nation absolved because the practice was far away and not on island soil.

We tend not to be aware that King George III actively perpetuated the slave trade in the late 18th Century, vetoing laws by Virginia and other states trying to deter the inflow by raising import taxes on slaves. It is why Thomas Jefferson's original draft of the US Declaration of Independence contained a clause saying the king "has waged cruel war against human nature itself, violating its most sacred rights of life and liberty in the persons of a distant people who never offended him, captivating and carrying them into slavery in another hemisphere or to incur miserable death in their transportation thither. Determined to keep open a market where men should be bought and sold, he has prostituted his negative for suppressing every legislative attempt to prohibit or restrain this execrable commerce. And that this assemblage of horrors might want no fact of distinguished die, he is now exciting those very people to rise in arms among us."

And no, Jefferson was not a hyprocrite because he owned slaves. They were mortgaged, due to his family's crushing debts left from monetary deflation after the Seven Years War. They could not legally be freed.

America puts its own gloss on events. Simon Scharma argues in Rough Crossing that "theirs was a revolution, first and foremost, mobilized to protect slavery". His point is that the "Somerset" ruling of 1772 in England - "the state of slavery is so odious, that nothing can be suffered to support it: the black must be discharged" - set off ferment in the colonies, and the Dunsmore Proclamation in 1775 offering freedom to slaves who fought on the British side rallied planters to the revolution. Yet this can be pushed too far. The intellectual leaders of the American Revolution were Lockeans through and through, almost all tormented by slavery.

As Britain prepares to defend itself against the Caricom suit - so soon after settling torture claims from Mao Mao victims in Kenya - it is scarcely helps perhaps to argue that the slave system was built by monarchical tyranny, rather than by private citizens beyond control, as we like to think. It is worse, in some ways, if it was a state endeavour.

Yet it should be some comfort that Parliament and liberal government may be absolved, at least in part. Slavery was excresence of absolutism, not free commerce. We cannot hold our own in the world's bare-knuckled battle of ideas if we concede this cardinal point of history.