Nature's Evil

TEN

The Resources that Failed

Ideas are intertwined with emotions. Together, they turn intellectual history into a succession of stormy waves in which sublime aspirations collapse into disenchantments. Resource panic occurs when a particular sort of raw material is regarded as the be-all and end-all. When vital resources come to an end, wars and uprisings seem unavoidable. On the other hand, wars and revolutions can be explained with hindsight not by the greed or stupidity of rulers but by the exhaustion of the soil, oil or other vital supplies. In fact, this was the starting point for the social sciences. The rules of the genre are such that disenchantment in resource projects is usually connected with pivotal commodities – food, energy or even land. Resource panics have defined the modern period just as much as images of the end of the world defined the Middle Ages.

Anti-imperial France

Colonial adventures, financial pyramids and resource wars led to the formation of a post-catastrophic movement in political thought. Behind Cantillon’s work stood the bitter experience of the Irish colonial ‘plantations’. Smith’s work was his reply to England’s ‘project fit only for a nation of shopkeepers’, which impoverished Scotland. The teachings of the physiocrats responded to the shock that John Law’s projects had caused in France.

Opposed to the mercantile system and colonial speculations, the physiocrats rediscovered the traditional basis of the national economy – agriculture. In their opinion, only fertile land and peasant labour could generate capital. Everything else – industry, long-distance trade, luxury items and, ultimately, financial operations prey on the people who till the soil. Pioneering the mathematical modelling of economic exchange, François Quesnay’s Economic Table focused on wheat. A commodity unlike others, grain was central for the economy. Trade in grain ought to be free, but the physiocrats wanted to impose high duties on colonial trade and luxury items. Industry does not produce wealth – artisans and merchants belong to the ‘sterile’ class, and only agriculture is productive. Commerce should be limited to local markets which didn’t require custom posts and bureaucrats. An ‘economic sect’ centred in Versailles, the physiocrats laid some of the theoretical grounds for the French Revolution.

Quesnay was Louis XV’s physician, and he treated Madame de Pompadour, the king’s official mistress. It was the moment when the ladies of the beau monde took a great interest in agriculture, particularly in dairy farming. The marquise de Pompadour had several pavilions – hermitages – where well-groomed farmers kept their cows on Italian marble floors and stored cheese in Chinese porcelain. Quesnay prescribed fresh milk and promenades as a cure for the marquise’s fevers, hysteria and frigidity. Together, they held a ‘salon’ for physiocrat economists and enlightened philosophers. Their shared interest in the problems of grain production was akin to the interest that the ladies of the court took in dairies. The philosophers and the favourites discussed agricultural improvements, the rotation of crops, fertilisers and grain prices. 1 Disillusionment with colonial adventures led them to switch their interest from sugar to wheat and from coffee to milk. This was the early Versailles version of going back to one’s roots. But romantic contemplation did not prevent the colonial adventures continuing.

The physiocrats were very familiar with the disaster in the French West Indies. Some of them contributed to Raynal’s History of the Two Indies . The chevalier de Mirabeau, the younger brother of the more famous marquis, served as the governor of Guadeloupe during the Seven Years’ War. Not subject to common law, the French West Indies were ruled directly by the minister for the navy. The exclusif mercantile regime meant that planters could transport their sugar only on French ships and only to France. In the quarter century after the Seven Years’ War the black population of the French West Indies doubled: in 1789 there were as many slaves on these islands as in the whole of the American states. In that revolutionary year the French treasury received an eighth of its revenue from the plantations, a sum comparable to the poll tax paid by all the peasants in France. Created by distant slaves, this income stream reduced the dependence of the king on his peasants – a goal of every autocrat since the time of Gilgamesh. But smuggling and piracy flourished on the islands. The price of sugar was already falling. The planters, many of them Huguenots who had fled from France, were moving to the American continent. Both Mirabeau brothers believed that the root of evil was to be found at Versailles. While the younger Mirabeau was serving as governor in Guadeloupe, the elder one languished in a Paris prison because of his writings. Then the governor returned to France and shared his bitter experiences with the Quesnay circle. 2

The most important institution in the mercantile regime was customs – the direct source of governmental revenue connecting the Treasury with the colonies. It so happened that some of the leading intellectuals of the Enlightenment doubled as customs officials, and this service provided them with material for their critical theories. The father of English philosophy, John Locke, began his career in their majesties’ customs service, as secretary of the board of trade and plantations. Charles Davenant wrote his books on trade, war and colonies while employed over three decades as a senior excise officer. Adam Smith, a propagandist for free trade, served as a member of the Scottish Customs Commission. The father of Russian political thought, Alexander Radishchev, served as the head of customs in St Petersburg. Leaving us an apt summary of the complexity of the job, he wrote: ‘My satisfaction was transformed into indignation such as I feel when in summer time I walk down the customs pier and look at the ships that bring us the surplus of America and its precious products such as sugar, coffee, dyes and other things, not yet dry from the sweat, tears and blood that bathed them in their production.’ 3

Their colleague was Lemercier de La Rivière, the intendant in Martinique, the informal capital of the French West Indies. Fighting smuggling on the islands, de La Rivière relaxed the exclusive regime, permitting ships from neutral countries to unload at Martinique and exchange goods for sugar. Realising that free trade would destroy their monopoly, the planters got de La Rivière recalled to France. A free intellectual, de La Rivière then acted as a consultant to the governments of France, Russia and Poland – mostly without success. After his visit to St Petersburg in 1767, Catherine the Great wrote to Voltaire, ‘De La Rivière thought that we crawled on all fours and took upon himself the great labour of leaving Martinique in order to teach us to walk upright.’ 4 But Voltaire too taught her to walk upright by encouraging her to partition the Ottoman Empire. She would get Constantinople (now Istanbul), resurrect Byzantium as a new colony of the Russian Empire, and leave it to her grandson Constantin. Launching war after war, Catherine captured Crimea but failed to restore Byzantium. The empress, an avid reader of French novels, might have remembered that years earlier Voltaire had also left Constantinople to his Candide. Published in the same year (1759) as François Quesnay’s Economic Table , Voltaire’s Candide ends with the protagonist urging his own little salon to cultivate a garden. But it is in Constantinople, of all places, that Candide, an orphan from Westphalia, makes his garden.

The collapse of the Mississippi Company, the defeat in the Seven Years’ War, the loss of Canada, the crisis in the West Indies, and the missed opportunities on the Bosphorus – all this led the French physiocrats to drink milk, to seek the secrets of life in wheat prices, and to concentrate on the internal workings of the national economy. The state debts were the consequence of colonial wars for the sugar islands, beaver dams, and hazy promises. Tariffs and excises, the poll tax and the salt gabelle led to the uprising in Haiti and the taking of the Bastille. But the anti-imperial ideas of the French physiocrats found fertile ground in another country that had also liberated itself from its imperial masters.

Post-colonial America

For its founding fathers, America was a land of farmers rather than merchants or manufacturers. In Paris, Thomas Jefferson had exchanged ideas with the physiocrats. Upon his return to America, he led the faction of landowners who defended freedom of trade. Political equality would be based on the access to land and general participation in the running of the republic. This new America would be different from old Europe – no exchequer, no aristocracy, no guilds. For Jefferson, the landowners – many of them slave-owners as well – were the nation, and he did not want to see factories and workers in America. The authors of the constitution enshrined this preference for agriculture over industry and farmland over towns. This romantic outlook still defines American electoral laws. Jefferson understood that towns needed builders and villages needed blacksmiths, but he wished to leave large manufactures to Europe. Let the Old World exchange its iron and textile goods for American tobacco, fish and flour. Trade must be free; duties, the symbol of British mercantilism, were the source of evil. Jefferson’s library in Monticello contained books by the physiocrats and Adam Smith. Believing that state debt was an attribute of the mercantile system, Jefferson opposed the creation of a federal bank. The state must not go into debt, burdening future generations. The constitution must be re-examined every nineteen years and arable land must be redistributed with every generation. Jefferson corresponded with Alexander I of Russia and possibly knew about the redistribution of land with every generation which the Russian peasants practised (many romantically inclined thinkers loved this narrative). Thomas Paine was similarly concerned about future generations. ‘Man has no property in man; neither has any generation a property in the generations which are to follow.’ The abundance of land and unlimited immigration would create a middle class – a large group of well-to-do farmers, whose harvests and happiness depended solely on God. So wrote Benjamin Franklin, for whom the agrarian economy was linked with a puritan mistrust of luxury. 5

Refuting these Franco-American ideas, Alexander Hamilton, the secretary of the American Treasury, in 1791 sent Congress his Report on the Subject of Manufactures . He discussed in detail whether agriculture or industry was more productive and profitable. Productivity depends on the division of labour, the use of machines and efficient time management. All these aspects were more pertinent to manufacture. Agricultural labour is seasonal, while factories can work continuously. Finally, industry widens the demand for the products of agricultural labour. A country without mines and factories will become dependent on other countries which do have them. This report was the first systematic examination of natural resources in intellectual history. Hamilton discussed in detail many resources, from leather to gunpowder, from iron to paper, from hemp to silk, and from cotton to coal. Writing about the new branches of industry that needed government support, he used such expressions as ‘infant industry’ or even ‘embryonic industry’. Later, this approach inspired Friedrich List and other theoreticians of industrial policy. It was Hamilton who came up with the image of the state-as-educator or government-as-gardener, which would create the favourable conditions for the growth of immature, childlike branches of industry.

Malthus

If Adam Smith was delighted by the new era, arguing that the division of labour and free trade would change the sinful world for the better, Robert Malthus condemned it on behalf of his science. The laws of human nature cannot be changed. The first law is that man must eat. The second is that he has a passion for reproducing. Neither law was new – it was Malthus’s discovery of their incompatibility that was shocking. If there is enough food for everyone, the population will double in twenty-five years, as it did in the American colonies. For this, land must be infinitely available. When there is a limit on land, the growth of the population will always outpace the growth of the productivity of labour.

John Maynard Keynes called Malthus’s Essay on the Principle of Population ‘a work of youthful genius’: 6 most of this book was not about hunger but about love. God commanded Adam and Eve to ‘be fruitful and multiply’ in order to populate the earth; for Malthus, this was also the mission of the empire which had colonised the New World. He disagreed with the philosopher William Godwin, who taught, with what was considered a sign of optimism, that the passion between the sexes may in time be extinguished and that this is the way for improving people and society (ironically, Godwin was the husband of the feminist writer Mary Wollstonecraft and the father of Mary Shelley, the author of Frankenstein ). Ever since original sin, wrote Malthus, ‘towards the extinction of the passion between the sexes, no observable progress whatever has hitherto been made.’ If it wasn’t for sexual passion and the parental cares arising from it, man would remain ‘inert, sluggish, and averse from labour’. People only till the soil when compelled by sex and concerned about the fruits of that passion. This is a general law – it ‘undoubtedly produces much partial evil, but … produces a great overbalance of good.’ 7

Malthus’s dispute with William Godwin and Adam Smith was based on their different understanding of economic value, but behind this lay a difference in the way they understood people. Smith wrote about the wealth of nations, by which he meant not peoples but states. In contrast, Malthus understood the population as a multitude – a certain number of individuals, rich or poor, carrying out trade and reproducing. In his interest in population statistics, Malthus was ahead of Smith and many nineteenth-century economists. Godwin was a Calvinist minister, Malthus an Anglican priest, and Smith a Presbyterian layman. All three critically observed the British Empire colonising overseas territories which, in some cases, left the empire. While Godwin later switched to book publishing, the other two had careers directly connected to imperial policies: Smith had a lucrative post on the Scottish Customs Committee, while Malthus became a professor of history and political economy at the East India Company College. Neither Smith nor Malthus visited the overseas colonies, but both men knew adjacent colonial possessions very well. For Smith this was his native Scotland, for Malthus Ireland, a subject of scholarly interest. And, for both of them, distant America was an intriguing example of the new imperial economy. Wars were fought over colonies, garrisons were quartered there, flotillas sailed for their sake. Why was all this done? What could justify the expense? From Smith to Bentham and his Manchester followers, liberalism was the critical theory of empire.

News from America was the main source for Malthus’s Essay . He referred to Franklin, the Abbé Raynal, Captain Cook, Humboldt and other explorers and migrants. Most of these travel accounts were remarkable for their belief in progress, censure of slavery, distrust of the Spanish, and admiration for the American colonies. Malthus wrote that the American rate of growth could never be transferred to the British Isles, even in one’s wildest dreams. A proponent of food security, as we would call it now, he calculated that imported grain, brought from America, Russia and the Baltic lands, fed about 2 million Britons, more than 20 per cent of the population. Malthus applauded when in 1813 Parliament passed the first tranche of the Corn Laws, limiting the import of grain. Corn prices soared and grain production increased. Nobody has expressed resource panic better than Malthus. He was terrified by the prospect of a grain deficit just when the British economy was becoming less and less dependent on its grain. Always concerned about grain, Malthus failed to take account of the large supplies of other commodities that Great Britain received from her colonies in the Atlantic. The main imported resource, sugar, guaranteed the British a great quantity of cheap calories. But sugar is not mentioned in the Essay , nor does Malthus mention the slave plantations in the British Atlantic.

However, his connection to the tropical world of slavery and sugar was very strong. His paternal grandfather, Sydenham Malthus, was a director of the South Sea Company; appointed in 1741, well after the notorious bubble, he could have been a treasure house of colourful memories, though he died before Robert was born. But, during Robert’s lifetime, the Malthus family still owned a large plantation in Jamaica. Robert willingly kept in touch with his relatives, the owners of hundreds of slaves, and he inherited wealth derived from the plantation. 8 Jane Austen, who was also dependent on the slave trade of the West Indies, often – and sometimes critically – mentioned news from the sugar plantations in her novels. 9 It is difficult to find such a theme in Malthus.

Malthus’s Essay made him famous; but he continued to teach and write for several decades afterwards, setting out his conclusions in a later book, Principles of Political Economy (1820). Here he was able to build on the works of his friend David Ricardo and the concept of rent. For Malthus, rent represented the most valuable characteristic of land – its ability to feed more people than worked on it. Ricardo’s ‘classical theory’ purged economics of anthropology and demography; Malthus recombined them, as John Maynard Keynes did again a hundred years later. One of the key problems discussed in Political Economy was ‘indolence’. Malthus drew a sad parallel between Mexico and Ireland: where foodstuffs were easily available, ‘indolence and slackness’ flourished. Like Mexican maize, the Irish potato was more productive than cereal crops. As a result, Ireland could support ‘a much greater population than it [could] employ’. For Malthus, this discrepancy is the route to idleness. The flow of capital will hardly remedy the situation; the main problem, he says, lies not in external capital but in internal demand. ‘The tastes and habits … are extremely slow in changing.’ Until they change, the import of capital for the building of factories and similar projects is doomed to failure. 10

The natural resources of Ireland are greater than those of England, wrote Malthus, and with the necessary development Ireland could be ‘beyond comparison richer than England’. This economic growth required ‘such a change in the tastes and habits of the lower classes … as would give [them] a greater will and power to purchase domestic manufactures and foreign commodities.’ 11 A comparative analysis of New Spain and British Ireland leads to a final conclusion: the poverty of fertile countries, writes Malthus, is connected to the lack of culture and civilisation. Only a ‘change in the tastes and habits of the lower classes’ could create an effective demand for manufactured goods. Thus the Enlightenment finally formulated its economic role as the formation of habits and the education of tastes. Consumption follows culture, trade follows consumption, production follows trade. In contrast, a surplus of capital – the import of silver – inhibits growth. Malthus pre-empts the conclusions to which economists would come 150 years later. If the supply of capital (for example, as a result of the export of guano or oil) exceeds internal demand, it is destructive to the country. Out of all the conditions for development, ‘effectual demand’ plays the leading role, and this demand depends on the cultural inclinations of the lower classes. Keynes singled out this idea as the most important of Malthus’s contributions.

Malthus sees the inability of Spanish America and British Ireland to cope with ‘indolence’ as a vicious circle. By the end of the nineteenth century, a similar conflict between ‘indolent smallholdings’ that survived on potatoes and grain trading enterprises arose again in eastern Prussia and western Poland. The German colonisers considered the Slav villages unproductive; disposing of state aid, the settlers exploited or ousted the Polish peasants just as the English had done to the Irish. The young sociologist Max Weber provided the scientific justification for this ‘internal colonisation’ (as this process was called by the Prussians). His early writings contained racist constructions along the lines of Slav indolence. 12

A less gifted writer than Hume or Smith, Malthus had broader historic experience. The further the reader delves into Principles of Political Economy , the more he sees Malthus’s sympathy for the ‘labouring classes’ and his distrust of the rich landowners. The wealth of a nation depends not only on the creation of capital but also on its distribution. ‘A very large proprietor, surrounded by very poor peasants, presents a distribution of property most unfavourable to effectual demand.’ 13 No matter how refined the owner of several estates, he is not going to renovate his castle every year. But if he gives out land to forty farmers, they could create demand by giving work to a great number of artisans and traders. The greatest secret of the wealth of nations stays with the ‘middle classes’; only they are capable of creating effectual demand, paying for goods and services with their own work. Thus Malthus, the prophet of crises and catastrophes, at the end of his life discovered the economic significance of the middle class.

In his appreciation of Malthus, Keynes compared him to Ricardo, whose formal laws of price formation defined the future of economics. With no hesitation, Keynes preferred the ‘vaguer intuitions of Malthus’ to Ricardo’s simplifying analytics: ‘by taking up the tale much nearer its conclusion, [Malthus] had a firmer hold on what may be expected in the real world.’ While Ricardo constrained economics ‘in an artificial groove’, wrote Keynes, Malthus had ‘disclosed a Devil’ of critical thought. Economic theories had practical consequences. ‘If only Malthus, instead of Ricardo, had been the parent stem from which nineteenth-century economics proceeded, what a much wiser and richer place the world would be to-day!’ 14

Jevons

Refuting Malthus’s predictions, the aggregate product of the fields, mines and colonies of the British Empire grew so rapidly that it far outstripped the population’s growth. The main source of this development was coal. When Malthus wrote his Essay , a thousand Newcomen engines were already at work in English mines and James Watt had patented his new engine. Malthus was not interested in coal and had nothing to say about steam; but, in his time, coal was about to play as significant a role in the English economy as grain.

When coal definitively overtook grain, the Malthusian logic of resource panic was promptly transferred to coal. In 1865 the economist William Stanley Jevons wrote The Coal Question , in which he warned of the imminent exhaustion of coal supplies in the British Isles. According to Jevons, between 1800 and 1865 the population of England had doubled but the production of coal has increased by a factor of eight. Since the beginning of the nineteenth century the population had been growing by 10 per cent every ten years, and the consumption of foodstuffs in England had grown correspondingly. But the urban population was growing much faster – it was doubling every twenty-eight years, almost as rapidly as the population of North America had been growing in the time of Malthus. The amount of coal being extracted was growing even more quickly, wrote Jevons. It was not the increase in grain production but the growth of the coal industry which gave rise to the unprecedented expansion of English towns. Digging deep into the earth to create coal mines was like exploring the American frontier, or even ‘the further shore of our Black Indies’. Or, no less triumphally: ‘We are like settlers spreading in a rich new country of which the boundaries are as yet unknown and unfelt.’ 15 Jevons states that the development of industry and the switch to free trade offers a way out of the Malthusian trap: bread is now exchanged for goods produced with the help of coal. But then Jevons takes a step back. The end of coal is inevitable and imminent. Reserves are finite, and there is a limit to how deep mines can go; every metre deeper made coal more dangerous to extract and more expensive. Neither could the efficiency of coal combustion develop indefinitely. Granted, steam engines – mine pumps, railway engines, river steamers, steam-powered ploughs – became more efficient as time went on: they consumed less coal per unit of work produced. But there were more and more such machines and the country needed more and more coal. At this point Jevons formulated a new paradox: every step that increases the efficiency of a natural resource only increases its consumption.

Comparing coal with grain and his doctrine of exhaustion with Malthus’s, Jevons argued that a coal crisis would be more devastating. The productivity of farmers’ fields could reach a plateau but they would nevertheless continue to yield a harvest. An exhausted mine is a different case altogether. Giving less coal but requiring more labour, it soon becomes unprofitable. At this point, the owner stops maintaining it, and the mine gets flooded or collapses; Jevons knew of such cases. In general, he predicted an imminent halt to economic growth. ‘We cannot indeed always be doubling the length of our railways, the magnitude of our ships, and bridges, and factories.’ 16

If coal runs out, what will replace it? Jevons runs through the alternatives and finds little comfort. He talks about wind power, the power of water and tides, and discusses peat; all these things have their good points, but they are unreliable, limited to specific places, and are no match for coal. He knew about oil and that it had the potential to outperform coal. All the same, for him oil was just a liquid form of coal. If coal runs out, there won’t be oil, thought Jevons. Perhaps people would learn to harvest the sun’s energy by as yet unknown means, or would obtain heat from completely new sources. But he was pessimistic on this point as well: when the sun’s rays replaced coal, England would lose its competitive advantages.

Keynes

Unlike the French physiocrats, the British political economists – Smith, Malthus, Ricardo – were at work precisely in the era and the country of coal. But, even while using its heat and energy, they preferred to think of themselves as living in an organic, grain-focused society. It was Jevons who saved economics from its ‘artificial groove’ by addressing coal. Keynes wrote about Jevons with unusual warmth and saw him as an important predecessor. He started his memorial essay with the fact that Jevons was born in the year after Malthus’s death; Keynes delicately forbore from mentioning that he himself was born the year after Jevons’s death. 17 All three shared the feeling that the resources used by humankind are limited and close to exhaustion, and that the analysis of these resources, in relation to labour, is the very essence of economic science. In Keynes’s words, this ‘extraordinary continuity of feeling ’ was ‘profoundly in the English tradition of humane science’. 18

It was not only about feeling . A Cambridge professor whose practical experience started with the administration of Indian finances, Keynes saw that his career aligned with this ‘English tradition’. He took part in the Paris Peace Conference in 1919, when the victorious states met to determine the fate of Europe after the First World War. In his book about the economic consequences of the Versailles Treaty, Keynes predicted a Malthusian crisis on a European scale. At the end of the nineteenth century, continental Europe had lost its self-sufficiency in food production in the same way that England had lost it about a century earlier. The population had grown, and Europe, like England, was able to buy increasing amounts of agricultural produce in exchange for its industrial goods. Every decade, a unit of labour invested in industry increased its purchasing power in relation to foodstuffs; here Keynes was reproducing Cantillon’s old idea, which had been recently recovered by Jevons (Prebisch and Singer would in turn reproduce these ideas of Keynes). His American counterparts Richard T. Ely and Thorstein Veblen were close to Keynes in their critical approach to land, resources and progress. But the peaceful end to the nineteenth century, which Keynes called an economic Eldorado, engendered a new, post-utilitarian generation. Nothing was more foreign to Keynes than their formalised optimism. It was the Yale economist Irving Fisher who started this neo-Panglossian canon by formulating still another ‘equilibrium theory’. On 16 October 1929, Fisher wrote in the New York Times that stock prices had ‘reached what looks like a permanently high plateau.’ The stock market collapsed on 24 October – the Great Depression had arrived.

European growth, explained Keynes, was possible only because both America and Russia supplied it with grain. But their own populations were growing even faster, with the result that the great powers to the West and the East of Europe could no longer feed the Old World. A brilliant prognostician, Keynes saw the new war in the making. But his Malthusian forecast for twentieth-century agriculture was wrong. Just as Malthus had failed to see the power of coal, so Keynes failed to see the full power of oil. Not long before the First World War, Fritz Haber, a Polish Jew and German patriot, succeeded in synthesising ammonia. Haber’s process gave rise to the first nitrogen fertilisers and new kinds of explosives. Working on munitions, he invented the first chemical weapons. Haber oversaw the chlorine gas attack at Ypres in 1915 and later invented the cyanide-based pesticide Zyklon B, which the Nazis used in the gas chambers. His wife and son both committed suicide, but half of humanity today is fed on products grown with the help of the Haber process. However, growing this food takes a great deal of energy: a kilogram of ammonium nitrate fertiliser consumes an equal amount of petroleum. The joint actions of a fertiliser, produced from air and natural gas, and machines that run on petroleum have liberated humanity from the threat of hunger. The inventions of Fritz Haber and Henry Ford carried the day over the fears of Malthus and Jevons.

Observing events, Keynes asserted that the prices of raw materials were more volatile – changing more abruptly and more frequently – than the prices of manufactured goods, which incorporate the regulated value of labour. In 1938, Keynes analysed the commodity prices over the previous ten years: the price of rubber was notoriously unstable, and every year it fluctuated, on average, by 96 per cent between maximum and minimum; but wheat also fluctuated by 70 per cent every year, and even cotton by 42 per cent. Keynes saw this volatility as a major evil. It could lead to a recession or war and should be averted by international control. For this purpose, in 1942 he proposed to create a new organisation under the auspices of the League of Nations, which he named the Commod Control. Referring to the ancient Chinese concept of the ‘ever-normal granary’, Keynes revealed the historical roots of his idea. The Commod Control would have been much more than a cartel; this organisation would have had its own storage facilities and special executive committees for every commodity – a rubber committee, a wheat committee, etc. These committees would have defined commodity prices, storage levels and national quotas; the price fluctuations would have been locked within 20 per cent, with price corridors reconsidered annually. The rest of the economy would have stayed free of administrative control. Essentially, Keynes was thinking about a bicameral economy, which would have kept a relatively free trade regime for wages (though they would have been controlled by trade unions) and the products of labour but would have established a global government run the primary commodities. Its ‘buffer stocks’ of raw materials would have prevented economic cycles. Responding to criticisms, Keynes agreed that his plan overlapped partially with what the Soviet and even the Nazi authorities proposed to do with the global economy if they had won their wars. 19

The Commod Control was never implemented, but Keynes’s predictions about the disastrous consequences of the Versailles Treaty were fulfilled. Hitler in his early days, while in prison in Munich, started to plan the colonisation of Poland and Ukraine. Deprived of her colonies and hungry for raw materials, Germany would have to acquire new ‘Lebensraum ’ – living space, colonial lands – in Eastern Europe. Hitler was particularly interested in grain. Even coal, also forfeited by Germany under the Versailles Treaty, worried him less than grain. In his early writings he barely mentioned oil, which would later define the course of his war. Hitler imagined himself the successor of Frederick the Great, patron of science and crafts. But he didn’t believe in science and, later, considered nitrogen fertilisers as some nonsense invented by Jews. He didn’t believe in trade either, thinking that this nonsense was invented by the British. ‘Our Mississippi will be the Volga, and not the Niger,’ said Hitler: the American method of acquiring Lebensraum by quick and brutal means was the ideal that was to be reproduced in the expanses of Eurasia. Appropriating the idea of internal colonisation developed under Bismarck, Hitler dreamt of a new frontier that German settlers would create in the centre of the continent. The Jews would be exterminated, while the Slavs in this internal America would be as submissive as the ‘Indians’. Supplying the fatherland with raw materials, German settlers would move the frontier further to the east as needed.

In the interwar period Germany did have resource difficulties that were created by the Versailles Treaty. Creating poverty and unemployment, the loss of the coal basins in the Ruhr, the shortage of metals and the food crisis helped Hitler’s rise to power. But his colonial vision was at odds with his own interests. 20 Even if he confiscated all stocks of Polish and Ukrainian wheat, they could not replace the other resources that were necessary for the German Reich – oil, rubber, cotton and much else. Direct rule over the Soviet expanses would have involved resettling millions of Germans there and supplying them with provisions. Meanwhile, right up to the very beginning of the German–Soviet war, the Soviet Union diligently supplied Germany with every possible sort of raw material – grain, timber, oil, fur, cotton, coking coal, iron ore, rare metals – in exchange for ready-made goods and weapons produced by German industries. Trade was free in the sense that the German and Soviet representatives chose goods, bargained and signed contracts on the basis of world prices. There is no doubt that Stalin provided Hitler with more resources than Hitler could have extracted from occupied territories. Until the Nazis attacked the Soviet Union and deprived themselves of their source of supplies, they had no grounds for a resource panic. Trade is cheaper than war, but dictators never understand that. Their panic is a false but self-fulfilling prophesy.

Notes

1 Beer, An Inquiry into Physiocracy ; Kaplan, Bread, Politics and Political Economy ; Martin, Dairy Queens ; Whatmore, Republicanism and the French Revolution . 2 Røge, Economistes and the Reinvention of Empire ; Popkin, ‘Saint-Domingue, slavery, and the origins of the French Revolution’. 3 Radishchev, A Journey from St. Petersburg to Moscow , p. 157; emphasis added. 4 Wolff, Inventing Eastern Europe , p. 223; Røge, ‘Legal despotism and enlightened reform in the Îles du Vent’; Herencia, ‘Le séjour du physiocrate Lemercier de La Rivière en Russie’. 5 Albertone, National Identity and the Agrarian Republic ; Albertone, ‘Physiocracy in the eighteenth-century America’. 6 Keynes, ‘Thomas Robert Malthus’, in Collected Writings , Vol. 10, pp. 71–108, at p. 86. 7 Malthus, An Essay on the Principle of Population , pp. 68, 114. 8 Bashford and Chaplin, The New Worlds of Thomas Robert Malthus . 9 Said, ‘Jane Austen and empire’. 10 Malthus, Principles of Political Economy , pp. 348–9. 11 Ibid., 349–50. 12 Zimmerman, Alabama in Africa , pp. 101–4. 13 Malthus, An Essay on the Principle of Population , p. 373. 14 Keynes, ‘Thomas Robert Malthus’, pp. 86, 88, 100. 15 Jevons, The Coal Question , pp. 178–9. 16 Ibid., p. 174. 17 Keynes, ‘William Stanley Jevons’, in Collected Writings , Vol. 10, pp. 109–60, at p. 109. 18 Keynes, ‘Thomas Robert Malthus’, p. 86. 19 Keynes, ‘Commodity policy’, in Collected Writings , Vol. 27, pp. 105–200. 20 Snyder, Black Earth .