Colonial exploitation: some definitions

As was the case in many other former colonies, in Indonesia many people in the immediate post-independence era blamed most, if not all, of their problems on the legacy bequeathed to them by the colonial power. Many politicians, civil servants, academics and journalists took it as axiomatic that the Dutch had ‘exploited the wealth of the Indies’ and that this exploitation was the reason for the country's poverty. But what was meant by colonial exploitation? Landes (1961) suggested that a useful definition would link colonial exploitation to coercion, which leads to the employment of workers at wages lower than would prevail in a free labour market, or the purchase of products at prices lower than would obtain in free markets. More generally, according to Landes, colonial exploitation must imply constraints on the free operation of markets within the colonial territory.

This is a definition which has in fact been widely used in the literature in the decades since Landes suggested it; its relevance to Indonesia will be further discussed later. It can be extended to include the use of colonial markets as protected outlets for the surplus production of industries in the metropolitan countries. By the end of the nineteenth century, radical critics of Western colonialism attributed it at least partly to the need of industrial capitalism for ever larger markets. Metropolitan politicians wanting to justify colonial adventures to sceptical domestic electorates often used the argument that colonies could serve as captive markets for home produce (Landes 1998: 429–30). To what extent industrialisation in the metropolitan economies depended on colonial outlets remains a contested issue, with some economic historians denying the importance of colonial markets as an important factor in the industrial growth of the metropole (Bairoch 1993: Chapter 6; Lewis 1978: 30).

What seems more certain is that in most colonies, the metropolitan powers had little interest in fostering industrial growth, and indeed often pursued policies which led to de-industrialisation. The most famous example is the demise of the textile industry in India in the nineteenth century, which lost not only most of its domestic market to foreign competition, but also its export markets. Williamson (2011: 64–5) has argued that similar de-industrialisation occurred in the Ottoman Empire, Indonesia and Mexico.