the role of capitalism in jamaica's development

The Role of Capitalism in Jamaica's DevelopmentAuthor(s): RALPH THOMPSONSource: Caribbean Quarterly, Vol. 12, No. 2 (June, 1966), pp. 22-28Published by: University of the West Indies and Caribbean QuarterlyStable URL: http://www.jstor.org/stable/40652963 .

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The Role of Capitalism In Jamaica's Development

I DEFINE capitalism as that economic system in which the means of production are owned largely by individuals or companies. A capitalist is a person who produces for his own use only Incidentally and primarily .for sale to others. We must be careful about definitions, however. They are only attempts in the logical order to describe and to categorise something which has its own existence in the objective order. We must not become slaves of labels. No matter how eruditely astronomers talk about galaxies and planets, distinguishing the Big Dipper and the Milky Way, there are really no such systerns in nature - there are only celestial bodies, going their celestial way regardless of how we think about them.

Furthermore I hope to show that as a system capitalism has its own internal dynamic of change so that no one definition can really capture its evolving essence.

Jamaica became a colony of England at a time when England was becoming a modern capitalistic society. One of the objects of the expedition which began the conquest of Jamaica was to enforce in the colonies of the Eastern Caribbean a rigid observance of the recent Act of Navigation; and the object of the Act of Navigation was to enable England to catch up with the Dutch.

When England or France looked out on the world 300 years ago, they moist have felt much as an "underdeveloped" country does today, seeing the "developed" countries regulating investment, controlling ciedit, monopolising know-how, commanding the supply of capital goods and owning the right of access to the basic raw materials of the world. And Holland, as any London merchant would have admitted, was a far more serious obstacle than Spain to the prosperity of Eîng- land because it had developed the techniques of capitalism.

This was not due to the natural resources of Holland. Its area was about two-thirds of that of the Dominican Republic today and its population about the sa'me; apart from agricultural land (two-thirds of which was poor) it hardly had any resources.

If you were to reverse Rip Van Winkle's feat and wake up to- morrow in 17th century Amsterdam the outlines of business life would be familiar. The Dutch traded in futures, had a sort of bank rate, ran a stock exchange, did nearly all their business with bits of paper instead of in hard cash. You would feel less at home in Cromwell's London where businessmen were often sorely puzzled at what the

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Dutch did, as when a man bought a crop that did not exist from a man who didn't own it for sale to someone who would never see it. Holland had become the centre of world commerce and finance by intelligent use of the "modern" instruments of 17th century capitalism.

Since Jamaica was developed as a colony at the time when Britain was growing up as a modern capitalistic society, one would expect Jamaica itself to grow up as such a society. It appears to me, however, that it did not. Its organisation was primitive. It depended on British merchants for credit, on British shipping to transport its major exports, on British underwriters for its insurance. The surplus it produced, its potential new capital, went largely to Britain and new capital coming in from, abroad went as a rule into sugar, the crop that Britain favoured.

This was in fact "economic colonialism'1. The economy was limited to production of goods desired by the imperial commercial system. Since one of the commodities desired by Britain was sugar, Ja'maica concentrated on that; and since sugar required a large labour force, the slave plantation became the normal method of production. This meant in turn that there were few local industries and only a limited retail trade since the great mass of population had only a very small disposable income.

The capitalism of slavery, then, was all along a very backward business and the role of capitalism was limited to the financing and direction of a limited range of operations largely from Britain. The local capitalist, whether planter or merchant, could imake only a limited number of decisions. The Jamaican planter could not sell in Hamburg if the price of sugar was better there than in London, nor decide to give up sugar and grow indigo because this would compete with the East India Company's supplies from India.

After slavery was abolished a more natural economy might have been expected to have evolved, particularly as Britain abandoned protection and so widened the local capitalist's range of choice in decision- mo king. Great efforts were in fact made to modernise. But capital •for the Railway was almost entirely British and very often planters remained tied to British merchants; so that they suffered the disadvantage of free trade (exposure to world prices) together with the disadvantage of the old system, namely lack of freedom of choice. As a matter of fact, capital investment in 1850 was probably lower than in 1830.

With Crown Colony government, however, the rate and volume of investment rose sharply. This was due to the banana business, increased public works expenditure, confidence felt by foreign investors in the stability of the government, improved housing and the revival of sugar aiter the 1914 war. Between 1870 and 1890 the volume of investment increased considerably. It has been estimated that capital investment in 1890 not only had twice the volume it had in 1870 but

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was a higher percentage of Gross Domestic Product. Between 1890 and 1910 the increase continued; capital investment in 1910 was 50% higher than in 1890. In 1930 it was twice the 1910 figure.

What accounts -for this progress? There were two sources of increased investment One was local saving as when a Kingston firm went in for sugar production. But most of it was brought in from abroad whether through large enterprises like the Boston Fruit Com- pany or by settlers who bought estates. There were foreign entre- preneurs supplying goods and services; for example trains, electricity, telephones, and gasolene. A good deal of money caime in through fire insurance collected after the 1907 earthquake.

In addition, the Government followed what were for the time bold policies of public investment based on taxes servicing loans floated in London or sometimes on grants and loans from the British Treasury. Acquisition and extension of the railway, a new road system with good bridges, the Rio Cobre Irrigation Scheme, «the Cockpit Scheme and the telegraph service are outstanding examples of public investment with a direot effect on the economy. Private capital was the chief source of funds for agricultural development and it was also the source of funds for industrial undertakings which date from this period- cigars, logwood, coconut products, ice, biscuits.

Probably private investment represented an increasing proportion of total investment in 1870 to 1930. Its expansion was marked by the wider adoption of typical contemporary capitalist institutions ( the limited company, the building society) and wider use of others (banks, insurance companies) , and by the rise of a construction industry after the 1907 earthquake. A form of capitalism was evolving with a number of unique aspects. When sugar revived after World War I, for example, the process culminated in the cartelisation of the industry under Government regulation in 1929.

Having traced the advance of capitalist development in 1930 and knowing from history that by 1937 the system was beginning fco break down, we must look back again in an attempt to discover whether the system was defective in itself or whether there were present other factors to which it had to adjust. One of the most important factors to my mind was the continuing patron and client relationship which persisted after the abolition of slavery and which produced a new cultural obstacle in the normal path of capitalist development.

Before emancipation the slave owner classified his slaves, like his

cattle, as part of the stock. But it was not in practice possible to treat them as stock. The laws gave them increasing protection and in addition the slave-owner, as a matter of convenience, wrapped the hard points of slavery in a web of customary rights and expecta- tions. Thus, when Simon Taylor, who was by no means an elevated character, wanted to take same land back from his slaves to expand his acreage under cane in St. Thomas, he paid his slaves £1 for every coconut tree they had planted on the land.

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Hence there existed between master and slave a patron and client relationship not defined by law. When a slave was set free, in many cases he continued to think of himself as a client of his former master. This even applied in the towns. If a slave carpenter, for example, became free he probably expected his former master to become his employer or to find him jobs with other people.

When slavery came to an end some estate owners attempted to break this relationship in the most brutal way by charging rent «for the old "negro houses'1 but most encouraged its continuance. Many owners allocated land to their ex-slaves and expected them to grow cane for their factories.

Many freemen formed settlements in the hills and, just as the slaves had grown foodstuffs and sold their surplus, so these settlements grew the country's ground provisions, and coffee and cocoa increasingly became peasant rather than estate crops. Thus there were now two separate types of agriculture; capitalist agriculture with a highly dependent work-force and peasant agriculture. The banana was a small 'man's crop as well as an estate crop, and for a while it looked as if the spread of bananas would help to break up the cultural pa/tron and client relationship.

However, even in the case of the banana a new reason for de- pendence appeared. Competitive buying for the companies meant that there had to be buying agents who were often estate owners. Thus the small grower came to regard the agent as his patron. In short the free contractual relationship of classical capitalism was not established.

It appears also that for cultural reasons Jamaica developed a type of capitalist who did not operate exclusively from the profit motive. The estate was regarded by owner and worker as much more than an economic enterprise. Many of the white immigrants who came in after 1865 were looking for a dignified life in a pleasant climate rather than maximum profits. Economic betterment of the masses through increased farm income seemed less important even to the worker than some insurance against calamity. The "good" estate worker was not the man who put all his land under cultivation and employed as many people as possible for as long as possible but rather the man who allowed his poor neighbour (whether regular workers for him or not) to collect firewood, mangoes and breadfruit; to burn coal, to draw water from his spring and, in desperate droughts, to take buckets to his cattle ponds. The boy who looked after the cows might be given milk to take home in the evening. The estate owner would drive a sick person to the doctor. His wife might train small farmers' daugh- ters as servants so that they looked after a home of their own better than others.

The masses tended to see such a system as essential to survival. But it was not a genuine capitalist system at all and was as out of date by 1900 as the English system had been by comparison with the Dutch two centuries before.

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The rural population began its flight to Kingston, but even King- ston capitalism was affected by the patron and client relationship. The owning and managerial classes often brought estate ideas to bear on urban occupations, and the manager of a factory might think of a foreman as an estate owner thought oí his headman. Employment practices were crude.

Kingston capitalism retained old-fashioned characteristics. There were of course a number of non-Jamaican firms operating in Jamaica but the average Jamaican business, even though a limited company, was usually a family undertaking. Banking expanded, largely through the Bank of Nova Scotia, but credit policies were narrow.

By 1937 therefore the danger signs were obvious. The system was breaking down as a means of providing the masses as well as clerical workers with steady livelihood and reasonable prospects. Capital investment in the private sector was too small and there were too »many people. The banana industry was running down, and even when Tate & Lyle decided to invest £li million in sugar this contributed to the general unrest of 1938 by building up new dissatisfactions and new disappointments as some people benefitted and more did not.

Had the time come for a new system or did capitalism have the inner resilience to modify itself to the needs oí the people? The unrest of 1938 appears in historical perspective to have been a genuine protest of the masses regarding themselves collectively as "labour". Many people regarded it as a revolt against estate feudalism; some thought of it as a revolt against capitalism. In fact it represented demands which could be met only in one way- by tremendously increased activity in the private sector and by Government action, including heavy expenditure to facilitate such greater activity in the private sector. And so Jamaica entered on its third phase of capitalist activity.

The post-war development of Jamaica has been marked by the increasing importance of the role of private capital and also by increased State activity through higher public investment, through planning and through various forms of intervention in the economy (such as tax concessions and protection).

In the thirties, capital investment, though too low, was higher in volume than for the previous century: it may have averaged £2 million and been about 10% of Gross Domestic Product, with private capital representing about three quarters of the total. Today the gross investment appears to be over £50 million representing from a fifth to a fourth of Gross Domestic Product with private capital contribut- ing about two-thirds. The public investment consists both of creation of assets of direct economic value and the building of schools, hos-

pitals, etc. It is obvious that a large proportion of the Gross Domestic Product goes into capital as the changing face of Kingston indicates. The private sector expends vast sums on factories, office buildings and

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residential buildings. In 1964 the output of the construction and installa- tion sector - including public activities - was some £30 million.

The Gross Domestic Product is now 12 or 13 times what it was in the thirties. This is due partly to the decline in the value of money. But Jamaica has also genuinely increased its output to much more than anything dreamed of in 1937. To do this has required a high rate of capital investment operating along the lines of modern capitalism.

A large proportion of this capital still comes from abroad: it is represented by machinery and buildings which without such foreign capital would not be there. It is represented by large masses of work- ing capital. Some of the private capital represents private savings, some the "ploughing back" of profits and a large amount consists of depreciation funds re-invested.

It has been Canadian and American capital which has trans- formed the economy by making bauxite and alumina the principal exports instead of sugar and rum. Jamaica is now the world's largest bauxite exporter. This has meant the appearance of new ports and new revenue. Bauxite has also had the curious side-effect of sweeping away a great part of the old pen-keeping economy. Two bauxite companies are now the chief cattle-breeders of the country and one of them the largest producer of ortaniques.

The tourist trade has been built up since World War II to a £16 million business by private capital (much of it local) with Government aid and encouragement. In fact Government's part in expansion of the economy has lain largely in enabling private capital to (function efficiently. The creation of new institutions- the Bank of Jamaica and various statutory bodies- has undoubtedly been part of a process of intelligent modernisation. We have reached the stage of capitalistic sophistication where a rudimentary stock-exchange exists, and more and more local savings are being channelled into private equities- thus making ownership truly ""communal" within the capitalistic system.

I (make no claim that the present evolution of the system is perfect. In fact there is a good deal of criticism of it from various sources. It is claimed that Jamaica is selling its resources to the foreigner; that the increase in national wealth is not accompanied by general betterment of the masses; that capitalist agriculture is leaving the small farmer far behind; that the system remains a closed one in which there is not really equal opportunity for all.

These criticisms must be heeded for there is much to be learned from them. To a great extent, however, these are criticisms not of the capitalistic system but of the tough conservatisms of the whole society. No economic system can be divorced from human personality and the cultural, sociological and psychological factors of the age. And change for change sake is as bad philosophically as the worse kind of reactionary thinking.

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All modern economic systems, including capitalism, are concerned with accomplishing a fair distribution of wealth. Only capitalism, however, is rooted in the historical reality that one first has to have something before one can start distributing it. Other systems are usually only advocated after capitalism has accomplished the "that" which is to be distributed.

Jamaica 'must certainly depend less on foreign capital. But it remains clear that neither the bauxite industry nor tourism could have been set going without foreign know-how, contacts and capital; that the expansion of sugar to 5 or 6 times the scale of the "thirties)" was set going by British capital in 1937; that Kingston never had a good bus service till foreign capital stepped in; that all the numerous factories started by foreign capital would not have been started if we had waited for local capital accumulation.

It is true that the betterment of the masses is not as dramatic as one would like. Nonetheless a great deal has been effected and the growth of public revenue means that the State can provide more by way of education and social services.

It is true that the small farmer has lagged behind; but it would seeto that this is not because of private capitalism but precisely because the small farmer has not been able to work himself into the third phase oí Jamaican capitalism.

The truth might well be that in a small country the process of growing richer involves greater effort and, unfortunately, there is a marked tendency not to make full effort. We would rather wait for the discovery of some new economic system to replace capitalism by making "money grow on trees". To a surprising extent we cling to old and inappropriate attitudes. Large masses of people who, when they migrate to the United Kingdom show themselves capable of saving, do not save in Jamaica because their environment- including Union attitudes- encourages free spending and an easy life. The middle class are conservative in their view of investment, thinking mainly of real estate. Companies cling to the family idea instead of accepting the implications ci a living capitalistic society. The Unions have helped Jamaica's economy considerably but their doctrine of "ability to pay" reflects the old patron and client belief that the status of the worker does not depend on himself and his productivity but on his employer's standing. The scale of absenteeism reflects an indifferent attitude towards work which would cripple any system.

Our task, it appears to me, is to effect a greater consistency in the approach to our problems. If there is need for a fourth phase of Jamaican capitalism, history seems to show that the system will make the necessary adjustment.

RALPH THOMPSON

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the role of capitalism in jamaica's development

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