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Robbins argued against East India Company (EIC) from the observations he made about the problems it created rather than solved. EIC was formed as a under a 1773 Regulations Act and granted the power to rule autonomously in India three separate towns; Madras, Calcutta AND Bombay of behalf of the British crown. It was run by a Board of Directors at East India House in London but in the ground in India it was ruled by three presidents. They were later changed to governors general. In essence it was a company which was formed to control trade in India and to protect it from outside exploitation though the company was favoring the British colonialists who formed it after they captured and controlled India from the former colonialist, the French. The company was awarded the Diwani of Bengal after the exit of Plassey. The colonialists ruled directly the locals. (Sen 98). The company was a government and also a trade agency to profiteer the colonialist and employed workers who were used to facilitate trade in the manufacture of goods, transportation and shipping to or fro foreign countries and other trade partners. The Madras presidency used EIC coin to facilitate trade.
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But over time the company lost control and became a bane to the locals as it served the colonial master forgetting the welfare of the subjects and its employees. Robbins tried to portray the EIC as a colonial mechanism to control the lives of the local people in India by exploiting them to improve the welfare of the crown and its agents while the people of India suffered from the misrule. The company sought to control the Asian trade up to China in the north east controlling all activities at the trade routes and ports used in anchoring ships used in the trade by what was referred as Canton system and sea routes.
Specifically Robbins pointed out the monopoly that the company developed in the trade in the Indian mainland and all trades routes that connected India to China and other countries to the east. Is it did this it was preoccupied majorly with making profits for the company and the country through which it colonized the country. The administration was assembled in an ad hoc manner and annexed to the Bengal which received instructions from Britain and was not concerned to rule was there in a temporary mode not investing for the long term and improve the welfare of Indians but to improve the bottom line of the company. The merchants made money and when they were satisfied they retired back to Britain leaving Indians miserable somewhat. The employees they offered jobs was under the control of the company but the locals who were never involved with the company was not in the company’s plan but left to suffer on their own. In fact at some point Adam Smith referred to the administration as a bloodstained system.
His critique was fair because the Indian population was left to suffer with them losing labor which served the colonialists while they were not getting proper compensation as the laborers were paid what they could merely survive on with which the colonialists made money and repatriated back to England and even moved when they retired leaving the India mainland underdeveloped. The development was made specifically to facilitate trade not reaching to the Indians to improve their welfare. The colonialist practiced mercantilism to protect their trade to reap maximum profits while exploiting the country rather than giving back a fair share.
As the company continued with the trade in buying Chinese tea, it piled a lot of stock in London warehouses of this tea holding money which would have been used in trade. The company sought the consent of the legislature to pass a tax exemption bill to make their tea cheaper in the market. It resulted in undercutting other trader’s tea business. This caused discontent which was part of the reason that led to uprising. Part of the problems they encountered led to the company piling a lot of debts and hence not able to carry on it activities. Social discontent started building up as Indians rose against the colonialist rule resulting in social strife. Mutiny occurred when about a third of the local population was wiped out because of a famine which swept through the region. The trade suffered as employees could no longer work in the factories and the company piled up debt spends in running the company. The company sought to take control all the states of India by force against the local’s wishes and imposing taxes throughout except two states of Punjab and Sindh. The government back in England took control of the company and India after the company was involved in the problems mentioned and other myriad of issues so that the British cannot lose control of the country.
In the second part we are going to consider how two perspectives of trade developed by Adam Smith and Karl Marx in the 18th and 19th centuries respectively. The views are based on either capitalism or communism by which capitalism is characterized free trade and communism on the other hand is characterized by state intervention if the system of trade does not address the general welfare to ensure that no one is left behind. Adam Smith proposed and explained how the trade system would balance itself based on the forces of demand and supply without any institutional intervention maybe to level the playing field for trade to thrive. But on Karl Marx point of view trade has to be controlled by the governing system with its participation being felt and help distribute goods and services to the under-privileged members of the society or regions not covered sometimes without any profit to gain but to spread welfare to all regions. In our case study Adam Smith advocated for a market system balancing itself (demand and supply) by proposing the classical market economics while Marx proposes the government to control. (Kratoska 435).
Mercantilism is a doctrine that the governing system should control all forms of foreign trade to ensure the stability of the country in terms of its security and ensures that the trade is balanced to favor all parties and as it practices it encounters resistance from other governments of countries which in the European history was the cause of wars between countries and therefore the need to expand territories through colonization of other countries around the world in the 16th to the 18th centuries. Powerful interests were defended through mercantilism and stronger countries like England overpowered other states to take control of other regions of the world apart from their own home country. The countries colonized others to take control of raw materials extraction to be shipped to their own countries for industrial production. The system reached India in the 18th century and we are going to use the system to analyze our case study. Karl Marx is against mercantilism. (Joseph 16).
Adam Smith is against the system that was practiced by the EIC in that his proposition is quite different from what actually happened. In the system trade was controlled by the colonialists strictly through the company to ensure that all profits were secured to benefit the company and repatriated back to England. (Prakash 125). The trade routes were protected to ensure there was no infiltration from foreign traders while prices of goods and services was pegged of the production chain without considering how the market would demand and supply it. The company exercised monopoly of all trade activities to make money primarily. Adam’s point of view is where there exists Laissez-Faire meaning the state or government should not have a role to play but rather to leave business and trade alone to be determined by forces of supply and demand. The products are paid for by products and the cycle continues. Through specialization of labor production will increase in time as expertise sets in and costs or production like labor will always fall to sustainable level hence the system paying for itself. (Joseph 17). The EIC never achieved an efficient trade in the long run as it failed through its tight grip and repatriating profits back to England instead of ploughing back to improve the business environment.
On the other hand the Karl Marx philosophy sought to defer in principle with Adam Smith theory in that as labor continued producing goods they profiteer the investors while the workers are compensated what is not fair with the surplus value of production going to the pockets of the capitalists. If the system is left alone capitalists would exploit the system and go away with much of the profit in the process dehumanizing the labor force. He advocated for the state to take control of the system to balance and reward more proportionately the workers to share the investors’ profits. He said that a few will not get too wealthy while the workers continue with their poverty hence investors should contribute more to enable the money get to welfare programs.
When the says that capitalists profiteer at the expense of the poor working force and therefore have pay more to ensure welfare is improved Adam answers him by saying that with labor specialization productivity increases hence less production costs and demand and supply will drive down huge profit margins when there is fair competition in the market to the extent that the profits are sustainable to continue doing business with no much profiteering. (Kesselman et al 226).
In the long term colonization of India according to Adam the system is bound to fail where trade is not free and efficiency sought in the production of goods and services with equal forces of demand and supply driving the market and actually the system failed and the English government had to intervene to correct the mess that had been created. While Marx still would propose the system increases the welfare of the subjects by taxing more of the profits to improve the welfare which was the cause of social unrest that occurred when EIC failed to take care of the Indian people. (Banerjee 56). The treaty that was signed in the Nanjing treaty was to allow the opening up of the markets and infrastructure facilities to be used by all in the trade and people to have more freedom to participate in business from India to Japan and China including all regions. In India free trade would open markets for all countries engaged in trade to access the market creating efficiency by Adam but on the other Marx would not accept the system since colonialists who are capitalists would drain out resources in these countries making the subjects poorer. Colonialists have to leave and leave the locals alone to take care of themselves.
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