To what extent did the establishment and growth of European settler agriculture depend on repressive colonial policies that allowed the European farmers to exploit local labour? In past and more recent literature it is commonly argued that the existence of so-called extractive institutions were more prominent in African settler colonies than in non-settler colonies (Arrighi 1966, Aceomglu and Robinson 2010, Frankema et al. 2016). In brief the argument goes that the Europeans who settled and opened up farms in Africa were faced with the challenge of securing access to labour due to relative low population densities and a general reluctance among Africans to supply labour. To what extent settler farming was successful depended upon the capacity of large-landlords to persuade the colonial governments to expropriate the most fertile African land and introduce regressive taxation systems, leaving Africans with no option than to sell their labour to the landlords. Or to quote Austen; ‘[t]he major weapon employed by Europeans in this context was […] not their superior access to various forms of producer capital but rather their influence over the state’ (1987: 173). Three indicators are used to support these claims: data that show a significant and lasting increase in the number of wage labourers employed on European farms, scattered data on stagnating real wages for rural labor in the early colonial period and qualitative information on the intentions behind specific colonial policies.
A fundamental problem is that these indicators alone do not provide sufficient evidence that European farmers exploited local labour. How do we – for example - know that declining real wages signify the strength of the settler farmers reducing labour costs while enjoying stable or increasing profits? It could be equally true that the decline in wages is the result of a failing sector which faces shrinking profits, hence is unable to pay higher wages.
Measuring wage shares
To scrutinize to what extent European settlers relied on cheap labour me and my colleagues Jutta Bolt, Ellen Hillbom and Maria Fibaek at Lund University are working in a project where we are measuring wage shares on settler farms in Malawi, Zimbabwe, Kenya and South Africa. The distribution of wage and capital incomes is a classic theme in political economy, evolutionary economics and economic history (e.g. Schumpeter 1947, Atkinson 2009, Schön 2010), but has so far never been applied to African cases. Our methods allow us to compare wage costs with profitability. We assume that the larger the gap is between the total wage cost faced by the Europeans and the total value of their production the more did the Europeans manage to exploit labour. In order to measure the wage shares me and my colleagues are currently put together series for African rural wages, transport cost, capital investments, value of export etc. for several African countries. The Colonial Blue Books is a fundamental source used in the project. It is labour intensive work, but we have already managed to provide new insights that questions the current consensus view. In our work on colonial Malawi we have found no evidence of a correlation between wage levels, let alone wage shares and repressive colonial policies (Bolt and Green 2015). Instead, the wage costs that European farmers faced was driven by migration flows. In times of increased immigration to Malawi wages declined and vice versa. Furthermore, we find that the gap between wage costs and value of production increases significantly in the post second world war period. This was not driven by stagnating wages. On the contrary, wages increased simultaneously, but not at the same pace. Instead, the gap increased as the European farmers could reap the benefits the post-war commodity boom.
Can we learn anything from our historical cases? A great deal we believe. It seems like market forces and technology played a far more important role for the development of profitable European farmers than repressive colonial policies. This does not imply that the African workers live a good and healthy life. They were generally low paid and working conditions were hard. But the profitability of European farming was not determined by the action of colonial policies aimed at increasing the supply of local labour. In that regard, the colonial blue books provide us with information that forces us to rethink the historiography and legacies of settler colonialism in Africa.
Acemoglu, D and J. R. Robinson (2010). Why is Africa Poor. Economic History of Developing Regions 25, 21-50
Arrighi, G. (1966). The political economy of Rhodesia. New Left Review, 39 , 35–65.Austen, R. (1987) African economic history – internal development and external dependency London: James Currey Ltd.
Atkinson, Anthony B. (2009) ‘Factor Shares: The Principal Problem of Political Economy?’, Oxford Review of Economic Policy, 25(1): 3-16
Bolt, J. and Green, E. (2015). Was the wage burden too heavy? - Settler farming, wages and the profitability of settler agriculture in colonial Malawi, c. 1900–1960. Journal of African History. 50 , 117-138
Frankema E. E. Green and E. Hillbom (2016). Endogenous processes of colonial settlement: Success and failure of European farming in Africa. Journal of Iberian and Latin American Economic History 34 , 237-265
Schön, Lennart (2008) ‘The Wage Share, Cycles and the Kuznets Curve of Income Distribution’, Christer Lundh et al. (eds). Wage Formation, Labour Market Institutions and Economic Transformation in Sweden 1860-2000, Lund: Lund University Press