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In their 2007 book Power and Plenty, a magisterial account of trade and the world economy during the entire second millennium, Findlay and O’Rourke had already emphasized the importance of colonialism to British growth, writing: “The remarkable innovations of the Industrial Revolution would not have had the deep and sustained consequences that they did if British industry had not operated within the global framework of sources of raw materials and markets for finished products that had been developed during the heyday of mercantilism.”63 While this revisionism didn’t support Williams’s claim that the profits of the triangular trade played a key role in financing the industrial revolution, it supported the broader argument that colonialism played an essential role in creating the conditions in which industrial capitalism was incubated and emerged. Another prominent economic historian also emphasized this point. In a short but insightful introduction to global economic history published in 2011, Robert C. Allen emphasized the changes that took place between 1500 and 1750, noting that, as Britain and Holland developed far-flung commercial empires, “trade with their colonies drove their economies forward. Cities and exportoriented manufacturing grew. The occupational structure changed accordingly,” Allen went on. By the eve of the industrial revolution, “there had been far reaching changes. England was the most transformed country … England was the most rapidly urbanizing country in Europe.”64

Some scholars also challenged the presumption, implicit in many of the critiques of the Williams Thesis, that colonialism and slavery had nothing to do with the technical innovations that propelled the industrial revolution. In his 2002 book, Africans and the Industrial Revolution in England, Joseph E. Inikori, an economic historian at the University of Rochester, pointed out that competition from cheap Indian cottons in the African market prompted British manufacturers to search for cost-saving innovations, and that growing demand from colonial markets “stimulated the development and diffusion of the new technologies.”65 Giorgio Riello, a historian at Warwick University, wrote in a 2013 book: “Cotton did not become a global commodity because its production was mechanised and industrialised; on the contrary, it became mechanised and industrialised thanks to the fact that it was a global commodity.”66 In a 2014 paper, the Cardiff University historian Pat Hudson highlighted yet another way slavery propelled the British economy forward: by stimulating financial innovations. She pointed out that merchants and shippers in the triangular trade relied heavily for financing on promissory notes known as “bills of exchange” that were privately issued and often backed by finance houses. Growing familiarity with these instruments helped to integrate money markets in London and other British cities, creating a national network of credit providers on which the industrial revolution, Hudson wrote, was “entirely dependent.”67

In a 2020 review article, the Stanford economic historian Gavin Wright noted that the transformation of expert opinion on the Williams Thesis “seemed all but complete.”68 Striking a definitive tone, Wright wrote: “The slave trade and slave-based commerce were core contributors to British economic development during the eighteenth century.” However, Wright also argued that during the nineteenth century, when new markets and new sources of raw materials became available, “slavery was far less valuable for the British economy.”69 This assertion wasn’t inconsistent with the Williams Thesis, Wright pointed out. Indeed, it provided support for another controversial argument that the Trinidadian had made in his doctoral thesis, and that he repeated in Capitalism and Slavery: economic factors rather than moral outrage were largely responsible for the abolition of slavery. “The commercial capitalism of the eighteenth century developed the wealth of Europe by means of slavery and monopoly,” Williams wrote in his concluding chapter. “But in so doing it helped to create the industrial capitalism of the nineteenth century, which turned around and destroyed the power of commercial capitalism, slavery, and all its works. Without a grasp of these economic changes the history of the period is meaningless.”70

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Like Marx, Luxemburg, and indeed Keynes, Williams recognized that capitalism was a global system and could only be understood as such. When he was writing Capitalism and Slavery, this system had been upended pending the defeat of the Axis powers. Old power structures were being questioned and new possibilities discussed. This was as true in the developing world as it was in London and Washington, DC. Near the end of his book, Williams noted that writing history couldn’t resolve present-day problems, but he also expanded on something else he had said to his examiner in Oxford years earlier. “The historians neither make nor guide history,” he wrote. “Their share in such is usually so small as to be almost negligible. But if they do not learn something from history, their activities would then be cultural decoration, or a pleasant pastime, equally useless in these troubled times.”71

Williams was determined that his own work wouldn’t become a mere decoration. In his 1942 book The Negro in the Caribbean, he had emphasized the common heritage of the region and advocated a pan-Caribbean federation as a long-term solution to its economic and political challenges. Williams was under no illusion that a small island like Trinidad could prosper on its own even if it eventually gained independence. In 1943 he organized a conference on the economic future of the Caribbean at Howard University, where he pointed out that, in economic terms, the islands of the West Indies were wholly dependent on Britain. “Though not yet articulating it in terms of neocolonialism, Williams argued that a transfer of power to nationalists that left these economic structures intact would allow metropolitan powers to manipulate the policies of the island states,” Adom Getachew, a University of Chicago political scientist, wrote in her 2019 book, Worldmaking After Empire: The Rise and Fall of Self-Determination.72

In regional cooperation, Williams hoped to find a way of breaking the ties of colonial dependency. He got involved with the Anglo-American Caribbean Commission, an international agency that the United States and Britain created in 1942 to promote regional development. After the war ended, Williams traveled broadly and met other future political leaders from the region, including Michael Manley, the leader of the Jamaican nationalist movement, and Luis Muñoz Marín, the Puerto Rican writer and activist. In 1948 he moved back to Trinidad, where he took a full-time post as deputy chairman of the Caribbean Research Council, a branch of the Caribbean Commission.

The council was meant to provide economic advice to the West Indian islands (plus British Guiana, French Guiana, and Suriname on the American mainland). At times, Williams got frustrated by his colonial bosses, who were resisting calls for a more rapid shift to self-rule. In Trinidad, the British had introduced universal suffrage and limited self-government in 1946, but there was still no proper party system, and the governor-general retained ultimate power. In 1954 and 1955 Williams gave a series of lectures on the history and politics of the West Indies at the Trinidad Public Library, which further raised his profile. “The task of building a West Indian nation is the decisive task of the present and future,” he declared.73 He called for schools on the islands to be placed under local control and demanded that they emphasize West Indian history, which hitherto they had largely ignored.

In June 1955 the Caribbean Commission fired Williams, a move he expected. He had decided to enter politics. In January 1956, at a mass meeting in Port of Spain’s Woodford Square, he launched a new political party, the People’s National Movement (PNM), which was modeled on Manley’s People’s National Party in Jamaica. It had a long list of demands: full self-rule for Trinidad and its sister island of Tobago; a democratically elected legislature; a national economic plan; a commitment to affordable housing, better schooling, and national health insurance; the establishment of a Caribbean Federation. Williams wrote many of the party’s programs and edited its newspaper. His erudite public lectures set him apart from other politicians on the island. In a general election held in September 1956, PNM won a majority in the Legislative Council, and Williams became the chief minister. He also appointed himself economy minister and minister for Tobago affairs.

Under Williams’s leadership, the PNM won a series of general elections, and he headed the government until his death in 1981. In 1962, under his leadership, Trinidad and Tobago became politically independent from Britain. (Fourteen years later it renounced its remaining ties to the British Crown and became a republic.) Like many charismatic independence leaders, Williams stayed in power for too long, and some of his critics accused him of harboring dictatorial ambitions. In 1962, C. L. R.

James, who had known Williams since his childhood and been a close political ally during the PNM’s formative years, but had now soured on his leadership, wrote: “Ultimately Trinidad and Tobago may become a state like Singapore.”74 Williams’s government later subjected James to house arrest for a time.

Despite criticisms from the left, Williams remained popular with many ordinary residents of Trinidad and Tobago. “He sent all these white people back and gave our black people, our black professionals, the jobs,” Erica James, C.L.R.’s niece, recalled in a 2012 interview. “Like the government railway had always been run by whites, by Englishmen, and when Eric Williams took power, it was over  … This is why people loved Eric Williams so much.”75 But even as Williams led Trinidad and Tobago peacefully to independence, his governments faced major economic challenges. In the immediate postwar era, GDP growth had risen rapidly as oil production shot up. But during the 1960s, growth slowed sharply. As the population increased rapidly, creating enough jobs was a constant problem.76 In many parts of the country, poverty was still endemic.

Lining up with dependency theorists throughout the developing world, Williams attributed many of the problems Trinidad had encountered since independence to the legacy of colonialism. “Independence did not bring us a clean slate,” he wrote in a 1968 memoir. “Our economy was essentially in foreign hands, the capital coming from outside, the profits being repatriated outside.”77 The island still had poor housing, an inadequate education system, and divisions of race and color that Williams said the colonialists had instigated. “The essence of the colonial system was internal disunity,” he remarked.78 In 1958 a group of Caribbean islands, including Barbados, Jamaica, and Trinidad, did create a West Indies Federation, raising the possibility of the new grouping eventually becoming a single independent state. But the new organization didn’t have much power, and after only three years the Jamaican public voted, in a referendum, to leave it, thereby dooming the entire effort. Subsequently, many of the islands became independent on their own, leaving them in a situation where, as Williams had predicted, they too faced major economic challenges.

Williams and his government soldiered on, introducing initiatives to build up Trinidad’s infrastructure, grow local businesses, modernize agriculture, extend secondary schooling, and expand exports. But all these things required money, which was in short supply. With Britain having offered only token financial aid, the newly independent nation had little choice but to apply for additional funding from the World Bank and the Inter-American Development Bank, a multilateral lender that had been founded in 1959. Both of these institutions were based in Washington, DC, and were largely beholden to the United States government. To receive financial backing from them, Trinidad would have to agree to a policy regime partly dictated by its external creditors.

After hundreds of years of subjugation, the Caribbean island and its neighbors now ruled themselves, but everywhere they still faced constraints and challenges. “This is the Reality of our Independence,” Williams wrote.79

“The periphery of the economic system”

The Rise and Fall of Dependency Theory in Latin America

Like the Caribbean, Latin America has a history of colonial plunder, resource extraction, and slavery. By 1945, however, many Latin countries had been self-ruling for more than a hundred years. Colombia and Chile became independent in 1810, Venezuela in 1811, Argentina in 1816, Mexico and Peru in 1821, Brazil in 1822, and Uruguay in 1825. Independence had proved a mixed blessing. Throughout the region, landowning elites with historic ties to the colonizers continued to exercise a great deal of political power, and economies remained heavily dependent on agriculture and the export of basic commodities, such as cacao, sugar, and nitrates. Under the international division of labor that had developed in the nineteenth century, primary production was the role allotted to developing countries. With the notable exception of Argentina, which enjoyed rapid export-led growth during the period before the First World War, it had left much of Latin America mired in poverty and underdevelopment. During the Great Depression, a collapse in commodity prices accentuated the region’s problems and highlighted its enduring dependency on conditions in the industrialized countries. Economic crisis created new political currents. In Brazil, the government of Getúlio Vargas, before and after the autogolpe of 1937 that turned Vargas into a virtual dictator, encouraged the growth of domestic industry using import quotas, tariffs, and credits from the stateowned Banco do Brasil.1 In Mexico, the populist government of Lázaro

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Cárdenas nationalized the country’s oil industry, expropriating the foreign companies that operated there.2

When, in 1948, the newly founded United Nations created an Economic Commission for Latin America, known as ECLA (CEPAL in Spanish), the debate about what economic strategy the region should pursue was a live one. On the left, echoing the theories of imperialism that Luxemburg and Lenin had put forward, many critics argued that underdevelopment was the inevitable product of an exploitative global system. Some orthodox economists, echoing the arguments of David Ricardo and Nikolai Kondratiev, believed it made sense for underdeveloped countries with large endowments of land and labor to concentrate on agriculture and other forms of primary production. The new commission, which was based in Santiago, scheduled a conference for Havana in 1949, and in advance of this meeting it commissioned an expert report on Latin America’s economic prospects. To produce the report, it hired Raúl Prebisch, a prominent Argentinian economist and former central banker, who had recently published an introduction to Keynesian economics.

Prebisch hailed from a conservative background. He was born in 1901 in the northern city of Tucumán. His father was a German immigrant who established a printing business, and his mother came from a family that could trace its roots back to the conquistadors. After graduating from the University of Buenos Aires with a degree in economics, Prebisch briefly worked as research director for the Sociedad Rural Argentina, which was closely associated with Argentina’s landed oligarchy. From 1927 to 1930, he worked at the Banco de la Nación Argentina, the country’s biggest commercial bank. In 1930 he was appointed as Under Secretary of Finance. From 1935 until 1943, he served as the general manager of Argentina’s new central bank under a series of military-backed governments.3

Until the Great Depression, Prebisch was, in his own words, “a firm believer in neoclassical theories.”4 He supported free trade, the gold standard, and the Ricardian argument that the competitive advantage of developing countries lay in exporting agricultural products. From an Argentinian perspective, there was historical evidence to support this claim. In the decades before the First World War, the development of steamships and refrigeration had enabled Argentina to greatly expand its exports of beef, wheat, and other agricultural products. An influx of foreign capital, especially from Britain, financed an extensive railroad network. Immigrants flocked to the country. Buoyed by these developments, Argentina became the richest nation in Latin America. In 1913, according to estimates from the economic data expert Angus Maddison, it was more than four times as rich as its neighbor Brazil on a GDP per capita basis.5 Indeed, Maddison’s figures suggest that Argentina was as rich as some European countries and not very far behind Britain. To be sure, many of the gains from this rapid economic growth had accrued to the landed oligarchy, but overall wages and living standards had also risen appreciably. However, the Great Depression and the accompanying collapse in commodity prices caused a sharp deterioration in Argentina’s “terms of trade”—the prices of its exports relative to the prices of its imports. To purchase the same quantity of goods that it had been importing before the Depression, the country would have to increase its exports by almost three-quarters, Prebisch noted in a 1934 paper.6 During a global slump, this was obviously impossible. The system of international capitalism that had enriched Argentina was now punishing it for being a primary producer.

Prebisch stayed at the central bank until 1943, when a coup brought to power a government led by the fascist-leaning General Pedro Martínez, which fired him. He returned to the University of Buenos Aires, where he taught courses and worked on a book proposal about monetary policy and Argentina’s economic predicament. At a 1946 conference of central bankers and academics, he identified the United States as the “cyclical center” of the global economy and Latin America as “the periphery of the economic system.”7 The taxonomy of center and periphery wasn’t new: the German economist Werner Sombart had used it in his multivolume history of capitalism. But it was Prebisch who introduced it to economic policymakers and central bankers. He argued that the United States, as the core country of the international monetary system and the issuer of its reserve currency, could adjust interest rates at will to maintain full employment, but countries at the periphery had no such freedom. Upswings and downswings in their economies were determined by the US economic cycle and US policies, Prebisch said. They were hostage to external developments.

In his report for ECLA, which ran to almost sixty pages, Prebisch mentioned this monetary dependency, but mainly he focused on international trade and global patterns of production. “In Latin America, reality is undermining the out-dated schema of the international division of labour, which achieved great importance in the nineteenth century,” the report began. This schema had “no place within it for industrialization of the new countries. It is nevertheless being forced upon them by events.”8 Citing figures prepared by a German-born British economist, Hans Singer, who was working at the United Nations headquarters in New York, Prebisch pointed out that between 1870 and 1939—i.e., over a period of nearly seventy years—the prices of primary products had fallen considerably faster than prices of manufactured goods, with the cumulative difference totaling more than 30 percent. These figures showed that although industrial and agricultural producers were both making productivity gains, the international trading system wasn’t sharing out these gains equally, Prebisch insisted. Countries at the periphery were passing along the benefits of rising agricultural productivity to consumers in the developed world by cutting the prices of their products. But in industrial countries, much of the rise in productivity was being passed on to domestic workers in the form of higher wages, which meant that prices of industrial goods exported to developing regions didn’t fall as quickly. “In other words,” Prebisch wrote, “while the centres kept the whole benefit of the technical development of their industries, the peripheral countries transferred to them a share of the fruits of their own technical progress.”9

Prebisch couched his argument in dry economic prose, but the import of it was clear. Rather than benefiting all countries, as the economic textbooks said, the global trading system was transferring economic value from the poor periphery to the rich center. Through the terms of trade effect, it was acting as a reverse Robin Hood. When the top officials at ECLA received Prebisch’s report, they decided it was too controversial to put out as an official publication representing the views of the new organization. Rather than publishing it as an ECLA report, they submitted it to the UN secretary-general as a research essay under Prebisch’s name with the title: The Economic Development of Latin America and Its Principal Problems. In a foreword, the commission said it hoped the essay would “arouse further interest in economic investigations in the Latin-American countries.”10

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