Industry in Undeveloped Countries


IN speaking on this subject, I am conscious of great diffidence. I know little of industry, and still less of undeveloped countries; on both, many of my hearers could instruct me. I have therefore not attempted to advocate any very definite conclusions, but only to analyze the problem, and to set forth various solutions that have been suggested, or seem possible.

The problem of industry in undeveloped countries arises in three different forms, according to the nature of the population in the country concerned. There are countries that are practically empty, countries with a barbarous population, and countries where the population is more or less civilized, though not industrialized.

The case of a practically empty country does not arise very often, although the Yukon gold affords a fairly recent example. But in earlier times, this case was the most important. The whole of America and Australia come under t his head, because the Red Indians and the Australian aborigines were too few and too feeble to count as populations. The settlement of the Western states of America, and subsequently of Western Canada, encountered only slight obstacles from the Indians, and was to all intents and purposes the development of an empty continent.

This case does not present the difficulties belonging to the development of already populous countries. In the development of empty but fruitful regions capitalism is seen at its best. Its harsher features do not appear, while its energy and enterprise are stimulated to the highest degree. The manner in which capitalism tackled the American West was admirable. It is true that there was corruption, and cruelty to early settlers, of the sort described in Martin Chuzzlewit. But when we compare the rapidity and prosperity of the expansion from the Alleghanies to the Pacific with the painful and laborious process by which the Atlantic seaboard was made habitable, we cannot but admit that modern capitalism is capable of wonderful feats. The task of developing empty regions is, however, nearly complete, and capitalism is less admirable in its more modern enterprises. This is one reason why, as a system, it commands much less respect than it did fifty years ago.

The outstanding example of the development of countries with barbarous populations is Tropical Africa. The problems that arose there were chiefly — (a) problems of competition among European powers, and (b) humanitarian problems. The former of these I shall leave out of account for the present, as I propose to deal, at the end of this paper, with the question of national rivalry. But the humanitarian problem is more of the essence of our discussion, because industrialism in its early phases tends always and everywhere to be very cruel, and this tendency is most developed in dealing with barbarous populations. The instance of the Congo under King Leopold is familiar. But one gathers that the Rand mines, in another way, involve almost equal damage to the native population, through the spread of disease — especially of consumption. Wherever industrialism comes across a barbarous population, it tends to use it up recklessly, just as it uses up raw material. This is part of the general character of wastefulness, of living for the moment, in a way that must lead to ultimate bankruptcy. And something of the same character is visible wherever an unindustrial population is industrialized, even though the population is not in other respects uncivilized.

The third class of undeveloped countries, namely those that already have a civilizat ion of their own, is the most interesting class in itself, and also the one that specially concerns us in China. It is in this case that the really baffling and perplexing problems arise, and in this case also that the most interesting diversity of solutions has been attempted. Consider, for example, the three cases of India, Japan, and Russia, each of which affords lessons from which China has something to learn.

The development of industry in India has been in dependence on British capital, and subject to the condition that it should not damage our trade, especially the Lancashire cotton trade. It has been peaceable, quiet, and gradual, with probably less sweating and child labor t han there would have been if a foreign power had not been in control. On the other hand, from the standpoint of a patriotic Hindu it may be urged that the development has been too slow, as also that it has not been sufficiently all-round to make India self-sufficient. It is doubtful, however, whether these are evils except from the standpoint of Indian patriotism; from an international point of view they may even be advantages. I leave out of account, for the moment, the effect, for good or bad, of British domination on Indian civilization.

In Japan, a quite different course has been pursued. Japanese industry has arisen in connection with Japan’s struggle for independence and power: it has been closely connected with the maintenance of the army and navy. Patriotic needs have dominated the whole development, which has been almost entirely native after the initial stages. This is an heroic course, of which the purpose has been to preserve national freedom. Hitherto this purpose has been successful. But, in order to succeed, it has been necessary to keep nationalistic feeling very intense, and therefore arouse hostile feeling in the rest of the world. It is doubtful whether the ultimate result will not be a clash involving the ruin of Japan, by a process not unlike that which brought about the ruin of Germany. This is always the danger of any policy involving a high degree of national passion, except in a nation capable of defying the whole of the rest of the world. And there is at present only one such nation, namely, the United States.

The course adopted by Russia is different again, though in many respects it is analogous to that adopted by Japan. Russia is virtually undeveloped, and the Bolsheviki desire, above everything, to bring about a great industrial development. The hostility of the world has forced them to consider ways of doing so with little or no outside help, and their Communism requires that the whole development should be undertaken by the State. Their experience hitherto tends to the conclusion that they cannot succeed in developing their industry unless they have a certain amount of outside help, partly in the way of machinery, partly in the way of skilled workmen and technical experts. The development of an industry from the start without any assistance from more advanced countries is a matter of at least a generation, and Russia cannot afford to wait as long as that. It has therefore been necessary for the Bolsheviki to make themselves so formidable by arms and propaganda, as to force the capitalist governments to make peace with them. In this, it would seem, they can now succeed, if they show the necessary moderation.

Among all these ways of developing industry, it appears that there are two pairs of alternatives: the development may be native or foreign, and it may be capitalistic or socialistic. It is, of course, also possible, in theory, to have no industry at all. We may therefore consider our problem under three heads. (1) Why not remain industrially undeveloped ? (2) Should development be native or foreign? (3) Should development be capitalistic or socialistic?


Why not remain industrially undeveloped? — The case against industrialism, considered apart from the balance of forces, is very strong. The world existed without industrialism until the end of the eighteenth century, and in many ways the spread of industrialism has been the spread of devastat ion. In Great Britain, the destruction of ancient beauty through the growth of factories and mining villages was the despair of every poet from Wordsworth to William Morris; while child labor, long hours, and starvation wages used to call forth the protests of philant hropists and social reformers. Nowadays, we have in the main mastered the evils that philanthropists deplored, and accustomed ourselves to the ugliness that pained the poets. But in a country like China, the process of destroying beauty is still so visible that even the most hardened industrialist can hardly be indifferent to it. As one travels up the Yangtse, it is not too much to say that the only ugly objects one sees are those due to industrialism, from factories and oiltanks down to sardine-tins. The destruction of handicrafts and all the unconsciously artistic traditions embodied in them is part of the same evil. At last the very nature of human beings seems to change: they become machinemade, all on one pattern; no longer selfsufficient individuals, but cogs and bolts in a vast machine.

But the æsthetic indictment of industrialism is perhaps the least serious. A much more serious feature is the way in which it forces men, women, and children to live a life against instinct, unnatural, unspontaneous, artificial. Where industry is thoroughly developed, men are deprived of the sight of green fields and the smell of earth after rain; they are cooped together in irksome proximity, surrounded by noise and dirt, compelled to spend many hours a day performing some utterly uninteresting and monotonous mechanical task. Women are, for the most part, obliged to work in factories, and to leave to others the care of their children. The children themselves, if they are preserved from work in the factories, are kept at work in school, with an intensity that is especially damaging to the best brains. The result of this life against instinct is that industrial populations tend to be listless and trivial, in constant search of excitement, delighted by a murder, and still more delighted by a war.

The intensification of war is one of the great evils for which industrialism is responsible. Pugnacity is such a strong instinct in homo sapiens, that most men will kill as many of their fellow men as is compatible with securing their own living — doing the killing, so far as possible, by proxy. Industrialism has increased the productivity of labor, and therefore the proportion of the population who can be set aside for the purpose of killing each other. Short of the complete decay of science, there seems no easy way of escaping from this evil. But this is a subject to which I shall return later.

For all these reasons, I cannot regard industrialism as an unmixed blessing. I think about half the Socialist indictment of capitalism ought to be an indictment of industrialism, or, at any rate, of the earlier stages of industrialism. In the early stages it must involve ugliness, the cruelties of a life against instinct, and unprecedently ferocious wars. Perhaps its later stages may compensate for the horrors of its beginnings; but that remains, as yet, a purely speculative possibility.

Whether an unindustrial country should become industrial would be, therefore, a very doubtful question, if there were, in fact, any option. Russia and China, to take two important exam - ples, would do well, I believe, from the point of view of the happiness of their populations, to remain unindustrial, if that were a real possibility. But the pressure of the outside world makes it impossible. The only real choice is whether they shall industrialize themselves or be industrialized by foreigners. The world’s supply of coal and iron and oil and the other raw materials of industry is limited. When the older industrial nations begin to feel a shortage in the home supply, they look to undeveloped regions to supplement the deficiency. And before t hat stage is reached, industrial enterprises in new countries begin to be a profitable investment for capital, provided governments can be induced to undertake the expense of military and political protection. The control of raw materials is one of the great sources of national strength; so that in all the Great Powers patriotic and pecuniary motives run hand in hand. The attitude of Soviet Russia toward oil and Persia suggests that the adoption of Communism makes very little difference in this respect.

The essence of the matter is that industrially developed nations are stronger in a military sense than undeveloped ones, and that they have powerful motives for undertaking, themselves, the exploitation of unused resources in industrially backward countries. It follows that industrially backward countries must either submit to foreign domination (which inevitably accompanies or follows economic exploitation), or must develop their own resources and at the same time create sufficient military forces to keep other nations at a distance.

This latter course is difficult, and requires that advantage should be taken of some exceptionally favorable opportunity. It has been adopted by Japan and Russia. Russia is still in the experimental stage, but Japan has had, so far, notable success. An essential part of the cause of Japan’s success was the mutual jealousy of England and Russia before 1907. If Russia succeeds, an essential part of the cause will be the mutual jealousy of Japan and the United States. But if we could imagine a really vigorous league of nations established, such opportunities would hardly occur, and the nations that were still undeveloped then would have to remain permanently subject to foreign domination.


But this brings us to our second question, whether there is, from an international point of view, any advantage in native as against foreign development. This is a question as to which the extreme patriot and the extreme internationalist can have no doubt. The extreme internationalist will say that it is a matter of entire indifference whether China, for example, is developed by the Chinese or by the Europeans and Americans. The extreme patriot will take the view that his own country ought to be developed by its own resources, while every other country ought to be developed by foreign resources. This, I imagine, would be a not uncommon attitude in Japan; nor is it unknown in other countries.

For my part, I do not think the question admits of a general answer, since there are considerations on both sides, which incline the balance one way in one country and the other way in another. On the side of native development there is the broad argument for national independence in general, namely, that it increases self-respect and initiative, that it avoids the virulent hatred likely to be felt toward dominant foreigners, and that it is capable of producing a more stable international situation than a system in which some nations are tyrants and ot hers arc reluctant slaves. It might also be urged that a native capitalist is likely to be less ruthless and inhuman than a foreign one; but this is often doubtful.

On the side of foreign development there are, in many countries, arguments which seem to me at least as strong as those for native development. Industrially advanced countries are, speaking broadly, the most civilized, the best governed, the most enlightened generally. From the point of view of intellectual progress, stability in politics, and freedom from the tyranny of custom, the influence of such countries is likely to be good. One may take the example of South America, which has been developed by Great Britain and the United States. There is, I suppose, no doubt that the needs of the financiers who invested there, and the influence of the businesses they established, have been very beneficial, and have done much to promote all that we call civilization. I am not denying that there have been great cruelties in dealing with Indians and negroes, but they would probably have occurred in any case, and they belong rather to the race-problem than to the problem of industrialism. They could not be worse than those perpetrated by the Spaniards during their first century in America, when there was no question whatever of industrialism.

Another grave objection to native industrial development in an industrially new country is that it cannot avoid being intensely militaristic, since foreign nations can be kept at a distance only by force. The necessary intensity of militarism can, as a rule, be kept in being only by creating a strong anti-foreign feeling, which is bound to develop into brutality and imperialism. Japan has run through this whole evolution; Russia is still in the middle of it. But we see in both cases the absolute necessity of a powerful army, in order to ward off the hostility of other nations. Without a powerful army, no industrially new nation will be allowed to develop its own industry; with a powerful army, no nation will abstain from conquest and oppression.

Moreover, the anti-foreign feeling will be directed, not only against foreign military and economic aggression, but also against foreign ideas. Japan has adopted just so much of foreign ideas as is necessary for military and industrial efficiency, but (I imagine) no more. Russia has adopted a creed of her own, which, though nominally international, stimulates nationalism so long as no other country adopts it. And Russia is far more impervious than she used to be to Western intellectual influences. That, of course, is an effect of the blockade; but the blockade is an effect of Russia’s desire to develop her own industry. Economic and intellectual intercourse go together, and when one is stopped, the other can hardly continue undiminished.

These arguments in favor of the foreign development of industry are, however, academic as addressed to strong nations, and unnecessary as addressed to others. Every nation will develop its own industry if it is strong enough, and every nation will develop another’s industry if it is strong enough. Perhaps China is one of the very few countries where the question may be decided on other grounds than mere force. It would perhaps be possible to rouse a patriotic movement here, analogous to that which secured the independence of Japan; but such a movement could succeed only if vigorously led by men of European education. If such men feel that furt her foreign intellectual influence is desirable, they may abstain from creating the kind of fierce anti-foreign feeling which would be necessary in order to keep the development of Chinese resources in Chinese hands. And even if a certain anti-foreign feeling is thought necessary, intellect ual motives may determine its direction. Japan, America, and Russia all have a chance of acquiring supreme influence in China, and the whole development of China will be very different, according to which of the three succeeds. The question as to which succeeds may be in part determined by the sympathies of the educated Chinese. As between America and Russia, their sympathies will be determined very largely by their attitude to Communism. This brings us to our third question.


Should development he capitalistic or communistic? — Until the Bolsheviki acquired power in Russia, it was always assumed, even by Socialists, that Socialism was possible only after an era of capitalist development. This was the view of Karl Marx, as Kautsky pointed out in a criticism that roused Lenin to a very bitter reply. The Bolsheviki take the view that they can develop Russian industry practically from the start on communist lines. What existed of Russian industry before has been so nearly destroyed by the Revolution, that Russia is now practically a new country industrially. Many among the Bolsheviki have had business training in America, and would like to introduce American technical methods. They are up-to-date, modern men, anxious to sweep away from Russia all trace of medievalism, and to make Russia one of the great manufacturing and producing nations of the world. Hitherto, we have succeeded in preventing them from beginning this undertaking, by blockading them and keeping them busy with a series of wars. Now, however, our fear for India, and America’s jealousy of Japan, give hope of a time when the Bolsheviki will be allowed to try their experiment — an experiment of the greatest importance to the human race, which those who prevent it evidently expect to prove successful, since otherwise they would have no motive for preventing it.

The quest ion whether industry should be developed communistically is not unconnected with our previous question, as to whether development should be native or foreign. Native development must, in general, be slower and less efficient than foreign, and must be put through in spite of foreign opposition, both in the way of war and in the way of attempted corruption. Consequently native development probably involves a period of hardship, which will be endured only if there is the stimulus of a strong enthusiasm. A strong enthusiasm is easier for a cause like Communism than merely for the enrichment of native rather than foreign capitalists. The power of resistance that Russia has shown during the last three years would hardly have been possible after the preceding three years of disastrous war, but for the fact that a number of able and energetic Russians were inspired by an intense and heroic belief in the merits of Communism.

I do not propose to consider the merits of Communism as an economic system; I am concerned with it, at the moment, solely as a national policy in relation to industrial development and the international situation. From this point of view its chief merit is the enthusiasm that it inspires, the new hope that enables it to put vitality into men who would otherwise despair, and the theoretical internationalism, which, although prevented by capitalism from bearing fruit in the present, yet remains as an ideal and may ultimately prove the salvation of the world. The chief demerit of Communism is exactly correlative, namely that, in practice, it involves more nationalism and militarism than is involved in letting foreign capitalists develop the national resources, as China has done to a certain extent. And Communism, even if it were universal, would not bring peace if it were still combined with nationalism. A communist Russia and a communist Japan might fight for the exploitation of China just as fiercely as if both were capitalistic. In fact, if Communism were firmly established and fully accepted in both countries, the result would be that a war would not rouse even that degree of opposition which occurs at present, among Socialists, who urge that the benefit does not accrue to the working classes; for under Communism the benefit, if any, would accrue to everyone, and pugnacity would always make people expect a benefit, however little rational ground there might be for such an expectation. National Communism, even if it existed in every nation, would therefore do very little by itself to bring an end of wars. It is only internationalism, embodied in a strong international authority, that can do this.

There is only one method of securing the peace of the world, and that is the creation of an international authority for the control and distribution of raw materials. Such an aut hority would, of course, be useless unless it were supreme from a military and naval point of view. During the war it existed more or less. But it will be a long time before people are as anxious to prevent a war as to win it; and until that time it is hardly to be hoped that they will tolerate in time of peace what they endure gladly in time of war. I am therefore not at all optimistic as to the prospects of an international authority for the control and distribution of raw materials; I say only that there is no other radical method of preventing wars.

At the same time, the growth of national Communism suggests possibilities, less radical, but perhaps more realizable. During the war and since, so much use has been madeof the blockade that in future no prudent nation will allow itself to depend upon foreign sources of supply for any vital necessity. I should myself now support a policy of making Great Britain self-sufficient as regards food, which I should have regarded as absurd before the war. It is possible that the world may become organized into a few great states, each invulnerable at home and economically independent of foreign supplies. It is possible — I do not say it is either desirable or probable — that Russia may acquire some degree of control over the whole of Asia. If that should happen after Russia achieved a certain measure of industrial development, Asia and Russia together would be invulnerable, and no one would have any motive for attacking them.

The whole of North and South America, owing to the Monroe Doctrine, is one state from the point of view of external policy, and is already too strong to be the subject of external aggression. Russia and America are empires not subject to naval power. If the British Empire could achieve an alliance with America, the parts of the world subject to naval power would be brought into the same block. In that way, a stable governmental organization of the world might be brought about—the world might be so completely mapped out that wars would no longer seem profitable. It might happen that in the Anglo-Saxon block industry would remain capitalistic, while in the RussoAsiatic block it would be communistic. Such a division might become just as stable as the division between Christianity and Islam.

Apart from these possibilities, however, there are others that are less remote. We may assume that every civilized country will attempt henceforth to be economically self-sufficient; certainly every country that wishes to adopt Communism will have to be, since, otherwise, the capitalist nations will inevitably starve it into surrender. There will thus be a tendency, assuming that Communism spreads, for nations to become more and more isolated one from another, politically, economically, and intellectually. It is not improbable that for a while they will wage wars for the possession of raw materials. But I think that communistic states, with the theory of internationalism that is involved in Communism, would be far more likely to come to agreements about raw materials. And the trade of each country would be conducted as the government desired, not according to the interests of private capitalists. There would be less foreign trade, none of the friction and hostility caused now by competition of foreign goods in the home market, and therefore fewer irritants to arouse the anti-foreign feelings of the masses. I believe, therefore, that, in spite of the isolating effect that Communism would have at first upon the nations adopting it, it would tend in the long run, if it were adopted by all the Great Powers, to promote international agreements and put an end to wars. And if that were once achieved, all other benefits would follow: international government would soon grow up, and nationalism would gradually fade away, owing to lack of stimulus.


The conclusion of the argument which we have been conducting is this: that the development of industrially backward countries is in no degree desirable, but is unavoidable owing to the greed of other countries; that, if it is done by foreign nations, it involves oppression, as a rule, though not always; while, if it is done by the backward nation itself, it involves a very intense militarism in order to prevent foreign interference; that, if it is to be done by the backward nation itself, it is probably better done communistically, since in that way some of the evils of the capitalist stage of industry can be avoided, and the necessary enthusiasm can be more easily generated; and that, although national Communism affords no guaranty of peace, it is probably more likely than capitalism to lead on to an international control of trade and raw materials which would ultimately bring about the cessation of wars.

For these reasons, I cannot but think that the method the Russians have chosen, painful as it is for themselves, is on the whole the best method of developing industry in nations situated as they are. Would it be possible for China to imitate Russia in this respect?

One finds in China a great desire to develop industry without the evils belonging to capitalism in partially developed countries. I am, however, very doubtful whether it is possible for China to escape these evils. Russia, in spite of Communism, is having to face many of them, such as long hours, low wages, and child labor, owing partly to industrial inexperience, but more to the hostility of the capitalist world. China is less able than Russia to face this hostility, and has need especially of the assistance of America, both intellectually and industrially. I do not think there is enough education or enthusiasm or industrial experience in China to make successful Communism possible except in dependence upon Russia, and dependence upon Russia might in the long run entail just the same evils as dependence upon any other foreign country, with the additional disadvantage of the enmity of all the other powers. It is not impossible that the force of these arguments may lessen with the lapse of time; but for the present, if I had the control of Chinese industrial development, I should look to America, and in a lesser degree to Great Britain, rather than to Russia. And I should endeavor to avoid a too great subjection to any foreign nation, with a view to the gradual acquisition of Chinese industry by the Chinese. Meanwhile, I should not forget the desirability of Communism whenever the international situation made it possible.