The year 1776 is often considered the birth year of capitalism, when the Scotsman James Watt presented the first industrially viable steam engine. This invention paved the way for the so-called Industrial Revolution, the industrialization of Europe and the USA.
However, James Watt (1736-1819) himself was anything but an exploitative capitalist. He is credited with a total of seven inventions, including a mechanical copying machine that remained in use well into the 20th century. Rather, he embodied the typical middle-class entrepreneur who worked tirelessly on improvements and could only raise the financial resources to implement some of his ideas by partnering with others. Watt also faced a second level of difficulty not with capitalists, but with other entrepreneurs: the obstacles posed by the state apparatus. These manifested themselves particularly in the form of legal difficulties with his patents.
The true birth of capitalism, however, falls on December 31, 1600, when Queen Elizabeth I of England granted the newly founded East India Company (EIC) the privilege of trading on the Indian subcontinent. The EIC was not the world's first joint-stock company, but it was arguably the first with the full profile of capitalism: above all, it was founded on close ties between private capital and the state, which granted it advantages and privileges—the basis for exploitative activities for which the term imperialism was later coined. The EIC perfectly embodied the interpenetration of state and private power; it organized administration, tax collection, and military control on the Indian subcontinent, thus fully assuming sovereign functions.
Three key characteristics of imperialism, as they resulted from the cooperation between state power and capitalists, can be identified. First, this is the anti-principle of domination through the sowing of discord among the ruled, especially between religious groups and social classes (castes); second, exploitation through the disruption of market mechanisms; and third, the destruction of independent livelihoods.
The latter occurred, among other things, by declaring the traditional tax collectors, known as Zamindars, to be landowners, thereby transforming the previously independent farmers into landless serfs and turning the tax collectors into a landed aristocracy with unearned income—naturally, dependent on their imperialist masters. / Klaus Schulte-van Pol, The Grab for India, in: Zeit Online, December 14, 2000.
Soon after the onset of the Industrial Revolution (invention of the mechanical loom in 1786), the EIC exported enormous quantities of cheap, industrially produced cotton fabrics from England to India, causing Indian hand weavers to lose their livelihoods. While industrial production had also replaced hand-weaving in Europe and the USA, the former weavers quickly found other employment in industry. In India, however, they were literally left to starve to death because industrialization was explicitly prohibited.
The EIC's control of the Indian subcontinent followed the principle of extracting maximum profit while minimizing costs. To this end, an indirect form of rule was established, which functioned largely while leaving the administrative and judicial apparatus in the hands of the previous Mughal rulers. They were content to control these rulers in turn, which was possible with an initially manageable military potential.
In India, the EIC presented a full-scale capitalist program:
Minimal effort on its part through the establishment of a power hierarchy of autonomously acting collaborators
Protection from competitors through state privileges
The application of structural violence, in its most extreme form of land expropriation
The creation of custodial positions for collaborators
The destruction of independent livelihoods
Thus, creating a class of uprooted people
The placement of some of these uprooted people in exploitative labor conditions
Such a system based on plunder generates enormously expanding business and profits for a temporary period; at times, the EIC accounted for roughly half of all world trade. However, it lacks sustainable stability. When the pressure on a plundered, "agentic state"-controlled middle-class and proletarian population reaches the level of existential threats, resistance arises and can only be suppressed by the ever-increasing use of power. At the height of its influence, the East India Company maintained a force twice the size of the entire British Army. The company was forced to cease operations in 1874 following mounting public pressure—pressure that even extensive lobbying could not overcome. However, this did nothing to clarify the true nature of the relationships between the state and private capitalists.
The traces of the world's largest corporation's activities have widely been erased. Reminders of this historical disgrace, which would serve as a crucial warning, are evidently politically undesirable, as there is no public museum or monument anywhere in London. Instead, in 1971, a new company was founded under the old, now trademarked, name, reviving the empire's former glory with its upscale merchandise, while its exploitative business practices, including the opium and slave trades, are dismissed with a few apologetic sentences. Today's company, The East India Company®, credibly emphasizes its social commitment, which would be entirely commendable were it not for the obvious attempt to retrospectively create a positive image for the historical corporation along with its corporate name.
Even though India was designated a Crown Colony of the British Empire, it was never, in the true sense of the word, a colony, but rather a vassal territory granted for exclusive exploitation. Significant British settlement activity, that is, colonization accordnig to Roman tradition, practically never took place on the Indian subcontinent.
The historical example of India offers three insights. First, the imperialism of the colonial era exhibits all the characteristics of capitalism—whose globally expansive side was a logical consequence of its drive for power.
The second insight is that imperialism is not synonymous with colonialism, because the latter, as an overarching and multifaceted phenomenon of an entire era, also encompassed colonization—that is, settlement activity involving exploration and development. In contrast to the largely destructive business activities of capitalists, colonization by bourgeois emigrants carried European civilization to other continents, thereby giving rise to significant, civilized nations with considerable integrative power, particularly throughout the Americas and the Australian-Pacific region. This clear distinction was also reflected in the structure of the British Empire. The few settler colonies of Canada, Australia, New Zealand, and South Africa were directly under the control of the British government. In contrast, the so-called Crown Colonies, which were open to exploitation by privileged trading companies, were under the control of the royal family, specifically within a network of representatives of the commercial and financial establishment known as the "Crown." The Crown's seat was the City of London, a special district with its own sovereign rights, which it retains to this day.
... Thirdly, the example of India under the EIC illuminates a characteristic of capitalism/imperialism that runs like a red thread through its history: the destructive attitude towards all independent individuals, groups, and—in the international context—states. In particular, every form of free, independent economic activity, no matter how simple, is targeted, its development hindered, or outrightly destroyed.
This mindset, aimed at oppression and paternalism, had to be disguised as best as possible by capitalists during their meteoric rise in the free society of the USA. However, the immense power that accompanied their economic success, and its anti-freedom manifestation (contrary to their professed commitment to freedom—see Chapter A 31), are becoming increasingly difficult to conceal.