Why We Need to Integrate the Historiography of Colonialism and the Historiography of International Business

25 07 2014

There is a sizeable historiography on the intellectual and cultural history of colonialism. (See the book covers below). The scholars who study this topic typically work in departments such as cultural studies, English literature, postcolonial studies, as well as history. This body of literature shows that early modern and modern Westerners invented and then manipulated essentialized ideas about ethnic and racial differences to suit a variety of ends.  Among historians of colonialism, the most common narrative does something like this: medieval Europeans, much like the people of ancient Rome, did many horrible things but they weren’t racist and did not attach much importance to skin colour. Racism and the other ideologies that were part of colonialism were invented in the age of European overseas expansion and then filtered down in the cultures of all of the colonial powers, plus their oversee offshoots. People used these ideas to justify taking the land of Native Americans, enslaving Black Africans,  banning Asians from migrating to Australia, etc. In the nineteenth century, the advent of pseudo-scientific racism made racial categories seem even more important to contemporaries. This belief in the reality and importance of race peaked in the middle of the twentieth century. After 1945, most people, at least in the liberal democracies of the West, came to realise that race was just a stupid cultural construct.  Although we are still dealing with many of the legacies of colonialism, particularly the persistence of various forms of subtle racism and Orientalist modes of thought, things are much better. Today, we mainly associated bigoted comments with elderly people, which is a very good sign.

 

 

 

 

 

There is a large body of historiography on the history of international business. (See book covers below)  Some of this historiography overlaps with economic history, imperial history, business history, and the history of globalization. This literature shows that globalization is hardly new and that there have been successive waves of globalization and deglobalization. This literature shows that while the modern MNE has important precursors in the form of the chartered trading corporation (e.g., the East India Company) and the long-distance networks created by various mercantile diasporas, the MNE as we know it did not emerge until the late 19th century. The scholars who do research on the history of international business are employed in a wide range of departments and faculties, including economics, various management school departments, political science, plus history departments.

 

The problem is that these two groups of scholars don’t really speak to each other that often. If you read the standard works on the history of colonialism, you don’t see that much evidence that the authors a) understand how business operates b) are interested in how contemporary ideas about the alleged inferiority of different cultures influenced the strategies and structures of firms.  Similarly, business historians rarely engage with the topic of race. There are some important “cross-over” works that speak to both scholarly communities. Susie Pak’s new social history of J.P. Morgan is a stellar example of that, as is Maria Misra’s book on race and business in British India. But such works are rare.

 

 

 

We can speculate on why these two communities of scholars do not talk to each other. Perhaps business historians want to play it safe rather than touch on emotive issues such as race and ethnicity.  Perhaps cultural historians don’t feel comfortable dealing with lots of numbers and balance sheets.  Perhaps some, but not all, cultural historians have an ideological bias against studying business.  Perhaps they dislike profit-grubbing business of all types. Whatever the reason, the literature on this topic is underdeveloped.

That’s a problem for several reasons.

First, we’re missing out an opportunity to contribute to an important area in social-scientific research. Economists have recently developed some interesting ideas for thinking about how cultural constructs such as racial and ethnic identities bias and distort economic exchange. This literature can obviously be traced back to the late Gary Becker, who argued in the late 1950s that some individuals have a taste for discrimination that influences their behaviour.  A much newer perspective on the topic is provided by

Luigi Guiso, Paola Sapienza, and Luigi Zingales. “Cultural biases in economic exchange?.” The Quarterly Journal of Economics 124, no. 3 (2009): 1095-1131.

How much do cultural biases affect economic exchange? We try to answer this question by using the relative trust European citizens have for citizens of other countries. First, we document that this trust is affected not only by objective characteristics of the country being trusted, but also by cultural aspects such as religion, a history of conflicts, and genetic similarities. We then find that lower relative levels of trust toward citizens of a country lead to less trade with that country, less portfolio investment, and less direct investment in that country, even after controlling for the objective characteristics of that country. This effect is stronger for good that are more trust intensive and doubles or triples when trust is instrumented with its cultural determinants. We conclude that perceptions rooted in culture are important (and generally omitted) determinants of economic exchange.

 

 

The article by Guiso et al., has over 500 citations and deals with some massively important issues of contemporary relevance, but business historians and historians of globalization haven’t really drawn on it yet. In fact, the IB literature has largely ignored, as far as I can see.

Second, looking at this issue is pretty important if we are to understand the historical processes that helped to produce our current world, which is characterized by high (but thankfully falling) income inequality between individuals.

Third, the residual legacies of the colonialist ideologies of yesteryear continue to influence how Westerners think about the world. To the extent to which such ideas create cultural myopia and prevent Western entrepreneurs from discovering opportunities for mutually advantageous trade with non-Western countries, the world as a whole will be poorer. Similarly, if anti-Black racism keeps a Chinese entrepreneur in Guangzhou from discovering a profit opportunity in Africa, everyone suffers. Studying how colonialist ideas influenced business behaviour in the past can help us to identify “missing opportunities” in the present.

I would like to propose several “ground rules” to guide how we might study this complicated and fraught topic before sketching out a possible way of proceeding to develop a research agenda and community on this topic.

Rule Number 1:  Don’t assume that when Europeans and other Westerners traded with non-Western people, they were necessarily exploiting them.  Many people in Canada assume that the fur traders of the Hudson’s Bay Company routinely and consistently cheated gullible aboriginal individuals out of value furs. The folk belief persists even though historical research has demolished this myth and has shown that the natives trappers were shrewd businessmen, good at bargaining, and true partners in the fur trade enterprise.

Rule Number 2: Be multi-disciplinary. Build research teams that include people from a range of disciplinary backgrounds so that you can combine qualitative and quantitative techniques.

Rule Number 3: Don’t assume that the adoption of discriminatory attitudes and practices by an economic actor necessarily impoverished them: market forces don’t always punish racists, though they often do under a regime of perfect competition. Let the historical record determine your conclusions on a case-by-case basis.  That’s what being a historian is all about. Sadly, Gary Becker’s insight the market forces will punish racists under certain circumstances has degenerated into the view that the free market will always punish those who discriminate (see video below). Alas, the perfectly competitive market is a pretty rare historical phenomenon.

 

Rule Number 4: Don’t assume that Westerners are more discriminatory than non-Westerners. Non-Western cultures had economically irrational systems of ascribed status long before Western explorers showed up. Moreover, while modern scientific racism may have been a Western invention, it was exported to other parts of the world and adopted by local. In the 1950s and 1960s, it was the liberal democracies around the North Atlantic that led the world in passing laws that banned racial discrimination in economic transactions. Hong Kong, which has a problem with discrimination against its South Asian minorities, only banned job discrimination on the basis of race in the private sector in 2009. (A ban on such discrimination in the public sector was brought in in 1996).

Rule Number 5:  Ask the following question: can the subject of the history of colonialism can be written as a comedy rather than just a tragedy?  A Canadian historian of aboriginal history recently argued that the problem with the existing historiography on the relations between whites and natives was that it was always written as a tragedy. The basic plot of this tragedy goes like this: the Natives had their own societies and lived well,  then the greedy whites showed up and killed them and gave them smallpox, and now they are a poor underclass. This historian did not dispute that there was a lot of truth in this way of viewing history and that it is certainly a good way of thinking about the histories of some of Canada’s 500-plus First Nations communities. Some of these communities are indeed characterized by massive poverty and social problems. In other cases, the First Nations communities are now doing quite well by many statistical measures. In such cases, it may sometimes make more sense to view the community’s historic relationship with whites as a comedy of errors: two groups of individuals who were separated by a massive language and cultural barrier came into contact, some mayhem ensued, but by Act V the two groups had learned to get along and to laugh at their previous misconceptions.

It seems to me that the history of colonialism, particularly in countries that are now quite prosperous (e.g., Singapore) might be written as a comedy. Whether we write the history of colonialism as a tragedy or a comedy has obvious implications for how we view MNEs founded in the heyday of colonialism.

 

Here is a road map about how we could move ahead.

 

Step 1. Assemble an inter-disciplinary team.

Step 2. Write a meta-analysis of the existing secondary literature on colonialism and international business. Look for secondary sources that talk about colonialist discrimination in international companies. Even though this is an under-developed area of research, there are enough books and articles on the topic to allow you to write an article doing a meta-analysis. After compiling a list of the publications on this topic, go through and see what the author has said about the impact of the colonialist attitudes on the financial performance of the firm or firms being discussed.

Step 3. Crowd-source your intellectual development. Try to organize workshops and informal gatherings where ideas can be kicked around. Try to attract real bright people who don’t have emotional or ideological hang-ups about the issues being discussed.  Go for bright ambitious people who don’t have an axe to grind and who simply want to publish in lots of top-tier journals, generate research income, and maybe pick up some consulting income from MNEs.

Step 4. Think about how this research could be useful to a wide range of people outside of the academe.

Step 5. Start by analysing the impact of colonialist ideas on economic exchange in the British Empire, which was the largest and best documented of the European colonial empires.

 

If you are interesting in being involved in such a project, please email me.

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