Political Economy and Sugar Business in the British Empire: Mauritius Miracle Postponed? by European University Institute

A conversation with Karolina Hutkova (London School of Economics) on 21 July 2021

In the framework of the Summer talks series: Connected histories of capitalism.

The development of the nineteenth-century Mauritius sugar industry illustrates the ways in which business activity in British colonies was shaped by trade and industrial policies. British policies, although not calculated to ruin colonial producers, often gave preference to consumers and/or producers at home and this had unintended effects on colonial economies. From the first quarter of the nineteenth century, British policies became increasingly more laisser-faire. The proliferation of such laisser-faire trade policies was gradual and was initially embodied by a shift towards the equalisation of customs duties within the Empire. In the next stage, the policies of Imperial Preference, defined by lower duties, leveraged on imports from the Empire, were phased out. These policies were intended to bring revenue to the Exchequer through the expansion in the volume of imports, to expand access to consumer goods at cheaper prices, and to create an incentive for more efficient production in colonies. However, these policy changes were largely unanticipated by entrepreneurs in the colonies, who had very limited time to adapt to the new trading environment. The aim of the British policies was to put imports from both within and outside the Empire on equal footing. Yet, producers outside the Empire were often beneficiaries of various forms of support from their own governments which British producers did not enjoy. The sugar industry is a case which illustrates the effects of changes in British trade policy on entrepreneurs in the colonies. Nineteenth-century sugar industry in the British Empire did not enjoy technological leadership and the competitiveness of sugar plantations and refining was starting to lag behind the major competitors – Brazil, Cuba, Java, and Continental Europe. Moreover, in the case of sugar industry, the equalisation of duties can hardly be seen as putting importers from outside the Empire on equal footing with British producers. The sugar industry in Brazil and Cuba continued to rely on slave labour beyond the end of the Imperial Preference regime in 1846. Moreover, the second part of nineteenth century saw the rise of the sugar industry in Continental Europe fostered by export bounties and tax exemptions. Sugar producers within the British Empire, on the other hand, continued to face challenges that were often exacerbated by the Empire’s political economy system. The Mauritius sugar industry offers an ideal illustration of the challenges that British sugar entrepreneurs faced since Mauritius possessed ideal environmental conditions for sugar production and the development of the industry was shaped mostly by access to markets, access to credit, and entrepreneurship on the part of the sugar businesses and organisations such as the Mauritius Chamber of Agriculture.

This chapter reflects on the theories of entrepreneurial leadership and on the arguments made by Bishnuprya Gupta and Tirthankar Roy pointing towards the inadequate investment into agricultural technologies on the part of British colonial government and to the limitations in access to financial capital as leading factors in sustaining underdevelopment. The chapter complements such arguments by showing the role inadequate Mauritius financial infrastructure had on the prospects of business survival in times of crises and opportunities for technological upgrading. It further adds to the debate on the role of colonial government in development by pointing towards the negative effects of sudden unexpected changes in trade policies on businesses.