It is popularly asserted that many countries became wealthy via colonialism, essentially sucking the wealth out of other countries. This claim ignores the fact that many countries that did little to no colonizing, like the US and Germany, are richer today than countries that did extensive colonizing, like Spain and Britain.
It sounds to me like the claim is backwards. Colonialism doesn’t make countries wealthy; wealth makes countries able to have colonies.
Colonies, on net, probably lose money. I don’t have a definitive cite for this and frankly, if I did, I’d be cherry-picking because I’m sure there were colonies that did make money and there are studies that show a variety of outcomes for different countries, especially given that the term “colonialism” covers a lot of different things.
Here’s an example from one article discussing the issue:
Conversely, John Keynes believed British savings would have been better employed at home in creating jobs and modernizing the capital stock of the British economy2. Marseille 1984, Davis and Huttenback 1986, Patrick O’Brien (1988), Fitzgerald 1988 and ForemanPeck 1989 followed this idea and provided evidence that colonization was costly to imperial economies. They made three arguments: first, public investments in the colonies were burdensome for French and British taxpayers3; second, the mainland private sector suffered because some private investment was diverted towards the colonies and earned lower than expected returns; and third, colonial trade led to lower productivity gains due to a lack of competition and colonial protectionism. (Marseille 1984 and O’Brien 1988). …
3 Davis and Huttenbach 1986 argue that British taxes would have been 20 percent less in the absence of empire because the United Kingdom bore most of the defense costs of the British Empire; Marseille 1984 estimates that the investment in public financial assets in the colonies amounted to 7 percent of metropolitan public
expenditures in the 1910’s, and 4 percent from 1947 to 1958; Marseille 1996 estimates that the trade deficit compensated by France’s public subsidies to the colonies represented 8-9 percent of metropolitan expenditure in the 1920s and from 1945 to 1962.
The authors of this study claim that Spain was economically retarded by its colonies.
The British also paid to enforce the ban on slave trading across the Atlantic:
For 60 years after the 1807 act, the Royal Navy was used to enforce the British ban by shutting down the slave trade routes and seizing slave ships at sea. The West Africa Squadron patrolled the seas liberating around 150,000 enslaved Africans. The majority of the British Slave Trade was suppressed very rapidly, but as the British ships withdrew from trading the French, followed by the Spanish and Portuguese, took their place. After 1815, with Europe finally at peace, British supremacy at sea was secured, but, even with a powerful navy, suppressing the trade proved difficult, dangerous and very costly.
It was a huge task requiring co-operation from the governments of all the countries involved. Heavy subsidies were paid to induce other countries to curtail their involvement through anti-slavery treaties with Britian. Smaller amounts were also paid to numerous African chiefs to cease their involvement. The cost of maintaining the British squadron was also high. Initially ships operated out of the Cape of Good Hope but in 1819 a separate West Coast of Africa Station was created. By 1825 there were seven ships on station, manned by around 660 men. This grew to around 25 vessels by 1845 manned by around 2000 British sailors and nearly 1,000 ‘Kroomen’, experienced African fishermen.
Let’s see if we can find some numbers:
In this article we develop a theory of costly international moral action by investigating the most expensive example recorded in modern history: Britain’s effort to suppress the Atlantic slave trade from 1807 until final success in 1867. Britain carried out this effort despite its domination of both the slave trade and world sugar production, which was based on slave labor. In 1805-1806 the value of British West Indian sugar production equaled about 4% of the national income of Great Britain. Its efforts to suppress the slave trade sacrificed these interests, brought the country into conflict with the other Atlantic maritime powers, and cost Britain more than five thousand lives as well as an average nearly 2 percent of national income annually for sixty years.
Lack of money is commonly cited as a reason for decolonization, eg:
The emergence of indigenous bourgeois elites was especially characteristic of the British Empire, which seemed less capable (or less ruthless) in controlling political nationalism. Driven by pragmatic demands of budgets and manpower the British made deals with the nationalist elites.
Further, we note that the end of colonialism did not cause nations like Britain and France to economically collapse:
John Kenneth Galbraith argues that the post–World War II decolonisation was brought about for economic reasons. In A Journey Through Economic Time, he writes:
“The engine of economic well-being was now within and between the advanced industrial countries. Domestic economic growth – as now measured and much discussed – came to be seen as far more important than the erstwhile colonial trade…. The economic effect in the United States from the granting of independence to the Philippines was unnoticeable, partly due to the Bell Trade Act, which allowed American monopoly in the economy of the Philippines. The departure of India and Pakistan made small economic difference in the United Kingdom. Dutch economists calculated that the economic effect from the loss of the great Dutch empire in Indonesia was compensated for by a couple of years or so of domestic post-war economic growth. The end of the colonial era is celebrated in the history books as a triumph of national aspiration in the former colonies and of benign good sense on the part of the colonial powers. Lurking beneath, as so often happens, was a strong current of economic interest – or in this case, disinterest.”
In general, the release of the colonised caused little economic loss to the colonisers. Part of the reason for this was that major costs were eliminated while major benefits were obtained by alternate means. Decolonisation allowed the coloniser to disclaim responsibility for the colonised. The coloniser no longer had the burden of obligation, financial or otherwise, to their colony. However, the coloniser continued to be able to obtain cheap goods and lobar as well as economic benefits (see Suez Canal Crisis) from the former colonies. Financial, political and military pressure could still be used to achieve goals desired by the coloniser. Thus decolonisation allowed the goals of colonisation to be largely achieved, but without its burdens.
Weirdly, the arguments in favor of colonialism are often framed in terms of “burdens” that whites ought to undertake. West Africa became known colloquially as “the white man’s grave” because so many died there, eg:
To expand on this: in the Orkneys, the land was rather barren; there were no trees because there were always gales blowing, but that didn’t bother me, I enjoyed it there, I wished I could have done my entire service there, but I couldn’t. I had to go to West Africa, which was known as ‘White Man’s Grave’, which it is. Anyone who stays there for five years can expect to have something radically wrong with them afterwards, because of the climate etc.
The doctor, Harold Tweedy then found that I had blackwater fever, sleeping sickness, from the bite of the tsetse fly, and malaria, all together. … They thought that I was going to die so for good measure John Busby gave me an injection of triparcimide. This was specific against the sleeping sickness which normally requires a prolonged course of treatment, but in a miraculous manner the blackwater fever seemed to evaporate and the fevers subsided. I was very weak and yet I felt remarkably better and in a week I was put in a hammock and taken down to the sea-shore and carried through the water to a launch. The Paramount Chief and his Tribal Authority stood in the water to bid me farewell and I remember leaning out of the hammock to shake the chiefs hand and say to him that I would be back to talk that alleged murder case and other things. …
It was evening and as the sun went down over the sea as one looked westward I noticed the phenomenon of the green flash, an optical illusion which one sometimes saw. In the morning I was feeling all right but an orderly brought me some tea. It was dark. He then came to shave me; it was still dark. I just thought they started early here. Then he brought me some breakfast; it was still dark. I asked him the time. It was 8 a.m. when the sun was well up and I could not see it. I had gone blind overnight.
(Note that none of this is arguing that colonialism was a net gain for the colonized. It is entirely possible for something to be a net loss for everyone involved.)
As for wealth allowing colonization:
According to the data gathered by Professor Angus Maddison in The World Economy: A Millennial Perspective, in 1600 India’s per capita GDP was $550 (1990 dollar levels), which remained the same for nearly a hundred and fifty years (the period of Mughal decline), and was slightly lower at $540 by the time the British became politically active in India in the 1750s. …
At the same time the British per capita GDP increased from $974 in 1600, to $1250 in 1700, $1424 in 1757,
In other words, India economically stagnated while Britain was zooming forward just before Britain colonized India.
So why colonize at all?
I propose that colonizing is akin to gambling. Sometimes you win. Sometimes you lose. If you can do it with someone else’s money, all the better. Some people love to gamble and will keep doing it for years. But in the long run, the house always wins.
“Colonialism will make us lots of money” sounds great, and clearly lots of people believe it. More likely, though, colonialism made some people a lot of money at the expense of a lot of other people losing money. So long as a country has lots of money to throw around or bad accounting, they can keep going, but eventually, repeat losers face insolvency and have to stop.