British capital in Malaysia (Part 1)

Up till a few months ago British and Indonesian soldiers were butchering each other in the jungles of North Borneo. With the ending of “confrontation” Tunku Abdul Rahman, Prime Minister of Malaysia, said that it was a “victory of the forces of good against the forces of evil”. But, when it is known that this relatively small area provides over one-third of the world’s natural rubber, is a leading producer of tin— and that nearby Brunei has the largest oilfield in the Commonwealth, it becomes clear that the war in Malaysia had very little to do with a struggle between “good” and “evil”. The prizes at stake were large enough for the British government, representing the general interest of British capital, to consider it worth spending £255 millions each year to maintain its armed forces in the country.

The original cause of British intervention in Malaya was trade. For this reason the island of Penang was rented on perpetual lease in 1786, the island of Singapore was bought in 1819 and the decayed port of Malacca was obtained from the Dutch in 1824. From these bases British “protection” was extended—so that between 1874 and 1909 the nine Malay states were brought under control. The sultan of each state signed a treaty by which he agreed to accept a resident adviser and to follow the “advice” in all matters except those that concerned the Moslem religion and Malay custom.. This arrangement still persists in the oil state of Brunei; the Sultan remains the nominal ruler but it is the British government, through its High Commissioner, which is responsible for all external affairs and defence.

Malaya in the 1880’s has been described as a museum piece of Asian feudalism, roughly similar to 12th century France or Germany. But with the rapid development of the tin and rubber industries this feudal backwater found itself hurled into the modern, capitalist world. The state of the country was suddenly determined by the prices of these two commodities and no longer by civil wars between rival claimants to the throne. By 1914 the value of foreign, chiefly British; capital in Malaya had already reached $.US 194,000,000. When the Second World War broke out this figure had been dwarfed and there was something like $.US 260,000,000 of British capital alone invested in the tin mines, rubber plantations, etc. In addition there was a further $.US 82,500,000 invested in government loans, which were often floated in London. French, Dutch, Chinese, Japanese and American capitalists had all staked their claims in the rush to exploit Malayan workers, but it was British imperialism which held the whip hand. In recent years there has been some reticence about revealing the total amount of British capital invested in Malaya but some idea of its enormity can be gauged from the fact that in 1961 remitted profits on direct, foreign investment from the Malayan Federation were $.M 321,000,000. In the same year a further $.M 137,000,000 flowed into the country as private, direct, long-term investment. It would be inaccurate to picture this as a one-way process. For example, the native capitalist class in Malaya—through its government—declared its official overseas assets to be $.M 825 millions at the end of 1960. These consisted mainly of British government securities, including local authority mortgages. A clear example that the exploitation of the world’s workers by the international capitalist class is a process that cuts across all national boundaries.

Although Malaya yields approximately one-third of the total world output of tin, it is interesting to note that only some two per cent of it is now produced by the traditional dulong washers. These are individual collectors who concentrate the ore by hand, using a pan in the beds of streams. There are upwards of a hundred mines owned by British capitalists and this represents about three-fifths of the total industry. Its contribution to the profits remitted out of Malaya, taking good years with bad, is a reasonably close rival to that of rubber.

The history of the tin industry is one of desperately trying to impose some sort of order on to the chaos of capitalist production. During the inter-war period an International Tin Committee was formed whose object was “the adjustment of production to consumption and the reduction of surplus stocks by the restriction of output”. This was set up largely as a result of the slump of 1930 when tin prices fell disastrously. The verdict of economists on this attempt at enforcing price stability is that “it was unable to prevent violent short-term fluctuations in the world price”. (L. A. Mills—University of Minnesota). After the Second World War it was confidently suggested that these “short-term fluctuations” could be ironed out by means of a world buffer stock of tin. This was the method adopted when international control of production was again established in the nineteen-fifties. Just how successful this has been is demonstrated by the table below.

As can be seen, after 1958 there was a run-away increase in prices and once again the professional economists were forced to admit that capitalism reduces the most carefully-laid plans to a shambles. Thus, the Economist ruefully made the point:

“The tin agreement, which is based on the manipulation of a buffer stock, and was intended to cope mainly with price declines, has been faced with unmanageable rises. The buffer stock manager has had no tin to sell since October, 1963. But, despite the long list of unsuccessful agreements, primary producers go on trying to find the ideal formula. What else can they do?” (10th July, 1965)

Any socialist could supply the answer: nothing at all, within the framework of capitalism. Only the ordered production of a socialist society provides a solution. The economists, yearning for an “ideal formula”, resemble nothing so much as the alchemists who searched in vain for the Philosopher’s Stone. (Incidentally, it has since proved just as hopeless to deal with price declines. Since January of this year, tin has fallen nearly £180 a ton on the London Metal Exchange).
J.C.