43 1.2.2 Emigration A further factor in explaining the lack of indigenous industrial capacity is the unprecedented high level of emigration. Emigration reaped the country of consumers, entrepreneurs and workers, thus reducing demand and inhibiting the growth of the home market. The Great Famine is commonly seen as the starting point of the great Irish exodus. Although the loss of life and the numbers of the population leaving the country during the famine were tragically unique, emigration had begun earlier. Propelled by the Great Famine, it became a fact of Irish life well into the 20th Century. Nevertheless, the decline in the population was not the result of the Great Famine. This unprecedented disaster served to accelerate the process of emigration.12 The underlying reasons for the exodus of the population lie in the socioeconomic structure of rural Irish society briefly mentioned above. British subjugation of Irish society led to a highly unequal rural society. Within this context, settlement patterns were also of importance. The Tudor and the Cromwellian campaigns forced Irish Catholics to settle in the less fertile west of the country (Elvert 1996: 227). Subsequently, the west of Ireland had the highest levels of poverty and social unrest leading to a pronounced east-west divide. The west was characterised by the Cottiers und coolie classes. These encompassed landless labourers and smallholders, living off unviable plots, working as day labourers and receiving their wages in land. They constituted an agricultural proletariat. In contrast, agricultural production was more diversified on the more fertile soils of the east and the midlands leading to the rise of the middleclass tenant farmer. Nevertheless, the numbers of cottiers doubled the more affluent rural and urban middleclass (Foster 1989: 332). The Transformation of Agriculture The transformation of agricultural production coupled with the ongoing deindustrialisation exacerbated the socioeconomic situation in 19th Century rural Ireland. This process beckoned the rise of the middleclass tenant farmer and the demise of the agricultural labouring classes. Following the end of the Napoleonic Wars in 1815 prices for previously profitable tillage farming fell. Furthermore, the rise in incomes in rapidly industrialising Britain caused an increased demand for beef. As a result of declining transport costs, the prices for labour-intensive products, such as 12 Between 1815 and 1845, an estimated 1.5 million people had already left the country prior to the Great Famine (1845-1849), which cost over 1 million lives and caused 1.5 million Irish men and women to leave the country. Between 1849 and 1870, a further 1.5 million people emigrated. By 1910, the Irish population was only 54% of its size in 1840 (Foster 1989: 337; Mjøset 1992: 221). 44 grain and milk products, fell and those for labour extensive sheep and cattle grazing rose (Foster 1989: 333; O’Malley 1989: 41).13 The plight of the poorest rural classes was further aggravated by the repeal of the Corn Laws in 1846. This measure allowed the import of cheap grain, thereby displacing expensive Irish grain from British and Irish markets, thus reducing the profitability of tillage farming (Foster 1989: 334).14 As cattle grazing became more profitable than grain production after 1830, farms became more concentrated. In combination with the ongoing process of de-industrialisation, the decline in labour intensive tillage farming and the increase in labour extensive pastoralisation resulted in high unemployment for the poorest rural class. An estimated 1.5 million people were affected by rural unemployment in 1841 and were unable to pay their rents (Mjøset 1992: 220). As a result, evictions increased as land was cleared for more profitable cattle grazing. Consequently, less land was available to non-grazier tenants. This, combined with the growth in population and predominant custom of partible inheritance mentioned above, led the remaining land to be divided into increasingly smaller plots, thus endangering the subsistence of the rural poor. This process strongly contrasted British experiences. Land enclosures introduced labour-intensive technological innovations through the higher levels of tillage farming (Elsenhans 1987a: 31; Landes 1965: 308-304). However, in Ireland they were unable to reduce rural unemployment, as land clearances reduced tillage farming in favour of pastoralisation (Foster 1989: 333). Rural unemployment as a result of the land enclosures for labour extensive pastoralisation increased the importance of the potato as the sole form of food for the rural poor. The weather conditions in Ireland supported its cultivation, enabling the agricultural proletariat to survive “by cultivating land without capital, other than a spade and a basket of seed potatoes” (Crotty 1986: 42). In the midst of this development, the potato crop failed again in 1845, thus destroying the staple food of the poor and leading to the Great Famine and increased emigration.15 Accordingly, the population decline followed the east-west divide, whereby the western counties with the largest proportion of rural poor were hit hardest compared to the more developed and affluent eastern region of Ireland (Elvert 1996: 341, 350; Foster 1989: 322). The tragedy of the Great Famine served to accelerate the forces of depopulation. Although emigration had been well under way due to the effects of deindustrialisation before the Great Famine, similar to the experiences in other Euro- 13 Crotty (1986: 43) estimates a long-term (1820-1970) fivefold rise in cattle prices compared to wheat and threefold rise compared to diary products. 14 Between 1820 and 1870, cattle exports increased by the factor six and Ireland became a net importer of grain (Elvert 1996: 341). 15 It should be noted that there was at no time an absolute shortage of food. However, the combination of unemployment due to labour extensive pastoralisation and de-industrialisation, lack of access to sufficient land, unusual weather, the specialisation on potatoes as the main source of nutrition and incompetent crises management culminating in sheer ignorance were responsible for the catastrophe (Elvert 1996: 341-353; Foster 1989: 325-331). 45 pean countries, the scale of Ireland’s demographic development during and after the Great Famine was tragically unique. Had emigration during the famine been the option of survival, post-famine emigration was driven by economic necessity in order to avert marginalisation through unemployment (Mjøset 1992: 62). The mass exodus of the population resulted in the shrinking of the internal market and the contraction of demand. Industrial employment in manufacturing fell from 27.3% in 1841, to 16% of the labour force in 1861. The total Irish labour force contracted by over 34% between 1841 and 1881 (Mjøset 1992: 221). By 1890, an estimated 3 million Irish born people lived overseas, representing 39% of the population (Foster 1989: 345). By 1910, the Irish population was only 54% of its size in 1840. Ireland and later the Irish Republic remained a comparative outlier in terms of emigration throughout the majority of the 20th Century (O’Connell 2000: 63). Detrimental Development Effects The resulting contraction of internal demand and slow growth of the domestic market hindered effective productivity gains, which could have enabled the unleashing of learning-by-doing processes in manufacturing. Furthermore, emigration led to the development of an open labour market with very elastic labour supply. This effectively impeded wages to fall to levels, which would have allowed unskilled wages to become competitive by sinking to divergent levels with those of the core regions in Great Britain. The process of de-population created labour scarcity and accordingly wages of unskilled labour rose threefold. Lower wages could have enabled low wage industrialisation such as in other small European countries during the 19th Century or in the case of the newly industrialising economies of East Asia in the 20th Century (Elvert 1996: 352; Barry 1999b: 31; Haughton 1995: 38). High wages for unskilled labour together with increased rural exodus accelerated the described trends in labour-extensive pastoralisation of Irish agriculture leading to increased live stock exports and a further concentration of farmland. The increased demand for live stock exports were supported by improved transport possibilities and led grazing profits to exceed labour-intensive tillage profits by over 30%. Subsequently, around 66% of small farms (between 1 and 5 acres)16 vanished between 1831 and 1851, whereas holdings of more than 30 acres increased from 17% to 26%. Correspondingly, the annual average number of live cattle exports increased six fold between 1820 and 1825 and 1866-1870, live sheep exports grew thirteen fold in the same time period (Foster 1989: 335; Crotty 1986: 44). De-industrialisation therefore enabled live stock exports to become the main source of Irish exports (Crotty 1986: 45). However, the lack of sufficient agroindustrial spillover effects caused a distinct developmental lock-in with live stock exports constituting the only major form of export income. The contrasting case to 16 (1acre = 4,046 m2) 46 Ireland in this respect is Denmark, which had a similar distribution of landholdings and dependent on British export markets during the 19th Century (Mjøset 1992: 214- 215). Nevertheless, Danish farmers were more diversified, specialising in labourintensive dairy cattle and pork. Additionally, Danish farms were more differentiated producing also cereals as well as fodder production. Cereals and fodder were mainly imported into Ireland from Britain. Forward and backward linkages in Danish agriculture allowed the specialisation in later industrial export niches (Katzenstein 1985: 166). A further striking difference was the introduction of cooperatives in Denmark and their strong acceptance by farmers. The cooperatives allowed the development of scale economies and their exploitation, thus increasing agricultural productivity (Mjøset 1992: 242-244). These cooperatives not only established important links between agricultural producers and producers of relevant services and goods. They also played a pivotal role in human and physical capital investment not only in the agricultural sector, but also supporting the later industrialisation of the country. Hence, as productivity gains and capital accumulation increased displacing labour, excess labour found demand in the sectors servicing agriculture (Katzenstein 1985: 167, 169). In Ireland, no such comparable organisation was developed until the 20th Century and these were only active in processing and marketing areas. Thus capital accumulation in Irish agriculture led to emigration, as the industrial and service sectors were too underdeveloped to take on displaced farming labour (Barry 1999b: 28). As Crotty (1986: 44) chillingly remarks, “people were replaced by more profitable livestock”. 1.3 Agricultural Export Dependency In summing up the modernisation blockages for both Ireland and Hungary, the development of both countries to agricultural suppliers explains the lack of indigenous industrial capacities. Backwardness in the form of a lack of technological and industrial capacity was the result of the culmination of both external and internal constraints resulting from the establishment of defective capitalism. In both cases, the external factors in form of imperial incorporation affirmed and guarantied the prevalence of the respective internal social and economic structures. Internal constraints, based on the unequal distribution of agricultural property rights, hindered the development of rural markets and demand for basic industrial and consumer goods. The high degree of land concentration resulted in a high level of income inequality. Consequently, the majority of the agricultural population was dependent on subsistence farming, thus crippling the development of rural markets due to low demand resulting from low incomes, as traditional consumption patterns prevailed. In both cases, imperial economic policies deepened the dependency on labourextensive agricultural exports in exchange for industrial imports. Externally-induced modernisation served to further increase this dependency. The nature of agricultural