When we talk about globalization today—free markets, deregulation, and borderless trade—we often forget its darker origins. At the heart of this system lies a peculiar alliance of two names you wouldn’t expect to see together: Adam Smith and Karl Marx. Both are considered ideological opposites. Smith, the father of capitalism. Marx, the father of communism. Yet both, in different ways, helped justify and legitimize the expansion of the British Empire through its most powerful tool: the East India Company (EIC).
This article from the EIC to MNC Series, takes a sharp look at the forgotten foundations of modern economics – how Adam Smith and Karl Marx supported British East India Company’s free trade agenda, from opium wars to colonial globalization.
Adam Smith: The “Father of Economics”… and EIC Propagandist?
Adam Smith is often celebrated for his 1776 book The Wealth of Nations, where he laid out the principles of what we now call free trade. But what’s less known is his connection to the British East India Company and how his ideas served the expansionist interests of empire.
Smith believed the best economy is one where everyone follows their own selfish desires—what he called “enlightened self-interest.” This invisible hand, he argued, would guide markets and societies to prosperity. Under this logic, even harmful trades like opium were just “commodities” subject to supply and demand.
That’s right—Smith defended the EIC’s trade in opium, a drug that devastated China in the 19th century. Why? Because, in his view, governments shouldn’t interfere in markets. If people wanted opium, then supplying it was a legitimate business—never mind the addiction, social collapse, or wars it caused.
Smith’s “free trade” wasn’t so free for the colonies. It meant removing national barriers, crushing local industries, and opening up markets—for British goods, British finance, and British drugs. Sound familiar? It’s the same liberalization script that global institutions push today under the banner of “globalization.”
Karl Marx: Opponent of Empire… or Useful Idiot?
Karl Marx, often hailed as a critic of capitalism, surprisingly shared some of Smith’s views on free trade—especially when it came to empire.
While Marx wrote passionately about class struggle and worker exploitation, he also saw British colonialism as a necessary evil. In his writings for the New York Daily Tribune, Marx praised the British destruction of feudal systems in India and China, claiming that capitalism would ultimately “modernize” these societies.
His most shocking defense? The First Opium War.
In a 1853 article, Marx wrote that British cannons blasting open China’s ports and forcing opium down its throat was actually a step forward. According to him, this brutal act shattered China’s “hereditary stupidity” and backwardness. The collapse of the old Chinese order, he believed, was the painful but necessary beginning of historical progress.
Marx’s justification echoed the old colonial trope: “We’re destroying you for your own good.” It’s the same logic later used to justify the Vietnam War, Iraq invasion, and today’s global “development” interventions.
The EIC Model: Free Trade at Gunpoint
Between 1836 and 1900, China tried to resist the opium trade. The result? The infamous Opium Wars. Britain, and eventually other Western powers—including the U.S.—attacked and humiliated China, forcing it to legalize opium and open its markets.
This wasn’t commerce. It was coercion.
By 1900, during the Boxer Rebellion, Western armies joined forces to crush Chinese resistance once and for all. Free trade, once again, was secured—at the barrel of a gun.
Meanwhile in India, after the anti-colonial uprising of 1857, the EIC lost its charter and the British Crown took direct control. Queen Victoria was declared Empress of India in 1877. But the system of extractive trade continued.
Fast forward to the 1920s. India, recognizing the damage opium had caused to China and Indian agriculture, launched a movement against its production.
The British response? They formed a commission to investigate and promptly decided to continue opium cultivation. Revenue came first.
Only in 1924, under global pressure—from the U.S. Congress, Japan, and the League of Nations—was opium production shifted to China, Iran, and Afghanistan.
Slaves, Coolies, and Commodities
Opium wasn’t the only “product” the East India Companies dealt in. Slavery was just as profitable. From Africa to China to India, millions of people were bought, sold, and shipped like cargo.
In South America, they worked plantations and mines. Indians were labeled “coolies,” Chinese were called “pigs,” and Africans were simply “slaves.” The EIC treated them all as products—with zero cost of production and 100% profit margins.
By the early 20th century, the British had trafficked millions of human beings to build the global economy we now call “free trade.”
The Legacy We Inherit
The roots of today’s global economic system lie not in benevolent ideas of cooperation or mutual progress—but in war, drugs, slavery, and empire.
Adam Smith gave it a moral framework. Karl Marx gave it a dialectical excuse. The East India Companies made it a business model.
Today’s globalization—championed by multinational corporations, Silicon Valley, and supranational bodies—is just a modern version of the old imperial formula: extract, addict, and control. The names have changed, but the logic remains.
