Nos. 44-46, April 2008

Nos. 44 - 46
(April 2008):


India’s Runaway ‘Growth’: Distortion, Disarticulation, and Exclusion
III. Colonial Rule: Setting the Pattern of Distortion, Disarticulation, Exclusion1

India was no exception to the laws of historical development. Before colonial rule, the feudal structure of Indian society was in the process of being undermined. Production for the market formed a large segment of the economy (since land revenue was collected in cash or sold for cash); domestic and foreign trade grew, and merchant capital flourished, with some merchants acquiring fabulous wealth; a sophisticated financial system developed, geared to the needs of commerce; and the urban sector expanded, in which a high proportion of the population was employed in industrial/craft production. New elements began to appear – instances of private property in land (whereby land could be bought and sold like any commodity); the emergence of cultivation performed with hired labour; the setting up of some manufacture and mining enterprises worked with hired labour. Most importantly, in response to the increasing extraction of rent, there arose stirrings, revolts and movements of the peasantry and artisans of various regions, sometimes clothed as religious movements, sometimes led by local chieftains. These dealt blows to the Mughal Empire and accelerated its collapse.2

However, the new elements were still weak, scattered or sporadic; they were far from achieving the scale or cohesion to lead a social revolution. Whatever the reasons for the delay in the emergence of such a revolution (for which the tenacious caste system and the self-sufficiency of the village economy must have had some share of responsibility), it was forestalled by the arrival of colonial rule.

Transfer of surplus from agriculture to the imperialist metropolis
The effect of colonial rule can be glimpsed in two figures. In 1700 India’s share of world Gross Domestic Product was roughly the same as that of all of Europe – both were around 23 per cent; by 1952 India’s share was four per cent and Europe’s 30 per cent. India’s share of world manufacturing fell from almost one-fourth in 1750 to less than one-fiftieth in 1900.3

The new British rulers took the already excessive land revenue levels of their predecessors as a starting point, and increased them steeply by re-assessment and more efficient collection. Common to the two main systems of land revenue they introduced – zamindari and ryotwari – was the drive to maximise revenue. Thus even in the latter – in which, theoretically, the cultivator directly confronted the State – parasitic classes developed rights over the surplus, since the cultivator was forced to borrow to make revenue payments. Since land could now be bought and sold, it became a commodity – but of a peculiar type, subject to a heavy rent/revenue. This huge drain from agriculture was also a drain from the country itself, because the land revenue formed the main component of British drain from India. Agriculture, thus drained of its surplus, retrogressed: while agricultural technique remained virtually frozen at the levels of Mughal rule, per capita foodgrains output declined considerably. Peasants had no surplus to invest in maintaining productivity, let alone improving it.

In one sense colonial rule superficially resembled classical capitalist development in that it forced an increase in the share of production for exchange; but this condition has aptly been termed a “deformed generalised commodity production”.4 The peasant now had to pay the (hiked) revenue in cash and that too before the harvest, when he was short of cash; this rendered him dependent on merchants and moneylenders. The merchants and the moneylenders had a stake in encouraging tradeable crops rather than subsistence farming, and brought about a shift in cropping patterns. The decline of subsistence crops and the expansion of cash crops served the process of transferring surplus from the colony to the imperialist metropolis: (i) these crops could be exported; and (ii) India was paid for these exports out of the taxes levied by the British rulers in India itself – in other words, India in effect received nothing in return. (Some writers talk of ‘export markets’ being opened up for India with British rule. This is similar to someone robbing one, and then paying for one’s goods with the money he has robbed.) Since the replacement of subsistence crops with cash crops depressed the consumption of the poor peasantry, it can be said that the ‘surpluses’ were transferred out of the very subsistence of the poor peasantry. The spread of cash crops went hand in hand with the spread of hunger. The late 19th century witnessed a series of devastating famines and epidemics that wiped out millions; even after that malnutrition persisted.

Before British rule, a portion of the land revenues used to return to the region from which they arose, through the nobility’s purchases of goods from artisans; now, with the ousting of the earlier nobility and their replacement by the British, this source of demand for artisans’ goods vanished. The British imposed internal tariffs on Indian textiles and heavy tariffs or outright bans on their import into Britain, whereas British textiles were imported into India at low tariffs. India was converted from a leading manufacturer and exporter of textiles to a massive importer of them. This destroyed the section of the Indian textile industry producing fine fabrics for consumption by the earlier feudal elite. The industrial cities of the earlier period – Agra, Dacca, Surat, Patna, and others – declined in economic activity and population. Large-scale unemployment was thus a direct and enduring product of colonial rule. The share of industry in the workforce fell, as did its share in national income. The share of agriculture in workforce and national income grew, not thanks to any development in agriculture, but because of the shrinkage of industry.

Deindustrialisation, pressure on the land, helplessness before feudal forces
The artisans and workers once employed in the textile industry now had to fall back on agriculture. Under Mughal rule there was a great abundance of land, which allowed cultivators to cultivate only the more fertile land, and to cultivate only half their land in a given year, thus maintaining its fertility. However, as deindustrialisation took place under British rule, and ruined weavers fell back on the land as the only means of livelihood, land became scarce. W.W. Hunter wrote in 1893: “In Bengal there was in the last century more cultivated land than there were husbandmen to till it. The landlords at that time were competing for tenants.... A hundred years of British rule has reversed the ratio.... It is [now] the husbandmen who have to compete with each other for land.”5

This destruction of indigenous industry, and the retrogression of agriculture combined with its commercialisation, led to a new kind of distorted feudalism, or ‘semi-feudalism’. The peasants’ lack of any alternative to cultivation rendered them helpless before the landlords, merchants and usurers, who found it easy to increase their extractions to the point where they took away not only the surplus, but even a part of what was needed for the peasant to subsist and to reproduce the conditions in which he/she could produce again. The lack of alternative employment also meant that many landless or very small peasants preferred to tie themselves in ‘voluntary’ bondage to a feudal lord with the guarantee of some sort of subsistence. Finally, it meant that, however poor the returns from cultivation, however marginal the plot of land, the peasant would cling onto it tenaciously as the only defence against complete destitution. At the same time, those trying to eke out a living in all sorts of petty trade proliferated, since there were no ‘barriers to entry’ in this field. Thus the share of the services sector in employment grew, even as the income of those so-called self-employed in such petty activities remained even lower than the income of those involved in production.

No doubt the peasant was now linked with national and international markets, but these did not operate to stimulate greater production. First, the large revenue demanded of the peasant left him little or no surplus to re-invest. Secondly, taking advantage of the peasant’s need for cash before sowing, the moneylender-trader was able to tie the peasant in debt and force him to sell the crop to him at a depressed price. Thirdly, between these traders and the international market intervened large wholesale merchants, banks in India, and businesses and banks in the imperialist countries. Any rise in international prices could easily be retained by those links in the chain closer to the outlets in the imperialist countries; even if the peasant had information of improved prices, he lacked holding power to extract better terms in such a situation. (Thus any improvement in ‘terms of trade’ would not accrue largely to the peasant, but to these other links in the chain, including foreign ones.) On the other hand, any fall in international prices could be passed back down the chain to the peasant, who, as we mentioned earlier, lacked alternative employment, and was trapped in debt to the moneylender-trader, and hence had no option but to continue to produce on worse terms.

The usurping of the forests
Before British rule, the forests were to a large extent under the control of the tribals, for whom they were the source of their food, fuel, fodder, housing materials, raw materials for household needs, and medicines, and therefore an indispensable part of their social and religious life. Lacking ploughs and draught animals, the tribals practised ‘shift and burn’ cultivation on forest land. They also earned income from the sale of wood and forest products to other communities.

From around the 1860s, the British began to monopolise the forests – then two-fifths of the country’s area – by a series of measures which classified most forests as ‘reserved’ or ‘protected’, set up a separate forest administration, placed restrictions on the tribals’ use of the forests and banned shifting cultivation (the typical method of agriculture among tribals, who could not afford ploughs and cattle), and extracted large tax revenues. At the same time, the British plundered the forests for timber and fuel, setting in motion the process of deforestation which continues to date. Attempts by tribals to reassert their rights over the forest were sparking-points for numerous violent tribal revolts against the Raj.

The processes of imperialist penetration and trade in forest products brought to the forest areas non-tribal moneylenders and merchants, who soon alienated tribal lands on a large scale, and thus joined the government as a target of tribal revolt. The debt-ridden tribals were routinely forced to perform veth, or forced labour, on the fields of the usurers. Frequently the same usurer-landowners were also appointed forest contractors (given timber contracts) by the forest officials. In the later years of the Raj, the rich mineral resources of the tribal regions began to be developed, again by the displacement and exclusion of the tribals (even as a few would be hired as coolie labour). In the absence of any other source of livelihood, the tribals, now deemed encroachers in their own land, nevertheless clung on to the forests and forest plots; as such they remained available for exploitation by sundry forest officials, merchants, and usurers.

There are a number of important common property resources (CPRs) apart from the forests: grazing lands, village commons, ponds, tanks, streams and rivers. Before British rule, a large part of the country’s natural resources were under the control of local communities, and were freely available to the rural population. As the British rulers extended State control over these resources, community control and management declined, and a dwindling share of erstwhile common property resources and forests remained available to the villagers. As a result, today, in almost all parts of the country, villagers have a legal right of access only on some specific categories of land and water resources.

The process of extending State control over the common resources, which began with the declaration of ‘reserved’ and ‘protected’ forests in the closing years of the 19th century, has essentially been that of exclusion of villagers’ access to common resources by law. As a result, the systems of community management gradually disintegrated and are now virtually extinct. Today, in almost all parts of the country, the villagers have legal right of access only on some specific categories of land like ‘pasture and grazing lands’ and ‘village forests’, which are under the jurisdiction of the village or village panchayat. All other categories of land not under private ownership like barren and uncultivable land, culturable waste, land put to nonagricultural uses and forests belong to State Revenue department or Forest department. Nevertheless, the rural population, particularly the poor, depend greatly on the goods and services available from these categories of land. Besides, though only those resources are treated as CPRs on which no individual has exclusive property rights, there are systems of customary rights which support traditional practices, such as gleaning or grazing of cattle in the fields after harvest, which represent common rights on private property in certain situations.6

Introduction of modern industry – displacement without re-employment
Machine industry was introduced into India in the 1850s (in cotton and jute textiles), and grew faster from the late 19th century onward. It came, that is to say, after the destruction of much of native industry, but, unlike in Europe, it did not grow out of native industry. Whether the firms were owned by British entrepreneurs or (as in western India) by Indian ones, the machinery for these firms was imported, largely from Britain. As modern industry proceeded, it kept displacing more workers from traditional industry, such as the surviving spinners and handloom weavers who produced cloth for the lower end of the market (the higher end of the market was catered to for a long time by imports). The modern sugar and iron industries similarly ousted traditional producers. In Europe too traditional industry in consumer goods had been ousted by machine industry, which developed through continuous increases in productivity; but in India, thanks to continuous imports of machinery, employment was not created within India itself in a machine-making industry and other heavy industries as could have made up for the loss of employment in consumer goods industries. Thus the net effect on employment was negative.

Given the nature of the transition to modern industry there was a large gap between the technology embodied in the imported machines and the know-how existing in India; indeed, even for running the machinery the mills imported technicians from Lancashire. Since the market was limited for many products, and the minimum size of the firms based on imported technology was large, Indian industry did not pass through a phase dominated by a large number of small firms competing for markets (with the winners growing into monopolies). Instead, a few firms between them could exercise monopoly control at the very outset, and did not face competitive pressure to reduce production costs and prices. As this practice proved profitable, technological dependence was continuously reproduced.

The typical Indian industrial house did not develop through an extended period of unfettered competition through which capital was centralised in the technological leader. Rather, it was born as a monopoly house, closely linked to government policy, contracts, and subsidies, and with ties to feudal sections, for example for the supply of raw materials. The background of the entrepreneurs was finance (including usury) and trade, and they excelled in financial, mercantile and speculative operations (often devoting to them as much attention as to their industrial operations). These firms, known as managing agencies, controlled a number of firms, often in disparate industries. A survey of Indian monopoly houses from the 1930s till the late 1970s remarked that “monopoly capital in India bears a closer family resemblance to pre-industrial monopolies than to contemporary monopoly capitalism in the west”.7

Railways and irrigation: infrastructure for imperialist penetration, not development
In his 1853 article on “The Future Results of British Rule in India”, Marx anticipated that

when you have once introduced machinery into the locomotion of a country, which possesses iron and coals, you are unable to withhold it from its fabrication. You cannot maintain a net of railways over an immense country without introducing all those industrial processes necessary to meet the immediate and current wants of railway locomotion, and out of which there must grow the application of machinery to those branches of industry not immediately connected with the railways. The railway system will therefore become in India truly the forerunner of modern industry.... Modern industry, resulting from the railway system, will dissolve the hereditary divisions of labour, upon which rest the Indian castes, those decisive impediments to Indian progress and Indian power.

Later, however, as he saw the actual process of colonial rule in Asia (in contrast to the history of colonial rule in North America), Marx revised his views: in an 1881 letter he referred to the railways as “useless to the Hindus” (i.e., the Indians), and one of the means for the British to carry on “a bleeding process with a vengeance!”8 And Lenin later remarked that imperialism had converted the building of railways, which “seems to be a simple, natural, democratic, cultural and civilizing enterprise”, into “an instrument for oppressing a thousand million people (in the colonies and semicolonies), that is, more than half the population of the globe inhabiting the dependent countries”.9

Indeed only a minute portion of the railway equipment was manufactured in India, and so the entire ‘multiplier’ effect of investment in the railways did not take place in India. On the contrary, the dividends on (inflated) British private investment in the railways were one of the major elements of the drain from India.

Moreover, the route alignments and rate structures of the railways made it cheaper to transport goods from the ports to the interior and back rather than between points in the interior. Thus the railways “increased the relative distances between places in the hinterland, since very often the only connections they now had between themselves passed through the ports. The railway revolution thus turned the third world economies inside out and enormously increased the intensity of dominion of advanced capitalist countries over them.”10 They helped convert India into a supplier of raw materials and foodgrains for Europe and its colonies, and open up the country’s market to imported goods. The actual effect of such growth of exchange, in a situation where productive forces and associated purchasing power stagnated, can be glimpsed in the export of, and increased domestic speculation in, foodgrain in the midst of famines:

As argued sarcastically by an administrator from a native state, “...In former famines only disjointed local areas were affected.... Now railways made it possible that we were starved to death as well as our neighbours.” Even an indigenous grain dealer of Calcutta was ready to concede that “...Prices rose throughout India during this famine largely due to operation of railways. In the previous (1878) famine there was little movement of crops due to good harvests in some parts. In this famine bad harvest is also equally spread.” Spread of telegraphs, according to the grain dealer, “...helped merchants in keeping up prices throughout India.”11

When the new rulers finally made investments in irrigation, they did so only in select pockets, on strictly commercial considerations, and in a distorting fashion. Their purpose was to stimulate high-value, intensively cropped, commercial crops in order to increase government revenues. In the United Provinces (U.P.), with the introduction of canal irrigation under British rule, merchants – who, as we noted earlier, had an interest in promoting crops in which they could trade – extended cultivation loans on the condition that the peasants grow sugarcane. The costs of sugarcane cultivation were heavy, and the peasants remained trapped in debt thereafter, often losing their land in the process. Since sugarcane displaced the crops peasants grew for their own consumption, the peasants now had to buy their subsistence needs from the market, and at higher prices (since the crops were now scarcer). Moreover, the pattern of canal development caused environmental damage, rendering large lands infertile.12 Thus the development of commercialised, ‘high-value’ agriculture did not result in accumulation within agriculture, but pauperised the poorer peasantry and drained surpluses into the hands of non-agricultural classes.

The process of spread of other cash crops, such as cotton or jute, was linked to a similar pattern of dependence on, and eventual near-bondage to, merchant-moneylenders. While physical coercion was used to impose certain crops such as indigo and poppy on the peasants, in most cases commercialisation was forced upon sections of peasants through the process described above, that is, through seemingly free exchange. At times the forced nature of this commercialisation showed up in the fact that, to the extent the peasant’s position improved (say, when he actually got the benefit of better prices), he would withdraw from the market – i.e., reduce the share of output sold.13

Stunted industrialisation
Because of the pauperisation of the peasantry and the small size of the working class and the middle class – largely as a consequence of British rule – the market for manufactured goods remained very restricted. Given the limited market and the absence of comprehensive tariff protection similar to that enjoyed by Britain before its Industrial Revolution (and for decades thereafter), investors did not find the Indian home market attractive enough to warrant large investments. Rather, speculation, hoarding, usury, and other such unproductive financial activities (for which the colonial economy provided much scope) proved more attractive.

Later, tariff protection was introduced selectively by the colonial rulers when Britain was in decline as an imperialist power, and it wanted to protect its market in India against encroachment from other imperialist powers. Thus the Indian sugar industry was protected in order to shut out sugar imports from the Dutch colony of Java; this led to sudden growth of the Indian sugar industry, which in turn led to a sharp rise in demand for sugar machinery from Britain. (The big bourgeoisie did not miss the significance of this experience of government support, and in post-1947 India the ability to manipulate governmental levers was critical to the fortunes of various business houses.) By the 1930s multinational corporations (a new phenomenon) were setting  up plants in India to take advantage of tariff protection and penetrate the Indian market. These were harbingers of a new phase, in which India would shift from colonial rule by one imperialist country to multilateral dependence on several imperialist countries.

Industrial development was stunted, and yet the size of individual firms was relatively large in relation to the market (a scale dictated by the technology imported from advanced capitalist Britain). Industrialisation was thus, inevitably, lumpy and spread unevenly over the country. Till 1914, industry was concentrated in Bombay and Calcutta (apart from Tata Steel in Jamshedpur). While some industry did come up in Ahmedabad, Delhi, Kanpur and some other places in U.P., Coimbatore, Madurai and Madras after World War I, growth remained regionally lopsided. “The situation was also markedly dichotomous – reflecting the disjunction between agriculture and industry. The port-enclave manufacturing centres, like Calcutta, were growing fast even as the hinterland agrarian and traditional industry was deteriorating. On the other hand, regions with relatively prosperous agricultural growth like Punjab had no major industrial centres.14 As late as 1948, the three Presidency-states of Bombay, Madras and Calcutta accounted for 77 per cent of the percentage of industrial workers, 77 per cent of industrial production, 82 per cent of engineering and electrical goods production, and 87 per cent of chemical goods production in the country. The corresponding figures for the minerally rich states of Bihar, Orissa, and M.P. were only 10, 10, 10, and 5 per cent, respectively, “showing how little the ‘natural endowments’ of the region mattered in this respect”.15

Distorted and arrested social development
By the late 19th century the minimum capital required to set up a competitive industrial enterprise was substantial, and was only available to sections endowed with considerable capital of their own and the confidence of the financial community. The big industrial entrepreneurs were almost exclusively drawn from a tiny handful of commercial castes/communities – the Gujarati banias, the Marwaris, the Parsis, the Khattris, the Aggarwals, and the Chettiars prominent among them. (Among the Muslims, too, business was dominated by certain trading castes, but they were weaker, and flourished only after the formation of Pakistan.) The big business communities had their roots, and continuing activities, in finance and trade rather than production, and they maintained this separation even after turning to industry. They refrained from carrying out any technological innovation; the more enterprising among them applied their minds to choosing which technology to import.

The education system the British set up in India cannot be criticised for not educating the masses, as it was not intended to do so; it was designed to create a class of Indians who would mediate between the colonial rulers and the ruled, as well as facilitate and reduce the expenses of their rule in India. (Macaulay, then a member of the Governor-General’s council, made this clear in the famous Minute he prepared for Bentinck in 1835:I feel with them that it is impossible for us, with our limited means, to attempt to educate the body of the people. We must at present do our best to form a class who may be interpreters between us and the millions whom we govern, – a class of persons Indian in blood and colour, but English in tastes, in opinions, in morals and in intellect.”)  No doubt, as a by-product of this education system, some independent-minded elements got access to European streams of scientific and analytic thought, but this was rare. The university system brought into being a class of professionals and upper white-collar staff which served the needs of colonial rule. Moreover, not only did the entire urban elite and a section of the middle classes learn English, but the Western education system, combined with the fact of British rule, established the intellectual and cultural domination of Europe over India. The urban elite and broader sections under their influence developed a mentality of subservience to all things European, an overpowering taste for European products, a sense of shame about their Indianness and a yearning for approval by the white man.

Secondary education too was shaped by the goal of entering tertiary education, reinforcing the status of English throughout of the educational system and consigning instruction in the native tongue to a second-class status. The real barrier to the fuller development of the numerous Indian languages was not any dominant Indian language, but the supremacy of English, just as the barrier to the development of the economic life of the various national regions was the imperialist-directed pattern of development.

All sorts of reactionary and obscurantist thought, rather than diminishing, spread under the British umbrella. After the revolt of 1857, it was a matter of conscious British policy to ensure communal division: in the words of the 1879 Army Commission, “Next to the grand counterpoise of a sufficient European force comes the counterpoise of natives against natives.”16 Unlike in the capitalist countries, the system of electoral politics was not introduced through a long process of democratic and working-class struggle; on the contrary it was introduced by the British rulers as part of their effort to associate elite sections with their rule, and to set competing communal elites on one another. However, the impact of these manoeuvres was not restricted to elite sections, but had terrible repercussions among the masses. It was in the late 19th century that communal mobilisations and riots among Hindus and Muslims began making a regular appearance, finding their grim climax in the great massacres of Partition.

The caste system, that “decisive impediment to Indian progress and Indian power”, far from being dissolved by the railways and the appearance of modern industry under British rule, survived in a somewhat modified but hardly weakened form. British administration created certain limited opportunities for members of castes lower in the hierarchy, resulting in a scramble among the various castes for these favours. The earlier Brahmin dominance in government posts and social status was challenged to some extent by certain non-Brahmin communities with growing economic and social clout, and important non-Brahmin movements arose in the south. However, while there was a partial reordering of castes within the hierarchy, the institution of hierarchy itself was not threatened, and remained particularly oppressive to those at the bottom of the pile. The British resolutely abstained from interfering with the social prohibitions and economic exclusions suffered by the oppressed castes; indeed, as Ambedkar observed in an address to the All-India Depressed Classes Congress, August 1930:

Before the British you were in the loathsome condition due to your untouchability. Has the British Government done anything to remove your untouchability? Before the British you could not draw water from the village. Has the British Government secured you the right to the well? Before the British you could not enter the temple. Can you enter now? Before the British you were denied entry into the police force. Does the British Government admit you in the force? Before the British you were not allowed to serve in the military. Is that career now open to you? Gentlemen, to none of these questions you can give an affirmative answer. Those who have held so much power over the country for such a long time must have done some good. But there is certainly no fundamental improvement in your position. So far as you are concerned, the British Government has accepted the arrangements as it found them and has preserved them faithfully in the manner of the Chinese tailor who, when given an old coat as a pattern, produced with pride an exact replica, rents, patches and all. Your wrongs have remained as open sores and they have not been righted....17

The abundance of land before British rule allowed some caste mobility, yet even under those conditions certain castes were kept landless; with the destruction of native industry and the enormous pressure on the land under colonial rule, there was even less scope for escape from caste oppression. Only an agrarian revolution, with all its political and social implications, would have created scope for a profound churning of the caste order; and such a revolution would have upturned the native classes on whom British rule itself was based.

Distinct class structure

Thus British rule created a class structure in India distinct from that of capitalist Britain. Parasitic classes – landlords, traders and usurers – maintained sway over the rural areas. There they found ample scope for fattening on parasitic extractions in landownership, usury and trading rather than on expanding productive forces. Their control over multiple markets – land, labour, credit, output – allowed them to increase extractions beyond the limits possible in any single market (for example, an indebted peasant would be compelled not only to pay interest but to sell his produce or his labour power cheaper to his creditor). The vast majority of producers fell in three groups: landless, very small, and small, who were not in a position to take advantage of market stimuli to accumulate. Though the middle and rich peasants were able to respond to market stimuli, they were unable to concentrate land in their hands, as small producers clung to their holdings, however uneconomic, as their only defence against destitution in conditions where employment in industry was stagnant.18

The big bourgeoisie, composed of big industrial and trading concerns with close ties to foreign capital and feudal forces, prospered under British rule. By contrast, a section of small industrialists grew in numbers, generally restricted to businesses such as cotton gins and presses, rice and oil mills, traditional sugar manufacture, and small powerloom or handloom factories. Some enterprising elements of this class ventured into pharmaceuticals, chemicals, and small engineering workshops. Lacking access to finance, linked too to feudal sections, denied any support from the colonial government, too weak to compete with the monopoly power of the big bourgeoisie, and most importantly hobbled by the meagre markets of poverty-stricken India, they were unable to unleash the necessary ever-expanding circuit of accumulation in industry.

Colonial rule in India also led to the development of an industrial proletariat associated with modern industry, thus creating the basis, as in Europe, for political organisation with the ultimate aim of the abolition of private property. However, far from emerging as the great majority of society, the proletariat in India remained a small island in a sea of peasants and petty self-employed. Several obstacles stood in the way of its developing class consciousness. As industrial employment stagnated and capitalist concentration of landholding failed to materialise, the workers retained strong ties to their villages and to the land; these ties proved useful for the industrial employers, as they could escape paying the worker a level of wages that would provide for security after retirement, or for the upkeep of the worker’s family (which would often remain in the village). This set-up allowed for the exploitation of women’s labour in reproduction, even more than in capitalist society.19 Further, workers tended to retreat to their villages at the times of strikes and mill closures, thus weakening the fight. Finally, the worker’s ties to the village imbued him with feudal consciousness, including subservience to social ‘superiors’ and fatalism.

The recruitment of workers, especially of the most unskilled manual labour, often took place in gangs and through contractors with feudal ties, which also helped keep them in line. (Large numbers of Indian workers were despatched as indentured labour to Assam, Ceylon, Fiji, South Africa, the West Indies, and Iraq, often in conditions of semi-slavery.) A major division emerged between the organised sector workers (which corresponded roughly to the unionised) and the unorganised sector; this division was greatly strengthened in the post-1947 period, and the second section was effectively kept beyond the pale of union organisation. In this environment, it is not surprising that reactionary influences, both caste and communal, retained their grip on workers to a large extent.

Even after the end of British rule, the Indian big bourgeoisie did not exercise exclusive hegemony over the Indian State. First, they served the interests of imperialism in the new configuration: that is, no longer the interests of a single colonial power but of the multilateral domination of the multinational corporations of all the imperialist countries. Secondly, the big bourgeoisie shared hegemony with a variety of feudal forces, who remained (and remain) prominent in the political life of the country, indeed dominating it at the state level. Formally, intermediaries in agriculture (such as the zamindars) were abolished, ceilings were placed on landholdings and tenants were protected from eviction, but in fact only trivial amounts of land were distributed, and landlords took evasive measures to perpetuate their hold. True, in the changed situation a greater share of the surplus could remain with the producers, and agriculture recovered to some extent from its long decline under British rule. However, as long as industrial employment grew at best slowly, the mass of the workforce remained trapped in agriculture, and thus subject to semi-feudal exploitation; agriculture remained trapped in the pattern of surplus extraction and redeployment  set by the class structure that emerged under colonialism. Important quantitative changes took place, such as those termed the Green Revolution, but they proved unable to break this mould.

Industry, on the other hand, has grown within the frame of (i) the restricted scale and skewed nature of domestic demand (concentrated at the top), (ii) domination by domestic monopoly business houses drawing on its control of State policy, and (iii) the worldwide domination of monopoly capital. These conditions have ruled out the possibility of the Indian bourgeoisie carrying out industrialisation of the type that would generate mass employment.

This sketch brings out the distinct historical process which has shaped the socio-economic formation of India today. The various sets of linkages described in the previous chapter, describing classical capitalism, are found here in a broken, distorted form. This helps us understand the nature of the growth taking place today, to which we now turn.



1. As in the preceding chapter, the argument in this chapter is drawn from several well-known works. Among them (in chronological order) are R.P. Dutt, India Today, 1946, Paul Baran, The Political Economy of Growth, 1957, A.K. Bagchi, Private Investment in India 1900-1939, 1972, and The Political Economy of Underdevelopment, 1982, and S.K. Ghosh, The Indian Big Bourgeoisie: Its Genesis, Growth and Character, 1985, though their perspectives that differ in many important respects. (back)

2. Irfan Habib, “Potentialities of Capitalist Development in the Economy of Mughal India”, Enquiry, Winter 1971. (back)

3. Angus Maddison, Chinese Economic Performance in the Long Run, 1998, cited in Mike Davis, Late Victorian Holocausts: El Nino Famines and the Making of the Third World, 2001, p. 293; and Mike Davis, op cit., p. 294. (back)

4. Krishna Bharadwaj, op cit, p. 90. (back)

5. Quoted in Utsa Patnaik, “Commercialization under Colonial Conditions”, The Long Transition: Essays on Political Economy, 1999, p. 260. (back)

6. National Sample Survey (NSS) Report no. 452, “Common Property Resources in India”. (back)

7. N.K. Chandra, “Monopoly Capital, Private Corporate Sector and the Indian Economy, 1931-76”, Economic and Political Weekly, Special Number, August 1979. (back)

8. See S.K. Ghosh, op cit, pp 91-113. (back)

9. V.I. Lenin, Imperialism, the Highest Stage of Capitalism,Preface to the French and German editions (1921). (back)

10. Bagchi, 1982, p. 34. (back)

11. Sunanda Sen, Colonies and the Empire,India 1890-1914, 1992, p. 174. (back)

12. Elizabeth Whitcombe, Agrarian Conditions in Northern India, Vol. I: The United Provinces under British Rule, 1860-1900, 1971. (back)

13. Krishna Bharadwaj, “A View on Commercialisation in Indian Agriculture” in Accumulation, Exchange and Development: Essays on the Indian Economy, 1994. (back)

14. Krishna Bharadwaj, “Regional Differentiation in India: A Note”, EPW, Annual Number, April 1982. (back)

15. Ibid. (back)

16. Quoted in Sumit Sarkar, Modern India, 1885-1947, p. 16. (back)

17. Quoted in R.P. Dutt, op cit, pp. 243-244. (back)

18. Bharadwaj, “A View on Commercialisation”. (back)

19. That is, the greater the labour of the wife of a male worker in household activities and child-rearing, the less the capitalist needs to pay the worker. Thus it is ultimately the capitalist who exploits the household labour of the woman. Where the family could be maintained not in an urban setting but in semi-feudal agriculture, the wages paid to the labourer could be even further depressed. (back)


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