[Reader-list] Book Review: Studies in Economic Change

[A. Mani]

http://www.hinduonnet.com/fline/stories/20110617281207400.htm

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Book Review: "Capitalism, Colonialism and Globalization: Studies in
Economic Change" Shireen Moosvi (ed)  Tulika'2011

Points to ponder

C.T. KURIEN

A critical discourse on the interconnectedness of capitalism,
colonialism and globalisation with a well-defined focus.


WHEN ‘globalisation' became a talking point a few decades ago, there
was a lot of discussion and debate as to what it was. The difference
of opinion was mainly between those who maintained that it was
primarily a technological phenomenon and those who held that it was
essentially caused by economic factors. By and large the latter
position is now widely accepted. Most people have also come to accept
that it is the latest manifestation of capitalism reflecting its
innate propensity to go beyond national boundaries.

Even for those who are fairly familiar with colonialism, though, the
link between it and capitalism, on the one hand, and between it and
globalisation, on the other, appears to be rather vague. A popular
point of view is that colonialism is an old and globalisation the
latest version of capitalism. Those who do not see this connection
frequently maintain that the colonial era is over and that the present
is the age of globalisation. Yet another position is that colonialism
was a crude version of capitalism associated with political
domination, but globalisation is quite refined and totally devoid of
any colonial element.

What the volume under review attempts is to make a critical evaluation
of the interconnectedness of capitalism, colonialism and
globalisation. It is a discourse among academics, the papers brought
together having been originally presented at a panel on economic
change organised by the Aligarh Historian Society in Delhi in May
2010. The papers in this volume are essentially exploratory in nature
with a well-defined focus.

The lead essay is by Irfan Habib on “Capitalism in History” and is a
contribution towards the old and ongoing discussion (perhaps debate)
on how capitalism emerged and what contributed to its early growth. A
widely held view is that capitalism emerged because of the innate
evolutionary proclivity of social systems. Those who hold this
position may find Habib's categorical statement that “[t]he arrival of
capitalism was not a natural, internal process. Subjugation of other
economies was crucial to the formation of industrial capital within
it” rather difficult to accept. But Habib is not making a glib
statement; he has long historical research to support his position. He
goes on to indicate that if the development of capitalism in a country
depends on the flow of resources from other countries in its early
stages, imperialism was and is a necessary element of capitalism after
it has developed. That is how capitalism, colonialism and
globalisation are interlinked, according to him.

Utsa Patnaik supports the stand that external resources were an
essential part of capitalist development. She contests the widely held
view that industrial capitalism in England was based primarily, if not
exclusively, on the agricultural revolution that had preceded it.
Examining various estimates of agricultural output, especially of corn
(wheat) in Britain and also of population during the period from the
late 17th to the early 19th centuries, she shows that the per capita
cereal output was declining. If so, it is not possible to maintain
that a prosperous agriculture in the country was the basis of the
Industrial Revolution.

Putting forward this as a hypothesis that requires to be further
explored, she suggests that the continuous transfer of wealth from the
colonies was an essential part of the development of industrial
capitalism in England.

In a scathing review of the writings of many modern scholars, Indian
as well as foreign, Surendra Rao shows that even those who condemn
colonialism are comfortable with capitalism. One thing I found quite
interesting in his paper is a quotation he gives from the Amrita Bazar
Patrika in an issue way back in 1892: “It is not the scarcity of food,
but inability to purchase food on account of poverty, which really
constitutes what is called an Indian famine.” This was almost exactly
a century before Amartya Sen made that the thesis of his celebrated
work on famines.

Raj Shekar Babu's paper on the conditions of low-caste workers in
Tamil Nadu which questions the usual assumption that agrarian
conditions were poor and that the lower castes did not have any
economic standing during the colonial period and Sanjukta Das Gupta's
account of colonial rule and tribal agriculture deserve attention.
Amar Farooqui provides an informative and interesting account of how
the opium cultivation and trade led to the growth of an Indian
capitalist class and how the East India Company's opium trade with
China provided considerable external resources for the growth of
capitalism in England.

Prabhat Patnaik expounds on how contemporary globalisation is
different from all global outreaches of capitalism in the past.
Contemporary globalisation has implied enormous increase in
international trade, particularly the movement of manufactured goods
and professional services from labour-intensive countries such as
China and India to the Western world, especially the United States. As
the workers in these richer countries compete with the workers of the
Third World, their wages do not increase. At the same time,
productivity in the labour-abundant countries is rising, but labour
absorption is not increasing there so that globally there is an
increase in the share of surplus in world output. Along with this,
petty production is getting destroyed, especially in Third World
countries, with producers getting progressively dispossessed and thus
swelling the labour reserves. The net result is a general sluggishness
of demand throughout the world.

The global economic situation is made more complicated because the
leading capitalist country in the world, the U.S., is not in a
position to stimulate global demand without increasing its own
indebtedness. Ironically, the U.S. can remain indebted thanks to the
export surpluses that China is piling up, making industrial products
available at relatively cheaper prices in the U.S. in return for
American promises to pay later. This is the contemporary version of
the older era when colonies were “markets on tap” for the imperial
countries.

Crisis of capitalism

I shall defer discussion of two chapters that deal specifically with
the impact of globalisation on India, and go on to the last one
directly dealing with the main theme of the volume. It is the piece by
Shireen Moosvi (who is also the editor of the volume) on crises under
capitalism. The growth of capitalism has always been uneven. The
latest crisis, the meltdown that started in 2008 and is still showing
its impact in many parts of the advanced countries, has been the
consequence of the concentration of capital in the hands of a few via
the control they exercise on credit and the conversion of substantial
extent of wealth into stocks. That involves the use of surplus for
additional creation of wealth without increase in production and
employment. The irony is that even poorer countries such as China come
to hold part of this newly created paper (or even non-paper) wealth,
at best in the form of the U.S. treasury's promise to pay. This
situation cannot be avoided without rational social control over
investment.

Of the two papers that deal directly with India, the first is by Vamsi
Vakulabharanam, who examines the nature of the widely recognised
increase in income inequalities in the country after it opened its
borders to large-scale flow of foreign private capital. The
beneficiaries of this flow have been largely those engaged in
information technology, biotechnology, finance, insurance, real
estate, travel and tourism, and so forth finding expression in the
bloating of the services sector. At the same time, the condition of
workers at the lower end has been deteriorating. What Vakulabharanam
has attempted to do is to provide a class analysis of this growing
inequality. The methodology he uses for an empirical identification of
classes and their relative performances will certainly attract the
attention of researchers.

Jayati Ghosh's paper, the longest in the collection, is a
comprehensive analysis, supported by massive empirical material of
what may be described as “the conditions of living of the people”
since globalisation began to be a reality in India. On the one hand,
people at all levels are being increasingly drawn into market
transactions, but workers are systematically excluded from employment.
She aptly designates this phenomenon as “exclusion through
incorporation” and describes it thus: “The growing army of
‘self-employed' workers, who now account for more than half of our
workforce, have been excluded from paid employment because of the
sheer difficulty of finding jobs, but are nevertheless heavily
involved in commercial activity and exposed to market uncertainties in
the search for livelihood.”

She then examines the long-term growth (from the early 1950s until
2008) in India, bringing out that the share of the primary sector fell
sharply from around 60 per cent to just 16 per cent, that of the
secondary sector increased from 13 to over 24 until the early 1990s
and has remained the same since then, and that of the service sector
went up from less than 30 to 60. Also, more than 60 per cent of the
increment in the gross domestic product during the period from 1993-94
to 2004-05 was contributed by services. She deals with the crisis in
the agrarian sector and shows that with respect to hunger India's
performance has been abysmal, worse than that of all its Asian
neighbours and only slightly better than Zimbabwe's, which is in the
throes of hyperinflation and collapse of domestic food markets.
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