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Points to ponder

Print edition : Jun 17, 2011 T+T-

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.

This volume, thus, provides much information to ponder over about the three related topics it deals with. Surely, some positions taken in it will be contested, but it will not share the fate of many good publications of being just ignored.