Indian Capitalism in Development

Barbara Harriss-White, Judith Heyer

• Publisher: Routledge
• Year: 2014
• eBook ISBN: 9781317673965
• Edition: 1
• Topic: Social Sciences
• Subtopic: Ethnic Studies
• Index: Social Sciences

Recognising the different ways that capitalism is theorised, this book explores various aspects of contemporary capitalism in India. Using field research at a local level to engage with larger issues, it raises questions about the varieties and processes of capitalism, and about the different roles played by the state.

With its focus on India, the book demonstrates the continuing relevance of the comparative political economy of development for the analysis of contemporary capitalism. Beginning with an exploration of capitalism in agriculture and rural development, it goes on to discuss rural labour, small town entrepreneurs, and technical change and competition in rural and urban manufacturing, highlighting the relationships between agricultural and non-agricultural firms and employment. An analysis of processes of commodification and their interaction with uncommodified areas of the economy makes use of the 'knowledge economy' as a case study. Other chapters look at the political economy of energy as a driver of accumulation in contradiction with both capital and labour, and at how the political economy of policy processes regulating energy highlights the fragmentary nature of the Indian state. Finally, a chapter on the processes and agencies involved in the export of wealth argues that this plays a crucial role in concealing the exploitation of labour in India.

Bringing together scholars who have engaged with classical political economy to advance the understanding of contemporary capitalism in South Asia, and distinctive in its use of an interdisciplinary political economy approach, the book will be of interest to students and scholars of South Asian Politics, Political Economy and Development Studies.

1 Introduction

Barbara Harriss-White and Judith Heyer

DOI: 10.4324/9781315770963-1

This book is the work of a group of political economists committed to using first-hand research as a basis for analysing the development of capitalism in India and for engaging with theoretical ideas about it. Capitalism bestrides the contemporary world like a colossus and is so naturalised in thought that alternatives are hard to imagine. Yet the word ‘capitalism’ is airbrushed from the index of most general texts in economics and is synonymous with ‘irrelevant’ Marxist approaches to development. The writers of this book however, whether they are institutionalists, Weberians or historical materialists, find it impossible to understand the dynamics of development in India without defining it as capitalist, and without, for the most part, engaging critically with Marx’s Capital.

The ways in which capitalism is theorised have ramifications both for our understanding and for interventions in its dynamics. Theories guide the analytical moves between general logic and historically specific circumstances (Banaji 2010). In arguing that a plurality of theoretical approaches is needed,¹ Tony Lawson, the feminist institutional economist and philosopher, provides justification for the pluralism of this book (Lawson 2003).

An understanding of the development of capitalism in the contemporary world requires knowledge of what is happening on the ground. The continual transformation of forces and relations of production, the exploitation of natural resources and of labour, relations with the state and with powerful social collectives that together provide a structure of accumulation are all uneven in their combinations and balances, their trajectories and effects. The fine detail of lived experience mediated by first-hand research, in the factory and field, on farms, in villages, in marketplaces, in offices and in the archives, makes possible an engagement with theory, both deductively, in testing hypotheses on the ground, and inductively, in fieldwork that allows for surprises and challenges preconceptions.

Barbara Harriss-White’s fieldwork over four decades in rural and small town Tamil Nadu, West Bengal and Arunachal Pradesh has emphasised the diversity of capitalist trajectories, the social heterogeneity of the capitalist class, the significance of relations of distribution for those of production, the roles of commodity markets in efficiency, exploitation and resource extraction; the ways in which structures of social authority are deployed in processes of class formation and accumulation and the nexus of interest between local capital and the state which generates both informal economic activity and a parallel or shadow state. The contributors to this book were invited to use their own theoretical perspectives on capitalism to interrogate Indian ground realities. They responded in different ways. Some chapters are more theoretical, using empirical material to illustrate their arguments; others are more empirical, informed by theory.

The book’s contributors raise questions about the varieties, institutions and dynamics of contemporary capitalism in India and about the regulative roles of the state. The opening chapter assesses Marx’s concept of primitive accumulation and uses it to look at the diverse ways in which primitive accumulation isoccurring in India today. This is followed by chapters tracking the constituent processes of capitalism in sectors involving the mass of the labour force: chapters on accumulation in agriculture, and on institutional diversity in agriculture; on agricultural markets; and on credit and finance. Together, they explore the range of capitalist trajectories in agricultural and rural development, the particular institutions of capitalism which make it distinctively ‘Indian’, and the role of the Indian state. The following chapters examine the persistent vulnerability of labour, both agricultural and non-agricultural; the way in which technical change affects the quality as well as the quantity of employment, the role of commodification in the development of capitalism which is proceeding with little resistance in India as everywhere else, and the institutional framework within which small-town capitalists try to stabilise the cycles of profit and investment. A chapter on the processes and agencies involved in the export of Indian wealth argues that this plays crucial roles not only in clandestine accumulation but also in concealing the exploitation of labour. This is followed by a chapter on the political economy of policy processes which examines the fragmented institutions of India’s regulative state. The final chapter foregrounds energy as the material dynamo of accumulation, exploring what may be the most serious challenge capitalism has faced to date, since non-renewable raw materials are being used up without precedent, and energy is being dissipated as heat-retaining gases in the atmosphere.

There are distinct limits to the scope of this project. It does not cover India’s corporate sector.² We have not looked at corporate and state banking and finance.³ We do not explicitly examine the political changes in the state (‘liberalisation’) which incentivise foreign direct investment and the role being played by FDI.⁴

What follows in this introduction is a brief review of some of the many debates surrounding issues taken up in individual chapters of the book.

1 Primitive accumulation/accumulation by dispossession

The scramble for raw materials, and their subsequent development based on labour, coal and other fossil fuels are some of the most well-remarked aspects of India’s twenty-first-century capitalism. This is a form of what Marx called primitive accumulation (PA) (Marx 1976: 500–502).⁵ He made clear that PA was a dual process. The first part of the dual process is the point of departure for productive capitalist investment, re-configuring nature as private property. The second part is the freeing of labour to work for wages. In Capital this is a process lasting for centuries before the era of manufacturing capitalism.

Adnan, in Chapter 2, interrogates Marx’s theory of PA, evaluating its relevance to capitalist development. He maintains that PA is necessary for twenty-first-century capitalist development because the latter relies on expansion of the forces of production while the former facilitates and renews it (Adnan 2013). As Adnan shows here, the process is both contested on the ground and debated in theory. Harvey’s concept of accumulation by dispossession, developed to describe something similar, neglects both the formation of the labour force and the productive purpose of the seizure of resources: the need for non-capitalist processes to precede capitalism. Adnan critiques both purpose and intentionality, arguing that PA is necessarily prior to the productive development of the resources seized. He questions the use of force: deliberate acts of violent seizure are one end of a continuum of social processes, the other end of which is ‘voluntary’ relinquishment of control over resources through market exchange. Marx himself listed speculation, restricted practices and price manipulation as components of the process in Britain. Further, Adnan argues that the simultaneous role of primitive accumulation in freeing labour to work for wages may actually be a special case of the general process of transforming property relations so that capital must hire labour in order that commodities be produced. Where a landless workforce predates land seizures, the second part of the dual process of PA ensures the continuing supply of labour that can be exploited rather than its creation for the first time. Resistance to the process may take open and hidden forms, and be violent or non-violent. The state itself may further these processes and/or yield to, or buy off, resistance.

The new era of acquisition of land in forest areas by global and Indian capital for mining and mineral exploitation is PA par excellence (see Rajshekhar’s meticulous work in India’s Economic Times Bureau (Raja and Rajshekhar 2012) on the politics of coal blocks, and Rajshekhar (2013) on the politics of hydel). Much of the acquisition of land and eviction of labour for Special Economic Zones (SEZs), for infrastructure such as motorways, and for urban development and property speculation, is a form of PA too (Karnad 2008) depriving people of assets, transferring control and undermining livelihoods.

The economic consequences of loss of land and other land-based assets include not only a swollen casual labour force but also a proliferation of tiny firms unable to accumulate in the informal, unregistered, non-farm economy, written into the labour laws as labour not as capital combined with labour (Sankaran 2008) and theorised as the formal (rather than real) subsumption of labour to capital (Banaji 1977). The political consequences of a lack of elementary compensation and rehabilitation to displaced people are visible as never before and include the turn to non-parliamentary, revolutionary politics (Dhagamwar et al. 2003; Shah 2010; Kunnath 2011).

2 The agrarian question

While, with very few exceptions, India’s transition to capitalism is well and truly over, debates in India still rage over whether agriculture is indeed capitalist (and undergoing constant transformation under capitalism) or ‘semi-feudal’,⁶ the latter buttressed by the persistence in some regions and the re-emergence in others of debt bondage, landlordism, share tenancy and servile relations to landowners (Rao 2012).

The agrarian question is concerned with the political conditions for agriculture to make the transition to capitalism while performing some vital economic roles for the non-agricultural economy as it does this (Lerche et al. 2013). Agriculture must be squeezed to provide raw materials (e.g. cotton), labour, finance and food. In turn the income of the agrarian population must grow to support a home market for the products of industry. Henry Bernstein (2006) has argued that since finance capital for industrialisation can bypass both national frontiers and domestic agriculture, all that is left of the agrarian question for the twenty-first century is the politics of classes of labour. Tom Brass has counter-argued (2007) that lumping all forms of work together as labour is just as politically and analytically flawed as is the neoliberal economic approach in which labour is a market.

This debate is important because India’s widespread agrarian poverty is far from being a starting point for development. It ...

Table of contents

• Cover
• Half Title Page
• Series Page
• Title Page
• Copyright Page
• Dedication Page
• Table of Contents
• List of illustrations
• Notes on contributors
• Preface
• Acknowledgements
• List of abbreviations
• 1 Introduction
• 2 Primitive accumulation and the ‘transition to capitalism’ in neoliberal India: mechanisms, resistance, and the persistence of self-employed labour
• 3 Regional patterns of agrarian accumulation in India
• 4 Agrarian relations and institutional diversity in Arunachal Pradesh
• 5 First transaction, multiple dimensions: the changing terms of commodity exchange in a regulated agricultural market in Madhya Pradesh
• 6 The political economy of microfinance and marginalised groups: implications of alternative institutional strategies
• 7 Labour in contemporary south India
• 8 Emerging spatio-technical regimes of accumulation in the globalising south and implications for labour
• 9 Commodification, capitalism and crisis
• 10 A heterodox analysis of capitalism: insights from a market town in South India after the Green Revolution
• 11 Money laundering and capital flight
• 12 Power-hungry: the state and the troubled transition in Indian electricity
• 13 Technology and materiality: South Asia in the twenty-first century
• Glossary
• Index