Amiya Kumar Bagchi-Globalising India the Fantasy and the Reality

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Globalising India: The Fantasy and the RealityAuthor(s): Amiya Kumar BagchiSource: Social Scientist, Vol. 22, No. 7/8 (Jul. - Aug., 1994), pp. 18-27Published by: Social ScientistStable URL: http://www.jstor.org/stable/3520150

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AMIYA KUMAR BAGCHI*

GlobalisingIndia: The Fantasy and the Reality**

The word 'globalisation' has no commonly accepted meaning, althoughit is used constantly by politicians, journalists and academics. As it is

applied to an economy and a society, the word might mean the process

of connecting it with the world in an intricate two-way network offlows of information, trade, finance, productive assets, and people. No

economy in the world is fully globalised in this sense. The advanced

capitalist economies may be said to be globalised in respect of most of

these attributes but they typically still impose severe restrictions on

movements of commodities and people from less developed countries

and do not permit a full flow of information to other countries. The

process of globalisation may be imposed from outside or it may be

induced from developments within the country concerned. A typicalthird world country such as India has globalisation imposed on it. This

means that India trades and treats with the advanced marketeconomies on unequal terms, her rates of investment remain abysmallylow (since the internal induction mechanism is throttled), her

industries become cripples or dwarfs, and the needed social changes are

postponed and even reversed. But this is not an inevitable process. The

imposed globalisation process was deliberately chosen by a subset of

the ruling classes-a coalition of internationalised domestic capitaland technocracy, and landlords turned semi-capitalist farmers. The

ruling classes have pushed this country from the stagnation of half-

hearted state capitalism to the disarray and dependency of

haphazard neoliberalism. India is being made to enact yet another

play in the tragedy of uneven development that has characterised her

experience of capitalism so far. I will try in this paper to pinpointcertain critical moments and processes in the story of uneven

development and underdevelopment.

Capitalism has always been global in its aggression and

aggrandisement. However, the degree of globalisation was contained

by resistance from other social formations and by inner contradictions

Director, Centre for Studies in Social Sciences, Calcutta.**ADRIFoundation Lecture delivered in Patna, 31 August 1994.

Social Scientist, Vol. 22, Nos. 7-8, July-August 1994



GLOBALISINGNDIA:THE FANTASYAND THE REALITY 19

among regions or nations undergoing capitalist transformation. These

contradictions, resistances, and the processes of uneven developmentwithin regions invaded by capitalism can be illuminated by

distinguishing between different moments of eventual globalisation:these moments are commercialisation, capitalisation, internation-

alisation, transnationalisation, financialisation, and globalisation.These moments may not be distinguishable in particular cases, but in

general we would expect them to behave like successive terms in a

sequence which are from time to time interrupted or which may even

temporarily change places. These changes in places will generally be

caused by two sets of factors-the use of force or its cessation or

reversal, and the ebb and flow of intercapitalist competition.Let me

very brieflydefine the

categorieswe have introduced.

Commercialisation is the process of increasing incidence of monetarytransactions in the exchange of goods and distribution of incomes.

Capitalisation is the conversion of production units themselves into

capitalist enterprises through the employment of wage labour,

capitalist slavery or other kinds of unfree labour. I do not like the term

'capitalisation', for it has other meanings in the context of companybalance sheets and stock markets. But the alternative would be to

invent a new word, and I do not know any Greek or Latin-the

languages which are often used to coin a new word in English. The

internationalisation of an economy is the process of increase in theimportance of foreign trade in the production and distribution processesof the economy. The process of transnationalisation is a sustained

increase in the direct command over the production and distribution

process of the economy by transnational firms. The financialisation or

securitisation of an economy is the process of conversion of increasing

proportions of the assets of an economy into properties traded on the

formal or informal stock markets: in this process, traders in assets are

rarely long-term owners of the assets. The globalisation of the economyis attained when international capital becomes fully mobile both

ways, that is, it comes into, and goes out, of an economy at frequentintervals. Even in a globalised economy, however, labour is generallynot mobile internationally. Only within western Europe, some degreeof two-way mobility of labour is yet observed, but it is still at a

preliminary stage.

Although all these different processes are moments in the

development of capitalism, they are rarely energised only by free

choices of free economic agents. Force or coercion has played a role in

different countries in the process of commercialisation, internation-

alisation, capitalisation, transnationalisation, financialisation and

globalisation of virtually all economies which have aspired todominance, there has been a tradition of resistance to coercion, and this

resistance has been organised around non-market instruments as well as

market-related phenomena. The generalisation may be hazarded that



20 SOCIAL SCIENTIST

the role of coercion has been far greater in the so-called Third Worldnations than in the developed countries, and this role has not

noticeablybecome weaker over time.

In the case of India, forced commercialisation may havecharacterisedthe marketingof peasant crops even before the onset ofBritish rule: forced commercialisation prevailed wherever money-lenders or landlords could dictate the choice of crops for marketingbyordinary peasants because of either debt bondage or because of theexercise of non-marketpower. But the arena of such forced commer-cialisationcould not have been very large because in most areas of the

country the cultivation of crops for marketing was limited in extent.The universalisation by the British of the system of assessment and

collectionof revenue in an internationallyconvertiblecurrencysuch assilver rupees, combined with the severe punctuality of kists and thelaws requiringconfiscationof property rights on the default from such

punctuality, imposed a pattern of forced commercialisation from the

top. The pressures were passed down to the final cultivator in a seriesof cascading restrictions: the discipline of an externally-orientedtributarystate circumscribedthe freedom of choice of all participants.

A very similar set of pressuresand the pressing down of phenomenaof debt bondage, traditionalcaste-based authority structures and of astate apparatussuffused with racist ideology led to the construction of

the colonial plantation enterprise. Such enterprises also directly orindirectlyinfluenced the enterpriseswhich were set up on the model ofan industrialisingBritain.Thus we come up against the phenomenon offorced 'capitalisation'.1

These phenomena of forced commercialisation and capitalisationwere, of course, the concomitants of the forced internationalisationunleashed by capitalist colonialism. Long before British conquest,India and South Asia in general had been linked in networks ofinternational trade which were primarily manned by Indians, Arabsand other Asians even down to the beginningof the eighteenthcentury.

These networks extended over the land frontiers of India into WestAsia, and the Mediterraneanand along the coasts of that sea and theAtlantic Ocean into further Europe, and into Tibet, Burma,Thailandand China; along the oceanic routes the network extended to East

Africa,the Red Sea ports, the lands bordering the PersianGulf and onthe other side to Indonesia, Malaysia, and the southern borders ofChina and Japan.The Europeanincursiondisrupted the patternof thistrade and reoriented it towards Europe, and the control of the trade

mostly passed from Asian businessmen into the hands of Europeanmonopoly companiesand otherprivatefirms.Throughoutthe period of

British rule, the imperative to send an annual remittance to theBritish to satisfy the demands of the British Parliament, thestockholders of the East India Company (when it was alive and evenafter it had become defunct) and the burgeoning civil and military



GLOBALISINGNDIA:THE FANTASYAND THE REALITY 21

establishment of the Government of India in Britain, imposed its

correlative compulsion to send out exports in bigger and bigger volumes

and values. Because of this imperative, Indian exports always partook

of the character of a consignment trade: prices were determined inauction markets.

The description of these processes as forced or coerced does not mean

that there were no agents in the colonialised society who voluntarily

participated in the process, nor does it mean that there was no

resistance by coerced agents against the process, nor finally that

coerced agents did not have any room for autonomous actions. ManyIndian merchants collaborated voluntarily with the British in the

process of conquest of India itself, and continued to survive and even

thrive through such collaboration. Many Indian rulers went over the

side of the British at critical points of conflict: Mir Jaffar deserted

Siraj-u-daulah and the Gaekwad of Baroda deserted the Peshwa,

although nominally he was a commander of Peshwa's army. The

landlords and moneylenders collaborated with the British rulers for

the major part of colonial rule. On the other side, peasant resistanceled to the demise of indigo cultivation in Bengal proper in the wake of

the Neel Bidroha. Peasants maintained a culture of their own in most

areas which could be only partially dominated by upper caste and

upper class ideologies. Moreover, as a the colonial system continued

through time, changes in international commercial and powerrelations, and changes within Indian society led to new fields of choice

and conflict. However, so long as the despotic apparatus of colonialism

continued, the basic structures were determined by the system and the

policy pursued by the controllers of the system. This means also thateven when the outer ramparts of force collapsed, many of the inner

bastions of coercion remained virtually intact.

With the understanding that similar remarks apply to eachmoment leading up to the globalisation process, we can now rapidlydelineate the role and nature of force and coercion in the processes of

transnationalisation, financialisation or securitisation or

globalisation (with limited labour mobility). In the process of

transnationalisation, an economy comes to be dominated bytransnational firms. In case of the Third World, most of thesetransnational firms are domiciled in other countries-mostly advanced

capitalist economies. The process of transnationalisation of much ofLatin America had been extensive already in the 1960s and 1970s. In

Brazil, for example, under the so-called tripe relationship, thetransnational firms gradually came to dominate the domestic economyand they were aided in this process by Brazil's military rulers.2 Latin

America experienced a further dose of transnationalisation in the1980s when virtually all the countries walked into a debt trap created

by loan-pushing transnational banks and complaisant governments run

by corrupt politicians and bureaucrats. In the 1980s the burden of debts



22 SOCIAL SCIENTIST

servicing came to take the place of colonial tribute payments in

creating an enormous drain of resources from the Third World to the

First.When the less developed countries (LDCs) became caught in a debt

trap, they were forced to undergo a process of financial deregulation on

the totally unwarranted and false supposition that the interest rate is

simply the price of loans just as Rs 60 per kg may be the price of mutton

or Rs 16 per kg may the price of apples and that the market for credit

is just like the market for apples or the market for mutton. One benefit

of this from the point of view of the transnational banks and other

transnational corporations was that large chunks of LDC real estate

and LDC organisations with large reservoirs of skill were just

auctioned off in the so-called debt-for-equity swaps. Of course, sincethese enormously valuable assets were sold in depressed and totallyimperfect markets (with the cash-rich banks or financial institutionsin developed countries as the main bidders), the LDCs remained as

indebted as before they had bartered away their land and destroyed

decade-long efforts at building of skills and manufacturing competence.The import substituting or infant-industry-protecting strategies of

LDCs can be seen as attempts at thwarting the process of

transnationalisation. In the few countries where the social and

political structures and geopolitical situations allowed these

strategies to go through in an uninterrupted fashion, the differentmoments in the latest phase of capital could be adopted or rejected

depending on the perceptions of those countries of their national

priorities. The East Asian countries are a prime example of such successand such conscious choices regarding the adoption of securitisation or

permitting TNCs to enter their economic spaces or allowing a two-waymobility of capital.

In most other LDCs, the sequence of the introduction of capitalistevolution was imposed by pressures from outside. The moments of

choice of these different sequences was not effected by internal

developments, although at almost every stage indigenouscollaborators could be found as active junior partners or cheer leadersfor the particular path imposed by the colonial power or the dominantblock of international capital. This applies, for example, to theintroduction of railways, or of increasing involvement of the Indian

economy in international trade. Dwarkanath Tagore or FramjeeCowasjee might have wanted railways for India but it was onlyBritish capitalists who were allowed to control railway companies.3Except in Bombay and to some extent in the trade of Madras with SriLanka and South-east Asia, the levers of international trade remained

in European hands. Again, except in Bombay, or Ahmedabad upto 1914,large-scale 'capitalist' enterprise meant European enterprise.

The period from 1947 to say 1975 was the phase in which Indian

capital sought some autonomy of action and was heavily subsidised by



GLOBALISINGNDIA: THEFANTASYAND THEREALITY 23

the state in this effort. But the social and political preconditions for

such autonomous choice were not built on the ground. The vast majorityof workers remained illiterate and ill-fed, landlords and local

power-mongers continued to exert non-market power and impede all

productivity raising initiatives, and the indigenous capitalist processfailed to evolve a technological or organisational trajectory of their

own. There may be an Indian road to capitalism,4 but there is as yet no

sign of an Indian path to internationally competitive or socially

responsive or technologically vibrant capitalism.The current attempt at globalising India seeks to short-circuit the

process of building either a self-generating decentralised and

internationally sustainable social democratic order or an internation-

ally competitive systemwith the dual

responsibilityof the

capitalists to invest in the continuous upgradation of skills of workers

and of workers to serve a process of productivity growth, and of thescientists and technologists to generate new technologies adapted to

the skills and organisational needs of Indian workers and of production

enterprises to use those technologies as paths to innovation and

adaptation of technologies. But such short-circuiting can only further

postpone or suppress the restructuring of society and economic

organisation while increasing the dominance of international finance

and capital on the Indian economy.

The reorientation of the Indian economy so as to make it viable inthe context of aggressive international capitalism, whose onlymechanism of coordination is the capital of G7 countries, demandsnumerous micro-level changes. The structure of management of many ofthe bureaucratically managed private and public enterprises has to berendered less hierarchical; more responsibility has to be given to shop-level workers and supervisors, and supplier-user relationships have tobe built up between different firms; and firm monitoring devices haveto be put in place between financial institutions and the borrower firms.Workers have to be better trained, better educated, better fed and

better housed for them to be able to perform as intelligent problem-solvers on the shop floor. Factor markets have to perform so as toallocate labour, capital and technology to their best uses. But all this

requires more investment in education, public provisioning, science and

technology, and of course, in the productive units themselves. Such

stepping up of investment cannot take place in a situation wheredemand is stagnant, workers and managers are demoralised, and an

enormous fraction of total resources is drained away to meet repaymentcharges on old loans, and the guaranteed profit to transnationals suchas Enron and Bechtel. The less resources the national decision-makers

can control, the more vulnerable they become to arm-twisting bytransnational banks, other TNCs, the IMF-World Bank duo and the

governments of the G7 countries. What I have styled macroeconomic



24 SOCIAL SCIENTIST

capacity in another context5 and microeconomic restructuring are

intimately related.In recent

years, AmartyaSen6has focussed on human

capabilities-their ability to realise a satisfactory level of functioning as free

responsible subjects-as a (vector) measure of human welfare. The

health, education, work satisfaction and other aspects of a good lifethat the concept of capabilities seeks to capture can be attained andsustained in the the long run only if an economy can maintain itsmacroeconomic capability, that is, that it can manage its exports and

imports, its public provisioning programmes,and its ability to providea reasonable degree of full employment in not-too-degrading jobswithout being abjectly dependent on the whims of aid-givers or

transnational bankers. That there is a link between macroeconomiccapabilityand the predisposition of the society to make a strong effortto improve capabilities is shown but the contrast between the

performance of most of the advanced capitalist world in respect of

public provisioning in the 1950s and 1960s, as contrasted with their

performance in the 1980s and 1990s, and by the far more grotesquecontrast between the record of the socialist eastern Europe up to say1970, and the social disintegration to which those ex-socialistcountries have become prey since 1989. Of course, macro-economic

capability is not a sufficient condition for the society to provide for

improvement of human capabilities:the record of primitive capitalistaccumulation in England or Italy would testify to that. But it seems

paradoxically true that if an aggressively individualist country failsto provide for improvement of human capabilities it would also

eventually lose out in the race for maintaining macroeconomic

capability.The inability of the ruling classes to choose sensibly increases the

costs of uneven development which is an inevitable concomitant of

capitalism. India has undergone colonial internationalisation and

predatorycommercialisation.Now it is undergoing what I have styled

premature financialisationand debt induced globalisation. A patternof globalisation which is dictated by the needs of a dominant but

declining capitalist power, viz. the U.S.A., cannot allow India tobecome the vibrant, globally competitive economy whose image hasbeen dangled before us. Insteadof that,we will have an economy and a

society continually threatening to fall apart under the uneven spreadof the moments of capitalism that have been identified above.7

Before I finish, I should issue one disclaimer, and attempt oneclarification. The disclaimer is that I am not putting forward a new

theory of stages within the epoch of capitalism. While there are

many ways in which the sequence of what I have called the momentsof capitalism can be seen to follow one another, in the dominant

capitalistcountriesand the logic of that sequencing can be worked out,it is to be remembered that under actually existing capitalism, there



GLOBALISINGNDIA:THEFANTASYAND THEREALITY 25

have been many forced marches and this sequence has been disturbed

by the logic of unequal interdependence and uneven development. If we

take another famous phrase that has been used to characterise a stageof capitalism, viz. that of monopoly capital, we find, for example,that Britain while being the most powerful capitalist country before

the First World War, seemed to be less subject to the growth of

monopolies or the coalescence of industrial monopoly and financial

capital than Germany or the USA. One reason for this was that

Britain's industry enjoyed a politically-based monopoly within the

British empire and more particularly, within the non-white

dependencies that were included in that empire.

Similarly, Germany and Japan, the two fastest growing capitalistcountries within the block of G7 countries after the Second World War

were less subject to the process of financialisation than Britain or the

USA. It may even be claimed that delayed and incomplete process of

financialisation allowed Germany and Japan to maintain a

competitive edge in the field of manufactures over the USA, and the

UK. However, just as the concept of monopoly capital as a stage within

capitalism still remains useful for descriptive and analytical

purposes, the setting out of the six moments of the process of capitalist

development may be useful in unravelling the complexity of that

process.The clarification that I want to make is that

justbecause the

moments of capital seem to follow a 'natural' sequence (processes

involving human agency are natural only in so far as human beings are

children of nature), there is nothing necessarily progressive about

those processes.8 Globalisation, for example, whether imposed from

outside or endogenously propelled, can have enormous destructive

implications. Globalisation is generally accompanied by the

dominance of giant TNCs and other global players. Even if there is

competition among the giants, that may be small comfort to a countrywhich finds its whole cultural heritage, its endowment of local

consumption goods or large chunks of its skills and productionapparatus wiped out by global competition. If most of the young peopleare persuaded that only the likes of Michael Jackson are worth

watching or listening to, there will be less and less patronage for

Indian classical music, Nazrul's or Ghalib's ghazals, or Tagore's songs,and the musical heritage of a whole civilisation may wilt and wither.

The sovereign choice of a consumer will end in an ironic whimper, if

the only choice of soft drinks she is left with is between Coke and

Pepsi. There are many production processes which are idiosyncratic in

their evolution, and which may be ground to smithereens by the

juggernauts of internationalisation, transnationalisation andglobalisation. Raulfia Serpentina has given rise to steroids used for

treating heart disease, but the Ayurvedic use of the plant may havevirtues which will be for ever lost if Ayurveda becomes a lost art, or is



26 SOCIALSCIENTIST

served up in a packaged form to customers with bulging wallets whotreat it as simply another 'alternative' way of life and not as a systemof medicine to be as

seriouslytreated as the

pharmacopiaused

bydoctors who only prescribeproductsof transnationaldrug companies.Of course, it may be urged that the process of capitalist

globalisation involves also enormous product and processdiversification. In theory, consumers have many more choices than

before, and human beings can be skilled in numerous new professions

may be closed for ever through the competitive destruction carried out

by the working of markets. More importantly, the global

impoverishment wrought by capitalism in the 1980s and 1990s has

deprived hundreds of millions of people of the purchasing power

neededto

buyeven the basic necessities let alone all the mouth-

watering products over which media barons would like to see us drool,and hundreds of thousands of trained scientists and engineers are

looking for jobs that would allow them to practise their skills. The

gulf between the haves and the have-nots as yet shows no signs of

closing except in the occasional stupefaction of drugs or the melodrama

of death in the hands of the hired assassin.

NOTESAND REFERENCES

1. On the nature of the colonial 'capitalist' enterprise see A.K. Bagchi,'Colonialismand the Nature of "Capitalist" nterprise n India',EconomicandPolitical Weekly,30 July 1988; see also A.K. Bagchi, Private Investment inIndia 1900-1939, Cambridge University Press, Cambridge, 1972; and A.K.

Bagchi, 'Working Class Consciousness' (Review of Dipesh Chakrabarty:RethinkingWorkingClass History: Bengal 1890-1940, Princeton UniversityPress, Princeton,1989, Economic nd Political Weekly,XXV(30), 28 July 1990,PE-54to PE-60and P.Ghosh, Communalism nd ColonialLabour:ExperienceofCalcuttaJute Mill Workers, 1880-1930', Economicand Political Weekly,XXV

(30),28July1990,PE-61-PE-72.2. See, in this connection,PeterEvans, 'Multinationals,State-ownedCorporation

and the Transformationof Imperialism:A BrazilianCase Study', EconomicDevelopmentnd CulturalChange,October, 1977.

3. See A.K. Bagchi, The Evolutionof the State Bankof India: The Roots, 1806-

1876,PartI,OxfordUniversityPress,Bombay,1987,pp. 357-58.4. As claimed,for example, by Thomas A. Timberg,TheMaruaris:FromTraders o

Industrialists,Vikas, New Delhi, 1978.5. A.K. Bagchi, The Differential Impact of New Technologies on Developing

Countries:A Frameworkf Analysis,Geneva, ILO,WorkingPaper No. WEP 2-

22/WP 176,June1987.6. Amartya Sen, Commodities nd Capabilities,Oxford University Press, Delhi,

1987;Idem.,InequalityReexamined, larendonPress, Oxford,1992.7. Fora moreextended treatmentof the conceptof predatorycommerdalisingand

its consequences, see A.K. Bagchi, 'PredatoryCommercialisationand Commu-nalism in India',in S. Gopal (ed.): TheAnatomyof a Confrontation:The Babri

Masjid-Ramanmabhoomissue,Penguin (India), Delhi, 1991,pp. 193-218;for a

preliminary analysis of the effect of premature finandalisation, see A.K.



GLOBALISINGNDIA: THEFANTASYAND THEREALITY 27

Bagchi: 'Transnational Banks, the US Power Game and Global

Impoverishment',Economic nd PoliticalWeekly,Vol. 27, 30 May 1992;for the

history of internationalisationand transnationalisation in South Asia upto,

1990,see A.K. Bagchi 'Transnationalisation n Asie du Sud' in S. Amin and P.Gonzalez Casanova (eds.), Mondiatisation et Accumulation, Editions

L'Harmattan, aris, 1993,pp. 199-238.8. Thisclarifications promptedby a questionraisedby Ms. BasabiSur at another

seminar.

Documents

Amiya Kumar Bagchi-Globalising India the Fantasy and the Reality