Industrialisation Hai? (3)

The last two posts discussed an overview of political economy in India and why the market/state dichotomy is largely irrelevant to understanding it.  This last one covers some ideas about what might be more relevant to understanding what leads to industrialization if it's not "the market" or "the state" or the precepts of any overarching ideology imposed from somewhere else, as well as some brief comments about social structure in India.

What leads to industrialization?  This question is more important than the ideological debates among (elite) statists and (elite) market fundamentalists and extremely sensitive to local history, politics, social structure, etc. (by local, I mean the bounds of a particular state, not a particular town). In this vein, I'd highlight the importance of policy autonomy for developing countries - the ability to shape their own ideas; it's not a coincidence, imo, that India and China are the largest and most powerful among the developing countries; that they both staked out non-aligned policies in different ways during the U.S.-USSR rivalry; and that India didn't wholeheartedly pursue socialism and China (and India) haven't wholeheartedly pursued liberalism. To put it slightly differently, ask yourself why they were among the last to be able to resist the demands of the IMF/World Bank/U.S.-led global system and why they are the ones that are succeeding the most now in terms of GDP growth and hype. Coincidence?

The real challenge, for India at least and probably developing countries as a whole, is to give enough lip service to global trends while at the same time pursuing steps that are tuned to the local and economic conditions in a way that foster industrialization. Ayesha Jalal gives a great counterexample in Pakistan and how it was constrained from independence by finances and economics, resulting in overdependence on foreign aid and internally too much military and bureaucratic power, which lays the backdrop for the situation in Pakistan.

The other component of putting together an effective development policy, in the context of policy autonomy (or lack thereof), is the importance of very specific and pragmatic policies of economic transformation which revolve around protecting industries that aren't globally competitive on price yet but at the same time making sure that there's enough of a stick to make sure that they actually do move up the technology ladder, improve organizational practices, etc., and become globally price-competitive in industries that are higher technology / require higher productivity (e.g. not garments, but making zippers...and then progressively increasing the level of technological sophistication and organization of your businesses). These also have to balance economic needs with the political needs that allow your system to continue.

Finally, on the word "development" as a terrain for political arguments-- don't make any mistake- this version I've presented is a process of trying to join the centre of a global capitalist economy by domestically developing a high-growth economy and high-productivity economy. This has NOTHING positive to do with ordinary people except the Great Hope of higher GDP leading to a bigger pie that can be redistributed to allow most people to gain in absolute terms and the immense amount of dislocation and pain that this process produces. Which is, perhaps, why the Indian army can't go to about 15% of the area within the state of India, from what I've heard (I would check on this before you repeat it).

These processes have a lot of violence, rape, expropriation, and other steps/outcomes that we rightfully ought to reject. But even if we do so, the nagging question still remains about massive poverty and how you deal with that, not just once, but continuously over the amount of time it takes to remove it. And, in fact, who decides what "massive poverty" that needs social action is. But if you do accept that discourse, that it's an issue--can you resolve it without industrialization?

Whether you alter the social basis of power (i.e. radical steps like redistributive land reform, which the Indian government never did in the 1950s) or you pursue liberalization (which leads to funneling massive amounts of people and resources into activities that the state is already competitive in...which in a country like Bangladesh means garments, in Pakistan means gray cloth, in India means BPOs and IT), the basic question still remains as to how these different strategies affect society and different segments of society.

So is India industrializing, and if so, in what way and to whose benefit?  We're not going to know for sure, at least for another few years, or from a more personal vantage point, I won't know without much more thinking and writing and research. Mushtaq Khan has pointed out that Brazil had a couple decades of really high growth and then that collapsed, and there's no reason why India won't do the same if you think it's relying on expanding sectors that were already globally competitive (like IT) but not developing new ones any more.

Partha Chatterjee offers his vision in EPW from a few weeks ago:

With the changes in India over the past 25 years, there is now a new dynamic logic that ties the operations of “political society” (comprising the peasantry, artisans and petty producers in the informal sector) with the hegemonic role of the bourgeoisie in “civil society”. This logic is provided by the requirement of reversing the effects of primitive accumulation of capital with activities like anti-poverty programmes. This is a necessary political condition for the continued rapid growth of corporate capital. The state, with its mechanisms of electoral democracy, becomes the field for the political negotiation of demands for the transfer of resources, through fiscal and other means, from the accumulation economy to programmes aimed at providing the livelihood needs of the poor. Electoral democracy makes it unacceptable for the government to leave the marginalised groups without the means of labour and to fend for themselves, since this carries the risk of turning them into the “dangerous classes”.

The basics are there, but I'm not fully convinced of the details (which in turn inform the basics). Nonetheless, it's an interesting read in the ever continuing stream of literature on the evolution of the political economy of India.

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