Add to my lbrary

Write review
Page 30

2 Industrialization in India before 1947:

conventional approaches and alternative
perspectives

Models of industrialization and social

change,
whether
tionalist, have been derived largely from the historicalMarcist or func
Western Europe and, experience of
especialy, of Britain. Social theories came to be
constructed upon a specific reading of a
particular, and in some respects,
unique, historical development. These theories or
seated in our historiographical models, now deep-
sticks
consciousness, increasingly offer yard-
agamst which industrial development elsewhere in the world is
measured. On closer examination, universal
postulates
appeared to generate a large number of special
thus
derivedofhave
cases. Vast expanses the
gobe are seemingty littered with cases of
arrested development or
examples of frustrated bourgeois revolutions.
Since the study of the rise of
industrialism, the central problemof
sociology, has hinged on so specific a historical example, it is not
ing that n spite of fundamental differences of surpris
intellectual traditions,
conceptual frameworks and political values, diverse models of economic
development and industrialization have been built upon
lar
assumptions. Of course, these models have often been essentially simi-
their parts, but they have criticized in
scarcely been rejected as a whole and while
historians may disclaim some of the
assumptions upon which they are
based, these continue to be pervasive in the analysis of economic develop-
ment both in the West and the
Third World. This essay sets out these
shared assumptions, common to Marxism and
functionalism alike, about
the character of industrialization as a
social process. Since they have left
their imprint
firmly upon the investigation of Indian industrialization and
conomic development, this
essay will attempt to set these
against the approaches and arguments which they have assumptions
speciñc case of India. To do so may not
generated in the
only indicate the inadequacy of
the latter, but may also serve to
highlight the limitations which these
assumptions have imposed upon empirical research and historical inter
30
 AOd to
my brary Nrite reNW
Page31

Industrialization in India before 1947

31
pretation. Finally, this essay will offer some alternative
and draw attention to, some perspectives
negdected questions in the history on,
of Indian
industrialization.
The historical example India offers a particularly helpful
of
upon prevailing models of industrialization. perspective
tional terms, India was For one thing, in conven
substantialy on the road to industrialism from the
mid-nineteenth century onwards without
reached its destination. This would perhaps ever having quite
suggest that eithber we should under-
stand industrialization in India (and other
similar examples) as a special
case requiring a
special model of its own or that existing models may be in
need of revision. Furthermore, the
is taken
history of industrialization in the West
primarily to mean the evolution of factory from craft
generaly presupposing the prior development of a market industry,
social differentiation of the economy, the
peasantry and changing legal and social
structures. In India, all these
forces were working together at the same
time; and if some showed signs of acceleration in the late nineteenth
century, their development usually had long historical
the imposition of colonial rule. In other roots, pre-dating
no words, simple evolutionary
schemata of social change and economic
applied to the Indian evidence. development can be readily

For functionalist writers, industrialization constituted a

serial process
through which society woukd duy pass at an appropriate stage of develop
ment. The roads towards a fiully industrialized society were many, but the
outcome was invariably the same: "industrialism . . t h a t which the
industrialization process inherently tends to create'This 'process'
was
guided by an undertying "logic"by the imperatives of industrialization'
which 'cause the industrializing élites to overcome certain constraints and
toachieve certain objectives which
are the same in all societies undergo
ing ranstormation The signposts of this transformation were charac
teristically an advanced level of technology, large-scale enterprise and the

C Ke, F H. Harbiaoa, J.T. Dunlop and C. A. Myen, Indhustriakim and Inhustrial Man:
he roems of Labour and Management in Eeomomic Grocth London, 1962), p. 33; C.
Ker and A Seigel, "The Structuring of the Labour Forcein Industrial Society',Inchesrial
ad Labour Relarions Revi, 8:2 (1955), 151-68; B. E. Hoselitz and W. E. Moore (eds.),
dstrahsaion and Socie (Pars,1963); W. E. Moore and A. S. Feldman (eda.), Labo
Co
a
t and SoaaCage n Devedoping Areas (New York, 1960); N.]. Smelser, Social
ad the ndaestrial Rrvobtio (London, 1959) and heory f Collectite Behaviour
New Yor, 1963). Kema a., ndausorialism and Indhusrial Man, p. 17.
C. Ke, E. H. Harbison, J. T. Dunlop and C.A. MyeT, "Industríalism and Industrial
Man', Inanational Labour Revie, 82:3 (1960), p. 238.
 Industrialization in India before 1947 33

out to examine the "historical experience of economic development'

The identifcation of the advantages in any one" of the advanced indus
trial economies, it was supposed, could be 'of value to those other
countries which still seem bereft of a good hand of cards"° If the central
fact of economic development is rapid capital accumulation', as W. A.
Lewis declared, its 'central problem' was to investigate how a given
society raised its level ofsaving and investment from'4 or 5 per cent of its
national income or less' to 12 to 15 per cent or more' Ironically, 'his
hypothesis was derived from the empirical study of wentieth-century
underdeveloped countries, and especialy from the case of India'" If the
industrial revolution in Britain was to serve increasingly as a model
against which industrial development in India could be counterposed, the
fine carvings of that model had originally been made upon Indian stone.
When this emphasis upon capital accumulation, large-scale industy,
entrepreneurial initiative and transformative lead sectors established a
firm grip on Indian economic history, the circle had begun to go back on
itself.2
But there was a deeper sense in which the history of the industrial
revolution in Britain came to acquire the status of a uníversal model."
This related not simply to identifying the circumstances of 'take-off , nor
even to the analysis of the social and economic pre-conditions of indu
trial development, but more fundamentally to a conception of the under
bying social processes of industrialization. Thus, David Landes, in his
classic study of European industrialization, defined an industrial revol-
ution a
H.J. Habakuk, Tbe Historical Experienoe of Bconomic Developmenr, in E. A. G.
pment, in E. A G.a
Nson (ed-), Problems in Bcomoic Develoo P: 8. For
NEnt bstorniographical survey of the industrial revolui
P ume into vogue among economic historims in the 1050
nadine,1The esentand the Pastin the Bnginblndustrial Revolution,1880-1980,Pasu
and Presen, 103 (May 1984), 131-71.
E.Jones (ed.), Amicuiral and Bcomomic Growth in England 1650-1815 (London,
1967), P. 2. See especialy, w. WRostow, The Stages Bconomic Growdk: A Now
ComNE Mantesto (Cambridge, 1960), p. l139 and passim.
w.A. Lewi, "Economic Development with Unimited Supplies of Labour, The Man
chester School of Ecomomic and Social Shadies, 22:2 (1954), 155.
"P.Crouzet, "An Essay in Historiography', in Crouzet, Capital Fomation in the Indusrial
Revohation (London, 1972), p. 11.
A.
K Bagchi, Private Iroestmt in India, 1900-1939 (Cambridge,
indhasmazanon n ndia: Groewth and Coticc in the Prvae Corporate 1972);
R K
Ray
Sector, 1914-1947
(Delh, 1979% M. D. Moris, The Growth of Large-ScaleeIndustry, in D.
Industry, in D. Kumar
Kurmar (ed.),
(
1 : 1750-« 1970 (Cambridee 19a
c o u n e , the industnalaton ot the "latecomers" has sometimes acquired the status ofa
n its own nght. However, in terms of the social process of findustrialization, it has

ce RCTe
Tong C.
1981, pp. 1-21.
1 nance t the original
IndTTmalizanow othe Britiah
CosNLalmodel. For a1750-1914
PoTs, useful summ(New
 Add to my library Write review Page 34

34 Imperial power and popular politics

that complex of technological innovations which, by substituting machines for
inanimate for human and animal force, brings about a shift
human skill and power
from handicrat to manutacture, and, by so doing. gives birth to a modern

economy. In this sense, the industrial revolution has already transformed a

number of countries, though in unequal degree; other societies are in the throes of
change; the turm of still others is yet to come.

Itgves rise to novel forms of industrial onganization, characteristically the

factory. The factory constiuted something 'more than ust a larger work
It was a system of production', which over time created a 'new breed
unit.
of worker" In this light, industrialization is taken to constirute an
autonomous force, determined by a neutral technology, whose impera
tives' and 'inherent tendencies' appear to lie beyond the realm of social
choice or political control, and which acts to shape society inevitably ina
single direction. It is not intended to suggest that there were no differen-
ces of approach berween the numerous writers in various fields who
investigated the 'transition to industrialism'. Rather, what needs to be
emphasized is that in spite of specific diferences, these assumptions
about the character of industrialization as a social process came to be
shared by a remarkably wide range of scholars.
These assumpions, often implicit, have influenced the study of indus
trialization in three ways. First, by postulating a unilinear direction of
change, they have trained our sights upon 'large-scale industry', as con-
stituting the lead sector of the economy, and have obscured not only our
understanding of other centres of dymamism and stagnation within it, but
also of their role in determining the structure of the economy as a whole.
has upon, arbitrary definitions of
Itlarge-scale
enabled, indeed sometimes depended
industry' or the so-called formal sector. Above all, it has often
led to the identification of the general problem of economic backward-
ness almost exclusively with the specific question of industrial failure.
Second, the crude distinction made between pre-industrial and indus-
trial societies frequently fails to advance our understanding of the former
or even its transition to the latter. Pre-industrial societices are often taken
to
be predominanty agrarian societies in which large-scale industry has
not been established. They are thus lumped together irrespective of their
levels of technology, economic activity or social organization. In this
perspective, the mainsprings of dynamism and change within pre-indus-

DS.Landes, 7he hboud Promahes: 1chnologcal Chan and Industrial Development

in Western Earope jro adiion.mming oriinally from the
oDs, stemming oniginally from
work of
work Manx, Durrtheim
of Mar. Durkheim and Weber, see P. Abrams, Huoncal Socxoy onoon
1983), Pp. 19-146.
 Pages 35to 38 are not shown in this preview

Industrialization in India before 1947 9

over his material environment, while 'a scientific approach to techno-

ogy was virtually non-existent'" Such propositions have been sanctiñed
by repetition but detailed scrutiny has more often highlighted their weak-
nesses than their strengths." In contrast, others have argued that the
appropriate circumstances for industrial development did not exist be-
cause they were systematically destroyed by colonial rule.3" Some recent
research on the eighteenth century has served to suggest that whatever the
direction in which the economy had been developing. it was distorted and
diverted into less fruitful channels by the impact of colonial rule. What
ever the disagreement, the method of approach to a counter-factual
counter-factual tone.
question has necessanly taken on a
But if Indian society in the eighteenth and nineteenth centuries lacked
'not only an extensive aray of basic social, political and economic pre-
conditions but also the development of an institutionalized capacity to
solve new problems that continually emerged in the process of change
it must be presumed that these conditions existed somewhere ebe at the
inception of industrialization. It might be saButary to ask where this was
his classic of the development of the British econonmy, Eric
so. In account
Hobsbawm wrote:*

the technological problems of the early Industrial Revolution were fairly simple.
of
They required no cdass of men with specialized scientific qualifications... Most
the new technical inventions and productive establishments could be started ona
succesive addition. That is to say, they
Bnal scale, and expanded piecemeal by
required litle initial investment, and their expansion could be financed our of
accumulated profits. Industrial development was within the capacities of a mult
plicity of small entrepreneurs and sktilled traditional artisans.
The factors which are now identified as the 'pre-conditions' of economic
development have more often turned out to be the consequences rather

Toid., 562-3. bid, 562.

On the initiatives of traditional merchants, see C. A. Bayly, 'Indian Merchants ina
"Traditional" Setting Benares, 1780-1830', in C. J. Dewey and A. G. Hopkins (eds.),
The Imperial Impace: Sudies in the Bconcsic Hizsory of Arica and India (London, 1978),
Pp. 171-93; on technology, see I. Habib, The Technology and Economy of Mughal
Indis', IESHR, 17:1 (1980), 1-34, on the dynamism of the comnmercial economy in
eishteenthcentury South India and its subeequent decine, see D. A. Wahbroo Some
Notes in Market Relations and the Development o the Bconomy in South India, G.
1750-1850, paper presented to the Second Anglo-Dutch Workahop on Comparstive
Colanial History, Leden, September 1981
The best statement of this case is to be found in Bagchi, Proate oesoeng, eee nlso,A. K.
Bagchi, 'Foreign Capital and Bconomic Development in India: A Schematic View, in K.
Gough and Hari P. Sharma, hperalim and Rrvoharion n Soak Asa (New York and

London, 1973» pp. 43-76.

F . Pertin, "Proto-Industrialization in South Asia', Past and Presens, 98 (February 1983),
30-95." Morris, Large-ScaleIndusury, 558.
EJ. Hobebawm, indusary and Empire (London, 1968), p. 39.
 Add to my Mbrary Write review
Pege 40

40 Imperial power and popular politics

than the causes of growth." We know most often that the pre-conditions

eristed only because we also know that development had subeequently

occurred. In any case, accounts which counterpose the history of Indian
industrialization against the historical experience of
eighteenth-century
Britain and Westerm Europe overlook the crucial fact that the tasks of
industrialization were becoming by the late nineteenth century increas
ingly compiex and expensive.
If industrialization was, indeed, a technologically determined process
which spread outwards from late eighteenth-century Burope, how did
this 'diffusion' occur? In the existing literature, it is generally supposed to
have been the consequence of India's relationship with the West largely

through the medium of trade and forified subsequently byformal colo

nialism. Technological diffusion occurred, in this view, through the 'great
presidency towns or "colonial port cities': Bombay and Calcutta, centres
of an expanding import and erport trade, of finance and banking, and of
course, of consumption. From the 1850s onwards, 'the first substantial
manifestations of modern industrialism'
became discernible." Once set
in along
motion, the movement the path industrialiem
to was
only forward. Although 'arge-scale industry', presumably mass produc-
apparendy
tion and the factory system, did not spread
easily across tne economy as a
whole "the pace of its extension within specifñc sectors was reasonably
brisk'.
As soon as entrepreneurs recognized "the commercial possibilities of
local factory production', and "the opportunities must have seemed very
obvious, they embarked upon industriaization. Once begun, the pro-
cess continued through functional necesity. As their interests came to
rest upon large-scale industries, so entrepreneurs were committed to
technological advance and optimal eficiency. Faced with market fuctu-
ations or intense competition, entrepreneurs either altered their product
or else attempted 'to diversify and upgrade the quality of their output'"
Sometimes, they attempted to suppress wage costs. Sometimes, and with
varying degrees of success, they attempted to take cover in sheltered
markets. But, in the long run, the only answer lay in technical and
administrative reonganization'; from this 'purgation', their industries
emerged healthier and more efficient. This linear view of industrialization
There is scaroely one of these pre-conditions, Habakauk had obeerved nearly rweaty
yearn ago, whch cannot be shown to have been abent in the case ofsome acknowiedged
Case of growth. Indeed, t in not diicult to cite cases whene the abaence of what in
cOmmonly regarded as apre-condition proved to be a positive stimuhus to growth.'
Habakluk, Historical Bxperience,pp. 118-19.
Moms,Large-Scale Industry', 566. Tbid, 553. bid., 574.
bid., 617.

C
 Industrialization in India before 1947

has led to an almost exclusive concern with a few major industries, and
among them a concentration upon its most important centres.

In chis perspective, entrepreneurs are perceived as the decisve force in

the process af industrialization. Marcists have focused upon their agency
in the development of capitalism and upon the frustration of their econ-
omic interests as the catalyst in the emergence of nationalist movements.
The emphasis in neo-classical and functionaist arguments has rested vari-

ously, in the case of apologistsfor empire, seekingto minimize the de

structive effects of colonial rule upon the Indian economy, upon the fhil-
ure of businessmen to take their chances, or alternauvely, n a natonaist
argument, upon the daring and briliance with which they manipulated
limited resources to maximum advantage. For Momi, the economy
itselfappeasto have been constituted by 'actual entrepreneurial choices.
The decisions of private businessmen determined the allocation of re
"the
sources'in the economy as a whole; they also serve to "explain' why
scope of industrial development (was) restricted' But the effect of this
argument is simply to reformulate the question. For if the range of alter-
native profit-making opportunities...explains the rate at which business-
men invested'," what determined those opportunities in the first place?
Ye, despite the central role thus allocated to the entrepreneur, there
are, apart from various hagiographical lives, few studies of individual
firms or of entrepreneurial development." Historians who place the
entrepreneur at the heart of their story of the rise of industry have
sometimes negiected to examine how businessmen made their choices or
indeed how far their intentions were translated into achievement.
Existing interpretations of the course of industrial development in
India, based upon models of apparently successful industrialization else-
where, have taken over pervasive assumptions about the nature of indus
trialization: that it was a technologically determined process beyond the
realm of social choice; that it was a serial process whose imperatives were
similar in each case; that it was inevitably and inexorably progressive;
that, flowing from the West, it constituted the only dynamic force acting
upon a passive 'indigenous' economy. The result has been the develop-
'
Io dealing with the development of the corton tertile industry, for instance, Morris
focuses exclusively upon Bombay despite the fhct that it constituted 'a diminishing part of
Ibd, 617, 572-83, 603-5,616-24.
a u n ndusry
m he
mterwr penod.
Toda., 354.
However, on the carly colonial period,sce C. A. Bayty,Rulers, Tonmn and Banaars
North Indian Sociegy in the Ag ofBritish Exspansion (Cambeidge,1983),Pp. 369-426; and
A. Siddiqi, The Business Vorld of Jamseti Jejcebhoy', IESHR, 19:3 and 4 (1982),
301-24; and for the nineteenth and rwentieth cennury, see T. Timberg, The Marwari:
From Traders to Indhustriahics (New Delhi, 1978), and D. Tripathi, The Dymamics of a
Tradiniom: Kasaurbhai Lalbhai and His Entrpreneurship (New Delhi, 1981).
 Add to my library Write review Page42

2 Imperial power and popular politics

ment of a Whig historiography of industrialization whose unflinching

focus is the so-called lead sector of the economy, and which faithfuly
chronicles the continuing discovery and application of increasingly eff-
this perspective,In
rational' and modern methods production.
of
cient,
the role of supposedly backward sectors in determining the structure ot
the economy as a whole is obscured. Moreover, in this view, industrial-
ization is ripped out of its historical context. The infuence of the agrarian
economy, the role of the colonial state, the effects of international capital-

ism, or the impact neglected; at best their interplay in

of labour is often
the process of economic development broadly defined receives cursory

attention.
These teleological approaches to industrialization have informed and
shaped economic history. First, it has helped to
the wider field of Indian
of the Indian economy in the early
create a hiatus in the historiography
colonial period. Whereas historians of the seventeenth and early eight
centh centuries, like those of the later nineteenth and twentieth centuries,
issues
agriculture, trade
address themselves to substantive cconomic
and markets; the growrh of towns and industries, workers and capitalists
the investigation of the early colonial economy is largely evacuated in
favour of guiding themes such as the expansion of British power and the

development of land revenue systems."The economic history of colonial

India is thus generally commenced only from the mid-nineteenth century
onwards. It is at this point that historians discern the first signsof modern
industrialisSm, bringing in its wake a period of quickening social change.
To describe the processes at work', cxplained one historian, speaking for
many, 'one tums to words like "anglicization", "modernization'", "secu
larization" Now the historian can trek along the familiar path to
industrialism. The 'historical experience of cconomic development' can
now be applied to the study of India's past; the way is cleared for the
history of Indian industrial development to be counterposed to the ex
perience of Western Europe. The past appears increasingly in the image
of the present.

Ray, Industriaizarion in India. Ray's synthesizing history of industrializarion combines an

interesting treatment of the colonial state with an almost total negiect of labour or inaeed

the wider economic context. Mors, 'Large-Scale Industry', touches upon the role of
abour but finds its impact minimal.
So much so that one of the most valuable studies of rarian relations' and land revenue
ssio
syvtems n the earty colona penod
productiviY CTOppin eeand Aneele 1979), D.
P
Bsh RaNorthe india he iniee eyanL 1
Jerey,
o1076 Tohisaoury. we
i c hat in these anoroaches
 Add to my
library Write review
Page 43 >

Industrialization in India before 1947

43
Furthermore, the concern of economic historians, their attention
tracted to when and how at-
explain why industrialization'modernization
came to
India, has been to
failed to transform the Indian
its corollary,
why the so-called pre-conditions were economy and
has been a primarily missing. The result
counter-factual history. Since the
prospects for economic development are so closely possibility and
growth of large-scale industry, it is not associated with the
lem of the backwardness of the Indian surprising that the general
prob-
issue of the slow rate of cconomy and the more specific
industrialization not only seem to
same explanation but at times even appear to be identical. Thewarrant the
ist approach has contributed to the diffiusion-
the focal point not identification of industrialization as
only for assessments of the
development in India but also for explanations of prospects
its faiure infortheeconomic
colonial
period. Similar "causes' are held to account for both
and the limited extent of industrialization. underdevelopment
The result is often to
ate an inherent perpetu-
tautology in such reasoning. If economic backwardness,
reflected by the absence of
"pre-conditions, is held to explain the modest
scale of industrialization, economic
backwardness itself is
industrialization. Since at least the lateexplained
terms of the failure of in
century, writers on the subject have invited us to choose
nineteenth
rule and the Indian social between colonial
structure as the main cause of economic
backwardness. These options have
the bulk of the research and provided the organizing principles for
writing
India. But a specifically historical
in the economic
history of colonial
in India may be better served
analysis of social and economic
change
by declining this choice and exploring more
fully the interplay between them.

The teleological perspective has concentrated attention

"large-scale
on
industry' asthe lead sector at the
expense of other supposedly backward
activities, on the triumphs of enterprise while
business failures, on the role of
neglecting the nature of
entrepreneurs
catalysts
as in
economic
development while assuming that labour and other social groups were
passive factors moulded and shaped by the autonomous
industrialization. By examining the categories thus used inimperatives
of
the investiga-
tion of industrialization, it is
possible to allow alternative emphases and
perspectives to emerge. It is the intention of this essay to suggest that our
focus may usefully be shifted from large-scale industry to the economy as
a whole, not as an
autonomous entity subject to the
of the laws of supply and mysterious workings
demand, but as it was constituted by production
conditions, by the relationship between town and country, by the
agency
 Pages 44to 46 are na sh own in this preview

Industrializaion in India before 1947 47

on the other hand, could simply by cutting off supplies of working capital
to their weavers reduce the output of cloth. Since they operated wider
marketing and production networks, they were also better placed to
identity and to respond to changges in price or demand. Yet these tenden
cies towards concentration did not mark a shift towards the factory
system. On the contrary, market fuctuations made capitalists even more
reluctant "to commit themselves to regular working and expenditure on
plant'*
This instability did, however, encourage the handloom capitalists to
diversify their interests, buying land, trading in mill-made piecegoods,
investing in the film industry. The decline of the erport trade in fine
goods had undermined the master weavers, engaged in luxury produc-
tion, and circumscribed the "independence of the skilled 'independent
weavers from the traditional weaving communities. Many of them urned
to the coarse goods trade, inflated its labour supply and probably accen
tuated its instability. As the number of weavers producing coarse cloth
increased, their incomes fell and the extent of regular employment aval-
able declined. Many were forced to seek work elsewhere, turning to
agriculural labour or service employment in the towns. Consequently,
the industry was becoming more part-time than pernmanent. By the
1940s it was already being deserted, and this rather than factory competi-
tion alone may account for its decline after 1948. But there were other
underlying pressures: especially the interplay between the internationa
and the internal economy, and the political priorities of the colonial state
which prevented it from mediating the impact of international fuctu-
ations upon the internal economy and wthich in fact led to the adoption of
fiscal,monetary, tariff and financial policies which aggravated their ef
fects.
The case of handloom-weaving in Tamil Nadu suggests that non
factory forms of production organization were capable not only of adapta
tion and survival in the face of factory competition, but also of dynamism
expansion and technical and organizational innovation. Nor can this
dynamism be viewed simply as the preliminary stage to the development
of the factory. And it is by no means the only such example. In jute, too,
the handicraft sector expanded rather substantially between the late
1830s and about 1880'." Similarly, for much of the colonial period,
Indian capital in the coal mining industry was typically confined to

404. Ibid, pp. 402-13.

Baker,An Indian Ruaral Ecomomy, p.
Tid., ch. 2; Tomlinson, Polirnical Bcomom, ch. 2.
Moris, Large-Scale Industry, 567. For the case of sugar, see S. Amin, Stugarcane an
Sugar in Gorabhpur: An Inquiry tinto Aasat Prodaction for Capitaliss Enseprise in Colorial
India (Delhi, 1984).

Capytg
48 Imperial power and popular poliics

small-scale individual orfamily proprietorshipsminingsecond class.

coal from very shallow depths' Nevertheless, operating on this basis,
several firmms survived with remarkable success over surprisingly long
periods" The factory system and large-scale production were not the
invariable outcome of industrial development
Ifby focusing upon large-scale industry, teleological perspectives have
tended to overlook handicraft production and apparently archaic forms of
enterprise, they have also concentrated attention on what are ready
perceived as the successes of industrialization and this has led to the
neglect of the failures. It is almost customary for historians to preface
their accounts of industrial development with passing reference to the
first attempts which failed, before hurying on to chronicle the triumphs
of those which succeeded. It may appear perverse to suggest that the
history of industrialization may be usefuly approached through the ven
tures that failed. Yet business failures frequently occured as a conse-
quence of the very constraints which also inhibited the firms that suc
ceeded and which established the limits within which all were forced to
work.
The first jute mil was estabisbed in 1855 by George Acland, formerty
a coffee planter in Ceylon. Despite his 'considerableexperience in Soutth
Asia', his 'sense of foreign markets' and his supposedly special knowledge
of how
onganize
to
Indian labour, 'the firm was never very
successful'*
The other four mills established by 1866, however, were 'supposed to
have been very profitable'. But this did not encourage a rush of entries
and the indusry began to expand signifcantdy only in the later 1870Os. In
coal mining, too, triumphant Indian entrepreneurs, like business faitures,
were similardy, though not perhaps equally, starved of capital. In the coal
mining industry, capital was not so much progressively "Indianized'
as

"Europeanized'. Coal mining was initiated by Dwarkanath Tagore in the

1830s but the collapee of his firm in 1847 marked the beginning of
European ascendancy in the industry, and in the decades which followed,
Indian entrepreneurs were increasingly squeezed into the least profitable
sectors of the
industry.
Early attempts by the East India Company and by Earopean investors
to launch iron and steel production failed largely because they were

Simmons "Indigenous Enterprise, 200, 189-217.

I n Japan, handlooms loched the cottoa mills out of the domestic market unil the 19208
which
and 1950. For general survey of the iteracure on Japanese industrialization
a

piaces n a comperngve contet, see B. RTomlinson, Writing History Sideways:

19:3 (1985), 669-98.
Lessons for Indian Ecomomic Historians from Meji Japen', MAS,
Moris, 1arpScale Industy,567
Simmons, "Indigenous Enterprise, 200, 189-217.B. B. Kling, Parer in Empine Dwar
kanazh Tagove and the Age of Entarprise in Bastern india (Cakcursa, 1981), Pp. 73-121.
 Industrialization in India before 1947 49
undercapitalized and because they could not effectively adapt technology
to existing factor costs and to the size of the market. But the same
problems inhibited subsequent attempts. The Bengal Iron Works Com
pany colapsed through undercapitalization in 1879. The failure of the
steel project initiated in 1906 by its reincarnation, the Bengal Iron and
Steel Company, was also in part due to the fact that it was "grossly
undercapitalized'. Even the redoubtable Tata family
difficulties in raising capital." Their survival has
encountered serious
commonly been
put
down to the business acumen and entrepreneurial skil of J. N. Tata and
his descendants. But other factors also contributed to their success. In

paricular, the inroads made by Belgian steel into the Indian market as
well as the lessons of the first world war - that it was as well to add an
ordnance base to the oriental barrack - increased the readiness of the

colonial state, whatever the modesty of its ambitions or the limited

efficacy of its policies, to assist the enterprise."
The first attempts at establishing cotton mills in Bombay failed because
the entrepreneurn had 'difficuty mobilizing capital'" Yet maintaining
the supply of fixed as well as working capital remained a perennial
problem for the Bombay millowners throughout the history ot the
try. Millowners with established reputations, who had gained the indus confi-
dence of the public investor and who arely had serious difficulies in
raising capital, were liable to be hoist with their own petard. Their ease of
access to funds
encouraged a tendency towards overextension and result-
ed in some spectacular failures: Dwarkadas Dharamsey in 1909; Greaves
Cotton and Company, which managed the largest group of mills in the
city, in 1915; Narottam Morarji in 1929; Currimbhoy Ebrahim, who
owned roughly 15 per cent
of the industry's capacity, in 1933. The high
cost of fixed capital as well as their
dependence upon the changeable
money market for their working costs led the millownerS who survived to
adopt flexible production strategics, geared to the maintenance of their
turnover, averse to holding stocks, deploying sizeable proportions of
casual labour and regulating production according to demand.a
Among the various constraints within which entrepreneurs operated,
and which led to the collapse of some, the lack of was capital prominent.
Morris,Large-Scale Industry', 583-92.
Ray, Indhestriaisanion, pp. 74-93; Bagchi, Proate Irosbmens, Pp. 291-331; D. M. Wagde,
Lmperial Preference and the Indian Steel Indusuy, Bcomowic History Revien, s4:l
120-31.
Moris, Large-Scale Industry, 574. But Moia uggests a few lines later that the first
p0onaly costy ventures by local standards' and fairly easy to
stabl
n
he
These ar are further elaborated in Chandavarkar, The Origis of Industrial Capi
ahm, pp. 67-
 Add to my library Write review Page50 >

Imperial power and popular politics

Yet this did not signify an absolute scarcity of supply. It was rather the
case that capital was most easily raised in small pools, by entrepreneurs
whose fame and fortune were already legendary, for whose enterprises the
markets were already proven and the risks well known. This is not to
return bya different route to old notions about the shyness of capital.
Attention to the nature of business faihures should alert us, on the con
trary, to the highly adventurous spirit of much investment, and serve to

emphasize the magnitude of risk which it entailed.

The evidence is increasingly conclusive that whereas most early Indian
ventures failed, European initisatives succeeded: in the coal mines," the
jute mills" and the cotton textile industry of Madras,""This was primanly
because Buropean entrepreneurs enjoyed easier access to and, therefore,
a greater command of capital while their connections with banks and
managing agencies facilitated its mobilization. On the other hand, their
Indian counterparts had to rely primarily upon their kinsmen, caste
fellows and acquaintances. Yet by deploying their own connections of
kin, caste and friendship, European entrepreneurs were able, under cer
tain conditions, critically to disadvantage their Indian rivals." A closer
examination of business failures also provides aa context within which the
nature and quality of entrepreneurship may
be
assessed. If the causes of
failures also dogged the survivors in their moments of triumph, there is no
reason to identify the collapse of firms necessarily with inferior entrepre-
did
neurial skil. Rather, faihures served as a reminder that entrepreneurs
not inevitably overcome the difficulties they faced.
In this perspective, it is possible to assess entrepreneurial responses as
well as to establish how they might be compared. Historians have con
tinued to address this problem primarily in terms of community. Moris,
for instance, registers "the different responses by various Indian groups
and of naives in contrast to foreigners' " Reluctance to break into
large-scale industry in a particular instance suggests to him the timidity of
capital or the lack ofenterprise among local business communities. Since
he finds no 'obvious barriers' to entry by Indians to the jute industry, their
absence signifies to Morris 'the passivity of Indian capital'. He concludes
that Bengali businessmen were primarily 'small investors and rentiers'
rather than aggressive entrepreneurs' " By contrast, 'the aggressive and

Simmons, "Indigenous Enterprise.

Bagchi, Private Ivoesbma,Pp. 157-217,262-90.
Baker,4nndian Rural Bcomomy, Pp. 3042
Bagchi, Prioate Iroestmens, pp. 165-70. Sce also, O. Goewemi, "Collaboration and
Confict: European and Indian Capitaists and the Jute Economy of Benga, 19191959
IESHR, 19:2 (1982), 141-79; B. R. Tomlinson, 'Colonial Firms and the Decline of
Coloaialismin Eastern Indis, 1914-1947,
Moris Large-Scale Industry, 557.
MAS, 15:3 (1981), 455-86
Iid., 568-70.
 Add to my brary Write rreview
Page51

Industrialization in India before 1947

successful merchants' of Bombay were quick to scize their chances." r i
cOst no more and probably somewhat less to set up a jute mil than to
open a cotton mill in Bombay at the same time... wby was natave
capital
in Calcuttaj so timid? But if the Bengali entrepreneur was backward in
jute, how should we explain his initiatives in coal, under increasingly
adverse conditions?" And in any case, what are we to make of the early
aures to Promote iron and steel making? For over one hundred years,
effortsby Europeans responding to the needs of Europeans', with the
help ofamodest quotient of oficial support and encouragement,ended
in catastrophe. The question ofwhether European capital, apparently the
most dynamic agency in the Indian economy, was timid has scarcely
arisen in this line of argument. Yet in the case of iron and steel one
presumaby, crucial) cause of failure was that 'even successfulcharcoal
iron
operation requireda shift to much larger-scale techniques than were
ever contemplated'.a
Morris's
own evidencesuggests that the problem of entrepreneurial
response posed in terms of community is not very helpful. For comversely,
the successful penetration of Marwari entrepreneurs into the jute indus-
try in the 1920s and 1930s, like Parsi enterprise in the founding of the
Bombay cotton textile industry,is atributed by Morris nottoanyinnate
business acumen but to their firnmly established base as traders which
enabled them to invest effectively in industry. On such evidence, dif
ferences in entrepreneurialresponses,it would seem, ane better explained
in terms of given economic contexts rather than what are perceived to be
the immutable characteristics of particular business communities. In-
deed, these communities themselves are often artbitrarily defined, refer-
ring interchangeably to different categories of identity - to race ('Euro-
pean', 'native), religion (Parsi, Jain), region (Bengali, Marwari, Gujarati)
and caste (bania). Any single capitalist from any one of these "communal'
groups might also be defined in terms of other particular attributes. To
approach thhe problem of differential entrepreneurial response in terms of
community is to assume that these diverse kinds of communities pos-
sessed an nternal coherence, and it has usualy led no further than the
discovery that entrepreneurs of any single community, however defined,
often had as much or as little in common with ench other as they had with
the of any group. A promising way
members other more
examining the patten of entrepreneurial response as a whole, for by
forward lies in
establishing what was general to businessmen, operating at different

Tbid, 574. Tid., 570. Simmons, Indigenous Enterprie.

Tbod., 585. How far does the noion of timidity eplan way European capital, having
come to dominate export-orniented industries,
ties of the domestic market?
remained retuctant to eaxplore the posbili-
Tbid., S80-1,615-16.
 Add to
my lbrary Write review
Back Cover
in terms of given economic contexts rather than what are percesved to be
the immutable characteristics of particular business communities. In-
deed, these communities themselves are often arbitrarily defined, refer-
ring interchangeably to diferent categories of identity - to race ('Euro-
pean', "native ), religion (Parsi, Jain), region (Bengali, Marwari, Gujarati)
and caste (bania). Any single
capitalist from any one of these 'communal
groups might also be defined in terms of other particular attributes. To
approach the problem of differential entrepreneunal response in terms or
community is to assume that these diverse kinds of communities pos-
sessed an internal coherence, and it has usually led no further than the
discovery that entrepreneurs of any single community, however defined,
often had as much or as little in common with each other as they had with
the members of any other group. A more promising way forward lies in
examining the pattern of entrepreneurial response as a whole, for by
establishing what was general to businessmen, operating at different
*
Ibid., 574. Tbid., 570.
Simmons, "Indigenous Enterprise.
Oomedomnateeport-oriented
8 How ar does the notionindustrics,
of"timicdity' explain why European capital, having
remained reluctant to explore the posibili
ues of the domestic market? " Tbid., 5 8 0 - 1 , 6 1 5 - 1 6 .

Some pages are omitt ed from this book preview

In this series of interconnected studies Raj Chandavarkar offers a powerful

revisionist analysis of the relationship between class and politics in
lndia
between the Mutiny and Independence. Dr Chandavarkar rejects the
Orientalist' view of Indian social and economic development as unique and
exceptional, which calls for explanations specific to its culture, and reasserts
the critical role of the working classes in shaping the pattern of Indian capi
talist
development. He demonstrates the inadequacy of "culture' as a
nant tool of historical analysis, especially as manifested in those recent sub-
domi
altern studies which have focused upon colonial discourse to the almost com-
plete exclusion of the material world. An underlying and recurrent theme of
the book is how perceptions of power shaped alignments of class and influ-
enced changing definitions of social identity. The book ranges widely across
the social and political history of the working classes in India, examining the
character of trade unions, the political culture of the working class neigh
bourhoods, the nature of violence and policing, popular responses to the
moral panic of the plague epidemic and the Gandhian inflection of national-
ist rhetoric. Dr Chandavarkar's analysis of political discourse, community
structure and class relations in industrialising India has major implications,
and Imperial power and popular politics offers one of the most sustained and
sophisticated critiques yet made otf both Marxist and functionalist narratives
of industrialisation. In their stead Dr Chandavarkar emphasizes the fluidity
and tlexibility of the relationships between discourse and power, language
and political practice, and in the work's concluding chapter he offers an
alter