Some 30 years after Indian Independence, in the mid-1970s, India was decidedly what was called a "mixed economy". What this effectively meant was that the industry was divided between an increasingly inefficient public sector and a largely opportunistic private sector, which criticised the government and the licence-permit raj, but also periodically made use of the state to do the things that private capital itself was unwilling to undertake. Students of economic history know well enough that contrary to what is so often asserted, planning was not imposed by the Soviet-influenced technocrats on a reluctant capitalist class in India. Rather, Indian merchant capitalists and industrialists had maintained close relations with the nationalist movement (as we know from reading Claude Markovits), and had thus a certain influence on how post-Independence economic policies were defined. They were certainly not keen on a regime which would leave them open to merciless competition from foreign investors, as even relatively late episodes from the '70s and '80s around personages such as Lord Swraj Paul showed. They were also happy to have certain low-profit and long-gestation industries fall to the lot of the public sector.
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|The market and capitalism will never free themselves from politics, whatever the gurus of liberalisation may tell us. |
The problem was that by the '70s, by the law of unintended consequences, the private-public alliance and the consequent division of labour had become riven with major tensions. The bureaucracy had acquired a mind of its own, and like the trade unions, wanted to pursue its own interests, an aspect of political economy deftly analysed by Pranab Bardhan. The political class, with the transformation of the Congress under Mrs Indira Gandhi, had also become far from parasitical, wishing to draw resources both to finance the political process and to engage in accumulation for its own benefit, placing the proceeds overseas through the mediation of its cronies. The "ideal" capitalists for many in the Nehru era may have been the Tatas, but their model was never really replicated. They remained too distant from politics and had even been less than clear about their relationship with nationalism. Their model of philanthropy, clearly influenced by the West, also found few other takers. The Birlas and other old-style merchant capitalists who had taken to industry remained a far more powerful model, as we see from the ranks of Khatri, Baniya, Chettiar and other entrepreneurs who emerged in the post-Independence decades, or who consolidated a position they had already enjoyed in 1950.
What has changed since then? Is there a new Indian capitalist who has emerged to add to this spectrum? This would certainly seem to be the case if one reads the claims by Forbes, for example, of how many of the 20 largest fortunes in India are new and "self-made". What this does not quite reveal is that the new actors who have emerged are of two sorts, and that one can make still finer sociological distinctions within these two categories. It may be noted that these new actors tend to belong in their vast majority to the older merchant communities (Baniyas, Khojas, Memons, Marwaris and Sindworkies), and there are relatively few who come from outside this fold. However, one group that stands out is that of "crony capitalists", who clearly owe a good part of their expanding fortunes to a proactive engagement with politics. It is precisely through their dealings with the state, whether in the import-export business-where tariffs may have been selectively manipulated to favour them-or in the arms trade, or in a variety of other modes, that some of these emerging houses of the '70s and '80s made their great killings. Again, this should warn us not to buy a simplistic view, where the poor struggling capitalist is attempting to free himself from the clutches of the state, a sort of golden legend of the liberalisation epoch.
But there are also others who seem to have emerged, often in relation to information technology, who are somewhat closer to the Tata model, though hardly its simple imitators. These fortunes have usually been consolidated since the mid-'80s and especially in the '90s. This is the impression one has of firms such as Wipro and Infosys, which have far more westernised profiles than the average. Like the Tatas, some of these firms have also sought to broaden their base of legitimacy in society through philanthropic activity. This is certainly the case with, say, the Azim Premji Foundation, which has an engagement with primary education. This is a rather different route than that favoured by others, whether in India or even abroad, who would rather pay for neo-Hindu temples than educational institutions or cultural centres.
Two features of this process are worth underlining. One is the fact that there is still very little evidence of the emergence of major entrepreneurs from among the OBCs and Dalit groups. This suggests that the means and networks that are being mobilised are still largely caught up in older routines of what was called the "bazaar". It is the communities that have been known to mobilise the bazaar that still throw up what Forbes likes to designate "self-made men". A second factor to be borne in mind is the persistence of what I have termed, albeit in a very different historical context, "portfolio capitalism". By this I meant that the worlds of capital and politics were often deeply interlinked and that in order to succeed in one, the actor had to be equally adept at the other. However, the trajectories that one observes can be quite different. There are those who make fortunes, and then-in order to protect them in a world of limited legal recourse-are obliged to seek a political umbrella (the case, I imagine, of many Marwari entrepreneurs of the '30s). There are those who know how to manipulate and influence political actors, and thus make fortunes; these are the "crony capitalists" that one sees in India and Southeast Asia.
At any rate, there are clearly no trends in the direction of a capitalism that will steer clear of an engagement with politics, as the recent episode in Bangalore around Infosys and H.D. Deve Gowda shows. To those who believe that the separation of the economy from politics was what characterised the modern, French sociologist Latour responded that in that event we had never been modern. Whatever the gurus of liberalisation and globalisation may tell us, the market-and capitalism-will never free themselves from politics and emerge as fully autonomous spheres, either in India or elsewhere. The question before us is whether social mobility in India, which is currently being expressed, above all, through the sphere and language of politics, will eventually find a proper economic dimension. Current observations suggest that the truly "self-made" entrepreneur is still something of a distant dream.
As the Indian state gradually withdraws from various spheres of activity, it is not clear that this shrinking is going to help such a process. Capitalism seems likely to remain the sphere of middle and upper castes. Whether these entrepreneurs will be willing to define a new "social contract", one in which they plough back into society at least a part of their profits, will determine whether Indian society can manage to survive with low levels of social violence. Some actions based on the application of enlightened self-interest may be the order of the day to manage this new balance between the private and public sectors.
(The author is professor of history at UCLA.)