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| Stunted explanation |
| C P Bhambhri / Feb 10, 2010, 00:08 IST |
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In this study, Tirthankar Roy has focused his attention on the role of “social collectivities” in the management of the very dynamic economy of pre-colonial India. Roy has opted for a culture-based explanation for the understanding of institutional mechanisms, which existed in the pre-colonial Indian economy. He has elaborated the processes through which culturally-determined institutions managed the economy. Roy aptly sums up that “if the leading figure in the business history of the twenty-first century is the risk-taking entrepreneur, the leading figure in the business history of the eighteenth century was the risk-reducing community”. Roy describes these social collectivities as “endogamous guilds” based on kinship, marriage, caste, community linkages and inter-social relationships. And the business used to be conducted on the basis of “trust” and “customs” which existed along these closely-related kinship groups.
Disputes were then settled by caste and community interventions, and the relationship between the King and the wealthy from Hindu to Islamic states was that of “disengagement of state courts form commercial and local disputes”. Not only this. Kings protected the caste system and these castes represented “endogamous guilds”. Mercantile activities thrived in the 18th century and trading and banking families functioned in the economy as a cluster of families related by ties of marriage and kinship, with their own rule of law that came closer to moral codes than professional statutes of kings or states.
The history of India (South Asia) went through a new phase of development in the 19th century and direct colonial rule from 1850 to 1947. Colonial rule over India brought new systems of economic management and a basic and antagonistic contradiction arose between the indigenously-managed system of economy based on “moral code” and the colonial system of legality.
Roy’s study deals with the economic history of institutional change in South Asia from pre-colonial to colonial India, and he has grappled with the long-term changing relationship “between state, market and guilds” and the impact of colonialism and globalisation on the traditional institutional mechanism of “endogamous guilds”.
If on the one hand Roy admits that “Indian society had always been a commercial one — commodity trade was extensive in Mughal India, drawing momentum from the gigantic fiscal system — on the other, he makes a startling statement on the impact of colonial rule by observing that “the merchant banker community experienced a creative destruction”. This is Roy’s real problem. The traditional, cultural endogamous guilds “proved unable or poorly able to cope with the new world of commerce”. Is it a satisfactory historical explanation for the retardation and destruction of the dynamic economy of pre-colonial India in the phase of colonialism? Roy’s limitation is inherent in his “culturalist” approach.
Even when Indo-European trade created a situation of “high disputation” and breach of contracts, Roy simply states that the “courts of law” created by the colonisers were created “outside the community” and that the “existence of the community was threatened”. So what? Were Indian merchants incapable of adapting to the changing institutional mechanism of economic management created by the British, or something deeper happened to play havoc with the ongoing productive economic system? Roy himself does not draw any valid, conclusive form of evidence mentioned by him.
On the eve of colonial rule, India had a thriving indigenous banking. “But as the need for capital expanded with industrialisation, community financial resources fell short and public money became “necessary”. Economic development requires capital and “government-sponsored Presidency banks — whose main clients were businesses connected with the European enterprise — were not easily persuaded to lend money to small- or medium-scale Indian business”. The disbursement of capital for investment was based on cold and calculated approach of the colonisers who had created Presidency banks and Roy is searching for the so-called cultural explanation for the “phenomenon of co-existence of Indian and European investors”. The natural transition of “merchants” into “industry” could not take place in India because of extremely adverse conditions faced by the “locals” in the face of “well-patronised colonial entrepreneurial groups”.
Further, Indian rural and urban artisan groups or karkhanas (not modern factories) “were the most well-developed business organisations” in the 17th and 18th century. But from 1800 onwards, “millions of people left their homes and jobs to work in new enterprises inside India and overseas”, and it is estimated that at least five million workers left the Indian sub-continent between 1846 and 1940 as famines drove them away and the colonisers indulged in the practice of “indentured workers from 1830 to 1900. A similar fate awaited the peasant class. With the breakdown of “customary law and customary justice”, the permanent settlement and other legal measures taken by the colonisers with a view to garnering assured “land revenue”, obstructed the development of a progressive agrarian system in India.
As scholar of economic history, Roy has not offered adequate explanation for the stunted development of India during the colonial period because he has not taken the “hard economic data” to its logical end.
COMPANY OF KINSMEN: ENTERPRISE AND COMMUNITY IN SOUTH ASIAN HISTORY 1700-1940
Tirthankar Roy
Oxford University Press, 2010
252 pages; Rs 695
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