They fought long, courageous battles to gain political freedom for their countrymen, but did not have quite the same respect for economic freedom.

Ha! As I read this post, the first book I thought of was Das' India Unbound. And Amit is indeed citing that in the article. India Unbound is a great read for the laymans version of India's economic history, though a trifle bit longer than this artilce :-) Das too recurringly expresses the sentiment about how the art of making money is not as respected in India.

¿it is a failure of India that 60 percent of India depends on agriculture for a living¿in most developed countries, that figure is closer to 5 percent.

Indeed! Though it should be said that manufacturing growth has picked up a good bit in the last few years and is exceeding the overall GDP growth. The fact that a 4% agriculture growth is considered a good year for agriculture and 60% of India's populace are involved in agriculture will be more and more of a problem over time. Also, it should be added that this 60% is not pure agriculture, people involved in as little as >50% of their time in agriculture are also in this 60%. Many split their year between labor (mazdoor) jobs and agriculture.

Has anyone read Rajadhyaksha's book and recommends it? I believe he is Amit's boss at Mint?

Gurcharan Das is the desi Tom Friedman. Too many anecdotes, much stereotyping, and little analysis.

Gurcharan Das is the desi Tom Friedman. Too many anecdotes, much stereotyping, and little analysis.

I think the time has come for a psychological analysis into Nehru's politics/governance vis-a-vis the caste system. I am not a psychologist but let me try:
- Here is a brahmin given the job of governing the temple of India by the Mahatma
- Naturally trade/making money should not be a priority but hidden away, like the hundi.
- The people who trade/make money owe the temple of India thru the brahmin (government). They are anyway vaishya.
- Existing business can remain (since they funded the freedom struggle anyway) but be bound by arcane government rules (brahmin rituals).
- New temples (Dams, power plants, universities) to be built by the government.
- Heading the new temples shall be career government employees eg., IAS (brahmin can trust brahmin).
- The people (vaishya, shudra, tribal) have to be guided, restrained by the govt.(brahmin). They do not know what they actually want.
- Corruption can be ignored, since paying a little extra to the govt. employee (brahmin) to see god is ok.
Socialism fits very well with this brahmin paternalism and you have Nehru's thoughts on Modern India.

Amaun, there may be more to your analysis than meets the eye...interesting...you could be on to something. The immediate post-1947 set-up was essentially de-facto brahmin rule in a way. Although it was a whole system, not just Nehru. And it was not all brahmins in charge, but at the least highly brahminized people. I agree that socialism as it developed in India, as well as the corruption, political casteism, licence raj, etc. were natural outgrowths of brahminical culture.

But then don't ask me why the same thing happened in other countries without brahmins... probably due to general tribalism and feudalism I guess.

I was trying to identify why Nehru was so enamored of socialism.

Socialism fits very well with this brahmin paternalism and you have Nehru's thoughts on Modern India.

One could make a claim that India's attitude towards money making is reflected in the divisions related to the caste system. Thus knowledge expertss are at the top of the ladder while the merchants are a lowly third. It could also very well be that over centuries of exposure to such social divisions, people got programmed to look up to intellectualism and look down on entrepreunerism and merchantile trades.

Also, I wonder how much was the effect of many merchant castes moving over to Jainism in ancient times.

However Nehru's ideas may have been probably more influenced by a few things

- His trip to Russia where he was shown cases of rampant and rapid progress and economic growth.

- The fact that most leading economists of the time around independence were not Adam Smithesque. Does anyone have an idea of how much Keynesian economics was popular at that time?

- The inherent but misplaced idealism in socialism.

I was trying to identify why Nehru was so enamored of socialism.

For one simple reason, that a lot of Oxbridge graduates like Nehru himself were Fabian Socialists, and it was a very popular paradigm at that time.

Well, according to you, Labor Party in UK or French Socialists (who were at the forefront of socialism at that time, in addition to Soviets) were also Brahmins, Brahmins in mindset.............I guess.

people got programmed to look up to intellectualism and look down on entrepreunerism and merchantile trades

You would think that an educated and supposedly atheist Nehru would realise that growth is present in the industries/farms not in government managing these industries/farms. Nehru had an aversion towards money that only be described as brahminical.
When I was growing up I was told of Vivekananda testing if his guru Ramakrishna was really spiritual. So, he put some money under his guru's pillow. The next morning Ramakrishna remarks that he was not able to sleep even a wink. This is the confirmation that Vivekananda was seeking from his guru about his spirituality!
In India the denigration of money is amazing and Nehru and whole bunch of the freedom movement really let their feelings dictate the future of India.

despite India achieving an agricultural surplus long ago, which should, in the normal course of things, have triggered an industrial revolution.

WINNIPEG and MUMBAI -- Back home in Canada, Lloyd Affleck raises wheat, barley and pulse crops on his spread near Beechy, Sask. (pop. 243), on the cold prairie between Swift Current and Saskatoon. Yesterday, though, found him standing in the steamy port of Mumbai, India, watching yellow peas from Canada come off a ship... India's consumption of pulses - yellow peas, lentils, chick peas, green peas - has doubled in a year.

Here's a comparative analysis between China and India on the state of their telecommunications industry [Au: S. Mani]. An excerpt.

China has followed a strategy of promoting manufacturing enterprises having strong in –house R&D capability. Also the country has sought to keep pace changes with movements in the technology frontier. For instance, she has built up considerable capability in the design and manufacture of mobile telephones (base stations, switching centers and handsets). India, on the contrary, has had a much longer manufacturing and research history in this industry. However its sectoral system of innovation is very weak... the laboratory, was not given the strategic direction to build up capability in mobile communications. Further, the in-house R&D efforts of the manufacturing enterprises were very weak as they depended entirely on the public laboratory for their technology needs.

I think the time has come for a psychological analysis into Nehru's politics/governance vis-a-vis the caste system.

Gurcharan Das is the desi Tom Friedman. Too many anecdotes, much stereotyping, and little analysis.

Maybe in this "flat world", Friedman can introduce a "paradigm shift" and outsource his Times column writing to Das. Same content-free style for just a tenth the price!

Nehru had an aversion towards money that only be described as brahminical.

What do you base this opinion on?

New temples (Dams, power plants, universities) to be built by the government... The people (vaishya, shudra, tribal) have to be guided, restrained by the govt.(brahmin)

Well, while we are belaboring the analogy, weren't the kshatriyas and vaishyas in the business of building new temples, and weren't the kings who restrained the people?

Nehru had an aversion towards money that only be described as brahminical.

1. Nehru had no aversion to money (at least a documented one); he came from an aristocratic family and had expensive tastes. Kush pointed out that Nehru was much influenced by the socialists in England. Nehru was always worried about the role of religion and superstition in keeping India behind the time, and was obsessed with technocratic knowledge and scientific management as the panacea to the ills of Indian society ("dams are the temples of modern India."). A well-known secularist with no sympathy for religion in the public sphere.
Contrast this with Gandhi, who developed a very different conception of development - self-sufficient village republics, each person does his/her duty and produces at the scale of the craftsman, and is mainly educated in the ways of his/her immediate vocation and station in life (this derived a lot of force from his conception of Hindu concepts of dharma, karma, and anti-materialism). In contrast, Nehru emphasized scientific and cosmopolitan education. Definite materialist grounded in European tradition of man's mastery over nature through scientific knowledge.

2. Nehru's enormous appeal to the peasantry in the princely states of India was what had catapulted him into a political superstar. He took up their causes, and received much love from that particular constituency. One of their biggest issues was fragmented land holdings, and tenuous to nil property rights. Thus, I think his drive to redistribution of wealth was most embodied in the redistribution of land post-independence. But this had a tenor much different, probably, from the Gandhian tack of redistribution, as taken up by Acharya Vinoba Bhave in his 'Bhoodan' movement.

3. We are being too presentist here. In the heyday of Nehru, the Soviet Union had achieved impressive GDP gains within a decade, amassed enormous weaponry, made great strides in human development, and their policies agreed with his internationalist bent. At that time, the fall of the USSR was not apparent in the least. This was also the era of Keynesian economics - where a pro-active stance of the state was considered necessary in increasing aggregate demand, and hence, the economic growth of the state. Even America had just seen the bountiful economic effects of the New Deal, the GI Bill, and investment in national infrastructure. Meanwhile, the Marshall Plan had done much for Europe. This was the era of the interventionist state, in which social justice and individual development was seen as the duty of the state (very differently by the US and USSR, but both claimed that their system led to the most optimal development of a citizen).
Moreover, Nehru was being harassed by Dulles and Co. for non-alignment, while Soviet Union was delighted with Nehru's close affinities with the leaders newly-free erstwhile colonies. USSR backed this up with support - know-how for dams, steel-plants, defense production, agricultural advancement, and later India's space program. Which accounts quite a bit for Nehru's socialist tendencies. It is more likely that Nehru's commitment to socialism and a strong welfare state came from the economic and philosophical climes of the time (with which he was very familiar, thanks to his poshness and cosmopolitan education) not some kind of 'aversion to money.'

Starting a business is still a nightmarish process: In their 2005 book, Law, Liberty and Livelihood, Parth Shah and Naveen Mandava wrote: “Entrepreneurs can expect to go through 11 steps to launch a business over 89 days on average.”

Nehru had an aversion towards money that only be described as brahminical.

That's weird. Wasn't he both a pandit and a bandit? Anyway, Money[Shankar Aiyar] has an affinity towards Nehru that could also be described as brahminical.

Industrial vs. IT Services as the path to growth is a frequent discussion topic on SM. We correctly laud Indian IT service sector giants like Wipro who employ some ~80,000 employees worldwide. However, standouts like Wipro are comparatively few and far between and their example is tough to scale to Indian population proportions.

One reason that IT is as successful in India as it is, was that it largely took off just before the Y2K fixing projects before any Central Government could make it part of their beloved Five Year Plans and thereby ruin it through overcontrol. This was one instance where the market essentially presented the Government with a fait accompli before the Government could wake up. Heavy engineering hasn't had the same history - everything from bulldozers to ships and power stations were nationalized at some point. Fertilizers still are subject to price controls, as is some of the paper and pulp industry.

Well , I am peeved because it is sort of selective quoting of Guha
I am reading the book currently and the whole p,icture that emerges out of it is not necessarily that Nehru completely loved Russia in 1947..(in 1927 yes he was enamored to see the progress a peasant country was making and it may very well have been a valid opinion to form because surely at that stage the Russians were very confident and believed in themselves too.)
Also note that Guha points out in his book that a group of big businesses themselves published a report saying that some of the crucial industries should be state controlled in order to achieve fast progress.
Also, It is not as if Nehru made the decision alone. Guha also indicates how Mahalanobis traveled throughout the world, got economists from different countries and got their opinions.

I dont support it or anything but it was more of a zeitgeist (Guha uses this word but I am not sure if he uses it in relation to this or some other topic) .
(and which portmanteau so eloquently points out. Is portmanteau guha by any chance?)

It is a great book by the way.

It also refutes this brahmin theory because Nehru and Ambedkar were the ones that tried to get in the Hindu civil code, which all the brahmins were opposing. one thing Guha mentions is tha Nehru fell for intellectualism but then.....

Amit used to be much better a year or two back. Now, the pressure of churning out more and more material has definitely watered down his writing quite a bit. imho.

If we really want to call people names, I think Nehru is much better described as a coconut. Of course he knew it and didn't mind: he once described himself as the last englishman to rule India.

I think the time has come for a psychological analysis into Nehru's politics/governance vis-a-vis the caste system. I am not a psychologist but let me try:

fyi - here are the 11 steps to starting the business in India.

If we really want to call people names, I think Nehru is much better described as a coconut. Of course he knew it and didn't mind: he once described himself as the last englishman to rule India.

Actually the guy was a total hipster arts major type. Look at his policies of non-alignment, his socialist beliefs, his internationalism, his disdain for religion, his discomfort with nationalism, his contempt for right-wingers (he described them once as 'lower class people with narrow minds' or something like that), the tomes he wrote discovering India. All the stuff that white people like.

My point behind Comment #23 was that it is anal, timeconsuming, but a comment like "Starting a business is still a nightmarish process" isnt quite doing justice to the indian bureaucracy.


i've dealt with bureaucrac in canada as well as in india. yes, it's much simpler to do things here but a lot of legacy proceses are mired equally deeply in paper and administrative gobbledegook. information is easier to access [a function of money] and human help is available to hold one's hand if needed [a function of the 1000x less population density - not an exaggeration].


Kripaya kuote kasteism, korruption, kleptocrats kautiously, 'kakas - khoofia

sorry for the somewhat incoherent commentary on this thread.

The post Independence attitude to trade also derives from the social structure, namely , the joint family system which strongly discouraged and repressed individual initiative. All members of the family were supposed to follow the direction of the head of the family or the elders. So the idea of doing something other than follow the sanctioned paths of government work or whatever trade the community had been following for centuries was, in some ways, revolutionary.
Also, re Nehru, he was largely a bleeding heart socialist and his wishy washy ideas cost India dearly in terms of economic progress.

One more thing in the book is Mahalanobis and Nehru were impressed by Japan which used state intervention to build up into a powerful economy

Vinod,
Your own post titled Gujus v/s Bengalis had the following quote.

In the Fifties, when P.C. Mahalonobis drafted the Soviet-inspired second five year plan, A.D. Shroff responded by starting the Forum of Free Enterprise.

who could blame Indians for being distrustful of trade?

The government is “mother and father,� protecting me from my rapacious brother.

Ardy said

Das too recurringly expresses the sentiment about how the art of making money is not as respected in India.

Vinod-

Less regulation to enable business is crucial but let's not gloss over the benefits that have accrued from regulation to stimulate India's "Industrial Revolution." For example, in Varma's piece, he writes,

In the absence of competition, there was no threat to the existence of public sector firms. There was no accountability, so inefficiency was not punished, and there were no incentives for efficiency. Labour unions became powerful, and wages were not dependent on performance. Decisions were not taken on the basis of market signals, which could safely be ignored, but on the basis of what special interest groups, such as labor unions and powerful politicians wanted—or on the basis of bribes paid.

which is a cursory take on the infant industry topic. Here's John Sutton via Dani Rodrik:

In the decade prior to WTO entry, both China and India used domestic content restrictions to stimulate development of the component industry, with a view to widening and deepening the benefits accruing from attracting international car-makers. The requirements were stringent, requiring about 70% domestic content within about 3 years, and this led to adverse comment from some of the car-makers who cast doubt on whether this target was feasible or sensible.

Policies of this kind are not always appropriate, or successful; but in the present cases the ‘infant industry’ has been successfully nurtured, and international car-makers show no inclination to turn away from local suppliers following WTO entry. [link]

and Pranab Bardhan:

Both China and India (but China more so) have succeeded in exporting more sophisticated products than is usual in countries in their respective per capita income ranges: China, in consumer electronics, including computers and other information- and communication-technology-related goods, and auto parts; India, in software, pharmaceuticals, vehicles, steel, and auto parts. This performance is remarkable (though more in gross value of exports than in value-added terms, as some of the components and technology used in production are acquired from abroad) and is due primarily to sizeable skill and technological bases, enriched over the years of “socialist slumbering� by indigenous learning-by-doing and nurtured by government policies of building domestic capability—sometimes at the expense of static resource allocation efficiency.

Of course, there are many cases in which protection from foreign competition sheltered massive inefficiency. But the overall storyline is by no means so simple. Consider auto parts. For many decades both countries practiced protection of “local content� (of components) in automobiles, contrary to the orthodox free-trade policy prescription. As a result workers in the auto parts industry acquired skills necessary to compete successfully in the global economy and have now reached international best practice. [link]

and I think Bardhan captures India's fawning over China's industrialization with this precious retort:

When I grew up in India, I used to hear leftists say that the Chinese were better socialists than us. Now I am used to hearing that the Chinese are better capitalists than us. I tell people, only half-flippantly, that the Chinese are better capitalists now because they were better socialists then!

the basic problem in india was that (unlike many european countries) capitalists were never ever directly incorporated in the state. if you look at eighteenth century world economic history, this was the time when merchants and manufacturers were beginning to become a part of the new "states" (except perhaps in the netherlands which was an early starter). this was also beginning to happen in parts of india, where big merchant bankers like the jagat seths (comparable to the rothschilds in terms of total wealth), and even before that virji vohra and abdul gaffur (owned more ships than the east india company) of surat were starting to assert themselves. but the stupidity and imbecility of the mughal ruing class allied them with the european companies instead. this was of course fatal to them in the long term as the company formed its own state and excluded indigenous merchants and bankers (hence the rise of the "informal" bazaar). this is the basic simplified story....indian merchants and bankers have always been suspicious of the state (both during the mughal rule and after that, when the british took over)and hence considered themselves separate, unlike say, american businessmen who considered the state "theirs".....the indian business class never had an ally, and had to chose the lesser of the two evils, i.e. the british, even during the mutiny of 1857. the mutineers were actually a throwback to mughal medieval attitudes when it came to trade and commerce, at least to native businessmen

of course this started to change very slowly after india gained independence...and it continues to change; all this talk of brahminical thinking is bs in my opinion. "brahminical" attitudes is not the cause, but the consequence of the fact that the british continued to promote certain attitudes among the indigenous clerks to promote their own ends, i.e. of not promoting the indian business class (when others in europe were doing so) ; gandhi was very shrewd in this respect....he knew that the support of native businessmen was crucial.

some typos,
but the stupidity and imbecility of the mughal ruling class allied them (indian merchants) with the european companies instead

all this talk of brahminical thinking is bs in my opinion.

but the consequence of the fact that the british continued to promote certain attitudes among the indigenous clerks to promote their own ends

32 · sigh! said

gandhi was very shrewd in this respect....he knew that the support of native businessmen was crucial.

right - in this respect gandhi's relationship with birla is odd and full of contradiction - gandhi's sharp critique of industrialization and capitalist exploitation, their shared grounding in hindu tradition and dharama philosophy, birla's strategic use of his exploitation with Gandhi etc etc.
also, sigh! thanks for highlighting the sophistication of the indian merchant class pre-east india company. kenneth pomeranz also does a great job dispelling the notion that instruments of capitalism were not present in the sub-continent pre-british rule (eg lending instruments, shareholding, double-entry book-keeping; he rehearses this is in support of his larger argument, many others produced the original analysis) in his 'the great divergence.' that book is a great analysis of why the industrial revolution happened in england rather than india, china, or japan - economies which were equal/superior to western european economies just prior to the ir. by no means the final word on the subject, but a taste of what good economic history can be like.

34 · RC said

That explains all the Bengali "intellectuals" who kept regurgitating socialist crap that they learned abroad and because of the unfortunately colonial legacy, the entire India had to suffer. It is easy to "philosophise" on someone else's dime. Eastern India where these socialist ideas came from remains till today the most impoverished place in India.

i don't think the bengalis controlled all of india/were disproportionately represented in the indian government post-independence that one can blame then for the economic suffering of all india. may be bengal itself, but other than that i don't see bengal post-independence as a beacon to the rest of india as it was at the end of the 19th c. i don't recall a bhadralok babu adda in delhi that held the parliament in sway, but may be you know better. we have accepted wholesale from the british their stereotyping of the bangali babu (which the bengalis also bought into somewhat at the end of the 19th c), which unfortunately carries on to this day. the only exception to this is the naxalite movement - but it is hardly 'philophie on someone else's dime.' even if you disagree with the methods of those who participated and instigated it - it was characterized by personal commitment and huge consequences to those individuals and their families (vikram chandra's new book has a character who participates in a naxalbari type movement which is decently done for a fictional account).
also props RC, for talking about succesful sindhi assimilation - but the earlier trading experience of sindhi communities can't be discounted in that analysis. what i'm saying is it's not like there is an intrinsic sindhi character that makes them capable of acting independent of
the state and being successful businessman thanks to some native endowments - but their historical familiarity with trade and migration in central asia led to entire communities (eg thattais, shikarpuris, or the broader 'vanya' category) that had deep entrepreneurial knowledge cultivated over centuries. if sindhis had occupations or social structures that were not initially centered around trade, it's not clear whether they would be equally successful post-partition. also - sindhis in india were never faced overt discrimination in india like the mohajirs did in pakistan. moreover, many were rightly compensated for the property they lost in sindh.
anecdotally, most hindu sindhis that i know in pakistan also belong to professional/service class - unable to succeed in business because they just don't have the resources, connections, or security like other pakistani entrepreneurs - necessary wherewithal to deal with the state. they hope to do well academically, become doctors and engineers and move to the us or canada. that is an example of (hindu) sindhis being unable to succeed when the state is unhelpful or discriminatory. muslim sindhis in sindh are not exactly happy either- as shown by the active sindhi separatist movement there.
(disclosure - i am a sindhi whose family received some compensation from the government of india post-partition)

the larger point i wanted to make was that the market has never really been "free" (assuming that the concept of "freedom" has been reasonably defined), ever, in history; the east india company succeeded with the help of the british state (remember it was a monopoly granted by the crown)which provided it with coercive backing, in return for virtually being the government's paymaster (at least throughout the 17th century). in fact i don't think there has been an economy (i.e. the industrial sector) that has succeeded without state backing ever in history.

many economic historians have done good work on this. see ha-joon chang's works, or richard sylla's work on the capital market in the united states (the result of wars etc.). in contrast the indian state (i.e. the colonial state) was genuinely laissez faire (by default) or at least more so than other economies at that time(where businessmen were routinely helped by the state; in fact i think the connotation of the term was that the state should do nothing to hinder business, but do everything to help, when its help is asked for). it did not necessarily always harm the indigenous sector (though it did that too), but it did nothing to help it either; in fact that state was completely separate from the "informal" sector (defined as such because of the participation of the indigenous business class).

btw, i like ken pomaranz's work a lot (of course being a china specialist, he is better on china).

"In India the denigration of money is amazing"

I think that's far more a legacy of of the socialism that grew out of the post-colonial context which had enamored quite a bit of the leaders in the third world more than out of any traditional stigma within Indian culture-brahminnical or otherwise. Afterall, where else do people place their account ledgers, gold coins etc. in front of their altars?