Wednesday, February 27, 2008

Had the British not been in India...........

At a seminar that I attended, a senior IAS official delivered a populist address in which he bemoaned the fact that the British had saddled us with bureaucratic processes and red tape that continued to plague us even today. He had no explanation to offer - nor did he feel that one was necessary- on why we have not changed the systems in the 60 years since they left us.

Another example of blame-the-British was an e-mail that did the rounds last year. It quoted Lord Macaulay as saying, in 1835, that the Indians were far too prosperous and knowledgeable and could be brought to heel only by replacing Sanskrit with English. A blogger, Gaurav Sabnis, had discussed this e-mail and had shown that it was a big hoax. (That the ‘true’ speech of Macaulay was even more damaging to our pride, we will not go into now)

Another of those curse-the-British claims is that India was one of the richest countries in the world when the British came in. India’s contribution to global GDP was 25% in the year 1750. And, when the British left us in 1947, they had stripped us dry and made us paupers.

Sure enough, charts such as this one below ( source) can be used to corroborate above claim. It does look like the rise in prosperity of Western Europe coincided with the drop in GDP share of India.



But, as many economists have pointed out, correlation is not the same as causation. For, till mechanization improved productivity levels dramatically, GDP was directly proportional to the manual productivity of the human population, assuming that there were no other adverse factors at work. If India had 25% of the world’s population in the year 1750, it was logical that its contribution to global GDP would also be around 25%. Industrial revolution in England in the late 18th century changed these equations dramatically, as a machine could produce more goods much faster than several individuals put together.

Why did industrial revolution begin in England and not in India or China? Or, for that matter, why not in France or Spain? Tim Harford provides some answers in the chapter titled, “A million years of logic”, of his book, “The Logic of Life”.

As Harford explains, human beings respond to incentives. And England happened to provide the right incentives and the right conditions conducive for mechanization to take place. In 1750, England had the highest labour wages, anywhere in Europe, and certainly far more than in India or China. It also happened to have the cheapest fuel- coal- that could be transported through short distances. There was a strong incentive therefore to replace high-cost labour with devices such as steam engines that would use coal. Also, higher wages meant that there was a good customer base for cotton clothing and this provided the impetus to develop cotton spinning machines. So, many of the important innovations of the Industrial Revolution were calculated and deliberate responses to high British wages and cheap British coal.

Ok, coal being there was a matter of geographical happenstance. But, why did England have higher labour wages ? Harford points out that this was a result of England, along with Spain, France, Holland, etc possessing a well-entrenched merchant class, having been involved in flourishing trade across the Atlantic for over two centuries. And, among these countries, England was the first to move towards a free market with property rights, fair taxation and minimal trade barriers. This provided the security blanket for more investments. A society with more capital investment and more entrepreneurship is also a society that is likely to enjoy more wages.

And, why did England have a freer society than Spain, Germany or France? Here, Harford admits, we hit bedrock. It was a combination of ‘luck, politics and even theology”.

So, with or without the British ruling India, the former was well placed to usher in the industrial revolution and reap the full benefits. And, the latter, was always vulnerable to the economic threat of having its share of GDP reduced, as the productivity of its manual labour would have been no match for the might of the machines.

But, wouldn’t India too, if left alone, have marched on to its own industrial revolution? Alas, no. If we go by Harford’s logic, the incentives were simply not there. Labour was abundant and available at very low cost. Why replace that?

( Disclaimer: This does not purport to be an endorsement of British rule in India)

17 comments:

Santhosh C said...
This comment has been removed by the author.
Santhosh C said...

I agree with your observations. Its more of a fashion, especially with politicians, to blame the British Raj for cracks in the current system. Nobody acknowledges the facts that we also 'owe' it to the same Britishers for the educational system as well as the Railways, to name a few. While it is true the British occupation was solely for exploiting India, its high time we stopped attributing any flaw in our current system to scars that are older than 60 years. The Indian public and the Government have found it convenient to work around issues in the current setup by playing the blame game instead of taking up the responsibility of dealing with it.
If we do an introspection on whether India has realized its maximum potential for economic development in the last six decades, the answer is going to be in the negative. Factors such as 'factionism' raging under the aegises of religions, languages, castes etc., are more culpable for the current milieu than what the British rule.

Sankar said...

Hey Raj
Great blogs - 3 blogs in 2 days 2 blogs in 1 day - Time pass - thats what it is - some playing the blame game and others playing the zero or reduced blame game.

However, some obviously unassailable truths are
1.it is always the powerful who rule
2.divide and rule will always be a part of the ruling procedure etc. etc.
3.ultimately the past is of limited or no value except for historians/writers/bloggers who make a living of it and time passers like us - well it probably covers the entire human population.

I am reminded of Henry Fords typically American (brash) saying
"We want to live in the present and the only History thats worth a tinker's damn is the History we make today"

Raj said...

santhosh, well said. Though I didn't want to get into the question of whether British rule was good or bad.

sankar, if the past is dead, the fuure is unborn and the present is hopeless, what do I blog on? Have a heart.

Anonymous said...

may be true but india didn't have 25% of the world's population in 1700s to provide 25% world's GDP thats a westerners version: in matters of population,illiteracy,poverty etc---'blame-the-indians'

Chandra said...

The issue is not whether British would have reaped benefits from industrialization - it is where did two hundred years of British rule leave India by 1940s. The key is not high wages or private property, but trade and transfer of technology. All those negative conditions are true, by and large, even now in India, and in China, but industrialization is happening at a faster rate - reason is trade and openness.

That's exactly what the British did - shut India out of the global trading system beyond what was required for British homeland leaving India poor - from 1900-1940 when shut out was complete, economy grew close to 0% - four decades of no-growth...

But ignore the facts, let's blame the Indians - because Tim said so...Tim must be right...

Raj said...

Chandra, we can't ignore the fact that the British were the primary beneficiaries of the industrial revolution and that this would have happened with or without India being under their rule.

Again, with or without the British ruling us, our trade would have been affected, as we would never have managed to compete globally with our manual methods.

So, the question is, would we have opened our doors to bring in new technology, master it and regain our position in the global trade?

My assessment is, no, that was unlikely to happen,without a pan-Indian Govt and the benefit of formal education. This might have come to pass eventually, as it did in the case of the Chinese, but who knows when it would have happened?

All this does not mean that the British were justified in ruling over us or staying here for two hundred years.

Aniruddha Bose said...

Raj, you're debating a very important question here. The latest trends in world history have been to stress connections instead of the comparative framework you have used. In other words, Britain did not have an industrial revolution because it had unique advantages as you have claimed. Rather, British industrialists were able to flourish because they had access to Indian markets where they enjoyed a monopoly thanks to their position as colonial masters.

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Anonymous said...

Hi

your blog entry is a wonderful read, however some questions I came up with.

when we say India before the British Raj, We are referring to some thing that did not exist. India was a collection of many smaller kingdoms. I do agree that Industrial reveloution added to the GDP and is responsible for the growth Birtan achieved. However...

What about the exorbitant taxes paid to the british which went in to the british treasuery? if that money would have stayed in India, wouldn't we be richer?

There might be poor people in India before the british, but there were also very rich Kings who had more riches than most other people in the world, what happend to all those?

We have heard of kingdoms like vijayanagar emapire, who had built a very planned city taking care of all amenties as we do in modern day cities, in the mean time streets were used as a means to discard sewage in edinburgh. Why do you think we would not have had a industrial revolution?

most new inventions after the british started ruling india are not from India, but most of the inventions including the number system are from India. (before the british rule)

To sum it up it would not be proper to say that the British are responsible for India being poor today, because its not only the British but many other Arab invaders have looted India before that. so they are equally responsible with the British and the people of India who gave in to these invaders.

The late 1700's to early 1900's were a time of revolutions in the world, this is where many countries became what they are today , unfortunately India was ruled by the british at this time, If not maybe things might have been different.

Anonymous said...

Mr. Raj -

Here is one thought. If the decline in India's GDP was not due to the British, why is that India's GDP has been steadily growing since the British left India???

Raj said...

Anon 1: We have had several bright and prosperous regimes, but the conditions, the scientific temper, methods and rigour evolved in unique European conditions. To say, we could have ushered in the industrial revolution too, if the British had not been here, is mere patriotic conjecture. We simply did not possess the necessary scientific ingredients.

Anon 2: I am not sure if the GDP went down in absolute terms during the British rule. Our GDP as a percentage of world trade went down, and that's what I have discussed here

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AD said...

Why do you ignore things like: Indian farmers were FORCED to grow tobaco & poppy in their fields - which were bought for meager prices & sold to the chinese for high prices.

The exorbant taxes imposed on farmers, the taxing system itself where the one who could collect the highest taxes would get the contract.

Never allowed any higher posts or jobs in their own country. NEVER. They could only do clerical jobs.

I would like to know more about the 'true speech of Maculay'. Because funny thing, new evidence coming up that YOU DID DISTORT INDIA'S HISTORY (what could be the motivation behind tht? if not for what maculay said in his speech).

Facts like: they say it was the aryans who came from central asia who became indians. And tht the harappa civilization was NOT ours.

- Now there's this strange diacotomy: there is a so called 'aryan civilization' for which there exists no historic proof, no culture, architecture or language evidence.

- And there is this advanced sindhu valley civilization - for which no origin of its ppl is known.

My history sucks, but you are talking crap. There are so many things I am missing here...

Raj said...

AD, thanks, It's been 4 years since I wrote that post and I had to read it again to remember what I had said.

Victor_47 said...

It is gross misinformation to claim that India did not possess the scientific ingredients. It is not a just a mere coincidence that the European Golden Age started after they Discovered India.

When it comes to math, astronomy, calculus India was way ahead of Europe. The Europeans did not even have a proper calendar. The first major works on Calculus were written in Kerala a few hundred years before Newton. Aryabhatta had calculated the size of the earth to within 40 miles, and developed a heliocentric model 1000 years before Copernicus.

Unfortunately, the West does not want to give credit to the East, especially India. Even Indians who did seminal work needed the approval of a Westerner for their work to be accepted (e.g. Bose-Einstein statistics). During the first 200 years of European interaction with India, their was a vast transfer of knowledge which went unacknowledged; though things are changing slowly.

Today in the US, Yoga is being de-Hinduised as its Dharmic connections are being viciously cut and it is being projected as something invented in America. Please search for Rajiv Malhotra's seminal work in this regard (U-Turn Theory).

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