Published by EH.NET (January 2005)

Aditya Mukherjee, Imperialism, Nationalism and the Making of the Indian Capitalist Class, 1920-1947. New Delhi, Thousand Oaks and London: Sage Publications, 2002. 461 pp. $110 (hardcover), ISBN: 0-7619-9564-1.

Reviewed for EH.NET by Tirthankar Roy, Gokhale Institute of Politics and Economics.

The interwar years were the most turbulent period in the politics of colonial India. After remaining dormant for some years, the Indian National Congress revived under a new leadership early in the period. The “non-cooperation movement” of 1920-22 was a struggle for rights that demonstrated M.K. Gandhi’s ability to mobilize the masses and paralyze administration. These were unprecedented developments with implications for the future of British rule in India, implications not lost on London. Indian business understood these implications too, and saw that the Congress could become an effective platform for making demands for economic concessions. Indians by then dominated the business world of Bombay, Ahmedabad and Madras, and were a force to be reckoned with in European-dominated Calcutta and Kanpur. The First World War had created enormous opportunities of accumulation for Indian capitalists. These lobbies organized themselves in major chambers of commerce that maintained a conscious distance from their European-dominated counterparts. The 1920s brought them close to the Congress and Gandhi, so that in a short time, the demand for state aid to business and the demand for autonomy in national economic policy became identical. The next two decades saw major figures in Indian industry and trade spiritedly fighting this dual battle, with help from the Congress. At 1947, when India attained freedom, business leaders and political leaders had no essential disagreement on the future shape of the economy. They agreed, for example, that a policy of restricting import and foreign capital would be good for national development.

Aditya Mukherjee, Professor of Contemporary Indian History at the Jawaharlal Nehru University of New Delhi, tells the story of the participation of Indian capitalists in nationalist politics. The book consists of twelve chapters. Chapters 1 and 2 set out the objectives and arguments. Chapters 3 through 5 deal with fiscal and monetary policy issues. Chapters 6 to 9 discuss trade and industrial policy. Chapter 10 deals with Indian capitalists’ views on foreign capital. Chapter 11 draws links between business-politics collaboration before 1947 and policy-making after 1947. The principal episodes that figure in this narrative include the “ratio controversy” or debate over the rupee-sterling exchange in the 1920s; the large remittance on the government account which was the reason why Britain wanted control on Indian finances and did not like devaluation of the rupee; monetary policy during the Great Depression; struggle over tariffs and preferential treatment for British goods in the Indian market; currency standard; and the sterling balances accumulated by India on account of its contribution to the Second World War. The book is essentially a very detailed narrative history of Indian business responses to these episodes and issues.

None can deny that business participation in politics in this period is an important part of the history of Indian nationalism and of economic history. That being said, the interwar debates on these episodes have been studied many times over in historical scholarship, so often indeed that one gets the impression that nothing mattered to the economy of India more than the bickering between London and Bombay. Among books published in the last twenty-five years, those by B.R. Tomlinson, G. Balachandran, and D. Rothermund studied the ratio controversy, remittances and the depression; that by Claude Markovits studied business-politics interaction in Bombay; and those by Basudev Chatterji and Sunanda Sen dealt with trade policy issues. The chapter by A.G. Chandavarkar in The Cambridge Economic History of India is a good survey of monetary policy debates. And none of these authors was exactly a pioneer in choosing to focus on these issues. Biographies of business leaders like G.D. Birla or Purshotamdas Thakurdas, and official histories of major chambers of commerce, revisited the role of the capitalists in nationalist politics. Did historians of interwar India really need another book on a subject that had been squeezed bone-dry?

The strength of Mukherjee’s work lies in the detailed picture. It is a meticulous day-by-day account of events and episodes. A specialist historian in need of specific details on specific episodes should consult this book. Indeed, Mukherjee may well be the last word, mercifully, in meeting such needs. The weakness of the book lies in the big picture in which it locates itself. And this is a big weakness in my view, one that would make it difficult for most readers to see the point of its rich raw material.

The argument of the book derives from a dependency framework, by which I mean the frequent use of two key ideas. First, the colonial regime repressed Indian business aspirations and opportunities. And second, the colonial regime deprived Indian government of the right to pursue an autonomous economic policy. Few economic historians of India would reject these ideas outright, but most would use them on a case-by-case basis, and with an open mind as to how these factors mattered to India’s economic growth. Mukherjee treats these as incontestable truths and has no doubt about their significance. Using them as premises, the book makes two further arguments. First, Indian capitalists, “demonstrating remarkable maturity … saw through British intentions” of keeping India under “the vice-like grip” of Britain. They resisted repression and imperialist exploitation, and “wrenched” and “wrested” an economic space for themselves. And second, while the capitalists entered politics, they neither used politics to serve self-interest nor molded politics to that end. Rather, nationalist politics and the resistance of Indian business to the “hostile colonial context” existed as two autonomous spheres. These spheres joined together not out of selfish motives, but because there was real substantive identity between the capitalists’ fight for freedom and the nation’s fight for freedom.

It is necessary to note where these arguments are coming from. The book reads as if it is written with a 1970s readership in mind. Its main point of reference is a set of writings, including some very obscure and outlandish ones, which defined the party-line of the extreme left in India twenty-five to thirty years ago. The two points that constitute the dependency framework are shared with the orthodox leftist interpretation of Indian history. The book, however, breaks with the extreme left by rejecting their view that Indian business was too weak or “comprador” vis-?-vis foreign capital or the colonial state. And by doing so, it tries to establish a centrist perspective, the line closer to the Congress and democratic left party-lines in the 1970s.

In terms of its arguments, this is a political book. That does not necessarily reduce the scholarly worth of its arguments. What does reduce their worth is the fact that these debates have long been dead outside die-hard ideologue circles. The book does not engage itself with the pictures of business-politics interaction drawn in more recent scholarship, Markovits for example. Furthermore, the 1990s economic reforms and re-globalization of the Indian economy has exposed the whole dependency framework to a serious critique. The book believes that Indian capitalists were repressed by colonialism, so that their struggle for concessions and the nation’s struggle for autonomy were both battles for freedom. An advocate of present-day globalization might say that the rise of the Indian capitalist class owed to the “first globalization” of the nineteenth century. That is, it owed to colonialism itself. Their struggle for concessions, in that case, cannot be seen as a battle for freedom; at least partly it was an opportunistic and strategic movement. Moreover, the “remarkable maturity” Indian capital showed in resisting foreign capital by using nationalist politics pushed independent India towards an insanely protectionist regime that delivered poor economic growth. There was indeed a conflict between business self-interest and national welfare, which the book either cannot see or does not admit. By not engaging itself with critiques such as these, the book remains years behind the times.

The back-cover of the book advertises it as “a comprehensive economic history of colonial India” in the early-twentieth century. In fact, its “economic history” is pedestrian, biased, and antiquated. That said, the book remains a potentially valuable reference for the historian of Indian nationalism on the strength of the impressive quantity of material that it processes.

Tirthankar Roy is Professor, Gokhale Institute of Politics and Economics, Pune (India). His publications include The Economic History of India, 1857-1947 (Delhi: Oxford University Press, 2000).