On the Border of Economic Theory and History

Published by EH.NET (May 2001)

Amit Bhaduri, On the Border of Economic Theory and History. New Delhi:

Oxford University Press, 1999. 197 pp. $27.50 (cloth), ISBN: 0-19-564901-X.

Reviewed for EH.NET by Marcia J. Frost, Department of Economics, Grinnell

College.

Amit Bhaduri, Professor of Economic Studies and Planning, Jawaharlal Nehru

University (New Delhi), is a prolific author whose work may be familiar to

readers of the Cambridge Journal of Economics, the Economic

Journal, and the Indian Economic and Social History Review. On

the Border of Economic Theory and History is a compilation of ten essays

organized into two sections. All but one of the five “Essays on Traditional

Agriculture” were previously published in English between 1986 and 1993. Three

of the “Essays on Capitalism” were written for this book; two were previously

published in unidentified French and Turkish journals. Most essays are

followed by a short bibliography, and there is a seven-page keyword and person

index.

The five “Essays on Traditional Agriculture” all share a common ideology,

theme and method. The former is clearly indicated by the essay titles: “A

Study in Agricultural Backwardness under Semi-Feudalism,” “The Evolution of

Land Relations in Eastern India under British Rule,” “Class Relations and the

Pattern of Accumulation in an Agrarian Economy,” “Forced Commerce and Agrarian

Growth,” and “Economic Power and Productive Efficiency in Traditional

Agriculture.” Bhaduri’s common theme focuses on what he alternatively terms

semi-feudal, underdeveloped or traditional agriculture which he characterizes

by the exploitation of agricultural workers (who hold little or no land) by

the landed class through sharecropping and usurious credit arrangements.

According to Bhaduri, because the landlord-cum-moneylender earns income

(extracts surplus) both from his share of the agricultural output and the high

interest on consumption loans he extends his sharecroppers, the landlord has a

reduced incentive to encourage the adoption of technological improvements in

agriculture. Technological innovation, by increasing the income of

sharecroppers, reduces borrowing to meet consumption needs and thus reduces

the landlord-cum-moneylender’s income from his credit extension activities. If

the reduction in interest income exceeds the increase in crop share income,

the landlord-cum-moneylender will not innovate, and agricultural progress

will be stymied. In addition Bhaduri argues there are no gains from trade for

the exploited, since sharecroppers are coerced by their usurious credit

agreements to sell their share at harvest when prices are low and then buy

months later when prices are high and credit must again be sought.

Bhaduri’s theoretical exercises are thorough and, given his assumptions, his

conclusions are reasonable. What’s lacking, however, is empirical backing of

his basic assumptions, empirical testing of his models and concreteness in

time and space. Why is it that only landlords are agents and sharecroppers are

precluded from innovation in his model? Where is the empirical evidence of the

reasonableness of this fundamental assumption of his models? Who comprises the

landlord class and is class an appropriate characterization of post-zamindari

agrarian relations in Bengal, let alone elsewhere in India?

The second set of “Essays on Capitalism” shares no common theme beyond

Bhaduri’s concluding statement “Lying on the border of ‘theory’ and ‘history’,

economic analysis cannot escape the influence of the arbitrary initial

conditions inherited from history” (p. 189). The first of these essays “Why

Factories?” examines the tension of cooperation and conflict between modes of

production as labor productivity enhancing investments shifted production from

home to factory. It’s an interesting essay and reminds us of the

interdependence of both modes of production for long periods of time. In “Some

Lessons from the Two Economic Systems” Bhaduri explores why socialist systems

collapsed at the end of the twentieth century, and tells a now common story of

the failure of labor productivity to rise in the long run and the rigidity of

a system without political and economic mechanisms to self-correct. In “The

Political Economy of Social Democracy” his goal is to explain the evolution of

economic ideology as political institutions have changed through the expansion

of universal suffrage, the adoption of full-employment and welfare

Keynesianism, and open trade has made “the autonomous conduct of economic

policies by the nation-state, not only difficult, but also exceptionally

risky” (p. 157). “Dangers and Opportunity of Globalization for Developing

Countries” briefly traces the dismantling of regulations on international

capital flows and argues for IMF flexibility as developing nations face acute

difficulty in meeting international payment obligations. His final essay

“Reflections on the Economic Role of the Transformational State” reflects on

the important role the state played in the evolution of market economies and

must play in transition economies in defining rules and providing public

goods.

Marcia Frost is Assistant Professor of Economics at Grinnell College and

author of “Coping with Scarcity: Wild Foods and Common Lands: Kheda District

(Gujarat, India), 1824/5,” The Indian Economic and Social History

Review 37:3 (2000).