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IGNOU HISTORY NOTES : Modern India - IMPERIALISM: ITS EFFECTS

IGNOU HISTORY Study Notes for IAS, UPSC Exams

Modern India 1857-1964

IMPERIALISM: ITS EFFECTS

Structure
2.0 Objectives
2.1 Introduction
2.2 Theories of Colonialism
2.2.1. European Views
2.2.2 Indian Nationalists' Views
2.3 Effects of Colonialism
2.3.1 De-industrialisation
2.3.2 Famines in Colonial India
2.3.3 Commercialisation of Agriculture
2.3.4 Impact of Commercialisation on Rural Society
2.4 Modern Industry and Indian Capitalist Class
2.5 The Colonial State
2.6 Let Us Sum Up
2.7 Key Words
2.8 Answers to Check Your Progress Exercises

Objectives

In this Unit we intend to study the impact of Colonialism on Indian society in details and spell out the economic, social and political effects of the British colonial rule in India. This unit shows that the colonial state was a serviceable instrument not so much for the modernisation of Indian economy and society as for maintaining the logic of colonial state. After reading this unit, you will be able to learn :

the various theories of colonialism, both European as well as those formulated by Indian nationalists,
the impact of colonialism on Indian economy in terms of de-industrialisation and commercialisation of agriculture,
how modem industry emerged in India and the role of capitalist class, and
some of the political aspects of the colonial process.

2.1 INTRODUCTION

In order to understand the nature of colonialism and its economic, social and political impact on India, it is necessary to comprehend colonialism in a world perspective. If we look at India alone we shall fail to understand the structural logic of imperialism and a good deal of what happened might appear to be due to the "bad policies" or from another point of view "good policies" of certain individual figures among the ~rit"lsh rulers and policy framers in India. A great deal of historical criticism in the past has been done in these terms; how a misguided Governor General or a bad administrator or a negligent public opinion in England allowed or brought about bad things to happen to Indian People. The apologists for the empire have invariably repeated the same discourse on goodlbad policies. Even the nationalist leaders of the early days were not entirely free from this type of superficial thinking about the empire. They were able to build a convincing case against the exploitative and oppressive aspects of British rule; but lacked the broader perspective which enabled the later-day critics including those influenced by Marxism to locate colonialism within the context of capitalist imperialism or the capitalist world system, and thus enhanced our understanding of the historical developments within its coii~punent part, the Indian Elnpiie. The iatrcl dpproech rc the phenomenon of colonial expansion can be traced back to some early twentieth century critics of imperialism; Hobson, Hilferding, Rosa Luxemburg and Lenin. In India this approach was developed by, among others, M.N. Roy, Jawaharlal Nehru and R.P. Dutt etc.

2.2 THEORIES OF COLONIALISM

Let us examine the various theories propounded by Europeans as well as Indian nationalists in relation to colonialism.

2.2.1 European Views

Hobson, far from being a Marxist, was a conventional British ~abour Party intellectual who propounded a theory of colonial empire building (his major work Imperialism was published in 1902). He thought that capitalism was bound to engender such expansionism or imperialism. Capitalist system, he pointed out, means a very uneven distribution of income. Large profits accumulate in the hands of the capitalist and the wages of the worker are low. Thus the low level of income of the large mass of workers under capitalism keeps the level of consumption low. What is the result? On account of "under-consumption" all the industrial products that are produced cannot be sold within the country, for there are no buyers. What can the capitalist do under these circumstances? He can try to sell the excess produce, that cannot be marketed within the country,to foreign markets. If all capitalist countries follow this policy there will be a struggle to capture markets and to secure captive markets in the form of colonies. Thus colonial expansion and conflict between capitalists of different countries, according to Hobson, were inevitable outcomes of the capitalist system. Further, due to the above constraint of "under-consumption", the opportunities for investdent for the capitalist become limited in the long run. At the same time profit keeps on accumulating and there are savings waiting to be invested. This is what Hobson called "over-saving" which again tended to push the capitalists' towards colonial expansion: acquisition of colonies would make investment of surplus capital possible. To sum it up Hobson's theories of under-consumption and over-saving suggested that colonial expansion or imperialism was a logical corollary of the capitalist system.

Eight years after the publication of Hobson's work, Rudolf Hilferding published (1910) another important analysis, focusing attention on Finance Capitalism. A social Democrat, a brilliant economist, and for a while the Finance Minister of Germany, Hilferding had to seek refuge in Paris after the rise of Hitler and Nazism in Germany; when Paris was occupied by the German invading army Hilferding was captured and killed by them. This heroic leader of the Central European socialist movement is known for his penetrating analysis of the ultimate phase of capitalism. During this phase, capitalism as Hilferding pointed out, is dominated by huge banks and financial interests who act in close association with monopolist industrial business houses. This analysis of finance capitalism was further extended by V.I. Lenin in his tract on Imperialism, The Last Stage of Capitalism (1916). In 1913 Rosa Luxemburg also published her work on accumulation of capital and the stages of imperialist expansionism. She was a socialist leader who migrated from Poland to Germany. Intellectually and politically she left a mark on the European socialist movement and continued to play an important part until she fell a victim to the Nazi onslaught. As for Lenin, all that perhaps needs to be said here is that this tract on Imperialism was written to expose the capitalist tnachinations leading to World War. His ultimate aim was to dissuade the Russian people from engaging in a war that was caused by conflict of interests between the financial monopolists of Western Europe. It was a very successful piece of polemical writing which deeply influenced Marxist Historiography.

2.2.2 Indian Nationalist.' Views

Independent of this critique of Imperialism developed by Hobson, Hilferding and Lenin, the nationalists $n India in their scholarly and polemical writings offered a sharp and telling criticism of the colonial economic impact on India. Through the works of Dadabhai Naoroji, Mahadev Gobind Ranade, Romesh Chandra Dutt and many others who developed a school of Economic Nationalist analysis which highlighted some important features of India's experience under British Rule. The main components of this analysis were as follows:
i) The concept of Drain of Wealth evolved in the writings of Naoroji and Dutt. To them it meant the transfer of wealth from the late 18th century in the form of plunder and loot and illicit gains by servants of the East India Company and in the form of Home charges, i.e. the expenses incurred by the Government of India in England out of its income derived mainly from the taxation of the Indian people and finally, in the form of interests and profits and capital transfer from India to England on private account. * Nationalist critics pointed out how drain in these different forms impoverished this country and increased the economic gap between India and England which was the destination of the drain of wealth.
ii) They also pointed out how British regime brought about the destruction of the small-scale industries of India, a process that in more recent times has been called de-industrialisation.
iii) The idea of Free Trade and laissez faire, nationalists contended, led to a tariff and industrial policy which stifled the possibilities of growth of industries in British India. Consequently, India became "the agricultural farm" of industrial England, i.e. a source of raw materials and food-grains, dependent totally on industrial supplies from England.
iv) The rate of taxation of agriculture was also criticised by R.C. Dutt who felt that the burden of land revenue was excessive in areas which were subjected to periodical temporary settlements. This, in his opinion, was the cause of frequent recurrence of famines in British India. Wealth of the countryside was drained away through the revenue collection machinery, making the economic viability of farming so precarious that the farmer could not withstand failure of rain and other natural disasters.
v) Finally, an important part of the nationalist analysis of British economic policy in India was their criticism of government expenditure on the army, the police and other apparatus of government. The expenditure was so excessive that developmental investments were neglected. For example, the low expenditure on irrigation works contrasted sharply with the generous expenditure on the British Indian army, the railways, etc.

We shall discuss the above issue later in detail. For the present, it may, however, be noted that most of the criticisms voiced by these two schools, the European Socialists as well as the Indian Nationalists, relate to the phases of colonialism that correspond to the stage of Industrial Capitalism and Finance Capitalism in Europe (see the 'stages of colonialism' in Unit 1). Further, one may note that the Indian Nationalists' critique is naturally directed towards features characterising 'Formal imperialism', i.e. imperialism as witnessed in India under formal political subjugation of the colony under British Imperial power. The European Socialists like Hobson, Hilferding, etc. addressed themselves on the other hand, to a study of imperialis~ll in a more general way, also taking into account 'informal imperialism' where political subjugation of the colony might not have occurred but economic colonialism characterised metropolitan colonial relations (e.g. in the case of China or the Latin American countries). Finally, we may also note that unlike the Indian Nationalists' approach developed by Naoroji, Ranade, R.C. Dutt etc., the Hobsonian or Leninist approach linked colonialism to the world system of capitalism. Colonial exploitation, to Hobson and others, was a natural systemic product of capitalism as it evolved in Europe, not merely an abberation caused by 'wrong policies' in Europe. On the whole the critique of imperialism offered by the Indian Nationalists was one of the most powerful instruments of building national consciousness among a subject people. The latter day nationalist spokesmen, like Jawaharlal Nehru developed and strengthened this critique by incorporating into it some elements derived from the Marxian, Hobsonian and ~eninist approach to imperialism.