The Argumentative Indian

by Amartya Sen

  The issue is not so much whether British investors, or for that matter British governors, might have been directly swayed by the protests that came from vested interests in Britain (for example, by the strong memorandum that the Manchester Chamber of Commerce sent to the Secretary of State for India in 1871, demanding tariff adjustment for Indian cotton textile), or by alarmist reports produced by field studies specially commissioned by established British interests (for example, by the report, in the 1870s, of John Robertson, an experienced spinner, on the growth of Indian cotton textile and its likely damaging implications for the British economy).

  Rather, the question is whether a general sense of social identity and priorities, which are known to play a considerable part in economic decisions in general, exerted significant influence on the pattern of British investment in India, both through public policy and through private choice. Sir John Strachey, the well-admired and efficient English administrator with much experience of the Raj, put the central point very clearly, in his Budget speech of 28 March 1877:

  I have not ceased to be an Englishman because I have passed the greater part of my life in India, and have become a member of the Indian Government. The interests of Manchester at which foolish people sneer, are the interests not only of the great and intelligent population engaged directly in the trade in cotton but of millions of Englishmen.1

  Identity, Nationalism and Investment

  In contrast with possible British concerns, the social aspects of these investment opportunities looked enticingly different from the opposite end of the divide. As J. R. D. Tata put it in his Foreword to Frank Harris’s biography of Jamsetji Tata, not only did Jamsetji understand ‘the full significance of the industrial revolution in the West and its potentialities for his own country’, but also ‘dreamt of an industrialized and prosperous India’.2 We can even see a progressive hold of nationalist thinking in the sequence in which Jamsetji’s first cotton mills, called ‘Empress Mills’ and established in 1877 (just as Queen Victoria was proclaimed the Empress of India), were soon followed by the new ‘Svadeshi Mills’, established in 1886.* Indeed, in the year before, in 1885, Jamsetji was present at the founding of the Indian National Congress in Bombay, a cause to which he generously contributed.3 The nationalist connections were present in different ways and to varying extents in the different economic decisions in which the early Tata enterprises were involved. They were perhaps most colourfully visible, in an anecdotal form, in his determination to establish a top world-class hotel in Bombay. There is, apparently, truth in the story that Jamsetji’s decision to establish, in 1903, the ambitiously planned Tajmahal Hotel (the first building in Bombay to be lit by electricity and a place that would soon attract celebrities, from Somerset Maugham to Gregory Peck), followed his being told at Pyrke’s Apollo Hotel, to which he had taken a foreign friend for a meal, that while the friend was welcome in that (‘for Europeans only’) hotel, he – Jamsetji – was not.4 The anecdote adds colour to our understanding of Jamsetji’s sense of identity and priorities, but the basic picture is clear enough from many other decisions as well.

  Jamsetji’s determination to have a flourishing iron and steel industry in India fits clearly into this pattern. There had been earlier, abortive attempts, including one by a remarkable Englishman called Josiah Marshall Heath in the 1830s (the chronicle of his misfortunes was recorded by Charles Dickens in Household Words in 1853).5 Also, a small iron works was established in Barakar in 1875, which in 1889 became part of the newly formed Bengal Iron and Steel Company, and had a rather troubled history. But we can see no great groundswell of interest among British investors to go into iron and steel in India. Jamsetji’s attempts in the 1880s at large-scale production of iron and steel were initially frustrated, particularly by the unwillingness of the Raj to cooperate, specifically in the arrangements for transport – a vital infrastructural requirement for the proposed iron and steel mill.

  By the turn of the century, however, Jamsetji had received the support of the new Viceroy of India, Lord Curzon, and the coordination of the transport arrangements with industrial production was henceforth much easier to organize. Curzon even offered to help build a 45-mile rail connection from the identified hill of iron to the proposed factory. The personality of Curzon was undoubtedly important in this shift in governmental policy, but it is also worth noting that Indo-British trade relations were undergoing very major changes in this period. In particular, Britain was being displaced from its semi-monopoly position of exporting steel to India and losing ground in iron exports as well. In the middle of the 1880s, the United Kingdom was the dominant source of steel imports into India (supplying more than 90 per cent of the total imports), but by the time Curzon arrived in India in 1899, Belgium had overtaken Britain as the largest exporter of steel to India, and Germany too had become a significant source.6

  What had not changed was the determination of the Tatas to establish a major iron and steel industry in India. There were still barriers of bureaucracy and of financing to be overcome, and when Jamsetji died in 1904, the project was yet to materialize. By 1906 matters had progressed enough for Dorabji to seek financing from London. However, the London money market was unenthusiastic, and despite protracted efforts, nothing much came of them.

  And then, interestingly enough, the link with Indian identity and nationalism, which was part of the Tata motivation, itself came to the rescue. When the prospectus for the projected iron and steel works was published in August 1907, the appeal to the ‘Svadeshi’ movement was loud and clear. The response was immediate. As a close observer (Mr Axel Sahlin) later reported in a speech given in England:

  From early morning till late at night, the Tata Offices in Bombay were besieged by an eager crowd of native investors. Old and young, rich and poor, men and women they came, offering their mites; and at the end of three weeks, the entire capital required for construction requirements … was secured, every penny contributed by some 8,000 native Indians.7

  The construction of the project began in 1908 and the much-prized output started to roll out from December 1911.

  Nationalism and Global Connections

  This brief history is worth recollecting, not only to pay tribute to one of the leaders of the events described, but also because it illustrates how our sense of identity and social motivation can indeed play a major part in the determination of our behaviour, including economic behaviour. Evidence of such connections emerges from different sides, including the visionary determination of Jamsetji, Dorabji and others to pursue an industrial future for India, the spontaneous support provided by an inspired Indian public, the selective reticence of British investors and the varying attitudes of British Indian government. This is not the occasion to pursue these connections further, but they are strongly suggestive of a significant role of identities and values in economic behaviour, which deserves greater attention than it tends to receive in mainstream economic analysis.8

  There are also general issues which are raised by this historical experience, and which have significant relevance to India’s relation with the world. It is, in particular, important to distinguish between the inclusionary role of identity and the exclusionary force of separatism. To want to do something in the interests of a country is not the same thing as wanting the country to be distanced from the rest of the world, or to be isolated from it. The sense of identity leaves the issue of appropriate actions and policies entirely open to scrutiny and choice. This applies to science and technology on the one hand and to economic, social and cultural relations on the other. India’s relations with the world may demand significant use of the Indian identity, but they also call for critical scrutiny of specific ends and particular ways and means through which those relations may be appropriately advanced. Since identity politics and communitarian reasoning often have the effect of nurturing and promoting separatism, the distinction is important to seize.

  The industrial story with which I began also illustrates this clearly eno
ugh. Despite the long history of the iron industry in India (Lovat Fraser, the historian of that industry, describes the more than 2,000-year-old massive iron column, entirely free of rust and deterioration, situated on the open ground outside the Kutub Minar in Delhi as ‘a mystery greater than the building of the pyramids’9), the Tatas would have got nowhere in their attempt to build a modern iron and steel industry without the help of foreign expertise. They needed technical know-how from abroad, which they proceeded to obtain, well illustrated by the critical role of Charles Page Perin and the expertise he brought from Pittsburgh.10 In general, the pursuit of what is sometimes called ‘Western science and technology’ was central to India’s industrial and economic development. The priority the Tatas gave to modern scientific education is also well illustrated by their commitment to their educational and research agenda, such as the pioneering foundation of the Indian Institute of Science, which came into existence in 1911, and which in its turn encouraged the development of a number of other scientific institutes in the country.

  A similar point can be made about the need to take note of possibly beneficial uses of interdependence in the field of trade and exchange. Considerations of identity may suggest that note be taken in economic decisions of a country’s broad interests (going beyond immediate business profits), but we still have to ask how these interests will be best served. Indeed, they may, often enough, be well served by greater economic engagement with the world, rather than by shunning global association. This is a matter for actual economic assessment – not to be determined through the adoption of one or other of the simple slogans (either worshipful of markets or dismissive of their role) that bedevil critical scrutiny of such issues as trade and globalization.

  This decision may call for some clarificatory remarks. The development of new enterprises tends to involve displacing existing imports, since goods for domestic consumption obviously have to come from abroad when they are not yet produced at home. There is no mystery here. As a result, import substitution is typically the initial form of industrial expansion in an economically interconnected world; this is an important but thoroughly unsurprising fact. But it does not entail anything whatsoever about the relative desirability of import substitution or export promotion.11 The economic case for one or the other has to be worked out on the basis of economic returns both to the enterprises involved (including its employees as well as employers) and to the public at large. The experiences of many countries in the world, beginning with Japan but later on also other sizeable economies, such as South Korea and Taiwan, suggest that there is typically a strong case for moving rapidly from the import substitution phase to one of active export promotion, and that this strategy of development is perfectly consistent with the championing and promotion of a powerful national identity. Whether this would indeed be the right policy in a particular case is, of course, a matter for critical scrutiny and cannot be determined by simple formulas of one kind or another that are often championed – either favouring unrestrained trade in general or shunning it altogether.

  Sharing of Global Opportunities

  This gives me the occasion to move to the more general question of the pros and cons of globalization. Debates on the merits and penalties of globalization have been very active in recent years, not only within each nation (not least in India), but also in global protest movements, such as those in Seattle, Prague or Washington, DC, which drew protesters from every part of the world. In this sense, protests about globalization themselves constitute a globalized phenomenon, and should be seen as such. Globalized political resistance has tended to confront the established pattern of globalized economic relations.

  I have tried to argue elsewhere that these protest movements have often been, in many ways, quite constructive, in forcefully drawing attention to problems of inequality in the world.* Indeed, the real debate on globalization is, ultimately, not about the efficiency of markets, nor about the importance of modern technology. The debate, rather, is about severe asymmetries of power, for which there is much less tolerance now than in the world that emerged at the end of the Second World War. There may or may not be significantly more economic inequality today, as is sometimes strongly asserted and equally staunchly denied (the evidence on this is conflicting, depending on the indicators we use), but what is absolutely clear is that people are far less willing to accept massive inequalities than they were in 1944 when the Bretton Woods agreement led to the establishment of the IMF, the World Bank and other institutions and paved the way for the present international architecture of finance and business. The global doubts partly reflect this new mood, and it is, to a great extent, the global equivalent of the within-nation protests about inequality with which we have been familiar for quite some time.

  It is not at all hard to present arguments to reject many of the criticisms that have tended to figure on the posters and placards of the global protest movements. But there is a basic need to recognize that, despite the big contribution that a global economy can undoubtedly make to the prosperity of the world, we also have to confront the far-reaching manifestations of global inequality and injustice. There is, in fact, no real conflict between being determined to resist global inequality and injustice and at the same time understanding and facilitating the positive contributions of globalized economic, social and cultural relations across the world.

  Indeed, resistance to global disparities calls for both global initiatives and for national and local ones. At the global level, there is need for a variety of policies. These issues were not seen clearly enough at the time of the Bretton Woods Agreement in the 1940s – when half the world was under colonial rule, when the claims of democracy and human rights were not yet widely recognized, when the massive prospects of global economic growth were not fully understood and when the tolerance of global disparities and divides was very much greater. Global initiatives are needed for a more responsive international architecture (including the strengthening of the financial viability and economic power of the United Nations), better formulation of patent laws (taking note of their actual effects on the use of technology as well as vitally important products, including medicine for severe ailments), more pressure on the richer countries to reduce trade restrictions (rather than demanding this only from the poorer and less well-placed countries), more effective institutional arrangements for defending human security and basic human rights across the world (not being content only with promoting international trade), and so on. There is need for quite a global agenda.

  Domestic Policies for Global Strength

  However, healthy global economic relations also call for appropriate domestic policies. For example, the feasibility of effective global participation is closely linked with the development of human resources and capabilities (for example, through educational expansion) and the development of infrastructure. Interestingly enough, the history of the Tatas has significant light to throw on the importance of both these. Indeed, Jamsetji’s attempt to develop large-scale iron and steel production was initially held up, as I mentioned earlier, precisely because of the barrier of underdeveloped transport facilities, which was a crucial infrastructural handicap. There is a clear analogy here with the restrictions imposed today by infrastructural underdevelopment in India, for example in public communication and electric power, well illustrated by the debilitating – and perhaps even maddening – role of power cuts and non-working telephones. Infrastructural problems are, in many fields, still as central to the contemporary Indian economy as they were to Jamsetji’s India a century ago.

  The importance of education was one of the factors strongly identified by Jamsetji. This was, in fact, his reason for starting the Institute of Science. He saw the field of industrial competition being matched by one of educational competition. In praising the scholars associated with the Institute, Jamsetji could not help remarking, with some pride, that Indian students ‘can not only hold their own against the best rivals in Europe on the latter’s ground, but
can beat them hollow’.12 This was a matter not only of national pride, but also of India’s ability to interact fruitfully and strongly in the international arena. The connection is still very important.

  The central role of education also highlights the far-reaching effects of the remarkable contrast between India’s neglect of school education and the massive expansion of higher education that has already occurred and continues today. The Tatas were among the pioneers in developing higher and technical education in India – a priority that Nehru, too, adopted, especially in the programme of expanding such institutions as the Indian Institutes of Technology, which were launched at his initiative and which have been critically important for the recent flowering of information technology and related developments in India. This, along with the good work of Institutes of Management, has brought many dividends and has certainly been instrumental in opening up possibilities in a powerful way to many well-placed Indians. They have done remarkably well in India and many of them abroad as well. When I went to give some lectures at Stanford University in California in January 2001, I was asked to address a group of about 800 so-called ‘Silicon Indians’ (in an impressive meeting arranged by The Indus Entrepreneurs: TIE), and it was quite evident that one part of the Indian community has been able to seize the opportunities offered in a very different culture and society from the one in which they were reared. Even within India, the size and speed of expansion of technology products (including computer software) have been quite extraordinary.