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The Transition between the Old and New Traditional Economies in India

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Abstract

We extend Karl Polanyi's traditional economy concept to modern economies with advanced technology that are embedded in a traditional socio-cultural framework. This is the New Traditional economy, seen in parts of the Islamic world and with the Hindu nationalist movement in India. However, rural India is also the largest repository of the Old Traditional economy with its Hindu caste and jajmani system of reciprocal labour relations. The changes in India's complexly mixed economy, with its increasing market and strong planned elements, constitute a transition from the Old to the New Traditional economy. We shall consider this transition both ideologically and systemically.

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Notes

  1. This idea that economic behaviour may be subordinated to socio-cultural frameworks is acceptable to most social economists and Old Institutionalists, and in economic anthropology Polanyi's position is known as substantivism (Sahlins, 1972; Halperin, 1998). However, this view is criticised by the formalists who see all behaviour as reflecting rational economic decisionmaking, irrespective of the socio-cultural context. LeClair and Schneider (1974) and Pryor (1977) present the formalist argument within economic anthropology.

  2. See Behdad (1989) for a survey of the range of Islamic views of property rights.

  3. For Protestant Christian movements see North (1987), Wallis (1987), and Iannaccone (1993). For Roman Catholic Christianity see the United States Catholic Conference (1993). For Judaism see Tamari (1987) and Neusner (1990). Other religions for which New Traditionalist movements can be identified include Buddhism (Spiro, 1970; Keyes, 1993) and Sikhism (Oberoi, 1993).

  4. Although the term ‘neo-Confucian’ is now generally used to describe a revived Confucianism that supports modern economic growth and development, the term was originally applied to a synthetic official imperial religion that emerged in China in the 11th and 12th centuries. This religion was anti-commercial and xenophobic and would express itself in the most extreme form in the isolationist ‘Hermit Kingdom’ of Choson Korea (Nahm, 1988; Cumings, 1997).

  5. The evolution of the role of castes can be seen as the central issue in the struggle between modernity and tradition in India. Rudolph and Rudolph (1967) provide a broad analysis of how the position of the Untouchables has evolved in law and politics over time in India.

  6. This partition was along the lines of the current border between India and Bangladesh and triggered the eventual movement for a more general partition that would occur with independence in 1947, with the creation of Muslim Pakistan out of the former British Raj as well as of India and later the predominantly Buddhist nations of Sri Lanka (Ceylon) and Myanmar (Burma).

  7. The official view of the RSS is to support Hindutva, the idea developed in the 1920s that Hinduism is a cultural identity that all Indians share irrespective of their official religious identities. As recent Prime Minister Vajpayee put it in 1968, ‘Indian Muslims and Christians did not come from outside. Their ancestors were Hindus. Culture does not change with religion’ (Pattanaik, Vol. 1, 1998, p. 72). Curiously the concept of Hinduism as a well-defined religious identity in India only came with the British in their 1871 census when they categorised anyone as ‘Hindu’ who was not Buddhist, Jain, Jewish, Christian, Muslim, Parsi, or Sikh. It was only at the 1893 World Parliament of Relgions in Chicago that Hinduism was generally recognised as a ‘great world religion’ (Frykenberg, 1993).

  8. Ironically, the earliest work on economics or politics in India, the Arthashastra of Kautilya, dating from the fourth century B.C.E., makes no reference to Hindu concepts at all and presents an essentially Machiavellian instrumentalist approach to statecraft, urging the use of whatever will maximise power of the ruler and his ability to conquer the world (Lal, 1993, p. 411).

  9. India remains a majority rural in population, although urbanisation is accelerating rapidly. Becker et al. (1992) argue that the urbanization process has actually been slowed by the nature of the economic system somewhat.

  10. In the census of 1901, the British counted 2,378 castes, sub-castes, and tribes in the Raj, with the tribal population being viewed as not properly Hindu by the priestly Brahmin caste members even though they were so categorised by the British (Edwardes, 1961, p. 72). See also Frykenberg (1993) and Singh (1993).

  11. This view of Abu-Lughod and Goody that India and other east Asian nations, especially China, were better off than Europe until the industrial revolution has been argued vigorously by others, including Chaudhuri (1990), Blaut (1993), and Frank (1998). Certain basic practices of modern market economies arose in India such as accounting systems using the number zero in their arithmetic (Goody, 1996). Landes (1998) criticises this view of India and Asia more generally, arguing that they did not have a substantial lead over Europe even in the medieval period.

  12. For an argument that this widely accepted damage to the Indian cotton textile industry by the British has been substantially exaggerated see Tirthankar (2002).

  13. The process by which the movement towards full-blown socialism was halted and reversed is rather complex. According to Nayar (1989), it was Indira Gandhi herself who made the initial moves as early as 1974 after an outbreak of inflation and her failure to nationalise wholesale trade in wheat. Kohli (1989) sees her as adopting both a more pro-Hindu and pro-business stance after the 1977 election when the Congress Party was defeated in the Hindu heartland. He argues that secular socialism and pro-business Hinduism are competing ideologies, although this seems overly simplistic given that the harder line Hindu nationalist factions of the BJP tend to oppose market reforms. In any case, despite reformist moves by both Indira and Rajiv Gandhi, the government's share of investment continued to increase all the way through the 1980s, only clearly declining after the 1991 reforms (Joshi and Little, 1996, p. 38).

  14. Regulations on firm size were viewed as fitting in with the Gandhian ideal of small village enterprises, and such regulations have been especially strict in the cotton cloth industry.

  15. That eliminating most of the continuing restrictions on trade is advocated by most Indian economists can be seen by the survey of many of their views in Balasubramanyam (2001).

  16. It should be understood that the variety of cultures and economic systems in India may be greater than one finds in all of Europe, India being called a ‘subcontinent’ for good reason. Thus one finds a very free market approach prevailing in high income and partly Sikh-inhabited Punjab in the northwest, an oppressive version of the Old Traditional system in poverty-stricken and very Hindu Bihar in the northeast (Drèze and Sen, 1995, 1996), and a highly egalitarian form of socialism in partly Christian-inhabited Kerala in the southwest (Parayil, 2000).

  17. It can be argued that the Taliban movement in Afghanistan represented a revival of a form of Old Traditionalist Islam, given its apparent rejection of many modern things. Although this may be the case, many of its strict ideas are not found in traditional Islam and were invented by the Taliban itself. Thus, it may represent a kind of ‘neo-Old Traditionalism.’

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Acknowledgements

We acknowledge useful input from Robert Eric Frykenberg, Jeffrey Miller, Ajit Sinha, Robert C. Stuart, and two anonymous referees, none of whom are responsible for any errors or misinterpretations contained in this paper.

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  1. Economics, MSC 0204, James Madison University, Harrisonburg, 22807, VA, USA

    J Barkley Rosser Jr & Marina V Rosser

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Rosser, J., Rosser, M. The Transition between the Old and New Traditional Economies in India. Comp Econ Stud 47, 561–578 (2005). https://doi.org/10.1057/palgrave.ces.8100059

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