In the previous post we identified the key ingredients of economic growth and development. The first/top three are:
1. Education
2. Health
3. Infrastructure
Education-health-infrastructure (E-H-I) – this is the "mantra" for development according to the current discourse in books, newspapers and magazines. Sounds like common sense, doesn't it? Well, not exactly.
It turns out this "common sense" (E-H-I) is a specific school of thought in development economics – the "market-friendly" school. And the market-friendly school/approach in turn is a branch of a broader school of thought – the "neo-classical revolution" of the 1990s.
Anyway, if we accept the E-H-I formula, the questions arises: E-H-I for whom? and where? The discussion/debate on economic policies in India takes place mainly in the English-language media (ELM). This ELM is by and for the middle class of the metros – the metro middle class (MMC). Now the "India" of the ELM and MMC consists of just the 8 metros. So when the ELM says "E-H-I", what it really means is E-H-I for the metros.
So "education" means more IITs and IIMs. "Health" means more super-speciality hospitals. And "infrastructure" means more international airports. This is what education, health and infrastructure mean to the MMC and its mouthpiece, the ELM.
But the metros account for only 7% of India's population. The vast majority of India – 70% – lives in villages. So that is where we must focus. Thus "education" means not more IITs and IIMs, but more primary schools in villages. "Health" means not more super-speciality hospitals, but more clinics in villages. And "infrastructure" means not more international airports – but drinking water, sanitation, roads and electricity for India's 6,00,000 villages.
All this is nothing but rural development.
15 September 2010
14 September 2010
The Secret of Economic Growth and Development
What is the secret of economic growth and development?*
Wealth is created when certain inputs are combined to produce some useful/valuable output. These inputs, or factors of production, are:
1. Land – Natural resources (soil, water, sunlight, coal, iron ore, etc)
2. Labour – The human input of production
3. Capital – Physical inputs of production (ploughs, tractors, computers, etc)
To increase the wealth created, we must increase the amounts of the inputs. A country grows or develops economically when its factors of production increase. Let us look at each factor.
Land is more or less fixed, so we will ignore it.
Labour has two aspects – quantity and quality. Quantity has no effect on wealth – the increase in production due to more labour is cancelled out out by the increase in consumption. Quality of labour is determined mainly by two things: education and health. The more educated and healthier a worker, the more he/she produces.
Some capital is privately owned, like machines and factories. Some capital is publicly owned, like roads and electricity. Publicly owned capital is nothing but infrastructure, which is provided by the government. Privately owned capital is due to investment, which is funded by savings.
However factors of production by themselves are not everything. How effectively the factors of production are combined to produce output is also important. This effectiveness is called productivity.
Now productivity consists of two parts:
a) The knowledge of how to combine the factors of production.
b) The effectiveness with which this knowledge and the factors of production are combined.
(Yes, there is a little hair splitting here)
The first we call technology. The second we call efficiency.
Knowledge/technology is a result of research and development (R&D). Efficiency is an outcome of a country's economic policies and institutions.
We can thus summarise the determinants of economic growth:
A. Factors of Production
a) Labour
1. Education
2. Health
b) Capital
1. Infrastructure
2. Savings
B. Productivity
1. Knowledge
2. Efficiency
Or we can simply list the key requirements for economic development:
1. Education
2. Healthcare
3. Infrastructure
4. Savings
5. Knowledge
6. Efficiency
*This framework is from "Economic Growth" (2009) by David Weil.
Wealth is created when certain inputs are combined to produce some useful/valuable output. These inputs, or factors of production, are:
1. Land – Natural resources (soil, water, sunlight, coal, iron ore, etc)
2. Labour – The human input of production
3. Capital – Physical inputs of production (ploughs, tractors, computers, etc)
To increase the wealth created, we must increase the amounts of the inputs. A country grows or develops economically when its factors of production increase. Let us look at each factor.
Land is more or less fixed, so we will ignore it.
Labour has two aspects – quantity and quality. Quantity has no effect on wealth – the increase in production due to more labour is cancelled out out by the increase in consumption. Quality of labour is determined mainly by two things: education and health. The more educated and healthier a worker, the more he/she produces.
Some capital is privately owned, like machines and factories. Some capital is publicly owned, like roads and electricity. Publicly owned capital is nothing but infrastructure, which is provided by the government. Privately owned capital is due to investment, which is funded by savings.
However factors of production by themselves are not everything. How effectively the factors of production are combined to produce output is also important. This effectiveness is called productivity.
Now productivity consists of two parts:
a) The knowledge of how to combine the factors of production.
b) The effectiveness with which this knowledge and the factors of production are combined.
(Yes, there is a little hair splitting here)
The first we call technology. The second we call efficiency.
Knowledge/technology is a result of research and development (R&D). Efficiency is an outcome of a country's economic policies and institutions.
We can thus summarise the determinants of economic growth:
A. Factors of Production
a) Labour
1. Education
2. Health
b) Capital
1. Infrastructure
2. Savings
B. Productivity
1. Knowledge
2. Efficiency
Or we can simply list the key requirements for economic development:
1. Education
2. Healthcare
3. Infrastructure
4. Savings
5. Knowledge
6. Efficiency
*This framework is from "Economic Growth" (2009) by David Weil.
29 August 2010
Primary Education in the East Asian Miracle
From "The East Asian Miracle: Economic Growth and Public Policy" (World Bank Report, 1993):
Creating Human Capital
In nearly all the rapidly growing East Asian economies, the growth and transformation of systems of education and training during the past three decades has been dramatic The quantity of education children received increased at the same time that the quality of schooling, and of training in the home, markedly improved. Today, the cognitive skill levels of secondary school graduates in some East Asian economies are comparable to, or higher than, those of graduates in high-income economies.
Enrollment rates are higher at higher levels of per capita income. But the HPAEs' enrollment rates have tended to be higher than predicted for their level of income. At the primary level, this was most obvious in 1965 when South Korea, Hong Kong and Singapore had already achieved Universal Primary Education – well ahead of other developing economies. Even Indonesia with its vast population had a primary enrollment rate above 70%. By 1987, East Asia's superior education systems were evident at the secondary level. Indonesia had a secondary enrollment rate of 46%, well above other economies with roughly the same level of income, and Korea had moved from 35% to 88%, maintaining its large lead in relative performance. In part as a function of their success in increasing enrollment, the East Asian economies have also been faster to close the gap between male and female enrollments.
A common, though imperfect, measure of educational quality is expenditure per pupil. Between 1970 and 1989, real expenditure per pupil at the primary level rose by 355% in Korea. In Mexico and Kenya, expenditure rose by 64% and 38%, respectively, during the same period, and in Pakistan expenditure rose by only 13% between 1970 and 1985. These dramatic differences reflect mostly differential changes during the period in income growth and in the number of children entering schools, both of which favoured the East Asian economies. A somewhat better measure of school quality is the performance of children on tests of cognitive skills, standardised across economies. In the relatively few international comparisons available from such tests, East Asian children tend to perform better than children from other developing regions – and even, recently, better than children from high-income economies.
Creating Human Capital
In nearly all the rapidly growing East Asian economies, the growth and transformation of systems of education and training during the past three decades has been dramatic The quantity of education children received increased at the same time that the quality of schooling, and of training in the home, markedly improved. Today, the cognitive skill levels of secondary school graduates in some East Asian economies are comparable to, or higher than, those of graduates in high-income economies.
Enrollment rates are higher at higher levels of per capita income. But the HPAEs' enrollment rates have tended to be higher than predicted for their level of income. At the primary level, this was most obvious in 1965 when South Korea, Hong Kong and Singapore had already achieved Universal Primary Education – well ahead of other developing economies. Even Indonesia with its vast population had a primary enrollment rate above 70%. By 1987, East Asia's superior education systems were evident at the secondary level. Indonesia had a secondary enrollment rate of 46%, well above other economies with roughly the same level of income, and Korea had moved from 35% to 88%, maintaining its large lead in relative performance. In part as a function of their success in increasing enrollment, the East Asian economies have also been faster to close the gap between male and female enrollments.
A common, though imperfect, measure of educational quality is expenditure per pupil. Between 1970 and 1989, real expenditure per pupil at the primary level rose by 355% in Korea. In Mexico and Kenya, expenditure rose by 64% and 38%, respectively, during the same period, and in Pakistan expenditure rose by only 13% between 1970 and 1985. These dramatic differences reflect mostly differential changes during the period in income growth and in the number of children entering schools, both of which favoured the East Asian economies. A somewhat better measure of school quality is the performance of children on tests of cognitive skills, standardised across economies. In the relatively few international comparisons available from such tests, East Asian children tend to perform better than children from other developing regions – and even, recently, better than children from high-income economies.
28 August 2010
Agriculture in the East Asia Miracle (Asian Tigers)
From "The East Asian Miracle: Economic Growth and Public Policy" (World Bank Report, 1993):
Introduction
East Asia has a remarkable record of high and sustained economic growth. From 1965 to 1990 the twenty-three economies of East Asia grew faster than all other regions of the world. Most of this achievement is attributable to seemingly miraculous growth in just eight economies: Japan; the "Four Tigers" – South Korea, Taiwan, Hong Kong and Singapore; and the three newly industrialising economies (NIEs) of South East Asia – Indonesia, Malaysia and Thailand. These eight High Performing Asian economies (HPAEs) are the subject of this study.
Dynamic Agricultural Sectors
Typically, as an economy develops, agriculture's share of the economy declines. The six HPAEs with substantial agricultural sectors – Indonesia, Japan, Korea, Malaysia, Thailand and Taiwan – have been making this transition more rapidly than other developing economies. But the decline in the relative importance of agriculture in the HPAEs is not because agriculture has lacked dynamism. Across developing regions, agriculture's share of output and employment has declined most and fastest where agricultural output and productivity have grown the most. From 1965 to 1988, growth in both agricultural output and agricultural productivity was higher in East Asia than in other regions. Many factors contributed to the success of agriculture in these economies. Land reform (notably in Korea and Taiwan), agricultural extension services, reasonably good infrastructure (especially in the former Japanese colonies), and heavy investments in rural areas (notably in Indonesia) all helped.
East Asian governments have actively supported agricultural research and extension services to speed diffusion of Green Revolution technologies. Their substantial investments in irrigation and other rural infrastructure hastened adoption of high-yielding varieties, new crops, and the use of manufactured inputs, such as fertiliser and equipment, to cultivate them. In Taiwan, during the 1950s, 45% of the growth of agriculture was due to rising productivity, much of which resulted from government programs.
Information on the allocation of public investment between rural and urban regions is limited, and it is difficult to make good comparisons among economies, but available data suggest that the HPAEs have allocated a larger share of their public investment to rural areas than did other low- and middle-income economies. Of critical importance in this respect has been the build-up of infrastructure – roads, bridges, transportation, electricity, water and sanitation. There has been a more even balance between rural and urban public investment in sanitation and water facilities in Indonesia, Korea and Thailand than in other developing economies. The data on rural electrification also suggest that the HPAEs with rural sectors have, on average, more effectively provided electricity to rural areas. Since the early 1980s, electricity has been universally available in the rural areas of Korea and Taiwan. Malaysia and Thailand have made great strides in rural electrification. Indonesia has not done as well, but even there the relative disparity between the urban and rural sectors is smaller than the disparity in economies with approximately the same per capita income (Bolivia and Liberia) or the same population (Brazil).
Equally important, however, were the typically low levels of direct and indirect taxation on agriculture in East Asia. During the past three decades, dozens of governments in other regions, eager to promote industrial growth, have funneled surpluses from agriculture to industry through taxes, food price controls, and pro-industry allocations of public investment. Less overtly, governments have favoured manufacturers, and hurt agriculture, by overvaluing currencies and protecting domestic industries that manufacture agricultural inputs and the goods purchased by rural households. The exchange rate that results from restrictions on manufactured imports reduces the domestic currency proceeds of agricultural exports. Industrial protection acts as a hidden tax on agriculture, raising the price of agricultural inputs to subsidise industry. Direct interventions include export taxes and price controls, while indirect interventions also take account of industrial protection policies and real exchange rate overvaluation. Both Korea and Malaysia have substantially lower taxation of the agricultural sector than the comparators, and in Korea the agricultural sector receives positive protection. Thailand's taxation of the agricultural sector was similar to South Asian levels in the 1960s and 1970s but fell in the 1980s while taxation in South Asia was rising.
Introduction
East Asia has a remarkable record of high and sustained economic growth. From 1965 to 1990 the twenty-three economies of East Asia grew faster than all other regions of the world. Most of this achievement is attributable to seemingly miraculous growth in just eight economies: Japan; the "Four Tigers" – South Korea, Taiwan, Hong Kong and Singapore; and the three newly industrialising economies (NIEs) of South East Asia – Indonesia, Malaysia and Thailand. These eight High Performing Asian economies (HPAEs) are the subject of this study.
Dynamic Agricultural Sectors
Typically, as an economy develops, agriculture's share of the economy declines. The six HPAEs with substantial agricultural sectors – Indonesia, Japan, Korea, Malaysia, Thailand and Taiwan – have been making this transition more rapidly than other developing economies. But the decline in the relative importance of agriculture in the HPAEs is not because agriculture has lacked dynamism. Across developing regions, agriculture's share of output and employment has declined most and fastest where agricultural output and productivity have grown the most. From 1965 to 1988, growth in both agricultural output and agricultural productivity was higher in East Asia than in other regions. Many factors contributed to the success of agriculture in these economies. Land reform (notably in Korea and Taiwan), agricultural extension services, reasonably good infrastructure (especially in the former Japanese colonies), and heavy investments in rural areas (notably in Indonesia) all helped.
East Asian governments have actively supported agricultural research and extension services to speed diffusion of Green Revolution technologies. Their substantial investments in irrigation and other rural infrastructure hastened adoption of high-yielding varieties, new crops, and the use of manufactured inputs, such as fertiliser and equipment, to cultivate them. In Taiwan, during the 1950s, 45% of the growth of agriculture was due to rising productivity, much of which resulted from government programs.
Information on the allocation of public investment between rural and urban regions is limited, and it is difficult to make good comparisons among economies, but available data suggest that the HPAEs have allocated a larger share of their public investment to rural areas than did other low- and middle-income economies. Of critical importance in this respect has been the build-up of infrastructure – roads, bridges, transportation, electricity, water and sanitation. There has been a more even balance between rural and urban public investment in sanitation and water facilities in Indonesia, Korea and Thailand than in other developing economies. The data on rural electrification also suggest that the HPAEs with rural sectors have, on average, more effectively provided electricity to rural areas. Since the early 1980s, electricity has been universally available in the rural areas of Korea and Taiwan. Malaysia and Thailand have made great strides in rural electrification. Indonesia has not done as well, but even there the relative disparity between the urban and rural sectors is smaller than the disparity in economies with approximately the same per capita income (Bolivia and Liberia) or the same population (Brazil).
Equally important, however, were the typically low levels of direct and indirect taxation on agriculture in East Asia. During the past three decades, dozens of governments in other regions, eager to promote industrial growth, have funneled surpluses from agriculture to industry through taxes, food price controls, and pro-industry allocations of public investment. Less overtly, governments have favoured manufacturers, and hurt agriculture, by overvaluing currencies and protecting domestic industries that manufacture agricultural inputs and the goods purchased by rural households. The exchange rate that results from restrictions on manufactured imports reduces the domestic currency proceeds of agricultural exports. Industrial protection acts as a hidden tax on agriculture, raising the price of agricultural inputs to subsidise industry. Direct interventions include export taxes and price controls, while indirect interventions also take account of industrial protection policies and real exchange rate overvaluation. Both Korea and Malaysia have substantially lower taxation of the agricultural sector than the comparators, and in Korea the agricultural sector receives positive protection. Thailand's taxation of the agricultural sector was similar to South Asian levels in the 1960s and 1970s but fell in the 1980s while taxation in South Asia was rising.
20 August 2010
India's Education System/Policy: Primary Vs Higher
In the previous post I talked about primary education, and not just "education". The emphasis is deliberate. India's education system/policy suffers from a serious distortion. There is too much focus on higher education, and too little focus on primary education. It should be exactly the other way around.
What is the purpose of education? To train people for employment. (Yes, there are other purposes of education: teaching children to become good citizens and good human beings; teaching them values and morals, creative thinking, etc. But these things can/should be taken care of at the primary level itself; they shouldn't wait till college)
Now the employment opportunities/requirements in a modern economy are like this:
So an education system must turn out workers in a similar pattern:
Our education system is like this:
See the mismatch between figures 1 and 3?
So the government must focus exclusively on primary education, and leave higher education to the private sector. Those who want to go to college but cannot afford the high fees must take bank loans. They should repay the loans with the salaries from their high-paying jobs.
I know this argument is the height of hypocrisy, coming from someone who is himself the beneficiary of a heavily subsidised higher education (at REC/NIT and IIT). What to do?
What is the purpose of education? To train people for employment. (Yes, there are other purposes of education: teaching children to become good citizens and good human beings; teaching them values and morals, creative thinking, etc. But these things can/should be taken care of at the primary level itself; they shouldn't wait till college)
Now the employment opportunities/requirements in a modern economy are like this:
So an education system must turn out workers in a similar pattern:
Our education system is like this:
See the mismatch between figures 1 and 3?
So the government must focus exclusively on primary education, and leave higher education to the private sector. Those who want to go to college but cannot afford the high fees must take bank loans. They should repay the loans with the salaries from their high-paying jobs.
I know this argument is the height of hypocrisy, coming from someone who is himself the beneficiary of a heavily subsidised higher education (at REC/NIT and IIT). What to do?
19 August 2010
India's Development: Best Strategy/Policy
What is the best strategy/policy for India to achieve development? The answer* is to focus on these key areas:
1. Primary Education
2. Agriculture
3. Rural Development
4. Women's Empowerment
1. Primary Education
The government must focus only on primary education. It should get out of higher education, and leave it to the private sector. All public resources for education must go to primary education. No public resources/subsidies must go to higher education.
2. Agriculture
Agriculture is the foundation of any economy. Agriculture provides the foundation for industry. Without a strong base in agriculture, an economy cannot industrialise. A strong agricultural sector is a must for industrialisation.
3. Rural Development
70% of India lives in villages. Our metros cannot provide adequate infrastructure and employment to their existing population (7% of the total). How on earth can they cope with more rural migration? Imagine the situation if this 70%, or 85 crore people, were to land up in the 8 metros. Basic infrastructure (drinking water, sanitation, roads, electricity) and employment opportunities (agro-based small industries) have to be provided in villages.
4. Women's Empowerment
Finally, everything boils down to the woman. Everything depends on the woman: education, health, nutrition, employment – everything. So if you focus on the woman, you take care of everything else. Women-centric development programs are needed.
*Economic Development (2003) by Michael Todaro and Stephen Smith
PS: The authors also talk about another important issue – healthcare.
1. Primary Education
2. Agriculture
3. Rural Development
4. Women's Empowerment
1. Primary Education
The government must focus only on primary education. It should get out of higher education, and leave it to the private sector. All public resources for education must go to primary education. No public resources/subsidies must go to higher education.
2. Agriculture
Agriculture is the foundation of any economy. Agriculture provides the foundation for industry. Without a strong base in agriculture, an economy cannot industrialise. A strong agricultural sector is a must for industrialisation.
3. Rural Development
70% of India lives in villages. Our metros cannot provide adequate infrastructure and employment to their existing population (7% of the total). How on earth can they cope with more rural migration? Imagine the situation if this 70%, or 85 crore people, were to land up in the 8 metros. Basic infrastructure (drinking water, sanitation, roads, electricity) and employment opportunities (agro-based small industries) have to be provided in villages.
4. Women's Empowerment
Finally, everything boils down to the woman. Everything depends on the woman: education, health, nutrition, employment – everything. So if you focus on the woman, you take care of everything else. Women-centric development programs are needed.
*Economic Development (2003) by Michael Todaro and Stephen Smith
PS: The authors also talk about another important issue – healthcare.
18 August 2010
"Economic Development": Todaro and Smith
Contents of "Economic Development" by Michael Todaro and Stephen Smith (2003, 8th edition):
A. Basic Concepts
1. What is Development?
2. Developing countries
3. Developed countries
4. Development models - 1 (Classical)
5. Development models - 2 (Recent)
B. Internal Issues
6. Poverty and Inequality
7. Population growth
8. Urbanisation
9. Education and Health
10. Agriculture and Rural Development
11. Environment
C. External Issues
12. Trade theory
13. Trade policy
14. Deficits and debts
15. Foreign investment and aid
D. Towards Development
16. State vs Market
17. Financial and fiscal policies
I have read half of this book. Chapters 9 and 10 are the best and the most important chapters of the book, in my view.
A. Basic Concepts
1. What is Development?
2. Developing countries
3. Developed countries
4. Development models - 1 (Classical)
5. Development models - 2 (Recent)
B. Internal Issues
6. Poverty and Inequality
7. Population growth
8. Urbanisation
9. Education and Health
10. Agriculture and Rural Development
11. Environment
C. External Issues
12. Trade theory
13. Trade policy
14. Deficits and debts
15. Foreign investment and aid
D. Towards Development
16. State vs Market
17. Financial and fiscal policies
I have read half of this book. Chapters 9 and 10 are the best and the most important chapters of the book, in my view.
17 August 2010
Economic Growth and Development: Definition
What is the definition of economic growth and economic development? What is the difference between the two?
1. Economic Growth is an increase in economic output. It is a quantitative change.
2. Economic Development is more than just an increase in economic output. It is the change of an economy from one stage to another (higher) stage. It is a qualitative change.
In particular, economic development is the change of an economy from the agricultural stage to the industrial stage. So,
Development = Industrialisation ?
We have seen that this is an incomplete view. More correctly,
Development = Agriculture + Industry + Services
in that order
1. Economic Growth is an increase in economic output. It is a quantitative change.
2. Economic Development is more than just an increase in economic output. It is the change of an economy from one stage to another (higher) stage. It is a qualitative change.
In particular, economic development is the change of an economy from the agricultural stage to the industrial stage. So,
We have seen that this is an incomplete view. More correctly,
in that order
16 August 2010
India's Economy and Development: Agriculture, Industry, Services
Imagine a pyramid:
How would you build this pyramid? Like this:
Or like this:
The second method may look nonsensical. But that is exactly what we Indians are doing, with our economy and development. The pyramid is a country's economy:
The bottom layer is Agriculture, the middle layer is Industry, and the top layer is Services.
The first method shows how today's developed countries (Europe, America, Japan) have grown. First they developed their agriculture, then their industry, finally their services.
The second method shows how India is developing – in an upside-down fashion. First we developed our services. Now we are developing our industry. We have yet to start developing our agriculture (so the last step is more hope than reality). This is exactly the reverse/opposite of the first method.
Gunnar Myrdal – the winner of the 1974 Nobel Prize for Economics – said:
"It is the agricultural sector that the long-term battle for economic development will be won or lost."
How would you build this pyramid? Like this:
Or like this:
The second method may look nonsensical. But that is exactly what we Indians are doing, with our economy and development. The pyramid is a country's economy:
The bottom layer is Agriculture, the middle layer is Industry, and the top layer is Services.
The first method shows how today's developed countries (Europe, America, Japan) have grown. First they developed their agriculture, then their industry, finally their services.
The second method shows how India is developing – in an upside-down fashion. First we developed our services. Now we are developing our industry. We have yet to start developing our agriculture (so the last step is more hope than reality). This is exactly the reverse/opposite of the first method.
Gunnar Myrdal – the winner of the 1974 Nobel Prize for Economics – said:
"It is the agricultural sector that the long-term battle for economic development will be won or lost."
15 August 2010
The Three Stages of the Industrial Revolution
The Industrial Revolution occurred in three stages:
1. Agricultural revolution (1700 – 1800)
2. Industrial revolution (1800 – 1950)
3. Services revolution (1950 – )
Usually when people use the term "Industrial Revolution" they mean only the "industrial" part of the Revolution (the second/middle part). But the above version give a more complete picture.
The Industrial Revolution marked the transition from the Agricultural/Traditional Age to the Industrial/Modern Age. So people jump to the conclusion that modernisation means industrialisation. Though industrialisation forms the core of modernisation, it is not its only component. As seen above, the agricultural revolution is a pre-condition for industrialisation.
1. Agricultural revolution (1700 – 1800)
2. Industrial revolution (1800 – 1950)
3. Services revolution (1950 – )
Usually when people use the term "Industrial Revolution" they mean only the "industrial" part of the Revolution (the second/middle part). But the above version give a more complete picture.
The Industrial Revolution marked the transition from the Agricultural/Traditional Age to the Industrial/Modern Age. So people jump to the conclusion that modernisation means industrialisation. Though industrialisation forms the core of modernisation, it is not its only component. As seen above, the agricultural revolution is a pre-condition for industrialisation.
09 July 2010
Poverty: How Many Are Poor In India?
What is the extent of poverty in India? How many poor people are there in India?
The World Bank defines moderate poverty as living on less than $2 (PPP) per day and extreme poverty as living on less than $1.25 (PPP) per day.
Here is the poverty data for India and some other countries:
This means 90 crore Indians live in moderate poverty and 50 crore Indians live in extreme poverty.
Source: Wikipedia
The World Bank defines moderate poverty as living on less than $2 (PPP) per day and extreme poverty as living on less than $1.25 (PPP) per day.
Here is the poverty data for India and some other countries:
| Country | ||
| India | ||
| Indonesia | ||
| China | ||
| Brazil | ||
| Mexico |
This means 90 crore Indians live in moderate poverty and 50 crore Indians live in extreme poverty.
Source: Wikipedia
25 June 2010
India's Rate of Industrialisation/Modernisation Since 1991
A country's GDP growth rate can be taken as a measure of its rate of industrialisation/modernisation (I/M). After Independence, India opted for an inefficient industrial system - socialism - and industrialised/modernised at an average rate of 3.5% per year. More than four decades later (in 1991) we switched to an efficient industrial system - capitalism. Here are the results:
Notice how the rate of I/M increased to 7%+ in the mid-1990s and later to 9%+ in the mid-2000s.
Source: World Bank (via Google public data)
| Year | |
| 1991 | |
| 1992 | |
| 1993 | |
| 1994 | |
| 1995 | |
| 1996 | |
| 1997 | |
| 1998 | |
| 1999 | |
| 2000 | |
| 2001 | |
| 2002 | |
| 2003 | |
| 2004 | |
| 2005 | |
| 2006 | |
| 2007 | |
| 2008 |
Notice how the rate of I/M increased to 7%+ in the mid-1990s and later to 9%+ in the mid-2000s.
Source: World Bank (via Google public data)
20 June 2010
Literacy Rate: India and Other Countries
Here are the literacy rates of India and some other countries:
Source: United Nations Development Program Report (2009)
| Country | |
| India | |
| Brazil | |
| Indonesia | |
| China | |
| Russia | |
| Japan | |
| France | |
| Germany | |
| Britain | |
| America |
Source: United Nations Development Program Report (2009)
19 June 2010
Per Capita Income (PPP): India and Other Countries
Here are the per capita incomes (PPP) of India and some other countries:
Data from CIA's The World Factbook
PPP = purchasing power parity
| Country | |
| India | |
| Indonesia | |
| China | |
| Brazil | |
| Russia | |
| Japan | |
| France | |
| Germany | |
| Britain | |
| America |
Data from CIA's The World Factbook
PPP = purchasing power parity
03 June 2010
Marx: The Modern/Industrial Age and Modernity
Karl Marx and Friedrich Engels in the first chapter of "The Communist Manifesto" (1848):
1. On the Modern/Industrial Age:
In the earlier epochs of history, we find almost everywhere a complicated arrangement of society into various orders, a manifold gradation of social rank. In ancient Rome we have patricians, knights, plebeians, slaves. In the Middle Ages (we have) feudal lords, vassals, guild-masters, journeymen, apprentices, serfs.
The modern capitalist society that has sprouted from the ruins of feudal society has not done away with class antagonisms. Our epoch, the epoch of the capitalist class, possesses, however, this distinct feature: it has simplified class antagonisms.
Thereupon, steam and machinery revolutionised industrial production*. The place of manufacture was taken by the giant, modern industry; the place of the industrial middle class by industrial millionaires, the leaders of the whole industrial armies, the modern capitalist.
The capitalist class, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of nature's forces to man, machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground — what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?
2. On the nature of modernity:
Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the capitalist epoch from all earlier ones.
All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify.
All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind.
*The Industrial Revolution
1. On the Modern/Industrial Age:
In the earlier epochs of history, we find almost everywhere a complicated arrangement of society into various orders, a manifold gradation of social rank. In ancient Rome we have patricians, knights, plebeians, slaves. In the Middle Ages (we have) feudal lords, vassals, guild-masters, journeymen, apprentices, serfs.
The modern capitalist society that has sprouted from the ruins of feudal society has not done away with class antagonisms. Our epoch, the epoch of the capitalist class, possesses, however, this distinct feature: it has simplified class antagonisms.
Thereupon, steam and machinery revolutionised industrial production*. The place of manufacture was taken by the giant, modern industry; the place of the industrial middle class by industrial millionaires, the leaders of the whole industrial armies, the modern capitalist.
The capitalist class, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of nature's forces to man, machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground — what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?
2. On the nature of modernity:
Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the capitalist epoch from all earlier ones.
All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify.
All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind.
*The Industrial Revolution
24 May 2010
India's States and Europe's Countries: Population
Here is a comparison of the population of India's states and European countries:
| European Country | |
| 1. Germany | |
| 2. France | |
| 3. Britain | |
| 4. Italy | |
| 5. Spain |
| Indian State | |
| 1. Uttar Pradesh | |
| 2. Maharashtra | |
| 3. Bihar | |
| 4. West Bengal | |
| 5. Andhra Pradesh | |
| 6. Madhya Pradesh | |
| 7. Rajasthan | |
| 8. Tamil Nadu | |
| 9. Karnataka | |
| 10. Gujarat |
14 May 2010
Technology, Economy, Politics, Culture - 2
Karl Marx in the preface to his "A Contribution to the Critique of Political Economy" (1859):
1. In the social production of their existence, men inevitably enter into definite relations, which are independent of their will, namely relations of production appropriate to a given stage in the development of their material forces of production.
2. The totality of these relations of production constitutes the economic structure of society, the real foundation, on which arises a legal and political superstructure and to which correspond definite forms of social consciousness.
3. The mode of production of material life conditions the general process of social, political and intellectual life.
4. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness.
5. The changes in the economic foundation lead sooner or later to the transformation of the whole immense superstructure.
6. In broad outline, the tribal, ancient, feudal and capitalist modes of production may be designated as epochs marking progress in the economic development of society.
See "Technology, Economy, Politics, Culture" (T-E-P-C)
1. In the social production of their existence, men inevitably enter into definite relations, which are independent of their will, namely relations of production appropriate to a given stage in the development of their material forces of production.
2. The totality of these relations of production constitutes the economic structure of society, the real foundation, on which arises a legal and political superstructure and to which correspond definite forms of social consciousness.
3. The mode of production of material life conditions the general process of social, political and intellectual life.
4. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness.
5. The changes in the economic foundation lead sooner or later to the transformation of the whole immense superstructure.
6. In broad outline, the tribal, ancient, feudal and capitalist modes of production may be designated as epochs marking progress in the economic development of society.
See "Technology, Economy, Politics, Culture" (T-E-P-C)
08 May 2010
Degree of Urbanisation: India and Other Countries
Q: How much of India is urban?
A: 30%
Here are some countries and their degree of urbanisation:
Data from CIA's The World Factbook. The definition of "urban" is different for different countries.
A: 30%
Here are some countries and their degree of urbanisation:
| Country | |
| India | |
| China | |
| Indonesia | |
| Japan | |
| Russia | |
| Germany | |
| France | |
| America | |
| Brazil | |
| Britain |
Data from CIA's The World Factbook. The definition of "urban" is different for different countries.
08 April 2010
India's Tribals/Adivasis and Naxalite/Maoist Violence - 2
Arundhati Roy on India's tribals/adivasis and the Naxalite/Maoist violence*:
This legacy of rebellion has left behind a furious people who have been isolated and marginalised by the Indian government. The Indian Constitution, the moral underpinning of Indian democracy, was adopted by Parliament in 1950. It was a tragic day for tribal people. The Constitution ratified colonial policy and made the State custodian of tribal homelands. Overnight, it turned the entire tribal population into squatters on their own land. It denied them their traditional rights to forest produce, it criminalised a whole way of life. In exchange for the right to vote, it snatched away their right to livelihood and dignity.
Over the past five years or so, the governments of Chhattisgarh, Jharkhand, Orissa and West Bengal have signed hundreds of MoUs with corporate houses, worth several billion dollars, all of them secret, for steel plants, sponge-iron factories, power plants, aluminium refineries, dams and mines. In order for the MoUs to translate into real money, tribal people must be moved. Therefore, this war.
This CSR masks the outrageous economics that underpins the mining sector in India. For example, according to the recent Lokayukta report for Karnataka, for every tonne of iron ore mined by a private company, the government gets a royalty of Rs 27 and the mining company makes Rs 5,000. In the bauxite and aluminium sector, the figures are even worse. We're talking about daylight robbery to the tune of billions of dollars.
There are no teachers in any of the schools, Chandu says. They've all run away. Or have you chased them away? No, we only chase police. But why should teachers come here, to the jungle, when they get their salaries sitting at home?
The perennial problem, the real bane of people's lives, was the biggest landlord of all, the Forest Department. Every morning, forest officials, even the most junior of them, would appear in villages like a bad dream, preventing people from ploughing their fields, collecting firewood, plucking leaves, picking fruit, grazing their cattle, from living. They brought elephants to overrun fields and scattered babool seeds to destroy the soil as they passed by. People would be beaten, arrested, humiliated, their crops destroyed. Of course, from the forest department's point of view, these were illegal people engaged in unconstitutional activity, and the department was only implementing the Rule of Law.
When the Party is a suitor (as it is now in Dandakaranya), wooing the people, attentive to their every need, then it genuinely is a People's Party, its army genuinely a People's Army. But after the Revolution how easily this love affair can turn into a bitter marriage. How easily the People's Army can turn upon the people. Today in Dandakaranya, the Party wants to keep the bauxite in the mountain. Tomorrow, will it change its mind?
Most of the people, including those in the PLGA (People's Liberation Guerrilla Army), have a haemoglobin count that's between five and six, when the standard for Indian women is 11. There's TB caused by more than two years of chronic anaemia. Young children are suffering from Protein Energy Malnutrition Grade II, in medical terminology called Kwashiorkor. "It's an epidemic here, like in Biafra," the doctor says, "I have worked in villages before, but I've never seen anything like this." Apart from this, there's malaria, osteoporosis, tapeworm, severe ear and tooth infections and primary amenorrhea — which is when malnutrition during puberty causes a woman's menstrual cycle to disappear, or never appear in the first place. "There are no clinics in this forest apart from one or two in Gadchiroli. No doctors. No medicines."
Niti talks about the range of agricultural problems they have to deal with. Only 2 per cent of the land is irrigated. In Abujhmad, ploughing was unheard of until 10 years ago. In Gadchiroli on the other hand, hybrid seeds and chemical pesticides are edging their way in. "We need urgent help in the agriculture department," Vinod says. "We need people who know about seeds, organic pesticides, permaculture. With a little help we could do a lot."
*"Walking With The Comrades" (Outlook, 29 March 2010)
This legacy of rebellion has left behind a furious people who have been isolated and marginalised by the Indian government. The Indian Constitution, the moral underpinning of Indian democracy, was adopted by Parliament in 1950. It was a tragic day for tribal people. The Constitution ratified colonial policy and made the State custodian of tribal homelands. Overnight, it turned the entire tribal population into squatters on their own land. It denied them their traditional rights to forest produce, it criminalised a whole way of life. In exchange for the right to vote, it snatched away their right to livelihood and dignity.
Over the past five years or so, the governments of Chhattisgarh, Jharkhand, Orissa and West Bengal have signed hundreds of MoUs with corporate houses, worth several billion dollars, all of them secret, for steel plants, sponge-iron factories, power plants, aluminium refineries, dams and mines. In order for the MoUs to translate into real money, tribal people must be moved. Therefore, this war.
This CSR masks the outrageous economics that underpins the mining sector in India. For example, according to the recent Lokayukta report for Karnataka, for every tonne of iron ore mined by a private company, the government gets a royalty of Rs 27 and the mining company makes Rs 5,000. In the bauxite and aluminium sector, the figures are even worse. We're talking about daylight robbery to the tune of billions of dollars.
There are no teachers in any of the schools, Chandu says. They've all run away. Or have you chased them away? No, we only chase police. But why should teachers come here, to the jungle, when they get their salaries sitting at home?
The perennial problem, the real bane of people's lives, was the biggest landlord of all, the Forest Department. Every morning, forest officials, even the most junior of them, would appear in villages like a bad dream, preventing people from ploughing their fields, collecting firewood, plucking leaves, picking fruit, grazing their cattle, from living. They brought elephants to overrun fields and scattered babool seeds to destroy the soil as they passed by. People would be beaten, arrested, humiliated, their crops destroyed. Of course, from the forest department's point of view, these were illegal people engaged in unconstitutional activity, and the department was only implementing the Rule of Law.
When the Party is a suitor (as it is now in Dandakaranya), wooing the people, attentive to their every need, then it genuinely is a People's Party, its army genuinely a People's Army. But after the Revolution how easily this love affair can turn into a bitter marriage. How easily the People's Army can turn upon the people. Today in Dandakaranya, the Party wants to keep the bauxite in the mountain. Tomorrow, will it change its mind?
Most of the people, including those in the PLGA (People's Liberation Guerrilla Army), have a haemoglobin count that's between five and six, when the standard for Indian women is 11. There's TB caused by more than two years of chronic anaemia. Young children are suffering from Protein Energy Malnutrition Grade II, in medical terminology called Kwashiorkor. "It's an epidemic here, like in Biafra," the doctor says, "I have worked in villages before, but I've never seen anything like this." Apart from this, there's malaria, osteoporosis, tapeworm, severe ear and tooth infections and primary amenorrhea — which is when malnutrition during puberty causes a woman's menstrual cycle to disappear, or never appear in the first place. "There are no clinics in this forest apart from one or two in Gadchiroli. No doctors. No medicines."
Niti talks about the range of agricultural problems they have to deal with. Only 2 per cent of the land is irrigated. In Abujhmad, ploughing was unheard of until 10 years ago. In Gadchiroli on the other hand, hybrid seeds and chemical pesticides are edging their way in. "We need urgent help in the agriculture department," Vinod says. "We need people who know about seeds, organic pesticides, permaculture. With a little help we could do a lot."
*"Walking With The Comrades" (Outlook, 29 March 2010)
India's Tribals/Adivasis and Naxalite/Maoist Violence - 1
Arundhati Roy on India's tribals/adivasis and the Naxalite/Maoist violence*:
Right now in central India, the Maoists' guerrilla army is made up almost entirely of desperately poor tribal people living in conditions of such chronic hunger that it verges on famine of the kind we only associate with sub-Saharan Africa. They are people who, even after 60 years of India's Independence, have not had access to education, healthcare or legal redress. They are people who have been mercilessly exploited for decades, consistently cheated by small businessmen and moneylenders, the women raped as a matter of right by police and forest department personnel.
If the tribals have taken up arms, they have done so because a government which has given them nothing but violence and neglect now wants to snatch away the last thing they have — their land. Clearly, they do not believe the government when it says it only wants to "develop" their region. Clearly, they do not believe that the roads as wide and flat as aircraft runways that are being built through their forests in Dantewada by the National Mineral Development Corporation are being built for them to walk their children to school on. They believe that if they do not fight for their land, they will be annihilated. That is why they have taken up arms.
In 2008, an expert group appointed by the Planning Commission submitted a report called 'Development Challenges in Extremist-Affected Areas'. It said, "the Naxalite (Maoist) movement has to be recognised as a political movement with a strong base among the landless and poor peasantry and adivasis. Its emergence and growth need to be contextualised in the social conditions and experience of people who form a part of it. The huge gap between state policy and performance is a feature of these conditions. Though its professed long-term ideology is capturing state power by force, in its day-to-day manifestation, it is to be looked upon as basically a fight for social justice, equality, protection, security and local development."
They (the tribals) asked why when the government says that "the Writ of the State must run", it seems to only mean that police stations must be put in place. Not schools or clinics or housing, or clean water, or a fair price for forest produce, or even being left alone and free from the fear of the police — anything that would make people's lives a little easier. They asked why the 'Writ of the State' could never be taken to mean justice.
*"Mr Chidambaram's War" (Outlook, 9 November 2009)
Right now in central India, the Maoists' guerrilla army is made up almost entirely of desperately poor tribal people living in conditions of such chronic hunger that it verges on famine of the kind we only associate with sub-Saharan Africa. They are people who, even after 60 years of India's Independence, have not had access to education, healthcare or legal redress. They are people who have been mercilessly exploited for decades, consistently cheated by small businessmen and moneylenders, the women raped as a matter of right by police and forest department personnel.
If the tribals have taken up arms, they have done so because a government which has given them nothing but violence and neglect now wants to snatch away the last thing they have — their land. Clearly, they do not believe the government when it says it only wants to "develop" their region. Clearly, they do not believe that the roads as wide and flat as aircraft runways that are being built through their forests in Dantewada by the National Mineral Development Corporation are being built for them to walk their children to school on. They believe that if they do not fight for their land, they will be annihilated. That is why they have taken up arms.
In 2008, an expert group appointed by the Planning Commission submitted a report called 'Development Challenges in Extremist-Affected Areas'. It said, "the Naxalite (Maoist) movement has to be recognised as a political movement with a strong base among the landless and poor peasantry and adivasis. Its emergence and growth need to be contextualised in the social conditions and experience of people who form a part of it. The huge gap between state policy and performance is a feature of these conditions. Though its professed long-term ideology is capturing state power by force, in its day-to-day manifestation, it is to be looked upon as basically a fight for social justice, equality, protection, security and local development."
They (the tribals) asked why when the government says that "the Writ of the State must run", it seems to only mean that police stations must be put in place. Not schools or clinics or housing, or clean water, or a fair price for forest produce, or even being left alone and free from the fear of the police — anything that would make people's lives a little easier. They asked why the 'Writ of the State' could never be taken to mean justice.
*"Mr Chidambaram's War" (Outlook, 9 November 2009)
02 April 2010
India Vs Bharat: Modern-Industrial-Urban Vs Traditional-Agricultural-Rural
India and Bharat. Two different countries. Or at least, two different parts of the same country. "India" is industrial/urban/modern, while "Bharat" is agricultural/rural/traditional.
This is a popular theory. Then the question arises: Exactly how much of the country is "India" and how much is "Bharat"?
The answer depends on exactly what criterion you use to divide the two:
*My estimate for 2010.
Thus we can identify different 'India's and 'Bharat's.
Now these categories (industrial-urban-modern and agricultural-rural-traditional) do not merely represent differences in occupation, location and income/lifestyle. They represent something much bigger. They represent two different ages in the history of man: the Agricultural Age and the Industrial Age.
Now historical Ages differ from one another materially, no doubt. For example, they differ in food, clothing, shelter, tools, etc. But they also differ from one another "mentally" – that is, in mindset or worldview. By mindset/worldview, I mean the sum total of a human being's tastes, interests, opinions, attitudes, outlook, values, norms, knowledge, awareness and beliefs. Each Age has its own mindset/worldview. Accordingly, there is an Agricultural Age mindset/worldview and an Industrial Age mindset/worldview.
Now if we take this mindset/worldview as a criterion, where do we draw the line between 'India' and 'Bharat'? Firstly, when it comes to mindset/worldview, the "urban" vs "rural" classification (30% vs 70%) is misleading. A more correct division would be metro vs non-metro. This reduces 'India' from 30% to 7%, and increases 'Bharat' from 70% to 93%. That is, considering mindset/worldview as a criterion, the 8 metros are on one side and on the other side are not just the 6,00,000 villages or the 5,000 towns but also the 400 "cities" (so called just because their population is more than 1 lakh). So we have:
Now in these metros, it is only the middle class that has an Industrial Age mindset/worldview, not the lower class or poor. So what we are left with is the metro middle class (MMC). What % is this group? The McKinsey study indicates that about 25% of our urban population is middle class today. That gives us an MMC of about 2%. So finally we have:
Thus the real India–Bharat divide is 2%–98%. If you are reading this, you almost certainly belong to the metro middle class (MMC). That means you represent only 2% of India!
Note:
This is a popular theory. Then the question arises: Exactly how much of the country is "India" and how much is "Bharat"?
The answer depends on exactly what criterion you use to divide the two:
| India | Bharat | ||
| 1. Industrial – Agricultural | Employment (Industry + Services vs Agriculture) | ||
| 2. Urban – Rural | Location (Cities + Towns vs Villages) | ||
| 3. Rich – Poor | Income (Middle Class vs Lower Class + Poor) |
*My estimate for 2010.
Thus we can identify different 'India's and 'Bharat's.
Now these categories (industrial-urban-modern and agricultural-rural-traditional) do not merely represent differences in occupation, location and income/lifestyle. They represent something much bigger. They represent two different ages in the history of man: the Agricultural Age and the Industrial Age.
Now historical Ages differ from one another materially, no doubt. For example, they differ in food, clothing, shelter, tools, etc. But they also differ from one another "mentally" – that is, in mindset or worldview. By mindset/worldview, I mean the sum total of a human being's tastes, interests, opinions, attitudes, outlook, values, norms, knowledge, awareness and beliefs. Each Age has its own mindset/worldview. Accordingly, there is an Agricultural Age mindset/worldview and an Industrial Age mindset/worldview.
Now if we take this mindset/worldview as a criterion, where do we draw the line between 'India' and 'Bharat'? Firstly, when it comes to mindset/worldview, the "urban" vs "rural" classification (30% vs 70%) is misleading. A more correct division would be metro vs non-metro. This reduces 'India' from 30% to 7%, and increases 'Bharat' from 70% to 93%. That is, considering mindset/worldview as a criterion, the 8 metros are on one side and on the other side are not just the 6,00,000 villages or the 5,000 towns but also the 400 "cities" (so called just because their population is more than 1 lakh). So we have:
| Divide | Parameter | India | Bharat |
| 4. Metro – Non-metro | Location (Metros vs Cities + Towns + Villages) | 7% | 93% |
Now in these metros, it is only the middle class that has an Industrial Age mindset/worldview, not the lower class or poor. So what we are left with is the metro middle class (MMC). What % is this group? The McKinsey study indicates that about 25% of our urban population is middle class today. That gives us an MMC of about 2%. So finally we have:
| Divide | Parameter | India | Bharat |
| 5. Mindset / Worldview | Income + Location (Middle Class and Metro vs Lower Class, Poor + Cities, Towns, Villages) | 2% | 98% |
Thus the real India–Bharat divide is 2%–98%. If you are reading this, you almost certainly belong to the metro middle class (MMC). That means you represent only 2% of India!
Note:
- I have used the names "India" and "Bharat" merely because they are the most popular terms used to denote this divide. The more correct terms are Agricultural Age India/Bharat and Industrial Age India/Bharat (quite a mouthful). For me, India and Bharat are one and the same.
- I am NOT saying that "India" (Industrial Age India/Bharat) is better/superior/preferable/more desirable than "Bharat" (Agricultural Age India/Bharat). I am merely noting the difference between the two.
- I am NOT saying that the Industrial Age mindset/worldview is better/superior/preferable/more desirable than the Agricultural Age mindset/worldview. I am merely saying they are different from each other.
01 April 2010
India's Ranking/Position in the World Economy
Question: What is India's ranking/position in the world economy?
Answer: #12
Source: World Bank (2008 data)
Answer: #12
| Rank | Country | GDP ($ tr) |
| 1 | America | 14.20 |
| 2 | Japan | 4.91 |
| 3 | China | 4.33 |
| 4 | Germany | 3.65 |
| 5 | France | 2.85 |
| 6 | Britain | 2.65 |
| 7 | Italy | 2.29 |
| 8 | Brazil | 1.61 |
| 9 | Russia | 1.61 |
| 10 | Spain | 1.60 |
| 11 | Canada | 1.40 |
| 12 | India | 1.22 |
Source: World Bank (2008 data)
17 March 2010
Max Weber: The Iron Cage of Capitalism
Max Weber on the iron cage of capitalism in "The Protestant Ethic and the Spirit of Capitalism" (1905):
The Puritan wanted to work in a calling; we are forced to do so. For when asceticism was carried out of monastic cells into everyday life, and began to dominate worldly morality, it did its part in building the tremendous cosmos of the modern economic order. This order is now bound to the technical and economic conditions of machine production which today determine the lives of all the individuals who are born into this mechanism, not only those directly concerned with economic acquisition, with irresistible force. Perhaps it will so determine them until the last ton of fossilised coal is burnt. In Baxter's view the care for external goods should only lie on the shoulders of the "saint like a light cloak, which can be thrown aside at any moment". But fate decreed that the cloak should become an iron cage.
Since asceticism undertook to remodel the world and to work out its ideals in the world, material goods have gained an increasing and finally an inexorable power over the lives of men as at no previous period in history. Today the spirit of religious asceticism – whether finally, who knows? – has escaped from the cage. But victorious capitalism, since it rests on mechanical foundations, needs its support no longer. The rosy blush of its laughing heir, the Enlightenment, seems also to be irretrievably fading, and the idea of duty in one's calling prowls about in our lives like the ghost of dead religious beliefs. Where the fulfillment of the calling cannot directly be related to the highest spiritual and cultural values, or when, on the other hand, it need not be felt simply as economic compulsion, the individual generally abandons the attempt to justify it at all. In the field of its highest development, in the United States, the pursuit of wealth, stripped of its religious and ethical meaning, tends to become associated with purely mundane passions, which often actually give it the character of sport.
No one knows who will live in this cage in the future, or whether at the end of this tremendous development entirely new prophets will arise, or there will be a great rebirth of old ideas and ideals, or, if neither, mechanised petrification, embellished with a sort of convulsive self-importance. For of the last stage of this cultural development, it might well be truly said: "Specialists without spirit, sensualists without heart; this nullity imagines that it has attained a level of civilisation never before achieved."
The Puritan wanted to work in a calling; we are forced to do so. For when asceticism was carried out of monastic cells into everyday life, and began to dominate worldly morality, it did its part in building the tremendous cosmos of the modern economic order. This order is now bound to the technical and economic conditions of machine production which today determine the lives of all the individuals who are born into this mechanism, not only those directly concerned with economic acquisition, with irresistible force. Perhaps it will so determine them until the last ton of fossilised coal is burnt. In Baxter's view the care for external goods should only lie on the shoulders of the "saint like a light cloak, which can be thrown aside at any moment". But fate decreed that the cloak should become an iron cage.
Since asceticism undertook to remodel the world and to work out its ideals in the world, material goods have gained an increasing and finally an inexorable power over the lives of men as at no previous period in history. Today the spirit of religious asceticism – whether finally, who knows? – has escaped from the cage. But victorious capitalism, since it rests on mechanical foundations, needs its support no longer. The rosy blush of its laughing heir, the Enlightenment, seems also to be irretrievably fading, and the idea of duty in one's calling prowls about in our lives like the ghost of dead religious beliefs. Where the fulfillment of the calling cannot directly be related to the highest spiritual and cultural values, or when, on the other hand, it need not be felt simply as economic compulsion, the individual generally abandons the attempt to justify it at all. In the field of its highest development, in the United States, the pursuit of wealth, stripped of its religious and ethical meaning, tends to become associated with purely mundane passions, which often actually give it the character of sport.
No one knows who will live in this cage in the future, or whether at the end of this tremendous development entirely new prophets will arise, or there will be a great rebirth of old ideas and ideals, or, if neither, mechanised petrification, embellished with a sort of convulsive self-importance. For of the last stage of this cultural development, it might well be truly said: "Specialists without spirit, sensualists without heart; this nullity imagines that it has attained a level of civilisation never before achieved."
16 March 2010
Ugadi: The Indian/Hindu New Year
Today is Chaitra Shuddha Pratipada – the first day of the year in the Indian/Hindu calendar. The festival is celebrated as Ugadi (yugAdi) in Karnataka and Andhra Pradesh, and as Gudi Padwa (guDhI pADvA) in Maharashtra. This is
- the 5112nd year of the Kali Yuga.
- the 1932nd year of the Shalivahana Era.
- the year "Vikruti" (Samvatsara).
08 March 2010
The Three Periods in India's History
Based on the economic stages of history, we can divide India's history into the following three periods:
Industrial Age = Modern Age
| 1. 3000 BC – 1947 AD | Agricultural Age |
| 2. 1947 – 1991 | Semi-Industrial Age |
| 3. 1991 – | Industrial Age |
Industrial Age = Modern Age
02 March 2010
India 1991: Economic Reforms, Liberalisation, Capitalism
When the Industrial Revolution (1775–1850) happened, India was under British rule (1757–1947). The British did not bother to industrialise India. Nor did they allow Indians to industrialise on their own. As a result, India could not industrialise, and was stuck in the Agricultural Age. In 1947, India finally overthrew the British and became independent. Now she was free to industrialise/modernise and enter the Industrial Age.
There were two industrial systems: capitalism and socialism. In capitalism, industries are owned by individuals and enterprises. In socialism, industries are owned by the government. Jawaharlal Nehru, India's first Prime Minister (1947–1964), chose socialism. With socialism, India's economy grew at about 3% per year. In other words, India industrialised/modernised at the rate of 3% per year. This went on for 40 years. Nehru's daughter Indira Gandhi (1966–1984) and grandson Rajiv Gandhi (1984–1991) continued with socialism.
Then, in 1991, India became bankrupt. Things could not go on as before. Something had to change. P V Narasimha Rao, the then Prime Minister, did the unthinkable. He changed India's industrial system from socialism to capitalism. He dumped socialism and adopted capitalism. As a result, India's economy started growing at 6% per year – double the earlier rate. Later it started growing at 9% per year – triple the earlier rate. That is, after adopting capitalism in 1991, India's rate of industrialisation/modernisation has now tripled. India is now industrialising/modernising thrice as fast as she was doing during the period 1947–1991.
That is what is happening today. And that is the significance of 1991. People call it "economic reforms" or "liberalisation". In fact, the switch from socialism to capitalism was nothing short of a revolution*. As a milestone in modern India's history, 1991 is second in importance only to 1947.
*China had carried out its own revolution in 1978, in a much more decisive manner, with much more spectacular results.
There were two industrial systems: capitalism and socialism. In capitalism, industries are owned by individuals and enterprises. In socialism, industries are owned by the government. Jawaharlal Nehru, India's first Prime Minister (1947–1964), chose socialism. With socialism, India's economy grew at about 3% per year. In other words, India industrialised/modernised at the rate of 3% per year. This went on for 40 years. Nehru's daughter Indira Gandhi (1966–1984) and grandson Rajiv Gandhi (1984–1991) continued with socialism.
Then, in 1991, India became bankrupt. Things could not go on as before. Something had to change. P V Narasimha Rao, the then Prime Minister, did the unthinkable. He changed India's industrial system from socialism to capitalism. He dumped socialism and adopted capitalism. As a result, India's economy started growing at 6% per year – double the earlier rate. Later it started growing at 9% per year – triple the earlier rate. That is, after adopting capitalism in 1991, India's rate of industrialisation/modernisation has now tripled. India is now industrialising/modernising thrice as fast as she was doing during the period 1947–1991.
That is what is happening today. And that is the significance of 1991. People call it "economic reforms" or "liberalisation". In fact, the switch from socialism to capitalism was nothing short of a revolution*. As a milestone in modern India's history, 1991 is second in importance only to 1947.
*China had carried out its own revolution in 1978, in a much more decisive manner, with much more spectacular results.
21 February 2010
India, Modernity, Washing Machines and Women
The NCAER's study on the Indian middle class has some interesting data on the ownership of consumer durables in India:
Now colour TVs, refrigerators and washing machines cost about the same. But the ownership of washing machines is about half that of colour TVs and refrigerators. It is comparable to the ownership of scooters and motorcycles, which cost about 5 times as much.
So the 'deficit' in the ownership of washing machines (compared to colour TVs and refrigerators) is about 7% of the population. This translates to about 1.5 crore families. That is, 15 million families can afford a washing machine, but haven't bought one.
What does this mean? It means 15 million Indian women wash clothes by hand – even though they don't have to. It means 15 million Indian women spend half their day washing clothes, from morning to afternoon, everyday – even though they don't have to.
What does this say about modernity in India?
| Consumer Durable | Ownership |
| Colour TV | 14.6% |
| Refrigerator | 13.4% |
| Scooter | 7.9% |
| Washing machine | 7.2% |
| Motorcycle | 7.1% |
| Car/Jeep | 0.3% |
Now colour TVs, refrigerators and washing machines cost about the same. But the ownership of washing machines is about half that of colour TVs and refrigerators. It is comparable to the ownership of scooters and motorcycles, which cost about 5 times as much.
So the 'deficit' in the ownership of washing machines (compared to colour TVs and refrigerators) is about 7% of the population. This translates to about 1.5 crore families. That is, 15 million families can afford a washing machine, but haven't bought one.
What does this mean? It means 15 million Indian women wash clothes by hand – even though they don't have to. It means 15 million Indian women spend half their day washing clothes, from morning to afternoon, everyday – even though they don't have to.
What does this say about modernity in India?
06 February 2010
Degree of Industrialisation: India and Other Countries
How do we measure to what extent a country is industrialised? There is no economic indicator called "degree of industrialisation". A rough substitute would be the percentage of the population that is employed in the industry and services sectors (as against agriculture). Taking this as a measure, here are some countries and their "degree of industrialisation":
Data from CIA's "The World Factbook".
| Country | |
| India | |
| China | |
| America | |
| Britain | |
| Germany | |
| France | |
| Japan | |
| Russia | |
| Brazil | |
| Indonesia |
Data from CIA's "The World Factbook".
05 January 2010
India's Major/Largest Cities
India has 8 cities with more than 50 lakh people:
These are India's major/largest cities. These 8 cities account for 50% of India's urban population.
*2010 estimates.
| Rank | City | Population* |
| 1 | Bombay | 2.2 crore |
| 2 | Delhi | 1.9 crore |
| 3 | Calcutta | 1.6 crore |
| 4 | Madras | 74 lakh |
| 5 | Bangalore | 66 lakh |
| 6 | Hyderabad | 64 lakh |
| 7 | Poona | 55 lakh |
| 8 | Ahmedabad | 54 lakh |
These are India's major/largest cities. These 8 cities account for 50% of India's urban population.
*2010 estimates.
03 January 2010
The Size of India's Middle Class
Question: How big is India's middle class?
Answer: 5% (Yes, only five percent)
2001: NCAER
2005: McKinsey
McKinsey also makes forecasts for the relative sizes of the different income classes for the years 2015 and 2025:
So McKinsey's picture is roughly like this:
Answer: 5% (Yes, only five percent)
2001: NCAER
| Income Class | Monthly Family Income* | % of Total Population |
| Poor | < Rs 7,500 | |
| Lower Class | Rs 7,500 – Rs 17,000 | |
| Middle Class | Rs 17,000 – Rs 85,000 | |
| Rich | > Rs 85,000 |
2005: McKinsey
| Income Class | Monthly Family Income* | % of Total Population |
| Poor | < Rs 7,500 | |
| Lower Class | Rs 7,500 – Rs 17,000 | |
| Middle Class | Rs 17,000 – Rs 42,000 | |
| Upper Class | Rs 42,000 – Rs 85,000 | |
| Rich | > Rs 85,000 |
McKinsey also makes forecasts for the relative sizes of the different income classes for the years 2015 and 2025:
| Income Class | 2015 | 2025 |
| Poor | 35% | 22% |
| Lower Class | 43% | 36% |
| Middle Class | 19% | 32% |
| Upper Class | 1% | 9% |
| Rich | 1% | 2% |
So McKinsey's picture is roughly like this:
| Year | Poor | ||
| 2005 | 55% | ||
| 2015 | 35% | ||
| 2025 | 20% |
- Middle class will increase from 5% to 40%.
- Poverty will go down from 55% to 20%.
- Lower class will hover around 40%.
31 December 2009
Vishnuvardhan: Best/Top Movies
Vishnuvardhan, Kannada movie actor, passed away yesterday. He was 59.
He acted in 200 films in a career spanning 36 years, from Vamsha Vriksha (1972) to Apta Rakshaka (2008).
I am not an authority on VV's movies. Based on my limited viewing, these are his best/top movies and most memorable performances:
1. Bhootayyana Maga Ayyu (1974)
Gorur Ramaswami Iyengar's novel comes to the big screen. Lokesh is the zamindar Ayyu, but VV as the fiery villager Gulla steals the show.
2. Bandhana (1984)
A doctor (VV), his colleague (Suhasini) and her jealous husband (Jai Jagadish) make up the triangle in this hit movie of the 1980s.
3. Malaya Maruta (1986)
A poor boy becomes a famous classical singer, with the blessings of his deceased guru. An excellent score by Vijaybhaskar makes this a treat for music lovers.
4. Suprabhata (1988)
VV falls in love with a deaf-mute girl who turns out to be a rape victim. A sensitive love story, with a fine performance from Suhasini.
5. Muttina Haara (1990)
The story of a soldier: 1948 Pakistan war - injured - falls in love - marries - 1962 China war - captured - tortured - meets a hero's end. Moving, inspiring, patriotic.
6. Nishkarsha (1993)
A bunch of terrorists take control of a building and hold some civilians hostage. Enter the Anti Terrorist Squad and Major VV. Kannada cinema's first Hollywood-style action movie.
He acted in 200 films in a career spanning 36 years, from Vamsha Vriksha (1972) to Apta Rakshaka (2008).
I am not an authority on VV's movies. Based on my limited viewing, these are his best/top movies and most memorable performances:
1. Bhootayyana Maga Ayyu (1974)
Gorur Ramaswami Iyengar's novel comes to the big screen. Lokesh is the zamindar Ayyu, but VV as the fiery villager Gulla steals the show.
2. Bandhana (1984)
A doctor (VV), his colleague (Suhasini) and her jealous husband (Jai Jagadish) make up the triangle in this hit movie of the 1980s.
3. Malaya Maruta (1986)
A poor boy becomes a famous classical singer, with the blessings of his deceased guru. An excellent score by Vijaybhaskar makes this a treat for music lovers.
4. Suprabhata (1988)
VV falls in love with a deaf-mute girl who turns out to be a rape victim. A sensitive love story, with a fine performance from Suhasini.
5. Muttina Haara (1990)
The story of a soldier: 1948 Pakistan war - injured - falls in love - marries - 1962 China war - captured - tortured - meets a hero's end. Moving, inspiring, patriotic.
6. Nishkarsha (1993)
A bunch of terrorists take control of a building and hold some civilians hostage. Enter the Anti Terrorist Squad and Major VV. Kannada cinema's first Hollywood-style action movie.
29 December 2009
India: Cities, Towns, Villages
Here is a snapshot look at India's cities, towns and villages:
Cities are usually district capitals, while towns are usually taluk capitals.
*Approximate
| City | |||
| Town | |||
| Village |
Cities are usually district capitals, while towns are usually taluk capitals.
*Approximate
24 December 2009
Christian Missionaries in India
Here is an example of the activities of Christian missionaries in India.
23 December 2009
Alvin Toffler on the Modern World/Age
Alvin Toffler on the modern world/age in "The Third Wave" (1980):
Until now the human race has undergone two great waves of change, each one largely obliterating earlier cultures or civilisations and replacing them with ways of life inconceivable to those who came before. The First Wave of change – the agricultural revolution – took thousands of years to play itself out. The Second Wave – the rise of industrial civilisation – took a mere three hundred years.
(First chapter)
Some historians may take issue with the way this book divides civilisation into only three parts: a First Wave agricultural phase, a Second Wave industrial phase, and a Third Wave phase now beginning.
(Introduction)
A new civilisation is emerging in our lives, and blind men everywhere are trying to suppress it.
(First line of the book)
Until now the human race has undergone two great waves of change, each one largely obliterating earlier cultures or civilisations and replacing them with ways of life inconceivable to those who came before. The First Wave of change – the agricultural revolution – took thousands of years to play itself out. The Second Wave – the rise of industrial civilisation – took a mere three hundred years.
(First chapter)
Some historians may take issue with the way this book divides civilisation into only three parts: a First Wave agricultural phase, a Second Wave industrial phase, and a Third Wave phase now beginning.
(Introduction)
A new civilisation is emerging in our lives, and blind men everywhere are trying to suppress it.
(First line of the book)
22 December 2009
A Short Economic History of Modern India
Swaminathan Aiyar, in a brilliant article*, gives us a short economic history of modern India:
At last week's annual meeting of the World Bank and IMF, many speakers spoke of the need for governments to reduce controls and trade barriers and let entrepreneurs get on with the job. They also stressed the vital roles that governments did indeed need to perform: ensuring law and order, the enforcement of contracts, honest governance and the creation of basic infrastructure.
Dissenters will say this sounds suspiciously close to the formula of the British Raj. The result then was not prosperity but poverty and stagnation. Now that we are in our 50th anniversary year of independence, many people will ask: why did liberal economics prove an economic failure during the British Raj? And why should it be any more successful today?
Before the Industrial Revolution, India was the second biggest industrial power in the world (next only to China). When the British Raj ended in 1947, India was a poverty-stricken nation with minimal modern industry. Nationalist leaders like Jawaharlal Nehru blamed this decline on colonial exploitation. The British did not see it that way. They thought they had brought peace to a subcontinent that was earlier riven with constant war; had created political stability and rule of law where there had been neither; created an efficient and impartial civil service and judiciary; built one of the biggest railway networks in the world.
However, GDP growth in the first half of this century was barely 1% per year, just keeping pace with population growth. Food availability per capita declined. Indian artisans, who once dominated world industry, were decimated by the Industrial Revolution. And while in Europe the Industrial Revolution replaced handloom weavers with local textile mills, in India it replaced them largely with Lancashire textiles. Jawaharlal Nehru complained that this de-industrialisation halved India's urban population and forced once-prosperous industrial workers back to the land. He felt free trade was a British ploy to force its manufactures on India and prevent Indian industry from growing.
So after independence Nehru went for rapid industrialisation through import substitution and by taxing agriculture through adverse terms of trade. He felt agriculture lacked the potential to reduce poverty or increase employment and could only be a holding ground for surplus labour till industry provided additional jobs.
During the British Raj, India ran a persistent trade surplus. The ratio of India's exports to imports was 172.5% in 1840-69, 148% in 1870-1912, 133.4% in 1913-38. This persistent trade surplus, averaging 1.5% of GDP, was used to transfer wealth to Britain. So Nehru viewed export-orientation as a tool of colonial exploitation. He switched the emphasis from exports to import substitution. He viewed technical education as vital for industrialisation, but viewed primary education as less important and so did less for literacy than East Asian countries.
This strategy was initially hailed as a success. GDP growth rose to 3.5% per year, almost thrice the rate achieved in the last 50 years of the British Raj. Planning was high fashion at the time and Indian planning was at the very forefront of development economics. Only much later did East Asian countries demonstrate that 3.5% growth was slow, not fast, and that a different strategy – emphasising exports, agriculture and primary education and entrepreneurship – could produce much better results.
Nehru's biggest mistake related to agriculture. He failed to see, as Korea and Taiwan did, that with enough public investment and new technology, agriculture could be a dynamic sector that raised the living standards of the masses. The industrial sector was much too small to create much income or employment and so taxing agriculture to finance industrialisation did not reduce poverty in India during Nehru's rule or the Garibi Hatao phase of Indira Gandhi. It started declining only from the mid-1970s onwards, when the spread of the green revolution finally lowered real food prices and raised real rural wages. Higher rural incomes provided a firmer basis for rapid industrial growth than Nehru's earlier import substitution.
Nehru failed to see that the really big blow India suffered under the British was not in industry but agriculture. Ashok Desai estimates that grain yields in 1947 were one third of those in Mughal times. In the first half of this century, food production rose by only 0.5% per year, half the rate of population growth. This, not de-industrialisation, was the main cause of poverty in a country which was 85% rural.
The whole de-industrialisation thesis was flawed. Certainly the artisans of old suffered, but under the Raj a new breed of modern Indian entrepreneurs came up. The share of industry in India's GDP rose from 3.8 percent in 1913 to 7.5% by 1947 and the share of manufactures in India's exports rose from 22.4% in 1913 to 30% in the late 1930s. Modern industry employed fewer persons than the old artisan industry, but its output was more competitive.
Nehru's anti-export bias was mistaken. The British may have used trade exploitatively, but it had enormous possibilities with the end of empire. The East Asians saw this, but were regarded with contempt by Nehru as US puppets. They had the last laugh.
Let us return to where we started. Why did liberal economics and good governance not lead to prosperity during the British Raj? The main reasons are:
*"De-industrialisation Thesis Was Flawed", The Times of India (29 September 1996)
At last week's annual meeting of the World Bank and IMF, many speakers spoke of the need for governments to reduce controls and trade barriers and let entrepreneurs get on with the job. They also stressed the vital roles that governments did indeed need to perform: ensuring law and order, the enforcement of contracts, honest governance and the creation of basic infrastructure.
Dissenters will say this sounds suspiciously close to the formula of the British Raj. The result then was not prosperity but poverty and stagnation. Now that we are in our 50th anniversary year of independence, many people will ask: why did liberal economics prove an economic failure during the British Raj? And why should it be any more successful today?
Before the Industrial Revolution, India was the second biggest industrial power in the world (next only to China). When the British Raj ended in 1947, India was a poverty-stricken nation with minimal modern industry. Nationalist leaders like Jawaharlal Nehru blamed this decline on colonial exploitation. The British did not see it that way. They thought they had brought peace to a subcontinent that was earlier riven with constant war; had created political stability and rule of law where there had been neither; created an efficient and impartial civil service and judiciary; built one of the biggest railway networks in the world.
However, GDP growth in the first half of this century was barely 1% per year, just keeping pace with population growth. Food availability per capita declined. Indian artisans, who once dominated world industry, were decimated by the Industrial Revolution. And while in Europe the Industrial Revolution replaced handloom weavers with local textile mills, in India it replaced them largely with Lancashire textiles. Jawaharlal Nehru complained that this de-industrialisation halved India's urban population and forced once-prosperous industrial workers back to the land. He felt free trade was a British ploy to force its manufactures on India and prevent Indian industry from growing.
So after independence Nehru went for rapid industrialisation through import substitution and by taxing agriculture through adverse terms of trade. He felt agriculture lacked the potential to reduce poverty or increase employment and could only be a holding ground for surplus labour till industry provided additional jobs.
During the British Raj, India ran a persistent trade surplus. The ratio of India's exports to imports was 172.5% in 1840-69, 148% in 1870-1912, 133.4% in 1913-38. This persistent trade surplus, averaging 1.5% of GDP, was used to transfer wealth to Britain. So Nehru viewed export-orientation as a tool of colonial exploitation. He switched the emphasis from exports to import substitution. He viewed technical education as vital for industrialisation, but viewed primary education as less important and so did less for literacy than East Asian countries.
This strategy was initially hailed as a success. GDP growth rose to 3.5% per year, almost thrice the rate achieved in the last 50 years of the British Raj. Planning was high fashion at the time and Indian planning was at the very forefront of development economics. Only much later did East Asian countries demonstrate that 3.5% growth was slow, not fast, and that a different strategy – emphasising exports, agriculture and primary education and entrepreneurship – could produce much better results.
Nehru's biggest mistake related to agriculture. He failed to see, as Korea and Taiwan did, that with enough public investment and new technology, agriculture could be a dynamic sector that raised the living standards of the masses. The industrial sector was much too small to create much income or employment and so taxing agriculture to finance industrialisation did not reduce poverty in India during Nehru's rule or the Garibi Hatao phase of Indira Gandhi. It started declining only from the mid-1970s onwards, when the spread of the green revolution finally lowered real food prices and raised real rural wages. Higher rural incomes provided a firmer basis for rapid industrial growth than Nehru's earlier import substitution.
Nehru failed to see that the really big blow India suffered under the British was not in industry but agriculture. Ashok Desai estimates that grain yields in 1947 were one third of those in Mughal times. In the first half of this century, food production rose by only 0.5% per year, half the rate of population growth. This, not de-industrialisation, was the main cause of poverty in a country which was 85% rural.
The whole de-industrialisation thesis was flawed. Certainly the artisans of old suffered, but under the Raj a new breed of modern Indian entrepreneurs came up. The share of industry in India's GDP rose from 3.8 percent in 1913 to 7.5% by 1947 and the share of manufactures in India's exports rose from 22.4% in 1913 to 30% in the late 1930s. Modern industry employed fewer persons than the old artisan industry, but its output was more competitive.
Nehru's anti-export bias was mistaken. The British may have used trade exploitatively, but it had enormous possibilities with the end of empire. The East Asians saw this, but were regarded with contempt by Nehru as US puppets. They had the last laugh.
Let us return to where we started. Why did liberal economics and good governance not lead to prosperity during the British Raj? The main reasons are:
- The British sadly neglected agriculture and rural infrastructure, far more so than industry.
- The British Raj was racist, favouring British entrepreneurs and goods over Indian ones. This racism was probably important that the alleged lack of tariff encouragement to Indian manufacturers.
- The British sadly neglected primary education and literacy. By contrast, East Asian countries had high levels of literacy by 1950.
- The British used India's trade surpluses to remit capital to the UK instead of investing it in India's growth.
*"De-industrialisation Thesis Was Flawed", The Times of India (29 September 1996)
27 November 2009
Technology, Economy, Politics, Culture
Some points about the T-E-P-C concept mentioned in the previous post:
1. The four basic aspects of society are technology, economy, politics and culture. There are other aspects of society, but these are the most important.
2. These four aspects are not independent. They are inter-dependent. That is, each of the four aspects influences the other three.
3. The four aspects are not equal in the degree to which they influence the other aspects. Some aspects are "stronger" than others.
Example: Both X and Y influence each other. But X influences Y more than Y influences X. Then X is said to be stronger than Y.
4. The four aspects can be arranged in the ascending order of their strength (or importance/influence):
a) Technology
b) Economy
c) Politics
d) Culture
(Thus we have the T-E-P-C abbreviation)
5. The higher order aspects (culture and politics) influence or determine the lower order aspects (economy and technology) – normally.
6. But sometimes there can be a major change in a lower order aspect. Then the direction of influence is reversed. That is, it becomes possible for the lower order aspects to influence or determine the higher order aspects .
(The "fundamental change" discussed in the previous post)
7. Such a major change in the lower order aspects has happened only twice in human history:
a) The invention of agriculture (c10,000 BC)
b) The Industrial Revolution (c1800 AD)
8. On both these occasions, the initial changes were in technology and the economy. But they led to changes in politics and culture as well.
9. T-E-P-C is different for:
a) Different civilisations (ex: India vs China vs America)
b) Different Ages (ex: Agricultural Age vs Industrial Age)
10. Between two civilisations (belonging to the same Age), the differences between each of the four aspects are not of the same magnitude. The four aspects can be arranged in the ascending order of the magnitude of their difference between two civilisations (belonging to the same Age):
a) Technology
b) Economy
c) Politics
d) Culture
(Again we have the T-E-P-C abbreviation)
11. That is, between two civilisations (belonging to the same Age), differences in technology are nil to slight, in economy and politics are slight to significant, and in culture are significant to maximum.
Definitions:
1. Technology = how man makes and does things.
2. Economy = how man produces goods (and services), and distributes them.
3. Politics = how man makes collective decisions.
4. Culture = how man lives, i.e., his way of life – his customs, habits, beliefs, practices, values, norms, systems and institutions.
1. The four basic aspects of society are technology, economy, politics and culture. There are other aspects of society, but these are the most important.
2. These four aspects are not independent. They are inter-dependent. That is, each of the four aspects influences the other three.
3. The four aspects are not equal in the degree to which they influence the other aspects. Some aspects are "stronger" than others.
Example: Both X and Y influence each other. But X influences Y more than Y influences X. Then X is said to be stronger than Y.
4. The four aspects can be arranged in the ascending order of their strength (or importance/influence):
a) Technology
b) Economy
c) Politics
d) Culture
(Thus we have the T-E-P-C abbreviation)
5. The higher order aspects (culture and politics) influence or determine the lower order aspects (economy and technology) – normally.
6. But sometimes there can be a major change in a lower order aspect. Then the direction of influence is reversed. That is, it becomes possible for the lower order aspects to influence or determine the higher order aspects .
(The "fundamental change" discussed in the previous post)
7. Such a major change in the lower order aspects has happened only twice in human history:
a) The invention of agriculture (c10,000 BC)
b) The Industrial Revolution (c1800 AD)
8. On both these occasions, the initial changes were in technology and the economy. But they led to changes in politics and culture as well.
9. T-E-P-C is different for:
a) Different civilisations (ex: India vs China vs America)
b) Different Ages (ex: Agricultural Age vs Industrial Age)
10. Between two civilisations (belonging to the same Age), the differences between each of the four aspects are not of the same magnitude. The four aspects can be arranged in the ascending order of the magnitude of their difference between two civilisations (belonging to the same Age):
a) Technology
b) Economy
c) Politics
d) Culture
(Again we have the T-E-P-C abbreviation)
11. That is, between two civilisations (belonging to the same Age), differences in technology are nil to slight, in economy and politics are slight to significant, and in culture are significant to maximum.
Definitions:
1. Technology = how man makes and does things.
2. Economy = how man produces goods (and services), and distributes them.
3. Politics = how man makes collective decisions.
4. Culture = how man lives, i.e., his way of life – his customs, habits, beliefs, practices, values, norms, systems and institutions.
26 November 2009
Modernity: The Modern or Industrial Age
To understand modernity correctly, we must understand the implications of the Industrial Revolution (1775-1850):
1. The Industrial Revolution, which took place in 18th century England, gave birth to machines and factories (modern industry).
2. The Industrial Revolution was not merely a technological, or economic, change. It brought about political, and cultural, changes as well. Indeed, it changed society itself.
3. The Industrial Revolution was a fundamental change in how man produces goods, or satisfies his wants. The last time such a fundamental change occurred was when agriculture was invented – around 10,000 BC (12,000 years ago).
4. Whenever there is such a fundamental change in how man produces goods, it is not just technology or economy that changes, but also politics and culture. Indeed, society itself changes.
5. The Industrial Revolution was such a change. (That's why it's called "Revolution")
6. The Industrial Revolution marked the end of the Agricultural Age, which lasted for 12,000 years, and the beginning of a new Age in the history of mankind: the Industrial Age.
7. Each Age is defined by its own technology, economy, politics and culture (T-E-P-C) – in the broadest sense. Just as the Agricultural Age had a certain T-E-P-C, similarly the Industrial Age also has its own T-E-P-C.
8. The Industrial Revolution may have occurred first in the West, but it was not a Western development. It was a human development. That is, it concerns the whole of mankind, not just Europe.
9. Just as agriculture began first in Sumeria (around 10,000 BC) and then spread to other ancient civilisations (Egypt, India, China), similarly, modern industry began first in Europe and then spread/is spreading to other civilisations (first to America and Japan, now to China and India).
10. In modern industry, production is more. That is, wealth created is more. So an industrial society has more wealth than a non-industrialised society. Wealth means economic strength. Thus an industrialised society is stronger than a non-industrialised society. Therefore we have to industrialise.
Notes:
1. The term 'modern industry' is used to distinguish it from the earlier 'cottage industry' where manufacturing was done by artisans and craftsmen in their homes and workshops, using simple tools.
6. The terms 'Agricultural' and 'Industrial' are used in a relative sense – to denote which sector dominates the economy (in value of total output) and society (in population employed).
8. Due to certain geographical and historical factors, the Industrial Revolution happened to take place first in Europe, that's all.
1. The Industrial Revolution, which took place in 18th century England, gave birth to machines and factories (modern industry).
2. The Industrial Revolution was not merely a technological, or economic, change. It brought about political, and cultural, changes as well. Indeed, it changed society itself.
3. The Industrial Revolution was a fundamental change in how man produces goods, or satisfies his wants. The last time such a fundamental change occurred was when agriculture was invented – around 10,000 BC (12,000 years ago).
4. Whenever there is such a fundamental change in how man produces goods, it is not just technology or economy that changes, but also politics and culture. Indeed, society itself changes.
5. The Industrial Revolution was such a change. (That's why it's called "Revolution")
6. The Industrial Revolution marked the end of the Agricultural Age, which lasted for 12,000 years, and the beginning of a new Age in the history of mankind: the Industrial Age.
7. Each Age is defined by its own technology, economy, politics and culture (T-E-P-C) – in the broadest sense. Just as the Agricultural Age had a certain T-E-P-C, similarly the Industrial Age also has its own T-E-P-C.
8. The Industrial Revolution may have occurred first in the West, but it was not a Western development. It was a human development. That is, it concerns the whole of mankind, not just Europe.
9. Just as agriculture began first in Sumeria (around 10,000 BC) and then spread to other ancient civilisations (Egypt, India, China), similarly, modern industry began first in Europe and then spread/is spreading to other civilisations (first to America and Japan, now to China and India).
10. In modern industry, production is more. That is, wealth created is more. So an industrial society has more wealth than a non-industrialised society. Wealth means economic strength. Thus an industrialised society is stronger than a non-industrialised society. Therefore we have to industrialise.
Notes:
1. The term 'modern industry' is used to distinguish it from the earlier 'cottage industry' where manufacturing was done by artisans and craftsmen in their homes and workshops, using simple tools.
6. The terms 'Agricultural' and 'Industrial' are used in a relative sense – to denote which sector dominates the economy (in value of total output) and society (in population employed).
8. Due to certain geographical and historical factors, the Industrial Revolution happened to take place first in Europe, that's all.
25 November 2009
Turgot: The Idea of Economic Stages of History
Anne Robert Jacques Turgot (1727-1781) was a French administrator and economist. He served as comptroller general of France from 1774 to 1776. In his work Plan of Two Discourses on Universal History (1750), he divided the history of the world into three (economic) stages:
1. Hunting
2. Pastoralism
3. Agriculture
(Remember - this was before the Industrial Revolution)
Later, Adam Smith made the idea famous in his Wealth of Nations (1776). He divided human history into four stages:
1. Age of hunters
2. Age of shepherds
3. Age of agriculture
4. Age of commerce
(This was also just before the Industrial Revolution)
In our own time, we divide history into these three stages:
1. Hunting-gathering (primitive)
2. Agricultural (traditional)
3. Industrial (modern)
Today this view of history is commonplace. The credit for originating the idea belongs to A R J Turgot.
Some thinkers like Alain Touraine, Daniel Bell and Alvin Toffler divide history (implicitly or explicitly) into these stages:
1. Agricultural
2. Industrial
3. Post-Industrial
Even they are children walking in Turgot's footsteps.
1. Hunting
2. Pastoralism
3. Agriculture
(Remember - this was before the Industrial Revolution)
Later, Adam Smith made the idea famous in his Wealth of Nations (1776). He divided human history into four stages:
1. Age of hunters
2. Age of shepherds
3. Age of agriculture
4. Age of commerce
(This was also just before the Industrial Revolution)
In our own time, we divide history into these three stages:
1. Hunting-gathering (primitive)
2. Agricultural (traditional)
3. Industrial (modern)
Today this view of history is commonplace. The credit for originating the idea belongs to A R J Turgot.
Some thinkers like Alain Touraine, Daniel Bell and Alvin Toffler divide history (implicitly or explicitly) into these stages:
1. Agricultural
2. Industrial
3. Post-Industrial
Even they are children walking in Turgot's footsteps.
24 November 2009
The Three Stages in the History of the World
Based on how man satisfies his needs, that is, based on how man produces goods, the history of the world can be divided into the following three stages:
1. Hunting-gathering (began 2,00,000 years ago)
2. Agricultural (began 12,000 years ago)
3. Industrial (began 200 years ago)
These stages can also be called, respectively:
1. Primitive
2. Traditional
3. Modern
The primitive stage of hunting-gathering corresponds to pre-history, while the traditional/agricultural and modern/industrial stages together correspond to history.
History is usually classified into three periods: ancient, medieval and modern. The periodisation, in the case of Europe and India, is like this:
So the 'Modern' period is different for different civilisations*. However, when speaking of the history of mankind as a whole, the Modern Age is the Industrial Age (and 'modernity' refers to industrial society). When did this Modern Age begin?
The Industrial Age began with the Industrial Revolution, which occurred from 1775 to 1850. However, most of the major developments happened between 1775 and 1800. Therefore, 1800 can be taken as a convenient year for the birth of the modern world.
Btw, the Ancient and Medieval periods together come under the Agricultural/ Traditional stage.
*The word 'modern' means 'present' or 'contemporary' (from Latin 'modo' = 'just now').
1. Hunting-gathering (began 2,00,000 years ago)
2. Agricultural (began 12,000 years ago)
3. Industrial (began 200 years ago)
These stages can also be called, respectively:
1. Primitive
2. Traditional
3. Modern
The primitive stage of hunting-gathering corresponds to pre-history, while the traditional/agricultural and modern/industrial stages together correspond to history.
History is usually classified into three periods: ancient, medieval and modern. The periodisation, in the case of Europe and India, is like this:
| Period | ||
| Ancient | Classical age of Greece and Rome (–500 AD) | The Hindu period (–712 AD) |
| Medieval | Christian age of the Catholic Church (500–1500 AD) | The Islamic period (712–1707 AD) |
| Modern | Secular/humanistic age after the Renaissance (1500 AD– ) | The European period (1707 AD– ) |
So the 'Modern' period is different for different civilisations*. However, when speaking of the history of mankind as a whole, the Modern Age is the Industrial Age (and 'modernity' refers to industrial society). When did this Modern Age begin?
The Industrial Age began with the Industrial Revolution, which occurred from 1775 to 1850. However, most of the major developments happened between 1775 and 1800. Therefore, 1800 can be taken as a convenient year for the birth of the modern world.
Btw, the Ancient and Medieval periods together come under the Agricultural/ Traditional stage.
*The word 'modern' means 'present' or 'contemporary' (from Latin 'modo' = 'just now').
23 November 2009
The Best Books about the Modern World
The best books to understand today's world:
Society, Technology, Economy
1. The Age of Revolution: 1789-1848 – Eric Hobsbawm (1962)*
2. The Third Wave – Alvin Toffler (1980)
Culture, Religion
1. The Clash of Civilisations – Samuel Huntington (1996)
2. The Lexus and the Olive Tree – Thomas Friedman (1999)
Politics
1. The End of History – Francis Fukuyama (1992)
2. The Future of Freedom – Fareed Zakaria (2003)
Based on my limited reading, these are the definitive books about the modern world.
*I have not yet read this book.
Society, Technology, Economy
1. The Age of Revolution: 1789-1848 – Eric Hobsbawm (1962)*
2. The Third Wave – Alvin Toffler (1980)
Culture, Religion
1. The Clash of Civilisations – Samuel Huntington (1996)
2. The Lexus and the Olive Tree – Thomas Friedman (1999)
Politics
1. The End of History – Francis Fukuyama (1992)
2. The Future of Freedom – Fareed Zakaria (2003)
Based on my limited reading, these are the definitive books about the modern world.
*I have not yet read this book.
14 November 2009
M Vishweshwarayya: Life and Achievements
M Vishweshwarayya (1860-1962) is the architect of modern Karnataka. A look at his life and achievements:
Early Life and Education (1860-1883)
Early Life and Education (1860-1883)
- 15 September 1860 - Born in Muddenahalli village near Chikkaballapur, Karnataka.
- The initial 'M' stands for Mokshagundam - his family's native village in Andhra Pradesh.
- Second son of Srinivas Shastri, a Sanskrit scholar, and Venkatalakshmamma.
- Attended primary school at Muddenahalli, middle school at Chikkaballapur and high school at Bangalore.
- In Bangalore, supported himself by giving tuitions to children. Studied at night under streetlights. (No, this is not a cliche)
- Lost his father at the age of 15. First rank in the matriculation exam in Mysore state.
- Did his BA at Central College, Bangalore. First rank in Madras University.
- Studied Civil Engineering at Science College, Poona. (Today's College of Engineering Pune - COEP)
- 1884 - Joined the PWD of Bombay Presidency as Assistant Engineer.
- Built automatic floodgates for Khadakvasla reservoir, near Poona.
- Built a system to supply drinking water at Aden, Egypt.
- 1906 - Awarded the "Kaiser-i-Hind" by the British government.
- 1908 - Resigned from the PWD. In spite of his many achievements he was not made Chief Engineer. The post was reserved for whites/Englishmen.
- At the request of the Nizam of Hyderabad, built dams for Moosi and Iyasi rivers near Hyderabad, to protect the city from floods.
- 1909 - Became Chief Engineer of Mysore state, then ruled by Krishnaraja Wodeyar IV (1902-40).
- 1913 - Founded the Mysore Bank (today's State Bank of Mysore). The British did not want India to industrialise. Indian entrepreneurs could not get capital to set up industries. So MV founded the Mysore Bank.
- 1916 - Founded the Mysore University. Mysore's higher education broke free of the British-run Madras University.
- 1916 - Founded the Government Soap Factory at Mysore. Today the Karnataka Soaps and Detergents Ltd (KSDL) - maker of the world-famous Mysore Sandal Soap.
- 1917 - Founded the Government Engineering College at Bangalore. Today the University Vishweshwarayya College of Engineering (UVCE).
- Gave great importance to women's education. 1917 - Upgraded the Maharani's College at Mysore to a degree college.
- Revived the Mysore Iron and Steel Works (MISW) at Bhadravati. Today the Visvesvaraya Iron and Steel Plant (VISL).
- Built the Krishnaraja Sagar dam (1911-31) on the Kaveri river near Mysore.
- Started the Sharavati Hydro-Electric Project at Jog Falls near Shimoga.
- Built the Bangalore-Mysore railroad.
- Built the Bhatkal harbour.
- Started the civil service exams in Mysore state.
- 1915 - Awarded the Knight Commander of the Indian Empire (KCIE) by the British government.
- 1940 - Persuaded industrialist Walchand Hirachand to found the Hindustan Aeronautics Ltd (HAL) at Bangalore.
- 1943 - Founded the Sri Jayachamarajendra Polytechnic Institute with his earnings from MISW.
- Consulting engineer for Karachi, Bombay, Nashik, Poona, Belgaum, Dharwad, Indore and Gwalior - mainly for water supply projects.
- 1955 - Awarded the Bharat Ratna by the Indian government.
- 14 April 1962 - Died at the age of 101.
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