De‐industrialization in India in the nineteenth century: Some theoretical implications

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Abstract
The ‘naive’ idea current among many of the older nationalists of the Third World regarding the de‐industrializing effect of western capitalism on their countries is confirmed by the analysis of occupational data relating to the State of Bihar in India. Similar evidence is also available for Egypt and China. If we shift from models of what can ideally happen under capitalism in its international aspects and look at what actually happened until, say, 1914, we find that it often had opposite effects on the advanced capitalist countries and their overseas offshoots, and on the colonial or semi‐colonial economies of the Third World in respect of industrial employment, investment in productive assets and distribution of income. Technological change even today often carries highly disruptive and inegalitarian consequences for Third World countries. In the light of such experience with market‐orientated growth, an alternative model is suggested in which development proceeds by localized economic activities, distributing incomes and opportunities equally and keeping out ‘backwash’ effects on other regions. One major task of the economist in the future will be to explore the inner logic of such a ‘paradigm’, suggest the means of implementing the model, and ferret out possible contradictions. The Chinese (and perhaps Vietnamese) experience may serve as an example or laboratory for such explorations.

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