The Indian Constitution outlaws caste-based discrimination, and it has largely disappeared in the cities. Yet as late as 2008 the relatives of a girl who received a love letter from a fifteen-year-old boy of a different caste threw the teenager in front of a train after giving him a public humiliation. Oddly enough, lasting traces of caste remain in politics, where castes act as interest groups. In 2008, Uttar Pradesh, the largest state in India, stunned the nation when it elected an untouchable woman as its head. Kumari Mayawati has put together a coalition that has attracted voters from all ranks of the Hindu caste system.37 A convenient organizing principle, caste-based politics promote patronage practices that undermine merit as a basis for promotion in both politics and economics.
Despite its democratic beginnings, in 1947 newly independent India went through a blood-soaked separation of its Hindu and Muslim populations. Great violence attended the exodus of the Muslim population from India to Pakistan and later to Bangladesh. Nor was the separation complete. India today has the third-largest Muslim population in the world, a frequent source of violent conflict, as the 2008 terrorist attack in Mumbai sadly showed. Because of China’s impressive economic development, some experts are jumping to the conclusion that authoritarianism and capitalism can live well together. They say that the firm hand of the Communist Party may have been essential for a stable transition from a command to a market economy, something unnecessary in India, where partisan politics disturb without destabilizing. Others rush to point out the superior environment democracies offer, though India’s politics are far from admirable. Of the 522 members of Parliament in 2008, 120 were facing criminal charges.
The powerful Congress Party, which has ruled India since independence, must now put together fragile coalitions to rule at all. Biting the bullet to execute urgently needed reforms gets harder and harder, for Indian legislative sessions are raucous, unruly affairs.38 A more interesting question perhaps is whether there are elements in capitalism, such as private decision making, easy communication through the market, promotion of innovation, and the indulging of consumer tastes, that create a tide pulling developing countries toward more participatory politics. Both Taiwan and South Korea went from authoritarian politics to democratic ones. Singapore is an excellent test of this proposition since its laws are severe and its economic progress is remarkable.
India’s Modernizer
The architect of India’s new prosperity is Manmohan Singh, who started steering the Indian economy in a new direction when he became finance minister in 1991. A Sikh, Singh took advantage of an acute financial crisis to dismantle the socialist elements in India’s economy. He privatized public companies, invited in foreign investments, and stimulated both imports and exports. Most significant, he got rid of the License Raj, an elaborate system of regulations whose red tape had been choking enterprise for decades. Put in place by Pandit Nehru in 1947, the License Raj instituted the Planning Commission that administered the economy through Soviet-style five-year plans. Singh became prime minister in 2004. Although an intellectual and moderate, he has built a power base in the working class, as distinguished from the jobless impoverished who still predominate in the countryside.
Most Americans became aware of India in the global market when they telephoned their computer companies for technical support and found themselves talking to someone with an English-accented, Indian-lilting voice. In the 1990s American companies seized the opportunity to outsource their customer services to India, where there was a huge, fairly well-educated, English-speaking, low-wage work force. American and British banks are outsourcing clerical work as well. Service outsourcing, as distinguished from moving factories to cheap-labor sites, started two decades ago, when New York City banks airmailed their daily transactions records to Ireland, where another group of well-educated, English-speaking, low-wage workers processed them for a quick return flight. As American firms send their “back office” work to India, so European companies are turning to Eastern European countries for their number crunching and bookkeeping. In a new development, India’s offshore specialists have begun hiring thousands of Americans to help them compete for higher-end work in technological services. Indians want to move up the white-collar ladder.
The importance of these call centers to India can be gleaned from the predominance of work in the service sector of the economy. While the actual number of farmers has declined steadily to 24 percent of the population, the percentage of those in service work has grown to 50 percent. By comparison, China has become the world’s factory with almost 50 percent of its workers in industry. Each country has found its comparative advantage in the world market. And their investment in higher education reflects this difference. Fewer than 1 percent of Chinese men and women have had any college education, compared with 3 percent of Indians, both extremely low numbers for countries that want to be world leaders.39 Both countries have suffered from a brain drain as some of their most talented young people seek better jobs abroad. India has produced legions of software engineers, many of whom have emigrated to the United States. With prosperity and progress evident back home, some of these people have returned to participate in the great national effort to build economies equal to their country’s distinguished histories. And they often bring new skills and fresh capital with them.
Two-thirds of India’s 1.1 billion people live in the countryside, though some of them, as in China, work in rural factories. A quarter of this population, some 215 million people, live in degrading poverty despite the enormous changes in Asian agriculture made in the 1970s and 1980s. Looked at a bit differently, 65 percent of Indians live on agriculture, representing less than 18 percent of the GDP. With independence, the rate of Indian population growth accelerated, along with that of much of the Third World. The British had invested little in agricultural improvements in India, even though their own agricultural sector performed marvelously. The disappearance of cholera, smallpox, and malaria in the 1960s extended lives in India before fertility rates began to drop, wiping out any economic gains of the 1950s. To meet this new Malthusian crisis of too many mouths for too few bowls of rice or loaves of bread, Western aid groups embarked on a crash course to avert famines.
Former New Deal Agricultural Secretary Henry Wallace persuaded the Rockefeller and Ford foundations to come to the rescue of hungry people, starting in Latin America. Once on board, the Rockefeller Foundation established the International Center for Maize and Wheat Improvement in Mexico and the International Rice Research Institute in the Philippines. There they drew upon the skill of geneticists to develop new strains of rice, wheat, and maize that would respond to new fertilizers and grow short, stout stalks to hold up heavier heads of grain. Norman Borlaug, like Wallace an Iowa farm boy, who knew a thing or two about raising wheat and corn, won a Nobel Prize for his modified strains of wheat and rice. Starting in 1963, Ford, Rockefeller, and the United States Agency for International Development carried these seeds to the southwestern wheat belt that extends from India’s Punjab district through to Turkey. Soon honored as a Green Revolution, these high-yield varieties doubled 1995 cereal production in Asia. Real per capita rural income doubled even though land under cultivation increased by only 4 percent. Diet improved, adding significantly to the extension of life expectancy.40
These advances in Third World agriculture were not without cost. Many farmers overused both water and fertilizers, adding to the degradation of the environment. Inequality in rural areas increased because many of the poorest farmers ignored the new seed and techniques for applying fertilizers. Larger harvests from the improvers sent food prices tumbling, so the poorest got poorer, as had happened during the Agricultural Revolution in England three centuries earlier. After a promising start, the advances of the Green Revolution began to stall in the 1990s. The governments quit financing new irrigation projects, failed to lend farmers money, and didn’t build the transportation links necessary to get harvests to city markets. It also pulled back on research.
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sp; Half the children in India today suffer from malnutrition, despite an economic growth rate moving into double digits. The need for public health and sanitation programs is crucial. Still in the much-touted state of Kerala on the southwestern tip of India, life expectancy and literacy match American rates. As a model Kerala is mixed. The leftist state government invests heavily in health and education—and it shows—but the scarcity of jobs sends almost two million of its young men and women abroad each year. From their adopted homes, these workers in Dubai and surrounding areas send back remittances that account for a quarter of Keraleans’ annual income. All remittances from Dubai returned to Pakistan, Uzbekistan, and Bangladesh in addition to India total sixty-five billion dollars a year!
Next to the United States, India has the world’s most acres under cultivation. Given its wide variation in soils and climates, India could well be a cornucopia of fruits and vegetables for its people and for the world.41 Yet much of this land is in semiarid areas, where water shortages hamper the introduction of high-yield seed and improved fertilizers. Others get too much water from seasonal flooding. Both India and China face future water shortages. India has been forced to import rice and grain, putting more pressure on world food prices. These imports stirred the government to raise the prices of the grains it bought from farmers as a way to encourage them to expand production. Even grimmer signs of distress in the countryside have been the hundred thousand desperate farmers who committed suicide in the last two decades. Prime Minister Singh has promised that the government will act to relieve rural misery.
Though it would seem that there are enough acres in India to accommodate both manufacturing and farming, in fact farmers and manufacturers clash bitterly and repeatedly over land usage. India’s automaker Tata drew up plans for a plant on the delta plains of the Ganges River, where the soil is so fertile that farmers get two rice crops a year along with growing garden vegetables, all easily transported to New Delhi by a new national highway. Such a location was ideal for Tata, but protesters succeeded in stopping the construction. The conflict highlighted the militancy of India’s farmers; it also signaled a fresh and strong move to develop manufacturing. India has differed from its Asian rivals and neighbors by concentrating first on its domestic market rather than going for exports, as had China, Taiwan, and South Korea. Now that is changing.
John Deere, LG Electronics, the Essar Group, Honda, Toyota, Nissan, Motorola, General Motors, and Whirlpool all have built multimillion-dollar plants in India to serve its many consumers as well as the vast export market. The government is predicting annual foreign investments to top thirty billion dollars. India’s new consumers have heated up its automobile market, now the fourth largest in Asia. Ford, General Motors, and Japan’s big three chalk up big sales each year. More than a third of the buyers are purchasing their first car. More than 90 percent spend less than fifteen thousand dollars for their vehicles, and India’s Tata Motors is determined to bring that cost down with a five-passenger vehicle priced at twenty-two hundred dollars! Another Indian automobile company, Reva, offers Indians a two-passenger hatchback that runs on electricity. The environmental and economic concerns of the twenty-first century have enhanced the prospects of Indian automobile makers who have been concentrating on cheap, energy-efficient cars. Reva plans to market its electric automobiles in Europe and has already acquired European Economic Community certification.42
India’s demographic dynamics make it competitive with China, where the one-child policy is shrinking the size of the next generation of workers. Not until 2030 will India nudge China out of first place in world population. Already its cohort of men and women, ages twenty to twenty-four, entering the job market in 2013, will be 116 million, compared with China’s 98 million. Half the Indian population is under twenty-five; 40 percent under eighteen. In 1950, 29 percent of the world population lived in cities; in 2008 the figure was 60 percent, with India in the vanguard. Singh has committed billions to refurbish sixty-three Indian cities. Plans call for luring the poor in from the depressing outskirts of urban areas with decent living. Hyderabad has completed its urban renewal, and Calcutta and Bangalore have entered the blueprint stage. What makes these ambitious programs possible has been the 8.8 percent growth rate India has sustained for several years. Should it persist—a tall order—its one-trillion-dollar economy will double by mid-2016!
A Young Cohort of Indian Consumers
India is pressing close to the United States in having the world’s top spenders; domestic consumption is 64 percent of Indian GDP, compared with 70 percent in the United States, 57 percent in Japan, 54 percent in Europe, and 38 percent in China. Retail lending now accounts for one-fourth of all credit extended by banks. Where China is a country of savers, India is one of spenders. In a nice folkloric touch to this contemporary phenomenon, banks hire drummers to serenade debtors who fall behind in their payments. They must be working overtime now, as India’s debtors find themselves caught in a credit squeeze. At the same time, Indians save, their rate moving from 28 to 35 percent last year. The conservative policies of Indian banks keep their spending in check. Their wisdom became apparent when the global financial center collapsed in the West in 2008. Comparing themselves with the West, Indian banking leaders stressed their restraint: few home equity loans, no securitized mortgage investments, no subprime mortgages. No Indian banks have failed or received government bailout funds, but even the strong can get pulled down when they’ve tightly embraced others less prudent.43
Maybe moviemaking and consumption go together, for India has achieved world recognition for its films, its industry familiarly called Bollywood. Sports too have been drawn into the capitalism catch basin. None is more popular in India than cricket, whose world headquarters moved from its old Lord’s Cricket Ground in London to Mumbai, no doubt the better to serve the multitudinous fans in India, Pakistan, and Sri Lanka. With a cohort of twenty-somethings gaining good incomes, Indians buy clothing, CD/DVD players, color TVs, air conditioners, and kitchen equipment at a fast clip. The new hyperrich are snapping up Chanel perfume, Piaget watches, Louis Vuitton bags, and Rossetti shoes, now available in their own stores.
The popularity of mobile phones has transformed retailing. As ardent spenders Indians want to get the best buy for the rupee and search the Internet for good prices. With such a promising market, the Finnish firm Nokia built a plant in India while the American firm Motorola, turned multinational, built the first global headquarters in India. In 1996 the Forbes billionaire list included three Indians; in 2006 there were twenty-three. They typically made their billions in telecommunications, wind energy, and a mix of information technology, synthetics, and textiles, along with oil and gas exploration and refining.
The biggest billionaire of all is Mukesh D. Ambani, whose father’s company, Reliance Industries, has a finger in every Indian economic pie. Ambani is more than the wealthiest man in India; he is also a secular prophet and a Bill Gates–like doer. He envisions eliminating India’s poverty within fifteen years and has suggested that Reliance build a new, more livable city across the harbor from his native Mumbai. The changing of the name of Bombay to Mumbai was a deliberate gesture to erase a lexical association with Britain. Ambani, whose family came from a merchant caste, exemplifies this spirit. Unlike the Brahmins of old who went to Oxford and adopted English tastes, Ambani prefers to speak his native tongue at home, loves the kind of Indian food that is sold on streetside carts, and relaxes with two or three Bollywood films a week.44 Offering an entrepreneurial speedup to the sluggish pace of social reform in India, Ambani embodies the spirit of the New India, its back firmly turned against its socialist past.
Mahatma Gandhi and Mao Zedong—Two Men Cast Long Shadows over China and India
Because capitalism impinges so closely upon attitudes, values, habits—the stuff of culture—it is worthwhile comparing China and India in yet one more way. Both countries found their venerable traditions challenged by a charismatic leader in the late 1940s. Pe
rhaps some of their responses to capitalism can be traced back to the impact of those two giants, Mahatma Gandhi and Mao Zedong. Gandhi headed the movement for India independence from Great Britain from 1913 to 1948, when a Hindu extremist assassinated him six months after India had reacquired its autonomy. Educated as a lawyer in London, Gandhi at twenty-four began a twenty-year stint in South Africa, which had a sizable Indian population in 1893. Outraged by the treatment of people of color there, Gandhi found his calling as an advocate for justice, a passion that landed him in prison on several occasions. He came to see civil disobedience and passive resistance as the best means for a suppressed people to build the solidarity and courage to overthrow their oppressors.
Gandhi dreamed of an India not only free of the British but liberated from the ugly clatter and soul-destroying exploitation of industrial societies like the one that the British had imposed. With ascetic habits, Gandhi inspired a powerful mix of love and admiration with a determination to prevail. His successor, Jawaharlal Nehru, succeeded in investing India’s modern constitution with guarantees for human rights that reflected Gandhi’s ideals. While the constitution recognized caste identities and the distinction between Hindus and Muslims, it corrected many unfair land laws and raised the status of women. Gandhi, who himself built on a long Indian tradition, stressed peaceful means of protest, a stance still lively in his country. He also bred a tolerance for India’s diversity reflected in its twenty some political parties competing for authority today.
Mao came to power in China as the victor in a defensive war against Japanese occupiers and a protracted civil struggle with the Chinese Nationalists. The internal conflict began in the late 1920s, when he was in his thirties and lasted until 1949 with the creation of the People’s Republic of China. Mao matured as a brilliant and ruthless general whose commitment to Communist principles dictated the course he followed when victorious. He masterminded a violent transformation of a traditional and, in some ways, very sick Chinese society. Once peace arrived, the Communist Party succeeded in eradicating prostitution, the exploitation of children, foot binding for women, and opium dens. Invested with totalitarian power, the party redistributed land and conducted a bloody suppression of “counterrevolutionaries.” Mao and his associates also put into place a party structure, answerable to him, built up from the lowliest village through levels of command leading up to Chairman Mao.
The relentless revolution: a history of capitalism Page 47
