OPE-L review of Harriss-White's India Working

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Thu Dec 18 2003 - 15:26:59 EST

Vol:20 Iss:09 URL: http://www.flonnet.com/fl2009/stories/20030509000107100.htm

India's informal economy


India Working: Essays on Society and Economy by Barbara
Harriss-White; Cambridge University Press, Cambridge, 2003; pages
316, Rs.950.

BARBARA HARRISS-WHITE has been producing remarkable work for two
decades in the varied field of development issues. Much of this work
has drawn on insights from her fieldwork in northern Tamil Nadu and
she uses these insights to illuminate important questions of wide
relevance. In this valuable and provocative book she engages with a
range of debates, drawing the reader into an intense argument right
through the book's 300 pages. I found myself disagreeing with several
of her arguments, but I learnt a great deal from each one of them.

The book is not an easy read. It is densely written and its heavily
footnoted text draws on a vast and diverse array of academic
research. However, it repays close attention from the reader.
Harriss-White tries to do something that few development economists
try to do - she attempts to set the economic data on India within its
socio-political contexts. This is a task that mainstream economists
do not even think of attempting since they are not willing to
acknowledge that economic reality is very different from the abstract
models they prefer to study. For this reason, Harriss-White's book
deserves applause and wide readership.

The book's focus is on India's informal economy, what Harriss-White
calls "the economy of the India of the 88 per cent". This term is
used since more than 74 per cent of the population is rural and
another 14 per cent lives in towns with a population below 200,000.
The remaining 12 per cent lives in metropolitan cities (page 1). The
informal economy generates 90.3 per cent of all livelihoods in India
and 60 per cent of the country's net domestic product (page 5). Her
study of the informal economy leads us, as well, into the country's
black economy, with which the informal economy overlaps at several

Harriss-White's central argument in the book is that "the social
structures of accumulation" in India create "the matrix through which
accumulation and distribution take place" (page 13). She argues: "In
the India of the 88 per cent, it is clear that a range of non-State
social structures, and the ideas and cultural practices attached to
them, are even more crucial for accumulation than they are in
industrial societies. Six, in particular, are explored in this book:
the structure of the workforce, social classes, gender, religion,
caste and space" (page 15). Thus her book has ambitious goals - she
tells us that it seeks "to describe and analyse the economy of
India's 88 per cent" by examining the socio-cultural and political
elements of "the social structures of accumulation". It also hopes
"to contribute, however modestly, to the analysis of contemporary
capitalism" in India (page 15).

Harriss-White draws primarily on data on small-town India, arguing
that this is where one can best examine "the non-corporate (economy)
in which 88 per cent of Indians live and work" (page 239). To
delineate the micro-economies of small-town India where the
"intermediate classes", who are her main focus, reside, she draws on
her own field research from northern Tamil Nadu.

Harriss-White's research on the local economy, seen within its
cultural matrices, is insightful. This "field economics", focussed on
the business classes in their daily dealings with each other, with
their workforces and with the local state, reveals the ways in which
the local economy is very tightly - though "informally" - controlled
and regulated by these mercantile business classes. Her detailed
documentation of the business methods of these "intermediate
classes", shows the ways, mainly hidden but sometimes brazen, by
which the state's control is neutralised and rendered harmless,
competition is eliminated, and new entrants kept out of the market.

Harriss-White argues that throughout India small-town and rural
economies are dominated by these intermediate classes, which are
constituted by "a loose coalition of the small-scale capitalist
class, agrarian and local agribusiness elites, and local state
officials" (page 241). The interests of the intermediate classes are
significantly different from those of corporate capital. Harris-White
argues that the former "directly appropriate the returns to rents of
all kinds and are able to do this through oligopolistic collusion in
markets and through structures of regulation that remain hardly
touched by liberalisation. They connive with local officials to
secure the protection of rents and of the state resources they
capture. They seek state subsidies, but more importantly they secure
beneficial concessions by influencing policy in its
implementation.... Their evasion of tax is the equivalent of a major
subsidy to [their] mercantile accumulation, while depriving the state
of capacity and legitimacy" (page 241).

Harriss-White argues that it is these intermediate classes that are,
in fact, the dominant segment in India's economy. She defends this
thesis by arguing that the informal economy, in which the
intermediate classes are hegemonic, "accounts for two-thirds of Gross
Domestic Product (GDP)" and that "at least half of the informal
economy is `black'" (page 246). This is why she characterises the
informal economy as "anti-social" - it is regulated by the
intermediate classes and ruled by their narrow values based on

Harriss-White further argues that the size of the intermediate
classes is growing and a "new wave of small capital, based on primary
accumulation, is reinforcing and expanding the informal and black
economy, intensifying the casualisation of labour and transferring
the risks of unstable livelihoods to the workforce" (page 246). The
severely exploited labour force is radically subordinated and "labour
is regulated through the social structures of gender, religion and
caste, and of local markets" (page 241). Her study of the local
hegemony of the intermediate classes leads her to conclude: "Fraud
and tax evasion are part and parcel of Indian capitalism.... The bulk
of the economy is beyond the direct control of the State... .
Countering this literally anti-social economy calls for the emergence
of a more robust and active culture of collective accountability"
(page 247).

It is impossible to do justice to the richness and complexity of this
book in a short review. Among the many interesting issues that it
raises are arguments relating to the impact of India's religious
pluralism on the structure of its economy and the question of whether
capitalism in India is proving to be the "social solvent" that it was
widely expected to be (page 245). A major contribution of this book
is its discussion of the debates on "industrial clusters" (or
"industrial districts") in India. Here Harriss-White argues that the
overly positive view of "industrial clusters" and "flexible
specialisation" in India, that currently prevails, is quite mistaken.
Her arguments here are well taken. She points out that industrial
clusters are a common, not exceptional, form of development in India.
Low technology is usual in these industrial districts. Contrary to
what cluster theory enthusiasts, whose numbers are growing, claim,
most industrial clusters do not have the "developmentally positive
potential" (page 208) shown by highly exceptional clusters like
Bangalore and Tirupur. In fact, most industrial clusters in India
excel in the "super-exploitation" of workers, especially women and
children (page 222).

Importantly - and this is a fact that cluster enthusiasts often
choose to ignore in studied silence - a lot of field research shows
that entrepreneurs demonstrate "a complete disregard for anything
other than private profit". This, coupled with "the inadequate and
negligent enforcement of effluent standards" by the co-opted state,
has resulted in vast tracts of agricultural land being rendered unfit
for agricultural use, while large sections of local populations have
been deprived of their sources of drinking water, because these are
now toxic (page 237). In Tamil Nadu such disasters have occurred in
the Palar Valley (due to tanneries) and in Tirupur (due to the
hosiery industry). The state has remained indifferent or slow and
extremely reluctant to act against the entrepreneurial class (page
237), with whom it is in close collusion. The result is that the
burden of these "negative externalities", created by highly
profitable (and much admired) industries, falls, crushingly, on those
least able to bear this environmental disaster - the virtually
disenfranchised rural poor.

The book's postscript turns to the contemporary political context.
Entitled, "Postscript: proto-fascist politics and the economy", it
examines "the key elements of fascism" and "the class origins of
fascism" in order "to evaluate the prospects of fascist currents in
India" (page 253). While this is helpful, even more interesting is
Harriss-White's argument, made at several points in her main text,
that, in the final analysis, it is likely to be economic reasons that
lie behind Hindu communal attacks on Muslims, even though these are
camouflaged and covered up in political rhetoric about "religion" and
"Hindutva". This argument is extremely persuasive, especially given
the fact that anecdotal evidence so far suggests that this was the
motivation behind the Bharatiya Janata Party's supervision of the
shocking pogroms against Muslims in Gujarat in 2002.

Harriss-White's book, with its pragmatic, undeterred attention to the
unlovely realities of the structuring forces behind the economy, is a
wake-up call. It documents the strength of the powerful political and
institutional forces that rule the economy today, in unholy alliances
that have institutionalised corruption and fraud, making them an
accepted, everyday part of the economy. These hegemonic forces have
created almost overwhelming obstacles to the possibility of
"democratically determined accountability" (page 247).

But, though overwhelming, these forces and their "anti-social
economy" can and must be challenged. To do so requires, as a first
step, a dispassionate recognition of the reach and nature of the ugly
political and economic realities that encircle us. In this task this
book is a useful guide.

 Copyright 2000 - 2003 The Hindu

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