In the 1960s and the 1970s, Marxist historiography followed Karl Marx’s Capital to define capitalism with reference to production relations, especially, extensive use of wage labor (Desai
relations being a concept too tied to specific production sites to be quite portable. One alternative explored was to designate Europe capitalist and non-Europe as non-capitalist. “The capitalist penetration,” Robert Brenner writes, “of the ‘third world’ through trade and capital investment not only has failed to carry with it capitalist economic development, but has erected positive barriers to such development,” allowing “old modes of production” to dig in deeper inside India and China (Brenner 1977: 26; see also n. 2). Such an approach would not find favor today. For India, the scholarly enterprise saw its fullest flourish in an exchange known as the “mode of production” debate, which deliberated on the appropriate characterization of the Indian agrarian system as it had evolved from the colonial times (essays in Patnaik 1990). This debate died without heir. It proved unsure in dealing with business history, engaged in semantics more than real history, and found diversity within the Indian experience difficult to handle.
Interestingly, in his remarks on India, which had first appeared in journalistic writings before Capital was published, Marx followed a different way of understanding economic systems, one that emphasized the state rather more than capital–labor relations. Possibly, the emphasis arose from Marx’s famous belief that private property did not exist in Asia (Thavaraj 1984). Be that as it may, it was this conception that led to the most influential attempt to read the history of capitalism in India.
In 1969 an article was published on the subject (Habib 1969). The article belonged in a line of interpretive scholarship that employed the concept of capitalism in order to draw broad distinctions between the economic trajectories of the West and the East. Earlier characterizations of Asian business had made use of notions such as peddling (J. C. Van Leur), pre-capitalist (J. H. Boeke), and non-materialistic (Max Weber). The Habib article followed a different tradition, that of James Mill and Karl Marx, to focus on the relationship between the Mughal imperial state and the big merchants and bankers of the imperial realm. The argument was that a centralized and revenue-hungry state had left the capitalists too dependent on a “parasitical” system of “direct agrarian exploitation by a small ruling class” (Habib 1969: 77). Apparently, the Indian capitalists were left with little outlet for their enterprise outside the cities of courtly power.
Despite the differences between models of capitalism, the shared assumption until the 1980s was that India represented an impure version of capitalism, the purest manifestation of which was to be found in the modern West. Interpretations of world history and Indian history implicitly retained the assumption. Frequent use was made of “class” in order to define the distinctiveness of the Indian experience, especially the distinct pattern of economic change experienced during British colonial rule, at a time when world economic inequality reached unprecedented levels (Bagchi 1982).
A major challenge to the assumption came in the 1980s and 1990s from research on maritime trade along the littoral. This scholarship revealed quite another order of enterprise in early modern India, one that did not fit the picture of a politically dependent world of business. In this realm, the states were smaller and weaker than those inland, the capital-owning merchants did different kinds of business from those located in the cities of the empire, and the relationship between the state and the merchant was different too. Research on Indian Ocean trade showed not only how deeply European commercial success in Gujarat, Coromandel, and Bengal depended on the agency, accommodation, and partnership of Indian merchants and bankers, but also how little direct influence the land-based empires exercised on coastal entrepreneurship.1 Large swathes of the coast were ruled by states that remained at a remove from those that had formed inland, a circumstance that enabled the English East India Company to acquire port sites where it could function unmolested as landlord. Trade in the
Indian Ocean, and India’s strategic role as a transit point, were shown to be of great antiquity. The scholarship also showed that the decline of the Mughal empire might have made the coastal entrepreneurs politically more ambitious than before, even drawing them closer to collaboration with the Europeans. In this way, the early modern commercialization was seen as preparatory to the start of a merchant-ruled empire in the eighteenth century.
On one point, the historiography of inland commerce and the historiography of coastal commerce were in agreement. Both considered that the “potentialities” of their preferred version of capitalism to lead to a full-blown industrial society had been limited.2 In Habib’s narrative, the promise was not fulfilled because the merchants were too dependent on the despotic state. Others have taken pains to replace the picture of dependent capitalists with one of free and institutionally advanced capitalists in the eighteenth century. Indian businesses in this reading were “sophisticated” (Perlin 1983: p. 69; Ray
1995: 455). But they lost their freedom to negotiate terms as European colonial rule consolidated in the region. Indian merchants became increasingly oriented to Europe and were coordinated by European capitalists.
In this way, these two stories, one about the business world of the Mughal empire ruling the Gangetic plains and another about the business world of the coasts, converged into one that we can call the story of capitalism interrupted. What lent this story relevance and purpose was the need that many Indianists felt to explain the failure of nineteenth-century India to become as capitalist as western Europe, leading to a historiography “dominated by forebodings of colonial conquest and decline” (Washbrook 2007).
Revisiting this grand narrative of decline and fall is not the aim of the present chapter. There are two reasons why that is not so. First, the decline and fall idea looks odd in the backdrop of a capitalistic resurgence that has occurred in south Asia in the more recent times. Surely the resurgence had owed something to colonial India’s trading heritage? The decline and fall story would suggest, implausibly, that it did not. Second, whether or not the prospect of capitalism was obstructed by colonial rule is a rhetorical question. We should, instead, use these scholarships to do real business history, by which I mean pay more attention to the empirical propositions they advance.
So far in the historiography of early modern India, the maritime and the interior have remained discrete worlds. The two form subjects of different specialisms, partly because the relevant archives are different, until late in the eighteenth century when the East India Company records begin to display considerable interest in the Gangetic plains. The two specialisms have been even engaged in a fierce debate over who is more right as to the cause of economic decline in the eighteenth century (Marshall 2003).
It is the argument of the chapter that these two orders of commercial enterprise, one based on land and the other ocean bound, do not represent alternative interpretations of history, but should be combined to construct the picture of a dichotomous business world. The dualism between the land and the sea predated the early modern times by centuries because it was primarily geographical in origin. But it was also a field of political action, because land-based powers wanted to control the sea, albeit with insufficient means, until a limited success in the endeavor was achieved in the 1600s. Thereafter, Indo-European trade added a new dimension to this politics by steadily empowering the seaboard militarily and politically.
much earlier times.3