Lost Glory: India's Capitalism Story

Description

Lost Glory: India's Capitalism Story deconstructs India's industrialization story, challenging contemporary ideas about her economy. Based on careful and detailed empirical analyses of India's industrialization, for a period of almost seven decades, the book provides deeply-nuanced depictions of the history of political economy, that have affected India's industrialization over the course of a century. These dimensions of India's economic history have never before been collated and presented. The presentation takes readers on a definitive evidence-based survey of India's industrial landscape. It includes a detailed historical description of the intellectual origins of India's modern industrialization, anchored in a privileged view of economic policy making. Grounded in deep historical and political analyses, that account for the variations, continuities, and changes in institutional contingencies, the facts derived on India's long-term economic performance are used to put the record straight. The findings of the book will transform debate, and set the agenda for thoughtfully assessing what course the Indian economy needs to follow. Cover Lost Glory: India’s Capitalism Story Copyright Dedication Preface Contents List of Figures List of Tables List of Boxes List of Appendices 1: Prologue INDIA’S WORLD POSITION Utopia Dystopia CHANGE The Beginning of the End Altered Political Economy Impact of the Industrial Revolution RECOVERY IN INDIA’S POSITION Reversal of Fortunes Comparative Contemporary Growth Patterns THE GROWTH AND IMPORTANCE OF CAPITAL Growth Matters Industry and Growth Capital and Its Utilization Political Economy of Efficiency Efficiency and Economic Growth INDIA’S CAPITALISM EXPERIMENTS Three Capitalism Experiments The Key Issue with which the Book Deals BOOK STRUCTURE Framing and Context Chapters 2: Capital and Capitalism INTRODUCTION CAPITAL Capital as Funds Capital as Structure Capital as Capabilities Human and Organizational Capital ORGANIZING CONTEMPORARY CAPITALISM Capitalism Processes Social Systems of Production STATE ROLE Institutions and Adaptive Efficiency Institutions and Economic Action Government and Institutions Government Tasks State Involvement and Industrialization State Capital Accumulation NATIONAL INDUSTRIAL DEVELOPMENT Projection and Enhancement National Innovation Systems INDUSTRIAL STRATEGY Three Facets Institutional Facet Innovation Facet Involvement Facet Implementation Control INDUSTRIAL STRATEGY IN INDIA Necessity for State Involvement Strategy and Outcomes 3: History and Background HISTORICAL BACKGROUND Growth in Colonial India What the 1940s Brought The 1940s Bombay Plan INDUSTRIAL POLICY IN THE FIRST PART OF THE TWENTIETH CENTURY Political Background The Indian Industrial and Fiscal Commissions Industrial Survey Results NATIONALISM AND INDUSTRIALIZATION IN THE EARLY TWENTIETH CENTURY M. Visvesvaraya’s Fundamental Contributions National Planning Committee of the Indian National Congress THE BOMBAY PLAN AND GOVERNMENT AND BUSINESS SYMBIOSIS Bombay Plan Impact and Economic Nationalism A Possible Motivation for Collusion Ardeshir Dalal’s Role and Economic Nationalism Translating the Bombay Plan into Policy Recognizing the Molecular Economy CREATING NATIONAL INDUSTRIAL CAPABILITIES Preamble Knowledge Sector Foundations GETTING ON WITH IT The Economic Situation after Independence Birth of the Planning Commission 4: India’s Growth Story INTRODUCTION THE CHANGING COMPOSITION OF INDIA’S ECONOMY Relative Shares of Sectors ECONOMY COMPOSITION BY DECADE Sectoral Change Implications ASSESSING INDIA’S GROWTH PATTERNS FROM TWO GENERATIONS AGO Preamble Growth in the 1950s Growth in the 1960s A Public Choice Explanation of 1960s Growth ASSESSING INDIA’S LATER HISTORICAL GROWTH PATTERNS The Political Psychology of 1970s Growth Policy Transition from the 1970s to the 1980s Mrs. Gandhi Ditches Socialism and Embraces Capitalism INSTITUTIONAL DISRUPTION AND GROWTH FROM THE 1990S ONWARD Background to Growth in the 1990s Troubled Times and the Solution Sought Institutional Disruption and its Outcomes DEINSTITUTIONALIZATION AND DEINDUSTRIALIZATION IN THE 2010s The Political Economy of Industrial Decline in the 2010s Nervous Breakdown in Indian Industry Industrial Uncertainty in the 2010s Deinstitutionalization and Deindustrialization 5: India’s Mixed Economy Experiments THE HISTORICAL STRUCTURE OF INDIA’S ECONOMY Prehistory Ancient History Recent History Current History STATE INVOLVEMENT IN THE MAURYAN AGE AS PRECURSOR TO MODERNITY Ancient Historical Institutions Ancient Historical State Enterprises HISTORY OF STATE INVOLVEMENT IN MODERN INDIA Background in the Late Nineteenth Century First World War Impact and Constitutional Reforms STATE INVOLVEMENT BEFORE INDEPENDENCE Political Background Prior to Independence Other Mimetic Influences STATE INVOLVEMENT AFTER INDEPENDENCE Pandit Nehru’s Role The Need for State Sector Involvement Summing Up OUTCOMES OF STATE INVOLVEMENT IN INDIA’S ECONOMY Numbers of State Sector Enterprises Departmental Enterprises Administrative Coordination PUBLIC OPINION AND REACTIONS TO STATE INVOLVEMENT Cost and Benefit of State Sector Enterprises Nature of State Sector Problems State Sector Productive Efficiency Conundrums Intrusive Bureaucratic and Regulatory Intervention STATE INVOLVEMENT IN A MANAGEMENT EXPERIMENT Background to the Indian Management Pool Creating the Indian Management Pool Status and Outcomes from the Indian Management Pool Reprise of the Indian Management Pool PRIVATIZATION AND CURRENT STATE INVOLVEMENT STATUS Theory of Private Ownership Privatization in India THE MOLECULAR ECONOMY Background to Molecular Economy Policy Edward Penderel Moon and Indian Economic Policy The Community Development Program in India Policies for the Molecular Industrial Economy 6: Productive Efficiency Analysis over Six Decades EFFICIENCY MATTERS PRODUCTIVE EFFICIENCY CALCULATIONS Background Data and Computations EMPLOYMENT PATTERNS OVER SIX DECADES Aggregate Employment Picture Employment Levels by Decade CAPITAL INPUTS AND OUTPUT PATTERNS OVER SIX DECADES Aggregate Input Investments Input Investment Levels by Decade Aggregate Output Outcomes Output Levels by Decade INDIA’S TECHNOLOGY PROFILE OVER SIX DECADES Technology Importance Capital Deepening Measures Fixed Capital per Employee Capital Deepening Measure Trends Working Capital per Employee Capital Deepening Measure Trends A Composite Capital Deepening Measure Capital Deepening Conclusion PRODUCTIVITY PATTERNS OVER SIX DECADES A Value Added Outcome Measure A Composite Efficiency Index Productive Efficiency Growth Patterns Productive Efficiency Growth Patterns by Decade ASSESSING PRODUCTIVE EFFICIENCY DYNAMICS Indian Industry’s Efficiency Debacle Explaining Indian Industry’s Efficiency Debacle ASSESSING LATENT ATTITUDES TOWARDS INDUSTRIAL RESOURCES Latent Attitudes to Inputs Temporal Patterns of Latent Attitudes Measures Patterns of Latent Attitudes Measures by Specific Decades Changing Latent Attitudes from Liquid Capital to Human Capital Attention WASTE AND INEFFICIENCY ESTIMATES Measuring Waste in Input Consumption Aggregate Inputs Consumption Waste Inputs Waste Proportion by Decades Waste Patterns and Sources of Industrial Incompetence Inputs Waste Quantities over Time Inputs Waste Quantities by Decades CONCLUDING REMARKS Employment Outcomes Capital Deepening Outcomes Efficiency Outcomes 7: Productive Efficiency and Growth THE EFFICIENCY–GROWTH RELATIONSHIP Preamble Productive Efficiency and Growth Base Findings Productive Efficiency and Growth Detailed Findings Productive Efficiency and Per-Capita Growth Detailed Findings INEFFICIENCY AND LOST GROWTH The Impact of Inefficiency on Growth Loss over Six Decades Inefficiency and Lost Growth Before and After Liberalization The Impact of Inefficiency on Lost Per-Capita Growth EARLY CONCLUSIONS ON INDIA’S INDUSTRIALIZATION EXPERIMENT Industrialization Matters Lost Glory DETERMINANTS OF PRODUCTIVE EFFICIENCY Framework Institutional Reforms Technology Diffusion International Orientation Economic Atmosphere Monetary Policy Economic Outlay Structure of Economy WHAT IMPACTS PRODUCTIVE EFFICIENCY? Competition Benefits for the Indian Economy Organizational Failure and Negative Technology Outcomes for Indian Industry Other Factors Impacting Industrial Efficiency 8: Organization Type and Productive Efficiency CALCULATIONS FRAMEWORK Data Efficiency Computation INDUSTRIAL STUCTURE PATTERNS OVER FOUR DECADES Introduction Aggregate Factory Numbers Aggregate Output Shares and Relative Sector Importance Aggregate Relative Sector Importance and Scale of Output INPUTS CONSUMPTION PATTERNS OVER FOUR DECADES Aggregate Fixed Capital Investments Aggregate Working Capital Investments Aggregate Employment Summary ORGANIZATION TYPE AND INDUSTRIAL PERFORMANCE A Value Added Measure of Performance over Four Decades Productive Efficiency Index by Organization Type over Four Decades Summary and Implications WASTE AND INEFFICIENCY ESTIMATES BY ORGANIZATION TYPE Inputs Consumption Waste Patterns by Organization Type Inputs Consumption Waste Amount by Organization Type Summary MARUTI SUZUKI CASE STUDY Background Modern Automobile Production Systems Maruti Production Systems Maruti People Approach Outcomes CONCLUDING REMARKS The Molecular Dimension of India’s Industry The Private Dimension of India’s Industry The State Dimension of India’s Industry 9: Final Thoughts INDIA’S CHALLENGE EVIDENCE FROM CAPITALISM EXPERIMENTS Industrialization Experiments and Lost National Income Fall and Rise of Productive Efficiency Liberalization and Aftermath Efficiency and Achievable Growth Competition Policy and Efficiency Monetary Policy and Efficiency Technology and Efficiency A Malaise Afflicting Indian Business OUTCOMES OF INDUSTRIAL ORGANIZATION EXPERIMENTS Structure of Capitalism Comparative Efficiency of Organization Types Comparative Management of Inputs Veneration Not Vituperation The State and National Image Projection AN ADMINISTRATIVE REFORM Democratization of Industrial Administration Resurrecting the Indian Management Service Idea A STRUCTURAL REFORM A Future Administrative Pathway A Public Investment Management Model A BEHAVIORAL REFORM The Contours of Economic Nationalism History of Economic Nationalism Future of Economic Nationalism APPENDIX I: Capital and Capitalism Concepts Complementary Perspectives Weightless Capital Capitalism Models Three Models Components of the Models Elements in Models Agency and Autonomy Production Organization APPENDIX II: Intentions for Investment in Industrial Units from 1991 to 2015 APPENDIX III: Data Envelopment Analysis APPENDIX IV: Annual Survey of Industries APPENDIX V: Constructing Capital Series APPENDIX VI: Efficiency Scores from 1950–51 to 2013–14 References Index