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Civilisation,not institutions

Is there an Asiatic mode of capitalism that standard analysis misses?....

In certain phases of history,the sheer resilience shown by some economies cannot be seen purely through an economist’s prism. The science of economics then becomes totally inadequate in helping us understand big changes in societies as a result of the energies unleashed

by their economic agents. The Western world is still trying to understand what is it with the

2.3 billion people in India and China that makes them so resilient

that they can quickly shrug off

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the greatest recession since the

Great Depression.

Suddenly,the Westerner is trying to intuit as to what makes India and China relatively immune from global economic shocks. I deliberately use the word intuit because this phenomenon cannot be understood through any of the current frameworks of analysis about India and China. India was always viewed as too much of a chaotic,misgoverned democracy to be on a sustainable growth path. Most economists agreed that India had no stomach for further

reforms as there were too many competing interest groups — the self-seeking middle class; farmers; the rural poor; caste,religious and gender groups. Besides,the instruments of the state do not

adequately work in nearly a third of India’s districts,those that are Naxalite/ Maoist-ridden.

Similarly,the view on China is that it cannot sustain its current rise as an economic power,and it is only a matter of time before its successful economic globalisation programme gets halted by domestic political turmoil,civil society unrest,etc. It is not possible to run capitalism within a communist institutional framework. Therefore,many Western academics view China as a pressure cooker waiting to implode in the not-too-distant future. Sometime before the 2008 Wall Street crises,a renowned expert on global democracies being hosted by the American Embassy in New Delhi told an audience that America was actually preventing China from imploding by encouraging its deeper participation in the global free trade regime!


In general,analysis on India and China has often been marked by sheer scepticism about the way the two societies function,followed by incredulity over how they manage to keep afloat in the face of global shocks such as the Great Recession of 2008-09. To understand this phenomenon better,one just has to look at some longer-term economic patterns in history. According to a statistical study by well-known British economist Angus Maddison,India and China had a nearly 48 per cent share of global output until 1830. Subsequently,as the industrial revolution bypassed these two societies,their share of world output dramatically fell to around 10 per cent over the next 70 years. Their combined share of output stagnated at the same level for much of the 20th century and was about 8 per cent until 1980.

However,there has been an impressive rise in their share of output over the past 30 years. On a purchase power parity (PPP) basis,India and China have reached about 23 per cent of world output. Using Maddison’s data,economist Surjit Bhalla projects their share will reach 38 per cent by 2020.

So if you look at the historical growth pattern for India and China over 200 years — starting 1830 — they are steadily and surely coming back to their peak share of world output. During this 200-year period the two societies have suffered the worst forms of internal strife as well as colonisation by the West,which completely emasculated their economic potential. Yet how have these societies managed to bounce back to capture a good part of their share of world output lost in the mid- to late-19th century? This is even more puzzling when one considers the fact that the industrial revolution followed by massive economic growth in the West,fed partly by erstwhile colonies,gave such an unbeatable advantage to Europe and later America through leadership in military and other technologies.


In spite of these crippling historical disadvantages,if India and China are relentlessly coming back to reclaim their share of world output,there are clearly forces at work which we do not yet understand. This can only be explained by the existence of a different kind of resilience. One can perhaps speculate whether this resilience stems from a certain deeper civilisational consciousness,which goes beyond existing social structures and institutional frameworks — the nation state,democracy,linear capitalist progress,and so on.

Of course,proponents of scientific temper and determinism might pooh-pooh the very idea of a civilisational consciousness as something totally without any empirical basis.

Eminent Marxist historian Eric Hobsbawm too has tentatively speculated about the possibility that the Protestant Ethic which drove Western capitalism in the previous centuries could be replaced by the “Confucian Ethic” which might power Asian capitalism. Hobsbawm also suggests that Asian capitalism might follow its own unique trajectory in the way it harnesses resources,both human and material.

The entire debate on how India and China,with their unique growth strategies,could be the real gamechangers in charting a different path of development in the context of the challenges posed by climate change and the optimal use of scarce resources such as water and energy has a deep connection with the brand of Asian capitalism that Hobsbawm talks about. Of course,Asian capitalism should not be seen as some new animal altogether. It could draw a lot from the Western framework but at the same time get imbued with a deeper cultural experience that is uniquely Asian. 

Marxist scholars might baulk at the idea but this is precisely where the cultural consciousness comes to play a critical role. After all,India and China must eventually evolve their own version of modernity which emerges organically from their deep-scripted cultural memory.

The writer is Managing Editor,‘The Financial Express’

First published on: 02-04-2010 at 03:26 IST
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