India’s success as a premier player in our modern globalized world has become something of a cliché in recent decades. Less well known perhaps is India’s role in the world’s first real phase of globalization, in roughly the period 1500-1800. In these centuries, it was the wealth of India that drew first the Portuguese, then the Dutch and the English trading companies to the region. India’s production and export of specialized handicrafts, particularly textiles, and the openness of its societies to trade, was simply unmatched.
What was it that made India such a magnet, such an attractive place to do business? And what does this tell us about its social order? Most obviously perhaps, India had a long coastline where the sea, far from creating barriers, offered lanes to the rest of the world. Its frontiers were open, in contrast in particular to China, where trade was state-controlled. India’s early modern states put few limits on trade; on the contrary, they strongly encouraged it.
But most important, India’s local economies had produced a high degree of specialization. How and why? Geography was undoubtedly a factor. India’s large fertile riverine and deltaic regions permitted a large population estimated in the 17th century at somewhere between 90 million and 160 million. The large population was one precondition for specialization.
India’s caste system was another. While often seen in “modern” times as economically dysfunctional, in “early modern” conditions —where goods were handmade—caste encouraged the development of exceptional handicraft skills. Many Indian goods, from specific kinds of textile to hardened sword steels, could not be reproduced under the work conditions prevalent anywhere else in the world, at least before industrialization.
High levels of specialization also meant well-established systems of exchange—and to mobilize these, a widely developed facility with money use, a willingness to exchange goods for cash and long-distance credit networks of increasing sophistication. Kin and caste connections helped to establish relations of trust that were essential for these credit networks.
The mobility of India’s population —particularly of its specialized artisan communities and skilled agriculturalists—was another critical factor in the development of these exchange relations. Skilled people were a highly sought after social and commercial asset and regional states competed to attract them. Caste was also a factor here in facilitating mobility and preserving long-distance social ties.
But what were the links between these elements of geography, ecology, demography and social institutions? It could be argued that the conditions of subsistence in much of India, subject to the vagaries of monsoon agriculture, were so locally unstable that it was difficult for peasants and artisans ever to ensure their livelihoods by serving local markets alone. They engaged in exchange in order to spread their risks across multiple localities and ultimately, most of the world.
These features help to explain why India, in spite of its huge volume of commerce, may have developed few recognizable features of “market rationality”. It may also explain why many of the things that we have come to regard as “backward”—a high degree of human specialization in production, caste and family as the basis for commercial organization —continued to be important.
Illustration by Jayachandran / Mint
Early modern India saw a similar drive to diversification at other levels of economy and society. The role of intermediaries was very important, particularly in the provision of credit. Perhaps the most famous example here is the great Marwari banking family, the Jagat Sheths, who were bankers to the government of Bengal. T
he family was the receiver of revenue and the treasurer of the government. Landholders paid their revenue through it and the rulers of Bengal remitted their annual payment to Delhi through it. Its credit was stunning: Every year, it paid two-thirds of the revenue of Bengal, the richest province of India, into the Mughal treasury with a single “hundi” or bill of remittance.
Key intermediaries in this period were also “portfolio capitalists”: Moneyed men with diverse interests in trade, contracting to states for the collection of their revenues, providing credit, acting as diplomatic intermediaries between Indian states.
Take, for example, the Persian shipowner Mir Kamaluddin, who lived in the southeast Indian port of Masulipatnam (now called Machilipatnam) in the 1620s and 1630s. He acted as an agent for the Dutch and English companies. His ships took elephants, pepper, cloves and bullion eastwards to Java and westwards to Surat. After the Dutch capture of Hormuz in 1622, he opened up the shipping route to take Coromandel textiles up into the Persian markets.
With the coming of colonialism, these relations of exchange continued but were subordinated for a long period and their methods regarded as inherently backward. But what we may have seen in the last two decades, in the return of India to the global economy, is something of a re-emergence of these older patterns.
Western capital now comes again to India as a remarkable repository of skilled human labour. India’s sophisticated methods of money management, once regarded as archaic in their dependence on personal and family-based forms of trust, are now beginning to look rather different, given the stark inadequacy of Western models for the management of risk.
Indian banks are increasingly lending to make up the shortfall from global banking firms. Indian companies have shown an impressive ability to extend their dominance over their own new domestic markets.
As India moves more confidently to become an international player, new horizons are being opened up and of course, new risks emerge. But to a historian, what we are seeing here may be as much the emergence of older strengths and patterns as developments that are entirely new.
Polly O’Hanlon is professor in Indian history and culture at the Oriental Institute at the University of Oxford
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