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Complex truths about colonial India’s economy

Discussion in 'World Economy' started by InfoWarrior, Sep 7, 2017.

  1. InfoWarrior

    InfoWarrior Lieutenant FULL MEMBER

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    Economist Angus Maddison dwells on India at great length and his analysis reaffirms certain popular notions of the colonial impact on the Indian economy
    Sidin Vadukut
    [​IMG]
    Maddison is the creator of that oft-quoted table that shows how India’s share in the world economy declined from a massive 24.4% in 1500 to a measly 4.2% in 1950. Photo: Getty Images
    When British economist Angus Maddison died in 2010, The Economist magazine published a charming obituary of this giant of the field of “quantitative macroeconomic history”. “Given the length and depth of his career,” the obit read, “it is tempting to say that this intellectual influence is impossible to measure. But that would be contrary to his faith in quantification. His curriculum vitae counts 20 books and 130 articles, plus another 19 volumes that he edited or co-authored. His work has been translated into 12 languages and two books have racked up more than 2,000 citations, according to Google Scholar.”

    And it shows.

    Talk to anybody who works in history, economics and, especially, economic history, and they will attest to his ubiquitous presence in footnotes, bibliographies and appendices.

    But those are academic citations.

    Even more impressive, perhaps, is how often Maddison is cited on more popular platforms such as newspaper articles, popular history books, social media and even WhatsApp.

    Especially, I reckon, in India.

    This is because Maddison is the creator of that oft-quoted table that shows how India’s share in the world economy declined from a massive 24.4% in 1500 to a measly 4.2% in 1950. Curious readers who have never come across this table, all four of you, can see it in Maddison’s 2007 book Contours Of The World Economy, 1-2030 AD. It is table A.6 in Statistical Appendix A.

    It is a remarkably powerful table because it both speaks for and to a wide variety of people and perspectives. This writer has seen the table used to illustrate several things: the transformative economic impact of the Industrial Revolution, the remarkable rise of China apropos India from the 1970s onwards, the great divergence between the economies of the East and West, the remarkable rise of the US economy, and the post-Gorbachev collapse of the Soviet economy. Somewhat ironically I’ve seen the estimate used in The Economist several times. Especially when it is used to illustrate a point that Maddison himself has made—that the Asian economies in the 21st century are not emerging nations but re-emerging ones.

    In India, the Maddison table is generally used to make two claims. The lesser one is to show how much China has left India behind in the last 70 years. But the far, far more common appearance of the table and its statistics is to show the debilitating effect of colonialism on the Indian economy.

    Look, the refrain goes, how we used to be 25% of the world economy and then the British came and we were reduced to just 4%. We were so rich and then we became nothing.

    This is where I would like to use this fortnight’s column to make a couple of gentle interventions (frequent readers will point out that I have made this Maddison intervention before. But I think a periodic reminder will do no harm).

    First of all, we need to keep in mind that Maddison’s estimates of historic macroeconomic growth and gross domestic product (GDP) are, as Maddison himself is eager to admit, built on a superstructure of a whole range of estimates, approximations and projections. Maddison’s strategy, a 2013 working paper by Jutta Bolt and Jan Luiten van Zanden of the Maddison Project said, “was to produce numbers even if a solid basis for them did not always exist, expecting that scholars might disagree and do new work to show that he was wrong. In this way, he induced many scholars to work on these themes and to try to quantify long-term economic development.” There are other critics who have dismissed Maddison’s estimates, especially those before the year 1820, as nothing more than well-educated guesswork.

    Still you could say that if all the estimates before 1820 are somewhat equally conjectural, there is still a case to be made for lost Indian riches.

    Perhaps. But now I must make a second intervention. In Maddison’s table, India has a 24.4% share of the world economy in 1500 largely because it has 25.1% of the world population in 1500. Glance at the next table in the book, on world per capita GDP, and Maddison estimates India’s figure for 1500 at $550 (in 1990 dollars). This is below the Western European average of $798 and slightly below China’s $600. Yet multiplying population by per capita GDP, as Maddison does, gives India its huge historical economy.

    Two more tables are worth looking at: on rate of growth in per capita GDP, and rate of growth in GDP. Both tables suggest that the fastest period of growth in the pre-independence Indian economy occurred between 1870 and 1913. The slowest took place between 1913 and 1950.

    Putting all these tables together, the picture of India’s economic history appears far more complex and layered than a single snapshot of share in world GDP would suggest.

    So the next time somebody brings that table up, tell them to glance at all the other tables. Better still, tell them to read the book. Maddison dwells on India at great length and his analysis reaffirms certain popular notions of the colonial impact on the Indian economy, but also disturbs certain other notions. For instance, the British may have reduced inequality between the village economy and the non-village economy compared to the Mughals, but increased inequality within the village economy itself. There are many, many more such interesting ideas in the book.

    Some of these ideas may not exactly fuel an adequate amount of historical outrage. But it is always better to be informed and outraged than just outraged.
    http://www.livemint.com/Opinion/JFl...lex-truths-about-colonial-Indias-economy.html
     
    Guynextdoor and Agent_47 like this.

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