ALLIANCE MARXIST-LENINIST (NORTH AMERICA)
Issue NUMBER 5. OCTOBER, 1993.


First Part of:
THE ROLE OF THE BOURGEOISIE IN COLONIAL TYPE COUNTRIES:WHAT IS THE CLASS CHARACTER OF THE INDIAN STATE ?
CHANGING  LINE, REVISIONISTS DISTORT LENIN AND STALIN  

ALLIANCE, AUTUMN, OCTOBER 1993
PREFACE

The world is undergoing dramatic changes even as we pass the 76th anniversary of the Great October Revolution. But at this moment of rebuilding the movement, a Journal such as ours cannot hope to cover all events that Marxist-Leninist have to be aware of. We can only take on issues that illustrate general theoretical and practical problems. Though many highly significant events have occurred since Alliance 4.

For now, we know that events in Somalia and the Middle East are relatively easy for Marxist-Leninists to understand. In Somalia, the hypocrisy of the UN mask "of neutrality" has been thrown off by the USA masters. But they have difficulties in subduing the raging struggles they themselves have previously ignited. Unfortunately we are not aware of any representatives of the Somalia poor and middle peasantry, and the small working class. There appears not to be a significant and strong Marxist-Leninist party. No representatives of the workers and peasants is currently vying with the national bourgeoisie. In that fatal vacuum, there can be no successful end to the struggles of the Somalia peasants and minuscule working class, and no true independence.

In the Middle East, we have previously outlined part of the game plan of the USA in Alliance 2, which analysed the Gulf War. We examined the rise of Middle Eastern Nationalism, centring around Nasserism. We showed how US imperialism in its fight with a declining British imperialism, struggled to control the Middle East producers of oil. We depicted the state of Israel as a client state of the USA. Just so, Israel's current rapprochement with the Palestine Liberation Organisation (PLO) reflects a desire of the USA to obtain a degree of stability in the Middle East. Nonetheless, we support the current initiative despite this. Because for the first time since they were driven out, some Palestinians will have a beginning of a homeland. We view this as a small progressive step, a potential base; towards a future secular joint Palestinian-Israeli State. But, again the achievement of this requires a Marxist-Leninist party.

At a future date we hope to review these topics in some detail. However, in this issue we concentrate upon one major underlying issue, that unifies both these topics. Of course, this is the National Question in colonial-type countries.

The article following is one that we committed to in Alliance 4. Solving the problems raised by Somalia and Palestine, and India we suggest, requires understanding the stages of struggle of the workers and peasants in the colonial countries, and correspondingly their allies. This forms part of the programmatic goals of Marxist-Leninists world wide.

For as Marxist-Leninists know, this debate was one of those that divided Trotsky from Lenin and Stalin. The commonest Left wing distortion is the Trotskyite one, that unless there is a socialist revolution led by the Communist party, there can be no national progressive democratic revolution against imperialism. Marxist-Leninists will not be troubled by this. But less well known are the distortions introduced by the hidden revisionists inside the Communist International. The correct policy of United Fronts with the revolutionary type bourgeoisie in colonial countries, during the first stage-the Democratic stage, was distorted after 1928 by the Comintern (CI).

In relation to India, the CI foisted the Communist Party of Great Britain, (headed by hidden revisionists) upon the Communist Party of India (CPI). Then it destroyed the possibility of winning the best elements away from the Indian National Congress, by a sectarian turn. In the middle of this complicated nest of turns and distortions, and counter-claims, the character of the Indian state has been obfuscated.
What occurred in the apparent "transfer of power" from the British to Nehru on August 15th, 1947 ? These are not arcane academic questions. The answers will dictate the approach to the continuing national liberation struggles world wide.

A common Marxist-Leninist view of India, states that 1947 represented a coming to power of the comprador bourgeois capitalist class, in a facade erected by the British. Thus because of this, the two stages of revolution (The bourgeois democratic revolution and the socialist revolution) both have to be carried out. The corollary is that a revolutionary bourgeoisie still exists in India.

In this article we agree that there is an unfinished democratic revolution (stalled by the bourgeoisie) to be carried out prior to socialist revolution. But we pose the stages of revolution in relation to the multi-national character of the Indian state. We identify the rulers of India at 1945 as a class coalition of the Pan-Indian national capitalist class, dominated by the Marwari national capitalist class, and a comprador capitalist class. We attempt to work out Marxist-Leninist attitudes for India, and distortions of the line. This article is meant for discussion. Of course, comrades in India are significant discussants, but the entire international movement is of necessity joined in this debate.

This is particularly so, since our analysis of the CI from 1928 alarms some Marxist-Leninists. We urge public airing of disagreements with tabling of counter-documents, and a non-sectarian open discussion. The movement can learn only from open discussion. Of course, disagreement on the interpretation of these historical events is not the basis of splits. However, if disagreement extends to principles, exemplified in means of practical work nowadays, the implications are obvious. This article is Part One of an article that will be concluded. In part Two (Hopefully to be published over the next six months) we will analyse events in India from 1945-1993.



TABLE OF CONTENTS BY PAGE FOR HARD COPY.
NOTE THIS WEB EDITION IS SPLIT INTO TWO PARTS  INDICATED BELOW:
First Part
- PREFACE 1-4
- SOME DEFINITIONS 12-13
- ENTRY OF BRITISH IMPERIALISM, ORIENTAL DESPOTISM AND DEVELOPMENT OF THE INDIAN MERCHANT CLASSES 14-15
- INDIAN MERCHANTS AND DEVELOPMENT OF INDIAN NATIONS 16-18
- THE DESTRUCTION OF THE HANDLOOM INDIAN INDUSTRY 18-19
- SURVIVAL OF SPECIALISED PRIMITIVE SMALL SCALE INDUSTRY 19-21
- INDIAN RAILWAY AND LAISSEZ-FAIRE 21-22
- THE COLONIAL MANAGING AGENCIES 22-23
- THE INDIAN CAPITALIST CLASS BECOMES INDUSTRIALISED 23-25
- DEVELOPMENT OF THE INDIAN PROLETARIAT 25-26
- THE POLITICAL REPRESENTATIVES OF INDIAN ASPIRATIONS 26-28
-SPLITS WITHIN CONGRESS 28-35
-OWNERSHIP OF INDIAN BUSINESS AND INDUSTRY PRE WWI:
COMPRADORS AND NATIONAL CAPITALISTS IN INDIA 36-43
-EFFECTS OF THE FIRST WORLD WAR 43-57
-CONCLUSIONS ON INDUSTRY IN INDIA BY 1947. 57-59
-COMPARISON WITH THE INDUSTRIAL SITUATION IN 1980 59-63



Click:FOR SECOND PART
-ATTITUDES OF THE COMMUNIST MOVEMENT TO THE INDIAN BOURGEOISIE 64
-MABENDRA NATH ROY (M.N.ROY) AND LENIN 65-76
-FORMATION OF THE COMMUNIST PARTY OF INDIA 76-77
-ROY IN PRACTICAL WORK 78-86
-THE ATTITUDE OF J.V. STALIN TO THE INDIAN REVOLUTION 87-89
-REVISIONISTS TURN ULTRA-LEFT: OTTO KUUSINEN, AND WANG MING. 89-98
-DECOLONISATION? 98-103
-TWO FLANK ATTACK ON CPI: RIGHT BRITAIN, LEFT COMINTERN 103-111
-REVISIONISM TURNS RIGHT. DUTT FOLLOWS. 112-122
-REALPOLITIK 123-128
-SOVIET VIEWS ON INDIA - DYAKOV 128-132
-YUGOSLAV REVISIONISM ENTERS DEBATE 133-134
-YUGOSLAVS TAKE CONTROL OF CPI-ADVENTURIST TURN 134-137
-CONCLUSIONS PERIOD UP TO 1948. 138
-BIBLIOGRAPHY 139


INTRODUCTION

Amongst Indian progressive and Marxist-Leninist movements there have been intense debates on the issue of the character of the state in India. The participants realise that the class character of the State decides the strategy of Marxist-Leninists towards revolution in India. The Communist League of Britain (CL) has reported the period up to 1928, in a two volume work (London, 1977). This document cites from it, in order to extend the analysis to 1947 (Part One). Part Two will cover the period 1947-1993.

The central question is whether the comprador capitalist class or a variety of National bourgeoisie took control of the Indian State after 1947. Perhaps three hurdles are faced in answering this question. These are :

Firstly to characterise the nature of the industrial base that India had at Partition (this phrase avoids the term Independence).

Secondly to define Congress party politics. It is a fact that the Congress party was originally formed by the British to pre-empt a movement of independent minded Indians. But equally it was also clear that by the time of the British Partition, the Congress was a class coalition.

Finally the multi-national character of India needs to be considered.

These three hurdles, or issues superimpose themselves on one fundamental underlying question. This is :"What attitude should communists take to the bourgeoisie in a colonial-type country ?"

On this question, first Lenin was divided from Trotsky; and then Stalin and Trotsky were divided.
We take our stand on the importance of the bourgeois democratic national revolution as proposed by Lenin and Stalin. How relevant is this analysis in the 1990's?

It is significant that Stalin in his talk to the "University of the Toilers of the East", uses the phrase that there are 2 wings of the national, or native bourgeoisie in India:

"The situation is somewhat different in countries like India. The fundamental and new feature of the conditions of life in countries like India is not only that the national bourgeoisie has split up into a revolutionary part and a compromising part, but primarily that the compromising section of the bourgeoisie has already managed, in the main, to strike a deal with imperialism. Fearing revolution more than it fears imperialism, and concerned with more about its money bags than about the interests of its own country, this section of the bourgeoisie is going over entirely to the camp of the irreconcilable enemies of the revolution, it is forming a bloc with imperialism against the workers and peasants of its own country."
Stalin, p.318.
Here Stalin unequivocally states that a revolutionary part of the bourgeoisie still existed as late as 1925, in India. By this reasoning, to dismiss ALL the bourgeoisie struggles of this period in India as being led by comprador factions, is a Leftist error. Marxist-Leninists know that Trotsky argued that ALL bourgeois factions were useless to consider as allies for the workers. But, Marxist-Leninists seem unaware of the contradiction of the line of the Communist International (CI) after 1928, with Stalin's view.

If, as Stalin argued, there WAS a revolutionary wing, then WHERE was it?
To ignore that the Congress Party harboured some of the "revolutionary part" of the bourgeoisie would be to search in the vastness of India, for the proverbial needle in a haystack. Thus the Congress cannot be dismissed as wholly a tool of the British imperialists.

Any Marxist-Leninist history of India must include the struggles of M.N.Roy. True, he had a chronically Leftist interpretation of the bourgeoisie in a colonial type country. But, in practice, both in India and his ill-starred mission to China, he adopted Marxist-Leninist principles aimed at a United Front with the National bourgeoisie. Roy agreed with Stalin that there were at least 2 wings within the Congress party; the capitulators and the more resolute. He attempted to form a principled united front with the best elements. In so doing, he fell into dire conflict with the Comintern.

Furthermore, both the CL and other Marxist-Leninists have noted the positive contribution of Dyakov to the debates on India. Dyakov, a member of the USSR Academy of Sciences, was an acknowledged expert on Indian affairs. His observation of the multi-national character of the Indian state is key to forming current Marxist-Leninist policy in India.

Dyakov thought that the post-Partition state represented a coming to power of a section of the bourgeois and the middle bourgeoisie that had turned reactionary. But, according to Dyakov, until Partition (engineered by the Mountbatten Plan), the now reactionary bourgeoisie had been struggling against British imperialism. In this struggle, he clearly identified a dominant national bourgeoisie that was now oppressing other nationalities:

"The expression of the centralistic tendencies of the summit of the Indian bourgeoisie, primarily the big tendencies of the province of Gujerat and Marwara.. this capitalist group aspires to a monopoly to dominate the Indian market and in this sense it struggles not only against British capital but also against the bourgeoisie of other nationalities of India.. which strive to tear its own market away from the hands of Gujerati-Marwari capital."
Dyakov, Cited in Selig Harrison. "India the Most Dangerous Decades." Princeton, 1960. p. 158.
This Marwari national bourgeoisie then came to be the Pan-Indian national bourgeoisie. Dyakov concluded this after open debate in the Academy of Sciences, during which he sided with Balabushevich against Zhukov : "The differences in the more extreme views of Balabushevich and Dyakov and the somewhat more moderate stand of Zhukov should not be overlooked. The former considered that the Nehru Government represented not only the big bourgeoisie but the middle bourgeoisie as well and that the latter had turned reactionary. In place of Zhukov's four-class strategy against imperialism, feudalism, monopoly capitalism, Balabushevich and Dyakov proposed the three class strategy against capitalism (excluding the entire class of the bourgeoisie and relying only on the workers, peasants and the petty bourgeois intelligentsia). The Moscow debate signalled the birth of a new line towards the National movement in Asia."
Shashi Bairathi."Communism and Nationalism in India." p.211
But, if the Pan-Indian national bourgeoisie had "turned" reactionary by 1947, what should be its historic role in fighting for a progressive Front in 1993? It must be surely limited now ?

One other question should be asked. What did the turncoat, erstwhile Pan-Indian revolutionary bourgeoisie now do, after 1947? Perhaps they were content to remain under the thumb of Imperialism?  

After all, a bourgeoisie that is defeated has two choices. Either it accepts its subservience to Imperialism, remaining content with its level of profits; or else it fights back.

We believe that this bourgeoisie continued to fight by stealth, no longer fighting battles in the streets. But now, it was a battle in boardrooms, assisted by the Foreign Exchange Regulations enacted by the new state.

In support of this controversial contention, data from this period shows that although the absolute level of Direct Foreign Investment (DFI) increased from 1947 to 1980; when expressed as a percentage of total industrial and trade investments, it actually fell:

"For India independence from foreign financing became a fact of life between the amendment of the Foreign Exchange Regulation Act (FERA, 1973) and the next relaxation of government restrictions on foreign investment (1980). To illustrate, let us consider chemicals. Between 1974 and 1980, as we see from figure 4, (see p.48 below-Editor) foreign financial tie-ups declined for Indian business houses from 2/3 of all collaboration agreements in 1974 to 2/5ths in 1980. Among large houses, Only Birla actually increased its' reliance on foreign financing always coupled with technology. Conversely houses like Tata and Sarbhai, long known for their proclivity to seek out foreign financing by 1980 evinced no such preference.. in 1980 Indian business houses and other local enterprises already had established their financial independence from foreign enterprises."
D.J.Encarnation.

THIS DECLINE IN THE FOREIGN HOLDINGS IN INDIA OVER THE POST-"INDEPENDENCE" PERIOD MUST HAVE A CLASS BASIS.

Difficulties faced by bourgeois appraisals of the Indian National Congress (INC) include an over-estimation of the resolve of the INC to take on imperialism. "Left wing" opposition sees only that the INC did not unconditionally expropriate foreign capital. These difficulties can be resolved, seeing that the INC was a class coalition of national capital (represented by a Pan-Indian bourgeoisie composed of Marwari-Parsi-Gujerati capital), comprador capital, and landlord classes.

Ensuring there was not a separate party, representing the nascent national capitalists was a master stroke of the British, who had first floated the INC under Octavian Hume.

This INC coalition was to acquire considerable sway over the peasant and workers masses of India. Thus the accession to power by the INC in 1947 effectively allowed a weakened British capital to retain some neo-colonial hold. To ensure this, British imperialists arranged the Partition of India, by the Mountbatten Plan. This ensured that the hostility between Hindu and Moslem would continue. Thereby crippling further Indian development by cutting Indian industry in two, handicapping industry in both the future infant states- Pakistan and India.

Furthermore, as stated above, we suggest that the response of the nationalist wing of the INC was to continue to "fight Imperialism by stealth" - Always just enough to maintain its development. This battle by stealth (as opposed to overt "street fighting") over the subsequent 30 years, resulted in a State control of key sectors that aided the Gujerati-Marwari-Parsi Pan-Indian capitalists to further their own industrial development. The economic data here should be scrutinized critically, to ensure we adopt a correct orientation.

Simultaneously, the Marwari capitalists suppressed development of the other nations of India. In so doing the Gujerati-Marwari capitalists suppressed the major planks of the Democratic stage of the revolution. This includes Land Reform which was obstructed and distorted in a thousand ways. They reneged on their own programmes, and halted the democratic revolution. This needs to be, and will be completed.

But if economic data does demonstrate "a struggle against imperialism by stealth", why should the Pan-Indian Marwari-Gujerati-Parsi national bourgeoisie need (from their perspective) to be in alliance with the workers in 1992, at a Pan-Indian level ? In this context, support of a pan-Indian bourgeoisie would be a Rightist error.

But this does not mean to say that alliances with the smaller struggling embryo national bourgeoisie are to be ignored; this would be a Leftist error. Support to the "regional" ie. embryonic (or usually embryonic) national bourgeoisie would be a correct tactic. Here the working class party should attempt to become the leading force in a class alliance aimed first at securing the National Democratic Revolution, and then moving uninterruptedly to the Socialist Revolution.

PART ONE outlines Indian economic development. In the 1900's, this formed the two new classes that would shape India - the industrial bourgeoisie and the industrial proletariat. We start with development of Indian capital and their political representatives, examining British imperialism's attitude to native capital. We examine views of Marxist-Leninists to the bourgeoisie in colonial-type countries, and India; with the formation of the Communist Party of India (CPI). In doing so, we cover deviations from Lenin and Stalin, promulgated by the Comintern (CI). We end Part One just after the Mountbatten Plan of imperialism.

PART TWO, (This was to have been completed at a later time. But this task was never compelely fulfilled, however in a later polemic in 1998 it was at least partially completed. This will be also placed on the web shortly -Editor Alliance; February 2000) will examine the Nehru and Mahanobis Plan to develop India, halting of Land Reform, the national question in India, the struggle between USA and USSR social-imperialists for the control of the Indian state, and finally the recent victory.

SOME MARXIST-LENINIST VIEWS

"The Communist International must enter into temporary alliance with bourgeois democracy in colonial and backward countries."
V.I.Lenin: Preliminary Draft of Theses on the national and Colonial Countries, 2nd Congress CI, in "Selected Works", Volume 10, London, 1946; p.237.

"The task of the communist elements in the colonial type countries is to link up with the revolutionary elements of the bourgeoisie.. against the bloc of imperialism and the compromising elements of 'their own' bourgeoisie, in order.. to wage a genuinely revolutionary struggle for liberation from imperialism".
J.V.Stalin :"The Results of the Work At the 14th Congress of the RCP(B), in "Works" Volume 7, Moscow, 1954, p.108-9.

"The second deviation lies.. in an underestimation of the role of an alliance between the working class (of a colonial type country) and the revolutionary bourgeoisie against imperialism.. That is a deviation to the Left , and it is fraught with danger of the Communist Party being divorced from the masses and converted into a sect. A determined struggle against that deviation is an essential condition for the training of real revolutionary cadres for colonies and dependent countries of the East."
J.V.Stalin, "The Political tasks of the University of the Peoples of the East", In Works", Vol 7. Moscow, 1954, p.154.

SOME DEFINITIONS
A colonial type country is one which is industrially relatively undeveloped and which is under the economic, and possibly the political, domination of a Great Power - in the 20th century an imperialist country.

A COLONIAL-TYPE COUNTRY MAY BE :
1. A colony ie. under the open direct political rule of a dominating Great Power;

2. A semi-colony ie. nominally independent but with its economic system largely dominated and controlled for the benefit of the ruling class of a dominating great Power;

or 3. A neo-colony ie. a former colony which has become nominally "independent" but which continues to have its economic system largely controlled for the benefit of the ruling class of the same dominating Great Power which formerly ruled it directly.

The nominal "ruling class" of a semi-colony or of a neo-colony is one which is dependent on the ruling class of the dominating Great Power.

CLASSES IN THE COLONIAL-TYPE COUNTRIES.
Sooner or later the struggle for national liberation from the domination of the Great Power concerned develops in every colonial type country. In the 20th Century, in general:
the classes in a colonial-type country which could be benefitted by the national liberation are :
1. The working class
2. The urban petty-bourgeoisie
3. The peasantry and
4. The national bourgeoisie, that section of the capitalist class whose whole interests are held back the domination of the Great Power.

In general, the classes in a colonial-type country which have interests that would be harmed by the national liberation are :
1. The landlord class; and
2.The comprador bourgeoisie, ie. that section of the capitalist class the interests of which (mainly commercial and financial) are dependent upon the domination of the Great power.

ENTRY OF BRITISH IMPERIALISM, DISINTEGRATION OF ORIENTAL DESPOTISM AND DEVELOPMENT OF THE INDIAN MERCHANT CLASSES

By the end of the 18th Century, India was not a single State. However significant links between parts of the sub-continent had been established. These resulted in Indian trade nets that antedated the British East India Company, but were then used by the colonists:

Trade developed along regional lines reflecting the lack of a single state. These regional differences became important in later years:  The British brutally remedied the lack of a unified State. In doing so, they took advantage of various unscrupulous feudal rulers like Mir Jafar, but they were also helped by the merchant-bankers: From herein on, the Indian merchants: Throughout this period, the British continued to demolish the achievements of the previous Mughal rulers of the central part of India; and their equivalents in the South and elsewhere. Prior to the entry of the British on to the stage of the Indian sub-continent, various dynasties of Oriental despots had stressed the need for unity between Hindu and Moslem (and later with Sikh). Except for short periods when communalism was fostered for political ends, appointments to the royal courts deliberately crossed religious barriers. For example, Mughal emperors would appoint Hindu Prime Ministers to ensure a stable fiefdom.
When Britain first started despoiling India, the impoverishment of the latter for the enrichment of the former, led to the compete ruin of the "stable" Oriental Despotic Mughal and Hindu Princely States. The British destroyed both public irrigation works and the land system, ruing the country's agricultural system and dispossessing the peasantry: INDIAN MERCHANTS AND DEVELOPMENT OF INDIAN NATIONS :

Because trade was largely controlled by certain communities, particular regions of India became dominant in the mercantile businesses. The less well developed regions were unable to prevent influx of aggressive experienced traders. To follow this development, it helps to distinguish the various sub-types of the merchants :

Other differences took on ethnic and linguistic forms in Eastern India and other regions: These differences often created tensions: The relevance to developing a "national consciousness" is clear: As judged from constant clashes, India has enormous problems between the Center and the States. In fact India is a multi-national state. The Soviet ethnologist, Dyakov pointed out that the later Indian multi-national state was dominated by a Gujerat-Marwari clique based largely in the heartland of India. Bland has suggested, this should be amended to a dominant clique of Gujerati-Marwari-Parsi clique (Source from Alliance). Bland refers to Prakash, who cites ownership data of modern industry: The question arises: Post-Partition, this class opposed the national aspirations of the smaller regional nascent bourgeoisie. The big Pan-Indian bourgeoisie were aided by the hyperbole and mysticism of Gandhi's preaching of ancient Hindu (which was taken to be equivalent to Indian) society; and the Indian National Congress (INC) attitude to Muslims. In fact D.N. conjectures that the views of the big bourgeoisie formed one of the reasons why the INC did not oppose the Partition of India in 1947. The big bourgeoisie favoured Partition over an alternative option of a Federation which would have yielded major power to the other competing bourgeoisie, not just the bourgeoisie in the Muslim areas. The leading industrialist, Birla, was particularly against a Federation.
 
 THE DESTRUCTION OF THE HANDLOOM INDIAN INDUSTRY

As well as traders, Indian society had a well developed artisan type industry. The hand loom industry with cottons was already exporting to Europe:

 Among the first steps of British imperialism in their penetration into India was the dismantling of any independent industry. Karl Marx commented that: By 1840, Sir Charles Treveleyan was able to tell the House of Commons Select Committee on the British East India Company: Inter-capitalist rivalries had however set in amongst British rivals early in the East India trade. Initially there were battles against the monopoly of the East India Company. These culminated in the denial of their monopoly trade. But then came an even more complicated situation: Because of this, both the native Indian industrialist, and the British industrialist based in India, continued to have problems in building any sort of totally independent industry. Marx commented that: SURVIVAL OF SPECIALISED PRIMITIVE SMALL SCALE INDUSTRY

Though British efforts destroyed the handicrafts industries, it did not entirely eliminate them. In fact small scale "lower forms" of industry were preserved. Naturally these were unable to accumulate large capital reserves:

But the vast oversupply of labour, gave small entrepreneurs and owners of manual establishments the ability to cut costs: A final reason for small entrepreneurial survival was the nature of the market: Inevitably, the end result of this survival of the most vigorous of the handicraft producers was their growth into capitalist industry: But accumulation was not high enough to allow an easy transition into capitalist industry. In fact there was only one way that enough big capital could be developed: The origin of Indian Big Capitalism was then initially under the thumb of Comprador capital. ie. That section of the capitalist class in a colonial type country, most dependent upon, and intimately linked to foreign capital.

INDIAN RAILWAY AND LAISSEZ-FAIRE

Initially, the British state refused to aid even British owned industry in India, was justified by the ruling theory in economics - Free Trade and with it Laissez Faire. Ironically, the days of Laissez-Faire were numbered.

But, as Lenin pointed out, imperialism was marked by the export of capital. The mercantile period of colonial development of India was coming to an end, and a new phase was beginning. Given the low returns, and the uncertainty of investment in India at that point (other than investment in trading) private enterprise was unwilling to provide financing for heavy industry. It was the State itself that broke the expressed sanctity for Laissez Faire. The single great State sponsored act in India was the creation of the Railways.
 
Lord Dalhousie had already proposed in 1853 a national system. But the State had to underwrite the whole scheme, in order to lure private financing. A 5 % guaranteed rate of interest was the bait, with the 50% share with government of any profit above that initial figure. The cost of the operation was enormous; the rail lines in operation in 1868 cost Pounds Sterling PS 18,000 per mile rather than the planned PS 8,000 (Oxford History, Ibid, p.707).

By 1910, figures from Sir George Paish showed that India and Ceylon were the 5th largest recipient of British capital exports. Of this:

Marx foresaw that the inevitable effects of the railway, (despite the intentions of the builders) would be progressive. That is to say, the effect would be to build the basis of an industrial society: THE COLONIAL MANAGING AGENCIES

Usually, the British industrialist was linked to the Indian marketplace by a Managing Agency. These Agreements became a convenient institution for both the industrialist in Britain and the local Anglo-Indian merchants, as resident British traders were then called.

The structure of the agency would be such that it would be represented in the Board of Directors of Joint firms; and one of its partners would act as Chairman of the board. They would receive a percentage of profits, commission on sales, and an allowance for services; plus interests on loans or fees. In practice: Because they eliminated middlemen and the banks, they were able to ease financing. So the agencies could easily become very diversified in function. Their portfolios would run the gamut of industry. Furthermore they tended to be quite "interlocked " in character. That is to say, there were often joint directorships; across several firms and spanning several sectors of industry.
 
 THE INDIAN CAPITALIST CLASS BECOMES INDUSTRIALISED
 
Railways were a major factor tending towards consolidation for the developing bourgeoisie of India. In the interim, the merchant communities of India had primarily become linked with British capital as outlined above. Before there could be a transition in Indian merchant capital to industrial, certain internal and external factors were required.

Internal conditions included the accumulation of money, the existence of a market for the commodities, and the existence of a labouring class. These conditions were present.

The external condition was the technology and machinery, which had to be imported from Britain since the "normal" developmental stage in India had been bypassed.
 
Inducements for the British imperialist-capitalists were necessary. These were Firstly, the tendency in capitalism for the rate of profit to fall, prompting that phase of Imperialism identified by Lenin as marked by the export of capital not goods; Secondly as Marx noted (see above) the growing need of the British capitalists for a market rich enough to absorb British goods:

The railways provided a major stimulus to Indian industry: As well as cotton, other industries started up like jute: But ultimately the most significant industry to become established was the iron and steel industry - itself the basis of any large scale industrialisation. In turn this depended upon coal. It is notable that this was entirely Indian owned and financed: As Mabendra Nath Roy (M.N.Roy) says: DEVELOPMENT OF THE INDIAN PROLETARIAT

The development of the bourgeoisie inevitably meant the development of the proletariat. As M.N.Roy put it:

Exactly how fast was the pace of development? - would be contended by various Marxist-Leninist commentators. Both Lenin and Stalin recognised a bias in Roy, which was to overestimate the growth of the proletariat. However, the strike waves of the Bombay mill workers in 1928 set off India wide strikes that testified to the growth of the Indian proletariat. It was this strike wave that prompted the British imperialists to launch their direct attack on the Indian workers and peasants through the Meerut Conspiracy Case. At the same time the Comintern (CI), by now in the hands of Otto Kuusinen and others entered into an Ultra-Left phase that attacked the workers from the left. This is discussed in greater detail below.

THE POLITICAL REPRESENTATIVES OF INDIAN ASPIRATIONS

Eventually it was bound to be the case that indigenous Indian educated elements would arise and threaten British rule. As a means of self-defence, the British helped to create the Indian Congress Party (INC) - seeing in it a way of neutralising the political activity of the Indian middle classes. The founder of the Indian Congress was a very shrewd British administrator, Allan Hume.
 
Hume had watched the rise of famine and the reaction of the population with mounting concerns, lest it should provoke more serious agitation. As his biographer said of his motives: The First Congress was in Bombay, in December 1885. Hume himself expressed the role of INC in this way: The Vice-Roy Lord Dufferin saw the wisdom in this: Among the ruling echelons of the British, there were some concerns however. Some anticipated that INC might be a double edged sword, such as Sir Auckland Colvin, the Lieutenant Governor of the north-Western Provinces. He warned in October 1888, that Hume:  Similar considerations led to a parallel organisation aimed at the Muslims, the Muslim League. This vehicle was a continuation of the policy of "Divide and Rule" that the British had used from their earliest days in India. Lord Elphinstone Governor of Bombay sent to the Enquiry on the causes of the Indian Mutiny of May 1857 (led by Nawab Mahmud Khan) a memorandum stating: Many other citations bear witness to this conscious policy of the British, which in general contrasted with the behaviour of the previous Emperors of India, the Muslim Mughals. The Mughals sought harmony between Hindu and Muslim, the emperors often appointing Hindu Prime Ministers. Not that religious feuds and riots (Communalism) never occurred before the British arrived. But the British had a conscious widespread policy of using these divisions.

The logical goal was a "Two Nation -Hindu and Muslim" Theory in a modern "National" form. This was first enunciated by a British stooge, Sir Sayid Ahmed in 1887. He had been knighted for his defence of Empire against the Indian Mutiny.

The logical divisive step was for a separate party to siphon off the energy of the Muslim agitators. Lord Minto, the Vice Roy mediated the formation of the Muslim League party in 1906. Minto's private secretary, Dunlop Smith wrote to Minto:

SPLITS WITHIN CONGRESS

So the Indian National Congress (INC) was clearly initially a movement set off by the British as a false trail, to divert the developing Indian nationalist movement. However, it came to be a very broad umbrella that included diverse individuals and groups. It could not ultimately completely suppress the tides of nationalism.
 
Early on Two Wings of the Congress became clearly demarcated. They were represented by Gopal Krishina Gokhale and Bal Gangadhar Tilak. The former represented a Moderate wing:

Naturally, this bred a response that was more vehemently anti-British. At first these responses were exemplified by the Arya Samajand formed by Dayananda Saraswati; and Vivekananda. Both sponsored Hindu Revivalist societies aiming at fostering pride in Indian traditions, including Hinduism. But it was Tilak, that really formulated a viable movement that stood for a more firm militant stand. This wing, termed the so-called Extremists can be considered the germs of the native revolutionary bourgeoisie, and called for: Tilak was explicitly influenced by Lenin and the Bolsheviks in Russia: Thus early on after its formation, the Congress became a rather confused class coalition; between pro-British compradors and a native bourgeoisie that was the nascent revolutionary national bourgeoisie. This tension within the ranks of the INC led to the Allahabad Conference of the INC in 1907. At this conference, whose President was Motilal Nehru, the ground work was laid for a spilt. The expulsion of the Extremists followed at the next Surat Congress, from the INC.

The First World War provoked much debate as to the attitudes of the nationalists. But clearly the nationalists expected for their "loyalty" during the war to obtain some rewards later. They therefore halted any major struggle, as did the Muslim League.
 
Mohandas Gandhi, having launched a struggle in South Africa against the treatment of Indians there, left for Britain. There he joined the ambulance forces and was about to depart for France's battlefields. But then returned to India at the behest of Gokhale. After the stand of the INC in 1914 to support the war in Europe, Gokhale died.
 
This made it easier for the "Extremists" to return to the party, led by Tilak and Mrs.Annie Besant. In leadership also was Mohammad Ali Jinnah, a conservative future leader of the Muslim League. But at this point he fought against the disunity of Muslim and Hindu. In the Lucknow Pact of 1916, both the Congress and the Muslim League joined together in a demand for Dominion Status. This was a significant step against communalism, though simultaneously a step back from full independence. Since both the Muslim League and the Congress had halted significant attacks on British imperialism, during the First World War, this limited anti-communalism was not a threat to the British.
 
Although the general orientation of Tilak had become more cautious, younger militants were drawn into the Congress. Mrs.Besant was voted into Congress office as the President in 1917, but her leadership was short lived, being rejected by the younger militants in 1918.

By now Mohandas Gandhi had returned to India from South Africa. He turned to Champaran in Bihar, where severe repression of bonded labour and rural workers existed. Here in 1918, he organised the indigo dye rural workers and displayed a capacity of mass agitation. Courting arrest made him a national figure.
 
By 1917, the war going badly, Lord Montagu (Secretary of State for India) had accepted the need for sops to the Indians nationalists. Akbar cites ihs words and comments:

 As Gandhi put it in a letter to Lord Chelmsford on 30 April 1918: However the quid pro quo, after the end of the war as found to be "entirely unacceptable " as Tilak said. The 1918 Montagu-Chelmsford Reforms had rejected the Congress demand for Dominion status. Coupled with this were draconian anti-revolutionary and nationalists Bills which abolished democratic rights, called the Rowlatt Act, after Justice Rowlatt of the Kings bench High Court.
 
It was only now that Gandhi launched a Satyragraha campaign aimed at non-cooperation with the British administration. This movement became rapidly very widespread.

On 11 April 1918, General Dyer inflamed the Indian masses even more by his brutal slaughter of over 500 dead in Jalianwalla Bagh, in Amritsar. Gandhi halted the movement (p.118, Akbar Ibid). He would continue to retard the movement at key times. Despite Gandhi's temporary alliance with the progressive Muslim Khilafat movement he clearly was a Hindu obscurantist of the worst reactionary stripes. Tilak died in 1920, leaving Gandhi clear passage. Gandhi's staunch conservative allies in the Congress were Villabhai Patel, Rajendra Prasad, and C.Rajagopalachari. Gandhi rapidly took control of the Congress. He imposed strict non-violence.
 
 When despite this, on 4th February 1922, at Chauri Chaura the masses erupted into violence Gandhi performed a trick that was to be repeated at key times in the future - he called off Civil Disobedience campaigns. Akbar notes that Gandhi said:

As Edwardes comments: Jawaharlal Nehru, the son of Motilal Nehru, was a more complicated character. Though certainly an acolyte of Gandhi, he cultivated a more radical position. Nehru was clearly influenced by the Bolsheviks just as Tilak had been: Often Jawaharlal Nehru was able to unite factional splits. He and Maulana Azad, were able to form a Center party in 1923, within the INC. This defused and prevented an open split between those who wished to contest elections and change tactics away from Gandhi's abstentionism, the Pro-Changers (led by Motilal Nehru and C.R.Das) and their opponents the No-Changers (led by Rajendra Prasad).
 
However Nehru was also beholden to Gandhi, and was not able to break with Gandhi. But he rejected non-violence, and he attacked obscurantism at various moments. He tried to abolish the name Mahatma,(p.165 Akbar) and said of the religious elements in the INC: After Chauri Chaura and Gandhi's back down at a critical moment: Other sections of Gandhi's allies were also furious: As it was, Gandhi now catered to the Ultra-Right Hindu fanatics in side the Congress, called the Hindu Mahasabha organised in December 1913. They had adopted a Plan called Shuddhi. This meant "purification", and was aimed at the proselytisation of the "impure", which naturally included the Muslims (Akbar, Ibid, p.176-77). By 1924 they were in an ascendancy and sabotaged an all-party conference on the issue of communalism. Gandhi kow-towed to Hindu extremism, and fostered the growth of the Hindu-Moslem rupture. A key member of his entourage, Rajendra Prasad was a member of the committee of the Hindu Mahasabha that adopted the programme in 1924 to "popularize" the Hindi language.
 
At this point, the Non-Cooperation movement was only objectively helping the British. Though the mass nature of the movement had been aborted, the policy of Non-Cooperation at electoral level was still in force.
 
This Abstentionism deprived the Congress of another voice. To address this, a section of Congress Opposition led by C.R.Das formed the Swaraj Party in 1922.
 
By 1927 Jawaharlal Nehru was contending for the Presidency of the Congress. He accused Gandhi in a private letter of: As the Indian Statutory Commission headed by Sir John Simon arrived in India in February 1928, the objectives of the INC had been under discussion for some time.In May the INC had set up a Drafting Sub Committee headed by Motilal Nehru, and this submitted its report in August termed the "Nehru Report". This recommended that the Constitution be based not upon independence, but on dominion status within the British Empire. Jawaharlal disagreed. Though he still did not breach with Gandhi and Motilal Nehru (his father) fully, he provoked turmoil over his controversial resolution for discussion at the Madras Congress in December 1928. This read: In these demands, Jawaharlal Nehru was repudiated by the Mahasabha and pro-Gandhi forces like Rajendra Prasad. Motilal Nehru's Report was accepted. But Jawaharlal did manage to secure a proviso; that if dominion status had not been obtained within twelve months, Congress would revert to its demand for complete independence and would organise a country wide civil disobedience campaign. Gandhi himself broadcast the news of this rupture.
 
Jawaharlal Nehru and Subhas Chandra Bose and Zakir Husain, now formed the Independence For India League within the INC with the declared aim of: The League decided to affiliate to the League against Imperialism. In 1931, the League Against Imperialism (under the Ultra-Left turn of the revisionist Comintern) expelled the Independence for India League.

Another manifestation of the more determined wing of the INC was the formation of the Congress Socialist Party (CSP). In 1934, in protest against the Congress resolutions on private property and the conditions of the working class, Rafi Ahmed Kidwai and Subhas Chandra Bose formed the Congress Socialist Party as a pressure group. Other leaders were Jayaprakash Narayan, Acharya Narendra Dave and Achut Patwardhan. They appealed to Jawaharlal to join, and to target the reactionaries.

Gandhi threatened to leave Congress if the CSP became too powerful. During this period, Jawaharlal was confronted by the right wing of the Congress (including Birla). Gandhi effectively prevented an overt expression of the Congress Socialist Party's views in the form of a binding resolution , ever taking place.
 
IN CONCLUSION:

1. There were clear differences in the degree of militancy of members in the INC.

2. Gandhi objectively represented the most servile and ultimately compliant wing of the Indian native bourgeoisie that came to represent the comprador faction.

3. Jawaharlal Nehru came to represent a more determined nationalist wing. Together with other possible progressive nationalist forces within the INC (eg. The faction around C.R.Das), this wing was opposed to the more moderate wing of Gandhi. But this wing was itself "vacillating", and also anti-Communist. It would back down in future whenever there was a possibility of a socialist up-turn of the masses. But it was more militant than was Gandhi; and did not wish to settle for less than full independence.

4. This meant that there were two wings in the Indian Congress party. This allowed a certain flexibility for work within the INC by representatives of the Indian working class and peasantry. As we will see, this line in colonial-type countries was explicitly endorsed by Stalin.

5. In summary, the INC was a class coalition between representatives of the comprador capitalist class and a developing national capitalist class. This latter was mainly if not entirely, composed of the Marwari nation.

The confusing nature of the class coalition ensured that the real objectives of the INC were obscure to most observers. Stalin, had however pointed out by 1925, that the INC was in effect a class coalition; and that both sections were timid; and that the worker and peasants should take over the leadership (See p.80). Unfortunately this thrust did not achieve fruition, sabotaged as it was at a critical juncture, by a revisionist Communist International.
 
OWNERSHIP OF INDIAN BUSINESS AND INDUSTRY PRE WWI.
COMPRADORS AND NATIONAL CAPITALISTS IN INDIA
 
 The ownership, management and financial capital underlying the large scale industries was dominated by the British. Nonetheless it is significant that this does not mean that there was no ownership by the native bourgeoisie. The process of development of the Indian industrial bourgeoisie was progressing :

As outlined above, the representatives of Indian capitalist to first become industrialists were the old traders that had made links with British colonists: But simply because the merchants had been connected with British capital did not necessarily make them indefinitely tolerable to British capital, or compradors. Moreover, the process of coming into being of a bourgeoisie wholly interested in its own capital, and not satisfied with being an imperialist chained beast, is not a mechanical and rigid one. For example, the great Birla family.
 
Gyanshamdas D. Birla (in the second wave of industrialists identified by D.N. in the above quote) was originally a trader whose family had its' first successes in the opium and cotton markets. Thereafter, as his biographer explains, Birla was blocked repeatedly by British interests. His further rise was helped ultimately by an Indian feudal prince. This little story of coming into being, goes against expectations in two ways, firstly that a feudal prince should aid the capitalists; and secondly that a "true" comprador could change his stripes :  
Naturally the discrimination that Birla experienced did not endear the British regime to him. He later became a major industrialists and a key business supporter of the Indian National Congress. This firm also became one of the top 5 major monopoly business houses in India, and the Birlas are further discussed below.
 
Marxist-Leninists use the term Comprador capitalist to refer to a group of capitalists whose profit comes wholly from the role they perform for foreign colonial capital. The term originally comes from China, where these individuals were primarily traders and merchants. In India traders as outlined above were clearly linked to imperialism. Marxist-Leninists use the term National capitalists to describe the capitalists whose business interests are primarily in industry, and who are not dependent upon foreign capital for their surplus profit.
 
 Some bourgeois scholars eg Claude Markovits argue that the Marxist-Leninist distinction between these two groups of capitalists is a fantasy. This is the view also, of those Left Revisionists such as Trotsky who 'dispense" with the need for class alliances in the colonial type countries. But this view is easily parried. Though it may be that the process of separation, of native from imperialist sponsored capitals; may be less clear in some countries than others. This does not invalidate the view, that generally national capitalists have different economic interests than do comprador capitalists. Markovits himself almost admits as much.

Markovits argues that in India, the distinction between "comprador" and "national capital" was not easy to make as there was a great interpenetration between the commercial businesses (ie. more or less equivalent to comprador capital) and the industrial businesses (ie more or less equivalent to national capital) :

But Markovits can only argue that in India, a classical comprador bourgeoisie such as in China (one purely dealing in trade) did not exist. For he himself draws back from his previous statement to admit one special case of "classical compradors": And Markovits even agrees that there were opposing views within Indian capital on the entry of foreign capital, but with a large group in the middle camp: So Markovits' conclusions are incorrect, in that he himself discerns different groups. He does offer interesting data by which we can see the lineage of the compradors.

Though often thought of as a uniformly comprador faction, the Marwari community was split into two when the Birlas set up an opposition group in business:

However, even the truly identifiable comprador capital did not simply remain a true comprador class (ie purely a middle man and trader and transportation merchant) for ever. Often they were drawn by the forced pace of change by the nationalists to redirect their finance towards an industrialisation: Even in the Post-War period where Indian capital was often simply financing British industry, there was a tendency (relative though it was) for the Indian financier to stretch their wings: Markovits summarises the difficulty in separation between Indian comprador and national capital, pointing out that there were regional differences in the degree to which the regional bourgeoisie were able to develop: The regional factor left certain clearly defined areas where the balance between pro-imperialist business and pro-nationalist business was slightly different. The different factions devolved into Family groupings.
 
 Thus Bombay (mainly Parsi, Khoja, Vania, Bhatia and Marwari business communities) contained shipping (dominated by Walchands) and cotton textiles (dominated by Sir Purshotamdas Thakurdas); cotton mills (Currimbhoys, Wadias, Thackerays and Tatas) but it was also the head quarters of the Tatas, who were of the Parsi community. Being close to the Tata Iron & Steel Company (TISCO) at Jamshed, and the electrical factories of Tata, Bombay was the key Tata stronghold. Though the Tata grouping was initially formed in 1907 in the face of government "indifference if not outright hostility" (Markovits, p.10), it did come to almost a monopoly position in the Indian sub-continent which forced the Government to appreciate it: Despite the initial hostility they received from British imperialism, the Tata group represented a group of capital most enamoured of British capital. They influenced other sections of Bombay capital in this direction also: The obvious political conclusions are drawn by Markovits: Thus Markovits has identified, despite his opening comments, at least one group who were pro-British compradors, centered on Bombay.
 
Calcutta was dominated by the Marwaris and the largest magnates were the Birlas and the Jalan and Bajoria families, both in jute industry after years in the jute trade. Here the British dominated Bengal Chamber of Commerce was practically closed to Indians. In response to this bar therefore, the Federation of Indian Chambers of Commerce and Industry (FICCI) was founded in 1925 by G.D.Birla: This faction at times took a policy that favoured Nationalism. However it frequently was frightened off by militant workers campaigns and as a consequence frequently ended up in dialogues with British capital. This then can be called one of the vacillating wings of national capitalists.

The third main area was Ahmedabad, which was uniquely a purely indigenous capital. The mainstay here was cotton textiles, entirely owned by local businessmen (Jains: Sarkalal Bhalbhai, Kasturbhai Lalabhai and Ambalal Sarabhai; a Patel ; Mafatlal Gagalbhai; and one Vaisnava ; Chamanlal Parekh), excepting one Tata owned mill. Here the industry was much undercapitalised as compared to Bombay. As a whole this center was more homogenously in favour of Nationalism. This can be called the more resolute and militant wing.
 
The remaining centers were much smaller, although Cawnpore (North India), Coimbatore (In Madras Presidency), and Karachi (outlet port of Punjab) also deserve mention.

The fragmentation of Indian industrial interests was shown by the development of these regional blocks (See Markovits, p.19). This prevented a unified business class, despite the Railways, arising whose interests were truly Pan Indian. This obviously allowed the domination of certain specific nations such as the Marwari. Because of the fragmentation of the Indian industrialists, the British were able to play each off against each other. But the objective power of the British was also waning.
 
The extent to which the Indian financier, or the comprador trader could develop into a "fully fledged" industrial capitalist was dependent upon the room left them by British imperialism. British Imperialism underwent a severe crisis immediately during and after the First World War. This tended to let the Indian national bourgeoisie some space to develop. Indeed with the Depression Years, even further room to develop was left.
 
Under this process, even the more Pro-British, or comprador sections were inclined to taking an anti-British stance at least for limited objectives and time periods. Another point of interest is that the group of pro-British Indian capitalists should include even a large industrial firm like Tata. Again, these were not merchants as the classical comprador capitalists were in China.
 
In general the net effect was that the Indian bourgeoisie developed 'airs and graces' beyond their original station in life. They aspired to become the primary capitalists; yet they wished to do so without losing the advantages offered by Imperialism, or arousing the masses to unpleasant visions of revolution.
 
EFFECTS OF THE FIRST WORLD WAR

Following the First World War, there were two 2 main changes that resulted in an increase in the industrialisation of India. Both were at least partly impelled upon Britain by the stringency of the war and the strains on the lines of communication.

The first was that there was a much greater tendency now to use Indigenous financing, ie. Indian owned capital. Even the purely physical transfer of funds was a major problem in war time. This had an effect beyond the war years:

This allowed a partial infiltration of Indian ownership into previously wholly British firms: Even more important for the Indian colony was a new awareness of the need to industrialise the country. As the acute comments above show, from the Vice Roys Lord Hardinge, and Lord Chelmsford, there was a need both to protect the market of India from other predator Imperialist nations; and to keep India self-sufficient in times of war.
 
The effects of the other competitor Imperialisms, "dumping" on hitherto British protected grounds can be seen in TABLE 1 drawn from Tomlinson, Ibid, p. 47. (See below, p.43). Of course, both the Government of India and Britain were essentially the same. Nonetheless a certain contradiction had evolved from the perspective of the issue of whether or not to industrialise India. The contradiction was especially acute from the point of view of British industry that had no branches, nor direct hold in India. This section of British industry, simply wanted to have the opportunity to "dump" its' goods. If Indian business locally (whether indigenous or wholly, or partly British was irrelevant), had the industry locally then this Dumping perforce was limited buy competition.

The net effects of the industrialisation can be gauged from the following data. Over the next few years a swing in the relative balances of Indian trade and British trade took place. In effect the swing was due to the increase in Indian import substitution. This significant step had its corresponding effects on British revenue statistics :

TABLES

TABLE 1 :
PERCENT SHARE OF BRITISH GOODS IN INDIA'S IMPORTS (1913-1938)

                                                    1913-1914            19128-9             1938-9
_______________________________________________________________

Cotton Piece Goods                         94                     79                         32
Iron and Steel                                 78                      56                         50
Other metal manufacturers               46                     34                         34
Hardware and Cutlery                     56                     26                         29
Electrical machinery                        79                     66                         57
Rail locomotives& Carriages             95                    88                         61
Motor vehicles                                 66                    15                         30
Chemicals                                        75                     59                         57
______________________________________________________________
Source : Statistical Abstract for British India.
Cited By Tomlinson, Ibid, p. 42.
______________________________________________________________

TABLE 2.
INDIA'S INDUSTRIAL PROGRESS IN IMPORT-SUBSTITUTION (1919-1936)
______________________________________________________________

% INDIAN PRODUCED IN :         1919             1936
________________________________________________________________

Cotton Goods
whites                                                 57.6         85.3
Coloured                                            69.6         74.1
Sugar                                                 12.0         96.0
Steel                                                    14.0        70.0
Paper                                                  54.0        78.0
Cement                                                51.0       95.4
Tinplate                                               24.5       71.4
______________________________________________________________
Source : N.S.R.Sastry "A Statistical survey of India's Industrial development" Bombay 1947; Sir Harry Townsend "A History of Shaw Wallace &Co" Calcutta 1965; and W.A.Johnson The Steel Industry of India Cambridge, Mass 1966. Cited Tomlinson, Ibid, p. 32. ______________________________________________________________

TABLE 3. INDICES OF INDIAN INDUSTRIAL PRODUCTION 1925-1937.
(1925=100)
                                                1931                     1937
______________________________________________________________
Cotton                                     111                     152
Jute                                           81                     90
Sugar                                       128                     584
Iron and Steel                            84                     133
Paper                                       119                     168
Cement                                     121                    222
Coal                                           92                     103



Cited by Tomlinson, Ibid, p.33.
Source V.Anstey The Economic Development of India, London.


TABLE 4 INDICES OF INDUSTRIAL PRODUCTION INDIA AND THE WORLD
1920-1938.
______________________________________________________________
                         INDIA         WORLD                     INDIA         WORLD
_Year_________________________________Year_______________________
1920                 82.4                 68.9                1930     100.7             101.6
1921                 78.4                 59.9                1931     108.1             90.5
1922                 81.1                 73.5                1932     108.1             80.1
1923                 81.1                 77.2                1933     116.7             89.9
1924                 92.6                 82.0                1934     132.4             100.8
1925                 91.9                 89.2                1935     143.0             114.2
1926                100.7                 93.5               1936     150.7             131.6
1927                105.4                 99.4               1937     163.5             144.7
1928                 92.6                 104.8              1938     166.8             135.0
1929                109.5                113.4
_____________________________________________________________
Source: League of Nations, Industrialisation and Foreign Trade 1945;p.140-1
Cited Tomlinson, Ibid, p.132.
 


Table 1 shows this same trend in Britain's declining share of imports into India. These figures are complemented by the accompanying Tables 2, 3, and 4. Figure 2 details India's progress through these years in terms of Import substitution; table 3 details India's Indices of Industrial production as compared to total world industrial production; and finally table 4 details as a table showing just the change in India's production over the years 1931 to 1937.

These dramatic increases, are relevant to the Comintern debate on "Decolonisation" discussed below, in the second part. Much of this industrialisation was achieved by the mechanism of erecting of Tariffs, behind which industry could be developed. This is further discussed below.

In the years before World War I, the tendency of British Imperialism had been to see India only as a source of revenue by export access, and military support. In other words as purely a giant milk cow:

But as Imperialism came into its Finance Imperialism phase, it required new and different conditions. These included the entry of money capital exports in preference to exclusively goods into India. But this then required an expenditure locally of the imported capital. Hence the construction of industries. As outlined above, a contradiction with British based "Home Industry" was highly likely. This strategy of providing industry to India would be resisted strongly by the British home-based industrialists. But in this battle the tendency was that Finance capital would predominate in discussions about India: There may also have been further sectional differences: Also the very fact that there was general resentment in Indian business circles (in both the British expatriate and the indigenous Indian business circles) about the lack of tariffs, worked in the favour of the financiers. The British industrialists in India, would obviously be on their side. They then became an objective ally of Finance Capital in its battle with the older traditional Industrial Capital. This helped the promulgation of an Indian Tariff policy, which of itself defused this native Indian industrialist driven resentment: This ensured that the GOI with the Legislative Assembly of India, could set fiscal policy independently of the Secretary of State for India, except in 'Paramount considerations of Imperial policy': The GOI even took some drastic purchasing decisions for its own stores that favoured Indian industry. This became vital for even such heavy sector industries such as the Iron and Steel industry of Tata: Thus if the temporary divergence between the interest of The British Home based Finance and Industrial capital, had altered the attitude to financing Indian industry, it had also allowed a set of Tariffs to be brought in behind which Indian industry could shelter: As anticipated, Manchester was not happy about the new Tariffs: Willingdon protested and: The Ottawa Agreement was critical for the British Imperialists at this time as they hoped to weld the trade of the parts of the empire together in the face of increasing competition for the trade of their colonies from places such as Japan, Germany and the US: After the First World War, despite the inducements to investment, British interests in India did not display many new dynamic approaches, especially when compared to the Indian rival entrepreneurs and industrialists: Unsurprisingly, these Indian firms had themselves been closely modelled on the British: Consistent with their more "adventurist" approach they were expanding fast: Indians were penetrating into finance, but also into the Board Rooms: Indian firms and British firms even developed common interests against the Colonial Government: But, finally, and crucially, British control was not relinquished easily: In fact control sometimes only followed ownership, later in the post-Partition era: But those firms that had industrialised found themselves in a very select group controlled by mostly British firms and a few Indian firms: Further more there was a high degree of concentration of industry: By 1939 there was a considerable interpenetration of capitals, and a decline in the objective "value" of the colony in its' current form for the British: The author B.R. Tomlinson, as will have been noted uses the term "Decolonisation" in the title of his work. This will be discussed below in connection with the debate that took place in the 6th Congress of the Comintern; whose intent it was to remove Stalin and M.N.Roy from positions of influence in the Comintern.
 
But first we should summarise the preceding analysis of the changes in Indian industry after the First World War.
 
CONCLUSIONS ON INDUSTRY IN INDIA BY 1947.
 
I. There was an overwhelming dominance of industry by British imperialism. This remained in place until post 1948.
 
2. But, there had been a relative decline in the strength of British imperialism, as judged by its' ability to restrict the entry of other imperialists into the market of India. And related to this the costs of maintaining India, as a colony, were mounting to the British.

3. Indian capital had moved from its' mercantile phase to an industrial phase.
 
4. This shift had first been made by that section of capital that had been closest to British interests, characterised by the Marwari-Gujerati clique.
 
5. Consistent with this, for the most part the strongest sections of Indian capitalists still had major links with British capital.
 
6. Nonetheless, this section itself had been growing in strength and adventurousness. They were developing themselves into new areas not previously undertaken by British capital. They were beginning to chafe at the restrictions. Moreover another sector had long been separate from British capital and was even more restless. It was becoming possible for it to see its' "own way". Some of this section overtly challenged British imperialism, such as the Birlas.
 
7. The British state was facing political problems in direct and overt control of India. A more palatable control was offered by a "Pseudo-Independence".
 
8. Despite the chafing of the Indian bourgeoisie at British control, they were fearful of the Indian proletariat and the mass movements that had been put into play. Their fears could be played on by British imperialism.
 
9. Because the battle between the Financiers and the older branches of Industrialists in the Home Country was intensifying, an objective reason to industrialise India had arisen. Thus in a hesitant, self-doubting manner the British had begun the increasingly rapid process of industrialising India.

In conclusion, by 1947 this whole process had resulted in a change in ownership, but not necessarily of control of the bulk of industry and trading : 

A COMPARISON WITH THE INDUSTRIAL SITUATION IN 1980's

By comparing the situation graphically depicted by Kidron and Tomlinson, ("Pre-Independence") to a later time period (Well past "Independence"), we can ask if the objective reality of the Indian industrialist has changed? Of course, the recent switch towards a pro-USA position of the current Rao Government mandates that this analysis be before Rao's administration took power.
 
Has there in fact been a change in the Independence of the Indian industrialist ?

1. Over the years 1965 to 1985, the amount of monies entering India from Direct Foreign Investment (DFI) were considerably less than in previous years. In fact there was a net efflux of monies. This is a highly significant change in the direction of cash flow. (From D.J.Encarnation. "Dislodging the Multi-nationals. India's Strategy in comparative perspective." Ithaca, New York, 1989. p.11.)
 
2. Some authorities would point out that there has been an increase in the amount gross of monies owing by the Indian state to Western Aid agencies and multi-nationals. But it is also the case that as a percentage of the overall assets owned by State and private enterprises, there has been a diminution over the years 1962-1982. See Below, figure 1. (Encarnation Ibid.p.35).
 
3. In keeping with this are figures that show a growth of Indian state owned investments over the years 1951-80. These show an increase in State holdings of major proportions as compared to all private sectors; including private corporation and private non-corporation. See figure 2 below (Encarnation, Ibid, p.38) and figure 3, below (Encarnation, Ibid, p.92).
 
4. The means of achieving this was a very conscious policy of Governmental restrictions on the inflow of foreign funds and investment. Those foreign funds actually allowed in were specifically earmarked for the definite purpose of acquisition of new technology:



FIGURES. (Please note all figures are only in hard copy and not in this web version)


FIGURE 1. From p. 35, Encarnation. SHOWS THE DECREASING LEVEL OF FOREIGN OWNED CAPITAL; COMMENSURATE WITH INCREASED STATE OWNED.
 

FIGURE 2. from p.38, Encarnation. SHOWS GROSS DOMESTIC CAPITAL OWNED AS EITHER STATE OR PRIVATE HOLDINGS.


FIGURE 3. SHOWS NUMBER OF GOVERNMENT LICENSES WITH AND WITHOUT FOREIGN COLLABORATION.(P.92. ENCARNATION).


 FIGURE 4. DECLINE FOREIGN TIE-UPS IN CHEMICALS (fig 2-11, Encarnation).

THIS ALL SUGGESTS THAT THERE WERE GENUINE ATTEMPTS BEING MADE TO RESTRICT THE PLAY OF FOREIGN CAPITALS IN INDIA BY THE INDIAN NATIONAL CONGRESS, AFTER "INDEPENDENCE".
 
IN THE BOMBAY PLAN, the leading sections of business and their political representatives would try to "Plan" out the future of India, after the British had "transferred" power. In this prototype for a capitalist India, both the 2 leading industrialists of India - G.D.Birla and J.R.D.Tata - argued for a restriction of foreign technical dependency:

As Encarnation points out:

BIBLIOGRAPHY

Journals International Press Correspondence. ECCI, Labour Monthly (London), Communist (India), Compass(CL,London).

Adhikari, G. Editor Communist Party India:"Documents of the History of the Communist Party of India Vols 1&2 Delhi, 1971. Akbar,M.J. Nehru:The Making of India."London, 1988,

Bairathi S: "Communism and Nationalism in India." Delhi, 1987.

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