Prashant points us at yet another interesting, Desi economic history piece by Gautam Bastian. In it, Gautam quotes a provocative Telegraph OpEd that discusses a surprising diversity in the Desi Intellegentsia’s attitudes towards the market. Instead of the uniform, Pavlovian rejection Uncle Milt experienced, the Telegraph’s Ramachandra Guha points at a specific braindrain of Guju econ knowledge –
Back in the Sixties, it used to be said that India’s most successful export were economists. Our economy was resolutely insulated from the rest of the world, but our economists occupied high posts in famous universities in Europe and America. Later, the joke was amended to say that the reason India’s economy was mediocre was because its economists were world-class. No South Korean was a professor of political economy at Cambridge; no Malaysian had been awarded the Nobel Prize. But their economies grew at an impressive 8 per cent, whereas ours stayed stuck at 3.5 per cent, also known as the “Hindu” rate of growth.My own theory about Indian economists is more specific and hopefully less facetious. It runs as follows; Gujarati economists place faith in the market, while Bengali economists are prone to trust the state. In the Fifties, when P.C. Mahalonobis drafted the Soviet-inspired second five year plan, A.D. Shroff responded by starting the Forum of Free Enterprise. In the Sixties and the Seventies, about the only economist of pedigree advocating Indian integration with the world economy was the Gujarati, Jagdish Bhagwati. He was opposed by an array of Marxists, many of whom (naturally) were Bengali.
As Gautam notes, several prominent thinkers have attacked the the broad question of “if intellectuals are so smart, how come so many have been so wrong about markets?” (Heck, little old me, in my blogging youth tried to add on to Nozick). But by slicing and dicing across socio-cultural lines within India, Guha takes the question in a different direction. While I’d heard the stereotype of Bengali Marxists (keep in mind that my homestate – Kerala – has its fair share as well) I wasn’t aware that Guju’s were responsible for the counter pole. Biz friendly Gujus, eh? I suppose many stereotypes start with a grain of truth somewhere….
Good post. Thanks!
that was indeed the era of the indian intellectual. mahalanobis (by the metric of that name), rao (of Rao-Blackwell theorem, Cramer-Rao inequality etc) and many others came out of (I believe) Bengali educational institutes. it is amazing looking at some of those papers in jasa etc from the sixties. those guys said more and more clearly in two-three pages than the the canine breakfasts served out today.
i wonder if there is a correlation between the origin of bengali intellectuals from managerial bureaucratic traditions (brahmins & kayasthas) and gujarati merchants and entrepeneurs (banias?).
Fantastic post. Not just Marxism and state socialism, but also violent Naxalism (Charu Mazumdar, Kanai Chatterjee); not to mention subalternism and a veritable arsenal of leftist academics. The Gujjus OTOH, well, as Gautam Sen said once, just take a look at the Swaminarayan temple in Britain- a work of high culture produced without the least bit of pretence.
razib: I think Gurchuran Das went into that in India Unbound (?).
retract the aspersions or we’ll take back tagore!!!
This all goes to further my theory that Gujurat = Texas.
Good post!
Take a look at the hunger strike by Mamata Banerjee to oppose the acquisition of farm land in West Bengal for a Tata car unit, also opposed by Medha Patkar. A project initiated(?) by the ruling CPM and supported by Pro-Communist Party of India-Marxist (CPI-M) farmers.
Nobody seems to be sticking to an ideology. Bengal sure needs to resolve some issues.
As for the intellectuals go, they are over-rated. Not that we don’t need them, but we need to listen to them less and make our own decisions (based on what we know and not based on what they say). James Surowiecki makes a good case for that in his book The Wisdom of Crowds, worth a read for anyone who believes in the collective intelligence of human societies (or the market if want to call it so).
That’s an interesting observation. But also, the socialist sentiments of many prominent intellectuals in India were a carryover from the independence movement, many of whom equated imperialism with capitalism(which was not farfetched, given the circumstances of the time). There was a socialist wave across India in the early 20th century that was not limited to Bengal alone: Bhagat Singh declared himself an atheist and communist, and many prominents Muslim intellectuals saw themselves as socialists. So did the prominent Congress leaders such as Nehru(Gandhi, as usual is hard to pin down). Socialism probably caught on in Bengal even earlier, as Tagore, the greatest influence on the Bengali bhadralok early in the century century, had expressed sympathies for the Soviets. It is no surprise that socialism/communism was the flavor of the day when these people moved into positions of power after independence.
Interestingly, the only prominent freedom fighter who had capitalist leanings was Sardar Patel, from Gujarat.
Interestingly, the only prominent freedom fighter who had capitalist leanings was Sardar Patel, from Gujarat.
yes, that’s the interesting thing. between 1930-1980 obviously socialism was the ‘hot’ view. so, the ? is did gujaratis in particular resist this tendency? and could it be due to their prominence in mercantile activities?
… surprising diversity in the Desi IntellegentsiaÂ’s attitudes towards the market …
There is diversity only after you unlearn the stuff from high-school and B.Com. classes. The economics that I learnt in an Indian high school was part of the Civics class implying that it was a government function. So, if you were not born into a family that ran a business you had no clue how markets worked. Even now the Indian cabinet shows the holdover from my civics classes.
List of ministers
Yeah, but think of the other Gujarati – Gandhi. He saw not only capitalism, but industry itself as dehumanizing and detrimental to human happiness.
I don’t know though how much of a following he had in Gujarat.
Yeah, but think of the other Gujarati – Gandhi. He saw not only capitalism, but industry itself as dehumanizing and detrimental to human happiness.
i need a bigger sample size, not alternative exemplars. anyone who knows indian public intellectuals in economics care to list some numbers?
Very true! At beginning of my high school years I thought soviet style communism was the best thing in the world, because we were taught that (from NCERT textbooks) without a fair comparison. Though I realized by the end of my high school years that it only leads to an unfair society (dad worked in DRDO, a good example of wasted taxpayer money).
I don’t know about gujarat but traditionally merchant castes did not join the naxalite movement in Punjab. Lots of punjabi writers and poets in 70ies were left leaning anti bania/merchant and anti government. I don’t know of any Punjabi economist who preached left or right, but certainly there seems to be a correlation between caste/community and practice of capitalism.
personal question. may seem kinda naive.
Here in mumbai, a lot of the businessmen happen to be guju, my dad says it has something to do the fact that gujus by their very nature are very enterprising. he gives ambani as an example. is that true at all?? if so is it just confined to mumbai, because i seem to run a lot of enterprising businesses here.
Does this have any relation to the point Floridian made recently in another thread? What is the caste make-up of the communities in these countries?
Not sure that this is true. Rajaji founded the Swatantra Party. It was quite opposed to the Soviet style central planning. Rajaji also coined the phrase Permit-Licence-Quota Raj. See this.
What is the caste make-up of the communities in these countries?
if you are are talking about the british colonies like mauritius & trinidad, mostly peasants from their respective region. but, in mauritius, fiji and throughout east africa, including south africa, gujarati mercantile groups play an important role as distinct economic elites. sometimes they aren’t hindu, e.g., the ismaili in uganda, or the sunni muslims in south africa.
Implicitly, as a Gujarati, I’m kinda biased towards this view. However, real information may say othewise. Gujaratis were pretty damn successful mid century in Africa (when socialism was hot in India) before instability in places like Uganda saw a mass exodus of desis.
Gujaratis ( and Sindhi’s) in my personal experience have been aligned with making a ‘buck’. Venturing beyond the shores of the subcontinent to do so brings considerable know how and an understanding of how to secure one’s interest.
How many Bengalis ventured out to do business as opposed to leaving to get a better education or intellecutal enlightenment?
To me, it has everything to do with what is prized in each community and market value assigned to it. Bengalis seem to value higher education, the status that goes along with it, and intellectual discourse spawned from having literate folk around you. Gujus value the engineers, doctors – but more as a result of the financial windfall that came along with said professions.
I’ve always maintained the Bengalis were similar to the French in that aspect, while Gujaratis are analogous to Americans.
I’ve always maintained the Bengalis were similar to the French in that aspect, while Gujaratis are analogous to Americans.
is that why i like french wine?
Incidentally, Mahalonobis was not an economist by education. He was a statistician.
razib: yes, that’s the interesting thing. between 1930-1980 obviously socialism was the ‘hot’ view. so, the ? is did gujaratis in particular resist this tendency? and could it be due to their prominence in mercantile activities?
The definition of Gujarati needs to be broadened to include Parsis, who in my book are bonafide gujjus. Then it is very clear that the Gujaratis have been a bullwark against the excesses of socialism. Intellectuals like Minoo Masani, Nani Palkhivala, et al worked tirelessly to promote free markets.
sakshi There was a socialist wave across India in the early 20th century that was not limited to Bengal alone
I will include quite a few Tam-brams in the list of the politically and economically left. I suspect that their nostalgic angst about the end of socialism has largely to do with how a lot of their parents (IAS types, civil servants) benefitied from a lifetime in babudom.
Bengalis are leftist because they love to argue. No other reason, really. If being martian was controversial, they would be martians, argue a lot, make art-films, write novels, garner awards and pontificate with self-righteousness about the glory of being martian. -P
Kidding, kidding, kiddng.
Vinod,
Lynne Truss may be offended by your use of the apostrophe. 🙂 Shouldn’t it be Gujjus and Bengalis?
LOL.
There are more of the enterprising gujjus in Mumbai coz it was/is the commerce capital of India (at least for the last 200 yrs?) and is obviously close to Gujarat. I grew up in B’lore and have seen that most businesses were owned by Gujjus, Sindhis, Jains and Muslims. A visit to the most popular market in the city will confirm that.
dad worked in DRDO, a good example of wasted taxpayer money
I venture that the ROI on DRDO was far higher than from the DAE (Dept. of Atomic Energy) even though there was no industrial/market mission for the DRDO. Compare that with DAE’s funding for a nuclear power goal of 20,000 MW by 2000. DAE now delivers 1,500 MW. It does not surprise me that they are the most vocal critics of the nuclear deal with the US.
On the stereotpyical front, I agree with Vinay. Most peple who do any sort of work in Bangalore are non-Kannadigas. I know. I am a Kannadiga. You will not find a more lethargic group of contented people than the old-Mysore community – well, probably the Pune Maharashtrians [1], but not many other folks.
A good guide to the gujju & marwari community (more or less) is this book. India’s best business writer is a gujju woman.
Among Gujjus, there is a curious presence in the stock market. IIRC, all NSE and BSE brokers bar none, are gujjus or marwaris). Following the Harshad Mehta scandal, some Jain stock brokers stated (India Today article) that they were not as ruthless as the Hindu vaishyas, which was an imaginative but outright lie. 🙂
Related topic: Why are gujjus are so powerful (along with Hassidic jews) in the diamond industry?
[1] Caveat – the Pune Maharashtrians who fought the Mughals and later, for independence, on the other hand (Ranade, Tilak, Chapekar etc) were exceptions.
Dear member quizman, The actual and true story about Harshad Mehta can be seen here Harshad Mehta It has very beautifully described every bit of 1992 scam.
I am a Kannadiga too, we sure do like to take things easy. Hey but weren’t we smart enough to settle in Bangalore in the first place 🙂
Why are gujjus are so powerful (along with Hassidic jews) in the diamond industry?
aren’t these gujjus jains? for hasidic jews it is for two reasons
a) this a profession that doesn’t require education in, and much interaction with, the outside world b) a lot of the transactions in the jewelry business are done through personal trust. hasidic jews have prefab networks of trust enforced through implicit socially mediated contracts so they can move gems internationally with minimal risks
for jains, didn’t it have to do with the fact that diamond dealing doesn’t shed blood? 🙂 (yes, a reference to blood diamonds….)
razib: True. And not just any jain. They are almost always Palanpuri Jains. Must be the water.
😀
Nope, that’s pretty right on, I think …and, sadly, why I lust after them Bengali mens so much (also because I have a bit of an inferiority complex about being the scrappy little Bihari neighbor to the land of Tagore).
“Bengalis are leftist because they love to argue. No other reason, really. If being martian was controversial, they would be martians, argue a lot, make art-films, write novels, garner awards and pontificate with self-righteousness about the glory of being martian.” almost exactly the same thing can be said about tamil brahmins, except the part about actually converting the arguments into something tangible – art-films, awards and the like.
As a non-Gujarati NI who grew up in Guajrat I can give you first hand account of the business freindly nature of the state. When we visited relatives in Madhya Pradesh and Maharashtra state, I could feel the difference even more.
I was always interested in the stock market. I saw that in 1991 during Harshad Mehta period even “thele-walas” (street vendors) were investing in stock market. I remember all braches of all banks in Baroda, Gujarat ran out of “Tata Timken” initial public offering forms !!!!!!! (Unlike the US, the IPO process in India much more democratic and even a small investor can invest. The risks are high for retail investors) I think only in Gujarat.
Consequently the biggest bulls of BSE of the past years are Nimesh Shah, Ketan Parekh (involved in scams).. Gujaratis.
Conventional wisdom has it that (in no particular order) Gujjus, Marwaris, Sindhis, and Sikhs (of Khatri/Arora castes) are India’s best business people. We should encourage these groups to ‘do their thang’, because they are equal to anyone in the world in this particular arena, and India’s continued economic growth and development rests to a large degree on their shoulders.
In my comment #34
What I am trying to say is that in India a retail investor can invest directly in IPOs. Since IPOs are risky investment, this freedom puts retail investors at a greater risk. Where as in the US only the underwriting firm (for example Lehman Brothers) lets its “preferred” investors in on a IPO.
I am not going to allow anyone to do their “thang” – Not In My BackYard:)
Just an additional note to comment #36. Since the big firms dont let retail investors in on IPOs, GOOGLE broke that rule and directly alloted shares to regular people (retail investors) at IPO price $80. They are sitting preety today !!!!
almost exactly the same thing can be said about tamil brahmins, except the part about actually converting the arguments into something tangible – art-films, awards and the like.
tam brams are too busy doing physics to make films 🙂
Very interesting post on a topic that has always affected me!
The intellectual bong and the business-minded Gujju are both very common stereotypes.
Being a “probashi” (expat) Bengali and a Gujju at heart (I grew up in mumbai but my parents hail from kolkata), I have always seen the “intellectual” (spoken with faux french accent here) tendencies of my pure-bong friends as an idiosyncrasy or annoyance. A lot of this dislike stems from the condescending attitude I received from them, and also due to their negative stereotypes of Gujjus, Marwaris and anyone else who actually did anything useful in life (IMHO).
I think that this whole coffeehouse-socialist-intellectual-leftist thing is turning out to be Bengal’s Achilles heel, as it as has led to an extremely lazy work ethic and resistance to any change. It’s kinda similar to France, that way.
However, your post does remind me, as I sometimes remind myself, that these intellectual tendencies have in fact produced some great thinkers/scientists/artists/reformers in their heydays.
Dunno man, I sure as hell like cheap wine by the gallon or in a box (quantity over quality), so it may be true.
Not that I don’t appreciate good wine – I do, but I also enjoy the cheap shit by the volume. Miller High Life, Mickey’s, Olde English, PBR, lite beer, whatever.
On a parallel note , One should also commend the Gujjus for having an intricate lending system , unique to the community. Remember folks, that this is a way more profitable and quicker to mint the moolah at a 30-40% interest rate while sitting on a white gaddi . This was also probably the only system akin to the CREDIT CARD..(circa 1960-1998). There is something to be said about the “iski topi uske sar aur uski topi iske sar system”! Munimji ..kahan ho ?
technophobicgeek: To be fair to Bongs, all non-academic bongs have done remarkably well outisde of Bengal. Rajat Gupta, Shombit Sengupta & other advertising biggies, execs of various IT companies are probably proof of the fact that once you leave Bengal, you are bound to succeed in business.
I think that this whole coffeehouse-socialist-intellectual-leftist thing is turning out to be Bengal’s Achilles heel, as it as has led to an extremely lazy work ethic and resistance to any change. It’s kinda similar to France, that way.
if bengal (east and west) had france’s prosperity & productivity it would be golden again 🙂
Oh razib…shonar bangla and all…I’m positively welling with tears here 🙂
Yup, dem bongs got the French cafe-intellectual sh*t down, but dey forgot dat u need to go out and exploit some colonies and get some bling to keep the game goin’.
Yep, agreed. Not to forget Subhash Chandra (Sahara Inc), and Amar Bose and so on. Dude, these folks are my only hope that genes can be overcome… 🙂
Amar Bose is half italian. Rajat Gupta looks Nepalese. Shombit Sengupta OTOH looks pure Bong.
I thought the Gujarati lending system was based on trust (no paper records at all), and also based on village/caste/family ties. I also thought it was interest-free. Was I wrong? I know that many people could only break into the hotel business because of these loans from other Gujaratis.
Amitabh, It’s sort of like an elite club. If you screw up on payments, you get thrown out. Very hard, almost impossible to get back in. You do not want to lose membership privilages. Where else can you raise big money without the usual lender hassles?
Some jargon for your enjoyment. Peti: 1 lakh (100000) Khoka: 1 crore (10000000)
Next time you hear someone saying “Mane khoka joiye”, you know he’s not asking for a big box.
N.O. 2% per month is standard rate. It’s in your interest to pay on time (I kill myself with the hahas).