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Rural Commercial Capital: Agricultural Markets in West Bengal

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Commodity markets are at the heart of development and understanding them is a necessity. Through unique field research over the last quarter century, this book examines the political economy of markets for staple foods in West Bengal. From serious food deficit to rice bowl of India, the Left Front government implemented a set of celebrated reforms to production but the food markets remained untouched until the late 1990s, as a result reformed agrarian structure interacted with an unreformed marketing system. This volume traces the result both before and after liberalization This lucidly written book breaks the traditional way of looking at the agricultural system through a) ownership patterns, and b) inter-linked contracts of trade. These two systems not only help understand markets but also about how agriculture is organized in India. It is the first study to conceive of the post-harvest sector as a system of markets. While analysing the informal community financing system the book also weaves into it the role of ethnicity, caste, and clan in market operations. This helps the reader to understand commodity markets. The importance of availability of credit to petty traders and post-harvest trade channels brings to light a very important gap in policymaking and available literature where the focus was always on credit for cultivation only. It shows how political economy may be used to contribute constructively to development policy. The volume is the first to examine regulation-both by the state and by means of institutions of social identity. It pioneers the study of self-regulation of markets through institutions of collective action.
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West Bengal's Rural Commercial Capital
Barbara Harriss-White
a
a
Contemporary South Asian Studies Programme, School of
Interdisciplinary Area Studies, Oxford University, UK
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West Bengal’s Rural Commercial Capital
Barbara Harriss-White
Contemporary South Asian Studies Programme, School of Interdisciplinary Area Studies, Oxford
University, UK
This paper aims to understand the achievement of high agricultural growth alongside persistent
poverty and a mediocre record of human development in West Bengal under the democratically
elected Left Front over the last 30 years. Contrary to conventional explanations which centre on
the nature of land distribution and rental arrangements, it seeks to explain the contrast between
the expansion of agriculture and the deprivation of its mainly rural population through an
analysis of the social relations of the post-harvest marketing system which links production with
circulation and distribution. Based on field work in West Bengal’s agricultural commodity
markets over the quarter century 1981 200 4, it shows how the seemingly contradictory outcome
can be explained in some measure through the control over the marketed surplus by a handful of
oligopolistic firms and their dominance over petty producers and labour in the agricultural
production and marketing system. It also highlights how the Left Front governments, despite
their attack on large-scale landed property, continued to enhance the privileges of the local agro-
commercial elite which prevented agrarian poverty from being addressed.
Keywords: merchant’s capital; agricultural marketing; West Bengal; class formation; poverty
Introduction
The state of West Bengal is distinguished by having had the longest running, democratically
elected Left Front government in the world—a coalition of left parties led from 1977 to 2011
by the Marxist Communist Party of India CPI(M). It is also distinguished by having transformed
its agrarian economy from one with regular deep deficits in food-grains, one which endured a
serious famine that is still within the living memory of some, to one which moved into surplus
in the early 1990s. From 198283 to 1988 89 annual rice production is recorded as doubling
from 5 to 10 million tonnes, which is a phenomenal achievement. Although stagnant in
the twenty-first century—at 15 million tonnes—West Bengal has been confirmed as India’s
top-ranking rice bowl (Adhikari et al. 2011; and see table 1). By all accounts the marketed
surplus has followed suit and risen from under a third to about half of production (Erenstein
et al. 2007, 38).
Yet, the state’s performance in human development has not mat ched that in rice, and it has
ranked comparatively low in dimensions of economic and social deprivation—improving by the
start of the twenty-first century to attain ninth position out of 15 states in the proportion under
the poverty line and eighth in the composite indicator of human development (Mehta 2003).
table 2 shows its structure of miniaturized landholdings with 81% of owned holdings being
under 1ha, a third of which is rented-out in reverse tenancy to producers in the 12ha size class.
To research this contrast between agricultural achievement and a mediocre record in poverty
alleviation, explanations were sought not in the structure of land control but rather in the structure
of markets, not in production relations so much as in the interaction of production with the sphere of
# 2013 Chinese Academy of Social Sciences
Email: barbara.harriss-white@qeh.ox.ac.uk
International Critical Thought, 2013
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distribution, not in semi-feudalism but in relations of contemporary capitalism. This was not
unproblematic since issues emerged from field research which challenged positions held by
the CPI(M) and the Communist Party of India (CPI)—the main political forces in the Left
Front.
1
In particular, the productive composite character of commercial capital differed from the
archetype of merchant’s capital. Commercial capital might be an active agent in class formation
and so also might be institutions expressing social status and identity. Though the system of
distribution could not be read off mechanically from the structure of production, the mass of
livelihoods in the markets was no better than the production system which extruded surplus
labour. The Left Front protected the local capitalist elite and failed to develop the petty producing
2
economy which its agrarian policies had helped to create.
This essay develops these themes in a summary of the results of three rounds of primary field
research on the political economy of agricultural markets over the period 1981 to 2004,
3
in two
districts of central West Bengal whose characteristics are presented in table 3. It explores first
the structure and behaviour of the grain markets, and second, their dynamics and change. In the
Table 1. Contribution of West Bengal to all India production of rice (in million tonnes).
1980
81
1990
91
1995
96
1999
2000
2000
2001
2001
2
West Bengal 7.5 10.4 11.9 13.8 12.4 15.3
All India 53.6 74.3 77.0 89.5 84.9 93.1
West Bengal to all India production
(%)
13.9 14.0 15.4 15.4 14.6 16.4
Source: Data from Directorate of Agriculture, Government of West Bengal, compiled and presented in Adhikari et al.
(2011).
Table 2. Structure of agriculture in West Bengal (2007 8).
Category of farmers Land ownership (%) Land under operation (%)
Marginal (,1 ha) 81.17 50.65
Small (1 to ,2 ha) 14.38 28.87
Semi-medium (2 to ,4 ha) 4.04 13.98
Medium (4 to ,10 ha) 0.40 2.49
Large (10 ha & above) 0.01 4.01
Source: Agricultural census (quoted in Adhikari et al. 2011).
1
Over this quarter century, the research was regularly discussed with three party-politically engaged Marxian
economists, the late Professor Biplab Dasgupta of the CPI(M), the late Professor Sunil Sengupta and the late
Boudhayan Chattopadhyay of the CPI, all of whom knew how grateful I was and am for their support.
2
Petty production is small scale production organized around the household in which the unit of production
and consumption are the same. It is sometimes also called simple commodity production as the surplus is
usually occasional or very small scale and not for accumulation. Petty production is sometimes regarded
as disguised wage work because of the poor returns. It exists on a continuum of forms between disguised
wage work and autonomous production, takes place under a variety of logics and is prevented from accumu-
lating by a range of exchange relations. It is called self-employment, own account enterprise, the small scale
sector, cottage industry, artisan production, and so on (see Harriss-White 2012).
3
Practical details of the fieldwork, including evolution of research objectives over three rounds, the sites,
sample selection, interview methods and schedules of questions are critically discussed in Harriss-White
(2008, chapter 1 and appendix 1).
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Table 3. Basic data about case study districts: Bardhaman and Birbhum districts central West Bengal in the early 1990s.
literacy
population 2001 (m) % urban
% scheduled
castes
% scheduled
tribes
% not
sown
% cultivated area per
agricultural worker
(ha)
index no
production 1972
¼ 100
% rural population
cultivators (1991)
% rural population
agricultural labourers
(1991) M F
Bardhaman 7 36 27 6 68 0.5 237 21 29 71 51
Birbhum 3 9 31 7 68 0.6 141 32 35 59 37
WB 80 27 23 5 62 0.5 206 27 23 67 46
% West Bengal’s elec
consumption 1983 84
% West Bengal’s elec
consumption 1991 92
Banks
1981
Banks
1995
Bardhaman 25 20 184 363
Birbhum 25 20 184 363
Kolkata 62 62
Sources: Government of West Bengal (1996, 205 7, table 14; 147, table 2.1; 152 53, table 9).
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interests of length, empirical detail is omitted that may be found in the book length treatment
(Harriss-White 2008). In each section of the argument, substantive findings are related to critical
theory or debates in political economy: first, exchange relations and grain market behaviour
inform a discussion of Marx’s theory of merchant’s capital and institutional theories of the social
embedding of the economy; and second, developments before and after the liberalization of dom-
estic markets are related to debates about the state’s roles in de-regulation and re-regulation and
their implications for class formation.
Markets for Food-Grains: Exchange Relations, Structure and Behaviour
There is a wealth of scholarship on West Bengal’s “semi-feudal” land relations, dominated by
share cropping. In practice, field research in Birbhum and Bardhaman districts in the centre of
the state reveals that there have been two distinct streams of large-scale surplus appropriation
from agriculture. First, as Amit Bhaduri (1983) famously models it, there is a local elite
Bengali landlord-moneylender jotedar nexus with a direct interest in rent and interest repay-
ments but less interest in (or even hostility to) productivity-increasing technological change.
Second, there is a largely unreported diasporic Marwari commercial oligopoly which manages
a rural and urban banking system, has a direct interest in expanding streams of marketed
surplus, and has no particular reason to resist either land reform or rises in productivity (see
references and field evidence in Harriss-White 2008, chapters 2 and 10).
The grain markets they dominate are persistently segmented—see figure 1 and table 4. On the
one hand, there is large-scale rural commercial capital built from surplus appropriated through
rent, interest and market exchange. In this sector of the system of agricultural markets, the mar-
keted surplus is controlled through webs of credit and debt managed by agents, the prime purpose
of which is to secure paddy supplies to some 560 modern, semi-automatic rice mills (each pro-
cessing a rough average of 8000 tonnes per year in 2002), reduce their riskiness and protect com-
paratively wide margins between paddy and rice prices.
4
Throughout the quarter-century of this
field research, the rice mill capitalists borrowed from nationalized banks and lent part of these
loans onwards to the informal web of credit on a scale that greatly exceeded formal (state) pro-
duction credit (Harriss-White 2008, chapters 6 and 8). As early as the 1960s, the Government of
India’s Report on an Enquiry into the Pace and Pattern of Market Arrivals of Foodgrains (Season
1958 59) in 1960 offered this account of the process of vertical integration using money
advances, which our research confirms has persisted into the twenty-first century:
Some (of these wholesaler miller-farmers) also own grocers’ shops and some others are dealers in
fertiliser. In both these capacities they often extend credit to the smaller producers on condition
that the repayment is effected in paddy after harvest. It is in this way that the big producers and
some of the ex-zamindars started to acquire command over paddy stocks after harvest. Recently
they have also entered the field of trade and milling of rice. This has led to the emergence of a
new type of imperfection in the rice markets, particularly in the areas where transportation has
been well developed. (Government of India 1960, 148 49)
On the other hand there is a population of approximately 40,000 husking mills processing
roughly 5 tonnes per year,
5
supplemented by scores of thousands self-employed petty commodity
4
Marketing margins in West Bengal have been twice those of Tamil Nadu in the south of the country through-
out the period studied.
5
These use variations on the Lewis Grant hulling mill, converted from a coffee grinder in 1897 by a Scottish
engineer and still appropriate for the “factor endowments” of semi-subsistent rural India—whatever the legal
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traders, processors (renting in mills for paddy they had parboiled domestically) and transporters
(an army of cycle freight carriers) themselves a reflection of petty production in agriculture, who
enter trade intermittently and seasonally, who expand by multiplying “self-employment” but who
Figure 1. The physical and economic system of circulation of rice in India.
regulations. The populations of the petty sub-circuit are not recorded. This information was estimated by the
Chief Inspector, Food and Civil Supplies Corporation, Bardhaman District (personal communication 2004).
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Table 4. Organization of the system of markets for rice: Birbhum and Bardhaman districts, central West
Bengal, 2002.
Birbhum
Dt.
Bolpur +
vicinity
Bardhaman
Dt.
Burdwan + Katwa
towns
Paddy sub-agents 200
Paddy commission agents 140
Rice mMills (60) 40 14 307
Solvent bran oil extractors 2 1
Rice brokers 20 1 .100 740
Wholesalers
—with licence
—without licence
150
2550
3040
Muri (puffed rice)—makers dk
Husking mill 23000 34000 50
Kutial—paddy-rice traders petty
renters of husking mills
60 ,15,000 300
Small local itinerant. tr. 60
wh/retailer
—with licence
—without licence
200
200
Freight rickshaws 6000
Cycle carts 2000
Lorries 500
Source: Author’s field research.
Table 5. Indicative scales of operation: Birbhum district, 2002.
Firm type
Av starting
capital Rs’000
Gross output (rice
equivalent) tonnes/yr
Approx net
income (Rs) Comments
Itinerant trader 58 13,000
Village agent 20 70 160 n.a.
Paddy agent 35 3,500 300,000 Commission Rs 5/
q paddy
Husking mill 175 100550 25,000
100,000
Rice mill 17,500 6,0008,000 1,185,000
2,005,000
Small paddy-rice dealer 12 90 30,000 Net income Rs 53/
q paddy
Puffed rice trader n.a. n.a. 30,000
Rice commission Agent n.a. n.a. n.a. Commission Rs
50/q rice
Rice wholesaler 2400 350 140,000
Wholesalerretailer
grocer
n.a. 3 450 1200180,000 Net income Rs 10
50/q rice
New itinerant rice
traders
n.a. 35 48,000
Freight cycle rickshaws
Source: Author’s field research.
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are prevented from accumulating by the exchange relations in which they are embedded. Some
effect distribution in the immediate rural and semi-urban locality and compete with other petty
traders (generally on a cash basis, few being moneylenders as well), while others supply rice
to the large-scale oligopolistic segment of the market and borrow advance funds for bulking at
interest rates which prevent their accumulating (Harriss-White 2008, chapters 3 and 5). Indicative
numbers and operational sizes of the differentiated sub-circuits in the two key central districts
which alone account for two thirds of the state’s milling capacities are presented in tables 4
and 5. Unlike the first “dominant” segment, however, the second “prominent” petty trading
segment of the market is not politically protected. Indeed if it is monitored at all, it is for purposes
of harassment and extortion by local police and officials.
In 1981, a practical question of why half of West Bengal’s then 700 rice mills were at that time
lying idle provoked the first round of field research. Was this the result of a successful challenge
by petty commodity production, swelled by the beneficiaries of land reform and investing new
profits from agriculture into trade and small rice processing industries in the rural non-farm
economy? The answer, more complicated than “no,” revealed the power of the processes of con-
centration in the dominant segment of capital rather than a challeng e to the oligopoly from petty
commerce. Since the Left Front’s land reform proved to be primarily a reform to the security of
tenure and had affected only 8% of cultivated land, it could not possibly be indirectly responsible
for the idleness of so many big rice mills. Indeed, the Left Front’s reforms in production had not
affected the structure of property in rice markets. Despite being ostensibly dedicated to crushing
middlemen, and despite the fact that rice mills were a key element in commercial portfolios, the
government was actually protecting in the marketing system the equivalent of the very class it was
challenging in production.
Mills were idle because mill-owning business families were in the throes of a massive
capital-biased technological upheaval. The process of technological change was encouraged
and protected by the Left Front, reinforcing with subsidized loans the power of the marketing
oligopoly. Meanwhile throughout the 1980s and 1990s, any challenge from a new proliferation
of firms in petty trade was avoided by the absolute growth in the marketed surplus, feeding
both segments.
Merchant’s Capital and Actually Existing Commercial Capital
The question how a Left Front could seek to empower petty producers and disempower petty
traders is a product of its engagement with Marx’s concept of merchan t’s capital. For Marx, mer-
chant’s capital is money used in a specialized sphere of circulation, distinct from that of pro-
duction, in which commodities are bought and sold—what in this case we are calling the
agricultural marketing system. Marx argues that there are no activities on the part of merchant’s
capital in the sphere of circulation which can increase the use-value of the commodities which it
buys and sells, because the act of buying and selling on markets does not change the physical
nature of the commodity. In ter ms of use value, then, merchant’s capital is therefore unproduc-
tive—even though it is clearly necessary to the process of social reproduction. It follows that
the social value of this form of capital is confined to the fact that “a smaller part of society’s
labour power and labour time is tied up in this unproductive function” than would be the case
were there to be no such a mechanism for the facilitation of the turnover of capital. Without mer-
chant’s capital, the mass of surplus value produced by industrial—and capitalist agricultural—
capital would be (greatly) less efficiently produced for all commodity producers would
somehow have to find all commodity consumers. Merchant’s capital is a drain on surplus
value but it facilitates the turnover of capital (Marx 1974a, chapter 4).
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Marx has been criticized for having an inadequate theory of the transition to capitalism.
6
However he can be read as arguing that merchant’s capital plays a fundamental role in this tran-
sition. This argument is significant because it introduces the idea that merchant’s capital itself
embodies contradictory relationships with respect to production.
For Marx, the role of merchant’s capital is essentially ambivalent and has both progressive
aspects (conducive to the establishment of [industrial] capital) and retrogressive aspects (blocking
this process). Marx (1974b, chapter 20) is clear about its ambivalent roles: first, “[t]he develop-
ment of commerce and merchant capital gives rise everywhere to a tendency towards the pro-
duction of exchange values, increases its volume, multiplies it, makes it cosmopolitan and
develops money into world money. Commerce therefore has a more or less dissolvi ng influence
on the producing organisation which it finds at hand, and whose different forms are mainly carried
on with a view to use value.” For Marx, another progressive aspect of the role of merchant’s
capital is to enable the concentration of capital for investment in production. This is a process
which is “logically” prior to the development of capitalist production because production takes
place in time and investment capital must be mobilized for plant, raw material and the
payment of wages. Merchant’s capital is not the only process of capital which is logically prior
but historically interwoven with productive capital—even in the contemporary world. Better
known than merchant’s capital is the role of “primary,” “original” or “primitive” accumulation
(Perelman 2000), now relabelled “accumulation by dispossession” by Harvey (2009).
7
Yet at the same time, merchant’s capital cannot avoid having a retrogressive role because
insofar as merchant’s capital re-invests resources got from buying cheap and selling dear into
markets and speculation, it clearly does not re-invest in the expansion of production. “The inde-
pendent development of merchant’s capital is inversely proportional to the degree of development
of capitalist production” (Marx 1974b, 329). It is productive investment rather than merchant’s
capital which revolutionizes capital. Merchant’s capital “is an obstacle to the real capitalist
mode of production” (329).
So the way Marx argues about the balance of contradictory effects is to privilege production
relations: “[t]o what extent it (commerce) brings about the dissolution of the old mode of pro-
duction depends upon its solidity and internal structure, and whither this process of di ssolution
will lead, in other words what new mode of production will replace the old, does not depend
on commerce , but on the character of the old mode itself (Marx 1974b, chapter 20). Productive
industrial capital is also privileged in Marx’s historical prediction that the development of capit-
alism would force merchant’s capital to be progressively subordinated to the role of a passive
wing of industrial capital.
Despite the specificity of Marx’s model of nineteenth-century British capitalism, Marx’s
concept has been influential in India in part because, as the quotations used here reveal, Marx
tended to elide the abstract concept of merchant’s capital with the concrete one of commerce.
His formulation of merchant’s capital as being unproductive but necessary found resonance in
many of the colonial interwar investigations into wide marketing margins (price differences
between producers and consumers which reflected, as these reports revealed, the exploitation
of impoverished producers by strikingly wealthier traders and commission agents). Their
6
See Bottomore et al. (1985) for a sympathetic treatment, and Hodgson (2001) for an unsympathetic
treatment.
7
Primitive accumulation is not just a process of seizure of resources prior to productive accumulation (and
resources are sometimes seized and sequestered for indeterminate future use, or seized and immediately
squandered in unproductive ways, see Adnan [2012]) but also the “liberation” of labour from the means
of production to have no option but to labour “freely” under the shackles of wage work contracts (see
debates about wage labour and freedom: Brass [2009] versus Breman Guerin and Prakash [2009]).
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culmination was surely the Report of the Committee of Direction of the All-India Rural Credit
Survey (Government of India 1954) carried out after Independence in 1951 which concluded
that the root problem of agrarian backwardness was the “colonial-cum-c ommercial-cum-urban
domination over the rural economy” to such a degree that “private trade can be tolerated only
if the government does not have viable alternatives” (Chattopadhyay 1969, 221 22). Not only
was merchant’s capital seen as unproductive but, contrary to Marx’s theorizing, it was also
seen as not necessary, at least not in the form of the mercantile firm. From this sprang many
state interventions—not only in West Bengal but throughout India—aimed at “eliminating
middlemen” and at by-passing merchant’s capital altogether, notably the Public Distribution
System (PDS) for food-grains and ot her essential commodities.
8
However it is also possible to argue the opposite—that trading activity is both necessary and
productive. To do this requires the analytical separation of the various elements of trading. Trans-
port links production and consumption and so “produces” the commodity in space—at the point
of consumption. Without transport there would be no commodity to consume. Processing clearly
changes the nature of the commodity and is productive. Storage may constitute hoarding—
deliberate withholding of a commodity from the market so as to secure an increase in prices—
and that is clearly unproductive. But insofar as the commodity is perishable and storage prevents
natural deterioration and wastage, by preservation it also “produces” the commodity over time
and by doing this, it is productive. It can therefore be argued that the activities of the system
of markets combine production and distribution as well as necessary and unproductive activity
with productive activity in historical forms of rural commercial capital. So while Marx reasoned
that merchant’s capital, capital used for buying and selling, could not contribute actively to capi-
talist class formation, merchant’s capital is an abstraction and the actually existing terms and con-
ditions on which exchange and distribution take place do indeed constitute an active set of
relations of rural and urban class formation.
So to focus on production and consumption (and/or the reproductive relations of the house-
hold) alone, and to neglect the active role of distribution in capitalist development as is so often
done, leads to analyses that are not just incomplete, but also misleading. From the field research
over nearly a quarter-century, summarized in this paper, it seems unlikely that the diasporic frac-
tion of the commercial elite had an interest in opposing land reform or technical change in pro-
duction, and the fact that they did not oppose it may even have made the political struggle a little
easier. It is clear that the large-scale commercial elite has been used to reduce the transaction costs
of grain procurement for the state-administered public distribution system.
9
But that once
admitted into the structure of state trading as “agents” for this purpose, they became powerful
“principals” and have succeeded in reinforcing their interests and their class position. Equally
8
See Harriss (1984) for a history of state interventions in trading, warehousing, transport and their finance.
9
After Independence, but still in the long shadow of the Bengal famine, and after heated parliamentary
debate, from 1965, the Indian state has procured and distributed (or buffer-stocked) a fraction of the marketed
surplus of food-grains (that part of production that is sold on the market), along with a set of other “essential
commodities,” an act of such political salience that the public distribution system has resisted the neoliberal
reforms and much criticism in the mass public interest. Over the last four decades, the Public Distribution
System—originally targeted from the grain-bowls of the north-west to strategically important frontier
regions and the poor in cities—has been constantly interfered with. It has expanded and contracted social
coverage, duplicated and subcontracted many practical functions to (provincial) state corporations, procured
from farmers’ regulated markets and then withdrawn from them, built massive buffers in times of scarcity
and released them in times of plenty—the opposite of the textbook role—initiated forced linkages with
state production credit and state storage and then withdrawn them. Currently it has a surplus buffer three
times the entire production of cereals in Africa and is the object of new justifications in terms of rights to
food (Harriss 1984; Mooij 1999; Swaminathan 2000; Khera 2011).
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clearly the wide marketing margins which the commercial elite seeks to preserve draw in petty
traders who then, by self-exploitation and by operating at lower costs per unit of output than
do the rice mills, can and do undercut these margins. Steady growth in the marketed surplus
has enabled the different processes at work in both segments to persist, while the state has pro-
tected the oligopoly and neglected petty trade.
Due to its long history of agrarian resource extraction, West Bengal has a peculiarly undiver-
sified rural non-farm economy, making the system of rice markets almost the only sector which is
capable of creating new livelihoods and absorbing surplus labour. It is clear that (more or less
seasonal) pett y trade is vital for the reproduction of the class of small-scale producers populating
the agrarian economy in an era when agricultural growth no longer absorbs labour. But the system
of markets and credit results in a range of rates of return which differ according to social class
(see table 5). Once interest payments for the loans which they take are factored in, the rates of
return to producers keep them unable to rise out of poverty. Without including the way
markets are structured, the trajectory of agricultural growth and agrarian poverty cannot be
explained. Once markets are included, the paradox is dissolved.
The Social Regulation of Markets
Actually existing markets, however, are instituted in ways other than class. They are shaped by the
state, in ways discussed later in this essay. Suffice it to say at this point that though the Indian and
West Bengal states have comprehensive legislation for market regulation (including for their own
active participation in markets), this legislation is either not enforced, or only selectively enforced.
When the state fails to enforce, beyond the limits of its actual regulative capacity, no matter the
scope of the formal law, the economy is s aid to be “informal”—and in India the term is “unorga-
nized.” Unorganized does not mean disorganized however. Markets are also shaped by non-state,
market-making institutions which operate outside as well as inside the (informal) economy, inter-
secting with class and affecting the character of class formation. Theorists of institutions have
identified the most prominent non-state, non-class forms of social regulation of the economy
as being gender, caste, ethnicity and locality (see Hodgson 2001; Harriss-White 2003). As
specialist sub-fields of knowledge, large literatures are devoted to each, reflecting and
theorizing relations in society and politics and, to a lesser extent, in the economy. While the
forces they express are widely theorized in the aggregate as “capillary power” (Foucault 1995)
or “social capital” (Bourdieu 1986) etc.—the reason institutionalists strive to identify and theorize
a range of social institutions is because the power they express is specific. It then becomes impor-
tant to identify non-class power relations in the economy without falling prey to essentializing
these forms and practices of authority. For not only do these forms of capillary power engage
with class relations in ways which vary socially at a given moment in history, but they are also
dynamized over time in ways which can be contradictory. A given social institution such as
caste may simultaneously be dissolved and intensified in close physical and social proximity.
A social structure may comprise institutions that persist practically unchanged (such as gender
relations), or that are physically displaced (commonly rural to urban migration s of institutions,
such as the discourse of “toil” and its oppressive practices [Chari 2003]), co-existing with ones
that progressively disappear (such as the collective management of irrigation). Mean while
those of value to capital may be re-worked to have hard regulative outcomes in th e economy
(such as caste, ethnicity, religion and locality). Further, the persistence of a regulative institution
such as gender may not indicate stasis—rather it may result from a balance between forces for
change and forces resisting change.
With respect to caste, almost all of those wh o operate in the West Bengal grain markets vehe-
mently deny that caste is significant in them and say they have “no idea” of the caste of their
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employees.
10
In West Bengal the structuring role of caste in markets varies with caste status.
Being Scheduled Caste or Tribe,
11
for instance, is a massive barrier to entry into—and to accumu-
lation from—all but the pettiest of trade for a third of the population of the state. The state flinches
from giving them trading licences, and banks do not give credit easily to Scheduled Caste bor-
rowers. None were found to own rice mills and very few own husking mills. Historically confined
to agricultural labour or marginal land holdings, only recently have they gained entry into the
small scale marketing segment as self-employed petty traders. The collective, corporatist,
“civil society” organizations through which markets are self-regulated, in rejecting Scheduled
Castes, also reject the interests of labour, or at best they paternalistically seek to control labourers’
interests. Caste and community are indispensable to market exchange because they are the insti-
tutions through which the collective preconditions for competition are most easily secured when-
ever the state fails to provide them. However, while the castes dominating trade are associated
with rentier landlordism, with diasporic business networks and with migration from East
Bengal, they are not reducible to these three factors. Over time an increasing range of castes
find livelihoods in markets, and markets are being cosmopolitanized. To conclude from this
that market exchange dissolves caste or relegates it to the private domain, however, would
be to ignore the co-existence of the relationships through which caste persists as an economic
regulator—and may even intensify as a form of social regulation.
Ethnicity is generally treated as a territorial attribute, as in the tribal states of north-eastern India;
alternatively it is reduced to the question of whether people are or are not members of the crude
category of Scheduled Tribes, to be grouped with Scheduled Castes and treated as “backward sec-
tions. In markets in West Bengal, however, it is not possible to ignore marwari ethnicity, long
established as a social construct covering a range of migrant castes from north-west India which
have been in business for centuries and which operate across most sectors of the economy
through powerful networks (mediating contacts, commodities and money) as well as through
localities. There, rather than integrating “backwards” into the ownership of land and territory,
their control over production is at one remove, through their occupation of space in the post-
harvest system by means of credit, storage and processing. The architecture of marwari portfolios
best embodies Chattopadhyay’s conception of conglomerate capital.
12
In this, Chattopadhyay
invokes a “Trinity which “commands the land market, commands the credit and comes with the
transport. In eastern India the Trinity may have “an arm reaching into processing units at one
end and urban epicentres of finance, trading and political-administrative linkages at the other
10
This is in dramatic contrast to the strongly and explicitly acknowledged structuring role of caste in South
India (Harriss-White 1996, 2010).
11
The caste system—a hierarchical and exclusive ordering of society in terms of ritual purity, occupation,
diet and kinship probably never existed in a pure form and is undergoing profound changes. There are
four main orders (varna), thousands upon thousands of endogamous sub-castes (jati) within the orders,
and a lively debate about whether the 16% of the population which are out-castes (whose work is to
clean the material fabric of society and who are thus most polluted) are within the “system” at its base or
outside the system altogether (Ilaiah 1996). For higher castes, the institution is either being dissolved or per-
sists as a structure of difference. But for lower castes it very frequently persists as relations of upper-caste
contempt and economic and social domination (Guru 2011). Tribal India (8% of the population) is regarded
as “pre-Hindu” and whether tribes complement out-castes or have a different principle of social order is also
debated. For purposes of positive discrimination (called “reservations”) the state scheduled a subset of eli-
gible very low castes and tribes (Scheduled Castes and Scheduled Tribes). Their special favours are hotly
contended by upper castes, have generally under-performed but have created a “creamy layer” of benefici-
aries. Reservations persist because even the creamy layer continues to face discrimination.
12
By “conglomerate capital,” Chattopadhyay means combinations of commercial, industrial, agricultural,
financial capital—both rentier and directly productive—investments in which are shifted according to
circumstances and are often mediated through political accommodations with the state.
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end. While “eluding research,” it persists as a major socially and economically distinctive stream
of finance and accumulation in the rural economy (Chattopadhyay 1969).
Gender relations in grain markets illustrate the general point that the role of any non-market
institution should not be treated in a reductionist way. Patriarchy regulates West Bengal’s grain
markets in instrumentally non-rational ways that are independent of the impact of production
relations. Women may be educated but are generally property-less. With the exception of petty
retailing, the system of markets is significantly more masculinized than is agricultural production,
and becoming increasingly more male—over time—debarring a further 50% of the population
from entry to markets as anything but wage- or family-labour. Yet patriarchal power is also struc-
tured through class (Bardhan 1993). As petty traders, an army of women have long constituted the
front line in rice retailing in Kolkata where their businesses are controlled by caste (entry and
information), kin (terms and conditions of work) and trust (stocks to sell). In the petty market
sector they perform unpaid work—parboiling and drying grain in their bari courtyards and in
public spaces, such as roads and roadsides. In the labouring class they are casualized and discri-
minated against in wages (see Harriss-White 2008, chapters 4, 6 and 8). In the mill labour force,
their attempts at political organization are actively resisted by millers and passively marginalized
by union labour mobilizers—they are increasingly being displaced from wage work in rice mills.
In spite of being relatively cheap labour, they are nonetheless being displaced by changes in pro-
cessing technology. There is no state protection for this constituency of female voters. By con-
trast, women in propertied families perform symbolic work. The women in patriarchal
business families are carefully domesticated as part of the discipline of reproductive subordination
through which business reputation and creditworthiness are constructed.
Locality is another powerful and complex social force which operates outside as well as inside
the economy. Locality has been variously theorized as a discrete unit of information (Rudra 1982), a
slice of regional agrarian structure (Rukmani 1996), a collective moral and social unit (Lambert
1996), a unit of (migrant) labour (Rogaly et al. 2001; Rogaly and Rafique 2003), a unit of regu-
lation, a unit of language, and a concept which changes its significance and meaning at different
scales of aggregation (Sengupta 1998). In agricultural markets in West Bengal, price behaviour
and market structure have been found to be specific to locality. Local agrarian structure has been
found to shape the structure of assets, and the supplies of and demand for commodities and
labour. Local moral communities are as necessary for the socialization of entrants to trade as
they are for collective self-regulation. So the way locality shapes local markets is significant, and
in long-distance markets its functions must be performed by other agencies with, consequently,
other effects. The precise meaning of locality as a regulator, and the balance of these meanings
with those of other forms of social power discussed here, are obviously not things about which
generalizations can be made, but that does not mean that they are not often causally significant.
So region of origin may shape the way labour is organized in rice mills while the organization
of finance through caste or community is a formidable entry barrier to gaining the heights of econ-
omic power, and gender sets up barriers throughout the market system. Information, together with
a common—if restricted—language, is essential to market exchange and these also structure the
development of the national market.
Locality also defines the political scope of business organizations. Where the state chooses
not to enforce the legal rules through which markets are ordered, markets regulate themselves
through collective action. Collective action (sometimes called “horizontal integration” by econ-
omists distinguishing it from vertical integration) accompanies competition. The former is necess-
ary to the latter. Trade and business associations and chambers of commerce have developed from
being purely representative bodies (some are actually thinly disguised caste associations) to
organizations that set the terms and conditions of market exchange, police entry, watch over
apprenticeships, adjudicate disputes, regulate wage labour and even on occasion organize
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insurance. But unlike formal state laws which have general scope, such informally-set terms and
conditions are arbitrary and incomplete. They do serve to establish market order but they also
prevent access by deviant kinds of firms—most notably small/low caste ones.
Dynamism and Change
What then are the changes that have been observed over the period of Left Front rule?
First, from the mid-1980s there was a massive expansion in the volumes of rice handled by
both arms of the segmented system—requiring a massive growth in the spatial reach of West
Bengal’s markets—just as the earlier rates of expansion of production inside the state itself slack-
ened. The flows of commodities became increasingly complex, some moving out of the state and
into it along the same trade routes according to the season. Second, the agricultural economy
diversified its crop mix; the cultivation of crops like potato, mustard oil and vegetables—catering
for income-elastic urban demand—registered remarkable growth rates during the post-1991
period when and where rice production grew more slowly.
13
Third, production has been being
relentlessly commodified. The data are increasingly poor but it would seem that since the early
1980s (and the start of the decade of accelerated growth rates) production for subsistence has
dropped from about 6570% to 4550% of total output (Adhikari et al. 2011).
The system of markets studied in central West Bengal responded by becoming increasingly
unequal and differentiated, with relatively massive concentrations of capital and an intensifying
process of female wage labour displacement at its apex (see table 5). This co-existed with a con-
tinued capacity to absorb petty producers in colourful but squalid market-places, but these tiny
firms continued to be unable to accumulate on their own account because of the combined
effect of a web of debt relations, including the terms of daily repayment of the goods they
sold, and the costs of routine extortion by officials.
14,15
The system of markets has also developed an institutional complexity (not expected in theories
of technology and business organization in market economies, where efficient forms are supposed
to displace inefficient ones). Over time, firms in West Bengals food markets have developed
increasing internal structural intricacy in terms of forms of organization, kinds of technologies
and combinations and permutations of functional activity (see figure 2). Unlicensed retailers devel-
oped wholesale activity; agents started transporting; traders in rice started trading in by-products.
At the same time, new institutions emerge from others—agents become wholesalers, and formerly
illegal husking mills develop into micro-conglomerate capitals involved in the pre-milling processes
of parboiling and drying. Yet during the last round of field research in 2004, there was still no sign
of institutional convergence between the two principal market segments.
13
Analysed in detail in Harriss-White (2008, chapters 6 and 7).
14
Food Department and Municipal Market officials extort on grounds of the site, weights and measures and
licencing of firms. Electricity is fickle and licences for electricity supplies are rationed and slow to be
granted—so sums that are significant to their donors are transferred to the Electricity Board. The relation
between the modern rice mill contracted to the Food Department or the Food Corporation of India is fes-
tooned in rules, the easing of which is lubricated by bribes. The laws are then not enforced so that complicity
and extortion go hand in hand in the forces actually regulating the petty producing circuit of the market
system.
15
Our evidence is thus at variance with the thesis of Sanyal (2007) and other post-colonial Marxists (Chat-
terjee 2008) to the effect that this part of the economy is non-capitalist, or a “needs economy”—or indeed a
“reserve army” (Altvater 1993); or a “labour bog” (Patnaik 2011). Also see the theoretical critique of Sanyal
by Jan (2011). Our evidence suggests that petty commodity trade is subsumed within the circuits of circula-
tion of the capitalist economy and represents a form of contemporary capitalism in which expansion is by
multiplication rather than accumulation and concentration (Harriss-White 2012).
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The Regulation of Change and Change in Regulation
West Bengal’s state has had to balance two difficult regulative demands. One is the need to replace
markets by active state-owned organizations in order to fulfil social objectives (e.g., food security,
anti-poverty, food-for-work), or to go where unregulated markets will not, or do not, go (or where
they penetrate on incomplete and/or oppressive terms). So, like other states of India, from the
Figure 2. Elements of the system of rice markets: West Bengal, 2002.
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1960s, West Bengal has created a set of state trading and storage corporations, cooperatives and a
public distribution system to respond to these development needs. The other demand on the state,
also developed back in the 1960s but fully consistent with liberalization, is to set parameters so that
the emerging “free” markets of capitalism may be regulated in the interests of society in general, and
agricultural producers in particular. So credit is denied for pure trade; and under the Agricultural
Markets (Regulation) Act physical places and stores, transparent modes of governance, price for-
mation and payment for transactions are established so as to “create” competitive markets which
will prevent traders from exploiting producers. The law also requires these market auction sites
to be governed transparently by a committee constituted democratically by an elected
coalition of competing interests: traders, farmers and weigherbaggerloaders.
The demands of these two developmental requirements are not always compatible. For
example, the practice of movement (trade) restrictions in order to police the public distribution
of grain led to prices in surplus districts being lower than they would have been under “free” move-
ment thereby penalizing producers of marketed surplus in surplus districts. Apart from widespread
corruption at checkposts, they led to prices in deficit districts being higher, thereby penalizing
landless and net-purchasing (poor) producers in deficit districts. Together the two approaches to
regulation generated a certain amount of incoherence in the official regulative environment.
In practice, their sabotage by the “informal” structures and relations of actually existing
markets distorts the state’s legal framework and makes the regulative environment even more
inconsistent and disputed. Regulations have been reinterpreted by privately negotiated norms
of procedure between the state and apex commercial capital: for example, in the 1990s, the
levy for the public distribution system, exacted after harvest as a percentage of all traded grain,
was replaced by informal quotas for each rice mill; then, instead of being levied on all traded
grain throughout the post-harvest season, these quotas were informally complied with using
the coarsest grain bought at the lowest prices—immediately after each harvest. Such practices
further weakened the state’s capacity to discipline markets, and channelled “discipli nary
action” into relations of extortion meted out to its weakest elements—petty traders and the
husking mills they patronized.
Before the Left Front was elected in 1977 there was already a legal contradiction in the
emerging markets between the foot-operated dheki (stipulated in law as being the only legally
recognized milling technology in order to protect the millions of female livelihoods generated
by dheki-milling) and the husking mill (which was outlawed but proliferating in hundreds of thou-
sands throughout the entire country).
16
A dheki processed in a day about one-eighth of what a
regular-sized mechanized husking mill processed in an hour. In West Bengal, the huller/husker
spread like wild fire in very small illegal firms which existed in tense relations with the State
Electricity Board. A second kind of contradiction involved the penalizing of a large class of
voters who should have been patronized by any progressive party. The public distribution
systems coercive procurement quotas at below open market prices led to price hoists on the
“residual” open markets to compensate millers for the losses they made in selling to the state.
These hoisted prices have been those at which the masses of net purchasers in the countryside,
who were unprotected by ration cards and had no access to the PDS, have had to buy their
essential food.
16
For reasons of nutrition and employment, the “government should formulate a programme for the replace-
ment of the huller type of rice mills by the organised hand pounding of rice” (Government of India 1955,
103, 43 47, 322). These aims accorded with those of the First Five Year Plan which envisaged a cooperative
condominium of organized cottage industries as the goal of development. Rules and regulations on the
statute book reflect this vision to this day, but material conditions rapidly evolved to render them
unimplementable.
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Not only did these informalized and “liberalized” practices long precede the process of formal
liberalization, but also actually existing liberalization created a set of rural propertied interests that
could obstruct formal liberalization when the moment was ripe for it. In 1993, a process of dom-
estic agricultural liberalization was set in motion nation-wide. It penetrated West Bengal in the
politically conflictual era of rule by the Hindu nationalist Bharatiya Janata Party (BJP) at the
Indian centre in New Delhi which had no truck with the Left Front. However, the reforms
were locally welcomed and shaped through strong national- and state-level lobbying by the
business associations of the commercial elites, nurtured by the Left Front but with divergent
material interests from it. Rice capitalists wanted liberalization—in particular, an end to trading
and storage restrictions—in order to improve the quantity and security of their supplies of
paddy and their access to final demand and to raise the capacity utilization of their progressively
heavily capitalized mills. But they wanted this only on condition that their access to credit, to new
“weather-proofing” and labour-displacing technology was to remain protected, and that all the
while their low-risk and high-rent transactions with the state as its milling agents for the public
distribution system would continue (details in Harriss-White 2008, chapter 9).
It is difficult to assess the meaning and effects of de-regulation when regulation has already
been “re-interpreted beyond recognition,” in the famous phrase of Sudipto Kaviraj (1988). At
best, formal deregulation will permit a shift in the balance of the force of social, non-state regu-
lation. It will signify “re-regulation” rather than de-regulation. In West Bengal, re-regulation
brought some surprising and unintended outcomes to the system of markets. Complex forms
of micro-conglomerate capital have emerged. Husking mills became eligible for local licences
and for the first time also became eligible for credit from formal banks. Some moved from
renting out their mills to directing an own-account business and expanded, others rented-out sur-
rounding land to petty producers who installed parboiling pots and created tiny drying yards.
Labour markets sprouted up around these sites of small and hybrid capitals as they grew.
Paddy agents for the large mills (formerly tied by law to them) wrenched themselves free, devel-
oped into wholesalers and money-lenders in their own right and busied themselves with long-
distance supplies (Harriss-White 2008, chapter 9).
Meanwhile extortion persisted, under laws which are obsolete or even no longer actually exist
(e.g., check-post guards requiring bribes for lorry consignments for which movement restrictions
no longer apply). And there is also a considerable amount of persistent non-reform: no liberaliza-
tion of credit for trade, no change in the provision and (informal) regulation of electricity; no
change in labour laws (though in any case the actual labour relations in the system of rice
markets were hardly touched by these distant and universal laws).
Nor was the state’s formal retreat from its structure of direct control of part of the food dis-
tribution channels proof against unexpected outcomes. Perversely, in the era of liberalization,
as the central government wished to be seen to reduce control, the West Bengal Food Department
was persuaded to take over the yearly handling of the storage processing and distribution of
150,000 tonnes of rice for Ko lkata’s public distribution system alone, while wheat, for which
there is a constant and even greater demand than there is for PDS rice in the cosmopolitan city
of Kolkata, remained the preserve of the central government’s Food Corporati on of India.
17
The Reserve Bank of India actively controls the resources for procurement through the release
of funds, and the Central Government of India will also broker disputes between agencies. Per-
versely, under the right-wing BJP rule at the centre, while the prices at which food was retailed
under state control rose, food subsidies also shot up. This was because of the national compul-
sions to purchase from the north-west of India combined with rules about minimum purchase
17
Source of data: raw data from the Food Corporation of India Eastern Zonal HQ, Kolkata.
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consignments (25kgs at a time) which poor eligible consumers frequently did not have the liquid-
ity to meet. In 2002, these two conditions resulted in a massive 60-million-tonne mountain of
stocks, the costs of storing which formed a growing part of the subsidy. The targeting of consump-
tion became more extensive but targeted households were unable to consume state grain because
they could not purchase it in multiples of 25kgs—what the government must have considered to
be minute consignments but what we re in practice for them impossibly large bulk purchases. So
de-control did not result in radical changes in the structure of formal and informal property rights
and rents.
Class Formation—A Petty Bourgeois Revolution
Clearly that there was much regulative flux for which the state of West Bengal—as one of
the set of constituent states in the Indian federal system—could not possibly be expected to be
other than a passive recipient. However this is to deny the Left Front any agency in the
regulation of rural markets, which—as was argued earlier—would not just be incomplete but
also inaccurate.
“We will implement our programmes not from Writers Buildings
18
alone but also from the
fields and factories where our strength lies and with the help of the people,” declared Chief
Minister Jyoti Basu on his election in 1977 (quoted in Sankar 1997, 123). From 1977 onwards
there was tension between the role of the Left Front in the bourgeois revolution that had to
precede a socialist one and its anti-capitalist dedication to the eradication of social and economic
parasites—notably the landlord and the middleman. As explained here, the reality is that all but
the tiniest minority of trader-middleman carry out a combination of productive and unproductive
but necessary activity. The tension was resolved by the Left Front by betting on the strong, by
relying on the local commercial capitalist elite to reduce to the minimum the information and trans-
action costs of procurement. Being agents of the state was not inconvenient—it reduced commercial
risk, led to an illicit flow of leakages from which profit was made and enabled working capital to be
shifted elsewhere. Betting on the strong also led to the states endorsement of technical change in
processing (parboiling and milling) which in turn has displaced a massive, unrecorded number of
wage-labourers (mostly women) from the work-force of the rice mills with no attempt by the state to
stimulate alternative livelihoods. As a result, this constituency of (female) voters has been “returned
to agricultural labour and, as they framed it, “pauperized.
19
The CPI(M) was “completing a bourgeois democratic revolution, in which our administration
is transparent and everything is taken to the people,” explained West Bengal’s Attorney General in
November 1991.
20
The problem is not so much the fact that the Left Front government’s (LFG)
revolution was a bourgeois one; it is that the LFG lacks an economic-cum-political project for the
petty-bourgeois class, to which it has acted as midwife and which lives in the economic spaces
between fields and factories. The LFG lacked a project for the actually existing factor endow-
ments of the rural non-farm economy; or a project, as Datta puts it, for “an entrepreneurial tra-
dition that has its roots in the bazaar economy” (Datta 2002, 3182); or a plan to incorporate
“informal markets”; or even a vision for a worked-out “people’s capitalism” (the concept that
Abhijit Banerjee and others drew from their reading of development in China, for lack of a critical
analysis of West Bengal).
21
18
The West Bengal Secretariat.
19
For direct testimony from female mills workers in Bolpur in 2002 and 2004, please see Ghosh (1998).
20
Lecture in Nuffield College, Oxford University (personal communication).
21
See Banerjee et al. (2002), Bandhyopadhyay (2001, 4790) and Chatterjee (1997, 67 68) on the limits to a
paternalistic project for the small peasantry.
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While wa ge workers are exploited on labour markets, petty producers can be exploited
through four other transactional processes—through the rent for their premises, the loans they
contract to purchase inventory, the raw materials purchased, and the commodity markets on
which th ey buy and sell. In the labour-intensive segment of agricultural commodity markets,
which has the capacity to absorb petty traders and processors (though mainly men), the lack of
provision of sites and other infrastructure, and of licences and credit, has forced petty traders
into being victims of extortionate exactions from officials and of disadvantageous exchange
relations with money-lending traders which prevent them from accumulating. Licensing was
reformed to cease rationing and storage restrictions were lifted by order from New Delhi—
only in the late 1990s. Even so, and despite the fact that licensing provided access to formal
bank credit, many petty traders continued unlicensed, while owners of rice mills used the
lifting of storage rules to expand capacity and develop the kind of inter-annual storage plans
that used to be thought of as antisocial “speculation.” And while the Regulated Markets Act
(whose intention was to improve the conditions of the first transaction in the commodity
market, i.e., that between primary producer and trader) has until very recently succeeded only
in creating market yards rank with weeds throughout much of India, nowhere had the implemen-
tation of this Act been more dysfunctional than in West Bengal. The Left Front appeared to
accept—as impossible to challenge—the domination of exchange relations in which the marketed
surplus was governed by the terms of the producers’ debts to traders and to millers. The asymme-
try of power involved in the interlocked grain and money contracts which held the system
together was certainly not to be overcome through open auctions held in official market
places, however nicely bricked.
Further, the kind of commercial capitalist development reported in this essay strongly
suggests that petty production and trade may be intrinsic to state-regulated capitalism—incor-
porated by it and an outcome of it—and other evidence confirms its ubiquity throughout the
country (Harriss-White 2012). Activity outside the regulative ambit of the state—not just
petty production and trade but also casualized labour in and around large registered firms
(even the Food Corporation of India)—gives clear advantages to business and the state.
Market or environmental risks may be shifted onto independent out-workers or home-
workers or unprotected wage labour. Costs may be reduced by avoiding overheads, abandoning
or never meeting employers’ obligations, undercutting legal wage floors and replacing wage
work by work regulated within families by patriarchal authority relations. New kinds of low-
cost labour may be incorporated, or old forms of low-cost labo ur may be re-incorporated
(e.g., rural, female and child labour, migrant workers). The labour process is controlled by
avoiding the creation of conditions where it might be organized in unions, through which it
might grasp rights and exert some countervailing power. The state’s regulative and welfare
responsibilities towards labour can be shed and the state’s infrastructural responsibilities
toward business and capital can be reduced. Petty production and trade is not a pre-capitalist
relic. It is not confined to residual sectors. If it is transitional at all, th e transition is very
long and drawn-out.
Conclusion: The Project for Agricultural Markets in the Twenty-First Century
The tenancy reform, “Operation Barga,” and rural interventions such as local government through
Panchayats have been intended to consolidate bourgeois agrarian society. They have resulted in a
differentiated agri-food system that differs little from other regions of India, except in the vastness
of the pediment of petty trade. After tenancy reform, the Left Front had no further economic
development project for the agrarian petty bourgeoisie that it has created below its political
and conceptual radar.
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Instead in 2000, the LFG followed the Communist Party line in China, Mozambique and
Vietnam. It employed McKinsey, the US management consultancy, to secure the involvement
of some 10 Indian and multinational corporates to scale up West Bengal’s commercial capitalism
by many multiples and to vertically integrate the supply chain to “big retail” (WBIDS- McKinsey
2002). This was to be done through the contract-farming of poultry, shrimp, “vision crops” in
fruit and vegetables, and rice for export and for new supermarket retail outlets.
22
Rice is to be
developed through new brands—“Bengal rice,” or perhaps “Darjeeling rice.” A few strategi-
cally-placed rice millers have lobbied to be the procurement agents of these corporate agri-
business supply systems.
23
The LFG was asked by McKinsey, acting on behalf of its corporate
clients, to organize pilot projects to collaborate with banks to release the credit needed for contract
farming, to offer fiscal incentives, to build infrastructure and to deliver an “articulation” of the
contract farming policy through its Panchayats (The Hindu Business Line 2002). In this vision,
which introduces a much larger-scale fraction of agri-business and reduces the current agro-
commercial elite to the role of supplying-agents or contractors, petty, post-harvest production
and trading is completely by-passed. In fact it is invisible and questions about its development
are begged. For McKinsey, it simply does not exist. In this, West Bengal is simply following
the trajectories of all the other component states of the Indian federation.
This essay has been written in the wake of a series of bloody land conflicts in West Bengal
associated with land acquisitions for exactly the kind of industrial project which the previous
paragraph has outlined for agriculture. The infrastructure for the new agricultural marketing
project would also be very land-extensive. Agriculture itself is no longer growing at the rate of
the years 1983 93. It has decelerated and stagnated, caught in a pincer of rising costs and
falling prices, and its rates of return have declined (Adhikari et al. 2011, section XVI). For the
first time in Indian history its role as a sponge, a labour reserve, has reached its limit (Sen
2002). All field researchers of agrarian India are unable to avoid commenting on out-migration.
The sector is leaking labour (Rogaly and Rafique 2003).
In comparison with other states like Tamil Nadu, West Bengal has a backward rural non-farm
economy for which the Left Front has also not privileged and resourced a coherent project. Land
itself is the object of renewed struggle—not only confined to the wave of renewed primitive accumu-
lation for big national and multinational capital, but also mediated by local commercial and landed
capital. As Biplab Dasgupta recorded after a fact-finding visit in 2002 and before his untimely death,
even the sons of landlords find livelihoods in scarce supply (Dasgupta et al. 2002). They are recruit-
ing and evicting seasonal share croppers, are exchanging share-croppers’ pattas for tiny house plots
and are on an offensive to resume control of the land. As Shapan Adnan and Ranajit Dastidar (Adnan
201 1; Adnan and Dastidar 2011) are now recording over the border in Bangladesh, so in West
Bengal, the current era is one of renewed and widespread primitive accumulation by local
capital—by force (separating workers from productive resources by seizing land), by guile (ensuring
barely sufficient self-provisioning by labour so that employers can maximize the downward pressure
on wages), by oppressive super-exploitation (of petty production and wage labour—reworking insti-
tutions of social regulation to immobilize tiny capitals, to set workers against each other and prevent
them from organizing), and by dispossession from the state (by privatizing public entitlements and
by exacerbating the access to the state of those below the poverty line). The CPI(M) and its allies had
no response but complicity to these “market-driven” relations of coercive liberalization.
22
It had earlier commissioned other international management consultancy firms for advice on industry:
Arthur D. Little and Price Waterhouse, as reported from an interview with the CPI(M) Minister for Industry
and Commerce (Ganguly 1997, 123).
23
They are not to be read as accepting a passive role as agents of industrial capital.
38 B. Harriss-White
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As Marx commented on the persistence of primitive accumulation: “the nature of capital
remains the same in its developed as well as its undeveloped forms ... cruelty through wage
labour is no less than the cruelty of primitive accumulation” (quoted in Perelman 2000, 29).
Petty producers and traders have not mobilized politically against apex capital, not only
because this capital is protected by the politicized arrangements regulating the state’s own
Public Distribution System, but also because petty producers and traders, even when harassed
by state vigilance forces, can gain seasonal livelihoods out of the wide margins enduringly
maintained by the accommodation between state and commercial capital.
24
Commodity markets have been below the radar of most of the abundant scholarship on the
political economy of agrarian change in West Bengal, save that of Visva Bharati. Had they
been more studied, the significance of the LFG’s focus on rural production, which led it to
neglect property relations in exchange and circulation—in practice, if not rhetorically—might
have been appreciated. This political and academic neglect has permitted the development of
socially-regulated, as opposed to state-regulated, markets, the perpetuation of an accommodation
between the state and the agro-commercial power elite established under previous regimes, nego-
tiated in Kolkata out of sight of rural West Bengal (and its scholars), and, as the poverty and
human development data show, a persistently deprived population.
In this, the LFG is not at all exceptional.
25
It is only in the political ideology committing it to
eradicating parasitic and predatory economic elements—landlords and middlemen—that its
accommodation with the agro-commercial elite has been concealed that it has been exceptional.
In West Bengal until recently, petty commercial capital has not been encouraged to accumu-
late; quite the reverse. Now, with the liberalization of domestic agricultural markets, triggered by
a right-wing government in New Delhi, the dynamics of accumu lation are extending towards the
mass of petty trade, but unaccompanied by a development project for them. An unholy—and to
date politically un-articulated—alliance between a mass of small peasant/petty traders, transpor-
ters and processors on the one hand, and liberalizers at the centre on the other, is providing a
theoretically and politically uncomfo rtable challenge. This challenge exposes for all to see the
local structure of agro-commercial capitalist interests which were interlocked for decades with
those of a government politically dedicated to opposing them. It is of importance theoretically
to recognize the political economy of actually co-existing commercial capital and petty commod-
ity production and trade. It is of importance, electorally and developmentally, to create a devel-
opment project not just for wage labour but also for the large class fraction of petty producers and
traders which co-exists with wage labour and populates the markets for food.
Acknowledgements
This essay, summarizing my book Rural Commercial Capital (Harriss-White 2008), has been written in
memory of Professor Biplab Dasgupta, M.P. (Marxist Communist Party of India). The author is very grateful
to the three anonymous reviewers for their constructively critical comments on the draft and to the
exceptionally good copy editing.
24
Sarkars formulation that the LFG’s stability is due to the physical-political protection it provides to liveli-
hoods in the non-farm economy (while being deduced without evidence and needing further research) is an
indictment of the poverty of the political project for petty production and trade in the informal economy
(Sarkar 2006).
25
See Harriss-White (2003) and also the Editorial of Economic and Political Weekly (2002) in which Tamil
Nadu’s efforts to encourage corporates and contract farming, and the amendments needed to the Regulated
Agricultural Markets Act to legalize contract farming and the transformation of “wasteland,” are critically
discussed.
International Critical Thought 39
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Notes on Contributor
Barbara Harriss-White is Emeritus Professor of Development Studies, Oxford University, and Emeritus
Fellow of Wolfson College, Oxford. She is a Senior Research Fellow in the School of Interdisciplinary
Area Studies and currently directs research into bio-physical materiality and the political economy of
India’s informal economy, with a case study in the production and distribution of rice. For four decades
she has used field research to study Indian agricultural and rural markets and local capitalism. For three
decades she has also studied the relationships between markets and many forms of deprivation. Recent
books include: Mapping India’s Capitalism: Old and New Regions (edited with Elisabetta Basile; Palgrave,
forthcoming); The Political Economy of Development: Africa and South Asia Compared (edited with Judith
Heyer; Routledge, 2010); Rural Commercial Capital (Oxford University Press, 2008; Edgar Graham Prize).
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