Ishasree Mukherjee
Associate
Intueri Consulting
ishasree.mukherjee@intueriglobal.com
Legacy of Bagchi: Timeless Lessons for Business and Economy
Jackson Hole Economic Symposium 2024: Key Highlights and Global Market Impact with a Focus on India
October 5, 2024
Manmohan Singh: Transforming India’s Future
December 28, 2024
On November 28, 2024, India bid farewell to Professor Amiya Kumar Bagchi, one of its most distinguished economic historians and public intellectuals, whose profound contributions to understanding the forces perpetuating “underdevelopment” in colonial economies leave an indelible mark on economic thought. Bagchi graduated from Kolkata’s Presidency College. He then pursued higher studies at Trinity College, Cambridge University, where he received a doctorate in 1963 with a path-breaking dissertation on private investment behavior in India during the first two Five-Year Plan periods. Unlike many of his contemporaries, Bagchi focused on the finer details of economic transformation, leaving behind a legacy of rigorous scholarship that continues to influence economic thought and intellectual discourse.
Over the course of his career, he served as Director of the Centre for Studies in Social Sciences, Calcutta, and as the founding Director of the Institute of Development Studies, Kolkata, retiring from the latter in 2012. A dedicated advocate of Leftist ideologies, Bagchi worked closely with the Left Front government in West Bengal as a member and vice-chairman of the State Planning Board, actively contributing ideas and occasionally advising Party leaders, including thorough communications relayed to Comrade Sitaram Yechury. Bagchi steeped into his career as an economic historian with his seminal work, Private Investment in India 1900–1939 (1972), which offered a deep historical and empirical analysis of capitalist development in colonial India. The work was a first-of-its-kind sectoral analysis of investment in India’s cotton, jute, iron and steel, cement, sugar and paper industries. Over the years, Professor Bagchi engaged in scholarship that took an extraordinary intellectual trajectory. His writing reflected India’s conceptual process of long-term deindustrialization under British rule, followed by the slow emergence of indigenous private industry under colonial tariff protection after the Great War. His developmental planning completely transformed the two decades following independence–examined, with a critical eye, India’s move toward market liberalization and globalization from the 1990s onward. In addition to his pioneering papers in the Economic Weekly and Economic and Political Weekly, Professor Bagchi became well-known for writing major books such as The Political Economy of Underdevelopment (1982), Perilous Passage: Mankind and the Global Ascendancy of Capital (2006), and Colonialism and Indian Economy (2010). His four-volume history of the State Bank of India constitutes the foundation for documenting the evolution of the largest bank in India. He received numerous accolades, including the general presidentship of the Indian History Congress, the Padma Shri, and several visiting professorships and honorary doctorates; however, he humbly treated these honors.
Bagchi’s intellectual contributions extended beyond academia. He was an unapologetic critic of neoclassical economics, decrying the Nobel Committee’s refusal to honor Cambridge economists such as Michal Kalecki, Joan Robinson, Nicholas Kaldor, and Pierro Sraffa—pioneers who dared to challenge orthodoxy. When Amartya Sen received the Nobel Prize in 1998, Bagchi celebrated the moment as a turning point, penning a comprehensive academic tribute chronicling Sen’s revolutionary impact on the science of development.
The Modern Relevance of Bagchi’s Work
Professor Amiya Bagchi’s profound insights continue to serve as a vital compass in understanding the structural dynamics of economic inequality and exploitation in India and globally. This comment goes along with those criticizing market forces, state negligence, and exploitative systems, which continue to be relevant as modern economies are confronted with rising inequality, climate crises, and the ramifications of unregulated globalization.
Illuminating Colonial Exploitation
Bagchi’s influential work on the economic devastation wrought by British colonial rule in India exposes a distinct process of systemic and institutionalized exploitation, to which modern economic imperialism has evolved into nothing else. His analysis of India’s colonial tax system—where regressive land revenue constituted one-third of total revenues—the tariff system Bagchi analyzed set a clear reminder of the peril posed by inequitable fiscal policies. Today, as debates on wealth taxation and progressive fiscal policies take centre stage globally, Bagchi’s evidence-based critique of regressive systems stands relevant. His work on de-industrialization highlights how colonial policies destroyed local industries, such as the cotton sector in Gangetic Bihar, through predatory trade practices and skewed access to the market. Bagchi’s findings—that British industrial expansion depended on tariff barriers and the destruction of Indian manufacturing—offer a host of lessons for contemporary trade policy. However, Bagchi’s view of colonial policies causing deindustrialization was challenged for oversimplifying and neglecting global market dynamics and indigenous responses. In her The Deindustrialization of India in the Nineteenth Century: A Methodological Critique of Amiya Kumar Bagchi (1979), Dr. Marika Vicziany brought out the limitations of the term “deindustrialization.” Bagchi eventually replied to this paper and rebutted all critiques quite comprehensively. Bagchi’s magnum opus, Perilous Passage, dismantles imperialist apologia by demonstrating how the global ascent of capital was built on centuries of exploitation and systematic violence. His evidence—in particular, tariffs on Indian textile imports to benefit the metropole industry—counteracts the mainstream narratives that attribute the wealth of the North to innovation alone. These historical truths inform current calls for reparations, fair trade practices, and the dismantling of exploitative international systems. Bagchi’s critique of post-independence economic shifts—from planned development to neoliberalism—provides a matrix from which to engage the socio-economic consequences of liberalization. His statements about the rising inequalities and retraction of public sector investments are hitting home as today’s India grapples with dwindling resources on its front lines amidst a global climate. However, he faced criticism for not sufficiently acknowledging the benefits of neoliberal economic reforms like increased foreign investment and economic growth. To nations seeking to rebuild an industrial base amid global competition, Bagchi’s assertion for protecting nascent industries from unequal global competition holds high significance.
“The themes of social and political conflicts and struggles of ordinary people to achieve a decent standard of living in dignity and freedom still form the core of my professional work. So long as the human world retains its unlovely constitution, my penchant for dissent is unlikely to disappear.”
Contemporary Parallels: Private Capital and Underdevelopment
Bagchi’s analysis of the reluctance of the colonial rulers to reinvest surpluses in Indian development is suggestively paralleled by today’s domestic private investment crisis. Even after monumental corporate tax cuts in India, private capital formation in India remains at a dismal 3.2% of GDP. Bagchi’s characterization shows that if capitalism is defined as predatory, then wealth extraction happens as a system that should nourish the general practice for assessing the efficiency of the neoliberal approach. Moreover, the very critique he offers against imperialist capitalism, on the grounds that it relied on violence, plunder, and monopoly, reverberates the ongoing discussions on the global economic order. In his 1972 article, Bagchi showed that the very economic growth of the North was very much intertwined with the underdevelopment of the South, fueled by exploitation rather than competition. His call for equitable global economic structures assumes even higher significance in the current global scenario where emerging economies face debt crises and existing trade imbalances.
The Role of the State in Economic Planning
In a time of agitated debate regarding economic development, the thought of Bagchi draws lessons from the utility of state intervention for the pragmatic outcome of economic growth. His critiques of laissez-faire policies clearly show that planning for development is required to tackle structural inequalities and secure sustainability. Bagchi’s indictment of colonial railways serving extractive rather than developmental goals offers an important lesson for large-scale infrastructure projects today. His work emphasizes the importance of such investments for local economics in registering the inequities instead of serving the needs of global capital or geopolitical ambitions. Indeed, Bagchi’s suggestions would be extremely useful in the formulation of equitable growth-oriented policies at this juncture when India is once again intervening in its industrial policy and financial regulation.
Relevance to Climate and Economic Justice
Bagchi’s insistence on analyzing capitalism as a predatory system extends easily into modern discussions on climate justice. The exploitative extraction of resources and labor that he extensively documented in colonial contexts persists in contemporary environmental degradation and unequal carbon burdens. His work commands a rethinking of development to allow growth, sustainability, and equity.
The Significance of Bagchi’s Works in Shaping Today’s Corporate World
Drawing on the profound economic insights of Prof. Amiya Kumar Bagchi, his seminal works, Private Investment in India, 1900–1939 (1972) and The Political Economy of Underdevelopment (1982), have provided a profound understanding of the structural roots of inequality and exploitation. His in-depth analysis of colonial economic policies revealed how imperial rule created systemic barriers to industrial growth and drove deindustrialization in colonized economies. These insights remain deeply relevant in today’s corporate world, offering practical guidance for businesses as they navigate the enduring impact of historical inequities and work toward more inclusive and sustainable practices. However, Bagchi’s work on Private Investment in India, 1900-1939 (1972), was criticized for maintaining the relevance of his conclusion to modern economic contexts due to the use of historical data. His findings are particularly significant for multinational corporations (MNCs) and businesses operating in post-colonial economies, where understanding the socio-economic legacy of colonialism is crucial for designing equitable strategies. Companies like Unilever and Nestlé used this approach by adopting ethical sourcing practices and investing in community development initiatives that reflect Bagchi’s focus on equitable economic participation and localized resilience. By integrating these historical angles into their business models, corporations can address systemic disparities, strengthen their reputation, and ensure long-term sustainability, demonstrating how businesses can balance profitability with social responsibility.
Ascendancy of Capitalism, extensively discussed in his book Perilous Passage: Mankind and the Global Ascendancy of Capital (2006), remains highly relevant in the age of ESG (Environmental, Social, and Governance) and stakeholder capitalism. He warned against the dangers of unregulated markets and emphasized the role of state intervention in promoting equity and social welfare. Today, businesses like Patagonia and Tesla exemplify these principles by focusing on environmental sustainability and ethical innovation, showing how corporations can align profit motives with societal good. In the same way, Bagchi’s ideas continue to influence and help corporate strategies by addressing the growing demand for accountability in areas such as fair labor practices, transparent governance, and ethical supply chains. Companies leveraging their critiques of unbridled capitalism are finding innovative ways to create shared value, aligning with global goals like the UN’s Sustainable Development Goals (SDGs).
“Capitalism has relied on markets so long as they have served their purpose. As in the past, big capital has not been squeamish in training big guns on innocent people when they appear as obstacles against its designs.”
Moreover, Bagchi’s insistence on equitable policy frameworks and the long-term consequence of economic exploitation has implications for industries facing scrutiny over monopolistic practices and data ethics, such as the tech sector. Companies like Microsoft and Google have begun adopting ethical standards and transparent governance measures to rebuild trust, reflecting Bagchi’s belief in the need for corporations to operate as stewards of societal progress. By integrating his findings into corporate strategies, businesses can address pressing challenges such as income inequality, environmental degradation, and social justice, ensuring their own sustainability and a more balanced and inclusive global economy. Bagchi’s works provide an invaluable roadmap for ethical capitalism, reminding corporations of their potential to drive systemic change while achieving sustainable growth.
Ultimately, Bagchi’s insights provide a pragmatic framework for addressing the challenges and imbalances of capitalism, emphasizing the importance of state intervention, transparency, and ethical business practices in fostering a more balanced and inclusive economy. For corporates and business leaders, his work prioritizes long-term sustainability, equitable growth, and social responsibility over short-term profit motives. He advises businesses to integrate ethical sourcing, fair labor practices, and community-focused initiatives into their operations, ensuring profitability without perpetuating systemic inequalities. While the inherent flaws of capitalism cannot be entirely eradicated, Bagchi’s vision equips economies and businesses with practical tools to direct these complexities and work toward a fairer and more sustainable global future.
Balancing Capitalism with Ethical Standards: Bagchi’s Applicability in Today’s Economy
Born in 1936 in Jadupur village of Murshidabad, Amiya Kumar Bagchi’s life was marked by a relentless quest to understand and reshape economic systems. Bagchi’s childhood in famine-stricken Bengal, marked by the devastating 1943 Bengal famine caused by colonial economic policies, profoundly shaped his commitment to studying how economic systems perpetuate human suffering. Having rooted in Kolkata, he declined many prestigious offers from institutions like the Delhi School of Economics and Jawaharlal Nehru University and chose to stay in his beloved city. Bagchi’s legacy today remains the reverberations of his work as an institution builder, social scientist, and public intellectual. This analysis of colonial and modern capitalism with systemic inequities opens up significant clues to the development challenges and the construction of more equitable economies.
Applying his principles to the corporate world raises an important question: can capitalism achieve efficiency with fair distribution of wealth? While capitalism remains the most dominant force in the international economy, Bagchi’s ideas thoughtfully reconsider alternative growth strategies from profit maximization due to the reference given to principles such as transparency, accountability, and intervention as a pragmatic approach to surpassing the advancement of capitalism. Bagchi has argued for control over monopolies, the rights of labor, and equality of access to resources, all of which would operate in a market system that is legally accountable and transparent. But it must be built into the story of economic growth based on social justice and sustainability.
Bagchi’s vision is not predicated on overthrowing capitalism; instead, he puts forth compulsions that restrain excesses of capitalism and share its benefits among the greater populace. He has emphasized the role of the state and the private sector in nudging innovations and addressing structural inequities issues via public-provisioned welfare programs and progressive taxation. The principle of equity arrived at on competitive terms will go a long way in Bagchi’s provisional tools for a balanced macroeconomy that is efficiency versus justice, thereby opening the doors for sustainability and equity issues.
References
- Patnaik, P. (2024, November 28). Economic historian Amiya Kumar Bagchi passes away. The Hindu. https://www.thehindu.com/news/national/economic-historian-amiya-kumar-bagchi-passes-away/article68924567.ece
- Bagchi, A. K. (1976). De‐industrialization in India in the nineteenth century: Some theoretical implications. The Journal of Development Studies, 12(2), 135–164. https://doi.org/10.1080/00220387608421565
- Wallerstein, I., & Wallerstein, I. (2014, June 30). The human costs of economic growth. Monthly Review. https://monthlyreview.org/2008/12/01/the-human-costs-of-economic-growth/
- (2023, December 10). Amiya K. Bagchi: A political economist and economic historian who stands tall in South Asia. Newsclick. https://www.newsclick.in/amiya-k-bagchi-political-economist-economic-historian-who-stands-tall-south-asia
- (2024, December 3). Goodbye, Professor Amiya Bagchi. Matters. https://mattersthepodcastforourtimes.substack.com/p/goodbye-professor-amiya-bagchi
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Anamika Dhar
Associate
Intueri Consulting
anamika.dhar@intueriglobal.com
