Political Economy History of Pakistan – Part-1

Definitions of Political Economy

During the time of Adam
Smith and John Stuart Mill, what was known as “political economy”
evolved into economics as a discipline. Researchers in this field investigate
the evolution of economic thought as it is framed by various political and
social contexts, from its philosophical roots to the application and
construction of methodologies and tools.

In the twentieth century, the neoclassical viewpoint evolved
into “normal science,” or textbook economics. The neoclassical
approach came to be associated with economics in the same way that Newtonian
mechanics came to be associated with physics. The process of normalizing
economics, on the other hand, was one of constant intellectual and political
ferment, deserving of a book on the political economy of economics. The
Austrian and Cambridge wings of the mainstream neoclassical school debated the
importance of markets and the role of the state. Fundamental criticisms of the
paradigm’s assumptions, concepts, conclusions, and engagement were leveled by
institutional, Marxian, and corporatist approaches.

This conflict between normal science and ferment
continues to exist. On the one hand, it appears that neoclassical economics has
triumphed in academia and politics. Economics journals are primarily concerned
with unsolved puzzles and relationships that necessitate mathematical
fine-tuning within the neoclassical paradigm. Some of the discipline’s
brightest and most astute practitioners work as policy analysts and
policymakers for government and corporate entities. Fundamental critiques of
normal economic boundaries, on the other hand, continue to mount. Scholars
educated in the field question the discipline’s ability to explain even the
narrow sphere known as the formal domain of economics.

“Economics” is derived from the Greek words
oikos, which means “home,” and nomos, which means “law.” As
a result, the term “economics” was first applied to household
management, a viewpoint that was carried over into the work of classical
political economy’s founding influences, Scottish Enlightenment figures like
Francis Hutcheson, and, most importantly, Adam Smith. The term
“political” is derived from the Greek word “polos,” which refers
to the city-state, which was the fundamental unit of the political organization
during the classical era. As a result of the control of family and political
households, political economy arose.

Other interpretations emphasize how the field of
economics has shrunk over time from what was once a broad discipline. Although
the term “political economy” is still used, the discipline as it is
now understood is not purely political: it is concerned with the industrial
activities of individual men rather than interactions between the government
and the governed, according to a standard economic dictionary from 1913.
Anyway, without delving into a delegate debate on political economy, we arrive
at our topic.

India’s Pre-Colonial Economy

Moghul India had much to offer Western visitors. From
Akbar’s time to Shah Jehan’s, the court was one of the most brilliant in the
world. It was multicultural and religiously tolerant. Literature and painting
flourished, and magnificent palaces and mosques could be found in Agra, Delhi,
Fatehpur Sikri, and Lahore. The nobility resided in fortified castles complete
with harems, gardens, fountains, and large retinues of slaves and servants. They
had vast wardrobes filled with exquisite garments made of fine cotton and silk.
To meet their demands, a variety of handicraft industries created high-quality
cotton textiles, silks, jewelry, decorative swords, and weapons. These luxury
industries arose in urban areas. During the Muslim period, the urban population
was larger than it had been under Hindu rulers because caste restrictions had
previously kept artisans out of towns. The majority of urban workers were
Muslims. The primary market for these urban products was the domestic market,
but a significant portion of luxury textiles was exported to Europe or South
East Asia.

Other items exported included saltpetre (used in
gunpowder), indigo, sugar, opium, and ginger. The Europeans had a difficult
time finding products to trade for these Indian luxuries. They were able to
export a few woollen goods and metals, but the only things the Indians really
wanted in exchange and were worth the cost of transporting so far were precious
metals. As a result, there was a steady flow of silver and gold to India, which
absorbed a large portion of the bullion produced by the Spaniards in the New
World. This phenomenon most impressed and perplexed Europeans in their dealings
with India.

According to the testimony of European travellers,
some of Moghul India’s urban centres were larger than the largest cities in
Europe at the time. The majority of the luxury handicraft trades were
concentrated in cities, and there was a well-developed banking system for
transferring funds from one part of India to another. Occupation in urban
society was regulated by guild regulation and a hereditary caste structure, but
occupational mobility was greater than in villages because town life was
dominated by Muslims, or, in some commercial areas, by Europeans.

From the sixteenth century onwards, European traders
dominated the export business. Previously, India traded textiles with East
Africa, the Persian Gulf, Malaya, and Indonesia. The Europeans established new
markets in Europe, West Africa, and the Philippines, and their trading
companies established textile, indigo, and saltpetre production centres in
Gujarat, Coromandel, and Bengal. For the first time, they introduced new dyeing
and silk-winding techniques, as well as large-scale factory production. thirty
years after the East India Company’s conquest of Bengal.

The upper class’s living standards were undoubtedly
high during the Moghul period, and there were larger hordes of gold and
precious stones than in Europe, but there is substantial evidence that the
majority of the population fared worse than in Europe. The Moghul economy appears
to have peaked during Akbar’s reign (1556-1605) and then declined. At its peak,
the per capita product could have been comparable to that of Elizabethan
England. When India became a European colony in the mid-eighteenth century,
there is little doubt that the economy was backward by West European standards,
with a per capita product that was perhaps two-thirds that of England and

In a report to the Dutch East India Company
summarising his seven years in Agra in 1620-7, Francisco Pelsaert wrote,
“the rich in their great superfluity and absolute power, and the utter
subjection and poverty of the common people—poverty so great and miserable that
the life of the people can be depicted or accurately described only as the home
of stark want and the dwelling place of bitte.” .. a workman’s children
can follow no other occupation than that of their father, nor can they marry
into any other caste… They have little knowledge of the taste of meat. In the
evening, they eat a little khichri made of “green pulse” mixed with
rice, cooked with water over a small fire until the moisture has evaporated,
and eaten hot with butter; during the day, they munch on a little parched pulse
or other grain, which they say suffices for their lean stomachs. Their homes
are made of mud and have thatched roofs. There is little or no furniture…
bedclothes are scanty, merely a sheet or two, serving both as under- and
over-sheet; this is adequate in hot weather, but the bitter cold nights are
miserable indeed.

Life expectancy was lower than in Europe, but
fertility was higher because marriage was socially and religiously obligatory,
and almost all girls married before puberty. Death rates were higher for a
variety of reasons. Because of the reliance on the monsoon, agricultural output
fluctuated more than in Europe, making famine more common. Health conditions
had deteriorated, due in part to a poor diet and in part to other factors. The
weather was oppressive. Tropical diseases coexisted with European ones. Because
of Hindu taboos against killing rodents and insects, the bubonic plague lasted

Although the Indian economy was the most complex and
sophisticated that Europeans colonized, its productivity level was
significantly lower than that of Western Europe at the time of the conquest in the
mid-eighteenth century. Its relative backwardness was partly due to
technological factors, but it was primarily due to institutional
characteristics that prevented it from making the best use of its production
capabilities. The parasitic state apparatus had a negative impact on
agricultural production incentives, which was exacerbated by the effect of
‘built-in depressants’ within the village, where there was a further hierarchy
of exploitation. The productive investment was insignificant, and the economy’s
savings were insignificant.

The productive investment was minimal, and the economy’s
savings were invested in precious metals, palaces, and tombs. The predatory
nature of the state also had a negative impact on the productivity of the urban
economy. In comparison to Western Europe, urban industry and trade had less
protection against arbitrary state demands.  

Reference: Class Structure and Economic Growth India and Pakistan since the Moghuls

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