The Foundations of Indian Economics.

by Radhakamal Mukerjee
Review by: J. M. Douie
The Economic Journal, Vol. 27, No. 106 (Jun., 1917), pp. 255-258
Published by: Wiley on behalf of the Royal Economic Society
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1917] MUKERJEE: THE FOUNDATIONS OF INDIAN ECONOMICS 255

The Foundations of Indian Economtics. By RADHAKAMAL

MUKERJEE,M.A. (Longmans, Green and CG. 1916. Pp.
515+xxiii. Price 9s. net.)
MR. RADHAKAMALMUKERJEE, who is a Professor ofEconomics
in a Bengal College,has writtenan interesting book. Patriotism
has led himto paintthe moraland materialresultsoftheexisting
Indian socialand economicorganisation in toobrightcolours,but,
generallyspeaking,he has himselffurnished the means forcor-
rectingthe picture. To quotea singleinstance,the statement on
p. 327 that "the middleman,the trader,or the moneylender, in
theirdealingswith the craftsman,are always straightforward.
They do not exploitthe labourer,but maintainhim," may be
comparedwith the author'sown remarkselsewhere(e.g., on
pp. 168 and 378).
If the virtuesof India are overpraised, the West is not fairly
treated. One may have a livelyperceptionof the evils of un-
bridledindividualism and unlimitedcompetition, and yet fail to
recognisethe portraitsof the economicconditionsprevailingin
Europeancountriesdrawnon p. 453 and elsewhere. Our indus-
trialmethodshave infectedour publicand privatemorality,and
"created the modern contrastsbetween ethics and business
morality, betweenethicsand statecraft and diplomacy."For the
former we mayrecallLecky's contention that,whilethe develop-
ment of commerceis accompaniedby painfulexamplesof low
morality, it has on thewholepromoted thehabitoftruth,because
a reputationfortruthful dealingis a valuablebusinessasset. As
regardsthe latterwe may well ask whetherthe statecraft of the
rulersof the industrialItaly of to-dayis morallybelowor above
that of Cesare Borgia and Lodovico Sforza.
The desireto replaceimportsof manufactured goodsby home-
made productsis naturaland praiseworthy, and, as Mr. Mukerjee
has noted,Indian publicopinionis strongly protectionist.It is
doubtfulwhetherhe himselfhas much faithin this expedient.
But he seems quite preparedto put restrictions on foodexports
in the supposedinterestsof the Indian consumer. For he holds
that "unfortunately in our countryour internaltradeguidedby
foreignmerchants is graduallytendingto exploitour agriculture
in the interestsof foreigncountries. The exportsof rice and
wheat have been steadilyincreasing,while theirproductionhas
not extended in the same proportion.. . . In the eleven years
ending1911 the inereaseof exportsof rice and wheathas been
steadyand continuouswithbut slightfluctuations
even in famine
No. 106.-VOL. XXVII. 8

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256 THE ECONOMIC JOURNAL [JUNrE

years. . . . But the areas underrice and wheat have not increased
in the same proportion."The figuresquotedon p. 309 in sup-
portofthiscontentionmightratherbe usedto provethecontrary.
The exportsof wheat in the cycle1901-1911have rangedfrom
241millionsofhundredweights to 43 millions,or in theproportion
of 1: 20. In a countrywhere the areas sown and harvested
varyso widelywiththe characterof the seasonsit is useless to
compareagriculturaldata forsingleyears. But omitting1908,
a year of abnormallylow exports,in orderto give the author's
argumentfairplay, we get the followingavera.geof figuresfor
two cyclesof years
Exports. Areas.
Period. Rice. Wheat Period. Rice. Wheat.
1901-1905 43 76 21 04 1901-1905 71 6 21 7
1906-19111 43-3 2141 1906-1910 75 9 22.4
1 Omitting 1908.

It seems paradoxicalto assert that in ordinaryyears any

artificialrestrictions
on exportswould be forthe benefitof the
agriculturistsofIndia, whilethree-fourths of its peopleare depen-
dent on the cultivationof the soil in a greateror less degree.
Undoubtedly higherpricesof agriculturalproductsare unpopular
in towns,and manyof the villages,owingto theirignoranceand
indebtedness,lose much of the benefitsof having a European
market. The remedyis to be foundin the measuresnow in
operation,the extensionof whichthe authoradvocates,forthe
deliveryof the peasantfromhis enslavement to the moneylender.
It is truethatabnormalconditionsmayprevail,as at the present
moment,when authoritative restrictionson exportare required
in the interestsofthe Indian population,and it is quiteconceiv-
able thatsuchconditions mightariseevenin timesofpeace. But
AMr.Mukerjee'sargumentgoes far beyondthat. Holding the
viewshe does, it is not surprising to findhimopposedto fuirther
extensionof railwaycommunications, and assertingthat "more
lines do not mean greaterimmunityfromfamines; theymean
greaterfacilitiesforexploitation,whichis thecause offamines."
Whatevermaybe thoughtoftheseeconomiceccentricities, the
volumecontainsmuchvaluablematter,and its appearance,when
a Commissionis engagedin investigating the questionof the
industrialdevelopment of India, is timely. Book II. consistsof
a carefulsurveyof village occupations,arts, and crafts. The
materialsare naturallydrawnfromBengal,but hereand in other
parts of his workthe authorseems occasionallyto forgetthat
Bengal and India are notconvertible terms. His conclusionthat

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 1917] MUKERJEE: THIE FOUNDATIONS OF INDIAN ECONOMICS 257

thereis stillroomforhandloomweavingin the production of the

coarsest and finestfabrics,but that it cannot compete with
nmachinery in mediunmqualities,is interesting.He sees thatthe
futureof the leatherindustryis mainlyin the factory,and that
thevillageblacksmith mustmakeway forthe ironmanufacturer.
But the bell metal industryand the goldsmiths'acraftshould
survive.
Book III. and thefirsttwochaptersofBookIV. dealwithexist-
ingIndiancreditand tradesystems,thelatterofwhich,as regards
ethicalresultsand effect on the welfareof the masses,the author
holds to be very superiorto the industrialorganisationof the
West. Howeverthis may be, everyonecan sympathise withhis
desirethat cottageand workshopindustries shouldnot be super-
seded by the factoryexceptto the extentthatmodernconditions
renderinevitable.The transition is boundto be accompaniedwith
a considerable amountof suffering, and in India it is undesirable,
even if it werepossible,to hurrythe process. The real obstacle
to the development of largeindustries is not the absenceof fiscal
protection.Labouris cheap butinefficient, and the nativesupply
of foremenand managershas stillto be created. As the author
perceives,the firststep requiredis a thorough overhaulingof the
educationalsystem,whichproducesa superabundantsupplyof
clerks,but veryfew lads withany ambitionto turnthemselves
intoskilledworkmen.Joint-stock enterprise is hamperedby lack
of mutualconfidence and by theinexperience, and sometimesalso
thedishonesty, ofmanagingbodies. A heavyburdenofresponsi-
bilitylies on Government to ensure decenthousingconditions,
otherwiseany rapidincreaseof factorieswill be accompaniedby
the physicaland moralevils whichMr. Mukerjeeforesees.
He pointsout thatthe extentto whicheven in England pro-
ductionis carriedon in smallworkshops is oftenunder-estimated,
and he quotesinteresting figuresto showhow strongthe position
ofhomeindustries is on the Continent.His conclusionis thatin
India thereare manybranchesof productionwell suitedto the
workshop;that here "thereis a richfieldforthe investment of
capital forour middleclasses"; and that educatedyoungmen
will findthe managementof such workshops"good trainingfor
largerventuresin thewayofbigfactories." This is soundadvice.
He sees thatin thecase ofcottageindustries improvement depends
on the degreein whichco-operation is adoptedas a meansof pro-
vidingthe artisanwith (a) cheapercredit,(b) bettertools and
betterand cheaperraw materials,and (c) bettertermsof sale.
Government has donemuchin the last twelveyearsto encourage
s2

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258 THE ECONOMIC JOURNAL [JUNE

credit,and increasedattentionis now beingpaid to

co-operative
co-operationforthe purposesof purchlase
and sale.
The book is adornedwith excellentillustrations,and dis-
figuredby an unusualnumberof misprints.
J. M. DouIE

Economic Protectionism. By JOSEF GRUNZEL,edited by Eugen

von Philippovich. (Oxford: the Clarendon Press. 1916.
Pp. xiii.+357.)
THIS treatiseis, we understand, of the
publishedin fulfilment
purposeof the Carnegie Endowmentfor InternationalPeace.
The Divisionof Economicsand History,the Directortells us in
a generalIntroductory Note, has been "organisedto promotea
thoroughand scientificinvestigation of the causes and results
of war"; and we should imagine that the fiscal policy here
elaboratelydiscussedwouldbe placed by manypacifists,without
hesitation,"among" thoseeconomicinfluences which,Professor
"
J. B. Clark declares, in time of peace bringabout clashing
interestsand mutual suspicionand hostility." The anticipated
curse is, nevertheless, in this instancechangedinto a blessing.
The authorconsidersthat the case commonlyput forwardfor
freetrade has been vitiatedby incurabledefect; and he holds
the view that protectionmay be properlyregarded as an
expedientof whichneitherthe advantagenorthe need is small.
It shouldbe added that his editor,as the Austrianmemberof
the Committeeof Research,whileresponsibleforthe choice of
the writerand the perusalof the manuscript,and fordeciding
whetherit has meritedpublication,is not committedto " any
opinions" which have been expressed. But complimentary
reference is made to his attitudeupon the questiontreated.
The book is a "'thorough " study,arguedfroma "'scientific
standpoint,of importantmattersclouded or distortedby the
storm-laden gustsofpartisancontroversy.It is a new experience
not to meet on the thresholdof the debate with the question-
beggingepithets"natural" and "artificial,"wornthreadbarein
this connection. Towardsthe close alone of this freshscrutiny
the traditionalantithesisappears. It is then ingeniouslymain-
tainedthat,"as thenaturalconditions"ofproduction are,in fact,
becoming " less and less important," and " conditions
artificial
are moreand more decisive"-cotton, forexample,beingmanu-
facturednotwhereit has grown,or ironore whereit was mined,
but in the places wheremarketsexist-a fiscalpolicymay be

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