Session 91: The Political Element in Economic Development: Perspectives from India and Pakistan

Organizer: Christopher Candland, Columbia University
Chair: Philip Oldenburg, Columbia University
Discussants: Atul Kohli, Princeton University; John Echeverri-Gent, University of Virginia

Much of the scholarship on the political economy of economic development has treated the political as an obstacle to economic rationality. The recent economic liberalization efforts in South Asia, a region long resistant to international economic integration, affords comparativists and South Asianists the opportunity to demonstrate the centrality of political processes and societal institutions in economic development and to assess core components of conventional political economy theorizing.

The panel proposed here explores the relationship between the state, political regimes, political parties and organized labor. Each of the three papers is concerned with the recent economic reforms in India, one in comparison with Pakistan. The panel begins (with Arun Swamy's paper) by situating the concept of economic liberalization within the nationalist development ideologies of Indian political parties. The panel moves (with Vibha Pinglé's paper) to consider the institutional relationship between organized labor and the Indian state. The panel then concludes (with Christopher Candland's paper) by comparing the legal mechanisms developed under Indian democracy and Pakistani authoritarianism for the selection of trade union representatives at the factory level.

Using India's experience with economic adjustment and development, all three papers take issue with some aspect of conventional political economy. Arun Swamy's paper makes sense of Indian economic reform by abandoning the dichotomy between state and market in favor of an analysis based on nationalist ideologies. Vibha Pinglé's paper argues that economic development requires a close relationship between the state and significant economic actors, such as organized labor, rather than authoritarian actions by an autonomous state. Christopher Candland's paper suggests that authoritarian political regimes do not necessarily produce authoritarian labor institutions and that democratic labor regimes may not emerge from democratic political structures. The two discussants, one a comparative political economist and the other a South Asianist, will assess and help to develop the contributions made on the relationship between democracy, economic development and the Post-colonial state.

The Many Faces of Indian Economic Nationalism: Party Ideology and Policy Frameworks in Indian Economic Debates

Arun Swamy, University of California, Berkeley

How does politics influence economic performance? Our answers are shaped by how we characterize the policies that governments pursue. The familiar state intervention/laissez-faire debate suggests two possibilities: if "statist" strategies necessarily fail, "rent-seeking" politics explain their adoption; if state intervention is necessary but not sufficient for developmental success, institutional factors affecting the implementation of policy explain divergent outcomes.

This paper will argue, however, that systematic differences of priority, conception and means exist among economic nationalist strategies-all of them internally consistent-which have a profound impact on future performance. If this is the case, then explaining economic performance, or changes in strategy, may require examining the ideological conceptions of policymakers, and the politics that bring the proponents of one framework to power rather than another. This paper will make such a case for India, arguing that while both critics and champions of India's recent economic reforms view them as the dawn of a "market-economy," such views cannot make sense of the apparent incompleteness of the reforms-such as the continued ban on consumer goods imports-or the differences among political parties, all of which have sponsored ''liberalization" in some manner. On the other hand, if we view the reforms as an attempt to learn from the East Asian experience the value of pursuing "dynamic comparative advantage" by using exports to fund technological upgrading, and treat the different mixes of state and market envisioned by rival parties as consistent with ideological differences with roots back to the pre-independence period, a more coherent picture emerges.

Authoritarianism, Democracy, and Factory-Level Politics in India and Pakistan

Christopher Candland, Columbia University

Conventional political economy, both neoclassical and Marxist, regards authoritarianism as the political condition for capitalist development and capitalist development as the economic condition for democracy. Only authoritarian governments, the argument goes, can impose the social hardships of economic rationality. Nowhere has this argument been articulated more forcefully than in the field of industrial relations. Labor, it is argued, must be disciplined in order to achieve economic growth and thus prepare the conditions for democratization.

A comparison of the experience with economic reform in India and Pakistan seems to support this evolutionary model of political and economic development. Politically powerful trade unions formed under Indian democracy successfully oppose industrial restructuring. Accordingly, Indian economic growth suffers and democracy is under strain. The politically repressed Pakistani trade unions fail to slow economic adjustment. Pakistani growth rates are higher and democratization, although under threat, is proceeding.

An examination of the legal mechanisms and local operation of collective bargaining in Indian and Pakistani industries demonstrates that the conventional evolutionary model has ignored an important dimension: the factory-level organization of trade unions. At the plant-level, Pakistan trade unions are democratically elected by a bi-annual secret ballot. Pakistani managers thus negotiate labor force restructuring with a single recognized union. Indian unions, in contrast, are freely formed by any seven individuals (whether they be laborers or lawyers) and are typically coopted by political parties, religious movements, and organized crime.

It may appear ironic that the labor regime promulgated by a martial law government is based upon regular elections, whereas the labor regime developed under a democratically elected government is based upon political manipulation and demagogy. In fact, regular elections provided the authoritarian state with the mechanism for the control and depoliticization of the trade union movement. The absence of regular elections provided competitive political parties with opportunities for mobilizing and politicizing the labor movement. The examination of factory level politics in India and Pakistan thus challenges macro-sociological models of political and economic development, raises questions about local-level politics under democratic regimes, and points to a fertile field for further investigation into the politics of economic development.

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