Analysis of Classes in India: A Preliminary Note on the Industrial Bourgeoisie and Middle Class

Deepankar Basu, Sanhati.

In a previous paper [Basole and Basu (2009)] an attempt to begin an analysis of social classes in contemporary India organized around the idea of economic surplus was initiated, by revisiting the 1970s mode of production debate. The focus in Basole and Basu (2009) was on the rural classes and the unorganized industrial and service sector workers. In this paper, I extend that analysis by shifting attention to the classes that had been left out in Baole and Basu (2009): the industrial bourgeoisie and what might be called the middle class.

Introduction

In the Marxist tradition, the notion of class is intimately related to the idea of economic surplus. Thus, I would like to begin this paper with a few brief and introductory comments on the relationship between the two. Every society, if it is to reproduce itself over time, must organize social production in such a way that it manages to reproduce the material and non-material conditions of its existence. Production in excess of what is necessary to reproduce the material conditions of its existence is the production of what we can call economic surplus. Thus, a society produces economic surplus when it produces more than what is necessary to cover the costs of social production, i.e., when it produces more than is necessary to replace (or replenish) the labour and non-labour inputs used up in the production process. This allows us to divide the total labour time of society into two parts: necessary labour time, which corresponds to the labour time required to merely replace the labour and non-labour inputs to production; and, surplus labour time, which corresponds to the economic surplus.

It is the economic surplus, moreover, that allows any society to grow and develop, to not only increase the scale, scope and sophistication of material production and encourage and facilitate technological change but also to increase the scale and depth of its non-material products. Every viable, growing society, therefore, must produce an economic surplus to sustain its material and non-material growth.

Of course, reproduction of a society requires not only the continuous production of an economic surplus but also the reproduction of its social relations of production. While the problem of the reproduction of the social relations of production is an important one and deserves serious study, here I would like to draw attention to another, though related, issue: the relationship between economic surplus and class.

What is class? Here I can do no better than give a fairly comprehensive definition of class by Lenin:

“Classes are large groups of people differing from each other by the place they occupy in a historically determined system of social production, by their relation in most cases fixed and formulated in law to the means of production, by their role in the social organisation of labour, and, consequently, by the dimensions of the share of social wealth of which they dispose and the mode of acquiring it. Classes are groups of people, one of which can appropriate the labour of another owing to the different places they occupy in a definite system of social economy” (Lenin 1919 (1972), p.421).

Thus, classes, as understood in the Marxist tradition, are defined by the appropriation of the surplus labour time of the group of direct producers by the group of non-producers (or exploiters). This appropriation is made possible by the differential location of the classes in the process of social production and the differential ownership of the means of production. The appropriation is guaranteed by the existing legal system enforced through the power of the State.

But if classes are defined by the appropriation of surplus, then they can only come into existence when the productive capacity of society has progressed to the extent that it can produce a surplus over and above what is needed for bare subsistence. Thus, class-divided societies are made possible and materially supported by the existence of economic surplus, corresponding to the surplus labour time of direct producers.

Being defined by the relationship between exploiters (those who appropriate the surplus) and exploited (those who produce the surplus), class-divided societies have often been studied with two-class models: master and slave, serf and lord, worker and capitalist. It is of course clear that two-class models arise as abstractions from the more complex class structures of real societies; the presence of groups which lie in the “middle” of, or straddle, both class locations, i.e., exploited and exploiters, needs to be taken into account to arrive at a more realistic class analysis of real societies. Before proceeding to take account of the “middle” in Indian society, it needs to be reiterated that even though two-class models are simplified representations of reality, they are useful for understanding the basic dynamics of the societies they refer to at a high level of abstraction. For instance, Marx’s analysis of the dynamics of capital accumulation presented in Capital, Volume 1 (Marx, 1992), where he works primarily in terms of two fundamental social classes – the proletariat and the capitalists – is extremely useful in understanding the long term tendencies of capitalist societies.

With these preliminary comments in place, let me propose the following three-class typology as a first approximation to the class structure of contemporary India: the working classes, the ruling classes and the middle classes, the plural being used to draw attention towards the internal heterogeneity of each of these three classes.

Three Fold Classification for India

The working classes are the only productive classes in Indian society and are defined by the fact that they produce the economic surplus in the following specific sense: the income that accrues to this class, which is equal to the value of its labour-power, is lower than the value added by the use of that labour power during any period of time (say a year). Taking account of the internal heterogeneity of the working class in India, it can be broadly divided, with two important qualifications, into two large groups: (1) the unorganized workers (i.e., workers in the unorganized sector of the economy) as defined by the National Commission for Enterprise in the Unorganized Sector (NCEUS), and (2) productive workers in the organized sector of the economy. The first qualification relates to the fact that the NCEUS defines the unorganized workers to include almost all of the agricultural sector; hence we must exclude the following two rural classes from the NCEUS definition of the unorganized workers: (a) rich farmers and landlords, and (b) middle peasants. The second qualification relates to a tiny portion of the workers in the organized sector whom we will include in the middle class and not in the surplus-producing working class, viz., the highly skilled workers, the professionals, the managers, and all the employees of the State sector. Thus, in India, the working class consists of: (1) the landless labourers, (2) the marginal and poor peasants, (3) the workers in the unorganized industrial and service sectors, and (4) a large part of the workers in the organized private sector.

At the other pole of Indian society resides the dominant, or ruling, classes. These classes are defined by the fact that they not only appropriate the economic surplus (that has been produced by the working classes defined above) but also determine the direction and mode of its utilization. For historical and structural reasons, the ruling class combine in India has been, and still is, internally heterogeneous and consists of the following three elements: (1) the industrial bourgeoisie, (2) the rich farmers and landlords, and (3) the professionals (State-elite, i.e., the top-level managers of PSUs, the top-level officers of the bureaucracy, the police, the army and the judiciary, and the top-level managers and professionals in the private sector). The industrial bourgeoisie is the dominant element in the ruling class combine.

Lying between these two poles, the productive and the non-productive poles, is what we might call the “middle class” which is defined by the following two characteristics: (1) this class is the recipient of a part of the economic surplus, i.e., the total compensation earned by the middle-class is higher than the value of its labour power (i.e., the cost of producing and reproducing the labour power); and (2) the middle class is crucial for the reproduction of the existing social relations in India which is what fetches it the extra income, i.e., the income above the value of its labour power, in the form of rent from the ruling classes. There are two main segments of the middle class: (a) the petty bourgeoisie, who largely own their means of production: middle peasants in agriculture, the merchants, the traders, and the owner-operators of small enterprises, and (b) the professionals: the technical experts, the managers, and the skilled workers in large-scale private enterprises, and the large majority of the employees of the State sector.

Basole and Basu (2009), by revisiting the 1970s mode of production debate, attempted to begin an analysis of social classes in contemporary India organized around the idea of economic surplus. The focus in Basole and Basu (2009) was on the rural classes and the unorganized industrial and service sector workers. In this paper, I extend that analysis by shifting attention to the classes that had been left out in Baole and Basu (2009): the industrial bourgeoisie and what might be called the middle class. But before moving on to an analysis of the industrial bourgeoisie and the middle class, let me briefly summarize the findings of Basole and Basu (2009) about the rural classes and the unorganized workers.

The main input into agricultural production is land and so the analysis of property and power in the agricultural sector has to carefully look at the ownership distribution of land. While the aggregate distribution of land ownership remains as skewed today as it was five decades ago, interesting and important patterns are visible within this unchanging aggregate picture. The share of land owned by large (10 ha or more) and medium (4 ha to 10 ha) landholding families has steadily declined over the last few decades from around 60% to 34%; the share owned by small (1 ha to 2 ha) and marginal (less than 1 ha) landholding families has increased from around 21% to 43%, while the share of semi-medium (2 ha to 4 ha) families has remained unchanged at around 20%.

Going hand-in-hand with the decline in the share of land owned by large landowning families, is the steady decline of tenant cultivation and its gradual replacement by self cultivation in Indian agriculture. The share of operational holdings using tenant cultivation declined from about 24% in 1960-61 to about 10% in 2002-03. There are large geographical variations in the extent of tenancy, with the largest share of leased-in land as a share of total operated area occurring in Punjab and Haryana, two prominent examples of what Basole and Basu (2009) called large landholding states; Orissa has high prevalence of tenancy and is an example of a small landholding state. The proportion of area owned and the proportion of area operated by the different size-classes are almost equal; hence, there is no evidence of reverse tenancy on any substantial scale at the aggregate level, though this might hide reverse tenancy at state or regional levels.

Disaggregating total incomes of rural households engaged in agriculture according to types of income showed that wage income has become the main source of income for a large majority of the population. For about 60% of the rural households in 2003, the major share of income came from wage work, supplemented by income coming from petty commodity production, both in the agricultural and non-agricultural sector. Another 20% of rural households drew equal shares of their total income from wage work and cultivation, both at about 40%. The natural corollary to this is that “effective landlessness” is large and has steadily increased over the past few decades. The share of effectively landless households in total rural households has increased from about 44% in 1960-61 to 60% in 2002-03.

These, and other related, facts led Basole and Basu (2009) to conclude that: (a) the hold of semi-feudal landlords had declined significantly over the past few decades; thus, the primary element of the rural ruling class today seems to be the rich farmers; (b) there has been a significant growth of the rural proletariat, and (c) the prevalence of petty production, in agriculture, industry and services, remains undiminished; hence the petty bourgeoisie remains numerically and politically important; (d) the vast majority of the industrial proletariat is seen in India today as unorganized workers, who lack social security, work security and employment security (NCEUS, 2007). Let us now turn to a study of the industrial bourgeoisie and the middle classes.

The Industrial Bourgeoisie

The dominant element in the ruling class combine is the industrial bourgeoisie, which emerged and grew under the long shadow of British colonialism. Accumulating capital through merchant and trading activities related to the colonial economy, this class gradually diversified into industrial activities, beginning with the textile industry in an around colonial Bombay. Significant portions of the industrial bourgeoisie has been, and continues to be, organized along family lines, with the Tatas and the Birlas being the most prominent historical examples. Three characteristics of the Indian industrial bourgeoisie demand further analysis and comment: its attitude towards other elements, especially the semi-feudal landlords, of the ruling class combine; the evolution of its internal structure and its relationship with the State; and, its relationship with the center of the global capitalist system.

The Indian bourgeoisie has, because of its historical origins, always had an ambivalent attitude to the whole gambit of semi-feudal interests in the economy. Even though it hesitantly supported the nationalist leadership of the Indian National Congress, it was never strong enough to push for its hegemony either in the nationalist movement or in the post-colonial State. It never fought a frontal battle with feudal interests, the biggest indicator of which is the half-hearted nature of land reforms in independent India. As a result, it could neither fashion an independent capitalist development path for the country based on the home market nor consistently democratize the polity. If the nationalist struggle for independence is, therefore, understood as the beginning of the bourgeois democratic revolution in India, then it largely remains unfinished even 60 years after political independence from British colonialism.

Even though the Indian bourgeoisie has not initiated and led a broad-based capitalist development, which could have improved the material conditions of the vast masses of the country, it has nonetheless managed to significantly widen and deepen the industrial structure of India. Starting with consumer goods industries like textiles, it has diversified into the production of basic capital and intermediate goods, and consumer durables. This has been largely possible because of the protection and patronage of the State, with which this class has had a complex relationship. On the one hand, it has resisted all attempts at disciplining by the State for larger development programmes (Chibber, 2006); on the other, it has utilized industrial, tax, credit, export and import policies of the State to further its own narrow class interests.

At the time of political independence, the industrial structure in India was very concentrated at the top, with a few large monopoly business houses controlling large swathes of the market. Three trends have emerged, slowly at first, since then. The first trend has been the differentiation of the economy into an organized and an unorganized sector, roughly coterminous with large and small scale industries; policies of the Indian state helped in this differentiation. The second trend has been the relative growth and proliferation of the small scale sector, i.e., relative to the large-scale, organized sector. The third trend has been the slow but steady growth of a regional bourgeoisie, different from and often competing with the established large business houses. Thus, concentration and centralization of capital has proceeded in several branches of the organized sector; but this has also been accompanied by increased regional and sectoral competition and growth of the small scale sector.

To get a sense of the evolution of the concentration of Indian capital at the very top let us look at some data. In 1971, total sales of the top 20 industrial houses in India accounted for about 61 percent of the net domestic product of the private organized sector; the corresponding figure for 1981 was 87 percent (Bardhan, 1998). To come to the situation in the early part of this century, note the continued dominance of what the business press regularly calls the “big four” of Indian business: the Tatas, the Birlas, the Ambanis and the Mittals. In key industries like energy, telecom, steel, automobiles, IT and retail, these four business houses either continue to dominate or are poised to do so in the near future. Another measure of the concentration of Indian capital at the top can be seen from the following: according to data from the ET 500, in 2008 the top 20 private companies accounted for about 40 percent of the sales, 47 percent of after-tax profits and 45 percent of market capitalization of the top 500 private companies. Though not strictly comparable with the earlier data for the 1970s and 1980s, the data about 2008, when situated in a historical setting, suggests the following: the monopoly power of Indian big capital increased continuously after political independence till the mid-1980s, and has seen a relative decline since the inception of the process of economic liberalization.

While Indian capital continues to be highly concentrated at the top in many industries, we notice another trend too: regional capital has grown by leaps and bounds over the past two decades and has made serious forays into industries such as automobile ancillaries, capital goods, casting and forging, chemicals, construction, diamond and jewelery, entertainment and media, textiles and transportation and many others.

The relationship of Indian capital to the center of the global capitalist system has been the focus of much debate and discussion within left circles in India with one prominent strand characterizing the big bourgeoisie as comprador and the Indian state as semi-colonial, both these characterization meant to convey the continuing hold of foreign capital on the Indian economy and polity, especially since the beginnings of the 1990s. Concrete evidence regarding the presence of foreign capital in the Indian economy and the continuous overseas expansion of Indian capital seem to suggest a more complicated story.

Let us first look at the evidence on the presence of foreign capital in the Indian economy. In 1981-82, “only about 10 per cent of total value added in the factory of mining and manufacturing was accounted for by foreign firms.” (Bardhan, 1998); if only large firms are kept in the picture, foreign firms still account for only about 13 per cent of the value added. Of course, there were a small number of industries where foreign presence was substantial: industries producing cigarettes, soap and detergents, typewriters, electrodes, etc. To the extent that there was a rise of foreign collaboration during this time, “the overwhelming proportion of such agreements [did] not involve any foreign participation in equity capital.” (Bardhan, 1998). Similarly, there has been an increasing trend of outright purchase of technological imports thereby reducing the dependence of domestic capitalists on the foreign suppliers of technology. Of the top 25 industrial units in 1983, only 4 were foreign.

The contemporary picture is tilted even more towards the domestic bourgeoisie. Of the top 500 companies in 2008, only 2 were foreign: Larsen & Tubro and Maruti-Suzuki; if we restrict ourselves to only private companies, then the corresponding figure is 3 out of the top 25: Larsen & Tubro, ITC and Maruti-Suzuki. If we look at the same issue at a more disaggregated level, there are only three major industries which has substantial foreign capital: capital goods (Larsen & Tubro), fast moving consumer goods (ITC and Hindustan Lever), and retail (Pantaloon retail). Other than these three, all the major industries are controlled by Indian capital: automobiles, banks, chemicals, construction, consumer durables, entertainment, fertilisers, finance, metals & mining, oil and gas, pharmaceuticals, power, real estate, steel, textiles, transportation (ET 500, 2008).

The overseas expansion of Indian capital in recent years has been commented on a lot, especially in the ecstatic business press in India. Some of the prominent examples that have been splashed across the national media are: Videocon’s acquisition of South Korea’s debt-burdened Daewoo Electronics; Tata’s acquisition of Corus; ONGC Videsh’s acquisition of Exxon Mobil’s stake in the Campos Basin Oil Fields in Brazil; Suzlon Energy’s acquisition of Belgium’s Hansen Transmissions International NV; Ranbaxy’s acquisition of Terapia, the largest independent generic drug company in Romania; Wipro’s acquisition of United States-based Quantech Global Services; and the largest acquisition of all, Reliance’s reported move to acquire controlling stake in LyondellBasell, the world’s third largest chemical company. Going beyond such anecdotal evidence from the business press, there is substantial evidence based on detailed research that major fractions of Indian capital, with active assistance from the State, has successfully entered the global scene. Researchers have pointed out that Indian investments abroad has moved through two stages. During the first stage of the 1970s and 1980s, the quantity of investments was small, and the destination was primarily in the developing world, shifting from Africa to Southeast Asia. During the second phase, starting roughly from the mid 1990s, there has been a dramatic quantitative increase of outward flow of capital, accompanied by a widening breadth and depth of industries where investment has been directed to; interestingly, in this phase, an increasing share of the investment have found destinations in the imperialist core: USA and Europe. (Pedersen, 2008).

Thus, taking account of these recent trends, viz., growing concentration and centralization of capital in certain key sectors of the Indian economy, the rise and growth of the regional bourgeoisie, and the increasing overseas expansion, especially into the core of the global capitalist system, it seems that the characterization of the big bourgeoisie as “comprador” and the Indian state as semi-colonial needs to be seriously rethought. What this implies is not the absence of imperialism but a suggestion to carefully rethink how imperialism operates in the Indian context, i.e., to rethink how the Indian economy is articulated to the global capitalist system by imperialism. Two issues that might be helpful in this context, and needs to be explored further, are the following: (a) the role and effect of financial capital (i.e., flows of portfolio capital as opposed to direct foreign investment) on the Indian economy, and (b) the possible influence of imperialism operating through the channels of government policy rather through the channel direct investment, i.e., export of ideas replacing the primacy of the export of capital à la Lenin. Next, we look at the middle classes.

The Middle Class

What I have called the middle class, for lack of a better expression, is composed of two distinct segments in contemporary India, the petty bourgeoisie and the professionals (technical experts, managers, skilled workers scientific personnel and state sector employees). The first segment of this class owns its means of production and thus, does not produce, surplus value; the second segment, on the other hand, receives a small portion of the total surplus value due to their crucial position in the production process and their important role in the reproduction of the existing social relations.

The petty bourgeoisie owns its means of production and, therefore, does not need, in the main, to sell its labour power for ensuring its livelihood. In the agricultural sector, the petty bourgeoisie refers to the middle peasants, i.e., families whose main source of income is cultivation and who mainly rely on family labour for organizing cultivation. In the industrial and service sectors, the petty bourgeoisie refers to owner-operators of small enterprises operated mainly with family labour and the small traders and merchants. There is internal differentiation within the petty bourgeoisie, with one section managing to produce surplus and accumulating capital while the other part lives perpetually in poverty, barely managing to reproduce themselves at a constant level of operation.

The privileged position of the professionals in the production process can be better understood if we focus on two crucial dimensions of the production process: skill and expertise, and exercise of authority in the production process. The analysis of professionals in this paper draws heavily on the pioneering work of Marxist sociologist Erik Olin Wright (Wright, 1997).

Let us consider authority first by looking a little more carefully at the production process. Capitalists not only hire labour in the market, but also dominates labour in the production process relating, for instance, to the pace, intensity and other dimensions of work; this aspect of power and control of capital by labour is crucial. As the scale and scope of production increases it becomes increasing difficult for capitalists to carry out this function; hence, they delegate this function to the class of managers and supervisors: managers and supervisors exercise the authority of capital over labour in the production process on behalf of capital. Thus, this dimension of delegated authority is one crucial dimension along which working people are differentiated, creating a contradictory class position: managers and supervisors can be seen as belonging both to the capitalist class and the working class. To the extent that they exercise the delegated authority of capital in the process of production, they act as capitalists; to the extent they are themselves controlled by capitalists, they resemble workers. There is, of course, a whole range of such contradictory class positions with lower level supervisors strongly resembling workers and top level managers, like corporate directors and CEOs, identifying completely with capital.

How do capitalists, in turn, monitor and control the managers and supervisors? Thinking about this question gives us a way to explain the earnings differentials, compared to the working class, of managers and supervisors. For the smooth functioning of the production process and the continuous generation of surplus value, capital needs managers and supervisors to exercise the power and authority over workers in an effective manner. This cannot be ensured by surveillance and monitoring of managers, both because it is difficult to monitor managerial effort and because coercive methods hamper creative managerial intervention. The alternative is to pass off a part of the surplus value to the managers so as to build loyalty of the managers towards the organization, internalize the imperatives of capital and thereby do capital’s bidding effectively in the production process. This part of surplus that goes to the managers and supervisors, and explains the huge differentials in earning from the working class, can thus be understood as a “loyalty rent”that capital pays to maintain its power and control in the production process.

Let us now turn to the other dimension: skill and expertise. Much like the class of managers and supervisors, workers who manage to acquire skills and expertise relevant to the production process attain a privileged position. There are two aspects of this privileged position. First, not only are skills always in short supply but there are systematic obstacles to the acquiring of these skills by members of the working class which often operates through the monopoly of the middle class on the educational system and training programs. This allows skilled and technical workers and the so-called experts to derive a “skill rent” from capital, which partly explains the wage differential vis-a-vis the working class and is an indicator of their privileged position. Second, technical and skilled work often cannot be effectively monitored; hence, capitalists generate optimal effort from skilled and technical workers by building up their loyalty to the organization, again through a part of the surplus being passed off as a “loyalty rent” to the skilled workers.

Among what we have called professionals, there is a special category that deserves separate attention: state sector employees. There are two characteristics of this group that deserves mention. First, their income comes from the tax revenue of the State, and thus can be easily seen to be a part of economic surplus of society; their income is thus a deduction from the surplus, they do not produce surplus in the sense in which workers produce surplus value for the valorization of capital. But this also means that they are not dependent on capitalist profit making for their livelihood; this might have important implications in terms of class consciousness vis-a-vis capitalism. Second, following Wright (1997), the various institutions of the state can be broadly divided into two parts, the political superstructure and the decommodified state service sector. The political superstructure consists of all the institutions that work for the reproduction of the existing social relations: the police, the courts, the military, the legislature and other such institutions. The decommodified state service sector, on the other hand, produces use values, and not exchange values, directly beneficial to the people at large: health care, educational services, public infrastructure and utilities, public recreation and entertainment, etc. The rationale for separating the two sets of institutions is that the second, the decommodified state service sector, operates largely outside the logic of commodity production and capital accumulation. Production in this sector is not subordinated to the imperatives of profit maximization; hence, this sector can be viewed as part of the institutional set-up of a post-revolutionary State and hence would need to be preserved even when the current configuration of power is dismantled. The political consciousness and orientation of workers working in these two sectors of the State might be expected to be radically different, a point of particular relevance to radical mass movements.

It goes without saying that there is a gradation of the middle classes, and the upper sections merge into the ruling class while the lower sections are very close to the working classes. The upper sections of the middle class share in the decision-making process relating to the use of the economic surplus (CEOs, top managers, and directors of corporate sector firms, etc.), have significant control over a large part of the productive resources of society in the form of public sector units (top managers of the PSUs) and have a monopoly over the use of the ideological and repressive apparatus of the State (top level bureaucrats, army officers, members of the judiciary). They seamlessly merge into the ruling class.

Relative Population Shares, Income and Wealth: Initial Estimates

What are the numerical strength of the three broad classes – the ruling class, the middle class and the working class – in Indian society today? Some very interesting recent research (Jaydev, et al., 2009; Vakulabharanam, et al., 2009) can throw some light on this important question. In their comparative study of the changing nature of inequality in India and China, Vakulabharanam, et al. (2009) use data from two rounds of the National Sample Survey (NSS) to provide a detailed picture of class structure in India. They use the National Classification of Occupation (NCO 3-digit, 1968 scheme) to divide households into various occupational categories, which can used to roughly compute relative shares of what I have defined as the ruling, middle and working classes. Using data from Table 2 in Vakulabharanam, et al. (2009), I get the rough picture presented in Table 1.

Table 1: Class structure in India (Percentage share in population)
1993-94 2004-05
Ruling Class 11.89 11.71
Middle Class 24.26 21.08
Working Class 63.85 67.21

Though lot more work needs to be done to get a more accurate and refined picture, Table 1, nonetheless provides a rough estimate of the relative shares of the three social classes in contemporary India. Ruling classes, in Table 1, consist of the following: owners or managers of the formal and informal sector enterprises and the rich farmers; the middle class consists of the following: professionals and skilled workers in manufacturing and services, middle peasants, rural professionals and moneylenders; the working class is composed of the rest of the population: the unskilled workers in manufacturing and services, the small and marginal peasants and the landless labourers. An interesting, though expected, fact that emerges from Table 1 is the relative squeezing of the middle class and not their growth, as the mainstream media constantly suggests. Since the size of the ruling class has remained more or less constant over the decade, it must mean that sections of the middle class is getting pushed down into the working class.

The picture presented in Table 1 is only an approximate picture; hence some caveats are in order. First, the National Sample Survey Organization (NSSO) consumption expenditure surveys, which is used by most researchers including Vakulabharanam, et al. (2009), do not give a correct picture of the members of the big bourgeoisie (the super rich in terms of wealth and income); they need to be oversampled if they are to be truly representative of their population weight in the sample. Second, some of the owners and managers that are currently part of the ruling class would actually need to be included in the middle class; this is because many of the owners would be owner-operators of small scale enterprises and some of the managers would occupy lower levels in the firms’ hierarchy; but this adjustment could not be carried out because of lack of more disaggregated data at the moment. That is why the sample share of the ruling class in Table 1 seems to be an overestimate of their true population share. Both these facts, moreover, suggest that the figure for the ruling class in Table 1 needs some serious modification. Third, some of the skilled workers that are currently part of the middle class in Table 1 should be actually included in th working class; again, this could not be done because of lack of more disaggregated data. This is the reason why, just like in the case of the ruling class, the sample share of the middle class in Table 1 is an overestimate.

A more disaggregated analysis to arrive at a more accurate picture will be conducted in the future. My conjecture is that the disaggregated analysis will throw up a picture which will correspond closely to the distribution of households according to consumption expenditure that was reported in Table 1.2, NCEUS (2007): the ruling class would be roughly 4 percent of the population and their average consumption expenditure would be greater than 4 times the official poverty line, the middle class would be roughly the next 19 percent of the population with an average consumption expenditure between 2 and 4 times the poverty line, and the rest, about 77 percent, would be what I have called the working class and which corresponds to what the NCEUS called the poor and vulnerable section which, in 2004-05, spent less than Rs. 20 per day on consumption (Table 1.2, NCEUS, 2007).

Of course, the consumption expenditure distribution that is deduced from the NSSO surveys do not provide an accurate idea about the true income and wealth of the big bourgeoisie and the top professionals in India. There are two sources that provide a much more accurate picture of the income and wealth of this class: income tax data that has been used to estimate top Indian incomes from 1922 to 2000 (Banerjee and Piketty, 2005) and the World Wealth Report and the Forbes list of the richest persons in the world (which now, quite understandably, has a separate list for India).

To get an idea of the wealth of the big bourgeoisie, note that in 2009, India had 52 billionaires, which was close to twice the number in 2007; the wealthiest them of all, Mukesh Ambani, has a net worth of $ 32 billion (Times of India, Nov., 19, 2009). The combined net worth of the richest 100 Indians in 2009 was US$ 276 billion; their Chinese counterparts had a combined net worth of US$ 170 billion (Livemint, Nov., 20, 2009). To make the comparison fair recall that China’s GDP in 2008 was $ 7.992 trillion (PPP) while India’s GDP in 2008 was only $ 3.304 trillion (PPP): wealth is far more concentrated at the top in India than it is in China.

Moving on to incomes of the richest Indian, Banerjee and Piketty (2005) present some very interesting facts. First, the top 1 per cent of the population accounted for about 12-13 per cent of total income in the 1950s; the share fell to 4-5 per cent in the early 1980s, and then picked up again to reach 9-10 per cent in the late 1990s; whatever the problems of the Nehruvian policy frameowrk, it did manage to redistribute income away from the rich. This U-shaped pattern, which is very similar to patterns observed in the USA too, can be an entry point into understanding the sharp policy change from the mid-1980s onwards in India: the big bourgeoisie pushed for the change in policy direction to reverse the trend of income distribution. While the top 1 per cent have more or less gained back their pre-Nehruvian era share, there are interesting patterns if we look more closely at the various sections within the rich: there has been a rapid divergence in the income shares accruing to what can be termed the super rich (the top 0.01 per cent), the moderately rich (the top 0.1 per cent) and the rich (the top 1 per cent).

Conclusion

Mao’s analysis of the class structure of Chinese society in the 1920s was extremely influential in the Chinese communist movement and facilitated the formulation of the strategy and tactics of the Chinese revolution. Given the widespread use of Mao’s basic framework of class analysis in Third World settings, it would be useful to contrast the results of the analysis presented in this paper with Mao’s characterization of classes in pre-revolutionary China (Mao, 1926).

For Mao, the ruling class in pre-revolutionary China consisted of “the warlords, the bureaucrats, the comprador class, the big landlord class and the reactionary section of the intelligentsia attached to them.” In contemporary India, the ruling class consists of the big bourgeoisie, the rich farmers and the top sections of the professionals and bureaucrats; the crucial difference, to our mind, is the absence in contemporary India of what Mao called the comprador class (the class of merchants who acted as agents of foreign capital) and the big feudal landlords. The big bourgeoisie in India today seems to be less under the influence of foreign capital than their counterparts in pre-revolutionary China; similarly, the big feudal or semi-feudal landlords that held sway over the economy of rural China seem to have been largely replaced by the rich farmers as the key ruling class element in rural areas of contemporary India.

Mao’s analysis had identified a tiny proletariat in China, which, according to him, would be the leading force in the revolution. In contemporary India, in sharp contrast to China, the proletariat is significantly larger, not only in absolute terms but also in relative terms, i.e., relative to the other social classes. This is the direct result of the wider and deeper industrial development following political independence in India compared to pre-revolutionary China. The proletariat consists, in contemporary India, of the vast majority of workers in the unorganized industrial and service sectors, part of the lower level workers in the organized sector and the effectively landless laborer families in the agricultural sector, and thus partially includes what Mao had called the semi-proletariat.

In Mao’s analysis, the petty bourgeoisie was accorded “very close attention” both because of its size and because of its class character. He had concluded that this large and important group would be an ally of the revolutionary proletariat. In contemporary India too, the petty bourgeoisie – composed of the middle peasant and the owner-operators of small enterprises and small traders and merchants – is numerically very large and because of its objective economic position will play an important role in radical social change.

What Mao did not stress and what seems to have become important in contemporary India is the place occupied by the second segment of what I have called the middle class: the professionals. With the growing complexity of social organization and social production, this group will become even more important, not only in the present social order but also in any radically different society that might arise in the future. In both the Russian and the Chinese revolutions, the post-revolutionary regime had to rely very heavily on this class to ensure functioning of the economy. According more attention to this segment of the middle class, therefore, seems warranted.

REFERENCES

Banerjee, A. and T. Piketty. 2005. “Top Indian Incomes, 1922-2000,” The World Bank Economic Review, 19(1), pp. 1-20.

Bardhan, P. 1998. The Political Economy of Development in India (expanded edition with an epilogue on the Political Economy of Reforms in India). Oxford University Press: Delhi.

Basole, A. and D. Basu. 2009. “Relations of Production and Modes of Surplus Extraction in India: An Aggregate Study.” Working Paper, Department of Economics, University of Massachusetts, Amherst. Available at: http://www.umass.edu/economics/publications/2009-12.pdf and http://sanhati.com/non-excerpted/1506/

Chibber, V. 2006. Locked in Place: State-Building and Late Industrialization in India. Princeton University Press: Princeton, NJ.

ET 500: http://economictimes.indiatimes.com/Features/ET-500-companies/articleshow/3603974.cms

Jaydev, A., Motiram, S. and V. Vakulabhranam. 2009. “Patterns of Wealth Disparities in India during the Era of Liberalization,” in A Great Transformation? Understanding India’s Political Economy (forthcoming).

Lenin, V. I. 1919. “A Great Beginning: Heroism of the Workers in the Rear.” Collected Works, Volume 29, pp. 409-434. 4th English edition, Progress Publishers, Moscow, 1972. Available at: http://www.marxists.org/archive/lenin/works/1919/jun/28.htm

Marx, K. 1992. Capital: A Critique of Political Economy, Volume 1. Penguin Classics. (first published in 1887).

National Commission for Enterprise in the Unorganized Sector (NCEUS), 2007. “Report on the Conditions of Work and Promotion of Livelihoods in the Unorganized Sector.” Government of India.

Tse-tung, Mao. 1926. “Analysis of the Classes in Chinese Society.” available online at:http://www.marxists.org/reference/archive/mao/selected-works/volume-1/mswv1_1.htm

Pedersen, J. D. 2008. “The Second Wave of Indian Investments Abroad,” Journal of Contemporary Asia, 38(4), pp. 613-637.

Vakulabhranam, V., Zhong, W. and X. Jinjun. 2009. “Patterns of Wealth Disparities in India during the Era of Liberalization,” Working Paper, Graduate Economics Research Center, Nagoya University.

World Wealth Report, 2009. Available at: http://www.ml.com/media/113831.pdf

Wright, E. O. 1997. Class Counts: Comparative Studies in Class Analysis. Cambridge University Press: Cambridge, UK.

Deepankar Basu is Assistant Professor at the Department of Economics, University of Massachusetts.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: