Exclusion, Surplus Population, and the Labour Question in Postcolonial Capitalism: Future Directions in Political Economy of Development

ABSTRACT

In this expository essay, we argue for building a fresh research programme in the political economy of development to analytically investigate and empirically substantiate the specificities of postcolonial capitalism. A key theoretical framework developed through the work of Kalyan Sanyal may be built upon, reformulated and productively deployed for this purpose. We provide a purposive engagement with this framework, its critiques, and the extant literature that develops it further. Some illustrations based on the agricultural and non-agricultural informal economies in India are provided to highlight the significance of this framework in examining the contemporary processes of capitalist development in the global South. The informal segments are marked by a persistence and reproduction of large swathes of non-capitalist economic spaces that are majorly structured around the logic of satisfying consumption needs, without discernible tendencies towards a classical pattern of capitalist transition. These spaces act as holding grounds of the population that is excluded from the capitalist growth poles of the economy and are often rendered as an undesired excess (as a surplus population) for the process of capitalist reproduction. Such a framework may also provide a compelling theoretical structure to interrogate the vast economic and political changes in the global landscape in the current conjuncture, and their implications for labour.

KEYWORDS:

• Postcolonial capitalism
• agriculture
• informality
• surplus population
• non-capitalist reproduction

JEL CODES:

• B51
• J43
• J46
• O13
• O17

1. Introduction

The nature of evolution and reproduction of capitalist social formation in the postcolonial economies have been theorised from various, often contesting, strands of scholarship. These theorizations, despite critical differences between them, majorly rest on the received wisdom regarding the historical trajectory of capital’s unfolding in the global North. It is often implicit that a successful path of economic development in the postcolonial ‘less- developed’ economies should entail a process of full-fledged capitalist transition of these economies through a transformation of their overall economic structures.¹ To put it differently, the challenge of underdevelopment in these economies is understood to concretely manifest in terms of a continued co-existence of non-capitalist production and labour processes characterised by petty commodity production, unwaged work, kinship relations, etc., providing livelihood to vast segments of the workforce, along with an enclave of capitalist production and distribution. Through economic development qua transition, the logic of capitalist accumulation and growth is expected to pervade all economic sites over time, dissolving the non-capitalist segments and giving shape to a homogeneously capitalist economic formation.

The realities of the postcolonial economies, however, do not square well with this expected pattern. In most of these economies, there has been a continued preponderance of non-capitalist production and labour processes both in agriculture and in the non-agricultural informal sector, even when there have been sustained periods of relatively high economic growth. Both these sectors are largely comprised of small and marginal farms or micro-enterprises that may be argued to be undertaking petty commodity production and trading activities (PCP) that are mainly organised using unwaged family labour, and are predominantly driven by the logic of satisfying consumption needs of the households rather than by a capitalist logic of accumulation and expanded reproduction. In these economic spaces, there is often no clear demarcation between the production space of the enterprise and the consumption space of the household. Rather, the physical sites, resources, labour time, and other inputs are pooled to ensure the reproduction of the two interdependent and co-constituted spaces. In most postcolonial economies in the global South, vast sections of the working population continue to generate their livelihood in such non-capitalist economic spaces. In other words, the dualism between the capitalist and non-capitalist sectors that was expected to wither away with capitalist development and structural transformation (Lewis 1954), continues to characterise most of these economies even ‘after development’ (Ruccio and Gibson-Graham 2001; Li 2017) and decades of capitalist growth, defying the standard expectations regarding the pattern of capitalist transition.

The example of India is illustrative in this context. The Indian economy has experienced a sustained period of relatively high economic growth for nearly three decades since the mid-1980s, which peaked over the first decade of the 2000s (faltering soon after 2015). However, the informal economy in India — comprising both informal enterprises and informal wage workers in agricultural and non-agricultural sectors — still provides livelihood to more than 80 per cent of the total working population (CSE 2018). Notably, agricultural and non-agricultural self-employment activities, often marked by an absence of any form of wage labour relations, provide livelihood to roughly 50 per cent of the total working population (NSSO 2014a). Among the informal non-agricultural household enterprises, the proportion of self- employment is as high as 85 per cent (Kesar and Bhattacharya 2020), while in agriculture, where most economic activities are informal in nature, almost 74 per cent of households are self- employed (Chand and Singh 2022).

We argue that a fresh theoretical approach needs to be developed to explain this conundrum of continued persistence of vast non-capitalist spaces with capitalist growth, and to make sense of the nature and evolution of postcolonial capitalism whose distinctiveness elude much of the prevalent narratives on the process of capitalist development. While it is well recognised and emphasised in critical theories that the fundamental contradiction between capital and labour importantly frames the dynamics of such development process, a theorisation of the specificities of postcolonial capitalism also requires an analysis of the relation between the capitalist and non-capitalist economic spaces to situate the labour question within such a context. This calls for a new research programme based on a global South-centric lens to theoretically and empirically analyse these specificities and to explore their implications for labour.

In this regard, we find the work of Kalyan Sanyal (2007) on the process of postcolonial capitalist development to be particularly productive in providing the initial building blocks for such a research programme. In the following section, we lay out some of the salient theoretical interventions offered by Sanyal, and delineate how they depart from the traditional critiques of the process of capitalist development. In the process, we discuss some of the critical engagements with the work that probe the framework for its theoretical and empirical validity, and point to some of the pressing issues highlighted in the literature that require attention in further developing the framework. Thereafter, in the following two sections, we provide some illustrations based on the Indian economy during its peak growth period (focusing on the 2001–2013 period) regarding how a development of this framework may provide fresh insights into the specific nature of reproduction of the non-capitalist spaces of the economy. In Section Three, we explore the pattern of reproduction of agrarian households to interrogate the role of agriculture in postcolonial capitalist development and its implications for labour. In Section Four, we briefly explore the dynamics of reproduction of the non-capitalist non-agricultural informal sector, as well as the high level of flux among the working population across various segments of the economy without resulting in a transformation of the overall economic structure. In the concluding section, we indicate some critical issues in contemporary capitalism that a fresh research programme providing future directions in the political economy of development must address.

2. The Project of Rethinking Postcolonial Capitalist Development: Sanyal’s Intervention

Sanyal marks his departure from the prevalent critical perspectives that either posit a teleology of capital’s unfolding based on the historical experiences of global North; or explain the persistence of non-capitalist spaces by signalling to the ‘weakness’ of postcolonial capital in rooting out these spaces, or, in sharp contrast, to the ‘power’ of capital in shaping these spaces to satisfy its own economic needs. It is often argued that the non-capitalist spaces play a critical function in facilitating capitalist accumulation by serving as a repository of the reserve army of labour that weakens the bargaining power of wage workers, as well as by maintaining a steady supply of food at low prices and by provisioning cheap wage goods that help to keep wages low (Patnaik 2009; Gerry 1978; Wuyts 2001). It is further pointed out that they provide cheap raw materials or inputs for production in the capitalist segment, and are often linked to the latter via various subcontracting linkages (Ranis and Stewart 1999). Moreover, they play a key role in the process of expanded reproduction of capital by acting as outlets for final goods that cannot be absorbed within the capitalist segments, or as sites that are encroached upon for investment of over-accumulated capital (Harvey 2003). In other words, in these various narratives, these spaces, rather than being effectively non-capitalist, are seen to be completely embedded in or subsumed under the logic of capitalist accumulation, and their continued existence within a capitalist economic formation is argued to be fully functional to the economic needs of capital. Departing from such ‘capitalocentric’ views (Ruccio 2011) on the persistence and the logic of operation of non-capitalist segments, Sanyal (2007) provides a non-teleological, non-reductionist account of the arising and being of capital in the postcolonial context that does not render these spaces as completely functional to the economic needs of capital.

In certain crucial ways, his understanding of the economic formation under capitalism aligns with the non-determinist strand of Marxian literature, as developed by Resnick and Wolff (1987, 2006) and others. This strand characterises the capitalist economic formation as inherently heterogeneous, comprising both capitalist and non-capitalist processes of production, appropriation, and distribution of surplus (viz., ‘appropriative’ and ‘distributive’ class processes). The capitalist appropriative class process involves the production and appropriation of surplus value through commodity production via exploitation of wage labour for expanded reproduction of capital within the circuit of productive capital (M–C … P … C’–M’). The non-capitalist class processes, on the other hand, include both commodity and non-commodity production that usually do not involve a capital-wage labour relation, exhibiting what Shanin (1986, n.p.) calls an ‘extra-capitalist pattern of social and economic existence under capitalism’. The former, i.e., non-capitalist commodity production, may involve a process of self-exploitation by direct producers as in PCP, while the latter, i.e., non-commodity production, may involve non-waged social reproductive care work undertaken within the site of the household and outside the realm of market (Kesar, Bhattacharya, and Banerjee 2022).² The capitalist and non-capitalist class processes interact with, affect, and shape each other, as well as other non-class processes, i.e., mutually constitute each other, to produce the social totality of capitalism. So, within the social formation, these class processes coexist irrespective of the ‘stage’ of capitalist development. Such heterogeneity, where capital always has to contend and negotiate with non-capital, indicates an absence of a complete hegemony or domination of capital where it subsumes all economic and non-economic sites that exist within capitalism.

While Sanyal’s intervention is largely in line with this framing, he breaks away from the nature of relation between capital and non-capital as posited in this framework. In it, the continued persistence and reproduction of non-capitalist spaces within capitalism is a mark of non-capitalist class success against the hegemony of capital within the economic totality (Gibson-Graham 1996; Ruccio 2011). Sanyal begins his thesis precisely by problematising, what he calls, a ‘“simpleness” of the concept of hegemony and dominance’ (Sanyal 2007, p. 6) that prevails in this framework. He asks whether the persistence of the non-capitalist spaces and the ‘economic heterogeneity that constitutes capitalism … can [itself] be seen as an expression of capital’s hegemony’, and if it is possible to understand ‘capitalist development as [a] process that necessarily produces, brings into existence, non-capitalist economic processes in its own course’ (p. 7; original emphasis in the text).

To develop this argument, he begins by interrogating the prevalent theorisation of the process of primitive accumulation in the context of the postcolonial economic. This process is often seen as a necessary precondition for initiating capital-relations in pre-capitalist social formations by expropriating and transferring resources from ‘traditional’ segments to the ‘modern’ capitalist segments and transforming the dispossessed population into capitalist wage workers (Marx 1867 [1977]).³ Sanyal, rather, argues that this is an always-continuing and ever-incomplete process under postcolonial capitalism. While capitalist growth continuously undermines and disintegrates the non-capitalist segments by encroaching on their resources and dispossessing the population that derive their livelihood in these spaces, this dispossessed population, unlike the classical pattern, is not absorbed in the expanding capitalist segments as wage labour. Nor can they be considered as part of the reserve army of labour, whose existence and size are fully determined by the cycles of capitalist accumulation. In any case, it makes little analytical sense to describe the vast majority of the workforce as entirely being part of some kind of ‘reserve’. Rather, these populations are rendered extraneous or ‘surplus’ to the process of capital accumulation, with ‘very limited relevance to capital at any scale’ (Li 2010, p. 67). Diverging from theories of capitalist ‘hyper-functionalism, wherein even the last landless peasant … [is] considered to be functional to the reproduction of capitalist exploitation’ (Nun 2000, p. 12), the existence of this surplus population is seen to be, to a large extent, a-functional to the economic needs of capital.⁴ This population, excluded from the domain of capital (that Sanyal refers to as the ‘accumulation economy’), is, then, forced to recreate its condition of livelihood in the informal non-capitalist segments (that Sanyal refers to as the ‘need economy’), thereby continually reproducing these spaces at the very heart of postcolonial capitalism. The persistence of the non-capitalist sector, then, is an outcome of a ‘successful’ process of capitalist growth and accumulation, rather than being a sign of lack of capitalist transition. Consequently, the process of primitive accumulation, instead of leading to annihilation of pre-capital, becomes one of its resuscitation and regeneration as non-capital in the postcolonial context, disengaging the narrative of postcolonial capitalist development from its teleological foundations.

The non-capitalist segments, then, are governed by their independent economic logic of operation geared towards satisfying the consumption needs of the excluded population. As a holding ground of the surplus population, they also serve an important political condition for capital in maintaining its prevalence in the social formation. Without these spaces, the economic survival of the surplus population is endangered, which may lead to large-scale political upheavals, and threaten the stability of the process of capitalist reproduction. This calls for certain governmentalist interventions by the State through various welfare measures that are oriented towards a form of management of poverty to allow for basic survival of the poor by tenuously preserving the non-capitalist economic spaces (Sanyal 2007; Chatterjee 2011). Such efforts may entail some ‘reversal’ of the process of primitive accumulation, even though modestly. These interventions undertaken to maintain capital’s hegemony are supported or tolerated by capital at certain junctures, or, often vehemently contested by it and scaled back in the face of its expansionary thrusts. The relentless conflict between the expanded reproduction of capital through primitive accumulation and dispossession, and the logic of economic survival of large segments of surplus population, highlights a fundamental contradiction between capital and non-capital. This contradiction, along with the intrinsic conflict between capital and labour within the domain of capital, underlies the process of capitalist development in much of the global South. This attests to the specificity of postcolonial capitalism that escapes most critical strands of literature on the political economy of development.

Sanyal’s intervention provides a powerful framework to make sense of the process of postcolonial capitalist development, but a more comprehensive theorisation and empirical analysis of this process needs a considerable amount of further work. Over the years, Sanyal’s work has been subjected to some sharp, yet often productive, critiques that help to think about various pathways and directions that such work should follow.⁵ These critiques have distinct theoretical, empirical, and political dimensions. We briefly elaborate on some of these dimensions (while adding a few of our own), point to an emerging literature that has partly delved into them, and, in the process, identify certain issues that need further exploration.

Seven major issues stand out through the critical interrogations of Sanyal’s framework. First, there is a need to further analyse and empirically describe the concept of need economy (Chatterjee 2014), its specific dynamics, and its relation to the capitalist segment (Deshpande 2012). Can the two segments be strictly separated as autonomous sub-economies following a traditional dualist reason (Breman 2013)? Is the need economy a ‘pure’ outside of capital that is constituted by populations who are completely excluded from the space of capital, or is the relation between the two spaces structured by a process of ‘spatio-temporal flux’ of population groups moving across capitalist and non-capitalist economic segments (Gidwani and Wainwright 2014)? Moreover, while Sanyal conceptualises the need economy as comprising the non-agricultural non-capitalist informal sector, can the category be expanded to include the vast agrarian sector in postcolonial economies, which is also largely based on petty production (Dasgupta 2021)? If so, how to analyse the dynamics of agriculture’s relation with the capitalist and non-capitalist non-agricultural segments of the economy? Further, aside from the distinct economic logics that govern the need economy and the accumulation economy, what about the various ‘other normative logics (of gender, caste, race, region, and religion, to name some) that traverse, enable, and interrupt the capitalist and non-capitalist forms of production he [Sanyal] foregrounds’ (Gidwani and Wainwright 2014, p. 44)?

Second, can the need economy also be productively understood from a class-theoretic approach analysing processes of production, appropriation, and distribution of surplus, including in the case of need-driven micro-enterprises where the owner-worker may employ some wage workers and appropriate their surplus labour? While Sanyal calls such an articulation of the need economy as ‘class essentialism [that refuses] to allow the politics of exclusion/dispossession to have a space of its own in the overall project of social transformation’ (Sanyal 2007, p. 260), non-determinist Marxian theory would argue that Sanyal’s framework suffers from an essentialist depiction of capitalist and non-capitalist spaces in terms of accumulation and need, respectively. It would, however, be crucial for the project of transformation to investigate the possibility of building a framework that integrates both the dimensions of class and exclusion, as Sanyal himself asserts (Sanyal 2007, pp. 261–262).

Third, it has been argued that the identification of the narrative of capital’s arising with the development discourse needs to be traced back to ‘the complex histories’ of the process of colonialism in the 19th century, rather than being seen as a provisional construct of the postcolonial period in the 20th century (Gidwani and Wainwright 2014, p. 45). Fourth, Sanyal’s argument regarding the implausibility of full-fledged or ‘complete’ capitalist transition along classical lines under postcolonial capitalism warrants more detailed examination (Bardhan 2009, 2018; Basu 2019). A distinct yet related concern is to examine how the trajectories of capitalist development (and possibilities of transition) may vary under specific contexts of different postcolonial societies with wide variations in their historical circumstances and economic structures (including in the relatively less labour surplus or more resource abundant economies in the global South as in some parts of Latin America and Africa).

Fifth, there is a need to expand the scope of the framework to integrate into it the analysis of the vital role of the non-capitalist and non-commodified space of the household in the reproduction of the capitalist social formation. The Marxian social reproduction theories show that the household provides both an economic condition for capital’s reproduction by providing labour power for wagework, and a cultural condition by socialising new generations in specific ways to attune them for future wagework, mostly through the unpaid care work performed by women (T. Bhattacharya 2017). Such unwaged work plays a role in subsidising the process of capitalist accumulation. The dynamics of neoliberal economic processes, however, have increasingly threatened the stable reproduction of the household spaces across the world, compromising their ability to play the above critical roles and thus weakening the process of capitalist reproduction (Fraser 2016). However, in the specific context of postcolonial capitalism, the non-capitalist agricultural or non-agricultural household enterprises play a key additional role in sustaining the economic reproduction of the excluded or the surplus population. Increasing fragility of these non-capitalist spaces in the postcolonial context, then, has a distinctive and a more serious adverse consequence in terms of undermining the political, economic and the cultural role of these spaces for capitalist reproduction.

Sixth, to what extent can the process of governmentality and ‘reversal’ of primitive accumulation be viewed as a salient feature of postcolonial capitalism in the face of ongoing and often increasing predatory thrusts of global corporate capital (Gidwani and Wainwright 2014; Basu 2019)? Further, it is argued that a theorisation of governmental practices should account for the key role they play in facilitating dispossession through primitive accumulation, instead of only being focused on the process of its reversal through welfarist interventions (Basu 2016). Finally, Sanyal’s theoretical intervention has been critiqued for a lack of scope and agency for subversive, counter-hegemonic and anti-capitalist political practices due to his framing of the politics of exclusion within the boundaries of welfarist governmentality in contemporary postcolonial capitalism (Basu 2016). While Sanyal stresses that his framework produces a discursive ‘space in which radically new counter-hegemonic imaginaries … can be made visible’ where ‘one can catch a glimpse of the politics of exclusion and resistance for the post-colonial world today’ (Sanyal 2007, p. 262), much of it remains as a theoretical task for future work.

A growing body of theoretically and empirically grounded work has emerged in recent years that seriously engages with Sanyal’s intervention and develops his framework further, while reformulating it in certain ways. In the process, these works elaborate on many of the issues discussed above. We briefly highlight some aspects of these engagements.

The dynamics of the non-capitalist economic spaces have been analysed to some extent in the context of India (Sanyal and Bhattacharya 2009; S. Bhattacharya 2017; Kesar and Bhattacharya 2020; Bhattacharya and Kesar 2020). This work points to the distinct economic logic that allows these spaces to secure their conditions of reproduction, without much possibility for accumulation, growth and transition. It also shows how the reproduction of conditions of dualism with capitalist growth makes the process distinctly different from traditional theories of economic dualism that underpin the teleological understanding of development-as-capitalist-transition. At the same time, these contributions also problematise the notion of ‘outside’ — and, relatedly, that of the process of exclusion — by showing that in the specific context of India the non-capitalist economic spaces are continually reconstituted via transitions of vast sections of population across different economic spaces through some form of ‘spatio-temporal flux’. However, the non-capitalist terrain remains centred on a distinct economic logic of satisfaction of consumption needs rather than expanded reproduction, and as a reservoir of surplus population that cannot meaningfully be seen as a reserve army of labour. Further, a detailed analysis of the nature and pattern of these transitions show that most of them are likely to be driven by conditions of distress, rather than indicating a welfare-inducing dynamism in the economy (Kesar 2020). We illustrate some of these issues in more detail in the context of the informal economy in India in Section Four.

The agricultural and non-agricultural informal economies in the postcolonial context are the major locations for petty producers. While the dynamics of the non-agriculture informal economy has been analysed through the category of need economy to some extent, some recent work has studied the agrarian dynamics locating it within Sanyal’s framework to interrogate its role in the process of postcolonial capitalist development (Dasgupta 2021). However, the problematic of petty production in agriculture in terms of its mode of economic reproduction, its relation to the ‘labour question’ in postcolonial capitalism as a reservoir of populations that are not directly integrated into capitalist non-agricultural segments, and its implications for the broader process of capitalist accumulation and transition need further theoretical and empirical investigation. We highlight these issues with regard to Indian agriculture in Section Three.

Some work has been done following Sanyal to further unpack the specific nature of relationship between the domain of capital and that of non-capitalist segments of the agricultural and non-agricultural informal economy. There exists some scholarship that integrates Sanyal with a Kaleckian/structuralist framework to emphasise the dynamics of intersectoral conflicts between these segments (Chakrabarti 2013, 2016; also refer to Bhaduri 2018). They show that in the presence of primary resource constraints (generically denoted by land and food constraints) posed by an agricultural sector that is predominantly non-capitalist and informal in nature, the process of expansion of the capitalist sector syphons resources away from the non-capitalist non-agricultural informal sectors in both urban and rural economies, leading to their dispossession and worsening their already precarious economic conditions.

Other works point to the intrinsic contradictions between the domains of capital and non-capital that arise due to the expansionary thrusts of capital through primitive accumulation, as well as through the ‘dispersion’ of capital to non-capitalist spaces via subcontracting linkages and unwaged gig/platform work. Furthermore, the informal economy is seen to encompass disparate production and labour processes located both within and outside the circuit of productive capital (Bhattacharya and Kesar 2020). These processes, along with the non-capitalist and the non-commodified spaces of the household, are argued to provide distinct economic, political, and cultural conditions of existence for capitalist accumulation in specific ways in the global North and South in the present conjuncture (Kesar, Bhattacharya, and Banerjee 2022). However, the contradictory and conflictual relation of the different economic spaces with the process of expanded reproduction of capital endogenously generates conditions of crisis that tends to destabilise the process of capitalist reproduction, as has been made increasingly visible during the Covid pandemic (Kesar, Bhattacharya, and Banerjee 2022). In this context, in a much contested theoretical formulation, Sanyal highlights the role of governmentalist interventions through myriad welfare measures as serving to partially reverse the effects of primitive accumulation. Some recent works, either independently or following Sanyal, have elaborated on how such interventions have become increasingly institutionalised and normalised across the world as a necessary tool to maintain political stability — and capital’s legitimacy — in face of an escalation in processes of primitive accumulation (Li 2010; Chatterjee 2011; Bhattacharya 2019a; Kesar, Bhattacharya, and Banerjee 2022).

Apart from the governmentalist interventions, the non-capitalist informal enterprises may, however, also be able to reproduce their conditions of existence through their own internal dynamics. Empirical studies in the context of India that attempt to integrate Sanyal’s framework with the non-deterministic Marxian strands show that such enterprises are able to economically reproduce themselves, although at precariously low levels and often by pushing down the value of labour power of the direct producers, without being able to retain any surplus for accumulation and expansion (S. Bhattacharya 2017; Kesar and Bhattacharya 2020; Bhattacharya and Kesar 2020). These works show that the class qua surplus framework of analysing the processes of production, appropriation, and distribution is a productive way to clearly enunciate the working of these non-capitalist enterprises, while emphasising the process of exclusion that Sanyal highlights. We illustrate these arguments further in Section Four.

Finally, there have been attempts to further problematise and develop the theoretical construct of primitive accumulation within Sanyal’s framework and its role in maintaining the hegemony of capital within the capitalist social formation (Bhattacharya 2019b). The process of primitive accumulation is dissociated from prevailing historicist narratives that relegate it to the pre-history of capital to bring to light and theorise an ever-present ‘outside’ of capital. A reading of the process through a late-Althusserian non-determinist lens delinks it from the teleological account of transition and de-centers the standard chronicles on the classical pattern of capitalist development. This brings to fore the fundamental but contingent role of primitive accumulation in provisioning the conditions for maintaining the dominance of capital within postcolonial capitalism.

The global South-centric approach elaborated by Sanyal avoids the pitfalls of essentializing capitalism and its contemporary process of development and universalising the specific, conjunctural trajectory of capital’s arising in the global North. This clears the ground for understanding postcolonial capitalism on its own terms. Our purposive survey of the interventions developing on Sanyal’s framework, however, also highlights that the theoretical and empirical extent of the work remains rather limited, and its geographical focus remains majorly confined to the Indian context. Further, several dimensions of the critiques that we framed earlier stay unexamined and uncharted. This calls for a full-fledged research programme to build upon this framework of analysis to make sense of the specificities and particularities of postcolonial capitalism in different contexts across the world in the current juncture of global capitalism. This would be important for imagining the contours of a counter-hegemonic politics that speaks to these particularities.

In the following two sections, we provide specific illustrations in the context of agrarian and non-agrarian informal economy in India emphasising how this approach towards postcolonial development from a global South-centric lens may be productively deployed. In the process, we draw attention to some of the issues that we have discussed in this section.

3. Agrarian Informal Economy and Postcolonial Capitalist Development

It has been widely noted that Indian agriculture has been embroiled in deep distress over the past three decades, characterised by rising operational costs, falling incomes from cultivation, and declining crop productivity (Reddy and Mishra 2010; Mishra 2020). These adverse conditions have been increasingly pushing people out of agricultural activities to rural or urban non-farm informal economies in search of alternative livelihoods, which, it might be argued, signifies a Lewisian process of structural transformation (Lewis 1954). However, we find that in spite of such migrations, agriculture continues to provide livelihood to around 43 per cent of the total workforce in 2019 (which has fallen from 63 per cent in 1991 since the initiation of neoliberal economic reforms), though its contribution to GDP is only 17 per cent (falling from 27 per cent between 1991 and 2019).⁶ Absence of alternate employment opportunities have forced this huge segment of population to remain in agriculture in spite of pervasive agrarian distress, which has been compounded by declining government support and rising integration with the global market, resulting in increasing fluctuations in agrarian incomes and rising indebtedness. This has even lead to widespread incidences of suicide by farmers. It has been estimated that between 1995 and 2014 more than 300,000 people engaged in agriculture have committed suicide (Basu, Das, and Misra 2016). Further, it has been noted that there is a pattern of circular migration, where people often move between cultivation activities during peak harvesting seasons and other non-agricultural activities during lean seasons. The prevailing critical function of agriculture in sustaining a vast section of population brings to fore the issue of contemporary relationship of agriculture to the growth process of the economy.

We provide some examples of the precarious nature of reproduction of small and marginal farmers that constitute the vast majority of agrarian households in India, and relate the discussion to the specificity of postcolonial capitalist development. We show that while such non-capitalist informal agrarian enterprises qua households are implicated in the commodity economy producing for the market, mostly in the form of PCP, it appears that a key economic logic for their persistence in agricultural activities in the face of widespread distress is to satisfy the basic consumption needs of the households. Further, given the nature of economic reproduction of these agrarian enterprises, there does not seem to be much possibility for an overall transition towards capitalist agrarian structure. We read the situation of agrarian PCPs by drawing from Sanyal’s framework that has been developed in terms of the non-capitalist non-agricultural informal economy. In the process, we also identify the distinctiveness of agriculture that calls for a more expansive theoretical formulation to analyse the dynamics of reproduction of both agricultural and non-agricultural non-capitalist spaces in postcolonial capitalism.

For example, as can be observed from Table 1, by 2012–13, i.e., towards the end of the decade-long period of peak capitalist growth in the Indian economy, almost 67 per cent of agrarian households owned between 0.01 and 1 ha of land, and an additional 17 per cent owned between 1 and 2 ha. Moreover, over this growth period, the proportion of petty producers with marginal and small landholdings (i.e., between 0.01 and 1 ha and between 1 and 2 hectares, respectively) increased from 80 per cent in 2002–03 to about 84 per cent in 2012–13.

Table 1. Proportion of agricultural households across different land size categories for 2002–03 and 2012–13.

Land size	Proportion of agricultural households across different land size categories in 2002–03	Proportion of agricultural households across different land size categories in 2012–13
< 0.01 (landless)	2.56	3.00
0.01–1 (marginal)	59.69	67.06
1.00–2.00 (small)	19.32	16.93
2.00–4.00 (semi-medium)	11.81	9.01
4.00–10.00 (medium)	5.46	3.54
>10.00 (large)	1.16	0.45

Source: Based on NSSO (2014b) report of Situation Assessment Survey (SAS) 2012–13.

The continued reproduction of a vast segment of petty producers in Indian agriculture puts into question the traditional understanding regarding agrarian transition. There has been a long lineage of scholarship on the role of agriculture in facilitating the process of capitalist development, particularly focusing on its significance for rapid capitalist accumulation throughout the economy via its demand and supply linkages with industry and services. The ‘traditional’ agrarian sector is understood to be functional to the process of capital accumulation in non-agricultural sectors, as the existence of Lewisian surplus labour in agriculture serves as a reserve army of labour for the expanding capitalist ‘modern’ sectors. Further, agriculture provides cheap raw-materials for production, ensures sufficient food supply at relatively low prices to keep non-agricultural wages in check, and provides a ‘home market’ for industrial commodities (Kalecki 1976; Mundle 1985). Much of the standard critical literature on the Marxian ‘agrarian question’ focuses on how capitalist development in the economy transforms the mode of production in agriculture, which in turn, crucially impacts the process of economy-wide accumulation (Akram-Lodhi and Kay 2010a, 2010b). In the context of the global South, it has been argued that the persistence of pre-capitalist (i.e., feudal or ‘semi-feudal’) modes of production in agriculture due to the relative ‘weakness’ of capital in charting an indigenous path of capitalist development, have been the major impediments towards full-fledged capitalist transition in the economy (see Chakrabarti and Cullenberg 2003, for a review).

However, in the Indian context, while large segments of small and marginal agrarian households continue to persist as non-capitalist petty producers, this has not undermined the process of rapid accumulation and growth in the non-agricultural capitalist sectors. Similar situations have been observed in many other countries in the global South (Bernstein 2006, 2009). In fact, in India, the proportion of households engaged in petty production has increased during the peak period of high growth as is evidenced from Table 1. It, thus, appears that the role traditionally assigned to agriculture in the process of capitalist transition needs to be re-thought. Indian agriculture is evidently not a pre-capitalist self-subsistent economy as it is deeply embedded in the commodity economy, where households are vitally linked to the market for purchase of various inputs, including wage labour, and for sale of marketable surplus. For example, in 2012–13, almost 60 per cent of agrarian households with marginal landholdings and 75 per cent of those with small landholdings hired wage labour (NSSO 2014b). This implies that rather than the traditional C-M-C production circuit of pre-capitalist agriculture, where households source their inputs (seeds, natural fertilisers, etc.) and labour from within, the circuit for this agrarian PCP begins with M that is used for purchasing inputs and labour power from the market, and the marketable surplus generated, after taking care of household consumption, is also sold back to the market at the end of the circuit.

However, on an average, the vast majority of agrarian households are unable to produce any significant amount of economic surplus from cultivation for accumulation and growth, as becomes apparent from the following table.

Table 2 shows that for 2012–13, median monthly net income of households (i.e., retained household earnings from cultivation after deducting all cultivation-related out-of-pocket expenditures) belonging to the marginal category, which, as shown above, constitute around 67 per cent of the agricultural households in India, is less than INR 900 (approximately USD 54 at exchange rates based on purchasing power parity), and for small households, who constitute another 17 per cent, it is around INR 2900 (approximately USD 173) per month.⁷ However, the median monthly household consumption expenditure for the households in the marginal and small land size classes are INR 3917 (approximately USD 234) and INR 4492 (approximately USD 268), respectively. Thus, the agricultural incomes for the majority of the agrarian households are insufficient to even cover their household consumption expenditure, let alone any possibilities for accumulation and growth. In fact, it is observed that the median monthly net incomes of households belonging to the marginal and small landholding classes after deducting the household consumer expenditures are negative INR 2614 and negative INR 1300, respectively.⁸

Table 2. Median monthly net income from cultivation and household consumption expenditures for 2012–13 (in INR).

Land size	Median monthly net income from cultivation (2012–13)	Median monthly household consumption expenditure (2012–13)	Median monthly net income from cultivation left after accounting household consumption expenditure (2012–13)
< 0.01	313	3555	−2713
0.01–1	879	3917	−2614
1.00–2.00	2892	4492	−1300
2.00–4.00	5261	5075	396
4.00–10.00	10502	6250	3975
>10.00	26683	8688	19070

Source: Authors’ calculations based on SAS 2012–13.

In other words, for most of the cultivating households, we have a M-C-C′-M′ circuit, where M′ = M + m, with a positive, though often rather meagre, surplus m. But most of this surplus has to be distributed to those providing the conditions of existence of the PCP farm (as rents, interests, etc.), without leaving any positive net surplus for accumulation and growth. Given that in the situation of widespread agrarian distress the households can reproduce their conditions of existence only by pushing down their customary standard of living, any positive net surplus left with the households after distributions is likely to be used for satisfying the consumption needs of the household or for higher future consumption, without any scope for accumulation.

This situation resonates with a recent strand of literature on rethinking the traditional agrarian question that adopts a more non-teleological approach towards the process of capitalist development (Bernstein 2006; Akram-Lodhi and Kay 2010b). It argues that the traditional agrarian question of capital has become redundant in the contemporary globalised economy as the accumulation process in industry no longer depends upon growth in the domestic agricultural sector and is linked to the accumulation process at the global level. Rather, the issue has now transformed into an agrarian question of labour, as a key role of agriculture in the current context has been to provide basic livelihood conditions to a vast segment of workforce in the absence of alternate employment opportunities in spite of expansion and development of a ‘modern’ capitalist industrial sector (Bernstein 2006, 2009; Lerche 2013). Drawing parallels between the above formulation of the agrarian question of labour and Sanyal’s account of the consumption needs-oriented economy of the surplus population in the non-agricultural informal sector generated through the process of primitive accumulation, it has been argued that the latter can be extended to the agrarian context as well to categorise much of Indian agriculture as part of the ‘need economy’ (Dasgupta 2021).

However, while agriculture’s prominent role in providing economic conditions of reproduction for the rural population that is excluded from the capitalist industrial sector is quite apparent, it is not a ‘need economy’ in Sanyal’s sense of the term. First, the ‘need economy’ comes into existence through the process of primitive accumulation, which dispossesses the petty producers, who, in turn, have to recreate these non-capitalist spaces for their economic survival. Thus, the very genesis of the ‘need economy’ is tied to the process of primitive accumulation. This does not hold true for much of Indian agriculture, where, as noted above in Table 1, more than 84 per cent of all agrarian households operate on marginal and small landholdings (that are increasingly getting further fragmented), rather than being expropriated from their land, which would have led to higher land concentration.⁹ Second, the dynamics of the ‘need economy’ is such that the population subsisting on it is majorly dependent on the money income it earns by selling commodities in the market (apart from direct or indirect government transfers), as in the case of informal non-capitalist household enterprises. Thus, conditions of their economic survival are tethered to market relations. In contrast, while most agrarian households are implicated in the commodity economy, their production also plays an important role in directly meeting a significant portion of their consumption needs without being mediated through the market (as noted below in the context of Table 3). Third, the ‘need economy’ is argued to be a-functional to the process of capitalist accumulation and, hence, in terms of its economic role, an unnecessary excess for the dynamics of accumulation. In the agrarian sector, on the other hand, a large proportion of the marketable surplus comes from low-cost production undertaken by the PCP households, which ensures steady supply of cheap food in the economy, thereby playing a crucial role in facilitating capitalist accumulation by keeping the non-agricultural real wages low (Dasgupta 2021). Thus, it might well have been a conscious decision on Sanyal’s part to focus on the non-agricultural informal sector, rather than agriculture, as the locus of the ‘need’ economy’.

Table 3. Ratios of imputed value of home-produced stock to gross income from all sources, household consumption expenditure, and total value of household consumption for 2012–13.

Land size	Imputed value of home-produced stock / Gross income from all sources	Imputed value of home-produced stock / Gross income from all sources plus imputed values of home-produced stock	Imputed value of home-produced stock / Household consumption expenditure	Imputed value of home-produced stock / Total value of household consumption (out- of-pocket expenditures plus imputed values)
< 0.01	0.24	0.13	0.23	0.17
0.01–1	0.35	0.18	0.31	0.22
1.00–2.00	0.23	0.15	0.38	0.25
2.00–4.00	0.17	0.11	0.37	0.25
4.00–10.00	0.10	0.08	0.36	0.25
>10.00	0.06	0.05	0.32	0.23

Source: Authors’ calculations based on SAS 2012–13.

While agriculture may play this important role of providing cheap supply of food, categorising it as being fully functional to the needs of capital is analytically analogous to the arguments made in context of the non-agricultural informal economy that rather than having any independent logic of existence and operation, it is completely subsumed under the logic of capitalist accumulation (for example by providing cheap wage goods and a reserve army of labour for the capitalist sector) (Bhattacharya 2014; Wilson 2020). It has also been argued that demand deflation in agrarian PCP brought about by neoliberal policies have maintained non-increasing supply prices of food that play an important role in stabilising the capitalist system (Patnaik 2009; Patnaik and Patnaik 2016). There is, however, no theoretically compelling reason why capital would need this kind of non-capitalist agriculture to persist in order to keep food prices low — the same could be achieved by increasing productivity in agriculture through more intensive and extensive capitalist farming. But given the specific characteristic of food as an essential commodity that cannot be substituted, unlike the case of the non-capitalist informal sector that produces non-food wage goods, agriculture cannot also be seen to be completely unrelated to the process of accumulation, as might be argued to be the case for ‘need economy’. To that extent, the necessity of PCP in agriculture for capitalist accumulation remains an open question.

In spite of all this, the lack of possibilities of accumulation for a vast majority of agrarian households (as discussed above in the context of Table 2) and hence the bleak possibilities of capitalist transition in agriculture through internal dynamics of accumulation and class differentiation among peasants, comes across as a stark reminder of the process of need-based economic reproduction undertaken by the non-capitalist non-agricultural informal economy. In this sense, while agriculture may not be considered as the ‘need economy’, Sanyal’s framework still provides a productive way of understanding the specificity of the agrarian sector in the postcolonial context. Specifically, it can be seen as performing a similar role to the ‘need economy’ in one crucial aspect, i.e., in terms of serving as a holding ground for a large segment of the working population that do not find alternative employment opportunities in the capitalist industrial sector and are thereby excluded from the internal sphere of capital. Even when agricultural production is carried out mainly for the market, a part of the produced output may be used by the household to directly provision for a substantial portion of its food requirements, as shown in the table below, which importantly helps to sustain the household without completely depending on the market-based purchase of food.

Table 3 shows the crucial importance of agricultural activities for directly sustaining the households through home-produced stocks to meet their consumption needs. It can be observed that for the median household with marginal and small landholdings, the (imputed) value of home-produced stock is more than a third (35 per cent) and about a quarter (23 per cent) of their gross income from all sources, respectively. To look at it in another way, their home-produced stock accounts for 18 and 15 per cent, respectively, of their total gross income from all income sources including the value of home-produced stock. Similarly, it is seen that the value of home-produced stock accounts for 31 and 38 per cent of household consumption expenditures for marginal and small agricultural households, respectively, or 22 and 25 per cent, respectively, of the total value of household consumption including out-of-pocket expenditures and values of home-produced stock.¹⁰

Apart from partly sustaining the agrarian population through direct provisioning of food, agricultural PCP also plays an important role in the reproduction of the non-agricultural ‘need economy’ through supply of cheap food grains. Moreover, agricultural and non-agricultural informal economies are closely related to each other through another vital channel. The large-scale agrarian distress forces agricultural households to diversify their income sources whereby some members of the households may look for unwaged work in the non-capitalist informal sector or wage work as informal casual labour on a seasonal or perennial basis, to supplement their inadequate incomes from agriculture (Breman 1996). Simultaneously, it can be argued that the incomes from agriculture help to partly sustain and reproduce, though precariously, non-agricultural PCP and casual wage labour.

For example, it is seen that in 2012–13, 46 per cent of the households who perform cultivation also engage in wage employment, while 14 per cent engage in non-farm business activities (NSSO 2014b). Table 4 illustrates that more than half of households cultivating marginal landholdings (about 55 per cent) also engage in wage labour, while more than one in seven of such households (about 16 per cent) also engage in non-farm business. The corresponding figures for households with small landholdings are about 39 and 13 per cent, respectively. Moreover, more than a quarter of them have wage labour as their principal source of income, while more than one in twenty of such households have non-farm business as their principal source, implying that almost a third of these households have non-cultivation as their principal source of income. Similarly, about one in eight among the households with small landholdings have non-cultivation as their principal source of income (i.e., 8.65 per cent with wages and 3.19 per cent with non-farm business as principal source of income).

Table 4. Proportion of households across land size categories that engage in wage labour and non-farm business and those that have their principal sources of income from wage labour and non-farm business for 2012–13.

Land size	Engage in Wage labour	Wages as principal source of income	Engage in non- farm business	Non-farm business as principal source of income
< 0.01	75.67	56.64	18.64	11.77
0.01–1	54.63	26.83	15.53	5.33
1.00–2.00	39.11	8.65	13.22	3.19
2.00–4.00	33.16	7.15	11.51	1.64
4.00–10.00	24.27	6.06	10.98	0.91
>10.00	28.91	6.92	10.28	1.77

Source: Authors’ calculations based on SAS 2012–13.

From Table 5, we can observe that even if we consider the net income of agricultural households from all sources combined (cultivation, animal husbandry, non-farm business and wages), the total funds left with the median households in the marginal and small categories of land class sizes after deducting household consumption expenditures are quite negligible. For 2012–13, the median monthly amount of such funds for marginal agricultural households is negative (negative INR 228) and that for small agricultural households is only INR 1185 (approximately USD 71). This points to the lack of possibilities for accumulation for productive investment for most of the agricultural households. On the other hand, households with medium and large land holdings, accounting for only 4 per cent of all agricultural households, are able to retain relatively high amounts of funds — median values of INR 7735 and INR 20085 (or approximately USD 462 and USD 1194), respectively — which can be used for accumulation and growth.

Table 5. Median monthly net income from all sources (cultivation, animal husbandry, non-farm business and wages), median monthly household consumption expenditure, and median monthly funds left with households after accounting for consumption expenditures for 2012–13.

Land size	Median monthly net income from all sources	Median monthly household consumption expenditure	Median monthly funds left with households after accounting for consumption expenditures
< 0.01	3613	3555	370
0.01–1	3445	3917	−228
1.00–2.00	5539	4492	1185
2.00–4.00	8236	5075	3280
4.00–10.00	13960	6250	7735
>10.00	26458	8688	20085

Source: Authors’ calculations based on SAS 2012–13.

Three broad points can be made from the above tables: (i) Even the precariously low levels of net incomes for vast majority of agricultural households are possible because most cultivation activities are performed through unwaged labour of the members of the households, i.e., through self-exploitation, that sharply brings down the cost of cultivation by eliminating the wage costs they would have had to incur if most of the agricultural activities were performed through hired labour. (ii) The out-of-pocket household consumption expenditures are lower than what they would have been if the households had to purchase their entire food from the market, which would have made their reproduction even more precarious. As shown in Table 3, a significant part of the household consumption comes from home-produced stock, i.e., the food sourced through agricultural activities on their own farms. This partly explains the reason for holding on to the marginal and small tracts of land in spite of such low levels of net incomes generated through the sale of marketable surplus. (iii) Given that the household consumption expenditures are higher than the net incomes for most agricultural households, they have to depend upon other sources of income to meet their consumption needs, as shown in Tables 2, 4 and 5.

It may be argued that the specificity of agriculture in terms of being a holding ground for a significant proportion of the population serves two important functions. Along with providing basic conditions of existence and economic reproduction for this population, this economic space also serves an important political function. Given the exclusionary process of capitalist accumulation and growth, agriculture provides conditions for basic, albeit increasingly tenuous, livelihood for the excluded, thereby mitigating the risk of widespread upheavals and instability to some extent. Over the past decades, there have often been feeble efforts on the part of the State (at times responding to people’s movements and public demands) to manage the distress and pauperisation of agrarian households through limited schemes on insurance, government procurement of foodgrains, and policies like debt-waivers, etc. Such policies do not seem to affect the capitalist growth process, but rather they seem to serve a completely different purpose of preserving a space where a vast population is able to eke out their subsistence living without posing a risk to the stability of the capitalist system. However, these policies have remained largely inadequate in alleviating the extremely difficult situation. Moreover, with the onset of the neoliberal reforms and whittling down of much of the State support to agriculture, the tension between preserving the fragile conditions of survival of the agrarian population and the pressure of expansionary thrust of capitalist accumulation has been growing, which, in turn, is worsening the situation in agriculture. This growing tension seems to have intensified the flux of agrarian households undertaking seasonal migrations to engage in precarious jobs in the non-agricultural informal sector. The recent political upheaval in response to the promulgation of three farm laws by the Government of India to chart a path towards corporatisation of agriculture, and eventual withdrawal of the laws in the face of massive resistance, should be seen in this context.¹¹ The resistance, to a large extent, had been motivated by widespread anxiety among the agrarian population regarding a possible loss of their livelihoods and economic conditions of survival that may be brought about by an introduction of large-scale capitalist farming as a consequence of these laws (Workers Unity, Groundxero, and Notes on the Academy 2022). This attests to the centrality of agriculture as a sink for a vast section of excluded population, which points to the need for a fresh theorisation of the agrarian question in the context of contemporary process of postcolonial capitalist development in the global South.

4. Non-agricultural Informal Economy

The non-agricultural informal economy is a relatively more well-trodden, though still not sufficiently frequented or adequately explored, economic space in the context of the theoretical framework on postcolonial capitalist development that we foreground. This framework is built upon the understanding that the non-agricultural informal segment is the site that, unlike the agricultural sector, is continually encroached upon through the process of primitive accumulation and regenerated by the dispossessed population for their economic survival. In this section, based on a recent strand of scholarship (Sanyal and Bhattacharya 2009; Chakrabarti 2016; Bhaduri 2018; Kesar 2020; Kesar and Bhattacharya 2020; Bhattacharya and Kesar 2020), we examine the nature and pattern of reproduction of the non-agricultural informal economy in India while continuing to focus on the peak growth decade in the Indian economy, to provide another set of illustrations signalling the specificity of postcolonial capitalism. Given the centrality of the manufacturing sector as the expected driver of economic growth and, thereby, a catalyst for the process of capitalist transition and structural transformation (Tregenna 2009; Storm 2015), we first explore the dynamics of reproduction of informal manufacturing enterprises, and then expand the scope of our exploration to other segments of the economy to make sense of the nature of reproduction of the overall economic structure.

The non-agricultural informal sector in India broadly comprises two sets of enterprises:

(a) the non-capitalist own account enterprises (OAEs) undertaking PCP using unwaged family labour without hired workers, and (b) the relatively larger establishments with comparatively better technology and higher productivity, employing at least one wage worker. Overwhelming proportion of the informal sector is constituted by non-capitalist PCP units and this proportion has not fallen over time even during the peak growth decade. Table 6 shows that the OAEs made up about 85 percent of informal non-agricultural enterprises in India in 2010–11 towards the end of the peak growth period. Even according to the latest available official survey data in 2015–16, the proportion has remained broadly similar (84 percent).

Table 6. Proportion of OAEs and establishments in the informal sector in India in 2010–11 and 2015–16.

Sector (proportion in the overall distribution in 2010–11)	OAEs (2010–11)	Establishments (2010–11)	OAEs (2015–16)	Establishments (2015–16)
Manufacturing (30)	84	16	86	14
Trade (36)	86	14	85	15
Other services (34)	84	16	83	17
All (100)	85	15	84	16

Source: Based on the 67th round (2010–11) and 73rd round (2015–16) of surveys conducted by National Sample Survey Organisation (NSSO 2012, 2017).

The non-capitalist PCP segment has persisted and reproduced over time, albeit at precariously low levels of earnings, without eroding or fading away even after a relatively long period of sustained economic growth. At the same time, as shown below, the PCP units have not exhibited any discernible tendency to grow and transition into larger capitalist enterprises. This runs counter to the standard expectations regarding the process of capitalist transition in the teleological narratives on economic development that pervade much of both mainstream and critical literature.

To make sense of the pattern of such reproduction, let us first consider the gross value added (GVA) per enterprise. In 2010–11, the median GVA for the non-capitalist household enterprises (OAEs) was only 0.13 times that of the establishments (INR 2948 and INR 23579 per month, or USD 176 and USD 1407 at exchange rates based on purchasing power parity, respectively).¹² As the GVA is calculated by deducting total out-of-pocket expenses from the gross revenue of an enterprise, without accounting for the value of unpaid family labour, even this acutely low level of GVA for the OAEs is possible because the economic activities of these PCP enterprises are mostly done through the unwaged work of the members of the household, i.e., through self-exploitation. Moreover, for these enterprises, there is often no clear demarcation between the production space of the enterprises and the consumption space of the household. Concretely this usually manifests in household resources being used for production purposes without the enterprise having to incur any explicit expenditures for these resources. According to the survey data, in 2010–11, about 75 per cent of the OAEs in the informal manufacturing sector were operating from within the households. It may thus be argued that these PCP units are able to survive and reproduce themselves over time precisely because they are non-capitalist enterprises embedded within a household dynamic of provisioning and income sharing rather than in the capitalist dynamics of accumulation and growth.

Due to the overlap between the enterprise and the household, the total retained earnings for the OAE is also the income for the household to satisfy its consumption needs and to reproduce itself. There exists no clear demarcation between the part of the income that may be directed towards satisfying the consumption needs to reproduce the labour power of the owner-worker and the unpaid family workers (i.e., the implicit labour costs or value of labour power), and the part that may be retained for accumulation, re-investment and expansion of the household enterprise (i.e., the net surplus of the enterprise after deducting all outward payments from the surplus like rents, interests, etc). Following Bhattacharya and Kesar (2020) and Kesar and Bhattacharya (2020), if we estimate a notional (or pseudo-) wage fund for the unwaged workers by imputing the amounts they would have received as wages if they were working as a wage workers in ‘similar’ enterprises (similar in terms of GVA, location, industry), and deduct these amounts along with rent and interest payments, if any, from the GVA of the enterprise, we get an estimate of the net surplus of the enterprise.¹³

Based on such estimations, from Table 7 we find that the median OAE could potentially retain only a meagre amount of INR 958 (approximately USD 57) per month as net surplus in 2010–11, with the median rural OAE having INR 836 and the median urban OAE having INR 1286 (approximately USD 50 and USD 77, respectively) — the highest amounts reported over the peak growth decade. However, even this precariously low level of net surplus, highlighting the bleak possibilities of growth and expanded reproduction for these enterprises, is likely to be an overestimation. While we have estimated and imputed the notional wage fund of the unpaid household workers based on the wages received by informal workers working in ‘similar’ enterprises that employ wage workers, it has been noted that during this period, the consumption levels for the households that derived their primary income from informal self-employment was higher than those deriving their primary income from informal wage employment (Kesar 2020). Therefore, if we account for this higher consumption level for the self-employed households and make commensurate deductions from the GVA of the OAEs, the net surplus for the median OAE is likely to be pushed down to almost zero. The stark situation of the PCP units becomes particularly apparent when compared to the larger, more dynamic, micro-entrepreneurial informal establishments that, on average, had 6 times the net surplus of the OAEs at the beginning of the peak growth decade in 2000–01, with the gap rising to more than 7 times (5.6 times for rural and 6.5 times for urban areas) at the end of the decade in 2010–11.¹⁴

Table 7. Median monthly net surplus of OAEs and establishments (2012–13 prices).

	Rural			Urban			Overall
Year	OAE	Establishment	Ratio	OAE	Establishment	Ratio	OAE	Establishment	Ratio
2000–01	557	2167	3.9	867	4800	5.5	611	3684	6.0
2005–06	385	2726	7.1	841	5109	6.1	462	4013	8.7
2011–12	836	4685	5.6	1286	8400	6.5	958	6891	7.2

Source: Authors’ calculation based on 56th (2000–01), 62nd (2005–06), and 67th (2011–12) rounds of NSSO surveys, Table 1 (p. 395) in Bhattacharya and Kesar (2020) and Table 2 (p. 569) in Kesar and Bhattacharya (2020).

Despite such low earnings and negligible net surplus, the OAEs, on average, are able to reproduce themselves without dying out. Such persistence attests to their alternative economic logic of operation, rather than being driven by the logic of expanded reproduction that often appears as a structural condition of capitalist firms. While the latter would be prone to go out of business if they are unable to accumulate and grow over time, the non-capitalist household enterprises continue to reproduce themselves even if they have to do so by lowering the consumption levels of the households, closely mirroring Sanyal’s analysis of the dynamics of the need economy. This is particularly because the reproduction of the enterprise is intricately linked to, and often mainly driven by, the reproduction of the household itself, given a lack of viable alternative livelihood opportunities.

The space of the non-capitalist PCP is, however, not an impermeable and stagnant one. Occupants of this space often transition to other economic sites, mostly that of casual informal wage employment, in search of livelihoods either as a short term strategy to augment household income, or to fully transition out when sustenance of basic livelihood in the non-capitalist segment becomes non-viable or when better alternative economic opportunities are available. But, in general, the nature of such transitions do not appear to be in consonance with the idea of voluntary movements driven by expectations of higher incomes from wage employment as often posited in the mainstream literature on sectoral transitions (Maloney 1999; Fajnzylber, Maloney, and Montes-Rojas 2009; Mandelman and Montes-Rojas 2009). Data from the second round of India Human Development Survey (IHDS) in 2011–12 suggests that the per capita consumption levels of households deriving their primary income from casual informal wage employment has been much lower than that for households in the self-employed informal segment. For example, the monthly per capita consumption expenditures (MPCE) for households deriving their primary income from agricultural and non-agricultural wage labour in 2011–12 was 25–30 per cent lower than those for the self-employed households in agriculture and non-agriculture.

On the surface level, this seemingly distress-driven transition from non-capitalist self- employment to wage work in the capitalist segment finds resonance with the traditional notion of primitive accumulation leading to dispossession and proletarianisation. However, the Indian experience over the high growth decade is more complex. We find a remarkably high degree of churn and flux across different segments of the economy, with movements both away from and towards various sectors, resulting in the reproduction of the same economic structure over time. In other words, while there have been significant transitions away from non-capitalist self-employment to capitalist wage labour (often driven by distress), there has also been a huge volume of transitions towards self-employment, leading to a continuous reproduction of the non-capitalist segments that are dynamically recreated over time rather than remaining as vestiges of the past as a mark of economic stagnancy. It appears that unable to secure stable sources of income, a vast section of the working population has to constantly move across different segments of the economy in search of livelihood opportunities, in the process regenerating the non-capitalist segments that were traditionally expected to wither away with capitalist growth. This signals to the characterisation of postcolonial capitalism as being marked by an ever-ongoing and always-incomplete process of primitive accumulation, as theorised by Sanyal and others. However, it also brings to fore the underlying ‘spatio-temporal flux’ through which the need economy is continually reconstituted, and the dualism reproduced.

For example, data from the IHDS panel survey in 2005 and 2011–12 show that for the urban areas, while about 60 per cent of households deriving their primary income from urban non-capitalist self-employment transitioned to another segment of the economy in terms of their primary income source between 2005 and 2011–2012, this was accompanied by a similar volume of transition towards self-employment from other segments (Table 8). Similarly, in rural areas, while about 49 per cent of households deriving their primary income from agricultural self-employment transitioned to another segment between 2005 and 2011–12, about 40 per cent of households moved towards this segment from other sites (Table 9). Further, about 43 per cent of households deriving income from informal wage work in the urban areas in 2005 transitioned to another sector between 2005 and 2011–12, while this was accompanied by about a similar volume of transition from all other segments into informal wage work, such that about 41 per cent of households deriving primary income from this segment in 2011–12 had a different source of primary income in 2005.

Table 8. Proportions of sectoral transitions (in percentage) in urban area between 2005 and 2011–12.

Urban	Proportion (2005)	Proportion (2011–12)	Transition from	Transition to
Informal wage labour	24.53	24	42.63	40.86
Employers	7.69	7	68.65	65.94
Self-employed PCP	15.74	15	60.21	59.33
Regular salaried	41.97	41	33.2	31.5
Others	6.72	10	51.26	68.47
Agriculture	3.35	2	66.06	52.78
Total	100	100	–	–

Source: Authors’ calculations based on IHDS-I (2005) and IHDS-II (2011–12).

Table 9. Proportions of sectoral transitions (in percentage) in rural area between 2005 and 2011–12.

Rural	Proportion (2005)	Proportion (2011–12)	Transitions from	Transition towards
Agriculture	30.16	25.58	49	39.88
Informal wage labour	41.22	40.28	36.67	35.19
Employers	2.23	2.02	81	78.87
Self-employed PCP	8.01	6.99	73.12	69.2
Regular salaried	12.91	12.6	59	58.21
Others	5.48	12.53	53.16	79.54
Total	100	100	–	–

Source: Authors’ calculations based on IHDS-I (2005) and IHDS-II (2011–12).

Such a pattern of churning has been observed even in more recent times. For example, based on data from the Centre for Monitoring Indian Economy (CMIE), it is seen that between 2019 and 2020, about 30 per cent of the casually employed, 20 per cent of the self-employed, 50 per cent of the temporary salaried, and 23 per cent of the permanent salaried transitioned to another source of employment (CSE 2021), with such transitions being mostly concentrated towards casual wage employment and self-employment. Moreover, the volume of such transitions has further accentuated during the pandemic (Abraham, Basole, and Kesar 2021).

This reminds of Sanyal’s apposite invocation of Foucault’s rendition of ‘ship of fools’: ‘The ship carrying its insane cargo, drifting from port to port, with the gates of the cities closed and the insane not allowed to disembark, brings to my mind a similar landscape, the postcolonial one, in which a large part of the population, dispossessed and marginalised, wander around a wasteland created by “capitalist development”’ (Sanyal 2007, p. 45). The informal non-capitalist economic spaces filled with the dispossessed, the rejected and the excluded — the vast population rendered surplus for the process of capitalist growth — provide a critical function to the reproduction of postcolonial capitalism that the capitalocentric readings of economic development and transition, both mainstream and radical, fail to perceive or refuse to acknowledge. The economic logic of reproduction of these spaces, acting as sinks for the surplus population where they can tenuously enact their conditions of survival, is distinct from merely fulfilling the ‘needs’ of capital; rather than being completely subsumed under capitalist logic, these spaces mostly work as external holding grounds for the excluded. As Davis (2004, pp. 26–27) points out:

[T]he informal proletariat is not a ‘labour reserve army’ or a ‘lumpen proletariat’ in any obsolete nineteenth-century sense. Part of it, to be sure, is a stealth workforce for the formal economy and numerous studies have exposed how the subcontracting networks of WalMart and other mega-companies extend deep into the misery of the colonias and chawls. But at the end of the day, a majority of urban slum-dwellers are truly and radically homeless in the contemporary international economy. … As rural areas lose their ‘storage capacity’, slums take their place, and urban ‘involution’ replaces rural involution as a sink for surplus labour which can only keep pace with subsistence by ever more heroic feats of self-exploitation and the further competitive subdivision of already densely filled survival niches. ‘Modernization’, ‘Development’ and, now, the unfettered ‘Market’ have had their day. The labour-power of a billion people has been expelled from the world system, and who can imagine any plausible scenario, under neoliberal auspices, that would reintegrate them as productive workers or mass consumers?

A research programme on the political economy of development predicated on the experiences of vast parts of the global South needs to theoretically interrogate and empirically substantiate the specificities of postcolonial capitalist formations moving beyond the prevalent ‘hyperfunctionalist’ narratives of economic development and transition.

5. Postcolonial Capitalism and Future of Political Economy of Development

We have attempted to illustrate some particularities regarding the nature of postcolonial capitalist development in the context of India, where in spite of a sustained period of high economic growth, there has been a persistence and reproduction of large swathes of non- capitalist economic spaces in agricultural and non-agricultural informal economies. The economic logic of operation of enterprises in these spaces, involving vast segments of population, is primarily governed by the consumption needs of the households operating them. We have provided some preliminary illustrations to show that these non-capitalist spaces are able to reproduce themselves only under extreme distress. However, the excluded population may work to revive these spaces even by pushing down their customary standard of living, given the lack of alternative livelihood opportunities. The precarious conditions of reproduction force the population to keep moving from one unstable occupation to another, resulting in a high volume of churn and flux in the economy, without much tendency towards a ‘full-fledged’ capitalist transition that could mirror the historical trajectory of capitalist development in the global North. While our illustrations are in the context of India, many postcolonial economies in the global South share similar experiences, albeit with their own specificities, that need to be aptly theorised and empirically investigated.

Sanyal argues that the non-capitalist informal economic segments provide a political (rather than economic) condition for the stable reproduction of postcolonial capitalism by allowing the surplus population to tenuously arrange for their basic survival needs through unwaged work in these spaces. Moreover, as we have argued above, non-capitalist PCP in agriculture helps, in part, to sustain non-agricultural non-capitalist economic spaces, as well as informal wage labour, either by directly supplementing their income or by supplying cheap food grains through the market. Such domains outside the direct ambit of capitalist production have become even more critical for the survival of vast sections of population across the global South over the past couple of years with the adverse economic impacts of the ongoing pandemic (CSE 2021; ILO 2021, 2022). However, the relentless expansionary drive of capital, particularly in the era of neoliberal globalisation, increasingly undermines the very reproduction of these non-capitalist spaces. This represents a fundamental contradiction in the process of postcolonial capitalist development that is getting increasingly accentuated and intensified at the current conjuncture.

In recent times there have been a series of attempts, which are becoming increasingly significant and influential, to construct a new architecture of policy framework to manage and negotiate this sharpening contradiction, and resuscitate the political stability and legitimacy of capitalist order through governmentalist interventions. Such interventions, often meant to support the non-capitalist spaces that act as holding grounds for the surplus population, include experimenting with universal basic income (UBI), universal and targeted cash transfers, publicly funded job guarantee schemes, subsidising health or social insurance for informal workers and petty producers, provisioning micro-credits to informal PCP, etc. Many of these policies are radically different from the erstwhile welfarist interventions of the State that were meant to provide relief from temporary dislocations in the economy, and were predicated on the understanding that capitalist growth will, over time, create conditions for economic advancement for all. Rather, there seems to be an increasing realisation that widespread incidences of exclusion from the growth pole of the economy is the ‘new’ normal under contemporary global capitalism (Bhattacharya 2019a), which calls for a specific form of neoliberal governmentality. While this has been a global phenomenon in the recent period across both ‘advanced’ capitalist economies and the global South, the specificities of this dynamics in the context of postcolonial capitalism, and their distinctions in terms of scope, scale and implications from the global North context, need to be interrogated and theorised.

Further, there has also been a growing tendency towards a ‘southernization’ of the global North (Kesar, Bhattacharya, and Banerjee 2022). This tendency is apparent through the increasing conditions of informality and precarity in employment relations and growing dependence of the working population on household resources, self-employment, and unwaged remunerative work (e.g., in the platform or gig economy) that often depend on principles of income sharing, as have traditionally been the common features of the informal economy in the global South. A South-centric lens to analyse contemporary global capitalism may provide a productive and compelling framework to analyse the distinctiveness of the vast economic and political changes in the global landscape. Such a framework, however, must also account for the distinctiveness of the developments in the global North from those in the postcolonial context of creation of a large surplus population through the incessant push of primitive accumulation and the problematic of their sustenance.

In this article, we have argued that Sanyal’s intervention provides a productive framework for rethinking the process of postcolonial capitalist development from a global South perspective, and have foregrounded some of the salient issues that such a rethinking must entail. This calls for a fresh research programme to theoretically grapple with and empirically enunciate the specificities of the process of postcolonial capitalist development and their implications for labour.

Acknowledgements

We thank the editor of this Special Issue, and the anonymous reviewers for their very helpful and constructive comments that have significantly helped us to improve the article.

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1 For critical discussions along these lines on the process of capitalist development, see Escobar (1995), Rist (1997), Sanyal (2007).

2 There exists a long lineage of discussions and debates on the idea and definition of PCP — for detailed discussions, see, for example, Akram-Lodhi and Kay (2010a, 2010b); Bernstein (1986, 2010); and Harriss-White (2014, 2018). In some influential strands, a production process is identified as PCP if it is mainly driven by subsistence logic while being mediated through commodity relations (Bernstein 1986). Such production units are based on family- or self-exploitation, and they grow by multiplication rather than accumulation (Harriss-White 2014, 2018). A key issue then becomes whether the marginal and small peasants in agriculture and the marginal producers in the non-agricultural informal economy reproduce themselves mainly through such self-exploitation (as in PCP), or majorly by having to sell their labour power through wagework (in which case, such production units cannot be characterised as part of PCP) (Bernstein 2010). Some other interventions, in contrast, argue that in order to be considered as part of PCP, the producer should be able to maintain some control and autonomy over the production process and the final product (Bhattacharya 2014). If the direct producers are unable to effectively retain such control and are alienated from their labour process and fruits of labour through market mechanisms — or, in other words, if they are indirectly subsumed by capital through exchange relations — they may be categorised as disguised wage labour rather than petty producers. Another issue is related to whether households engaged in agricultural production for their own consumption as well as for sale in the market (in the form of marketable surplus) can be categorised as part of the PCP, as they may not be firmly embedded in commodity relations. Also, a related issue is whether a PCP is simply a historical remnant of pre-capitalist peasant production, or can it be seen to be reproduced through capitalist development itself (Sanyal 2007). For a summary of the differences between Bernstein, Harriss-White, and Sanyal in their characterizations of PCP, see Yadav (2022). We reflect on some of these debates in the context of India’s agricultural and non-agricultural informal economy in Sections Three and Four.

3 The process of primitive accumulation is not limited to dispossession of peasants from agricultural land but, in a more general sense, refers to dissociation of direct producers from their means of labour and various other resources (including the ‘commons’) that enabled their existence as petty producers.

4 While some other recent strands of literature, including Harvey (2003) and Patnaik (2009), also view primitive accumulation as an ongoing process in the postcolonial economies, their theses remain rooted in the functionalist argument. In this regard, it should be noted that the notion of a-functional spaces and relations employed here does not imply that the capitalist and non-capitalist economic spaces are irrelevant for or completely independent of each other. Rather, as explained in terms of the non-determinist Marxian strand mentioned above, the capitalist and non-capitalist spaces mutually constitute each other in shaping the economic totality under capitalism. In that sense, it is obvious that the spaces are related to each other in various ways, where the existence of one may also importantly benefit the other. To regard such relations through the lens of functionalist logic in the present context would be analytically trivial. Functionalist reasoning within the economic domain, for our purpose, refers to the understanding that non-capitalist spaces derive their logic of existence by serving the economic needs of capital and hence are completely subsumed under the logic of capitalist accumulation. In other words, such spaces would cease to exist if capital is able to satisfy the economic needs for its reproduction from within the capitalist segment — a position that is based on a specific ‘ontology of capital’ that sees ‘a full transition to capitalism [as] inevitable, if only delayed’ (Bhattacharya, Bhattacharya, and Sanyal 2013, p. 343). Sanyal sharply rejects such economic functionalism in his framework. For him, while certain sections of the petty producers are indeed subsumed under capital through a process that he terms as ‘dispersion of capital’ (e.g., when informal PCP enterprises are subcontracted to capitalist enterprises), and, thus, may be seen as ‘disguised’ wage workers, they constitute a relatively minor component. The overall non-capitalist segment has its independent logic of existence, and continues to persist even if capital does not functionally depend on it for its economic needs. Further, it does provide non-economic (political) conditions for maintaining capital’s legitimacy, but not in the functionalist sense as described above (i.e., it exists only to provide the political condition for capital’s rule). The particular nature of the relation between capital and non-capital depends on the specificities of capitalist social formation across time and space.

5 Certain critical commentaries on Sanyal are based on apparent misreadings of the text. For example, Breman (2013) posits that ‘[f]alling prey to populist rhetoric, Sanyal sings the praise of microcredit’ (p. 30). Moreover, Sanyal’s position is argued to be colored by the currently influential ‘neoliberal’ strand that celebrates the entrepreneurial dynamism of informal micro-enterprises, which are seen to provide possible pathways towards achieving broad-based capitalist prosperity at the grassroot levels (De Soto 1989). However, even a cursory reading of chapter 5 (particularly pp. 228–236) of Sanyal’s text clearly shows that he considers the schemes for provisioning microcredits, enhancing skills, and providing access to markets to informal enterprises and petty producers as governmentalist interventions undertaken to provide legitimacy to the rule of capital by reconstituting the need-based non-capitalist spaces created through primitive accumulation. His analysis of mainstream development discourse that extols these practices is also along the same line. Some other commentaries (for example, Jan 2013) strongly disagree with Sanyal’s characterization of postcolonial capitalism by conceiving the entire economy as being fully and irreducibly structured by (or as being completely functional to) the logic of capitalist accumulation. This position is based on a theorization of capitalism that serves as the initial point of departure for Sanyal’s intervention, and he provides a detailed critique of this ‘capitalocentric’ imaginary.

6 https://databank.worldbank.org/source/world-development-indicators (retrieved on May 31, 2022).

7 We use purchasing power parity (PPP) exchange rates to convert INR to USD. The PPP exchange rate between USD and INR for 2012 and 2013 were: USD 1 = INR 16.16 and USD 1 = INR 17.34, respectively (https://data.oecd.org/conversion/purchasing-power-parities-ppp.htm#indicator-chart, accessed on 31 May, 2022). Since the Situation Assessment Survey (SAS) 2013 spans the period from July 2012 to June 2013, we take an average of the two exchange rates and convert INR to USD using PPP exchange rate of USD 1 = INR 16.75.

8 The consumption expenditures of these households may, of course, be funded through other sources of income as well. We have accounted for this possibility later. Here we focus only on the possibilities of accumulation from cultivation activities.

9 The process of primitive accumulation may not always directly dispossess the peasants from their land but may also involve other forms that undermine the conditions of existence of petty producers (Hart 2006; Nichols 2015). However, in order to categorize these processes to be same as or analogous to the concept of primitive accumulation and its theoretical underpinning, they should at least indirectly lead to the alienation of petty producers from means of labour. In the context of Indian agriculture, however, while there has been continuous movement of population from agriculture to non-agricultural activities due to lack of adequate subsistence opportunities, a vast section of agricultural households continue to hold on to their marginal and small landholdings to secure their basic subsistence even though at precarious levels (Basu 2019). While for Basu (2019) this absence of large-scale primitive accumulation in agriculture indicates a refutation of Sanyal’s argument, we present a very different reading in the text.

10 It should be noted that while the proportions of imputed value of home-produced stock and household consumption expenditure, or the total value of household consumption remain almost same across all land size categories, this is because as one moves up the land size categories, the household consumption expenditure as a proportion of gross income falls significantly — from 75 to 50 per cent for households with marginal and small landholdings, respectively, to 25 and 16 per cent for those with medium and large landholdings, respectively.

11 On September 20, 2020, the Indian Parliament passed three agriculture-related bills: (i) The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, which allows the sale of agricultural produce outside the mandis or markets regulated by the Agricultural Produce Marketing Committees (APMCs) and constituted by different state legislations; (ii) The Farmers (Empowerment and Protection) Agreement of Price Assurance and the Farm Services Bill, 2020, that facilitates contract farming; and (iii) The Essential Commodities (Amendment) Bill 2020, that deregulates production, supply, distribution of food items like cereals, pulses, potatoes, onion and edible oilseeds.

12 All monetary figures in this section are reported in 2012–13 prices. As noted earlier in Footnote 4, the average PPP exchange rate between USD and INR for 2012 and 2013 was USD 1 = INR 16.75.

13 Unlike our discussion on the agricultural sector in the previous section, here we do not consider the consumption expenditures of the household given the unavailability of such data for non-agricultural informal household enterprises. Rather, we focus on notional wages for the owner-worker and unwaged family workers involved in the household enterprise.

14 Even when the OAEs are linked to larger capitalist enterprises through network of subcontracting relations, which is often expected to be a key driver in the process of transition of the OAEs (by providing them with better technologies, enhancing their skills and entrepreneurial capabilities, and providing better access to markets), they are found to retain even lower net surplus than the non-subcontracted firms. Most such informal subcontracted enterprises exist merely as appendages of the larger firms without much autonomy in the decision making process (Bhattacharya and Kesar 2020).