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Source link: http://archive.mises.org/10920/gold-indias-capital-asset-through-history/

Gold: India’s Capital Asset through History

October 27, 2009 by

>India’s obsession with gold is well known around the world. To most Western commentators, this obsession seems irrational, and Indian people seem like incurable gold bugs. FULL ARTICLE by Ganesh Ratham

{ 27 comments }

Prashanth Perumal October 27, 2009 at 9:03 am

What a surprise! I am happy to see an Indian writer in mises.org :)

pravin varma October 27, 2009 at 9:30 am

good stuff.btw, indian kings didnt have a monopoly over minting coins. gold coins could be minted by private entrepreneurs and the king’s currency would have to compete with the others – a la free banking.

also important to note is the introduction of the british enforced gold standard leading to massive currency crises during the late 1890s and until 1930s .this was the first time that the govt gained control of the currency. Montagu Norman single handedly manufactured the currency crisis of the 30s which caused the bengal famine among other things.
btw,it is interesting to know that all of india’s private gold came from trade and not foreign conquests (unlike the spanish conquistadores and the loot of the americas by western europe).

it is interesting to note that the huge gold loot Francis Drake brought back to England on the Golden Hind in 1580 was supported by Queen Elizabeth was a shareholder in the syndicate, which extended financial support to this secret expedition. She paid off England’s entire foreign debt, balanced her budget, and invested the remaining money in the Levant Company. Out of the profits from this venture, the East India Company was founded

Abhilash Nambiar October 27, 2009 at 10:14 am

There are problems with being an Indian gold bug. Money has value because it can be exchanged for stuff that has value. India did not have a capitalistic society. Indian rulers, both Hindu and Muslim for centuries have never fully appreciated the importance of accumulating capital. The British too did not care to impart this habit on Indians and preferred taxation to investment as a means of building the Indian infrastructure.

In fact in the Hindu caste system where the priests are on the highest rung and the commoners on the lowest (the untouchables have no rung to stand on), the merchants are on the second lowest rung. They are considered only bit better than commoners. See where things where on the value scale? So there is lots of gold, but the gold is cheap in terms of goods and services that can be exchanged for it. That explains the poverty in India despite all the gold.

Gold hoarding and capital accumulation is not the same thing.

You could exchange so much more real goods and services with the same gold outside of India where there is real capital accumulation. Which is probably why the British kept finding excuses to loot it all…

All this is mostly in the past tense of course. India has finally embraced capitalism and is enjoying record growth. But it is playing catch up for centuries of neglect, ruin and plunder and thus has a long way to go.

Bala October 27, 2009 at 10:25 am

Another Indian (and a gold “bug” to boot) chiming in… Good article with a fairly good historical context.

Renegade Division October 27, 2009 at 11:56 am

I am glad to find this article on Mises.org. I have always wondered how much gold ownership has helped India in this recession. Also an 11% inflation rate does not cause a hyper inflation trigger:
http://www.tradingeconomics.com/Economics/Inflation-CPI.aspx?symbol=INR

I have previously written on my blog that banning gold import was the best thing Indian govt could do to create such a huge stash of gold in India. It won’t happen the same way in America because in America people actually follow the even most ridiculous laws, but in India, you could make a law to use only gold spoons in all the restaurants and nobody is going to oppose it (or follow it for that matter).

fundamentalist October 27, 2009 at 1:37 pm

Abhilash: “Indian rulers, both Hindu and Muslim for centuries have never fully appreciated the importance of accumulating capital.”

That’s because they had no religious teaching or other ideology that sanctified private property. As Douglass North writes, in traditional states the masses can’t steal from each other and the nobility can’t steal from each other, but the nobility can plunder the masses at will.

It’s hard for Westerners to understand traditional societies. The nobility had no incentive to accumulate capital. If they needed more wealth to support their conspicuous consumption, they simply stole it from someone. And society expected them to engage in conspicuous consumption because that was how the wealth got recirculated to the poor who provided the goods for consumption. It was sort of a Keynesian economy.

The poor didn’t accumulate capital because it was too easily stolen by the nobility or criminals. Hoarding gold or buying land were the only safe places for extra income. Capital accumulation didn’t become common until at least Venice, but especially the Dutch Republic when the Dutch created an independent, honest judiciary. Those who accumulated capital became very rich. Only then did people recognize that capital accumulation was important.

Wealth October 27, 2009 at 2:27 pm

“Indian rulers, both Hindu and Muslim for centuries have never fully appreciated the importance of accumulating capital.”

On the contrary they appreciated that importance all too well.
It is precisely because they knew that capital accumulation meant independence from rulers that they obsessively looked for ways to thwart savings.

Even here in the USA, the government punishes savings through taxes, regulations and inflation.

Rulers want their people to remain poor, weak and dependent.

I think the only thing worth accumulating is guns and ammo. You can keep the gold.

Ganesh Rathnam October 27, 2009 at 2:32 pm

@ Prashanth – Hi Prashanth, I’m not on Orkut. Nice website, very impressive reading list. I wish I was able to break away from my statist indoctrination at 20. I wasted 11 years.

@ Pravin – Thanks Pravin, I did not know that private coins could be minted in India as well as the other historical stuff you stated. Very interesting. Why am I not surprised that the Bengal famine (if what you say is indeed true) was caused by the state or a rent seeker in collusion with the state.

@ Abhilash – “Gold hoarding” in many cases turns into capital accumulation as in the case of my father. But you’re right, not always the case. In fact, I’m halfway through an article on gold banking to tap into the hoarded gold and convert it to capital.

@ Renegade – India is problematic but one thing gives me hope. Our hopelessly inefficient system cannot (at least I think from current evidence) enforce idiotic laws that are sure to follow in the event of a currency crisis. The US may enforce them more efficiently and ruthlessly. Oath Keepers, I hope you guys succeed.

Igor Panarin Is Coming October 27, 2009 at 2:41 pm

Fundamentalist et al,

“Hoarding gold or buying land were the only safe places for extra income.”

Real estate is a very easy target for rulers to confiscate with troops. Real estate is a very poor investment in a country that doesn’t respect private property nor free market capitalism.

Ask farmers that lived during world war II if they think real estate or land ownership is safe.

Gold can be burried underground, but you can’t burry your crops or your house underground.

Owning land is being a still target for government to find and plunder you.

I’d rather own an SLBM nuclear sub than land or gold. That way I would be certain not to be plundered and I would be certain to be respected and treated with dignity.

Governments, like all bullies and brutes, only respect force. So the people are extremely stupid for not wanting force.

You get what you deserve america, I have no pitty for you.

When Obama finally grabs your ammo and your guns, he will come to grab your savings, your retirements, your crops, your property your children to compulse them into the Obama-youth and the federal militia.

Dhruv October 27, 2009 at 3:00 pm

“Indian rulers, both Hindu and Muslim for centuries have never fully appreciated the importance of accumulating capital.”

I would not agree about the Hindu rulers part here. The Hindu king’s administration was not taxation and bailout welfare centric. One of the reason’s for this was that the king himself belonged to the warrior caste and hence was primarily responsible in terms of religious duty only for law and order and protection of the subjects. Economic progress was officially left to the entrepreneurial caste of Vaishyas, whose prescribed religious duty was entrepreneurial activity, and also a good number of businesses for example leather tanning and precious gems were owned by the 4th caste which is incorrectly generalized as all slaves.

Further there was a huge religious check on the king’s taxation and the acceptible amount used to be 1/6th of all produce. Further I dont think there was any income tax, or trading tax or capital gains tax etc.

It was also difficult for the rich citizens to openly bribe the king and administration because not accepting gifts and donations was one of the primary religious prescriptions of the Hindu warrior caste.

A very powerful religious idea unique only to the hindu kingdom amongst all civilizations was that with the percentage of tax collected by the king, the king also accumulated the same percentage of his subjects sins and good deeds. High taxation is considered the definitive mark of rogue kings in Hindu scriptures.

As the for the Hindu priest as the top caste, the only benefit they had in the economic scenario according to Hindu law was exemption from taxes because their prescribed income was only donations from other people. Many of those belonging to this class who were not learned in religion and other academic subjects and were involved in entrepreneurial business like others were many times not exempted from taxation.

Abhilash Nambiar October 27, 2009 at 3:00 pm

fundamentalist

I cannot disagree with you here. In fact I agree with you here. You are extremely close to the bulls eye with this one. Too uncomfortably and too controversially close to the bulls eye in fact. Yet it is a reasonable statement to make. But conversations like these can open lines into fallacious polylogistic lines of enquiry. So let us better stop, lest the blog admin thinks it appropriate to ban us.

Wealth

I have to disagree with you here. India has a glorious tradition of valor, sacrifice, piety, honor, humility, love and many other admirable and worthy qualities, but not liberty. Rulers will allow for enough liberty to create a society productive enough to meet their agendas. The fact that it was not done, because it was not known.

Ganesh – I am sure gold hoarding can lead to capital accumulation quite easily. But not if there is no capital accumulation happening in the first place. I was talking history remember. Obviously that is no longer the case in present day India.

Abhilash Nambiar October 27, 2009 at 3:41 pm

Where is the consumer or the business man taking the center-stage in the model you describe? It is mostly a residual function in what is basically a welfare state. One which barring concessions to pragmatism is extremely rigid and deeply entrenched in nepotism. Is it any wonder then that Independent India first embraced socialist economics and state funded welfare economics?

Welfare is admirable for its good intnetions but it is the road to hell paved with good intentions. Prosperity is the true path to progress and India has only got on that path recently. And no hoarding gold and precious stones is not the same as saving and investing.

Dhruv October 27, 2009 at 4:24 pm

Abhilash,

Are you talking about the model I described? Well I just said that it was not welfare centric. Neither taxation nor bailout/welfare centric. The king and the rest of the warrior class that form his army are only responsible for law and order and protection. Their dharma or religion is not bailing out the underprivileged. Also the taxes are mostly geared towards maintaining an army and preparing for a the emergencies like a siege from an enemy state. Investment and capital accumulation in predominantly economic sense is not something the Hindu King is really involved in. Heck that would be like a social security program. He is only responsible for protecting the wealth of his subjects. The investments and capital accumulation are left to people themselves.

As for the consumer, he is given all the importance because there is a whole entrepreneurial class of people dedicated to this. This is the section that carries out the economic calculation. They are the entrepreneurs adjusting their operations to the needs of all the consumers in the system, no matter what caste the consumer belongs to otherwise. These entrepreneurs might not even be the actual producers of handicrafts/food produce etc but it is they who bid prices up and down as traders so as to adjust to the consumer’s needs.

The king is not interfering in the economy, or subsidizing parts of it thus distorting consumer price data that has lead to the great socialist chaos in the many nations in the 20th century including India and the current Keynesian chaos of the US.

As for the India born in 1947, its whole alleged premise was the poor man and Nehru’s ‘modern’ vision to move away from India’s “dark’ social traditions. There was supposedly nothing to be learnt from Hindu ‘superstitions’. It was Nehru’s romantic obsession with the USSR, eventually endorsed by a rather clueless and desparate masses who had been under a mercantile foreign rule for a couple generations now. Gandhi had already idealized economic autarky in the form of ‘Swadesi’ (and ‘idealized poverty’ in a subconcious way in my personal humble opinion.) These things mixed together lead to the socialist India in 1947.

The reason for medieval India’s plight from 7th-10th century AD onwards has been a lot of foreign invasion, cut off trade routes and frequent sieges of various kingdoms. No ideal system can compensate for havoc of this kind.

But we dont even need to bother the ancient past too much. The poverty that you and I have seen in India in our lives can be a 100% attributed to Nehruvian socialism since 1947.

Abhilash Nambiar October 27, 2009 at 8:23 pm

Dhruv,

Looks like you made weaved that story from whole cloth did you not? It is going to take lot of writing to correct what you said. A fable with a glorious past, put to ruin by evil invaders and corrupt politicians that must be regained to return back to the glory days? Typical idealization of the past.

I can comfortably say that historically Indians did not recognize the importance of capital accumulation, because institutions necessary for capital accumulation where largely absent. If there was capital accumulation there would be lots of banks. A country with millions would have a few hundred banks, but like it is clearly stated in this article, ‘millions of people in rural India completely bypass the banking system’.

You cannot have capital accumulation without banks because you do not have a conduit for distributing savings as loans. Banks help raise funds for huge projects that offer economies of scale. For most of history there was the gold smith and the money leander, but in the West they evolved into bankers. Did not happen in India.

Another sign of capitalism is a standardized weights for currency. You do not need a government to do that if capital accumulation is taking place. It will be achieved due to the ease of accounting that it facilitates. In India it was introduced by an Afghan King called Sher Shah Suri who ruled India from 1540-1545, not the free market. Which is another thing that did not evolve, standardization of accounting practices.

Also in an agro based economy one institution that facilitates efficient redistribution of resources is a commodities exchange, like the Chicago Mercantile Exchange. Never evolved independently. Not to mention of course most of the conveniences that come about resulting from people trying to move goods efficiently – an efficient transportation network. The British had to build a railway system from scratch (funded by taxing Indians). Even today many Indian villages are inaccessible by road and rail.

Capital accumulation was certainly not the way of life in old India and I said that plain fact with neither pride nor shame.

Resource extraction and distribution was completely submerged within a tradition of duties and privileges allotted on the basis of caste. Just like you have indicated. It afforded to you a particular way of life that you had to stick to whether you like it or not and part of your duties included marrying and having children who are born into the same caste who will continue the same process. This repeats into perpetuity with little change. Which explains why a religion which originated at 5000BCE or before continues to exist.

Note none of this has do with removing uneasiness. There is Karma (duty) and phala (fruit of performing the duty) which is preferably performed with indifference. The way to remove uneasiness is devotion in prayer and meditation. The priests ran the show, not the merchants. They like everyone else did their duty. Which is to say they did what they where told within very narrow confines that someone else allotted to them. I suppose you could say there was little capital accumulation, but little to no would be more accurate.

And you cannot blame Nehru and Ghandi without also blaming the people they where hugely popular with. People who did not have much of a sense of what economics was, because their lives depended little on that knowledge.

And what about the evil invaders? Well in the case of India they existed and did a lot of damage. But nations that follow capitalistic policies can afford strong armies with the latest weaponry. They cannot be defeated and tend to end up become imperialists themselves. It happened to Great Britain and it is happening to the United States. It did not happen to India. I suppose it is a matter of pride, but not if it comes at the expense of capital accumulation.

So sorry, you are wrong in too many ways here.

Now accumulating gold is part of that tradition. But without institutions to accumulate capital, it won’t improve the quality of life. The institutions are there now and capitalism has come, there is gold as well. So the future looks bright. But the past…well the past in my opinion was a noble experiment that went wrong. It is no one’s fault.

chao-fan October 27, 2009 at 9:46 pm

@fundamentalist

“Capital accumulation didn’t become common until at least Venice, but especially the Dutch Republic when the Dutch created an independent, honest judiciary. Those who accumulated capital became very rich. Only then did people recognize that capital accumulation was important.”

Any articles on this?

P.M.Lawrence October 27, 2009 at 10:18 pm

Pravin Varma wrote “important to note is the introduction of the british enforced gold standard leading to massive currency crises during the late 1890s and until 1930s”.

That’s almost right, apart from the “enforced” bit. The Fall of the Rupee, which happened when silver was effectively demonetised and lost its premium, was because of the increasing connection with the wider world economy that was on the Gold Standard. It seriously hurt the (British) Government of India, e.g. P.G.Wodehouse couldn’t go to university because his father’s pension as a retired judge in India collapsed.

“it is interesting to know that all of india’s private gold came from trade and not foreign conquests (unlike the spanish conquistadores and the loot of the americas by western europe)”.

Well, that depends what you call “foreign” in the days before national identity. Certainly a lot changed hands through conquest – the English language got the word “loot” from India, after all.

Abhilash Nambiar wrote “The British too did not care to impart this habit [the importance of accumulating capital] on Indians and preferred taxation to investment as a means of building the Indian infrastructure”.

Again, it depends on your definitions. For instance, technically they often did not go for taxation but for something economically equivalent in the short term, rents through the Riotwary system mediated by local middlemen. But that system opened up a capital base, which could have led to building infrastructure – though that never came to pass, apart from tea and opium plantations etc. which were disconnected from any local ownership base. Likewise, things like railways were built up, but again disconnected from locals that way. The problem was, changing to a more European land ownership system made many losers, both from wealth transfers away from former independent peasants who did not become owners and from people not being familiar enough with a system that was new to them. It’s not a simple “the British did it” thing, because it wasn’t a one off but it’s still in progress, building up even today (and not just in India).

“In fact in the Hindu caste system where the priests are on the highest rung and the commoners on the lowest (the untouchables have no rung to stand on), the merchants are on the second lowest rung. They are considered only bit better than commoners… The priests ran the show, not the merchants.”

It depends on which part of India you are in. When a friend of mine got her PhD, someone else at the ceremony (an Indian) got his for a thesis on a particular region where the merchants had taken the top position and had ultimate control over religion. (If you want more details I’d have to look it up somehow.)

Fundamentalist wrote “As Douglass North writes, in traditional states the masses can’t steal from each other and the nobility can’t steal from each other, but the nobility can plunder the masses at will… The nobility had no incentive to accumulate capital. If they needed more wealth to support their conspicuous consumption, they simply stole it from someone… The poor didn’t accumulate capital because it was too easily stolen by the nobility or criminals.”

Oh, dear. That is a caricature, only applicable to times of breakdown like civil wars with robber barons. In normal times there were strong protections against that, mostly in the form of different privileges for each group. Nobles were prevented from indulging in wealth creation, which was reserved to guild members and such – except indirectly, by setting up and sponsoring towns and markets, then collecting rents. Peasants were protected from being robbed at will, because only feudal dues could be asked and nobody else could take commoners’ privileges (like keeping livestock on the common within their quota – but they could and did accumulate capital in that form up to that point much like Haitians before the USA destroyed the Creole Pig, see Sir Walter Scott’s Ivanhoe).

“Igor Panarin Is Coming” wrote “When Obama finally grabs your ammo and your guns, he will come to grab your savings, your retirements, your crops, your property your children to compulse them into the Obama-youth and the federal militia”.

I am reminded of what happened when George I came to the throne. He gave a speech in Torbay in his limited English, saying “I have come for your good. I have come for all your goods.” Luckily, everybody laughed and thought he was a jolly good fellow.

Abhilash Nambiar wrote “The British had to build a railway system from scratch (funded by taxing Indians)”.

Actually, that was only partly funded that way. Mostly, it was funded by bond and share issues in Europe – though of course servicing the payments for those fell on taxation as well as railway revenues later, and taxation’s effects flowed through to benefits like cheap supplies and workers for the railway building.

“…a religion which originated at 5000BCE or before continues to exist” is overstating the case, since that far back either the original culture did not exist or it had not yet split into the groups that went into Persian, Greek and Italic paganism. That is, claiming continuity and identity means claiming the Romans were Hindus.

“And what about the evil invaders? Well in the case of India they existed and did a lot of damage. But nations that follow capitalistic policies can afford strong armies with the latest weaponry. They cannot be defeated and tend to end up become imperialists themselves. It happened to Great Britain and it is happening to the United States. It did not happen to India.”

In my view, it did happen to India, as witness Hyderabad, Kashmir, Goa, Sikkim, intervention in (then) East Pakistan, recent overtures in Muritius and the Maldives and so on. Arguments that those were justified and/or internal matters miss the point; justifying and bringing within are just precisely what is involved. Arguably, Britain learned empire from Indian precedents too, copying the Moguls. It even invented the modern Civil Service in response to conditions there (it was only adopted in Britain later).

chao-fan October 27, 2009 at 10:19 pm

The strategy of divide-and-rule has always been used effectively against India – be it by local or foreign rulers.

@fundamentalist

“Capital accumulation didn’t become common until at least Venice, but especially the Dutch Republic when the Dutch created an independent, honest judiciary. Those who accumulated capital became very rich. Only then did people recognize that capital accumulation was important.”

Any articles on this?

Abhilash Nambiar October 27, 2009 at 10:45 pm

P.M.Lawrence,

I suppose I was not too off the mark, but you have an more interesting and sophisticated way of looking at things. I appreciate your insights and clarifications and I would like to comment on them.

I would like it if you can find more details on that corner of India where merchants run the show. It would not be impossible. I come from a little part of India where the woman is considered head of the household and has an very anomalous marriage ritual that goes with it.

My 5000BCE arguments does not make Romans Hindus. The Romans broke off from their pagan roots, which where distinct from the Indian roots to begin with. The continuity of that ancient culture with modern Hinduism however is more marked.

When I said India did not become an ‘imperial’ power I was referring to the pre-independent India. The post-independent India did become a small scale imperialist. Even had its own Vietnam in Sri Lanka, against people who are ethnically Indian!!

Here is something more funny. It is generally understood that all Hindus wish well for India. But in Nepal, Hindu priests do chants and rituals praying that India does not become strong and powerful enough to gobble up their country into its sphere of influence.

Mushindo October 28, 2009 at 2:52 am

Hm. If the citizenry of India has this much gold squirrelled away for entirely rational economic reasons, one wonders how many tons are in the hands of the Chinese people ( as distinct from the Chinese State)……

fundamentalist October 28, 2009 at 8:09 am

PM: “Peasants were protected from being robbed at will, because only feudal dues could be asked and nobody else could take commoners’ privileges…”

You may be referring to the way things were supposed to work, but check out Peter de la Courte’s work on the Dutch Republic. He details how the nobility would bring false charges against a wealthy peasant or merchant. Since the judge and the sheriff were paid by the nobility, they would go along with the false charges, convict innocent people and the nobleman would get the innocent victim’s property. De la Court wrote that such cases were common in the Netherlands before the Dutch Republic abolished the practice by creating an independent judiciary. The nobility has many “legal” ways to steal whatever they wanted and they did so quite a bit. Also, there are many accounts of nobility murdering peasants with impunity.

chao-fan: “Any article on this?”

Sorry, no articles. In searching for the roots of capitalism I read a lot of books on medieval economics. I think the best series I read was by Braudel. His history is great. You just have to ignore his socialist conclusions. There seems to be a consensus among historians that the nobility exercised conspicuous consumption and never considered capital accumulation. Wealthy merchants put excess money into land in order to become part of the nobility and gave to the Church in order to help their souls.

P.M.Lawrence October 28, 2009 at 8:28 am

Fundamentalist, the Dutch Republic didn’t use the mediaeval feudal system, which applied in many of the “traditional states” of “As Douglass North writes, in traditional states the masses can’t steal from each other and the nobility can’t steal from each other, but the nobility can plunder the masses at will… The nobility had no incentive to accumulate capital. If they needed more wealth to support their conspicuous consumption, they simply stole it from someone… The poor didn’t accumulate capital because it was too easily stolen by the nobility or criminals.” In fact, the early phase Dutch Republic where that happened wasn’t a traditional state at all, it was a transition from the Renaissance approach to the modern approach. It’s no counter-example to my point, but the feudal system is a counter-example to Douglass North’s claim, because it really did work the way I described outside special circumstances.

Wealth October 28, 2009 at 9:16 am

Abilash Nambiar,

“I have to disagree with you here. India has a glorious tradition of valor, sacrifice, piety, honor, humility, love and many other admirable and worthy qualities, but not liberty.”

I disagree with you that those qualities are admirable and worthy. That’s your opinion, not mine.

I think that weakness and submissiveness and subservientness are not admirable nor worthy qualities.

Sacrifice, piety and humility are handicaps.

Valor is admirable and worthy and the sikhs are extremely valorous.

But “love” ??? Come on, I won’t believe that one instance. India has got to be one of the most collectivist and violent nations in the world. There is no place for love in india.

Jarnail Singh Bindranwale is no lover, neither were the brutes at the indian army who maimed and tortured innocent sikhs.

The story of india is one of perpetual suffering and bloodshed. I don’t see the love nor the admirable worthy qualities there.

Free market capitalism, freedom and private property would bring some sense to this barbarous nation.

fundamentalist October 28, 2009 at 10:28 am

PM, So explain why economic growth took place in the cities where peasants could get away from their masters, and why peasants wanted to get away if life was so wonderful down on the farm.

Abhilash Nambiar October 28, 2009 at 11:36 am

Wealth

I knew you had moved from having a civil academic discussion to slander when you used the term ‘barbarous’ on an entire nation and all its people. Your comments are neither intelligent nor civil. So I shall ignore you.

P.M.Lawrence October 28, 2009 at 10:42 pm

Fundamentalist asks “So explain why economic growth took place in the cities where peasants could get away from their masters, and why peasants wanted to get away if life was so wonderful down on the farm”.

That “get away from their masters” is a red herring, because it had nothing to do with it (e.g. in early 19th century Russia, serfs went to cities and had to keep paying their masters – but the cities still grew).

There is a good discussion of the former in Michael Crichton’s novel Timeline and in its notes, based on the research he did. Basically, it did not take place there any more than a ship generates power in its propeller. Rather, that’s where wealth concentrated – but in an agricultural economy, most of it was generated elsewhere.

As to the latter, peasants generally did not want to get away from the farms while things were still working properly. They were driven off them, sometimes by things like wars and taxes but mostly by evictions and enclosures, e.g. in England – and those happened after the traditional systems died. In more recent times, there have indeed been rural exoduses; but those were driven partly by eroding the ability to stay, and partly by peasants not appreciating that higher cash wages in towns also needed to pay for living costs – rural cash wages were nearer being net disposable income.

RTRebel October 28, 2009 at 10:46 pm

Indian history might not have championed liberty, but it has had a rich cultural tradition promoting anarchism and local rule, despite distant tyranny. Many hindu epics have stories of God resisting and destroying a tyrant, and a hidden theme often seems to be “only God is fit to rule”. Maybe the noble classes throughout Indian history didn’t get it, but the local village tribes seem to always live like that was the case http://www.lewrockwell.com/knaebel/knaebel21.html

It’s also nice that the tikikural doesn’t condone envy either http://www.hinduism.co.za/tirukkur.htm#Do%20Not%20Envy

P.M.Lawrence October 28, 2009 at 10:49 pm

Sorry, Abhilash Nambiar, I can’t track down that PhD work any more than to say that it was at La Trobe University in Melbourne a few years ago, and it was an Indian who did it.

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