A Tangled Web of Disorderly Transactions? Embedded Capital and the Resilience of the Monetary Outside in a North Indian Town

Lecture by Dr Sebastian Schwecke (Centre for Modern Indian Studies, Göttingen University), jointly organized by LIAS, AMT & IIAS.

The lecture

In 1913, when Rosa Luxemburg published Die Akkumulation des Kapitals, notably discussing what in her view constituted the necessity of capitalism to encroach upon the ‘capitalist outside’, the government of British India coincidentally initiated a sustained period of legislative activism against usurious practices, money lending, and more generally the ‘tangled jungle of disorderly transactions’ (Lt. Governor Lyall) that supposedly formed the core of ‘indigenous’ financial markets. In the process it brought Indian financial markets into the colonial endeavour to define propriety in economic behaviour (Birla 2009).

Financial markets in India outside the originally very small segment of organised ‘modern’ banking have transformed significantly in being exposed to metropolitan capitalism and have certainly been reduced in scope at least relative to their position within the larger economy. At the same time, they have remained firmly within the realm of the capitalist outside and have shown a protracted resilience in their non-capitalist functionality. Hardiman’s argument of the replacement of a moral economy by a contractual system of debt (Hardiman 1996) points to a change in the grammar of financial markets in 19th century India that led to an intensification of processes of (‘primitive’) accumulation rather than an expansion of capitalist financial markets. Late colonial as well as post-colonial policy in India clearly sought to transform financial markets in line with capitalist modes of organisation, both by enacting legal restrictions against the usurious practices and ‘disorderly transactions’ lying at the core of the monetary outside and by supporting the development of ‘modern’ capitalist institutions to supplant these. State endeavours in this regard created a parallel financial market but have so far failed to overcome the resilience of local financial ‘reserve markets’ (Patnaik 2008) – the monetary outside.

Turning aside from the question of its functionality for a capitalist economy, the resilience of the monetary outside can be understood from a neo-substantivist position as the ‘stubborn’ persistence of the embeddedness (Polanyi 1944) of petty financial capital in the face of state-led attempts to rationalise financial markets through regulation. In the absence of a legally valid framework governing it, the monetary outside has developed mechanisms of organisation that rely on the communication of trust through reputation via neighbourhood networks, gossip and informal social arenas, interspersed with enclaves of sophistication. The paper analyses the evolution of these mechanisms in the context of the north Indian town Banaras (Varanasi) from the late colonial period to the present, using both historiographic and ethnographic approaches.

The speaker

Sebastian Schwecke is Assistant Professor for Modern Indian History at the Centre for Modern Indian Studies (CeMIS), University of Göttingen, Germany. He specialises in identity-based politics in India and Pakistan, the study of social and political brokers and patronage, and the social history of markets in modern India. His current research traces the evolution of informally organised financial practices and monetary markets, including moneylending and speculative ‘games’, in the northern Indian city of Varanasi. His recent publications include New Cultural Identitarian Political Movements in Developing Societies. The Bharatiya Janata Party (Routledge, 2011) and the co-edited volume The Transformation of Politicised Religion (Ashgate, 2015).