Marx and the railways

Tue, 10 Mar 1998 14:00:36 -0500
Louis Proyect (lnp3@columbia.edu)

P. Waterman:
> To add all the above is to qualify, not reverse, the evaluation.
>It is, for example, equally evident that, as the Manifesto argues, the
>development of railways and other technical channels of communica- tion
>were determinant in the rapid organisation of labour nationally and
>internationally. An interesting question follows. If the railways thus
>allowed labour organisation, did they not, perhaps, also restrict its
>shape?

It is one of the banalities of liberal economic thought to consider private
international foreign investments as a polarizing agent in the
industrialization process of the recipient country; but the illusion that
foreign investment in railways would, under all conditions, usher in a new
period of industrialization was also shared by the founders of Marxism. In
one of his letters to Engels, Marx maintained that the British conquest of
India should be seen as part of a historically progressive force, and that
the British occupant was "the unconscious tool of history."

"England, it is true, in causing a social revolution in Hindustan, was
actuated only by the vilest interests, and was stupid in her manner of
enforcing them. But that is not the question," he continued. "The question
is: can mankind fulfill its destiny without a fundamental revolution in the
social state of Asia? If not, whatever may have been the crimes of England,
she was the unconscious tool of history in bringing about that revolution."

To him, the harbinger of this "British Revolution" in India was, of course,
the railway, for once this was introduced the dialectical process of
industrial inevitability became operative. Given the availability of
strategic resources, industrialization was irresistible once railways were
laid.

It is surprising to find a League of Nations economist repeating the
Marxist fallacy. The inflow of capital for the development of other
activities stimulates industrialization. "If foreign capital is engaged,
for instance, in building a railway intended to carry agricultural exports,
those employed in the construction and later in railway transportation and
agriculture will exercise a demand from which domestic manufacturing will
profit; the railway will also serve the transportation of domestic
manufactured goods; and will release domestic savings for investment in
manufacturing." ["Industrialization and Foreign Trade, 1945, p. 67]

The story of the Indian railways, within the context of economic policies
of the British raj reveals the fragility of such a generalization, and
justifies Jenk's contention that "railroad building in India did not give
rise to a flood of satellite innovations, and it destroyed more
occupational opportunities than it opened up." [Journal of Economic
History, December 1944]

It is true that the "iron horse" contributed immensely towards the opening
up of the American and Canadian West and their later remarkable growth. The
same is true of France, Germany and the United Kingdom. Railway
construction in Japan after the Meiji restoration of 1868, under the
impetus of state initiative, was a potent factor in Japanese growth.
Nevertheless, it does not follow that the establishment of communications
networks must *inevitably* lead to industrialization.

In certain cases it may even retard balanced growth, as both India, China
and certain parts of Africa and Latin America have demonstrated. In the
last analysis, it would appear that the ancillary effects of railway
construction depends on the socio-political and economic background of
railway policy: the objectives and interests it intends to serve.

Railway financing on the London money market did not create enhanced
possibilities for the risk-taking creative "dynamic entrepreneur" in the
Schumpertian sense of the word nor did it induce new metallurgical
construction or the training of technicians and engineers, so intimately
tied up with the development of a railway network. This last point is of
vital importance, being equally applicable to other countries which nave
absorbed vast inputs of foreign capital. The Actworth Railway Committee of
1921 reported the absence of native trained personnel. Of 710,000 persons
employed by the Indian railways, 700,000 were Indians and only 7,000 or 1%
Europeans. "But the 7,000 were like a thin film of oil on the top of a
glass of water, resting upon but hardly mixing with the 700,000 below. None
of the highest posts are occupied by Indians; very few even of the higher."
[Actworth Report, London 1921]

*********

(From Frederic Clairmont's "The Rise and Fall of Economic Liberalism", The
Other India Press, Goa, India, 1995)

Louis Proyect