ism. Nor could Khrushchev dramatize the new good-neighbor policy by announcing a program of massive economic aid to New Delhi, if the official line still labeled India's economy as a “raw material and food-producing appendage of imperialism." Accordingly, a revision of the Soviet assessment of India's economic system was in order. The present paper is aimed at determining to what extent a more favorable diplomatic climate has led the Soviets to a new view of the nature of modern capitalism, as they conceive it in the developing Indian nation.

T

trialization. As for "capitalism”—the only remaining Marxist category—it had, since Lenin's October Revolution, been associated with reaction, whether in its internal expression as monopoly capitalism verging on fascism, or externally as aggressive imperialism, continually menacing the survival of Soviet socialism. What the Soviets did, then, was to reactivate the old notion of "state capitalism," restoring a "progressive" connotation to the idea of capitalism as found in such developing economies as India's. Around this concept Indologists have constructed a thorough reinterpretation of the Indian economy, starting with the industrial role of state capitalism itself and going on to consider India's private sector and planning system, its dependence on Western aid, and the evolution of its agriculture.

he starting point for the Soviet reassessment was a reappraisal of India's role on the stage of world history. It was recognized that India had achieved genuine political independence from State Capitalism British imperialism in 1947. India's neutralist foreign policy, epitomized for the Soviets by the government's refusal to join the anti-Communist military bloc of SEATO and its continued support

for the admission of Communist China to the

United Nations, showed that the country was playing a genuinely "anti-imperialist" part in international relations. Accordingly, bourgeois Nehru was rehabilitated as the authentic leader of the "na

tional liberation revolution" for complete indepen

dence from Western control.1

The economic corollary to the politically progressive role that was thus accorded to the "national bourgeoisie" was the recognition that the Indian government was genuinely devoted to the

goal of independent economic development. In the Stalinist analysis, India's economy had been described as a stagnant feudal system in which capitalism was developing despite the resistance of the imperialists and their collaborators, the local bourgeoisie. Now, bourgeois rule was acclaimed as successfully attempting "to liquidate the fatal consequences of two centuries of the English colonial regime."

As the theoretical core of the new MarxistLeninist analysis of Indian underdevelopment, state capitalism has been endowed with all the qualities of a distinct stage of development. Viewed historically, it is the politico-economic system resulting from the "general crisis of capitalism" which developed after World War II-"when the forces of powerful socialist camp had been formed." That imperialism were greatly weakened and when the state capitalism is considered to be a function of decolonization is made clear by the date of its inception; it "appeared in the Indian Republic in August 1947, i.e., at the moment of the acquisition of independence," when the national bourgeoisie took power. At that moment it expressed the contradictory situation in which the new ruling class found itself: the advent to power of the national bourgeoisie offered new possibilities for the acceleration of capital accumulation in the industrial branches, which had remained undeveloped as a consequence of colonial rule, but the growing demand of native capital for rapid industrialization was frustrated by the "impossibility of realizing this on the basis of private capitalist enterprise.' This is why "state capitalism was called upon to create the basis for the new stage of development

1 Among many other statements of the post-Stalin view on India, see E. Varga, Osnovnye voprosy ekonomiki i politiki imperializma posle vtoroi mirovoi voiny, Moscow, 1957, pp. 4102 Ibid., p. 410.

36.

3 A. I. Levkovski, "Gosudarstvennyi kapitalizm v Indii— nekotorye osnovnye problemy," Sovremennyi Vostok, No. 5, 1958, p. 16.

4 A. I. Levkovski, “Osnovnye problemy razvitiia gosudarstvennovo kapitalizma v sovremennoi Indii," in Gosudarstvennyi kapitalizm v stranakh Vostoka, Moscow, 1960, p. 12.

This tendency to put the best interpretation on the state's direct activity in the economy does not preclude all Soviet criticism. For example, the Senate Trading Corporation, a government firm with a monopoly in the import and export of certain goods, is described as serving the interests of the ruling class, for it consolidates the economic positions of the national bourgeoisie on the world market.12 Yet even this institution is called progressive, as it reinforces the role of the state in the domain of foreign trade.13

Private Enterprise

how the growth of Indian free enterprise has verified Marx's laws of capitalist development:

The concentration of production, the centralization of capital, and the strengthening of the economic power of big capital on this basis in the private sector of India's economy is an obvious fact.16

Soviet writings leave no doubt that this free enterprise vigor is in itself reactionary: it "leads inevitably to a growth of the monopolies' influence.” 17 In addition, the growth of profits and productivity, when seen against the stationary level of real wages, proves that the Indian proletariat has been the object of growing capitalist exploitation.18 But these manifestations of classical capitalism are not judged severely in the total Soviet view, as demonstrated by Ulianovski's quotation of an Indian Communist Party statement declaring that "the progressive nature of national capitalism's development in India under the present concrete conditions" is "indisputable.

It was to be expected that the Soviets would look kindly on manifestations of the state's direct activity in the economy. What is more interesting is the degree to which even free enterprise receives the benefit of the doubt. The Soviets note a basic contradiction between state capitalism, which attempts to develop the economy in the nation's interests, and free enterprise, which is interested in restricting to a minimum the state's interference Planning in the economy. But there is a contradiction in the Soviet analysis itself. According to the theory, state capitalism is a superior economic form because it can discipline and even oppose private enterprise; in practice, the Soviets observe that, far from being stifled, private enterprise is flourishing because of the support it receives from the Indian state. One Soviet analyst, R. A. Ulianovski, has recognized that there is really no competition between the investments of the two sectors. Noting that 82 percent of the state's investment funds are spent to improve agriculture, generation of electricity, transport, and port construction, he states that such infrastructure development "creates the necessary conditions for the penetration of private capital in food products and light industry, as well as in other poorly developed areas." Thus the encouragement of private capitalism by the state is not bewailed by the Soviets; it is rather approved as proof that state capitalism is abbreviating the primitive accumulation of capital and encouraging the emergence of a thoroughly modern capitalist economy.15

99 14

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99 19

Capitalist planning used to be one of the most sensitive subjects for Marxist-Leninist analysis. In fact, during the Stalin era, the term “Indian planning" was always inserted between quotation marks to underline the fraudulent nature of an institution which is incompatible with the "spontaneous" and anarchic essence of capitalism. But if post-Stalin toleration can accept the growth of free-enterprise capitalism as progressive, it looks with an even more encouraging eye at Indian planning. True, the attempt to direct India's economic development falls far short of being genuine socialist planning, because it can only be effective in the narrow domain of the public industrial sector. Yet the advent of the First FiveYear Plan in 1951 was deemed to be the logical corollary of state capitalism, implementing the state's claim to direct the nation's long-term evolution.

16 Ibid., p. 73.

17 Levkovski, "Gosudarstvennyi kapitalizm i chastnokapitalisticheskoe predprinimatelstvo v Indii," loc. cit., p. 211.

18 Ulianovski, op. cit., pp. 68-70; and L. A. Gordon, "Polozhenie promyshlennovo proletariata Indii i nekotorye osobennosti borby rabochevo klassa," in Polozhenie rabochevo klassa i rabochee dvizhenie v stranakh Azii i Afriki (19591961), Moscow, 1962, p. 71.

19 R. A. Ulianovski, "Indiia v borbe za ekonomicheskuiu nezavisimost; o gosudarstvennom sektore v ekonomike Indii," Sovetskoe Vostokovedenie, No. 4, 1957, p. 25.

The plan reflected the objectively ripened necessity to institute a certain kind of planning for the realization of state capitalist construction of new enterprises.

By the volume of planned public expenditures and by their orientation, the plan was said to surpass by far the limits that would be achieved under normal capitalist expansion.2

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The Second Five-Year Plan (1956-61), with its far greater emphasis on heavy industry, was hailed not just as proof of India's continuing independent development, but as a triumphant indication that India was "borrowing from the planning experience of the socialist countries in its effort to escape from its backward condition and to suppress its economic dependence on foreign capital." 21 To be sure, the plan was criticized, this time for relying on foreign aid and deficit financing instead of extracting investment resources by the severe taxation of the country's big bourgeois, feudal and princely rich. Once again, however, the Soviet critique ended in approval, notably for the high priority given to heavy industrial construction in the state sector.2

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This blanket praise underlines a dilemma inherent in the Soviets' enthusiastic attitude towards India's progressive capitalism: either they must exaggerate the role of the planning element or they must admit that capitalism can of itself achieve important progress. When they chose not to denounce the second plan for the fact that it was not socialist, instead simply observing that the proper conditions did not yet exist to make it really "consistent," they indicated their choice. Even a specialist such as R. S. Gorchakov, who is most critical about India's planning, reported the aims of the Third Five-Year plan (self-sufficiency in agricultural and producer-goods production, and 5 percent annual growth of the gross national product) without suggesting that these objectives were illusory in a capitalist system 2-a discreet admission, in its own way, that the Indians were in fact tackling the problems involved. The tolerant tone adopted towards Indian planning contrasts sharply with the invective reserved for imperialist planification-witness, for example, the Soviet comment that French "state planning has become an apparatus to drain the nation's resources into the strong boxes of the monopolies." 25 Because French planning operates in a monopoly state capitalist system, it is fundamentally bad, despite its sophistication; whereas Indian planning, regardless of its insufficiencies, is an integral part of progressive state capitalism. Still, the Soviet attribution of India's economic progress to the plans indicates an acceptance of the thesis that planning can accomplish substantial successes even in a non-socialist system.

A survey of the first decade of Indian planning, drawn up by the economist E. A. Bragina, exemplifies the Soviet endorsement of Indian governmental policy. The author acknowledged a 42 percent increase in the gross national product in the period 1951-61; during these years the working force in the manufacturing industries rose from 2.96 to 3.76 million, and the output of producer goods increased from an annual value of 40 million to 2,500 million rupees. While Miss Bragina drew special attention to the growth of the public industrial sector, whose share in the output of the manufacturing branches increased from 1.5 to 8.4 percent, her tribute to planning successes embraced Dependence on Imperialism the whole economy: