The Politics of Obsolescence: Technology and Protectionism in British India

• In Event: Historical International Political Economy

Abstract

According to conventional wisdom, producers made obsolete by global technological change will be less likely to organize against their decline if they can transition into new comparative advantage sectors. By contrast, I argue that such transitions can backfire if those who adjust find themselves in a position of weaker bargaining power in the comparative advantage industry. I study this in the context of British India, whose traditional handloom-based textile industry declined precipitously as a result of the Industrial Revolution and India’s rapid integration into global markets. Using decades of newly digitized archival data, I show that the American Civil War (1861-65), which increased world demand for Indian raw cotton, pushed traditional weaving communities into agricultural employment. However, compared to communities less subject to the shock, those who transitioned to agriculture were more likely to support the \emph{Swadeshi Movement}: a boycott movement for economic nationalism in 1905. I find suggestive evidence for three mechanisms behind this finding: (1) a loss in bargaining power to landed elites (2) lack of state capacity and (3) an inability to adopt modern technology. Overall, I show that shifting workers from comparative disadvantage to comparative advantage sectors might not be sufficient to make globalization self-sustaining. Institutions that govern the division of economic power between factors within industries mediate the politics of global technological change.

Author

• Zuhad Hai, Stanford University