In what way, and to what degree, did the Mughal state inhibit Smithian growth in India in the seventeenth century?
The nature of the seventeenth-century Mughal state and its land revenue taxation system has become a matter of controversy in recent years. Irfan Habib and his followers dominated thinking on this subject from the sixties onwards. They saw the regime as highly centralized and essentially extractive in nature. The land revenue system was designed to extract the whole surplus, leaving the peasants immiserated. Trade was sterile in that it was state inspired, and required to meet the cash demands of the tax system. ‘Natural’ commerce and Smithian growth scarcely existed, since there was no surplus after the state had taken its share. This view has been challenged by economic historians such as Frank Perlin, David Washbrook and Sanjay Subrahmanyam, who believe that much of the revenue was redistributed back to local interests, and that there were thriving regional and, for some goods, national markets. They also think that central control was weak in many areas, especially southern India, and that the proportion of agricultural produce actually collected was much less than claimed by Habib. The dissertation looks firstly at the evidence that the state extracted the whole surplus, and in particular at a statistical study by Shireen Moosvi, based on source data from the A’in-I Akbari. The quality of the source and the internal consistency of Moosvi’s calculations are examined, and the conclusion reached is that the peasants could not have paid at the level hypothesized. The second part of the study is particularly concerned with the growing spatial division of activity, characterized by free market exchange, because if this was happening then Smithian growth was underway. This section looks at merchants and credit institutions, external and internal trade, and revisionist thinking. The associated subjects of transportation and the structure of the textile industry are also touched upon. The overall conclusion is that while some agricultural production was consumed by the peasants and so did not enter the market, and much was doubtless exchanged to meet revenue demands, there was also a commercial economy, which may well have borne comparison with pre-modern Europe and China.
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