In the study of sociology of economic development, some important questions of sociological relevance
are: What is economic development? How does economic growth begin? What social infrastructure
is needed for economic development? What are the preconditions for economic change and how can
these be induced? Can factors which accelerate economic development be identified? Can social and
cultural barriers to economic development be overcome and its pace increased? What are the social
consequences of economic development? How can dysfunctional aspects of economic development
be checked? In this section, we will try to find out the answers to these questions.
What is Economic Development
In the broadest sense, economic development might be viewed as “any growth in real income per
capita from whatever source”. Bach (1960:167) has described it as “growth in the total output of
goods and services in the economy”. Novack (1964:151) has referred to a very old definition of economic
growth, according to which it is “continuous substantial increase in per capita consumption of goods
and services”. The substantial consumption of economic goods is possible only when there is
substantial production of economic goods, and sub-stantial production these days depends upon
greater use of technologies. In a narrower sense, therefore, it may be said that economic development
refers to “the extensive application of inanimate power and other technologies to the production and
distribution of economic goods” (Faris, 1964: 889). In this sense, economic development is practically
equivalent to industrialisation. But to say that economic development is only industrialisation would
not be correct because besides involving the use of power and technology in production, it also
involves labour mobility, extensive educational system, and so on.
Jaffe and Stewart (1951), who described economic development as “rationalisation of economic
production”, have given a dichotomy of developed and underdeveloped countries on the basis of per
capita income and factors like high literacy, high expectation of life at birth and low fertility, low
proportion of labour force engaged in agriculture, and high production of kilowatts of electricity per
capita. Besides these, we may add a third category to this classification, that of a country which is in
between the developed and the underdeveloped countries, that is, the developing country. In terms
of the per capita income, the United States, Canada, Australia and western Europe (Italy, France,
Germany, England) are considered to be developed countries. On the other hand, South Africa, Mexico
and most of the southern and eastern European countries are developing countries. India too, in
terms of its per capita income, is a developing country.
Jaffe and Stewart have said that economic development entails changes in everything at once to
achieve the above characteristics (of developed countries). But, Robert Faris believes that this conclusion
(of achieving everything at once for economic development) is not justified. He thinks that though its
proximate measurement will be taken as an increase in real income per capita, yet all other changes
would depend upon the degree of requiredness.
Determinants of and Barriers to Economic Development
The factors that are generally believed to contribute to economic growth of a society are: natural resources,
capital accumulation, technology, sources of power, manpower, labour force, characteristics of population
and its economic organisation, and social environment. According to Faris (1964:890), the important
prerequisites of economic development are: (i) values or ideology; (ii) institutions or normative complexes,
that is, unanimously accepting and following the rules of conduct or normally sanctioned prescriptions
for behaviour; (iii) organisation (polities), that is, whether the government wants to promote public
sector or private sector or both; and (iv) motives (incentives) pertaining to profit/prestige. Gunnar
Myrdal (1968:1942) in his three volumes of Asian Drama, in which he has analysed poverty and
development of the countries of South Asia, has pointed out six important factors affecting development:
output and income, conditions of production, levels of living, attitude towards life and work, institutions,
and politics. The first three refer to economic factors, the next two to non-economic factors, and the last
one to a mixed category. Myrdal has maintained that the economic factors are significant and decisive.
Novack (1964:156) holds that chief criteria of underdevelopment are scarcity of capital, low industrial
population and lack of natural resources. On the other hand, the prerequisites of economic
development include capital, quality of technology, and natural resources. He further maintains that
the factors which impede economic growth in the underdeveloped areas are: (i) lack of sufficient
quantity of innovation, (ii) lack of agrarian reform, (iii) lack of discipline, (iv) population growth, and
(v) foreign exchange shortages.
Jacob Viner (see, Jean Meynaud, 1963) has also referred to six barriers to economic development.
These are: unfavourable physical environment, low quality of working population, scarcity of technical
knowledge, scarcity of capital, rapid growth of population, and defects in agrarian structure.
In Europe, the Protestant Reformation paved the way for the rise of capitalism and growth by changing
the outlook of society and its institutions. Along this line developed the ‘Protestant Ethic’ which was
conducive to economic growth. Writing about this European occurrence, Max Weber emphasised the
institutions of capitalistic society that have accompanied rapid economic development in the West:
(1) private ownership and control of the means of production; (2) barriers and government pricefixing; (3) the reign of calculable law, enabling people to know in advance under what rules they
operate in economic life; (4) freedom of individuals to work for wages; (5) ‘commercialism’ of economic
life through a market system of wages and prices to mobilise and allocate productive resources; and
(6) speculation and risk taking (which had been largely prevented in the preceding feudal societies).
However, some scholars have referred to some holes in this thesis.
Obstacles to Economic Development in India
The above mentioned factors can also help in understanding obstacles to economic development in
India. According to Thomas Shea (see, Jean Meynaud, 1963), the four important barriers to economic development in India an context are caste, pattern of land tenure, population growth, and property
laws (which lead to fragmentation of landholdings).
The basic obstacles pointed out by A.R. Desai (1959:130) are: (a) the social and institutional framework
and values inherited from the past (i.e., caste system); and (b) persistence of backward types of loyalties.
The caste system though has been theoretically and juridicaly abolished by the Constitution of India,
yet its significance in real life, its influence on the economic development, its effect upon the patterns
of property relations and patterns of consumption, and its impress upon the configurations of power
structure in the economic, political, social and cultural fields are still not properly comprehended
and hence gravely underestimated. Caste prevents mobility of people so essential for dynamic
economic development. It prevents certain groups from taking to certain vocations, certain patterns
of economic behaviour, and certain forms of consumption. It has been found that most of the controlling
positions in economy, administration and cultural pursuits are monopolised by a few castes all over
India. In fact, a few castes control the destiny of most people of the country, leading to caste and
regional tensions and social unrest. This unrest becomes the cause of and keeps alive a bitter
competitive struggle among the privileged groups themselves as well as between them and the
underprivileged groups. This has a detrimental effect on the development of a healthy national
economy.
Besides caste (which inhibits occupational and social mobility), some important barriers in economic
development of India have been identified as joint family system, communalism, regionalism and
linguism. It has also come to be accepted that changes in the caste system have made development
possible. Since Gunnar Myrdal had not given importance to changes in social institutions like caste,
family, etc., as also to their functional aspects in the analysis of development, his analysis of economic
development has been described as negative, patchy and disjointed.
Another sociological implication is the persistence of backward types of loyalties resulting into
factionalism and division of the Indian people into groups with petty egos, to the detriment of the
growth of a highly developed national consciousness. Some types of loyalties that very much persist
(besides the caste loyalty) in India are kinship loyalties, regional identifications and religious
attachment. These divisions tend to inhibit the development of a feeling of unity in the society and of
identify among its members. The normative pressure rooted in such an environment profoundly
affects the conduct of the individual in external situations and relations.
A. R. Desai (1959: 131-32) further holds that this parochial mentality, together with the old outmoded
institutions, obstructs the proper economic development in a number of ways: (i) it leads to nepotism;
(ii) it results into the growth of the harmful practices of unproductive investment patterns and wrong
consumption patterns; (iii) it generates distorted attitudes to work, efficiency, vocations and allocation
of resources; and (iv) it obstructs the growth of those mores and sanctions which are basic to a
developing economy in modern times, namely, mores and sanctions founded on law, respect for
personality, concept of equal citizenship, etc.
The barriers to economic development in India as given by Yogendra Singh (1973) are: (i) transcendence
(according to which legitimation of traditional values cannot be challenged); (ii) holism (according to
which the relation between individual and society (or group) is such that individual subordinates his
rights and aspirations to that of society’s welfare; it also means precedence to collectivity over the
individual); (iii) hierarchy (stratification in caste occupation and social status); and (iv) continuity
(belief in rebirth and karma, etc.).
Stages in Economic Development
Rostow (1960:4) has referred to five stages in the economic development. These are: (i) traditional
society, (ii) preconditions for take off, (iii) the take off, (iv) the drive to technological maturity, and (v)
age of high mass consumption.
Traditional (peasant) communities are not self-sufficient but dependent on towns for markets, and
for religion, philosophy and even government, as leadership is poorly developed within the
communities. The decisions for the peasants are made from the outside. Often they do not even know
how or why these decisions are made. Try though they might, they can have no part in the making of these basic decisions which affect them from the outside. This produces not only a fatalistic outlook
towards life but also a suspicion of outsiders and a wariness of new ideas. The distrust of the outside
world does not unite them with their neighbours. The extended family draws together to defend
itself against the dishonesty of its neighbours. This is one segment of unity with the traditional society.
Production in the traditional society is limited due to limited resources, especially land.
Then comes the process of gradual transition. In this stage, the preconditions for take-off are developed.
Generally, these pre-conditions arise from external intrusion by an advanced society. These intrusions
stimulate new ideas and feelings and people begin to believe that economic progress is good as well
as possible. Some people go for education, some leaders emerge, and some new areas of investments
like trade and commerce appear. All this happens slowly because conventional social structures and
old values are difficult to change. Before the transition in institutions and values take place, certain
prerequisites of social change and economic growth must be present. These are: an awareness of
purpose, an eye to the future, a sense of urgency, the need for variety of opportunities and roles, an
intellectual appreciation of and an emotional preparedness for self-imposed tasks and, sacrifices,
and the emergence of a dynamic leadership.
In the take-off stage, resistances to steady growth are overcome and growth becomes a normal
condition. There is accumulation of capital, technological development in industry and agriculture,
and the emergence of a political group which takes up the modernisation of the economy as a serious
business. New industries expand rapidly and profits are reinvested to yield more expansion. The
number of workers increases and so do their wages.
A long interval of sustained growth follows the take-off. During this interval, there is a drive to
spread modern technology through an economic activity. New industries accelerate their rate of
expansion and production. An important aspect of the drive to maturity is that goods formerly
imported are now produced at home. Maturity is usually reached forty years after the take-off.
In the age of high mass consumption, there is a shift towards durable consumers’ goods and services.
America has emerged from this stage while western Europe and Japan are beginning to experience
its joys. Since no country has developed beyond this stage, it is impossible to say what the next stage
will be.
Does Social Change Precede or Follow Economic Development?
One view is that without economic development, change in social system is not possible, while the
other view is that it is the change in institutions operating in society which makes economic
development feasible. According to Frankel (see, Jean Meynaud, 1963), however, economic
development and social change are dependent on each other, that is, each is the cause and effect of
the other.
If we are to speak of the effects of technical change, we must be careful to avoid falling into the
common error of thinking that changes in “knowing how to do a certain thing” can be separated
from changes in “the actual doing of it”. The idea that technical change is an exogenous force altering
the established day-to-day activities of society springs from this erroneous way of speaking and
thinking. It consists in the fallacious belief that society’s activities proceed in two separate
compartments: the first containing the process of knowing, and the other containing the application of
such knowing. The same thing may be said about economic development and social change, that is,
whether the former leads to the latter or the latter leads to the former. As pointed out above, social
change neither precedes economic development nor follows it. Both are interrelated. For example, when there is a change from farming to industry (say, cement industry, or sugar industry, or paper
industry, or steel industry), this will involve the development of new aptitudes and new habits of
work. If we regard the introduction of an industry as a purely mechanical process which will have
certain social consequences, we fail to see that what we regard as the result or consequence is but the
continuous process of change itself. Thus, if workers in the industry are independently housed, or
suffer deficiencies in the standard of nutrition, education or recreation, now necessary in their new
environment, these are not the consequence of the process of change in industry, but rather of a
failure to complete it. Even the direct activity of increasing the production (say, of cement, sugar,
paper or steel, etc.) cannot be brought to optimum efficiency unless all other economic and social
activities to which the task must be related, have been developed. Indeed, an industry cannot even
begin until some changes in the previous attitudes, habits and patterns of social organisation have
taken place.
Let us take another example of what may be regarded merely as a technical change. Let us assume
that it is desired to increase the productivity of land and cattle-ownership of a village community
which has never engaged in the production of butter or other milk products, either for sale or its own
consumption. It is hoped that not only will this community consume these products itself but will
also market some of these as to enable it to increase its income by selling the surplus dairy produce.
At first, the problem might appear to be merely one of introducing new methods of production and
the tools, instruments or machines appropriate thereto. But, what is really involved is a vast change
in social beliefs and practices. Here, let us for a moment consider only what far-reaching social changes
will have to be made to enable technical change to be introduced at all. The utilisation of cattle (besides
possessing land) as a source of income presupposes a basic alteration in social and economic structures
of the community. It also implies recasting of the traditional values of the members of the community.
Thus, it suggests a change in the traditional beliefs as to how and by whom the land is to be cultivated,
whether by men or by women, by individuals working for themselves or for others. This, in turn,
presupposes the growth of new attitudes and patterns of behaviour which will regulate their social
and mutual relations. There is also an assumption of the parallel emergence of a group of persons
concerned not only with dairy production itself but also with transport, distribution, marketing and
finance of all that the new producers have to buy and all that they have to sell. This also necessitates
the political structure—local, provincial and even national—suited to the establishment of these
complementary economic activities. It further implies the willingness of the community to permit the
growth of all legal, political and administrative institutions necessary to harmonize the rights and
duties of persons engaged in this new interdependent economy.
The purpose of this long list of social adjustments is to show that whatever it be that we may care to
designate as technical change, it is but one aspect of mutually determined and determining processes
of growth on many fronts of the social structure as a whole. It is idle to endeavour to ascertain which
change is the innovation or cause and which is the effect. Frankel has said that when we take one
change as cause and other as effect, we are merely examining the process of change itself from different
points of observation.
Sociological Problems of Economic Development
Economic development is not possible without structural change. Scholars like H.W. Singer (see,
Jean Meynaud, 1963: 157) have submitted that for the economic development of the underdeveloped
countries, industrialisation is very necessary. Poor underdeveloped countries have 60 to 80 per cent
of their population engaged in agriculture. Their national income and per capita income are very
low. As such, for the economic development of these countries, there are two alternatives: (i) by
improving the existing predominantly agricultural structure (that is, changing low productivity within
the existing structure); and (ii) by changing the entire structure, that is, shifting away from agriculture
and taking to industry development. The choice between the above two alternatives depends upon
which of the two approaches is more challenging? To our mind, correct approach is to emphasise
both.
As this point, the two main questions arised are: (i) How can agricultural improvement be brought
about cheaply? Agricultural improvement is possible by changing land tenure system, and by providing more irrigation facilities. Industrial improvement is feasible by extensive re-equipment,
and by re-location. Singer (see, Jean Meynaud, 1963: 158) has further suggested that in change from
agricultural to industrial structure, the cost of industrilisation can be lowered in three ways: (i) by
avoiding urbanisation, which means bringing industry to villages so that there is less demand of
transport, water, etc., this will also discourage migration to towns; (ii) by concentrating on industries
requiring little capital; and (iii) by applying a technology which uses much labour and little capital.
This shows how improving the existing structure as well as attempting structural change is possible.
Wilbert Moore (1964) has referred to the impact of industry on social and economic structures in
following terms: (i) shift from agriculture to manufacture and services, (ii) occupational specilisation,
(iii) division of labour, (iv) coordination of specialised activities, (v) labour mobility, (vi) creation of
banks, (vii) extension of market, (viii) change in consumption, and (ix) change in network of social
relationships.
A.R. Desai (1959:127) has referred to four sociological problems of economic development in India:
(1) replacing the old social organisation and evolving new web of social relations; (2) modifying or
discarding old social institutions and developing new types of social institutions; (3) altering or
removing old forms of social control and creating new devices of social authority; and (4) revising or
liquidating old agencies of social change and determining new instrumentalities and factors of social
change.
The British kept India underdeveloped. Whatever industrial development was made, it was
predominantly regulated to suit the needs of British capitalism. Heavy industries were not permitted
to grow. While the British retarded the development of India’s economy, they also made a dent into
social organisation, social institutions, and social outlook of the Indian people. The traditional selfsufficient village community which operated through the institutions of panchayat, caste and joint
family and was governed by custom, was almost fatally undermined. However, it was not replaced
by a new social framework, a new institutional matrix, or a new outlook. In the absence of these, the
introduction of the new legal system resulted in disorganising the then prevailing social relations.
The old principle of cooperation and coordination was replaced by the principle of competition which
set into motion a whirlpool in the social structure. After independence, the government undertook
the task of the reconstruction of economy through Five Year Plans. Economic development has created
on the one hand sociological problems (i.e., problems of social relations, social institutions, social
control, and agencies of social change) of negative character and on the other hand of positive character.
The negative type of sociological problems are the result of the persistence of old social institutions
like authoritarian joint family and traditional religious institutions, etc. These problems have also
emerged out of old forms of social control like supernatural sanctions, authoritarian norms, and
family, caste, tribal, religious and other customary sanctions. Besides, these have arisen out of the old
world outlook which was basically religious, fatalistic and anti-democratic in content. Lastly, these
have emanated from large-scale illiteracy, unemployment, corruption, casteism and poverty. The
positive type of problems are the result of the policies of industrialisation, commercialisation and
monetisation (i.e., introducing the money economy). Industrialisation has uprooted the old division
of labour, created new occupational patterns demanding new discipline and a new mode of living.
Further, modernisation—whether in agriculture or in industry—has separated man from the
traditional processes and techniques of his social units and from the skills he learned from his family.
Commercialisation has also created numerous problems. It has brought about a shift in power and
authority. Not farmers and producers but land and industry owners and administrators have become
the new ruling elite. In villages, the centre of political power has shifted from elders of upper castes
to usurers (moneylenders), merchants, landlords and officials. Lastly, monetisation is also fraught with numerous sociological problems. It has created dangers of greater fluctuation in land values,
greater price-spreads of food articles, greater money illusions, and greater proportion of expenditure
on non-food items. Besides these dangers, the introduction of money economy has meant atomisation
of individuals within the family and destruction of family relationships. Thus, the three processes
(industrialisation, commercialisation and monetisation) have generated numerous sociological
problems.
Economic Development, Planning and Social Change in India
The economic development in India after independence can truly be described as a revolutionary
change. If we compare the economic development in the British period with the one in the Nehru
period of about two decades, Indira Gandhi and Rajiv Gandhi periods of about two decades, the
period of more than six years of V.P.Singh, Chandra Shekhar and Narasimha Rao’s governments,
about two years period of United Front governments, and about one year period of BJP-led government,
the truth behind the above statement becomes self-evident. The industrial sector was overwhelmingly
dominated by the British capital. A fragment of the industrial sector owned by Indians was managed
by the British agencies. In the agricultural economy, the cultivators were in the clutches of zamindars,
jagirdars and local moneylenders (sahukars). Savings and investments were very low. Technology
was of inferior level. There was no concept of regional balance through enforced backward area
development. Foreign capital was not available for building India. Low incomes lead to low savings,
which further lead to low investment, low growth, and once again to low incomes. The theory of
vicious circle of poverty and never-ending cycle quite fitted the economy of the colonial period.
After independence, the task for the new government was two-fold: dismantling the colonial economy
and erecting in its place base for a modern, independent and self-reliant economic order. The blueprint
for the country’s modern economy and nationhood—the socialist pattern of society—was provided
by the Avadi session of Congress in 1955 (during the Nehru era) and by the Bangalore session in 1969
(during the Indira Gandhi era). There is no denying the fact that the Nehru model of socialism did
improve our economy in the four decades of the 1950s, 1960s, 1970s and 1980s, though there is a
school which decries its (Nehru model’s) performance in comparison with the economic growth in
South Korea, Singapore, Hong Kong, Thailand and Taiwan. We have now millions of modern
industrial enterprises where there were once but a handful; we have a huge reservoir of technical and
entrepreneurial skills; we have big public projects like Bhilai and Rourkela as well as big dams like
Hirakud; we have the highest rate of savings in the developing world; we have growth rate of 5 per
cent per annum (in 1998-99); we have sustained growth in exports, a twenty-fold increase in the
deposits of Non-Resident Indians (NRIs); we have unparalleled credibility in international money
market; and we have dropped the percentage of population below the poverty-line (from 51 per cent
in 1972-73 to 36 per cent in 1997-98, as claimed by the government after accepting Lakdawala
Committee’s recommendations). In spite of all this development, it is also a fact that we are faced
with the problem of inflation and high debt. The balance of trade deficit is very high and the budget
deficit is in trillions.
The Narasimha Rao’s government discarded the socialist model in 1991-92 and launched a new
revamped model based on the philosophy of liberalisation, marketisation and privatisation (what is
now called Nehruvian capitalism), which the Congress government claimed gave a big boost to our
economic development. The then Congress government maintained that the essence of the new model
was that it combined trust in the state as well as the private entrepreneurs, and held unflinching faith in a plural democracy and mixed economy. The United Front government and the BJP-led government
also continued this economic policy.
The Tirupati session of the Congress in April 1992 adopted a new ideological paradigm which was a
shift from left-of-centre to right-of-centre. It was a technique of discarding Nehru in Nehru’s name. It
focused on cutting down subsidies to various sectors (including’ agriculture and public distribution
system), discarding licence-permit raj, introducing the exit policy, opening the country for
multinational corporations, removing import controls, and not treating public sector merely as a job
distribution agency characterised by a non-work ethic. Thus, the rhetoric stayed socialist while the
content of policies became capitalist with a vengeance.
There are scholars who do not believe that the new economic policy will really rejuvenate the Indian
economy. They maintain that our economy can be revived best by imposing curbs on import, promoting
exports, widening the tax-net, debureaucratising the public sector, unearthing black money,
introducing cuts in defence spending, taking more interest in tapping natural resources, creating a
very large market for goods, bringing radical land reforms, and so on. These scholars also believe
that country should depend on the internal rather than the external measures.
Sociologically, it may be held that the economic development—both through Nehru and liberal
models—has affected our social structures in a direction as we desired it. Whatever sociological
model we may use for evaluating our society, viz., evolutionary (assessing evolving of society in
series of stages), conflict (emphasising competition and continuous struggle for power), functional
(analysing the consequences of each institutional practice for all other elements in the social structure),
etc., it will be obvious that change has taken place in the network of social relations, social institutions,
social systems and social structures, social norms, etc. People in India are no longer as conservative
as half a century ago. They do not cling tenaciously to the moral norms and social values that came
down to them from the past. Men individually strive towards individual liberty and collective security.
There is also change in their outlook and ideas. They wish for new experiences. They have a curiosity
to borrow not only technologies but also cultural elements from other societies. They have a creative
urge for innovations. They are not much afraid of the consequences of the acceptance of innovations
and social changes. They may protest and agitate against the power elite for failing to mitigate the
problems of poverty, unemployment, corruption, inflation, nepotism, terrorism, casteism, regionalism,
etc., yet they know that social order in India will never be in a state of disequilibrium. Indian culture,
with divergence of interests, will not only survive but develop too. Social change, through economic
development, will provide clues arid directions to social structures and social behaviour—traditional
as well as transitional.