The economy which evolved during the last phase of Sri Lanka's colonial rule under the British (1796–1948) has been the subject of increasing scholarly attention in the recent years. Much of the writing which has emerged is descriptive by nature; the concern has been to lay bare the manner in which the economy took its shape and not to provide an analytical framework to explain the developments of the colonial era. This is not to say that conceptualizing has been wholly absent. Indeed, one particular conceptual treatment of the economy of British Sri Lanka has produced an interpretation which has gained wide currency and it has now acquired considerable influence over the economic literature concerned with the country.

The late 1930s saw a definite turn in political developments in India. Following the abandonment of Civil Disobedience in 1934, a prolonged period of internal peace helped the Congress, until then a broadly-based movement with a general commitment to fight foreign rule, evolve into a more organized party capable of aspiring to political dominance. In the process, its relations with different social forces took a more definite shape. While in the past the Congress had clung to the myth of an Indian society free of internal conflicts and united in opposition to the British, the growth of social conflicts in town and countryside forced it to take into account the competing aspirations of various groups.

The initial alignment, by means of the Anti-Comintern Pact, of the Japanese government with the Third Reich in 1936 was made possible by the extraordinary activities of Ōshima Hiroshi, then military attaché to Berlin. Colonel Ōshima, whose diplomatic role far transcended his early rank and authority, moved from the rank of Colonel and position of attaché in 1934 to Lieutenant General and Ambassador by 1938. Ōshima, both daring and enterprising, had the full support of his military superiors and certain pro-Axis Japanese; thus his role in Germany proved crucial to the making of major changes in Japanese foreign policy. He both represented and expressed military and totalitarian tendencies in the Japanese army, government, and society, helping those tendencies to reach dominance in Japan by 1940.

During the inter-war years there were significant developments in Indo-British economic and political relations. It is in the context of these developments that this paper will seek to study the complex relationships between the different fractions of businessmen, British and Indian, the Government of India, the Home Government and the Indian National Congress. The major theme of this paper is the attempts made in the 1930s by governments and businessmen to reorganize the economic relations between Britain and India to take account of changes wrought by the first world war, the world depression, and the ascent of Indian nationalism. One question which dominated these negotiations was the long-standing issue of duties on cotton goods imported into India. This issue served to bring into sharp focus the different views of the imperial rulers, British businessmen in India, Indian businessmen of different sorts, and nationalist politicians, on the immediate future of the economic link between Britain and India. The question of cotton duties dogged the talks on economic cooperation from the tariff negotiations of the early 1930s, through the period of the Ottawa agreement and Lees-Mody pact, to the Indo-British Trade Agreement of 1939.

Throughout the colonial period, the government played a substantial role in structuring India's foreign trade and in moulding the economy of the great port cities and their immediate hinterlands. Once Company and government had started to prise themselves apart in the early nineteenth century, however, the colonial rulers adopted a very haughty attitude towards the working of the internal economy. The development of internal production and trade would of course be deeply affected by the imperial connection, but the colonial government refused to admit responsibility and was careful not to be drawn into active intervention. The transition from colonial rule to independence did not mark a sharp break between this era of laissez faire or minimal interference in the internal economy, and an era of 'development' or constructive intervention. Indeed, it is more likely that a reluctant slide into economic management during the latter part of the colonial period helped to speed the colonial rulers along their course of retreat; any attempt to tamper with the mechanisms of the internal economy opened up the colonial government to contradictory pressures and threatened to expose many of the weaker links in the mesh of colonial command.

Between the wars, the development of a labour movement in Bombay reflected a growing polarization in social and political relations in the city. This period, which saw an intensification of social conflict, also witnessed changes in the character of industrial action. Until 1914, strikes in the cotton textile industry were largely confined to particular departments and mills; increasingly after the war, they were coordinated across the industry as a whole. Rising prices and unprecedented profits which accompanied the post-war boom led to the demand for higher wages supported by two general strikes. In the mid 1920s, as the industry's markets slumped, attempts to cut wages were once again strongly resisted. With a slight improvement in their fortunes in the later 1920s, the millowners introduced ‘rationalization’ schemes; for the workforce this meant more work, less wages and higher chances of unemployment. Between April 1928 and September 1929, two general strikes crippled the industry for about eleven months, and the extension of these schemes and a further round of wage cuts led to another strike wave in 1933-34. Apart from several one-day closures, eight general strikes occurred in the industry between 1919 and 1940. The impact of this militancy was felt not only in other occupations in Bombay but also in other industrial centres, such as Sholapur and Ahmedabad. As Bombay became the scene of militant working-class action in India, its labour movement, under communist leadership since 1928, acquired an explicitly political direction.

Perhaps the most intransigent problem in the recent history of Indian society remains an adequate understanding of the processes of social change which took place under colonialism. As the continunig controversies within, as much as between, the traditions of modernization theory, Marxism, and the underdevelopment theory make plain, the Indian historical record is peculiarly difficult to grasp with conventional sociological concepts. In the study of Western European society, a focus on the evolution of legal ideas and institutions has proved a useful entry point to social history.The law may be seen to represent a set of general principles through which political authority and the state (however constituted) attempt to legitimize the social institutions and norms of conduct which they find valuable. As such, its history reflects the struggle in society to assume, control or resist this authority. Its study should help to reveal the nature of the forces involved in the struggle and to suggest the implications for social development of the way in which, at any one time, their struggle was resolved. The condition of the law may be seen to crystallize the condition of society. This, of course, could be said of any governing institution. But where the law becomes uniquely valuable is in that, because of its social function, the struggle around it is necessarily expressed in terms of general statements of principle rather than particular statements of private and discrete interest. At the most fundamental level, these principles demarcate the rules on which the contending parties seek to build their versions of society and provide useful clues to their wider, often undisclosed, positions.