HANDICRAFTS AND MILL PRODUCTION IN THE COTTON INDUSTRY

The textbook story of development of capitalist industry goes as follows: Given a blue-print of techniques, with a rise in wages a more capital-intensive technique than the one hitherto in use becomes profitable. Hence if a weaver was operating by hand only one loom it becomes profitable to add some device to speed up the production on the loom, thus increasing the amount of capital per weaver; the logical culmination becomes the displacement of the handloom by a powerloom. The speed of the change is not, however, dictated by the extent of rise in wages; it is determined by the rate of investment which in turn is dictated by the capitalists' share in income and their propensity to save.

One can adapt this story to the Indian case and argue that there occurred a rise in the standard of living of the Indian worker at the end of the nineteenth century; this was induced by the increase in the prosperity of the peasant through the greatly increased exports of primary products. The rise in the wages of workers combined with the removal of the barriers to free competition imposed by an inefficient transport system, to bring about a situation in which the powerloom became a more profitable implement than the handloom.