(Sir William Arthur Lewis, 1915 -1991)
For a few decades now we in India have witnessed what the Saint Lucian economist Sir William Arthur Lewis characterised, and which later came to known as the 'dual sector model' or the Lewis model of development. In terms of its premises, it is fairly straightforward. A developing economy (such as India) will reach a point in its historical development where increasing surplus labour in agriculture does not add any value to the marginal profit made by the sector. There may be a number of reasons for this, but principly there are two main factors 1) Increasing investment and use of machinery leading to the industrialization of farmlands means that there is a diminished requirement for labourers in total in agriculture. This is statistically noticeable even in our recent history. From 2009 to 2019 the proportion of the population employed in agriculture has reduced from 52.5% to 42.6%. Agriculture, for the last two decades, as a sector has not been gaining in terms of its contribution to the GDP, though this trend seems to have been arrested somewhat in 2021 when it once again reached 20% after a period of 17 years (Kapil, 2021). This is undoubtedly due to the lockdown enforced to tackle covid and is unlikely to sustain itself. 2) Even when migrations do not take place, due to the above mentioned factors - they effectively ensure that the marginal product of labour is zero or even negative in agriculture, leading to situations of disguised unemployment.
In essence, this leads to a situation where there is an increasing glut of surplus labour in the agricultural sector, which has historically migrated to urban areas to seek employment in industries. In 2001, the number of migrants who moved from rural areas to urban centres in India, stood at 51 million. By 2011, this number rose to 78 million. Historically, in the near and long term, with the progressive mechanization of agriculture and greater trade between nations, leading to a diminished dependency on domestic agricultural products, this number is bound to increase.
These premises point to a conclusion, that urban areas can bank with some certainty on an influx of labour power from rural areas. This would also mean, that as more people move into cities, the demands in those cities, for basic necessities, food, shelter, transportation, etc. is bound to increase. This would mean an upward trend in the demands for products and services, ie. commodities in these areas. The increasing number of labourers would also mean that the supply of labour power could be used to suppress wages by capitalists, and in turn, keep the prices of their commodities low and competitive.
To be noted however, Lewis observed that apart from the influx of labour power and the changes that means for the industry, industry itself does autonomously lead to an expansion of demand. This is usually a result of changes in consumer taste, government purchases or expansion into international markets, these being indexes of the health of an industry.
The bottom line that the Lewisian model rests on however, that without any segregation of the labour power that enters cities from rural areas, ie. treating all of them as homogenous and unskilled, the supply of labour from the country to the city is unlimited, or completely elastic. On a side note, it should be stated that Lewis originally classified the two sectors as capitalist and subsistence. The key facet characterising the relationship between these two sectors is the supply of surplus labour power to urban industries from rural agriculture. What facilitates this tendency is the extent of disguised unemployment which persists in agriculture. This may include, but is not limited to, agriculture, domestic services, casual jobs, petty retail trading etc.
Also note how such a tendency does complement the drive within capitalism to mechanise low skill and easily reproducible occupations. A cashier today, is almost universally replaced by a transaction interface linked to your bank via Google pay or some other service on virtually every website selling anything. Hence, we may also notice that the contribution to the disguised unemployed may be now rising from the among the ranks of the urban 'industries' as well, particularly in the light of increasing developments in production, and sale processes, better tuned to the demands of the market.
In essence, and in rounding up - this situation serves the interests of Capital in general, but industry in particular. As the supply of unskilled (or semi-skilled) labour to industry holds down industrial labour costs in wages. More labourers lead to higher demands in these areas as well, while the suppressed wages allow for competetive prices of commodities, and profits for the capitalist.
At this stage, even the industrial capitalist would be incentivized to plough back profits into industrial capital formation. This would be equally the case in strictly reproductive labour, the purchase and consumption of milk bottles and diapers for babies etc.
As is evident, such developments which are not merely industrial, but trace a rural to urban migration, leading to a concentration of populations in urban centers (whether of workers or capitalists) leads to a necessity for further industrialization of such centers, to provide for the labour power. Someone who has been following the argument here will note that this is a very strong tendency. This is only reversed or stagnated when the marginal product of both sectors is approximately equal. For this to happen, agricultural productivity would have to rise dramatically, often only accomplishable via the introduction of mechanization and perhaps the collectivization of land holdings.
It would be interesting to trace precedents to this trend in India. Sikhism for instance started as a largely agrarian revolt against landlords (Kushwant Singh, 1971), as did the Naxalbari movement. Communist governments in West-Bengal and Kerala have in their history introduced land re-distributions on limited scales.
Yet even for farm produce, in ever greater volumes to find a market, transportation and storage mechanisms would have to be widely developed, the latter of which is sorely undeveloped in India (Rajesh Trichur Venkiteswaran, 2018).
Amidst this backdrop and questions regarding ‘essential services’ which cannot be shutdown; this would necessarily be prioritized. What does it mean for urban centers however where the effects and casualties of coronavirus are most reported?
As stated, we have witnessed a hiccup in the usual dual sector model, forcing a massive reverse migration from urban to rural areas, drastically changing the labour market. Not much is known about the scale of this however as the government in India has not tracked it or collected data. Yet, it may be noted that as of 3rd August, 2021, there is some data on a statewise inoculation conducted, even a breakup of the percentiles of its administration among urban and rural areas. With no data on the reverse migration however we have no way of knowing whether these campaigns have had any success in halting or reversing the model. It is to be expected however, that as the economy progressively opens up - we will see this come to light.
Notes:
*According to the Ministry of Agriculture and Farmer's Welfare, "As per Census 2011, conducted by the Registrar General of India, the total number of agricultural workers in the country have increased from 234.1 million (127.3 million cultivators and 106.8 million agricultural labourers) in 2001 to 263.1 million (118.8 million cultivators and 144.3 million agricultural labourers) in 2011. In terms of the proportion of the population employed in agriculture.
*As per 2018 agriculture employed more than 50% of the Indian work force and contributed 17–18% to country's GDP.
Bibliography:
-Shagun Kapil, Agri share in GDP hit 20% after 17 years: Economic Survey, downtoearth.org.in, 2021. https://www.downtoearth.org.in/news/agriculture/agri-share-in-gdp-hit-20-after-17-years-economic-survey-7527
- Kushwant Singh, Banda bahadur, Amar Chitra, 1971.
- Rajesh Trichur Venkiteswaran, Food grains rot in India while millions live with empty stomachs, the interpreter, The Lowy Institute, 2018.
- Prasanna Mohanty, Rebooting Economy 56: Why India should follow agricultural development-led industrialisation growth model, Business Today, 2021.https://www.businesstoday.in/opinion/columns/story/why-agricultural-development-led-industrialisation-could-be-a-better-growth-model-for-india-283636-2021-01-06
- Nipun S, The Lewis model of economic development, economic discussions.net, 2021.https://www.economicsdiscussion.net/economic-development/the-lewis-model-of-economic-development/26298
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