In the years since the Second World War there have been profound changes in the pattern and dynamics of capitalist development in the metropolitan countries of the West, and in its expansion overseas. Changes in the pattern of colonial relationships have followed the response of metropolitan capitalism to the political revolution in colonial countries—the emergence of governments committed to the mobilization and deployment of substantial amounts of their countries’ resources for ‘economic development’; and the rise of indigenous bourgeoisies. These profound changes also reflect substantial alterations in the organizational structure of metropolitan capitalism itself: especially the rise to pre-eminence of huge self-financing industrial corporations with international ramifications and the relative eclipse or subordination of those financial institutions which mobilized rentier capital.

The old type of colonial investment—in plantations, extractive industries, public utilities, transport, trading and financial enterprises—owned exclusively by metropolitan capital, has (with the exception of oil) declined in relative importance. By contrast, there has been a major growth in investment in manufacturing enterprises, often in partnership with local capital. Such ‘manufacturing’ enterprises generally play a role in production complementary to that of industries located in metropolitan countries. The old pattern still predominates in those countries (there are many in Africa for example) whose domestic economy provides little or no surplus to sustain the new pattern of development. It is in countries such as India, possessing a fairly developed economic base, that the new forms of colonial investment are most advanced. Michael Kidron’s detailed studyfootnote1 of the changes which have taken place in foreign investments in India studies the new pattern. It must therefore be welcomed as an important work which can contribute greatly to an understanding of the New Imperialism.

Kidron has described and documented the far-reaching changes in the operation of foreign capital in India, its organizational forms and its relationship with the Indian bourgeoisie. He has provided the first full and coherent account of the decline of the ‘old-type of foreign capital’, and as an analysis of the current patterns of collaboration between Indian and foreign capital. Kidron’s detailed research confirms my own analysis, undertaken two years ago, based on more limited data.footnote2 But this is not the main reason for my enthusiasm. The fact is that Kidron’s work is the first systematic study of its subject. This is perhaps a sad reflection on the state of the Indian Left, considering not only the talent at its disposal but also the flood of data available in recent years, especially through the Reserve Bank of India’s ‘Surveys’ of foreign capital. The only other significant works in the field (neither of which is included in Kidron’s extensive biliography) are by two Russians, Sofia Melman and V. I. Pavlov; both published in English in 1963 by the Communist Party of India.footnote3

Several of the large (and complacent) conclusions drawn by the Russians are not supported by the more detailed examination of the facts undertaken by Kidron. Having examined the post-independence pattern of distribution of foreign investment in India, they conclude rather simply that ‘it is the Government of India that establishes the terms of drawing in foreign capital and directs its utilization.’ They appear to have attached too much weight to the rhetoric of the Government’s policy statements. Such official stipulations as the rule that there should be at least 51 per cent Indian participation in foreign sponsored ventures, lead them to conclude that, ‘As a rule, it is Indian capital that prevails in the new joint company.’ More arduous examination of the facts reveal such conclusions as superficial and false.