India

For the study of real wages in India, I rely on evidence and sources used in the debate on long-run living standards that appeared in the Indian Economic and Social History Review in the 1970s.⁵ The discussion ranged from real incomes to agricultural productivity to demographic indicators.

The Ain-i Akbari reports the prices of all of the commodities shown in Table 5.1, so it is straightforward to compare the price levels in India in 1595 to Europe at various dates. The chosen years are 1500-9, 1600-19, and 1750-9; that is, wages and prices in each European city in those years are compared to Indian wages and prices in 1595. Obviously, it would be desirable to have Indian prices for the same dates, but that evidence is not available. The values for 1500-9 show the European situation before the price revolution and at the real wage peak of the fifteenth century for most places. Averages for 1600-19 show European wages at the end of the price revolution, while values for 1750-9 do the same for the eve of the Industrial Revolution. Table 5.2 shows comparisons between London, Oxford, Amsterdam, Valencia, Vienna, and northern Italy.

Even before the price revolution, wages and prices in Europe exceeded those in India. The Italian price level in 1500, for instance, was triple that of India in 1595.

Table 5.2 European wages relative to Indian in 1595

Source.

In 1600—19, after the European inflation, the differential widened to almost 6 to 1. It is no wonder that European explorers found many good buys in the Indies or that commodities flowed from East to West with the trade being balanced by silver flows from Europe to Asia.

It was a similar story with wages. Indian wages in 1595 were a third or a half of European wages in 1500 when both are expressed in grams of silver per day. Comparisons around 1600 show even larger differences. The low silver wages noted in the eighteenth century were long-standing.

Table 5.2 compares European real wages in the years shown to Indian real wages in 1595. In the table, the Indian real wage is set equal to 1.00. Real wages were high and reasonably uniform across Europe in 1500—9 and fell everywhere except Italy in the sixteenth century. The Italian decline happened in the fifteenth century. The drop was least in London and Amsterdam. In the seventeenth and eighteenth centuries, there was little change in real wages in Valencia, Vienna, or Strasbourg. In England and the Low Countries, on the other hand, wages rebounded. Table 5.2 shows the same divergence in living standards as was shown by Figure 5.1.

Since the wages in Table 5.2 are indexed with respect to Indian wages in 1595, it also shows European living standards relative to Indian living standards at the end of the sixteenth century. The high water mark of European wages in the fifteenth century exceeded the Indian level in 1595. Population growth in Europe in the sixteenth century pushed European wages below Indian wages except for the few booming cities of the northwest. Skilled workers did particularly well in India since skilled wages there were twice that of unskilled wages, while the premium was only about 50% in Europe and Japan. Unskilled workers in south and central Europe earned about the same real income as their counterparts in India, while skilled workers did better in India than in south or central Europe.

Table 5.3 Indian standards of living, 1595 (in grams of silver) and 1961 (in rupees)

Source.

India, while the earnings of skilled workers were a toss-up. These results confirm that Parthasarathi's findings for English weavers were not limited to that group.

What happened to Indian living standards in the next four centuries? The contributors to the standard of living debate did not compute conventional real wage indices. Instead, they calculated how much of each good could be purchased if all of the wage were spent on it. Results for 1595 were compared to those for c. 1960. The conclusion was that workers' living standards declined over these four centuries.

This pessimistic conclusion is confirmed with the real wage framework utilized here (Table 5.3). The basket of goods cost 73.5 g of silver in 1595 and 277.3 rupees in 1961. The relative difference is 3.77 (=277.3/73.5). Over the same period, the wage of an unskilled worker changed from 0.83 g of silver to 2.4 rupees, that is, by a factor of 2.89 (=2.4/ 0.83). The implication is that the real wage fell by 23.3% (1.028=2.89/3.77) in almost four centuries. This finding confirms Desai's pessimism.

3.3