The Concept of Subsistence
Ashok Mitra
A L O T of analytical effort in
current economic literature
has been claimed by discussions
o n w h a t i s k n o w n a s 'subsistence a g r i c u l t u r e ' .
Y e t looseness a b o u n d s i n t h e use o f t h e
t e r m 'subsistence', a n d one can
scarcely resist the cynical conc l u s i o n t h a t there are as m a n y
definitions of the concept as
t h e r e are people w h o define i t .
A l l o f the f o l l o w i n g definitions,
f o r example, have been either
simultaneously or alternately
used: a u n i t where the bulk of
domestic output is retained for
home consumption; a unit where
the b u l k of domestic consumpt i o n comes f r o m h o m e o u t p u t ;
one i n w h i c h t h e r o l e o f t h e
m a r k e t is either negligible or at
most peripheral; a u n i t w h i c h is
featured by
t h e absence o f
m o n e t i z a t i o n ; etc.
The followi n g p a r a g r a p h s are an exercise
t o c u l l o u t a m o r e o r less clearcut definition f r o m out of the
chaos of these several p r e v a i l ing notions,
marginal productivity of land,
of rising rent and money wagebill.
B u t by n o w all passion is
spent; w i t h the profit rate
s l u m p i n g d o w n t o zero, n o u r g e
is left to continue r a i s i n g surplus and expanding economic
activity.
The economy returns
to t h e level of subsistence.
This is then the remarkable
message of classical analysis:
the b e g i n n i n g and the end are
alike; the
economy Emerges
f r o m subsistence, m a t u r e s , p r o gresses, decays, finally slides
back t o subsistence.
Although
over this period of evolution the
scale a n d c h a r a c t e r o f p r o d u c t i o n change tremendously, the
repetition between the beginning
and the end is provided by the
lack of surplus at both termini.
Ill
T h e absence o f surplus, t h e r e fore, ought to be regarded as
t h e essence of s u b s i s t e n c e .
A
subsistence
economy
is
one
w h i c h j u s t manages t o subsist,
t h a t is, w h e r e w h a t i s p r o d u c e d
II
goes e n t i r e l y f o r i n t e r n a l conL i k e m a n y other categories sumption, and no surplus is
I n t h e case w h e r e t o w h i c h have come to fashion in realized.
r e c e n t a n a l y s i s , t h e c o n c e p t o f t a l o u t p u t does n o t e v e n c o v e r
subsistence too can be suspected the demands f o r depreciation or
to be a refurbishing of an old replacement, the phenomenon is
classical idea.
T w o different one of dissaving. S t i l l , since t h e
parallels f r o m classical econo- e n t i r e o u t p u t i s d r a f t e d f o r conmics come to m i n d .
Thus the sumption, the economy remains
It is also
p r i m i t i v e state of society in of a subsistent nature.
A d a m S m i t h ' s m o d e l h a s c e r - p o s s i b l e t o e n v i s a g e cases f e a t a i n l y t h e d i s t i n c t r i n g o f sub- t u r e d by t h e e m e r g e n c e of a cersistence: labour is employed on t a i n gross surplus, w h i c h h o w l a n d , w h a t is p r o d u c e d goes as ever is b a r e l y sufficient to m e e t
wages a n d is c o n s u m e d ; since t h e needs of a g r o w i n g p o p u l a t h e use o f c a p i t a l i s y e t u n - t i o n a t t h e c u r r e n t level o f l i v k n o w n , there is no accumula- ing. In the j a r g o n of the H a r t i o n ; production is essentially rod-Domar equation, given the
magnitude of the capital-output
f o r subsistence.
A t t h e other extreme, i t i s ratio, t h e surplus is all used up
possible to discover t h e t r a i t s t o m a i n t a i n t h e per capita i n o f subsistence i n t h e R i c a r d i a n come level because of t h e conpopulation
growth.
stationary state where the rate t i n u i n g
of profit has already reached W h e r e t o t a l o u t p u t fails even to
the level of zero a n d there is no y i e l d t h i s surplus necessary f o r
f u r t h e r inclination t o w a r d s accu- t a k i n g care o f the g r o w t h o f
m u l a t i o n and expansion.
I n population, a slow sinking takes
between lies
compressed
t h e p l a c e i n t h e l e v e l o f t h e ecoA subsistence economy
w h o l e h i s t o r y o f c a p i t a l i s t deve- n o m y .
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economies of scale; of f a l l i n g
650
W h i l e it is possible to subsist at
the current level of l i v i n g , a
population
can
also t r a v e l
t h r o u g h a stage of progressive
'immiserisation' so l o n g as the
r o c k - b o t t o m of subsistence is
not reached.
IV
W h a t h a p p e n s t o s u c h a n economy w i t h the superimposition
o f f o r e i g n t r a d e ? T h e r e w i l l be
general recognition t h a t extern a l t r a n s a c t i o n s d o n o t necessarily impair the character of
subsistence.
An economy can
give away a p a r t of its wagegoods and get other types of
wage-goods instead.
No qualitative
t r a n s f o r m a t i o n takes
place w h e n a c o u n t r y , w h i l e rem a i n i n g subsistent, decides t o
e x p o r t 10 per cent of its t o t a l
o u t p u t and get in lieu other
goods a n d services w h i c h too
are taken up f o r consumption
d u r i n g the
current
period.
F o r e i g n trade, therefore, need
not imply the condition of an
emerging surplus.
The utmost
t h a t can be claimed is t h a t ext e r n a l transactions can sometimes help to smoothen out the
r i g i d i t y o f subsistence w i t h o u t
affecting its basic character. I n
instances w h e r e the balance of
t r a d e is not even, t r a d e t r a n sactions can also act as an i n strument for either sharpening
or r e d u c i n g the features of subsistence.
Where a favourable
balance of trade is maintained,
a subsistence e c o n o m y is at the
same t i m e b u i l d i n g up foreign
assets.
This is precisely w h a t
happened in India d u r i n g the
war, w h e n the accumulation of
s t e r l i n g balances coincided w i t h
the prevalence of acute famine
conditions in the country. On
t h e other hand, a subsistence
economy can build up an i m p o r t
surplus too. I f t h i s i m p o r t surplus can be continued over an
appreciable period of time, the
w h e r e w i t h a l n e c e s s a r y f o r sett i n g t h e process o f g r o w t h i n
motion w i l l be provided
from
abroad.
I n t h e case o f a d e f i c i t
e c o n o m y , t h a t i s t o say, a n economy which is going through the
stage of d e t e r i o r a t i n g subsistence, a n i m p o r t surplus s i m i l a r -
M a y 25, 1957
THE
l y can h a l t t h i s process a n d help
m a i n t a i n the economy at least
a t t h e e x i s t i n g level o f subsistence.
V
L e t u s t r y t o see h o w f a r
these e m p i r i c a l correlates of t h e
concept can be traced back in
the field of agriculture.
One definition of subsistence agricult u r e v e r y c o m m o n l y suggested
is t h a t in such an organization
of agriculture the bulk—for
example, 80 per c e n t — o f t o t a l
output is retained for home cons u m p t i o n and o n l y the residue
enters m a r k e t transactions, Can
s u c h a d e f i n i t i o n be defended
f r o m the analytical point of
view? The answer w i l l depend
on the character of disposition
o f the proceeds f r o m
market
dealings.
I f the entire proceeds
of the 20 per cent of aggregate
output sold in the m a r k e t belong
to the category of surplus, the
f a r m can by no means be considered as f e a t u r e d by subsistence characteristics. W h a t e v e r
the f o r m of economic organization, such a h i g h rate of surplus
is the h a l l m a r k of a r a p i d l y progressing economy.
This is so
since, h o w e v e r u n f a v o u r a b l e t h e
value of the capital-output ratio
m a y be, t h e r a t e o f p o p u l a t i o n
g r o w t h is unlikely to be ever so
h i g h as to eat up the advantages of an overall surplus of
t h i s o r d e r . I n t h e c o n t r a r y case,
w h e r e the proceeds f r o m m a r k e t
transactions are m o s t l y utilized
for buying non-farm consumpt i o n articles,
the subsistence
character becomes
immediately prominent.
Thus it may
seem m o r e s a t i s f y i n g t h a t t h e
emphasis while defining the
n o t i o n of subsistence s h o u l d be
not on the proportion of market transactions to total output,
but on the proportion of total
consumption to, again, t o t a l
output, b o t h being expressed i n
t e r m s of the same standard of
value.
T h i s of course i m m e d i a t e l y l i n k s u p w i t h t h e question of surplus.
T h e case w h e r e t h e b u l k o f
h o m e c o n s u m p t i o n comes f r o m
out of the farm output may not
always be unambiguous.
Conceivably, a m a j o r p a r t of the
consumption requirements can
come f r o m outside on account
o f e i t h e r o f t h e f o l l o w i n g reasons: (a) T h e f a r m does n o t
produce as m u c h as t o t a l cons u m p t i o n , i.e., i t i s a d e f i c i t econ o m y a n d subsists o n i m p o r t s ;
and (b) Other types of commodities besides those t h a t are p r o duced on the f a r m are demanded for consumption. There m a y
be progressively deteriorating
subsistence economies w h i c h do
not produce the bulk of their
o w n c o n s u m p t i o n a n d yet, since
the t o t a l i t y of their output is
taken up by consumption, they
r e t a i n t h e subsistence character.
A l s o , as we h a v e seen, a s u b sistence
economy m a y
at the
same t i m e have a h i g h l y developed
f o r e i g n t r a d e sector, so
that most of its consumption
could f l o w i n f r o m outside i n exchange f o r commodities t h a t i t
i t s e l f is able to p r o d u c e .
VI
Thus the only definition of
subsistence l i k e l y to cover a l l
t h e categories is t h e one w h i c h
concentrates on the aspect of
surplus.
It is the measure of
the surplus w h i c h determines
subsistence. T h e u p p e r l i m i t o f
subsistence is reached w h e n t h e
emerging surplus just pays for
depreciation
and - population
growth.
There w i l l be a lower
l i m i t depending upon the spread
between
the current level of
l i v i n g a n d the m i n i m u m possible
level.
What is important is that in
m e a s u r i n g t h e size o f t h e s u r plus b o t h the internal and the
external activities of the f a r m
ought to be taken into account.
It is possible to have a p r o gressively deteriorating standa r d o f subsistence i n t e r n a l l y a n d
at the same t i m e to pile up a
substantial
external
surplus.
F o r example, one can suspect
that much
of
the
resources
which flowed into industry in
m a n y East European countries
in recent years was artificial
s u r p l u s squeezed o u t of a subsistent agriculture, although no
f o r m a l credit was registered in
the latter sector on t h a t account.
I n a l l s u c h cases, a t t e n t i o n
s h o u l d b e g i v e n t o t h e ' n e t ' aspect of the transactions before
deciding w h e t h e r the sector is
subsistent or not.
The above instance however
has to be distinguished f r o m
t h e case w h e r e a n o v e r w h e l m i n g
m a j o r i t y of a population are
660
ECONOMIC W E E K L Y
t r a d i t i o n a l l y a t t h e subsistence
level, w h i l e the rest of the comm u n i t y , consisting of entrepreneurs,
managers and rentiers,
reap a substantial surplus.
It
i s d o u b t f u l w h e t h e r s u c h a sect o r can be termed subsistent
despite t h e preponderance of a
subsistence
population.
For,
w h a t e v e r t h e degree of exploitation, internally there is no new
s i t u a t i o n , a n d the sector, f r o m
the
aggregative
aspect,
is
actually yielding a surplus w h i c h
does n o t
involve any further
netting operations.
Vll
As we have defined the concept, a u n i t is of t h e subsistence
standard if at the upper l i m i t its
realized surplus is b a r e l y able
to
sustain
the
current per
capita
income level
a f t e r accounting for population growth
and depreciation. Thus the level
of
subsistence w i l l v a r y
with
other accompanying conditions.
I n case
of
rapid population
growth,
an apparently high
THE
ECONOMIC
M a y 25, 1957
W E E K L Y
gross surplus rate m a y prove
illusory and the net surplus m a y
be i n s i g n i f i c a n t . T h e same w i l l
be t r u e in instances where capit a l equipment are of an inefficient character and have to be
replaced frequently.
Another point w o r t h mentioning is the a s y m m e t r y t h a t a
deficit e c o n o m y is a subsistence
e c o n o m y w h i l e a s u r p l u s econ o m y is not. A deficit economy
w i l l in the long r u n wither away,
b u t s o l o n g a s i t d o e s n o t d o so,
i t subsists o n its o w n s h r i n k i n g
wherewithal, provided there is
no intervention f r o m outside
d u r i n g the process o f w i t h e r i n g
away.
VIIl
E v e n i n t h e case o f a f a r m ,
distinction can of course be
d r a w n between net surplus and
net profits. A subsistence f a r m ,
i f i t i s n o t deficit, w i l l b e m a k i n g some net profits w h i c h will
be compensation for managerial
and entrepreneurial
functions
performed.
Where household
l a b o u r i s e m p l o y e d , these elements are difficult to isolate and
the net earnings are all j u x t a posed. B u t t h e a n a l y t i c a l p o i n t
to note is t h a t in a subsistence
sector the category of net profits
too is
spent a w a y on current
consumption.
L a s t l y , the concept of subsistence has n o t h i n g t o d o w i t h
t h e degree a n d pace o f m o n e t i zation. The foreign trade component m a y be made up of barter or any other f o r m of real
transactions, but, f r o m the point
of view under investigation, this
i s r e a l l y a n i r r e l e v a n t issue. A n
economy w i l l r e m a i n o f the subsistence t y p e even i f i t sells a l l
its output for money in the mark e t a n d gets other commodities
i n exchange, i f the proceeds o f
t h e aggregate o u t p u t are needed in entirety f o r internal consumption.
On the other hand,
it can shun b o t h money as w e l l
as the m a r k e t , a n d yet pile up a
surplus
in
goods
and thus
possess t h e r e s o u r c e s t o e x p a n d
continuously. This is after all
h o w economic development was
sponsored before money and
market entered the picture.
661
Coaching Underframes
C O A C H I N G
underframes,
hitherto , wholly imported
will
now be manufactured
in
India by as m a n y as five firms
w i t h w h o m orders have been
placed by Indian Railways.
A l l efforts b y the R a i l w a y
Board Development Cell to i n duce m a n u f a c t u r e r s i n I n d i a t o
enter this
field
had till now
produced no results and global
tenders h a d consequently been
invited.
Subsequently,
however,
the
R a i l w a y B o a r d has succeeded
and the five firms who
have
come f o r w a r d have undertaken
to
manufacture
the
entire
pending requirements of underframes.
Orders
have
been
placed f o r 500 b r o a d
gauge,
791 metre gauge and 60 n a r r o w
gauge bogie
coaching underframes.
The G o v e r n m e n t of I n d i a has
decided to release a q u o t a of 2.84
l a k h lbs o f M a d r a s / M y s o r e
silkwaste f o r export up to the end of
September, 1957.