Because of continuing capital controls in the core countries during the immediate postwar period, the action in international monetary economics was initially mainly in the periphery, where the new IMF played a leading role. As the market system recovered, academic economics began to take an interest, with Robert Mundell (among others) working to extend the economists’ preferred macroeconomic modelling framework (the so-called IS–LM), to include the balance of payments. In time, the logical endpoint of these academic efforts was revival of the empirically discredited specie-flow model by Harry Johnson and others. Kindleberger’s practitioner wisdom resisted all these academic developments as distraction from real world financial developments.

The previous chapter outlined the evolution of India's policy choices associated with economy-wide national and sector-specific global institutional changes. In particular, new global rules of the game regarding international trade and global competition in the textile and pharmaceutical industries in 1995 overlapped with domestic economic liberalisation underway during the previous years. The subtle but important implications of this interaction of national and global institutional changes are reflected in the epigraph passages from the preamble to India's five-year plans. While the development path put in place in the Eighth Five-Year Plan (1992–1997) to further economic liberalisation was through specialisation (that is, focusing on domestic production in employment-intensive industries while allowing free imports in industries that are not employment-intensive), the path in the Ninth Five-Year Plan (1997–2002) recognised the need for integration with global markets and sought to improve the competitiveness of Indian industry so that it can effectively compete in international markets. Both the textile and pharmaceutical industries belonged to the group of key sectors that would anchor India's development strategy, and, accordingly, industry-specific policies were put in place to help achieve the international competitiveness of the two industries.

The objective of this chapter is to evaluate the evolution of the Indian textile and pharmaceutical industries within the context of the multilevel institutional changes.

As the end of his MIT career approached, Kindleberger took on the challenge of explaining the catastrophic world depression that had been the context of his own intellectual formation. As against current Keynesian and monetarist orthodoxy, he wrote in defense of the conventional wisdom of his youth which, in his view, provided not only a viable explanation of events but even more a viable methodology for doing economics more generally. Comparative economic history would henceforth be his evangelical mission, explicitly so in his first postretirement book Manias, Panics, and Crashes, which became a best-seller.

Namakkal Ramalingam Pillai (1888–1972), a poet and anationalist, was arrested during the CivilDisobedience Movement in 1932 and was incarceratedin a B-class cell in Vellore where many frontlineCongress leaders were also jailed. Bulusu Sambamurtiof Andhra Pradesh was one of them. Sambamurti was awell-groomed person, genteel and energetic, who tooka liking to Ramalingam while the latter was alreadyan admirer of the former. One day, at the prayergathering in the evening, one person sangRamalingam's poems. Sambamurti was impressed withthe lyrics, which as a Telugu speaker he couldn'tunderstand and took help to comprehend fully, askingwhether the poems sung at the prayer were written bySubramanya Bharathi, the famous nationalist poet.People replied that they were written by Ramalingamwho was present there. Sambamurti was delightfullysurprised. After this incident, he starteddiscussing Ramalingam's poems and songs in theirprivate conversations, which were conducted mostlyin English as Sambamurti could somewhat understandTamil but could not speak the language, same asRamalingam who could not speak Telugu, though hecould understand it to some extent. Sambamurti'scell was located next to that of Ramalingam, whichperhaps allowed them to meet often. Ramalingamdescribes one significant conversation that led tohis writing a novel, Malaikkaḷḷaṉ (Thief of theMountains):

The context and tenor of the conversation in the prisonalmost makes it appear like writing a novel in proseis in public cause akin to the service of thenation. Much has been theorized about the intricatelink between nation and narration.

Institutions and institutional change have attracted considerable scholarly interest in numerous disciplines given their primacy as rules of the game in society that structure exchange between various societal actors (for example, Greif 2006; North 1990; Scott 2014). Research has scrutinised the process of institutional change, whether it is narrow or broad in scope, incremental or discontinuous, and exogenously or endogenously determined, among other characteristics (for example, Campbell 2004; Mahoney and Thelan 2010). There is a general agreement among scholars that irrespective of the process, institutional change encompasses shifting the rules of the game and imposes institutional complexity on the actors. Institutional changes emanating from evolving political and economic landscapes within individual countries and pressures from supranational bodies such as the World Trade Organization (WTO), the International Monetary Fund (IMF) and the World Bank have been instrumental in triggering economic reforms and liberalisation programmes of developing economies and their integration into the global economy (Gereffi 2010). Increasing integration into the global economy has transformed the competitive landscapes for developing country firms, thus necessitating organisational transformations to deal with new competitive dynamics.

In the context of a variety of local and global institutional reforms, understanding how indigenous firms in developing economies worldwide respond to challenges presented by a radically changed competitive environment has been the subject of vigorous research in the past two decades (for example, Aulakh and Kotabe 2018; Newman 2000; Malerba and Lee 2021; Peng 2003; Uhlenbruck, Meyer and Hitt 2003; Zahra et al. 2000). The objective of this chapter is to use this body of research and its underlying theoretical approaches to develop an analytical framework through which the global institutional changes of interest in this study and the multilevel national responses (at the level of the state, industries and organisations) in the Indian textile and pharmaceutical industries can be evaluated in subsequent chapters.

The central argument of the book has been that theDravida Munnetra Kazhagam (DMK) accomplished thetask of construction of a people as Dravidian–Tamilthrough or alongside the formations of thepolitical. In borrowing Laclau's formulation ofpopulist reason, we have argued that Tamilfunctioned as the empty signifier that unified thepeople while the divide between Aryan–Dravidian orBrahmin–non- Brahmin functioned as the internalfrontier. We sketched this proposition throughChapters 1 and 2, providing a sum-up at thebeginning of Chapter 3. We will return to this laterto fully expand on its significance and also relateto two previous works on the DMK mobilization byMarguerite Ross Barnett and Narendra Subramanian. Wewill now focus on, in conclusion, our propositionrelated to the formations of the political. In acertain sense, formations of the political have alasting validity and importance that providesstability to the construction of a people. Ourunderstanding of the term “political” and itsformation in Tamil Nadu needs some parsing now.

POLITICAL: PLAY OF IMMANENCE ANDTRANSCENDENCE

In his recent work An Archaeologyof the Political, Elias Jose Palti hassuggested that it was with the separation of thespheres of immanence and transcendence and throughthe play of the two that a historical phase began inwhich regimes of power were organized in what cameto be referred to by the term “political.” He hassketched at least three distinct ages: “the age ofrepresentation” (the seventeenth and eighteenthcenturies), “the age of history” (the nineteenthcentury), and “the age of forms” (the late twentiethcentury). Without going into the details of theseepochs and logic corresponding to each, what weborrow for our own analysis is his formulationsuccinctly expressed in these terms: “The political,as we have seen, is a play ofimmanence/transcendence, and the different regimesof exercise of power we have been analyzing arediverse modes of production of the transcendenceeffect out of immanence, a justice effect” (Palti2017, 143).

Kindleberger’s intellectual formation was in American institutionalism. At Columbia University, the two biggest influences on him were H. Parker Willis and James W. Angell. He learned banking from the former and international economics from the latter, even as he turned away from the policy conservatism of the former and the doomed multilateralism of the latter.

War service completed Kindleberger’s intellectual formation, establishing him as fundamentally an intelligence analyst. First in London as Chief of the Enemy Objectives Unit, then on the Continent as advisor to General Bradley, and then after the war at the State Department working first under William Clayton on the reconstruction of Germany and then under George Marshall on the reconstruction of Europe, Kindleberger’s government service career provides a staffer’s eye view of the dramatic events of war and reconstruction.

It rained that evening, September 18, 1949, at RobinsonPark, Royapuram, Chennai, where the public meetingto announce the founding of the Dravida MunnetraKazhagam (DMK) was held. People never fail tomention the rain whenever the legendary first publicmeeting is remembered. The rain has many valences ina narrative; it is primarily a cathartic device thatepitomizes the emotional surge of a moment. It ishard to imagine a greater moment of a mix of intenseemotions for the people gathered there than thatevening. They were sad, bitter, despondent, angry,hopeful, euphoric, and happy all at the same time.They had parted company with the father figure, theinimitable Periyar E. V. Ramasamy (1879–1973), whohad adamantly refused to listen to their plea fornegotiation over the future of the organization, thefive-year-old Dravidar Kazhagam (DK), molded in 1944from the fragments of the Justice Party, also knownas the South Indian Liberal Federation (founded in1917), and the vibrant group of activists gatheredin the Self-Respect Movement nurtured by Periyar(since 1925).

The public meeting at Robinson Park was the culminationof the deliberations held on September 17 and 18 inseveral rounds. The decision to launch a new partywas first taken by a smaller group of those who wereholding offices in the DK closeted in a room and wasannounced to all those gathered outside. The name ofthe party and a provisional design of the party flagwere decided (the provisional design of thetwo-color flag, black strip on top and red strip atbottom, was later confirmed as the party flag). Thegeneral council, with 133 members, with severalsubcommittees were formed and office bearers wereselected on the 17th. The modus operandi of the newparty was discussed. Following these discussions,the public meeting was held on the 18th in theevening (Tirunāvukkaracu 2017, 325–332).