Adam Smith’s Invisible Hand and Kashmir

One of the things I miss during Canadian winters is lazing in the warm afternoon sun on a charpoy in the aangan - courtyard - of my old house in India, munching on peanuts or mooli with neembu and salt. Now when I go to India, the new houses have neither aangans nor charpoys, but I still like to laze around in an easy chair at the porch after a satisfying meal in the afternoon. It was on one such afternoon, when I was enjoying my siesta in the sun last February, that I heard the door bell ring. I saw at the gate a light-skinned man with a sack on his back. I gestured him to come in. He introduced himself as Maqbool Butt, a vendor of Kashmiri shawls. He carried an identity card, which confirmed his credentials as a genuine Kashmiri vendor. Before I could send him away, the women of the house came to the porch and expressed an interest in his wares. Soon, a full-fledged sale exhibition was on, with Mr. Butt displaying all the consummate skills of the travelling salesman that he was.

Indians have an uncanny knack for sniffing out an NRI. Mr. Butt was no exception. As soon as he identified us as the migratory birds from a distant land, he upgraded the product on display. Soon, he was offering to sell us a Shahtoosh shawl. Shahtoosh is a much-prized shawl made from the hair of a rare Tibetan antelope found in the high reaches of the Himalayas. The antelope is on the endangered list and its trade is banned both in India and internationally. Nevertheless, the intrepid salesman offered to sell his “Shahtoosh” to us for Rs. 25,000. The women haggled him down to a price of Rs.8,000. A genuine Shahtoosh, though banned, would be a heck of a bargain even at Rs. 25,000. We were obviously dealing with a fake here. Needless to say, we did not buy the “Shahtoosh”.

The Shahtoosh vendor set me thinking. I had a somewhat different image of the travelling Kashmiri salesman. I remembered from my childhood poor Kashmiri workers coming to my street in Panjab carrying huge saws and axes and offering their services to chop logs of wood to turn them into firewood. They were called haatos. They came down to the plains during winters, as there was no work for them in the mountain valley during that off-season. From the woodcutter to the vendor of fine shawls, the Kashmiri haato had certainly come a long way.

The incident also brought to my mind changes in the relationship between the economy of Kashmir and that of India. Kashmiri merchants have become ubiquitous in all major urban centres of India. I remember that back in the 60s when I was going to the Northern hemisphere, someone suggested that I should look for Kashmiri accessories like fur gloves and hat. The only place I could go for those back then was an emporium run by the Jammu and Kashmir government in an old Kothi in New Delhi. The wares were indifferently displayed by indifferent government employees who seemed to be more interested in their chai and newspaper than in the odd client who walked into their ‘store’.

All this has changed. In Delhi alone, there were two exhibitions being run by Kashmiri merchants during my visit to that city; one of them, in Connaught Place, seemed like it might be a permanent exhibition. There were also quite a few Kashmiri merchants at Dilli Haat, a trendy flea market located in the fashionable South Delhi. In my travels through India, I saw Kashmir emporiums almost everywhere I went, even in small places like Kulu and Manali. Kashmiri merchants are doing a flourishing business everywhere in India and the Kashmiri economy seems to be more integrated with India’s than ever before.

This is the opposite of what was supposed to happen. The insurgency was supposed to cut Kashmir from the rest of India. And it did, in a substantial way. In the pre-insurgency days, Kashmir’s interaction with India was primarily through tourists and the export of fruits, especially apples and cherry, to the Indian market. Indian tourists to Kashmir were lured by its natural beauty, promoted by several Indian films. Tourists bought traditional Kashmiri handcrafts, such as shawls, rugs and paper maché products. Fruits were exported through traditional intermediaries. All this changed after the insurgency. Merchants and tourists, both domestic and foreign, abandoned the valley and headed for alternative destinations, such as Kulu and Manali in the neighbouring Himachal Pradesh. Even the Bollywood producers took their crews and glamourous stars to more distant lands. And with them went the money the tourists and merchants brought.

But then there was an unanticipated response to these developments. Deprived of the source of livelihood, the Kashmiri merchants were forced to look for the alternative. The obvious one was to go where the market was; if the buyers were not willing to come to Kashmir, the merchants had to take their product to where the buyers were. In the process, they discovered that the market potential was a lot bigger than what had been tapped with the government run emporiums and visiting tourists.

The merchant was not the only one who benefited. The tourists and the film producers had not been the only ones who took the flight, so had the state owned banks that reduced their presence in the State when its streets became unsafe. The gap was filled by the small Jammu and Kashmir Bank, which showed itself to be the little bank that could. It succeeded in achieving an almost total monopoly of the state’s banking business, which was flourishing. The very insurgency that was driving others away brought a lot of money into the valley from both militants flushed with legal and illegal flows of money and the spending of the military, para-military and other counter insurgency operations. Flushed with its domestic success, the bank expanded aggressively outside the state and is now the fastest growing bank in India. Half of its customers are now outside Kashmir and it has become a major lender to Indian corporations. Its share price has multiplied six times in just two years.

All in all, it seems that Adam Smith’s invisible hand has taken over Kashmir. Adam Smith famously had said, "As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it."

Whatever the political future of Kashmir, one hopes that these strong economic links will continue.