“And our ears have been empty since then” – Gold Ownership and Changing Work Vulnerability in the Informal Silk Reeling Economy of Post-Liberalisation South India

By IMTFI Researcher Nithya Joseph

In my proposal to IMTFI I explained that I planned to collect life stories of stakeholders in the silk industry, paying particular attention to gold ownership as a way to understand the impact of economic liberalisation on work vulnerability in the sector, in the context of historic trends. I chose to trace gold because it is an important store of value and a material valued in multiple ways in India, and so it is inevitably connected to everyday financial and social practices. I thought gold stories would allow a way of hearing about the impact of liberalisation that is embedded in the everyday life of the narrator, indicating how finances relate to social affiliations – caste, class, religion, friendship networks – that are crucial to understanding how the informal economy in India works. 

Photo Credit: Nithya Joseph

My idea: that stories of gold ownership would provide insight into the domestic, reproductive sphere of stakeholders in the industry complementary to the study of the politics of production in the sector. I had in fact underestimated the importance of the ways in which gold stories can be directly related to the histories of firms and institutions.

As I began research in the silk-reeling economy I found the semantics of gold ownership not only indicative of the impact of liberalisation on household finances, but also of changes in production that were directly related to changes in the value of gold holdings. 

Gold as Productive and Reproductive Capital in the Silk Reeling Sub-Sector

I began interviews in a town where over a thousand home-based units are engaged in silk reeling, worked by labour and entrepreneurs from marginalised Muslim and Dalit groups. Silk reeling has historically been highly volatile and particularly risky because it requires expensive raw materials but has low profit margins.

Photo Credit: Nithya Joseph

Narratives gathered in my study describe how surpluses from silk production and savings from wages to labour are invested (often mandated by social norms) in gold, and how gold is divested, providing an important source of capital for the silk industry. Gold is used by both labour and capital to manage unusual expenses, but also often for subsistence. I began to realize that though the use of gold as a source of productive capital is not unusual, the scarcity of capital in this sector makes the reliance on gold particularly explicit.

People described how wedding gold had been mortgaged to establish a new production unit or to provide working capital for an existing unit. A woman in her thirties explained: 

“Soon after my marriage seventeen years ago my husband sold my thaali (wedding necklace) for capital to start a hand charka unit. He made profits and bought it back, but then later when I had my daughter we had to keep her in the incubator for ten days, so we sold it again.” 

She joked that silk-reelers and pawnshop owners know each other well because reelers are constantly mortgaging any gold they own to buy raw materials as well. 

Gold and Liberalisation 

Stories of gold ownership showed the particular ways in which asset holdings of raw silk producers have been impacted by the opening of the market to Chinese silk yarn in 2001, which led to a crash in demand for silk produced in the town. The correspondence between changes in gold holdings and family financial circumstances following liberalisation points to ways in which gold holdings have influenced an individual’s ability to find work in less precarious conditions and/or to accumulate a surplus from 2001 to the present in a context of fluctuating regulations on silk imports. 

Photo Credit: Nithya Joseph

An elderly woman explained that her family was in severe debt after domestic prices crashed following the entry of Chinese silk into the market because they had bought expensive cocoons before the prices fell and couldn’t sell the silk they produced. “My son took all my gold and my daughter-in-law’s gold and tied it in a knot and gave it to the moneylender to whom he owed money – and our ears have been empty since then,” she said, emphasizing that they still haven’t recovered from the financial shock. 

The peak in gold rates in 2008, which saw prices rise to three times the 2001 prices and corresponded with the world financial crisis, has meant that stocks of wealth held as gold have multiplied in value. Individuals who held gold at the time of the peak have larger asset holdings while those who lost gold struggle to acquire it at current prices.

One employer who made losses when the market crashed, and who worked as labour for some time before now running his own unit with family labour, complained bitterly:

“I sold the earrings my wife's family gave her in 1996 when the prices were so low. I got seven thousand for them - and now they'd be worth more than one lakh (one hundred thousand). I went the other day to see if I could buy a tiny pair of earrings for my older daughter - nowhere as big as my wife's - and they asked for forty two thousand!”

Producers like him who mortgaged their gold and couldn't recover it during the period of dramatic raw silk price falls immediately following liberalisation now struggle both to run their production units—in which they work themselves—and to buy gold at the current prices, even for social necessities like the customary pair of earrings for their daughters’ marriages. On the other hand, those who were able to hold gold through that period have seen the value of their assets multiply and this seems to have contributed to their ability to sustain production, hold onto hired labour by offering large loans as 'advances', and invest in the education of their children. 

Another narrator told how her family sold their hand charka unit before her daughter’s marriage in the 1990s, and went to work as labour in someone else’s unit. Later they invested in a semi-automatic unit using the gold her daughter-in-law brought to the family. They now run a profitable factory and have been able to replace the gold they sold earlier. 

Photo Credit: Nithya Joseph

I saw a similar diversity of impact on firm employees, where some people managed to hold gold through this volatile period of employment without incurring unmanageable debt. This was possible because they had jobs throughout this period, had employers who were willing and able to loan them money on good terms, or had other assets or family support. Some individuals have been able to acquire gold because they used advances from employers or microfinance loans strategically, or simply because they have more sons than daughters. Individuals have been able to make productive investments with this gold (like investments in children's education), which sometimes free them from the need to work in silk units. Some individuals were even able to use this gold to start silk-reeling businesses of their own. Others who have been unable to hold their gold due to lack of social and financial capital, or because of large expenditures on healthcare or dowries, find it much harder to make productive investments with their earnings and with borrowings, and are more vulnerable as employees in debt-based contracts.

Scholars studying the Indian economy have argued that liberalisation has deepened income inequality despite increases in the rate of economic growth (Deaton and Dreze 2009). As my study shows, tracing gold ownership offers insight into the mechanisms that contributed to widening income gaps in this particular case, highlighting how changes in levels of productive and reproductive capital have interacted with each other. A thorough map of gold ownership, as this case suggests, could provide a way of understanding changes in accumulation patterns in other sectors of the Indian economy over time. 


References

Deaton, A and J Drèze (2009): “Food and Nutrition in India: Facts and Interpretations”, Economic & Political Weekly, 14 February. https://www.princeton.edu/~deaton/downloads/Food_and_Nutrition_in_India_Facts_and_Interpretations.pdf

Click here to see Nithya Joseph's Final Report Gold-based Spectrums in a South Indian Silk Producing Hub: Relating continuums of accumulation, vulnerability, and wellbeing.