Thursday, April 3, 2014

Gandhian Economics: A Humane Approach

_Gandhian Economics: A Humane Approach_ by Rashmi Sharma
New Delhi: Deep and Deep Publications, 1997
ISBN 81-7100-986-7

(xi) No one's gain should be anybody's loss, financial, physical, moral or spiritual. This is the first brick upon which the edifice of his entire economic philosophy stands.

(24) He was not a theorist; but was primarily an activist. He himself admitted "I am not built for academic writings. Action is my domain. What I understand according to my lights, to be my duty and what comes my way I do."

(26) The centre of his economic thought is man and not the material prosperity or scarcity. He aimed at the development, upliftment and enrichment of human life, rather than a higher standard of living with scant respect for human and social values.

(27) He says, "According to me the economic constitution of India, and for that matter of the world, should be such that no one under it should suffer form the want of food and clothing. In other words, everybody should be able to get sufficient work to enable him to make the two ends meet. And this ideal can be universally realized only if the means of production of the elementary necessaries of life remain in the control of the masses. They should be freely available to all as God's air and water are or ought to be... Their monopolisaton by any country, nation or group of persons would be unjust. The neglect of this simple principle is the cause of the destitution that we witness today not only in this unhappy land but in other parts of the world too."

All economic theories are meant for man. His well-being is the ultimate goal of all of them. Replying to Rabindranath Tagore he said, "To people famishing and idle, the only acceptable form in which God can dare appear is work and the promise of food as wages."

(30) In a speech at Muir College, Economic Society, Allahabad, he said, "By economic progress, I take it, we mean material advancement without limit, and by real progress we mean moral progress, which again is the same thing as progress of the permanent element in us. The subject may therefore be stated thus: Does not moral progress increase in the same proportion as material progress? I know that this is a wider proposition than the one before us. But I venture to think that we always mean the large one even when we lay down the smaller... I venture to think that the scriptures of the world are safer and sounder treatises on the laws of economics than many modern text books. He (Jesus) is himself the greatest economist of his time."

(30-31) "True economics," he argued, "never militates against the highest ethical standard, just as all true ethics to be worth its name must at the same time be also good economics. An economics that inculcates Mammon worship, and enables the strong to amass wealth at the expense of the weak, is the false and dismal science. It spells death. True economics, on the other hand, stands for social justice, it promotes the good of all equally including the weakest, and is indispensable for decent life."

(33) "It is good enough to talk of God whilst we are sitting here after a nice breakfast and looking forward to a nicer luncheon, but how am I to talk to God to the millions who have to go without two meals a day? To them God can only appear as bread and butter."

(35) Such an economist is propagating what king Yayati said long long ago. "Wants can never be satisfied by increasing them." Same as the belief of Gandhi.

(36) "We should not receive any single thing that we do not need," he wrote in "From Yerevada Mandir." "We are not always aware of our real needs and most of us improperly multiply our wants, and thus unconsciously make thieves of ourselves. If we devote, some thought to the subject, we shall find that we can get rid of quite a number of our wants. One who follows the observance of non-stealing will bring about a progressive reduction of his own wants. Much of the distressing poverty in this world has arisen out of breaches of the principles of non-stealing." The profound truth upon which this observance is based is that God never creates more than what is strictly needed for the moment. Therefore, who ever appropriates more than the minimum, that is really necessary for him, is guilty of theft.

Thus he offered his doctrine of non-possession as an indictment of the doctrine of multiplication of wants, fueled by an insatiable propensity for superfluous or conspicuous consumption.

(36-37) "During the days of my education, I had read practically nothing outside textbooks and after I launched into active public life I had very little time for reading... However, I believe I have lost not much because of this enforced restraint. On the contrary, the limited reading may be said to have enabled me thoroughly to digest what I did read. Of these books, the one that brought about an instantaneous and practical transformation in my life was 'Unto This Last.' I translated it later into Gujarati, entitling it 'Sarvodaya'." He further listed three main lessons that he received from this book.

(i) That the good of [the] individual is contained in the good of all.
(ii) That a lawyer's work has the same value as a the barber's in as much as all have the same right of earning their livelihood from their work.
(iii) That a life of labour, i.e. the life of tiller of the soil and the handicraftsman, is [a] life worth living.

(39) Gandhi was of the definite opinion that property was trust. He divided property in two parts; gifts of nature and the product of social living. The gifts of nature include land, mines, natural resources, etc. The second part deals with the man-made property. He believed that all forms of property and human accomplishments were either the gift of nature or the product of social living. As such they belong not to the individual but to the society and therefore should be used for the good of all. Everything belongs to God and was from God, and therefore, it was for His people and not for a particular individual. When an individual had more than his proportionate portion, he becomes the trustee of that portion of God's people." At another place he says, "Supposing I have come by a fair amount of wealth - either by way of legacy, or by the means of trade and industry - I must know that all my wealth does not belong to me; and what belongs to me is the right of an honourable livelihood, no better than that enjoyed by millions of others. The rest of my wealth belongs to the community and must be used for the welfare of the community."

(40) "I would allow a man of talent to earn more. I would not cramp his talent. But the bulk of his greater earnings must be used for the good of the state, just as the income of all earning sons of the father go to the common family fund. They would have their earnings only as trustees... i.e. owners not in their own right but owners, in the right of those whom they have exploited. I will not dictate to them what commission to take, but ask them to take what is fair, e.g. I would ask a man who possesses Rs. 100 to take Rs. 50 and give the other Rs. 50 to the workers. But to him who possesses Rs. 100,000,000 I would perhaps say take one per cent for yourself, so you see that my commission would not be a fixed figure that would result in atrocious injustice."

(41-42) Swadeshi is another fundamental basis of Gandhi's economic philosophy. It defines the relation of the individual to his society and the larger world in terms of socially responsible economic behaviour. It is of great eternal and social significance also. Explaining his views on this, in the Missionary Conference in 1915, he said, "Swadeshi is that spirit within us which restricts us to the use and service of our immediate surroundings to the exclusion of the more remote. Thus, as for religion, in order to satisfy the requirements of the definition, I should serve it by purging it of its defects. In the domain of politics, I should make use of the indigenous institutions and serve them by curing them of their proved defects. In the domain of politics, I should make use of the indigenous institutions and serve them by curing them of their proved defects. In that of economics, I should use only those things that are produced by my immediate neighbours and serve those industries by making them efficient and complete where they might be found wanting." He further clarifies, "In your village you are bound to support your village barber to the exclusion of the finished barber who may come to you from Madras. If you find it necessary that your village barber should reach the attainments of the barber from Madras, you may train him to that. Send him to Madras by all means, if you wish, in order that he may learn his calling. Until you do that you are not justified in going to another barber. That is Swadeshi. So when we find that there are many things that one cannot get in India, we must try to do without them. We may have that frame of mind, you will find a great burden taken off your shoulders."

(43-44) "I think of Swadeshi not as a boycott movement undertaken by way of revenge. I conceive it as a religious principle to be followed by all. I am no economist but I have read some treatises which show that England could easily become a self-sustained country growing all the produce she needs... But India can not live by Lancashire or any other country before she is able to live by herself. And she can live for herself only if she produces and is helped to produce everything for her requirements within her border... Much of the deep poverty of the masses is due to the ruinous departure from Swadeshi in the economic and industrial life. If not an article of commerce had been brought from outside India, she would today be a land flowing with milk and honey."

(44) Sarvodaya is a generic name given to the non-violent social order which Gandhi aimed at. Sarvodaya stands for the emancipation, the uplift and elevation of all, and that all living beings are participants in or portions (amsa) of a super material reality. Hence the food of all living beings which necessarily implies the good of all humanity has to be positively fostered. He repudiates, therefore, the limited gospel of the greatest good of the greatest number.

(46) In Gandhian economics, social equilibrium is an optimum combination of material and moral progress through a progressive movement towards a non-violent society founded on non-exploitative, humanistic and egalitarian society.
NB: maximum versus optimum

(47) Gandhian economics, one can claim, produced just that - a set of welfare criteria for the attainment of a 'feasible social optimum according to some morally impelling welfare functions.'

(49) Gandhi, MK, _Constructive Programme: Its Meaning and Place_ (Ahmedabad, Navajivan Publishing House, 1991)

(57) "The ocean is composed of drops of water; each drop is an entirety, and yet it is a part of the whole; 'the one and the many'. In this ocean of life, we are little drops. My doctrine means that I must share the majority of life in the presence of God. The Sum-total of this life is God."

(58) Gandhi emphasized, "It has been my experience that I am always true from my point of view, and am often wrong from the point of my honest critics. I know that we are both right from our respective points of view. And this knowledge saves me from attributing motives to my opponents or critics." Continuing, he says, "The seven blind men who gave seven different descriptions of the elephant were all right from their respective points of view, and wrong from the point of view of the man who knew the elephant. I very much like this doctrine of the manyness of reality."
NB: Karl Popper and the Open Society

(61) Without self-effort no amount of social ordering will yield any result. As Gandhi says, "In the West, when they talk of amelioration of the lot of the masses, they talk of raising the standard of life... how can an outsider raise the standard when the standard is within everyone of us. We can only strive to increase man's opportunities of realising and fulfilling his duties and of getting nearer to God."

(63) What Gandhi wished to stress was that every act contains its own propaganda and needs no other.

(81) "I have always said that my ideal is that capital and labour should supplement and help each other. They should be a great family living in unity and harmony, capital not only looking to the material welfare of the labourers but their moral welfare also capitalists being trustees for the welfare of the labouring classes under them."

(84) I. Trusteeship provides a means of transforming the present capitalist order of society into an egalitarian one. It gives no quarter to capitalism, but gives the present owning a class a chance of reforming itself. It is based on the faith that human nature is never beyond redemption.

II. It does not recognize any right of ownership of private property except so far as it may be permitted by society for its own welfare.

III. It does not exclude legislative regulation of ownership and the use of wealth.

IV. Thus under state-regulated trusteeship, an individual will not be free to hold or use his weatlh for selfish satisfaction or in disregard of the interests of the society.

V. Just as it proposed to fix a decent minimum living wage, even so a limit should be fixed for a maximum income that would be allowed to any person in a society. The difference between such minimum and maximum incomes should be reasonable and equitable and variable from time to time so much so that the tendency would be towards obliteration of the difference.

VI. Under Gandhian economic order the character of production will be determined by social necessity and not by personal whim or greed.

(84) All the persons-labourers, managerial staff and the owners will be equal share-holders in a trusteeship firm.

(100) Jai Narain, _Economic Thought of Mahatma Gandhi_, (New Delhi, Sehgal Publishers, 1991)

(113) That is why he advocated a need-based economy devoid of any exploitation. The policy must be tuned in favour of the rural classes, the production priorities must cater to the needs of these poor people and they must be provided adequate opportunities both for greater participation in economic activities and for enjoying extended opportunities to raise their income and social status. The slogan of Gandhi 'Back to Villages' has to be viewed in this context as he not only wanted to save millions of rural people from underwork, he sought to provide them self-employment opportunities at the village [level] only. This will exploit local talent and local raw material for better and cheap[er] production.
NB: Cottage industry, global/local crafts market through etsy, eBay, et cetera

(115) He argued, "I do visualise electricity, ship building, iron works, machine making and the like existing side by side with village handicrafts. Hitherto industrialization has been so planned as to destroy the village and village crafts. In the state of the future, it will subserve the villagers and their crafts."

(119) "Independence must begin at the bottom. Thus, every village will be a republic of panchayats having full powers. It follows, therefore, that every village has to be self-sustained and capable of managing its affairs even to the extent of defending itself against the whole world. It will be trained and prepared to perish in the attempt to defend itself against any onslaught from without. Thus, ultimately, it is the individual who is the unit. This does not exclude dependence on and willing help from the neighbours or from [the] world... In this structure composed of innumerable villages, there will be ever-winding, never-ascending circles. Life will not be a pyramid with the apex sustained by the bottom. But it will be an [o]ceanic circle whose centre will be the individual always ready to perish for the village, the latter ready to perish for the circle of villages, till at last the whole becomes one life composed of individuals never aggressive in their arrogance but ever humble, sharing the majesty of oceanic circle of which they are integral units. Therefore, the outermost circumference will not wield power to crush the inner circle but will give strength to all within and derive its own strength from it."

(133) To Gandhi, essential human requirements are food, shelter, clothing, health and individual freedom.

(134) ..."conservative subsistence farming could enable us to maintain out of our own resources all our population even with the present rate of increase for a good long time to come, provided we are prepared to forego for the time being some of the trimmings of progress and to put first things first." He accordingly made the proper disposal of night-soil by composting the foundation of his reconstruction schemes beginning with his Ashram. The erection of trench or pit latrines and scavenging was an essential part of the daily ashram routine and of the apprenticeship which every novice went through.

(134-135) The nature sets limits. It requires a person to contain himself within its capacity. Thus the emphasis is on self-control and limitations of wants. Mechanised industry knows no such limitation. Its law is one of progressive increase. Those who laid down the pattern of India;s ancient culture could not accept the notion that culture increases with the increase in the number of man's wants and their satisfaction.

Gandhi advocated a solution of this problem in the form of wantlessness, meaning thereby that let us voluntarily reduce our wars to a genuine level...

"The mind is a restless bird," observed Gandhi, "The more it gets the more it wants. and still remains unsatisfied... Our ancestors, therefore, set a limit to our indulgence... Our fore-fathers knew that, if we set our hearts after such things, we would become slaves and lose our moral fibre. They, therefore, after due deliberation decided that we should only do what we could with our hands and feet. They saw that our real happiness and health consisted in a proper use of our hands and feet." If we follow this it can conserve a lot of natural resources for us which will be sufficient for generations to come.

(140) To quote him, "The world will live in peace only when the individuals composing it make up their minds to do so." Human beings will have to realize that a way of life that rapidly depletes the power of earth instead of sustaining it piles up more insoluble problems for each succeeding generation can only be called violent. Man's urgent task is to follow a non-violent way of life in economics. It is a concept that needs to be widened out to combat not merely the violence of man against man, but also the violence of man in his dealing with living nature around him and with the limited and finite resources of the earth.

(144) Afterwards, as the political power of the [East India] company increased, they did not want to bring their ships empty from England to India but, instead, to load it with Cargo which would at least pay for the freight charges. It was on this account that the Company's Government here put an excise duty on salt manufactured in India. This enabled the British masters to fill their ships with British Salts and sell it profitably in India to cover the cost of the journey of their ships to India. This was the origin of the salt tax. That is why Gandhi called this tax sinful. It killed the flourishing salt industry of India.

(145) Gandhi thought that the only industry which could be universal was the textile industry. This was also the biggest item of import from England. It had made for prosperity not only of Manchester but also fo Great Britain. For centuries there had been a tradition in India of hand spinning and hand weaving. The former had been given up in many parts of the manufacture in Indian mills. But weaving was yet common in progressively wiped out in competition with Indigenous and foreign mill cloth. Gandhi considered spinning and weaving to be the industries which could best provide subsidiary work to the agricultural masses of India. Therefore, he worked for the revival of this industry. Gandhi also believed that if India could organise this industry so as to make the import of cloth from abroad superfluous, it would greatly add not only to its economic but also its social and political strength.
NB: Luddites, cottage industry, handcrafts

(147) What was meant by effective control? What industry could satisfy Gandhi as being Indian? "An Industry to be Indian must be demonstrably in the interest of the masses. It must be manned by Indians both skilled and unskilled. Its capital and machinery should be Indian and the labour employed should have a living wage and be comfortably housed, while the welfare of the children of the labourers should be guaranteed by the employers. This is the ideal definition.

(149-150) Gandhi defined Swadeshi as a principle which is broken when one professes to serve those who are more remote in preference to those who are near. A teaching that is shared by all mankind, states Gandhi, and one that is common to all religions alike, is that one must be kind and attentive to one's neighbours. The duty of helping one's neighbours is the core of the ethics of Swadeshi.

(153) Gandhi's doctrine that buying local products was a moral imperative had protectionist implications, but Gandhi had no particular allegiance to free trade. In response to an interviewer's comment that no country was free from foreign competition, Gandhi observed that on contrary each sovereign nation tried to protect its infant industries by bounties and tariffs and pointed to the sugar industry in Germany which had developed under a prohibitive tariff-wall. However, the exercise of ethical preference by consumer was, he claimed, a better solution because it was voluntary and hence was in correspondence with the principle of non-violence and was more likely to benefit the poor. Consumption behaviour that corresponded to the principle of ethical preferences, far from destroying the economic benefits flowing from foreign trade would conduce to the healthy growth of nations and so promote both material and moral progress.

(155) The test of Swadeshi was not the universality of the use of an article which goes under the name of Swadeshi but the universality of participation in the production or manufacturing of such articles. Judged by this test spinning had a potential unmatched by other contenders.

(156-158) I. An individual a la consumer, will reduce one's wants. In reducing one's wants, the utility function will depend upon the commodities that are, or can be produced locally by neighbours. In other words, one's utility function will not be made up of commodities imported in their entirety. In urban areas, particularly in developing countries, the utility functions of the affluent members of the society is entirely made up of important commodities. Such a utility function is unswadeshi since it denies the local producers the necessary means to produce commodities and thereby earn a livelihood for themselves.

II. Not only will the consumer redesign his or her utility function such that it is made up of commodities produced, or producible, in the neighbourhood, but also the consumer will make an effort to obtain these commodities from the neighbourhood itself. In other words, the consumer will prefer the commodities produced by the immediate neighbour to the commodities produced by a distant neighbour except when either the immediate neighbour does not produce these goods from a distant neighbour.

III. The consumer will cooperate with the producer neighbour in the process of improving the efficiency of production. This translates into the idea that the utility function not only contains the commodities produced in the neighbourhood but also a variable reflecting cooperation with the producer. In this sense the consumer and producer do not generate antagonistic relationships; such as in the dictum that consumer is sovereign and the producer the willing slave. On the contrary, the consumer and the producer are jointly involved in a cooperative effort.

IV. Translated in economic language swadeshi involves two shifts: an upward sift in the demand curve and a downward shift in the cost curve for a commodity producer in the neighbourhood/locality. Both these shifts take place simultaneously. The effect of these two shifts is obvious. It ensures that the production of the needed good producible in the neighbourhood is profitable and hence feasible. Swadeshi, thus, is opposite to the trend in the last fifty years where the demand curve has been shifting downwards and the cost curve upwards. This was exactly the policy of British colonialism in India. The people were encouraged to consume goods produced in England and high taxes were levied on the producer in India of competing goods. Neo-colonialism is also operating through this mechanism. As a result of these two movements, the village industries have become uneconomic and eventually have gone out of production.

(168) Yet as long as Khadi is produced by labour which would otherwise do nothing at all, it is, for the economy as a whole, the cheapest cloth of all - a fact very much appreciated by the father of the nation and which we are ignoring. We will have to pay a very heavy price for it.

(174) If the estimates of community and voluntary services are included in the calculations of GNP, India would rank much higher. But economists are uncomfortable with consideration of family and community sentiments and pay no regard to culture, craftsmanship and tradition. An underlying objective of the present Western-oriented model of economic enrichment, hidden from even some local enthusiasts, seems to eradicate all values that can not be exploited monetarily.

(181) But in this scheme of things the accent is not on antyodaya (the welfare of the lowliest and the lost).

(189) Actually he believed that a blind pursuit of economic abundance through accumulation, competition and technological innovation would lead to economic aggression, exploitation and violence in the society. This led him to denounce the conventional economics.

(1 90) His economics did not accept Robbins neutrality to normative and moral values, nor did it agree with Adam Smith's emphasis on wealth nor did it accept the Marxian concept of class conflict. He cherished a new value, ie the human value on which he based his economic approach.

(191) He wanted to elevate modern economic philosophy from is materialistic base to a higher spiritual plane where human actions were motivated by social objectives rather than individualistic and self-considerations.

(201) Kumarappa, JC, _Economy of Permanence_, Varanasi, Sarva Seva Sangh Prakashan, 1984

(204) Sethi, JD, _International Economic Disorder: A Theory of Economic Darwinism and a Gandhian Solution_, New Delhi, Vikas Publishing House Pvy Ltd, 1992

More notes on books about Gandhian economics:

Sarvodaya, Swaraj, and Swadeshi

Foundations of Gandhian Economics

Gandhi’s Economic Thought

Inclusive Economics:  Gandhian Method and Contemporary Policy

Essays in Gandhian Economics

Economy of Permanence

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