Inclusive Economics: Gandhian Method and Contemporary Policy

_Inclusive Economics:  Gandhian Method and Contemporary Policy_ by Narendar Pani

New Delhi:  Sage Publications, 2001

ISBN0-7619-9580-3

(30)  For instance, Bhabatosh Datta [Indian Economic Thought:  Twentieth Century Perspectives] outlined the 'basic principles' of the Gandhian economic programme to be:

...first, avoidance of mechanisation and encouragement of cottage industries...;  second, improvement of rural small scale agriculture;  third, making the village community as much self-sufficient and self-reliant as practicable;  fourth, decentralisation of the administrative and economic structure;  fifth, reducing income inequalities, by raising the income level among the poor and by changing the attitude and motivation of the rich;  and sixth, ensuring that capitalists and big businessmen serve as 'trustees' for the whole community.

(32)  [Kenneth] Boulding, for instance, contended that 'the culture of the scientific community is profoundly Gandhian.  It is based quite fundamentally on the principle that people should be persuaded by evidence and never by threat.  The extraordinary success of science in expanding human knowledge is a direct consequence of this principle.'

(33)  Even when Gandhi's ideas are being compared to other thinkers, like Popper, the focus will only be on their methods of understanding society.

NB:  Soros as a follower of Popper

(36)  The way to be liberated from this cycle of birth and death was 'to do good deeds, to have compassion for all living things, and to live in truth'.  Given this underlying faith, it is useful to begin our exploration of the Gandhian method with his concept of action.

(37)  'Knowledge, the object of knowledge, and the knower compose the threefold urge to action;  the means, the action and doer compose the threefold sum of action' (Bhagvadgita, Chapter XVIII)

(39)  In Gandhi's words, 'There is no difference between means and ends'. 

(40)  As Gandhi put it:  'fundamental rights can only be those rights the exercise of which is not only in the interest of the citizen but that of the whole world'.  Society would then work towards protecting these rights.  It is important to stress here that the role that society plays cannot be played by the state alone.  Gandhi was, in fact, sceptical about how much the state could achieve on its own.  The onus of protecting rights then falls primarily upon the individuals who together form society.  The protection of rights is then the duty of individuals.  And if individuals consistently fail to perform their duty towards the protection of a right, that right would automatically wither away.  In Gandhi's words, '...all rights emanate from duties - if there is no duty, there is no right either'.  'The man who neglects his duty and cares only to safeguard his rights does not know that rights that do not spring from duties cannot be safeguarded.'

(40-41)  Similarly, the right to a completely free market would be best protected if individuals did their duty of ensuring that markets did not destroy society.  If markets are allowed to destroy society, the right to a free market will necessarily be challenged.  Every time a duty is not performed, it erodes the ability of society to protect the corresponding right.

(42)  In Gandhi's words:  'There is no such thing as absolute morality for all times.  But there is a relative morality which is absolute enough for [the] imperfect mortals that we are.'

(42-43)  Gandhi:  I will give you a talisman.  Whenever you are in doubt or when the self becomes too much with you, try the following expedient:  Recall the face of the poorest and the most helpless man whom you may have seen and ask yourself whether the step you contemplate is going to be of any use to him.  Will he be able to gain anything by it?  Will it restore him to a control over his own life and destiny?  In other words, will it lead to ... self-rule for the hungry and also spiritually starved millions of our countrymen?  Then you will find your doubts and your self melting away.'

(44-45)  In Gandhi's words:  'Whether an act is moral or otherwise depends upon the intention of the doer.  Two men may have done exactly the same thing; but the act of one may be moral, and that of the other to the contrary.  Take, for instance, a man who out of great pity feeds the poor and another who does the same, but with the motive of winning prestige or with some such selfish end.  Though the action is the same, the act of the one is moral and that of the other non-moral'.  In addition, it was not 'enough for a moral act to have been done with a good intention, but it should have been done without compulsion...  There is no morality in my living a simple and unpretentious life if I have not the means to live otherwise'.  It is the purity of intention combined with the sacrifice involved that provides strength to the moral idea as a means of convincing  others.  

(49)  The severity of the conditions on the person seeking knowledge has contributed to the Gandhian perspective being treated as an idealistic one.  Few, if any, living in a modern society will be willing, or even able, to meet the stringent conditions that Gandhi lays down for the ideal person seeking knowledge.  But the critical element here is that Gandhi was only defining the ideal.  And, as he was fond of pointing out, the ideal could never be realised.  The persons seeking knowledge woudl then necessarily be less than the ideal.

(52)  In the words of the Gita:

Those who, with the eyes of knowledge, thus perceive the distinction between the Field and the knower of the Field,... they attain to Supreme.

NB:  OODA [Observation Orientation Decision Action] Loop of John Boyd

...It is thus essential to include as many elements as possible in the search for knowledge.  It is this inclusiveness that is elaborated in the Gita's concept of the field:

The great elements, Individuation, Reason, the Unmanifest, the ten senses, and the one (mind), and the five spheres of the senses;  Desire, dislike, pleasure, pain, association, consciousness, cohesion - this, in sum, is what is called the Field and its modifications.

(53)  For Gandhi absolute truth was but an ideal.  And like all ideals, absolute truth could not be realised.  'Euclid has defined a straight line as having no breadth, but no one has yet succeeded in drawing such a line and no one will.  Still we can progress in geometry only by postulating such a line.  This is true of every ideal'.

(54)  As Gandhi saw it, 'Faith has no place in a sphere in which we can exercise our reason.  Faith has meaning only in relation to what is above reason.'

(65-66)  ...'ultimately it is the individual who is the unit';  'if the individual ceases to count, what is left of society?'.  The focus of policy making thus had to be on the final consequences for individuals.

But the individual is not an island.  He or she interacts with other individuals in a society.  As Gandhi put it, 'Love, kindness, generosity and other qualities can be manifested only in relation to others'....  'Unrestricted individualism is the law of the beast of the jungle...  Willing submission to social restraint for the sake of the well-being of the whole society enriches both the individual and the society of which one is a member'.

NB:  Margaret Thatcher:  "...there's no such thing as society. There are individual men and women and there are families."

(67)  Again, rather than arguing that a classless society was possible, he argued for cooperation between classes.  The Gandhian method's focus on the individual thus does not imply that other groups do not exist, or even that they should not exist.  All that the Gandhian method would like to see is that the individual is not treated as a faceless entity in a group...

For consensus to be a practical instrument, it has to be used even when there is a conflict.  In other words, consensus has to also be a means of resoving a conflict.  As this consensus is not based on unanimity of views, it has to involve a compromise.  The details of such a compromise would be worked out through a process of bargaining.  And in this bargaining process each individual would be able to use moral pressure.  This view of bargained consensus is reflected in Gandhi's insistence that 'non-co-operation... is a prelude to co-operation'.

(68)  First, he ruled out the violent disruption of the bargaining process by emphasising non-violence.  Non-violence had to be the norm not just in the physical sense, but also in the realm of the intellectual.  There had to be a willingness to listen to alternative points of view.  Tolerance to alternative points of view and non-violence are thus essential parts of the Gandhian method.  Any compromise on this score would lead to the bargaining process becoming socially disruptive.  A deeply divided and angry society would make bargaining impossible.  The Gandhian method would then not be in a position to complete even the first step of identifying the desired consequences for a society.

The second measure to reduce the possibility of an unfair bargained consensus is the empowerment of the weaker groups.  

(69)  Gandhi did not believe that merely increasing the availability of commodities would be able to satisfy human wants.  As he saw it, 'The mind is a restless bird;  the more it gets the more it wants. and still remains unsatisfied'.  Satisfaction, therefore, is dependent not just on increasing the availability of commodities, but also on ensuring that the individuals' demands are within achievable limits.

(70)  Those who are oppressed today may be empowered tomorrow and become the new oppressors the day after.  The third essential requirement for effective bargaining in the Gandhian method is thus the creation of a method of fairness.

(71)  Gandhi argued that 'workers instead of regarding themselves as enemies of the rich, or regarding the rich as their natural enemies, should hold their labour in trust for those who are in need of it'.

This concept of Trusteeship has two distinct dimensions to it.  The first is the definition of fairness that is implied in the concept, and the second the question of its practicality'.

(73)  In 1916, Gandhi announced, 'After much thinking I have arrived at a definition of swadeshi that perhaps best illustrates my meaning.  Swadeshi is that spirit in us which restricts us to the use and service of our immediate surroundings to the exclusion of the more remote'.

(80-81)  The ideal knower then faces the difficult challenge of not being attached to the consequences of the action based on the knowledge he generates, while at the same time being able to identify with the subject of his knowledge.  In this task it would help if the knower recognises that the two attributes are not, strictly speaking, in direct conflict with each other.  Non-attachment relates to the consequences of an action, while participant observation helps in improving the understanding of a particular situation.  The skill of the knower in making this distinction in a real life situation will determine the quality of the subjective components of his or her knowledge.

In dealing with the objective elements of knowledge, the Gandhian method is guided by its inclusiveness.  The method militates against reducing any situation to a single grand theory.  Instead, it seeks to put together all the objective knowledge available at a point of time to develop a comprehensive picture of a particular economic situation.  This would involve piecing together a number of economic models.  The method, therefore, does not presume that models that may have meerged from different perceptions of the same situation are mutually exclusive.  It is open to the possibility of models that focus on different factors having a role to play in understanding the same situation.

(82)  The Gandhian method does not also believe that the state and the market are the only instruments of intervention in the economy.  Gandhi was particularly fond of using a direct appeal to the individual as an instrument of intervention in the economy.  He often sought to change economic trends by getting individuals to change their economic behavior.

(101)  By explicitly ruling out a reliance on any grand theory, the method makes it clear that no single model can claim to be an approximation to reality.  There is instead a larger analysis with a focus on consequences.  This focus makes it imperative that all the factors that influence the consequences, directly or indirectly, are taken into account.  Indeed, omitting factors from an analysis, even if they were relatively minor, would be treated as a serous shortcoming of an analysis based on the Gandhian method.  The method would also allow for the significance of each factor to vary across different situations.  The required consistency is to be found in the predefined morality, the focus on consequentialism and the goodness of the actions in themselves.

(115)  In contrast, the Gandhian method deals squarely with the methodological issues that are thrown up by subjectivity.  Indeed, the most striking aspect of the Gandhian method's approach to subjectivity is that it does not seek to reduce it.  It recognises that knowledge has both its subjective and objective dimensions, and both dimensions must be understood.  While it recognises that subjectivity could lead to bias, it does not believe the focus of the Gandhian method is on improving the quality of subjective judgements.  A biased judgment would then call for improvement in the use of subjectivity rather than believing that the role played by subjective judgements can be wished away.

(120-121)  With the Gandhian method being based on the concept of knowledge in the Bhagvadgita, there is always an awareness of the role of interpretation.  Since knowledge in the Gita is defined in terms of its specific elements, knowledge of the whole of the parts is itself influenced by knowledge of the whole.  There is thus a recognition of the need to address the hermeneutical circle, where interpreting a text requires pre-knowledge of the text.  This circle is, however, not as much of a constraint for Gandhi as it would be for those seeking objectivity.  For those seeking objectivity the circle would have to be broken so as to arrive at the absolute objective truth.  Gandhi, on the other hand, believed that the absolute truth was an ideal towards which we could work but which would never be attained.  And he recognised the role of subjectivity when working with relative truth.  As such he only needed to enter the hermeneutical circle and his knowledge would keep growing with the knowledge of the parts improving his knowledge of the whole, which would in turn improve his knowledge of the parts.  This approach is consistent with the view of Heidegger that what is decisive is not to get out of the hermeneutical circle but to come into it the right way.

For Gandhi, the right way to enter the hermeneutical circle was to seek to distinguish between the essential and the non-essential.  As this ability would vary from person to person and over time, interpretations of the same situation could vary.

(122-124)  As the Gandhian method opposes the reduction of reality into a single model, its method of intervention in the economy is necessarily more pluralistic.  Its focus on consequences makes it open to any instrument that is available at a point of time to achieve a particular consequence.  Its inclusiveness implies that the analysis cannot be restricted to a few key factors, no matter how important they may be.  As a corollary, the intervention in the economy cannot be through only a few select factors.  And since the Gandhian method deals with a multiplicity of units of analysis, the intervention in the economy too would have to be at different levels of aggregation.  In the Gandhian method, the system of regulation and policy implementation would operate at a multiplicity of levels, beginning with the local and going on to higher degrees of aggregation right up to the global.  The movement from a lower degree of aggregation to a higher one would only be justified when the more decentralised unit cannot, for whatever reason, operate effectively.  The Gandhian mechanism for intervention in the economy would then not be just a single macroeconomic agency.  Instead, it would be a variety of agencies working together to develop as inclusive a picture of the economy as possible.  The specific agencies that need to come together would vary from one desired consequence to another.  The efficient utilisation of water might call for a group of agencies related to that river basin, while the efficient utilisation of power might call for a group of agencies that includes representatives of all the users of power.

The main advantage of such a pluralistic, flexible method of policy implementation is that it increase the instruments available to a policy maker.  He does not have to rely on the market or the government machinery alone to intervene in the economy.  There could be collective action to achieve a specific economic objective.  Gandhi used his movement against foreign cloths as, among other things, a means of changing the conditions faced by Indian cloth manufacturers.  In a more modern context too collective action has had some success in influencing demand patterns.  Environmentalists have influenced a variety of economic factors including the fuel consumption of automobiles.  But such changes have often been brought about through external pressure on policy makers.  In the Gandhian method these pressures would be internalised into the mechanism of formulating and implementing policy.  Groups such as the environmentalists would be an integral part of the process of formulating and implementing policy.  This would serve to make these pressure groups more aware of the factors influencing others in the policy making process.  Environmentalists, for instance, would be forced to also address factors other than the environment.  And if the pressure groups do not get bureaucratised, they will provide policy makers with new instruments of policy implementation, such as collective action.

If this pluralism of policy instruments is not to lead to complete anarchy it is essential that policy makers are very sensitive to unintended consequences.  Since the Gandhian method also recognises the fallibility of all knowledge, the implementation agency must be in a position to change course at the first sight of a policy developing unintended adverse consequences.  A reform programme based on the Gandhian method would then begin gradually, with an extensive monitoring of unintended consequences.  It is only when the unintended consequences are manageable and there is sufficient evidence of the measures leading to the desired consequences, that the the momentum of the reform will be speeded up.  The sensitivity to the fallibility of policy will also ensure that the focus will be on first alleviating the more extreme pain of a crisis, if need be through short term measures.  And once the economy is in a position to absorb the shocks of unintended consequences, the necessary systemic changes will be brought about.  The mechanism to implement a policy would thus be sensitive both to the need to reduce the possibility of error as well as the need to reduce the undesirable consequences of an error.

(144-145)  In the Gandhian framework it is the method that is important, and not any ideological theory.  The focus is on consequences rather than any specific theories.  The Gandhian method would be open to consider alternative theories to achieve a particular consequence, if one set of theories fails.  there cannot then be a commitment to any specific ideological theory.  Moreover, the tendency to treat most problems as a choice between the market and the state goes against the inclusiveness of the Gandhian method.  The market and the state are just two of the many instruments available to intervene in the economy.  For instance, the intervention in the economy could occur through social institutions.  the activities of a religious institution, such as opening schools, could very well influence the economy of a region [Mondragon cooperative].  Social institutions could also influence the social behaviour of an individual.  And since the Gandhian method focuses on the consequences to an individual in a local society, these influences could, at times, be very much more important than either the state or the market.  This would be particularly true of remote, say tribal, economies where neither the state nor the market has penetrated.  But even in more modern economies there are dimensions of economic behaviour that are influenced by institutions other than the state or the market.  The attitude to specific ethnic groups, for instance could well determine the role they play in the economy [untouchables, Romany peoples].  It is for this reason that Gandhi remained largely outside the capitalism-versus-socialism debate that dominated global thinking in his time.

(175)  The first step in building a Gandhian alternative is to decide what should be the objective of the entire exercise.

(176)  In the Gandhian method, on the other hand, the focus is on the individual in the context of the local economy.  All measures are chosen on the basis of the impact on the individual within the local economy.  The removal of poverty, ignorance and disease would undoubtedly require measures not only at the local level, but also at the levels of the larger region, the nation, the regional bloc and the global.  But all these measures would have to be continuously evaluated in terms of the impact on the individuals within the local economy.

(177)  The objective of a Gandhian Budget in July 1991, would then have been to contribute to the removal of poverty, ignorance and disease for all individuals in their context.

(178)  The response to the power crisis, for instance, would have concentrated not only on increasing generating capacity, but also improving the efficiency of utilisation of power.  The value of a unit of power saved would have been more than the value of a unit of power generated because of the transmission and distribution losses between the point of generation and the point of consumption.  This difference would have been used to provide incentives for power conservation, including duty cutbacks on pumpsets or lighting systems that make more efficient use of power.

(179-180)  The next best option would be to focus on small towns.  If a large enough number of small towns are developed across the country, and the links between the small town and the village are improved, it would be possible for a substantial section of the rural population to work in industries in these towns even as they continue to reside in the familiar environment of their village.  The Gandhian alternative would thus have focused on creating a vast network of modern, industrialised small towns.  It would have built on the inherent benefits of these small towns, such as the ability to tap low cost rural labour or even capital generated by the Green Revolution.

(182)  There has been, for instance, a tendency India to use the tractor for transportation.  This could be interpreted as a latent demand for other more efficient systems of mass transportation.  Similarly, the huge wastage in vegetables produced in a large number of widely dispersed villages could be seen as an indicator of the demand for small food preservation units.  And if urban industry remained sceptical about the potential about the potential of the rural market, the Gandhian alternative would have focused on rural capital.  It could then have gone so far as to demonstrate this potential to urban industry by tapping capital that was generated as a result of the Green Revolution. 

(183-184)  Even as it found new roles for the government, the Gandhian alternative would not have lost sight of the fact that the state was only one player in the economy.  Most economic decisions had to be implemented by individuals outside the employment of the state.  This meant that it was not just the government but all organisations that had to be sensitive to signals from a variety of sources, from the local economy to the global one.  One way of increasing this sensitivity woudl be to encourage organisations that listened to all those who had a stake in it.  This is more likely to happen in organisations would retain their sensitivity to local conditions even when they grow into global giants.  The Gandhian alternative would thus have encouraged the development of stakeholder organisations.  The managements of these organisations would be able to distance themselves from any set of stakeholders and represent all stakeholders.  These managements would provide a modern version of Gandhi's concept of Trusteeship.  The task of developing such modern stakeholder organisations in a relatively backward industrial climate that existed in India in 1991 was not an easy one.  But a Gandhian alternative would have taken a significant step in this direction by encouraging the distancing of ownership from control.

(190)  There is then clearly a need for a method that does not attempt to reduce reality to a single model.  At the same time the method must not compromise on the rigour offered by models.  The Gandhian method seeks to meet these apparently contradictory objectives  by shifting the focus of analysis to the consequences.  Instead of searching for a model that can explain a particular situation, the emphasis is on identifying a set of desired consequences.  The policy maker can then take into account all the factors that influence these consequences.

(191)  As it does not see any action in isolation, an action is not evaluated in terms of its predetermined consequence alone.  All possible consequences are taken into account.  Since the very fact of an action being taken instantly changes a given situation, it is a consequence in itself.  There is then no difference between means and ends.  And the goodness of the consequences automatically implies the goodness of the actions as well....

The Gandhian method recognises the difficulty in defining an absolute morality.  It therefore recognises that it can function only with a relative morality.

(192)  For instance, the right to work is an extremely desirable right, but few societies are able to guarantee it.  The Gandhian method's answer to this challenge is to link each right to a duty.  The right to work would be linked to the duty to work efficiently so that the economy could grow at a pace that generates an increasing number of jobs.  The moment a duty is not performed the corresponding right cannot be protected.  The relative morality must then only be defined in terms of the rights that a society is willing to do its duty to protect.

(192-193)  Our case for consequentialism has been built primarily on its inclusiveness.  It encourages taking into account all factors that can influence consequences.  But clearly no analysis can take into account all consequences in the universe.  The Gandhian method thus focuses on a chosen set of desired consequences.  It excludes consequences other than the ones chosen.  The analysis then becomes very sensitive tot he choice of consequences.  And the policy maker will tend to be preoccupied with consequences that directly affect him or those whom he represents.  There is thus an inherent tendency to prefer the immediate surroundings.  The Gandhian method explicitly recognises this inherent tendency developing it into the concept of Swadeshi.  Through this concept the method advocates a focus on immediate surroundings when choosing the desired consequences.  But the immediate surroundings would depend on the level of aggregation.  The immediate surroundings for a rural individual would be his village, while for a nation it could be a regional bloc.  The precise components of an aggregation too would vary from issue to issue.  An individual's immediate surroundings for a religious issue would be his religious group. while for an economic issue it could be all groups, irrespective of their religion, in the local economy.  There is thus always a variety of groups at different levels of aggregation, each with its own set of desired consequences.

To arrive at a common set of desired conseqences at any level of aggregation, the Gandhian method advocates a bargained consensus.  The method recognises the prerequisites of such a consensus.  If the consensus is not to be unequal, all groups must be empowered.  If the system of bargaining is not to break down, there must be a tolerance of opposing views.  The ability to arrive at a consensus would improve if there are more options.  For the consensus to be accepted it would have to be seen to be fair.  And the Gandhian method believes that if those involved in the consensus were not seen to be attached to the fruits of that consensus, there is a greater chance of their judgements being considered fair.

(194)  A great deal of the emphasis of the [Gandhian] method, for instance, is on identifying the questions that must be raised, while much of conventional economics concentrates on finding answers to questions that are taken as given.

(195)  _Towards a New Economics:  Critical Essays on Ecology, Distribution and Other Themes_ by Kenneth E. Boulding

_Gandhi's Power:  Nonviolence in Action_ by Dennis Dalton

(196) _The Bhadvadgita_ by Mohandas K. Gandhi Delhi, Orient Paperbacks, 1996

(198)  "The Core of Gandhi's Social and Economic Thought" by Sugata Dasgupta in _Gandhi's Significance for Today_ edited by J Hick and LC Hempel

More notes on books about Gandhian economics:
Sarvodaya, Swaraj, and Swadeshi
http://hubeventsnotes.blogspot.com/2014/04/sarvodaya-swaraj-and-swadeshi.html

Foundations of Gandhian Economics
http://hubeventsnotes.blogspot.com/2014/04/foundations-of-gandhian-economics.html

Gandhi’s Economic Thought
http://hubeventsnotes.blogspot.com/2014/04/gandhis-economic-thought.html

Essays in Gandhian Economics
http://hubeventsnotes.blogspot.com/2014/04/essays-in-gandhian-economics.html

Economy of Permanence
http://hubeventsnotes.blogspot.com/2014/04/economy-of-permanence.html

Gandhian Economics:  A Humane Approach
http://hubeventsnotes.blogspot.com/2014/04/gandhian-economics-humane-approach.html