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Mainstream, VOL LVII No 42 New Delhi October 5, 2019

Gandhi’s Economic Thought: Contemporary Relevance

Saturday 5 October 2019, by Arun Kumar


October 2, 2019 being the 150th birth anniversary of Mahatma Gandhi, we are publishing here several articles on different facets of Gandhiji’s contribution to national life.


In today’s world, Gandhi and his thoughts seem to be out of date to a majority and especially the young. It is often argued that Gandhi was relevant in a different era when the nation needed independence from foreign rule. It is also argued that technology has dramatically improved since Gandhi’s time making his thought irrelevant.

One of the key aspects of Gandhian thought was Swadeshi—implying self-reliance. This was used to fire the imagination of the colonised people to become self-reliant and throw the yoke of foreign rule. But in today’s world where trade is a driving force for growth and development, this idea appears to be irrational for increasing prosperity in society.

Since WWII, nations are focused on the comparative advantage and extensive division of labour in production. Almost nothing is entirely produced in one nation. There are chains of supply that cut across nations under the control of the MNCs. In these times rules for trade among nations are set by the WTO with little place for protectionism or defence of the national markets from the onslaught of the MNCs. Thus, Indian small-scale has suffered with the massive import of goods from China or high-tech goods production in India is not viable due to availability of these goods from the advanced countries.

Marginalisation of Gandhian Thought in Society

Gandhian thought also suggested simple living, protection of the environment, shunning of consumerism, strengthening of democracy and an education system which would not be alienating and connect individuals to nature and society. He argued that work gives individuals dignity. So, technology which displaces labour and leads to unemployment or which leads to the destruction of the environ-ment is not desirable. This made him appear to be anti-technology.

In his basic writing, Hind Swaraj, he argues against Western modernity and calls it evil. So, in the post-independence period, when the Indian elite wanted to copy Western modernity and set ‘modernisation’ of India as its goal, Gandhi appeared irrelevant and backward.

In Hind Swaraj, Gandhi criticised railways, doctors, British parliamentary democracy, etc. He talked of the village republic while the modernisers thought of the Indian villages as ‘cesspool’ of backwardness from which nothing good could emerge. They wanted the villages to be urbanised/modernised. Again, from the perspective of the modernisers he appeared to be backward and it was argued that if his thought was to be the basis of India’s develop-ment, the country would remain perpetually backward.

Gandhians could not take up the challenge posed to Gandhian thought by the ‘modernisers’. They were overwhelmed by Gandhi’s stature and did not advance his ideas further. They could not establish a dialogue with the critics to show why Gandhi was still relevant for society, not just in India but also for the West and what were the flaws in its idea of modernity. They became a fringe group which the main-stream largely ignored.

Indeed, the world has changed considerably compared to the pre-independence period and there was the need to take up the challenge of showing the relevance of Gandhian thought in the new societal milieu. While it is important to maintain principles, it is also crucial to show how they apply in a rapidly changing situation that has been witnessed since Gandhi’s days. The kind of technological change that has taken place, consumerism and new products that have emerged, the transport and communication revolution witnessed and the dominance by the global institutions and finance capital are unprecedented.

Above all, there is a philosophical change that has come about in the thinking of people which must be addressed. Today people have become short-termists, looking for immediate gratification. Due to rapid technological change even society as a whole has become short-termist. In contrast, Gandhian thought is based on long-term social well-being. It is this shift in the belief system that needs to be addressed by the Gandhians.

Marketisation and its Principles

The present-day philosophy, propelled by marketisation, has led to atomised individuals who are homoeconomicus and working for self-interest by maximising their gain. In contrast, the Gandhian thought argues for the individual situated in the collective and not atomised but working for social gain and through that achieving her own betterment.

The contemporary reality is one of a globalising world, growing concentration of economic power, a rapidly deteriorating environment, an upsurge in intolerance and a rise in authoritarianism leading to a decline in the democratic content in society. There is growing concentration of production, capital, technology and trade in the hands of MNCs largely originating in the big economies. The result is a growing concentration of economic power within nations. In India, there is a growing split across States and within them. Income and wealth disparities are growing across and within nations. In India, according to the last OXFAM report, nine people have more wealth than 70 crore Indians. Similarly, in the USA, according to Krugman, disparities in the 2000s are greater than in the 1920s.

What are the features of contemporary economic philosophy that are resulting in the above-mentioned issues confronting the world and for which solutions have not emerged in spite of a deteriorating situation? At times, it appears as if society has a death wish. It does not implement even the most obvious solutions to resolve many of the problems confronting it. This kind of short sightedness is a result of the philosophical blind-spot we are in. So, what are these?

Markets have always existed but marketi-sation is new. It implies the penetration of market philosophy into every social institution. The first principle of marketisation is the ‘dollar vote’—one has as many votes in the market as the number of dollars one has. So, the rich determine the market outcome. It contradicts ‘one person, one vote’ and that undermines democracy. The domination by the rich is at all levels—international, national and regional. No wonder disparities are rising dramatically due to the policies based on marketisation.

The next important principle is ‘more is better’. It suggests that when individuals consume more, their welfare goes up. This is the underlying basis of consumerism—that is, consumption for the sake of consumption. So, instead of drinking water we may drink soft drinks. Need is created where it does not exist. Sacrifice or even reducing one’s consumption is then stupidity because one is hurting one’s own self-interest. An associated idea is that people are rational beings, maximising their welfare. Thus, it does not matter how one earns an income—right or wrong way as long as it benefits the individual—no moral judgment need be made. So, greed is raised to a new high pedestal—not that greed did not exist earlier. Above all, to maximise profit, costs need to be minimised. Since feeling of guilt is a cost, one should not feel guilty about one’s actions and conscience should not be allowed to come in the way. Individuals get truly atomised.

In present-day economics, based on neo-classical ideas, equity is only paid lip-service. Since it is too difficult to achieve, society need only to strive for ‘allocative efficiency’ which is status quoist. ‘Pareto Optimality’ needs to be achieved given the distribution of resources. So, no question of redistribution. Since there are no taxes and transfers that are non-distortionary, redistribution cannot be achieved except in theory. Further, markets fail and because of distortions, all markets fail; so one can only achieve the ‘second best’. This requires all, pervasive government intervention to achieve ‘optimality’, but this idea is ignored.

Gandhian Thought: The Economic Aspects

How does Gandhian thought stand in relation to these principles of marketisation? Clearly, the latter runs counter to the former which is not just an economic thought but a holistic one in which the social and the political are intertwined with the economic. It must be said that Gandhi changed his position as the situation demanded. This was the political aspect of Gandhi who was also a political leader. But at the philosophical level there were certain fixed points/ principles which can be used to assess what his vision for society was.

His most important principle was ‘last person first’. Nothing could be more democratic than this. The policy has to be aimed at the person at the bottom of the income ladder unlike in the market where those with the highest amount of purchasing power determine the market outcome. These are the people who also determine the political outcome via control over politics of the country. So, in the current milieu it is the organised sector which gets the concessions from the government even though the problem originates in the unorganised sector. The latter is always treated as a residual sector. So, they get the resources left after catering to the organised sectors.

Globally also the rich countries determine the shape of policies via their control over the IMF, World Bank and so on. So, India only enjoys relative policy independence to do what is needed for the poor.

The next principle is ‘there is enough for everyone’s needs but not for their greed’. This is contrary to the idea of ‘more is better’ and consumerism. Gandhi suggested ‘voluntary poverty’. That is, people have to voluntarily minimise their consumption. The idea is one cannot preach sacrifice but it has to be based on the individual’s own will. So, creation of needs via advertising has to be curtailed. This is an environmentally sound principle. It also minimises greed.

Gandhi talked of a holistic person and not an atomised one who could resist the onslaught of the modernisers and the advertisers. The alienation created by the market was to be challenged by making the individual strong and conscious in a holistic manner. His education system was designed to create such strong individuals. He felt that the education system foisted by the colonial power was alienating since it was not relevant to the experiences of the Indian population. He suggested Nai Taleem which would end alienation of the individual.

Under Gandhi’s scheme of things individuals would become socially responsible for their actions rather than killing their conscience. They would work for the wider good and not just for themselves. The focus would be different from that in the idea of the ‘invisible hand’. That idea is crucial to the practice of ‘voluntary poverty’.Voluntary poverty also implies equity in society. Whatever they may earn, people would live similar Spartan lives. This idea also leads to the notion of ‘trusteeship’ for which Gandhi has been criticized since it is seen as a defence of capitalism. But this idea is also one of collective ownership of means of production with the capitalists only as ‘trustees’ of social wealth.

Often a false linkage is established between capitalism and democracy. Historically, the rise of capitalism was simultaneous with the fight against the tyranny of the feudal structures. Thus it seemed as if the two were inter-linked. But, by itself, capitalism has been grossly unequal and the principle of ‘dollar vote’ undermines democracy within nations and across nations. This is now clearly visible whereas earlier it was camouflaged. Under pure capitalism, what was aid to the developing world which had come out of the yoke of colonisation, has turned into capital flows attracted by giving concessions to inter-national finance capital.

Gandhian Thought Contrary to Principles of Marketisation

Gandhian Thought is in contrast to the principles of marketisation. For instance, equity, which is only paid lip-service to by the neo-classical economists is central to Gandhian thought. This is not to be achieved via government intervention through the non-existent non-distortionary ‘lump sum taxes’ but by highly conscious individuals automatically redistri-buting. Thus, the parameters of Gandhian economics are completely different from those of the neo-classical economics based on optimisation under given constraints.

Gandhian thought is contrary to the idea of optimisation whereas the entire neo-classical economics depends on this device. Under the latter, individual actions are determined by economic incentives and punishments. In contrast, Gandhi believed that individuals can be motivated by higher ideals to do the socially correct thing. So, in neo-classical literature, tax evasion is an exercise in optimisation between gains of tax evasion and expected losses if caught. Smuggling is supposed to enhance social welfare by allowing that to happen which the state prohibits, so it is welfare-enhancing and desirable. Under Gandhian thought the individuals would automatically desist from these activities so that they would be marginal occurrences. In contrast, for neo-classical theory this would be the norm since everyone would indulge in illegality to the optimum amount— so, illegality has to be tolerated rather than eliminated.

Under neo-classical economics people are a cog in a big machine optimising their gains. They are mere statistic so that markets are amoral. If one has the purchasing power one can buy food, otherwise not—no value judgment need be attached to it. Society is supposed to be subjective and is in retreat while markets are taken to be objective and dominate present-day thinking. Social judgments are a check on the individual and hence undesirable. Individuals as optimisers can act whichever way, depending on what is to their benefit, so social values are seen as paternalistic. Underlying the marketi-sation process is ‘consumer sovereignty’. So, the collective should not intervene in the choices of the individual. The government represents the collective; so it should retreat from the markets. This is the theoretical idea of a ‘free market’.

Under the marketisation philosophy, a new international division of labour has emerged, with polluting production located in the developing world and clean production in the advanced countries. The argument is that if people die earlier in the developing world than in the advanced world that is optimum from the point of view of the markets. Gandhian thought would be entirely opposed to such a formulation since each person and nation is responsible for their own actions and cannot thrust the consequences of their actions on those who are weak.

Gandhian philosophy requires a different person than today’s ‘materialistically’ inclined citizen. Present-day citizens, imbued with the philosophy of marketisation, are homoecono-micus —to them only economics matters to the exclusion of history, sociology or politics. This philosophical change in society is visible in the dominance of economics in Social Sciences with the other disciplines relegated to the back-ground. Immediate economic policy issues matter far more than other aspects of the citizen’s life.

Today’s economic models are ahistorical and hence status quoists. Optimisation is also a largely ahistorical device. So, capitalism is the ultimate form of social organisation and there is endism—no other possibilities exist. In the general equilibrium models, all other social formations are simply different cases of the same set of equations. This is the result of stripping all variables of their social, political and historical content. Even when time is introduced in the equations it is done in such a manner that its essential aspect, namely, uncertainty of the future, is eliminated. In doing so, real time, which distinguishes between the past, present and the future, is eliminated.

Conclusion: Relevance of Gandhian Thought Today

Gandhi was also for the withering away of the state as society evolved to become an agglomer-ation of highly conscious individuals. So, Swaraj meant self-rule at every level from the individual to the village and the larger entity. In this sense, Gandhi was for decentralised governance and a bottom-up approach unlike the present structures which are based on a top-down development model.

Gandhi was for non-violence against other individuals or animals or nature in general. That made him an environmentalist at heart and his life reflected that. Even though it was said that it was expensive to keep Gandhi in poverty, it was important that he set an example so that the world which was going in the opposite direction to his belief system could see what was possible if everyone adopted what he was suggesting.

In brief, Gandhian thought provides an alternative to tackle the problems confronting present-day society by talking of genuine democracy, non-alienated individuals, protection of the environment, equity among all and so on. It is a holistic vision rather than a piece meal one as is the case with the current phase of capitalism based on marketisation.

Prof. Arun Kumar is a retired Professor of Economics in Jawaharlal Nehru University, New Delhi and is currently the Malcolm S Adiseshiah Chair Professor, Institute of Social Sciences, New Delhi

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