A review, practice and critique of Gandhian economics

1. HS4570 GANDHIAN THOUGHT
Gandhian Economics
Review, Practice and Critique
Shivraj Singh Negi
HS07H022
Documentwrittenaspart of firstassignmentforthe course.

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Table of Contents
Gandhian Economic Thought............................................................................. 2
Swadeshi:.......................................................................................................................................3
Economic Equality (Swaraj):.............................................................................................................3
Non-Exploitation:............................................................................................................................4
Non-Possession:.............................................................................................................................4
Trusteeship:...................................................................................................................................5
Gandhian Economic Thought in Practice............................................................ 6
Critique of Gandhian Economic Thought............................................................ 8
Bibliography...................................................................................................... 9

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Gandhian EconomicThought
Gandhian economic thought starts with his work ‘Hind Swaraj’ where he has criticized
the current western civilization and its economic model of industrialization and
consumerism. Gandhi speaks against some fundamental concepts of modern western
economic thought: Industrial Capitalism and Rationalist Materialism.
In Chapter 6 of Hind Swaraj he criticizes the modern industrial societies of Europe. He
talks about the pathetic industrial working conditions, crowded cities, craze for wealth,
decaying moral and physical strength of people and obsession with mechanization. He
call this kind of civilization as ‘irreligious’. This economic model is not worth emulation
by India. In Chapter 9 he speaks about Railways have increased the mobility of evil and
dishonest people rather than actually spreading goodness. It has also helped the British
to consolidate their rule over India, and exploit it efficiently by exporting raw materials
and spreading their goods far and wide into India. This has also destroyed domestic
artisans as they are unable to cope with cheap British imports. He denounces lawyers
and doctors in the same vein.
Gandhi eulogizes ancient Indian way of life, which had ‘Dharma’ at its core. He says,
‘Civilization is that mode of conduct which points out to man the path of duty.’ (HS
Chap13, 3rd
Para)
He says that human wants are unlimited and it is futile to design an economic structure
which focuses on satisfaction of human wants. Ancient Indian society was based on
limiting one’s wants. People understood that happiness is largely a state of mind. And
no amount of luxuries can truly satisfy anyone. So they set limitations on indulgences
and pleasures. Since people were happy with whatever they had, the society did not
feel the need to change. A stable system of fixed wages and occupations was followed.
People also understood the harms of living in large cities and developing machines, so
consciously they decided against them. He returns to the question of machines once
again in Chapter 19.

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Gandhi says that machines destroy a man’s morality and soul. And if industrialization
takes place in India, then the wealth generated will not be in any manner less evil than
the wealth generated in the west through exploitation of colonies. He calls for
minimization of use of machinery, to be used only when absolutely necessary when it
actually increases human welfare without bringing any harm or loss of labor.
The later Gandhian economic thought had several basic concepts, all related to one
another. These were Swadeshi, Economic Equality (Swaraj), Non-Exploitation, Non-
Possession, Trusteeship and Bread Labor.
Swadeshi: Swadeshi means preferring locally produced goods and self-sufficiency.
People should prefer what is produced in their neighborhood for satisfying their needs. If
the neighbors are not capable of supplying for the necessities then they should come
together to develop the capacity to produce them. This will address the problem of lack
of job opportunities and economic activities sin rural areas. This will also protect them
from the onslaught of foreign producers.
Economic Equality (Swaraj): In the Gandhian ideal society, everyone enjoys the
same basic minimum necessities. All ordinary amenities of life are accessible to all men
in society. He believed that the government's first task must be to work on programs
which ensure these conditions for all. Thus for Gandhi, human development has to
precede the economic development. Gandhi also realized that concentration of wealth
undermines democracy; hence economic equality was necessary for Swaraj. He was a
believer of the Marxist maxim ‘from each according to his capacity, to each according to
his need’.
Gandhi wanted socialist conditions and removal of private proprietary rights, but was
against the violent means by which it was bought about in the communist countries.
Gandhian socialism was rooted in religion. He wanted people to change themselves, by
non-violence and persuasion, in order to bring about the socialist revolution, and thus
avoid the class conflict which characterizes other socialist revolutions. People need to
be realizing the value of labor and human dignity, and forego extra luxuries. Thus the
Gandhian socialism wanted to convert the rational man of capitalist order.

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Non-Exploitation: Gandhi had highest regards for the dignity of human labor and
believed in the fullest assertion of rights of the labor. He also wanted laborers to first
faithfully fulfill their duties toward their work. He advocated the idea of a ‘minimum living
wage’ depending upon the dietary requirements of a labor. This standard was later used
by ILO to calculate the standard minimum wage. For him all kinds of labor, whether
physical or intellectual had same value.
Though Gandhi spoke against machinery in Hind Swaraj, he was not against
machinery. When machinery takes over the individuality and humanity, only then they
need to be done away with. Use of machines helps select few to control the economic
activities and this ultimately leads to exploitation. Gandhi wanted this oppressive
machine based industrialized structure to be replaced by small machine based
economy where machines are small, inexpensive and adaptable to be used by one
family or individual. All other machine tools, which are needed to produce and maintain
or power these machines, are to be produced and controlled by state. Gandhi wanted to
avoid the effects like business cycles, slums, overcrowded cities, pollution, and
resource exploitation by avoiding a large scale industrialization, which is primarily
geared to meet rising consumer demands. Given the Indian economic reality of cheap
abundant labor, and low capital, Gandhi wanted machinery which will remove the
burden of individual labor and increase their individual productivity.
Non-Possession: For Gandhi, non-possession was a kind of 'voluntary poverty'.
Gandhi believes that taking something that we do not need for sustenance, even when
it is offered for free, is theft. For Gandhi, poverty has two faces. It is lack of status and
lack of sustenance. He considers the struggle for sustenance as a better activity, when
compared to struggle for status, as the latter is predatory activity while former is
productive. When people work for sustenance they often cooperate with each other, but
when they work for status they end up harming each other. Gandhi did not want wealthy
people to become attached to their wealth, and therefore derive status from it. He
wanted them to give anything above what was required for their minimum needs, for
social welfare. Aparigraha is therefore renunciation of status which people often derive
out of wealth.

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Trusteeship: Most of the societies are divided into elites and the masses. The elites
often exercise power over the masses. It controls the instruments of decision making
and uses it to further its own interests. The elites enjoy social, economic and
psychological privilege. According to Gandhi, the idea of trusteeship is "what belongs to
me is the right to an honorable livelihood, no better than enjoyed by millions of others.
The rest of my wealth belongs to the community and must be used for the welfare of the
community.”
The idea of trusteeship was closely related to the decentralized democracy made of
village republics which function free from the tyranny of central rule. It called for social,
political, and economic decentralization in order to bring millions of Indians, who are
normally excluded from decision making process by a strong central state, to participate
in decentralized structures of decision making and give them the power to determine
their own lives.
For Gandhi, most of the economic activities and relations were to be interpreted in
terms of non-violence. The ultimate aim of Gandhian economic philosophy was to
achieve Sarvodaya or welfare for all. Economic activities were not to be about killing
competition but to have life nurturing cooperation. Gandhi wanted to replace the self-
serving yet socially beneficial economic man of Adam Smith with the duty driven man of
his ideal rural society. His focus was not the individual welfare, but for him benefit of all
meant benefit for the individual. Gandhi replaces the entrepreneur of capitalist society,
which anticipates and takes risks to satisfy society’s demands, by collective social effort
directed towards production of minimum level of necessities.

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Gandhian Economic Thought in Practice
Immediately after independence, the Indian Planning procedure incorporated many
crucial Gandhian thoughts into the Five Year Plans. Although Nehru disagreed with
Gandhi with respect to heavy industrialization and use of machinery, but several
important Gandhian visions were sought to be achieved through economic planning.
Gandhi valued human values over economic values and for him every country should
have an economic system that suits its socio-economic reality. Many important
Gandhian social ideals like khadi industries, swadeshi promotion (through infant
industry protection and import substitution), cooperative movement, democratic
decentralization through Panchayati Raj, minimum wage for labor and adequate
working conditions, and land reforms and land ceilings (in limited areas) were
incorporated into these plans. Different social schemes were also launched like plans
for universal education, removing untouchability, addressing the evils of caste,
prohibition, and uplifting status of women. Gandhi’s views on industrial relations were
incorporated into Industrial Disputes Act of 1947.
Gandhi was a supporter of minimum interference from state into the daily lives of
people. But, Indian state grew in every sphere of national life after independence. This
has also gone hand in hand with establishment of industrial townships, development of
nuclear and missile technology, heavy machine industries and adoption of neo-liberal
policies after 1991. Although many would argue that, Indian state has largely remained
a welfare state, as envisioned by Gandhi.
Many of the Gandhian economic insights have off late been adopted by
environmentalists and people advocating sustainable living. Gandhi’s famous quote
‘The earth provides enough for every man's needs but not for every man's greed’
outlines the theory of sustainability. His theory of appropriate technology was adopted
and built upon by E F Schumacher in his collection of essays, Small is Beautiful: A
Study of Economics as if People Mattered. People have also realized that rampant
consumerism and consumption is unsustainable for the society in the long run as it
brings environmental ruin. People have slowly realized that technology may not bring

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the salvation that it promises for the hungry toiling masses, but instead it may aggravate
the existing inequalities. As Gandhi had pointed out they may end up making strong
more stronger and intensify the exploitation of poor. The way globalization has marched
ahead and bought new areas and populations into global relations of economic
production, often illustrate the process. As technology makes it easier for companies to
shift production bases, the labor has lost its bargaining power in many places.
The new found focus on ‘inclusive growth’ and policy making with which places ‘last one
first’ along with programs like MNREGA, Right to Food reflect long term Gandhian ideas
about developing India.

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Critique of Gandhian Economic Thought
Gandhian economic philosophy has been criticized on many accounts. Many of the
critics point out to the failure of many of the plan policies of India that were essentially
Gandhian in principle. Gandhi's heavy dose of ascetism and other-worldliness is
considered as utopian nostalgia.
Ambedkar criticized Gandhian ideal village republic and its economic structure, saying
that it was this decentralized village that was the power base of exploitative money
lender, provided the cultural stage for caste exploitation, and bred isolated economies
which often failed to cooperate with each other due to long distances and
disconnectedness. Early experiments in Decentralization in India have demonstrated
some of the evils of empowering local levels of government.
Gandhi's concept of swadeshi (favoring local production and production by one’s
neighbors) is seen as divisive by some critics, as it leads to favoritism in an already
divided and stratified society. Given that most of the Indian villages are caste villages, it
may actually cause greater isolation than assimilation.
Rise of cities and rapid industrialization along with globalizing economy are indicative to
some that Gandhian some Gandhian ideals have been given a back seat in Indian
Economic Planning. Only those features which can be accommodated in modern
industrial structure have been carried forward.
Most of the Gandhian ideas which were sought to be implemented by Planning Process
(swadeshi, promotion of village and cottage industries, import substitution) have failed,
though it is debatable if they were failure of governance or the Gandhian ideal itself. It is
also argued that the problems of the 21st century have to be solved in response to the
needs of the day, without necessarily adhering to the ideology made and developed in
early 20th century, by someone who could not have seen the unprecedented
interconnectedness and dependence (with associated social, economic and political
problems) of 21st century.

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Bibliography
"Towardsan Economicsof HumanDevelopmentandthe GandhianConceptof Swadeshi.(1981). Gandhi
Marg:Journalof GandhiPeaceFoundation,5-15.
Diwan,R. (1971). Planningforthe Poor. Economicand Political Weekly,1809-14.
Gandhi,M. K. (1938). Hind Swaraj.NavjivanPublishinghouse.
Heredia,R.C. (1999 ). InterpretingGandhi'sHindSwaraj. Economicand PoliticalWeekly,1497-1502.
Koshal,M. K.(1973). Gandhi'sInfluence onIndianEconomicPlanning:A Critical Analysis. American
Journalof Economicsand Sociology,,311-330.
Rivett,K.(1959). The EconomicThoughtof Mahatma Gandhi. The British Journalof Sociology,1-15.