Gandhian Economic Ideology in Modern Economy

In this article, I have thrown light on the various aspects of economic ideas of Gandhiji along with the evaluation of the relevance of Gandhian ideology in modern technological age.

Gandhi Economic

Gandhian economics is a school of economic thought based on the socio-economic principles expounded by Gandhiji. It is characterised by its affinity to the principles and objectives of socialism, but with a rejection of class war and promotion of socio-economic harmony.

Gandhi’s Economic Ideas

Gandhi’s economic ideas also aim to promote spiritual development and harmony with a rejection of materialism.

Gandhiji enunciated his economic position in the language of the people, rather than that of academic economists: Schumacher accepts his greatness an economist in these words ‘And so the economists never noticed that he was, in fact, a very great economist in his own right, and it may well emerge … as the greatest of them all’.

Thus, Gandhiji was very much original in his thoughts as Schumacher is saying.

Gandhian economic philosophy is becoming increasingly relevant to the world as well as India today, particularly, the Third World countries.

Gandhian economics transcended the purely technical aspects of traditional value free economics, and became instead an ethical charter of organising the productive resources of an economy.

In Young India, Gandhiji confessed that he had not drawn ‘a sharp line of distinction between the economics and ethics’.

Gandhi claimed that ‘True economics never militates against the highest ethical standards just as all true ethics, to be worth its name, must at the same time be also good economics … True economics stands for social justice; it promotes the good of all equally, including the weakest and is indispensable for decent life’.

Gandhiji defined Swadeshi as ‘the spirit in us which restricts us to the use of goods and service of our immediate surroundings to the exclusion of the more remote’.

Gandhiji’s championing of Swadeshi and non-cooperation were centred on the principles of economic self-sufficiency.

Gandhiji sought to target European-made clothing and other products as not only a symbol of British colonialism but also the source of mass unemployment and poverty, as European industrial goods had left many millions of India’s workers, craftsmen and women without a means of living.

Gandhiji advocated Swadeshi and advised boycott of foreign goods, foreign companies, and foreign capital to maximum possible extent for the economic betterment of our country.

By championing homespun Khadi clothing and Indian-made goods, Gandhiji sought to incorporate peaceful civil resistance as a means of promoting national self-sufficiency.

Thus, Khadi at once became a propaganda weapon in the liberation movement. Economically it was solution of the formidable problem of rural under development’.

Thus, Gandhiji’s central economic concern is the production of village crafts against further encroachment of foreign industry and the Swadeshi which embodied his entire thinking on economic issues.

Gandhiji regarded Economics as a moral science and laid tremendous emphasis on the ethical aspect of the problem.

Gandhiji was against the big industries and was worried about the increasing industrialization.

He used to call the set up of industrialisation as ‘satanic set up’. Gandhiji was of the opinion that the industrialization was based on the exploitation of man by man.

The inequality will increase in the industrial set up and there cannot be justice.

Today the increasing unemployment in India and more industrialization has reminded us of the relevance of the Gandhian thoughts.

In so many countries including India today, small-scale industries, cottage industries and industries run by the workers are lying shut and the persons involved in such industries have been badly affected.

Gandhiji’s economic ideals were not about the destruction of all machinery, but a regulation of their excesses.

In fact, Gandhiji’s favour for the small-scale industries had the main reason for it that Gandhiji always thought the benefit of the poor.

His approach ‘wholly concerns itself with the human’, while ordinary economics ‘is frankly selfish’.

Craze for Machinery

Gandhi Economic

Gandhiji had explained that while he was not against machinery per se, he did object to the ‘craze for machinery’: “The craze is for what they call labour-saving machinery. Men go on ‘saving labour’ till thousands are without work and thrown on the open streets to die of starvation. I want to save time and labour, not for a fraction of mankind, but for all. I want the concentration of wealth, not in the hands of a few but in the hands of all. Today machinery merely helps a few to ride on the backs of millions. The impetus behind it all is not the philanthropy to save labour, but greed”.

Gandhiji thought that besides the establishment of heavy industries, the second level must be saved and this second level was of the rural economy. That economics is untrue which ignores or disregards moral values.

The extension of the law of non-violence in the domain of economics means nothing less than the introduction of moral values as a factor to be considered in regulating international commerce.

The value of an industry should be gauged less by the dividends it pays to shareholders than by its effect on the bodies, soul and spirits of the people employed in it. In essence, supreme consideration is to be given to man than to money.

The economics that disregard moral and sentimental considerations are like wax works that, being life-like, still lack the life of the living flesh.

At every crucial moment, thus anew-fangled economic laws have broken down in practice. And nations or individuals who accept them as guiding maxims must perish.

Local, short-distance transportation should receive every encouragement but long hauls should be discouraged because they would promote urbanisation, specialisation beyond the point of human integrity, the growth of a rootless proletariat, in short, a most undesirable and uneconomic way of life.

Gandhiji always considered the welfare of the poor as the centre of the war of independence. He knew it very well that revolution in society or development can be brought only by providing the necessities of life to the poor.

Therefore, any exercise on economic planning on a national scale would be futile without uplifting these most vulnerable sections of the society in a direct manner.

Gandhiji has often quoted that if humankind was to progress and to realize the ideals of equality and brotherhood, it must act on the principle of paying the highest attention to the prime needs of the weakest sections of the population.

So doing, we serve humanity to the best of our capacity. We cannot serve humanity by neglecting our neighbors.

In the ultimate analysis, it is the quality of the human being that has to be raised, refined and consolidated. In other words, economic planning is for the citizen, and not the citizen for national planning.

Everybody should be given the right to earn according to his capacity using just means.

Khadi requires decentralization of production and consumption, which in turn should take place as near as possible to the source of production.

Such localization would do away with the temptation to speed up production regardless of the costs and would alleviate the problems of an inappropriately structured economic system.

In his economics of locally handmade goods, the Gandhiji saw the poor as being delivered from the ‘bonds of the rich’.

Gandhiji was attracted by the concept of a simple society.

The basic hypothesis of the Gandhian system is “Earth provides enough to satisfy every man’s need but not for every man’s greed”.

In the present economic system even after a very impressive turn over, no one says he can stop now, that he has enough. Enough is a word not to be found in the dictionary of economics.

Limiting of Wants

Gandhiji hints here that a Gandhian economics would begin with the limiting of wants. He continues: ‘that you will see is the antithesis of the position of the modern civilization which says: ‘increase your wants.’

Those who hold that belief think that increase of wants means an increase of knowledge whereby you understand the Infinite better.

On the contrary Hinduism rules out indulgence and multiplication of wants as these hamper one’s growth to the ultimate identity with the universal self.’

Global system makes common people completely helpless in the matter of production and distribution.

Gandhiji wanted to ensure distributive justice and wanted to see that production and distribution were not separated.

Gandhiji visualized that it can be solved through the choice of technique of small scale production and through the system of Swaraj.

Economics of swaraj

Economics of swaraj is related to total life. The components of swaraj are based on two independent variables- psychology and ethics.

The goal of swaraj brings limits to human wants, and it also limits monetary gains.

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

Gandhian economics places importance to means of achieving the aim of development and this means must be non-violent, ethical and truthful in all economic spheres.

Economics that hurts the moral well-being of an individual or a nation and does not cater to the needs of the poor and down trodden is immoral and, therefore, sinful.

Its goal is not pure material benefits but advancement of humanity on its road to progress.

Gandhiji formulated his economic principles in the context of his design of an ideal social order : a non-violent non-exploitative, humanistic and egalitarian society. Satisfaction of needs and moral elevation of individual were not anti-ethical for him.

Gandhiji’s dream was the development of a level of technology which would be appropriate to the needs and resources of the poor with tools and equipment designed to be small, simple, low-cost, environmentally friendly and ‘compatible with man’s need for creativity.’

Economic activities cannot be abstracted from human life. Long ago Sismondi has said that the real object of economics should be man.

To give importance to wealth and to ignore the human being is to distort the goal. He propounded a theory in which he said that distribution must combine with production.

Gandhiji’s design moved in that line. Sismondi realized the danger of over-production. That was why he wanted to employ the state in curbing production.

In 1978 E. F. Schumacher, perhaps the 20th century’s most celebrated humanist-economist, acknowledged his debt to Gandhiji and called the Mahatma one of the truly great economists and prophesized that one day Gandhiji may be remembered as the greatest economist of all.

Gandhiji gave us a simple criterion with which to evaluate economic theory and policy: are means and ends interchangeable?

Gandhian economic thought is good economics that concentrates on the even distribution of economic opportunities and benefits that is the need of the time; otherwise, the world will have to face anarchism in future.

Plain Living : Economics of Nonviolence

In fact, the first basic principle of Gandhi’s economic thought is a special emphasis on ‘plain living’, which helps in cutting down your wants and being self-reliant. Accordingly, increasing consumer appetite is likened to animal appetite, which goes the end of earth in search of their satisfaction. Thus a distinction is to be made between ‘Standard of Living’ and ‘Standard of Life’.

In order to achieve this means he advocated trusteeship, decentralization of economic activities, labour intensive technology and priority to weaker sections.

‘In short, man’s urgent task is to discover a non-violent way in his economics as well as in his political life … Non-violence must permeate the whole of man’s activities, if mankind is to be secure against a war of annihilation … Present day economics, while claiming to be ethically neutral, in fact propagates a philosophy of unlimited expansionism without any regard to the true and genuine needs of man which are limited. For Gandhi, economics was an economics of nonviolence.

Gandhian economics brings a socialist perspective of overall development and tries to redefine the outlook of socialism.

Bhoodan and Sarvodaya

The path of socialism should only be through non-violence and democratic method and any recourse to class-war and mutual hatred would prove to be suicidal. Gandhian activities such as Bhoodan and Sarvodaya movement promoted self-sufficiency amidst India’s rural population by encouraging land redistribution, socio-economic reforms and promoting cottage industries.

The movement sought to combat the problems of class conflict, unemployment and poverty while attempting to preserve the lifestyle and values of rural Indians, which were eroding with industrialisation and modernisation.

Gandhian focus on human development is also seen as an effective emphasis on the eradication of poverty, social conflict and backwardness in developing nations.

Gandhiji knew it very well that the real soul of India lives in the villages. Until and unless the villages are not developed the real development of the country is meaningless.
Gandhiji advocated to develop the rural economies with the development of agriculture and village industries.

There should be small scale and cottage industries in these areas.

Development should have some relation with human values and human qualities.

To SchumacherTo SchumacherTo Schumacher “Development does not start with goods, it starts with people…”We have been able to create prosperous countries, but we have failed to create better and better human beings. Prosperous countries are in no way good societies. Both poverty and prosperity degrade.

Gandhian paradigm of development is based on this principle. This can be called an economy of Swaraj– an economy of self-reliance. That will create just distribution of income without special efforts.

Direction of development

Gandhiji also accepted some basic industry on large scale like mines, cement, electricity etc. His ideas are helpful for backward and developing economies in the world. His ideas are also useful for solving problems in capitalist economies.

Direction of development is also very important. Villages must get more importance than cities. Highest priority is given to agriculture and agro-centric industries.

The balance between primary, secondary and tertiary sectors should be skillfully made on the basis of available human resources. Gandhi advocated wide use of technology of being self-reliant.

To make village self-reliant Gandhiji said, “There would be no objection to villages using even the modern machines and tools that they can make and can afford to use.”

In fact Gandhiji was in favour of giving technology to everyone. His plan was to take technology to the grass-roots level.

In his scheme human beings control technology and technology does not control the human beings.

Economic activities cannot be abstracted from human life. Gandhian economics is the economics of the whole person.

The proximity of Gandhian economic thought to socialism has also evoked criticism from the advocates of free-market economics.

To many, Gandhian economics represent an alternative to mainstream economic ideologies as a way to promote economic productivity without an emphasis on material pursuits or compromising human development.

Gandhiji’s emphasis on peace, “trusteeship” and co-operation has been touted as an alternative to competition as well as conflict between different economic and income classes in societies.

Today we are moving ever more rapidly into a world dominated by the large-scale; complexity; high capital intensity which eliminates the human factor; and violence.

Gandhiji recommended new guidelines which point towards smallness rather than giantism, simplification rather than complexity, capital saving rather than labour saving – and towards nonviolence.

The profit motive throws humanity and the planet out of equilibrium. The emphasis has to be shifted back to the person rather than the product.

Costs have to be measured in human terms by taking cognizance of happiness, beauty, health and the protection of the planet.

Towards the end of his life Gandhiji wrote: I will give you a talisman. Whenever you are in doubt or when the self becomes too much for you, apply the following test.

Recall the face of the poorest and weakest man whom you have seen, and ask yourself if the step you contemplate is going to be of any use to him. Will he gain anything by it? Will it restore him to a control over his own life and destiny?

In other words, will it lead to Swaraj (self-rule) for the hungry and spiritually starving millions? Then you will find your doubt and your selfmelting away.

The concept of intermediate technology, following initial criticisms by the economic community, was eventually taken up by UN agencies, governments and non-governmental organizations around the world and led to a proliferation of studies in Gandhian economics.

Thus, Gandhian economic thinking was based on a spiritual criterion.

Gandhiji advocated trusteeship, decentralization of economic activities, labor intensive technology, and first priority to rural India.

Gandhiji explained that capitalism and mechanization would lead to unemployment, poverty, and inequality. Communism would not survive as it was inhuman.

Gandhiji integrated economic aims and activities with morality and nonviolence.

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