UNIT 1
BASICS OF MODERN ECONOMICS
Structure
1.1 Introduction
Aims and Objectives
1.2 Economic Thought before Economics
1.3 Classical Economics
1.4 Basics of Modern Economics
1.5 Summary
1.6 Terminal Questions
Suggested Readings
1.1
INTRODUCTION
Economics has emerged as one of the most important social science disciplines in modern
times. Its importance has increased because it aims to be a positive science, meaning thereby
that it can present objective and scientific explanations of how an economy works. It also aims
to be normative. Norms here do not imply moral or ethical stands on economic issues. The
norms are in the form of offering prescriptions and recommendations on what should be done
to cure perceived economic ills arising from the working of the economics. It should be known
that Economics evolved from moral philosophy, but slowly it started dealing with study of
allocation of resources to production of goods and services and its distribution. Modern
Economics seeks to apply scientific method to construct theories about the processes involved
in economic activities and to test them against what actually happens. Its two central
concerns are the efficient allocation of available resources and the ways of reconciling finite
resources with a virtually infinite desire for goods and services. Modern Economics claims that
it tries to be value neutral.
Aims and Objectives
This Unit would enable you to understand

the evolution of economics as a discipline

the basics of modern economics

some outstanding thinkers in economics
1.2
ECONOMIC THOUGHT BEFORE ECONOMICS
Understanding the contemporary world becomes easy and meaningful when we begin from
past. In this sense history of thought and in this case history of economic thought would be
helpful in understanding the basics of economics as they appear in present. Similarly, it will also
be easy to place Gandhi’s economic thought in a perspective. A very well-known economist
Lionel Robbins, whom we will be referring to elsewhere also, said that contemporary institutions
and contemporary thoughts are expressed through with the heritage of the past. For this
reason if we want to claim that we know little about the subject, we need to have a ‘nodding
10
Gandhi’s Economic Thought
acquaintance’ with its past body of knowledge and also perhaps a little knowledge about
people who developed it in the then given social situations.
It is recommended that whosoever is interested in understanding more about Economic thought
well up to the beginning of the twentieth century should read Robbins’s ‘A History of Economic
Thought: The LSE Lectures’. Published by Oxford University Press in 1998, these lectures
were delivered in 1980-81 at the London School of Economics. Robbins calls the early
economic thought as ‘anticipations’. These are thoughts that appeared not as economics, but
which had the potential that led to the development of the economics as a discipline much
later. Economic thought has two sources. One, Moral Philosophy from Greek scholars that
had an element of economic thought in their writings and second, ad hoc pamphlets or
monographs written by theologians and officers in government that argued out a particular
case. Interestingly centuries later, even Gandhi also did not write on economics and was not
an economist, but he wrote on an issue when he wanted to argue a particular case. There is
one more important thing that one notes. Unlike the early pamphlet and monograph writers,
Gandhi did not write any special pamphlet or monograph, he had mostly produced notes not
bigger than three pages to make his argument.
Plato and Aristotle are two Greek philosophers whose contribution to early economic thought
has got registered. Both philosophers belong to the era before Christ. Plato was looking for
an ideal State and responsibilities of people. He examined the working of the economic
relations in the State and compared it with what ought to be. It should be made clear that he
was not in favour of democracy. Athens was the centre of economic happening and it was
easy for them to comment on the working of the economy then. Plato, in the detailed discussion,
ended up giving idea about division of labour. Aristotle was not looking for an ideal State in
the sense in which Plato was. His focus was household behaviour and in this context he
commented on money and ways of money-making from ethical point of view. Interestingly, he
approved the system of slavery in the household management.
Aristotle thought that people by nature could be divided into two types, one who gave orders
and one who took orders. The justification for slavery came from the belief that indeed people
by birth had different nature.
Nothing significant appeared in economic thought after the contribution of these two great
Greek philosophers. Roman Empire followed in economic prosperity and there is none who
stands out as a thinker or philosopher who contributed to the economic thought. In the
intellectual world this period is called the Dark Age. The scholarships started reappearing and
economic issues also got attention only in the Middle Ages. St. Thomas Aquinas wrote
summa Theologica. He considered the economic affairs of exchange and interest as sin.
Nevertheless, the major discussion that occupied the debate was about the ‘just price’ for a
commodity that came up for exchange. These debates laid foundations for the labour theory
of value. It should be noted that the period was fourteenth century.
It is also worth noticing that the discipline of economics evolved only after the nation state
started coming into existence after the Dark Ages, and international trade picked up once
again. This environment provided thinkers to contribute to the working of the economy. There
was lot of discussion on money and related matters and the Mercantilists school of thought
emerged. It contributed to economic debates during 16th and 17th centuries. With the emergence
of the concept of nation state, feeling for own nation became strong and national policies
received priorities over the local policies in economic affairs. The core concern of the mercantilists
could be summed up in a title of the pamphlet that appeared in 1613 from a prison! It read
Basics of Modern Economics
11
A Brief Treatise on the Causes which can make Gold and Silver plentiful in Kingdoms
where there are no Mines. The best contributions came from Gerard Malynes, Misselden and
Thomas Mun. It is interesting to note that most of the persons who contributed to economic
thought were holding some government positions in trade and commerce related work.
Malynes advocated exchange control because in the absence of controls speculations lead to
deviations that made goods artificially dearer or cheaper. Such fluctuations were not favourable
to the State. Misselden had developed an antithesis to Malynes and advocated inflationary
environment to stimulate exports. The most important scholar in this school of thought was
Thomas Mun. His book England’s Treasure [by] Foreign Trade was recognised as the most
important work of Mercantilist school. Adam Smith, who is known as the Father of the
Economics considered it as the bible of mercantilists. Though it may appear that the chief
concern of the mercantilists was to make England rich with gold and silver, Mun’s writings
made it clear that it was all about the terms of trade especially the factorial terms of trade
favouring England.
Last in the series of ‘anticipation’ is Sir William Petty. In a way he laid the foundation of
quantitative economics. He approved of the Francis Bacon’s method of scientific research.
Collecting facts and analysing them to test hypothesis was the mainstay in that method. His
contribution lies in combining the monetary ideas with political arithmetic. He was investigating
and estimating the amount of money that was necessary to keep the trade going with full
employment and constant prices. His recommendations for taxations came from this basic
arithmetic and thus Petty becomes a very important forerunner of economists who later
developed systems.
This section ends with mention of Josiah Child and John Locke on the interest rate debate
that took place in the later half of the seventeenth century. The legal interest rate was 6 per
cent in the second decade of the seventeenth century. There was a feeling that it should be
reduced and Josiah Child was influential as the head of the East India Company and argued
in favour of reduction in 1668. He referred to past experience and then quoted immediate
experience of the Netherlands that had prospered on account of reduced interest rate. From
the point of economics the logic was not sound, but the argument was well received because
Child was an influential person. John Locke, an academic and a philosopher whose contribution
was more substantial in the area of coinage debate in his days and for his writings on property,
was against the lowering of interest rate. According to him, lowering of interest rate would
make borrowing and lending difficult and this in turn would adversely affect the trade. His
second argument was a welfare argument. He referred to the class of poor and widows, who
have some small investments and interests accrued to them was necessary for their survival.
1.3
CLASSICAL ECONOMICS
Before we actually learn about classical economics and economists, it would help us to learn
about some thinkers and schools of thought who envisioned complete economic systems.
Cantillon is the first in this series. He was of Irish origin and settled in France. In his book
Essay on the Nature of Commerce, published in 1755, he deals with working of the
economy in first part, followed by elaborate discussion on the monetary and interest theory.
In the third and final part he describes banking and commerce including international trade in
an authoritative way. It may be noted that for the first time, an economist described the
working of the entire economy. Cantillon was a successful banker who could also describe
the working of the economy.
12
Gandhi’s Economic Thought
Just about when Cantillon was writing, a group of people calling themselves Physiocrats was
active in France. It was a sect which had regular practices in debating on issues and
advocated that agriculture was the main sector in any economy which could generate real
value and hence national income. It believed that the economy worked in a particular way
should be promoted. Dr. Quesnay, a surgeon turned physician, was the founder who is wellknown for his Tableau economique. He, for the first time, estimated national income. Of
course, there were assumptions. According to physiocrats agriculture was the only productive
sector. Extractive industry was later added to it, but rest all labour was useful but sterile. This
work was followed by the work of Turgot who wrote Reflections on Formation and
Distribution of Wealth. It should be clear that by that time economics as a discipline was
taking shape in the form of explaining how the economic system worked and how wealth was
being created and distributed.
Foundations of classical economics were laid with the writings on property rights. It was also
the beginning of the thinking on individual economic enterprise. John Locke and David Hume
are beginners in this tradition. The explanation of the systems in which the economic functions
were taking place and were explained came to be known as political economy and the focus
on individual enterprise, use of labour for production for a unit of output and returns to the
factors of production etc. came to be known as analytical economics. Hume has contributed
to both. Classical Economics began with Adam Smith, who is referred to as the Father of
Economics.
Adam Smith is known for his classic An Inquiry into the Nature and Causes of the Wealth
of Nations written in 1776. The main inquiry by the classical economists was to determine
the value of the production and its distribution. Robbins put it differently and said that the book
was about theory of productive organisation and a theory of the causes of economic growth.
Smith was interested in theory of value as his predecessors and successors were and he was
also inquiring about distribution. His major focus was on how a country could create wealth
and what type of productive organisation provided best opportunity for wealth creation. His
concept of division of labour which evolved while writing about the organisation of production
has become a famous maxim in economics. He said, ‘division of labour is limited by the extent
of market’. He advocated a production environment which allowed an individual to pursue an
enterprise working on what was best for him and one that would yield maximum returns. He
also advocated individual liberty and believed that the economic affairs were to be facilitated
under laissez faire. The State was to play a facilitator’s role. He wanted the State to carry
out all those enterprises which the individual or small group of people would not find profitable,
but people at large would benefit out of it. The contribution of Adam Smith is difficult to be
summarised in a short passage. His contribution to analytical economics and political economy
was very comprehensive and therefore he is called father of economics. It can also be said
that economics started emerging as a separate discipline with the times of Smith.
We will consider a few more prominent thinkers who contributed to the classical economics.
They are Robert Malthus and David Ricardo, Colonel Robert Torrens (who is not much
remembered and taught in the economic thought paper in regular economics courses), James
Mill, his son John Stuart Mill and Nassau Senior, McCulloch and J.E. Cairnes. With Malthus
we enter into nineteenth century economic thought. Malthus is known for his theory of population
growth. He also wrote on principles of economics and got engaged in serious debate with
David Ricardo on issues of the day. Malthus believed that population growth was faster than
the increase in food production. Power of earth to produce food was limited. He said,
“Population, when unchecked, increases in a geometrical ratio [and] subsistence [for man] in
an arithmetical ratio”. He then wrote the ratios as 1,2,3,4…..and so on like that - constant
Basics of Modern Economics
13
additive factors – 1,2,4,8,16,32… and so on. The numbers are given just because he had
become known for this, otherwise mathematically he was wrong. What is important, however,
is to understand that he was aiming to explain the law of diminishing returns in agriculture.
Land being a constant factor and labour being the most important variable factor applied to
it, Malthus wanted to argue that the increase in production would gradually decline. It should
be remembered that the Law of Diminishing return was further polished by other classical
economists, mainly by Ricardo and this is a fundamental contribution of the classical economists
to the subject. Malthus wanted to make this point because he thought that human beings did
not behave and especially poor did not behave and they will keep on having more children
and eventually most population in the world will live on subsistence level only. The diminishing
returns theory became so dominant in the times when classical economists wrote that they
were termed as ‘doomsday economists’ and economics came to be known as ‘dismal science’.
The hardcore classical economics was about theory of value and distribution in an economy.
David Ricardo is the master draftsman of the labour theory of value. It started in the backdrop
of the Corn Law in England and the thinkers worked on various explanations. Ricardo’s
labour theory of value, succinctly put in his own words in On the Principles of Political
Economy and Taxation, reads as follows.
“The exchangeable value of all commodities rises as the difficulties of their production increases.
If then new difficulties occur in the production of corn, from more labour being necessary,
whilst no more labour is required to produce gold, silver, cloth, linen, etc. the exchangeable
value of corn will necessarily rise, as compared with those things. On the contrary, facilities
in the production of corn, or of any other commodity of whatever kind, which shall afford the
same produce with less labour, will lower its exchangeable value”.
Ricardo went on constructing the theory of rent and theory of profit from labour theory of
value. ‘Ricardian rent’ is even today an accepted concept for the part of profit that is made
due to advantage over the quality of the resource, given the same production technology.
The Labour theory of value had a problem. Even Ricardo understood that in production there
was contribution of capital as well. This became more and more important with industrial
production, where land formed a very small part of the production factor. The acceptance of
capital added the problem of distribution on the agenda of economics. James Mill and
McCulloch, followers of Ricardo, confronted this issue of capital and treated all of such capital
as indirect labour and thus reduced everything to labour. The other contribution of Ricardo
was theory of international trade and it has come to be known as theory of comparative
advantage.
The last most discussed of the classical economists was John Stuart Mill. He wrote Principles
of Political Economy. Mill approached production and distribution differently. He believed
that laws of production had universal applicability, whereas the laws of distribution were
guided by the institutional arrangements in each society. Mill was also a distinct classical
economist because he introduced the concept of static and dynamic in the political economy.
His approach to distributional issues made him a socialist although there remains dispute about
it. The Fabian socialists claim Mill to be a socialist. But one thing is certainly established that
he was not a collectivist. He did not know Marx and he would not have advocated collectivism.
He remains an individualist and his quest was that of explaining laws of production and
distribution.
Before turning to basics of modern economics, the contribution of Marx needs to be understood.
Although not a classical economist, Marx has been one of the most influential thinkers who
14
Gandhi’s Economic Thought
had impact on economics for all times to come. Marx is one social scientist whose theoretical
position was accepted by political activists all over the world and there has been serious
attempt to put the theory into application. It is significant however, that after about 80 years
of serious application, almost most of human societies have found that his theory did not work.
The collapse of the Union of Soviet Socialist Republic (USSR) is the case in point. In this unit
our focus is to understand his theory briefly.
Marx also focussed on the theory of value in Volume I of Das Kapital. The English translation
of this original German work was Capital, A Critique of Political Economy. He also
developed the theory of wages. He argued that employers determined the wages as they
always had better bargaining power and they mostly kept the wages at subsistence levels and
thus generated surplus value. He also considered the component of capital cost which was the
labour cost of producing it. Since the cost of the capital was the value of labour spent in past,
the employer could not create surplus from it and hence all surplus came only by reducing the
wages of labour currently employed. In this volume, he did not tackle the problem of varying
proportion of labour and capital in different industries. Only in volume 3 he admitted, like
Ricardo, that ultimately in theory of value it was real cost theory and that it was indeed labour
cost mainly but there were other factors as well that determined the cost of output.
Once the surplus value theory was established, he went on to build the theory of declining
profit, theory of growing rate of concentration in manufacturing industry and then there was
theory of the economic interpretation of the history, the theory of class war. It is the class war,
professed by Marx, which came to be accepted with great appeal. It is interesting that Marx
not only developed the theory of value, wages and distribution for explaining the economic
phenomenon, he also went on to build a political theory for action. His theory of value in
essence was no different than that of Ricardo’s last position, yet he became a revolutionary
thinker in the world. Marx’s theory got converted into ideology and the whole world witnessed
the rise of communism and socialism. Russia experienced a bloody revolution and the USSR
was formed. Quite a few Eastern European countries became communist and a communist
block was formed and became powerful after the Second World War, which ended in 1945.
Marx’s basic purpose was to change the social system like Gandhi who also worked for social
change. The basic difference is that Marx wanted to be a theoretical master of system change.
He wanted to prove theoretically that what he proclaimed was inevitable and part of a process
for which he was only providing scientific explanation in a theoretical framework.
1.4
BASICS OF MODERN ECONOMICS
The fundamental departure by the modern economics from the classical lies in showing that
prices of goods and services depended not so much on the cost of production but on the
demand and supply of them at a given point in time. The foundation for this came from what
Robbins calls the Marginal Revolution. It is due to this evolution that the modern economics
was no longer a political economy (which still continues to be a part of economics), but it
became an independent scientific discipline. We shall briefly review the beginning of the
modern economics in the same way as we have done in the case of classical economics. This
will help in understanding the thought evolution and continuity from the predecessors. The
evolution of economic thought will continue until Alfred Marshal, the first master of modern
economics after which the present state of modern economics will be presented. Then we will
present an idea about what modern economics is today.
The modern economics is also known as Neo Classical Economics. This name was given by
Basics of Modern Economics
15
an Austrian economist Thorstein Veblen. The credit of introducing the Marginal Revolution
goes to three scholars Jevons, Menger and Walras. Menger and Walras had independently
discovered the application of the theory of value to the idea of declining marginal utility. Jevons
too came up with The Theory of Political Economy, but it is not explaining the economy
or an economic system. Instead it focuses on the theory of value in relation to utility, and a
theory of capital, both are the core elements in the modern economics. Utility was something
which was not seen as important in determining the price of a good. To put it differently, the
classical economists focussed only on supply side for explaining the price and the economy
whereas the modern economics saw and introduced the demand side. Perhaps this is what
led Alfred Marshal to say the famous maxim which meant that even a parrot could learn
economics; it should only learn two words demand and supply!
Utility appeared in theory of value for the first time in Jevons writing in a major way. It got
established that utility had its foundation in wants. Second, utility is not intrinsic in a commodity.
Utility is attached to a commodity when an individual thinks about it. Thus utility is related to
thinking about a commodity for a particular purpose. Jevons also introduced the concept of
market which to him is a place, an area, where all buyers and sellers come together. An
important thing he notes is the absence of conspiracy among buyers; nobody is influencing the
market. Everybody has complete knowledge of the price at which a commodity is traded or
exchanged. Then the exchange takes place when the relative scales differ, that is each buyer
and seller for one another has a commodity which is of relative high value. The goat with one
person is more valuable to another who has a stock of poultry which in turn is more valuable
for person with goat. In such case exchange takes place. The modern economics thus
begins with Jevons where he boldly takes a stand that the origin of value is in utility
and scarcity thus dismissing the labour.
Carl Menger developed the theory of value with utility independently. He and his two students
Wieser and Bohm Bawerk founded the Austrian school of utility theory. Menger differentiated
between value and utility. Things which are not valuable may have utility. Menger explained
the utility theory in terms of an arithmetic table. It explained the way that exchange would take
place. Interestingly, Menger brought out that utility of a commodity and its units also help
immensely in case of income constraint. Menger in this sense also introduces/d the concept
of maximising total utility with income constraint. With Menger began the measurement of
satisfaction in economics. Walras, a French economist, developed the marginal theory
independent of Jevons and Menger. His contribution was in explaining the complete static
economic system.
It is necessary to learn about Alfred Marshall in this context. He was a brilliant mathematician.
He wrote Principles of Economics among many other books. He developed theory of firm
which included theory of value and theory of capital, working of the economy at macro level
with money, credit and interest and finally introduced the concept of equilibrium in commodity
and factor markets at the economy level. None of this was complete, but Marshal’s contribution
in establishing economics as a science has been immense.
Modern economics has immensely grown since the days of Marshall. Modern economics is
presently defined as the study of how, in a given society, choices are made in the allocation
of resources that have alternative uses to produce goods and services for consumption, and
the mechanisms and principles that govern this process. Economics has become the study of
efficiency in production and in consumption. Modern economics also includes policy studies
with respect to conflicting demands for resources and the consequences of whatever choices
are made, whether by individuals, enterprises, or governments.
16
Gandhi’s Economic Thought
Thus Modern economics is now a fully developed social science devoted to studying the
production, distribution, and consumption of wealth. The study of economics is divided into
study of various branches. Microeconomics is the study of firm, industry, consumer behaviour
and markets. Macro economics is the study of the economy as a whole. In other words it
examines and understands the working of the economic system such as working of the money
market, taxation by government and public spending. The macro concerns were very well
explained and theorised by a giant intellectual named John Maynard Keynes He was a key
theorist in economics. His theory has been developed into a school, Keynesian school of
thought. Keynesian economics derived from his book The General Theory of Employment,
Interest and Money (1936) that explains the determinants of national income in the short run
when prices are relatively inflexible. Keynes tried to evolve a theoretical framework for failure
of self-correcting high labour market unemployment which was a result of low “effective
demand” and reasons for unavailing price flexibility and monetary policy. His contribution
came after the Great Depression in United States and he had recommended government
spending during economically depressed times to improve purchasing power with people so
that effective demand could rise.
After Keynes two branches developed new Keynesian and Post Keynesian and the latter
survived. A feature of post-Keynesian economics is the principle of effective demand, that
demand matters in the long as well as the short run, so that a competitive market economy
has no natural or automatic tendency towards full employment. Contrary to the view often
expressed, the theoretical basis of this market failure is not rigid or sticky prices or wages.
The positive contribution of post-Keynesian economics has extended beyond the theory of
aggregate employment to theories of income distribution, growth, trade and development in
which demand plays a key role, whereas in neoclassical economics these are determined by
the supply side alone.
The role of state that was envisaged in The Wealth of Nations by Adam Smith has almost
been regained after the collapse of the USSR. The Keynesian school was confronted with the
Chicago School where Prof. Milton Friedman argued cogently for market superiority in economic
theory and policy. The Chicago school was a post Second World War phenomenon which
rose essentially against the dominance of State in the communist and socialist countries. The
debates between the Chicago school and the Keynesian school continued to rage. Post
Second World War, the economic crisis world over saw the emergence of a mixed approach
that the world governments took. The world witnessed the role of economists significantly
hyped in the Bretton Woods Conference where two important global institutions were formed.
One was the International Monetary Fund (IMF) and the second was the International Bank
for Reconstruction and Development (IBRD), popularly known as the World Bank.
We end this section with a comment by Partha Dasgupta, an economist of international repute.
He says that the modern economics treats human beings with respect. To quote him “This
it does by trying to illuminate the various pathways through which millions of decisions made
by individual human beings can give rise to emergent features of communities and societies.
Since individual decisions are, in turn, influenced by these emergent features (e.g. rate of
inflation, productivity gains, level of national income, prices, cultural values, and social norms),
there is mutual feedback over time….. This character of modern economics isn’t, of course,
new; but it has never been espoused with such abandon as it is today; and so, when the
modern economist says he seeks a micro foundation for some observation or the other, it
isn’t an admission on his part, it is an assertion”.
Basics of Modern Economics
17
This is one of the new philosophical premises on which the modern economics is working
today. The subject is of course still evolving and will continue to do so because it deals with
human behaviour and therefore laws cannot remain constant as they do in Natural Sciences.
1.5
SUMMARY
The objective of this unit was to acquaint the learners with basic features of modern economics.
This is necessary to understand Gandhi’s Economic Thought better and also to appreciate
how the modern economics has evolved as a discipline. We have done this by taking you
through a journey beginning from the days of Greek philosophers and passing through the
Middle Ages and entering into classical age and then the modern or the neo classical stages.
The Unit also acquainted the learner with the process in which economic thoughts were
formulated and embedded into the then prevailing societies. We have also come to know
about the prominent thinkers during each of these times and shown in brief the premises,
arguments and theories they developed. We have ended this Unit by stating that the discipline
of economics is not likely to have any laws that would be constant over time as in the case
of laws in Natural Science because laws formulated in economics are based on human
behaviour which has been ever changing. This also is the reason why there are constant
criticisms of economic thought and alternative thoughts keep emerging. In this light we should
be able to appreciate Gandhi’ Economic Thought.
1.6
TERMINAL QUESTIONS
1.
What were the economic issues discussed by the Greek scholars?
2.
Describe in brief the main economic thoughts that appeared during the Middle Ag e s
and until the classical economics got established?
3.
What were the main features of classical economics?
4.
What is the Marginal Revolution in Economics?
5.
What is the Scope of Modern Economics today?
SUGGESTED READINGS
Robbins, Lionel., A History of Economic Thought: The LSE Lectures, Oxford University
Press, New Delhi, 1998.
Dasgupta, Partha., Modern Economics and its Critics, 1998, (http://www.econ.cam.ac.uk/
faculty/dasgupta/modecon.pdf)
Web References
http://en.wikipedia.org/wiki/Keynesian_economics
http://en.wikipedia.org/wiki/Post-Keynesian_economics
UNIT 2
CRITIQUE OF MODERN ECONOMICS
Structure
2.1 Introduction
Aims and Objectives
2.2 Critiques of on economics discipline
2.3 Critiques on British Economic Policy
2.4 Gandhi’s Critique of Moden Economics
2.5 Summary
2.6 Terminal Questions
Suggested Readings
2.1
INTRODUCTION
Modern economics has come under criticism from some quarters on various counts. In this
unit we will focus mainly on the criticism from Gandhian thought perspective because the main
aim of the whole course is to understand Gandhi’s economic thought. General criticism on the
discipline is part of the intellectual tradition to strengthen it. But in the context of Gandhian
thought perspective critique of Modern Economics would imply looking for alternative thought
which would have potential to overcome the severe limitations in the discipline that is being
criticised. Nevertheless we have included some criticism from non-Gandhian perspective as
well so that we can understand the mainstream criticism as well. Modern economics fails to
take ethical consideration into account and hence Gandhi had said that the discipline as
followed and as taught was largely irrelevant for understanding human behaviour and for
prescribing cures for economic ills that appear in the system. At some place in a particular
context, he called Arthashastra as Anarthashastra.
Gandhi understood some basic problems with the Modern Economics and economic system
from two Indian Scholars- Dadabhai Naoroji and Romesh Chandra Dutt. He had read
Naoroji’s Poverty and Un-British Rule in India and Dutt’s Economic History of India.
Here we will present the critique which these two scholars had developed during early times.
Tolstoy and Ruskin had taken a moral stand on how labour should be treated and criticised
the way in which it was treated. We begin next section with this discussion. It is followed by
a debate within economists in India about the need for a separate theory to understand and
analyse the economic system in India. J.C. Kumarappa not only developed a critique, but also
suggested an alternative system, which is briefly discussed. We have also introduced Partha
Dasgupta’s brief comment on what is emerging as criticism under the Post-modern thought in
the Western world.
Finally, Gandhi saw and experienced the pressure of colonial rule on people and the economy,
which made him rethink on the economic issues and take a strong position. The last section
will acquaint readers with these points of Gandhi’s critique of economics.
Critique of Modern Economics
19
Aims and Objectives
After reading this Unit, you would be able to understand

the critique of Modern Economics

Gandhi’s basic critique of modern economics.
2.2
CRITIQUES OF ECONOMICS DISCIPLINE
Among the foreign scholars who developed critique of economics before Gandhi developed
his economic thoughts, Tolstoy and Ruskin are important. Tolstoy’s basic criticism was about
the way labour was treated in economics. Tolstoy had developed the concept of ‘bread
labour’ out of self-realisation. He belonged to a feudal family from Russia and a brave warrior.
He disapproved of war and became a world renowned litterateur for his piece of fiction War
and Peace. His concept of bread-labour was that one must earn one’s bread from sweat of
one’s brow. One does not have a right to eat if one does not perform bodily labour. Strictly
speaking this was not economics, but a moral sentiment expressed and practised for survival.
The critique that gets developed in the process of evolution of economics as discipline is that
this concept challenges the labour theory of value and also the marginal school. The implication
would be that for maintaining this body each member will have to perform labour without any
consideration for wages. Irrespective of the labour time employed, the return is in terms of
food which should be guaranteed. In case of people working on land, they grow food; in case
of those who sweat off farm must be supplied food as their returns to labour. This approach
changes the basis of economic thinking.
We had shown in Unit 1 that over time, economics has developed as a positive science. In
modern economics, therefore, man has got established as an ‘economic man’. The meaning
implied in this expression is that in general circumstances at an individual level man will
maximise benefits and minimise cost in any activity that is economic. Tolstoy’s position would
be that for eating food man should not be ‘economic man’. Irrespective of his/her capacity
to buy food without physical labour, he/she should be working physically for food. Tolstoy’s
thought never entered economics discipline, but Gandhi used it as we will see in the sections
and Units that follow.
John Ruskin had more substantial comment to make on economics. His famous book ‘Unto
This Last’ was first published in 1862, the time when classical economics was firmly established.
The Industrial revolution was at its peak. Factories were all around, industrial production
attracted rural labour to urban areas. Their living conditions in the cities were not very good.
The firm establishment of classical economics as a discipline had made government and
business to take it more seriously. The Economic Man was rising fast and getting established.
Ruskin noted the following in this regard. “The social affections,” said the scholar, “are
accidental and disturbing elements in human nature; but avarice and the desire of progress are
constant elements. Let us eliminate the inconstants, and, considering the human being merely
as a covetous machine, examine by what laws of labour, purchase, and sale, the greatest
accumulative result in wealth is obtainable. Those laws once determined, it will be for each
individual afterwards to introduce as much of the disturbing affectionate element as he chooses,
and to determine for himself the result on the new conditions supposed.”
Ruskin did not like the idea in which man was treated in economics. He critiqued the political
economy mainly for the way in which labour employment and wages were determined in
theory. He commented on the political economy. He did not like the mercantile part of it. His
idea of political economy was
20
Gandhi’s Economic Thought
“(The economy of a State, or of citizens) consists simply in the production, preservation, and
distribution, at fittest time and place, of useful or pleasurable things. The farmer who cuts his
hay at the right time; the shipwright who drives his bolts well home in sound wood; the builder
who lays good bricks in well-tempered mortar; the housewife who takes care of her furniture
in the parlour, and guards against all waste in her kitchen; and the singer who rightly disciplines,
and never overstrains her voice, are all political economists in the true and final sense: adding
continually to the riches and well-being of the nation to which they belong.
But mercantile economy, the economy of “merces” or of “pay,” signifies the accumulation, in
the hands of individuals, of legal or moral claim upon, or power over, the labour of others;
every such claim implying precisely as much poverty or debt on one side, as it implies riches
or right on the other. It does not, therefore, necessarily involve an addition to the actual
property, or well-being, of the State in which it exists. But since this commercial wealth, or
power over labour, is nearly always convertible at once into real property, while real property
is not always convertible at once into power over labour, the idea of riches among active men
in civilized nations, generally refers to commercial wealth; and in estimating their possessions,
they rather calculate the value of their horses and fields by the number of guineas they could
get for them, than the value of their guineas by the number of horses and fields they could buy
with them”.
This longish quotation is given to clearly bring out Ruskin’s idea of political economy (this
should not be confused with politics, in his days economics was known as political economy,
he meant economic system) and his understanding of political economy as was presented in
those days. He rejected the demand and supply of labour idea. He thought that human being
was treated as a machine. Though Ruskin’s argument and criticism did not find many takers
in those days, Gandhi was simply struck by his writing about which we will have observations
in Unit 3.
A feeble debate had ensued among economists during pre and post independence period on
the issue whether there should be a separate theory for Indian Economy. This had its base
in the continued argument in the discipline about the dominance of history and institution over
logic and scientific method of analysing human economic behaviour and its interpretation. The
Austrian school has major contribution in bringing objective analysis and creating the ‘economic
man’. The British tradition had consideration of history and institutions in its economic thought
and theories.
In pre-Independence time, there was a controversy among Indian economists about the need
for separate economic theory for Indian economy. Georgescu Roegen, a noted economist,
had commented as follows. “There is an economic theory which does not have any corresponding
reality in the society and there is a reality which cannot be explained by the existing economic
theory”. Justice Ranade, who was also an economist, V.G.Kale and D.R.Gadgil believed that
there was no need for a separate theory. According to them human behaviour was same
across space and time and hence a uniform theory is obvious. Further, they also thought that
the institutional difference between West and India were narrowing and disappearing and
hence a separate theory would not be needed, although Gadgil had changed his opinion soon
after Independence when he assumed the charge of economic affairs for the country.
Two economists S.V. Ketkar and R.K. Mukerjee thought that there was need for a separate
economic theory to understand and analyse the Indian economy. They argued that the production
function developed in West could not explain the production relation in Indian production
sectors. N.V. Sovani sharply made this argument while commenting that the nature of an
Critique of Modern Economics
21
economy did not depend on the techniques of production but on the socio-economic conditions
and hence a modified theory was necessary. Nevertheless, all these economists were suggesting
modification in the theory and recognised the importance of history and institutions. B.R.
Ambedkar, who was also an economist, had his comments on the macroeconomics and
especially on the fiscal prudence and the role of the state.
J.C. Kumarappa stands out among all these scholar economists in the context of Gandhian
economics. Unit 12 has a detailed account on him as a Gandhian economist. As an economist
trained in West, Kumarappa’s critique of modern economics is worth noting. To him modern
economics promoted a system of market where use value could only be exchanged in market.
He disagreed with the dominance of self interest and allowance of freedom to pursue it with
state as the facilitator. He saw violence in this process. He proposed economy of permanence
where people should work with nature to satisfy their basic minimum needs and without
creating any major conflict with nature. He was opposed to large industries. He rejected the
‘economic man’. Kumarappa, in Gandhian tradition, had gone beyond Gandhi and the
mainstream economics. He thought that history and institutions matter in understanding economic
system and theory and there was also a need and possibility to build new economic system
using the indigenous theoretical understanding.
Now let us turn our attention to mainstream critique very briefly. The post-modern thought has
influenced economic theorising as well. Partha Dasgupta has explained the new criticism in the
following way.
“Neoclassical theory contends that the particular set of institutions in an economy does not
matter. This position rests on three points: (a) outcomes are determined by fundamental forces
(reflecting resources, preferences, and technology), (b) these forces lead to Pareto-efficient
outcomes, and (c) institutions do not even influence the choice of the equilibrium. For example,
whether a society has an institution in which the bride’s family pays a dowry, or the groom’s
family pays a bride price, or neither one, neoclassical theory would contend that—with given
fundamentals—the distribution of incomes will be the same as it would have been without
those institutions. The standard modelling technique in neoclassical economics is to solve for
the outcomes that would emerge from an impersonal setting with a market for all goods, all
periods, and all risks, where people make trades “with the market.” History does not matter.
Not even the distribution of wealth matters if one is interested solely in efficiency. These are
strong hypotheses. And in leaving out institutions, history, and distributional considerations,
neoclassical economics leaves out the heart of development economics”.
It can be seen from the above discussions that the critique of modern economics is also raising
issues that would lead to considerations of history and institutions in any society. It is becoming
clear that economic system is a sub system getting influenced by other systems and cannot be
treated as the main system affecting all other. Gandhi wanted to make this point clear and he
also added what ought to have been incorporated in understanding, analysing and shaping an
economic system.
2.3
CRITIQUES ON BRITISH ECONOMIC POLICY
Gandhi developed his economic thoughts specifically for India. As mentioned, he was not a
theorist. He wanted the Indian economic system to evolve in a particular way. His unrest with
the economic state of affairs seemed to have begun from his reading of Dadabhai Naoroji’s
work depicting poverty in India and Romesh Chandra Dutt’s economic history of India. Both
the works moved him emotionally. Gandhi was also inspired by two persons from foreign
22
Gandhi’s Economic Thought
origin. They were Count Leo Tolstoy from Russia and John Ruskin from England. Their
thoughts and ideas influenced his sensitivity and way of thinking; he evolved his thought both
as principles and as features of system. We will examine these influencing sources as to see
what their criticism of economics was that had evolved until then. It should also be remembered
that economics as a discipline has grown immensely after these writings and so also the
systems.
Dadabhai Naoroji published his book Poverty and Un-British Rule in India in 1888. He
was one of the bright Indians who had become a member of British Parliament. He had
imbibed the true spirit of the parliamentary democracy. He developed the critique of British
administration of its colonies and chief among them was India. He analysed India as an
economy and wrote about its status. He was the first Indian economist to make an economic
assessment of India. In his analysis he showed that India’s economic condition had become
pathetic. More importantly, through his analysis, he showed that the cause for poverty in India
was the British rule and the colonial policies. He showed with data that there was a continuous
and planned wealth drain from India to England. Naoroji was also the first to estimate,
however inadequately, national income of India. He used production statistics for this purpose
and worked out that in 1876, per capita production in India was worth 40 shillings or
converted in rupee of the day, rupees 20! This one figure was enough to depict abject poverty
and destitution in India by the last quarter of the Nineteenth century.
Let us remember that in 1776, Adam Smith had published The Wealth of Nations, it actually
meant the wealth of England. He theorised about Laissez faire and the role of the State as
a facilitator. Given that, he saw tremendous potential in increasing industrial production through
division of labour. He also had foreseen and stated that division of labour was limited by the
extent of market. 112 years later Naoroji showed that indeed England had followed the policy
advocated on extending the market with roaring success. A trading company had gained
enormous political power. By 1860, the Queen had subjugated India totally and even the
government followed the same exploitative policies. Export from India of agriculture produce
and other raw material at cheap rates provided ample raw material to British factories. The
factory production was pushed to India at a price that was far lower than the cost of
production that the indigenous producers could produce. This was serving the policy of
extending market so that the division of labour in English factories could go on profitably. The
indigenous production base was destroyed completely in India. Naoroji wrote that from 1870
onwards the rural population had started registering an increase. Workers in indigenous nonagricultural production were pushed out and they joined the already crowded agriculture,
reducing the average productivity to a further lower level. Later, the population statistics
showed that between 1871 (the year of first population census in India) and 1911, the
percentage of rural population to total population had increased. Naoroji stood vindicated.
Secondly, the taxation policy of the British on the Indian subjects was also exploitative.
Income Tax on income from agriculture was on an average 15 per cent in India as compared
to 8 per cent in Britain. Further, this income to the public exchequer in India was not utilised
for the welfare of Indian Population. In addition, England had laid “Home Charges” on India.
This was the amount extracted from revenue generation in India to meet the expenses of the
British administration administering India.
The third important criticism of Naoroji was that the exploitation of the British was not
restricted to economic sources of the colony that was India, but it extended to destroying of
human resource as well. The British introduced an education system that almost completely
destroyed the skill base in the country.
Critique of Modern Economics
23
Naoroji did not seem to have moved beyond this assessment. He did not develop any
theoretical criticism of the economics discipline that was emerging. One is also not sure
whether he was reading the theoretical work and debates that were going on in Europe and
in which England was the focus of arguments and counterarguments. No surprise that Gandhi
internalised this criticism and developed economic thought more on the system than on theory.
Another person who presented the critique of the British economic system was R.C. Dutt. He
took forward the work of Naoroji especially on the international trade. He estimated that by
the end of 19th century, Britain had drained India of 20 million sterling pounds. This left
nothing as resource within the country to invest in productive work. He also came to similar
conclusion that the British policy in India was to extort wealth from India. Dutt has attempted
a more comprehensive work of writing the economic history of India. He begins with the era
of the Battle of Plassey, which the East India Company won and founded its empire in India.
Dutt records economic conditions in Bengal between 1757 and 1785. He had documented
the work of the British governors of the Company and their policies for business and
administration. In different chapters he had analysed the situation that prevailed in different
regions such as Madras, Bombay, North India, and South India. He had also examined and
analysed domestic and international trade, deterioration of the Indian industry and political
administration until 1860 when the Queen of Britain was also crowned as the Queen of India.
As stated earlier, Dutt also was not commenting or critiquing the economic theory as such,
but his inquiry was into sources of income in India and the causes of poverty. It is indeed a
contrast that Adam Smith who talked about Laissez faire and inquired about the wealth of
nations, an Indian economist from the British colony, inquired into the causes of poverty and
found that there was no freedom to pursue economic activity freely in the country in which
British ruled. Dutt had examined both the fiscal policy and the economic policies at work in
British India. He systematically produced evidence to destroy the justification of flimsy reasons
advanced by the British that the Indian farmers were poor because they were extravagant in
social expenditure and were in the clutches of the local moneylenders who charged exorbitant
interests. He showed that it was the rigid land revenue collection policy that made Indian
farmers pauper. Even the foreign exchange policy was regulated in a way in which although
exporters gained a little by way of price gain in the international market, the common man had
to contribute to the British Exchequer to meet government borrowings for revenue expenditure
and capital expenditure especially for railways. Dutt, for instance, showed that from 1871-72
to 1898-99 the rupee was devalued against the sterling pound by about 20 per cent. Since
the Indians had to pay in rupees, they had to pay that much more towards borrowing and
charges. Thus, Dutt had produced an all round critique of the British economic policy in India
and documented the economic history. Gandhi had one more reason to question and he
criticised modern economics which generated such policies. He did not agree with the basic
theoretical foundation of creating wealth without purity of means. We now turn to Gandhi’s
critique.
2.4
GANDHI’S CRITIQUE OF MODERN ECONOMICS
Ajit K. Dasgupta has given in depth and detailed account of Gandhi’s Economic Thought. In
Gandhi’s opinion, ethical considerations in the economic behaviour of a man were nonnegotiable. As you would remember from Unit 1, Gandhi had not read works of reputed
economists, yet he had formed an impression from his experience and observation that the
mainstream economics did not emphasise moral and ethical behaviour.
24
Gandhi’s Economic Thought
The mainstream economics wanted ethics abstracted from analysis because they were disturbing
factors. This was thought necessary for an objective analysis and theorising. Gandhi understood
this necessity and yet did not yield to the compulsion of it to recommend behaviour without
ethical consideration. Gandhi was pragmatic enough to see the place of economic behaviour
relevant in social formation. As he considered ethics to be necessary for economic behaviour,
he also thought that ethics must be relevant for day to day economic behaviour and not just
an exercise for philosophers and religious discourses. He recognised the necessity of selfinterest and yet he emphasised the presence and practice of care and welfare of others. He
has/had an interesting observation on religion and wealth. Ajit Dasgupta quotes Gandhi,
‘Whatever is basically harmful on economic grounds is also certainly harmful from the religious
point of view. Untainted wealth can never be opposed to religion’.
Gandhi also had problem with Bentham and J.S. Mill’s concept of welfare as they formulated.
The Utilitarian School that Bentham started and Mill brought into his welfare economics
analysis, suggested greatest good for greatest number. For Gandhi it was greatest good for
all. This he called as Sarvodaya. This was the ethical point he had in mind, which he thought
economics should be addressing. When welfare of all is to be considered, the system based
only on self-interest would have severe limitations. Gandhi understood that a system which
functions on the principle of allowing full freedom to pursue self-interest would impinge upon
the welfare of someone and Sarvodaya will not be achieved. More importantly, the foundation
for the ‘economic man’ was in this self-interest thesis. By rejecting the thesis of self-interest,
Gandhi also rejected the concept of ‘economic man’. He concluded that any economic system
that functions with ‘economic man’ as the basic behaviour would have a moral fall. He quoted
from history about past civilisations that had a moral fall due to turpitude in individual moral
behaviour on account of greed for accumulating wealth. He meant that the ‘economic man’
would have the tendency to do so.
An implication of pursuing limitless self-interest is on demand. We have seen in Unit 1 that the
Marginal School introduced the concept of demand and the labour theory of value was
dismissed from the price determination analysis. This seemingly innocent appearing demand
conceals in it uncontrolled wants. Gandhi saw an ethical problem in this when the demand
theory worked in a system. Not controlling wants in a society would lead to disastrous
consequences. Ethical considerations, the sentiment of giving rather than taking and renunciation
rather accumulation would bring welfare for all. In this context, it needs to be understood that
limiting wants in one’s life is not only for spiritual consideration, but also for ethics-based
economic behaviour of one for the benefit of all.
Gandhi joined Tolstoy and Ruskin in criticising the treatment of labour in mainstream economics.
He delinked labour with wages and emphasised the necessity of bread-labour in earning
livelihood. According to Ajit Dasgupta, Gandhi had both- hard and soft - positions on it. The
hard position was related to every individual. He proposed that every individual should earn
a living out of physical labour. Rest of the work should be for contributing to the society. The
soft position was that every individual must earn part of living (meeting basic minimum needs
of food, clothing and shelter) through physical labour.
A direct implication of emphasis on bread labour was on the mode of production. Gandhi
rejected the use of machine for mass production of basic necessities. He criticised factorybased production and consequently urbanisation. If everybody was engaged in earning minimum
needs by becoming what Alvin Toffler had called ‘prosumers’(one who produces and consumes
both), then the production theory would change completely. Gandhi was highly critical about
Critique of Modern Economics
25
centralisation of production. The modern economics has explained that for creation of wealth
of nations centralised production was the way.
We end this section with two points that introduces Gandhi’s system level critique. One,
Gandhi had rejected the Marginal School. He did not isolate history and institutions from
economic analysis and economic theorising. He had conceded that his thoughts were his and
yet not his because he was only reiterating what had been culturally ingrained in the Indian
society and was sustainable. The Marginal School made the economic thought objective and
took the society to a different route. This led to his second major criticism on modern
economics where he said that unbridled consumerism would form an unethical society based
on greed. He rejected the modern civilisation because he thought it came with modern economic
analysis and policies. You will read from Unit 5 onwards the detailed thoughts on all these
issues.
2.5
SUMMARY
This Unit dealt with the criticism of the mainstream and modern economics. It must be clear
that all major criticisms are towards the economic system that has developed over time. There
is also a review of criticism that has been raised at conceptual level. The unit began with the
critique of Tolstoy and Ruskin on the understanding of labour in economic system. Both had
criticised the commoditisation of labour. Tolstoy had rejected it because he considered that
it was spiritually necessary that every individual would eat after doing physical labour for
bread. Ruskin had questions about just price and justice by treating labour as a commodity
on sale for wages. He also had disagreed with wage differentials. The Unit then contains
thoughts of the Indian economists of both -pre and post-independence period on the relevance
of modern economic theory that developed in West in the Indian context. We find that
although some scholars thought that a separate theory was necessary for Indian situation, the
main stress was in favour of suitable modification of the theories developed in the West. In
this there is also mention about the debate in the mainstream about the necessity of history
and institutions in building economic theories. The next section examines the critique of two
pre-Independence economists Dadabhai Naoroji and R.C. Dutt. Both of them had come
down heavily on the economic policies pursued by the British for centuries. They had shown
with empirical evidence that Britain had drained India of its wealth and destroyed the production
base almost completely. Gandhi, who had read Naoroji, Dutt, Tolstoy and Ruskin, was
convinced that the modern economics was not relevant for India. He had raised very fundamental
criticisms on philosophical basis of modern economics by pointing out that without explicit
ethical considerations, modern economics was narrow and would not lead to the welfare of
all.
2.6
TERMINAL QUESTIONS
1.
What were the conceptual issues raised by Tolstoy and Ruskin against Modern Economics?
2.
Which policies of British were responsible for creating poverty in India and how?
3.
Do you think that history and institutions matter in building country specific economics
theory? Reflect upon the mainstream critique of the modern economics.
4.
What are major points of criticisms that Gandhi raises against Modern Economics?
26
Gandhi’s Economic Thought
SUGGESTED READINGS
Dasgupta, Ajit. K., Gandhi’s Economic Thought, Routledge, London, 1997.
Dasgupta, Partha., Modern Economics and its Critics, 1998, (http://www.econ.cam.ac.uk/
faculty/dasgupta/modecon.pdf)
Padoshi, A.R., Contribution of Indian Economists, Booklet no 63, Think – Line, A Guna
Gaurav Nyas Publication, Nashik
UNIT 3
INDIGENOUS AND EXTERNAL
INFLUENCES
Structure
3.1 Introduction
Aims and Objectives
3.2 Indigenous Influences (Ethical and Spiritual)
3.3 Indigenous Influences (Persons)
3.4 External Influences
3.5 Summary
3.6 Terminal Questions
Suggested Readings
3.1
INTRODUCTION
Leaders, who contribute to action or thought in the world, base their learning from the thought
and practice of the predecessors. Rare is a case where a person works only on own inspiration.
Gandhi is no exception. He formulated his economic thought based on his experience, reading
and internalisation of ideas and values. Readers should understand at the outset that Gandhi
was not a philosopher, but essentially a practitioner and a reformer. It is also necessary to
know that there is nothing like Gandhism. Thus, there is no dogmatisation of thought. Acharya
J.B. Kripalani, an astute political intellectual and Principal of the Gujarat Vidyapeeth College,
in mid 1920s, makes this point very clear in his book ‘Gandhian Thought’ that there was
nothing like Gandhism. ‘Isms’ do not exist with the original thinker; the followers dogmatise
it and make the working principles very rigid. The dogmatised principles then become ‘ism’
losing flexibility and the scope to change. Kripalani goes on to say that Gandhi was not a
philosopher. He did not formulate any structure of principles. He had been a practical reformer
and an ever growing person and hence he could not have given any universal theory applicable
forever. This point has been reiterated to establish that Gandhi is not an economist philosopher,
but he has contributed to economic thought as a practitioner.
An ever growing person keeps learning and so did Gandhi. In setting out his thoughts of
economic affairs he was influenced by many thinkers and practitioners. He presented his world
view in his book Hind Swaraj, written in November 1909. In the ‘foreword’ he notes, “These
views are mine, and yet not mine. They are mine because I hope to act according to them.
They are almost a part of my being. But yet, they are not mine, because I lay no claim to
originality. They have been formed after reading several books”.
Another important point in this context is that Gandhi’s economic thought has appeared on
specific economic aspects and policies, which again establishes him more as a practitioner than
a theorist. His stand against modern factory-based manufacturing, his insistence on village
industries and spinning wheel, swadeshi, implying boycott of foreign goods etc. illustrate that
he had never thought about economics as a theory-building exercise. One does not come
across any macro picture of the economic system that he wanted to advocate in a theoretical
framework. It becomes clear that he responded to situations as a practitioner and by doing
so firmed up on certain principles that could be of great value in economics.
28
Gandhi’s Economic Thought
Apart from the books, Gandhi was also influenced by persons, their lives, and his experience
during his encounters with real life situations and religious thought. Books and individuals who
influenced him were from India and other countries. In this Unit, our focus is limited to the
review of influences on his economic thought. There might be some overlap in the material
presented here with that in Unit 2 because Gandhi was influenced by the critics who had
commented on the mainstream economics during his times and we have already reviewed their
critiques in the previous Unit. But care is taken to avoid total duplication.
Aims and Objectives
This Unit would enable you to understand

Various influences Gandhi had in formulating his economic thoughts.

How those influences reflected in his thought.
3.2
INDIGENOUS INFLUENCES (Ethical and Spiritual)
We have noted in Unit 2 that a fundamental difference between thinkers of modern economics
and their thought and that of Gandhi lies in the latter’s emphasis on ethical considerations in
all economic affairs. For Gandhi ethics was so important in dealing with economic affairs that
his vision could almost become a utopia. But Ajit Dasgupta (1997) tells us in his writing that
Gandhi was trying to describe an economic idea to strive for rather than simply an economic
plan to implement. In that sense his vision may have been utopian, but in the sense of an idea
being non-implementable, his economic thought was not utopian. His understanding of ethics
had evolved from his faith in religion. The second source of influence was from writings of
other scholars who wrote commentaries and critique on economic issues and concepts. In this
section we will consider indigenous influences.
Before discussing religious influences on Gandhi’s economic thought, it should be clarified that
Gandhi’s understanding of religion was faith in God and soul power in human beings. He was
against organised religion and various forms of sects and sampradayas. He detested any kind
of fundamentalism. He wrote in Young India in July 21, 1920 issue (Collected Works), ‘I
reject any religious doctrine that does not appeal to reason and is in conflict with morality’.
His concern was not ‘other worldly.’ He was very much concerned with this worldly affairs
and he wanted everybody to have faith in God and follow one’s dharma. His connotation of
dharma was performing one’s duty selflessly. If an individual performed his/her dharma with
all his faith and sincerity, his /her ‘other worldly’ affairs will be taken care of. Thus both religion
and ethics were very important for Gandhi also in running economic affairs.
The influence of religion on Gandhi in his childhood and early youth was limited and more on
emotional and devotional side. His parents were religious and so also his wife Kasturba.
Gandhi was deeply impressed by this religiosity of his parents and wife. He learnt from them
the capacity to make sankalpa – take oath and stick to a decision. We know that he
promised his mother while leaving for his studies to England that he would keep away from
wine, women and non-vegetarian food. He stuck to his determination. In England he first read
Bhagvadgita. His encounter with different religions and especially Christianity was intense in
South Africa. There arose many doubts and he had a friend who was way ahead in individual
spiritual practices. His influence on him was very important.
The person who drew him to the power of indigenous sources was Rajchandra Ravji Mehta
known also as Shrimad Rajchandra. He died young at 39, but became an outstanding and
Indigenous and External Influences
29
revered Jain. Gandhi corresponded with him regularly and asked him questions and doubts
about religion. Rajchandra told him about the soul and the dharma. Rajchandra wrote to him
in one of the letters, “Dharma does not mean any particular creed or dogma. Nor does it mean
reading or learning by rote books known as shastras, or believing all that they say. Rather,
dharma is ‘a quality of soul’ present in every human being. Through it we know our duty in
human life and our true relation with other souls”. We saw in the previous paragraph that
Gandhi went beyond Rajchandra’s influence.
We have noted in Unit 2 that Gandhi rejected the ‘economic man’, as conceptualised in
modern economics. The roots of his rejection lie in the influence of religion and ethics on his
economic thought. Bhagvadgita and Ishavasya Upanishad had influenced him a great deal.
With this inspiration Gandhi turned the modern economics’ ‘economic man’ into ‘ethical man’
who gains not by maximising personal benefits and minimising personal costs, but by readiness
to give and derive pleasure from renunciation than self-indulgence.
Gandhi was so much influenced with the Ishavasya Upanishad that he believed that if all
other scriptures were destroyed and if this Upanishad was saved, the basis of the Hindu
Philosophy would be salvaged. Further, even if the Ishavasya Upanishad was destroyed and
if somebody had in memory the first shloka (verse), the basic Hindu Philosophy could be
salvaged. This verse is the one from which he derived economic ethics as well. The verse is
as follows.
Ishavasyam idam sarvam Yatkinchit Jagatyam Jagat
Ten tyaktena bhunjitha maa grudha kasyaswid dhanam.
Whatever there is changeful in this ephemeral world, - all that must be enveloped by the Lord.
By this renunciation (of the World), support yourself. Do not covet the wealth of anyone
(Swami Sarvananda, 1987).
The verse is self-explanatory. One is not supposed to covet the wealth of other. Consumption
and use or indulgence is to be done with an attitude of sacrifice. Kishorilal Mashruwala, a
renowned scholar and an inmate of Gandhi Ashram, has provided a brilliant commentary on
Gandhi’s economic thought. According to him, so deep was the influence of Gita and
Upanishads on Gandhi that he visualised Sant Sanskruti – noble civilisation. Mashruwala
adds that this was not the same as Bhadra Sanskruti – elite civilisation. In the sant sanskruti,
an individual tries to maximise social benefit and minimise social cost. In this civilisation all
human beings are equal; there is no stratification of any kind. Where as in the Bhadra
Sanskruti, there is inequality among individuals and it is assumed to be natural and hence
inevitable; because of this inequity brute force and violence are indispensable. The individual
in elite civilisation maximises personal benefits and minimises personal costs. Mashruwala
stops here, but we add that in this game ‘economic man’, where individual maximises benefits
and minimises cost, imposes social costs and in the present times, also the environmental
costs. Gandhi with this influence of religious values moves to create ‘ethical man’.
Let us now see what he draws from Bhagvadgita. It says that one who eats food without
offering the necessary daily sacrifice was a thief. This sacrifice (Yagna) to Gandhi was physical
labour. Gujarat Vidyapith, a university founded by Gandhi in 1920, until today has a practice
of daily spinning which is known as Yagnarthe Kantan – spinning for Yagna. Gandhi had
studied and learnt that all religions practiced in India in their basic scriptures, be it Koran,
Bible, Parsi Scripture, Guru Granth Sahib recognise dignified physical labour equal to Yagna.
In December 1916, he responded to Kapildeva Malaviya’s invitation to speak to the members
30
Gandhi’s Economic Thought
of the Myore Central College Economics Society, Allahabad, and he delivered a lecture that
was titled “Does Economic Progress Clash with Real Progress”? To the economists who had
gathered, he defined real progress as moral progress. He said, “By economic progress, I
mean material progress without limit and by real progress we mean moral progress, which
again is the same thing as progress of the permanent element in us.” (Collected Works,
Volume 15).
For him, the source of moral progress came from the saints who lived life of voluntary poverty
all over the world. But he had drawn immensely from India. In the lecture that we have
referred above he quoted from Bible and then added, “I have not taken the trouble of copying
similar passages from the other non Hindu scriptures and I will not insult you by quoting in
support of the law stated by Jesus passages from writings and sayings of our own sages,
passages stronger even if possible than the Biblical extracts have drawn your attention to.
Jesus, Mohamed, Buddha, Nanak, Kabir, Chaitanya, Shankara, Dayanand, Ramakrishna
were men who exercised an immense influence over and moulded the character of thousands
of men ……And they were all men who deliberately embraced poverty as their lot” (Collected
Works, Volume 15).
It may be seen clearly from above that Gandhi was considerably influenced by the moral and
ethical values stated in authentic religious scriptures and also advocated by Saints and Sufis.
It was also possible to trace the sources due to which Gandhi was able to propose an ‘ethical
man’ in economic affairs rather than an ‘economic man’.
3.3
INDIGENOUS INFLUENCES (PERSONS)
On society, polity and economy Gandhi was under influence of some and had resisted influence
of others. A brief review of it is attempted here covering largely the politico-economic influences.
Gandhi was aware that economics was not working in isolation. Political environment had
substantial impact on the type of economic system that would get established.
Gopal Krishna Gokhale was Gandhi’s political mentor. Gandhi had accepted him as political
Guru. Both had significant differences in their ideas- political and economic. Gokhale had not
thought much of Hind Swaraj. Yet, both had very good and intense relationship. Thomas
Weber (2007) has provided good account of this relationship and shown how Gokhale
influenced Gandhi and how Gandhi was influenced. Interestingly, Gandhi had defended Gokhale
in Hind Swaraj. The young revolutionaries did not like Gokhale’s ideas. He was thought to
be a friend of the English. But Gandhi had assessed Gokhale as a person with pure heart and
motive and highly committed to serve the nation. Gokhale also saw Gandhi as a pure soul and
declared it in public. It appears that Gandhi saw in Gokhale pure person of the kind he had
in his imagination, and he must have thought that such a pure person’s politics would also be
pure and serve only the real interest of people. Other than the political connection which
Gandhi and Gokhale shared, it is to the credit of Gokhale that he sensitised Gandhi regarding
the conditions of common people in India. When Gandhi returned to India in 1915 and
thought of getting involved in the freedom struggle, Gokhale advised him to undertake a tour
of the entire country and learn about the socioeconomic conditions of people. This tour, as
we know, helped Gandhi later in formulating his thought of the economic system and economic
activities for the poor and unemployed.
Before we end this section we need to mention two more individuals whose writings influenced
Gandhi immensely. We have already learnt about their ideas and work in Unit 2. They are
Dadabhai Naoroji and R.C. Dutt. The writings of both helped Gandhi in making correct
Indigenous and External Influences
31
economic assessment. At the end of Hind Swaraj, Gandhi has given a list of suggested
readings. The list contains books by both Naoroji and Dutt. (Reference has been given in Unit
2, suggested reading). Gandhi has internalised the contribution of Naoroji, which would be
evident from the following conversation. From Chapter 1 of the Hind Swaraj some dialogues
are reproduced below.
READER: That surely, is not the case. Young India seems to ignore the Congress. It is
considered to be an instrument for perpetuating British Rule.
EDITOR: That opinion is not justified. Had not the Grand Old Man of India prepared the soil,
our young men could not have even spoken about Home Rule.
Here the reference made to Grand Old Man by the EDITOR (Gandhi) is an honorific address
to Dadabhai Naoroji. This reflects deep respect to the Naoroji and acceptance of his
contribution. This is further elaborated as the text follows.
READER: It seems to me that you simply want to put me off by talking round and round.
Those whom you consider to be well-wishers of India are not such in my estimation. Why,
then, would I listen to your discourse on such people? What has he whom you consider to
be the Father of the Nation done for it? He says that the English Governors will do justice
and that we should co-operate with them.
EDITOR: I must tell you, with all gentleness that it must be a matter of shame for us that you
should speak about that great man in terms of disrespect. Just look at his work. He has
dedicated his life to the service of India. We have learned what we know from him. It was
the respected Dadabhai who taught us that the English had sucked our life-blood. What does
it matter that, today, his trust is still in the English nation? Is Dadabhai less to be honoured
because, in the exuberance of youth, we are prepared to go a step further? Are we, on that
account, wiser than he? It is a mark of wisdom not to kick away the very step from which
we have risen higher. The removal of a step from a staircase brings down the whole of it.
When, out of infancy, we grow into youth, we do not despise infancy, but, on the contrary,
we recall with affection the days of our childhood. If after many years of study, a teacher were
to teach me something, and if I were to build a little more on the foundation laid by that
teacher, I would not, on that account, be considered wiser than the teacher. He would always
command my respect. Such is the case with the Grand Old Man of India. We must admit that
he is the author of nationalism.
R.C. Dutt also had deep impact on Gandhi’s mind and emotions. In Hind Swaraj the chapter
on machinery is written entirely on the basis of understanding that he developed from Dutt’s
Economic History of India. The following text from Hind Swaraj is reproduced to show
Dutt’s influence on Gandhi.
READER: When you speak of driving out Western civilization, I suppose you will also say
that we want no machinery.
EDITOR: By raising this question, you have opened the wound I have received. When I read
Mr. Dutt’s Economic History of India, I wept; and as I think of it again my heart sickens. It
is machinery that has impoverished India. It is difficult to measure the harm that Manchester
has done to us. It is due to Manchester that Indian handicraft has all but disappeared. But
I make a mistake. How can Manchester be blamed? We wore Manchester cloth and this is
why Manchester wove it. I was delighted when I read about the bravery of Bengal. There
were no cloth mills in that presidency. They were, therefore, able to restore the original handweaving occupation. It is true Bengal encourages the mill-industry of Bombay. If Bengal had
32
Gandhi’s Economic Thought
proclaimed a boycott of all machine-made goods, it would have been much better. Machinery
has begun to desolate Europe. Ruination is now knocking at the English gates. Machinery is
the chief symbol of modern civilization; it represents a great sin. The workers in the mills of
Bombay have become slaves. The condition of the women working in the mills is shocking.
When there were no mills, these women were not starving. If the machinery craze grows in
our country, it will become an unhappy land. It may be considered a heresy, but I am bound
to say that it were better for us to send money to Manchester and to use flimsy Manchester
cloth than to multiply mills in India. By using Manchester cloth we only waste our money; but
by reproducing Manchester in India, we shall keep our money at the price of our blood,
because our very moral being will be sapped, and I call in support of my statement the very
mill-hands as witnesses. And those who have amassed wealth out of factories are not likely
to be better than other rich men. It would be folly to assume that an Indian Rockefeller would
be better than the American Rockefeller. Impoverished India can become free, but it will be
hard for any India made rich through immorality to regain its freedom. I fear we shall have
to admit that moneyed men support British rule; their interest is bound up with its stability.
Money renders a man helpless. The other thing which is equally harmful is sexual vice. Both
are poison. A snake-bite is a lesser poison than these two, because the former merely destroys
the body but the latter destroy body, mind and soul. We need not, therefore, be pleased with
the prospect of the growth of the mill-industry.
It can be seen from the text above that Gandhi was emotionally disturbed by the account of
exploitation rendered by Dutt in his book. Since in Hind Swaraj Gandhi has adopted the style
of READER and EDITOR, it appears that they are two, but in reality Gandhi has raised
questions and answered them. Thus, while writing Hind Swaraj, he is disturbed once again
by getting reminded of Dutt’s account. It should be noted that Gandhi goes beyond Dutt.
Gandhi not only saw the ills of exploitation that was heaped upon India by the British but also
saw the mills and factories in urban India doing the same to rural India and its poor. He also
saw the ill effects on the character of the people.
It may be clear now that Gandhi was influenced considerably by religion, culture, history and
people in India and with that influence went on to synthesise his economic philosophy with his
holistic philosophy of lifestyle.
3.4
EXTERNAL INFLUENCES
Ajit Dasgupta (1997) makes an interesting observation on external influences on Gandhi. He
says, “Gandhi borrowed the doctrine (bread-labour) from Tolstoy whom, he noted had himself
taken it over from another Russian writer, but Gandhi also professed to find roots of the
doctrine in Bhagvadgita……” This was true not only for Tolstoy, but also for other foreign
influences. Jesus Christ’s life had made great impact on him and he was highly impressed by
the Sermon on the Mount. Twice he came in close contact with the Christian priests. When
he was a student in England he got acquainted with a Christian who was vegetarian. Gandhi
was persuaded to read the Bible. He could not read the Old Testament with interest. Gandhi
writes in his autobiography,
“When I came to New Testament, there was different impact. I had very positive influence
of Jesus’ ‘Sermon on the Mount’. I internalised it in my heart. My mind compared it with
Gita…..My childlike mind integrated Gita, Life of Buddha by Arnold and Jesus’ sermons. I
was very comfortable in my understanding that religion is in renunciation”.
Indigenous and External Influences
33
We can see that Gandhi, in his autobiography in 1927-28, conceded that from an early age
he found roots of all doctrines in Hindu religious discourses and sermons.
Years later, in his mature age when Gandhi was lecturing in Allahabad in December 1916, in
front of economics teachers, he cited an illustration from Christianity. By then he had a vision
of his own that was expressed comprehensively in Hind Swaraj. He said in that lecture that
the societies that prospered materially experienced a moral fall. Rome suffered a moral fall
after it achieved material affluence. The Yadavas ruined themselves morally when they were
rolling in riches. Gandhi thought that an ordinary measure of morality is possessed by most
including the very rich, but their material gains did not ensure moral richness. Sharing his
longstanding observation of the society of the rich he said that almost invariably the greater
the possession of riches, the greater was their moral turpitude. Rich men, to say the least, did
not advance the moral struggle of passive resistance, as did the poor. The rich men’s sense
of self-respect was not so much injured as that of the poorest. Gandhi continued and said
that Jesus Christ was the greatest economist of his time. Quoting the dialogue between Christ,
a citizen and other disciples described by St. Mark, Gandhi emphasised in his lecture the
virtue of spending wealth in the service of the poor and the have-nots. He used illustrations
from Christ’s life to show that the economics which the West was practising was against the
moral and religious preaching of Christianity.
We have noted that Gandhi was influenced by many thoughts and people. However, he came
to his own conclusion and it was not always necessary that he accepted all aspects of the
other thought. Dasgupta (1997) has provided an illustration on this point. He says that Gandhi
condemned exploitation of workers by the capitalists, but refused to condemn all businessmen
as individuals. In fact, it is known that Gandhi was very close to Birlas, and considered Jamna
Lal Bajaj from Wardha as his fifth son. Gandhi had said that his relationship with the rich was
to continue. He did not look upon the rich as wicked and upon poor as angels. Dasgupta
notes, “Statements of this kind are consistent with a Buddhist attitude to wealth which is in
sharp contrast to that of the Christian Fathers who could see ‘no possibility of acquiring great
riches without resort to evil practices or inheritance from those who had resorted to them’,
and for this reason called on all Christians to avoid seeking wealth” (p.166).
There is one more illustration where it becomes evident that while he was highly impressed
by the Sermon on the Mount, he was not at all happy with what some Christian missionaries
were doing in India. Dasgupta notes that Gandhi pointed out that Britain has been particularly
successful in acquiring colonies all over the world. These colonies served as the market for
manufactured products. There were attempts according to Gandhi, to encourage the adoption
by natives of a Western life-style, through conversions, which would cut them off from their
own culture and stimulate a taste for foreign goods. Christianity, as propagated in India had
more to do with life-style and material consumption than with the Sermon on the Mount. The
advent of a missionary in a Hindu household simply meant change in ‘dress, manners, language,
food and drink’.
We can see that Gandhi had fine sense of getting influenced and also be open to critically
analyse every thought and practice he came across. Most importantly, Gandhi never ever
mixed up persons with thought. Relationship with individuals was not determined on the basis
of thought likeness. Heart and intrinsic human values in a person mattered to him most. We
will now briefly review the influence of people from foreign land on Gandhi.
Count Leo Tolstoy highly influenced Gandhi. He had named one of the two farms in South
Africa as Tolstoy Farm. Thomas Weber has given a detailed and analytical account on this
34
Gandhi’s Economic Thought
aspect and it is recommended that students read the book given in the section on suggested
reading. In Hind Swaraj Gandhi in his list of 20 books he had suggested for further reading,
six are that of Tolstoy’s. He was specially impressed by Tolstoy’s ‘Letter to a Hindoo’. He
had read it in England and he translated it in Gujarati and published it in the Indian Opinion.
It appears that Gandhi had become very eager that Tolstoy knew about him and his work.
In South Africa, Father Doke had written a short biography of Gandhi and Gandhi sent it to
Tolstoy. He had also sent translated version of the ‘Letter to a Hindoo’ to him. In 1910,
Gandhi had rewritten Hind Swaraj in English and with utmost urgency sent it to Tolstoy and
sought his comments on it. Unfortunately, Tolstoy could not read it and died, although he sent
a letter of acknowledgement. Gandhi received the letter after Tolstoy’s death.
Gandhi was touched by Tolstoy’s ‘Kingdom of God is within You’. He found very good
resonance of his own ‘inner voice’ in it. The search for self and self-regulation was one of the
key premises in Hind Swaraj. Tolstoy was also rejecting the modern civilisation and he had
also come to the conclusion that modern civilisation had in its core violence and wars. Tolstoy
had suggested going back to nature and earn livelihood by hard work. He called it Breadlabour. We have already shown in Unit 2 how Gandhi interpreted it. Gandhi had made the
reading of ‘Kingdom of God is within You’ book mandatory for all Ashramites in South Africa.
The book influenced Gandhi in formulation of ‘ethical man’ in place of ‘economic man’.
Tolstoy’s books, How Shall We Escape?, The Slavery of Our Times and The First Step
mainly contain criticism of industrial civilisation. Interestingly, in these books Tolstoy, besides
raising the issue of exploitation of labour, disgrace of peasants etc., mentioned about rampant
consumerism in modern life (Parel, 1997). It is clear that Gandhi had internalised most of this
criticism by the time he wrote Hind Swaraj. His idea of limiting wants and leading ethical life
with bread-labour shows the influence of Tolstoy’s ideas. No surprise that Gandhi very much
wanted Tolstoy to take a close look at his Hind Swaraj.
Another important person whose writings had very deep influence on Gandhi’s economic
philosophy was John Ruskin. From the list that is given in Hind Swaraj, one can learn that
Gandhi must have read many more authors who had developed critiques of new industrial and
modern civilisation. But, Ruskin made a deep impact. It should be mentioned here that another
person who had deep influence on Gandhi’s thinking on economics was Henry Polak. A
Contemporary of Gandhi in South Africa, he gave Ruskin’s Unto This Last to Gandhi to
read. Most of you would know if you have read Gandhi’s autobiography that Gandhi read
this book in an overnight train journey. He wrote that once picked up to read he could not
keep the book down. An important characteristic of Gandhi was if he was convinced of an
idea, he would put it in practice. In this case too, Gandhi formed his economics first on the
ground and then formulated the thought.
Unit 5 contains more details on Ruskin’s impact on Gandhi’s economic thought, but even at
the risk of repeating we are introducing here Gandhi’s key learning from the book. Gandhi in
his autobiography has summarised following three points.
1.
That the good of the individual is contained in the good of all
2.
That the lawyer’s work has the same value as the barber’s, inasmuch as all have the same
right of earning their livelihood from their work
3.
That a life of labour, i.e., the life of the tiller of the soil and the handicraftsman, is the life
worth living
Indigenous and External Influences
35
Gandhi published Unto This Last in Indian Opinion serialising it in nine parts. Later he
published a pamphlet and titled it as ‘Sarvodaya’. It should be clear by now as to why Gandhi
had not agreed with Bentham and Mill’s concept of welfare where ‘greatest good of greatest
number’ was the formula. Ruskin guided him to reach to the concept of all i.e., Sarvodaya.
Readers will be able to appreciate that the Sarvodaya movement which was initiated after
Gandhi’s death has its foundation in this concept of ‘unto this last’.
Decentralised village and cottage industry, bread-labour, agriculture based economy and rural
culture all became corner stones of Gandhian economic thought, and we can readily see that
they had their bases in Ruskin’s principles. It may be noted that Gandhi also absorbed
supplementary ideas from others to complete his vision of an economic system that was nonviolent and guaranteed distributive justice. Important among these works was Henry Sumner
Maine’s classic Village Communities. Maine, with his in-depth study of village in different
continents, analysed special features and their strengths and weaknesses. In case of India, he
observed that villages were representative institutions. The Village Council or what we knew
then and know now as Panchayat, enjoyed quasi-judicial and quasi-legislative powers. Gandhi,
in his rural economic system, propounded individual and family life as per Ruskin and Tolstoy’s
concepts of work and wages, and for community life he suggested restoration of village
councils with power.
We may note that the foreign influence on Gandhi was deep with respect to economic thought.
The number of persons influencing were not many, but few influenced his thought significantly.
But it should also be remembered that he, with the help of those thoughts, formulated his own
original thoughts.
3.5
SUMMARY
In this Unit we have described in some detail ideas and persons who influenced Gandhi. We
have shown that influences came both from within India and outside. It is evident from the
sections above that Gandhi drew his basic strength from the Indian sources such as Vedas,
Upanishads and Bhagvadgita. He was influenced by saints who lived in India from time to
time. For political thought and action Gandhi has given credit to Gopal Krishna Gokhale as
his guide. Two more persons’ writings influenced in shaping Gandhi’s economic thought, they
were Dadabhai Naoroji and R.C. Dutt. We have also seen that Gandhi was influenced by the
Christian thought as well. The concept of voluntary poverty appears to have come from life
and discourses of Jesus. The writings of Tolstoy and Ruskin are two most important influences
on Gandhi in the formulation of his economic philosophy. It is shown that Gandhi was influenced
by many persons and thoughts, but he formulated his own seeking roots in the Indian sources
and culture.
3.6
TERMINAL QUESTIONS
1.
Describe the basic Indian sources that influenced Gandhi’s thought on economics.
2.
Which Indian individuals shaped Gandhi’s political and Economic thought? How?
3.
What impressed Gandhi in Christianity and what made him sad about practitioners?
4.
What and how did Gandhi integrate Tolstoy and Ruskin’s idea on economic philosophies
into his own?
36
5.
Gandhi’s Economic Thought
Write short notes on:
i)
Influence of Gokhale on Gandhi
ii)
Ruskin’s central ideas and his adaptation by Gandhi
iii) Rise of ethical man in Gandhi’s economic thought
SUGGESTED READINGS
Collected Works of Mahatma Gandhi, Publications Division, Government of India, Volume
18, p. 73
Dasgupta, Ajit K., Gandhi’s Economic Thought, Routledge, London, 1997
Iyengar, S, and Shukla, N., “Human Values, Individual and Society in Hind Swaraj”, in Journal
of Gandhian Studies, Volume VII, no 1, 2009, pp. 15-41.
Kripalani, J. B., Gandhi: His Life and Thought, Publications Division, New Delhi, 1970
Mashruwala, K.G., Gandhi and Marx, Navajivan Publishing House, Ahmedabad, 1951, referred
April 2007 reprint.
Mashruwala, K.G., In Quest of Truth and Humanity, Navajivan Publishing House, Ahmedabad,
1983.
Parel, Anthony J., Hind Swaraj and Other Writings, Foundation Books, New Delhi for
Cambridge University Press, 1997
Shah, Ramesh B., Gandhian Philosophy of Lifestyle and Economic System, Gujarat Vidyapeeth,
Ahmedabad, 1998 (Gujarati)
Swami Sarvananda., Ishavasyopanishad, Shri Ramakrishna Math, Madras (Chennai), 13th
Revised Edition, 1987
Weber, Thomas., Gandhi as Disciple and Mentor, Cambridge University Press, New Delhi,
2007 (South Asia Edition)
UNIT 4
ENCOUNTER WITH COLONIALISM AND
POVERTY
Structure
4.1 Introduction
Aims and Objectives
4.2 Colonialism (South Africa)
4.3 Colonialism (India)
4.4 Understanding Poverty
4.5 Summary
4.6 Terminal Questions
Suggested Readings
4.1
INTRODUCTION
Gandhi’s encounter with colonialism is normally viewed in the political context. However, our
task here is to look for its implications on Gandhi’s economic thought. When Gandhi went to
England as a student, he did not have any intensive experience vis-à-vis colonialism. He had
joined the Vegetarian Society and was even given an opportunity to hold the office of the
organisation and he also enjoyed freedom of expression. His encounter with colonialism began
in South Africa when he realised during his very first experience in a formal situation, when
in a court he was asked by the Judge to remove his turban. This was contrary to his learning
of English society as a liberal society. He immediately realised that the Indian and other nonBritish enjoyed a secondary citizen’s status in South Africa. Gandhi’s humiliation during the
train journey and subsequent coach travel etc. are well known. This is how he encountered
colonialism individually and he could see the implication on different sections of population. In
this Unit we will try to examine economic implication of colonialism in South Africa and the
formation of economic thought by Gandhi.
After returning to India in 1915, the very first experience of getting involved in Champaran
farmers’ problem gave him the economic implications of colonialism in India. Here it becomes
essential to examine the Champaran Satyagraha and identify the economic issues that Gandhi
encountered. By then Gandhi had written Hind Swaraj. He had understood the way colonialism
had taken grip on India and its economy. He had experienced colonial imperialism and its
features. We will therefore, use the text from Hind Swaraj to assess Gandhi’s encounter with
colonialism. In that analysis there will also be an assessment of industrial capitalism which was
functioning. Gandhi’s response to colonial imperialism and industrial capitalism should not be
restricted as political response alone as some scholars, especially political scientists, have
suggested, but it was a comprehensive response at societal level that included confronting and
responding to political, social and economic issues. Charkha is thus, not a fancy but part of
the comprehensive response.
Gandhi’s encounter with poverty also began in South Africa. In his book ‘Satyagraha in South
Africa’ he has recorded the history of the Indians reaching South Africa. There he records
38
Gandhi’s Economic Thought
their conditions as well. He also encountered poverty issue in the writings of R.C. Dutt about
whom we have mentioned in Units 2 and 3. He was deeply moved by Dutt’s account. Gandhi
undertook an extensive tour of India at the suggestion of Gopalkrishna Gokhale in 1915, and
during this tour he had direct encounter with poverty at many places. It is interesting to note
that Gandhi has not written anything about poverty in India per se, but he has addressed the
problem in making his case for a decentralised economic system and while expressing his
views on machinery. The discussion on poverty in this Unit will be around machinery,
industrialisation and Gandhi’s thought. This is done in order to link Gandhi’s encounter with
poverty in his economic thought perspective.
Aims and Objectives
This Unit would enable you to understand

Gandhi’s exposure and experience with colonialism in South Africa

Gandhi’s encounter with colonial imperialism in India

The link between Gandhi’s economic solution with regard to his experience of poverty
in India in the context of industrial capitalism.
4.2
COLONIALISM (SOUTH AFRICA)
Gandhi lived in South Africa for 23 years. The Satyagraha of South Africa is known all over
the world for its uniqueness. Rare are occasions in history where one finds a completely nonviolent protest movement that has been organised for years and has achieved success. Gandhi
not only led this struggle but was transformed from Mohan to Mahatma. Gandhi had documented
the South Africa struggle. It was also originally written in Gujarati by Gandhi and later translated
by Valji Govindji Desai as ‘Satyagraha in South Africa’. This book contains a detailed account
of Gandhi’s encounter with Colonialism in Africa.
Gandhi notes that the European planters required slave labour. To serve the purpose, the
Natal government had made an agreement with the Indian government and under this agreement,
the labourers came for five years. After five years they had the option to return or stay back
as free labourers. They could offer their labour in open market. They also could pursue some
other occupations. As most labourers were illiterate, reading or writing English was beyond
their capacity. The Agreement was known as girmit and the labourers under agreement came
to be known as girmitiyas. Once their number increased, the white population started having
problems. Gandhi records that with the entry of Indian indentured labour in South Africa, the
Indian business people, mostly Muslims from Mauritius, ventured into the states in South
Africa. They came as free Indians and set up business. Soon they were successful. The native
Africans were afraid of communicating with white population. They were not only cheated by
the white traders and businessmen, but they were also abused, insulted, thrashed. The Indian
business committee soon expanded and natives were very comfortable with them. Hence, the
free Indian business community prospered.
The freed indentured labour also decided to settle down in South Africa. The main reason was
that back home in India they did not have means of livelihood in agriculture or any other
occupations. The first batch of the indentured labour had reached the South African coast on
November 16, 1860. Gandhi had reached Durban in 1893. In 33 years thousands of indentured
labour, free Indian origin businessmen, Indian labourers free from agreement had settled in
South Africa and they had become a sort of threat to the Whites in conducting their business
Encounter with Colonialism and Poverty
39
with authority, cheating and loot. The Indian business community with good relations with
natives had done really well and had prospered. They also had a new market in the Indian
population. Quintals of rice had to be imported from India for them and it was a paying
business. There were Sindhi business people as well who trade in ‘fancy goods’ and their
market were whites! The free indentured labour known as free Indians started growing and
selling vegetables at competitive prices. The whites’ business suffered. There were a few
liberal whites who argued in favour of granting voting rights to the free Indians and hence
Indians had got themselves enrolled in the electoral rolls.
The Whites had colonised Africa for improving agricultural prospects, especially cash crops.
Gandhi writes in ‘Satyagraha in South Africa’,
“They settled in Natal, where they obtained some concessions from the Zulus. They observed
that excellent sugar cane, tea and coffee could be grown in Natal. Thousands of labourers
would be needed in order to grow such crops on a large scale, which was clearly beyond
the capacity of a handful of colonists. They offered inducements and then threats to the
Negroes in order to make them work but in vain, as slavery had been then abolished. The
Negro is not used to hard work. He can easily maintain himself by working for six months
in the year. Why then should he bind himself to an employer for a long term? The English
settlers could make no progress at all with their plantations in the absence of a stable labour
force” (p 21).
The purpose of colonising is clear from above. Since the natives did not want to respond to
their labour requirement, which as Gandhi notes earlier that was almost slave kind, the Indian
government was persuaded to send labour. The agreement which the Indian government had
insisted upon was to ensure the safety and welfare of the Indian labour in a foreign soil.
Interestingly, the colonial rulers in India did not trust England’s white subjects in Africa with
respect to taking care of the Indian origin labour. Gandhi rightly observed that Whites in Africa
were looking for slaves. They could not ask for them in literal sense because slavery had been
abolished. The colonial mindset thus was interested in exploiting the labour from anywhere or
from other colonies along with the natural resources in the colonies which they had occupied.
Their objective was to exploit and get rich. Although Adam Smith would have suggested to
them about Laissez Faire and competition for creating wealth of nations, the white people
who had colonised hated any competition from the colonised population.
The whites in Natal wanted to restrict the advancement of the Indian community. They exerted
pressure on the government. Gandhi notes,
“One set of agitators demanded that the labourers who completed their indentures should be
sent back to India, and that therefore fresh labourers arriving in Natal from that time onward
should have a new clause entered in their indentures, providing for their compulsory return to
India at the expiration of their term of service unless they renewed their indentures. A second
set advocated the imposition of a heavy annual capitation tax on the labourers who did not
re-indenture themselves at the end of the first period of five years. Both, however, had the
same object in view, namely, by hook or crook to make it impossible for ex-indentured
labourers to live as free men in Natal in any circumstances”.
The Government appointed a commission and recognised the right of Indians to stay back and
pursue any legitimate business they liked. Natal then was still a Crown Colony; the Colonial
Office was fully responsible for its governance. Natal’s White population first sought to get
empowered with independent governance right. This movement succeeded in 1893. After this,
the Natal government put pressure on Indian government and suggested that the indentured
40
Gandhi’s Economic Thought
labour freed from agreement and other free Indians should pay a per capita annual fee of
pound sterling 25. In those days the rupee equivalent was 375. We should recall here that
about hundred years later when rupee had further devalued, the annual per capita rupee value
of production was 20! This was Dadabhai’s estimation of national income of India. Everyone
could understand that pound sterling 25 was a ridiculous amount to be charged towards the
Indians who wanted to stay back. Finally, this was reduced to pound 3 and this tax was
imposed and collected. This was also very heavy as it was per capita tax. A family normally
had five to six members and it would cost pound 15 to 18 per family per year.
Gandhi had reached South Africa in 1894. This was also the year when the Natal government
was empowered to have its own governance. The Legislative Assembly deliberated on the
issue of rising power of the free Indians and introduced a Bill that discontinued the right to
vote of the free Indians. The Bill was passed and it was the first Bill based on racial
discrimination. By that time Gandhi had finished his work of mediating between the two parties
in conflict over finance matter. But people requested him to stay back when in the farewell
meeting he pointed out at the violation of basic human right in the ‘democracy of whites’ in
Natal. He stayed back and formed an organisation. It collected ten thousand signatures
opposing the Bill, and sent it to Lord Ripon, who was Secretary of the State for Colonies.
The population of Free Indians was around Ten thousand. Lord Ripon disallowed the Bill and
directed not to pass any Bill based on racial discrimination. The ruling community did not sit
quiet. It found different ways of stopping the Indians from competing with them and becoming
more powerful and prosperous. The efforts in Gandhi’s words took the following shape.
“However that may be, the result of the successful opposition to the disfranchising bill was,
that in two other laws passed by the Natal Legislature it had to avoid racial distinction and
to attain its end in an indirect manner. The position, therefore, was not as bad as it might have
been. On this occasion too Indians offered a strenuous resistance, but in spite of this the laws
were enacted. One of these imposed severe restrictions on Indian trade and the other on
Indian immigration in Natal. The substance of the first Act was that no one could trade without
a licence issued by an official appointed in accordance with its provisions. In practice any
European could get a licence while the Indian had to face no end of difficulty in the matter.
He had to engage a lawyer and incur other expenditure. Those who could not afford it had
to go without a licence. The chief provision of the other Act was that only such immigrants
as were able to pass the education test in a European language could enter the Colony. This
closed the doors of Natal against crores of Indians”.
It can be seen from the account above that Gandhi’s encounter with colonialism in Africa made
him realise that the ruling whites wanted to take full advantage of the colonising population
across the globe and continue to exploit them. They did not, in any manner, want the colonised
people to compete and prosper. Gandhi came to view colonialism as a product of modern
Western civilisation. He realised that colonialism legitimised aggressive wars of conquest and
condoned the treatment of the colonised as ‘lesser breeds’ without rights. Gandhi went on to
stay in South Africa until 1915 and fought to gain all human and economic rights and granting
equality to Indians living in Africa using non-violent methods. This protest movement is famous
as the ‘Satyagraha movement in South Africa’.
4.3
COLONIALISM (INDIA)
Gandhi first realised the ground level economic impact of colonial India when he visited
Champaran. He had direct experience of it when in South Africa. He came back to India in
1915 after achieving remarkable success in Satyagraha against the mighty British. It is not that
Encounter with Colonialism and Poverty
41
Gandhi was unaware about India’s condition, but close encounters such as the ones he had
experienced in South Africa were yet to happen. We should remind readers that we have
already narrated about Naoroji and Dutt’s accounts of India’s economic exploitation and
destruction of skills and skilled workers in the country. We have also noted that Gandhi was
deeply moved by these accounts especially the one rendered by Dutt. The Champaran story
of exploitation was more severe and this he learnt when he came back to India from South
Africa and joined India’s struggle for freedom.
D.G.Tendulkar, who has also written a very good biography of Gandhi, has in his another
book ‘Gandhi in Champaran’ (2005 edition) begins with the words that captures the heart of
the situation.
“ The tale of Indian Ryots, forced to plant indigo by the British planters, forms one of the
blackest chapters in the annals of colonial exploitation. “Not a chest of indigo reached England
without being stained with human blood,” said Mr. E, De-Latour of the Bengal Civil Service,
who was Magistrate of Faridpur in 1848. Giving evidence before the inquiry committee, he
revealed: “I have seen several ryots sent unto me as a magistrate, who have been speared
through the body. I have had ryots before me who have been shot down by Mr. Forde, a
planter. I have put on record how others have been first speared and then kidnapped; and
such a system of carrying indigo, I consider a system of bloodshed”.
Indigo, known as Neel in most Indian languages, is an Indian native product discovered by
the British for their use in textile industry. The East India Company in 1600, when it was yet
to exercise political power in India as a coloniser, had already traded in indigo and it was a
major item giving them huge profit. The first revolt against the Company and later against the
British Raj happened in Bengal in the beginning of the nineteenth century and a special
commission was appointed to look into the indigo farmers of Bengal. Tendulkar has given a
very detailed account and it is recommended to read this account of how economic exploitation
of the colonised was organised and carried out with the sympathy of the administrators. The
indigo cultivation had moved to parts of Bihar that was under the Bengal province during the
British administration towards the end of the eighteenth century. The system was exploitative
from the beginning. In about hundred years, Champaran had ranked first in indigo cultivation
among other areas in Bihar. Tendulkar notes, “The cultivation of indigo was more extensive
in Champaran than in any other districts of Bihar. According to the survey of 1892-97, no less
than 21 factories with 48 outworks employing 33,000 labourers had been established in the
district, while the area under indigo cultivation was 95,970 acres or about seven per cent of
the cultivated area” (p.16).
The artificial dye appeared in Europe in 1900 and this led a depression of indigo prices. It
also led to extreme exploitation of indigo farmers. The main problem was that the indigo
farmers were not free to grow anything else if they felt that indigo did not yield remunerative
price to them. In the liberal and free situation, farmers can also respond to price signals and
decide to grow or not to grow a particular crop. In the colonised period, the British planters
not only forced the farmers to grow indigo, but also forced them to accept lower prices and
taxed the land heavily.
It should be admitted that the British administration had made efforts to understand the
systems and intervene in the process. This was because the British had always claimed that
justice was for everyone. They also worked towards smooth revenue administration. The
Indigo problem had also become intertwined with the land revenue administration issues. The
land ownership and tenure system also was exploitative. The combined result of this was that
42
Gandhi’s Economic Thought
the tenants suffered the most. The issues were then referred to Settlement Commissioner. We
end this discussion by highlighting critical observations contained in the Report of the Settlement
Commissioner that indicate the consequences of colonisation in the area.
The Report noted that an illegal cess abwab was collected by the planters and land owners.
It was equal to the legal rent and indigo farmers ended up paying twice the legal rent. There
were forty types of payments that made up the abwab. Tenants had to pay for the use of
water from the canals. It was known as painkharcha. This had to be paid even by those who
did not get access to canal water and a few cases even when there were no canals. Besides,
the other abwab items included salami, tinkathia, lagan, bandhbaheri, bathmat, bapahiputhaii etc. The last was a sort of a death duty. There were other specific items collected
by planters as part of abwab such as marwach when tenant’s son got married, sagaura at
the time of widow remarriage, on Hindu festival the planters received dawatpuja, phaguahi,
dasahari, chaitnawami. When the planter had to buy an elephant the tenants had to mobilise
fund that was called hathiahi. If the planters build a new house or bought a car or a boat,
the tenants had to mobilise ghorahi, motorahi and hawahi. When a planter fell ill, the tenants
had to pay ghawahi.
One can see that the system led to severe extortion. The Settlement Commissioner’s Report
had come out in 1915, the year Gandhi came back to India from South Africa. One of the
indigo farmers Rajendra Shukla, who was courageous, made continuous representations in
various political fora. He approached Gandhi in the Lucknow Congress and requested him to
take up this cause. Gandhi with some reluctance accepted it and then as we know championed
it. In the process of the Champaran Satyagraha, Gandhi once again encountered colonialism.
This time it was in India.
There was one more type of encounter that Gandhi had with the colonialism among Indians.
This related to the mindset. According to Gandhi, the people in India had developed the
mindset to get colonised. He has described this in Hind Swaraj. He could clearly see that
the Indians fighting for freedom and Home Rule did not have indigenous vision of what the
country should be like and what should be the fundamentals of society building or reconstruction.
Gandhi had found this out during his visits to India during 1896 and 1909 and his interactions
with the Indian nationalists in England. In Hind Swaraj he has interpreted the minds of those
moderates or extremists and shown that everybody wanted British to go, but they wanted to
emulate the same system. Relevant text from Hind Swaraj is quoted below.
READER: I have now learnt what the Congress has done to make India one nation……….I
would now like to know your views on Swaraj. I fear that our interpretation is not the same
as yours.
EDITOR: It is quite possible that we do not attach the same meaning to the term. You and
I and all Indians are impatient to obtain Swaraj, but we are certainly not decided as to what
it is. To drive the English out of India is a thought heard from many mouths, but it does not
seem that many have properly considered why it should be so. I must ask you a question.
Do you think that it is necessary to drive away the English, if we get all we want?
READER: I should ask of them only one thing, that is: “Please leave our country.”…….
EDITOR: ………… Why do you want to drive away the English?
READER: Because India has become impoverished by their Government. They take away
our money from year to year…… We are kept in a state of slavery. They behave insolently
towards us ……..
Encounter with Colonialism and Poverty
43
EDITOR: If they do not take our money away, become gentle, and give us responsible posts,
would you still consider their presence to be harmful?
READER: That question is useless. It is similar to the question whether there is any harm in
associating with a tiger if he changes his nature…. When a tiger changes his nature, Englishmen
will change theirs….
EDITOR: You have drawn the picture well. In effect it means this; that we want English rule
without the Englishman. You want the tiger’s nature, but not the tiger; that is to say, you would
make India English. And when it becomes English, it will be called not Hindustan but Englistan.
This is not the Swaraj that I want.
The text that follows contains elaboration of most of these points. Gandhi saw that even the
educated Indians had taken to the Western thinking and they all wanted to modernise India.
For them Home Rule or ‘Hind Swaraj’ was political freedom. They wanted to change the
ruler. They did not have much of a problem with the set of rules for governance. This also
implied that the Indians seeking freedom were heading for similar civilisation. This, in Gandhi’s
opinion, was colonial mindset. He realised that the British had also colonised the minds of
people. Gandhi rose to fight against political as well as socio-economic colonialism in India.
4.4
UNDERSTANDING POVERTY
It should be clear by now that one of the serious and severe impacts of colonialism on India
was impoverishment of large masses. This happened because the economic backbone of India
was broken systematically by the British from the very beginning of their landing on the Indian
shore. The East India Company had come to look for business and with the expansion of
industrialisation in Britain, the company helped in extending the market for industrial output.
It imported inputs required for industry and infrastructure cheaply from India and exported
finished goods at prices cheaper than the domestic prices. The local producers who produced
goods manually and in small scale could not stand the competition. Gandhi noted that this led
to rampant unemployment and the skilled and unskilled workers in non-agriculture sectors had
to leave their work and go back to agriculture and allied work. The pressure on land and
agricultural activities increased.
Gandhi has realised the gravity of the situation in India with respect to poverty. But he has
not written about poverty as a subject in great detail. He encountered poverty in many
different situations and there are descriptions about them. Interestingly, a person who was
compassionate and believed in ‘Sarvodaya’ and rejected the thesis of ‘the greatest good of
the greatest number’, did not ever talk about anti-poverty programme in the way in which it
is discussed presently. This does not mean that he failed to recognise it as a serious problem,
or that he did not want poverty to be eradicated. Poverty, for Gandhi, was a curse and all
efforts had to be directed towards removing it. For Gandhi poverty was a structural issue. The
present day economic analysis has tried to look at poverty problem as an incidental occurrence
and to some extent the destitution issue arising out of unusual circumstances like widowhood,
losing the main earning worker in a family or some family level misfortune.
Ramesh Shah (1998) writes in this context that Gandhian economic system is understood on
the basis of specific programmes he had suggested for removal of unemployment and poverty.
His suggestions are then analysed and declared irrelevant in the present day context. This is
a wrong approach to take. Shah sees two reasons for it. One, the remedies Gandhi had
suggested for poverty and unemployment removal in his times was borne out of the ground
44
Gandhi’s Economic Thought
realities in those times. Further, his solutions also were embedded deeply in his economic
philosophy. The programmes came as part of the lifestyle that Gandhi had recommended. The
second problem with respect to the application of Gandhian solution to the present day
situation of poverty is that Gandhi’s solution assumed some basic values in society. If the
building or reconstruction of society was not based on those values, how could one apply the
solutions and expect to yield results?
Let us elaborate this point. In Gandhi’s economic system emphasis is placed on home and
cottage industries and decentralised production system. He recommended Khadi based on
hand spinning and hand weaving during the freedom struggle and argued that it would solve
the twin problems of unemployment and poverty. One should not deduce on the basis of this
recommendation that Khadi and village industry are effective anti-poverty programmes. This
was attempted in the Five Year Plans in the country to solve the rural unemployment poverty
from the Second Plan onwards. If such inference is made then the next inference would be
that if there were no poverty and unemployment in a society Khadi and village industry and
decentralised production systems were not required. Gandhi would not have accepted this
position. As Vinoba Bhave, a scholar and Gandhi’s follower explained later decentralised
home-based and cottage industry was part of the total economic system and not a stand alone
solution. Had it been so, it would only mean decentralising centralised industries. Breaking the
large units into small and tiny ones and spreading it in nooks and corners of the country is not
what decentralised industry means in Gandhian sense. There it is a part or a feature of a
society that has minimum urban settlements in which basic needs of all are met and there is
no place for luxury. People are not greedy. In short, it is ‘ethical man’ who is in the economic
system and not the ‘economic man’. Perhaps a more relevant question would be: should
Gandhi’s recommendation be applied in the situation where the overall philosophy is not
accepted by the society?
In this context we should briefly review the debate on the economic development premises.
We have reviewed it already in Unit 2, but a revisit is necessary in order to understand why
and how Gandhi understood poverty differently. Dasgupta notes that the central concern of
the Indian economic nationalism was to find a solution for mass poverty in the country. The
causes for poverty were relatively well established and accepted by thinkers and politicians
of the time. Naoroji and Dutt had carried out good empirical analysis and had shown the
process of impoverishment of the Indian masses. However, there were different opinions when
it came to suggesting remedies. In fact, Justice Ranade had different view on the process of
impoverishment in the country. He was in agreement with others that over-dependence of
workers on agriculture was the result of fall in output and employment in indigenous craft
industries. But Ranade thought that it was a global phenomenon due to the advent of technology
and machine-based industrialisation that had created economies of scale and the factoryproduced goods were competitive. He did accept that since India was a colony and the
economic policies were exploitative, deceleration of the indigenous industry was faster. Ranade
suggested industrialisation and urbanisation. He also formulated his views similar to the ones
developed in economics literature that came to be known as development economics. Ranade
viewed that the Indian economy was in the agrarian stage and its next stage should be
industrialisation. This had been happening all over Europe and other countries. Most economists
in India agreed with his basic view that India should industrialise in order to eradicate poverty.
They differed in why it was not happening or how it could happen.
Gandhi did not agree with the goal of industrialisation. He did not see industrialisation as
solution for removal of poverty. He argued that economic development based on machinery
Encounter with Colonialism and Poverty
45
would lead to further unemployment and impoverishment. He held firmly that machinery
displaced labour. He was very apprehensive about industry-led economic development because
he feared that it would lead to concentration of wealth and power in the hands of few. The
elite would then start exploiting the rural poor masses in similar fashion as the British did.
Instead he proposed the revival of indigenous and traditional village and craft industry. He saw
in this enormous scope to provide productive employment to a very huge number of workers.
He thought that such kind of productive employment would not only increase national output,
but would also contribute directly towards removal of poverty. It would also arrest urbanisation
and would almost eliminate scope for concentration of economic power. For Gandhi a society
with minimum inequity was the preferred goal. In this context he had introduced the concept
of Swadeshi. It would be working to eliminate capitalism; resources would be owned by
individual producers or by the community. The output would be shared rather than being paid
as returns to factors of production.
We can see that Gandhi understood the poverty problem in a radically different way than the
economists of his times. While Gandhi and most economists had agreed on the process of
impoverishment, they differed significantly in suggesting remedies. Interestingly, Gandhi listed
18 Constructive Programmes and not one was specifically named as anti-poverty. It is hoped
that the reader is able to understand that for Gandhi poverty was not a residual issue, but a
structural issue and his remedy to it was also structural.
4.5
SUMMARY
In this unit we have tried to develop an understanding about the influence of colonialism on
Gandhi’s economic thought. Gandhi encountered colonialism in South Africa more in terms of
human rights violation. Indians had entered South Africa as indentured labourers and when
free wanted to pursue livelihood activities honestly and presumed equality with the whites.
Gandhi saw that the white who ruled the states in South Africa saw this as threat to their way
of profiteering and exploitation and tried to stop Indians by assigning them second grade
citizenship. Their rights as citizen were curtailed. This happened mainly due to the coloniser’s
mindset that prevailed heavily among the white citizens in Africa. In India the colonialism had
been working at two levels. At the economic level the way of working was the same. Since
the workers were not indentured labour, they had to deal with independent owners of production
resources. The British started with trade and soon turned advantages of terms of trade in their
favour. Industrialisation came to their help. In agriculture British became almost extortionists.
This is explained with the help of the Indigo production in Champaran. The second way of
working of colonialism was through the introduction of liberal education. An educated class
indeed grew and the Indian nationalism was born. But this group could not have its own vision
for free India. Be it moderates or extremists, most thought that the British should leave India,
but it would be run by the Indian elite on the same principles that governed England and other
European countries. In this Unit, we have followed the discussion on colonialism with Gandhi’s
understanding of poverty. It is shown that with his unique encounter with colonialism both in
South Africa and in India, he developed different understanding on poverty and remedy for
it. He could see that the impoverishment of the Indian masses was definitely due to colonising
and pursuant economic policies and agreed with other scholars, nationalists and economists.
But he strongly disagreed with the remedy. To him eradication of poverty was not a residual
and independent issue and industrialisation was not an answer. His vision of development of
India was based on revitalising indigenous craft and village industry and providing productive
and dignified livelihood for all.
46
4.6
Gandhi’s Economic Thought
TERMINAL QUESTIONS
1.
What were the central issues with free indentured labour and other free Indians in South
Africa?
2.
How did Gandhi shape his Satyagraha movement in South Africa?
3.
What did Gandhi understand about economic exploitation through Champaran situation?
4.
Why did Gandhi think that the British had colonised the mindset of the Indian elite?
5.
What was the major difference in the approach of Indian Nationalists and Gandhi with
respect to eradication of poverty and why?
SUGGESTED READINGS
Dasgupta, Ajit K., Gandhi’s Economic Thought, Routledge, London, 1997.
Gandhi, M.K., Satyagraha in South Africa, Navajivan Publishing House, Ahmedabad,
(Translated by Valji Govindji Desai), 1928
Heredia, Rudolf C., “Interpreting Gandhi’s Hind Swaraj”, in Economic and Political Weekly,
June 12, 1999
Shah, Ramesh B., Gandhian Philosophy of Lifestyle and Economic System, Gujarat Vidyapeeth,
Ahmedabad, 1998, (Gujarati).
Tendulkar, D.G., Gandhi in Champaran, Publications Division, Government of India, New
Delhi, 2005 edition.
Web Source:
http://nos.org/317courseE/L-35%20COLONIALISM%20IN%20INDIA.pdf
UNIT 5
BREAD LABOUR
Structure
5.1
Introduction
Aims and Objectives
5.2
Ruskin on Work and Bread Labour
5.3
Impact of Leo Tolstoy
5.4
Manual Labour
5.5
Intellectual Labour
5.6
Motivation for Work
5.7
Components of Labour
5.8
Shadow Work and Subsistence Works
5.9
Value–in-Use and Value-in-Exchange
5.10 Summary
5.11 Terminal Questions
Suggested Readings
5.1
INTRODUCTION
Gandhi had great regard and admiration for labour, whether bodily or physical labour, mental
or intellectual labour. To him, the real wealth of any nation consists in its labour. He did not
accept the labour theory of value which was propounded by David Ricardo or of Marxian
form; rather he advocated the moral idea of dignity of labour and believed that labour has its
unique place. He was more near to Saint Paul remarks that if any person would not work,
neither should he eat or Saint Augustine who regarded labour as a means for perfection of
man. The following extract from “Yervada Mandir” gives us an idea as to how the concept
of Bread Labour gripped his mind: “The Law, that to live man must work, first came home
to me upon reading Tolstoy’s writings on Bread Labour. But even before that I had began to
pay homage to it after reading Ruskin’s “Unto This Last”. The Divine Law that man must earn
his bread by labouring with his own hands was first stressed by a Russian writer named T.
M. Bondaref. Tolstoy advertised it and gave it wider publicity. In my view the same principle
has been set forth in the Third Chapter of Gita where we are told that he who eats without
offering sacrifice eats stolen food”(Gandhi,1932, p. 21). Sacrifice here can only mean Bread
Labour.
Aims and Objectives
After studying this Unit, you should be able to:

Explain the concept of Bread Labour as developed by Gandhi.

Discuss how Gandhi gave equal importance to manual and intellectual labour.

How Bread Labour can solve the problem of inequality and exploitation in society.
48
5.2
Gandhi’s Economic Thought
RUSKIN ON WORK AND BREAD LABOUR
John Ruskin, a British Writer and Thinker believed in sincere, honest and happy work, a work
by the hand. The significance of manual work and necessity of bread labour was noted by
him in ‘The Seven Lamps of Architecture’, where he is very much concerned with happiness
of the carver when he is doing his work. “For we are not sent into this world to do any thing
into which we cannot put our hearts. We have certain work to do for bread, and that is to
be done strenuously, other work to do our delight, and that is to be done heartily: neither is
to be done by halves and shifts, but with a will; and what is not worth this effort is not to be
done at all” (Ruskin, 1925, p.318). He also said that hand-work elevated and machine work
degraded the soul. In his famous essay on ‘The Nature of Gothic’, he expresses his concern
for happiness and the delight that a worker should take in his work: “It is not that men are
ill fed, but that they have no pleasure in the work by which they make their bread and
therefore look to wealth as the only means of pleasure” (Ruskin, 1924, p.194). Work with
a will and with all delight is the first requisite of honest and simple life. Life can be made
pleasant only on the sound principle of ‘joyful human labour’, as presented by Ruskin in ‘Unto
This Last’: “Smooth in field; fair in garden; full of orchard; trim, sweet, and frequent in
homestead ringing with voices of vivid existence” (Ruskin, 1934, p.10). Happy work in the
field, in the garden and at home will bring peace and prosperity to the individual and will create
conditions conductive to national health and wealth. In the same book, he noted that what was
needed in England at that time was ‘to show the quantity of pleasure that may be obtained
by a consistent, well administered competence, modest, confessed and labourious.’ In The
Political Economy of Art, Ruskin wrote that all youths of whatever rank, ought to learn some
manual trade thoroughly; “for it is quite wonderful how much a man’s views of life are cleared
by the attainment of the capacity of doing any one thing well with his hands and arms” (Ruskin,
p.174). The members of Parliament should learn how to plough and how to make a horseshoe.
Ruskin is all praise for the life of a labourer and deems him in no way inferior to the soldier
and the author. The labourer serves his country with spade, as a man in the middle ranks of
life, serves it with his sword or pen: so he deserves honourable rewards also.
Mahatma Gandhi admitted in his autobiography that he derived three principles from Unto
This Last. (1) That the good of the individual is contained in the good of all (2) That a lawyer’s
work has the same value as the barber’s in as much as all have the same right of earning their
livelihood from their work, and (3) That a life of labour, i.e. the life of the tiller of the soil and
the handicraftsman is the life worth living. He further acknowledged: The first of these I knew,
second I had dimly realised. The third had never occurred to me. Unto This Last made it clear
as day light for me that the second and third were contained in the first. I arose with the dawn
ready to reduce these principles to practice (Gandhi, 1927, p.275).
5.3
IMPACT OF LEO TOLSTOY
Gandhi was also deeply influenced by the thoughts of Tolstoy, who warned the humanity of
the impending peril if it neglected the value of bread labour. Referring to the Russian writer
Bondaref, Tolstoy observes that his discovery of the vital importance of Bread Labour is one
of the most remarkable discoveries of modern times. The idea is that every healthy individual
must labour enough for his food and his intellectual faculties must be exercised not in order
to obtain a living or amass a favourite but only in the service of mankind. If this principle is
observed everywhere, all men would be equal, none would starve and the world would be
saved from many a sin. It is possible that this globe rule will never be observed by the whole
world. Millions observe it in spite of themselves without understanding it. But their mind is
Bread Labour
49
working in a contrary direction, so an incentive to those who understand and seek to practice
the rule. By rendering a willing obedience to it they enjoy good health as well as perfect peace
and develop their capacity for service (Gandhi, Ashram Observances, 1955 edn, pp.60-61).
To avert the moral degradation and cultural decadence, we have to order our life and vocation
in such a manner as to exert our hands and legs. Brain work alone is not enough, because
man has not only head. He has also the faculty or other limbs, which also needs attention and
proper exertion.
Tolstoy discusses the system of division of labour and said that a section of society is in
poverty, while another enjoys the fruits of others in the name of science and art. He said,
‘Science and art are beautiful things, but just because they are beautiful they should not be
spoilt by joining depravity to them, that is freeing oneself from a man’s obligation to support
his own and other people’s lives by labour’.
5.4
MANUAL LABOUR
Gandhi practised the ideal of Bread Labour in Phoenix Settlement and Tolstoy Farm in South
Africa. Body labour was essential for certain hours of a day in the ashrams. There were
various activities carried on such as agriculture, dairying, weaving, carpentry, tanning etc.
which were must for every member of the ashram. After returning to India, he included these
items in his Ashram vows. He imparted special dignity and position by making it the pivot of
all activities whether political, social, economic and educational activities. The real purpose
of work is to develop man’s higher faculties, just as food builds and sustains the physical body.
Gandhi was of the firm opinion that the adoption of bread labour by one and all as a necessary
value of life would surely pave the way for the establishment of classless and casteless society.
A millionaire cannot carry on his luxurious way of life for long and soon will get tired of this
lifestyle of rolling in his bed all day long and being helped to his food. He has to induce hunger
by exercise. Gandhi said, ‘If everyone, whether rich or poor has thus to take exercise in some
shape or form, why should it not assume the form of productive i.e. Bread labour? No one
asks the cultivator to take breathing exercise or to work his muscles (Gandhi, 1932, pp.3637). He was sure that the distinctions of rank would be abolished when everyone without
exception acknowledged the obligation of bread labour.
According to Gandhi, everyone must be his own scavenger. Evacuation is as necessary as
eating; and the best thing would be for everyone to dispose of his own waste. “If this is
impossible, each family should see to its own scavenging. I have felt for years that there must
be something radically wrong where scavenging has been made the concern of a separate
class in society. We have no historical record of the man who first assigned the lowest status
to this essential sanitary service. Whoever he was, he by no means did us a good” (Ibid.).
We should realise that everyone of us is a scavenger and commence bread labour as a
scavenger. By prescribing the adoption of bread labour by all the Varnas and by making the
scavenging the concern of all, Gandhi attempted to rectify the social structure which was highly
stratified into different castes with the attendant high low, caste outcaste syndrome.
In his own words, “Brahma created his people, with the duty of sacrifice laid upon them, and
said: ‘By this do you flourish, let it be the fulfiller of all your desires.” He who eats without
performing this sacrifice, eats stolen bread,” this says the Gita, “Even thy bread by the sweat
of thy brow,” says the Bible, Sacrifices may be of many kinds. One of them may well be bread
labour. If all laboured for their bread and no more, then there would be enough food and
leisure for all. There would be no cry of overpopulation, no disease and no such misery as
50
Gandhi’s Economic Thought
we see around. Such labour will be the highest form of sacrifice (Harijan, 29.06.1935, p.156).
By this our wants would be minimised, our food will be simple. We should then eat to live,
not live to eat. Let anyone who doubts the accuracy of this proposition try to sweat for his
bread, he will derive the greatest relish from the production of his labour, improve his health
and discover that many things he took, were superfluities’. Men will no doubt do many other
things, either through their bodies or through their minds, but all this will be labour of love,
for the common good. There will then be no rich and no poor, none high and none low, no
touchable and no untouchable.
He further elaborated, ‘Everyone should deem it a dishonour to eat a single meal without
honest labour. If we could shed the aversion to labour and adapt ourselves to unexpected
changes of fortune, we would go a long way towards the acquisition of fearlessness and thus
towards an upliftment of our national character’. He further clarified, let me not to be
misunderstood. I do not discount the value of intellectual labour, but no amount of it is any
compensation for bodily labour which every one of us is born to give for the common good
of all. It may be, often is, infinitely superior to bodily labour, but it never is or can be a
substitute for it, even as intellectual food, though far superior to the grains we eat, never can
be substitute for them. Indeed, without the products of the earth, those of the intellect would
be impossibility’ (Young India, 15.10.1925, pp.355-356).
5.5
INTELLECTUAL LABOUR
Gandhi remarked that intellectual labour is for the soul and is its own satisfaction. He said,
‘In the ideal state doctors, lawyers and the like will work solely for the benefit of society, not
for self. Obedience to the law of bread labour will bring about a silent revolution in the
structure of society. Man’s triumph will consist in substituting the struggle for existence by the
struggle for mutual service. The law of brute will be replaced by the law of man. Intellectual
work, however superior, cannot compensate for bodily labour, even as intellectual food though
far superior to the grains we eat, never can be a substitute for them. Gandhi said, ‘Intellectual
work is important and has an undoubted place in the scheme of life. But what I insist on is
the necessity of physical labour. No man, I claim, ought to be free from that obligation. It will
serve to improve even the quality of his intellectual output’. When the rich take to some useful
physical labour, they will come to know the problems and difficulties of millions of labourers.
Gandhi wanted to stop the mad craze for white collar jobs and check the feeling of hatred
towards physical labour. He said, ‘Under my system it is labour which is the current coin, not
metal’. Therefore he wanted that everyone must do some productive physical labour. Physical
labour done out of ignorance or compulsion can also not be termed as Bread Labour.
Compulsory obedience to the law of Bread labour breeds poverty, disease and discontent.
It is a state of slavery. Willing obedience to it must bring contentment and health’.
Man cannot develop his mind by simply writing and reading or making speeches. Gandhi
believes in eight hours’ day of honest and clean labour. He would not approve of free meals
because, he thinks, it has degraded the nation and has encouraged laziness, idleness, hypocrisy
and even crime. He calls it a misplaced charity which adds nothing to the wealth of the
country, whether material or spiritual, and gives a false sense of meritoriousness to the donor.
He strongly recommends organising institution where honest work has to be done before
meals are served. He wanted to give effect to a cultural revolution by asking even poets,
doctors, lawyers, etc., to practise bread labour and to use their special talents for the service
of humanity. There would be no diseases in the society because the physical labour will keep
men healthy.
Bread Labour
51
Gandhi felt that the conflict between labour and capital can be eliminated only when everyone
voluntarily takes to some useful physical labour. He felt that agriculture, spinning, weaving,
carpentry, etc. which are connected with some primary needs will flourish if all take to physical
labour of the productive nature. The love for Bread labour will not only provide work to the
unemployed manual labourers but will also solve the problem of educated unemployed. When
everyone will be engaged in useful physical labour not only the wants will be reduced but also
the production will increase. These two things will reduce scarcity and solve the problem of
overpopulation, disease and misery.
Gandhi noted that in India, villagers lived a life worse than animals. They were so debased
that they could not work and live naturally. If the people of India had realised the dignity of
labour, they would have never debased and exploited their brethren. Gandhi emphasised that
everyone had the capacity to work and earn more than his daily bread. No labour is too mean
for an honest penny. The only thing is that man should be ready to use his hands and feet for
his bread.
There was a great disparity between the rich and the poor and a great conflict between labour
and capital. This disparity and conflict could be easily removed if everyone put in labour
enough to win his bread. If all worked for their bread, distinctions of rank would be obliterated,
said Gandhi. In India it was particularly required as caste distinctions had become severe and
the number of the poor and the unemployed was increasing.
Bread labour, further, was essential for those who followed a life of non-violence and truth,
as these principles preclude every possibility of exploitation, idleness and the possession of
property for private profit. Gandhi wants every man to work according to his capacity – and
that too useful or serviceable work – that will be a sure remedy against the economic ills of
the country.
5.6
MOTIVATION FOR WORK
One of the major sources of motivation for work lies in the ethical, moral and spiritual values.
Gandhi formulated it in the form of bread labour. The concept of bread labour involves a union
of two basic principles: (i) the expenditure of energy through body work and (ii) the moral
and ethical values enjoined to such energy use. A person expresses oneself through work.
Such work has both subjective and objective dimensions. The objective dimension is the
production of values. The subjective part involves the process of raising the spiritual level of
the person. In other words work is necessary for spiritual growth. It is this spirituality that
provides the most important motivation for work. However, this work has to be searched so
that it can promote spiritual growth. It cannot be ‘stranger defined work’. It has to be ‘friend
or self-defined work.”
Gandhi’s idea about bread labour provides an alternative motivation and source for work and
production. In the work emanating from bread labour, the motivating force is caring, love, and
service. The person who performs bread labour questions both the nature of work and
production; both ends and means are equally important. One does not justify the other. The
production of values generated through bread labour must satisfy the criteria of service, caring,
and love. Similarly the work that is done through bread labour must also be motivated by
caring, love, and service.
52
5.7
Gandhi’s Economic Thought
COMPONENTS OF LABOUR
J. D. Sethi distinguishes four components of labour, namely (i) minimum physical necessary
labour, (ii) instrument for self-actualisation, (iii) method for service, and (iv) means to earn a
living. The concept of bread labour fully incorporates all the first three components. As regards
component four, the concept of bread labour accepts a part of this component with the clear
proviso that the labour involved in earning a living does not involve the giving up of the
principle of morality and service.
This contrasts, fundamentally, with the nature of production in our “modern” production system
of today. In this “modern” system the person who works has no say about the end of this
work production. Many a time they do not even know what they are producing; as, for
example, workers in chemical plants have no idea what sort of chemicals they are producing.
It is not that the workers in our society do not care about what they produce and would like
to produce. But they just do not have the opportunity to effectively express their preferences.
They feel alienated both from the nature of their work and from the resulting production. The
alienation of this work follows from its being devoid of moral and service criteria perhaps
because of its injury to the spirit.
In spite of the alienation and “joyless economy”, the conventional wisdom of today is that the
existing production system is the best, that is, it ensures the production of all the values
desired. What is produced is justified by the existence theorem, namely that if it exists it must
be desired and be desirable. Behind this, no doubt, there is a whole ethical and moral
superstructure. In view of the existence of production, any alternative is immediately suspect
particularly the one based on bread labour. It is dubbed as utopian, idealistic, impractical, and
all that. Such characterisation, criticism and doubts imply a number of questions. Is production
at all possible under an alternative system where the major motive for work is caring, love,
and service? What type of values would such an alternative produce? Is such an alternative
consistent with the existing nature of production? These questions deal with the feasibility,
nature, and comparison of production under the principle of bread labour.
5.8
SHADOW WORK AND SUBSISTENCE WORKS
It should be quite obvious that certain values will certainly be produced by bread labour. It
follows from the principle that human beings do like to work. Bread labour involves that
people gain satisfaction, utilities, and enjoyment from work. The work is, in this case, its own
reward. Such work will, thus, be done simply to raise the spirit of the persons working. In
all societies from past to present, such work has been performed. In our own society a lot
of work is done by people voluntarily. However, voluntary or unpaid work needs to be
distinguished between shadow work and subsistence work. The real difference between the
two kinds of unpaid activity- shadow work which complements wage labour, and subsistence
work which competes with and opposes both is consistently missed. Subsistence work is
nothing else but bread labour. The important point here is that the society/person has to bring
in the elements of a different value system, that of caring, loving, and service.
A contrary view of work prevails when a community chooses a subsistence oriented way of
life. There, the inversion of development, the replacement of consumer goods by personal
action, of industrial tools by convivial tools is the goal. There, both wage labour and shadow
work will decline since their product, goods and service is valued primarily as a means for
ever increasing activity rather than as an end, that is, dutiful consumption. There, the guitar is
Bread Labour
53
valued over the record, the library over the schoolroom, the background garden over the
supermarket selection. There, the personal control of each worker over his means of production
determines the small horizon of each enterprise, a horizon which is a necessary condition for
social production and the unfolding of each worker’s individuality. This mode of production
also exists in slavery, serfdom and other forms of dependence. But it flourishes, releases its
energy, and acquires its adequate and classical forms only where the worker is the free owner
of his tools and resources; only then can the artisan perform like a virtuoso. This mode of
production can be maintained only within the limits that nature dictates to both production and
society.
5.9
VALUE-IN-USE AND VALUE-IN-EXCHANGE
Regarding the nature of production, virtually all things that satisfy basic needs will be produced.
In addition, things and activities that bring joy to people and uplift them will be produced and
performed. These are the values that have been classified as “values in-use”. Even in the
“modern” production system a very large part of “values in use” are produced by the voluntary
and unpaid work process; e.g., the kitchen gardens, the caring for children, old and sick
people, the comradeship, the production of arts and crafts, etc. Even in a “modern” society,
where the emphasis of production is on “values-in-exchange” and “values in threat”, the
contribution of bread labour type work is considerable.
If the society promotes opportunities for and principles of bread labour, the share of “values
in use” in total production will increase and the share of bread labour that produces these
values will also go up. It is quite feasible for the “values in use” to be a preponderant part
of production and all these “values in use” being produced by bread labour.
A question is generally raised: is bread labour consistent with technology? One has to be clear
about technology. Obviously, any technology that dehumanises people is not consistent with
bread labour. On the other hand, there are technologies more specifically tools that are
complementary with bread labour. In a society where bread labour is performed, there will
be a good amount of far more modern technology albeit of a different kind.
For purposes of comparison, it needs to be pointed out that production under the principle
of bread labour may not produce “values in threat” and very little of “values in exchange”. The
reasons are not far to seek. The ethical dimensions of caring, love and service ensure that
“values in threat” will not be produced since these manipulate, degrade and hurt people the
very antithesis of caring and love. Theodore Roszak states the idea forcefully: “Work that
produces unnecessary consumer junk or weapons is wrong and wasteful. Work that deceives
or manipulates, that exploits and degrades is wrong and wasteful. Work that wounds the
environment or makes the world ugly is wrong and wasteful”.
The societies that produce “values in exchange” are generally export oriented. Successful
export orientation involves a work force that feels equally committed to the goals of the
society and willing to maintain the high quality of its product. Japan is, perhaps, the most
visible example of such modes of production. The organisations in Japan are structured to
make the workers identify with the organisations. Japan has been very successful in this effort.
West Germany has also been successful in this regard.
The bread labour and “values in use” determine the quality of life in a society. In the current
literature there is a growing discussion about the divergence between “standard of living” and
“quality of life”. With the growth in GNP, “standard of living” has been going up. However,
54
Gandhi’s Economic Thought
increasingly it is being found that the “quality of life” in these societies has been declining. Part
of the explanation lies in the reduction in the use of bread labour and the production of “values
in use”. As a result, growth has involved an extension of “values in exchange” and “values in
threat”. Such growth has resulted in greater inequality in the society.
5.10 SUMMARY
Gandhi had great regard and admiration for labour, be it bodily or physical labour, mental or
intellectual labour. He noted that the real wealth of any nation consists in its labour. He did
not accept the labour theory of value which was propounded by David Ricardo or of Marxian
interpretation. He firmly believed in the moral idea of dignity of labour and believed that labour
has its unique place. He was highly influenced by the works of Ruskin and Tolstoy in his views
on bread labour. He also believed with great conviction that the adoption of bread labour by
one and all is a necessary value of life that would surely pave the way for the establishment
of classless and casteless society. Above all, Bread labour was essential for those who
followed a life of non-violence and truth, as these principles preclude every possibility of
exploitation, idleness and the possession of property for private profit. Gandhi wants every
man to work according to his capacity – and that too useful or serviceable work – that will
be a sure remedy against the economic ills of the country.
5.11 TERMINAL QUESTIONS
1.
Analyse the doctrine of Bread Labour. How does it solve the problems of inequality and
exploitation in the society?
2.
Critically examine the concept of Bread Labour as developed by Gandhi.
3.
Write short notes on the following:
a)
Shadow work and subsistence works
b)
Value-in-use and value-in-exchange
c)
Ruskin and Tolstoy on Bread Labour
SUGGESTED READINGS
Anjaria, J. J., An Essay on Gandhian Economics, Vora & Co., Bombay, 1945
Biswas, S. C., (ed.), Gandhi, Theory and Practice, Social Impact and Contemporary
Relevance, Indian Institute of Advanced Studies, Shimla, 1969
Dantwala, M. L., Gandhism Reconsidered, Padma Publications, Bombay, 1945
Dhawan, Gopi Nath., The Political Philosophy of Mahatma Gandhi, Navajivan Publishing
House, Ahmedabad, 1951
Gandhi, M.K., From Yervada Mandir, Navajivan Publishing House, Ahmedabad, 1957
Gandhi, M.K., Ashram Observances in Action, Navajivan Publishing House, Ahmedabad,
1955
Harijan, A Journal of Applied Gandhism, Garland Publishing Inc, New York, 1973
Bread Labour
55
Myrdal, Gunnar., Asian Drama: An Inquiry into the Poverty of Nations, Three Volumes,
Panteon, New York, 1968
Ruskin, John., The Political Economy of Arts, Collin’s Clear Type Press, London
Ruskin, John., Seven Lamps of Architecture, George Allen, London, 1925
Ruskin, John., Unto this Last, Oxford University Press, London, 1934
Sethi, J. D., Gandhi Today, Vikas Publishing House, New Delhi, 1976
Sharma, Jai Narain., Alternative Economics, Deep and Deep, New Delhi, 2003
The Collected Works of Mahatma Gandhi, Publications Division, Ministry of Information and
Broadcasting, Government of India, New Delhi, 1961
Young India, Navajivan Publishing House, Ahmedabad
UNIT 6
SELF-RELIANCE AND SELF-SUFFICIENCY
Structure
6.1 Introduction
Aims and Objectives
6.2 Swadeshi, Swadharma, Swabhava
6.3 Not against Foreign Trade
6.4 Principle of Neighbourhood
6.5 Self-reliance: A Moral Imperative
6.6 Economics of Khadi
6.7 Essence of Swadeshi
6.7.1 Swadeshi: Some Misunderstandings
6.7.2 Contemporary Relevance
6.8 Summary
6.9 Terminal Questions
Suggested Readings
6.1
INTRODUCTION
Winners do not do different things. They do things differently. Many of the conceptions
Gandhi used, developed and made popular were not new. Gandhi claimed no originality for
himself. He said, “I have nothing new to teach the world. Truth and non-violence are as old
as hills” (Harijan, 28.03.1936, p.49). Originality does not always lie in inventing new ideas.
It also lies in giving old ideas new meanings and made practical and are popularised. Swadeshi
was one of the ideas, which was not new. Much before Gandhi, political reformers had talked
of reviving indigenous industries. India had centuries-long traditions of indigenous industries.
The Indian patriots had realised, long before Gandhi that the poverty of India was principally
due to the neglect of their industry at the hands of the British. R.C.Dutt’s ‘Poverty of India
- under British Rule,’ depicts it effectively about which Gandhi said that when he read it he
was so powerfully affected that he began to shed tears. They felt that unless there was a
revival of Indigenous Industry, the masses of India would remain poor.
The Swadeshi movement received a great impetus during the agitation of the Partition of
Bengal (1905) and was characterised by a great deal of emotion and sentiments. During the
partition days patriots could weave beautiful words but they could not produce articles of use.
The result was that merchants passed off imported goods as India made. Early in 1919 a
meeting was arranged between Gandhi and a patriotic mill-owner. The latter told Gandhi,
“You are aware that in the days of partition (Bengal) the mill owner fully exported the
Swadeshi movement. When it was at its height, I raised the price of cloth and did even worse
things. We are not conducting our business out of philanthropy. We do it for profit” (Kripalani,
1967). Gandhi then understood why the Swadeshi movement of the partition days had fizzled
out.
Self-reliance and Self–sufficiency
57
Gandhi realised that the Swadeshi and the boycott movement could not prosper without an
increase in indigenous production, which would be independent of the mills. He also realised
that in olden days the agricultural masses in India had always some subsidiary industries to add
to their meagre income. He felt that the textile industry as the most viable one especially
because of its being the biggest item of import from England. The tradition of hand-spinning
and hand-weaving had been given up owing to the import of mill yarn from England and was
wiped out in competition with foreign mill cloth. Upon realising that spinning and weaving
could best provide subsidiary work to the agricultural masses of India, Gandhi worked for the
revival of this industry; it would not only make the import of cloth from abroad superfluous,
but also would greatly add to Indian’s economic, social and political strength.
Aims and Objectives
After studying this Unit, you should be able to

Discuss the Gandhian concepts of Self-Reliance and Self-Sufficiency.

Examine the relevance of Gandhi’s concepts of Swadeshi in the contemporary world.
6.2
SWADESHI, SWADHARMA, SWABHAVA
Gandhi’s conception of Swadeshi was very identical to that of Swadharma in the Gita. This
Swadharma depends upon Swabhava, one’s fundamental nature. People must follow in life
such avocations as would not do violence to this nature. The Gita says: “One’s own dharma
though imperfect is better than the dharma of another well performed. The dharma of another
is fraught with fear”. Gandhi says of this: “Interpreted in terms of one’s physical environment,
this gives us the law of Swadeshi, for Swadeshi is Swadharma applied to one’s immediate
environment” (Ibid).
In a speech delivered before the Missionary Conference, Madras, on 14 February 1916, he
defined Swadeshi in the following terms: 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. Thus, as
for religion, in order to satisfy the requirements of definition, I must restrict myself to ancestral
religion. That is the use of my immediate surroundings. If I find it defective, I should serve it
by purging it of its defects. In 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 things that are produced by my immediate neighbours and serve those industries
by making them efficient and complete where they might be found wanting” (CWMG, Vol. 13,
p.219).
As Dr. Gopi Nath Dhawan noted, Gandhi’s views on Swadeshi seem to have undergone an
evolution (Dhawan, 1951, p.106). A study of his address delivered at the Missionary
Conference, Madras, 1916 shows that he then stood for total self- sufficiency of the country
and its economic isolation from the world. Referring to the external trade, he said: “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, she would
be today a land flowing with milk and honey”. He further said, “It has been argued that India
can not adopt Swadeshi in the economic lift at any rate. Those who advance this objection
do not look upon Swadeshi as a rule of life. With them it is a patriotic effort not to be made
if involved any self-denial. Swadeshi is a religious discipline to be undergone in utter disregard
of the physical comfort it may cause to individuals. Under its spell the deprivation of a pin or
needle, because these are not manufactured in India, need cause no terror. A Swadeshist will
58
Gandhi’s Economic Thought
learn to do without hundreds of things which today he may consider necessary. Moreover,
those who dismiss swadeshi from their minds by arguing the impossible, forget that swadeshi
is the only doctrine consistent with the law of humility and tone” (CWMG, vol.13, p.222).
6.3
NOT AGAINST FOREIGN TRADE
In 1926 Gandhi wrote, “I have never considered the exclusion of every thing foreign under
every conceivable circumstances as a part of Swadeshi. The broad definition of Swadeshi is
the use of all home made things to the exclusion of foreign things, insofar as such use is
necessary for the protection of home industry, more especially those industries without which
India will become pauperized. In my opinion, therefore, Swadeshi which excludes the use of
everything foreign no matter how beneficent it may be, is a narrow interpretation of Swadeshi”
(Young India, 17.02.1926, p.213). From the excerpts of Yervada Mandir, we read: “To reject
foreign manufactures because they are foreign and go on wasting national time and money in
promotion in one’s country of manufacture for which it is not suited would be criminal folly,
and a negation of Swadeshi spirit” (Gandhi, 1957, p.66).
This shows that he moved away from his earlier position. Now he has permitted international
trade and exchange of commodities if this meant an exchange of equal advantage and did not
involve injustice. However, if it was to be a question of choice, he would have preferred selfsufficiency. But as a matter of practical policy he did not think that India should stand aloof
in the matter of trade. “I would not wish India to live a life of complete isolation whereby it
(sic) would live in water-tight compartments and allow nobody to enter her borders or to
trade within her border” (Rajagopalachari, 1957, p.51).
He defined Swadeshi articles as any article which “subserves the interest of the millions even
though the capital and talent are foreign but under effective Indian control” (Harijan, 25.02.1969,
p.25). 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 an ideal
definition” (Ibid, 23.10.1937, p.311).
Though Gandhi did not ordinarily favour legislative interference, yet we find him as an ardent
supporter of protectionism. He pleaded strongly for stiff protective duties upon foreign goods
in order to nurture national interest. This may be cited as showing his allegiance to the Indian
capitalist class. But a correct reading will be that he was not guided by any such definite
interest, though objectively the Indian capitalists benefited by this demand. As P. Spratt
reminds us, “His support is no doubt likely to benefit the capitalists rather than anybody else,
but he does not advocate with that intention. His protection is a villagers’ protection, designed
to help the effort for self-sufficiency, not that for profits” (Spratt, 1939, p. 223).
6.4
PRINCIPLE OF NEIGHBOURHOOD
We have duties to all humankind but the duties we owe to all segments of it are not of equal
importance. There is a hierarchy of duties based on the degree of proximity. Proximity is the
decisive element in forming ties in terms both of closeness of feelings and knowledge of
circumstances: “Our capacity for service is limited by our knowledge of the world in which
we live” (CWMG, Vol. 63, p.233). Accordingly, we must start with service to our neighbours.
An individual’s service to his country and humanity consisted in serving his neighbours. One
Self-reliance and Self–sufficiency
59
should not serve one’s neighbour and claim to serve one’s distant cousin in Antarctica, for one
must not serve one’s distant neighbour at the expense of the nearest. This is not only the
teaching of all the religions in the world but also the foundation of true and humane economics.
Gandhi saw no contradiction between the principle of Swadeshi, interpreted in terms of
neighbourhood, and that of rendering service to all humanity, which he also upheld.
Asked if a man can serve the immediate neighbours and yet serve the whole of humanity,
Gandhi replied that he can, provided the service to neighbours was not itself exploitative of
others. The neighbour himself would in turn serve his neighbours and in this way the chain of
service would be expanded to include the world, rather than shut it out. For the same reason,
the principle of neighbourhood, according to Gandhi, was neither metaphysical nor too
philosophical for comprehension but just good common sense, for ‘If you love your neighbour
as thyself, he will do likewise with you, and both would gain thereby” (Ibid, Vol. 60, p.254).
The neighbourhood principle was not confined to the choice of commodity bundles but
applied quite generally to choice of states of affairs. When you demand Swaraj, you do not
want Swaraj for yourself alone but for your neighbours too. It was the choice of commodities
however, that formed the primary concern of the Swadeshi Movement.
The neighbourhood principle has a direct consequence for the interpretation of ethical preferences
in terms of Swadeshi, namely that whenever local products are available they should be
preferred to their imported counterparts. Whether the latter were imports from foreign countries
or from other regions of the same country made no difference. From around 1919 onwards
Gandhi spelt out this moral imperative of local buying in much detail using numerous specific
examples (Ibid, Vol. 16, p.30).
As between countries the neighbourhood principle translates as patriotism. An individual’s
preference ordering over commodity –bundles should therefore be guided by patriotism. The
law of each country’s progress demands on the part of its inhabitants preference for their own
products and manufacturers. Accordingly, for Indians, there is a moral obligation to use
products made in India whenever they can get them, even though these may be inferior to their
foreign counterparts.
“There are several Swadeshi things on the market which are in danger of disappearance for
want of patronage. They may not be up to the mark. It is up to us to use them and require
the makers to improve them whenever improvement is possible”, he pleaded (Ibid, Vol. 40,
p.435).
Gandhi does not, however, explain how consumers continuing to use a product could, at the
same time, require the makers to improve them. He mentions a number of goods belonging
to this category. India produces a sufficient quantity of leather. It is therefore a duty on the
part of an Indian consumer to wear shoes made of Indian leather in preference to foreign
leather shoes, even if they are comparatively dearer and of an inferior quality. For the same
reason products of Indian textile, sugar or rice mills ‘must be preferred to the corresponding
foreign product’. Swadeshi items should not be discarded in favour of better or cheaper
foreign things, for comparisons of price or quality are not relevant for the kind of consumer’s
choice Gandhi is talking about, but patriotism is. “We attend flag-hoisting ceremonies and are
proud of our national flag. Let me tell you that our pride has no meaning if you do not like
things made in India and hanker after foreign ones” (Ibid, Vol.62, p.324).
If, on the other hand, a particular commodity is not, or cannot easily be made in India, the
argument ceases to apply. Accordingly, while Gandhi regards it as a sin to import wheat from
60
Gandhi’s Economic Thought
Australia on the score of its superior quality, he would not rule out importing Oatmeal from
Scotland, for Oats are not grown in India. “I buy useful healthy literature from every part of
the world. I buy surgical instruments from England, pins and pencils from Austria and watches
from Switzerland” (Ibid, Vol.26, p.279). For the same reason, in his Presidential Address at
Belgaum Congress on December 26, 1924, he asserts “All British goods do not harm us.
Some goods such as English books we need for our intellectual or spiritual benefit” (Ibid,
Vol.25, p.475).
While upholding the principle of ‘patriotic preference’, Gandhi was at pains to explain that the
spirit of Swadeshi was not vindictive. Exclusion of foreign goods was not intended as a
punishment, it was a necessity of natural existence. Nor was it narrow or parochial, ‘for I buy
from every part of the world what is needed for my growth’. But by the same token, ‘I refuse
to buy from anybody anything, however nice or beautiful, if it interferes with my growth or
injures those whom nature has made my first care’ (Young India, 12.03.1925, p.88).
Not all foreign things, therefore, were to be excluded but only certain foreign things, especially
cloth. Gandhi attached considerable moral importance to this distinction, “If the emphasis were
on all foreign things, it would be racial, parochial and wicked. The emphasis is on all foreign
cloth. The restriction makes all the difference in the world”. Equally, the ethics of Swadeshi
required that the exclusion should not be targeted at British cloth only. It applied just as much,
say to the import of cloth from Japan, which was rapidly increasing during the 1930s. ‘How
can I take a single yard of Japanese cloth however fine and artistic it may be? It is poison
to us, for it means starvation of the poor people of India’ (CWMG, Vol.68, p.188).
6.5
SELF-RELIANCE: A MORAL IMPERATIVE
Gandhi’s doctrine of buying local products was a moral imperative that had protectionist
implications, but Gandhi had no particular allegiance to free trade. Responding to a 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 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 be
conducive to the healthy growth of nations and so promote both matter and moral progress.
“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 introduction of moral
values as a factor to be considered in regulating international trade.” He emphasised this
approach to foreign trade would not lead to anarchy. “There will be nations that will want to
interchange with others because they cannot produce certain things. They will certainly depend
on other nations for them but the nations that will provide for them should not exploit them”
(Harijan, 12.02.1938, p.5).
6.6
ECONOMICS OF KHADI
While the argument applies in principle to all home grown products, Gandhi singled out the
products of village industry for special attention. In that Khadi claims place of pride. Indeed,
the Swadeshi movement comes to be regarded primarily as a means of encouraging consumer
Self-reliance and Self–sufficiency
61
to wear Khaddar. Accordingly, people were asked to buy Khaddar in preference to mill-made
cloth and to boycott foreign cloth altogether.
Gandhi’s identification of the Swadeshi Movement with village industry, and with hand-spinning
in particular, was based on a two-fold argument, that the urban population of India owed a
special moral duty towards the villages; and that this duty would be best discharged by
providing a market for village products and above all for hand-spun cloth. This argument is
a logical consequence of the principles of neighbourhood (there are few towns or cities in
India that are not surrounded by villages) and patriotism (most Indians are villagers). Gandhi
sought to strengthen it further by introducing yet another moral principle, that of historical
justice. Both economic and moral standards in the villages had declined through long neglect.
City people as a whole were partly to blame. “The poor villagers are exploited by the foreign
government and also by their own countrymen, the city dwellers. They produce the food and
go hungry. They produce milk and their children have to go without it” (CWMG, Vol.83,
pp.26-27).
Reparation had to be made. “We are guilty of a grievous wrong against the villagers and the
only way in which we expiate it is by encouraging them to revive their lost industries and arts
by assuring them of a ready market” (Ibid, Vol.60, p.256).
This solution was entirely feasible, provided, that city people come to accept their moral
responsibility. ‘We have to be rural minded and think of our necessities and the necessities of
our households in terms of rural mindedness- it is in consonance with the true economics of
our country’ (Ibid). Gandhi saw himself as an exponent of this ‘true economics’. ‘A link has
been built to bridge the yawning gulf between the cities and villages. We have only to cross
this bridge. Patronising village industries will constitute the crossing of the bridge’. To Gandhi
this was not a matter of charity, but a purely commercial proposition, requiring one to exercise
ethical preferences when choosing one’s consumption bundle.
The second part of the argument seeks to justify the use of hand-spun cloth as the appropriate
means of repaying the debt that city people owe to the villagers, and is based on standard
economic reasoning. Spinning was a solution for rural unemployment. The whole scheme of
Khadi, according to Gandhi, rested upon the supposition that there were millions of poor
people in India who had no work during at least four months of the year. Around threequarters of the population of India belonged to this category, because agricultural work was
seasonal, they remained idle for a third of the year or more. This contributed to their endemic
poverty, pushing them to the verge of starvation. If there was crop-failure or famine, the extent
of involuntary unemployment became much greater and many of them died of hunger and
disease. For the semi-starved but partially employed millions, spinning provided a means of
part-time employment as well as insurance against famine. Spinning, therefore, is primarily a
supplementary industry for agriculture.
Why, one might ask, choose spinning rather than some other subsidiary occupation for
agricultural workers? Gandhi answered that ‘Spinning had long been practiced by villagers in
the past. It required a few simple and low cost implement and little technical knowledge and
skill. It could be learnt easily, did not require too much attention, could be done at odd
moments and, for these reasons, was suitable as part time employment for masses of rural
people. Neither cattle-breeding nor weaving, which has been suggested as possible alternatives
to spinning, as a supplement to agriculture, enjoyed these advantages even though they were
more remunerative’.
62
Gandhi’s Economic Thought
Spinning was the easiest, the cheapest and the best, that requires minimum capital outlay and
organisational efforts. 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.
Gandhi neither contemplated nor advised the abandonment of a single, healthy life giving
industrial activity for the sake of hand-spinning. On one occasion, he found that a number of
women had been spinning who were not without occupation or means of making a living.
‘Perhaps they spin in response to our appeal and because they realize it is good for the
country’ (Ibid, Vol.30, p.386). Gandhi remained firm in his resolve that their spinning should
stop, for the Charkha movement had not been conceived with such people in mind but only
for able bodied people who were idle for want of work. The operative principle was quite
clear: if there were no crises of semi-unemployed people, there would be no room for
spinning-wheel.
Gandhi viewed Khadi as not only an economic but also as a political phenomenon. He
believed that the universal adoption of Khaddar by Indians was equivalent to the acquisition
of Swaraj. Daily spinning on the wheel was a symbolic offering-of dedication to India. Khadi
was also the symbol of unity of India. Spinning was a daily sacrament and a concrete viable
technique of participation for the unification and revivification of India. Further, Khadi was a
potent instrument of mass-uplift and mass-education. The spinning-wheel, therefore, was divine
instrument and satisfied the needs of the meanest and humblest of human beings.
Much to Gandhi’s disappointment Khadi could not become a sustainable alternative. It had
limited patronage, and never became an economic proposition as he viewed it.
6.7
ESSENCE OF SWADESHI
The essence of the concept of Swadeshi lies in the following propositions:
1.
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 are entirely made up of important
commodities. Such a utility function is un-swadeshi since it denies the local producers the
necessary means to produce commodities and thereby earn a livelihood for themselves.
2.
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 neighborhood 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 or refuses to improve the efficiency of production. Only
in such cases will the consumer obtain these goods from a distant neighbour.
3.
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 as the consumer is sovereign and the producer the willing slave.
Self-reliance and Self–sufficiency
63
On the contrary, the consumer and the producer are jointly involved in a cooperative
effort.
4.
Translated in economic language swadeshi involves two shifts: an upward shift in the
demand curve and a downward shift in the cost curve for a commodity produced in the
neighbourhood/locality. Both these shifts take place simultaneously. It ensures that the
production of the needed goods 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. People were encouraged to consume goods produced
in England and high taxes were levied on the producer in India of competing goods. Neocolonialism 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.
Swadeshi, if revived, can provide the resurgence of village industries. In view of the dynamic
interactions between the consumers and producers, it can lead to a process of self-reliance.
6.7.1
Swadeshi: Some Misunderstandings
As the idea of Swadeshi mingled with the national movement for independence, a number of
even well meaning intellectuals equated Swadeshi, with the ‘buy Indian’ movement. This ‘buy
Indian’ movement stood by itself and was, in a way, the economic dimension of the political
movement. It involves an act of resistance. It was argued that the British colonialism was able
to obtain resources through exports to India. Further, the ‘buy Indian’ movement will generate
production, employment and income of Indians. This will help the resistance. This idea of buy
nationally produced goods has been refined into a new ‘import substitution industrialisation
strategy of development’. In this strategy, the country attempts to produce goods that it
imports and goods that are produced in other countries. Both these versions reflect a
misunderstanding of the Gandhian concept of Swadeshi. In the ‘buy Indian’ idea the consumer
should switch to production within India which is different from the idea of production, by the
immediate neighbour. The ‘buy Indian’ idea does attempt to shift the demand curve for the
goods in India upwards. However, it also pits the Indian manufacturer against the foreign
producer; i.e., it involves a concept of narrow national patriotism and generates a competitive
struggle between the national and the international or foreign producer. In this sense, it goes
against the Swadeshi spirit which is to serve the world via service to the immediate neighbour.
The import substitution strategy, on the other hand, does not have any redeeming features. It
is based on the proposition that the utility function of the consumer is based on commodities
produced in foreign countries from which imports are obtained. Swadeshi involves changing
these utility functions. Import substitution strategies work towards the satisfaction and further
accentuation of such utility functions. Since import substitution is not necessarily based on the
idea of local resources, the import substitution prices do not even ensure the reduction in the
cost curves of the production of substitution goods. There is thus nothing Swadeshi about
import substitution.
Some scholars have confined Swadeshi with autarky, where a country produces everything
within its borders. It is a state in which there is no trade. Autarky concerns itself only with
production. It differs from Swadeshi in that autarky poses no relationship between the consumer
and the producer. Swadeshi involves a dynamic relationship between the consumer and the
producer wherein cost curves are shifted downwards and demand curve upwards. In an
autarky, demand curve remains independent of production and cost curves may be shifted
upwards. Furthermore, autarky imposes a competitive relationship between the foreign and
domestic producers.
64
Gandhi’s Economic Thought
6.7.2
Contemporary Relevance
During the freedom struggle, most of the Congress leaders missed the comprehensive nature
of Swadeshi as conceived by Gandhi. They merely concerned themselves with its economics.
In the boycott of British goods they also found an effective weapon to fight the foreign
government. They did not fully grasp the meaning of Swadeshi, as enunciated by Gandhi in
terms of Swadharma, which meant for him, as has been already discussed, that the swadeshi
dharma required people to give preference to the goods made by their neighbours over goods
made at far-away places. In India or outside, the educated Congressmen, and more especially
the socialists and communists, conceived of Swadeshi in its limited aspect of patronising Indian
goods, whether made through village and cottage industry in the villages or factories in the
cities.
The economics and business of India’s globalisation of trade and investment flows have
undermined its complex cultural and strategic policy perspective. India’s economic priorities
have to be shaped within the emerging global power structure, maintaining internal socioeconomic stability and defending its sovereignty and territorial integrity.
6.8
SUMMARY
If India is to emerge as a nation whose global relevance is commensurate with its image, it
must establish its credentials by furthering productive multilateral economic and political
relationship all around, and not remain hostage to the western global interests. In fact the
linkage of India’s economy with the global economy is such that India has no option but to
grapple with the dynamics of globalisation. Whether to globalise India or not is not the
question now because globalisation of the world financial system is a historical process. India
is already hooked on to both the world financial economy and the ballooning flow of world
information. It cannot hope to remain half-pregnant, and its choice now is either to abort or
to go all the way. It is in this context that the application of Gandhi’s Swadeshi assumes much
relevance for us.
6.9
TERMINAL QUESTIONS
1.
Discuss the Gandhian Concepts of Self-Reliance and Self-Sufficiency.
2.
Examine the relevance of Gandhi’s concept of Swadeshi in the present world.
3.
‘Swadeshi does not mean close door Economy, but is based upon ‘Swadharma and
Swabhava’. Comment.
SUGGESTED READINGS
Anjaria, J. J., An Essay on Gandhian Economics, Vora & Co., Bombay, 1945
Biswas, S. C., (ed.), Gandhi, Theory and Practice, Social Impact and Contemporary
Relevance, Indian Institute of Advanced Studies, Shimla, 1969.
Dantwala, M. L., Gandhism Reconsidered, Padma Publications, Bombay, 1945.
Dhawan, Gopi Nath., The Political Philosophy of Mahatma Gandhi, Navajivan Publishing
House, Ahmedabad, 1951.
Self-reliance and Self–sufficiency
65
Gandhi, M.K., From Yervada Mandir, Navajivan Publishing House, Ahmedabad, 1957.
Harijan, A Journal of Applied Gandhism, Garland Publishing Inc., New York, 1973.
Mukherjee, Hiren., Gandhi- A Study, People Publishing House, New Delhi, 1960.
Myrdal, Gunnar., Asian Drama: An Inquiry into the Poverty of Nations, Three Volumes,
Panteon, New York, 1968.
Namboodiripad, E.M.S., The Mahatma and the Ism, People Publishing House, New Delhi,
1959.
Nehru, Jawaharlal., An Autobiography, The Bodely Head, London, 1958.
Rajagopalachari, C, and J.C. Kumarappa., The Nation’s Voice, Navajivan Publishing House,
Ahmedabad, 1957.
Sethi, J. D., Gandhi Today, Vikas Publishing House, New Delhi, 1976.
Sharma, Jai Narain., Alternative Economics, Deep and Deep, New Delhi, 2003.
Smith, Adam., An Inquiry into Nature and Causes of Wealth of Nation, The Modern Library,
New York, 1937.
Spratt, P., Gandhism: An Analysis, The Huxley Press, Madras, 1939.
The Collected Works of Mahatma Gandhi, Publications Division, Ministry of Information and
Broadcasting, Government of India, New Delhi, 1961.
Young India, Navajivan Publishing House, Ahmedabad.
UNIT 7
TRUSTEESHIP
Structure
7.1
Introduction
Aims and Objectives
7.2
Trusteeship - Roots in Indian Cultural Heritage
7.3
Kinds of Property
7.3.1 Gifts of Nature
7.3.2 Product of Social Living
7.4
Spirit of Japanese Nobles (Samurai)
7.5
State Regulated Trusteeship
7.6
Trusteeship Formula
7.7
Criticism
7.8
Summary
7.9
Terminal Questions
Suggested Readings
7.1
INTRODUCTION
The most important and controversial issue of economic philosophy is the right to private
property. The controversy as it developed, mainly between Capitalist and Communist economists,
led scholars to no definite conclusion. This (right to property) remained more a matter of
dogmatic attachment to ideology than of rational convictions. The former believes that right to
property is absolute and needs no intervention by the state. They believe that each man is the
best judge of his own interest and would make efforts to better his own lot and also promote
general good. The Communists rejected the Capitalist model on the ground that it inevitably
led to the growth of monopolies and imperialism on one hand, and the perpetual immersion
of the working class on the other. They suggested the revolutionary overthrow of the entire
politico economic system, the socialisation of all means of production and the total elimination
of ‘bourgeoisie’ through the dictatorship of the proletariat.
Gandhi rejected both these solutions. He believed them to be based on violence, exploitation
and tyranny. He was of the confirmed belief that instead of changing the property relations,
if we change the uses to which property is put, we can have the desired results. He advocated
trusteeship as a relevant choice between the existing but unacceptable system of Capitalist
organisation and its ‘inevitable’ throw by violence. He believed that as far as the present
owners of wealth are concerned they have to make a choice between war and voluntarily
converting themselves into the trustees of their wealth. The choice is not between the two
parties, that is wealth-owners and their workers, but for the society as a whole. He seeks to
harmonise the economic relations and to conciliate the ultimate values into a state of equilibrium
through Trusteeship.
Trusteeship
67
Aims and Objectives
After studying this Unit, you should be able to understand

the Doctrine of Trusteeship as propounded by Gandhi

its contemporary relevance.
7.2
TRUSTEESHIP - ROOTS IN INDIAN CULTURAL
HERITAGE
Trusteeship, to Gandhi, was neither an economic expedient nor a make shift for him. It was
a way of life. He said: “My theory of trusteeship is no make shift, certainly no camouflage.
I am confident that it will survive all other theories. It has the sanction of philosophy and
religion behind it” (Harijan, 16-11-1939, p.376). The Indian philosophy, religion and morals
are replete with this. The ancient Indian concept of rulers or kings was that of a real trustee.
The philosophy contained in the concept of ‘Ramarajya’ bears testimony of the fact that under
the Indian cultural heritage, the rulers wielded power not for their own sake but for the sake
of their subjects. Bharat reigned over Ayodhya during Ramachandra’s absence as the latter’s
trustee. Lord Krishna acted as the charioteer of Arjuna in the battle of Mahabharata, not with
any ulterior motive or expectation of any gain from the battle; he acted as a trustee of Arjuna
to give satisfaction to the latter.
In the past, the heads of Hindu joint families used to live the life of true trustees. According
to K.M. Munshi, “He held the family property and was expected to manage and administer
it for the welfare of the family He was expected to watch with care the advancement of its
younger members belonging even to collateral branches and had to give asylum to the orphans,
widows, destitutes in the family” (Munshi, 1956, pp.15-16). Writing specifically about the
property, Dr. S. Radhakrishnan has pointed out, “Property according to the Hindu View, is
a mandate held by its possessors for the common use and benefit of the commonwealth. The
Bhagavata tells us that we have a claim only to so much as would satisfy our hunger. If any
one desires more, he is thief deserving punishment”(Radhakrishnan, 1937, p.127).
Thus the concept of trusteeship should be viewed in the context of the values it stood for.
Though the doctrine is as old as the age, Gandhi tried to apply this philosophical teaching to
the concrete realities of life for the solution of the existing economic problems.
The words like, aparigraha (non possession) and ‘samabhava’ (equability) had gripped him.
He realised that the principles of non possession and renunciation of one’s property or
possession or assets as advocated in the Gita can be given effect to by way of trusteeship
whereby the propertied people, while retaining their property, can still divest themselves of
such possessions by holding the property in the form of trust for the real beneficiaries. His
study of English Law also came to his help in deciding upon his divesting himself of all
possessions. To quote from his autobiography, “My study of English Law came to my help.
Snell’s discussion of the maxims of Equity came to my memory. I understood more clearly in
the light of Gita teaching the implication of the world trustee ... I understood Gita teaching of
non possession to mean that those who desired solution should act like trustees who, though
having control over great possessions, regards not an iota of them as his own”(Gandhi, 1947,
p.221).
In a letter to Polak on October 14, 1909, who was at that time in India, Gandhi employed
the word ‘trustee’ for the first time. He wrote, “Then the British rulers will be servants and
68
Gandhi’s Economic Thought
not masters. They will be trustees and not tyrants, and they will live in perfect peace with the
whole of the inhabitants of India. Laying his heart bare before the august audience assembled
on the occasion of the opening of the Banaras Hindu University on February 4, 1916, he
appealed to the ‘richly bedecked noblemen’ present on dais to strip themselves of the jeweller
and ‘hold it in trust’ for their countrymen in India” (CWMG, vol.9, p.481).
7.3
7.3.1
KINDS OF PROPERTY
Gifts of Nature
Gandhi opined that all forms of property and human accomplishments are either gift of nature
or the product of social living. They belong not to the individual but to the society and
therefore, should be used for the good of all. He said, “Everything belonged to God and was
from God, and therefore, it was for his people and not for a particular individual. When an
individual has more than his proportionate portion, he becomes trustee of that portion for
God’s people.” He further argued, “Suppose I have come by a fair amount of wealth either
by way of legacy or by 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 belong to the community and
must be used for the welfare of the community” (Harijan, 3-6-1939, p.145).
‘Land, mines and other natural resources, are the gift of nature. No individual has made them.
God created these not for any particular individual or group of individuals. Man has only
occupied a piece of land and demarcated it. He is only the maker of a boundary line. He
cannot be called the real owner of that property. Let us take an example. There is a landlord
in a village having 100 acres of land. From where he got this land? ‘From his forefathers’,
can be the safest answer. His forefathers got the land from their forefathers and so on. Actually
what would have happened? Some one from that family might have occupied that portion of
land and created a boundary line. That person was not the creator of land but the creator of
that boundary line. The land which should have belonged to other persons also, belongs to
one particular landlord because of the boundary line’.
7.3.2
Product of Social Living
A person cannot accumulate wealth in social vacuum. Suppose a person has accumulated
huge wealth and established several industries, he alone cannot make that. There may be so
many persons who helped that person in accumulating that wealth. Gandhi emphasised that
the ownership of the labourers and the peasants is something more than mere moral ownership.
The rich cannot accumulate wealth without the help of the poor in the society. Since they have
helped the capitalist in accumulating the wealth, they have their share in that also. Each is
entitled to acquire only that much of wealth or property that is essential for his immediate need
or his existence. None has a right to acquire more than what is needed to satisfy his absolute
and immediate needs particularly, when millions are unable to satisfy their most basic requirements.
He wrote, “You and I have no right to anything that we really have until these ... millions are
clothed and fed better.”
He allowed the people with talent to earn more but asked them to utilise their talent for the
good of the suffering people. They would have their earnings only as trustees i.e., owners in
their own rights but owners in the right of those whom they have exploited (Young India, 2611-1931, p.369).
An industrious person with more than average intelligence may acquire by legitimate means,
Trusteeship
69
more property than idle men and men of average or below average intelligence even without
resorting to violence and exploitation. He admitted, “It is my conviction that it is possible to
acquire riches without consciously doing wrong. For example, I may light on a gold mine in
my one acre of land” (Harijan, 8-3-1942, p.67). Writing in the form of a reply to Shankar
Rao Deo, who raised an issue, whether crores can be earned by legitimate means, ‘Surely
a man may conceivably make crores through strictly pure means assuming that a man may
legitimately possess riches.... If I own a mining lease and I tumble upon a diamond of rare
value I may suddenly find myself a millionaire without being held guilty of having used impure
means” (Ibid., 22-2-1942, p.49). Although such wealth may be legitimately acquired without
violence and exploitation, he was not prepared to accept it as a source of one’s real happiness
and his balanced growth. Rather they stand as stumbling block on the way of self realisation
and blossoming of an integrated personality and all-round development of the individual since
worship of the mammon and cultivation of manliness do not go hand in hand. As a remedy
for such an untenable position arising out of the possession of wealth flowing into one’s purse
almost without any conscious effort on his part for the accumulation of the same, Gandhi
suggested cultivation of a spirit of detachment for wealth and utilisation for oneself only a
portion of it that is needed for meeting one’s ‘legitimate needs’ and ‘honourable livelihood’.
He accepted trusteeship as a practical proposition which shall liberate the wealthy and the
possessing class of their sin of acquisitiveness and greed and effect a change over in favour
of egalitarian society. Elaborating the Upanishadic mantra ‘Tena Twaktena Bhunjitha’ he said,
‘Earn your crores by all means. But understand that your wealth is not yours, it belongs to
the people. Take what you require for your legitimate needs and use the remainder for
Society’ (Ibid., 1-2-1942, p.20).
Gandhi knew that both physical and intellectual ability differs from man to man. Some are
capable of working with greater vigour and energy than others and their labour sincerely
performed and honestly executed, may prove more productive of material wealth than that of
others, who are less energetic and enterprising. Besides, people with better intellectual ability
and vigour may devise ways and means for greater material prosperity and intellectual excellence
of the nation. The material prosperity and progress of the nation depend upon enthusiastic
performance of such capable, energetic, enterprising and imaginative individuals and not on the
half-hearted work of the idler, sickly, and the mentally deficient citizens. Gandhi’s ideas do not
imply that men of greater ability and vigour shall not work more than what is necessary to earn
their absolute minimum. It also does not propagate the idea that men of more than average
physical strength and vigour, resourcefulness and enterprise, intellectual ability and excellence,
shall allow their additional ability and energy to be frittered away or wasted. Nor does it fix
a premium on idleness, inactivity, inefficiency, mental incapacity and intellectual deficiencies.
Gandhi realised that the society shall be poorer, unless such men of ability keep themselves
active throughout. He clarified, “We do not want to produce a dead equality where every
person becomes, or is rendered incapable of using his ability to the utmost possible extent.
Such a society must ultimately perish” (Gandhi, 1949, p.24).
Gandhi preferred that such individuals with more than average, or unusual ability shall work
as per their capacity but shall get in return for themselves only what is required for fulfilling
their legitimate needs.
There is a finer, subtler, and a more vital chord, according to Gandhi, in every human heart,
that is noble, self sacrificing and full of compassion for others. Sometimes the dust of greed,
selfishness and egoism may accumulate on this chord, but properly handled, this subtle chord
in human heart shall transmit the melodious music of sacrifice, self sufferings and renunciation
70
Gandhi’s Economic Thought
for the benefit of the others. “There are chords in every human heart. If we only know how
to strike the right chord we bring out the music.” Besides, he said later: “We must appeal to
the good in human-beings and expect response.”
7.4
SPIRIT OF JAPANESE NOBLES (SAMURAI)
Through the device of trusteeship, the capitalists and the privileged classes were given an
opportunity by Gandhi to reform themselves. As a pragmatist, he realised that inspite of all
persuasions, many moneyed men, capitalists, industrialists and landlords may not easily respond
to such a moral appeal. When he found that many propertied people were not voluntarily
converting themselves into trustees by shedding their greed and acquisitiveness, without any
physical or mental coercion and blackmail, he administered a dose of warning to the possessing
class. On the eve of Salt Satyagraha, he wrote, “All these (moneyed men, landlords, factory
owners, etc.) do not always realize that they are living on the blood of the masses, and when
they do, they become as callous as the British principals whose tools and agents they are. If
like the Japanese Samurai they could but realize that they must give up their blood stained
gains, the battle is won for non violence. It must not be difficult for them to see that the holding
of million is a crime when millions of their own kith and kin are starving and that, therefore,
they must give up their agency” (Young India, 6-2-1930, p.44).
He advised the Zamindars and Talukdars to imbibe the spirit of Japanese nobles, to revise
their notions, and hold their wealth as trustees for the good of the people and the ryots.
Without that surrender, the famishing millions would plunge the country which no government
nor armed force can stop. “There is no other choice than between voluntary surrender on the
part of capitalists of the superfluities and consequent acquisition of the real happiness of all
on the one hand, and on the other by impending chaos, into which, if the capitalists do not
wake up betimes, awakened but ignorant, famishing millions will plunge the country and which,
not even the armed force, that a powerful government can bring in to play can avert “ (Harijan,
15-12-1944, p.396).
Though Gandhi was firmly dedicated to the application of non violent technique of persuasion
and conversion and non violent non cooperation for the attainment of any objective, he
specifically warned while writing in the Constructive Programme: “A violent and bloody revolution
is a certainty one day unless there is a voluntary abdication of riches and the power that riches
give and sharing them for the common good.” He repeatedly pointed out to the capitalists that
their wealth was the cause of their worries and anxiety, unhappiness and insecurity. “They who
employ mercenaries to guard their wealth may find those very guardians turning on them.”
Writing in Harijan he further warned the wealthy sections of the society, “As for the present
owners of wealth, they would have to make choice between class war and voluntarily converting
themselves into trustees of their wealth” (Ibid., 31-3-1946, pp.63-64).
Gandhi was not prepared to condone violent methods for the sake of realisation of his ideas
of Trusteeship. Non violence is too precious an ideal to be sacrificed by Gandhi. Besides the
concept of Trusteeship was devised as an alternative to the violent overthrow of privileges so
that violent method cannot take precedence, yet if the privileged sections of the society, inspite
of all manners of persuasion and moral pressure fail to live up to the ideal of trusteeship, the
technique of social compulsion short of violence or coercion can be employed against them.
“All exploitation”, observed Gandhi, “is based on co operation willing or forced, of the
exploited.” If the real producers the labourers and the peasants resort to Satyagraha,
accumulation of wealth will fizzle out and the spring of the prosperity of the wealthy sections
Trusteeship
71
of the society will dry up. Speaking about the conversion of the recalcitrant landlords into
trustees, Gandhi also suggested the adoption of the same formula of non violent non cooperation.
He said, “The moment the cultivators of the soil realise their power, the Zamindari evil will be
sterilized. What can the poor Zamindar do when they say that they will simply not work the
land, unless they are paid enough to feed, and clothe and educate, themselves, and their
children, in a decent manner? In reality the toiler is the owner of what he produces. If the
toilers intelligently combine, they will become an irresistible power.”
The non violent non cooperation, although a potent instrument that can compel the wealthy
section of the society to act as trustees, is dependent on the promise that the labour or the
working class must become conscious of the strength and should be ready to assert its right.
Besides, the strength of the labour comes from its unity and collective behaviour. But in real
life, labour is not united and when some labourers non cooperate with the employers, others
are ready to take their place. Under these circumstances, requisite amount of pressure cannot
be exerted on the propertied classes to compel them to act as trustees.
7.5
STATE REGULATED TRUSTEESHIP
Gandhi, having realised the limitations of the concept of voluntary assumption of trusteeship
by the rich and the need for the adoption of the strategy of pressure to be exercised by the
labourers, came around to the significance of statutory measures or legislation for giving effect
to his idea of trusteeship. But the statute that Gandhi had in his mind is not one which is
imposed from above by the all-pervading state that represents violence in its concentrated and
organised form. It shall not be planned out and implemented by a coterie or clique of the ruling
party or the bureaucracy.
His ideal picture of social and political organisation comprehended a system of self sufficient
and self governing village republics, democratically organised, with Gram Panchayat as the
basic unit of the government erected on the basis of consent of the people. The legislation
regulating the wealth of the propertied class shall therefore emanate from such Gram Panchayats
after a free and full discussion and proper appreciation of the principles by people in general.
“Such a statute will not be imposed from above. It will have to come from below. When the
people understand the implications of trusteeship and the atmosphere is ripe for it, the people
themselves beginning with Gram Panchayats will begin to introduce such statutes. Such a thing
coming from below is easy to swallow. Coming from above it is liable to prove a dead
weight.”
Gandhi favoured the statutes or legislations as technique of last resort to give effect to the idea
of Trusteeship. He did not overlook the potency of the technique of persuasion and conversion
to aid, and effectualise the statutory enactments. He felt that persuasion and conversion should
precede statutory enactments so that it will make the propertied classes mentally prepared to
accept the statutory enactments intended to give effect to trusteeship system. As he said,
“Conversion must precede legislation. Legislation in absence of conversion is a dead letter.”
But the technique of conversion that he suggests is not by way of prayer and petitions, but
by exhibition of potency of democratic forces or public opinion. He said, “If the owning class
does not accept the trusteeship basis voluntarily its conversion must come under the pressure
of public opinion.”
Gandhi also felt that the state may be depended upon for the introduction of trusteeship.
Educating the people in the principles of trusteeship to provide a basis to the statutory
trusteeship system, or educating the workers and peasants to be conscious of their rights and
72
Gandhi’s Economic Thought
dignity so that necessary social conditions conducive to trusteeship are created, is a time
consuming process. But unless the state intervenes in time, some national assets may be
spoiled by unimaginative and useless owners of that property. Although Gandhi was afraid of
the power of the state and the violence perpetuated by it, for the sake of the long term interest
of the nation, he was prepared to allow state intervention to force trusteeship upon the
possessing and the privileged class: “I would be happy indeed if the people concerned
behaved as trustees, but if they fail, I believe we shall have to deprive them of their possessions
through the state.”
The question of inheritance is vital for any scheme of socio economic reconstruction. While
advising the Congress ministries in 1937 to tax the rich persons heavily, he dealt the question
of inheritance also, “For the inheritance should rightly belong to the nation.”
When Gandhi wanted to fetter the original trustees’ choice making it a subject to ‘legal
sanction’, he acted as a pragmatist who felt that the trustees, however above the average men
and however, self sacrificing they themselves may be, may have some weakness for their own
children. If the trustees are given unrestrained power to choose their successor they may
choose their own people to succeed them as trustees. This may be particularly true in case
of statutory trustees who have not voluntarily renounced their possessions or possessiveness,
but have been forced to act as such under the pressure of the statute enacted either by the
village Panchayat or the state. Gandhi suggested that the nomination made by the original
trustees needs to be confirmed by the state.
7.6
TRUSTEESHIP FORMULA
K.G. Mashruwala and N.D. Parikh drew up a trusteeship formula which was placed before
Gandhi, who made a few changes in it. The final draft reads as under:
I.
Trusteeship provides a means of transforming the present capitalist order of the society
into an egalitarian one. It gives no quarter to capitalism but gives the present owning class
a chance of reforming itself. It is based on faith that human nature is never beyond
redemption.
II. It does not recognise 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
wealth for selfish satisfaction or in disregard of the interest of the society.
V.
Just as it is proposed to fix a decent minimum living wage, even so a limit should be fixed
for a maximum income that could be allowed to any person in a society. The difference
between such minimum and maximum should be reasonable and equitable and variable
from time to time so that the tendency would be toward obliteration of the difference.
VI. Under the Gandhian economic order the character of production will be determined by
social necessity and not by personal whim or greed (Harijan, 25-10-1952, p.301).
7.7
CRITICISM
The principle of trusteeship has been subject to much misconceived criticism, and described
as a ‘make shift’, as an ‘eye wash’, as a shelter for the rich and as merely appealing to the
more fortunate ones to show a little more charity. As a means of affecting social transformation,
Trusteeship
73
this theory, its ethical content notwithstanding, is seen as ineffective. Professor M.L. Dantwala,
in his ‘Gandhism Reconsidered’, quotes a Marxist appraisal of the doctrine: “The division of
the society into the property owning and the property less classes, which is the characteristic
of capitalism, is sought to be retained in Gandhism also. The only difference in Gandhism is
that the erstwhile capitalist, property owning classes will consider itself trustee on behalf of the
proletariat. The change is purely on the subjective sphere. The objective conditions of production
will continue by remaining as they were in capitalism. Production will continue by unplanned
private competition among the individual trustees. These conditions of production have a
compelling logic of their own which will lead to the same contradictions as are witnessed under
capitalism today. The class appropriation of surplus value, which trust production will continue
in a pious guise, will mean larger and larger accumulations of the capital on the one hand and
pauperisation of the masses on the other... These evils cannot be banished by wishing a change
in the hearts and minds of the owners of property” (Dantwala, 1945, pp.54-55).
As Professor Hiren Mukherjee says, “This apostle of pity wanted a sea change in human
relationships, but he had a great deal more than the convinced conservative’s caution in
bringing it about; he was ready to be gentle even with fragrantly self seeking and basically anti
social vested interests; and in his pre occupation with the right kind of means for social change,
he would make compromises and concessions to the ‘status quo’ which were often paradoxical
and in their implications as in the idea of the rich being ‘trustees’ of the poor, positively
pernicious” (Mukherjee, 1960, p.204).
E.M.S. Namboodiripad has attacked not only Gandhi’s philosophy but his intentions also. He
said, “Not only in relation to the rural poor, but also in relation to the working class and other
sections of the working people, his was an approach which, in actual practice, helped the
bourgeoisie. His theory of trusteeship, his insistence on certain moral values as the guiding line
for any political activity, the skilful way in which he combined his own extra parliamentary
activities (constructive programme and satyagraha) with the parliamentary activities of his
lieutenants, the characteristically Gandhian way of combining negotiations with the enemy even
while carrying on mass direct action against him all these proved in actual practice to be of
enormous help to the bourgeoisie in (a) rousing the masses in action against imperialism and
in (b) preventing them from resorting to revolutionary mass action. This ability of his to rouse
the masses and yet to check them, to launch anti imperialist direct action and yet to go on
negotiating with the imperialist rulers made him the undisputed leader of the bourgeoisie”
(Namboodiripad, 1959, p.115).
Critics of this theory include not only the Marxists but also from sympathetic reviewers of
Gandhian economics, like Professor J.J. Anjaria regarding its validity as a long term solution.
“As a short term measure, this is excellent; coercion is ethically bad; on any large scale, it is
also not expedient. But the run away from the problem by merely appealing to the more
fortunate ones to show a little more charity awful word is no solution” (Anjaria, 1944, p.31).
Nobel Laureate, Gunnar Myrdal, who calls Gandhi ‘a radical liberal’, maintains in his ‘Asian
Drama’ that “the trusteeship idea is fundamentally a concept that fits into paternalistic, feudal,
pre democratic society. It is so flexible that it can serve as a justification for inequality. Possibly
Gandhi realized this, for he demanded a moral revolution, a change of heart among the rich.
But in the real world, such a revolution is unlikely and the trusteeship ideal is nought but a
vision of society where the rich are charitable so that the poor can remain weak ... by his
stress on the principle of trusteeship, and his friendliness towards many in exalted economic
positions, he established a pattern of radicalism in talk but conservatism in action that is still
very much a part of the Indian scene” (Myrdal, 1968, p.755).
74
Gandhi’s Economic Thought
Even Pt. Jawaharlal Nehru, Gandhi’s political heir and most trusted disciple, wrote in his
autobiography, “Again I think of the paradox that is Gandhiji. With all his keen intellect and
passion for bettering the downtrodden and oppressed, why does he support a system and a
system which is obviously decaying, which creates this misery and the wastes? He seeks a
way out, it is true, but is not that way to the past barred and bolted? And meanwhile he
blesses all the relics of the old order which stands as obstacles in the way of advance the
feudal states, the big zamindaris and taluqdaris, the present capitalist system. Is it reasonable
to believe in the theory of trusteeship to give unchecked power and wealth to an individual
and to expect him to use it entirely for the public good? Are the best of us so perfect as to
be trusted in this way? ... And is it good for the others to have even these benevolent
supermen over them” (Nehru, 1936, p.528).
Whether it is the association of ideas around the word trusteeship or a deliberate refusal to
understand the principle or pre conceived determined attack on the doctrine, that is responsible
for these misconceptions, it is difficult to say. “Whatever it may be,” writes Prof. Dantwala,
“I shall content myself with restating, at the cost of repetition the basic principles of doctrine.”
1.
The erstwhile capitalist is reduced to the status of a manager of the trust property. But
the change is not confined to the name. The schedule of rights, privileges and obligations
of the two is basically different. The capitalist, instead of being sent to the concentration
camp as under the socialist dispensation, is given an opportunity of conforming to the
ethics of the new society. It is misnomer to call the class of trustees the property owning
class. They are not different from the property managing class under the socialist economy.
2.
The trustees will not be allowed to appropriate for his personal use more than twelve
times the income of the poorest paid workers. The difference in income of the managerial
class and the common run of the workers, permitted in Soviet Russia is much wider than
is allowed under Gandhism. Yet, the critics accuse Gandhism of allowing “larger and
larger accumulations of capital on the one hand and pauperisation of the masses on the
other.” It may also be pointed out that since the instruments of production under Gandhism
will be comparatively simple and cheap, the danger of managerial class appropriating
political and economic power will be much less than under socialism.
3.
Production under Gandhian economy will not be unplanned. The character of production
will be determined by social necessity and not by personal whim or greed. What warrants
the critics have for asserting that “production will continue by unplanned private
competition”, is difficult to ascertain.
4.
In case the trustee does not conform to the discipline imposed by doctrine, and, as critics
fear, goes on appropriating the surplus value under a pious guise, the Gandhian techniques
will not rest content with “wishing a change in the hearts and minds of the owners of the
property” (Dantwala, 1945, pp.55-56).
7.8
SUMMARY
The main thrust of trusteeship is very broad and deep and is thus not easy to comprehend.
There is no historical example of it to go by. Besides full trusteeship cases have not been
experimented anywhere. This doctrine has been either bitterly criticised or eulogised but not
experimented. It was also said that Gandhi had a way of prescribing sugar coated quinine for
the maladies of the society. He would administer the bitterest of truth under a thick coating
of ahimsa. But his followers have developed a way of lapping up the sugar and spitting out
the quinine. The theory of trusteeship has been dealt in the same manner.
Trusteeship
7.9
75
TERMINAL QUESTIONS
1.
Discuss Gandhi’s Theory of Trusteeship. Is it practicable in our time?
2.
“To make the World Happier the concept of Gandhi’s Trusteeship is essential”. Discuss.
SUGGESTED READINGS
Anjaria, J. J., An Essay on Gandhian Economics, Vora & Co., Bombay, 1945
Biswas, S. C., (ed.), Gandhi, Theory and Practice, Social Impact and Contemporary
Relevance, Indian Institute of Advanced Studies, Shimla, 1969
Dantwala, M. L., Gandhism Reconsidered, Padma Publications, Bombay, 1945
Harijan, A Journal of Applied Gandhism, Garland Publishing Inc., New York, 1973
Mukherjee, Hiren., Gandhi: A Study, People Publishing House, New Delhi, 1960
Myrdal, Gunnar., Asian Drama: An Inquiry into the Poverty of Nations, Three Volumes,
Panteon, New York, 1968
Namboodiripad, E.M.S., The Mahatma and the Ism, People Publishing House, New Delhi,
1959.
Nehru, Jawaharlal., An Autobiography, The Bodely Head, London, 1958.
Sethi, J. D., Gandhi Today, Vikas Publishing House, New Delhi, 1976.
Sharma, Jai Narain., Alternative Economics, Deep and Deep, New Delhi, 2003.
Smith, Adam., An Inquiry into Nature and Causes of Wealth of Nation, The Modern Library,
New York, 1937.
The Collected Works of Mahatma Gandhi, Publications Division, Ministry of Information and
Broadcasting, Government of India, New Delhi, 1961
Young India, Navajivan Publishing House, Ahmedabad
UNIT 8 PREFERENCES, UTILITIES AND WANTS
Structure
8.1
Introduction
Aims and Objectives
8.2
Maximum Satisfaction from Limited Resources
8.3
The Affluent Society
8.4
Problem of Scarcity
8.5
Limitations of Human Wants
8.5.1 Wants are Sources of Pain
8.5.2 Killing of Wants
8.6
Doctrine of Non-possession
8.7
Criticism
8.8
Summary
8.9
Terminal Questions
Suggested Readings
8.1
INTRODUCTION
Economic theory deals with the laws and principles which govern the functioning of an economy
and its various parts. An economy exists because of two basic facts. Firstly, human wants are
unlimited. Although differing degrees of acquisitiveness have been exhibited in different
civilisations, it appears indisputable that human wants can be regarded as insatiable. At no time
in our own society has our economic system had sufficient resources to produce all the goods
that would be needed to satisfy everyone. Wants have been and remain greater than the
quantity of goods, available for the satisfaction of these wants. Secondly, the means to satisfy
wants are limited. The resources of a society consist not only of the free gifts of nature, such
as land, forests and minerals, but also of human resources, both mental and physical, and of
all sorts of man-made aids to further production, such as tools, machinery and buildings. If
the resources like wants were unlimited, no economic problem would have arisen because in
that case all wants could have been satisfied and there would have been no problem of
choosing between the wants and allocating the resources between them.
Aims and Objectives
After studying this Unit, you should be able to

Explain the doctrine of the limitation of wants as propounded by Gandhi.

Examine its practicablity in this age of growing consumerism.

Understand the significance of the doctrine that can lead to peace in the society.
Preferences, Utilities and Wants
8.2
77
MAXIMUM SATISFACTION FROM LIMITED
RESOURCES
Since our wants are unlimited and the means to satisfy them are scarce, we cannot satisfy all
our wants. We may be able to satisfy one want for all times or all the wants for one time but
we cannot satisfy all the wants for all the times. We must decide some way of selecting those
wants which are to be satisfied. Thus a society is faced with the question of choice i.e. choice
among vast array of wants that are to be satisfied. We know that the resources have alternative
uses. If it is decided to use more resources in one line of production, then resources must be
withdrawn from the production of some other goods. As the resources are scarce, we are
confronted with the problem of choosing among the different channels of production to which
resources are to be devoted. In other words, we have the problem of allocating scarce
resources so as to achieve the greatest possible satisifaction.
Thus it is clearly evident from the above discussion that the economic problems are due to
unlimited wants and limited resources. Had there been limited wants or unlimited resources or
both, then there would have been no economic problem or even the need to study Economics.
In that state of affairs, goods would have been free goods. But in actual life we cannot obtain
goods freely or without price; we have to pay price for them and do labour to obtain them.
8.3
THE AFFLUENT SOCIETY
It may be pointed out here that recently some economists in the industrially developed countries,
especially the U.S.A., have pointed out that the basic problem now confronting them, is the
problem of ‘affluence’ rather than ‘scarcity’. During the past century or two, there has been
a rapid economic growth in these countries which has brought unprecedented riches and
prosperity for their citizens. As a result, the standard of living of the people there has gone
up very high. It is said, they have won over the problem of scarcity and poverty, and are facing
the problems created by affluence and growth; such as problems of mental tensions, optimum
use of leisure, luxury, longevity etc. Thus having achieved growth and affluence they are now
thinking with reference to what might be called, ‘beyond economic growth’. The economist
who has put forward this point of view is J.K. Galbraith, Professor of Harvard University and
former Ambassador of U.S.A. to India. He presented this view point in his revolutionary
work, “The Affluent Society”.
The use of the term, ‘the Affluent Society’ looks strange, since economists have always been
laying a great stress on the point that the basic economic problem a society has to encounter
is the problem of scarcity, which is the mother of all economic problems that arise in a society.
8.4
PROBLEM OF SCARCITY
It is true that the U.S.A. and the Western European countries have eliminated general poverty
and with the phenomenal progress of science and technology, have achieved unprecedented
affluence and abundance of production of goods with which they have been able to satisfy
their citizens’ wants to a greater extent. But from this it should not be construed that the
economic problem of scarcity of resources has ceased to exist in the so called affluent world
of USA and Western Europe. The term scarcity in Economics is used in a relative sense, that
is, in the sense of scarcity of resources relative to the wants of people. With technological
advancement, no doubt the developed and rich countries have greatly increased their resources
and production but with growth and development new wants have also been created. The
78
Gandhi’s Economic Thought
problem of economic scarcity could be said to have been won only if the resources would
have been abundant in relation to wants which are multiplying during the process of growth.
The problem of unlimited wants still exists in the affluent societies also.
Even otherwise, it is important to note that two-thirds of the world is still lying in poverty. The
abysmal poverty, hunger, disease, squalor and unemployment rule the land here. The problem
of scarcity is present here in its full strength and the affluence for these people is still a far cry.
They nourish unlimited wants, not to speak of desires. It is important to note here that there
is a vast difference between desires and wants. Every desire is not a want. Human beings
cherish unlimited desires in their hearts. To fulfill some of the desires, they make efforts and
earn money. If they are still willing to spend that money to fulfill their desires, then these desires
become wants. Thus the number of wants is several times less than the number of desires.
When wants are unlimited, the number of desires can only be imagined. But we are taking the
wants into consideration and not the desires.Thus, because of the unlimited wants and limited
resources, human beings strive to get the maximum satisfaction from whatsoever they have.
The economic activity of man is concerned with the production of material goods, their
exchange, distribution and consumption. These activities are necessary not only for the existence
of man but also for his happiness and progress. Man lives in society and all these activities
concern not only the individual in isolation but also they create social relations. As a matter
of fact, if we think of it, all wealth is socially produced. That is Gandhi’s view. No Robinson
Crusoe on a solitary island- whether he is a capitalist or labourer- can produce wealth.
Gandhi, therefore, held that the socially produced wealth must be equally divided among all
those who are instrumental in producing it. If this is too idealistic a view, socially produced
wealth must be equitably divided. 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 from
want of food and clothing” (Young India, 15.11.1928, p.381). 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 realised 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 monopolisation 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” (Ibid).
8.5
LIMITATIONS OF HUMAN WANTS
From the above conception is derived Gandhi’s idea of limitation of human wants within
certain limits. Some amount of material goods is necessary for the good life, as the Greek
philosophers called it. The possession of material goods beyond that, instead of working for
the freedom and the happiness of the individual, works for his enslavement and often, for his
unhappiness. It is, therefore, necessary that one should limit one’s wants and not increase them
indefinitely. About this multiplication of wants as a mark of progress, Gandhi’s reply to a
questioner was: “If by advance you mean everyone having plenty to eat and drink and to
clothe himself with, enough to keep his mind trained and educated I should be satisfied. But
I would not like to pack more stuffs into my belly than I can digest and more things than I
can usefully use.” While discussing the possibility of world peace, Gandhi said: “This again
seems impossible without great nations ceasing to believe in soul destroying competition and
to multiply wants and increasing their material possessions.” Once he said that his attempt was
to see beauty in voluntary simplicity, poverty and slowness, “Multiplicity of wants has no
fascination for me”.
Preferences, Utilities and Wants
79
“They deaden the inner life in us,” he added (Ibid, 23.02.1921, p.59). Again he says: “A
certain degree of physical harmony and comfort is necessary, but above a certain level it
becomes a hindrance instead of a help. Therefore, the ideal of creating an unlimited number
of wants and satisfying them seems to be a delusion and a snare. The satisfaction of one’s
physical needs, even the intellectual needs of one’s narrow self, must at a certain point, come
to a dead stop before it degenerates into physical and intellectual voluptuousness” (Ibid,
8.12.1927, p.414).
Gandhi also says: “In so far as we have made the modern material craze our goal, so far are
we going downhill on the path of progress. That you cannot serve God and mammon is an
economic truth of the highest value. We have to make our choice.... I have heard many of
our countrymen saying that we will gain American wealth but avoid its methods. I venture to
submit that such an attempt, if made, is foredoomed to failure. We cannot be wise, temperate
and furious in a moment” (Speeches and Writings, 1933, pp.353-354).
If Gandhi was against the artificial multiplication of wants, he was also against the enforced
grinding poverty of the masses in India and elsewhere. It was not only materially harmful but
was also morally degrading. About this, he says: “No one has ever suggested that grinding
pauperism can lead to anything else than moral degradation. Every human being has the right
to live and therefore to find the wherewithal to feed himself and where necessary to clothe
and house himself. But for this simple performance we need no assistance from economists
or their laws.” Gandhi also held: “... Nature produces enough for our wants from day to day,
and if only everybody took enough for himself and nothing more, there would be no pauperism
in this world.... But so long as we have got this inequality, so long we are thieving” (Young
India, 3.7.1924, p.221).
8.5.1
Wants Are Sources of Pain
However, there is a paradoxical twist in the Gandhian method of solving this economic
problem of unlimited wants and limited resources. It almost amounts to putting the energy in
reverse gears. Instead of satisfying the maximum wants with limited resources, Gandhi advocated
wantlessness. He was of the opinion that wants are the sources of pain. Instead of adding
to the sum total of human happiness, wants subtracts from it a good deal. In fact, he thinks
that maximisation of satisfaction is rather completely inconsistent with the maximisation of
human wants. A want is a painful experience. This is evident from the fact that we wish to
satisfy it and want to rid of it as soon as possible. We would not have bothered to remove
or satisfy it had it not been painful. So the removal of a want means removal of pain and
procurement of pleasure. And this pleasure is the same thing as satisfaction or utility. If one
wants to get maximum pleasure one should see to it that all pain is removed and no fresh pain
is experienced in future. At least this is the ideal for any one who wants to achieve maximum
pleasure from his limited resources.
The absolute removal of pain by eliminating wants, seems impossible on the surface. But it is
really not as impossible as thought by several scholars. This, of course, is true that for a man,
who has a large number of wants to satisfy and, therefore, a large amount of pain to remove,
the task of removing all pain becomes more difficult than for one who has less wants and
hence a smaller amount of pain to be rid of. But this does not imply that complete removal
of pain is necessarily impossible in each case. It rather implies a more hopeful state of affairs,
that it becomes increasingly possible to remove all pain provided the wants and hence the
pain, corresponding to them decrease in their number and amount. The less wants we have,
the less our pain, and hence easier the task of removing that pain and achieving maximum
80
Gandhi’s Economic Thought
satisfaction. If therefore maximum satisfaction is the object behind the behaviour of human
being while he makes his choices for satisfying his wants, it would be more fully achieved if
his wants are few rather than if they are many. And thus we are led to the objective of
controlling or simplifying wants for the purpose of attaining maximum satisfaction through
human behaviour. Now Economics studies human behaviour as concerned with the maximisation
of satisfaction and maximisation of satisfaction is better achieved when wants are at the
minimum rather than when they are not. This led Professor J.K. Mehta to define Economics
as the study of human behaviour as concerned with the wantlessness (Mehta, 1962, p.67).
And this minimisation of wants can be rightly regarded as the ultimate objective of the science
of economics.
Professor Mehta further elaborates his thesis that to satisfy a want is to yield to it, as it were.
When we satisfy a want we obey the commanding voice of the wanting mind. When we go
on satisfying wants as and when they arise all that we do is to pamper the wanting mind. One
who yields to such a mind becomes virtually its slave (Ibid). To remove the pain caused by
the presence of wants by satisfying them is, therefore, an undignified way of getting pleasure.
Instead of obeying the orders of a want we can ourselves order the want to quit. When we
satisfy a want, we make it quiet for the time being. When we order it to quit, we do not merely
make it quiet, we kill it as it were.
8.5.2
Killing of Wants
The process of killing wants has been called elimination of wants. But wants can be killed only
by wants. Therefore, stronger wants must be employed to kill the weaker and inferior wants.
And when such a battle is fought all the inferior wants get ultimately killed and one is left with
superior wants only. The better among these can, in their turn, be employed to kill the other
wants. In this way we can ultimately reach a stage in which only one, the most superior want
would be left. It is only when this stage is reached that we can, with impunity, satisfy the wants.
Once satisfied such want never recurs. The pleasure then obtained lasts as it were, forever.
The state of happiness is reached—the state in which the mind remains absolutely free from
the tormenting pressure of wants. The one final want, the satisfaction of which frees us from
all wants, can be called the want of being wantless. By the process of killing or eliminating
wants we thus ultimately reach the state of wantlessness – a state in which perfect happiness
is experienced.
8.6
DOCTRINE OF NON-POSSESSION
Gandhi approached the problem of wantlessness from another dimension also. “We should not
receive any single thing that we do not need”, he wrote in “From Yervada 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 (Gandhi, 1940). 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 principle of
non-stealing. He further clarified that 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.
The propensity to accumulate commodities cramps the soul and degenerates into the morbid
desire to make a fetish of external goods of life. The luxury of the ascendant classes, therefore,
makes them morbid desire to make a fetish of external goods of life. The luxury of the
ascendant classes, therefore, makes them morally deprived. The monopolisation of the things
Preferences, Utilities and Wants
81
needed by all by a few men at the top, is unjust. Moreover accumulation is condemnable
because it is not possible to be practised by all. Accumulation by a few amounts to the
dispossession of the many. Thus the alternative lies in renunciation. To Gandhi, renunciation
is life. Accumulation spells death. But he clarified: “This does not mean that, if one has wealth,
it should be thrown away and his wife and children should be turned out of doors. It simply
means that one must give up attachment to these things and dedicate one’s all to God and
make use of His gifts to serve Him only”(Harijan, 28.04.1946, p.111). He advised the
moneyed men to earn their crores (honestly only, of course) but asked them to dedicate
themselves to the service of all. For those who wish to follow this way, “The best and most
effective mantra is Enjoy thy wealth by renouncing it”. Expanded, it means: Earn your crores
by all means. But understand that your wealth is not yours; it belongs to the people. Take
what you require for your legitimate needs, and use the remainder for society” (Ibid, 01.02.1942,
p.20).
Thus it is clear that Gandhi offered his doctrine of non-possession as an indictment of one of
the most powerful drives in the modern economic society, the drive for multiplication of wants,
fuelled by an insatiable propensity for superfluous or conspicuous consumption. One may
justify such consumption as an essential prerequisite for economic growth. This argument is,
of course, based purely on economic grounds. To Gandhi it was an economic as well as a
moral issue. To him, Ethics and Economics are inseparable. “I must confess that I do not draw
a sharp or any distinction between Ethics and Economics. The Economics that hurts the moral
well-being of an individual or a nation are immoral and, therefore, sinful” (Young India,
13.10.1921, p.325). But he realised that the perfect ideal of wantlessness is unattainable
because it demands total renunciation. His pragmatic mind would accept the perfect realisation
of the ideal, namely a movement towards it through the process of gradual reduction of wants
and minimisation of consumption.
The doctrine of non-possession, if it implied only voluntary reduction of wants, could be
construed as a totally negative doctrine. But Gandhi expounded it as a positive doctrine.
According to him, the doctrine of non-possession would teach that every one should limit his
own wants and spend the rest for the welfare of others. He considered this as a desirable nonviolent method of reducing inequality of income distribution and unequal distribution of wealth.
To explain in his own words, “Now let us consider how equal distribution can be brought
about through non-violence. The first step towards it, is for him who has made this ideal part
of his being to bring about the necessary changes in his personal life. He would reduce his
wants to a minimum bearing in mind the poverty of India” (Harijan, 28.08.1940, p.260). He
was aware of other means of dealing with these problems of inequality of income distribution
and unequal distribution of wealth but he discounted this because of his fear that other
methods may include the coercive power of the state. Thus Gandhi put utmost reliance on the
individual and his moral awakening to bring these radical changes in the distribution of income
and wealth in the society through wantlessness.
8.7
CRITICISM
Gandhi’s insistence on minimising wants has been attacked on several grounds. ‘Necessity is
the mother of invention’ is an old proverb that we often hear. It describes the way in which
men’s wants have brought into existence new wants and then these new wants have created
fresh activities and wants, and these in turn have produced more new wants. All the discoveries
of new lands, of new material, of new variety of food, clothing and houses, of new machinery
etc. are due to the working out of this proverb. And if the doctrine of wantlessness is followed
82
Gandhi’s Economic Thought
then all progress will stop leading to economic stagnation and reversing the circle of human
progress. Again, more than two-third countries of the world are underdeveloped or developing.
Majority of people in these countries are living on bare necessities. Their daily needs are
hardly fulfilled. And to preach further reduction of wants to these persons is a sin. Their wants
are already minimum. For a country like India, where nearly 40% of the population is living
below poverty line, the doctrine of wantlessness has no meaning. It is rather a mockery to
teach them to reduce their wants. Further, this doctrine many not take the form of Escapism:
That we know that all our wants cannot be satisfied. Instead of making efforts to satisfy those
wants, we may not take the shelter of wantlessness. This is against ‘The theory of Karma’,
which teaches us to work tirelessly. Then, the doctrine may be philosophically sound but it is
almost impossible to practise it. If attempted to do, it will create several problems.
Man has many urges. The economic urge is one, however basic it may be. It is true that an
individual’s life would be bleak indeed if he lacked the minimum requirements of a cultured
life. But if economic competence is necessary for the happiness and progress of an individual
and a group, freedom too is as necessary and so are moral and spiritual values. Christ truly
said, “Man does not live by bread alone.” But it is also a fact that he cannot live without it
either. Matter may be less important than the spirit, but in human beings the spirit manifests
itself and works through the flesh.
Thus it is not necessary to go fully with Gandhi in reducing wants to follow a godly path. But
it also remains true that anyone who wants to pursue serious interests in life, apart even from
sprititual ends, finds it essential to regulate his wants severely: he chooses to forego many of
his wishes. It is also patently wrong to say that human wants are insatiable.
Anthropological studies of tribal culture show that there is no inherent insatiability where wants
are concerned. This is also proved today, by the fact that huge amounts are spent to persuade
people to buy what they, in all likelihood would not buy otherwise. At best, then, it can be
said that human want is malleable and can be manipulated to make it insatiable. The converse
would also be true then: Wants could be reduced without loss.
8.8
SUMMARY
Our wants are unlimited and the means to satisfy them are scarce; therefore, we cannot satisfy
all our wants. The resources of a society consist of the free gifts of nature, such as land, forests
and minerals, and that of human resources, both mental and physical, and of all sorts of manmade aids to further production, such as tools, machinery and buildings. These tools are taken
as important for satisfying the human wants. Gandhi was against the artificial multiplication of
wants, as he was against the enforced grinding poverty of the masses in India and elsewhere.
These are not only materially harmful but also morally degrading. In order to solve the
problems arising out of such unlimited wants with limited resources, Gandhi advocated voluntary
reduction of wants or wantlessness. Wants are the sources of pain; instead of adding to the
sum total of human happiness, wants subtracts from it a good deal. Gandhi opined that
maximisation of satisfaction is rather completely inconsistent with the maximisation of human
wants. He felt that the doctrine of non-possession would teach that every one should limit his
own wants and spend the rest for the welfare of others. For Gandhi, ethics and economics
are inseparable. He envisioned a natural blend of the two, for he considered this as a desirable
non-violent method of reducing inequality of income distribution and unequal distribution of
wealth. Ethics should, he felt, ultimately guide us with regard to wants.
Preferences, Utilities and Wants
8.9
83
TERMINAL QUESTIONS
1.
Discuss how, according to Gandhi, multipilicity of wants and acquisitiveness lead to
moral decay and social disintegration?
2.
Discuss Gandhi’s doctrine of limitation of wants. How is it practicable in the face of
growing consumerism of the day ?
3.
“Only by deduction of needs can one promote genuine reduction in those tensions which
are the ultimate causes of strife and war.” Comment.
4.
Analyse the doctrine of limitation of wants and show how it would lead to prosperity and
peace in the society.
SUGGESTED READINGS
Anjaria, J. J., An Essay on Gandhian Economics, Vora & Co., Bombay, 1945
Biswas, S. C., (ed.), Gandhi, Theory and Practice, Social Impact and Contemporary
Relevance, Indian Institute of Advanced Studies, Shimla, 1969
Dantwala, M. L., Gandhism Reconsidered, Padma Publications, Bombay, 1945
Galbraith, J.K., The Affluent Society, Hamish Hamiltion, London, 1958
Gandhi, M.K., From Yervada Mandir, Navajivan Publishing House, Ahmedabad, 1957
Harijan, A Journal of Applied Gandhism, Garland Publishing Inc., New York, 1973
Mehta, J.K., A Philosophical Interpretation of Economics, George Allen and Unwin, London,
1962
Mukherjee, Hiren., Gandhi: A Study, People Publishing House, New Delhi, 1960
Myrdal, Gunnar., Asian Drama: An Inquiry into the Poverty of Nations, Three Volumes,
Panteon, New York, 1968
Namboodiripad, E.M.S., The Mahatma and the Ism, People Publishing House, New Delhi,
1959.
Nehru, Jawaharlal., An Autobiography, The Bodely Head, London, 1958.
Sethi, J. D., Gandhi Today, Vikas Publishing House, New Delhi, 1976.
Sharma, Jai Narain., Alternative Economics, Deep and Deep, New Delhi, 2003.
Smith, Adam., An Inquiry into Nature and Causes of Wealth of Nation, The Modern Library,
New York, 1937
Spratt, P., Gandhism : An Analysis, The Huxley Press, Madras, 1939
The Collected Works of Mahatma Gandhi, Publications Division, Ministry of Information and
Broadcasting, Government of India, New Delhi, 1961
Young India, Navajivan Publishing House, Ahmedabad.
UNIT 9
MACHINERY AND INDUSTRIALISATION
Structure
9.1
Introduction
Aims and Objectives
9.2
Gandhi’s Concept of Machine
9.3
Technique of Production: Man vs. Machine
9.3.1 Evil Effects of Machinery
9.4
Industrialisation
9.4.1 Structure and Patterns of Industrialisation
9.4.2 Classification of Industries
9.4.3 Key Components of Western Industrialisation
9.5
Gandhi’s views on Industrialisation
9.5.1 Gandhian Model of Industrialisation
9.5.2 Rural Industrialisation
9.6
Small Industries in Industrialisation process in India
9.6.1 Survival of Small Industries – Challenges of Globalisation
9.7
Summary
9.8
Terminal Questions
Suggested Readings
9.1
INTRODUCTION
Industrialisation plays a major role in the economic development of a country. Historically
industrialisation has been a major source of economic growth in Western countries. Development
in the post-war period in initial phase was defined as a sustained annual increase in GNP at
rates varying from 5 to 7% or more with such alteration in the structure of production and
employment that the share of agriculture declines in both whereas that of manufacturing and
tertiary sectors increases. To bring in such structural transformation, investment in industrial
sector has to be increased at a rapid rate through the transfer of resources from agriculture
towards industry. Industrialisation is associated with higher levels of income and technology.
Colin Clark’s thesis states that with greater economic development and rise in national and per
capita incomes, there is shift in the occupational pattern from primary to secondary and tertiary
sectors. This is clearly evident in the case of Western countries like UK, USA, Germany etc.
It is in this context that the developing countries have laid more emphasis on programmes and
policies promoting industrialisation in the economy.
The process of industrialisation is associated with mechanisation and urbanisation in developing
countries. The mechanisation process has led to large-scale labour displacement and
unemployment in these countries. Poverty and unemployment in these labour surplus economies
have social, economic and moral costs. Gandhi was well aware of these consequences and
therefore, he never favoured large-scale industrialisation based on capital intensive machinebased technology in these countries. His ideas on machinery, industries and modern civilisation
are clearly expressed in Hind Swaraj, Harijan and Young India.
Machinery and Industrialisation
85
Aims and Objectives
After reading this Unit, you would be able to understand

Gandhi’s ideas on Machinery and Industrialisation

His model of industrialisation and the current structure of industrialisation in India

The relevance of Gandhi’s ideas in the present context.
9.2
GANDHI’S CONCEPT OF MACHINE
The process of industrialisation has been promoted by rapid technical progress and use of
machines in production process. To mechanise means to substitute mechanical power for the
power of man. A machine is equipment that does the work automatically and performs the
work efficiently and faster than the man. It does the work of more than one person. The work
is uniform in character. The purpose to be served by machines is to modify the environment
in such a way as to fortify and sustain the human organism by extending its powers or by
manufacturing, outside the body a set of conditions more favourable towards maintaining its
equilibrium and ensuring its survival.
As against this, Gandhi’s concept of machine involved simple tools and instruments that help
to increase production and reduce the drudgery of workers. The tool differs from a machine.
The machine lends itself only to automatic action. The tool is manipulated by the person using
it. Machine emphasises the specialisation of function whereas the tool indicates flexibility. A
tool such as knife may be used for various purposes but the machine is designed to perform
a single set of functions.
Gandhi felt that machinery, to be well used, has to help and ease human effort. His machinery
was of most elementary type which he can put in the hands of millions of people. His comment
on the invention of sewing machine by Singer clearly indicates this. It is one of the useful things
ever invented and there is a romance in the device itself. He (Singer) devised the sewing
machine in order to save his wife from unnecessary labour. He, however, saved not only her
labour but also the labour of every one who could purchase a sewing machine. Gandhi
favoured the machines that supported and reduced the burden of the labourer. It should be
simple and available to all. It should generate more income and employment for the poor.
The spinning-wheel, advocated by Gandhi, is a simple tool. It symbolises his ideas about
machinery. The advantages of the spinning-wheel as put forward by Gandhi are as follows:

It provides occupation to those who have leisure.

It is easily learnt

It is known to many people.

It requires practically no outlay of capital.

It can be easily and cheaply made.

It fights famine.

It spells equitable distribution of wealth.

It solves the problem of unemployment and underemployment.
86
Gandhi’s Economic Thought

It can stop the drain of wealth which goes outside India in the purchase of foreign cloth.

It supports other village industries.

People have no repugnance to it.
(Young India, 21-8-1924, 21-10-1926 & 11-11-1926.)
Spinning-wheel is the way of life. No other village craft other than it had the power to put
money in the pockets of the millions of rural people. The advocacy of home-made cloth
(khadi) is no more a fad of a romantic eager to revive the past, but a practical attempt to
relieve the poverty and uplift the rural areas. It was a strategy of inclusive growth.
9.3
TECHNIQUE OF PRODUCTION: MAN VS
MACHINE
Mechanisation is a process of large-scale application of machines at all stages of production.
Gandhi felt that mechanisation is good when the hands are too few for the work intended to
be accomplished. It is an evil when there are more hands than are required for work, as is
the case in India. Thus mechanisation was acceptable to him only if it did not displace useful
labour and did not lead to concentration of production and distribution in few hands. His views
on machinery are mixed in nature.
He further wrote: “what I object to is the craze for machinery and not machinery as such. The
craze is for what they call labour saving machinery”. Gandhi made his first frontal and massive
attack on machinery in Hind Swaraj in 1908. He also used the concept of machinery in Hind
Swaraj as symbolic: “Machinery is the chief symbol of modern civilisation”. It is this symbol,
which he used as a line of demarcation, between the machine-based British India and the
machine-less poor India. Gandhi was against machinery and modern technology as in his early
writings he described machinery as ‘great sin’. He opined that books could be written to
demonstrate its evils. Material advances need to be judged by their moral and spiritual effect
on human beings. Machines should be made for man and not vice versa.
But in his later writings on machinery, Gandhi has made his stand clear. He classified that what
he opposed was the craze for labour saving machinery as men go on saving labour till
thousands are thrown on the open streets to die of starvation. He said: “I would favour the
most elaborate machinery, if thereby India’s pauperism and resulting idleness be avoided.” His
concern was to eliminate poverty and unemployment in the shortest possible period through
providing productive employment to human beings. Grinding pauperism leads to nothing else
than moral degradation. Every human being has right to live and therefore, the securing of
one’s livelihood should be the easiest thing in the world. The growing social violence and anti
social activities in India are on account of growing unemployment. Gandhi realised that even
if India makes the maximum possible efforts, it will not be able to meet the requirements of
all the people through large-scale production due to shortage of capital, or give full employment
to rural labour or utilise effectively the idle physical and human resources going waste in the
villages. The solution is an appropriate mix of the two.
Gandhi favoured some great inventions of science which had eased human labour, like Electricity,
shipbuilding, railways, iron works and the like existing side by side with village handcrafts.
They should not supplant but rather sub-serve the villages and their crafts. He considered them
as necessary evils and felt that these should be owned by the state. Further, the centralised
ownership of industry in most essential sectors was supported because if the cottage sector
Machinery and Industrialisation
87
has to be provided with even simple tools and machinery, if this has to be done for millions
of production units, then, all the tools and machinery has to be produced in factories and these
should be essentially in nationalised sector.
Gandhi’s advocacy of spinning-wheel and other village industries was thus based on his
preference for labour-intensive technique of production. This is rational in the context of
scarcity of capital and abundance of labour in India. The growth models developed by Lewis,
Vakil, Brahmananda and Gunnar Myrdal support the low capital, small industries and simple
machinery-based industrialisation in developing countries.
Gandhi thus supported simple technique of production which was an appropriate technology
for India. This technology was later strongly advocated by EF Schumacher in his work Small
is Beautiful (1974) as a technology with human face. Man should occupy the sovereign place
he deserves in this scheme of things. Man is always the end and not the means. There is no
objection to the adoption of machinery in which human goals are constantly kept in view.
9.3.1
Evil effects of Machinery
Gandhi opposed the craze for machinery as it was labour saving. His ideas about machine and
industrialisation are shaped by the socio-economic conditions that prevailed in India. He
observed the growing pressure on land in India, as the alternative occupations were not
available due to destruction of village crafts and industries under the rule of East India Company.
Millions of landless labourers had no gainful employment and the farmers who worked on their
own land were underemployed for several months in a year. ‘The problem with us’, he wrote,
‘is not to find leisure for teeming millions inhabiting our country. The problem is how to utilize
their idle hours which are equal to the working days of six months in the year. Dead machinery
must not be pitted against the millions of living machines represented by the villagers scattered
in the seven thousand villages of India’ (Harijan, November 16, 1934). His views on machinery
and large-scale industrialisation are not thus based on any blind prejudice but the harsh
realities of the millions of poor people living in rural areas of the country. The evil effects of
machinery as listed by him are:

It leads to unemployment and starvation of masses.

Machinery makes concentration of wealth in the hands of few people.

It does not lead to philanthropy but ‘greed’ i.e. profiteering.

Machinery tends to atrophy the limbs of man.

It destroys the villager and the village craft and village economy.

It promotes mass production.

It makes machine supreme to man.

It makes people idle.

It makes reduction of poverty more difficult.

It widens the urban-rural gap and the gulf between the rich and the poor.

It leads to imbalanced development.
88
Gandhi’s Economic Thought
In Hind Swaraj, he said “machinery is like a snake-hole which may contain from one to a
hundred snakes.”
Gandhi also opposed the mechanisation of agriculture. Indiscriminate use of mechanical tractors
denudes the soil of the covering which the living vegetation provides. Absence of protective
covering for the soil and absence of grass roots to bind soil together leads to soil erosion and
lessens the water holding capacity of the soil. Once the vegetation covering of the soil is
destroyed, the productivity of the soil is drastically affected. Therefore he did not favour the
application of modern technology in agriculture that provides food and employment to the
people.
Gandhi is not alone who wrote about the evils of machinery. Other economists like Adam
Smith, Ricardo and Marshall also pointed out the evils of the system but they were equally
influenced by the development potential of the capitalist system in the form of growing profits
and investments made possible by the use of machinery. It was only Marx and Engels who
pointed out that it is the system of capitalism at the root through which the machines are
begetting the evils. Gandhi not only condemned the machine but also the system of ‘greed’
(profiteering), which was enabling it to do so.
Gandhi’s views on machinery may ultimately be expressed in the following form: “As a
moderately intelligent man, I know that men can not live without industry, therefore, I can not
be opposed to industrialisation. But I have a great concern about introducing machine industry.
The machine produces much too fast and brings with it a sort of economic system that I can
not grasp, I do not want to accept something when I see its evil effects which outweigh
whatever good it brings with it. I want the dumb millions of our land to be healthy and happy
and I want them to grow spiritually. As yet for this purpose we do not need machine. There
are too many idle hands. But as we grow in understanding, if we feel the need for machines,
we certainly will have them. Once we have shaped our life on Ahimsa, we shall know how
to control the machine” (Pyarelal, ‘Towards New Horizons’, Navajivan Publishing House,
Ahmedabad, 1959, pp. 45-46).
9.4
INDUSTRIALISATION
Meaning
Industrialisation is a process of expansion of industrial sector with application of more capital
and higher level of technology. For obtaining a higher level of technology, the economy is
required to enlarge the physical apparatus in the form of machines, equipments, tools and
instruments of production on the one hand and on the other, to train the labour force of the
country to make use of the physical apparatus thus created. The process is thus associated
with mechanisation and high rates of capital formation. It is characterised by mass production
in factories and in essence supports and strengthens capitalism. The strategy of industrialisation
essentially involves the establishment of basic and large-scale industries in urban areas.
Industrialisation and urbanisation invariably and undoubtedly are closely linked to each other.
9.4.1
Structure and Patterns of Industrialisation
Industrialisation does not follow any single or uniform pattern all over the world. It may
encompass a single industry like cotton textile or a group of industries which may include
different types of industries, such as:

Manufacturing industries: Industries producing capital goods or consumer goods on largescale with machines.
Machinery and Industrialisation
89

Energy-based industries: Industries producing energy from various sources like wind,
solar, natural oil gas, bio-gas etc.

Processing industry: Industries processing agricultural products like paddy, red gram, oil
producing units, fisheries, Tea processing, herb-culture, vegetable processing and tissue
culture etc.

Mining industry: Industries that are involved in excavating or processing minerals.

Service-based industries: transport, hospitals, education, trade and business, laboratory,
cold storage, consultancy etc.

Construction industries: Roads, bridges, railways, construction of residential and industrial
complexes etc.
The process has started with consumer goods and then shifted to capital goods industries. In
case of underdeveloped countries, the pattern should be guided by the considerations arising
from the scarcity of capital. Since labour is abundant and capital is scarce, the development
of labour-intensive consumer goods industries is inevitable. Therefore, the Western model of
industrialisation is less applicable to developing countries as it is based on the situation of
scarce labour in those countries at the time of industrialisation. Thus Industrialisation process
may generate different types of industries based on the availability of raw materials, infrastructure,
capital and skilled manpower etc.
9.4.2
Classification of Industries
On the basis of capital investment, industries are classified as:

Cottage industries.

Small-Scale industries.

Large-Scale industries.

Cottage industries mainly use traditional skills, art and culture. They are home-based and
require less skills and capital. The use of power and machinery is minimum. They use
local resources and cater to the needs of the local market.

Small-scale industries are industries operating on small-scale using mostly indigenous
technology. These include industries producing soap, leather products, textiles, accessories,
food processing units etc. The investment limit is up to one crore.

Large-scale industries: These are industries with investment above Rs. 1 crore producing
on large-scale with indigenous as well as imported technologies. These include a variety
of industries producing different types of commodities.
The process of industrialisation may follow any one of the two paths, one consisting of cottage
and small-scale industries and the other consisting of large-scale industries or a combination
of both.
9.4.3
Key Components of Western Industrialisation
The Industrial Revolution had its origin in Great Britain sometime during the middle and latter
part of the 18th century. It transformed the country from a rural traditional society seeking its
livelihood from agriculture to an urban-centred society, largely engaged in factory work. The
factory system gave rise to a new mode of production with abundant gains in production and
90
Gandhi’s Economic Thought
productivity encompassing other sectors of the economy. From UK, it spread to other European
nations and followed by others during the 19th century. All these countries experienced rapid
economic development during this phase. The basic features of this industrialisation process
are:

Basic and heavy industries.

Sophisticated high level technology.

Capital-intensive production process.

Substitution of machines for human skills.

Mass production.

Mass consumption.

Capital accumulation.

Urbanisation and centralised production.
Industrialisation in this form and pace that took place in Western countries was able to attain
high rates of growth in production, productivity and income. The society reached the stage of
affluence and high levels of material welfare, but it failed to understand the limits of production.
As J. K. Galbraith has pointed out, this society increases its wants and therewith its consumption,
with its production. It is interested in production for profit or production for production and
thus moving along a road which has no direction. A great evil afflicting industrialism lies in the
fact that while it rationalises the processes of production, it never rationalises the purposes of
production. It does not attempt to know the limits of production. Gandhi did not support this
model of industrialisation and development; he focused on rural economy strengthening the
khadi and village industries using simple machines.
9.5
GANDHI’S VIEWS ON INDUSTRIALISATION
Gandhi’s views on industrialisation and machinery should be read in the context of his attitude
towards modern civilisation which was criticised severely in his Hind Swaraj. The Western
industrialisation promotes mass production and is sustained by high levels of consumption
arising out of growing wants. Gandhi believed that the chief aim of socio-economic organisation
should not be multiplicity of wants and accumulation of wealth but a minimum standard of
living must be assured to all human beings. The progress of materialism does not promote
happiness and instead gives rise to conflict and social discontent. He was not against the
industrialisation but what he opposed was machine-based industrialisation.
Gandhi strongly disliked the profit motive which is the base of modern industrialisation. The
new economic order that Gandhi envisaged is not judged by the value of production and the
quantity of material comforts and luxuries but by high standards of moral and ethical values
that govern the life of a nation.
9.5.1
Gandhian Model of Industrialisation
Gandhi’s model of industrialisation was village industries based on limited capital, local raw
material, short gestation period and easy marketing. He favoured the khadi and village industries
model. The industries should be small in size, simple in organisation, capital saving, non-violent
and non-exploitative. They use locally available resources. The industries are eco-friendly and
Machinery and Industrialisation
91
human-friendly with an advantage of short gestation period. It has decentralised the structure
and adequate income and employment generating capacity. He wanted production by masses
in their homes.
Gandhi saw the difficulties and dangers of indiscriminate industrialisation in the under-developed
countries which may result in the concentration of wealth or creation of industrialised urban
areas leading to regional imbalances. It will promote exploitative relationship between the city
and the village. Modernisation, industrialisation and mass production was not useful in solving
the problems of mass poverty and unemployment. He considered hand-spinning and other
village industries that provide employment opportunities to the people.
Gandhi favoured the use of machines as long as it helped in the eradication of poverty and
unemployment. He did not mind using electricity or even atomic energy for the spinning wheel.
He also accepted the importance of shipbuilding. He did not deny the importance of largescale industries in essential spheres like basic and capital goods. But they should be
complementary to small industries and should be owned by the state.
Gandhi was aware of the fact that the nature is being destroyed by unlimited industrialisation
and massive urbanisation which are thought necessary for development. He felt that any
attempt to introduce mass production, is endemic and self-defeating. It increases the problems
of unequal distribution and it also creates the problem of urbanisation.
Gandhi visualised a self-sufficient village economy wherein villages produce all necessities of
life. Cities buy the necessities and supply the machine tools and equipments. They should
produce machines needed for village industries. This was his view of village industrialisation,
forging a complementary rural-urban relationship.
The Gandhian model of small industry-oriented industrialisation was based on the self-employed
small producer producing for his basic requirements and not for the pursuit of wealth for its
own sake. These small producers are a social category fundamentally different from the
medieval surfs as well as the modern proletariat of the capitalist class. Now these small selfemployed producers working and living within the constraints of community life in the village
are also not the individual-based capitalists. Gandhi was aware of the difficulties and dangers
of alienating millions of small producers from the means of production. He therefore, argued
that the participation of his vast force in economic development calls for a new approach and
exploration outside the bounds of Western or Soviet models.
9.5.2
Rural Industrialisation
Rural industrialisation is a process of establishment of small and cottage industries in rural
areas. These industries help in the utilisation of local resources including the idle labour. It uses
labour-intensive technology and caters to the local needs and local markets. The industries can
be started with small amount of capital and use single technology. These industries have strong
forward and backward linkages and they support each other.
The basic features of rural industrialisation are:

Small and cottage industries located in rural and semi-urban areas.

Easy and convenient to start and manage.

Low capital investment.

Labour intensive technology and low skill requirement.
92
Gandhi’s Economic Thought

Simple production structure and organisation.

Flexibility and easy adaptability to local condition.

Adequate forward and backward linkages to promote rural development.

Near to local culture and environment.

Promotion of agro-processing and food processing activities.

Environment and consumer-friendly approach.

Variety of products suited to local tastes.

Decentralised ownership conducive to inclusive growth.
Rural industrialisation is thus a programme to boost the industrial activity in rural areas. This
programme helps to promote integrated development. It promotes diversifications of the rural
economy through development of non-farm sector. It has high employment potential. In view
of the meagreness of capital resources, there is no possibility for creating employment through
the factory industries. For example, consider the household or cottage industries. They require
very less capital. About six or seven hundred rupees would get an artisan family started with
any given investment, employment possibilities would be ten or fifteen or even twenty times
greater in comparison with corresponding factory industries (P.C. Mahalanobis).
The model based on khadi and village industries and rural industrialisation is ‘Swadeshi’ in
character. Since most of the production is localised in villages and caters to local needs, there
is little exchange market and profit. Gandhi thought that any payment to factory owner in
excess of the remuneration for the managerial skill was an indication of the exploitation of
worker. The strategy in this direction involves the following components:

Avoiding the consumption of any commodity, not producible by labour intensive methods.

There must be a plan to build up labour-intensive, mass-employment industries to supply
adequate level of consumption goods.

There must be a simultaneous attempt to build up capital/ intermediate goods industries
but only to the extent of the requirement of the mass employment industries.

As the economy approaches self-reliance, trade may be gradually opened in the form of
exports of mass employment goods, surpluses and purchases of goods not produced
within the economy.
Full employment was a key factor in Gandhi’s approach to development. Manpower, which
is the wealth of a nation, should not go waste. Thus the Gandhian model of industrialisation
was mainly guided by the considerations of removal of mass poverty and unemployment.
9.6
SMALL INDUSTRIES IN INDUSTRIALISATION
PROCESS IN INDIA
The independent India, under the leadership of Nehru, did not adopt the Gandhian model of
village industries and economic development. The Second Five Year Plan adopted Mahalanobis
model of large-scale industrialisation, covering basic and capital goods large-scale industries
based on capital-intensive technology. This model was borrowed from Soviet Russia where
it was found successful in promoting rapid economic development. Nehru believed that
Machinery and Industrialisation
93
industrialisation, along the Western lines, alone would make the nation really independent and
militarily strong. When the entire country passed through the long and arduous process of
industrialisation, the villages, he thought, would be automatically replaced by urbanised dwellings
with mechanised agriculture and therefore, the exploitation of villages by towns will not arise
at all. He adopted the strategy of large-scale industrialisation to promote rapid development
in India. Thus the Second Five Year Plan laid down the path for rapid large-scale industrialisation.
This strategy of industrialisation has not only been the root cause of unemployment today in
the economy but also for lopsided and imbalanced growth of the economy. The rural-urban
gap is on the increase continuously and the village economy is suffering from the insecurity of
income as well as employment. During the Second Five Year Plan in India, C N Vakil and
Brahmananda advocated the wage goods model based on small industries producing mainly
the consumer goods. But the model was not accepted. This model was close to the Gandhian
model of rural industrialisation and decentralised production. This could have solved the
problems of poverty and unemployment in the Indian economy and would have enabled to
promote sustainable development.
In the industrial policy resolution of 1948 and 1956, the small-scale sector was given special
role for creating employment with low capital investment. The thrust on small industries is also
observed in the Industrial Policy of 1977. The studies on small industries have brought out that
the failure of small-scale industries in India is mainly on account of lack of adequate working
capital, low technical skill and managerial ability and lack of marketing contacts. Therefore,
the focus of the policy approach is to fill up these gaps. Small industries are provided with
credit at concessional rates of interest. The National Small Industries Corporation (NSIC)
helps them in marketing, through obtaining a greater share in government purchases; there is
provision of grading and ISO 9000 certificate of small industries product; the corporation also
helps in the provision of adequate raw materials, imported components for production and
selected imported equipment to small enterprises. The industrial estates provide, on rental
basis, a good accommodation and other basic common facilities to the small entrepreneurs.
The small-scale sector was also promoted to produce the consumer goods. The Government
followed the policy of reservation of items for production in the small-scale sector. In 1972,
the list of reserved items was 177 which further increased to 837 in 1983. But since post
1990 new economic policy, the list of items has been declining continuously.
9.6.1
Survival of Small Industries- Challenges of Globalisation
The small industries are in crisis today in India as they suffer from severe competition and are
becoming sick at a rapid rate. They are facing numerous problems like lack of technological
methods, inadequate and irregular supply of raw materials, lack of organised market channels,
imperfect knowledge of market conditions, lack of quality consciousness and high costs.
Consumerism and the craze for foreign goods are increasing rapidly.
The economic reforms have an adverse effect on the small-scale sector. Cheaper and better
quality imported products are posing a serious threat to small industries, like chemicals, silk,
auto components, toys, sports goods etc. The entry of multinationals in small-scale sector
products, including retail trade, is a serious threat to these industries.
9.7
SUMMARY
Gandhi’s concept of industrialisation was rural industrialisation consisting of small and cottage
industries and not machine-based modern industrialisation. The industry should use simple
94
Gandhi’s Economic Thought
technology and labour, generate employment for the masses and ensure every Indian an
access to minimum level of living. It should promote self-sufficiency in rural economy and help
to avoid conflict between the labour and capital. This method effectively balances the production
and distribution. The present trend of industrialisation in India has generated wealth at the cost
of unemployment and poverty. The trend is less likely to be reversed by the forces of
globalisation.
Of late, machinery in the form of computer hardware and software skills have became the
drivers of the economic progress and with increased levels of literacy and skills the employment
opportunities have witnessed an increase. But the growth is highly unstable as it is driven by
the global demand. Gandhi’s concern about the type of economic development and
industrialisation is relevant even today. In a labour abundant economy, technology and industry
should support production for masses. The way out is either we have to reduce our population
drastically or search for big global markets. Both the alternatives are equally difficult. Therefore,
a proper balance between the man vs. machine i.e. the rural small-scale sector and the urban
large-scale sector in favour of the former is essential to find solutions in the present situation.
9.8
TERMINAL QUESTIONS
1.
Explain Gandhi’s concept of machine. Comment on the debate of Man vs Machine.
2.
Bring out the evils of the Western model of industrialisation.
3.
Discuss the Gandhian approach to Machinery and Industrialisation. Do you agree with
it? Substantiate.
4.
Evaluate the present pattern of Industrial Development in India and examine the relevance
of Gandhian model in the present context.
SUGGESTED READINGS
Dasgupta, A. K., Gandhi’s Economic Thought, Routledge, London, 1996.
Kripalani, J. B., Gandhi: His Life and Thought, Publications Division, New Delhi, 1970.
Indian Economic Association, Conference Volume, 68th Annual Conference, Ahmedabad,
1985.
Nanda, B. R., Gandhi and His Critics, Oxford University Press, New Delhi, 1985.
Tendulkar., D. G., Mahatma: Life of Mohandas Karamchand Gandhi, Vol. III & IV, Publications
Division, Government of India, New Delhi, 1960.
UNIT 10 ECONOMICS OF NON-VIOLENCE
Structure
10.1 Introduction
Aims and Objectives
10.2
Meaning of Non-violence
10.3
Sources of Violence in Economic Order
10.3.1 Imperialism
10.3.2 Urbanisation
10.3.3 Capitalism
10.3.4 Environmental Degradation
10.4 Preparing for Nonviolent Direct Action and Economy
10.5 Basis of Non-violent Economic Order
10.5.1
10.5.2
10.5.3
10.5.4
10.5.5
10.5.6
10.5.7
10.5.8
10.5.9
Bread labour
Khadi
Spinning Wheel
Swadeshi
Decentralisation
Village Swaraj
Trusteeship
Non-Violent Strikes
Sarvodaya
10.6 Satyagraha- Technique of Non-violent Direct Action
10.7 The Non-violent State
10.8 Summary
10.9 Terminal Questions
Suggested Readings
10.1 INTRODUCTION
The Gandhian economic thought is based mainly on the principles of truth, non-violence,
dignity of labour and decentralisation. Non-violence (Ahimsa) is a means to achieve the end.
Ahimsa or non-violence is an all-pervasive eternal principle applicable to every situation in life
without any exception. Ahimsa is the means and truth is the end. Gandhi said: “My marriage
to non-violence is such an absolute thing that I would rather commit suicide than be deflected
from my position. I have not mentioned truth in this connection. Simply because truth cannot
be expressed excepting by non-violence (Young India, 12-2-1931, p.354). The future of India
and the world lies in the adoption of non-violence. It is most harmless and yet equally effective
way of dealing with the political and economic wrongs of the downtrodden portion of humanity.
Thus non-violence as a means to attain the end, i.e. the truth involves all aspects of human
life. Non-violence and truth are inseparable. They are the two sides of the same coin. Both
represent purity. Impure means result in impure end. All the socio-political economic goals in
96
Gandhi’s Economic Thought
the Gandhian state- freedom, democracy, rural development, equality, Sarvodaya, decentralisation
and socialism are based on truth and non-violence.
Aims and Objectives
After reading this Unit, you would be able to understand:

Gandhi’s ideal of Non-violence and the economic aspects of non-violence.

The application of the ideal of non-violence from political to the economic life of the
people.

And how a non-violent economic order is established.
10.2 MEANING OF NON-VIOLENCE
The words Non-violence and Ahimsa are negative in form on account of negative prefixes ‘a’
and ‘n’ respectively. Gandhi explains why this virtue has been defined negatively. Himsa is an
inherent necessity for life in the body. Life lives on life. Ahimsa means an effort to abandon
the violence that is inevitable in life. It stands for the ultimate deliverance of man from the
bondage of the flesh, so that he may attain the state in which life is possible without the
necessity of a perishable body whose sustenance inevitably involves destruction. Thus Ahimsa/
or non-violence means avoiding injury to anything on earth in thought, work or deed. As
Gandhi says, “Exploitation is the essence of violence. The test of himsa is a violent intention
behind a thought, word or deed i.e., an intention to harm. Non-violence thus means the largest
love, love even for the evil doer”.
Non-violence in economic activities implies that one must engage in occupations that involve
the least violence. The occupations the non-violent man adopts should be fundamentally free
from violence and should involve no exploitation of others. Occupations and industries based
on body labour minimise exploitation. Therefore, physical labour is the base of non-violence.
In this scheme the work of butchers, hunting, war and war preparations are obviously ruled
out. Thus, in the economic life of an individual and the society, any activity that results in any
kind of exploitation of human-beings or natural resources becomes a source of violence.
Economic growth and prosperity attained through violence is not sustainable. Therefore, Gandhi
said that “an economics that includes mammon worship and enables the strong to amass
wealth at the expense of the weak is a false and dismal science”.
10.3 SOURCES OF VIOLENCE IN ECONOMIC ORDER
Any economic activity i.e. organisation of production and distribution, market and exchange
that results in exploitation of any kind becomes a source of violence. Gandhi strove to create
an economic order based on truth and non-violence in which the exploitation of man by man
will disappear in all its forms. The Western Civilisation based on rapid large-scale industrialisation
and mass production has generated many sources of violence. As Gandhi said, we cannot
build non-violence on factory civilisation. The Western Civilisation promoted by rapid
industrialisation is a basic source of violence. The consequent forms of exploitation that have
emerged out of it are discussed below.
10.3.1 Imperialism
Imperialism as a source of violence emerged in the post-Industrial Revolution Period. The
economic organisation of the West believed in the multiplicity of wants. It creates the supply
Economics of Non-Violence
97
and then creates a demand for it and thus strives to dispose of its production through capturing
the markets in other countries, for which, it requires power and to obtain such power it is
necessary to resort to violence. The East India Company entered India for trading purpose
to sell the excess production from the factories of England. Japan, in her industrialisation
process, began to push her goods in various countries. Thus industrialisation and mass production
lead to imperialism, which becomes a source of violence. It results in the exploitation of one
nation by another. This imperialism is also reinforced by the actions taken by the industrialised
country to control politically the places from where it gets its raw materials that again leads
to the use of violence, to subject simple people to political domination and make them merely
raw material producers, securing to the most violent nations the privilege of manufacturing the
finished goods. It has emerged now in the form of globalisation in which the underdeveloped
countries are forced to stay away from the global markets.
10.3.2 Urbanisation
The centralised mass production in urban areas leads to exploitation of villages that retards
their growth, paralyses their lives and contributes to their perpetual misery and dependence.
Exploitation is as much an evil when practised by the cities over the villages as it is when
practised by one country over another. The poor villages are thus exploited by the urban
centres. The process is well explained as cumulative causation by Gunnar Myrdal. In this
process, the resources are transformed from hinterland- the villages to centres of growth and
the centre- urban area grows at the cost of the pauperisation of periphery. Paul Sweezy also
supports this, wherein he says that even if a country adopts Socialism or Communism to end
violence, even then it cannot do so. Industrialisation, with centralised production in few urban
places, has always advanced from the very beginning by subjugating, plundering, exploiting
and re-shaping the environment in which it existed. The result was to transfer wealth from the
periphery to the metropolis and correspondingly to destroy the old society in the periphery
and re-organise it on a dependent satellite basis.
10.3.3 Capitalism
The capitalist mode of production is based on the exploitation of human labour and therefore,
it is a source of violence. Gandhi said that any payment to factory owner in excess of the
remuneration for the managerial skill was an indication of the exploitation of worker. It leads
to unequal distribution of income and violence is inherent in this economic inequality. As he
said, “A non-violent system of government is clearly an impossibility so long as the wide gulf
between the rich and the hungry millions persists- a violent bloody revolution is a certainty one
day, unless there is a voluntary abdication of riches and the power that riches gave and sharing
them for common good’ (Gandhi, M.K., Constructive Programme, Navajivan Publishing House,
Ahmedabad, 1968edn, p.26). Thus, without the elimination of inequality between the rich and
the poor and the labour and capital and cities and villages, there can be no real freedom in
society. He was in favour of socialism through non-violent methods only. He put forward his
doctrine of Trusteeship as against exploitative capitalism. But until trusteeship was not followed,
he was against the use of any kind of violence by the State against capitalism. He also said:
‘it is my firm conviction that if the state suppressed capitalism by violence it will be caught in
coils of violence itself and fail to develop non-violence any time.’ Thus industrialisation and
capitalism breed concentration of power and replacement of labour and became hindrance in
freedom and liberty of labour resulting in accumulation of wealth by violence. Here are few
examples:
98
Gandhi’s Economic Thought
The Industrial Revolution in England was financed from the profit of the Black slavery in the
West Indies and by the resource transfer from India. Violence in this form exists even today.
The advanced capitalist countries and the underdeveloped countries are not the two separate
entities but the top and bottom sides of the same globe. Trade investment and government aid
are the various means by which the advanced countries exploit the developing countries and
maintain them in a continuous state of backwardness. Though aid is given to promote
development, it is mainly in the form of tied aid which is not suitable to urgent requirements
of the developing countries. Much of the aid is also utilised for the purpose of paying back
the debt and interest. Thus the capital transactions, either in the form of investments or aid,
are never in favour of the developing countries and thus the control of developed countries
over the developing ones continues forever. The world economic relations are thus based on
violence over the times. The world order that is based on exploitation, injustice and disparities
cannot and should not be allowed to last long.
10.3.4 Degradation of Environment
The mass production and consumerism leads to environmental stress and degradation. The
western style of industrialisation was inherently not merely the violence of man against man but
also the violence of man in his dealings with living nature around him and violence against the
limited and finite resources of the earth. The environmental degradation is equalled to global
warming and depletion of the ozone layer, acid rain, etc. The more localised concerns are
pollution, soil degradation, desertification etc. The factory production process has thus led to
three major crises- the crisis of resource exhaustion, the ecological crisis and the crisis of
man’s alienation and disorientation. The modernisation of agriculture has destroyed the healthy
relationship between plants, animals, human beings and micro-organisms in the soil. The
massive uses of insecticides and pesticides and modern technology have been sources of
violence and crisis in agriculture.
10.4 PREPARING FOR NON-VIOLENT DIRECT
ACTION AND ECONOMY
Constructive Programme
The Constructive Programme, initiated in 1920, was considered essentially as a non-violent
direct action. To fight with the opponent, a Satyagrahi must generate adequate internal strength
through self-purification by conscious co-operative effort because fighting against evils in
others and harbouring them in oneself is neither truth nor non-violence. The Satyagrahi has to
establish rapport with the people. Success in Satyagraha campaign is impossible unless the
Satyagrahis have the sincere backing and firm control over the masses so that they would
eschew all violence. The only way to acquire this control is to win the heart of the masses
and to establish a living contact with them. Constructive work also goes a long way to
convince the opponent the non-violent intentions of the Satyagrahi. It is an essential prerequisite
of the Non-violent direct action. Just as the military training is necessary for armed revolt,
training in constructive work is equally necessary for civil resistance.
Constructive Programme is a quiet, solid and substantial work involving direct personal service
of the masses, suffering for them, organising them and educating them in the ways of nonviolence. It is a process of mass-effort and mass education. In 1942, Gandhi wrote, “If we
wish to achieve swaraj through truth and non-violence, gradual but steady building up from
the bottom upwards by constructive effort is the only way” (Harijan, 18-1-1942, p.4). Gandhi
consistently focused on and reshaped the Constructive Programme. In his foreword to this
Economics of Non-Violence
99
programme in 1945, he said that “Constructive programme may otherwise and more fittingly
be called “Poorna Swaraj or complete independence by truthful and non-violent means”.
The Constructive Programme is thus an effort to recast the present social order to eliminate
exploitation and injustice. It is a programme of social and economic reforms at the village level.
It includes:
1.
Communal Unity
2.
Removal of Untouchability
3.
Khadi
4.
Prohibition
5.
Village Industries
6.
Village Sanitation
7.
New or basic education
8.
Adult Education
9.
Village sanitation
10. Education in Hygiene and health
11. Provincial Languages
12. National Language
13. Economic Equality
14. Kisans
15. Labour
16. Students
17. Adivasis
18. Lepers
Of these, Gandhi attaches greatest importance to the economic items, particularly to khadi and
economic equality. To induce the rich to accept the ideal of economic equality and hold their
wealth in trust for the poor, he would depend upon persuasion, education, non-violent non
cooperation and other non-violent means. Gandhi said, “The theory of trusteeship lies at the
root of the doctrine of equal distribution. The only alternative to trusteeship is confiscation
through violence. But by resorting to violence the society will be poorer as it loses the skill
of a man who knows how to accumulate wealth. Non-violent non-cooperation is the infallible
means to bring about trusteeship because rich cannot accumulate wealth without the cooperation of the poor in the society” (Harijan, 26-8-1940, p.260).
Constructive Programme also includes organisations of labour, kisans and students. Labour
should have its unions who should take up educational programmes for workers and their
families. The organisation pattern of the kisans is indicated by Gandhi’s kisan movements in
Champaran, Kheda, Bardoli and Borsad. He was in favour of cooperative farming and
cooperative cattle-keeping and a decent living wage to the landless labourer.
100
Gandhi’s Economic Thought
The Constructive Programme is a ground preparation for non-violent direct action. Its aim is
the regeneration of society by ridding it of violence; it is a non-violent direct action, as a means
of generating moral strength among the masses and after direct action as a means of consolidation
in the form of a decentralised economic structure, social and economic equality and the right
kind of education.
10.5 BASIS OF NON-VIOLENT ECONOMIC ORDER
A non-violent economic order is characterised by a set of economic activities that promote
equality, justice and maintain natural balance in the economy. The organisation of production
and distribution on the following lines leads to the establishment of a non-violent economic
order.
10.5.1
Bread labour
Bread labour is at the base of economic philosophy of Mahatma Gandhi. The idea is derived
from Tolstoy, Ruskin and The Gita. Bread labour means every man has to labour with his
body for his food and clothing. According to him, the needs of the body must be supplied by
the body.
Gandhi regarded bread labour as a powerful tool for the removal of economic as well as
social inequalities, which are the sources of exploitation of the poor by the rich. In a society
based on bread labour, “there will be no rich and no poor, none high and none low, no
touchable and untouchable” (Harijan, 29-6-1935). Much of the exploitation and conflict in the
society was due to the fact that some powerful individuals avoid physical labour and throw
their burden on others. Therefore, all must be involved in physical labour for earning their
bread. Bread labour will eliminate large-scale production and profit motive and bring about
the self- sufficiency of the villages and the country.
10.5.2
Khadi
Khadi and village industries are not only a panacea for the problem of unemployment but also
the best means for industrialising villages. To Gandhi, khadi was the symbol of unity, economic
freedom and equality. Khadi production removes poverty, unemployment, idleness and
dependence on others.
Khadi is also the symbol of Ahimsa. The emphasis on Khadi was not only based on moral
and spiritual significance but also on strong common sense approach. Unemployment and
idleness lead to violence and Khadi is the only alternative to this. Thus Khadi spirit means
fellow feeling with every human being on earth. It means a complete renunciation of every thing
that is likely to harm our fellow creatures (Young India, 22-9-1927).
10.5.3
Spinning-Wheel
Spinning-wheel is a symbol of decentralisation and emancipation of the rural masses of India.
Gandhi believed that ‘Charkha’ (Spinning-wheel) was the only means to achieve full employment
to establish a non-violent economy. He believed that “the message of spinning wheel is much
wider than its circumference. Its message is one of simplicity, service of mankind, living so as
not to hurt others, creating an indissoluble bond between the rich and the poor, capital and
labour, the prince and the peasant. The larger message is naturally for all. The movement of
spinning-wheel is an organised attempt to displace machinery from the state of exclusiveness
and exploitation and to place it in its proper state”. It is a means to attain equitable distribution
of income which is an essential requirement of a non-violent economic order.
Economics of Non-Violence
10.5.4
101
Swadeshi
Gandhi defined Swadeshi as that “spirit in us which restricts us to the use and service of our
immediate surroundings to the exclusion of the more remote.” Swadeshi means use of goods
and services belonging to or produced in one’s own country. Every one must use only things
that are produced by his immediate neighbours and serve those industries by making them
efficient. The basic economic objectives of Swadeshi are economic self-reliance and employment
for the people. Swadeshi, through khadi, removes poverty, unemployment, idleness and
dependence. Swadeshi has an attachment to the rural civilisation of India, based on spiritual
and non-violent values, as against the materialism and violence of modern civilisation.
10.5.5
Decentralisation
Production and distribution should be decentralised at the village level to attain balance between
production and consumption. Decentralisation in economic sector involves a comprehensive
programme of rural industrialisation based on labour-intensive technology. Production in small
and cottage industries in rural areas, along with agriculture, facilitates production by the
masses. This promotes participative growth with social justice as the benefits of production
trickle down to the millions of masses. Gandhi favoured simple tools and techniques that may
help to increase industrial and agricultural production without throwing people out of employment.
Thus, if India has to evolve along non-violent lines, it will have to decentralise in many ways.
The system should be able to meet the basic human needs of food, clothing and housing and
restore equilibrium between agriculture and cottage industries.
10.5.6
Village Swaraj
Gandhi wanted to build up a new India in terms of Gram Swaraj. It was revival of the ancient
village community system with due purging of its social evils. The village is a republic, complete
in itself, self-supporting and self-sufficient, independent of neighbours for its own vital wants
and yet interdependent for many others in which dependence is a necessity. Here people have
maximum possible direct participation in the economic, political, social and cultural affairs. This
envisages maximum decentralisation of political and economic powers to the villages.
10.5.7
Trusteeship
In order to avoid a violent revolution in a capitalist society and to bring about equality in the
distribution of income and wealth, Gandhi propagated his doctrine of Trusteeship. The basic
idea is that the rich man will be left in possession of his wealth, of which he will use what he
reasonably requires for his present needs and will act a trustee of the remaining to be used
for the society. People cannot amass wealth without violence and without the co-operation of
the other members of the society. They have, therefore, no moral right to use any of it for their
personal advantage and to exploit others. Trusteeship thus provides a means of transforming
the capitalist order of society into an egalitarian one.
Gandhi’s way to deal with economic conflicts is not the class struggle and the extermination
of haves by have-nots but via class collaboration and class coordination as the first step
towards the classless democracy in which every one will perform the same form of productive
physical labour and there will be no exploiters. Gandhi believed that a capitalist can render
useful service to the society if he develops fraternal attitude towards labour and extend him
the status of co-proprietor of his wealth. Thus both labour and capital should act as mutual
trustees and trustees of consumers. This will help in attaining the goal of classless society by
ending all exploitation without violence and revolution.
102
Gandhi’s Economic Thought
10.5.8
Non-Violent Strikes
For solving the legitimate grievances, labour should resort to non-violent strikes to compel the
capital and to submit to arbitration. This is a strike which is non-violent in spirit as well as
method. It is a voluntary purificatory suffering undertaken to convert the erring opponent. The
important conditions of a non-violent strike are:

The cause of the strike must be just.

Strikes should not resort to violence

Workers should be able to maintain themselves during the period of strike without falling
upon Union funds and therefore, should occupy themselves in some temporary occupations.

They should remain firm no matter how long the strike continues. Unless the labourers
find their own support rather than depend on the resources of the union, the strike can
not be prolonged indefinitely.

There should be practical unanimity among the strikers.

A strike is no remedy when there is enough substitute labour to replace strikers. In that
case, in the event of unjust or inadequate wages, resignation is the remedy.

Workers should, on no account, strike work without the consent of their union.

Strikes should not be risked without previous negotiations with the mill owners on the
basis of an unalterable minimum demand.
Gandhi was against sympathetic strikes. He stated that a non-violent strike should be limited
to those who are labouring under the grievance to be redressed. He was also against labour
strikes for political purposes until the workers are able to understand the political situation and
are able to make right political choices.
10.5.9
Sarvodaya
Sarvodaya implies spiritual and material welfare of all. It is based on all embracing love and
no individual or group will be suppressed, exploited or liquidated. All shall be on equal footing
and sharing equitably the joint product, with the strong protecting the weak and the wealthy
functioning as trustee of his superfluous wealth in the joint endeavour of the greatest good of
all.
It is based on truth and non-violence and belief in God. It is an integrated approach to all
human activities. The social, political, economic and other activities of man are facts of human
life. It is based on equality and harmony with nature.
Sarvodaya seeks to eliminate injustice by eliminating economic conflict and by reducing the
scale of material wants to the minimum necessary for subsistence. Every human being must
satisfy certain material wants and to that extent a person may be a materialist but the excess
of wants over and above more than necessary for subsistence should be totally controlled.
Thus Gandhi opposed the notion of unlimited wants. It is based on the principle of simple living
and high thinking. To sum up, Sarvodaya refers to an all-round progress and development of
the humanity and advocates social ownership of means of production, equitable distribution
of income, elimination of discrimination of all kinds, universal brotherhood, peace and progress.
Thus bread labour, village swaraj, decentralisation, spinning-wheel, swadeshi and sarvodaya
form the basis of a non-violent economic order.
Economics of Non-Violence
103
10.6 SATYAGRAHA- TECHNIQUE OF NON-VIOLENT
DIRECT ACTION
As the situation in India was based on inequality, mass production, colonialism and centralisation,
it was essential to identify the means or instruments that may help to eradicate these sources
of violence. These means should also be non-violent in nature. Satyagraha fulfilled the
requirements of the technique of non-violent direct action.
Satyagraha
The literal meaning of satyagraha is “holding on to truth” or “insistence on truth” ‘Satyagraha’,
a non-violent mass action, is recommended as the sovereign remedy against economic oppression
and the ultimate means for economic reform. Satyagraha may be individual or corporate. A
corporate Satyagraha may take many forms such as non-cooperation, civil disobedience,
fasting, hartal (strikes), social boycott and picketing etc. Satyagraha is different from passive
resistance. Both are the methods of meeting aggression, settling conflicts and bringing about
social and political changes, but Satyagraha is a moral weapon based on the superiority of soul
force.
The Satyagraha at Kheda launched by the peasantry for non-payment of revenue was a
successful event and so also the Satyagraha at Champaran where the farmers were forced to
grow indigo plants in their land to obey the orders of the white rulers. Gandhi was able to
abolish this system with the help of cooperation of the people. Thus Satyagraha in various
forms was used as a technique to bring about socio-political and economic change in India.
Non-cooperation is an important off-shoot of Satyagraha. The idea that underlies noncooperation is that even the evil doer does not succeed in his purpose without carrying
conviction with him, if necessary, by force, and that it is the duty of the Satyagrahi to suffer
for the consequences of resistance and not to yield to the will of the tyrant.
The most potent weapon in the armoury of Satyagraha is fasting. Though fasting has a place
in the individual as well as group conflicts, it cannot be used correctly and effectively by the
masses. It can be resorted to only by select and qualified individuals. The method of fasting
is criticised as terrorism against which “the action of an opponent has no alternative between
surrender and the fasting individual’s suicide. It, therefore, is a kind of exploitation of the
opponent of his feelings of humanity, chivalry and mercy”. Gandhi has also emphasised that
it should be used in limited cases and only by those or under the direction of those who have
mastered the science of satyagraha and those who have acquired the necessary discipline.
Satyagraha as corporate action has been criticised on several grounds. It is sometimes described
as destructive of law and order, non-progressive and unconstitutional. But these criticisms are
not based on valid grounds and therefore, are not justified.
10.7 THE NON-VIOLENT STATE
Gandhi’s social ideal is the classless and stateless society. A society can be stateless when it
is completely or almost completely non-violent. This is an ideal that may not be fully realised.
What we may evolve in actual practice may be a predominantly non-violent state advancing
towards the stateless stage. The non-violent state has to be retained due to human imperfection.
Gandhi distrusts the state because it is steeped in violence. For the state to be democratic,
the citizens must acquire the capacities to resist any misuse of authority. The state is a service
104
Gandhi’s Economic Thought
state and will be a federation of rural republics.
The non-violent state has minimal interventions in social and economic life of the society. The
society is based on equality. A large part of production is in agriculture and cottage industries.
There will be a minimum of centralised production in essential sectors. The centralised production
will be organised either on the basis of private enterprise with both labour and capital acting
as mutual trustees and trustees of consumers or failing this, on the basis of state ownership
and joint management by the state and the representatives of workers.
Due to the partial realisation of bread labour and trusteeship, the non-violent state alone will
be able to achieve equitable distribution of wealth. Economic inequality will continue due to
differences in the earning capacities of the people. But this disparity will be within limits and
a part of the excess will be taken over by the state and will be used for the good of the
community.
The socio-economic structure of the non-violent state brings out the importance of the role
of the State, ensure social justice and self-sufficiency. The State will control forests, minerals,
power, and communications in the interests of the masses. On moral considerations, the State
will completely wipe out the revenue from alcoholic drinks and drug traffic. In the long run,
the State promotes adjustments in the socio-economic structures so that the economic life will
become increasingly self-regulated and the need for state regulation will diminish gradually.
Thus the non-violent state will minimise exploitation and replace master-servant and capitallabour relationships by a new cooperative order based on rural culture. There will be political
equality followed by social and economic equality. The society and economy will be simple
enough to be within the grasp of a normal person that shall make the society and the state
democratic.
10.8 SUMMARY
The economic order based on truth and non-violence is the ideal of the Gandhian economy.
It tries to eliminate the various sources of exploitation and violence emerging out of
industrialisation and centralised mass production. A non-violent economy is characterised by
decentralisation, production by masses, Village Swaraj, Swadeshi, Trusteeship, Sarvodaya
and Khadi. The spinning-wheel is a symbol of equality. Satyagraha is a technique of nonviolent direct action. The Constructive Programme is a precondition for non-violent direct
action. This corporate action may take various forms such as non-cooperation, civil
disobedience, social boycott, fasting etc. In this democratic rural based economy, the State
assumes a non-violent form with minimal intervention. It will promote the greatest good of all.
Today the rapid process of industrialisation and the consequent pattern of urbanisation have
raised serious social, economic, and environmental problems. In India, the level of urbanisation
is expected to reach 57 percent by 2025. The world is realising the limits to growth. The new
global economic order is based on multiplicity of wants and consumerism leading to violence
and over-utilisation of resources. While the short-term compulsions drive us towards the
technological race, the long-term solutions are to be searched within the Gandhian economic
order.
10.9 TERMINAL QUESTIONS
1.
Define non-violence. Explain how the modern civilisation is at the root of violence.
Economics of Non-Violence
105
2.
Write a note on Constructive Programme. How do you compare it with the Human
Development Approach?
3.
Discuss the base of a non-violent economic order. To what extent is this attainable in the
era of globalisation?
4.
Explain the nature of a non-violent State. Do you think that the present state in India is
non-violent in nature?
SUGGESTED READINGS
Dasgupta, A. K., Gandhi’s Economic Thought, Routledge, London, 1996.
Dhawan, Gopinath., The Political Philosophy of Mahatma Gandhi, The Gandhi Peace
Foundation, New Delhi, 1990.
Gregg, Richard B., A Philosophy of Indian Economic Development, Navajivan Publishing
House, Ahmedabad, 1958.
Kripalani, J. B., Gandhian Thought, Orient Longman, Bombay, 1961.
Sharma, S. P., Gandhian Holistic Economics, Concept Publishing Company, New Delhi,
1992.
Raval, M. N., et.al., Gandhi’s Economic Thought and Its Relevance at Present, South Gujarat
University, Surat, 1971.
UNIT 11 KHADI AND VILLAGE INDUSTRIES
Structure
11.1 Introduction
Aims and Objectives
11.2 Industrial Civilisation
11.3 Why Village Industries?
11.4 Swadeshi, Sarvodaya and Constructive Programme
11.5 Cottage Industries
11.6 Spinning-Wheel (Handlooms and Weaving)
11.6.1 Khadi/Khaddar Economics
11.7 Other Village Industries
11.8 Summary
11.9 Terminal Questions
Suggested Readings
11.1 INTRODUCTION
‘I would say that if the village perishes, India will perish too. It will be no more India. Her
own mission in the world will get lost. The revival of the village is possible only when it is no
more exploited. Industrialization on a mass scale will necessarily lead to passive or active
exploitation of the villagers as the problems of competition and marketing come in. Therefore
we have to concentrate on the village being self-contained, manufacturing mainly for use.
Provided this character of the village industry is maintained, there would be no objection to
villagers using even the modern machines and tools that they can make and can afford to use.
Only they should not be used as a means of exploitation of others’.
Harijan, 29-8-1936, p.226
Gandhi advocated years ago what we call today as ‘development with a human face’. It is
evident from his writings and speeches that he thoroughly opposed the heavy industrialisation,
which would rob the innocent villagers of their due share in the development work. He could
foresee the exploitation they would be subjected to and was highly critical of establishing such
system in the villages. Gandhi’s economics consists of village and cottage industries where
handicrafts, spinning, weaving and likewise remain constant sources of income and revenue
generation. These would ensure income to even the poorest of poor who would put in their
hard work and labour to earn their living wages. To him, this constituted the real ‘Swaraj and
Swadeshi’. An in-depth analysis of what Gandhi envisioned for village development and the
rise of all is necessary to understand his concept of economics, which is so uniquely different
from the conventional economic theories that talk of the welfare of man/individual.
Khadi and Village Industries
107
Aims and Objectives
After reading this Unit, you would be able to understand:

Gandhi’s concept of village development;

His intent behind promoting village and Khadi industries;

His preference for cottage and spinning units for village development; and

His analysis of how it would ensure economic equality.
11.2 INDUSTRIAL CIVILISATION
Gandhi attributes the demerits of mechanisation and industrialisation as the main reasons for
the decline of village development. As he says, ‘it is an evil when there are more hands than
required for the work, as is the case in India’. Mechanisation would not only displace the huge
manual workforce but also render severe unemployment problems for the villagers. He considers
that ‘the mills are menace to India, and it is no use thinking of labour-saving devices’. Gandhi
wanted these devices to be opted out in favour of providing work to the millions who would
spend idle hours for nearly half a year, mainly in search of work.
As had already been mentioned in the preceding Unit on ‘Machinery and Industrialisation’,
Gandhi did not favour industrialisation or the craze for mechanisation that leads to large-scale
labour displacement and unemployment. He was highly against this model of development for
it would contribute to deepening India’s pauperism and massive idleness of the masses. These
would also lead to mass production and consumption apart from capital accumulation and
centralised production. Gandhi highly deplored the Western model of development. He was
aware of the temptations of money and the lure of consumption that would ultimately enslave
a man to materialistic life. Machinery, as he said, ‘is the chief symbol of modern civilisation
that represents a great sin’ (Hind Swaraj, p.81) and that which is leading to the ruination and
desolation of the Western world. He did not want India to emulate this model of development
for it is ill-suited to the Indian needs.
As JS Mathur observes, ‘Gandhi despised modern industrialisation and wanted economic
regeneration of India in decentralised pattern. He felt that to change to industrialism is to court
disaster. The present distress is undoubtedly insufferable. Pauperism must go. But industrialism
is no remedy’ (Introduction, p.xxxviii). As he viewed it, materialism has stunted moral growth
which is so essential for humankind; his concept of national planning and development consisted
not in the industrial development but in adopting and leading a simple life by developing the
cottage industries. He despised the use of machinery which incapacitates man and that which
makes him weak in using the tools and cripples the limbs of the man.
Gandhi was against taking to industrialism on a massive scale. He considered it as nothing but
a control of the majority by a small minority. He warned against its entrapment by false
analogies. As he said, ‘to make India like England and America is to find some other races
and places of the earth for exploitation. The fact is that this industrial civilisation is a disease
because it is all evil. We must not suffer exploitation for the sake of steamships and telegraphs.
They are in no way indispensable for the permanent welfare of the human race’ (Young India,
12-11-1931).
108
Gandhi’s Economic Thought
11.3 WHY VILLAGE INDUSTRIES?
Gandhi’s model of industrialisation consisted of village-based industries wherein the labour is
used extensively and that which has limited capital and involves local resources/ raw materials.
This involves an element of non-violence and leads to non-violent economy, which includes
non-exploitative, cooperative and self-supporting mechanisms. Gandhi favoured giving utmost
attention to the rural industries as these would highly help in developing the rural areas without
involving the ills or negative effects of a typical capitalist and urbanised system. Further, to
empower the rural masses and generate income, he advocated the development of village and
cottage industries as the solution.
The rationale behind the village industries and insistence on khadi is to enhance the national
wealth not through industrialisation but through the small-scale industries. Gandhi insisted on
khadi since it represented the Swadeshi and self-reliant strategy. The purpose is to outline
village planning; development from below and within, inclusive in nature and to promote
employment opportunities in villages.
True Swadeshi, as Gandhi enunciated, consists in encouraging and reviving the home industries
and also ‘provide an outlet for creative faculties and resourcefulness of the people’ (MK
Gandhi, Village Industries, p.5). He espoused it especially for those who are unemployed and
willing to work hard to meet their basic requirements or add to their inadequate incomes.
Further, the villages are the chief sources of supply of our daily needs. Therefore, necessary
help should be extended to the supplier of our needs (Harijan, 23-11-1934).
Moreover, to help develop village industries is to engage in a constructive work. The main
purpose, as Gandhi viewed it, is to bring a ray of light into the lives of the millions of idle
masses so that their leisure hours are well utilised. Village industries are necessary to make
the villages self-supporting, self-contained with their own manufacturing tools and techniques.
The development of village industries acts as an insurance against the onslaught of the massive
industries. By preferring to take products manufactured in the village industries, Gandhi reiterated
that the village industries would be saved from extinction due to foreign competition. He felt
that the utmost need of the hour is to ‘protect the village crafts and the workers behind them
from the crushing competition of the power-driven machinery’ (Harijan, 10-8-1934).
Developing village industries also involves an element of nationalism as Gandhi had believed.
By opting to purchase from the village manufacturers, one tends to become village-minded.
To put it in Gandhi’s words, ‘when we have become village-minded, we will not want
imitations of the West or machine made products, but we will develop a true national taste
in keeping with the vision of a new India in which pauperism, starvation and idleness will be
unknown’ (Constructive Programme).
Village industries would also highly encourage the local skills and the use of local resources,
which can be obtained for a much cheaper rate than the machine made products. Gandhi
advocated developing of such a high degree skills by the villagers so that their products would
have high demand in the market. This would not only hone their skills but also make their life
worth living in the absence of enduring poverty and unemployment. There would be no dearth
of skilled people like village poets, artists, architects and others. Gandhi sought to ‘build India
from the bottom, that is from the poorest and the weakest and hence followed the centrality
of the villages’ (JN Sharma, p.47). Gandhi thus gave a new meaning to the concept of
reconstruction or regeneration of the villages.
Khadi and Village Industries
109
11.4 SWADESHI, SARVODAYA AND CONSTRUCTIVE
PROGRAMME
Swadeshi, as Gandhi defined it, is that spirit in us which restricts us to the use and service
of our immediate surroundings to the exclusion of the more remote. In the economic context,
it refers to the use of products produced completely in our own nation and by our own
villagers. Khadi became a symbol of Swadeshi in the Gandhian economics. His first advocacy
was not to give in to the temptation of using foreign mill cloth in preference for the hard work
of the millions of impoverished masses. Charkha or the spinning-wheel became an eternal
symbol of Swadeshi for Gandhi. As he often said, it is our desire to wear the foreign manufactured
cloth that displaced charkha from its dignified status. In order to revive that dignity and also
to inculcate true economic spirit that is devoid of exploitation and deceit, Gandhi took to the
spinning-wheel. As he rightly observed, ‘economics that hurt the moral well-being of an
individual or a nation are immoral and sinful. Thus the economics that permit one country to
prey upon another are immoral’ (Young India, 13-10-1921). The revival of hand-spinning and
the extensive use of spinning-wheel to assert our self-sufficiency demonstrated Gandhi’s deep
interest in developing it into a full-fledged khadi industry.
Sarvodaya means the rise or upliftment of all. In the economic context, it means the economic
equality of all devoid of discrimination. It also calls for the equitable distribution and this is
possible only when one adopts the self-denial method or voluntarily reduces the wants. Gandhi
advocated simple living and high thinking precept, for this alone can bring about the happiness
that is more spiritual in nature as against the accumulative materialistic life. Also, in the economic
field, ‘Sarvodaya pleads for (a) the repudiation of the proprietary possession of the nonproducers, (b) the establishment of proprietary possession of the producers, and (c) the
neutralization or the negation of ownership’ (JN Sharma, p.24). In the village development,
the precept of economic sarvodaya is crucial for it is built on the local resources with the
collective effort of all the villagers. The production is aimed not at commercial profit but for
the consumption within the village community. Moreover, it is the responsibility of the village
community to ensure a means of income to everyone. Gandhi envisaged that with
decentralisation, the village industries can prosper as they are not only labour-intensive but
also non-exploitative.
Constructive Programme is a blueprint of complete independence or Poorna Swaraj as Gandhi
envisaged. It consists of his guidelines regarding the reconstruction of the villages and society
by truthful and non-violent means. Gandhi includes the development of village industries as one
of its primary features. He laid emphasis on the village economy because ‘it cannot be
complete without the essential village industries such as hand-grinding, hand-pounding, soapmaking, paper-making, match-making, tanning, oil-pressing, etc’. He also talked of economic
equality calling for ‘abolishing the eternal conflict between capital and labour’, and also
stressing on adopting the ‘trusteeship’ doctrine. Gandhi clearly laid the outlines for village
development via village and cottage industries and promoting handicrafts.
11.5 COTTAGE INDUSTRIES
It is important to acknowledge the role of cottage industries in the Indian economic context
wherein they provide employment to millions of people. Unfortunately the encouragement
given to these industries has been rather dismal; they are also afflicted by shortage in budgetary
allocations. Gandhi once remarked that ‘Without a cottage industry the Indian peasant is
doomed. He cannot maintain himself from the produce of the land. He needs a supplementary
110
Gandhi’s Economic Thought
industry. Spinning is the easiest, the cheapest and the best’ (Young India, 10-12-1919).
Gandhi emphasised the development of this industry mainly to supplement the agricultural
occupation. Cottage industries, while encouraging spinning and weaving, would highly contribute
to the national wealth and also the economic and moral regeneration of India. Reminding that
spinning was a cottage industry that had a wider reach, Gandhi sought to reintroduce this in
order to provide specific means of income to all, as the ‘central idea behind hand-spinning is
to put money in the pockets of millions by finding an easy uniform cottage industry’ (Young
India, 31-7-1924). His strong belief was that the spinning-wheel would greatly contribute to
reviving the national cottage industry, which, in turn, would bring about the natural and equitable
distribution of wealth. This would do away with the enforced idleness of the masses and also
rid India of its perennial poverty. He was bewildered at the thought of having too many
industries rather than one universal industry, that is represented by spinning. At the same time,
he was not dismissive of other industries that bring about some remuneration to the village
labour. He opined that ‘the national resources must be concentrated upon one industry of hand
spinning which all can take up’ (Young India, 30-9-1926). To elaborate further, ‘it is not
enough to say that hand-spinning is one of the industries to be revived. It is necessary to insist
that it is the central industry that must engage our attention if we are to re-establish the village
home’.
Small and cottage industries can also avoid the evils of industrialism. The heart of social reform
is to make the world acknowledge the central place in it of everyman’s work (JN Sharma,
p.156). If we are to follow a decentralised pattern in the economic development, it is necessary
to encourage the craftsmanship of the villagers. This pattern of development also makes it
possible for the smaller communities to retain the ownership and control of the available
resources, which in a way, avoids the concentration of wealth in the hands of a few. This
profession can be carried on by the humblest of villagers, both men and women, and cater
mainly to the local markets.
Time and again, Gandhi stressed on the need to revive the cottage industries by reminding the
Congress leaders and the countrymen about the efficacy of these industries. Without their
revival, he warned, the village and its habitants are bound to undergo immense suffering. He
cautioned that one ‘must realise that it is not cities that make India, but the villages and that
you cannot reconstruct them unless you revive the village life with their defunct-handicrafts.
Industrialisation cannot bring life to moribund villages. The peasant in his cottage home can
be revived only when he gets back his craft and depends for his necessaries on the village
and not on the cities as he is compelled today’ (JS Mathur, Industrial Civilization and Gandhian
Economics, p.135).
11.6 SPINNING-WHEEL (HANDLOOMS AND WEAVING)
The spinning-wheel or Charkha has become an eternal symbol of Swadeshi in the Gandhian
economic vision. Gandhi was convinced of its efficacy and prominently backed its revival. ‘I
claim for the Charkha the honour of being able to solve the problem of economic distress in
a most natural, simple, unexpensive and businesslike manner. The Charkha, therefore, is not
only not useless, but it is a useful and indispensable article for every home. It is the symbol
of nation’s prosperity and therefore, freedom. It is a symbol not of commercial war but of
commercial peace’ (Young India, 8-12-1921).
Further, Gandhi gives the following reasons as to his insistence on spinning:
1.
It supplies the readiest occupation to those who have leisure and are in want of a few
coppers
Khadi and Village Industries
111
2.
It is known to the thousands
3.
It is easily learnt
4.
It requires practically no outlay of capital
5.
The wheel can be easily and cheaply made. Most of us do not yet know that spinning
can be done even with a piece of tile and splinter
6.
The people have no repugnance to it
7.
It affords immediate relief in times of famine and scarcity
8.
It alone can stop the drain of wealth which goes outside India in the purchase of foreign
cloth.
9.
It automatically distributes the millions thus saved among the deserving poor
10. Even the smallest success means so much immediate gain to the people
11. It is the most potent instrument of securing cooperation among the people.
He likened the spinning-wheel to the life-giving Sun for in it he saw the life giving occupation
to the millions of unemployed. He wanted the Charkha to symbolise not only the handicrafts
but also the spirit of swadeshi. He wanted that the masses should take to spinning and
handlooms in order to achieve economic independence. He believed that the spinning-wheel,
in this context, is a force in national regeneration. He even advocated spinning to be made a
compulsory subject for it is the ‘Secret of Swaraj’. He strongly pleaded for the revival of the
home-spinning to attain economic independence and to banish pauperism. To put it in his
words, ‘I hold the spinning wheel to be as much a necessity in every household as the hearth.
No other scheme that can be devised will ever solve the problem of the deepening poverty
of the people’ (Young India, 2-2-1921).
Spinning was also seen as a subsidiary industry by Gandhi. He remarked that ‘it is intended
to restore spinning to its ancient position as a universal industry auxiliary to agriculture and
resorted to by the agriculturists during those months of the year when agricultural operations
are suspended as a matter of course and cultivations have otherwise little to do. The spinning
wheel is capable of being applied as a complete insurance against famines and droughts’
(Young India, 4-8-1921). Gandhi was thoroughly convinced of the invincibility of spinning
wheel, without which the poverty of India cannot be solved. He advocated spinning for all the
households and making it a universal occupation so that the complications attached with
machinery are fully avoided. As millions of weavers and lakhs of carders revert to this
occupation, it would ensure the economic growth of India. It is interesting to note his unflinching
belief in this occupation wherein he pledges that it ‘defies the pranks of monsoons and acts
as an insurance against many risks. It gives the country an incentive to industrial effort and
renders cooperation on a national scale absolutely necessary for success’ (Young India, 121-1922).
Most importantly, Gandhi viewed the charkha as an eternal symbol of Hindu-Muslim unity and
also all-India unity. Those who believe in the unity would resort to spinning daily and nothing
can possibly unify and revivify India as the acceptance by all India of the spinning wheel as
a daily sacrament and the Khaddar wear as privilege and duty (Young India, 16-3-1922).
Gandhi saw charkha as a uniting force between communities thus bringing them together to
achieve common economic goals. Further, spinning is also advocated as a symbol of identification
112
Gandhi’s Economic Thought
with the poorest masses of India. It would rid them of the state of blank despair, painful
starvation and insane life of beggary. By providing them the spinning-wheel, we would be
rendering greatest service to them by restoring to them a dignified life and easy labour.
Spinning, as Gandhi often viewed it, is a cooperative effort that makes us realise our formidable
strengths.
11.6.1
Khadi/Khaddar Economics
What does khaddar stand for in Gandhi’s scheme of economic regeneration of India? To
understand the rationale behind it, it is important to note what he said with regard to it. Firstly,
Khaddar stands for simplicity and not shoddiness and does not go against the machinery but
its weedy growth. The wheel, in itself, is an exquisite piece of machinery. Secondly, it helps
in bridging the gulf between the rich and the poor and creates a moral and spiritual bond
between them. It bestows hope in the millions of helpless poor by becoming the centre of all
the village industries. It offers an honourable employment, utilises the idle hours, elevates the
living standards in the villages, and acts as a great organising power along the peaceful lines.
Most importantly he found it as a viable occupation for the poorest, including the untouchables,
who are the most helpless among the poorest. It is necessary to observe what Bharatan
Kumarappa said with regard to the reasons for Gandhi’s insistence on Khaddar. It is summed
up in the following paragraph:
‘Gandhi wanted people to shake off the inertia and a feeling of helplessness, to learn to rely
on themselves. Mill production of cloth could employ only a small fraction of the people and
also the employee could not be self-reliant as he was dependent on the employer for wages,
raw materials and machinery. It was khadi alone which could teach our village population to
depend on their own efforts to improve their lot, and thus to learn their first lesson in real
independence. It was meant to put new life in to the individual and to make him resourceful
and self-dependent. It contained the seeds of true swaraj or self rule or democracy in the real
sense of the term. Gandhi wanted to teach the importance of the dignity of hand-labour and
not to shun it or degrade it. Gandhi expected it to lay the foundations of a non-violent
economic and social order which would bring peace and happiness to the mankind. This was
the far-reaching and permanent objective which underlay his efforts for reviving Khadi’ (Khadi,
Why and How, Navajivan, Ahmedabad, 1955, pp.iii-iv).
Writing in Harijan (10-12-1938), Gandhi reiterated that ‘Khadi has a big mission. Khadi
provides dignified labour to the millions who are otherwise idle for nearly four months in the
year. Even apart from the remuneration the work brings, it is its own reward. For, if millions
live in compulsory idleness, they must die spiritually, mentally and physically. The spinning
wheel automatically raises the status of millions of poor women. Even though, therefore, mill
cloth were to be given gratis to the people, their true welfare demands that they should refuse
to have it in preference to Khadi, the product of their labours’. By advocating this selfsufficient and contented approach, Gandhi sought to uplift the spirit of millions of masses. His
firm conviction was that by reviving the khadi and other village industries, we would not be
dragged into the imperialism, wherein exploitation of the weaker races and pursuit of materialistic
life reign as supreme goals, making the concept of peaceful living almost impossibility. He felt
that in order to withstand the onslaught of the Western machinery, India should adopt selfsupporting techniques and the spinning-wheel represented the best alternative. Gandhi’s
advocacy of khadi was unequivocal and successfully countered numerous criticisms against it.
One such defence deserves to be quoted in full. Answering the criticism that khadi is economically
not feasible, Gandhi reiterated,
‘Khadi is the only true economic proposition in terms of the millions of villagers until such time,
Khadi and Village Industries
113
if ever, when a better system of supplying work and adequate wages for every able-bodied
person above the age of sixteen, male or female, is found for his field, cottage or even factory
in every one of the villages in India; or till sufficient cities are built up to displace the villages
so as to give the villagers the necessary comforts and amenities that a well-regulated life
demands and is entitled to. I have only to state the proposition thus fully to show that khadi
must hold the field for any length of time that we can think of’ (Harijan, 20-6-1936).
Gandhi was aware of the limitations khadi poses. He identified the factors such as settled
prejudices among the villagers, the unscrupulous competition, absence of state protection,
reluctance and opposition to khadi by the experts from economics field, and the demands for
a cheaper khadi among its users. The problem, he felt, lies in the lack of awareness among
both the city-dwellers as well as villagers regarding its utility. At the same time, he points out
to its benefits such as being the largest industry that employs largest number of people and
huge sums that go into the wage distribution and lastly as the most practical economic proposition
without a rival.
11.7 OTHER VILLAGE INDUSTRIES
11.7.1
Cooperative Farming
Gandhi conceived the idea of cooperative farming to banish poverty and engage the idle
masses in productive occupation. As for the objectives of this programme, apart from creating
employment, it would help in forging cooperation among people to work collectively for their
common good and help in the development of the villages. Since most of the people are
dependent on agricultural occupation, the cooperative farming would bring about common
benefits to all equally. ‘The land would be held in cooperation and this would cause a saving
of labour, capital, tools, animals, seeds, etc in cooperation. Cooperative farming of this kind
change the face of the land and banish poverty and idleness from their midst. All this was only
possible if people became friends of one another and as one family’ (Mathur AS and Mathur,
JS, p.335).
11.7.2
Tanning Industry
Gandhi believed that tanning industry is especially important for generating income considering
its worth and demand from many quarters of the world. This is especially useful for the
upliftment of the untouchables who are deprived of the basic necessities. They may be taught
this skill and thus help in ‘taking the art, education, cleanliness, prosperity and dignity to them’.
Gandhi supported the application of chemical talent that helps in improving methods of tanning.
He did not favour slaughtering animals for this purpose but suggested taking the hide from the
dead cattle. Lasting and cost effective footwear could be manufactured from this. It would
also help in bringing the intelligentsia who teach the techniques in contact with the villagers
through dissemination of knowledge.
11.7.3
Dairying
Gandhi wanted India to set the finest example in the dairying experiments, by setting up the
dairying centres/goshalas as model units. They should not be confined to a mere two acre
land but around fifty to hundred acres, where a modern dairy unit would be operating. The
ideal goshalas would supply milk to the villages and cities and thus, ‘there would be no profits
and no dividends to be paid and there would be no loss incurred’. These could be eventually
developed into model dairy farms and profitable national institutions (Village Industries, pp.2930).
114
Gandhi’s Economic Thought
11.7.4
Gur and Khandsari
Sugar industry is the most viable village industry and considering its fast multiplication, Gandhi
felt, there is a large scope for research and substantial help. He favoured the State’s help and
favourable legislation for this industry, whose profits are next only to the textile industry.
Jaggery, palm jaggery could be used to produce refined sugar or may be retained as they are
for nutritious value. The tadi and nira made from fresh khajuri juice also carry health benefits.
11.7.5
Miscellaneous Industries
Gandhi suggested and supported the setting up of compost manure units, organic in nature that
would help in enriching the soil and increasing the yield of the grains and pulses. It would also
rid the villages of unnecessary waste and filth and make them much cleaner. Hand-made paper
is also a viable industrial unit that can produce handicrafts. Another option is to prevent the
decline of ghani oil industry. Gandhi suggested an active role of the state to revive these units
and also make the oil seeds available to the oilman at reasonable rates. Cooperative societies
and panchayats could help in supervising the aid disbursement. Bee-keeping also held immense
opportunities to produce quality honey and sugar that have rich medicinal value. Handpounding of rice can help millions of housewives and artisans to earn their income; the use of
machinery may be avoided that deprives income to people.
Gandhi felt that the village exhibitions are best platforms to display the products manufactured
by the villagers. They have an educative value apart from monetary value. They also help in
bringing into limelight new methods and techniques that help in improving the production
output. Villages can thus create their own opportunities and provide for themselves the amenities
like Nai Talim, village medicine, maternity homes and health-care centres, better sanitation, art
sections and animal rearing. All these go a long way in the upliftment of the masses, which is
proclaimed in the economic aspect of sarvodaya.
11.8 SUMMARY
Gandhi’s ideal of village development was simple and straight. He did not set the high ambitions
of machine-induced development, which the large numbers of illiterate masses are unaware of.
He recommended much simple alternatives like dairying and cooperative farming for the village
development. He ruled out any role for machinery in the process that would render this large
population to unemployment and despair. Gandhi envisioned self-sufficiency and rejected
dependence on machinery and industries for livelihood opportunities. The cottage and khadi
industries fit his scheme of development that would ensure in grooming the village art and
skills. Unfortunately these industries have been relegated to background in the planning schemes
and have been replaced by ambitious development plans as prescribed by the state and
international financial organisations. Villages in India continue to suffer from gross
underdevelopment and perennial neglect. National reconstruction via cottage and village industries
provides a viable alternative and deserves much attention from our policy makers and
functionaries.
11.9 TERMINAL QUESTIONS
1.
Explain the rationale behind Gandhian scheme of village development via village
industries.
2.
Write a short note on the importance of cottage industries.
Khadi and Village Industries
115
3.
Spinning-wheel is an important instrument of economic development. Do you agree with
this? Explain.
4.
What do you understand by Khadi economics? Explain briefly.
SUGGESTED READINGS
Bharathi, K.S., The Philosophy of Sarvodaya, Indus Publishing House, New Delhi, 1990.
Gandhi, M.K., Khadi-Why and How?, (ed by B.C.Kumarappa), Navajivan Publishing House,
Ahmedabad, 1955.
Gandhi, M.K., Village Industries, (Compiled by RK Prabhu), Navajivan Publishing House,
Ahmedabad, 1960.
Gandhi, M.K., The Gospel of Swadeshi, (ed by Anand T. Hingorani), Bharatiya Vidya Bhavan,
Bombay, 1967.
Mathur, J.S., and Mathur, A.S., Economic Thought of Mahatma Gandhi, Chaitanya Publishing
House, Allahabad, 1962.
Mathur, J.S., Industrial Civilization and Gandhian Economics, Pustakayan, Allahabad, 1971.
Sharma, Jai Narain., Economic Thought of Mahatma Gandhi, Sehgal Publishers Service, New
Delhi, 1991.
UNIT 12 GANDHIAN ECONOMISTS
Structure
12.1 Introduction
Aims and Objectives
12.2 Principles of Gandhian Economics
12.3 J.C.Kumarappa
12.4 E F Schumacher
12.5 J K Mehta
12.6 Shriman Narayan
12.7 Summary
12.8 Terminal Questions
Suggested Readings
12.1 INTRODUCTION
During the course of our freedom struggle, Gandhi inspired many a distinguished persons to
take up the mantle of India’s regeneration plans. While some of the dedicated members
actively and directly involved themselves in the political struggle, many of them worked towards
the regeneration programme. They engaged themselves in mapping the agenda of social and
economic programme according to the Gandhian principles of truth and non-violence; yet
some others were thoroughly influenced by the Gandhian principles in an indirect manner and
their works reflected this influence. Gandhi’s prescription of an economic model was simple
and straight. It consisted not of heavy industrialisation or mechanisation but development of
cottage and village industries, khadi and village handicrafts. Among the distinguished Gandhian
economists and planners, special mention may be made of JC Kumarappa, Shriman Narayan
and JK Mehta. Gandhi’s ideas had also thorough influence on many economists and experts
outside India and EF Schumacher holds eminence among them. This Unit deals with the
thoughts and ideologies of these eminent men and how they charted the development agenda
with humanistic approach.
Aims and Objectives
After reading this Unit, you would be able to understand:

The principles of Gandhian economics

The contribution of distinguished Gandhian followers towards social and economic
regeneration of India

The relevance of Gandhian economic model in the contemporary globalised era.
12.2 PRINCIPLES OF GANDHIAN ECONOMICS
From the preceding Units, we have become familiar with the basic concepts of what Gandhi
envisioned for economic development and the means to realise these. Choudhuri summarises
Gandhian Economists
117
them as follows: ‘the goals that Gandhi set for a restructured economy were the end of
exploitation, economic equality and a world order free from war. The principles according to
which the restructuring was to take place were cooperation and sharing, universal participation
in physical labour, voluntary limitation of wants, decentralisation of economic activities, a new
technology in consonance with the new goals, Swadeshi, and the transformation of private
ownership of means of production to trusteeships’ (Manmohan Choudhuri, pp.191-192).
Gandhi believed in economic equality for non-violence to prevail upon in society. Gandhi’s
Constructive Programme was a step forward in this direction. He advocated productive
physical labour as one of the fundamental principles for a new economic order. He also
advocated spinning as the prime occupation, which would help in alleviating mass unemployment
among the villagers. He was against that development which would injudiciously use the
natural resources, thus aggravating the fragile ecological concerns. Voluntary reduction of
wants, he reiterated, reduces the massive consumption levels and makes resources available
to all in equal measure. Khadi became an eternal symbol of Gandhian model of development.
Gandhi’s approach to economics was humane and ethically progressive, and his devoted
followers made great efforts to convene economic models on these lines. As his close follower,
Shriman Narayan observed, ‘Gandhiji was not very familiar with modern economic terminology,
but his ideas revealed a pragmatic and rational approach to various economic problems
confronting developing countries’ (Gandhi- the man and his thought, p. 38). A common
element of genuine concern for the deprived sections is reflected in the works of his associates
and Gandhi’s non-violent means of achieving equality is clearly reflected in their approach.
12.3 J.C.KUMARAPPA (1892-1960)
Joseph Chelladurai Cornelius Kumarappa, a philosopher of striking originality, was the principal
preceptor of Gandhian Economics (Govindu and Malghan, p. 2, see URL). His thoughts and
ideas constitute new dimension in the human economic development and his writings reflected
close proximity of economic development and environmental concerns. He was one of the
earliest to voice this concern. Kumarappa’s tryst with the Indian economic scenario had its
origins during his study years in America, when he sought answers as to the reasons for India’s
extremely impoverished condition, with which he was unfamiliar with till then. His Master’s
thesis on ‘Pubic Finance and India’s Poverty’ focussed on the British colonial financial policy
and exposed him to the reasons for India’s economic condition. Upon his return to India, he
came in close contact with Gandhi, who later commissioned him to undertake the economic
survey in the Matar taluka of Kaira (Kheda) district. This not only familiarised Kumarappa
with the rural Indian economy but also made him think on further regeneration of India with
a human approach. He also contributed immensely to the working of All India Village Industries
Association (AIVIA), which he took charge of and was later assigned the responsibility of
editing the Weekly, Young India, during Gandhi’s imprisonment.
Kumarappa was undoubtedly a man of action and took upon the onerous task of charting the
socio-economic regeneration of India on Gandhian precepts. He developed an internally
consistent teleological framework that delved into such fundamental questions of economic
theory and philosophy as the nature of the individual, value theory, nature of work, division
of labour, role of the state, right to property and money as a medium of exchange (Govindu
and Malghan, p.3). He also brought out pioneering works like ‘Why the Village Movement?
A Plea for a Village Centred Economic Order’, ‘Practice and Precepts of Jesus’, ‘An overall
plan for Rural Development’, ‘Gandhian Economy and other essays’ and ‘Economy of
Permanence: A Quest for a Social Order based on Non-violence’. The last one is considered
as his magnificent work that strikes right chords between economy and environment, making
118
Gandhi’s Economic Thought
him one of the earliest pioneers on ‘green thought’ in India. He advocated protection of raw
materials and resources which are necessary to meet the basic requirements of livelihood in
a society. He envisioned an economy of permanence and peace that would involve not only
individual, moral and spiritual development but also ensure the ultimate Gandhian aim of
sarvodaya order of society (see Dashrath Singh, p. 130). Like his mentor Gandhi, Kumarappa
also viewed individual autonomy as key to society’s economic freedom and peace. He viewed
a close connection between the economic structure and organisation and the political structure,
for example, large-scale industrialisation is an anti-thesis to democracy in politics.
Kumarappa was dissatisfied with then prevailing economic policy where peacelessness was
the main characteristic. He viewed both the capitalist and communist models as inducing
materialistic values and enhancement of pleasure. He studied their negative impact on the
health of an individual and the vices that eventually cause stress and anxiety. Wars are also
immanent under these systems as there is a severe competition to control natural resources.
Further, money economy and price mechanisms also lead to inequalities in wealth.
Kumarappa’s solutions to these ills are manifold. Firstly, he advocates satisfying the natural
needs without creating an artificial demand and without breaking the cycles of nature. He was
keen to restore nature to its pristine element. Secondly, economy should be based on
communitarian type, with social control, decentralisation and social regulatory mechanisms.
This economy promotes cooperative and complimentary behaviour, a much needed element
in social altruism. Thirdly, the economic planning itself must be on the lines of durable peace
wherein the local resources and problems are tackled effectively. The national planning should
start from the village level (Dashrath Singh, pp.141-2). The plans need to incorporate the
issues of agriculture, village industries, sanitation, health, housing, education, village organisation
and culture.
Mark Lindley credits Kumarappa of doing pioneering work in the field of what is now called
‘ecological economics’. There have been others who had noted these concerns before
Kumarappa but the latter’s contribution stands out among all the works related to the field.
Lindley regards the Economy of Permanence as inventing the concept of sustainable economy.
He says: ‘Kumarappa’s vision of promoting the ‘cooperation and coordination of Nature’s
units’ will prove an essential complement to the hands-off concept’ (hands-off ideology of
humanity’s relation to nature to prevent the occurrence of environmental degradation, Lindley,
p.153). Further, Kumarappa cautioned the Indian government about scant attention that is
being paid to the renewal of soil fertility, careful use of artificial fertilizers, proper functioning
of irrigation tanks, and ‘the dangerous imbalance in the government’s anxiety about the revenue
production of forests rather than their being a conserving ground for water’(Ibid.,).
Further, Kumarappa never lost sight of the moral approach in his economic model. He
advocates against procuring things, which do not appeal to us morally and spiritually. Our
values should play a prominent role in this despite the product’s materialistic allurement. Lastly,
he advocates service of fellow human-beings as the ultimate way to economy of permanence.
As he said, ‘the principles of economics tend to be permanent in the measure in which we
recognise the transcience of life and formulate our laws in perspective of eternity. Such an
attitude alone will lead to the progress and prosperity of the human race and to a life of peace
and goodwill based on culture and refinement’ (Why The Village Movement?, p.29). His
vision was to emphasise distribution rather than production, on duty rather than right. Only this
would ensure an economy of peace and permanence with highest regard to humanity and
highest returns of moral and spiritual contentment.
Gandhian Economists
119
12.4 E.F.SCHUMACHER (1911-1977)
A reader of Ernst Friedrich ‘Fritz’ Schumacher’s works would undoubtedly find the influence
of Gandhi on this distinguished economist from the West. He too produced pioneering work
on the use of resources in a well thought-out manner in the process of development. His
seminal work ‘Small is Beautiful’ has been a telling influence on the scholars and experts of
his contemporary time and beyond. His advocacy of Buddhist Economics also gives an
account of how economics can be peaceful as well as non-violent. He often cited Gandhi in
his works, a proof of the widespread influence of Gandhi around the world.
Schumacher’s concern for the nature and its significance is well reflected in the following
words: ‘Modern man does not experience himself as a part of nature but as an outside force
destined to dominate and conquer it. He even talks of a battle with nature, forgetting that, if
he won the battle, he would find himself on the losing side’ (Small is Beautiful, p.1). He
lamented at the widespread belief that the problem of production is solved by exhausting the
‘natural capital’ and was highly concerned at the alarming rate with which nature is being
depleted. He was similarly aghast at quantum leap in industrialisation across the world. His
farsighted thinking is reflected in his reservations about the safety devices to be developed by
the scientists and technologists in ‘using, transporting, processing and storing of radio-active
materials in ever increasing quantities’(ibid, p.7). Like Gandhi, he advocated simple life as a
means of peaceful life. He reiterated that, ‘we must thoroughly understand the problem and
begin to see the possibility of evolving a new lifestyle-a lifestyle designed for permanence’.
These include building up soil fertility; producing health, beauty and permanence; evolving
small scale, non-violent technology, with a human face; evolving new forms of partnership
between management and men, and forms of common ownership. Thus one can find a striking
similarity to what Gandhi and his devoted follower Kumarappa have campaigned for. He once
questioned thus: ‘instead of Gandhi, are we not inclined to listen to one of the most influential
economists of our century, Lord Keynes?’
Schumacher forewarned about the consumption of fuel levels at alarming proportions ‘that
would produce environmental hazards of an unprecedented kind’. He cautioned about nuclear
energy and its use wherein ‘it is hard to imagine a greater biological threat, not to mention the
political danger that someone might use a tiny bit of this terrible substance for purposes not
altogether peaceful’. These prophetic words seem to be close to execution with proliferation
of nuclear weapons and its (likely) misuse by some of the nations.
Schumacher spoke against unlimited economic growth where everyone is saturated with wealth
as an unhealthy indicator of human progress. It not only makes the availability of basic
resources scarce but also endangers nature and ‘the capacity of environment to cope with the
degree of interference implied’. The cultivation and expansion of needs, he finds, is the antithesis of freedom and peace. This increases the dependence of the humankind on nature that
would face existential fear. As he says, ‘only by a reduction of needs, can one promote a
genuine reduction in those tensions which are the ultimate causes of strife and war’. Gandhi’s
concept of voluntary reduction of wants too echoes this. Schumacher believes that nonviolence and relationship of man to nature are the only factors that guarantee peace and
permanence. According to him, ‘economics deals with a virtually limitless variety of goods and
services, produced and consumed by an equally limitless variety of people’. He is completely
in agreement with Gandhi regarding the means and ends. Modern economics, he feels, ‘destroys
man’s freedom and power to choose the ends he really favours and the development of means
dictates the choice of ends’.
120
Gandhi’s Economic Thought
Schumacher’s significant contribution to economics is his concept of ‘Buddhist Economics’.
The influence of Burmese economics is quite evident which sees no conflict between religious
values and economic progress. He thus explains the concept and meaning of Buddhist
Economics:
‘While the materialist is mainly interested in goods, the Buddhist is mainly interested in liberation.
Buddhism is ‘The Middle Way’ and in no way antagonistic to physical well-being. It is not
the wealth that stands in the way of liberation but the attachment to wealth; not the enjoyment
of pleasurable things but the craving for them. The keynote of Buddhist economics is simplicity
and non-violence. It is the utter rationality of its pattern- amazingly small means leading to
extraordinarily satisfactory results. The ownership and the consumption of goods is a means
to an end, and Buddhist Economics is the systematic study of how to attain ends with the
minimum means’.
Therefore, from Buddhist Economics dimension, production from local resources is a rational
way of economic life. Further the reverence to nature determines the level of consumption to
minimum. This has two major advantages: (1) prevention of felling of trees and (2) genuine
economic development without foreign aid (as the resources are sufficient and there is no
scope for export/import). These ensure a measure of peace and permanence.
Schumacher wondered at the futility of the modern economics that does not help the poor man
to improve his standard of life. He too advocated production by the masses instead of
gigantism and automation in production processes. He forewarned the danger of atomic
energy which is meant for so-called peaceful use and views nuclear reactors as massive
wastes, where even a minor accident can cause catastrophe that affects several generations.
Schumacher raises some genuine concerns about the use of modern technology. It is bound
to lead towards suffocating and debilitating effects, or even a partial breakdown of living
environment. The limitless and expansive materialistic life ensures in the least the real purpose
of human development. Modern technology, as a massive replacement to human energy, leads
to unhealthy trends in human beings like overeating and sleeping, and renders them unproductive
and gives them greater amounts of leisure. He finds that hands and brains involved in productive
work are excellent tools and offer a therapeutic and educational value of real work apart from
promoting creativity, work-enjoyment, and much less illness. He named it intermediate
technology, vastly superior to the primitive technology or super technology, wherein ‘the
technology of production by the masses, making use of the best modern knowledge and
experience, is conducive to decentralisation, compatible with the laws of ecology, gentle in its
use of scarce resources, and designed to serve the human person instead of making him the
servant of machines’. In final, he says that technology should address the real needs of man.
Man’s needs too are small as ‘Man is small and small is beautiful. To go for gigantism is to
go for self-destruction’. Thus, one can find a close semblance of thought between Schumacher
and Gandhi, speaking for the welfare of humanity with a human touch.
12.5 J.K.MEHTA (1901-1980)
Prof. Jamshed Khaikusroo Mehta, a renowned economist, through his seminal work ‘A
Philosophical Interpretation of Economics’ interpreted the subject in a most humanistic and
spiritualistic mode. Mehta views economics as a subject of ‘everybody’s concern’ and the
economist as someone searching ‘for the one in many’. Mehta places greater responsibility on
the role of economist, who can bring about a positive change in the realm of human welfare.
Precisely, the economist, like his counterparts in other subjects, ‘studies man, and sees the
Gandhian Economists
121
universe through man’. In this search, the economist makes several generalised observations
to gives us a rational, temporal and holistic perspective. Mehta observes that ‘if the economist
regards bringing together of all men as his primary duty, he must begin to theorise and to
philosophise. He should give up his fruitless quest of social welfare among the developments
of the material world that surrounds him’. Such quest is bound to end in failure; therefore an
economist has to philosophise and make the philosophy of economics as the ultimate end. As
Mehta interprets, ‘wantlessness’ is the ultimate end, which brings with it peaceful solutions. In
spiritual analysis, man is the seeker of truth which is straight and axiomatic. This truth ensures
his reaching the spiritual goal. In the material world, man loses sight of his spirituality and
perceives the world through his sense organs; as Mehta says, this state is a complex picture,
ugly to some extent, which makes man look for happiness in material gains and the multiplication
of wealth and wants. This happiness cannot be lasting. The state of happiness is reached when
one becomes free from all wants and attains a state of ‘wantlessness’. An atmosphere of
material development, as Mehta observes, breeds jealousy and ill-will among human beings
and prevents them from living a harmonious life. The solution lies in looking at the ‘inner depths
of our mind and consciousness’ for forging better relations, the task which an economist can
successfully undertake.
Mehta rightly estimates the economic problems confronting the modern India. The low output
of produced goods, distribution of national resources and wealth, the dependence on foreign
countries not only for machinery, manufactured goods but also food depict the backwardness
of our nation. He also effectively points out to the causes and consequences of rising prices,
unemployment problem, small-savings, planned economics, and problems related to the
redistribution of national wealth. He advocates a thorough revision of these policies; further,
he laid emphasis on revising policies on agriculture and recommended great investments into
this sector. The fulfillment of basic needs like food, clothing and shelter should be prioritised
in planning. Mehta considers utilisation of resources in a careful manner and laid emphasis
on planning. Planning, he felt, should be done taking into account our own merits and demerits
rather than importing the ideas from other countries. As he observes, ‘we are blindly following
the pattern of life and growth of other countries, where the index number of a satisfied and
contented existence has been falling. That is a sad commentary on the manner in which we
manage our affairs’ (Economic Problems, p.151). The ultimate aim of planning is to ensure a
just redistribution of wealth and resources and also equality. The role of state is significant in
this context in that it needs to think and plan with an eye on the ultimate end. Mehta laments
that no state has done this job rationally; rather the states have concentrated more on procuring
armaments and spending huge amounts on defence equipment. He disapproved the concept
of the welfare and happiness of the people judged in terms of consumption of material goods.
That Mehta was influenced by Gandhi’s views on economics is evident in his appreciation of
Gandhian scheme of economic planning and development centred on villages. Gandhi’s spiritual
approach greatly influenced Mehta; the latter also agreed on the concept of self-realisation as
the ultimate happiness. It is apt to quote his words here: ‘it must be recognised that in the
matter of planning almost all the countries of the world have taken the narrower point of view
and have assumed that the end of happiness can be approached through the satisfaction of
a large number of wants. Poverty is exalted in all the religions of the world and a life of
comfort and luxury is regarded as an obstacle to the attainment of the ultimate end. But we
appear to believe that for purposes of economic planning, there should be a different conception
of happiness- poverty should be shunned and a life of ease and comfort planned for’ (Ibid,
p.172).
122
Gandhi’s Economic Thought
Mehta also believed in the economics of non-violence. He considers the basis of our economic
life as violent in nature that failed to address the issue of human unhappiness. To quote him,
‘non-violence is the right principle in economics. The science of economics is not only lightbearing, it is also fruit-bearing. The fruit we want it to bear is welfare or happiness of mankind.
Happiness is that state in which there is no pain. We have got all wants. When we have a
want, it causes some pain. That is why we want to get rid of our want. A want can be got
rid of by satisfaction…..the science of economics aims at freeing us from wants. It teaches
us how to eliminate our wants. We should be wantless so that we may be free from pain and,
therefore, happy’ (p.199). Non-violent economics implies that economics in which we yield
to our environment and free ourselves from wants. Instead of conquering nature, we should
adapt ourselves humbly to its forces. It enables us to envision the right economic policy to be
formulated by the state. When an individual, firm or state abides by this principle, non-violence
in economics prevails. Mehta’s thoughts resonate the current thinking on eco-friendly economics
that insists on judicious resource use. As he said, ‘if we only knew what non-violence really
meant we would realise that our happiness consists not in marching on the road to industrial
development but in living a simple life’ (p.201).
12.6 SHRIMAN NARAYAN (1912-1973)
Shriman Narayan was a renowned interpreter of Gandhian economic thought and the philosophy
of Sarvodaya, who worked closely with Mahatma Gandhi during India’s freedom struggle. His
distinguished work on ‘Gandhian Plan of Economic Development for India’ and ‘Gandhian
Constitution for Free India’ drew a great amount of appreciation from Gandhi, who
acknowledged the former’s works as illustrious pieces. He was also associated with many
Gandhian institutions and organisations apart from serving as a distinguished parliamentarian,
educationalist, social reformer, member of Planning Commission of India, Ambassador and
also held prominent Constitutional posts like Governor.
It is evident from the writings of Narayan that he was much impressed with Gandhi’s holistic
approach towards the human welfare and his refusal to compartmentalise it. In the same vein,
he maintained that ‘true economics could never be divorced from the ethical and spiritual and
values of life’ (Narayan, 1970, p.229). Narayan’s decisive work on Gandhian Plan of Economic
Development highlighted the need to adopt Gandhian approach if India has to achieve real
economic progress. Like Gandhi, Narayan believed in the following constituents of planning:
(1) planning should be based on indigenous culture and civilisation; (2) planning should not
divest people from their legitimate liberty in social, economic and political life; (3) planning
should necessitate the least amount of state control and coercion; and (4) planning should
preserve, promote and enrich democracy. Narayan also viewed an individual’s right to earn
his/her livelihood as absolute. The human aspect cannot be neglected in favour of increased
productivity through labour saving machines as ‘man is much more valuable and important than
machines or material goods’ (Narayan, 1944, p.6).
Narayan discussed in detail the prominent features of the Fascist Plan, American Plan, British
Planning and the Soviet Plan in his work on Gandhian Planning. He asserts that Gandhian Plan
is the most viable alternative in the context of these as it focuses on simplicity, decentralisation
and cottage industrialism. He cites Prof.Cole’s statement wherein he appreciated the Gandhian
plan as ‘a practical attempt to relieve the poverty and uplift the standard of the Indian villager’
(cited from GDH Cole’s ‘A Guide to Modern Politics’, p.290).Further, the Gandhian Plan
presents ‘to the perplexed and war-torn world an economic system based on peace, democracy
and human values’ (Narayan, 1944, p. 15).
Gandhian Economists
123
The fundamental principles of Gandhian Economics which Narayan identified are simplicity,
non-violence, sanctity of labour, denial of lure of leisure and promotion of human values.
Narayan’s objective of planning is to ‘raise the material as well as the cultural level of the
Indian masses to a basic standard of life’. He envisioned the implementation to be taken up
and reach the goal within a short span of time. His plan attached paramount importance to
‘the welfare of the rural areas, scientific development of agriculture and the subsidiary cottage
industries’ (p.54). The prominent features of his Plan have been highlighted as follows:
1.
The Basic Standard: Ensure a balanced and health giving food, clothing, housing, free and
compulsory education, medical facilities, public utility services, and recreational facilities
2.
Per Capita Income: to meet basic necessities of well balanced diet, per capita consumption
of cloth, expenditure incurred on housing maintenance, and assess annual income of the
total.
3.
Village Communities: establish autonomous, self-sufficient units that connect with the
taluka, district and higher councils and that which adopt economic decentralisation.
4.
Agriculture: to develop scientific methods to increase self-sufficiency, promote wholesale
national economy, discourage commercial farming and encourage community farming,
and set up model/experimental farms to tackle food shortage, ensure reasonable land
tenure and rent, envisage nationalisation of land, reduce rural economic indebtedness and
tackle the cases through special tribunals, tackle the problem of soil erosion, promote
irrigation facilities, increase agricultural efficiency via improvement of cattle, cow protection,
better seeds and implements, and agricultural insurance.
5.
Allied Industries to Agriculture: Promote animal husbandry, dairy farming, adopt mixed
farming (cultivation of food and fodder crops by scientific system), tanning and leather
work, promote fruit culture, vegetable gardening and adequate development of forest
industries.
6.
Cottage Industries: Khadi (spinning and weaving), paper making, oil extraction, paddyhusking, miscellaneous industries like bee-keeping, flour grinding, carpentry, cutlery, toymaking, bamboo and cane work, brick-making, and glassware. State should provide aid
to promote these industries by imparting technical skills and collective purchases of the
products via cooperative societies.
7.
Basic Industries: defence industries, thermal and hydro power, mining, metallurgy,
engineering and chemicals that are necessary for the development of the country.
8.
Public Utilities: The National Government should ensure public utilities like transport and
communications, public health and sanitation, basic and higher education and banking and
insurance; provide better roads, coastal shipping, civil aviation, post and telegraph; maternity
and child welfare, and promoting sports facilities.
9.
Trade and Distribution: including internal trade, distribution of resources to cities, towns
and villages, international trade.
10. Labour Welfare programmes, tackling population problems, efficient management of public
finance, taxation and currency, ensure administrative efficiency, formulate budgets that
include all the above mentioned areas, and finance disbursement to villages for the village
upliftment programmes.
124
Gandhi’s Economic Thought
Narayan also envisioned the implementation aspects of Planning that would include cooperation
and coordination between the national government and local bodies. It also requires a committed
contingent of individuals and youth who repose their firm faith in the Gandhian ideology of
simple living and high thinking. Without this, he observed, ‘all Planning will be an expensive
show and a mirage’, which needs to be realised by the present generation and policy makers.
12.7 SUMMARY
From the above discussion on eminent economic thinkers, we can draw certain commonalities.
Kumarappa, Schumacher, Mehta and Narayan, renowned for innovative and feasible economic
thinking, insisted profoundly on the wise use of economic planning for social welfare, individual
development and a careful use of natural resources. Their thoughts were very much in
consonance with that of Gandhi’s economic thoughts and ideas. The inherent spiritual inquiry
and approach is evident when we study their economic ideas in depth. In this market-oriented
economic system era, it would be wise to revise some of their thoughts for implementation at
the individual and societal level. The liberal economic policies have brought about agonising
results with the collapse of different corporations and the ensuing recession and its after-effects
on the global economic system. The so-called austerity drives and cut down on economic
privileges and benefits are being implemented to undo the damage. Further the current economic
system, with its expansionist agenda, has drastically reduced the availability of natural resources
and also widened the gap between the rich and the poor, while the benefits of globalisation
are yet to trickle down. What we need today is the revision of our economic policies- policies
that centre on human welfare, societal values and planning that simultaneously ensure the
conservation of our nature. A careful study and analysis of the works of these thinkers provide
many a viable solution to our impending economic crisis. It is in our interest to adopt some
of these principles and put them into practice for the benefit of all.
12.8 TERMINAL QUESTIONS
1.
Discuss the economic philosophy and ideas of J.C.Kumarappa.
2.
Examine at length the thoughts and ideas of E.F.Schumacher.
3.
Critically assess J.K.Mehta’s philosophical approach to economics.
4.
Evaluate Shriman Narayan’s concept of planning. Discuss its relevance in the contemporary
economic system.
SUGGESTED READINGS
Choudhuri, Manmohan., Exploring Gandhi, National Gandhi Museum (Reprint), New Delhi,
1999.
Govindu, Venu Madhav and Deepak Malghan., Building a Creative Freedom: J.C.Kumarappa
and his Economic Philosophy, September, 2005 (see URL: www.cfar.umd.edu/users/venu/
jck.pdf)
Lindley, Mark., J.C.Kumarappa-Mahatma Gandhi’s Economist, Popular Prakashan Pvt Ltd,
Mumbai, 2007.
Mehta, J.K., Economic Problems of Modern India, Central Book Trust, Allahabad, 1962.
Gandhian Economists
125
Mehta, J.K., A Philosophical Interpretation of Economics, George Allen and Unwin Ltd,
London, 1962.
Pandya, Jayant., Gandhiji and his Disciples, National Book Trust, New Delhi, 1994.
Schumacher, E.F., Small is Beautiful, Blond & Briggs Ltd, London, 1973; Radha Krishna
Publishers, New Delhi, Indian Reprint, 1977.
Singh, Dashrath., Perspectives in Gandhian Thought, Commonwealth Publishers, New Delhi,
1995.
Shriman Narayan., Gandhian Plan of Economic Development for India, Padma Publications,
Bombay, 1944.
Shriman Narayan., Relevance of Gandhian Economics, Navajivan Publishing House,
Ahmedabad, 1970.
Shriman Narayan., Gandhi-The Man and His Thought, Publications Division, Ministry of
Information and Broadcasting, Government of India, New Delhi, 2005 (Reprint).
UNIT 13 DECENTRALISATION
Structure
131
Introduction
Aims and Objectives
13.2 Decentralisation – Meaning and Dimensions
13.2.1 Concept of Decentralisation
13.2.2 Objectives of Decentralisation
13.3 Evils of Centralisation
13.4 Advantages of Decentralisation
13.5 Structure of Decentralisation- Gandhian approach
13.6 Requirements for the Success of Decentralisation
13.7 Decentralisation in India – Present Status
13.7.1 Decentralised Planning Process
13.8 Summary
13.9 Terminal Questions
Suggested Readings
13.1 INTRODUCTION
The structure of an economy is shaped by the organisation of production and distribution. The
organisation of production may be centralised in few large-scale industries catering to the
domestic as well as international markets in the form of big corporations or multi national
companies. It is also possible to organise production in a decentralised structure in the form
of small and scattered production units owned by masses. The production structures have far
reaching influence on the distribution of income and economic power. A society that intends
to establish an egalitarian socio-economic set up has to establish a decentralised polity and
economy prior to it.
Aims and Objectives
After reading this Unit, you would be able to understand

Gandhi’s concept of decentralisation, its structure and functioning

The present status of decentralised planning in India

The merits of decentralised process.
13.2 DECENTRALISATION- MEANING AND
DIMENSIONS
Decentralisation is a system in which the basic activities are carried out at various levels giving
adequate scope for all the partners to participate in these activities. Decentralisation involves
a systematic distribution of powers and functions across different political and economic
Decentralisation
127
agents in a society. Decentralisation has both political and economic dimensions. The political
decentralisation involves different levels of government and distribution of powers and functions
at various levels of government such as national, state and local levels.
Decentralisation in an economic system implies decentralisation of various economic activities
concerned with production, distribution and exchange. It implies organisation of production in
production units of different sizes- small, medium and large- owned by a large group of people
and distribution of production through various channels. In a mixed economy plans for such
a system are prepared at national, state and local levels to meet the local needs and enable
the people to participate in development activities. Planning and implementation of economic
activities is appropriately distributed at various levels. The empowerment of village panchayat
i.e. the village local self-government is an essential requirement for building-up an effective
decentralised politico-economic structure.
13.2.1
Concept of Decentralisation
Gandhi’s concept of decentralisation is to build up a socio-political and economic order based
on egalitarian framework. The four elements of decentralisation observed are:

Decentralisation in decision-making: Gandhi’s system is based on village republic or
village panchayat. Here the people of the village participate in the decision-making process.
All economic, political and social decisions related to the life of the people are taken by
the people. Decentralisation thus implies giving power to the people to take decisions that
affect their lives.

Decentralisation of ownership of means of production: Economic decentralisation implies
ownership of means of production by the masses. Gandhi’s model of rural industrialisation
based on khadi and village industries promotes decentralisation in ownership of means
of production. The village is a production unit. The production is organised in small and
cottage industries, spread over different sectors operating with labour-intensive technology.
It is therefore production by masses. The means of production are thus owned and
controlled by masses. Gandhi did not favour privilege and monopoly and opposed
concentration of production and distribution in few hands. “I hate privilege and monopoly,
whatever cannot be shared with the masses is taboo to me” (Harijan, 2.11.1934).

Decentralisation of structure of production: Decentralisation of production structure implies
production in a large number of small and cottage industries. Gandhi wanted to establish
khadi production centres in each of the 7,00,000 villages in India. The structure of
production is thus broad-based and the production is planned according to the local
needs and requirements. There is no risk of over-production. Thus Gandhi advocated
production by masses in the place of mass production by large scale modern industries.
The capitalist production on a mass scale was responsible for the crisis caused by
concentration of political and economic power. Large-scale industry leads to greed,
exploitation, inequality and unemployment. He observed that, most of the farmers in the
country could not maintain a minimum level of subsistence, unless there was supplementary
employment. Hand-spinning, hand-weaving and other industries could create employment
and make a visible dent on the poverty of the people. The spinning-wheel is a symbol
of village and small industries and emancipation of the rural masses. It encourages and
sustains many other village industries. Khadi is the sun of the village system. When
demand for khadi increases, the demand for spinning-wheel also increases leading to
more business for carpenters and blacksmiths. This will be followed by increased demand
for dyeing and printing business and other village industries. These industries in turn will
128
Gandhi’s Economic Thought
support khadi (hand-made cloth). Thus there is interdependence between khadi and
other village industries.

Decentralisation of location of production: Centralised production structure leads to
localisation of industries at few places, giving rise to urban agglomerates like Bombay,
Calcutta etc. This also creates difficulties in distribution. Therefore, the plan of rural
industrialisation involves organisation of production in small units spread over the rural
areas in the country. The distribution is thus equalised when production is spread over
geographical area in local units.
The concept of decentralisation thus covers different dimensions of decentralisation from the
process of decision making to distribution.
13.2.2
Objectives of Decentralisation
Decentralisation of production has the following objectives.

Generation of full employment and sustainable livelihood for the rural masses and promotion
of full utilisation of local resources.

Production of goods to meet the basic needs of the people and their equitable distribution.

To promote mass ownership of means of production and attain equitable distribution of
income.

To control exploitation of villages by cities and towns.

To promote ideals of bread-labour, simple living and self-sufficiency of villages.

To promote balanced regional development and balance between production and
consumption.

To strengthen democracy through decentralisation of political and economic powers and
empowerment of village panchayat.

To promote skill development and capacity-building among the poor.
13.3 EVILS OF CENTRALISATION
Centralised production is characterised by mass production in large factories located at few
urban places in the economy. Production is carried out with the help of machines. The
investment requires large amount of capital to start such industries. Inequality and exploitation
are inherent in the centralised production structure that characterises a capitalistic economy.
The demerits of centralisation are listed below:

Centralised production is highly capital-intensive and therefore leads to displacement of
labour. It springs from selfish nets and want of consideration for neighbours. It degrades
workers and deprives them of their dignity and worth.

Centralised production gives rise to the phenomena of colonialism through exploitation of
villages by cities. In this context, Gandhi writes, “the poor villages are exploited by the
foreign government and also by their own countrymen, the city dwellers. They produce
the food and go hungry. They produce milk and their children have to go without it. It
is disgraceful. Further they also face competition for their industries from urban sector.
In the long run, the villages will dwindle and disappear gradually”.
Decentralisation
129

Centralised industry promotes violence. Mass production is exploitation of nature as well
as man and the very negation of non-violence. Mass production can only subsist on the
control of large markets. It has thus become the mainspring of modern international
rivalries, imperialistic exploitation and wars.

Large-scale production offends against nature too. Increasing cost of coal and oil and the
accumulated energy reserves of the world and their fast depletion have necessitated
balance of the energy budget of the world. Thus the environmental costs of centralised
production are very high. It has led to threefold crisis – the crisis of resource exhaustion,
the ecological crisis and the crisis of man’s alienation and disorientation.

Mass production requires much larger capital; capital is scarce in the developing countries.
It therefore puts strain on the scarce resources at the cost of under-utilisation of the
abundant labour-force. Centralised production is therefore a disease and an evil.

Centralisation is hostile to the existence of non-violent social order. Large- scale production
leads to economic concentration, increasing state control, monopolies, urbanisation and
inequality of wealth and income. Even if it is socialised, it will not be free from evils of
capitalism.

The factory workers are deprived of the purity and naturalness of domestic atmosphere
in rural areas. The work here blocks their creative urge and turns them into mere
statistical units.
13.4 ADVANTAGES OF DECENTRALISATION

Decentralisation promotes development of small industries using local raw materials and
utilises simple tools and implements.

The widespread ownership of means of production endures equitable distribution of
wealth; decentralisation of production and distribution of wealth means automatic regulation
of economic life with little chance of fraud and speculation.

Cottage industries generate employment in congenial occupations in the natural setting of
the worker’s own place of habitation which has many secondary and tertiary moral,
physical and material benefits. It helps to preserve the rural values and the village way
of life and frees the labourer from the domination of the machine.

Cottage industries have many other benefits. They preserve the purity and compactness
of domestic life, the artistry skill and creative talent of the people and their sense of
freedom, ownership and dignity. They are thus a move towards simplification of life and
ruralisation of the society. Rural industrial decentralisation based on cottage industries
promotes self-reliance and self-sufficiency in villages and builds the moral stamina among
the people to face injustice. Small and cottage industries promote the distribution of
income in favour of the poor labour class. It is estimated that in textile mills in India, wage
bill forms only 22% of the revenue from production. In case of Khadi, the wages form
about 60% of the price (Kripalani, p.214).

The decentralised small and cottage industries use labour-intensive technologies that
create demand for local labour. This helps to promote full employment and sustainable
livelihoods for the pro-poor growth process.

Democracy and decentralisation of political power is meaningless without decentralisation
of economic power.
130

Gandhi’s Economic Thought
Production in decentralised set-up reduces costs through reduction or elimination of
costs. In khadi production, these are listed as follows:
Assembly of raw material; storage of raw material, transportation; packing required by long
transportation; waste of cotton fibre by high-speed power ginning and cording; damages from
transportability storage and handling fire and theft insurance; advertising; obsolescence of
product due to changes of taste and fashion, brokers, middleman and wholesale trade charges,
overhead costs, fuel and power charges, legal expenses, interest and charges on loans, income
and other taxes, municipal taxes and water rates, repair and maintenance of machinery,
depreciation of machinery, transposition to employees etc. (Richard Gregg,1958)

Decentralisation reduces the risks due to strikes and lock-outs; production stability is
maintained and therefore, there is balance between production and consumption. It also
promotes balanced regional development.

Decentralisation has significant impact on poverty reduction through a strong trickle down
process. The Gandhian chain of action works in the following way.
Small industries ’! more employment ’! more wages ’! more Demand - more production
The establishment of village industries in rural areas will create more employment. This will
increase the incomes and generate more purchasing power in the hands of the poor. This, in
turn, will increase the demand for goods leading to more production through further expansion
of the village industries. Since most of the production is localised in villages and caters to local
needs, there is little exchange, market and profit. There is neither any payment in excess of
the remuneration for the managerial skill to the owner, nor any exploitation of labour. The
increased effects of development across the rural economy are stronger than the backwash
effects leading to balanced growth in all the sectors of the rural economy.

There is little room for increasing the surplus beyond the basic necessities of life. To
illustrate, if a village community needs a hundred tons of all the commodities for their
necessities of a fuller life, then the village will produce by the application of simple tools
and labour one hundred tons and a little more i,e. 120 tons. The little more surplus is
needed for depreciation and repairs. There is no incentive to produce more as the ideal
is simple life. The model implies that production and consumption should be as proximate
as possible and based on proper use of local resources. This system of decentralised
production helps to generate full employment and production by masses, but may not
speed up the development process as there is no scope for accumulation.

Decentralisation of production would lead to decentralisation of economic as well as
political power. It is one of the means to create classless, unexploited egalitarian society.
Decentralised village industries are seen as employment- friendly, environment-friendly
and hinterland-friendly. Khadi economics is based on patriotism, purity, sacrifice, nonviolence, justice and love for the poor, truth, purity of soul and body and humanity. GDH
Cole observes that Gandhi’s campaign for the development of home-made cloth industry
is no mere fad of a romantic, eager to revive the past, but a practical attempt to relieve
the poverty and uplift the standard of the village.
It is sometimes argued that village industries will put the hands of the clock back and reverse
the engines of progress in economic development. Developing village industries based on
simple technology is not a regressive step. This is now considered essential to provide
employment opportunity to the people and enable the rural population to organise industrial
activity side by side with agricultural work. This will also help to check out migration to cities
Decentralisation
131
for employment. In view of the growing problem of unemployment, in Asia, Africa and mainly
in India one is convinced that Gandhian approach alone will be able to find a lasting solution
to this problem.
13.5 STRUCTURE OF DECENTRALISATIONGANDHIAN APPROACH
The Gandhian approach to economic decentralisation was revival of the village economy into
a republic complete in itself, self-supporting and self-sufficient with due equilibrium between
agriculture and cottage industries. In this self-sufficiency equilibrium model the entry of small
scientific technology was permissible if it did not cause unemployment and did not exploit
others.
Gandhi believed that centralisation was hostile to the existence of a non-violent social order.
Economic centralisation will lead to increasing state control, monopolies, urbanisation and
inequality of wealth and income. But in case of certain basic and key industries like mining,
heavy engineering, chemicals and in case of public utilities like electricity and railways, centralised
production is indispensable. These industries will be owned and managed by the State and
they will be in public sector, but the means of production of elementary necessities of life
remain under the control of the masses. What cannot be produced in small and cottage
industries may be produced in large-scale industries.
The conversion of the village into a republic makes it decentralised. This set-up promotes
direct participation of the people in the economic, political, social and cultural affairs on similar
pattern; the town and city communities are organised and bound together in bonds of mutual
cooperation and interdependence. As far as possible every activity will be conducted by the
panchayat on the co-operative basis. The panchayat or community government will be the
legislature, judiciary and executive combined to operate for its year of office. Here there is
perfect democracy based upon individual freedom and the individual is the architect of his own
government.
Thus, in the decentralised economic system, there are two major sectors- the public sector
and the private-cum-cooperative sector. The decentralised private-cum-cooperative economy
is shaped in Gandhi’s eighteen point Constructive Programme. But the issue of coordination
between the nationalised and non-nationalised sectors is made clear by Shriman Narayan
Agrawal in his book, ‘The Gandhian Plan of Economic development for India’ (1944). The
salient features of this planned economy are:

The basic and key industries shall be owned and managed by the state in the interests
of the nation as a whole.

There will not be much scope for capitalist investment and enterprise under this plan.

In the execution of this plan of economic development, although there will be a Central
National Planning Committee, with its provincial branches, greatest emphasis will be laid
on the resuscitation of village communities with the largest possible autonomy.

The Gram Panchayat is the pivot of the whole plan.

Simple living and high thinking is the creed of this plan.
Thus the objective of the decentralised private-cum-cooperative village community system
plus the nationalised commanding heights of the economy is a higher standard, (but not
progressively higher standard) of living for the people.
132
Gandhi’s Economic Thought
It is criticised that in the Gandhian village production system, there is balance between production
and consumption. There is no scope for the progressively increasing standard of living and
accumulation of surplus for further development of the society. The society is thus forced to
rotate within the orbits of simple reproduction as it was in the Middle Ages. Although his ideas
of voluntary poverty and non-possession make provision for accumulation of surplus, it does
not offer enough incentives to promote faster economic development. The organisation of
production in small units and the mass ownership of means of production promote equality in
the distribution of income. It generates employment and therefore, every one has access to
income. On the other hand, the centralised production in large-scale units leads to concentration
of income in the hands of few people but promotes accumulation and development. Therefore,
some adjustments in the system are required to balance the accumulation and development on
the one hand and equality and employment on the other.
Thus Gandhi’s concept of Swadeshi and Village Swaraj, his concern for the poor and the selfsufficiency of the village republics, the sovereign position occupied by the individuals in his
scheme of things, his passion for the growth of man in freedom through the exercise of person
of initiative, his desire for building-up the social structure on non-violence and his view of the
state as a soulless machine make decentralisation as a base of his philosophy. The decentralised
model was to address the basic questions about development raised by Dudley Seers. These
are: what is happening to poverty? what is happening to unemployment? And what is happening
to inequalities? Economists like D R Gadgil, C N Vakil and Brahmananda have accepted the
Gandhian model as most suitable to India.
13.6 REQUIREMENTS FOR THE SUCCESS OF
DECENTRALISATION
Decentralisation requires the following politico-economic structures for its successful operation.

Planning from below: Plans should be prepared at the village level to provide the basic
necessities the village needs. The village plan or the local plan must consider the needs
and circumstances of each family which is below poverty line. Additional avenues of
employment within a reasonable distance must be provided to make full employment a
reality.

Establishment of local self-governments at district/block and village/panchayat level and
proper distribution of administrative powers at various levels with proper co-ordination
and centralised direction. There should be right balance between the measure of
decentralisation that was desirable and the extent of central management that would be
needed.

The members at various levels should have adequate knowledge and information about
development programmes and policies. Appropriate knowledge should be transferred to
them through capacity-building programmes.

Public participation in planning process: People should get adequate opportunity to
participate in the process of planning, in taking decisions about what to produce, how
to produce and how to distribute at the village level. The poor should be empowered
adequately to participate in the process. This may require a change in the present structure
and distribution of power at the village level. The power is mainly concentrated in the
hands of the rich landlords. Its redistribution is essential to enable the poor to participate
in the development process.
Decentralisation
133

Integration and Implementation of the plans: The plans prepared at various levels should
be integrated in a broad framework and should be implemented effectively. This requires
adequate planning and implementing machinery at various levels.

Village as a unit of production: Decentralisation implies autonomy in production and
distribution beginning from the lowest level, i.e the village. At the village level all the basic
necessities of life should be produced based on the available local resources. It should
result in an integrated programme of rural development and rural industrialisation may
help to attain this.

The spinning-wheel symbolises the decentralisation of production with its forward and
backward linkages. The combination of spinning and weaving with agriculture provides
supplementary employment to the idle labour force. If every Indian utilised his spare or
idle time for spinning the yarn necessary for his own clothing, then idle persons would
get employment. The surplus labour would be utilised and the supply of cloth would
increase. If this could be done without reducing essential production anywhere else, then
there would be no need for developing a cotton mill industry; the spinning-wheel would
be able to use the surplus labour involving little or no social cost and provide an employment
enduring substitute for mechanised production.
Thus decentralisation of powers and functions, appropriate planning and decision-making at
various levels, and evolving the village as a unit of production based on an integrated programme
of rural industrialisation are the essential requirements of decentralisation.
As Gandhi says, India is in villages, if villages perish, India will perish. The ideal village is one
in which the cottages are built based on local materials and are well lighted and well ventilated;
perfect sanitation of traditional kind based on local recycling of human and animal manure;
houses have courtyards where vegetables can be planted and cattle are maintained; the lanes
and streets are clean and free of dust; a village common for grazing; common worship place,
common meeting place; a cooperative dairy; primary and secondary schools where the main
subjects are practical crafts and village industries. It would produce its own milk, grains,
vegetables, fruits, khadi and cotton cloth. When people become village-minded and love to
use their own goods, the desire for machine- made products from the West will be reduced,
The economics of khadi requires that from the cultivation of cotton to the manufacture of khadi
and its disposal, all the processes should be as far as possible gone through in the same village.
13.7 DECENTRALISATION IN INDIA- PRESENT
STATUS
The self-governing communities have been an important feature of India’s Policy since historical
times. These grass-roots units of local self-government in the history were popularly referred
to as ‘panchayats’ and they had tremendous influence over the political as well as socioeconomic life of rural people in India. These institutions received set back during the Mughal
period and British rule but were revived after independence.
The ‘Panchayat Raj’ institutions received special attention after the recommendations of Balwant
Rai Mehta Study team (1957) but they were again put to background within a decade and
did not receive much attention even after the Ashok Mehta Committee’s report. However,
some of the states like West Bengal, Karnataka and Andhra Pradesh tried their own models
of Panchayat Raj. The success of these experiments, especially the epoch making Karnataka
model enunciated by Ramakrishna Hegde regenerated the countrywide interest in Panchayat
134
Gandhi’s Economic Thought
Raj and political decentralisation, during the 1990s. During this period the consensus however
was in favour of giving Constitutional status to Panchayat bodies. This led to a landmark
passing of the 73rd Amendment to the Constitution which came into force with effect from 24th
April 1993. This Amendment was widely hailed as a revolution as it would bring democracy
and power to the door steps of millions of powerless rural Indians. Gandhi always believed
that the country’s well-being and progress depended very much upon how the village people
shaped themselves. These institutions of local self-government are expected to provide a
platform to the people to participate in the governing process and enable them to shape the
policies and programmes that lead to their total development.
A three-tier structure with Zilla Panchayat at the apex, the Taluka Panchayat at the middle and
the Gram Panchayat at the grass-roots level is established in the country. In recent years, there
is a drive towards the empowerment of Gram Panchayats with transfer of more powers and
functions at this level. The issues like primary education, rural health, watersheds, employment,
rural energy, poverty eradication and employment generation are in the purview of the gram
panchayat for planning and implementation.
13.7.1
Decentralised Planning Process
In the initial stage of planning, the focus was towards rapid industrialisation through development
of large-scale industries which required centralised planning. Planning at the village level for
major economic activities with long-run vision was not considered viable. The high levels of
illiteracy, lack of expertise and planning machinery were the other obstacles to start the
process at grass roots level. But the failure of planning in meeting the basic goals of development
viz. poverty, unemployment and inequalities, the growing regional imbalances and low levels
of attainment in human development has necessitated the preparation of plans at the grass
roots level based on local needs and priorities.
Now plans are prepared and implemented in decentralised structure to enable the people to
participate in the governing process. At present a three-tier structure of local self- government
is working in India. This is called “Panchayat System”. There is Zilla parishad or panchayat
at the district level, Taluka / Block panchayat at Taluka/Block level and Gram Panchayat at
the village level. The existing system is shaped out of reviews and re-designing by different
committees such as Balwant Rai Mehta Committee, Ashok Mehta Committee (1978) etc. The
73rd and 74th Amendments to the Constitution in 1993 have transferred many powers to local
self-government for planning and implementing various development programmes and policies.
The division of powers and functions is based on their relative importance at various levels
and relevance to local needs and requirements. Various issues related to public health and
sanitation, primary and secondary education, Women and Child Development, Drinking Water,
Rural Electrification, Agriculture, rural housing rural energy, Social Welfare, Management of
public property are transferred to local self-governments at village taluka and district level.
Many self-employment and wage employment programmes like National Rural Employment
Guarantee Scheme, Swarna Jayanti Swa-Rozgar Yojana are being planned and implemented
at the Gram Panchayat level. The beneficiaries of poverty alleviation programmes are identified
in Gram Sabhas. The Panchayats are given powers to impose taxes and collect revenues for
rural development. The marginalised groups are given opportunity to participate in the governing
process through their adequate representation ensured by reservation policy.
Gram Sabha is a basic tier to popularise development programmes. It tries to fill up the gap
between the two roles of the Zilla Panchayat/Parishads as a local government body and as
a district development organisation. The Gram Sabha establishes an active dialogue between
Decentralisation
135
the village people and their elected leaders at the village level regarding the choice, planning
and implementation of development programmes. This involves the village community in the
decision-making process. The Gram Sabha will be able to function effectively if the members
have a minimum level of literacy.
Dr. APJ Abdul Kalam, in his Vision 2020, has advocated PURA (Provision of Urban Amenities
in Rural Areas) model for rural development. PURA model involves four basic connectivities
to the rural areas- physical, electronic, knowledge and economic- to promote sustainable
development in rural India. It attempts to check the rural-urban migration process in the
country.
Planning from below is now being practised and the plans at local level are then integrated
into the State and the National Plans. The 11th Five Year Plan aims to promote inclusive
growth through effective planning and implementation of programmes and policies for the poor
and marginalised groups at the regional and local level. Efforts are now being made to
incorporate Gandhi’s ideals of decentralisation in planning and development.
13.8 SUMMARY
Gandhi’s model of economic development was based on decentralisation of economic activities
and organisation of production in small units. This was considered essential to eradicate
poverty and unemployment and promote economic equality. The focus on Swadeshi, the
village swaraj, the concern to eradicate poverty and unemployment and to attain economic
equality indicates the decentralisation as a base of his philosophy. It was an integrated individualbased model that linked economic development with spiritual development.
Centralisation adds to the complexities of life. It damages initiative, resourcefulness, courage
and creativeness, and reduces opportunities of self-governance and of resisting injustice.
Gandhi’s decentralised economy aims at nothing less than relieving the countryside from the
domination of urban industry, urban finance and urban political control and freeing the manual
workers from the domination of the machines.
Inspite of this progress, the village is yet to establish itself as a production unit. The rural
industrialisation programme, through the establishment of small and cottage industries in the
agro-processing sector, has not gained viability to withstand competition from the modern
sector. It continues to be sick and surviving on government subsidies and support. Globalisation
and the entry of multinational companies have further increased their problems and chances
of their survival are declining rapidly. The rural-urban divide is increasing rapidly. Though
policies like PURA (Provision of Urban Amenities in Rural Areas) are initiated to strengthen
the rural economy, their implementation is not effectively undertaken. The rural economy is in
need of an integrated approach in the Gandhian framework to attain sustainable development.
The inclusive growth strategy deserves adequate attention in this regard.
13.9 TERMINAL QUESTIONS
1.
Explain the concept of Decentralisation and its various dimensions.
2.
Examine the need for decentralisation and bring out the benefits of decentralisation.
3.
Discuss the Gandhian approach to decentralisation.
4.
Analyse the nature of decentralised economy in India.
136
Gandhi’s Economic Thought
SUGGESTED READINGS
Anjaria, J. J., An Essay on Gandhian Economics, Vora & Co., Bombay, 1945.
Gandhi, M. K., Harijan (various issues)
Gregg, Richard.B., A Philosophy of Indian Economic Development, Navajivan Publishing
House, Ahmedabad, 1958.
Kripalani, J. B., Gandhi: His Life and Thought, Publications Division, New Delhi, 1970.
Nanda, B. R., Gandhi and His Critics, Oxford University Press, New Delhi, 1985.
Narayan, Shriman., (ed), The Selected Works of Mahatma Gandhi, Navajivan Publishing
House, Ahmedabad, 1968.
Narayan, Shriman., Towards Gandhian Plan, S Chand & co., New Delhi, 1978.
UNIT 14 AGRARIAN ECONOMY AND
COOPERATIVES
Structure
14.1 Introduction
Aims and Objectives
14.2 Recent Global Development Scenario
14.3 Agrarian Structure in India
14.3.1
14.3.2
14.3.3
14.3.4
Growth Performance of Agriculture
Technology
Factors Responsible for Poor Performance
Indebtedness, Credit Markets and Institutions
14.4 Challenges before Agriculture Sector
14.4.1
14.4.2
Farmers’ Suicides
Question of Food Self-sufficiency, Security and Sovereignty
14.5 Cooperatives
14.5.1
14.5.2
Cooperatives in India
Cooperatives in Independent India
14.6 Basic Elements of Co-operatives in India
14.6.1
14.6.2
14.6.3
Agriculture Cooperative Structure
Agricultural Credit Structure
Agricultural Non-Credit Structure
14.7 Summary
14.8 Terminal Questions
Suggested Readings
14.1 INTRODUCTION
In the Gandhian parlance, it is considered that India lives in its villages and therefore India can
grow only if its villages are transformed and developed. The living condition of people can
inter alia be improved through rehabilitation of agriculture, cattle breeding and village industry
(Gandhi, 1962, p.92). One may consider Gandhian framework of analysis or otherwise, the
fact remains that rural economy in general and agriculture and its allied sectors in particular
remain the mainstay for majority of the population as well as workforce in the developing and
underdeveloped nations for their livelihood. This fact attaches special significance to agrarian
economy in a country like India where over 60% of workforce depends on agriculture for
their survival.
Aims and Objectives
After reading this unit, you would be able to understand

The recent global development scenario and details of the agrarian economy of India

Opportunities and challenges the economy faces

The interactions of agriculture with cooperatives.
138
Gandhi’s Economic Thought
14.2 RECENT GLOBAL DEVELOPMENT SCENARIO
The over-all Gross Domestic Product of the World grew by 3.2% in-between 2000 to 2007.
The developed countries, particularly the United Kingdom and United States of America,
registered a growth of 2.6 and 2.7% respectively, France 1.7%, Germany 1.1%, Italy 0.8%
Japan 1.7%, China 10.2%, India 7.8%, South Africa 4.3%. The GDP of low income
countries grew by 5.6%, low and middle income countries grew by 6.2% and high income
countries grew by 2.4% in the referred period (World Development Report, 2009, pp.356357).
The share of agriculture in global employment has declined sharply from 55% (in 1960) to
33% (in 2004). Declining and rising contributions of agriculture and manufacturing sectors
respectively have changed the distribution of labour in the low-income and emerging middleincome countries since the mid-twentieth century in South Asia and Sub-Saharan Africa, and
long before in East-Asia and Latin America. Institutional reforms remained instrumental in
rapid transformation of rural economy to a great extent. The World Development Report
2009 suggests that agriculture contributed 3% of the world’s gross domestic product (GDP)
in 2007. Agriculture of low income countries contributed 25% of GDP, middle income countries
about 8% and agriculture of high income countries contributed only 2%. Agriculture of Europe
and Central Asia contributed 7% of GDP, South Asia 18% and Sub-Saharan Africa 15% and
Latin America and Caribbean contributed around 5%. Thus, the agriculture of South Asia and
Sub-Saharan Africa together contributed about 33% of the World GDP. In the Indian economy,
agriculture contributed about 18% of the GDP (World Development Report, 2009, pp.356357).
14.3 AGRARIAN STRUCTURE IN INDIA
Agrarian economy has been acknowledged as shelter for majority of the workforce residing
in rural India. Over 56.5 % of the workforce and 63.9 % of the rural workforce – 39.8 %
self employed and 24.1 % agricultural labour were still directly dependent on this sector for
their livelihood (NSSO, 61st Round, 2006, p.27). Majority of holdings in this country were
of marginal and small farmers. According to the census of agriculture 2000-01, about 63 %
holdings were of marginal farmers who had only 18.82 % operational holdings and about
18.88 % small farmers had 20.17 % operational area. Semi-medium holdings were 11.66 %
and operated 23.96 % of area and almost similar amount of area were operated merely by
5.44 % medium holdings and about 1 % of large holdings operated 13.21 % of area. This
shows the glaring inequality in the distribution of land. The number of small holdings remained
almost constant in the last 30 years with marginal variations. However, the area under operation
increased. Moreover, the number of holdings under medium and large categories of holdings
decreased over the years but the area under their operation is disproportionately higher than
other holdings. It is obvious from the data that number of holdings has been increasing in
different farm sizes consequent upon sub-division and fragmentation of land on account of
natural attrition through population pressure.
The average size of marginal, small and semi-medium holdings remained almost stagnant with
marginal variations. The average size of holdings for medium and large also declined marginally.
It is important to note here that Gandhi was against fragmentation of holdings. Initially he
advocated that the zamindars should act as trustees of land but he learnt in due course of the
freedom movement that the question of equity and access to land to the direct producer can
help in the eradication of poverty and therefore he changed his stand and advocated that land
Agrarian Economy and Cooperatives
139
should belong to the tillers: “No man should have more land than he needs for dignified
sustenance. Who can dispute the fact that the grinding poverty of the masses is due to their
having no land that they can call their own?” (Gandhi, 1962, p.98). However, land reforms
remained a distant dream and an unfinished agenda.
14.3.1
Growth Performance of Agriculture
Though India’s growth since independence has been significant, its contribution of agriculture
in GDP declined from 59.2% (in 1950-51) to 18.5 % (in 2006-07) (Economic Survey,
Government of India, 2007-08). While other sectors have been growing fast because of the
continued neglect of this sector, there has been a substantial decline in rural income. During
the pre-Green Revolution (1951-52 to 1967-68), the total economy grew by 3.7 % where
as agriculture grew by 2.5 %; crops and livestock by 2.7 %; non-agriculture grew relatively
faster, at 4.9 % as infrastructure building initiatives and community development programmes
made a dent in the initial years of planning. Interestingly, the average growth-rate of total
economy in the post-Green Revolution period until 1980-81 was only 3.5 % and of agriculture
and allied sectors was 2.4 %, and non-agriculture was 4.4 % which were slightly lower than
earlier period. The growth rate of total economy in 1980s (1981-82 to 1990-99), known for
its wider dissemination of technology, was 5.4 %. Agriculture and allied sectors were also at
their best at 3.5 %. Crops and livestock grew even higher at 3.7 % and non-agriculture by
6.6 %. This period was also known as the best period of economic growth. During the early
phase of reforms, i.e., between 1991-92 and 1996-97, the total economy grew by higher rate
of growth, i.e., 5.7 %. Agriculture and allied sectors and crops and livestock also grew by
3.7 % each. Non-agriculture also showed higher growth rate to the tune of 6.6 %. During
Ninth and Tenth Plans, the total economy achieved highest rate of growth. However, agriculture
and allied sectors and crops and livestock suffered deceleration in the last one decade (199798 to 2006-07).
Crop-wise overall growth rates of area, production and yield of all principal crops during
1949-50 to 2007-08 were 0.51, 2.57 and 1.64 %. For food grains it was 0.27, 2.35 and
1.77 % and for non-food grains 1.22, 2.92 and 1.40 % respectively. Agriculture progressed
significantly in terms of production and productivity and the country was relatively comfortable
at food. Production of food grains increased from the self-sufficiency of 50.8 million tonne in
(1950-51) to 216 million tonne in (2006-07). In the pre-Green Revolution period growth
rates of all principal crops, in terms of their area production and yield were 1.58, 3.15, 1.21
%, for food grains 1.35, 2.82, 1.36 % and non-food grains 2.44, 3.74, 0.89 % respectively.
Post-Green Revolution, the growth rates of area and production of all principal crops were
lower but the yield registered higher growth rates than that of pre-Green Revolution period.
Non-food grains growth rates of area and production witnessed deceleration. However,
productivity registered increasing trend from 0.89 % to 1.61%. In case of food grains,
production registered lower rate of growth and yield rate increased.
The area of all principal crops increased in the 1990s but production and productivity registered
deceleration. Area of food grains declined, production and productivity encountered lower
rate of growth than 1980s. Area, production and productivity of non-food grains indicated an
increasing trend with deceleration, i.e., lower rate of growth than 1980s. However, during
2000-01 to 2007-08, there were overall signs of recovery reflected in the growth rates of
area, production and yield of cereals, pulses, total food grains, and taking all the principal
crops together.
140
14.3.2
Gandhi’s Economic Thought
Technology
In order to improve production and productivity of land, technology played significant role.
Expansion of irrigation coverage protected crops from uncertainty and vagaries of monsoon
but also enabled to intensify uses of land for multiple cropping. Gradually the increasing use
of modern technology - high yielding variety (HYV) of seeds, chemical fertilizer, pesticides
combined with irrigation changed cropping pattern remarkably. Irrigation coverage increased
over 40 % and cropping intensity also improved to the level of 134 %. But percentage
coverage of food grains did not change significantly until 1980-81. Coverage of total cereals
hardly changed and remained at the level of about 75 %. During 1990-91 to 2000-01 it
remained around 65 %. Coverage of oil seeds, fruits and vegetables almost doubled and area
under HYV increased from 1.2 % of GCA to 41.17 %. Paddy coverage of HYV increased
from 0.56 % in 1966-67 to 17.34 % in 1998-99, wheat from 0.34 to 12.61 %, jowar from
0.12 to 4.89 %, bajra from 0.04 to 3.76 and maize 0.13 to 1.89 % of GCA. Though
Production and productivity increased, in the absence of extension services, technology did
not spread as expected. At many places environmental questions cropped up. Uncritical use
of technology in general and extensive use of surface irrigation in particular resulted in waterlogging and salinisation in Punjab, intensive exploitation of ground water for cotton and sugarcane
in Maharashtra and Karnataka resulted in the depletion of water table, and disproportionate
use of nitrogen (N), phosphate (P) and potash (K) created imbalances in soil nutrient and
raised alarming situation against sustainable agriculture. It may be recalled that Gandhi warned
against this kind of quick mechanism of raising production and its impacts on soil nutrition. As
he said: “Trading in soil fertility for the sake of quick returns would prove to be a disastrous,
short sighted policy. It would result in virtual depletion of the soil.” (Gandhi, 1962, p.93).
However, the experiment of organic-farming is providing positive results towards sustainable
agriculture free from pesticides but the multinational control over this technology and access
to common farmer is also not free from challenges of extension services.
14.3.3
Factors responsible for poor performance
Important factors causing poor performance inter alia were: continued neglect of agriculture
towards structural inequity, non-development syndrome in infrastructure, inadequate budgetary
allocation of resources, etc. Percentage agricultural investment to GDP witnessed declining
trend over the years. During 1985-86 it was 2.3 % at 1993-94 prices, which declined to 1.6
% in 1989-90 and continued to decline further to 1.4 % in 1999-2000 and 1.3 % in 200304. Even at prices of 1999-2000 the level of investment in 2003-04 was 1.9 % and remained
stagnated at 1.9 % for three consecutive years, i.e., up to 2005-06 (GOI, 2006-07). It
imposed serious challenges on sustaining private investment.
Cost of cultivation increased significantly with the increasing use of modern technology across
the states. Difference in cost and price structure is another dimension for examination of the
viability of the crops. Escalating cost of production with poor returns from agriculture amidst
uncertainty of monsoon, risk of crop failures, absence of effective insurance cover, and almost
non-existent extension services pushed farmers into unprecedented hardships. Terms of trade
remained against agriculture even after termination of industrial protection and devaluation of
rupee in 1991 and employment in rural sector witnessed declining rate (Bhalla, 2005). Data
from NSS rounds suggested that there was significant decline in employment in primary sector
for both male and female (NSSO, 60:506). The findings supported apprehensions of noncompliances that National Rural Employment Guarantee Scheme encountered and
implementation reports from different states added to frustrations. Another disturbing factor is
decelerating real wage rates in agriculture and non-agriculture (Sharma, 2005).
Agrarian Economy and Cooperatives
14.3.4
141
Indebtedness, Credit Markets and Institutions
Rural indebtedness is an indicative of deficiency of rural income to carry out necessary
activities for livelihood support. Findings of the Royal Commission (i.e., farmers are born in
debt, they live, die in debt and transfer debt liability to next generation) still holds good which
aggravated peasantry to a syndrome of despair and suicides. NSSO data revealed that 48.6
% of the farmers’ households were indebted with an average outstanding loan amount of Rs.
12,585/-. Out of indebted farmers’ households, 31.3 % were landless and below marginal
farmers, 29.8 % were marginal farmers and 18.8 % were small farmers. Thus, altogether 80
% of the indebted households were from the poorest landholdings. About 45.3 % landless
labour households of rural area were indebted, who owed on an average Rs. 6121. With the
increasing size of land in possession, the rate of indebtedness and amount of loan increased.
Indebtedness by monthly per capita expenditure (MPCE) was higher in lower MPCE and vice
versa.
Among the states Andhra Pradesh registered highest incidence of debts (82 %) followed by
Tamil Nadu (74.5 %), Punjab (65.4 %), Kerala (64.4 %) and Karnataka (61.6 %). Uttarakhand
reported lowest percentage of farmers with loan. Punjab carried highest burden of per farmer
loan amount Rs. 41576 followed by Kerala (33907). Haryana stepped third with Rs. 26007
followed by Andhra Pradesh (Rs.23965), Tamil Nadu (Rs.23963), Rajasthan (Rs.18372),
Karnataka (Rs.18135) and Maharashtra (Rs.16973). Among social groups of STs, per farmer
loan amount Punjab was an outlier (Rs.1, 18,495), followed by Haryana (Rs.23555), Tamil
Nadu (Rs.21023) and Andhra Pradesh (Rs.12760). In case of SCs per farmer loan amount
was highest in Rajasthan (Rs.16708) followed by Haryana (Rs. 13341), Kerala (Rs. 13308),
Tamil Nadu (Rs.12786) and Andhra Pradesh (Rs.12720). For OBCs per farmer loan amount
was highest in Kerala (Rs. 33116), followed by Tamil Nadu (Rs.27355), Haryana (Rs.
26226), Andhra Pradesh (Rs.23697), and Rajasthan (Rs. 22009). In general category also
per farmer loan amount was highest in Kerala (Rs.38013) followed by Andhra Pradesh
(Rs.37802), Haryana (Rs.31548), Gujarat, Karnataka and Tamil Nadu.
About 30.6 % of loan amount was spent for capital expenditure in farm business followed by
current capital expenditure (27.8 %). Non-farm business consumed 6.7%. Thus, altogether 65
% loan amount was directly used for production purposes. Another 15 % was spent for social
development and remaining 20% was on marriage and other ceremonial occasions and on
consumption expenditure. Medical treatment and other expenditure cut significant proportion
in some of the states.
Formal players in the credit markets were government, cooperatives, commercial banks,
whereas informal credit market was run by and large by money lenders - often farmer, traders
including dealers of inputs, other professionals, friends and relatives. Commercial Banks remained
major players in providing credit to farmers (35.6 %) followed by cooperatives (19.6 %) and
government (2.5 %). Altogether 57.7 % of credit taken by farmers was provided through
institutional arrangements. Remaining 42.3 % credit market was controlled by informal players.
It is evident that credit extended by cooperatives and commercial banks emerged positively
directed towards increasing size of holdings whereas credit extended by moneylenders had
inverse direction. Landless households took 47.3 % loan from moneylenders alone. Adding
extended informal usury network it came to 77 %. Near landless and marginal households
took 56.7 % and 47.2 % of loan amount respectively from informal usury networks. Among
the states, Andhra Pradesh controlled greater non-institutional finance and credit market (68
%) followed by Rajasthan, Assam, Bihar and Punjab. Although Maharashtra provided 83.8
% credit through institutional sources, farmers were not free from distress and suicides. This
142
Gandhi’s Economic Thought
suggests that provision of institutional credit, although was important, it alone was not sufficient
to rescue the farmers from the syndrome of despair.
Flow of institutional credit to agriculture over the years increased many folds by cooperatives,
commercial and regional rural banks in terms of short, medium and long terms loan. Total
credit extended by cooperatives was to the tune of Rs.24.23 crore (in 1950-51) to Rs.15957
crore (in1998-99) and 33, 174 crore by December 2006 (GOI, 2007, p.171). Credit volume
extended by commercial banks and regional rural banks were even higher than cooperatives
although initials were the same. Their initial credit amount was to the tune of Rs.24.23 crore
in 1950-51, which increased to Rs.36860 crore in 1998-99 and 1, 16, 169 crore up to
December 2006 (ibid). The share of agriculture in total bank credit had steadily increased
under the impulse of bank nationalisation and reached 18 % towards the end of the 1980s,
but thereafter agriculture suffered neglect of institutional credit delivery mechanism in the
reform period. The distributional aspects of credit remained contentious.
The agriculture’s credit share dipped to less than 10 % in the late 90s. The number of farm
loan accounts with scheduled commercial banks declined in absolute terms from 27.74 million
(in March 1992) to 20.84 million (in March 2003) (Shetty, EPW, July 17, 2004). Per hectare
credit to agriculture in recent years increased from Rs. 1940 in 1998-99 to 4578 in 200304 but annual growth rate of per hectare credit to agriculture, slipped down to 14.2 % in
2000-01 from 25.5 % in 1999-00. After witnessing partial recover (17.4 %) in 2001-02,
growth of per hectare credit registered lower rate (14.1 %) in 2002-03 (Lok Sabha, 2005).
This partially explains as to why moneylenders were dominating credit market appropriating
surpluses through exorbitant rate of interest (Bhalla, 2005, p.6).
14.4 CHALLENGES BEFORE AGRICULTURE SECTOR
The NSSO data revealed that about 40 % of the farmers did not like to continue with
agriculture (NSSO, 2005, 59th Round), and about 27 % were reluctant to continue because
of non-viability. Interstate variations were even higher than that of all India average. About 36
% of the farmers of Bihar, West Bengal; 34 % of Orissa; 30 % of Haryana and Jharkhand;
29 % of Maharashtra; 28 % of the farmers in Punjab, Kerala and Karnataka, and 30 %
farmers of Haryana did not like agriculture occupation.
Indian agriculture, irrespective of the size of holdings, has been experiencing worst forms of
crises that culminated and manifested in starvation and tragic suicides of its producers, who
have been feeding the nation. Besides unregistered starvation in backward regions diversified
and prosperous agriculture of Punjab, petty cotton growers of Maharashtra, Andhra Pradesh
and Karnataka were also not spared from this trap. The Expert Group on agrarian crisis
underlined suicides as a disturbing symptom of deep-rooted crises that Indian agriculture has
been confronting. Broadly two dimensions of agrarian crises – low growth with declining
productivity and high-dependence of population on lower farm income have been the root
causes. Reflecting a little further stagnation, increasing risk in production and marketing, collapse
of the extension system, growing institutional vacuum, and the lack of alternative livelihood
opportunities, etc., were inter alia main factors behind agrarian crisis (Radhakrishna, 2007).
Challenges of the fatigue syndrome of technology, institution, policy and governance
(Narayanamoorthy, 2007; Behera and Mishra, 2007) have been debated at length. Mounting
criticisms loaded with adverse results of reforms undermining human face compelled planners
and policy makers to incorporate such policies that may appear addressing the crises and
concerns of marginalisation. Hence, the Eleventh Five Year Plan has been set to focus on
faster inclusive growth (GOI, 2006) to address the issues of exclusions.
Agrarian Economy and Cooperatives
14.4.1
143
Farmers’ Suicides
A comprehensive study on suicides of farmers of Maharashtra (Mishra, 2006, p.41) found
that about 86.5 % suicides were because of indebtedness, 73.9 % for deteriorating economic
status, and 40.5 % because of crop failures. Loss of face in community because of nonpayment of loan, unable to marry their marriageable sisters and daughters, etc., - were also
found among many other reasons. About 91 % of suicides were committed by male members.
As per police record, the number of suicides in Maharashtra, in 2004 alone was 4147. The
study reported that number of suicides increased from 11,866 to 14,729 between 1995 to
2004. Suicides in female population registered decline after 1999. Even cash crop growers
- small and marginal farmers of Amaravati and Yavatmal districts- were trapped in debt lured
with better returns from cultivation and committed suicides (Mohanty, 2005).
The Kisan Sabha estimated that more than 5,000 farmers committed suicide in Andhra Pradesh
since 1998, more than 3000 committed suicide in Maharashtra, about 1,000 farmers committed
suicide in Punjab from 1998 to the present, and about 5,000 committed suicides in Karnataka
over the same period. It was estimated that 488 farmers committed suicide in Wayanad
District in Kerala between 2001 and 2005 (People’s Democracy, vol.30, no.09, February 26,
2006). Another study (Vidyasagar, and Chandra, 2003) argued that “The central issue of
farmers’ suicides is the debt trap. Small and marginal farmers, especially those, who lease in
land from others, are not eligible for availing institutional credit and crop insurance. Thus, they
land at the doorsteps of the usurious moneylenders. This debt trap is tightening because of the
drastic shifts in the cropping pattern that is market driven.” Seeds, fertilizer and pesticide
dealers are at the centre of a growing controversy in Andhra Pradesh. They are the new
moneylenders to a peasantry strapped for credit. “The banks have given no loans in the past
seven years,” says Malla Reddy, general secretary of the Andhra Pradesh Rythu Sangham
(APRS). “So many farmers are forced to depend on sources like these for credit. The same
man advises them on what to buy and then sets the rates for the purchase.” With the seed
dealers tacking on hefty interest rates to their credit sales, the problems got sharper.
The Deccan Herald dated August 11, 2005 reported that Movement against State Repression
(MASR) claims that about 40000 farmers committed suicides in Punjab since 1988 but the
state government admitted only 2116 cases. Rising cost of cultivation, lack of market security,
exorbitant rate of interests charged by moneylenders, dishonouring contracts, etc., were inter
alia a few important reasons. After 1996 loan amounts increased four times but public
institutions’ share was merely 20 %. As Dr. Diwakar points it, most of the suicides were debtdriven. Delivery mechanism of institutional credit and its defined connivance with local middle
men and functionaries often hatched conspiracy to confiscate land of the poor marginal and
small farmers forcing them to commit suicide.
Tenant farmers have seldom access to institutional credit in the absence of ownership of land
as collateral security and they are forced to be trapped in usurious exploitative network. They
often sell their crops at pre-decided tied price to the input dealers or at best at farm harvest
price to petty traders. Kisan Sabha deliberated upon this serious crisis and noted: “While
every such death is a tragic individual reality for grieving families and loved ones, there are
important common features to the farmers’ suicides. These farmers invested heavily in inputs
– biological inputs, electricity, machinery, and other components of fixed and variable costs.
These costs have risen sharply in the period of liberalisation, and are especially onerous when
the farmer invests in seeds produced by private companies, particularly multinational corporations.
The farmers were often the victims of plain cheating – they were sold spurious seed and other
144
Gandhi’s Economic Thought
inputs by unscrupulous traders. Since 1991, farmers have had to witness the massive withdrawal
of the formal sector credit from the countryside, and have had to borrow from the informal
sector at usurious rates of interest for their production and consumption needs. Finally, when
they reaped a harvest, neo-liberalism and the new trade regime robbed them of prices that
could even cover their costs, let alone earn them a livelihood. Where the output itself is
destroyed by pest, disease or natural disaster, the farmer was un-indemnified by any system
of insurance, and inadequately compensated, if at all, by the state. It is the stark reality that,
for many in our society and in such a situation, suicide appears as the alternative of last resort”
(People’s Democracy, vol.30, no.09, February 26, 2006). Market driven farms diversification,
not necessarily designed differently but for the interests of corporate sectors, exploited the
farms undermining ecological and fertility balance. Globalisation and new trade regime has
made farmers condition vulnerable and exposed to uncertainty (Vidyasagar and Chandra,
2003, CSD, NIRD).
14.4.2
Question of Food Self-sufficiency, Security and Sovereignty
Self-reliant growth and self-sufficiency at food front was the prime objective after independence.
The Green Revolution could resolve problems of food shortage to some extent but unequal
access to infrastructure and technology remained a big challenge. Infrastructural gaps, rising
cost uncovered through inefficient administered prices, uncritical diversification, non-responsive
support system, unfavourable terms of trade of agriculture, etc., compounded the challenges
of food self-sufficiency. The USA argued to end the regime of food self-sufficiency in Uruguay
Round 1986. With the onset of reforms and liberalisation, the concept of self-sufficiency was
replaced by food-security through trade. Self-reliance got a new meaning which was defined
by purchasing power underlying assumption of free trade. The World Trade Organisation was
established to ensure level playing field and trade by rule and not by non-economic factors.
But this level playing field is a myth between land and capital starved poor nations and land
and capital surplus rich nations. Moreover, the trade has seldom been away from diplomatic
complications and free in real sense in the history. Creation of different subjective boxes,
particularly green and blue and sanitary and phyto sanitary proviso are the testimony under
which developed nations have manipulated their subsidies and trade restrictions, which have
been distorting trades. Rich countries have manoeuvred access through provision of obligatory
imports of food grains to the poor nations. Access to rich markets of the world has not been
ensured freely. Free access of labour from poor country to rich country is another area.
Therefore free trade is nothing but freedom of capital to flow in the poor countries for profit.
Food sovereignty is the responsibility and autonomy of any country to meet the demand of
the respective country in normal and exceptional situation. We have seen the aid linked loan
and technology imposed by the US and the World Bank. India faced many such situations in
the past and had to devalue her currency despite her unwillingness to get food grains under
PL-480 in 1960s. India had to maintain humiliating silence in favour of the US. Undoubtedly
Green Revolution brought some relief for many of the countries including India. However,
during 1975 the US took a cruel decision to identify only a large number of smaller countries
to save from starvation for diplomatic game of numbers and India was kept in negative list.
In the early 1990s, the US turned down India’s request for wheat on the pretext that India
permitted supply of one boatload rice to Cuba which was archrival of the US (Dasgupta,
2001). When India introduced green revolution technology, Mexico extended its substantial
support for HYV seeds of wheat and now following uncritical diversification for horticulture.
Mexico itself has become dependent on US for food. Being a small country in size perhaps
it can afford to import food and survive. But India, China and Russia cannot ignore their huge
requirement of food grains. Nor is it possible for any country to supply sufficient food grains
Agrarian Economy and Cooperatives
145
to these nations without vested interest when they face natural calamities. Privatisation and
unaccountable participation of multinationals in agriculture through diversification and seed
control brought about irreparable loss and agrarian crises to the farmers.
Agriculture in India is a major source of livelihood for the majority of the masses beyond the
commercial mechanism of market, profit and trade and is a mark of sovereignty. The wheat
surplus nations such as US, Canada, Western Europe, Australia, and Argentina are in need
of market for their surplus food grains. Rice surplus nations are smaller, with Thailand and
Vietnam notable among them. India has paid much higher prices to its wheat imports, and in
sum food insecurity crisis is looking large and sovereignty at risk.
14.5 COOPERATIVES
The word cooperative has been derived from the Greek word ‘co-operari’ which means
working together. The idea and concept of cooperative was first used by Robert Owen and
Charles Fourier of England. The idea got breakthrough in 1844 with the emergence of
Rochdale Society of Equitable Pioneers, a cooperative society of weavers. A consumer
cooperative store was set up in 1884 leading to European Consumer Movement and
establishment of International Cooperative Alliance in 1894. Since then cooperative movement
has been spreading worldwide with many dimensions.
14.5.1
Cooperatives in India
Cooperation has been one of the basic principles of the Gandhian action. During the colonial
rule, the British fought many wars to expand its empire in India against Indian feudal rulers
in different parts of this country. Expenditure incurred on this account was mobilised through
exploitation of peasantry which created simmering contents of resistance and revolts. Based
on the European experience, cooperatives were institutionalised in India to contain lurking
resentment. Frederick Nicholson, appointed by the British government in 1892, visualised the
establishment of Agricultural Bank as an alternative to local money-lenders either as cooperative
or joint stock.
Consequently, a few societies were established by the district officials in parts of Punjab,
United Province and Bengal. But, in the absence of stable legislation, this initiative failed to
provide credit to the needy agriculturists and consumers. A committee headed by Edward
Law proposed a scheme which formed the basis of the Cooperative Credit Society Act by
the British India Government on March 25, 1904. Later, comprehensive provisions were
made in 1912 and 1919 Acts. In 1945 a committee under the chairmanship of R.G.Saraiya
was constituted to decide the organisation and principle of the cooperative societies.
Gandhi favoured protecting the economies of scale in agricultural production through cooperative
farming, as he said: “In regard to agriculture, we must do our utmost to prevent further
fragmentation of land and to encourage people to take to cooperative farming” (Gandhi, 1962,
p.65). He advocated cooperative movement for the development of national interest. He said:
“Cooperative Farming or dairying is undoubtedly a good goal promoting national interest”
(Gandhi, 1962, p.66).
14.5.2
Cooperatives in Independent India
Indian cooperatives in agriculture, post-independence, were basically aimed at addressing
institutional credit support gap towards reducing the exploitation of peasantry by money
lenders. The All India Rural Credit Survey Committee, in 1954, recommended measures to
revive cooperative societies. Cooperatives have been contributing towards transforming the
146
Gandhi’s Economic Thought
socio-economic condition of India particularly the rural society and agriculture in terms of
institutional credit. Cooperatives have been expended from credit sector to inputs, marketing,
processing and now employment in general and poverty eradication through self-help groups
in particular. Cooperatives cover almost all villages of India, and the dimensions include
agriculture and food credit, fertilizer production and distribution, sugar production, wheat
procurement, cotton procurement, processing, handloom production and marketing, fisherman
cooperatives, animal feed production and marketing, milk and milk products procurement,
processing and marketing, rubber processing and marketing, retail fair shop, housing, banking,
utility, social workers’ insurance, etc.
14.6 BASIC ELEMENTS OF COOPERATIVES IN INDIA
The Cooperatives have following basic elements:

Unity of interest

Common goal

Common bonds

Democratic functioning

Solidarity

Defined methods

Equal rights in decision-making process

Ownership of individual, and

Proportionate share in costs, profits and risks.
Structure of Cooperative Societies in India
Cooperative societies are credit and non-credit oriented. Apex cooperative structure is called
National Cooperative Union of India (NCUI) followed by State Cooperative Unions (SCU)
– 27, District Cooperative Union (264) and Primary Cooperative (4.58 lakh credit and noncredit).
14.6.1 Agriculture Cooperative Structure
1.
Primary Agricultural Cooperative Societies (PACS)/ Large Size Adivasi Multipurpose
Cooperative Societies (LAMPS)/ Farmers Service Societies (FSS): These societies are
aimed at providing inputs, credits, seeds, fertilizer, insecticides, pesticides, and other
inputs, and storage facilities at village levels.
2.
Agricultural Marketing Cooperatives are engaged in states operating primary agricultural
markets and purchasing agricultural produces and providing support to secure better
prices to farmers.
3.
Processing and Specialised Commodity cooperatives: engaged in agro-processing activities
to add value in sugar, spinning, dairy, oilseeds and horticulture sectors.
4.
Integrated cooperatives are related to industries to manufacture agricultural inputs and
machinery, for example, Indian Farmers Fertilizer Cooperatives (IFFCO), Krishak Bharati
Cooperatives (KRIBHCO) for fertilizers and National Heavy Engineering Cooperatives
for machinery for sugar and oilseed crops.
Agrarian Economy and Cooperatives
14.6.2
147
Agricultural Credit Structure
Agricultural Credit cooperatives are of two types- a) production credit and b) investment
credits.
Production Credit
Production credit cooperative structure at the apex, a National Federation of State Cooperatives
Banks followed by State cooperative Banks (28) – District Cooperative Banks (367)- Farmers
Service Cooperatives.
Investment Credit
At the apex, there is a National Cooperative Agriculture and Rural Development Banks’
Federation (NCARDBF) followed by State Cooperative Agricultural/Rural Development banks
(19)- Regional /Division/District offices (318) – Primary Agricultural/Rural Development Banks
(728), Branches of State Cooperative Agricultural/Rural Development Banks.
14.6.3
Agricultural Non-Credit Structure
It includes marketing, sugar cooperatives, fisheries, labour, dairy, etc, each sector with its own
structure. For example, Dairy Cooperatives has at apex the National Cooperative Dairy
Federation Ltd., followed by State Cooperative Dairy Federation, District Cooperative Milk
Producers Union, Primary Milk Producers Cooperative Societies and their members. NDFI
coordinates and conducts research, undertakes publication, provides consultancy, and builds
linkages with other national level agencies such as NDDB and others. SCDF does production
and marketing programming, provides consultancy, and training. DCMDU organises and
supervises primary cooperatives, collecting milk from primary units and processing, marketing
milk and milk products. It distributes cattle feeds, provides technical inputs, and extension
services, training to DCS and farmers. Primary units collect and sell milk, make payments to
producers, provide first-aids and veterinary services. Similarly other cooperatives have their
structural support system and organisations, operating successfully. Self-Help Groups and
Micro-Finance approaches have brought new dimensions to cooperatives in India. However,
the sustainability of cooperatives as a movement to reduce inequality and poverty remains a
bigger challenge.
14.7 SUMMARY
This Unit dealt in detail the structure and workings of the agrarian economy and how their
growth has accelerated or decelerated over the years. It also highlights the demerits of the
agricultural system that have led to suicides of the farmers and the role of moneylenders, who
charge exorbitant interest rates. The Unit also dealt with the working of the cooperatives in
India, their inception and progress over the years. The success of any economy depends not
on its services or manufacturing but on the agricultural sector on which over 70% of the
population is dependent. Necessary steps have to be taken up by the policy makers and those
who implement the programmes. It helps in saving the agricultural sector from further crumbling.
14.8 TERMINAL QUESTIONS
1.
Highlight the main features of agrarian economy in India. What are the impediments to
its accelerated growth?
2.
Analyse the role of cooperatives in the Indian economy. How have they contributed to
the growth of the nation?
148
3.
Gandhi’s Economic Thought
Write short notes on:
a)
Food Security and National Sovereignty
b)
Indebtedness of the agricultural farmers
c)
Basic elements of Cooperatives
SUGGESTED READINGS
Behera, B, and Mishra, P., Acceleration of Agricultural Growth in India: Suggestive Policy
Framework, Economic and Political Weekly, vol. 42, No. 42. October 20-26, 2007.
Bhalla, G.S., The State of the Indian Farmers, G. Parthasarathi Memorial Lecture in 88th
Annual Conference of the Indian Economic Association, December 28, 2005.
Despande, R.S, and Prabhu, Nagesh., Farmers Distress – Proof beyond Questions, Economic
and Political Weekly, Vol.40, No. 44 and 45, November 4, 2005
Diwakar, D.M., Inclusive Growth of India: A case of Structural and Agrarian Challenges, India
Economic Review, December, 2007
Gandhi, M.K., Village Swaraj, Navajivan Publishing House, Ahmedabad, 1962 (compiled by
H.M.Vyas)
Government of India (2006), Towards Faster and More Inclusive Growth: An Approach to
the 11th Five Year Plan, Planning Commission, New Delhi, November 2006.
Government of India (2006a), Agriculture at a Glance 2006, Ministry of Agriculture, New
Delhi.
Government of India (2007), Economic Survey, Ministry of Finance, New Delhi.
GOI (2008), Agriculture Statistics at a Glance 2008, Ministry of Agriculture. http://dacnet.nic.in/
eands/At_Glance_2008/rates_new.html
Hough, F.M., The Cooperative Movement in India, Fifth Edition, OUP.
Indian cooperative Review (quarterly), NCUI, New Delhi, 1966
Karve, D.G., Principles and Substance of Cooperation, Gokhale Institute of Politics and
Economics, Pune, 1968.
Lok Sabha Starred Question No. 611, dated on 09.05.2005.
Memoria, C.B, and R.D. Saxena., Cooperation in India, Kitab Mahal, Allahabad, 1962.
Mishra, Srijit., Farmers’ Suicide in Maharashtra, Economic and Political Weekly, Vol. 41, No.
16, April 22-28, pp. 1538-45; see also, Suicide Mortality Rates across States of India, in
the same issue p.1567, 2006
Mohanty, B.B., We are Like the Living Dead: Farmer Suicides in Maharashtra, Western India,
Journal of Peasant Studies, vol.32, No.2, April, 2005, pp. 243-276
Narayanamoorthy, A., Deceleration in Agricultural Growth: Technology Fatigue or Policy
Fatigue? Economic and Political Weekly, Vol.42, No.25, June 23, 2007
Agrarian Economy and Cooperatives
149
National Sample Survey Organisation (2005), Indebtedness of Farmer Households in India,
NSS Report No. 498, 59th Round, January-December, 2003.
National Sample Survey Organisation (2006), Employment and Unemployment Situation in
India, 2004-05, Report No. 515 -I
NCUI, Indian Cooperative Movement: A Profile, New Delhi.
People’s Democracy, vol.30, no. 09, Feb 26, 2006.
Rao, Nageswara, The Hindu, September 11, 2005.
Radhakrishna, R., Expert Group Report on Agrarian Crisis in India, Government of India,
New Delhi, 2007.
RBI’s Basic Statistical Returns of Scheduled Commercial Banks in India (various Issues)
Sharma, H.R., Recent Trends in Wage Earnings of Agricultural Labourers State Level Analysis
for Different Social Groups, Arth Vijnana, vol. XLVII, Nos.3-4, September-December,
2005, pp.329-344.
Shetty, S.L., Distributional Issues in Bank Credit, Multi-pronged Strategy for Correcting Past
Neglect, Economic and Political Weekly, vol. Xxxix, no. 29, July 17, 2004.
Sainath, P., Farming- it‘s what they do, The Hindu, May 24, 2007, p.11
—————— Suicides are about the living, not dead, The Hindu, May 21, 2007, p.13.
—————— Vidarbha: Packaging an anniversary, The Hindu, August 31, 2007,
————— It’s official: distress up, suicides appalling, India Together, 22 November 2006,
The Hindu, p.11.
————— When farmers die, India Together, http://www.indiatogether.org/2004/june/psafarmdie.htm
United States Department of Agriculture: Agricultural Cooperatives in the 21st Century, Report
No.60, November, 2002.
Vidyasagar, R, and Sunianchandra, K., Study on Farmers’ Suicides in Andhra Pradesh and
Karnataka, CSD, NIRD, 2003.
UNIT 15 SUSTAINABLE ECONOMY AND SOCIAL
JUSTICE
Structure
15.1 Introduction
Aims and Objectives
15.2 Sustainable Economy – Its Significance
15.2.1
15.2.2
15.2.3
Sustainable Development
Sustainability
Sustainable Economy
15.3 Social Justice – Its Necessity
15.4 India – Past Profile
15.5 Measures for Social Justice and Sustainable Economy
15.5.1
15.5.2
15.5.3
Environment
Sustainable Economy
Social Justice
15.6 Social Justice in the Indian Economy
15.6.1
15.6.2
Positive Aspects
Inadequacies in the Development
15.7 Future perspectives
15.8 Summary
15.9 Terminal Questions
Suggested Readings
15.1 INTRODUCTION
“For me, an India, which does not guarantee freedom to the lowliest of those born, not merely
within an artificial boundary but within its natural boundary, is not free India….I shall strive
for a constitution which will release India from all the thralldom and patronage, and give her,
if need be, the right to sin. I shall work for an India in which the poorest shall feel that it is
their country, in whose making they have an effective voice; an India in which there will be
no high class and low class of people; an India in which all communities shall live in perfect
harmony. …Everyone must have a balanced diet, a decent house to live in, facilities for the
education of one’s children and adequate medical relief…”
–
Mahatma Gandhi
India embarked on planning after its independence in 1947. Influenced and inspired by the
ideologies of capitalism, socialism, liberalism, and Gandhism, the planning took the model of
‘mixed economy’ with coexistence of public and private sectors. It aimed at the goals of
economic growth with rising national and per capita incomes; reduction in inequalities – both
personal and regional; full development of manpower resources including employment
generation; eradication of poverty; and self-reliance with emphasis on science and technology
Sustainable Economy and Social Justice
151
and modernisation. However in every plan all these goals were not given the same importance.
The earlier plans also emphasised heavy and basic industries.
This ‘growth with equity or social justice’ became the overriding general goal, presumed to
spread its benefits to all the sections of society and to reach the poorer and weaker sections
of the society also, thus resulting in all-round development. Though India has achieved
significant progress in agricultural production, industrial output etc. and in GDP in the present
decade, the goal of equity or social justice was not satisfactorily achieved. During the 1990s
and later, environmental concerns became very strong with emphasis on sustainable development.
Presently, along with the achievement of sustainable economy, the realisation of social justice
has also become very important. As Gandhi suggested, the necessities of life ‘should be freely
available to all as God’s air and water are or ought to be, they should not be made a vehicle
of traffic for the exploitation of others’.
In July 1991, India liberalised its economy and made a significant change in its development
policy placing emphasis on private sector and market-oriented approach. This policy is continuing,
gaining more acceptance and is referred to as the LPG model (Liberalisation, Privatisation,
Globalisation) which has replaced the earlier LPQ (Licence, Permit, Quota) regime. The
government’s planning has been confined to social sector and infrastructure, covering poverty
eradication, employment generation, education, health, transport and other infrastructure. In
other words, now the whole private enterprise concentrates on business while the government
has taken the responsibility of equity or social justice wherein a lot has to be done.
Aims and Objectives
After reading this Unit, you would be able to understand

The meaning of sustainable economy and social justice

the present socio- economic profile of the Indian economy

measures to promote social justice in the context of ensuring a sustainable economy
15.2 SUSTAINABLE ECONOMY-ITS SIGNIFICANCE
15.2.1
Sustainable Development
Sustainable economy means an economy that is ready to embark on a sustainable development.
In the second half of the twentieth century, much emphasis was laid on peace, freedom,
development and environment. Peace was needed after the Second World War ended. Freedom
was demanded by people in the colonies. Both these were achieved to a large extent, and
attention centred on the remaining two.
The pace of rapid development, especially after the 1950s, affected environment adversely.
It was realised that both development and environment are very much needed for the survival
and good life in the posterity. From the studies and discussions on the relationship between
development and environment, the concept of sustainable development emerged.
The most popular definition of sustainable development was given by the UN’s Brundtland
Commission’s report which states that ‘Humanity has the ability to make the development
sustainable - to ensure that it will meet the needs of the present without compromising the
ability of the future generations to meet their own needs’. This definition stresses the resources
regeneration or renewal and their optimum use for the benefit of people, society and the world
community.
152
Gandhi’s Economic Thought
The 2002 World Summit on Sustainable Development (Johannesburg) expanded this definition
by adding three models used as pillars of sustainable development: economic, social and
environmental. The Johannesburg declaration created ‘a collective responsibility to advance
and strengthen the interdependent and mutually reinforcing pillars of sustainable development
– economic development, social development and environmental protection – at local, national,
regional, and global levels’. This view has been criticised as having more emphasis on economic
development and ‘such a narrow definition obscured (their) concerns for human development,
equity and social justice’.
Sustainable development is also discussed in terms of what is sought to be achieved. This is
discussed with reference to three sets of goals to be achieved in short term (by 2015) given
by the UN; medium term (by 2050) given by the Board on Sustainable Development of the
US National Academy of Sciences and long term (beyond 2050) given by Global Scenario
Group which assisted the Board (Kate et al, 2005).
The short-term goals are reflected in the Millennium Development Goals Declaration of the
UN (September 2000), eight of them, that cover peace, development, environment, human
rights, and attention on vulnerable-hungry-poor. Some of these were specific, like cutting
poverty by half and achieving universal primary schooling by 2015. In medium-term, the shortterm goals and larger set of human needs would be achieved by 2050. In the long-term there
would be much greater achievements for all humankind including a ‘rich quality of life, strong
human ties, and a resonant connection to the nature’.
The sustainable development debate continues to be dynamic. Different groups of experts and
different institutions have added to its various aspects with the goal of making development
people-oriented and environment more and more renewable so that life of more people can
be enriched. It has become a social movement for the welfare of people and for sustaining
their development along with environmental protection. In the present study these aspects of
social justice and equity will form a special focus with reference to India.
15.2.2
Sustainability
Sustainability is a broad concept that speaks about the ability of a society to sustain itself.
What does sustaining a society mean? Is it only human beings or all living creatures? Further,
sustainability should be at what level? Is it at survival or subsistence level or a very high
standard of life? It is also argued that sustainability will depend on collective values and
choices that a society chooses and such choices are political at national or macro level.
Prugh T & Assadourian E (2003) point out that ‘it may be convenient to think about sustainability
in terms of four dimensions – human survival, biodiversity, equity, and life quality. These are
four parts of a pyramid at whose base level is human survival which gives sustainability at the
minimum level. As we move up the pyramid the sustainability is at higher levels of welfare
covering freedom, fairness, fulfillment and related ideas. It means if we want to move to higher
levels of sustainability, we have to pay attention to biodiversity, social justice and equity, and
ending with sustainability with a very high quality of life. This study looks into sustainability
with social justice and equity under given resources, level of development and future potential.
All these are dynamic concepts and values over which individuals and communities may differ.
When we say that sustainability is a dynamic concept, we should note that sustainability, once
achieved, has to be maintained or it can be lost. The following box (Box 1) gives a typical
illustration:
Sustainable Economy and Social Justice
153
Box 1: Sustainability in Easter Island
Easter Island is a speck of land in the then Pacific Ocean 2000 miles off the Chilean coast.
This remote place and its people have been studied intensely for years, for Easter Island
today bears little resemblance to the island settled by voyaging Polynesians over 1500
years ago. The Island’s dramatic story tells us a great deal about sustainability.
When the new arrivals beached their ocean-going canoes, they found a lushly forested
place offering several valuable tree species, including large palms suitable for building
timber-framed dwellings. For food, the settlers has brought chickens (deliberately) and
rats (inadvertently), but the island also teamed with edible birds. Dolphins, seals, and the
crops typical of Polynesian culture—bananas, taro, sweet potatoes, and sugarcane—
rounded out the settlers’ diet. They thrived on the island’s abundance and their numbers
eventually grew to perhaps to 7000 (20,000, by some estimates). A sophisticated hierarchical
culture emerged, wealthy and organized enough to produce the island’s remarkable stone
statutes. Hundreds of these sculptures were carved over the centuries, and more than
200, some weighing over 80 tons, were raised up onto stone pedestals.
But the Eastern Islanders’ success triggered their undoing. Generations of harvesting trees
for building, making rope, and for fuel wood—and of seed-eating by the stowaway rats—
led to complete deforestation. (When the Dutch explorer Jacob Roggeveen first saw
Easter Island in 1722, it was shrubby grassland.) The spiraling competition among clans
to build and raise ever-larger stone statutes, which required a lot of timber for rollers and
other simple machines, took a particularly heavy toll. Pollen analysis suggests that the last
of the great palms were cut down in 1400. Bird nesting grounds were destroyed along
with the forest; that and direct consumption drove every native land bird species to
extinction. As the trees disappeared, so did the means to build the traditional big canoes.
Fish and dolphins from deeper offshore waters could no longer be harvested (and escape
or migration to other islands became impossible). Firewood supplies dwindled and streams
dried up. Soils eroded and became less fertile.
In short, the Island’s carrying capacity plummeted. Food surpluses disappeared, leading
to cannibalism. With the surpluses went the social complexity. Eventually the population
crashed by 75 to 90 percent and the culture devolved. Roggeveen found perhaps 2000
people on the island, living in “singular poverty’.
Prugh Thomas & Assadourian Erik, 2003, in ‘What is sustainability, Anyway’.
pp.19-20
The Eastern Island example tells us what happens to sustainability if environment and resources
are abused and people do not exhibit the needed concern for sustainability. It highlights the
need for utilising resources consistent with biodiversity, conforming to the principles of social
justice, and avoiding an excessively consuming behaviour.
The above example, as the experts say, is a potent warning offering the following four lessons:
a)
Human beings respond strongly to incentives to overuse of resources. People prefer to
find more resources than regulate their use and conserve existing resources.
b)
We do not pay attention when things go wrong gradually. ‘Bounty is taken for granted’
without realising that gradual overuse will wipe it off.
154
Gandhi’s Economic Thought
c)
‘Declining resources can undermine the very organizational structure and capacities needed
to fashion a response’. We can deal with short-term threats, not long-term ones. Actually,
‘culture, including our social organizations, social learning, science and politics, is our only
defence against the latter’.
d)
The failure of East Island culture to understand the erosion of resources, environment and
standard of living, led not to its extinction, but to its radical impoverishment and loss of
capability to preserve itself.
Thus sustainability depends not only on resources and environment but also on how people
govern themselves. It highlights the necessity of using resources in a way that can be sustained
for a long time and all people participate and develop a culture of sharing resources on the
principles of social justice and equity.
15.2.3
Sustainable Economy
Sustainable economy could be stated as the situation and capacity of an economy to perpetuate
or sustain itself at the given resource endowment and chosen national and social goals. It
indicates the rate at which the economy must grow to satisfy the needs of the society and at
the same time have sufficient surplus to maintain the growth rate to feed the growing population
and other life systems.
In the Indian context, sustainable economy has to be a dynamic concept. It is the ability of
the economy to sustain high growth rate and simultaneously ensure a mechanism to distribute
the benefits of the growth among people equitably on the principle of social justice. It must
be realised that Indian economy can be sustainable only if the socio-economic goals – especially
poverty eradication, reduction of personal and regional inequalities, and employment generation
are achieved and basic infrastructure is created to the extent of helping the people to contribute
and participate in the developmental process.
The achievement of socio-economic goals including social justice will help in creating and
carrying forward a sustainable economy in the long-term but at the same time the prevailing
economic structure and situation and the developmental process should concentrate on the
realisation of the socio-economic goals. There has to be a symbiotic relationship between
building up a sustainable economy and achievement of social justice and equity, one reinforcing
the other, resulting in the process and achievement of sustainable development.
15.3
SOCIAL JUSTICE– ITS NECESSITY
Social justice refers to a fair and just treatment of every section of a society. If there is no
just treatment and if there has been a victimisation of a section in the society, it is said to suffer
from social injustice. For example the practice of untouchability, which is banned by law now,
when it existed, was an example of extreme social injustice to people of certain castes who
were ill treated.
Social justice is a wide and multidimensional concept. It is very difficult to grasp the ‘holistic’
view of social justice. Every discipline like political science, economics etc. looks at social
justice from its own discipline point of view. According to John Rawls, justice is concerned
with the welfare of an individual as well as of the society. From political science point of view
social justice refers to fair treatment of the deprived, exploited and disadvantaged sections of
a society. In economics, social justice indicates equal opportunities and distributional equity.
In short, social justice refers to fairness, absence of harmful discrimination and just treatment
of all sections of the society. In the present study, social justice refers to fair socio-economic
Sustainable Economy and Social Justice
155
treatment of all sections of the society in the context of a sustainable economy. It demands
measures that will remove the social injustice done to or suffered by certain sections of the
society.
In the process of economic and social development it was earlier presumed by economic
thinkers that in a free capitalist economy, the operation of the market forces will ensure that
quality and efficiency is rewarded and as economic development takes place, all sections
of the society get the benefits of such development. Prosperity of western societies and their
high standard of living was pointed out as indicators of their ‘trickle-down and spread effects’.
But the problems faced by the developing economies in Asia and Africa disprove their claim.
These countries suffer from a number of problems like poverty, unemployment, discrimination,
exploitation and socio-economic inequalities among persons as well as regions in an economy.
Amartya Sen has highlighted that when in an economy and society significant inequalities in
income and wealth are present, the poor remain poor because of lack of capabilities they
suffer on account of poverty and deprivations. He advocates an effective role to be played
by government, civil society and private agencies.
Sustainable economy and social justice can have a symbiotic relationship in which government
and business can play significant roles. Infact sustainable economy can be achieved better,
if social injustice is removed and citizens, especially poorer sections are enabled to contribute
towards development. Such an economy can also allocate more resources to deal with the
problems of injustice with measures like free primary education, subsidised skill-building
programmes, promotion of self-employment and entrepreneurship programmes. These can
raise capabilities and contribution of poorer sections to economic and social development.
Social justice measures like poverty eradication programmes and employment generation
schemes can inspire the weaker and disadvantaged sections not only to improve their own lot
but also contribute to asset creations as well as production of commodities, which help the
economy to remain sustainable. All these demand right policies in the areas like poverty,
unemployment, taxation and public expenditure to reduce inequalities and promote intergenerational equity, education, skill-building and environmental protection.
15.4 INDIA-PAST PROFILE
This section concentrates on the position of the Indian economy soon after independence,
from the early 1950s, with special reference to the nature of the economy and position of
social justice. The objective is to judge later, the progress in the field of sustainability of the
economy and achievement of social justice.
a)
At the time of independence, the primary sector consisting of agriculture and allied
activities constituted the largest sector in terms of workforce employed as well as
contribution to the GDP. See Table 1 below:
Table 1: India’s GDP and Workforce Distribution in 1950-1951 (%)
Sector
Primary
Secondary
Tertiary
Total
Source: Misra & Puri, p.64
GDP in 1950-51
55.9
14.9
29.2
100.0
Workforce in 1951
72.7
10.0
17.3
100.0
156
Gandhi’s Economic Thought
The rural workforce was 73% of the total workforce and contributed 60% of the GDP. The
GDP itself was a small amount of Rs. 8979/- crores (at current prices). Given the large
population, the per capita income was only Rs.255/- in 1950-51. The large masses were very
poor, less educated, and received low wages.
b)
Large sections of the population were below poverty line which means such people are
left to partial hunger. In 1973-74, about 55% of the people were below poverty line
constituting about 321 million people. Poverty level was much higher in rural areas than
urban areas.
c)
In 1983, in rural areas about 90% men were self-employed or were casual workers
where terms and conditions were poor. 56% of the urban men were similarly employed
with remaining 44% employed in regular/salaried jobs. In the case of women, in rural
areas 97% were in self-employment or casual work, only 3% were in regular/salaried
employment. In case of urban women 74% were in self-employment or casual employment
and remaining 26% were in regular/salaried employment. The workers in general were
better off in urban areas and among them males were better employed than females. This
shows the comparatively poorer position of rural workers and women workers (IJLE,
January-March 2007, p.161).
d)
In 1983, the lowest 20% of the households had only 8.1% of the household expenditure
compared to the highest 20% having 41.4% 0f household expenditure. It shows steep
inequalities which is socially unjust.
There are other injustices about which we do not have precise data but are well known.
Caste system is a major issue in which S.Cs/S.Ts/OBCs together constitute about 50% of the
reservation in several areas. In the earlier period, reservations were Constitutionally provided
for S.Cs and S.Ts. The OBC joined this group later. These groups have faced exploitation
and discrimination for long and are now provided with special facilities and programmes for
their welfare and development.
Social justice for women is another important issue. Even after independence they were not
paid any significant attention. Their wages in private sector are lower than that of men. They
also face many social, economic and other problems. It is only after the International Year for
the Women in 1975, that more attention is paid towards women’s welfare and empowerment.
The group of aged, destitute, and disabled constitute another disadvantaged group. The
position and problems of child labour is another example of social injustice.
Rural labour has always been in an inferior position in labour market. Bonded labour in rural
areas is another category. Similar is the case of contract labour in urban areas.
The plight of unorganised labour who constitute over 90% of the labour force is also well
known. So is the case with migrant workers in India.
From social justice point of view, the Indian economy and society faced a colossal problem
of social injustice and it became a major challenge to the social and political leaders and
governments in India. There were several movements and agitations, of the people suffering
social injustice which led to the governments coming out with a number of special measures
to deal with injustice.
Now as far as economic development and efforts for creating a sustainable economy is
concerned, India was placed in a difficult situation at the time of independence. The parameters
that influence the growth process favourably and help in building a sustainable economy were
Sustainable Economy and Social Justice
157
not significant even after independence. According to Ch. Hanumantha Rao (1998), ‘for this
purpose some ‘classical prerequisites and other parameters are essential’. These include:
i) Savings rate ii) technological change iii) Appropriate population growth rate iv) Human
resources development v) Resource-use efficiency vi) Proper pricing of inputs vii) Elimination
of gender bias and viii) Proper use of natural resources.
Many of these are qualitative. He clarified that technological change should be environmentfriendly.
At the time of independence the savings rate was only 8.6% of the GDP in 1950-51 and later
increased gradually. The technological level was low, population growth rate was high and the
literacy rate was abysmal at only 18.3% and with inadequate school infrastructure. Human
Resources Development had yet to take deep roots. Resource-use efficiency depends on
capital, technology and human skills which were at a very low level. Pricing of inputs was a
complex issue of balancing the interests of several stakeholders and had its limitations. Gender
bias in terms of son preference, male domination, discrimination and exploitation did not help
women in significantly contributing to development. Exploration and efficient use of natural
resources was also a complex task in the absence of required expertise and technology.
Thus the Indian economy could not be called as a sustainable economy that can also contribute
to social justice at the time of independence. It is only after the establishment of the Planning
Commission and the implementation of several Five Year Plans that India began to move
towards creating a sustainable economy, capable of releasing resources and skills needed to
promote social justice.
15.5 MEASURES FOR SOCIAL JUSTICE AND
SUSTAINABLE ECONOMY
The measures for creating a sustainable economy that promote social justice are discussed in
this section.
15.5.1
Environment
The Constitution in Article 48A says that the state should protect and improve environment
and safeguard forest and wildlife in the country. People are also expected to contribute to this.
There are several laws covering water, air, and noise pollution, forests, wildlife and pestcontrol. Proper implementation of these laws can go a long way in creating a sustainable
economy. However our focus is on social justice.
15.5.2
Sustainable Economy
During the planning period beginning from 1951, the government has taken a number of steps
to make the economy sustainable. The goal of ‘self-reliance’ precisely reflects the government’s
aim of creating a sustainable economy.
Government’s efforts can be discussed in terms of the parameters given by Ch.Hanumantha
Rao. Major efforts were made to raise savings rate and towards the mobilisation of small
savings. The nationalisation of banks in 1969 and 1980 helped in this process. In the initial
period and up to 1980s foreign aid came in handy for adding to the resources mobilised for
development.
In science and technology, rural and industrial development, the government emphasised ‘selfreliance’. In agriculture the government went for food self-sufficiency through better technology
and seeds under the ‘green revolution’ during the mid-1960s. In industrialisation it went for
158
Gandhi’s Economic Thought
basic and heavy industries like iron and steel and heavy machinery industries and also opted
for import substitution.
The Government took measures for controlling population growth rate but compulsory measures
were resisted. The government has been relying more on incentives and on concentrating on
‘family welfare planning’.
In human resources development, school education was promoted in a big way, a net work
of vocational training institutes was established, and the higher education institutional network
was expanded, like the Indian Institutes of Management (IIMs) and Indian Institutes of
Technology (IITs).
In the field of resource-use efficiency, the government also promoted productivity under the
apex ‘National Productivity Council’ and quality control framework including the Bureau of
Indian Standards (BIS) for certifying and encouraging quality standards. It also promoted R
&D activities in pharmaceutical and food-processing industries.
In the area of pricing of inputs, government made attempts to balance the interests of producers
like the farmers and manufacturers and the consumers. Institutions like the Commission on
Agricultural Costs and Prices, and Bureau of Industrial Costs and Prices have been established
to ensure prices based on costs, demand, supply, balancing and development requirements.
Attempts were made for women’s empowerment, especially after 1975. Some of the measures
include setting-up of National Commission for Women, reservation in local bodies, Women
entrepreneurship promoted by institutions like Mahila Arthik Vikas Mahamandal (MAVIM) in
Maharashtra and by institutions for entrepreneurship at central and state levels.
Natural resources are very vital for development and good life. Government has been promoting
usage, conservation, and exploitation of minerals and metals. National Forest Policy Resolution
takes care of forests, their expansion and development. Similar steps were taken for optimum
utilisation of water, soil, petroleum and gas etc.
A significant change took place in the role of government since 1991 when the economic
reforms were introduced under the liberalisation regime. As a result, government is withdrawing
from areas like business leaving them to market forces, and the basic focus of creating a
sound and sustainable economy is now being shared between government and the private
sector.
15.5.3
Social Justice
In the process of creating sustainable economy, the government has also been promoting
social justice wherever possible by promoting special schemes for the needy sections, keeping
in view the social justice aspects in the society. Some of the important developments are stated
below.
While framing fiscal and monetary policies, the needs of poor and unemployed and the
prevailing inequalities are sought to be attended to. For example, while levying taxes, government
keeps this principle in view and imposes taxes to ensure that the burden of taxation is shared
by people according to their abilities and capacities. In taxing income, progressive taxation is
resorted to where people below a level of income are totally exempt from income tax.
Government’s expenditure policies pay special attention to infrastructural facilities which are
needed for common people most of who are poor. Similarly by taxing incomes and commodities
of richer sections, Government levies a higher rate of taxes so that more resources are
mobilised and inequalities in the distribution of income and wealth are reduced.
In the field of education, training, and employment, government meets the demand of social
Sustainable Economy and Social Justice
159
justice by having the policy of reservation for S.Cs./S.Ts/OBCs and other disadvantaged
sections, starting from school and extending upto elite institutions like the IIMs and IITs. There
is reservation for these sections, which enables them to improve their standards of living and
quality of life over a period of time when they start earning better and thus overcome their
chronic socio-economic problems.
A number of special measures for those who are poor and suffer from social disabilities are
promoted like poverty eradication schemes like the Integrated Rural Development Programme
(IRDP), Food for Work programme, Integrated Child Development Services (ICDS) and
Mid-Day Meals Scheme (MDMS) for the poor and backward sections to overcome acute
poverty and hunger.
Similarly special employment schemes are being initiated for poor, less educated or backward
sections. The National Rural Employment Guarantee Scheme in rural areas ensures employment
to one person in a household for 100 days in a year. This scheme takes care of both poverty
and unemployment and also ensures creation of productive assets thus directly helping in
building up a sustainable economy. Government also has schemes for urban areas like the
Swarna Jayanthi Shahari Rojgar Yojana (SJSRY).
It has been promoting self-employment and micro-entrepreneurship schemes for the poor and
socially deprived people. There are apex institutions like the National Institute for
Entrepreneurship and Small Business Development (NIESBUD) in New Delhi and the
Entrepreneurship Development Institute of India (EDII) in Ahmedabad which promote such
schemes among all, with special attention to those who are disadvantaged or disabled or poor
belonging to S.Cs/S/Ts/OBCs. There are such organisations at the state level also.
Inspite of the above measures towards ensuring sustainable economy and social justice, there
are problems of poor implementation and leakages. These aspects are discussed in the next
section.
15.6 SOCIAL JUSTICE IN THE INDIAN ECONOMY
In this section we briefly analyse the effectiveness of the measures in the above-mentioned
areas. It should be noted that not all measures are quantitatively measurable. Some are
qualitative evaluations. The positive and negative aspects of sustainability and social justice are
discussed here.
15.6.1
Positive Aspects
India’s economic growth has been steadily moving towards a higher path, despite fluctuations
in some years. It can be analysed in three phases. In the first phase of 1951-80 the average
annual growth rate was 3.6%. During this period a strong industrial and economic foundation
was laid and substantial development of basic and capital goods had taken place. During the
second phase of 1981-90 the growth rate of the economy rose to 5.6% per annum. During
the third phase of 1992-2007 the growth rate accelerated to 6.1% per annum. During the
recent period of 2005-08 the growth rate increased to 9% per annum suggesting that from
July 1991, the growth rate has been impressive. During 2008-2010, it is expected to slow
down on account of the global recession but is expected to be around 6% or more. The
savings rate increased from 8.6% of the GDP in 1950-51 to over 34% now.
During the period of planning, significant infrastructural development took place, which has
strengthened the economy making it more sustainable. The installed generating capacity in
electricity rose from 2300 Mega Watt (MW) in 1950 to 1,43,800 MW by the end of March
2006. The production of crude oil too increased from 0.25 Million Tons (Mn.Ts) in 1950-
160
Gandhi’s Economic Thought
51 to 34.0 Mn.T in 2006-07. Non-conventional energy sources like solar, biogas, and wind
power are also being expanded. India’s railway system is one the largest in the world with
a route length of 63,465 kms. The total road length has increased from 0.52 million Kms to
3.34 Kms now. Significant progress has been made in communications, where phone connections
(Landline and Cell phones) have reached the 500 million mark.
In agriculture too impressive progress has been made in the production of food grains, which
has increased remarkably after the ‘green revolution’ that commenced in mid-1960s. In
1950-51 the total food grains production was 50.8 Mn.Ts which increased to 216-1 Mn.Ts
in 2006-07. India is one of the largest producers of food grains in the world. The irrigation
potential has increased from 22.6Mn hectares in 1950-51 to 102.8 Mn hectares in 2006-07.
There has also been a rapid development of public sector enterprises that produce several
important commodities and services in the country. The total sales of 244 central government
enterprises was about Rs.9,64,410/- crores in 2006-07.
The government has made a creditable contribution to the development of infrastructure;
subsidised school education and started the National Rural Health Mission to attend to the
health needs of rural poor.
The government also subsidised public distribution system (PDS) that enables poorer sections
to get commodities at cheaper rates, the National Rural Employment Guarantee Scheme for
the unskilled and unemployed poor, reservation in jobs for the S.Cs/S.Ts/OBCs. Provision of
cheaper modes of transport in urban areas benefits common people many of who are poor.
In taxation too, the poor are treated favourably, with tax exemptions and lower taxes.
15.6.2
Inadequacies in the Development
Though the sustainability of the economy has increased as indicated in rising incomes and
growth rates, the benefits have gone to already better off sections, making the process of
social justice difficult. Some of its negative effects are presented below.
The impact of economic reforms and accompanying globalisation policies has also been having
adverse effects on social justice with benefits spread unevenly in the society. Such policies
have ‘multifaceted adverse effects to entire common people of the world and planetary
environment.’ These include the social and economic exclusion of poor who have no power
in the market; unfavourable effects on the quality of employment; weakening of the trade union
movement that normally stands for the protection of the workers; private business sector
encroaching upon public/common property resources like water and land; food insecurity as
governments may withdraw from such a role; adverse ecological impact; rising terrorism and
militarisation; and potential anti-people effects when government tries to serve the needs of
big business and the MNCs (Kurian V. Mathew, 2004).
The poverty levels have been coming down, but slowly after the introduction of new policies
in July 1991. See Table 2 below:
Table 2: Poverty ratios and change in poverty (%)
Category
Rural Poor
Urban poor
All Poor
Poverty
1983
45.8
42.3
44.9
Ratio
1993-94
37.3
32.3
36.0
2004-05
29.2
26.0
28.3
Source: Dev & Ravi, quoted in Rudder Datt, 2007
Change in
Percent
1983-94
–0.81
–0.92
–0.85
Poverty(%)
annum
1994-2005
–0.73
–0.59
–0.70
Sustainable Economy and Social Justice
161
To summarise, while poverty has been decreasing at 0.85% per annum during 1983-94, in
the post-reform period 1994-2005, it has decreased only by 0.70% per annum. Same is the
case in rural and urban areas.
There is also increasing inequality of consumption in both rural and urban areas during the
post-1991 growth. In rural areas inequalities in land ownership also continue.
Employment growth rate in organised sector, where the quality of employment is much higher,
has been falling in public sector as well as on the whole as indicated in the table (Table 3)
below:
Table 3: Rate of growth of employment in organized sector (% per annum)
Sector
Public Sector
Private sector
Total Organized
1983-94
1.53
0.44
1.20
1994-2005
–0.70
0.58
–0.31
Source: Economic survey, February 2008, table 10.12
Except for a small growth in private sector, the scenario is discouraging. According to NSSO
Rounds, unemployment rates have gone up during the period 1994-2005. Though government
has claimed large employment creation, it appears to be in the informal sector where quality
of employment is poor.
While the sustainability of the economy has been expanding, after the economic reforms in
1991, it has been in favour of better off sections as indicated by the large production of
FMCG (fast moving consumer goods) goods and elite consumption. As far as social justice
is concerned, there has been a strong criticism, appearing justified, that growth and development
has not been inclusive. A number of studies on the position of the backward classes over a
period of time show that these communities have not improved significantly, especially in rural
backward areas. Substantial attention needs to be paid to social justice aspect of development
in the future.
15.7 FUTURE PERSPECTIVES
The goals of sustainable economy and social justice can be and should be effectively harmonised
in any economy. Sustainable economy has to be one that sustains the welfare of the people
without any discrimination and adjusts to the environment and ecology. In the present study
the emphasis has been on sustainable economy and social justice. Here the concept of social
justice is fairness to all, support to the weak, and service to the disadvantaged as Gandhi
would have liked.
Gandhi was distressed by the absence of social justice on the one hand and craving for the
riches, on the other. “Let no one try to justify the glaring difference between the classes and
the masses, the prince and the pauper, by saying that the former need more. That will be idle
sophistry and a travesty of my argument…The contrast between the rich and the poor today
is a painful sight.”(The Mind of Mahatma Gandhi, p.267). Sustainable economy will have no
meaning and value, without social justice in the society.
At present India is also one of the fastest growing economies in the world. According to a
study by Uri Dadush and Bennet Stancil for Carnegie Endowment (Free Press Journal, 2211-2009), India will become the third largest economy in the world and in spite of its growing
162
Gandhi’s Economic Thought
population which will make India the world’s most populous country in 2031, India’s GDP
will reach to $17.8 trillion US dollars, sixteen times its current GDP of $1.1 trillion US dollar.
Thus there seems to be no question of Indian economy’s rising sustainability in the future. The
Indian leaders should make sure that the growing economy does not miss the goal of social
justice to become weaker because of the craze of consumerism and luxurious living.
The government and Planning Commission have expressed their clear preference to social
justice by mentioning in both Tenth and Eleventh Plans that their goal will be ‘growth with
social inclusion’ where weak and poor will be taken care of and they will be able to participate
and contribute to development.
In the future, government, business, and the civil society must manage environment and ecology
in a way that sustains the economy and at the same time promote social justice. According
to Prof. C.K.Prahalad of the Michigan University, “if you look at the water shortage, high
commodity prices and certainly global warming, the need for sustainable development is
obvious” (Economic Times, 20-11-09). Food security for all, in quantity and minimum needed
quality, must be ensured, which calls for priority for adequate food production. Conservation
and optimum use of resources like water and land is going to be crucial, while managing
environment and ecology, needs of people traditionally dependent on these, like tribals and the
displaced people.
International cooperation is highly essential to make the economies over the globe more
sustainable and socially more responsive. Cooperation in food production can be achieved
wherein countries producing more food can share their surplus with the developing poor
countries rather than diverting them to bio-fuel production. It is a welcome sign that organisations
like the World Bank and the WTO are coming together to help the poor in the interest of
social justice.
India should take the lead in promoting social justice and sustainability by encouraging innovation
and entrepreneurship that benefit the poor and where poor can also participate. The World
Bank feels that this is possible and must be attempted. Inclusive innovation is knowledge
creation and adoption activities most relevant to the needs of the poor (Dutz A. Mark, World
Bank, 2007). ITC’s e-choupal, Mumbai Dabbawala’s efficient distribution of food boxes, use
of mobiles by Kerala fishermen for selling fish are some of the examples quoted in the book
of Dutz. Such innovations not only benefit the poor but also improve the sustainability of the
economy. This would enable us to create a more egalitarian, contended, and peace-promoting
society that will be cherished in a Gandhian system.
15.8 SUMMARY
Sustainable economy and social justice are related concepts. Sustainable economy is necessary
to generate resources for social justice. Social justice, when achieved, raises the national
efficiency, and the poor and disadvantaged are enabled to contribute to developmental activity.
Sustainability covers survival needs of the present generation, environment and biodiversity,
equity that takes care of the future generation also, and life quality. India has tried to create
a significant sustainability in the economy over the six decades. Though the Government
attempted social justice through appropriate policies of taxation, public expenditure and
programmes to help the disadvantaged and the poor, social justice could not be claimed to
have been achieved totally and the conditions of poor has not improved as needed. India can
be expected to improve its economy’s sustainability in the future and it is forecast that it will
be the world’s third largest economy by 2050. Obviously the economy will become strong
and highly sustainable. But social justice will continue to need the government’s intervention.
Sustainable Economy and Social Justice
163
International organisations like the World Bank and WTO can also play a supportive role to
promote social justice. Thus sustainable economy and social justice can be balanced and
achieved.
15.9 TERMINAL QUESTIONS
1.
What is sustainable economy? What is its significance for social justice?
2.
What is ‘social justice’? What is its importance?
3.
Discuss the measures taken by government to promote economic sustainability and social
justice after independence.
4.
Briefly attempt to provide some future perspectives in the area of sustainability of the
economy and social justice in India.
SUGGESTED READINGS
Datt, Ruddar., Slower Poverty Reduction but Increasing Inequality, Mainstream, June 15-21
issue, 2007, pp.9-11.
Dutz., Mark A., (Ed) Unleashing India’s innovation-Towards sustainable and inclusive Growth,
World Bank, Washington, 2007
Govt. of India (2008), Economic Survey, February 2008, Ministry of Finance, GOI, New
Delhi.
Labor Statistics, Indian Journal of Labour Economics (IJLE), Vol. 50.
No.1, January-March, 2007
Kates, Robert., et al., What is Sustainable Development-Goals, Indicators, Values and
Practice, in Environment, April 2005, Holdref Publishers
Kurian, V Mathew., Globalization and its socio-economic impact, Mainstream,
April 3-9, 2004, pp.13-16
Madon, G.R., Sociology of Development, Allied Publishers, New Delhi, 2003.
Misra, SK, & Puri, VK., Indian Economy-Its Development Experience, Himalaya Publications,
Mumbai, 2008
Prabhu, RK, & Rao, UR., The Mind of Mahatma Gandhi, Navajivan Publishing House,
Ahmedabad, 1967
Purohit, BR., (Ed), Social Justice in India, Rawat Publications, New Delhi, 2003
Rao, Hanumantha., Social Sciences and Planning for Sustainable Development, See Introduction
by B.Satyanarayan. Himalaya Pub., Mumbai, 1998
Free Press Journal, Mumbai, dated 22-11-09 “India third Largest Economy by 2050”,
Carnegie Endowment.
Website Sources:
www.finmin.nic.in
www.labour.nic.in
UNIT 16 PARADOXES OF DEVELOPMENT AND
GANDHIAN ALTERNATIVES
Structure
16.1 Introduction
Aims and Objectives
16.2 The Dominant Paradigm of Development
16.2.1 Promises of Development
16.3 Discontents with Dominant Paradigm and Revisions
16.3.1 The Critique of Romanticism
16.3.2 Marxian Reformulation
16.4 Deficiencies of the Dominant Paradigm of Development
16.5 Paradoxes of the Modern Paradigm of Development
16.6 Gandhian Alternative
16.7 Summary
16.8 Terminal Questions
Suggested Readings
16.1 INTRODUCTION
One who serves the body, serves what is his, not what he is.
————Plato, Alcibiades 131.
Let man always remain greater than what he makes and more precious than what he has.
——Lanza Del Vasto, Return to the Source.
Every age embraces a key word; its repetitive use and redefinition mark the distinctive
channels of faith and thought. It has symbolic value; it exerts greater influence upon the nature
and direction of men’s thinking. This word epitomizes the faith of the times. More than a
linguistic vehicle of expressing thought, such words symbolize the conviction of men about who
they are and what the world they lived in means. They are both the outcome of thought and
the elicitors of thought. Men are fascinated by their referents and properties (Nisbet, 1977).
Such a key word has, since the Second World War, been “development”. It has pervaded
the contemporary sociopolitical scene in almost all societies. The use of the word “development”
by laymen, experts, administrators and policy makers demonstrates its centrality in our thinking
and doing.
The widespread use of this word “development” refers to three situations. First, it refers to
the discontent about patterns of development in the past. It refers to pervasive poverty and
its malignant consequences for human personality and dignity. It also bemoans material deprivation
as the primary factor leading to the loss of freedom, self-confidence and self-reliance. Second,
the word “development” articulates the belief that the present is malleable and the future
Paradoxes of Development and Gandhian Alternatives
165
determinable. It also affirms that mankind is capable of amending its own follies thereby
successfully erasing the pernicious effects of mal-development to clear the way for a bright
future. Lastly, it points, even if ambiguously, to certain referents and properties of the concept
of development. When translated into reality, it is hoped, it would induce and sustain ‘proper’
development that will ensure human well-being.
Proper development refers, primarily to three different aspects of man’s existence in
contemporary times. First, it is asserted that man’s well-being can be assured only when his
material needs, such as wealth, power and prestige, are fully satisfied. Hence, man’s development
into a moral being would be assured. Lord Keynes underlines this when he identifies economic
development as the foundation of development of all kinds. Thus, the term “development”
turns out to be a normative concept indicating the passage of civilisation from one level to
other higher levels. Second, such a development is supposed to assure not only individual
happiness but also collective well-being and harmonious social relations. And, lastly, development
is also seen as a process in which technological advances would free man from strenuous
labour, grant leisure that would allow man to cultivate culture and introduce progressive
refinements in thought-ways and work-ways.
Thus, the modern paradigm of development holds out the promise of unparalleled richness of
life, both in material and cultural senses, and also promises individual felicity and collective
well-being. The benign outcome that is expected to flow from development posits happy
individuals and harmonious collectivities. It promises well-being by obliterating lower standards
of living reinforced by agricultural economy. It also engenders the belief in his power to change
himself; he also believes in his power to change the world around him. Thus, development
reflects the idea that man can refashion the conditions of his living. However, the satisfaction
of ever-proliferating material needs leads unavoidably to the transformation/manipulation of
nature to create goods and services.
Interestingly, the search for bodily comfort has been given preference in the name of man’s
freedom, dignity and self-determination and also assures leisure, which sustains civilisational
progress. The denouement of the modern idea of development has thrown up a plethora of
paradoxes. These pertain not only to the failure of the modern paradigm of development to
deliver on its prodigious promises, but also to the pernicious conditions created by the idea
of development that threaten freedom, dignity of man and above all his very existence because
they have pushed mankind to the brink of an ecological disaster.
Aims and Objectives
After reading this Unit, you would be able to understand

The idea of man underpinning modern development

Specifications of the modern paradigm of development

Characteristics and consequences of the modern paradigm of development and its
paradoxes.
16.2 THE DOMINANT PARADIGM OF DEVELOPMENT
The idea of development is unintelligible without a reference to ‘who man is’? After all, the
first question that we need to answer is: Development for what? Obviously development is for
something- a changed state, a phenomenon which can be measured on a temporal dimension
along with the substantive changes that it brings about in whatever it touches. Obviously again,
166
Gandhi’s Economic Thought
our reference here is to both individual person and the socioeconomic milieu he lives in. As
such, development, whether of a person or his socioeconomic environment, implies some
implicit or explicit notion of ‘who man is’ (Heschel, 1965, p80). It is necessary to unveil the
idea of man that underlines the world he resides in. It is the substantive idea of man that shapes
the world and its characteristics.
Broadly speaking, two different perspectives about who man is compete for ascendance and
control. One of these perspectives considers man, as he ought to be. It underlines the need
for man to overcome and rise above his base nature and make the pursuit of a higher life
purpose, for example, self-realisation, the cardinal principle of his life. It is this principle that
must regulate his life activities. To be guided by a higher life purpose is not, in anyway, to
neglect or turn one’s back to the fulfillment of ordinary life needs. For, the pursuit of a higher
life purpose without attending to the fulfillment of ordinary life needs is not possible. The
fulfillment of ordinary life needs constitutes the other, very important aspect of man’s existence.
Traditionally, the view of man as he “ought to be” was regnant. However, with the arrival of
the modern era in the seventeenth century, this view was eschewed in favour of what Giambattista
Vico called, “man as he is.” This view saw man as simply a mind-body complex, an amalgam
of reason and passion. Obviously then, the spiritual aspect of man’s existence is suppressed,
even excluded. As Thomas Hobbes underlines, the rejection of any ultimate aim or summum
bonum in life, the rejection of the ultimate aim meant jettisoning the traditional worldview,
particularly the idea about man as more than a natural being. As Taylor (1981, p.112) notes:
Traditional worldview considered good life to consist primarily in some higher activity distinct
from the fulfillment of ordinary needs involved with production and reproduction of life.
Meeting these ordinary needs was, of course, infra-structural to a distinct activity that gave
life its higher significance….Lives which lacked the favoured activity, and were entirely absorbed
in meeting life needs were truncated and deprived.
With the rejection of higher life purpose, the acquisition of wealth, power and prestige emerged
as the focal point of man’s activities. A huge industrial system came into existence with a view
to fulfilling his endlessly proliferating needs. As a result, economic development came to
occupy the highest point on the scale of the values, that not only assures the realisation of
man’s self-defined purposes and, through it, his bodily well-being but also his moral development.
Thus what was simply infrastructural in the traditional view of man became central in modern
times. This made possible for kama (desire) and artha (resources necessary for satisfying
desires) to escape the suzerainty of dharma (righteousness) and allowed needs to become
limitless and gain auto-legitimacy. Man’s life becomes, as John Cooper points out, “openended” signifying that man must maximize, as a whole, the amount of certain goods but without
specifying at all what this maximum must be (Cooper, 1975, p.83). Here the traditional view
of man differs from the modern view insofar as it prescribes limits on the ever-proliferating
desires and underlines the principle of limitation of wants as something necessary to install
order in man’s interior.
The dominant paradigm of development is inspired by a partial image of man; it makes him,
in essence, a “broken totality” in Iris Murdoch’s view. This paradigm has provided the Third
World with a readymade model of What Ernest Gellner calls “social creation”. Man participates
in social creation by trying to realise his self-defined purposes. And this purpose largely, even
exclusively, as Hobbes insists, consists in satisfying one desire after another ceaselessly.
Man emerges as a free subject and becomes, in essence, someone who “follows an internal
Paradoxes of Development and Gandhian Alternatives
167
purpose and who owes no a priori allegiance to a preexisting order but only to structures that
one has created by one’s consent.” What is striking about men, as Taylor puts it, “is their
ability to conceive different possibilities, to calculate how to get them. The striking superiority
of man is in strategic power. The various capacities definitive of a person are understood in
terms of his power to plan”. (Taylor, 1985, p.55). Since man is a striving being, his felicity
depends on the degree to which he can satisfy his desires and acquire more and more power
for doing so. Therefore his rationality simply becomes instrumental rationality, a vehicle for
calculating the optimal means for realising a particular end. Rationality that was meant earlier
to control and regulate man’s unruly passion turns, on this account, as the calculation of cost
and benefit to realise a particular end. As such, rationality becomes subservient to passions,
cognition surrenders to will.
The fulfillment of the ever-proliferating desires is claimed not only to be the means of man’s
felicity but also supposed to promote two other things whose contribution to the development
of a person’s character is of immense value. In the first place, it is only through the satisfaction
of desires that hidden and slumbering potentialities of man are actualised. For Kant, the desire
for honour, power or wealth is natural. It stimulates man to strive after rank among his
fellowmen whom he can neither bear to interfere with himself, nor yet let alone. Discord is the
necessary outcome of this as it awakens in him all his latent powers and “the first real steps
are taken from the rudeness of barbarianism to the culture of civilisation.”
Thanks be then to nature for this unsociableness, for this envious jealousy and vanity, for this
insatiable desire for possession, or even of power! Without them all the excellent capacities
implanted in mankind would slumber eternally undeveloped. Man wishes concord but nature
knows better what is good for his species, and she will have discord (Kant, 1972, pp.159160).
In the second place, the claim that discord, fathered by man’s desire to possess, leads to the
full flowering of culture and promotes progress is not the only one. It is also claimed that in
the process of satisfaction of desires radical changes occur in man’s nature. For Spinoza, it
is the pathway for the development of “kindness” or sympathy. It is also claimed that man is
tabula rasa, a clean state; it is filled with qualities and attributes in the process of his
interaction with the external world. In this process, the external world undergoes changes,
moving from one level of development to another higher level. As the external world changes,
so do man’s motivations and beliefs; that is, his essential nature also changes along with his
changing beliefs. This leads to a radical change in man himself. As such, “in a new age, man’s
individual and social life could undergo almost unlimited change; a radically new order of social
relationships could be established, and in that new order there would be fundamental
transformation in human nature.” (Mandelbaum, 1971, p.142).
16.2.1
Promises of Development
The modern paradigm of development does two things concurrently. First, it draws our
attention to the fact that man’s past has been flawed in three important respects. It is flawed
because of its speculative philosophy, which relying on what Claude Helvetius calls “magic of
words” gave more importance to the world above. As a consequence, the world of here and
now was undervalued. This tended to ignore the material aspect of man’s existence. Poverty,
therefore, was not only tolerated, but was also praised and promoted. Consequently, extremely
low standards of living, deprivation and even hunger made the lives of a large number of
people all over the world extremely miserable. The past has also been flawed because
speculative philosophy promoted superstition, ignorance and a multiplicity of doctrines. Doctrinal
168
Gandhi’s Economic Thought
differences led to frequent conflicts. The past was marked by deprivation, ignorance and
conflict.
Secondly, the modern paradigm of development underlines mankind’s promising future and
offers the path to achieve it. Repudiating speculative philosophy, Rene Descartes underlines
the need to rely on practical philosophy. This will, he argues, render men, “the masters and
possessors of nature” (Descartes, 1958, pp.130-31). Practical philosophy projects two
important perspectives. The first relates to the creation of a purified universal language
encompassing simple, unambiguous and straightforward ideas. Such a language leads, it is
claimed, to the unification of all sciences (both physical and moral), on the one hand, and to
the reduction if not the elimination of contestable doctrines on the other. Such a language
makes knowledge available to all as well as eliminates differences and, therefore, conflicts.
The second aspect concerns the mastery over nature; this would pave the way for manipulating/
transforming nature with the help of technology enabling man to produce ever more goods and
services to satisfy his myriad needs.
The modern paradigm of development releases man from his erstwhile subjugation to the
unknown and the unknowable divine entity. His newly earned freedom permits him to indulge
his passions and desires. Man must constantly endeavour to create wealth to ensure his
felicity. This means that cupidity must be given a free play because it is only by pursuing it that
individual happiness and collective well-being can be ensured. The modern paradigm of
development, thus promises that man can gain the ultimate knowledge of the universe by
developing scientific ability and also promises that by using technology, nature can be pushed
to yield its hidden wealth and thereby fulfill everyone’s desires. In short, it promises to
establish heaven on this earth. It is ironical that the route to the promised terrestrial paradise
must pass through the thorny and insalubrious landscape of the enchantment of the body. This
paradise proves elusive and ever slips out of man’s grasp, and the promised paradise is not
only hollow but also never comes to pass. In this pursuit, man has to bear immense misery
and suffering. This is the cruellest paradox of the modern paradigm of development.
16.3 DISCONTENTS WITH DOMINANT PARADIGM
AND REVISIONS
According to the dominant paradigm of development, the key to personal development and
civilisational progress lies in the search for felicity, involving the fulfillment of ordinary life
needs. Underlying this conception of development are two postulates. First, the need to
produce and create ever more goods and services must be given the highest priority, if the
satisfaction of proliferating needs and wants is to be assured. Second, the fruits of development
must not be limited to only a few in society; they must be available to all so that they too can
enjoy the good life of modern conception. This good life assures everyone a life of affluence,
considered to be the means of ensuring salubrious human development, expected to guarantee
to man his dignity, safeguard, promote his freedom and give him the necessary leisure and the
wherewithal of creating culture. It is also assumed that man’s moral and intellectual levels will
continuously be raised. With this peace and order will mark human existence.
Central to this prospective is the strategic importance of rationality, and also the primacy of
the individual and his liberty. Rationality does not, however, refer to a true vision of things. It
is not an active principle of the soul that allows us to rise above particularities or contingencies
of our experience and ‘participate’ in the structure of the cosmos. Instead, reason is conceived
of as the handmaiden of appetites; it signifies instrumental, prudential, and calculative reasoning.
Paradoxes of Development and Gandhian Alternatives
169
It serves not the soul but the body. Its primary role is to suggest costs and benefits of different
means of realising a given end. It is then expected that the individual would choose the most
advantageous means of realising his purpose.
The dominant paradigm assumes the primacy of the individual who, driven by the need to
satisfy his material needs, advocates acceleration of economic growth as the necessary condition
of development. This model of development is incompatible with the spirit of communitarianism,
creating a market society where internecine competition rules. The spirit of competition
characterises market society where self-interest takes precedence over every other consideration.
And obligations are determined by the needs of mutual interest. Even common interest is
treated as an aggregate of self-interests of different individuals or groups. In a market society,
everything is subservient to ‘maximisation of profits’. Human beings are reduced to selfseeking animals with no permanent bonds of loyalty or commitment to any great ideal.
16.3.1
The Critique of Romanticism
The dominant paradigm of development has provoked a lot of criticism and most of these
refer not to the fact that it makes the fulfillment of ordinary life needs the gateway to man’s
well being. Romanticism, for example, is opposed to it for its rationalist perspective, which
reinforces the subjectivist bias. The rationalist bias pits reason against emotion and man against
society and nature. To overcome this separation, Romanticism considers man as a biological
organism whose life experience should express unity, wholeness, and purposiveness. As a
biological organism, man grows and changes according to the pattern encoded in the person,
an inborn inner essence that initially exists in potential, known in Greek philosophy as intelligible
essence, which, as it were, yearns for its realisation through a natural process of self-unfolding.
The process of self-unfolding can get and usually gets distorted and warped, if the environment
in which it occurs does not harmoniously echo the person’s inner pulsations. On this view,
discovering the unique essence constitutes in itself the mode of self-expression.
The vision that Romanticism projects on man and his world has yet to be absorbed and
assimilated in public institutions. It constitutes an integral part of modern identity of man and
shapes his private aspirations. It advocates a life according to nature. This involves a fusion
of the biological and the moral instead of their hierarchical ordering or setting in a relation of
rational control. If this fusion were to be fully realised in private life and institutional structures,
it would accentuate the opposition between man’s subjectivity and the external world.
16.3.2
Marxian Reformulation
If Romanticism attacks the dominant paradigm of development for its predilection for rationality,
Marxism does so for its propensity for the primacy of the individual. It cannot be denied that
the fulfillment of human needs is sine qua non for human development. However, the environment
in which these needs are to be fulfilled receives different treatment by different schools of
thinkers. Karl Marx makes the fulfillment of man’s needs a necessary condition for the
actualisation of man’s dormant capacities in a characteristically human society. Making a
distinction between biological and human needs, he argues that, unlike animals, man has,
besides biological needs, which he shares with animals, also non-biological needs (cultural,
spiritual, etc.). These needs arise out of activities aimed at satisfying material needs.
To satisfy needs, man uses tools that give rise to production system. Constant proliferation of
needs induces a corresponding expansion of man’s power along with the application of
technology to meet them. However, there develops, in the process, a disjunction between the
forces of production, the resources that man can command through his augmented powers and
170
Gandhi’s Economic Thought
the relations of production the forms of social organisation, which govern the exercise of these
powers and the control of resources. The disjunction is the genesis of dehumanisation of needs
and man’s alienation.
In the capitalist society, where this disjunction becomes very acute, use-value is transformed
into exchange value. Labour becomes a commodity to be sold and bought; workers get
alienated from their own labour. Marx uses the term “alienation” in three different senses. First,
the workers’ product becomes alien to him because his employer appropriates it. Second, as
a consequence of this, labour becomes a commodity and capital becomes both a product of
labour and a power over labour. And lastly, the entire thing must be considered as an effect
of what man has done, an effect, which they never intended, do not understand and cannot
control.
Marx believed that alienation in all these forms would cease with the end of capitalism. It will
usher in communism signifying the socialisation of all productive forces; it is only through this
that production relations could be freed of exploitation, appropriation and the resultant alienation
in all the three forms. With the coming of communism, man will become himself and begin to
satisfy all human needs. However, capitalism will not end of its own volition; it is to be violently
thrown out with the help of revolution. Thus, violence, for Marx is therapeutic since it cures
man’s alienation; this is tantamount to arguing that the path to heaven passes through violence.
16.4 DEFICIENCIES OF THE DOMINANT PARADIGM
OF DEVELOPMENT
The basic feature of the dominant paradigm of development and some of its variants underline
the fact that acquisitiveness or avarice, as Adam Smith points out, is unquestionably the most
effective means of keeping man’s destructive passions under leash. But, avarice inevitably
leads to the proliferation of material needs. This, however, remains the cornerstone of
development as it is practised today. As a natural result of this, technologically induced and
sustained economic growth must lead to a system of a large-scale production system making
the advent of industrial civilisation unavoidable. As Adam Smith noted, augmentation of fortune
constituted a regular order of fact; even while it is the most vulgar, it is the most obvious means
by which, Smith insisted, the greater part of men propose to better their condition. A passion
that was condemned as one of the most deadly sins was elevated to the status of the regulator
of man’s destiny. It was also supposed to be most durable basis of social order.
The pursuit of self-interest thus stands at the centre of the dominant paradigm of development
and its variants. The pattern of development that takes its inspiration from the primacy of the
pursuit of self-interest neither creates riches for all nor does it promote development of man.
It has certainly created riches, but only for a few; it has also succeeded in checking despotism,
but has also installed state despotism that is popularly elected, as Alexis Tocqueville notes.
What is perhaps more disturbing is that it has distorted man’s development, reflecting a
phenomenon of mal-development.
Given the centrality of economic development as the basis of all round development, it
becomes necessary for man to focus his energies on the mobilisation and utilisation of resources
for satisfying his proliferating needs. This leads to the externalisation of man; it means that man
becomes simply the reflexive creature of external, largely material, objects which attract or
repel him, his relations to those objects, of course, being, to a great extent, determined by his
class and economic position. The externalisation of man signifies the suppression of the indwelling
divine being. This paves the way for man to become what Chhandogya Upanished characterises
Paradoxes of Development and Gandhian Alternatives
171
as kamachar (life engaged in satisfying desires) or, as Plato calls “the slave of many mad
masters”. Man’s slavery to his passions renders him a “broken totality” signifying a split in the
interior of man. This further leads to splits between man and society and between man and
nature.
These splits are the natural result of the ascendance of instrumental rationality that treats both
society and nature as objects. Instrumental view of the external world drains out all significance
from society and nature. Given the nature of man as nothing more than a receptacle of
interests, he must disengage himself from the external world and seek to mould it to his own
will to serve his purpose. That is why freedom is defined as the absence of constraints on
human action. But to define freedom in such terms is to give a free play to power drive that
transforms social relations into “war of one against all.” It depicts a situation in which everybody
must seek to have a privileged access to and control over scarce societal resources. Competition
is forced upon individuals because everyone has to fend for himself as his well-being depends
on the extent to which he can mobilise the necessary resources in a situation where everyone
else is engaged in a similar pursuit. In this competition, a divergence occurs between the good
of one individual and the good of all individuals. This is so for basically two reasons. First,
there operates a tendency in the economic system signifying that the very process of satisfaction
of wants creates wealth, to be sure; however, material growth, as Fred Hirsch points out,
creates new wants. The efforts to satisfy these wants create “divergence between what is
possible for one individual and what is possible for all individuals. Increased material resources
enlarge the demand for positional (that is, status-related) goods, a demand that can be
satisfied for some only by frustrating demands by others”.
Second, the pursuit of self-interest is both natural and rational. However, acute competition
for controlling resources by individuals and corporations is likely to collide with the realisation
of collective good. In promoting his own interest, the individual fails to confront in his own
action “the distinction between what is available as a result of getting ahead of others and what
is available from a general advance shared by all.” Failing to do so, “the individual who wants
to see better has to stand on tiptoe. In the game of beggar your neighbour, that is what each
individual must try to do, even though not all can” (Fred Hirsch, 1977, p.10).
These strategies underline the motivation of individuals, signifying the need to outdoing others
for comparative advantage. As a result, social co-operation, morality and social harmony
become the casualty of human cupidity. The competition of each against all does not imply that
all can succeed; some get ahead and a large number of people are left behind. In this unequal
race, only the rich and powerful can win. Thus inequality is not only aggravated, but also
deepened and perpetuated. Unable to secure equality by their own strength and efforts,
people have to depend on the state for attaining and enjoying equality. This allows the state
to become omnipotent by entering into various aspects of people’s life, regulating social
relations, and severely limiting people’s freedom of choice.
What the dominant paradigm of development does is to encourage what Gandhi calls the “act
of establishing the maximum inequality in our own favour”. This mentality accentuates the
affliction of inequality, facilitates exploitation and institutionalises domination. It also makes
social conflict endemic. It leads to ecological degradation brought about by the relentless use
of sophisticated technology that science has contrived. We seem to have reached a state
where the follies of man cannot be easily repaired. As Jonas observes, “we live in an era of
enormous and largely irreversible consequences of human action, in an era of what I call the
total and global impact of almost any of the courses we embark upon under the conditions
of technological might; and we must anticipate that these courses, once set in motion will run
self propelled to their extremes” (Jonas, 1969, pp.78-79).
172
Gandhi’s Economic Thought
The variants of the dominant paradigm of development are least helpful in promoting human
development. The reluctance to give up the idea of self-interest and the objective of a materially
prosperous life renders them theoretically unsound and pragmatically unhelpful in neutralising
factors that impede human development. When things go wrong, they propose not to heal the
psyche of man, but to change man’s exterior, that is, the society he belongs to. This is
tantamount to dealing with symptoms without focusing on the root cause that produces these
symptoms. As Gandhi observes, the standard of the kind of life that man must lead is in the
interior of man, not outside. He reiterates that it is not possession but possessiveness that is
the root cause of man’s problems. It is in this context that John Dewey’s saying that the
Cartesian dictum “I think, therefore, I am” is not as appropriate as the dictum “I own,
therefore, I am.” And yet, what I own does not either make me happy or even comfortable.
Moreover, it has not added to human well-being; rather, there operates the phenomenon of
increasing totals and decreasing margins.
16.5 PARADOXES OF THE MODERN PARADIGM OF
DEVELOPMENT
The dominant paradigm has led us from crisis to crisis, from bankruptcy to revolt and from
revolution to conflagration. Today because of the pursuit of this development the impact of
globalisation on contemporary society has become all-encompassing. Human beings are seen
as rational, self-interested persons, who economise- make cost-benefit analysis before reaching
a decision. Growth and development are understood in terms of consumerism and material
success. New Right philosophies and neo-liberal tendencies have given impetus to consumerism
and have globally affected public policies. The gap between the rich and the poor is widening.
Controversies such as Special Economic Zones (SEZs) have been witnessed in recent years.
Terrorism and extremism have become festering wounds. Instead of peaceful means of conflict
resolution, wars continue to be seen as a means of dispute-settlement. Dangers of environment
degradation have caused panic, thus putting the very survival of human race in jeopardy. In
their greed, world leaders find even the modest targets of Kyoto protocol unacceptable.
Leaving aside the upheavals that this paradigm of development inflicts, what are the advantages
by which it tempts us? It claims that the use of machines for production helps man to save
time and labour, to produce abundance to multiply exchanges between people and to bring
them into closer contact and ensures leisure for all. If it is true that it saves time then it is
surprising that where machine is the master one sees only people who are pressed for time.
The assertion that it saves labour too is not supported by experience insofar as wherever it
reigns, people are busy, harnessed to unrewarding, fragmentary, boring, repetitive tasks. Very
few have a peaceful family life. These jobs wear a human being out. It can be asked: Is this
saving of labour worth all the trouble? Development claims to produce abundance, but then
how is it that wherever it reigns, there also reigns in some well-hidden slum the strangest, the
most atrocious misery? More importantly, if modern paradigm of development is instrumental
in producing abundance, why then can it not produce contentment? Overproduction and
unemployment have been its logical accompaniments. If it is true that it has brought people
into closer touch, why have people become more intolerant?
The most paradoxical consequence is that man’s freedom has been put in jeopardy by the
market. In the pursuit of the “cargo cult” man has been robbed of his freedom of choice, does
not procure what he wants. Rather the producers of goods and services determine what he
acquires. As such, his freedom is given content by forces outside of him (Taylor, 1979, p.106).
We should also note two further consequences. First, the trans-market society has placed a
Paradoxes of Development and Gandhian Alternatives
173
premium on ever-escalating growth and has raised aspirations and expectations. However, as
aspirations keep proliferating, their very endlessness ensures that they must eventually encounter
frustration on remaining unfulfilled. This necessarily heightens social tension and puts a strain
on societal relations. Second, as the pace of industrial civilisation becomes fast, minority
alienation also amplifies. The erosion of traditional identity and its supportive structures have
stimulated radical movements with millennium hopes of laying the foundation of a new future.
However, these new beginnings fail to make any dent in obtaining harsh reality. As the
promissory note of a better future proves untenable, frustrations multiply; unrest escalates; and
social accord breaks down. With increasing unrest, differential characteristics of minorities and
ethnic groups become politicised and the system becomes crisis prone. It is paradoxical that
while traditional referents of identity have lost their sheen, they provide the basis for political
unrest and conflict. As a consequence, discord not harmony becomes the prominent attribute
of modern society.
16.6 GANDHIAN ALTERNATIVE
The preceding discussion underlines that as long as acquisitiveness and proliferation of needs
remain the corner stone of human development, the economic system geared to fulfill human
needs will have to depend on industrialisation. Once this choice is made, man’s externalisation
will eclipse his inner-being and the resulting alienation of man will create several fundamental
problems. Since life will remain mechanically organised, man will be unable to develop his
capacities to become human. Thus atrophy of man will be complete. It is against this background
that the Gandhian alternative assumes significance.
Gandhi’s primary concern is to remove this difficulty that man faces by denying the development
of his capacities to become human. This requires the reversal of the process of man’s
externalisation. Gandhi observes that in the West, they always think of raising the standard of
life for improving human condition, however how can an outsider raise the standard when the
standard is within all of us? This inner standard is the indwelling divine. As such, true development
of man lies in his effort to get closer to God. For Gandhi, the attunement of the soul to the
divine ground of being is the firm foundation of development.
To seek to come closer to God is to install an overseer in one’s interior who takes a critical
view at what man thinks and does. By installing this overseer man links his finite existence to
the absolute, which happens to be the source of truth, meaning and value. This linkage
between the finite existence of man and the absolute makes the requisite change in the inward
spirit possible. This change in the inward spirit occurs in the lived world. Two conditions must
be fulfilled to promote this change. Firstly, the conduct of different life activities- social,
economic, political etc., must reflect a commitment to and be permeated by the requirements
of the quest for change in inward spirit. To be sure, this quest proceeds in the lived world;
it must take note of the empirical reality that confronts man. There must, on the one hand, be
harmony between man’s inner life and his external life activities and, on the other, there must
also exist a harmonious coexistence between the members of society.
Gandhi equates economics with ethics. Economic life and relations must be guided by moral
values, as economics must serve the cause of justice. This is possible by promoting Sarvodaya.
The key to this is the principle that “we should “cease to think of getting what we can and
we shall decline to receive what all cannot get.” As Gandhi underlines, “Earth provides enough
to satisfy every man’s needs but not for every man’s greed.” To live according to this principle
is to emphatically put a stop to satisfying material needs beyond a limit. Gandhi recognises that
“a certain degree of physical harmony and comfort is necessary but above a certain level it
174
Gandhi’s Economic Thought
becomes a hindrance instead of help (CWMG, VOL.XXXV, p. 174). To cross this limit is
to allow it to degenerate into physical and intellectual voluptuousness”. Gandhi insists on
minimising one’s wants. One must resolutely refuse to have what millions cannot. However,
all must enjoy the necessities of life. It is only on this basis that economics will be able to shed
what Gandhi calls its “demonic” character. Also the internal and external aspects of man’s life
can be well harmonised and human happiness can be combined with mental and moral growth.
The troika of physical, mental and moral growth constitutes true human development for
Gandhi. With the synchronisation of all the three aspects, human development can be assured.
This development becomes instrumental in establishing a proper balance and harmony between
man’s internal and external existence, between man and society and between man and nature.
According to Gandhi, it is through the refinement of individuality that a healthy social set-up
is born. By the refinement of individuality, he meant changing life into a pursuit of truth, through
the twin paths of “aparigraha” and “ahimsa”. He says: “Man’s happiness really lies in
contentment. He who is discontented, however much he possesses, becomes a slave to his
desires. All the sages have declared from the rooftops that man can be his own worst enemy
as well as his best friend. And what is true for individual is true for society” (Ibid, vol.LV,
p.62).
Self-contentment and the consequent simple-living can curtail the wants of human beings.
Multiplication of material wants is the root cause of exploitation. Therefore, an individual has
to grow above the material plane of knowledge and experience and reach a higher level of
spiritual plane. Gandhi believes that spirituality should be reflected in the day-to-day affairs of
an individual. This spiritual dimension compels one to see a relationship between man and
nature. This sense of harmony along with self-contentment minimises the attitude of exploitation
of nature and fellow beings. Minimisation of exploitation and maximisation of happiness is the
essence of Gandhian philosophy of development. This can be realised only when the principles
of “aparigraha” and “ahimsa” are practised by the individuals in a society. Gandhi insisted
on ‘production by masses’ over ‘mass production” by machines (Young India, 13-10-1921,
p.325). It was also necessary to prevent the concentration of wealth. According to him, the
present use of machinery tends to concentrate wealth in the hands of a few in total disregard
of the teeming millions whose bread is snatched by it out of their mouths. Gandhi’s principle
of non-violence was not confined to dealing with human beings. He wanted to extend it to
dealing with nature. In effect, he deprecated the actions that degrade the earth, impoverish
nature by overexploitation of its resources and create inequality among human beings. He
pronounced a code of ethics for the society and the individual. Ethics, with truth ensconced
in the centre, guided all spheres of man’s life. His concept of ‘bread labour’ insists that
individuals do physical labour thereby raising the dignity of labour. To eliminate dominance and
exploitation, a system of self-governance of small communities was for him, the logical step
(CWMG, vol.LXIII, p.241). He emphasised devolution of political and administrative power.
He argued for Swadeshi, where the communities will conduct their business by consensus,
depend on the use of local resources for the satisfaction of their needs, but coordinate with
the neighbouring communities for mutual help. This, according to him, is true development.
16.7 SUMMARY
This Unit highlights the discontent aspects of the modern paradigm of development. It is
paradoxical that man, instead of turning inwards to attain ultimate happiness through spirituality
is taking recourse to the material wealth and multiplication of wants as the ultimate source of
happiness. Gandhi opposed this materialism. He was in favour of an economic system in
Paradoxes of Development and Gandhian Alternatives
175
which every person earned his bread by ‘bread labour’. Gandhi elevated economics from
a mere material plane to a spiritual plane and directly related the science of economics to the
science of life, which, he felt, would lead to the right kind of development.
16.8 TERMINAL QUESTIONS
1.
The modern paradigm of development promises a better life for all. Critically examine this
statement.
2.
‘The modern paradigm of development must be given up in favour of Gandhi’s idea of
development’. Analyse.
3.
In what way does the dominant paradigm of development differ from the Gandhian idea
of development?
4.
What, in your view, are the paradoxes of development? Can they be corrected or
overcome without adopting Gandhi’s worldview?
SUGGESTED READINGS
Roy, Ramashray., The World of Development: A Theoretical Dead-End, Ajanta Publications,
Delhi, 1993.
Hirsch, Fred., Social limits to Growth, Routledge & Kegan Paul, London, 1977.
Taylor, Charles., “ Growth Legitimacy and Modern Identity”, Praxis International, Vol.1 No.2,
1981.
Gandhi, M.K., Hind Swaraj, Navajivan Publishing House, Ahmedabad, 1921.
Wood, E.M., Mind and Politics: An Approach to the Meaning of Liberal and Socialist
Individualism, University of California Press, Berkeley 1972.
176
Gandhi’s Economic Thought
SUGGESTED READINGS
Ahuja , H.L, Modern Economics, S Chand & Company Ltd , New Delhi, 2004
Anand, Sudhir & Sen, Amartya., Sustainable Human Development : Concepts And Priorities,
Oxford University Press , New Delhi , 1994
Anjaria, J.J., An Essay on Gandhian Economics, Vora&Co., Bombay, 1945
Bakshi, S.R., Gandhi and Ideology of Swadeshi, Reliance Publishing House, New Delhi,
1987
Bahuguna, Sunderlal., Towards Basic Change In Land Use, INTACH Publishers, New Delhi,
1989.
Basu , S.K., Foundations of The Political Philosophy of Sarvodaya , Bliss and Light Publishers,
New Delhi, 1984.
Bawa, Vasant Kumar., Gandhi In Twenty First Century: An Alternative Approach to
Development, Prachee Publications, Hyderabad, 1992.
Behari, Bepin., Gandhian Economic Philosophy, Vora & Company, Bombay, 1963.
Bhole, L.M., Essays on Gandhi’s Socio- Economic Thought, Shipra Publications, New Delhi,
2001.
Bourali, Himanshu., Poverty of Gandhian Philosophy and New World Order , Abhijeet
Publications , New Delhi , 2004 .
Chauhan, Sandip., Demand for New International Economic Order, MD Publications, New
Delhi, 1997
Chauhan, Sandip., GATT to WTO Gandhian Alternative and NIEO, Deep and Deep, New
Delhi, 2001
Dantwala, M.L., Decentralized Economic Order , Kashi Sarva Seva Sangh Prakashan ,
Varanasi ,1961.
Das, Kumar., Rural Development Through Decentralization , Discovery Publishing House ,
New Delhi, 1990 .
Dasgupta , Ajit., Gandhi’s Economic Thought , Routledge Publishers, London,1996 .
Dasgupta , Ajit., Growth, Development And Welfare, Oxford Blackwell, London, 1988.
Das, Amritanandan., Foundation of Gandhian Economics, Center For the Study of
Developing Societies, Allied Publisher Pvt Ltd , New Delhi ,1979.
Deshmukh, S K., (ed), Trusteeship, Precepts And Practice, Link Publications, Pune,1985 .
Diwan, Romesh., Towards An Economics of Human Development and Gandhian Concept of
Swadeshi, Gandhi Marg, April (1981).
Diwan, Romesh, and Mark Lutz., Essays in Gandhian Economics, Gandhi Peace Foundation,
New Delhi, 1985.
Diwan, Romesh., Trusteeship And Decentralization, Gandhi Marg, Vol.1, January, 1980
Dutt, R.P., India Today, People Publishing House, Bombay, 1949
Suggested Readings
177
Gandhi, M.K., Khadi Why and How, Navajivan Publishing House, Ahmedabad, 1959
Gandhi, M.K., My Picture of Free India, (ed by Anand T Hingorani), Bhartiya Vidya Bhawan,
Bombay, 1965
Gandhi, M.K., My Socialism, (Compiled by R.K.Prabhu), Navajivan Publishing House,
Ahmedabad, 1949
Geeta , Alborl , Gandhian Doctrine of Trusteeship and Its Relevance To Modern Times, in
J .S Mathur, (ed), Gandhian Thought And Contemporary Society, Bharatiya Vidya Bhavan,
Bombay,1974 .
George , S.K, and G Ramachandran., (ed), The Economy of Peace : The Cause and The
Man, Peace Publishers, New Delhi, 1962 .
Ghosh, P.N., Gandhian Political Economy, Ashgate, Hampshire, 2007
Goel, S.K., Gandhian Perspective on Industrial Relations , Shipra Publications, New Delhi
(2002).
Gregg, Richard B., A Philosophy of Economic Development, Navajivan Publishing House,
Ahmedabad, 1959.
Gregg, Richard B., To Which Way Lies Hope? Examination of Capitalism, Communism,
Socialism and Gandhi’s Programme, Navajivan Publishing House, Ahmedabad, 1959
Ishwaran, K., Tradition In Economy In Village India, Routledge, London, 1966.
Iyer, Raghavan., Gandhian Trusteeship In Theory And Practice, Gandhi Peace Foundation,
New Delhi, 1986.
Jain, Pratibha., Gandhian Ideas, Social Movements And Creativity , Rawat Publications Jaipur,
1985.
Jha, S.N., A Critical Study of Gandhian Economic Thought, Lakshmi Narayan Publishers,
Agra, 1961.
Joshi, Nandani., Development Without Destruction , Navajivan Publishing House, Ahmedabad,
1992 .
Joshi, Divya., (ed), Gandhi on Villages, Mani Bhavan Gandhi Sangrahalya, Mumbai, 2002
Joshi, Divya., Gandhiji on Environment , Mani Bhavan Gandhi Sangrahalaya , Mumbai, 2003.
Kalelkar, Kaka., Mahatma Gandhi –Gospel of Swadeshi, Hindustani Sahitya Sabha, New
Delhi, 2004.
Kantowsky, Detlef., The Other Development, Vikas Publishers, New Delhi, 1980.
Kates & Robert., What Is Sustainable Development, Goals & Indicators, Values And Practices
In Environment , Holdref Publications, 2005.
Kelkar, Ravindra., Voluntary Poverty, Navajivan Publishing House, Ahmedabad, 1961.
Kher, V.B., (ed), Economic and Industrial Life Relations, Navajivan Publishing House,
Ahmedabad, 1960
Koilpillai, J Charles., Total Development : Essays Towards An Integration of Marxism and
Gandhian Perspective, Vikas Publishing House, New Delhi,1983
178
Gandhi’s Economic Thought
Kumarappa, J.C, and Mehta, V.L., Economics of Non – Violence, Hamara Hindustan
Publishers, Bombay, 1944.
Kumarappa, Bharatan., Capitalism, Socialism And Villagism, Sarva Seva Sangh Prakashan,
Varanasi, 1969
Kumarappa, J.C., Peace And Prosperity, The All India Village Industries Association, Wardha,
1944
Kumarappa, J.C., Gandhian Economic Thought, Vora & Company, Bombay, 1951.
Kumarappa, J C., Gandhian Approach to Economics, in Philosophy of Work and Other
Essays, All India Village Association, Wardha, 1949.
Kumarappa, J C., The Unitary Basis For a Non- Violent Democracy, All India Village
Association, Wardha, 1951.
Kumarappa, J.C., The Gandhian Way of Life, AIVIA, Wardha, 1952
Kumarappa, J.C., Public Finance and Our Poverty, Navajivan Publishing House, Ahmedabad,
1930
Lewis, W.A., The Theory of Economic Growth, George Allied Unwin Publishers, London,
1955.
Martinez – Alier, Jaun., Ecological Economics: Energy , Environment and Society , Oxford
University Press, London,1990.
Mashruwala, K.G., Gandhi and Marx, Navajivan Publishing House, Ahmedabad, 1960
Mathur, J.S., Essays on Gandhian Economics, Chaitanya Publishing House, Allahabad, 1959
Mathur, J.S, and Mathur, A.S., Economic Thought of Mahatma Gandhi, Chaitanya Publishing
House, Allahabad, 1962
Mathur, J.S., Industrial Civilization And Gandhian Economics, Pustakalya, Allahabad, 1960.
Mathur, D.N., Socio-Economic Mechanism of Indian Polity And Gandhi, North-Eastern Hill
University Press, Shillong, 1985.
Mehta, J.K., Fundamentals of Economics, Allahabad, Patshala Ltd, 1952.
Mehta, J.K., Gandhian Thought, Asish Publishing House, New Delhi, 1985
Mehta, Ved., Decentralized Economic Development, Khadi And Village Industries Commission,
Bombay,1964.
Myrdal, Gunnar., Asian Drama : An Enquiry In To Poverty of Nations, Pantheon, New
York,1968
Naoroji, Dada Bhai., Poverty and Un- British Rule In India, Publications Division, Ministry
of Information And Broadcasting, Government of India, New Delhi, 1961
Nayar, Baldev Raj., Globalisation and Nationalism: Gandhian Perspective, Sage Publications,
New Delhi, 2001.
Parida, Gunanidhi ., Ecology And Development In Conflict: A Gandhian Approach, A.P.H
Publishing House, New Delhi, 2000
Pasricha, Ashu., Gandhian Approach to Integrated Rural Development, Shipra Publications,
New Delhi, 2000
Suggested Readings
179
Patel, Asha., Gandhian Vision of Rural Development –Its Relevance In Present Times, Decent
Books, New Delhi, 2005.
Paulox, V.I., The Indian Capitalist Class, People Publishing House, New Delhi, 1994.
Purohit, B.R., (ed), Social Justice In India, Rawat Publications, New Delhi, 2003.
Rayalu, T.V., The Relevance of Bread Labour Today, Gandhi Marg, July, 1988.
Sachs, Jeffrey.,The End of Poverty: How we can make it happen in our Lifetime, Penguin
Books, London, 2005.
Schumacher, E.F., The Non-Violent Economic Order, The Observer, 1960
Schumacher, E.F., Roots of Economic Growth, Gandhian Institute of Studies, 1962
Sen, A.K., On Ethics and Economics, Basil and Blackwell, London, 1987
Shah, Ghanshyam., Gandhian Approach To Rural Development, Ajanta Publications, New
Delhi,1983.
Sharma, Jai Narain., The Doctrine of Wantlessness: A Gandhian Perspective, Gandhi Jyoti,
May, 1987, Vol.3, Bhagalpur University Press, Bhagalpur
Sharma, Jai Narain., Alternative Economics, Economics of Mahatma Gandhi and Globalisation,
Deep&Deep Publications, New Delhi, 2003
Sharma, Rashmi., Gandhian Economics: A Humane Approach, Deep & Deep Publications,
New Delhi, 1997
Sharma, R.C., (ed), Gandhian Environmentalism, Global Vision Publishing House, New Delhi,
2003.
Siddharthan, N.S., Industrial Development, Issues And Policy Options, Economic And Political
Weekly, May, 1986
Sinha, Manoj., Modernization and Ecology: A Gandhian Perspective, National Book Trust,
New Delhi, 2003
Sinha, S.N., Gandhian Philosophy of Sarvodaya, Classical Publishing House, New Delhi,
1990.
Tandon, Vishwanath., The Social and Political Philosophy of Sarvodaya After Gandhi, Sarva
Seva Sangh Prakashan, Varanasi, 1965
Upadhyaya, R.B., Social Responsibility of Business and The Trusteeship Theory of Mahatma
Gandhi, Sterling Publishers, New Delhi, 1976
Williams, Rushbrook L.F., India in 1917-1918, Social, Political and Economic Developments,
vol.1, Anmol Publications, Delhi, 1985.
(Compiled by Vijay Srivastav, Research and Teaching Assistant, School of Interdisciplinary
and Transdisciplinary Studies, Indira Gandhi National Open University, New Delhi)