Just How Much Of An Economist Was Gandhi?

Economist Gandhi: The Roots and the Relevance of the Political Economy of the Mahatma. Jaithirth Rao. Penguin Press. 2021. Price Rs 473. Pages 256.

In my younger days, I had read Alfred Schumacher’s Small is Beautiful which was supposed to be modelled on Gandhi’s village or self-sufficiency economics. I was also attracted by the work of Ilango, the panchayat union president in the village of Kuthambakkam (near Chennai), who was inspired by Gandhi’s idea of a village as a self-sufficient economic unit and tried to implement many of the leader’s ideas including on encouraging village youth to forswear alcohol, take up gainful employment and on keeping the village clean, etc.

But, I always used to think that the secret to the enduring appeal of Gandhian economics was that it was never tried with any great enthusiasm in independent India. Had it been done, it might have been discarded sooner. It had its good elements but it cannot be positioned as antagonistic to the need for scale and capital given that India’s population had exploded.

Second, the economic growth paradigm had shifted in favour of capital in the economies of the West. They industrialised rapidly based on technological advancement. In turn, it facilitated scale and necessitated more capital. All of these were the consequence of the shift in the relative cost of labour and capital caused by the Black Death which decapitated able-bodied men and made labour scarce and wages excessive.

Given its poverty and rural population, India needed to strike a balance between sufficiency economics and scale economics. One at the exclusion of the other would not have served India well. I am not sure Gandhi understood that.

Whether the appellation, ‘Mahatma’ fitted him or not is a discussion that will, forever, be inconclusive. It is inevitable that the judgement of a public personality will become more nuanced as time passes. Black or white evaluations will acquire shades of grey. Given that Gandhi started off with a huge advantage in this respect, the risk is entirely titled towards one side.

Notwithstanding the above, I picked up the book, ‘Economist Gandhi: The roots and relevance of the political economy of the Mahatma’ by Jaitirth Rao aka Jerry Rao (‘Jerry’ for us in the rest of the document) with genuine curiosity. I am lucky to be in an email group with him. Almost invariably, every mail that he sends out is a rewarding learning experience. The man is widely read and has a deep understanding of Indian and global history and Indian culture. Hence, the burden of my expectation on Jerry Rao was rather high.

Jerry Rao makes a sincere attempt at presenting the economist Gandhi to his readers. The problem is that he has very little to work with. Therefore, he is forced to be repetitive (There are 12 references to Gandhi’s approval of the Singer sewing machine) and almost pleads with himself and his readers to accept his premise that Gandhi thought deeply about economics.

We see that in the arguments that he presents to make the case that Gandhi was not opposed to machines and industry. Gandhi was a printer and he used a printing press. Gandhi travelled extensively in trains. Gandhi extolled the launch of a steam ship by the Scindias under the Indian flag and he was proud of the modern mills in Ahmedabad in contrast to the antique and appalling condition of the mills in Manchester. Jerry Rao presents these to make his case for Gandhi’s love of machines after stating rather upfront that “reading Hind Swaraj, one cannot but be left with the impression that Gandhi was opposed to machines, large-scale industrialization, and large factories.”

If Gandhi was not opposed to machines, per se, but that Gandhi’s concern seemed to emanate from his concern over what machines might do to human psyche at a subliminal level, then Gandhi would have made that clear in his writings in Hind Swaraj or elsewhere. The author does not produce evidence of such a nuanced distinction.

Jerry Rao’s statement that Gandhi’s support of free markets should not surprise anyone still manages to surprise the reader because he provides no direct evidence to support his assertion. However, it is gratifying to note that Gandhi set his face against state-imposed socialism and violent overthrow of the rich or confiscation of their wealth. Jerry Rao is on solid ground because he provides concrete and unmistakable evidence from Gandhi’s writings to that effect.

Gandhi’s view that violent approaches to re-arrange the balance between capitalist and the labour class would leave societies unstable afterwards has proved to be prescient.

Similarly, Jerry Rao cites Gandhi clearly expressing his preference for equality of opportunities and his acceptance of the inevitability of unequal outcomes given that all do not have the same capacity. Gandhi wrote that he would allow a person of higher intellect to earn more and that he would not cramp his talent.

This obvious logic eludes many these days and Jerry Rao does well to write, “Gandhi was more hopeful that he could and he would influence the wealthy, while the socialists were likely to continue as his critics and his political adversaries.”

Jerry Rao is surprisingly defensive in explaining Gandhi’s reading of the Gita. Gandhi read the document not as exhorting warfare but as describing the duel that went on perpetually in human minds. That is as good as it gets.

The Gita is a call to action without attaching oneself or one’s self to the fruits of action. It is not just to act without any concern for the fruits of the action. Even if the setting of the context for the ‘Upadesam’ (advice) was a battlefield, we should remember that the lord has gone to the Kauravas as a peace emissary before declaring that war was inevitable. Once it became inevitable that a war had to be and will be fought, he exhorted Arjuna, belonging to the warrior class, to do his duty or his swadharma.

In any case, the chapter on Gandhi and Gita does not necessarily fit into the book.

In the final chapter, Jerry Rao emphasises that Gandhi’s idea of wealth as an asset held in trust by the wealthy for the benefit of society is an appropriate antidote to the evils of modern capitalism. He is quite right on that.

Indeed, if much of the book had been dedicated to how capitalism could have served capitalists and the society equally well had it reflected the spirit of trusteeship that Gandhi advocated, it would have seated the economist Gandhi in readers’ minds more securely.

Clearly, the way capitalism has evolved in the last 40 years in the West with its ‘winner take all’ mindset has alienated the rest of the society. Just before the US presidential elections in 2016 and in 2020, many millennials said that they preferred socialism over capitalism. Although state-sponsored socialism is no panacea for the ills visited upon societies by capitalism, the alienation that the practice of capitalism has created could have been avoided, had the principle of trusteeship been imbibed.

In India too, businesses would do well to imbibe that spirit. It does not mean that all business persons should write away their wealth as they approach the autumn of their lives. It is about how they conduct themselves while they run businesses or lead enterprises. Compensating themselves versus compensating employees and payment to suppliers on time are two examples. India has one of the highest managerial compensation to median compensation ratios in the world.

Further, stories of how large businesses starve small suppliers of working capital by delaying payments or not paying them at all are as tragic as they are legendary. The contribution of Indian packaged manufacturers to Indians’ obesity, diabetes and other health complications is through their stubborn refusal to attach colour codes to the healthiness of their products. These are some examples of how the notion of trusteeship is missing in action in India.

Wealth inequality has worsened the most in India and China in the last 30 years according to the Global Financial Stability Report of the International Monetary Fund published in April 2020. Gandhi’s exhortation thus remains highly relevant.

The book would have made an important contribution by discussing in depth some of these issues.

It is true that Adam Smith’s Theory of Moral Sentiments is likely more relevant for the twenty-first century than his Wealth of Nations. The latter might have fitted with twentieth century capitalism. Andrew Haldane, former Chief Economist of the Bank of England, said as much in his remarks to the Post-Crash Economics Society at the University of Manchester in 2010. The PCES created by students at the university sought to remake and redesign the economics curriculum. They failed.

Further, the Covid-19 pandemic that the world is still dealing with might have lent some credibility to Gandhi’s views on decentralised village-centric and dispersed economic growth. Urban agglomerations are easy prey to microparasites. Dispersed economic activity and sufficiency economics are worth re-examining because they may be good for the environment and good for our health. Hence, a thorough examination of the relevance of Gandhi’s self-sufficiency economics for the twenty-first century with some suggestions for avoiding the pitfalls of protectionism that might come with it as a package would have served policymakers and the readers well.

The exasperation of the intellectual-cum-thinker Jerry Rao with the mission that the writer Jerry Rao has undertaken comes through rather clearly in the chapter on Adam Smith and Gandhi. Sample these:

So where do all these hair-splitting discussions and our hypotheses of Gandhi’s thought processes leave us, apropos of his views on property, wealth, trusteeship, capitalism, socialism and so on?...

Attempting to make an intellectual connection between Gandhi and Adam Smith, the ‘father’ of economics, may appear to be a formidable task, given that Gandhi is popularly associated with asceticism and anti-industrialism….

…. I submit that my approach in seeking parallels between the agnostic Adam Smith and the religious or spiritual Gandhi is not particularly convoluted or unrealistic….

….The attempt to establish an intellectual linkage between Smith and Gandhi should not be seen as trying to force a square peg into a round hole….

….It is easy to dismiss evidence of congruence between the agnostic Scottish economist and the religious Gujarati Bania politician as merely digging up isolated quotations out of context and trying to force-fit analogies and similarities.

One praiseworthy section of the book is the one that deals with Gandhi’s views on the appropriate education curriculum for the independent India. Jerry Rao’s passion and conviction shine through rather well in his exposition of ‘Nai Talim’ and its relevance to modern India. ‘Nai Talim’ placed a lot of emphasis on vocational training and apprenticeship.

Independent India had given short shrift to vocational training. It was looked down upon.

Academic degrees were coveted more than the acquisition of practical skills and vocational skills. With all his marketing wisdom acquired through stints in consumer banking and computer software entrepreneurship, Jerry Rao points out the flaws in some of the language used to propagate the idea of ‘Nai Talim’. That was perceptive. Words matter and the imagery they convey matter. They are key to the difference between success and failure. Also, his short biography of J C Kumarappa, who was an ardent champion of ‘Nai Talim’ is very informative and instructive.

Another important message, although it is not relevant to the title of the book, is in Chapter 3:

The key learning from this exploration of Ahmedabad’s business history is that social institutions like the Mahajans and the Nagarsheths seem to have had an amazing continuity across rigid periods of history (the rigidity being in the eyes of the beholder rather than in the historical events themselves) and that the ‘theoretical framework’ that Banerjee et al. posit, which is simultaneously Indian and universal, can arise from the actual workings of these social institutions. Some of the nuances of these theories are waiting for those who have eyes to read the humble Gujarati khaatapatras, not just Latin-laden common law case histories or William Jonesian Sanskrit texts,...

By and large, Indians have not invested in learning about India through Indian experiences, Indian lens. Although this has nothing to do with Gandhi, the economist, it is an important message from the book.

In the final analysis, in his well-meaning desire to establish that Gandhi had well-formed views on economics and economic policy, I feel that Jerry Rao has strained too hard without much to show for it.

Perhaps, he has served up an appetiser and that the main course will follow.