Gandhi And His Economics

Gandhi was not an easy man to comprehend, especially when it came to his economics. One reason for this is that he arrived at his conclusions through a moral understanding of the universe, and not by thinking about growth or investment or demand and supply. This is why his economic ideas are difficult to slot in the Left-Right-Centre range of ideas, or the Communism-Socialism-Capitalism range of ideologies.

It is thus best to discuss his ideas in terms of broad themes, test them against current realities, and then conclude whether he has been prescient or foolish in his proffered solutions. Gandhi believed in Swadeshi, in rural self-sufficiency, in cottage and small industries rather than big industries, in less mechanisation and more labour input in production.

Despite being surrounded by many businessmen who bankrolled the Congress party during the freedom struggle, he did not think capitalism was the answer to India’s needs. But he did not believe in textbook socialism either and said:

“I have looked up the dictionary meaning of socialism. It takes me no further than where I was before I read the definition.”

He was probably a socialist by instinct, but without its rigid orthodoxies. He felt that a capitalist with a benevolent heart was the right answer. “No doubt capital is lifeless, but not the capitalists who are amenable to conversion.” He felt that the rich must hold their wealth in trust on behalf of the whole of society. He said: “Real socialism had been handed down to us by our ancestors who taught: ‘All land belongs to Gopal’.” In other words, the good capitalist is one who thinks of society before his own profits.

If you take the moral element out of Gandhi, you cannot understand his economics. But since it is not our purpose here to discuss his morality, we have to parse his ideas for their economic content in order to figure out where his ideas have been relevant, where they have failed, and where they could be proved right in future.

Let’s start with a core Gandhian idea—swadeshi. Today, interestingly, only RSS thinktanks hold the idea dear. In purely economic terminology, swadeshi is not too different from modern-day protectionism. Gandhi seemed to suggest as much when he wrote in one of his essays that “India must protect her primary industries even as a mother protects her children against the whole world...”. On another occasion, he wrote: “Much of the deep poverty of the masses is due to the ruinous departure from swadeshi in economic and industrial life. If not an article of commerce had been brought from outside India, she would be today a land flowing with milk and honey!”

India became a land of milk surplus and Dabur or Patanjali honey only after we abandoned swadeshi. But Gandhi’s swadeshi was not really inward-looking; it was more about promoting the idea of self-sufficiency and independence, less about just keeping imported goods out. “True swadeshi is that alone in which all the processes through which cotton has to pass are carried out in the same village or town.” This tied in with his idea of self-sufficient village republics which are governed democratically and produce all the basic things they need inside the same village. “My idea of village swaraj is that it is a complete republic, independent of its neighbour for its vital wants, and yet interdependent for many others in which dependence is a necessity. Thus every village’s first concern will be to grow its own food crops and cotton for its cloth. It should have a reserve for its cattle, recreation and playground for adults and children. Then if there is more land available, it will grow useful money crops, thus excluding ganja, tobacco, opium and the like.”

Gandhi’s village republics were posited as inimical to large-scale industrialisation as visualised by his successor Nehru. Unlike Ambedkar, who saw villages as cesspools of corruption and bigotry, Gandhi saw India’s future in its villages, and he pitted large-scale industry as being dangerous to the idea of the village republic and small business. He wrote: “I would say that if the village perishes, India will perish too. India 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. Industrialisation 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.”

Gandhi’s flawed ideas on cottage units and the debunking of large-scale industrial production made India miss every possible bus on the road to rapid industrialisation. Nehru compounded this folly by making the State the engine of industrialisation. We also created unviable small businesses by protecting them, and prevented them from growing in scale. We privileged smallness and import substitution all the way to 1991 when bankruptcy made us see sense.

The mix of Gandhian morality and Nehruvian statism gave us the worst of both worlds. It needed a member outside the Nehru-Gandhi consensus and an external crisis to take India out of the Gandhian paradigm.

Gandhi’s idea of everyone producing all his needs by himself and self-contained villages would be bizarre in today’s interdependent world. But is it all that bizarre in a post-internet, post-global world where growth is driven by services rather than manufacturing or agriculture? Is it all that unreal in a world where individuals can earn by doing jobs at remote locations, delivering services from home or office? If we assume that both manufacturing and agriculture will be substantially mechanised, creating very few jobs, we will all be living and working in our virtual village republic, linked by email, social media, Facebook, Twitter, and what-have-you.

The digital world has made the world a potentially self-sufficient village. Gandhi lived in a different world. It is inconceivable that he could have visualised this change. His idea of a village republic was wrong in the way he conceived it but has come true in a way he could not have imagined. India’s future is in urbanisation, but our urbanisation will be as part of the global village.

In the new world of automation and globalisation and localisation, where formal sector jobs will shrink, our future depends on self-skilling, self-employment and self-upliftment—exactly what Gandhi would have wanted. Self-empowerment, with governments and businesses playing enabling or supportive roles, is the future. Non-profits will have a large role to play in this brave new world. Pretty Gandhian, one should say.

The second Gandhian predilection relates to his aversion to automation and machinery. He saw physical work as ennobling and eulogised this with his embrace of the outdated charkha. If today’s digital world is inconceivable without large-scale automation, Gandhi seemed like the ultimate Luddite. He believed that machines ought to be built around men, and not the other way around—of men adjusting to assembly lines. If Gandhi had had his way, Ford would never have set up the Model T assembly line. He believed in low-tech, not high-tech. Hear his views on machines and automation: “My machinery must be of the most elementary type which I can put in the home of the millions.” And further: “I would not weep over the disappearance of machinery or consider it a calamity.”

But innovation and miniaturisation have gotten around the Gandhian rider that machinery must be small enough to enter the homes of millions, and that is exactly what is happening.

From the laptop to the smartphone, machinery and gadgets have not only entered the home, but also your pocket. Machinery has become empowering in a way which even Gandhi may not have objected to. What he would have objected to was our excessive dependence on it, and our slavish abandonment of human values by making machines and gadgets our new gods.

At the deeper level, what Gandhi really objected to was the exploitation of man by man, and this is where his objections to machines and automation and capitalism came from. Thus, even as he believed that “capital exploits the labour of a few to multiply itself,” he equally saw that organised labour could become a menace if it was not self-restrained. While the Congress party was at the forefront of strikes and hartals during the freedom struggle, Gandhi himself had this to say: “Strikes, cessation of work and hartal are wonderful things, no doubt, but it is not difficult to abuse them.” In fact, he abhorred concessions dragged out of employers by using the coercive power of strikes. His morality cut both ways, and he did not see capital and labour in perpetual conflict, as long as each of them focused on its own dharma.

Perhaps, the most interesting idea Gandhi propounded, which kept him untainted by the failures of capitalism (2008) and socialism (1989) in our times, was his idea of trusteeship. By trusteeship, Gandhi meant businessmen should run their enterprises for profit, but the wealth created should be used not for personal aggrandisement but to benefit the whole of society. This idea was accepted by the Tatas, who put all their shareholdings in trusts so that the profits not required for growth could be channelled back to society in some ways.

Gandhi did not fully expand on his ideas of trusteeship beyond a broad principle, and this is how he put it: “Supposing 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 that wealth does not belong to me; what belongs to me is the right to an honourable livelihood, no better than that enjoyed by millions of others. The rest of my wealth belongs to the community and must be used for the welfare of the community.”

Gandhi was clearly not against wealth creation, but he was against its egregious use for personal ends.

In many ways, the idea of trusteeship—though not in the way Gandhi may have conceived of it—is catching on in the west. America’s wealthiest billionaires are adopting what is called “The Giving Pledge”, under which they give up more than half their wealth for charitable purposes. Warren Buffett, the iconic investor, began this programme some years ago along with a few other billionaires, including Bill Gates.

Today, more than 150 billionaires have taken the pledge to donate more than half their wealth to philanthropy, including Mark Zuckerberg, Vinod Khosla, Elon Musk, Larry Ellison and David Rockefeller. Back home in India, our IT billionaires, from Narayana Murthy to Azim Premji and Shiv Nadar, are committing crores to philanthropy, though the giving tendency is yet to go mainstream. Perhaps, it is a matter of time before they too start thinking of themselves as trustees of the wealth they inherited or created.

Gandhi may or may not be the last word in modernity, but his moral force is working in many ways even with the wealthy.

Gandhi’s core ideas—swadeshi, village republics, small businesses, self-employment, dignity of labour, and trusteeship of wealth—are all anachronistic in today’s digital world, but somewhere his moral principles have driven change in the direction he desired. He was right in some ways, but often for the wrong reasons.

Acknowledgement: Many of the quotes and attributions in this article have been gleaned from S.R. Tikekar’s book Epigrams from Gandhiji.