By Ranjit Chaudhuri
Dean of Studies, Institute of Gandhian Studies, Wardha
The Most important task before a student of Gandhian economics has been to
define in a distinctive way Gandhian object of economics which separates
Gandhian economics from the mainstream economic tradition of Adam Smith. It is a
fashion to say that Gandhi has not been a professional economist. Whatever
Gandhi has written about economics has not been written in the language of
economics. So the mainstream economics, known as professional economists, tend
to ignore Gandhian contributions. But Gandhian economics, whether it is called
by that name or by any other name, is gradually occupying the imagination of
thinking people. We should analyse the crisis that is tormenting the mainstream
economics, and then we can understand why Gandhian way offers a viable
alternative.
Economics as a discipline had a history of more than two hundred years. The
appearance of Adam smith's book An Inquiry into the Nature and Causes of Wealth
of Nations in 1776 is generally taken as the beginning of economics. Adam Smith
defined the object of economics in the following words. He said, "The object of
the political economy of every nation is to increase the riches and the power of
that country". To Smithian economics wealth and power of a collective entity
called nation or state is the most important. Nation's power increases with more
and more production. That being the primary object of economics it ignored
humankind completely. Production increases employment, employment increase
income, income increases demand, demand increases and more productions. This is
the chain of developmental logic. Basing on this logic there have been unchecked
production. Production is not based on need. Demand is artificially created.
Neither production nor demand is based on spontaneity. That is why production
has seldom rationality. Gradually a pessismism has grown about the future of
production-centric economy. There are a number of valid reasons for this.
Firstly, growth rate is significantly coming down globally. The affluence of
Western Europe and the United States has been decreasing. Secondly, growth means
reduction of poverty. Today world-wide employment is falling and unemployment is
increasing. So the misery of labourer is on the increase. Thirdly, inequality
has been alarmingly increasing. It has been found that the top 1 percent gets 90
percent of total income gain in the USA and Europe. This trend is found
prevalent in all the developing economics. Fourthly, wages have been falling. It
was found that level of education has increased but the wage level has been
falling. As the economic crisis deepens labour becomes flexible and labour
market is becoming deregulated. Labour has further become dispensable due to
technological innovation. Now technology is used almost blindly. Lastly, more
important point is that with indiscriminate production the problem of scarcity
of input in the form of raw material is increasing. Industrial Revolution began
with abundance of mineral resources. They are being now exhausted. The
resource-rich countries are fast becoming resource-poor.
During the latter part of the twentieth century
global economy has been experiencing a new phenomenon. It is the phenomenon of
unification and competitive globalizations of economy. This is a development
which took place in the last two decades of twentieth century. Before that the
majority of countries were following controlled economy. Following the model of
soviet economy and so called welfare economy almost all countries ere practicing
protectionism in different degrees. As a result capital and technology remained
confined to a few developed countries. Initially the developed countries
prevented them form exporting to less-developed counties of Asia and Africa.
Today the developed countries are ready to transfer both capital and technology
to the less-developed countries. This is a new phenomenon which has brought a
new character to world economy.
Another development is the globalization.
Globalization means easy entry of any country to another country to trade and to
build industry, to invest and to have access to raw materials. This is a
neo-colonial device by the developed countries to maintain their full control
over the world market. Production needs expanding market. Rapidly investment
opportunity is shrinking. By abolishing tariff barriers one can make the whole
world open for investment.
The demand for globalization and liberalization
came not from less-developed countries but from developed countries. All kinds
of pressure tactics have been adopted by the developed countries to compel the
less-developed countries to accept the globalization, liberalization and
privatization. The industrial countries try to convince all other countries that
globalization is the compulsive necessity for all. Their logic is that low
growth economy gets capital and technology from the developed countries to build
their economy on high growth rate and the developed countries get markets for
their products. They try to conceal the fact that whole control of economy goes
to the developed countries.
The ultimate goal of globalization is to sell
more production. People today demand more goods, not because their real need
have increased but because their psychological prosperity to consume has been
increased through mass media. When we examine production analytically, we find
that increasing production leads to waste of resources, both natural and
mineral. The waste does not appear as waste because it comes in the form of
industrial and consumer goods.
Commodity fetishism of technocratic society has
created a superstitious psychology and erroneous notion regarding progress and
development. It can be said that few people and few nations has become rich. But
the world has definitely become poor. Apparently the world seems to be affluent.
Wealth of a nation, as the summation of goods produced in the boundary of that
nation, apparently shows the sign of progress. Whereas taking the total stock of
global categories of global resources have perceptively decreased.
Industrialization has made earth poor in respect or natural resources, fossil
fuel, mineral resources, greenery, maritime resources, sanitation health and
ecology.
Production has created its own problems. These
is no organic relation between production and needs. Production does not grow
out of needs. In industrial society production has its own dynamism. The
dynamism arises out of scale of production. The large-scale establishment is the
logical development of technology. Economics of scale become a myth if
considered from human management. Technology has a totalitarian connotation
which ushered in the role of technology. Giganticism is besieged with structural
problems besides many more social and human problems.
The issue before the global economy today is
the production verses employment. The important problem in the respect is the
problem of constant conflict between production and employment. The goal before
the industrial unit today is the maximization of employment. It is almost
axiomatic that more production leads to more employment. But in the operative
scale production is growing at a much faster rate leaving wide gap between the
two. This has been possible due to increasing reliance on technology. Employment
has become the first victim of technology. Unbridled production now marginally
generated employment. Technology after a certain stag replaces employment.
At the same time conceptually we cannot think production will ever go on
increasing. Daniell Bell pointed out: "Any growth which is exponential must
reach a point of absurdity". The crucial task is to find out criticality of
production point at which technology does not replace employment.
Technology intoxicates the people. Technology
and technocratic view of society ahs had a sweeping influence on the life of the
people. Hedonistic concept of technology was never questioned. All efforts have
been made to ensure freeplay of private enterprise. Competitive market economy has
started replacing social well-being. Protectionist measures are rejected
in favour of free trade. Subsidies as methods or protection are discouraged. Losing
concerns are allowed to die. Profit-making has achieved inviolable sanctity in
industrial theology. Government interaction in support of the weaker sections
of society is not favoured. Labour is treated in a cruel manner. Gradually
collective bargaining is not allowed. Job security is totally denied. To declare
lock-out in an industry is the prerogative of management. Management has no
responsibility to consult the workers lay off at any time is permitted
but the strike is not justified. Disinvestment has become a new religion of
industry giving farewell to public sector.
Market economy believes in capturing market by
ruthless elimination of rivals and conquering their income. Market economy
quickly converts this wealth in furthering inequality. Through mutual funds
people are forced to become involuntary investors in business. By accumulating
small savings, business houses collect huge funds from investment. This wealth
further generated inequality. Capitalism grew through the classical accumulation
process. It is acquired through a gambling house called stock exchange. Money
market is a corrupt economy made more corrupt by gambling effect of stock
exchanges. Stock exchange having wide linkages all over the world through
similar stock exchanges makes the money market a closed system. So the
small investors are helpless in relation to corporate bodies.
The functionality of the competitive market
economy is argued in terms of its cost-efficiency and service-efficiency. The
claim is based on doubtful evidence. There are literatures which are
purposefully made to prove that market economy is better in terms of efficiency.
The methodology used for measuring efficiency has its shortcomings. It failed to
take into consideration the imperfection of market. It is silent on market
failure. Studies of some companies in different parts of the world are now
available. In these studies some selective indicators for the assessment of
efficiency are taken. The selective indicators have been labour productivity,
total factor productivity, enterprise profits and growth in value- added per
employee. The criteria are chosen almost arbitrarily. In these categories
welfare criteria are shrewdly avoided. Private companies operate only in the
fields where profits are high and risks are low.
When we talk of efficiency, we need to be clear
what we mean by efficiency. Efficiency may mean efficiency for earning profits
for business houses. In that sense efficiency does not bring any benefit to
public. It does not bring efficiency at social level or ecosystem. Efficiency is
a highly loaded word. Nuclear source of energy may be a highly efficient source
of energy, is it efficient for environment? In the name of efficiency when there
is huge lay-off, we cannot take it as efficiency.
All the same time, enormous problems are
developing in the agricultural field in India. Indian agriculture is a
combination of capitalist agriculture and peasant agriculture. Myron Weiner has
defined them in the following way in his book. The Indian Paradox: "Capitalist
agriculture is considered as production for market and for profit, without
regard to whether wage labour is employed or how much mechanization there is,
and peasant agriculture is a form of production which does not go to market for
profit." Gradually competitive market economy has entered into Indian
agriculture with the system of patent rights. Through the system of patent
rights a speculative element has entered into our peasant economy. There is a
threat that controlling position in agriculture will go out of peasants' hands.
Marx did not exaggerate when he said that capitalist agriculture was not only a
move towards robbing the labour but also robbing the soil, because both farm
products and non-farm products will gradually come under the control of the
speculative elements. There may be difference and distinction between ownership
and control of assets. The farmers may own the assets but for all practical
purpose they may not fully control the assets.
It is therefore no more axiomatic to hold that
industrialization will bring prosperity, efficiency and progress in the society.
On the other hand, there are enough indications that industrialization an
indiscriminate production rapidly impoverish the world. The present world will
gradually find an unusual severity of economic crisis which according to
Schumpter, is caused by vanishing investment opportunity. Gradually all big
thing started appearing ugly and the small looked beautiful. The shadow of
smallness is haunting the world.
Here comes the importance of Gandhian economy.
If we look at global economy analytically, it becomes difficult to say that the
people are engaged in economic activities only to increase wealth of their
nations. Wealth of a nation in economics is estimated in terms of the Gross
National Products (GNP). By exploiting more and more natural resources GNP is
increased. What is development? Is it more and more production only? Development
should have some relation with human values and human qualities. It is said that
human quality does not improve as long as poverty and misery remain. Then the
question can be raised, in terms of human quality are the developed countries in
any way better? Are the rich countries going towards good society or sane
society? We are more concerned about decline of profit of business houses. We
are less concerned about degradation of human quality. As if profit is
development, human quality is not. To Schumacher "Development does not start
with goods, it starts with people....." We have been able to create prosperous
countries, but we have failed to create better and better human beings.
Prosperous countries are in no way good societies. Both poverty and prosperity
degrade.
That is why Gandhi advocated neither an
affluent nor a poor society. Gandhian paradigm of development is based on this
principle. This can be called an economy of Swaraj-an economy of self-reliance.
Economic activities cannot be abstracted from human life. Long ago this was
systematically argued by Sismondi. He said the real object of economics should
be man. To give importance to wealth and to ignore the human being is to distort
the goal. He propounded a theory in which he said that distribution must combine
with production. Gandhi's design moved in that line. Gandhi also wanted to
ensure distributive justice and wanted to see that production and
distribution were to be simultaneous. Sismondi realized the danger of
over-production. That was why he wanted to employ the state in curbing
production. Gandhi was attracted by the concept of a simple society of Tolstoy
and Ruskin.
The basic hypothesis of the Gandhian system is
"Earth provides enough to satisfy every man's need but not for every man's
greed". Global system makes common people completely helpless in the matter of
production and distribution. Gandhi visualized that it can be solved through the
choice of technic of small scale production and through the system of Swaraj.
Swaraj is necessary for the liberation of weaker economics from the
commanding position of developed countries. Weaker countries were vainly
struggling to achieve the level of growth of developed countries. The growth
rate of the developed countries is a historical accident. It is doubtful
that any of the developing countries will attain that level. It is equally
doubtful whether the developed countries can sustain that impressive growth
rate. It is to be realised that colonial foundation of the liberal economy is
gradually coming to an end. Economic leadership of the west is being eroded.
Comparative performance of the countries are only marginally meaningful.
The dangerous game of competitive affluence
should be abandoned. It is becoming compulsive for the survival of the economy.
Productivity is still based on overcapacity, which creates the crisis of
survival. The concept of swaraj is not an idealistic design. There is need
for new conceptual framework in which each country attains swaraj. In
Gandhian system every country stands on its own strength.
The components of swaraj are based on two
independent variables-psychology and ethics. Since resources are scarce,
production cannot be increased indefinitely. Psychology of affluence is an
irrational phenomenon. The basic principles of economic activity are
based on needs and not on
affluence. Affluence breeds inequality, as it is based on economic distortion.
Greed grows out of desire to be affluent. Human desire can be expanded to
unlimited scale. This is true. But human desire also can be reduced. This is
also undeniable. The crucial role is played by psychology. Values which
condition the mind can change human behaviour. The goal of swaraj brings limits
to human wants, and it also limits monetary gains. In the present economic
system even after a very impressive turn over, no one says he can stop now, that
he has enough. Enough is a word not to be found in the dictionary of economics.
To Gandhi economic activities are not excluded
from other activities. Economy is a part of of the way of life which is related
to collective mind and collective values. Economic activities cannot be
abstracted from human life. Gandhi wanted to ensure distributive justice and
wanted to see that production and distribution were not separated. The danger of
unchecked production has produced a number of complex problems rooted in
economic , social and environmental life. Economics of swaraj is related to
total life.
If economic swaraj is taken to be the goal it
is necessary to determine the ingredients on which it is based. First Gandhi
put adequate importance to traditional sector. Highest priority is given to
agriculture and agro-centric industries. The balance between primary, secondary
and tertiary sectors should be skillfully made on the basis of available human
resources. Direction of development is also very important. Directionless
development, in the present form, ends in crisis. Two, villages must get more
importance than cities. It is a dogma to say that by shifting population
from traditional sector to industrial sector the problem of unemployment can be
solved in the less developed countries. This idea is based on colossal ignorance.
For example, India has about 627 thousand villages and only four thousand urban
centers. It is absurd to believe that the swelling population of 627 thousand
villages will be employed in four thousand cities. It is equally absurd to
believe that by transferring population from village to cities everybody will
get factory employment.
Gandhi advocated wide use of technology of
being self-reliant. To make village self-reliant Gandhi said, "There would be no
objection to villages using even the modern machines and tools that they can
make and can afford to use." In fact he was in favour of giving technology to
everyone. His plan was to take technology to the grass-roots level. In his scheme
human beings control technology and technology does not control the human
beings. His policy of increasing human skill in the furthest corner of the country
was visualized by bringing qualitative changes in socio-economic field. The
method was Basic Education. Gandhi wanted to develop the foundation technology
in every part of the country through Basic Education.
The enormous complexity of productive apparatus
of present industrial society fails to develop inner capacity to sustain moral
problems. It wrongly emphasises ethical neutrality of productive method. Social and moral
consequences of economic activities are unreasonably and arbitrarily excluded from welfare concept. Welfare cannot always be determined in
quantifiable terms. It should be conceived in totality, in terms of integrity of
individuals.
Gandhi's position should be understood in this
perspective. In the past agrarian economy declined under the transformation.
Structural transformation is hailed by them for it has liberated economy from
the bondage of feudalism. But still there are more than two million villages in
the world and the number of cities is only few thousand. Few thousand
cities cannot give employment to the people of two million villages.
In this regard it is interesting to quote Marx
to find how Gandhi and Marx came close to each other. In German Ideology
which Marx wrote jointly with Engels and published in 1845-46, they mentioned
that in communism "(It is) possible for me to do one thing today and another
tomorrow, to haunt in the morning, fish in the afternoon, rear cattle in the
evening, criticize after dinner, just as I have a mind, without ever becoming
hunter, fisherman, shepherd or critic." Such a simple society is close to
Gandhian village system where division of labour does not exist. Marx's
communist society can come if the society becomes simple idyllic in nature. So
again in the The Critique of the Gotha Programme, Marx wrote:
The enslaving subjugation of individuals to the
division of labour, and thereby the antithesis between intellectual and physical
labour have disappeared........ when the all round development of individuals
has also increased their productive powers and the springs of cooperative wealth
flow more abundantly.......
Marx like Gandhi believed in need-based
consumption. He announced his maxim, "from each according to his abilities, to
each according to his needs."
Performance of Gandhi's system can be tested by
the application of seven criteria. The seven criteria are:
I) eradication of poverty and minimization of
affluence.
II) Self-sufficiency of every unit in basic
needs
III) Identification of human needs and their
fulfillment
IV) agro-centric economy as the basis to create
economy of permanence
V) Need-based production as far as possible
through small-scale units
VI) check on distortions through basic
education and skill formation, and
VII) curtailment of concentration of economic
power
The value-judgement of Gandhian system is quite
clear. Here the criteria of performance are different from mainstream criteria,
In Gandhian criteria, what is produced is to be judged along with how it is
produced. Its buoyancy depends upon restructuring the rural economy. Gandhi
observed: "You cannot build non-violence on a factory civilization, but it can
be built on self-contained villages........ You have, therefore, to be rural
minded. You can be non-violent, and to be rural-minded you have to have faith in
the spinning-wheel."
Gandhi is one of the pioneers of
interdisciplinary approach to economics. In his thought economics cannot be
separated from health, and health cannot be separated from sanitation, and
sanitation cannot be isolated from nutritious food, etc. In his thinking all
these stand ins close relation with each other.
Those who call themselves pragmatic feel that
there is an overtone of idealism is Gandhi. So, it is thought, that his system
has a doubtful applicability. His hypothesis is never tested. There is a
tendency to reject it without verification. The fact is the present system of
economy is dominated by vested interests. Whether Gandhi's ideas will be
accepted or rejected largely depends on availability of raw material. To call
Gandhian economy an ideal system is to ignore what is real. Reality changes with
the necessity of life. Without entering into a philosophical polemics, it can be
said, reality is not always real. The system which cannot be sustained is not
real. The permission of global competitive economy generates optimism of
Gandhian economy.
Source: Essays on Gandhian Thought from
Institute of Gandhian Studies, Wardha
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