Professional Documents
Culture Documents
ABSTRACT
Gandhian economy was different from conventional economics. His economy was based
justice in income distribution and opportunities. Everybody should be given the right to
earn according to his capacity using just means. The rich should serve the society after
satisfying his needs. Life is not meant for enjoyment only, but it is meant to help others.
For him the means are as important as the aims. The means must be nonviolent, ethical,
and truthful in all economic spheres. He provided the new economic system with those
technology, and first priority to rural India. He explained that capitalism and
not survive as it was inhuman. We have seen the collapse of communism and also
2| Page
observed unemployment, inequality of income and instability of common man even in rich
a capitalist society.
He advocated developing the rural economies with the development of agriculture and
village industries. This way full employment for 80% of Indian population can be
achieved. Even in the world economy nearly 70 % of the world’s population is rural
population. Their development can be made easy by the development of rural economies.
There should be small scale and cottage industries in these areas. That will create just
Mohandas K. Gandhi was born in 1869 to Hindu parents in the state of Gujarat in Western
India. He entered an arranged marriage with Kasturbai Makanji when both were 13 years old.
His family later sent him to London to study law, and in 1891 he was admitted to the Inner
Temple, and called to the bar. In Southern Africa he worked ceaselessly to improve the rights
of the immigrant Indians. It was there that he developed his creed of passive resistance
against injustice, satyagraha, meaning truth force, and was frequently jailed as a result of the
protests that he led. Before he returned to India with his wife and children in 1915, he had
Back in India, it was not long before he was taking the lead in the long struggle for
independence from Britain. He never wavered in his unshakable belief in nonviolent protest
and religious tolerance. When Muslim and Hindu compatriots committed acts of violence,
whether against the British who ruled India, or against each other, he fasted until the fighting
ceased. Independence, when it came in 1947, was not a military victory, but a triumph of
4| Page
human will. To Gandhi's despair, however, the country was partitioned into Hindu India and
Muslim Pakistan. The last two months of his life were spent trying to end the appalling
violence which ensued, leading him to fast to the brink of death, an act which finally quelled
the riots. In January 1948, at the age of 79, he was killed by an assassin as he walked through
"Nonviolence is the greatest force at the disposal of mankind. It is mightier than the
"Generations to come will scarce believe that such a one as this ever in flesh and blood
- Albert Einstein
If humanity is to progress,
Gandhi is inescapable.
affinity to the principles and objectives of socialism, but with a rejection of class war and
spiritual development and harmony with a rejection of materialism. The term "Gandhian
True economics never militates against the highest ethical standard, just as all true ethics,
to be worth its name, must at the same time, be also good economics… True economics
stands for social justice; it promotes the good of all equally, including the weakest, and is
The critical task to define M.K. Gandhi’s understanding of economics, as distinct from the
mainstream economic tradition of Adam Smith. While it is true that Gandhi was not a
To Gandhi, economic activities cannot be separated from other activities. Economics is part
of the way of life which is related to collective values. Economic activities cannot be
abstracted from human life. Gandhi wanted to ensure distributive justice by ensuring that
Economic Swaraj
One of Gandhi’s basic principles is that the “Earth provides enough to satisfy every man’s
need but not for every man’s greed”. Whereas mainstream economics makes the common
man completely helpless in the matter of production and distribution of resources, Gandhi
visualized an alternative through the system of swaraj. Swaraj is necessary for the liberation
of weaker economies from the commanding position of neo-liberal capitalism. There is need
9| Page
for a new conceptual framework in which each country attains economic swaraj. According
The components of swaraj are based on two independent variables, psychology and ethics.
Since resources are scarce, production cannot be increased indefinitely. The psychology of
affluence is an irrational phenomenon. The basic principles of economic activity are based
distortion. Greed grows out of the desire to be affluent. Here, psychology can play a crucial
role. Values which condition the mind can change human behaviour. The goal of swaraj
What are the ingredients of economic swaraj? First, Gandhi gave adequate importance to
the traditional sector. Highest priority is given to agriculture and agro-centric industries. The
balance between primary, secondary and tertiary sectors should be skillfully maintained, on
the basis of available human resources. Two, villages must get more importance than cities.
10 | P a g e
Gandhi observed: “You cannot build non-violence on a factory civilization, but it can be built
The effectiveness of economic swaraj can be tested by the application of the following seven
criteria:
Swadeshi
Mahatma Gandhi was a champion of swadeshi or home economy. People outside India know
of Gandhi’s campaigns to end British colonialism, but this was only a small part of his
struggle. The greater part of his work was to renew India’s vitality and regenerate its
culture.
For Gandhi, the soul and spirit of India rested in its village communities. He said: “The true
India is to be found not in its few cities but in its seven hundred thousand villages. If the
According to the principle of swadeshi, whatever is made or produced in the village must be
used first and foremost by the members of the village. Trading among villages, and between
villages and towns, should be minimal. Goods and services that cannot be generated from
Swadeshi avoids economic dependence on external market forces that could make the village
destructive transportation. The village must build a strong economic base to satisfy most of
its needs and all members of the village community should give priority to local goods and
services.
production. Mass production forces people to leave their villages, their land, their crafts and
their homesteads and go to work in the factories. Instead of dignified human beings and
13 | P a g e
In countries practising swadeshi, economics would have a place, but would not dominate
society. Both economics and politics should not simply be concerned with material things,
but should be the means to the fulfilment of cultural, spiritual and religious ends. In fact,
economics should not be separated from the deep spiritual foundations of life. This can be
best achieved, according to Gandhi, when every individual is an integral part of the
community; when the production of goods is on a small scale; when the economy is local;
and when homemade handicrafts are given preference. These conditions are conducive to a
spiritual values should not be separated from politics, economics, agriculture, education and
all the other activities of daily life. In this integral design, there is no conflict between the
For Gandhi, a machine civilization was no civilization. A society in which workers had to
labour at a conveyor belt, in which animals were treated cruelly in factory farms and in which
civilization. Its citizens would only end up as neurotics; the natural world would inevitably
be transformed into a desert, and its cities into concrete jungles. In other words, global
Trusteeship
Trusteeship. He based the concept of Trusteeship on the first sloka of the Isopanishad,
according to which, one is asked to dedicate everything to God, and then use it only to the
15 | P a g e
required extent. In other words, in the first instance, everything must be surrendered to God,
and then out of it, one may use only that which is necessary for the service of God’s creation,
according to one’s strict needs. The spirit of this concept is detachment and service.
Gandhi’s idea of Trusteeship arose from his faith in the law of non-possession. It was
founded on his religious belief that everything belonged to God and was from God.
Therefore the bounties of the world were for his people, as a whole, not for any particular
individual. When an individual had more than his respective portion, he became a trustee of
that portion for God’s people. If this principle could be imbibed by people in general,
Trusteeship would become a legalised institution. Gandhi wished it to become a gift from
of ownership and income, a kind of non-violent way of resolving all social and economic
conflicts prevalent in the world. Therefore, man’s dignity, and not his material prosperity, is
16 | P a g e
prosperity, keeping only human dignity in view. Thus it is dominated more by moral values
than by economic ideas. According to Gandhi , Trusteeship is the only ground on which he
can work out an ideal combination of economics and morals. In concrete form, the
egalitarian one.
• It does not recognize any right of private ownership of property, except so far as it
• Under State-regulated Trusteeship, an individual will not be free to hold or use his
• Just as in the case of a decent minimum living wage, a limit should be fixed for the
maximum income that would be allowed to any person in society. The difference
between such minimum and maximum incomes should be reasonable and equitable
and variable from time to time, so much so that the tendency should be towards the
As man advances from a narrow sphere of personal satisfaction to the nobler concept of the
welfare of all, he marches closer towards self-realization. The whole idea of possessing
wealth only to guard it from being misused and to distribute it equitably, aims at protecting
grounds. Gandhi enjoins this moral obligation on the part of the trustees, as he is fully aware
of the ills of capitalism which widen the gap between the rich and the poor.
philosophy too. If Marxism is the child of the Industrial Revolution, Gandhian theory can be
understood only in the context of certain basic spiritual values of the Indian tradition.
Marxian socialism aims at the destruction of the class called capitalists, whereas the
Gandhian approach is not to destroy the institution, but to reform it. Gandhian socialism,
being ethical, is different from Marxian socialism. Man to Gandhi , is an ethical being first
The most significant difference between Marxian socialism and Gandhian socialism lies in
the method they recommend to achieve it. Whereas Marxian socialism harps on violence,
Gandhian socialism aims at a change of heart on the part of the rich. There is no place for
violence, but only trust. The common man trusts his trustee and the latter plays the role of a
19 | P a g e
believed in the basic strength of the goodness of man and the value of morals. All other
“isms” address the problem superficially, whereas Trusteeship strikes it at the root. What
must not be forgotten is that at the centre of the concept lies the need to protect human
dignity.
Gandhi made a trenchant critique of machinery, saying that it was a grand, yet awful,
invention. In Hind Swaraj he observes: "It is machinery that has impoverished India".
Further, he says: "Machinery is the chief symbol of modern civilization; it represents a great
sin". This was no doubt an extreme position. Few agreed with him on this, but it would befair
But fundamentally Gandhi opposed machinery because he thought it displaced labour and it
is a very prominent feature of Gandhian economics, and here the influence of both Ruskin
and Tolstoy (who themselves were deeply moved by some of the social displacement and
labour exploitation excesses of the Industrial Revolution in Europe) is very discernible. But
there was also a pastoral romanticism in this opposition, which gets reflected in an exclusive
emphasis on the village community as an idyllic form of .Schumacher, for example, notes
that the affluence of a small part of the world was pushing the rest of the world into the three
Social existence to be preserved in its pristine form against all change. This
led Gandhiji’s to oppose all forms of modern industrialisation (whether foreign or domestic).
This opposition to domestic industrialisation (on modern lines) was probably based on his
empirical observation that even though considerable development of modern industry had
21 | P a g e
occurred in British India over the fifty years 1881-1931, there was no appreciable increase in
gainfully employed workers over this period – whatever increase in employment had
occurred in the organised sector was counterbalanced by the fall in employment in the
traditional sector. Gandhiji’s antagonism to industrialisation (in the modern sense) finds
expression in several of his writings. We reproduce two typical comments. The first is from
Young India (1931) wherein he writes – “Industrialism is I am afraid, going to be a curse for
mankind.” The second is from Harijan (1936), “Industrialisation on a mass scale will
competition and marketing come in.” Gandhiji’s model of development was one in which
every village produced all its necessities and a certain percentage in addition for the
cautioning that “Heavy industries will needs be centralised and nationalised. But they will
occupy the least part of the vast national activity which will be mainly in
Gandhi (1941)).
(as well as his mentors such as Mahadeo Govind Ranade and Gopal
saw large scale industrialisation as the only way out of mass poverty, and
criticisms against British Rule was the that the state was not proactive in
promoting
development.
rooted antagonism
of technology as a
24 | P a g e
be feared because
terms, it is beneath
human dignity to lose one’s individuality and become a mere cog in the
machine. I want
439). This view led Gandhiji to oppose technology not only in modern
the existing industries and to revive where it is possible and desirable the
dying or dead
“labour replacing”
and often “labour degrading”. But he was not opposed to technology per
se. As a matter of
27 | P a g e
country could be
Masani in D. G.
28 | P a g e
Dignity of Labour
There is another important reason why Gandhiji assigned pride of place to the village crafts
in his schemata for the economic regeneration of India – the influence on him of writers like
Ruskin and Tolstoy who glorified the dignity of manual labour and extolled the moral
superiority of self employment and independent work to wage employment. Writing in
Young India, (2nd May, 1929) he deplored the concept of wage employment and said he was
prepared to tolerate it only in those villages “where people are in perpetual want because they
do not get enough from agriculture and because they have leisure”. Gandhiji’s apathy to wage
employment was a natural reflection of his antagonism to the modern factory system of
production. However he was not entirely opposed to production for the market as his
advocacy of cooperation in marketing and raw materials purchase would serve to indicate.
Evils of Urbanisation
standard of living than that of the rural masses – a standard based on the exploitation of
villages.
Gandhian economy is mainly criticized by capitalist and liberalist. Gandhian economy lacks
many features which should an economy should have. Such type of economy is not feasible
in developed country where industry is the back bone of nation.
2. Swaraj in economic sphere a vague concept: according to him a nation should strive for
self-reliance in economic sphere, but it’s impossible in today’s world for any nation to be
self-sufficient in this world, especially in a world like globalization. Every economy of the
world has to depend of each other for survival and for progress. None of the nation in today’s
can ever dream of growth without the help of other’s.
3. His hate for industrialization and urbanization: as we are part of globalization and none
of the economy in this world has haven’t adopted the policy of globalization as only through
globalization, industrial development can be achieved, and thus its obvious that with
industrial development we will have urbanization. No doubt that have urbanization have its
defect but we can’t negate its importance and urbanization is inevitable in today world. Like
to face’s of coin everything have good side and bad side, likewise we have of urbanization.
30 | P a g e
4. Policy of trusteeship a utopian concept: his policy of trusteeship which is based on law
of no-possession.as this policy which says that everything is god’s property and everything
will be held in public at large. As we are living in world where society is so complex and it’s
very difficult to implement such kind of policy. The concept of private property exits from
very beginning so, no public property will exists. And men by its very nature are brutish and
nasty and might is right prevails, so mightier people will try to acquire more and more
property.
31 | P a g e
Another market oriented criticism is directed towards the entire gamut of subsidies for the
agriculture sector, which also has its moral justification in Gandhiji’s concern for the rural
masses. According to this line of criticism, this sector has been under taxed, has reaped heavy
subsidies on inputs like fertilizers, credit, seeds and electricity and has been supported by
generous purchases prices. It is further alleged that most of the benefits have not gone to the
intended beneficiaries but have been reaped by middlemen and large farmers. On the other
hand, these subsidies have strained the public exchequer and generated steep inflationary
pressure which have aggravated poverty amount the masses. Similar criticisms have also
been voiced as regards the PDS (public distribution system) which was designed to insulate
the urban poor from inflation in the commodities of basic consumption (the so-called wage
goods).
Phase 3 (1985-): The complete abandonment of Gandhian economic concepts really begins
with the onset of structural reforms, which were initiated hesitatingly in the mid-1980s, put
on firm track in the early 1990s and moved into high gear after 1997. To the newly emerging
affluent class in India (who have been the major beneficiaries of the reforms process),
Gandhian concepts like indigenous /appropriate technology, frugality, Swadeshi, etc. have an
anachronistic and archaic ring to them. Perhaps the clean break with these ideas was
inevitable, and judged solely by the accolades piled upon the architects of the process by a
doting domestic and foreign media, the reforms have been a grand success. But it is being
increasingly realised that behind the stratospheric growth rates there lies a reality far hasher
than our policymakers are prepared to admit. Firstly, short term macroeconomic stability is
being increasingly jeopardised by burgeoning capital inflows, a bubble like situation in the
stockmarket and the appreciating exchange rate.
33 | P a g e
. Past experience has shown the futility of expecting a mere acceleration of economic
reforms to alleviate these problems in any significant manner. But the real threat is in the
long run. Fundamental and endemic problems on the poverty, inequality, unemployment,
corruption and natural resources fronts have not only remained unsolved in the reforms
process, but have aggravated in an alarming fashion (see Nachane (2007)). The trickle down
effect , on which the Indian reformers have placed so much faith in recent years, in particular,
(if at all it exists), seem to be both protracted and slow. If bold and imaginative initiatives are
not undertaken at this stage to address these issues, rising societal tensions and political
compulsions will inexorably force a crisis unparalleled in our recent history.
Conclusions
Our discussion clearly indicates that modern India has traveled far in a direction quite the
opposite of the one the Father of the Nation would have advocated. In the early years of
planning (Phase 1 above), there were some efforts (by and large, sincere and well-
intentioned) to incorporate some Gandhian elements within the policy framework. Later, (in
Phase 2 above), realising their potential for mass mobilisation, attempts were made to apply
some of the Gandhian ideas, more often than not, with ulterior motives to produce results
quite contrary to Gandhiji’s original vision.
By the 1990s, however, even the lip service to Gandhian values was abandoned. Through a
succession of cleverly crafted steps by the various regimes holding power in the last two
decades, the nation has now been taken to a stage where it is impossible to retrace our steps
and the contemporary Indian milieu is one in which the Mahatma would have felt hopelessly
lost. It is a milieu in which, in spite of all the official rhetoric about inclusive growth, 255
million Indians live in stark poverty, 17,000 farmers commit suicide and the rulers wave their
flags at the 46 Indian billionaires who have made it to the exclusive Fortune 500 list. This is
certainly not the Ram Rajya that he dreamed of for his beloved land of birth. As long as no
serious efforts are undertaken to ameliorate poverty, reduce inequality and raise employment,
the annual pilgrimage by our rulers to Rajghat on 2 October will remain an elaborate and
empty ritual.
34 | P a g e
References
Ambedkar, B.R. (1943): “Ranade, Gandhi and Jinnah” in Collected Works of Babasaheb
Ambedkar, Vol. 1, Thacker & Co. Bombay [originally lecture at Deccan Sabha, Poona, 18
January 1940]
Datta, Amlan (1989). An introduction to India’s Economic Development since the Nineteenth
Century, Sangam Books, Calcutta
Dhar, P.N (1958): Small Scale Industry in Delhi, Asia Publishing House, Bombay
Gandhi, M. K. (1952): Rebuilding Our Villages, Navijivan Publishing House, Ahmedabad
Gandhi, M.K. (1958-1994) : “ Constructive Programme : Its Meaning and Place” in The
Collected Works of Mahatma Gandhi, Vol. 75 , Ministry of Information & Broadcasting,
Government of India [ originally published in 1941]
Tendulkar, D.G. (1951-54): Mahatma: Life of Mohandas Karmachand Gandhi, (8 volumes)
Published by Vithalbhai Jhaveri & D. G. Tendulkar, Bombay.
Myrdal Gunnar (1968): Asian Drama: An Inquiry into the Poverty of Nations, 20th Century
Fund, New York.
Nachane, D.M. (2007): “Post-Reforms Indian Growth: Miracle or Euphoria?” in Singh, H.
(ed.) South Asia in the Global Community: Towards Greater Collaboration and
Cooperation, ISAS-NUS Publication, Singapore.
Nair, Sankaran, C. (1995): Gandhi and Anarchy, Mittal Publications, Delhi [originally
published 1922]
Narayana, Sriman (1970): Gandhian Economics, Navjivan Publishing House, Bombay
Natarajan, S. (ed.) (1962): A Century of Social Reform in India, Asia Publishing House,
Bombay
Pani, N. (2002): Inclusive Economics: Gandhian Method and Contemporary Policy, Sage
Publications, New Delhi
Pomfret, R. (1988): Unequal Trade: The Economics of Discriminatory International Trade
Policies, Basil Blackwell, Oxford, UK
Shah, C.G. (1963): Marxism, Gandhism and Stalinism. Popular Prakashan, Bombay
Smith, Adam (1776): Wealth of Nations, (ed) E. Cannan, Methuen, London (1961).
Sandesara, J.C. (1966): “Scale and Technology in Indian Industry” Oxford Bulletin of
Economics and Statistics, vol. 28(3), pp.181-198.
Schumacher, E.F. (1978): A Guide for the Perplexed, Harper Collins, New York
35 | P a g e
36 | P a g e
37 | P a g e
38 | P a g e
39 | P a g e