Gandhi’s Views on Economics

By Sharon Coutinho

Truth and Non-Violence are the foundation stones of Gandhian Economics thoughts. According to Gandhiji, work is not only an economic activity. It’s necessary for spiritual growth. Bapu wanted that India should have its own economic policy. It should not follow any foreign countries policy.
In this paper I would be highlighting on six points:

  1. Swadeshi
  2. Mechanization
  3. Industrialization
  4. Trusteeship
  5. Villagism
  6. Decentralization

Swadeshi literally means ‘of one’s own country.’
Swadeshi is defined as that spirit within us which restricts us to use the service of our immediate surrounding to the exclusion of the more remote. It aims at the removal of unemployment and poverty. It doesn’t advocate rejection of foreign trade, in fact it advocate a healthy and non-exploitative form of trade. According to Bapuji, Swadeshi is not just good, it do comprise of our culture, tradition and values. Bapu wanted that people in India should have sufficient demand for their produce and therefore, he pleaded for the use of Swadeshi goods. However, its wrong to assume that Bapuji was altogether against foreign goods. Its clear from his word that says, “It is criminally foolish to produce the goods which are not profitable to be produced in our country, instead of producing them we should import them.”


Gandhiji had no objection to mechanization of production if it doesn’t hurt the dignity of man and self-reliance of villages. He believed that mechanization is good when the hands are few for the work to be done. In a country like India, here lab is abundance maximum industries should be labour intensive and not capital intensive.


Gandhian economics is not based entirely on handicraft and cottage industries Gandhiji visualized that electricity, ship building, iron works etc. should exist side by side with village and cottage industries, Industrialization leads to maximum exploitation of man and nature. Industrialization is based on large scale and highly sophisticated technology which leads to unemployment, poverty, urbanization, deforestation, desertification, pollution etc. large scale industries should be owned by the state and administrated wholly for public good.


According to Gandhi, capitalist and rich should consider themselves as trusty of society and make use of their wealth for the benefits of society which is known as trusteeship. Gandhiji wanted that co-operative system should be developed in India, in agriculture and many other fields so that everyone economic welfare can be achieved.


Gandhiji always said that India can’t be developed unless we develop the village of India, there has to be grass root development. In his opinion and which very correct that the process of development in India should being from village level. Gandhiji always profounded that agriculture should be supported by some subsidiary occupation like bee keeping, animal husbandry, khadi, paper making, mud utensils etc. Gandhiji advocated that women should contribute in agriculture and I subsidiary industries or by the way of playing charkha. He wanted that every home there should be charkha which will enable the use of local productive resources and man power able in villages.


Gandhiji strongly advocated decentralization of economic system. Gandhiji believed that centralization is the root caused of exploitation which leads to unemployment and poverty in India as the powers are concentration in the hands of few because of centralization. There has been wide gap between the haves and have nots that is rich are become richer and the poor are becoming more poor.

Economic Development

By Gulabbhai Jani
Translated into English by Alaka Sharma

The world economic order is in “crisis mode”. Well-known companies and banks of USA are declaring themselves as bankrupt, one by one. It is feared that the economy may slide down to the days of “Great Depression”. In this context, it is worthwhile to have a look at the economic thoughts of M. K. Gandhi.
Gandhiji’s economic thought is imbibed in his overall philosophy. His approach is holistic and aims at the socio-economic reconstruction of society. Once, Gandhiji was asked to write down the text of his economic thought, he refused, saying that his framework is based on some basic principles which he applies to solve the day to day practical problems. So it can’t be summarized in a few equations.
These days, many people tend to ridicule the Gandhian thought as “old fashioned and anti-progress”. Gandhiji visualized a total socio-economic reconstruction, so his economic thought must be viewed in this context. A look at the history of mankind reveals that those who dream the impossible dream can actually make it happen. Before Karl Marx wrote “Das Capital”, no one had ever imagined that large scale poverty can be eradicated but Marx insisted that his theory is a scientific doctrine. All historians, economists and sociologists of that era rose in unison to condemn Marx. But history tells a different story.
Gandhi, Ruskin Bond, Carlyle….all believed that “Economics sans morality is wrong”. Gandhi doesn’t give any theoretical model regarding economic development but gives some basic tenets based on which we can decipher what kind of economic structure is the need of the hour. Following are the basic tenets –

  • Contrary to the popular perception, voluntary reduction of wants is an indication of development and not the desire to satisfy unlimited wants.
  • Each person is not always bent on “Maximizing” his/her profit but wishes that he/she gets enough to save for a rainy day after meeting the day to day requirement.
  • Co-operation and not competition is a better principle of life.
  • It is inappropriate to look down upon physical labour.
  • There is latent talent in all individuals. Each person must have access to enough resources so that his/her basic livelihood needs can be taken care of.
  • Too much dependence on the “state” is fatal.

Based on these principles, Gandhiji has given the concept of constructive work. Here too, concepts like amity among all communities, lack of untouchability, prohibition (of liquor), khadiand village industries, focus on basic education, Gram Swarajya, Adult Education, Women’s Empowerment, training on how to maintain health and hygiene, knowledge of mother tongue/national language find eminent place. With practical experience and his unique experiments, Mahatma Gandhi has emerged as an economic reformer and not a professor of economics. Gandhiji strongly advocated that above mentioned are necessary social inputs without which economic growth is not possible. In simple words, in Gandhiji’s schemes of thoughts, the non-economic components of economic development are perhaps more important than strictly economic concepts.
Reconstruction of village economy based on “Gram Swaraj” is the pillar of economic development. In his vision, each village is a totally autonomous and self-sufficient unit which will be totally self-reliant in fulfilling the basic needs. A cluster of mutually dependent (in some matter) villages forms the basis of economic order. In Gandhiji’s vision of Gram Swaraj, human beings will be most important, labour will be given due importance, there will be decentralization of power and owners of property will consider themselves as trustees. Along with that he also mentions Satyagraha, secularism and self-reliance as necessary aspects of social ethos.
Once, Gandhiji was asked, how to eradicate rural poverty? “By spreading the message of knowledge and cleanliness”. Clearly, this is not a response of an economist but has relevance from economics viewpoint.
Gandhiji never opposed machines. He was critical of too much dependence on machines. In Gandhiji’s vision, the priority of any system which doesn’t want to thwart growth should be ‘man’ and not ‘machines’. Even while using the spinning wheel, he was eager to bring innovation in that spinning technology and had even declared a prize of Rs.1 lakh for such an innovation. In Gandhiji’s own words, “I wish to save hard labour and time of not just one section of society but for all. I wish that money is not centered in the hands of few rich people, but is accessible to all. The reason why Capitalists want to use money is not to save human labour and to ensure welfare of all, but to maximize their own gain. I am against this concept. I am not against machines but wish to define their limits.”
The fact is, even within western countries, there is a rethinking on which development model actually ensures the welfare of humanity. But we, the people of underdeveloped countries are so impressed by the Industrialization of the west that we have lost our ability to think.
Schumakhar and Arnold Toynbee are a few of the renowned western economists who have voiced concerns similar to the ones advocated by M.K. Gandhi. Schumakhar says very clearly that only that technology which is in synchronization with the social, cultural and economic ethos of a community, is the relevant technology for that community. Capital intensive technology had evolved in a totally different context and cannot be universally be deemed appropriate anywhere in the world, for all time to come.
Schumakhar lists certain basic tenets which are as follows –

  • People should get the work where they stay.
  • Work must be available with minimum expenditure (in other words capital intensive technology is not necessary).
  • Production should be based on local needs and the process should be such that it can be completed with local resources.

Schumakhar advocated ‘middle level’ technology. In 1965, an Intermediate technology group was formed to voice these concerns. There are many people who realize that the technology that we are following now is wasteful. We must have Paradigm shifts in our life styles to prevent wastefulness. There is an angle of sustainability to it also. Mankind will be doomed when wastefulness leads to resource crunch. But the history of Industrial society doesn’t give us any hope that wisdom will soon prevail. We will have to look for clues from spiritual knowledge. In other words, many years after the death of Gandhi, Schumakhar was presenting Gandhi’s ideas to those who cared to listen.
Even well-known Economist like Arnold Toynbee in his book, “Future of Asia and Africa” advocates the same philosophy that Gandhi advocated. Louis Fisher opines, “The Institution of Parliament has lost its relevance. Violence threatens to engulf Asian and African sub-continent.” In this situation, with every passing day, Mahatma Gandhi’s influence is increasing. Fisher feels that unless we follow the Gandhian model, we are leading to a situation where Capitalists – a microscopic minority of society – will become all too powerful. In the present context of Globalization of Indian Economy, it can be said that Fisher’s words are more true today than ever before. He had submitted that countries of Asia and Africa must retain their own uniqueness and not submit to the blind growth Capitalism.
Prof. J.K. Galbrath in “The New Industrial Estate” also reflects on the fact that slowly we are becoming slaves of the machinery.
Prof Gunnar Myrdal in “Asian Drama” opines that India and other SE Asian Countries must not imitate western countries blindly, but, instead make efforts to engage their large population in a productive activity in a disciplined way. But he also notes that the populist Governments are unable to take hard decisions and are incapable to force their people to work hard in a disciplined way.
In short, what Mahatma Gandhi had realized through intuition, many world famous thinkers later advocated after being a witness to the process of how Capitalism unfolds itself.
Gandhiji died in the year following India’s Independence. The ruling class of Independent India neither had the conviction nor courage to walk on the path shown by Gandhi. Though India initially followed the principle of mixed economy, after eighties, India embraced Capitalism and is now engulfed by forces of Globalization. The rich have become richer and poor have become poorer, all over the world. One may ask, “Is Gandhi relevant, even now?” The answer is, more so, then ever before. He taught us how to reclaim our freedom from the state by giving us the concept of ‘Satyagraha’. His economic thought centers on sustainable growth, focus on man against machine and reducing economic inequality. These are answers to the problem of Global Warming and lead us to ‘inclusive growth’ which has become a buzz word. His approach and concepts are the only solution if the mankind wants to survive.

Source: Shashwat Gandhi’