Dr. Ivo Coelho – Gandhian Economics


Article in PDF (Download)

Gandhi’s Challenge to the Economy by Dr. Ivo Coelho, Philosopher, Priest and Rector of Ratisbonne Monastery, Jerusalem.

Gandhi and the Future of Economics by Howard Richards and Joanna Swanger (Dignity Press, 2013) is an extraordinary little book, a fresh and compelling interpretation of that much controverted topic, Gandhian economics. Even ardent Gandhians balk at having to defend what is commonly regarded as one of the Mahatma’s idiosyncracies. Gandhi and the Future of Economics, instead, gently, persistently, and, I think, solidly makes a case for Gandhian economics.

The book is not meant to be a research study. It is rather that kind of felicitous publication that breathes new life into a known theme, and, in so doing, brings out its implications for praxis. Even better is the fact that it does all this in dialogue with a set of contemporary thinkers and actors from the Indian subcontinent: Jawaharlal Nehru, Jayaprakash Narayan, Tariq Ali, Vandana Shiva, Amartya Sen, Arundhati Roy, Manmohan Singh. In the process, it sometimes turns received wisdom on its head, as when it proposes that there is not as big a gap between Bapuji and Nehru as is usually imagined. But the crowning piece, for me, is the final chapter on Manmohan Singh: with this, the past meshes securely into the present, and our authors take a stand on the much-discussed topic of the Indian economic miracle. Given that that stand emerges out of a dialogue between someone who is considered the Father of the Nation and another who enjoys the unique privilege of being not only actually at the helm of affairs but also a renowned economist, Gandhi and the Future of Economics is as topical as it is surprising in the thesis it defends.

This thesis is that Gandhi criticizes the very soul of modern economics and culture. He refuses, in other words, to accept its premises, as for example that accumulating wealth is the general motive of production, or that material progress is a value in itself. He proposes instead that production be based on roles in society, on dharma or duty, on serving others by meeting specific needs, and that material progress without moral progress is no progress at all. This kind of critique is not intrasystemic: it calls the system itself into question. Such is the radicality of Gandhi’s critique, and it is in this sense that his thoughts must be taken.

Gandhi’s famous defence of the caste system makes sense, according to our authors, along the same lines: precisely, that is, in the light of its fundamental option for duty and service, over other economic motivations such as benevolence, or the self-interest championed by Adam Smith. Adam Smith, in keeping with the modernity of which he is a part, presumes that we are all atomic individuals. Gandhi, instead, presumes that the social order is organic, and that everyone is born with a vocation, with a role to play for the good of the community. Does this undermine the autonomy of the individual? Yet there is a prior question: whether one will have any vocation at all. “Faced with the tragic spectacle of an adharma modern society in which babies were daily being born without having attributed to them any membership at all in a bonded community larger than a nuclear family, and with no obligation at all to serve society, Gandhi was understandably reluctant to give up the Varnashram traditions of India.” Gandhi’s defence of the caste system is controversial, and I, for one, could think that while ‘being born to a vocation’ and having a place in an organically structured society is good, one need not identify vocation with some concrete task or service. It is possible to combine a vocation to serve with the deep sense of dignity that comes from belonging to one family, which is, to my mind, the basic vision coming from Jesus. But our authors do not dispute that caste does have its limits; they merely argue that the choice to improve caste by reforming it was, for Gandhi, a more practical way of moving toward the best results than starting from scratch. Their main point is that this choice was based on a truth rather than a hypothesis. “Duty done is duty done” is a tautology: if everyone were to do their duty in a well-organized society, all needs would be met. Self-interest as the prime motivating factor is a mere hypothesis: it was not self-interest that got Adam Smith his breakfast in his infancy, for example, but probably the love of his mother.

Following Gandhi, then, Richards and Swanger advocate transformation of the basic cultural structures of the modern world rather than intrasystemic economic changes. In the final chapter on Manmohan Singh, for example, they pose three questions: (1) whether there is any feasible method for changing the basic cultural structures of the modern world; (2) whether it is desirable to change the basic structures of the modern world; and (3) whether the advice currently being given to (and sometimes imposed on) developing nations by the main international agencies is good advice. Their answer to the third is a resounding no. Their answer to the second a clear yes. They do not, for some reason, answer the first.

In their answer to the third question, the authors consider two interpretations of the same facts, the neoliberal, and the NIDL (New International Distribution of Labor). The advice being given by international agencies is neoliberal advice: that the best path to the reduction and eradication of poverty is for each nation-state to pursue its comparative advantage within a regime of international free trade; that the basic cultural structures that allow the functioning of capitalism already provide for the elimination of poverty; and that reform and structural adjustment mean, therefore, relying more on markets and less on planning. The NIDL school instead maintains that the ‘economic miracle’ of India is merely a temporary reward for its pre-eminence in the global ‘race to the bottom.’ Richards and Swanger claim that it is this second interpretation is borne out by the facts.

Manmohan Singh’s program of economic reforms, initiated in 1991 when India was faced with a balance of payments crisis, was based on the neoliberal diagnosis of the problem. This diagnosis was that socialism in India created poverty because of its bias against employment. The cure was, therefore, to reverse that bias by, for example, reducing the protections given to labour. Manmohan’s reforms have been seen as the cause of the higher levels of income, and of India’s economic miracle. This, our authors maintain, is not true. It merely proves that capital moves to sites where labour is cheap. And this will not last: capital will keep moving, and the boom will bust. So the prosperity that we seem to see is merely temporary: India is merely part of the race to the bottom. Besides, there is an inherent instability in the global economic system. “The assurance given to governments around the world that a key element of the best remedy for poverty is to take decisions that will increase labour-market flexibility, on the assumption that if wage-rates fall low enough, full employment will be achieved, relies on the premise (the premise known as ‘Say’s Law’) that full employment is the natural point of equilibrium for an economy.” But this premise is merely a neoliberals assumption. Experience seems to confirm instead Keynes’ theory of lower-level equilibrium.

Richards and Swanger conclude that neoliberal advice is not good advice, “for the assertion that full employment will obtain when there is no ‘bias against employment’ is neither theoretically valid nor borne out by the vast empirical evidence from all corners of the earth.”

The second question is whether it is desirable to change the basic structures of the modern world. The neoliberals do not see the need for such change. The NIDL people do see the need but doubt that it is possible. Our authors, instead, answer with a resounding yes: change is not only desirable but also necessary. The goal of the current government of India – combining prosperity with justice – can be achieved only by questioning first premises. One way to do that is to reconsider Gandhi. First premises need to be questioned because the economic dilemmas faced by India are created by cultural structures. The dilemma of 1991 was imposed by the cultural structures of the modern world, the structures that Gandhi condemned. Democratic compulsions (as opposed to pleasing international capital), guaranteeing enough food (at the risk of running up deficits because of subsidies), the possibility of simply not paying debts: none of these things were decisive. Decisive, instead, were the systemic imperatives of the cultural structures of the modern world. These structures imply that costs of production must be kept down. They imply that debts must be paid, but here a moral command becomes a physical command – borrow or suffer! They imply that profits must be made, overriding other social goals.

Here is where we find an adumbration of an answer to the unanswered first questions. From the above, it follows that a method for cultural change must be one that modifies the dominant systemic imperatives. Gandhi, for example, would hold that production costs must not be lowered at the expense of workers, and that consumers must learn to pay higher prices for goods made under fair labour conditions. A good way ahead is consciousness-raising, educating people so that they understand that the systemic imperatives are commands imposed by institutions that have been culturally constructed. Gandhi understood this: he understood that the West’s cultural institutions were imposed upon India, that another world was possible, and that such a world had once existed in India and could exist again. This is a path of self-reliance. Workers would own their own tools. Service to neighbour rather than buying and selling would have been the goal of work.

For more substantial matter on the question of method, we would have to turn to the authors themselves. Howard Richards tells me that he and Joanna Swanger have done workshops on methods for changing basic cultural structures at the University of Toronto, and also in the Diocese of Los Angeles. More recently, he has been working with Gavin Andersson in South Africa on a methodology called ‘unbounded organization.’ On a philosophical level, the second volume (chapters 25-30) of his Letters from Quebec (San Francisco / London: International Scholars Press, 1995) is called Methodologies for Transforming the Structures of the Modern World. There was also a course at Earlham College called Methods of Peacemaking which was really about changing the basic cultural structures of the modern world.

For a Lonergan person like me, Gandhi as interpreted by Richards and Swanger has surprising echoes in the work of Bernard Lonergan – as, besides, Richards himself observes in his Introduction. Both, for one, were deeply dharmic persons, who believed not only that economics without ethics was impossible, but also that the moral sublates economics. Neither, on the other hand, was a professional economist, with the expected result, therefore, that the economic theories of both have been roundly neglected and relegated to the sidelines. So perhaps the dialogue between Gandhi and Lonergan might not be as strange as it first sounds. The following quote, in fact, sounds Gandhian, but is actually from Lonergan:

Nor is it impossible that further developments in science should make small units self-sufficient on an ultramodern standard of living to eliminate commerce and industry, to transform agriculture into a super-chemistry, to clear away finance and even money, to make economic solidarity a memory, and power over nature the only difference between high civilization and primitive gardening.[1]

Richards himself, perhaps, might some day bring together the ideas of Gandhi and Lonergan. In the meantime, the present piece can be counted as one little effort towards consciousness-raising.   

[1] Bernard Lonergan, For a New Political Economy, Collected Works of Bernard Lonergan 21, ed. Philip J. McShane (Toronto: University of Toronto Press, 1998) 20.


Also check out other articles by Dr. Ivo Coelho in Live Encounters Magazine

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.