Gandhian economics

John Michael Greer of the “Archdruid report”, explains in this post how E.F.Schumacher, the maverick economist, drew some of his central ideas from a very different source: the largely neglected economic ideas of Gandhi.

A lot of Americans think of Mohandas K. Gandhi as a spiritual leader, which of course he was, and as a political figure, which of course he also was. It’s not as often remembered that he also spent quite a bit of time developing an economic theory appropriate to the challenges facing a newly independent India. His suggestion, to condense some very subtle thinking into too few words, was that a nation that had a vast labor force but very little money was wasting its time to invest that money in state-of-the-art industrial plants; instead, he suggested, the most effective approach was to equip that vast labor force with tools that would improve their productivity within the existing structures of resource supply, production and distribution. Instead of replacing India’s huge home-based spinning and weaving industries with factories, for example, and throwing millions of spinners and weavers out of work, he argued that the most effective use of India’s limited resources was to help those spinners and weavers upgrade their skills, spinning wheels, and looms, so they could produce more cloth at a lower price, continue to support themselves by their labor, and in the process make India self-sufficient in clothing production.

…Current economics dismisses Gandhi’s ideas on the grounds of their "inefficiency," but this has to be taken in context, "efficiency," in today’s economic jargon, means nothing more or less than efficiency in producing somebody a profit. As a way of keeping millions of people gainfully employed, stabilizing the economy of a desperately poor nation, and preventing its wealth from being siphoned overseas by predatory industrial nations, Gandhi’s proposal is arguably very efficient indeed – and this, in turn, was what brought it to the attention of E.F. Schumacher.