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There is only one goal. That is to be whole again.

There is only one goal. That is to be whole again. How human beings live and work determines whether they remain whole or are split. ...


Karl Marx made an important observation: Human beings are different from other so-called factors of production. As workers, humans are paid less than what they contribute to production. There lies the source of surplus value.

Gandhian economics also sees human beings as unique. They are capable of consciousness. It is this capacity for consciousness that makes humans able to vary their level of what I call dignity value. So while everything in the world has its inherent dignity value, humans have the capacity to actually increase their dignity value.

This puts a great responsibility upon our shoulders as humans. We must accept what the Gandhian economist E. F. Schumacher called the 'vertical dimension.' We must allow ourselves to grow as people, grow in consciousness.

Modern life, based as it is upon self-interest and mass-production with a simultaneous rejection of spirituality, just does not allow for such growth. The spirit weakens, then withers.
The madness involved in the mass production and mass purchases of poorly conceived and poorly made products can be explained using Gandhian economics.

Decisions about what to make and where to make things are based not on total costs but on marginal cost, the cost of making one more unit of the product. In the manufacturing of a million units of a modern product, the cost of making one more unit is very small. So very large amounts of very many things get produced in far flung places at great environmental and human cost as long as marginal costs are low.


Developing our model of Gandhian economics further, we can say

P--c--P+ ....... (1)

P--m--P+ ......(2)

P = person
c = commodity produced by neighbors
m = microcredit obtained through and with neighbors
P+ = enhanced person

(1) Engaging in work and trade among neighbors enhances people.

(2) Engaging in credit and debt with neighbors through microcredit enhances people.


Our economic system makes us either whole or not whole. When the entire economy is based on making maximum profit at the least cost it fragments us. We are reduced to worker and buyer. We are not workers and buyers but whole beings to begin with. It is the harsh inanimate logic of classical economics that fragments us. Once divided, we lose touch with the whole life and simultaneously work a lot and buy a lot. We do this without joy for we are separated from ourselves.


There is a fresh way of doing things. I come across it every day. A new generation seems to be growing up looking for new ways to build relationships and model exchange. This week I came across two such examples.

My wife took me to gravel & gold in the Mission in San Francisco. The store is full of magical things made by hand with little hand-written notes about the maker. We found folding scissors made very sturdily by the same family in Oregon for a couple generations. They are TSA-approved and perfect for traveling with. A hand-written note said

Founded in 1971, Slip-N-Snip is the original inventor and manufacturer of folding scissors. All components are manufactured here in the US by Don Gallogly and family.

We also bought some beeswax candles. Each item in the store had a maker and a story behind the maker. There were no fake 'old brands' bought out by people looking to make money on the basis of a name that may have nostalgic associations. The shop-keeper when we went there was Nile, one of the three owners of the store. She was very knowledgeable about everything the store carried and clearly loved her work. She was working when we came in, filling out orders, hand-writing notes, arranging products for sale. She was working when we left. Watching her I had to say good work!

Back in Berkeley I was walking to the farmers market when I came across the East Bay Alternative Press Festival (December 11, 10-4). What a delightful event. There were rows and rows of tables and chairs with mostly hand-made and some small-press books, zines, and other artifacts. I bought a little hand-made comic called black tea by Jason Martin. Jason was shy but available to interact with his customers. Many of the maker/sellers were happy to trade their books for ones you may have made. I had a wonderful time being there.

What was interesting about these two experiences was to see an emerging Gandhian economics in action. What was being sold was a result of good work, and the selling and trading itself was done in a way that was on a small, human-scale respectful of human dignity.


Classical economics is based on self-interest. Krishnamurti said

Corruption is not just passing money under the table or smuggling goods into the country. Corruption begins where there is self-interest. Where there is self-interest, that is the origin of corruption.*

Classical economics, which is based on self-interest, is corruption.

* The Benediction is Where You Are: The Last Bombay Talks 1985. Chennai: Krishnamurti Foundation India, 2001, p 3.


Classical economics is based on an inanimate logic. The logic of machines. Each factor of production is paid on the margin, that is what the last unit employed contributes. It is the economics of the status quo. Values are exchanged but are static, never enhanced. Commodities trade for money which trades for commodities.

Marx improved on this system considerably by pointing out that labor was different from the other factors of production. Under capitalism labor was paid not according to its contribution but simply a socially conditioned subsistence wage that was below its contribution to production. This yielded surplus value which was appropriated by the capitalist. Thus money trades for commodities which bring the capitalist even greater sums of money.

Gandhian economics is the economics of the whole person. Engaging in living, the person does many things both spiritual and material. One aspect of living is working and trading with neighbors. The interrelationships created by living and exchanging commodities with others allows the person to grow.

While other approaches to economics treat money and commodities as the central aspect of economic life, Gandhian economics is a holistic economics with humans as it central point and the possibility of growth, both spiritual and material, as its promise.


If classical economics can be summarized as


where C = commodity, M = money,

and Marx's critique of classical economics as


where M+ = enhanced money,

then Gandhian economics is


where P = whole person, P+ = enhanced persons.

Work and trade amongst neighbors who are whole enhances people's lives.


The problem of economics was famously formulated by Paul Samuelson as What to produce, How to produce, and For Whom to produce. However, classical economics in it's quest for a value-free study of the subject has not looked at the three-fold central problem as a spiritual one.

The central problem of economics is a spiritual one. We can only answer the What, How, and For Whom in a holistic way by asking first, what would be in keeping with human dignity? and second, what would further the inner lives of the people involved? Based on these questions it is clear that the How of production becomes the first and most important economic problem. How do we work? What do we bring to our work? How do we work with others? How meaningful is our work? These are the central problems. From these flow the What and For Whom.

What I have described above is the opposite of the approach of classical economics which starts with What and then looks for the cheapest means (the How) to make it. To me this is a recipe for disaster.


What we call Gandhian economics is the small economics of neighbors and self-sufficiency. It has deep roots in the United States. The great historian of the Reconstruction, Eric Foner writes

Northern investors understood free labor to mean working for wages on plantations; to blacks it meant farming their own land and living largely independent of the marketplace.*

* Short History of the Reconstruction. NY: Harper & Row, 1990, p 25.
There is an increasing level of comfort with private for-profit microfinance institutions in developing countries. Even though only 1 in 10 microfinance institutions is private, they account for over half of the industry's assets.* These companies make a profit by lending to the poor at high rates of interest. I don't think these companies should be allowed to operate at all.

Microfinance is about extending small amounts of money to poor people. The loans are signed not only by the borrower but also by a number of neighbors who all vouch for the borrower. This system devised by Mohammed Yunus (who went on to win the Nobel Peace Prize) in Bangladesh was created in the spirit of seeing credit as a fundamental human right, one that was denied to the masses for much of human history. The only access to credit that the poor have had in developing countries has been the usurious money-lender. Microfinance was developed as a way to break this mold of exploitation and make credit available to all.

To allow market-driven for-profit institutions to operate in the guise of microfinance institutions is to return the poor to the world that Yunus worked so hard to bring an end to.  A for-profit company has a very simple goal: to make as much money as possible at the least cost. Private companies, in their search for new ways to make money pose as benefactors while exploiting the poor. They should not be allowed to operate. Microfinance is a spiritual idea of our time as much as Gandhiji's satyagraha, or soul-force was in his own. The spirit must not be compromised with the flurry of Initial Public Offerings (IPOs) and corporate scandals that have arisen with the privatizing of the idea of microfinance.

* Little India, November 2010, page 37.