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I = S - M

The modern way of thinking about economics has been I = M - S Where I is the I as in me, M is what is 'mine' and S is what ...

5/23/14

What is at the heart of Gandhian economics? It is an idea that is so simple. It is balance. What is at the heart of modern economics? Once again it is balance. Yet the two notions of balance are very different. The balance that I care about is complete balance. The balance that modern economics is based on called equilibrium, is an incomplete hence unbalanced balance. 

Gandhiji emphasized this point very clearly. His book The Wheel of Fortune is available as a free download at gutenberg.org. If you read this book you will see what I mean. Gandhiji is not against mill made cloth. He is not even against foreign made cloth. In espousing his idea of swadeshi as opposed to pardeshi, preferring locally made goods over those made at a distance, Gandhiji only seeks balance. He points out that the economic system has been tremendously unbalanced by British rule. Once all farmers were also spinners and weavers, supplementing the produce of the soil with clothing for the household. British economic policy destroyed this home based khadi industry and made India dependent on cloth imported from England. There were also in his time India-based cotton mills owned by Indians. He did not wish to put them out of business. Since they were unable to produce all locally needed cloth, a renewal of khadi would mean spinning and weaving in each and every household could make up the difference. With this balanced approach the massive trade deficit that India faced with Britain would come back into balance, the starving millions would once again have food and be clothed and Britain's overproducing cotton mills would reevaluate the logic of overproduction at murderous costs and scale back to human proportions. What a wonderful and complete vision of balance! 

E. F. Schumacher is widely known as the author of the beautiful little book Small is Beautiful. He has been called the father of humanistic economics, though he himself thought that it was Gandhiji who would one day be recognized as the greatest economist of all. Schumacher stressed a point that has generally been missed. In Small is Beautiful Schumacher says that the reason we must emphasize the small is that all emphasis in our modern world has been on the big. Modern economics inevitably leads to massive structures, institutionally and physically. Massive dams, massive global corporations, massive expensive technologies. It is this imbalance that creates our problems. Schumacher explains that small is beautiful because the whole world has erred so massively in the direction of the big. However, to err in the direction of the small would be just as bad! After all it is balance that we must seek. 

The notion of balance that is at the heart of modern economics is simply a balance between supply and demand. This is such a limited notion of balance that in practice it leaves the world more in a state of perpetual unbalance rather than balance. In focusing narrowly in balancing one small aspect of life, namely the material supply and material demand, the whole of life is left in a dizzying disarray. When we look around us we see that imbalance everywhere. There is so much wealth concentrated in the hands of the few. There is so much poverty. And both rich and poor suffer the consequences. 

If we are to truly develop a body of work that we can call Gandhian economics, we must base it on a holistic sense of balance. We must include everyone, women and men and children, rich and poor and the so-called middle class, westerners and easterners and those who have migrated from one hemisphere to the other. We must find the gaps in our economics where imbalances are creating so much suffering. When we focus our time, our thoughts on these and meditate upon them together, over time balance will come. 

When the world is in balance suffering will end. 


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