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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 ...

10/20/15

A Gandhian economy is not an economy closed off from the rest of the world. Though small, vibrant, local economies are the very substance of Gandhian economics, appropriate international trade has an important role to play is such an economy. 

In Gandhian economics we are interested in qualitative relationships, not the quantitative relationships assumed and analyzed by modern economics. We are looking for harmony rather than equality, with the notion of oneness and wholeness rather than the notion of equilibrium.

Equilibrium requires the presence of two or more opposing forces which are then met at one (or more in the case of multiple equilibria) point. In Gandhian economics we reject the notion of the equilibrium and look for harmony instead.

This is not just a theoretical approach. In fact we do not separate theory from practice. Instead we practice wholeness at all points:

Harmony happens at the point where 

X - M = (S - I) - (G -T)

where X = exports; M = imports; S = saving; I = investment; G = government purchases; T = tax revenue

viz. the harmony in the trade position of the economy depends upon the harmonies between the investment and saving positions on one hand as well as the harmony in the government's budget position. That is to say that if the nature of saving and the nature of investment in our economy are in harmony and further that the nature of government spending and taxation are in harmony, then there is the very great potential of a lively international trade with the rest of the world that is also in harmony


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