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Defying Capitalism And Socialism, Why Gandhi’s Ideas Of Economics Are Still Relevant

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Kuthambakkam Panchayat, which is 40 kilometres from Chennai, has metamorphosed into a self-sustaining village by religiously honouring the dictum ‘local production for local consumption’.

The Gandhi Niketan Ashram in T. Kallupatti, which houses a school in its premises, is a site bustling with activity associated with constructive village work. The guiding spirit is that of a man who has suffered from neglect both during his lifetime and for many decades since, primarily due to the dominance of the ideologies he had vehemently opposed. Widely regarded as the pioneer of ecological thought in India, Joseph Cornelius Kumarappa, Gandhi’s economic interlocutor, was a profound and farsighted thinker. The book under review seeks to shed new light on the Gandhian economic vision by meticulously reconstructing the life of J.C. Kumarappa.

Joseph Chelladurai Cornelius, who went on to become J.C. Kumarappa, was a Tamil Christian with a westernized upbringing. A man of great academic and professional competence, Kumarappa ‘traversed great cultural distance’ and relinquished a lucrative career as an accountant to join Mahatma Gandhi in his relentless endeavour to secure economic justice by enabling ordinary people with limited assets, skills, and education to become meaningful economic actors. Kumarappa’s stay in Britain during World War I and in the United States in 1927-28 were instrumental in shaping his views on the church, the nation-state, the British colonial government in India and mainstream economics. Contrary to popular perception, Kumarappa’s economic thinking evolved independently of Gandhi’s and Gandhi himself acknowledged that ‘Kumarappa had arrived ready-made’.

Political Swaraj Through Economic Swadeshi

Broadly speaking, there are two views on Gandhian economic thought: one considers it to be antediluvian, while the other respectfully dismisses it as impractical and utopian. The zeitgeist of the 1940s and 50s was inclined in favour of large-scale industrialization and mass production, an article of faith with both capitalists and communists. In such a climate, articulating a constructive village-work driven economic vision based on the pillars of simplicity, permanence, decentralisation and justice that transcended the two dominant ideologies was treated with contempt and with benign neglect at best:

“As is the case today, during his lifetime, Gandhi’s agenda of constructive work was deeply misunderstood. Thus, the widening of the constructive agenda to encompass village industries invited great ridicule.”

The efforts at the reconstruction and rejuvenation of rural India through decentralised economic activity was not based on the uncritical romanticism of the village, a view propagated and perpetuated for decades now. He found many faults with the existing lifestyle of the rural people and emphasised on the ways and means of reforming them. Gandhi and Kumarappa aspired to achieve political swaraj through economic swadeshi:

“Their social and economic understanding led them to conclude that ‘the only path to true democracy in political life, and to peace among nations’ was a decentralised economic and political system where, necessarily, the ‘rewards were moderate’.”

While Gandhi was energized to revive the rural economy by revitalizing a host of village industries, building on the political success of the khadi movement, he was quick to realize that the Indian National Congress saw value in the political symbolism of the fabric but failed to see its economic potential, thereby giving the constructive village work programme a short-shrift in its political agenda. Undeterred by this, Gandhi decided to retire from active politics and set up the All India Village Industries Association (AIVIA) in 1934, independently of the Congress but emphasised that the party staking its claim to political freedom must have an economic reconstruction of the rural as a key desideratum.

Kumarappa acquainted himself with the agonising realities of rural life through the village surveys he undertook early on in his career as a construction worker. As the prime mover behind the AIVIA, ‘Kumarappa repeatedly emphasised that the entire effort of the AIVIA was to bring science and progress into the stagnant pools that are called villages today.

Both Gandhi and Kumarappa were not revivalist in a sense. They did not seek to invoke a glorious past to set the village economy in order. They were acutely aware of the need to modernise and therefore emphasized ‘adapting and modifying the village economy to meet the present-day needs’. Kumarappa, along with other workers, undertook a range of experiments to demonstrate the possibility of creating an ecologically compatible decentralised village economy.

The experiments with the Ghani (oil presser) and palm gur elaborated in the book should debunk the apparently scientific arguments that seek to play down the fairly robust rationale of Gandhi’s vision. Nonetheless, the achievements of the AIVIA remained very modest and on top of it, ‘the village economy held no value for independent India’s planners who took the industrial road to modernity’. While Khadi was subsumed into the official development agenda after independence, today it remains a fashion statement at best, far removed from its foundational goals and ideals.

Ecology At The Heart Of Economic Philosophy

Kumarappa’s conception of the “Natural Order” was founded on the belief that every material activity is pregnant with moral implications and it seeks to locate ‘the place of humans in their larger ecological setting’. While human beings perform the act of cultivation, Kumarappa made a strong pitch for “balanced cultivation”, which factors in the natural environment’s response to the method adopted in the process.

In fact, though the authors repeatedly emphasise on Kumarappa’s apprehensions about socialist methods of organising an economic activity, in this particular instance, they appreciate the compatibility of his insights with Marx’s warnings about ecological degradation that capitalism brings in its train. Commenting on Kumarappa’s obsession with soil fertility, the authors observe that:

“Throughout his public life, Kumarappa devoted enormous attention to the maintenance of soil fertility. Indeed, this was the central ecological concern that he related to social well-being as well since, “in the final analysis, the fertility of the soil is the fountainhead from which springs all nourishment.”

It wouldn’t be far-fetched to speculate that had Kumarappa been alive in 1973 when E.F. Schumacher’s cult classic, “Small is Beautiful: A Study of Economics as if People Mattered” was first published, he would have suggested the inclusion of the word “nature” in the title, making it “Small is Beautiful: A Study of Economics as if People and Nature Mattered.”

Throughout the book, the authors have made painstaking efforts to highlight the organic link between decentralised economic activity and the imperative of sound ecological practices in Kumarappa’s economic philosophy. An illustration of this key element can be illuminating. In arguing against the desirability of oil mills, he reasoned that:

“Not only did the installation of an oil mill create unemployment in the village by using up all locally available oilseeds, it did far greater harm by removing essential nutrients from the ecological cycle.”

To borrow a phrase from Rajni Bakshi, the ‘civilizational Gandhi’ who lived and died for satya and ahimsa, knew violence was inherent in a system that subordinated human beings to machinery, killing creativity and individual autonomy. In fact, as Bakshi rightly points out in her book “Bapu Kuti”, Schumacher was trying to draw the attention of Western intellectuals to the manifestation of Gandhi’s idea of ahimsa in his economic ideas. As a man who had a sure grasp of the moral foundations of Gandhi’s views on the economy, Kumarappa’s position on the modern machinery was nuanced and context-specific.

“Kumarappa’s personal position was neither a romantic view of rural life nor a Luddite reaction to automation. On occasion, he warned against the reductionist ‘idea that doing things by hand is good and by machine is bad’. Instead, one needs to ‘see if these things promote ahimsa’.”

Views On Money And Public Finance

While renewed interest has emerged in Kumarappa’s intelligent thoughts on nature and ecology, his insightful views on a range of economic matters remain obscured. Kumarappa’s argument against a ‘fiduciary issue of notes with the great instability of purchasing power’ and B.R. Ambedkar’s prognosis about the gold exchange standard causing instability of the monetary unit were strikingly congruent.

Kumarappa was deeply concerned about the erosion of purchasing power of money, and his apprehension was vindicated by the cynically manipulative monetary policy of the colonial government during World War II, which resulted in massive expansion of money supply and rampant inflation. By creating a provision in the Reserve Bank Act, allowing the paper currency to be backed by (fictitious) Sterling Securities, the British gave the RBI carte blanche to print paper currency at whim, to help finance its war expenditure.

This was done under a regime of gold-exchange standard. The ramifications of such a move were manifold for the masses. Therefore Kumarappa felt that ‘it was essential to maintain the intrinsic value of our currency by an adequate backing in gold’. In a Mint column, Pramit Bhattacharya draws our attention to Ambedkar’s view that a gold-exchange standard would confer greater freedom on the issuer to manipulate the money supply. Both these views were diametrically opposite to the position John Maynard Keynes took on the issue. Interestingly, both Kumarappa and Ambedkar studied public finance at Columbia University under E.R.A.Seligman, who was one of the most authoritative voices on the subject.

After WW II, as Britain resorted to all kinds of subterfuge to repudiate its Sterling Obligations towards India, it found a staunch votary in Keynes. Kumarappa launched a scathing attack on Keynes in his book “Clive to Keynes”. This attack was not wholly unjustified. The authors argue that:

“In the contemporary context where Keynesian economics is posed as a counterfoil to the free market ideology of the Chicago School of economics, the clubbing of Keynes and with the robber baron Clive might strike the reader as odd. However, as outlined above, while he was concerned with stabilizing the economy of the Western world, Keynes had no compunction in causing grave injustice to India by repeatedly and vigorously arguing for the scaling down of Britain’s sterling obligations towards India as well as keeping the question outside the purview of international scrutiny.”

What outraged Kumarappa more was the Congress back-pedalling on its earlier commitment in 1931 to demand nothing short of a just and fair settlement of accounts with Britain when India achieves Independence. This was not a knee-jerk reaction to the instrumentalism of the Congress party which was on the threshold of political power in an independent India, but the moral anger of a man who was conversant with the nuances of public finance and acted as the Convenor of the Report on the Financial Obligations between Great Britain and India.

In fact, even in the post-independence era, Kumarappa remained a trenchant critic of the Congress party and state policy concerning the economy, especially its callous neglect of rural India in policy formulation. Unfortunately, one does not find any analysis of Kumarappa’s critique in the voluminous literature on the various strands of criticism of independent India’s economic policies.

The Web Of Freedom

Gandhi’s vision of a just and non-violent decentralized economic order centred on village republics was developed within a moral-material framework. He sought to guarantee the dignity of the individual by securing dignity of labour. For Gandhi, building a wholesome life depended on binding people into a moral compact based on mutuality and co-operation. This vision went beyond both possessive individualism and coerced collectivism to nurture non-possessive individualism with a cooperative spirit. No one spent a lifetime in public service articulating this position more passionately and cogently than Kumarappa:

“Kumarappa argued that the degree of individual autonomy available in a society is a measure of its freedom and the extent to which individuals honour their obligations reflects the social and moral evolution of that society.”

It could be reasonably argued that both Gandhi and Kumarappa did not forcefully articulate how their theory of decentralisation would play out, given the perniciously hierarchical sociological foundations of rural India. Ambedkar was unsparing in his criticism of the village for being a microcosm of all things undesirable and emphatically argued that taking the industrial route would not just liberate the oppressed but also offer a viable solution to the pressing land problem in the village.

Industrial modernizers such as Jawaharlal Nehru saw no value in India’s villages and viewed industrialisation as the panacea for India’s economic ills. The authors make an observation which seems to have some validity given India’s dalliance with ‘modern’ industrialisation:

“Gandhi and Kumarappa worried that the dissolution of the caste order should not translate into the press-ganging of the lower castes into a faceless labour force that could be exploited for India’s industrialization.”

The book has nineteen chapters, thematically organised and mostly chronological. At the very outset, the authors call Kumarappa “a pragmatic champion of the agrarian economy” and the entire book is an endeavour to marshal wide-ranging evidence to establish that claim on a firm footing. The authors deserve kudos for succeeding in that attempt by harnessing a rich and largely unexplored source of Kumarappa’s writings, the Gram Udyog Patrika, which was the official newsletter of AIVIA. It encompasses Kumarappa’s prescient views on the use of energy resources, land reforms and sustainable agricultural practices, among other things.

Another important contribution of this book is the restoration of the text, “Why the Village Movement?”  to its rightful place in history because it is the ‘economy of permanence’ which has received relatively more attention due to the exclusive focus on Kumarappa’s ecological precepts. It would be relevant to juxtapose two contrasting views on the ‘Why the Village Movement’.

While the Gandhian scholar Mark Lindley considers it “an exercise in angry propaganda rather than a step ahead in Gandhian economic thought”, the authors of this book posit that, as a well-argued Indian manifesto for economic decentralisation, “Why the Village Movement?” remains unsurpassed and they have made it a point to substantiate this claim by intelligently contextualising the arguments put forward in the text.

Kumarappa’s views on economy and ecology were strongly characterised by the notion of ‘permanence’, which has compelling resonance today in our collective quest for sustainability.

At a time when Sustainable Development Goals (SDG) are thought up in yet another attempt to bail out ‘development’, a creative reading of Gandhi can throw up interesting possibilities. In an evocative article, “The Fate of Gandhian Scholarship”, the sociologist Shiv Visvanathan remarked that we need not just acts of memory but new sources of reinvention. A close engagement with this book is likely to convince the reader that J.C.Kumarappa’s life could be an inspiring source with immense reinventive potential.


About the author: Raghunath Nageswaran has an M.A. in Economics from Madras Christian College and is currently working as Research Associate in the UNICEF project “Public Expenditure on Children in Tamil Nadu”

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