Gandhian economics is a school of economic thought based on the socio-economic principles expounded by Indian leader Mohandas Gandhi. It is largely characterised by its affinity to the principles and objectives of socialism, but with a rejection of class war and promotion of socio-economic harmony. Gandhi's economic ideas also aim to promote spiritual development and harmony with a rejection of materialism. The term "Gandhian economics" was coined by J. C. Kumarappa, a close supporter of Gandhi.
Gandhi's thinking on socio-economic issues was greatly influenced by the American writer Henry David Thoreau. Throughout his life, Gandhi sought to develop ways to fight India's extreme poverty, backwardness and socio-economic challenges as a part of his wider involvement in the Indian independence movement. Gandhi's championing of Swadeshi and non-cooperation were centred on the principles of economic self-sufficiency. Gandhi sought to target European-made clothing and other products as not only a symbol of British colonialism but also the source of mass unemployment and poverty, as European industrial goods had left many millions of India's workers, craftsmen and women without a means of living. By championing homespun khadi clothing and Indian-made goods, Gandhi sought to incorporate peaceful civil resistance as a means of promoting national self-sufficiency. Gandhi led farmers of Champaran and Kheda in a satyagraha (civil disobedience and tax resistance) against the mill owners and landlords supported by the British government in an effort to end oppressive taxation and other policies that forced the farmers and workers and defend their economic rights. A major part of this rebellion was a commitment from the farmers to end caste discrimination and oppressive social practices against women while launching a co-operative effort to promote education, health care and self-sufficiency by producing their own clothes and food.
Gandhi and his followers also founded numerous ashrams in India (Gandhi had pioneered the ashram settlement in South Africa). The concept of an ashram has been compared with the commune, where its inhabitants would seek to produce their own food, clothing and means of living, while promoting a lifestyle of self-sufficiency, personal and spiritual development and working for wider social development. The ashrams included small farms and houses constructed by the inhabitants themselves. All inhabitants were expected to help in any task necessary, promoting the values of equality. Gandhi also espoused the notion of "trusteeship," which centred on denying material pursuits and coveting of wealth, with practitioners acting as "trustees" of other individuals and the community in their management of economic resources and property. Contrary to many Indian socialists and communists, Gandhi was averse to all notions of class warfare and concepts of class-based revolution, which he saw as causes of social violence and disharmony. Gandhi's concept of egalitarianism was centred on the preservation of human dignity rather than material development. Some of Gandhi's closest supporters and admirers included industrialists such as Ghanshyamdas Birla, Ambalal Sarabhai, Jamnalal Bajaj and J. R. D. Tata, who adopted several of Gandhi's progressive ideas in managing labour relations while also personally participating in Gandhi's ashrams and socio-political work.
Gandhian economics do not draw a distinction between economics and ethics. Economics that hurts the moral well-being of an individual or a nation is immoral, and therefore sinful. The value of an industry should be gauged less by the dividends it pays to shareholders than by its effect on the bodies, soul and spirits of the people employed in it. In essence, supreme consideration is to be given to man than to money. In fact, the first basic principle of Gandhi’s economic thought is a special emphasis on ‘plain living’ which helps in cutting down your wants and being self-reliance. Accordingly, increasing consumer appetite is likened to animal appetite which goes the end of earth in search of their satisfaction. Thus a distinction is to be made between ' Standard of Living’ and ’Standard of Life’, where the former merely states the material and physical standard of food, cloth and housing. A higher standard of life, on the other hand could be attained only if, along with material advancement, there was a serious attempt to imbibe cultural and spiritual values and qualities.
Gandhi has often quoted that if mankind was to progress and to realize the ideals of equality and brotherhood, it must act on the principle of paying the highest attention to the prime needs of the weakest sections of the population. Therefore any exercise on economic planning on a national scale would be futile without uplifting these most vulnerable sections of the society in a direct manner. In the ultimate analysis, it is the quality of the human being that has to be raised, refined and consolidated. In other words, economic planning is for the citizen, and not the citizen for national planning. Everybody should be given the right to earn according to his capacity using just means. The rich should serve the society after satisfying his needs and not merely enjoy his life.
Gandhian economics places importance to means of achieving the aim of development and this means must be non-violent, ethical and truthful in all economic spheres. In order to achieve this means he advocated trusteeship, decentralization of economic activities, labour intensive technology and priority to weaker sections. Gandhi claims that to be non-violent an Individual needs to have a rural mindedness. It also helps in thinking of our necessities of our household in terms of rural mindedness. The revival of the economy is made possible only when it is free from exploitation, so according to Gandhi industrialization on a mass-scale will lead to passive or active exploitation of the people as the problem of competition and marketing comes in. Gandhi believes that for an economy to be self-contained, it should manufacture mainly for its use even if that necessitates the use of modern machines and tools, provided it is not used as a means of exploitation of others.
Another important way of achieving non-violence is through decentralization. Gandhi believed that grass-root development through micro-planning will inspire neighboring areas and ultimately the whole nation.Gandhi placed Village Panchayat as units of self-government and tools of grass-root planning which will ensure the self-sufficiency in the village. Self-sufficiency as stated by Gandhi, is as much self-dependent as interdependent, when dependence becomes necessary in order to keep society in good order then it is no longer dependence but co-operation where each is equal to the other.
Gandhian economics brings a socialist perspective of overall development and tries to redefine the outlook of socialism. Gandhi espoused the notion of “trusteeship” which centered on denying material pursuits and coveting of wealth, with practitioners acting as “trustees” of other individuals and the community in their management of economic resources and property. Under the Gandhian economic order, the character of production will be determined by social necessity and not by personal greed. The path of socialism should only be through non-violence and democratic method and any recourse to class-war and mutual hatred would prove to be suicidal.
During India's freedom struggle as well as after India's independence in 1947, Gandhi's advocacy of homespun khadi clothing, the khadi attire (which included the Gandhi cap) developed into popular symbols of nationalism and patriotism. India's first prime minister, Jawaharlal Nehru was a socialist as well as a close supporter of Gandhi. While Nehru was influenced by Gandhi's aversion to the brand of socialism practised in the Soviet Union, he was also an exponent of industralisation and critical of Gandhi's focus on rural economics.
Gandhian activists such as Vinoba Bhave and Jayaprakash Narayan were involved in the Sarvodaya movement, which sought to promote self-sufficiency amidst India's rural population by encouraging land redistribution, socio-economic reforms and promoting cottage industries. The movement sought to combat the problems of class conflict, unemployment and poverty while attempting to preserve the lifestyle and values of rural Indians, which were eroding with industrialisation and modernisation. Sarvodaya also included Bhoodan, or the gifting of land and agricultural resources by the landlords (called zamindars) to their tenant farmers in a bid to end the medieval system of zamindari. Bhave and others promoted Bhoodan as a just and peaceful method of land redistribution in order to create economic equality, land ownership and opportunity without creating class-based conflicts. Bhoodan and Sarvodaya enjoyed notable successes in many parts of India, including Maharashtra, Gujarat, Karnataka and Uttar Pradesh. Bhave would become a major exponent of discipline and productivity amongst India's farmers, labourers and working classes, which was a major reason for his support of the controversial Indian Emergency (1975–1977). Jayaprakash Narayan also sought to use Gandhian methods to combat organised crime, alcoholism and other social problems.
The proximity of Gandhian economic thought to socialism has also evoked criticism from the advocates of free-market economics. To many, Gandhian economics represent an alternative to mainstream economic ideologies as a way to promote economic productivity without an emphasis on material pursuits or compromising human development. Gandhi's emphasis on peace, "trusteeship" and co-operation has been touted as an alternative to competition as well as conflict between different economic and income classes in societies. Gandhian focus on human development is also seen as an effective emphasis on the eradication of poverty, social conflict and backwardness in developing nations. Gandhian socio-economic ideas have gained the interest and attention of an increasing number of people across the world.