Schumacher on Gandhi – by Surur Hoda

This essay first appeared in ‘Gandhi and the Contemporary World’, edited by Antony Copley and George Paxton, and published by the Indo-British Historical Society in 1997. The author, Surur Hoda, was one of the founders of The Gandhi Foundation

Gandhi’s visions of Gram Swaraj (i.e. self-sufficient but inter-linked village republics with decentralised small-scale economic structure and participatory democracy) left him immediately at odds with many in the Indian National Congress and outside who sought to develop India as a ‘modern’ industrial nation state. To Gandhi, political freedom was merely the first step towards attainment of real independence which entailed achieving social, moral and economic freedom for seven hundred thousand villages. ‘If the villages perish India will perish’ he had said. But the majority of academically-trained, so-called modern economists called his vision ‘retrograde’. Some extremists even described it as ‘reactionary’ or ‘counter-revolutionary’ which aimed to put the clock back.

Many of those who admired his skill in leading the struggle for national liberation reluctantly tolerated his views as the price to pay for his political leadership. They were sold on the concept of large-scale urban industrialisation, mass production and economics of scale. They failed to understand Gandhi’s economic insight and criticised him by saying ‘Whatever Gandhi’s merit as “Father of the Nation”, he simply does not understand economics.’

Yet almost a quarter of a century after his assassination, Dr E F Schumacher, when delivering the Gandhi Memorial Lecture at the Gandhian Institute of Studies at Varanasi (India) in 1973, described Gandhi as the greatest ‘People’s Economist.’ In his opening remarks, Schumacher told a story which went something like this. ‘A famous German conductor was once asked who did he consider as the greatest of all composers. “Unquestionably Beethoven” was his answer. He was then asked “Would you not even insider Mozart?” He said “Forgive me.” I thought you were referring to the others.’ Drawing a parallel Schumacher said the same initial question might he put to an economist as to who was the greatest. The reply might come ‘Unquestionably Keynes.’ Would you not even consider Gandhi?’ ‘Forgive me, I thought you were referring to the others.’

Schumacher indentified Gandhi as the people’s economist whose economic thinking was compatible with spirituality as opposed to materialism. He said: ‘Gandhi refused to treat economics as if people did not matter.’ Gandhi had his finger on the pulse of the masses and therefore when someone put it to him that no religion was any good that did not make sense in terms of economics, Gandhi countered that no economics was any good that did not make sense in terms of morality and the poor masses. Schumacher therefore interpreted Gandhian economics as people’s economics and explained the difference between economic reasoning based on ‘people’ as against ‘goods’, as was the case with materialistic economic thinking.

Schumacher explained that economic reasoning based on ‘goods’ would be solely concerned with increasing the supply of goods by means of advanced technology scientific knowledge and modern equipment. Based on this line of thinking industries should be large scale, highly sophisticated, capital intensive and labour saving, even to the point of total automation. From the ‘goods’ point of view, human beings were not ideal agents of mass production because they tended to make mistakes, were unpunctual, argued back and joined trade unions. The ideal therefore was to eliminate the ‘human factor’.

However, if the economic means of development was based on people, as with Gandhian thinking, one had to direct attention to people in need and start asking why are they poor; if it was because their productivity was zero, how then could this he raised?

With this line of reasoning eradication of worklessness was of paramount importance. The most disturbing aspect of most developing countries, Schumacher thought was the fact that millions and millions of people were without work or at such a low level of productivity that it was negligible.

How could these people be helped to help themselves? It was in order to address this issue that Gandhi gave a call for ‘production by the masses’ instead of ‘mass production.’ While giving his prescription to the nation, he said that

‘the salvation of India is impossible without the salvation of the villages and their poor inhabitants.’

The Gandhian Prescription

When asked how Gandhi, were he alive today, would view India’s present situation after three decades of independence, Schumacher pointed out that the number of rich, even very rich, people in India had increased as had the number of desperately poor people. He added that the situation in India reflected the situation of the world as a whole and Gandhi would undoubtedly consider this a sign of grievous failure. The obvious question, Schumacher asked, was

‘Why has it not been possible to help millions of unemployed and underemployed people to help themselves out ot poverty?’

The answer, Schumacher added, was that an approach to economic problems which started from ‘goods’ and therefore aimed to eliminate the human factor from the productive process could not possibly lead to constructive job provision. Gandhi would not have found it difficult to understand this. Schumacher prophesied that if the next twenty-five years in India produced a continuation of the trends of development based on the Western model established since independence, the outlook for the mass of poor people was grim, even hopeless.

Referring to the Western world, Schumacher said that ‘it is now widely accepted that there are limits to growth on the established pattern, so that, in all probability, the trends established over the last twenty-five years could not be continued even if everybody wished to do so. The requisite physical resources were simply not there, and living nature all around us, the Ecosystem, could not stand the strain. Gandhi had always known, and rich countries are now reluctantly beginning to realise, that their affluence was based on stripping the world. The USA with 5.6% of the world population was consuming up to 40% of the world’s resources, most of them non-renewable. Such a lifestyle could not spread to the whole of mankind. In fact, the truth is now dawning that the world could not really afford the USA, let alone the USA plus Europe plus Japan plus other highly industrialised countries. Enough is now known about the basic facts of spaceship Earth to realise that its first class passengers were making demands which could not be sustained very much longer without destroying the spaceship.’

Schumacher summed up Gandhi’s prescription for the salvation of India and in deed for the whole world as follows:

  1. Start all economic reasoning from the genuine needs of the people and help the poor to help themselves out of poverty.
  2. Revitalise and foster not only agriculture as such but also all possible productive, non-agricultural activities in the rural areas such as cottage industries for potters, weavers, shoemakers, carpenters, blacksmiths etc.
  3. Resist the further concentration of the growing population in large cities by reversing the trend of migration from rural to urban areas.
  4. Develop systematic policies, based on the best available knowledge for the mobilisation of all productive resources, the greatest of which is the population itself.

Only by following the above mentioned prescription, Schumacher thought, would developing countries such as India hope to feed, clothe, house and provide the bare necessities of life for their teeming millions.

He then went on to identify the five main pillars of Gandhian economic thinking.

  1. Nonviolent
  2. Simple
  3. Small
  4. Capital Saving
  5. Rural Based (Self Reliant and Employment-Orientated)

1. Nonviolent

Referring to the deep trouble in which the modern world found itself and the ecological crises facing it, Schumacher said that to most people this had come as a sudden shock. However, it would not have come as a surprise to Gandhi were he alive today. Gandhi perceived that the modern urban-based industrial civilisation was exploitative and violent. Gandhi did not employ nor did he require a computer to arrive at his conclusions. Common sense told him that Western style industrialisation was inherently violent and could never be implemented for the whole of mankind.

‘It would strip the world like a locust’

Gandhi had said and had warned that

‘For India to change to industrialism is to court disaster.’

Gandhi abhorred the industrial civilisation because it was based on callous exploitation of non-renewable resources. It made bodily welfare the sole object of life. which reduced man to nothing but a clever animal. It was the tendency of Indian civilisation and Indian philosophy, however, to make man better than he was and Gandhi therefore wanted India to follow a different path of development. Today people particularly the young, in the rich as well as poor countries, are looking for just this: a different path of development, a different type of society, a different lifestyle.

Schumacher, describing ‘Nonviolence’ as a Gandhian term, widened its concept to include not merely the violence of man against man, but also the violence of man in his dealings with living nature around him and violence against the limited and finite resources of the Earth. Taking agricultural research as an example, Schumacher said that this was all based on violence — the use of insecticides, herbicides, fungicides. chemical fertilizers and the breeding of plants and animals which depended on the creation of highly abnormal living conditions. As a consequence modern agriculture had become a gigantic battle with nature instead of a careful, devoted striving to gear in with her unbelievably gentle and efficient methods. Organic agriculture based on the strict observance of biological laws, the proper recycling of organic materials, decentralising, diversification and good husbandry, was receiving virtually no support and attention. Yet there could be no disagreement that agricultural systems which depended completely and utterly on cheap availability of non-renewable materials such as oil had no long-term future. But a civilisation ruled almost exclusively by town dwellers was always in danger of forgetting this basic truth.

‘As in agriculture, so in industry and in every other walk of life’, Schumacher went on, ‘we need to give our attention to the developing and perfection of nonviolent methods to find answers to the threefold crises of the modem world the crises of resource exhaustion, the ecological crises and the crises of man’s alienation and dis orientation. All this requires work ie Gandhian work with a spirit of truth and non violence which inspired Gandhi.’

2. Simple

A simple lifestyle was Gandhi’s hallmark. At his death his sole possessions were a pair of slippers, a watch, a pair of glasses and a few loin-cloths. He lived in poverty by choice most of his life in line with his motto

‘Simple living and high thinking.’

Quoting Gandhi’s

‘High thinking is inconsistent with complicated material life’,

Schumacher said that all real human needs were essentially simple, therefore only frivolities and extravagances like supersonic transport were inevitably complex. Complexity had to be seen not as a sign of progress but as a mark of failure. It entailed the need for extreme specialisation so that men became ‘fragmentary’, too specialised to be able to obtain wisdom. Schumacher maintained that the essence of the message of all the prophets and philosophers born in the East was a simple lifestyle.
In an attempt to emphasise this point Schumacher added that in the area of economics modern civilisation was moving at ever-increasing speed towards immense complexity and high capital intensity with the sole object of increasing gross national product, growth rate and per capital income. Referring to his experience in one of the Eastern countries in the early 1960’s, he said:

“This struck me very forcibly in Burma when I considered what my economist colleagues told me that the national income per head in Burma was £20 a year and I recalled wartime England, when a very effective official policy squeezed us down until the pips began to squeak and when the economists added it up, and the income per capital then calculated was £200. Now this is a comparison which ought to arrest our attention: with something in the order of £200 we could only just exist, and in other places of the world, with something called £20 they too can just exist. Are these genuine comparisons? They point not to differences in wealth but to differences in living patterns and life-styles. One pattern manifests and reflects itself in economists’ calculations as £20 per annum per head and another at its minimum level, to basically the same job, ie just to carry the person through the year, manifests in the economists’ book as £200 a head. If it were possible in the economy which has a pattern and is symbolised by the figure of 20 a head, to increase national income so that the 20 would become 30 or 40, while yet adhering to the same life-style, you would have transformed that country into the nearest thing to paradise on earth. But in doubling the national income and allowing the pattern to shift from your indigenous to an American one, which does not begin to function unless it is endowed with, in my symbolical statistics of £200, then the result would be simply disappoint ing although the economist will think that you have doubled the nation al income, but contrary to economists’ estimation the country would rather slip into a slum economy than an economy of affluence, as the £40 a head income under altered conditions cannot even be enough to meet bare needs. Recognising that there are in fact two economics and two life-styles and that is the trickiness of the problem we can recognise a two-fold need, namely to make a success of the westernised sector and to make a success of the rest.”

3. Small

Referring to his book Small is Beautiful, Schumacher said that when Gandhi said

‘Not mass production but production by masses,’

or when he talked about

‘decentralised rural based self-reliant economy,’

or when he demanded that

‘production and consumption must be reunited,’

he was talking the language of Small is Beautiful.

‘Man is small and man is — or ought to be — beautiful and as such only the human scale economy of Gandhi’s dream is appropriate’,

said Schumacher. The greater the size of the production unit, the greater the separation of production from consumption. Reuniting production and consumption units was only possible if production units were small. It would be easy to manage and adaptable to local conditions. One of the enormous advantages of small-scale production, reunited with small-scale consumption, was the minimisation of transport. Mass production entailed increased transport which added to the cost but never added anything to the real value of goods.

Modern economic thinking celebrated high speed and massive goods transport as wonderful achievements and included their costs in the gross national product as an indicator of economic progress. Post-modern thinking, according to Schumacher, would conceive the negative theory of transport, looking upon the need for goods transport primarily as an indicator of failure, proving that goods were being produced in the wrong places. This kind of thinking was already quite familiar to the factory planners and production agencies who strove for the minimisation of transport inside the factory and did not take pride in creating an elaborate infrastructure just for transporting goods from place to place.

The same thinking applied to society as a whole, which would never lose sight of the ideal, that things should be produced where they were needed. To use Gandhi’s language:

‘Production and consumption should become reunited,’

or, to use another phrase of Gandhi’s:

‘Bring work to the people and not people to the work.’

Hence the need Schumacher emphasised for the development of small units, to fit into small scattered markets. ‘Can we utilise science and technology to this end?’ Schumacher asked. It was important to ask our scientists and technologists to use their knowledge and ingenuity not to make production units even bigger — seeking so called economics of scale — but to develop mini-plants so that people living in small communities in rural areas could again become productive, without being dependent on people already rich and powerful to provide ‘job opportunities’ for them.

‘Economics of scale, which may well have been a nineteenth century truth, can be shown to be a twentieth century myth’, said Schumacher.

4. Capital Saving

One of the pillars of Gandhian economic thinking was capital saving. Tragically, Schumacher pointed out, the world was moving at ever-increasing speed into large-scale, immense complexity, high capital intensity, and elimination of the human factor: which was leading mankind into a crisis of survival. One of the reasons for Gandhi’s opposition to capital intensive and complex machinery was the fact that it turned a large number of people into ‘machine minders.’ This did nothing to develop their personalities and merely robbed them of their creative power. Schumacher supporting Gandhi said that, in addition, highly capitalised modern, complex and gigantic technology had proved monstrously inefficient in solving the problems of the world. He added:

‘If an ancestor of long ago visited us today, what would he be more astonished at? The skill of our dentists or the rotteness of our teeth? The speed of our transport or the length of time and the discomfort incurred in our travelling to and from work? The progress of our medicine or the overcrowding of our hospitals’! Our ability to land man on the Moon or our inability to find employment for people wanting work! The efficiency of our machines or the inefficiency of our system as a whole?’

Admiring Gandhi’s sureness of touch, Schumacher said: ‘Gandhi knew that a capital intensive economy could never solve India’s unemployment problem, and went on to explain by giving an example. He said that in order to establish one work place it cost 100,000 Rupees and if you had 100 Crores (1 Crore = Rs. 10,000,000) you could establish only 10,000 work places. If one had to tackle an unemployment problem which ran into hundreds of millions, one could see the problem facing a poor country like India.’

Quoting another example, Schumacher said that he went to see a village potter, who was a marvellously skilled man but who had very primitive technical equipment worth Rs. 50. He then went to a city and met another potter minding a machine tool imported from Belgium, the price of which was in the region of Rs 500,000. Evidently the worker could never afford that kind of money to set himself up in business and as a consequence would be forced to go to a big city like Bombay, where there were already hundreds of thousands of unemployed people. It therefore followed that constructive job provision was only possible if one followed the Gandhian prescription, namely to design work to develop modes of production which fitted into the actually existing conditions in terms of capital availability relative to labour availability. In other words: systematic development of technologies cheap enough in terms of capital to give the chance of work to everybody.

5. Rural Based

As stated earlier, to Gandhi political independence was merely ‘the first step’ towards the attainment of real independence: i.e. social, moral and economic independence in terms of India’s seven hundred thousand villages as distinct from its cities and towns. In a document which has become known as his ‘Last Will and Testament’ he provided a guideline to his followers to follow the Sarvodaya (Welfare of All) Movement for the uplifting of the villages. Quoting Gandhi

‘You cannot build nonviolence on a factory civilisation, the economy which I conceived eschews exploitation, because exploitation is the essence of violence. You have to be rural minded before you can be nonviolent ‘

Schumacher described him as a nonviolent social revolutionary. Schumacher said: ‘The grand objective of the Sarvodaya Movement as conceived by Gandhi and pursued by his followers was the total reconstruction of society. This meant that the village would become the basic unit of politics, economy and society. In such a unit agriculture would remain the basic industry but other small scale village industries using the most modern technology where it did not conflict with human needs would be developed. In short Gandhi’s dream was to develop a decentralised economy in which each basic unit would be self-sufficient in meeting its main material needs — food, clothing and housing.’

Schumacher regretted that the Government of India in the post-independence period did not pay much heed to the Gandhian dream and sought to develop India as a modern, industrialised nation state. Though India was on the way to becoming the tenth largest industrial state, Schumacher thought it remained a predominantly rural based agricultural economy.

Despite the fact that almost 80% of the Indian people lived in the villages, no proper attention was given to improving the quality of life and creating employment opportunities in rural areas. As a result there was a large migration of people in search of employment from the rural areas to the cities where they only swelled the ranks of the slum dwellers. The only way to reverse this trend and save the villages of india from perishing was to create small village industries with the help of appropriate technology, thought Schumacher.

Big city-based industries and mass production methods destroyed the productive capacity of the rural inhabitants and robbed them of their means of livelihood. Citing an example of how villages had been deprived of their employment opportunity, Schumacher said: ‘Once the paddy grown in the village was hand pounded in the village itself and consumed by the villagers, the surplus being sent to the nearest town or area where there was a shortage. Now all the paddy grown is taken by improved means of transport to the rice mills in a large city where it is pounded and sent back to the villages infected with all kinds of diseases. The village workers have lost their jobs and the net result remains the same, if not worse. What ought to have been done is to introduce improved paddy threshing equipment in the village itself. Unless we put all the able-bodied young men and women to productive use in the villages it would not be possible to pull India out of the massive poverty in which it finds itself,’ said Schumacher and quoted Gandhi as follows:

‘If we tap all our resources, I am quite sure, we can again be rich, which we were I suppose at one time. We can repeat the phenomenon if we profitably occupy the idle hours of the millions.’

‘To occupy the idle hours of the millions’ was the most serious challenge facing a country like India, said Schumacher and added that no country could develop without letting the people work. The greatest deprivation that anyone could suffer was to have no chance of making a livelihood. He questioned the wisdom of maintaining an educa tional system with 50 million people in primary school, 15 million in secondary school and roughly 1/2 million in institutions of higher learning unless at the end of the pipeline there was something for them to do. One way to occupy the idle hours of the millions in the village of India was to embark upon self-help projects.

Giving an example of self-help, he said ‘One of the greatest teachers of India, Lord Buddha, included in his teaching, the obligation of every good Buddhist to plant and see to the establishment of one tree every year for five years running. This in five years would give 2,000 million trees. The economic value of such an enterprise, intelligently conducted, would be greater than anything promised by five-year plans. It would produce foodstuffs, fibres, building materials, shade, water — in fact almost anything that is ready needed. And all this would have been done without a penny of foreign exchange and very little investment.’

According to Schumacher, Gandhi identified himself completely with the naked, hungry, starving millions of India and fought all his life to improve their lot. This is evident from the advice he gave to his followers which is know as ‘Gandhi’s Talisman.’

‘Whenever you are in doubt, or when self becomes too much with you, apply the following test: recall the face of the poorest and the weakest person you may have seen, and ask yourself if the step you contemplate is going to be of any use to that person. Will that person gain anything by it? Will it restore that person’s control over his or her own life and destiny? In other words, will it lead to Swaraj for the hungry and starving millions? Then you will find doubts and self melting away.’

This talisman is a challenge even today to all the decision makers of Gandhi’s India.

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Categories: Gandhian Economics

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2 Comments on “Schumacher on Gandhi – by Surur Hoda”

  1. May 15, 2011 at 5:29 pm #

    Just recently assumed position of Programme Coordinator: Education & Heritage at Gandhi Development Trust in South Africa. Valued greatly the above and can readily understand the philosphy expressed here. Will keep you posted on our work.

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  1. Seminar on the future of Indian village development in partnership with Oxford University | Jeevika Trust - August 27, 2013

    […] Jeevika Trust draws inspiration for its mission to tackle the roots of poverty in India by revitalizing rural communities through inclusive, harmonious sustainable development from the economic philosophy of Gandhi and E.F. Schumacher (For an article on Gandhi’s influence on Schumacher click here). […]

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