Most of the ideas that Mahatma Gandhi propounded and popularized focused on morals and spiritual values, which may not be directly related to economics or the way that economics is studied. But these values still play a huge role in the said discipline. It started from the days of the Mercantilists, who believed in the accumulation of wealth by means of a favourable balance of trade and the holding of a huge surplus of gold and silver. The philosophy of restrictions and emphasis on exports followed. Then came the Father of Economics, Adam Smith, who laid the foundation of what we call today’s Classical Economics, which is the economics of laissez-faire. They believed in industrialization and the automatic play of markets to reach an equilibrium with the least amount of interference from the government. This idea was later criticized by Keynes, after the Crisis of 1930s, as the markets weren’t able to come back to equilibrium by themselves and required the government as a mediator to create an equilibrium.
Later after the crisis, the way in which economists and people in general have started to look at this is the way Lionel Robbin has defined economics. “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses”. In its true sense, economics talks about unlimited wants and limited resources. It is here, where one of the quotes by Mahatma Gandhi needs to be looked at closely, as he says, “The earth has enough resources to satisfy one's needs, but not enough for one's greed." He was of the belief that the factor responsible for driving the world away from peace, happiness, and real prosperity was the multiplicity of wants.
His ideas were socialist in nature as they talked about full employment, fulfillment of basic needs by ethical means, and removal of poverty in order for one to stay happy and peaceful and to prosper forever. Through his journey to free India from British Rule, he was able to observe several things and suggested measures for the growth and development of a country, specific to the Indian state.
According to Gandhiji, the centralisation of economies seemed to be the root cause of exploitation, which led to unemployment and poverty in India as the power stayed concentrated in a few hands. This led to the rich getting richer and the poor people getting into more poverty - widening the gap between the two. Therefore, he believed in a decentralized economic system.
Watching rural India from up close, Mahatma Gandhi knew that India lived in its villages and that is the reason he believed in the growth of the rural economy. He was of the opinion that India could not be developed if the villages of India weren’t developed. Since the rural industries were based on family labour and required less capital, the goods could be sold in the local markets itself.
This way, production and market were both taken care of. He believed that village economies could provide maximum employment and income to the inhabitants, as well as generate equality. Therefore, he advocated the use of Charkha as a way to promote gainful employment for an able bodied individual. The charkha was a symbol of his views on how a person can earn his own livelihood and be self-reliant.
After watching India getting exploited by the Britishers, Gandhiji talked about Swadeshi and promoted Swadeshi goods. Though this idea sounds like a restriction to use products or services from foreign countries, this is not its true intention. The aim of Swadeshi ideology was the removal of unemployment and poverty. Through Swadeshi, he wanted the people to understand that they shouldn't compromise their own culture, tradition, values, resources, and shouldn’t get exploited by other countries. He wasn't against foreign goods which is clear from his own words, “It is criminally foolish to produce the goods which are not profitable to be produced in our country, and instead of producing them, we should import them."
Talking about equality, Gandhiji's idea of Sarvodaya, upliftment of all or progress of all, comes to mind. This is a concept commonly discussed in Economics. Sarvodaya is an agency of service for common welfare that is strictly against politics of power and exploitation.
Gandhiji believed that the capitalists and the rich people in a society should consider themselves trustees of the society. If a person has inherited a large fortune or has collected a large sum of money through business, trade, or industries, then the entire amount does not belong to him as the others were also part of the money cycle. And hence, the money belongs to society as a whole and should come back to society through social means. Therefore, they should make use of their wealth in order to benefit society as a whole. This was his philosophy behind the idea of a cooperative society in which everyone's development could be achieved. As the Capitalists will be the trustees of society, they will not only take care of themselves but also of others. Through this, a remarkable idea of equality can be achieved.
Many economists may not agree with his ideas in the economic ways that are followed nowadays, and it is very difficult to achieve a proper system in such a globalized world of billions of humans with billions of characteristics, However, very few would disagree with the fact that his ideas are extremely noble and a perfect fit for everyone who can follow his ideologies.