A Return To Gandhinomics

By Subhashish Bhadra (St. Stephen's College)

The 2008 recession brought into limelight the argument about rampant consumerism in the US and other western economies. Citizens and Governments of these countries were accused of spending beyond their means. However, consumption and production of goods as a basis of welfare has been so deeply ingrained in our psyche that these have become fundamentals that have never been questioned.

While there are various schools on development – most prominently the socialists and the capitalists- most of them agree that more goods are better than less, that more consumption is to be preferred to less; the only questions that are left are the hows and whats. It is surprising, and may I say a bit disappointing, that the thoughts of Gandhi were not given serious consideration even in his own land. Gandhi, I am sure, would be appalled by our craving for consumption. As he said, ‘the world has enough for man’s need, but not enough for man’s greed.’ While drafting India’s five-year plans, the debate was always about the level of state control and freedom of trade, rather than about the basic question of what we are trying to achieve. Was Gandhi’s conception of welfare and economics not even worth an afterthought? This forms the theme for the rest of my article.

It is true that output, as measured by GDP, is an indicator of national welfare. Rank the countries according to per capital GDP, and chances are that you have actually ranked them in terms of development. However, do you value a 2,000 dollar increase in per capita GDP more than political freedom, or basic law and order? This is where the measure of GDP becomes ineffective.

My personal issue with GDP as a measure of growth is its linearity, i.e. 1 dollar worth of goods produced by a country with a per-capita income of 500, and another with a per-capita income of 30,000 are valued equally. This creates perverse incentives. As an economic planner of a country who must show results, I have an incentive to continue to produce indefinitely, because each successive unit contributed equally to my performance measured by GDP.

This is what I believe could be a mathematical expression of Gandhi’s problem with consumerism. Man’s needs are limited – food, clothing and shelter. Beyond these basic needs, consumption should not be given much importance. If our measures of welfare based on national output were designed such that every successive unit was valued less, then we get rid of this problem, because every unit of production beyond what is the ‘need’, would not count for much. Consumer fetishism will cease to be a problem because beyond a point, additional units of consumption would almost be worthless. The consumeristic mentality would break down, and we will finally be able to focus on the ‘soft’ aspects of life – political freedoms, economic equality and environment.