Gandhi-Chapter III: Jayaprakash Narayan

III. Jayaprakash Narayan“Looking back, it seems clear that he [Gandhi] had already begun to lay the foundations
for his future course of action. But the significance of what he was doing was entirely lost upon me, as perhaps upon
many others.” --J.P. Narayan, 1957 [*] In 1936 Jayaprakash Narayan (also known as J.P.) wrote, “The
answer will be found in the origins of unemployment under capitalism. What do we find there ? We find that production
has been curtailed ruthlessly; factories are lying idle; credit is frozen; warehouses are glutted. At the same time we find
people who are in dire need of all the things that are locked up in warehouses or wantonly destroyed by the State and
the capitalists. On the one hand, there is said to be overproduction; on the other, an appalling
underconsumption. “Can there be anything more contradictory than this ? Yet it is one of the most persistent
characteristics of capitalism. It is clear that in a world where the vast majority of people live in dire need there can be no
overproduction. All that can be produced today, and a thousand times more, can be consumed without any difficulty. But,
then, where is the rub ? The rub is in the fact that the poverty of the people , their lack of purchasing power, does not
allow them to buy the goods that are lying idle or being dumped into the sea or thrown into the bonfire. The purchasing
power of the great majority of the people in capitalist countries comes from the wages they receive; and the latter are
kept down as low as possible by the capitalists so that their profits may be the highest possible. Thus a vicious circle is
drawn. The capitalist goes on manufacturing goods so that by selling them he may draw his profit, at the same time he
restricts the consuming power of the community by his policy of wages. Naturally, there is maladjustment between
production and consumption; and he periodically finds that he has produced ‘too much.’ Then he restricts
production and throws his workers out of employment.“Now, it should be clear that if goods were produced for
consumption and not for the profit of a few, all that was produced would be consumed. There would be no limit to the
purchasing power of the people except the supply of good itself, because ‘wages’ would represent under
those conditions the sum total of consumption goods produced. Overproduction would arise only when the needs of the
community have been satisfied, and these, as I have already indicated, are almost insatiable. Restriction of production
and de-mechanization would not be necessary till that point has been reached.” (1)Narayan wrote in the depths of
the world depression of the 1930s, and in the following pages other references will be made to it. However, there are
always involuntarily unemployed people, many with unsatisfactory employment, a great deal of underutilized capacity,
and many unmet needs that could be met if underutilized resources were mobilized to meet them. In what follows the
depression of the 1930s is to be understood as a convenient and dramatic symbol standing for social arrangements that
are always dysfunctional, even when there is no depression. Narayan asserts that the cause of unemployment, which is
an aspect of the larger problem of simultaneous overproduction and underconsumption, is the lack of purchasing power
of the workers. The lack of purchasing power, in turn, is caused by exploitation. The workers are the producers, but the
owners own the products of the workers’ alienated labor. The owners sell the products, and pay the workers who
make them whatever the law of supply and demand compels them to pay, keeping the rest of the revenue for
themselves. (Marx, following Ricardo and Smith, thought workers would get only enough to subsist on, but the argument
does not depend on whether wages are at a subsistence level or higher.) If, Narayan reasons, the producers were also
the owners, so that their would be no deduction from their incomes to pay for what Paul Baran called the
“permissive acts” performed by owners who charge for allowing the use of the assets they own, then
worker purchasing power would be higher. There would be no underconsumption because workers would have more
money to buy things. There would be no overproduction because everything that could be produced could be
sold.Narayan’s 1936 account of the cause and cure of simultaneous overproduction and underconsumption can
be criticized from Marxian, Keynesian, and Gandhian viewpoints. Of the three, the Gandhian is the most fundamental. It
is the one which brings into focus the basic structures of the modern world which are at the root of the causes, and which
must be transformed to effect a cure.From a Marxist viewpoint it must be said, contrary to Narayan, that even when the
means of production are owned by the producers, the proceeds from the sale of all the goods produced will not go to
wages. Narayan allows for this by specifying that wages would equal only the sum total of consumption goods produced,
recognizing that some goods are production goods which cannot directly be consumed, but only indirectly consumed
through their role in augmenting future production. The percentage of productive effort devoted to making consumption
goods may be rather small if a Stalin or a Nehru is intent on major investments in heavy industry in order to industrialize
a backward country rapidly. But whether or not consumption goods production is deliberately restricted to promote saving
and investment, wages will not be equivalent to the sum total of consumption goods produced. There are several
reasons why the workers will not receive as wages the equivalent of all they produce, even when the capitalists have
been dispossessed and the workers are the owners. In 1875, when the German social democrats proposed that workers
should be paid the undiminished proceeds of what they produced, Karl Marx explained that before the workers could be
paid, there had to, “be deducted:“First, cover for the replacement of the means of production used
up.“Secondly, additional portion for expansion of production.“Thirdly, reserve or insurance fund to provide
against mis-adventures, disturbances through natural events etc.“These deductions from the ‘undiminished
proceeds of labour’ are an economic necessity, and their magnitude is to be determined by available means and
forces, and partly by calculation of probabilities, but they are in no way calculable by equity.”After the above
deductions, there are other, social, deductions:“First, the general costs of administration not belonging to
production……”“Secondly, that which is destined for the communal satisfaction of needs, such
as schools, health services, etc…..”“Thirdly, funds for those unable to work etc. ….” (2)If,
then, even when the producers own the means of production, the money the workers are paid still has a value less than
what it would cost to purchase their products, then there is still a tendency toward simultaneous overproduction and
underconsumption. This tendency might be reduced by purchases by those unable to work, as under capitalism it is
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reduced by purchases by the profit-making classes. Narayan in the passage quoted properly assumes that where the
bulk of the people live on wages the purchases of the non-working classes will not be enough to stabilize the system.
The situation is not likely to be different when there are fewer non-workers. A socialist dictatorship might solve the
problem by force. If there is enough surveillance and enough discipline, then people might be compelled to continue
producing even where there are no willing buyers with enough money to buy their products. Or as Che Guevara
proposed, people might be persuaded to engage in economic activity when it is not profitable or in their self-interest to do
so by moral suasion. Or by some combination of force and moral suasion. If production does not depend on profit, or on
people thinking it worth their while to work, but can instead by motivated by other motives –including but not
limited to fear of punishment—then factories need not lie idle for lack of effective demand. Nor need the products
lie in warehouses unused for want of buyers. They could be given away free, or they could be allotted through a rationing
system in which money plays a reduced or even negligible role. In 1936 Narayan offered the Soviet Union as proof that
his argument was true. He pointed out that all the capitalist countries were mired in the depths of the Great Depression,
in which idle hands, idle lands, and idle factories coexisted with unmet needs. Only the Soviet Union, he said, had full
employment and a stable economy. He was not, by the way, quite right to single out the Soviet Union in this way, since
there was also full employment and a stable economy in another country which disregarded the laws of capitalist
economics and made the economy run with other motives, Hitler’s Germany. (3) In any case, if the reflections
made here are valid, the Soviet Union did not prove Narayan’s point. The problem to be solved was harder than
Narayan thought it was. If the Soviet Union solved it, it did not do so by making wages equal to the sum total of
consumption goods produced. It had to use other means. After 1936, as credible evidence of atrocities poured in,
Narayan gradually changed his mind about the Soviet Union. He ended up concluding not only that the Soviet
experience represented a cure worse than the disease, but also that its evils were not simply due to sociopathic
personalities like Stalin, but were inherent in its principles.The case of the Soviet Union does not demonstrate the validity
of Narayan’s 1936 solution to the problem of simultaneous overproduction and underconsumption. If it
demonstrated a solution to the problem at all, it did not demonstrate a desirable one.John Maynard Keynes attributed the
problem to a different set of causes. He proposed a different cure. At a practical level, Keynes consciously sought an
alternative to Marx. He wanted to find ways to stabilize an economy and to promote social justice (at least to a limited
extent) without major changes in the ownership of the means of production. At a theoretical level, he did not need to add
anything to the criticisms of Marxian theory that had already been written by others. Keynes was initiated into the
profession in the heart of an economic orthodoxy that had already decided, beginning at the first publication of Capital
and continuing forward from there, that Marxism was more metaphysics than science. His father John Nevile Keynes was
a professor of economics; he studied economics at Cambridge under Alfred Marshall; he became editor of the Economic
Journal, the leading British academic journal in the field. His theoretical concerns were those of a community of scholars
that had already decided that Marx was wrong.Keynes could take it to be assumed in his milieu that the sort of thing he
was doing was more scientific than anything Marxists were doing. That put Gandhi two down. The passage I quoted at
length above from Jayaprakash Narayan was taken from a chapter in Narayan’s book Why Socialism? which was
written as a refutation of Gandhi. Narayan there argued that Gandhi’s approach was merely ethical and religious,
which was equivalent to saying that it did not provide valid explanations of the cause and effect relationships that
determine what happens in the world. Narayan contrasts Marxism with Gandhian thought by claiming that Marx was
scientific. Exhibit A of Narayan’s proof that Marx was scientific and Gandhi was not is in the passage I quoted.
Marx could explain simultaneous overproduction and underconsumption. Gandhi could not. Narayan attributed to Gandhi
the naïve view that the cause of unemployment was machinery. The true cause, had been proven by Marx (according to
Narayan) to be the exploitation of labor rooted in the private ownership of the means of production. If the weight of
opinion of the majority of the economics profession, including Keynes, was that orthodox economics is more scientific
than Marx, and if Marx is more scientific than Gandhi, that makes orthodox economics very much more scientific than
Gandhi. Gandhi was two down.For Keynes the context of finding a scientific explanation for the same great depression of
the 1930s that Narayan explained in Marxist terms, was that of an economics profession that had long ago left Marx far
behind, or at least thought it had. For Keynes, the lack of sufficient purchasing power to buy the products of industry, and
the consequent idling of industry and laying off of workers even while needs were not being met, was not a problem
defined in terms of what Marx would call relations of production. The problem was defined in terms of what Marx would
call the level of circulation. According to the labor theory of value, as Marx applied it, the secret of profit-making (and
also, according to Narayan, the secret of simultaneous overproduction and underconsumpton) could only be discovered
by going deeper than the level of circulation to analyze the exploitation of labor at the level of the relations of production.
But for orthodox economists the law of supply and demand was science while the labor theory of value was not science.
The latter was metaphysical nonsense. The problem, for Keynes, was to explain why the law of supply and demand did
not bring about a satisfactory equilibrium. The depression was an equilibrium of a sort. Prices were fixed at the levels
people were willing and able to pay. The amount currently produced (disregarding unsold amounts left over from prior
overproduction) was the amount the market effectively demanded. If more were produced it would not be sold; if prices
went down it would not be worthwhile to produce as much and supply would decline; if prices went up people could not
or would not pay the higher prices. In these respects the law of supply and demand was working just as it was supposed
to work. But, as Narayan said, “factories are lying idle; credit is frozen; warehouses are glutted. At the same time
we find people who are in dire need of all the things that are locked up in warehouses or wantonly destroyed by the State
and the capitalists. On the one hand, there is said to be overproduction; on the other, an appalling
underconsumption.” According to Say’s Law, supply produced its own demand. Therefore, if there was a
supply of workers willing and able to work, then there must be a demand for them. Demand for investment capital was
supposed to be a function of the price of money, that is to say of the interest rate. But in the depression interest rates
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went down to one percent, and sometimes neared zero percent, and still nobody wanted to take the risk of borrowing
funds to put them to work to earn profits. The valiant efforts of classical economists to massage the data and tweak the
theory to make them fit each other were in vain. Keynes took large notice of the fact that in any given society for any
given period, total purchases must equal total sales. This is an accounting identity. (I mention that it is an accounting
identity partly in order to point out that economics is not always social physics; it does not always take concepts from
mechanics like elasticity, equilibrium, and so on and postulate equivalents to them in the social world that can be treated
with the same mathematical tools.) The accounting identity must be true because each exchange transaction is a
purchase from one party’s point of view and a sale from the other party’s point of view. All the money
spent is the same as all the money taken in as receipts. (I think this general point holds up well enough when it is
complicated by considering three party transactions, delivery of goods to be paid for at a later date, and so on
….)But people do not in fact spend all they earn. Already, Alfred Marshall, Keynes teacher at Cambridge, had
written in a critique of John Stuart Mill’s version of the supposed law that supply creates its own demand:
“But though men have the power to purchase, they may not choose to use it.” (4) For Keynes,
“…when our income increases, our consumption increases also, but not by so much. The key to our practical
problems is to be found in this psychological law. …. This analysis provides us with an explanation of the paradox of
poverty in the midst of plenty. For the mere existence of an insufficiency of effective demand, may, and often will, bring
the increase of employment to a standstill before a level of full employment has been reached.” (5)Because of the
psychological law, as Keynes called it, that people prefer not to spend all they earn, there will always be a certain amount
of savings, except perhaps in the extreme case where everybody is living from paycheck to paycheck This is a good
thing if you want there to be funds available for investment. It is a good thing if you want people to postpone consumption
and put their money in banks, and stocks, and bonds, and insurance, and corporate retained earnings, and government
budget surpluses etc. in order to bring into play what Ludwig von Mises called “round about methods of
production.” Savings make possible a world where instead of living from hand to mouth people can enjoy the
benefits of incomparably more efficient round about production methods, which can only be enjoyed after long lead times
needed for research and development and/or long lead times needed for the installation of expensive equipment, such
as, for example, dams, hydroelectric generators, long distance transmission lines, and the wiring for electricity of all the
buildings in all the neighborhoods of a large city. But the inevitability of savings is not necessarily a good thing from the
point of view of the accounting identity noted above. If business equals production for profit, and production for profit
depends on sales, and every sale is somebody else’s purchase, then it is not clear how business is supposed to
continue from one time period to another. If all the money spent is all the revenue, and if some of the revenue is set
aside for savings, then there will be less money spent the next time around. And therefore less revenue. All would be well
is all the money saved were invested. Then all the money would be spent the second time around. It would not all be
spent by consumers, but it would be spent by somebody; it would be spent by consumers and investors combined
(leaving aside as not essential to the present point government spending and foreign trade). Keynes locates the problem
in the tendency of investment to lag behind savings. Differing from Narayan’s focus on worker purchasing power,
Keynes locates the problem in total purchasing power, also known as aggregate demand. If there is plenty of investment,
then the circulation process can continue indefinitely, with their always being enough revenue in somebody’s
hands to carry on a steady stream of sales transactions producing for ever and ever steady streams of revenue. This
reasoning, this mindset, this institutional framework, lead to the growth imperative. Whatever other reasons a modern
economy may have for wanting to grow, there is an accounting identity that compels it to grow. There has to be enough
investment to sop up savings and thus ward off what is called a “downturn” where goods cannot be sold
and workers cannot be employed. But investment only happens when investors rationally believe that at some future
date they, or the enterprise they are investing in, will be the owners of some product that can be sold at a profit. Hence
more and more products must be brought to market for the sake of the stability of the system, independently of the
ethical or ecological reasons which may or may not justify bringing to market more products or bringing to market any
particular product. The government can prohibit the production of products it might deem harmful, such as cigarettes or
sports utility vehicles or pornography or violent television shows seen by children, but if it prohibits them it makes
compliance with the growth imperative harder to achieve. Then some other profitable ways to invest capital must be
found to make up for the prohibition against making money by means the legislature deems harmful.Keynes and
Keynesians have generally not been notably concerned with weeding out undesirable businesses. Keynes himself
frankly admitted that the health of the economy required vice, not virtue. Their efforts have been devoted to keeping
economies stable by using some combination of policy instruments to avoid overproduction. They advise governments to
pump money into the system, or encourage others to pump money into the system, so that there will be enough
purchasing power to avoid major gluts of unsold products and thus keep productive processes humming along at some
reasonable more or less normal level. In his General Theory Keynes argued against his neo-classical colleagues that the
low level equilibrium of the great depression was not a freak It was not something that was going to go away by itself. To
make it go away governments and reasonable people in the private sector had to do something about it.To stabilize the
economy Keynes advocated a number of measures that defied the common sense of people brought up to believe that
the purpose of business was to make money by producing some useful product or service, and that the measure of
business success was the accountant’s balance sheet. Deficit spending by the government in hard times is one of
the most famous. He identifies the problem using a kind of reasoning that follows out what happens when account books
are kept.In important ways Keynes identifies the solution to the problem with being able to move beyond an accounting
mentality. It is better to put people to work doing something useful than to leave them idle, regardless of what the
bookkeepers say about it. Keynes asked people to see the physical and human realities that sometimes became invisible
when the world was viewed through the conceptual lenses of accountancy: “The nineteenth century,” he
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wrote, “carried to extravagant lengths the criterion of what one can call for short “the financial
results” as a test of the advisability of any course of action sponsored by private or by collective action. The whole
conduct of life was made into a sort of parody of an accountant’s nightmare. Instead of using their vastly
increased material wealth and technical resources to build a wonder city, the men of the nineteenth century built slums;
and they thought it right and advisable to build slums because slums, on the test of private enterprise,
‘paid’, whereas the wonder city would, they thought, have been an act of foolish extravagance, which
would, in the imbecile idiom of financial fashion, have ‘mortgaged the future’ –though how the
construction to-day of great and glorious works to-day can impoverish the future, no man can see until his mind is beset
by false analogies from an irrelevant accountancy.” (6)Keynes located the problem of simultaneous
overproduction and underconsumption at the level of circulation. His solution to the problem consisted of a series of
policies designed to stimulate consumption and investment. He alleged that the real world results to be expected were
more important than any paper losses that might have to be written off. Unlike Narayan’s solution of the same
date, Keynes’ solution did not call for a change in the ownership of the means of production. Like Nehru, Keynes
did not have the luxury of protecting himself from empirical refutation by clinging to a counterfactual argument that the
world would have been better if his ideas had been applied, because to a large extent his ideas were applied. They were
orthodox from the mid 1930s to the mid 1960s. Allthough some, like Gunnar Myrdal thought that “the Keynesian
revolution” had changed economics forever, the general consensus is that mainstream economics has now
reverted to something very like pre-Keynesian economics. The age of Keynes is over. (6B) On a practical level,
managing national economies with the tools of macroeconomics has proven to be impossible in the era of globalization,
leaving in the lurch social democrats who used to favor Keynesian policies to bring about full employment, equity, and
inclusion of the marginalized. (6C) A.M. Huq is one of those who has pointed out that Gandhi had a better analysis than
Keynesian ideas provides with respect to India’s basic problem of massive rural poverty: “…he
[Gandhi] had a better perception of the nature of massive rural unemployment than he is given credit for. That type of
unemployment is structural, seasonal, and technological, rather than cyclical. Deficiency of aggregate demand has very
little to do with that type of unemployment.” (6D)Gandhi’s thought suggests an explanation of simultaneous
overproduction and underconsumption that is in principle different from those discussed so far, and also different from
the explanation of unemployment Narayan attributed to Gandhi when he associated him with the view that
unemployment is caused by machines. The explanation is that modern society is adharma. This comprehensive and
somewhat flexible word, rich in connotations, can serve as an emblem of several aspects of Gandhi’s thought and
practice, which suggest creative ways to think about the problems Narayan posed in 1936 when he asked, “Can
there be anything more contradictory than this ?”Gandhi questions the constitutive principles of economic science
laid down by Adam Smith, when he attributed the origins of its subject matter to the human propensity to truck or barter:
“Give me that which I want, and you shall have this which you want.” Gandhi questions Smith’s
confidence that he can find security in relying on the self-interest of the butcher, the brewer, and the baker to bring him
his dinner. Much historical evidence shows that indeed Smith’s confidence in the efficacy of self-interest is not a
principle of general validity. In the depression of the 1930s it was in the self-interest of employers to lay off their
employees. It was in the self-interest of bankers to foreclose on people’s houses and farms. In Argentina in 2001
it was in the self-interest of entrepreneurs to abandon their enterprises, leaving the workers without work, the government
without taxes, and consumers without products. One might regard such well known and frequently occurring situations
where self-interest does not function to meet human needs as bugs in the system that can be corrected by redesigning
institutions to harness self-interest more effectively. Or, like Gandhi, one might consider another alternative: that people
ought, in principle and as a matter of duty, make themselves useful to their fellow human beings, and, indeed, to all
life.Gandhi’s solution to the problem of simultaneous overproduction and underconsumption is not a sentimental
humanitarianism. It is not sentimental because it is about duty, not about feelings. It is not a humanitarianism because it
is primarily about serving family and neighbors, not about trying to serve all of humanity at once. Gandhi wrote,
“Pure service to one’s neighbors can never, from its very nature, result in disservice to those remotely
situated. ‘As with the individual, so with the universe,’ is an unfailing principle, which we would do well to
take to heart.” (7) Gandhi locates the problem not at the level of the legally constituted relations of ownership at
the level of production, nor at the level of interruptions of the flow of money in the circuits of buying and selling, but at the
level of personal morality and interpersonal relationships. Gandhi’s viewpoint is, in principle, the most
fundamental of the three, because production relations and circulation relations are subsets of interpersonal
relations.Over the years, Jayaprakash Narayan came to see the paradox of poverty in a world where there could be
enough for all more and more as Gandhi saw it. J.P. was never tempted by the theory that the supply of labor and the
demand for labor would come to a satisfactory equilibrium if only the free market were left alone to work its magic. Nor
was he ever tempted to believe that poverty could be abolished without making any changes in the ownership of the
means of production. He came to believe, instead, in “new values and ideas …so chosen that they have a
direct bearing on some major social problem and their acceptance and practice are expected to lead to a solution of that
problem and incidentally to a radical change in society.” (8) His evolution away from Marx was an evolution from
Marx to Gandhi, much to the delight of his wife Prabhavati, who had been a Gandhian all along. (9)By 1959, Narayan
was echoing what Gandhi had written in 1909: “Modern industrialism and the sprit of economism that it has
created, a spirit that weighs every human value on the scales of profit and loss and so-called economic progress, have
disintegrated human society and made man an alien among his fellow men. Not only has the community been
disintegrated, even the family is languishing in the West, and the mother, the woman, who was the centre and soul of the
family, is losing her womanhood.“The problem of present day civilization is social integration. Man is alone and
bored, he is ‘organization man.’ he is man ordered about and manipulated by forces beyond his ken and
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control –irrespective of whether it is a ‘democracy’ or a ‘dictatorship.’ The problem is
to put man in touch with man, so that they may live together in meaningful, understandable, controllable relationships. In
short, the problem is to recreate the human community.” (10)In Narayan’s proposed socialist Gandhian
grassroots communities, there can be no unemployment. People follow the norms that prescribe their roles in families
and communities in a spirit of service. Earning wages is not the purpose of working. Finding someone willing to pay for
work is not the condition that must be met in order to start work. Cessation of pay is not an event that implies that one
must stop work. This does not mean, as Gandhi, with whom Narayan presumably agrees, explained, that there can be no
money changing hands. The primary and decisive motivation for work is a spirit of service, but money may be received,
as well as other benefits, in association with service.An example is provided by the work of the Congress members who
worked under Gandhi’s leadership to organize the khadi movement that promoted the spinning of cloth by hand.
In order to qualify for a staff position people had to demonstrate so much commitment to the cause that they would work
as volunteers even if they were not paid. Having joined the movement because they believed in it, some staff members
(not the ones who had other incomes and did not need it) were supported by the movement. (11) Another example is
discussed by Gunnar Myrdal in Asian Drama. Myrdal pointed out that even villagers who had become modernized to the
extent that they took work for wages in cities, often chose to go back to the village some of the time to do agricultural
work in order not to forfeit their traditional right as a member of an extended family to share in the harvest. They wanted
to remain in good standing as community members lest their community membership lapse from disuse. In this system
there is no unemployment within a kinship network because anybody who shows up and participates in the work also
participates in the benefits of the work. Myrdal had a low opinion of this system because more people were employed
than were needed for the tasks done. If five people did work that three could have done just as well, then the extra two
added nothing to the product. Society would have been better off if the extra two had been employed elsewhere doing
something else. Gandhi too took large notice of the surplus of labor in Indian villages, and it was partly to put to work the
labor power that was left over after all necessary agricultural tasks were done that he promoted hand spinning and other
village crafts. Gandhi, like Keynes, was concerned with what we may call social efficiency broadly defined as meeting a
basket of desirable goals with the resources available. He was concerned with finding some honorable and respected
work for everybody to do and with giving everybody a legitimate claim to receiving the necessities of life.Churches
provide other examples. Churches usually have many volunteers and some paid staff. In between there are many people
who perform many roles which they would never perform if they were motivated just by market incentives and/or which
they would never be assigned if the purpose were to make a profit by employing them. They are supported in various
ways and to various degrees by the community of the faithful and by endowment income.Examples could be multiplied
indefinitely. Parents often have the social role of taking care of children, and children often have the social role of taking
care of aging parents, where the primary motivation for the work is service, but the workers are supported and helped by
other family members, and sometimes also by non-profit or governmental institutions such as child care centers,
hospitals, and schools. In every walk of life, in the public, private, and non-profit sectors, there are people who feel called
to a vocation, and there are organizations that write mission statements declaring pro-social goals. The transition from a
money-dominated economy to one where dharma is taken more seriously than it is now, is not a brusque shift from one
single model to another single model. It is gradual sarvodaya, moral awakening. To the extent that a spirit of service and
social responsibility pervades society, unemployment becomes a non-concept, because there is always something to do,
and there is always somewhere to turn in time of need.In Narayan’s proposed socialist Gandhian grassroots
communities there would, in principle, be very little overproduction. The problem is solved by redefining its terms; by
taking its analysis to a deeper level where the very categories of economic analysis, which are the institutional framework
of modernity, are reconsidered. This, I think, is what J.P. meant by his rather confusing slogan, “Total
Revolution.” (12) It does not mean destroying everything and starting over; quite to the contrary, it is a
constructive process. It means reconsidering every aspect of life, and constantly striving to improve life in all its aspects.
Overproduction, by definition, means the production of goods that are not sold, which remain unsold because there are
no willing buyers for them. It is a problem that dissolves for the most part when selling ceases to be the be-all and end-all
of production.For classical economics, before it was, in Paul Sweezey’s words, freed from “the tyranny of
Say’s Law “ (13) by John Maynard Keynes, overproduction meant that the producers had produced the
wrong things. They should have made something else. Instead of making what consumers wanted, they had blundered
and made something consumers did not want, or made too much of something because although consumers did want
that thing they did not want that much of it. If the market were left alone, producers would of their own accord re-allocate
resources in response to price signals. Overproduction would go away as supply and demand came into
equilibrium.Keynes made clear in theory what had always been clear in practice. The inability to sell something often
meant not that people did not want it and need it, but that people did not have the money to buy it. Traditional thinking
provides a solution to the problem encountered by someone who has produced something that cannot be sold, which is
needed by people who cannot afford to buy it. Give it away. There is an example in the bagel shop where I write part of
this. Every evening at closing hour the unsold bagels are put into a large bag. A little old hispanic lady in tennis shoes
arrives and takes the bag of unsold bagels to the Salvation Army. She does not speak much English and she does not
have a car. But she does not need to know English to know that God wants her to move the bag from the bakery to the
mission. God speaks to her in Spanish, as God speaks to the masses of India in their many languages and dialects. She
does not need the aid of modern automotive technology, and she does not need wages, to accomplish her task. Whether
the baker’s act in giving the bagels, the lady’s work in moving them, or the eating of the bagels by the
homeless people at the shelter is reflected somewhere in books of account or economic statistics I do not know. I do
know that it happens every day.The Government of India, in several recent years, has had a larger problem. Instead of a
sack of unsold bagels, the government has millions of metric tons of grains stored in warehouses. (14) The government
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is afraid to give it away, because the availability of so much free food would depress prices. Lower prices would depress
production. They might throw India, which has slowly and laboriously achieved food self-sufficiency, back into
dependence on imports. In some cases the depressed prices would throw farmers, who have been slowly and
laboriously climbing out of poverty, back into poverty.In Narayan’s proposed socialist Gandhian grassroots
communities, the Government of India’s problem would not arise. There would be no accumulation of power, or of
grain, at the Centre. Decision-making and grain surpluses would be widely dispersed in thousands of villages. What to do
with the grain would be rationally decided by ethical people –no wonder they called J.P. a dreamer !—in
ways that would keep going both ecologically sound production processes and fair distribution that met
everyone’s needs, including shipping grain to other areas that might have a shortage. Instead of the quasi-
mechanics of supply curves intersecting demand curves, and instead of business people making decisions with what
Keynes –optimistically !—called “irrelevant accountancy” there would be what Cyert and
March called“satisficing.” (15) In other words (explaining “satisficing”), the decision-makers
would find a satisfactory solution to the problems that would solve everybody’s problems to some reasonable
degree and leave nobody abandoned, rather than trying to maximize profit, and, indeed, rather than trying to maximize
any single variable (except perhaps a composite variable that might be constructed as a measure of satisfying many
different needs, interests, social goals and ecological goals). The self-governing local community would solve the problem
of how to distribute the unsold product without depressing production by talking about it together. The local community
would be aware of the several interests that need to be synthesized. It would have the wisdom that comes from what
Clifford Geertz calls “local knowledge.” (16) As Gandhi wrote, when you “concentrate production in
particular areas,” then, “you would have to go in a round-about way to regulate distribution, whereas, if
there is production and distribution both in the respective areas where things are required, it is automatically regulated,
and there is less chance for fraud, none for speculation.” (17) I think “automatically” was not quite
the word Gandhi was looking for, and that what he meant was matching production to distribution would be “easily
regulated by the local people.” For the same reasons, the local communities would contribute in practice to solving
a problem Keynes did not need to solve in theory, because the classical economists had already solved it: how to avoid
the technical blunder of making what is not needed instead of making what is needed. The modern world is beset by the
constant failure to materialize of the economists’ utopia of competition among producers, no single one of whom
is large enough to set prices, leading to a social maximum. The economists’ utopia’s failure to materialize
leads to numerous attempts to correct the failings of in-practice-non-ideal markets through the technocratic workings of
large governmental bureaucracies, and those of private and hybrid bureaucracies. Anybody can tell a dozen stories of
such bureaucracies making the sorts of dumb mistakes which tend to show that the bureaucratic cure is worse than the
market disease: like ordering the production of two hundred thousand rear wheels for bicycles, and only one hundred
thousand front wheels for bicycles. Critics of the Soviet Union made lists of such mistakes, and pointed out that they
would never have happened in a market economy. In India some of the dumb mistakes of large bureaucracies have
been in mega-dam projects, as will be discussed further in the chapter on Vandana Shiva.J.P.’s Gandhian
proposals are anti-statist and anti-bureaucratic. They entrust decision-making to people who are on the front lines, on the
ground, who know the exact details of each small problem. J.P.’s solution to the problem of how to organize social
cooperation is in its own way similar to the market solution advocated by Adam Smith and his Austrian followers von
Hayek and von Mises. J.P. offers another solution to the problems of allocation and re-allocation of resources that in
orthodox economics price signals are supposed to solve. Smith’s famous example was the pin. No high-level
bureaucrat with a general overview of the whole problem knows how to make a pin. And yet pins get made, in production
processes organized by markets, because each participant in the complex social process of pin making has learned from
experience how to carry out her or his specialized task. J.P.s proposed version of participatory democracy corrects the
insightful but exaggerated faith of Adam Smith in the market in a different way than statist bureaucracy–a way I
will not try to summarize in a phrase because it has many facets, being, as J.P.’s admirer Bimal Prasad says, a
synthesis of Marxist, Gandhian, and Western Democratic ideals. J.P.’s solution does not eliminate the possibility
of overproduction altogether. Overproduction does not become a non-concept as unemployment does. Mistakes and
injustices might still happen. But under J.P.’s proposed Gandhian decentralism there will be less overproduction
because the conceptual frame of reference within which production is harmonized with meeting needs is more
comprehensive. There are more options to choose from because the institutional framework is reconsidered. The
simplified ethics of modernity is re-complicated again as flesh and blood people with all their foibles and failings work
within institutional frameworks they are constantly re-inventing to wrest a decent living for all in the face of the physical
realities of their bio-region. The difficult problem of distributing products fairly without depressing prices and discouraging
producers remains. It is more likely to be solved because it is broken down into many specific local problems, in which
more people’s wisdom contributes to the search for solutions. It is addressed with the wisdom and the good will
(Narayan’s optimism again!) of people with on-the-ground detailed knowledge of each situation. Needless to say,
also, when more people “own” a solution because of having contributed to planning it, that solution is more
likely to be implemented.Gandhi, and Narayan following Gandhi, suggest an idea which provides in principle also a
solution to underconsumption, to poverty, even though neither expressed the idea explicitly, or at least not explicitly using
exactly the words I shall use. The idea is unconditional love. The cause of poverty in the midst of plenty is not precisely in
the ownership of the means of production. It is in conditionality. It is in the fact that owners only employ the means of
production they own to produce things people need when it is profitable for them to do so. The condition is the check.
Unless they can truck and barter, giving this which they have in exchange for that which they want, they sit on their
property and exclude others from it as trespassers, rather than putting it to use. Nor is the cause of poverty precisely the
lack of aggregate demand that keeps factories and workers idle. It is the condition that is the fundamental check.
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Demand only counts as effective demand when people have money to pay, because the condition without which
providers will not provide them with what they need is that they must give money in exchange. The fundamental problem
is neither at the level of production relations nor at the level of circulation relations, but at the level of the constitutive
rules of modern society. Workers do not work, and owners do not invest, unless there is compliance with the condition
that they get money for their work, or for their granting permission to use their property.Although Gandhi never spoke of
“eliminating conditionality,” he came close, and he clearly implied the idea. He wrote, for example:
“The worker will not only be spinning regularly, but will be working for his bread with the adze or the spade or the
last, as the case may be. All his hours minus the eight hours of sleep and rest will be fully occupied with some work. He
will have no time to waste. He will allow himself no idleness and allow others none. His life will be a constant lesson to
his neighbors in ceaseless and joy-giving industry. Bodily sustenance should come from bodily labour, and intellectual
labour is necessary for the culture of the mind. Division of labour there will necessarily be, but it will be a division into
various species of bodily labour and not a division into intellectual labour to be confined to another class. Our compulsory
or voluntary idleness has to go. If it does not go, no panacea will be of any avail, and semi-starvation will remain the
eternal problem that it is. He who eats two grains must produce four. Unless the law is accepted as universal, no amount
of reduction in population would serve to solve the problem. If the law is accepted and observed, we have room enough
to accommodate millions more to come.” (18)In one of many passages where Gandhi assured his readers that he
was not against technology, just in favor of what J.P.’s friend E.F. Schumacher later came to call intermediate or
appropriate technology, Gandhi wrote: “ …I am socialist enough to say such factories [one for making Singer
sewing machines] should be nationalised, or State-controlled. They ought only to be working under the most attractive
and ideal conditions, not for profit, but for the benefit of humanity, love taking the place of greed as a motive. It is an
alteration in the conditions of labour that I want. This mad rush for wealth must cease, and the labourer must be assured,
not only of a living wage, but a daily task that is not a mere drudgery. The machine will, under these conditions, be as
much a help to man working it as to the state, or to the man who owns it. The present mad rush will cease and the
labourer will work (as I have said) under attractive and ideal conditions. This is but one of the exceptions [to being
against machinery] I have in mind. The sewing machine has love at its back. The individual is the one supreme
consideration. The saving of labour of the individual should be the object, and honest humanitarian considerations, and
not greed, the motive.” (19) If all the people on earth, freed from the check of conditionality, made their best effort
to utilize their talent and treasure for the common good, then there would be no poverty, except insofar as nature made
poverty inevitable, and except insofar as lack of knowledge on how best to use resources produced mistakes. This
hypothetical state, characterized by much more good will than there is now, need not be one in which there would be no
markets. Even the pure in heart whose only desires are to serve God, neighbor, and biosphere (not to mention the less
pure in heart who are capable of the relative nonviolence, decency, and efficiency elicited by market transactions, but not
of altruism) may be grateful for price signals telling them what is wanted when, where, and how much. This hypothetical
state of good will and accurate knowledge, which I will imagine as employing accountable markets to do the things
markets are good at, sets a standard by which less desirable states can be measured. There would be no poverty if
everyone did the right thing. There would be less poverty if more people did the right thing. These things would be true
as long as people did the right things, i.e. those things that meet human needs and preserve the environment, regardless
of what motives they might have for doing them, and regardless of what beliefs they might hold. Unconditional service to
others is a perfect standard relevant to an imperfect world.Gandhi did not use the language of
“unconditional” and “conditional.” He wrote sometimes of the law of dharma, sometimes of
the law of love, and sometimes of the law of nonviolence, or ahimsa. The three are synonyms in that they all prescribe
unselfishly using right means to attain right ends. “Dharma” has the drawback that it is identified with
tradition. It needs to be corrected with reminders that duty today might not be the same as duty yesterday, and even that
duty yesterday might have been wrong even then but the people back then, or some of them, did not know it.
“Love” has the drawback that it sounds sentimental. It needs to be corrected with reminders that one ought
to do the right thing whether or not one feels like it. “Nonviolence” has the drawback that it brings to mind
as its supposed opposite physical and emotional violence, more than what Johan Galtung christened structural violence,
such as the violence of the jurisprudence that excludes millions from the benefits of property ownership, and the violence
of economic institutions that leave in penury whoever has no marketable commodity to sell.J.P.’s nonviolent
campaigns of the 1970s featured the slogan “total revolution.” That slogan tended to be identified in the
public mind with J.P.’s call for the resignation of the government of Bihar, his native state, and with the larger
project of bringing down the government of Prime Minister Indira Gandhi. But I think “total revolution” is
better understood as a consistent effort to put into practice Gandhian ideals, as interpreted and modified by J.P. The
revolution had to be “total,” because it affected everything, both ends and means, and because it would
never be over. Existing institutions will always be judged as failures in the light of what in principle they could be.J.P.
came to believe that social transformation could not be achieved by government action, certainly not by the actions of
central governments in a country as vast as India. In his Marxist days he had written that they key to socialism was state
power. Once in control of the police and the army, the socialists could change the economy by legislation and by
coercion. Later, as a Gandhian, he came to believe that social change had to begin at the grassroots, or as his friend
Minoo Masani said, at the rice-roots. There had to be a transformation of civil society, by civil society, for civil society.
J.P. resigned from the socialist party he had founded, and joined Vinoba Bhave’s sarvodaya movement. (He
could not join Gandhi because Gandhi was already dead by the time Narayan was finally won over by his ideas.) J.P.
had several opportunities to become Prime Minister of India. He declined them each time. He declined not from personal
humility but from theoretical consistency. He believed that governments could not bring about the needed changes.
Sarvodaya could. However, in his last years he had some third thoughts, tending to see the need for complementary
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government action and grassroots work.As it turned out, the Bhoodan sarvodaya movement led by Vinoba Bhave, and
followed by Jayaprakash Narayan, succeeded to a limited extent, but it did not transform the system. *** It collided with
what is called economic reality. Its main effort was to facilitate the self-organization of Gandhian villages on donated land.
Landlords pledged in public meetings to donate some of their land, but when it came time to hand it over many of them
balked and refused to sign the transfer deeds. Gandhi himself had collided with another aspect of economic reality in his
efforts to promote the spinning of khadi cloth in the 1930s. No matter how hard he tried to secure a living wage for the
spinners, he could not succeed because the people buying the cloth were themselves living at so low a level that they
could not pay enough –even if they wanted to—to provide a living wage for the spinners.If the thesis of this
book is correct, then Gandhi, if we imagine him smiling down from heaven on those of us still struggling on this earth, can
still speak to us with the counterfactual luxury of saying that the world would be better if his philosophy were more widely
practiced. In picturing him smiling down at us, urging us to follow his lead, I do not picture him as trying to justify
everything he said, wrote, or did, which in any event he could not do because he contradicted himself so often. I do not
picture him as proposing another school of economics. Rather, he advocated a traditional ethical framework by whose
standards the work of economists of all schools can be evaluated. His ethical framework has not been tested and
disproved just because some experiments failed. The limited success of the Bhoodan sarvodaya movement that J.P.
joined, need not lead one to see “…the JP movement as yet another form of Indian populism, and his ideas
as a subspecies of that latter-day Gandhism which promises much, but delivers little or nothing –except a
constantly reiterated and impotent moral outrage at the many iniquities of modern India.” (20) Instead, one can
take the failures of Gandhism so far as evidence that both it and the economic realities with which it has collided require
further examination.The next chapter will compare Gandhian thinking to revolutionary socialism, as it is advocated in the
writings of Tariq Ali. Ali is a contemporary intellectual who was born in India and spent his childhood there, although the
city he came from later became part of Pakistan.* Jayaprakash Narayan, letter of resignation from the Praja Socialist
Party. 1957, reprinted as Chapter 18 of Bimal Prasad (ed.) A Revolutionary’s Quest, Selected Writings of
Jayaprakash Narayan. Delhi: Oxford University Press, 1980. p. 196. (1) Jayaprakash Narayan, in chapter 3 of Why
Socialism?, as extracted in Bimal Prasad (ed), A Revolutionary’s Quest: Selected Writings of Jayaprakash
Narayan. Delhi: Oxford University Press, 1980. pp. 49-50. This work is hereafter cited as Selected Writings. I have
corrected a misprint where “are” should have been “or.” I will sometimes refer in the singular
to the inter-related set of problems Narayan poses as “the problem,” even though in another context I
might use the plural and make a list of what the separate problems are. I do not share the bias of those who consider it to
be always or nearly always more scientific to speak of a series of distinct problems. I agree with those who see
capitalism as having a central contradiction, which can be named as the contradiction between the accumulation of
profits and the production of use values. It creates obstacles to solving many problems. Hence one can also speak of a
single problem containing sub-problems, inasmuch as each sub-problem is exacerbated and partly caused by the same
central contradiction.(2) Karl Marx, Critique of the Gotha Programme. New York: International Publishers, 1938. p. 7.(3)
See Peter Drucker’s study of Hitler’s economy, The End of Economic Man. Drucker explains in detail how
Nazi Germany was not run on the basis of investment for profit, but nevertheless was made to run by enlisting other
motives. Hitler demonstrated that an economically successful alternative to capitalism is possible, although he did not
demonstrate a desirable alternative to it. Peter Drucker, The End of Economic Man.. New York: John Day, 1939.
Amritananda Das has argued that a Gandhian economy must appeal to nationalism, which is perhaps neither the best
nor the worst of human motives. Foundations of Gandhian Economics. Delhi: Center for the Study of Developing
Societies, 1979. p. 72. Das thinks historical experience shows that a desire to benefit the poor is not a strong enough
motivation for the sacrifices necessary to secure the benefit of the poor.(4) Alfred Marshall, quoted by John Maynard
Keynes, in The General Theory of Employment Interest and Money. New York: Harcourt Brace, 1936. footnote 2 on page
19.(5) Keynes, General Theory pp. 29-30 and 30-31.(6) John Maynard Keynes, “National Self Sufficiency,”
The Yale Review June, 1933, p. 765.(6B) “The marriage between interests and values that liberalism neatly
underwrote in the nineteenth century, with its simple but elegant view of the world, is in the process of being repeated
–a process perhaps embraced with more fervour in Britain than anywhere else.” Will Hutton, The
Revolution That Never Was: an assessment of Keynesian economics. London: Longman, 1986. p. 15. ”In the
middle 1940s, the Keynesians felt superior and triumphant. During the 1950s they were mostly losing their confidence
… In 1963 I thought that the clear academic retreat from Keynesianism had already been accompanied by a retreat
in policy.” William H. Hutt, The Keynesian Episode. Indianapolis: Liberty Press, 1979. p. 415, p. 419; Sheila Dow
and John Hillard (eds.), Keynes, Uncertainty, and the Global Economy (Beyond Keynes, Volume Two). Cheltenham UK:
Edward Elgar, 2002; (6C) e.g. Mark Latham, Civilising Global Capital: new thinking for Australian Labor. Sydney: Allen &
Unwin, 1998; Robert Reich, The Work of Nations. London: Simon and Schuster, 1991. (6D) A.M. Huq, “Welfare
Criteria in Gandhian Economics,” in Romesh Diwan and Mark Lutz (eds.) Essays in Gandhian Economics. Delhi:
Gandhi Peace Foundation, 1985. p. 68. ) Although developing nations after World War II generally accepted the idea of
macroeconomic planning of a more or less Keynesian sort, they often did not accept the idea that in poor country
contexts Keynes’ concept of effective demand being an obstacle to growth was valid. See Amartya Sen,
Employment, Technology and Development. Delhi: Oxford University Press, 1999.(7) Gandhi, Young India, June 18,
1931. (8) The resignation letter cited in the first footnote above, p. 205.(9) The gradual shift of Narayan’s thought
from Marx to Gandhi is recounted by his close friend Minoo Masani in Minoo Masani, Is J.P. the Answer? Delhi:
Macmillan, 1975. pp. 10-33.(10) Jayaprakash Narayan, “A Plea for Reconstruction of the Indian Polity,” in
Selected Writings pp. 218-219. Narayan gives an explanation of the meaning of dharma: “The concept of dharma
was of great importance in ancient India. It prescribed and regulated individual and group behavior in all walks of life.
This concept of dharma and its role in Indian polity and the wider life of society is another example of that synthetic,
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organic, communal organization of Indian society which has been discussed above. Communities, territorial or functional,
had developed laws and codes of behavior to regulate the internal life of their communities and groups and their relations
with the rest of society. There were in addition codes and laws that were common to and excepted by all of them that
made up the universal social ethics. The ensemble of these social ethics exercised a powerful influence over the
State.” Selected Writings p. 217.(11) “Those who are engaged in this voluntary organization not only derive
no pecuniary advantage from it but are expected, if they can, to give their labour free of any hire.” M.K. Gandhi,
Economics of Khadi. Ahmedabad: Navajivan Press, 1941. p. 542.(12) J.P. explains his concept of total revolution in
Selected Writings pp. 369-371. “There are four aspects for the work for total revolution: struggle, construction,
propaganda, and organization. In the present situation we should concentrate on the constructive aspect. …. Total
revolution is permanent revolution. It will always go on and keep changing both our personal and social lives.”
Selected Writings p. 369. The concept is analyzed by the Gandhian economist Romesh Diwan in “Total
Revolution and Appropriate Technology,” which is chapter 12 of Romesh Diwan and Mark Lutz (eds.) Essays in
Gandhian Economics. Delhi: Gandhi Peace Foundation, 1985. (13) Paul Sweezey, “The First Quarter
Century,” in Robert Lekachman (ed) Keynes’ General Theory. New York: St. Martin’s Press, 1964.
p. 305. “…his greatest achievements were freeing economics from the tyranny of Say’s Law and
exploding the myth of capitalism as a self-adjusting system which reconciles private and public interests.” (14)
“Fifty million tons of foodgrain are rotting while people cannot afford to buy food. Stocks of rice have increased
from 13 million tons to 22 million tons, while wheat stocks have gone up from 8.72 million tons to 24.11 million tons
between 1994-95 and 2000-01.” Vandana Shiva, in Vandana Shiva and Gitanjali Bedi (eds.) Sustainable
Agriculture and Food Security. Delhi, Sage, 2002. p. 460. (15) Richard Cyert and James March, A Behavioral Theory of
the Firm. Oxford: Blackwell, 1992. The authors show that business people in practice often do not follow the precepts of
classical economic theory. Instead of maximizing returns, they “satisfice” by finding solutions to problems
that do not leave anybody terribly unhappy.(16) Clifford Geertz, Local Knowledge, further essays in interpretive
anthropology. New York: Basic Books, 1985.(17) Gandhi in Masur and Masur (eds) Economic Thought of Mahatma
Gandhi. Allahabad: Chaitanya Publishing, 1962. p. 491.reprinted from Harijan November 2, 1934, p. 301.(18) Economic
Thought p. 291. reprinted from Harijan August 31, 1934, p. 229. (19) Economic Thought p. 475-6. reprinted from Young
India November 13, 1924, p. 378. [interpolations added] *** On Bhoodan’s accomplishments see T.K.N. Unnithan,
Gandhi and Free India. Groningen, Holland: J.B. Wolters, 1956. pp 127-31.(20) David Selbourne, “A Political
Morality Re-examined,” in David Selbourne (ed.), In Theory and in Practice: Essays on the Politics of Jayaprakash
Narayan. Delhi: Oxford University Press, 1985. p. 181. The phrase quoted expresses an attitude the author attributes to
his former self, of which he later repented.

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