Gandhian economics: An empirical perspective*

Abstract

This paper empirically tests underlying assumptions of Gandhian Economics in its relationship with mainstream Economics. It looks at, and questions, the scarcity idea that lies at the root of materialist and utilitarian functions in the neo‐classical economic theory. In the context of American dream based on material goods the scarcity idea has little relevance. To explain abundance of material goods and general malaise a second affluence concept is proposed. One is affluent not only when one possesses material goods but also when surrounded by caring relations. Affluence defined by “caring” leads to a Gandhian welfare function based on service to others, ecology and time. The paper explains this function in detail and articulates an alternative economics of well being. It outlines, and explains, basic principles of Gandhian Economics, namely: swadeshi, aprigrah, trusteeship, bread labor, non exploitation and equality. It compares and contrasts some Gandhian Economics concepts with those in mainstream economics. The paper further develops caring relations into a new concept of “relational wealth.” It formulates a functional relationship between material and relational wealth and tests it empirically. The tests confirm the coexistence of economic progress with general malaise and find that GDP growth eventually leads to a decline in “relational wealth.” At some point, further addition to GDP growth result into less, not more, welfare.