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I got into Gandhian economics from reading about Abdul Ghaffar Khan, a Pashtun colleague of Gandhi's who founded the "world's first non-violent army" in the very region where the Taliban is now active.  His non-violence was founded on Islamic principles and Pashtun tradition, patience and hospitality respectively. It is astonishing to me that we have not studied his work in light of Islamic fundamentalist terrorism.

It is also astonishing to me that Gandhi's ideas about economics are so pertinent today.  Turns out that all my life I've practiced his ideas - helping to found community gardens and farmers' markets, doing solar and now weatherization barnraisings (we do them monthly in Cambridge, MA and have an online manual  to help others do the same), working with a local carpentry cooperative, staffing a traveling energy show....  This is all swadeshi, local production, just as the White House organic garden can be considered swadeshi.

Recently, I was interviewed by Frank Aragona of AgroInnovations for a two part podcast on the subject.

I am joined by George Mokray, who has read and written extensively about Gandhian economics. Gandhi is often remembered for his civil disobedience and non-violent approach to ending British imperialism, but his economic thought and philosophy is perhaps more fundamental to his strategy for personal and communal liberation. More relevant than ever before, Gandhi’s thinking must be studied and internalized by those who wish to promote real change in our society.

In this episode I conclude my interview with George Mokray about Gandhian economics. Topics of discussion include Gandhi’s view of public policy, Gandhian economics as an alternative to modern social orders, how Gandhi would view the Internet, and Gandhi as a source of inspiration in contemporary society.

My notes on my readings in Gandhian economics are at

I suspect they are the most extensive collection on the subject available online and that Gandhi's economics are the only workable human ecological economics.

Local production, swadeshi, is a core principle of Gandhian economics.  I have written about a solar swadeshi, where the crank of a dynamo generating electricity serves the same purpose as the handle of the charkha, spinning wheel, Gandhi spent an hour a day turning to make thread for khadi cloth.  There is now an e-charkha which generates electricity while spinning thread.  Gandhi has entered the 21st century and his ideas could become increasingly powerful in the years to come.

Originally posted to gmoke on Mon Jul 27, 2009 at 07:23 PM PDT.


Gandhia economics offers us current solutions?

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| 18 votes | Vote | Results

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Comment Preferences

  •  I saw this last night too (8+ / 0-)

    are the autotipjars broken?

    Post a comment gmoke so people can tip you on this diary!


    "The longer you live and think, the more things tend to get out of hand." - Jack Levine

    by mieprowan on Mon Jul 27, 2009 at 07:36:35 PM PDT

  •  A Piece of the Puzzle (2+ / 0-)
    Recommended by:
    gmoke, mieprowan

    Thanks for publishing your notes. I've been investigating Islamic finance (actually, I have a complying bank account) with great interest as a model for future global banking principles.

    You present a bottom-up (action) approach that compliments the top-down (vision) approach of this stable and fair form of banking and lending.

    •  Islamic Finance (5+ / 0-)
      Recommended by:
      Pluto, Nulwee, Corwin Weber, allep10, mieprowan

      Having read Loretta Napoleoni's Rogue Economics, I have been interested in Islamic finance.  I would be interested in learning more about your investigations.

      Rogue Economics:  Capitalism's New Reality by Loretta Napoleonia
      NY:  Seven Stories Press, 2008
      ISBN 978-1-58322-824-1:

      (237-238)  Unlike market economics, Islamic finance centers on the religious tenets of Islam and operates in a way to keep Muslims compliant with sharia, the religious law that comes directly from the Koran.  Islamic activists, intellectuals, writers and religious leaders have always upheld the prohibition of riba, the interest charged by moneylenders, and denounced gharar, which refers to any type of speculation.  Under this belief, money must not become a commodity in itself to create more money.  Islamic finance thus shuns hedge funds and private equities, because they simply multiply cash by stripping assets.  Money serves as a means or instrument of productivity as originally envisioned by Adam Smith and David Ricardo.  This principle is embodied in the sukuks, Islamic bonds.  Sukuks always link to real investments - for example, to pay for the construction of a toll highway - and never for speculative purposes.  This principle springs from the sharia's ban on gambling as well as on the prohibition of any forms of debt and activities that trade risk.

      (240-241)  Partnership is the heartbeat of Islamic economics.  "Underlying the system is the philosophy of risk sharing:  the lender must share the borrower's risk, making the two in effect partners, injecting a strong social component into the financial system.  This concept separates Islamic Finance from Western Finance, which seeks to maximize profits and minimize loss through diversification and risk transfer."  Also, money must be put to work. Because Islamic finance prohibits interest, it seeks revenues form rents royalties, business profits, or commodity trading;  a mortgage, for example, represents a "rent to buy" arrangement.  Thus, conceptually, Islamic economics is the opposite of Western finance, which revolves around the individual's self-interest.

      Above all, Islamic finance represents the sole global economic force that conceptually challenges rogue economics.  It does not allow investment in pornography, prostitution, narcotics, tobacco, or gambling.  As discussed above, since the fall of the Berlin Wall, all these areas have blossomed thanks to globalization outlaws under the indifferent eyes of the market-state.

      (245)  Spurning intervention from the IMF and the World Bank, icons of Western finance, [Dr Mohammed] Mahathir turned to his fellow Muslims to sustain the Malaysian economy.  Muslim investors and the Islamic Development Bank put together an alternative rescue package with loans and investments. Unexpectedly, Muslim solidarity rebuffed the standard of Western finance, challenging Western capitalism's traditional rescue packages.

      (247)  By putting the interests of the Muslim community and the wellbeing of the Umma above the principles of market economics, Mahathir reminded Muslim investors that the strength of Islamic economics is partnership.  

      (249)  According to Moody's, the international rating agency, as of 2004, $41bn in Islamic bonds had been issued globally, and of that total $30bn or 75% in Malaysia and only $11bn in the Gulf.

      Sharia-compliant products became key accessories of transnational economic tribalism, and its roots are intertwined with the religious pride of being Muslim.  To be sold, a sharia-compliant product requires a fatwa, or religious edict, from a recognized Islamic scholar.  This gives Islamic finance a greater degree of flexibility than traditional Western finance, while at the same time it offers investors a degree of security unknown to Westerners.  The ethical issue, central to modern finance, does not arise in Islamic finance because the fatwa clears investment from any notion of wrongdoing.

      Paradoxically, Islamic finance blossomed under the dark shadow of the neoconservative's "clash of civilizations."  In the midst of the War on Terror, which many Muslims perceived as a witchhunt against them, Muslim investors greatly reduced their Western portfolios and turned to Islamic finance

      (250)  Until the collapse of the Ottoman Empire in 1923, the gold-dinar standard represented a means of exchange for thirteen centuries.  It lasted much longer than has our current monetary system, (the dollar standard was born only in 1971, after the collapse of the Bretton Woods agreement, signed in the aftermath of World War II.)  In the collective imagination, the gold dinar "holds historical, cultural and theological appeal for many Muslims.  Many Islamic economists advocate a rejection of paper money - since it can be created out of thin air - and a return to gold," writes Ann Berg, a former commodities trader turned artist.  Politicians, intellectuals, religious scholars, and even terrorists - Osama bin Laden is reportedly among the strongest supporters of the gold dinar - share this view.

      Return of the gold dinar relates to bin Laden's call for a return to the Caliphate and similar agitation of the 1920s, the Khilafat movement?

      (253)  Saif al Adl, Al Qaeda:  "Islamists will promote the idea of using gold as the international medium of exchange, leading to the collapse of the dollar. Then an Islamic Caliphate can be declared, inaugurating the fifth stage of al Qaeda's grand plan, which will last until 2016."

      Solar is civil defense. Video of my small scale solar experiments at solarray.

      by gmoke on Mon Jul 27, 2009 at 08:17:21 PM PDT

      [ Parent ]

      •  My Research is both Populist and Macro (3+ / 0-)
        Recommended by:
        gmoke, Nulwee, allep10

        First let me give you the link to the Islamic Finance Project at Harvard Law School. That's the best source.

        By this time next year, most US banks will have Islamic finance products, if they don't already, like Citi. I think most offer Islamic mortgages, and the US treasury has a division that offers Islamic investments. In the US, although carefully monitored by scholars, there is nothing about it that have anything to do with worship or human behavior.

        My interest is a bit out of this realm. I'm thinking about why an economy must grow 3 percent per year to avoid collapsing. I'm looking at that. What seems to be driving this, is compounding interest. Or any interest at all. Interest forces an economy to grow and eventually knocks it out of the sphere of sustainability. Islamic banking is profit-sharing.

        •  Is Compound Interest... (5+ / 0-)
          Recommended by:
          gmoke, Pluto, Nulwee, Corwin Weber, allep10

          ...the metastasizing tumor in our economic system?  I am reminded of Abbey's quote, "Growth for the sake of growth is the ideology of the cancer cell."

          Thanks for this diary, as usual.

          Let's get coffee sometime.

          Freedom isn't "on the march." Freedom dances.

          by WarrenS on Mon Jul 27, 2009 at 08:49:34 PM PDT

          [ Parent ]

        •  Economies also need to grow, in part... (1+ / 0-)
          Recommended by:

          ...simply because human populations grow.  If an economy didn't grow but the population did, people would find resources becoming much more expensive and the economy per capita shrinking.  Interest and the use of debt (leveraging/gearing) is great for companies and economies when times are good, but create huge problems when times are bad.  The avoidance of debt (one of the principles of Islamic finance) helps to moderate the pace of an economy:  the economy doesn't move as quickly when times are good, but don't do nearly as bad when times are bad; that's why the Islamic finance sector has done relatively well since this recession began.

          As a Muslim, I'm interested in the topic of Islamic finance/banking (for the obvious reason), and have put up a number of posts about the topic on my blog.

          Muslims and tigers and bears, oh my!

          by JDsg on Tue Jul 28, 2009 at 07:21:01 AM PDT

          [ Parent ]

      •  The problem is.... (3+ / 0-)
        Recommended by:
        gmoke, deaniac20, Nulwee

        ....that gold money can be created out of thin air too.  During bank runs?  Banks carted gold in the back door from other banks to try to stop the run.

        The gold standard isn't an answer.  Stopping banks from lending out money more than once (which amounts to lending money they don't have, so they make it up) is the answer.

  •  Fascinating. (4+ / 0-)
    Recommended by:
    gmoke, Nulwee, allep10, mieprowan

    I'll have to read up on this, but I'm familiar with the basic theory. I wholeheartedly agree that it is more relevant than ever.  I've felt strongly for quite awhile that re-localizing our economies, and particularly our food supply, is an issue of national security.

    "War can be likened to an erectile penis: an excellent assurance of domestic tranquility, but a dangerous temptation to foreign adventure." -unknown

    by Super Grover on Mon Jul 27, 2009 at 08:58:07 PM PDT

    •  Relocalization (2+ / 0-)
      Recommended by:
      Nulwee, Super Grover

      Transition Towns are working exactly on this.

      There's an infrastructure of local agriculture that has been rebuilt over the last thirty-five years or so.  Today there are about 4000 farmers' markets across the USA today.  I doubt there were over 100 in the country in 1975.

      Solar is civil defense. Video of my small scale solar experiments at solarray.

      by gmoke on Mon Jul 27, 2009 at 09:15:13 PM PDT

      [ Parent ]

  •  I guess vegetarianism would be considered (1+ / 0-)
    Recommended by:

    swadeshi yes?  Ghandi was a very famous vegetarian who said that a nations moral compass could be judged be the way it treated its animals.


  •  I don't know if cooperatives fall under the... (1+ / 0-)
    Recommended by:

    ..."Gandhian economics" radar, but I've always been impressed with Mondragón Cooperative Corporation.  I would be very tempted to start up another business under this structure if I were to do so again.

    Muslims and tigers and bears, oh my!

    by JDsg on Tue Jul 28, 2009 at 07:25:33 AM PDT

    •  Mondragon (1+ / 0-)
      Recommended by:

      Since Gandhi's time, some of the tools necessary for his conception of economics have been developed.  The success of the Mondragon cooperatives is one example.  Micro-credit as in the Grameen banking system is another.  Electronic micro-payments, when and if they come into existence, will be yet another.

      Solar is civil defense. Video of my small scale solar experiments at solarray.

      by gmoke on Tue Jul 28, 2009 at 09:25:56 AM PDT

      [ Parent ]

  •  Intentional Communities (1+ / 0-)
    Recommended by:

    I don't think Ghandi would inspire the larger US or even the larger India, but I do think he can be followed by smaller intentional communities.  There are more than you think.  Just google those two words.  I have needed to divorce myself from the extreme part of the GOP.  I just can't live within their influence anymore.  That is why DK is so important to me.  If I were to start over (I am old and set in my place) I would be part of an intentional community based on Ghandi's ideas.

    •  Larger (0+ / 0-)

      Gandhi, I believe, was not so much interested in the larger as the smaller.  Start from the villages and the neighborhoods and build up from there.  Under the radar, this was be exactly what is happening.

      Solar is civil defense. Video of my small scale solar experiments at solarray.

      by gmoke on Wed Jul 29, 2009 at 09:46:17 AM PDT

      [ Parent ]

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