Gandhi for the Wealthy

For the wealthy, Gandhi’s advice was pretty much taken out of the Gospels. Wealth has a seductive appeal. And like all seductive objects, it can be corrosive. Hedonistic excesses, slavish kowtowing to wealth and the serving of Mammon exclusively can result in loss of opportunity to engage with the kingdom of god. And one need not take this metaphor to mean engagement with organised religion. Rather, it implies an acknowledgement that human beings are more than selfish brutes, that deep within each of us there exists an element of our consciousness that needs to have communion with the sacred. And implied by the existence of this element, an umbilical cord that ties us with the sacred, is mankind’s attachment to the noblest in human traditions – the Upanishads, the Gita and the Gospels.

It is the complete disconnect from the sacred that might be the persistent weakness in modern capitalist doctrines. This disconnect would have suited David Hume, but may not have passed muster with Smith’s English friend Edmund Burke, and certainly not with Burke’s worthy successor in recent times, Roger Scruton.

Being a worldly ascetic, as envisaged by Gandhi, meant that the individual is engaged in constructive service with her fellow-humans. Just as Gandhi disapproved of retreat into monasticism, he would today disapprove of the wealthy retreating into gated communities. I quote the Mahatma’s own version of the contract which the wealthy need to have with the divine: “If god gives us power and wealth he gives us the same so that we may use them for the benefit of mankind and not for our selfish carnal purpose.”

While denigrating the carnal, he is perfectly fine with the connect between the aesthetic and the divine. After visiting the palatial residences of the rich people of Chettinad in south India, Gandhi has this to say: “If you give me a contract for furnishing all these palaces of Chettinad I would furnish them with one-tenth of the money but give you a much better accommodation and comfort than you enjoy today and procure for myself a certificate from the artists of India that I had furnished your houses in a much more artistic fashion than you have done.” His surprises never seem to end!

Gandhi for the Poor

For the poor, Gandhi had a clear message – that the pursuit of a chimerical equality with the wealthy, especially by violent means, was both immoral and impractical. Writing in the 18 August 1940 issue of Young India, he said: “Economic equality must never be supposed to mean possession of an equal amount of worldly goods by everyone.” The poor do have the right, nay the duty, of “resisting usurpation or misrule” by princes. But the resistance must not take the form of “rapine and plunder”.

Clearly, Gandhi’s message to the poor had to take into account the fact that he was a political leader in an impoverished country. He could not and did not support “grinding pauperism” of any kind. He resorts to the Parable of the Talents in the Gospels in urging the poor to work and raise themselves rather than do so by plundering the wealthy. In contemporary terms, he would have opposed welfare dependency for the corrosion it would cause to the moral fibre of the poor.

There is a Victorian Smilesian flavour to the ideas of education and hard work, which were the Mahatma’s normative prescriptions. But the poor too need to live in harmony with god’s edicts. If the poor were to say, “‘Since we cannot all become rich and own palaces, let us at least pull down the palaces of the rich and bring them down to our level.’ That could bring no happiness or peace either to themselves or anyone else, and god would certainly be not the friend and helper of the poor of such description.”

Gandhi for Business Relationships

For the complex relationship between owners and managers, Tirole makes the point that contracts and incentives, while necessary conditions, may not be sufficient. Between the principal and the agent, “...a relation of trust may helpfully replace formal incentives and actually improve on them”. In the extended business world, trust emerges as a key factor. The business leader and historian of modern India, Prakash Tandon, has explored the importance of trusted relationships between companies, dealers, suppliers and agents.

Gandhi’s favoured model is a fallback on the Anandji Kalyanji Pedhi in his native Gujarat, where the managers are trustees for the lord, who is the owner. This model builds on the English legal concept of trustees acting for the welfare of select beneficiaries or for large numbers of present and future beneficiaries in associative groups.

The lord as the beneficiary has the added advantage of making possible the creation of ecological environmental trusts for the benefit of future generations, who doubtless need the lord’s blessings. “When an individual has more than his proportionate portion, he becomes a trustee of that portion for god’s people. If this truth is imbibed by people generally, it would become legalised and trusteeship would become a legalised institution.” The Mahatma could not resist the temptation of being a patriotic Indian. He wished for it to become “a gift from India to the world”.

The emergence of businesses based on leveraging data and data analytics has introduced a whole new way to look upon trust and trusteeship. It can be argued that a firm does not “own” its customers’ data. The firm is merely a “repository” and a “trustee” of the data that the customer has chosen to entrust it with.

The legal analogy would be that the customer is the grantor of the asset known as her data, and the digital company that receives and preserves the data is a “trustee” of that asset. The grantor and the beneficiary of the trust is the customer. The trustee is duty-bound not only to follow the grantor’s instructions, but also to act as a fiduciary in the best interests of the beneficiary. The fact that the grantor and the beneficiary are one and the same person in no way changes the obligation of the trustee.

This is not just an ethical imperative that sounds nice. It has practical consequences. If digital firms do not embrace the concept of customer data being held in trust, then they run the risk of losing customers and losing the social permission needed to stay in business. This situation is complicated, as customers tend to have strong views on the state having access to their data.

Given his distrust of the state, Gandhi would have looked askance at Microsoft’s compromises with the Chinese government and would probably have lauded Apple’s refusal to hand over customer data “entrusted” to Apple to the US government. In any event, all data-driven firms could help themselves by reading Gandhi and trying to see how they can position themselves away from ownership and in the paradigm of trusteeship. This may end up being both a moral and a practical imperative. Once more the Mahatma turns out to have contemporary relevance.

Gandhi for the State

For the state, the Mahatma advocates creation of an environment where property rights are protected and expropriation is banned, but where an ecosystem is created which encourages voluntary trusteeship on the part of the wealthy. He also makes the practical suggestion of encouraging the wealthy in the interests of their own progeny not to be overly generous in inheritance matters.

Oddly enough, Gandhi would have opposed high inheritance taxes and the use of trusts in order to reduce such taxes! A combination of incentives for education and work for the less wealthy, and a frontal attack on “grinding pauperism”, must be the other principles behind the political economy of the Gandhian state. The state has the obligation not to create any hurdles in the path of voluntary action by individuals as they set up trusts.

In this context, it is worth considering whether taxes, levies and regulations are a hindrance for the formal organisation of trusts. The other question to ask is whether the granting of “charitable status”, with attendant tax-breaks, ends up debilitating the voluntary act and substitutes extrinsic for intrinsic motivation. Another public policy question that needs addressing is whether tax incentives lead to unintended consequences and susceptibility to misuse, which may over time delegitimise the very concept of trusteeship in the eyes of society and become a cause for withdrawal of social permission for all forms of trusts.

Economist Gandhi: The Roots and the Relevance if the Political Economy of the Mahatma

Excerpted with permission from Economist Gandhi: The Roots and the Relevance if the Political Economy of the Mahatma, Jaithirth Rao, Penguin Portfolio.