Saturday, November 13, 2010

M K Gandhi on Free Trade!!

When I get time to read long essays, other than the daily reading of newspaper, magazine, blogs etc I dwell on Universities/institutions working papers on development economics and Indian economics.

The recent one which I read is Indian Planning and Development Economics” by Lawrence H. White published on August 31, 2010. This is a Working Paper (No. 10-53) and is Chapter 10 from The Clash of Economic Ideas his 2008 book.

No doubt this paper would add some value addition to the subject but there are some serious and dangerously wrong interpretation and misunderstanding in this paper. Let me say the following two of course the second is a little minor one! But the former is really a big misunderstanding!

Mr.White writes:

  • “In sharp contrast to Adam Smith, who had recommended ending such transfers by instituting free trade between former British colonies and Britain, Gandhi called for ending trade. He favored a form of national selfsufficiency for India bordering on autarky.” (p.320)

  • “Jairam Ramesh, India‘s finance minister 1996–98, notes that western advisors strongly supported Nehru‘s planning efforts”: (p.327)

Let me take the second one first. India’s Finance Minister during 1996-98 was P.Chidambaram not “Jairam Ramesh”. For more see 1 2.

On the point of “......Gandhi called for ending trade.............” In absolute sense Gandhi was not against of free trade per say! He in fact said the following:

  • To reject foreign manufactures merely because they are foreign and to go on wasting national time and money to promote manufactures in one’s country for which it is not suited, would be criminal folly and a negation of the Swadeshi spirit. A true votary of Swadeshi will never harbour ill-will towards the foreigner; he will not be moved by antagonism towards anybody on earth. Swadeshism is not a cult of hatred. It is a doctrine of self-less service that has its roots in the purest ahimsa, that is, love” (1931) (From Yeravaa Mandir, 1957, p. 66).

M.K Gandhi also wrote in Young India:

  • Q. What is your opinion about the importation of foreign goods other than cloth into India? Are there any foreign commodities which you would like to see immediately under prohibition? What do you think should be the nature of India's foreign trade in the future?

  • A. I am more or less indifferent with regard to trade in foreign goods other than cloth. I have never been an advocate of prohibition of all things foreign because they are foreign. My economic creed is a complete taboo in respect of all foreign commodities , whose importation is likely to prove harmful to our indigenous interests .This means that we may not in any circumstance import a commodity that can be adequately supplied from our own country . For instance I would regard it a sin to import Australian wheat on the score of it's better quality but I would not have the slightest hesitation in importing oatmeal from Scotland, if an absolute neccesity for it is made out, because we do not grow oats in India. In other words I would not countenance the boycott of a single foreign article out of ill will or a feeling of hatred. Or to take up a reverse case , India produces sufficient quantity of leather , it is my duty therefore to wear shoes made out of Indian leather only , even if it is comparatively dearer and of an inferior quality in preference to cheaper and superior quality of foreign leather shoes . Similarly I would condemn the introduction of foreign molasses or sugar if enough of it is produced in India for our needs. It will be thus clear from the above that it is hardly possible for me to give an exhaustive catalogue of foreign articles whose importation in India ought to be prohibited. I have simply indicated the general principle by which we can be guided in all such cases. And this principle will hold good in future too as long as the conditions of production in our country remain as they are to-day (Young India, 15-11-28. p.381).

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