Showing posts with label Vedanta Kesari. Show all posts
Showing posts with label Vedanta Kesari. Show all posts

Swami Vivekananda’s Ideas on Economics



Swami Vivekananda remains one of the most influential personalities of India and the modern world. Though vast changes have taken place in the country since the beginning of the twentieth century, his influence continues to increase over the years. In fact many of his thoughts appear to be more relevant today.   

Swami Vivekananda is a great visionary, with a rare clarity on diverse aspects of human life.  His intimate knowledge of the Indian situation, wide experience across different countries, deep understanding of the civilizational backgrounds and keen intellect gave him a unique opportunity to develop new insights on different subjects, including economics.

Indian economy during the time of Swamiji

The Indian economy was at its worst period during the times of Swamiji. Dadabhai Naoroji calculated that the national income of India during 1867-68 was 3.4 billion rupees for a population of 170 million, with a per capita income of just 20 rupees1. Comparison of per capita incomes of different countries revealed that India’s income was very low; ‘even the most oppressed and mis-governed Russia’ was much better and it was believed that India was ‘the poorest country in the civilized world 2.’   

The European domination had made India, the nation with a long history of prosperity and superior achievements, a poor country.  The agricultural, industrial and business sectors were   destroyed. The replacement of the native education with the Macaulay system resulted in changing the entire course of education, apart from denying it to the larger sections of the society. The value based systems that governed the functioning of the society and economy since the ancient times suffered severe damages.

Swami Vivekananda’s insights into economic issues  

Swami Vivekananda acquired a deep understanding of the Indian economy due to his first-hand knowledge of the issues as an itinerant monk covering different parts of the country.  His experiences and interactions in the foreign countries provided him an opportunity to understand and compare the economic and social systems of different parts of the world. 

Though Swamiji was not a student of economics in the narrow   sense of the term, he was well-read in economics and was familiar with the works of political economists like John Stuart Mill. His expertise on economic concepts could be understood from the fact that he gave a lecture to the experts at the American Social Science Association in the United States on the ‘Use of Silver in India’ during 1893.  

Manifold contributions  

Swamiji proposed many new ideas in the field of economics at the global and the Indian levels. He emphasized the need for combing material prosperity with the spiritual values for the all-round development of people in different countries. When the western countries were accumulating wealth and involved in enjoying material pleasures, he told them clearly that it was necessary to imbibe higher principles for a meaningful life. The west is beginning to realize the meaning of his words only during the recent years, after suffering a lot.  

The western economic ideas revolve around the materialistic aspects only. The economic theories and models that they were advocating over the years are proving to be failures. It is only now that they have begun to understand that life is a complex process of which economics is only a part.

Swamiji’s thoughts for the Indian economy encompass different areas that are crucial to the functioning of the economic system.  He remains the one spiritual monk who emphasized the need for material progress of the society more than anyone else. This is the reason why he was called as ‘father of modern materialism.’3. He was not an arm-chair theorist, confined to standard sets of beliefs. His ideas cover diverse aspects necessary for the all-round development of different sections of people and the progress of the nation.   

India’s downfall due to exploitation

Swamiji had a clear understanding of the background of the Indian and Western economies during those times. He was aware of the higher performance of the Indian economy till the eighteenth century. He was one of those who understood that the primary source of wealth of the Europeans was the Indian resources.  

Swamiji noted: “Indian commerce, Indian revenue and all are now in the possession of the English; it is therefore that they are foremost of all nations now. …. That India, the India of the “natives”, is the chief means and resources of their wealth and civilization, is a fact which they refuse to admit, or even understand.4”  

Detailed research studies during the recent decades prove the above statements. The noted economic historian Angus Maddisson has established the supremacy of the Indian economy at the global level since the beginning of the Common Era5. Economists such as Andre Gunder Frank reveal as to how the western historians were engaged in projecting a wrong image of the West over the years 6.

Wanted India to develop on her own   

 During those times, two noted economists Naoroji and Romesh Chandra Dutt were producing works and arguing that the exploitation of India should be stopped forthwith.  Even at that time, Swamiji went many steps further and stated that India had to evolve her own economic policies for all round development without imitating other countries.

He was worried that the western countries were getting rich with the Indian resources, while Indians remained unaware of the opportunities. He said:  “In this country of abundance, the produce of which has been the cause of the spread of civilization in other countries, you are reduced to such straits!  Your condition is even worse than that of a dog ….. People of foreign countries are turning out such golden results from the raw materials produced in your country, and you, like asses of burden, are only carrying their load. The people of foreign countries import Indian raw goods, manufacture various commodities by bringing their intelligence to bear upon them, and become great. 7”  

Inclusive economics was his vision  

Swamiji’s vision of economics was concerned with the wholesome development of all categories of people in the country. He strongly advocated what the economists in the recent periods call as ‘inclusive economics.’ His priority was the removal of poverty and uplifting the poorer and downtrodden sections of the society.  He wanted all sections of the country to progress. His emphasize was on the weaker sections and women. He underlined that education and basic facilities be provided to all.  

Indian agriculture is unique

Basically India is an agricultural country. As a true visionary, Swami Vivekananda was fully aware of the importance of agriculture and noted that “Indians must not shy off from their unique characteristic of being an agrarian economy 8”.  He wanted India to adopt modern scientific practices to improve agriculture. He was particular that the small farmers need to be encouraged. 

His emphasis on agriculture remains true even in the present context, as about 60 per cent of the population still depends on agriculture and rural activities.  We are witnessing as to how the neglect of agriculture after independence is resulting in suicides and the younger generations leaving farming activities. This is not good for the future of the country. India has inherent strengths in agriculture, which the other countries lack. Besides, there is no other nation in the world that is capable of feeding our population, which is one sixth of humanity.

Industrialization  
Swami Vivekananda advocated the development of the   industrial sector for economic progress. He gave much importance to the promotion of a vibrant industrial sector.  He was clear about the nature of industrialization also. He wanted Indians to take steps to make the required items without depending on foreign countries. His discussions with Jamshedji Tata during his voyage to Chicago in 1893 reveal his vision for the development of the industrial sector.  Swamiji’s emphasize on domestic production instead of imports has become very important for India now, as the country has been facing the heat at several fronts due increased imports in different sectors during recent periods.

Entrepreneurship and promotion of traditional works

Swamiji was aware that India could be built only by developing the entrepreneurial talents of people.  Hence he encouraged self-employment activities at different levels. He was concerned that the art works of the village communities were neglected and wanted them to be taken up by those in towns. Swamiji underlined the need for the cottage and small scale units, as he was aware of the negative effects of the big industries.  

Emphasize on Science and Technology

Swamiji emphasized the use of modern science and technology to solve India’s problems. He wanted India to develop into a scientific and technological power. In this connection it is necessary to remember that it was the suggestion made by Swamiji to Jamshedji Tata that led to the establishment of the prestigious Indian Institute of Science.

Swamiji wanted Indians to learn Western science and adopt them in India. He said: “With the help of Western science, set yourselves to dig the earth and produce food-stuffs – not by means of servitude of others – but by discovering new avenues of production, by your own exertions aided by Western science 9.”  

India to be built on Indian methods

Swamiji was particular that India should be built on her own methods. In this context, he quoted Japan to admonish Indians who imitate the West. To quote:  “There, in Japan, you find a fine assimilation of knowledge, not its indigestion, as we have here. They have taken everything from the Europeans, but they remain Japanese all the same, and have not turned European; while in our country, the terrible mania of becoming westernized has seized upon us like a plague. 10

Swamiji was perhaps the first personality who suggested an Indian model of economic development, even when the country was under the colonial rule.  Ghosh notes: “The uniqueness of the Vivekananda doctrine lies in the fact that whatever remedies it suggests for India’s economic, political and spiritual regeneration derives from Swamy’s practical experiences of life. He used to meet the common Indian’s directly whenever he went to different places. This made him confident that India has to develop an economic model for herself which will take the peculiarities of her social life into consideration.11”   

India as the Jagat Guru  

After the rise of the West in the global arena, the entire world was made to believe that their economic models are the only solutions for progress.  Now after the global economic crisis during 2008, people have realized that the western ideologies cannot solve the basic problems even in their own countries.

Studies undertaken by experts at different levels during the recent periods clearly reveal that India need not follow the western models, as her fundamentals and functioning systems are unique. Many western scholars acknowledge that there is ‘the Indian way’ due to the peculiar social and cultural backgrounds of the country. 12 Our experience shows that India has failed to realize her full potential as the policy makers have been blindly following the western approaches.

As a pioneering thinker, Swamiji underlined the need to develop India on the national lines. He said: “My ideal is growth, expansion, development on national lines. 13” There is no doubt that if we frame our policies with the nation- centric approaches, India has the potential to emerge as the Jagat Guru, as Swami Vivekananda had envisioned.

References:

1.    Naoroji, Dadabhai, Poverty and Un-British Rule India, Ministry of Information and Broadcasting, Govt. of India, New Delhi, 1996, p.II
2.     Quoted in Bipan Chandra, The Rise and Growth of Economic Nationalism in India, Anamika Publishers and Distributors (P) Ltd., New Delhi, 2004, p.17
3.    Binoy Kumar Sarkar quoted in Santwana Dasgupta, Social Philosophy of Swami Vivekananda, The Ramakrishna Mission Institute of Culture, Kolkatta, p.459
4.    Swami Vivekananda, Complete Works, Vol. VII, Advaita Ashrama, Calcutta, Sept.1992, p.358
5.    Angus Maddison, The World Economy – A Millennial Perspective, Overseas Press ( India) Ltd., New Delhi, 2003
6.    Andre Gunder Frank, ReOrient: Global Economy in the Asian Age, Vistaar Publications, New Delhi, 1998
7.    Swami Vivekananda, op.cit., Vol. VII, p.145
8.    Swami Gamvirananda quoted in Ghosh, Sarup Prasad, Swami Vivekananda’s Economic Thought and in Modern International Perspective: India as a Case Study, The Ramakrishna Mission Institute of Culture, Kolkatta,  2010, p.53
9.    Swami Vivkenanda, op.cit.,  Vol. VII, p.182
10.                        Ibid., p.372
11.                        Ghose, op.cit., p.526
12.                       Peter Cappelli et al., The Indian Way: How India’s Top Business Leaders are Revolutionizing Management, Harvard Business Press, 2010
13.                       Swami Vivekananda, op.cit.,  Vol. III, p.195

(The Vedanta Kesari, Vol.100, No.12, Ramakrishna Mutt, Chennai, Dec.2013, pp.605-619)


Indian Cultural Values and Economic Development


 India’s Traditional Economic Systems

India is an ancient civilization with outstanding contributions in diverse fields of life. India was a pioneer in economic initiatives and remained the dominant economic power at the global level for several centuries. Long periods of domination by alien forces, especially which of the Europeans for about two hundred years, resulted in the systematic destruction of the time-tested Indian systems that were in use. 

With the introduction of the new education system during the early nineteenth century, the British were able to lay the foundation to disconnect the elite and the educated sections from their roots.  As a result modern India finds it difficult to understand the country and connect it to the realities. Besides the imposition of western ideas and thoughts over all these years has created an impression that India does not have the fundamentals to function on her own. But this is not true.

The recent developments at the global level confirm the failure of the western models. Their own experts admit that their economic and social models have largely failed.  At the same time, the slow and steady rise of India after independence shows that her functioning models are much better than those of the richer countries.

Indian economy – Ancient and pioneering  

India has a proud economic history. She was engaged in different economic activities. There were exclusive commercial cities and trade centres dominated by the merchant classes catering to the world markets, more than five thousand years ago. Evidences indicate that different forms of business organizations, including srenis (ancient corporate form) and partnerships, existed at least 2800 years earlier. Economics, as a subject of science, is believed to have originated in India more than 2600 years ago. Arthashastra, the first book on economics in the world, underlined that the basis of wealth of the nation was economic activity and that the state should run a ‘diversified economy.’

India remained the most powerful economy  

Maddison shows that India remained as the economic super power for most of the time during the previous two millennia 1.  India had the highest share in the global economy, accounting for 32.9 per cent of world GDP, during the beginning of the Common Era (CE). India continued to maintain her status as the premier economy and was dominating the world along with China till the nineteenth century. Even repeated invasions and the consequent disturbances could not affect her functioning much.  

 India was made poor

The Europeans destroyed India systematically. Their fatal assault on the vital sectors of the economy and the drain of resources had completely shattered India. The native systems that were built up over the years lost their significance. As a result India was made a poor and underdeveloped country. India’s share of global GDP came down to 4.2 per cent in 1950. During 1950-51, about 45 per cent of the people were living below poverty line; 18.3 per cent was the literacy rate and the average age of life was just 32.1 years 2. Industrial and business sectors were very weak. Most of the people were dependent on agriculture which had become unviable several decades ago.

India emerges amidst difficulties 

Now after sixty five years of Independence, India is fast emerging as a crucial player in the global order.  She is widely recognized as a potential nation possessing the capacity to reach the premier position in the coming years. The International Monetary Fund notes that India is the third largest economy in the world in 2011, with a GDP of $4.46 billion 3. Besides India remains the second fast growing nation after China. From being a poor country without much recognition, how did India become a nation commanding all round respect within a period of six decades? Almost all the estimates predict India to occupy a bigger space at the global level. How is this happening? 

One has to remember that all these developments have been happening, despite the state adopting policies based on the ideologies evolved outside. Initially for more than thirty years the socialistic ideology guided our policy makers and since the 1990s, the US driven market capitalism remains their inspiration. Hence the development over the years remains uneven, with large sections of people facing serious difficulties in critical sectors such as agriculture.  Poverty and unemployment remain to be addressed seriously. Inequalities and consumerist tendencies are on the rise.

But India is progressing in spite of the confusions and contradictions at the top and the myriad problems surrounding her people. Studies reveal that it is all due to the functioning systems that are based on stronger foundations.

Cultural values as the bedrock of economy  

 India’s greatest asset is her cultural backgrounds. The traditional institutions of close knit families and societies are the products of our culture. Hard work, frugal living, high rates of saving, higher levels of entrepreneurship, higher social capital and relationship- based activities are all part of our  value systems that remain as the foundations of the economy. Indian culture treats everyone as part of the larger family. Faith, goodwill, integrity, mutual understanding, norms and ethics are the basic elements of Indian life that impact on the activities of our people, including the economic transactions.

Family, community and traditional values

Families are the basic social, cultural and economic units in India. They are the prime source of savings in the country. These savings remain the basis for all the productive and entrepreneurial activities. Indian families are built on close relationships based on love, affection, faith, dedication and sacrifice.  For much of the economic initiatives, families remain the source of inspiration, providing the entrepreneurs the much needed support during the crucial periods.  Studies show that mothers, grandmothers, wives and sisters help accessing savings for entrepreneurial initiatives. As a result, major part of the initial investments comes from families, close circles and local sources. Economic Census 2005 reveals that the in about 95 per cent of the instances, promoters mobilize funds through their families and own sources in the unorganized sector 4.

 Communities function as the extended families in different parts of the country.  As a result, there is high social capital in the society. It enables economic transactions on the basis of mutual understanding, faith and good will. World Bank 5 notes that the emergence of Tirupur as a global textile centre has been facilitated by the easy availability of funds at lower costs to the exporters through ‘credit rotation’ during their times of need. It is possible due to the close relationships that prevail in the local societies.

Self-employment and higher levels of entrepreneurship

Long back, sage Vidhura noted that ‘self-employment is the best status in life’. Indian tradition considers self-employment as a virtue and accordingly it was given the highest status in the society. The concept of self-employment is unique to the Indian system that we find few parallels elsewhere. It is significant to note that in spite of the changes in the economic and social structures over the years, self-employment remains the most preferred form of activity among Indians. The Project OASIS Report notes that 53 per cent of the total workforce in the country was engaged in self-employment 6. At the same time, the self-employment rate in all the richer countries was 16.8 percent, while it was 7.5 per cent in the US 7.

Higher levels of entrepreneurial qualities prevailing in the society are a distinct feature of the Indian economy. Quoting Global Entrepreneurship Monitor Report 2003, India Brand Equity Foundation notes that “with more than 85 million businesses, India is one of the most entrepreneurial countries in the world 8.”   Economic Census 2005 notes that there were 41.83 million enterprises functioning in the unorganized sector with 100.90 million persons working. As of 2009-10, there were more than 29.8 million units in the Micro, Small and Medium Enterprises sector providing employment to more than 69.5 million persons 9. Ministry of Company Affairs notes that there were nearly 8, 73,000 companies at work during 2010 10.  Earlier, the Ministry of Small Scale Industries, Government of India had estimated that there were 2042 clusters functioning across the country 11. Many of these clusters such as Surat, Ludhiana, Agra, Tirupur and Kanpur play a significant role at the global level.

Self-made, self-financing and not state dependent

It is relevant to note that the family based non-corporate sector contributes about 57 per cent to the national output. The promoters of much of these enterprises are ordinary people from humble backgrounds, with lesser qualifications. A study of diamond exporters in Gujarat showed that around 66 per cent of them have studied less than fifth standard 12. But these are the people who dominate their fields at the national and global levels. They have mastered businesses, technology and management through dedication, experience and native wisdom. 

As a result, they compete with the mega corporations at the international markets and succeed. Their business models are entirely local. Theirs businesses are self- made, self-financing in nature and not dependent on the state.  Studies show that more than 95 per cent of the corporate sector is family based. During the recent periods, an increasing number of Indian companies are going to many countries to play bigger roles.

Higher values in business transactions

It is important to understand that higher values dominate the business transactions to a large extent. Most of the transactions in the non- corporate sector, which constitutes the major part of the Indian economy, take place on the basis of faith and goodwill. In a study of the non-corporate finance sector in Karur, the textile export centre from Tamil Nadu, it was found that almost the entire financial transactions revolved around goodwill and faith 13.

Mutual understanding and higher value systems prevail across the country, irrespective of the backgrounds of the people. Dutta writes: “The cultural artifacts- the languages spoken, gods worshipped and the numerous other details – differ from business community to business community across the country.  But the value systems are surprisingly similar.14” Studies in clusters reveal close personal relationships, cooperation and trust among businessmen from different religious communities. 

There are higher norms in practice in most of the industrial and business centres. Dwivedi presents in the context of Kanpur saddlery cluster: “Norms function in the cluster irrespective of the personal relationships that entrepreneurs have with each other and have an implication in providing stability to the entire cluster. We reported earlier that there are no legal contracts held among businessmen in this cluster. This practice seems to be based on normative behavior rather than a matter of having personal experience with the other party. Even in case of new ties, a contract is not demanded because it is simply not considered a way to do business.15

Indian models emerging at the global level

India has been growing steadily over the years. She is one of the countries least affected by the recent global economic crisis.  The Indian economic, business and management models are emerging at the global level during the recent periods. For example, Arvind Hospitals and Narayana Hridayalaya were studied by several international institutions for emulating their practices in other countries. In this respect many foreign universities, management institutes and research organizations have been visiting India to study the Indian systems. 

 Culture remains the basis of development

India was a dominant economic power for most of the time during the earlier periods. She is emerging once again during the recent periods. The main reason for this is the unique functioning models that are built around the cultural foundations and traditions of this land. These models are the efforts of the native the Indian genius born out of the beliefs, lifestyles and practices of our people.

The economists and management experts of the west acknowledge that the foundations of Indian economic development lie in her culture and unique backgrounds. Earlier John Kenneth Galbraith, former ambassador of USA to India and an economist, noted: “I wanted to emphasize the point, which would be widely accepted, that the success of India did not depend on the government. It depended on the energy, ingenuity and other qualifications of the Indian people. …… We’ve seen many years of Indian progress, and that is attributable to the energy and genius of the Indian people and her culture 16.”
Recently a team of management professors led by Peter Cappelli from the Wharton Business School, US analyzed the leadership practices of Indian companies. Pointing out the superior practices in India, they note: “The Indian leadership approach arose from the unique circumstances of the Indian economy and society 17.”

Decades ago, the Gandhian economist Kumarappa who wrote on the ‘Economy of Permanence’, noted that the Indian and Chinese civilizations had survived long as they were based on the values of permanence. He said further that our forefathers had laid down this kind of a foundation purposely with great vision. Kumarappa underlined: “The enduring qualities of these civilizations are pointers to the great farsighted standards of value our forefathers had made use of, in laying the foundations of a lasting society 18.”  Studies prove that the age-old Indian civilization, with her deep rooted values and traditions, remains the basis for economic development.

References:

1.     Maddison, Angus, The World History, Academic Foundation, New Delhi, 2007
2.     Economic Survey 2010-11, Government of India
3.     World Economic Outlook Database, International Monetary Fund, 2012
4.     Economic Census 2005, Government of India
5.     World Development Report 2001, World Bank, Washington
6.     Project OASIS Report, Government of India, 1999
7.     OECD Fact book 2011, Organization for Economic Cooperation and Development, Paris
8.     India Brand Equity Foundation, www.ibef.org
9.     Fourth All India Census, Ministry of Micro, Small and Medium Enterprises, Government of India
10.           Annual Report 2010-11, Ministry of Company Affairs, Government of India
11.    Final Results: Third All India Census of Small Scale Industries 2001-02, Ministry of Small Scale Industries, Government of India
12.  Patel, Sharad and P.Kanagasabapathi, ‘ A Study on Gujarat Diamond Export Industry’, P.S.G. Institute of Management, Coimbatore, 2005
13. Kanagasabapathi, P., Unorganised Finance Sector: The Engine for Economic Growth- A Study with Reference to Karur, Swadeshi Academic Council, Coimbatore, 2002
14.    Sudipt Dutta, Family Business in India, Response Books, New Delhi, 1997
15.      Dwivedi, Mridula, ‘ Nature of Trust in Small Firm Clusters: A Case Study of Kanpur Saddlery Cluster’, Paper presented at conference, Modena, Italy, 2003
16.    Galbraith, John K, interview, Outlook, August 20, 2001
17. Peter Cappelli and others, ‘Leadership Lessons from India’, Harvard Business Review, March 2010
18.     Kumarappa, J.C., Economy of Permanence, Sarva Seva Sangh Prakashan, Varanasi, 1997
(Vedanta Kesari Spotlight Issue, Ramakrishna Math, Chennai, Vol.99, No.12, Dec.2012)