The Global Financial Meltdown and Gandhian Philosophy..!! The world has enough for everyone’s needs, but not for everyone’s greed", Mahatma Gandhi..!!

The Global Financial Meltdown and Gandhian Philosophy
Second Naro Udeshi Commemoration Lecture by Prof. Veena Sikri


"The world has enough for everyone’s needs, but not for everyone’s greed", Mahatma Gandhi


Needs and greed lie at the heart of our discussions today. Unending greed for profit-making by the world’s largest financial institutions and multinational corporations led to the global financial meltdown that we find ourselves in the midst of. Meeting the basic needs of the common man -remains the yet unfulfilled endeavour in developing countries, where most of the world’s poor live. These are two opposing ends of the economic spectrum. Reconciling them presents among the most serious challenges facing governments, societies and individuals. Can the philosophy enunciated by Mahatma Gandhi through his writings almost 100 years ago provide us with answers today?

Mahatma Gandhi was among the greatest visionary thinkers of the 20th century. The well-being and upliftment of man (and woman) lies at the core of his thinking, embodied in the concept of Sarvodaya. The methodology for achieving Sarvodaya is through Satyagraha, or the struggle for truth through non-violent means.

Moral and ethical values form the kernel of a person’s (and society’s) wealth, to be judged by qualities such as self-discipline, sense of dignity and pride, compassion, concern for others, integrity, spirit of nonviolence, and openness to the world. Gandhiji rejected the yardstick of possession of material goods for judging wealth. For Mahatma Gandhi means are as important as the end. No matter how laudable the objective, if the means used to attain it are incorrect, the very achievement of the objective could be vitiated. Human beings, he said, are unique in their ability to distinguish between the moral and the material. Wealth that is judged entirely on the accumulation of material goods and the endless creation and satisfaction of wants invariably corrupts human beings and makes them dissatisfied and unhappy. The purpose of economic activity is to create material conditions for a good life, which is one that is firmly rooted in moral considerations.

It is important to appreciate that Mahatma Gandhi did not in any way glorify poverty. Rather he held that "poverty dehumanises human beings, undermines their sense of dignity and self- respect, wastes their potential and deprives their lives of all sense of meaning and purpose. It is one of the worst forms of violence that human beings can commit against other human beings."’. Gandhiji firmly believed that meeting every individual’s basic human needs, viz food, clothing, housing, education and healthcare, must have the first claim on society’s resources. Delivery mechanisms for such services should be centred around the village council or Gram Sabha, so that the recipients themselves could play an active role in the maintenance and administration of such facilities. For day-to-day operations, the Gram Sabha elects a Gram Panchayat, which also discharges the functions of maintaining law and order and administration of justice for all matters arising within the village. This is the concept of Grama Rajya.

Gandhiji perceives the individual as being at the centre of a set of concentric circles that move from him right up to the central or federal government. He has used the term Principle of Oceanic Circles to describe this concept. At the very first level for each individual there are three concentric circles, namely the person himself, his or her family and the Gram Sabha. From the Gram Sabha one moves on to the group of neighbouring villages or Gram Samuha. A group of these forms a Taluka, and a group of Talukas forms a Zilla. Each outer wave derives its authority from the immediately preceding inner wave. Consequentially, each federal or central government body will be constituted by representatives of its immediately inner circle.

The core issue for Mahatma Gandhi, his primary objective in formulating such an economic system is to guarantee a nonexploitative society. He delved deep into the history of the Indian subcontinent where, during the time of the Rig Veda (1200 BC), gram sabhas and gram panchayats were functioning as institutions of grass-roots governance in almost every village. The elected village panchayat (council of five persons) had substantial executive and judicial powers. The panchayat distributed land, collected taxes out of the produce of the land and gave the government its share on behalf of the village. Overtime this system was replaced by a much more feudalistic system of governance where feudal chiefs and revenue collectors (zamindars) emerged as the intermediaries between the rulers and the people. Under British colonial rule the autonomy of the panchayat eroded still further with the establishment of local civil and criminal courts and the operation of the individual Ryotwari (landholderwise) system as against the earlier Mahalwari or village tenure system.

Gandhiji’s struggle was against the highly centralised federal governments that he came up against first in South Africa and later in British India. He considered such governments to be exploitative of the individual since their power is supreme. Individual development is suppressed in such systems even though the federal system derives its power directly from nationally elected representatives. Financial allocations made for projects at grassroots level get filtered off at the state, district, taluka and village levels that they have to pass through, such that the individual and his family remain ignorant about and only rarely benefit from such allocations. Very little reaches them.

Decades later India’s former Prime Minister Rajiv Gandhi spoke about this with great feeling and pain, just before he introduced the historic Panchayati Raj 64th Constitutional Amendment Bill in India’s Parliament in 1989. This was finally adopted by Parliament in 1992 as the Constitutional (73rd Amendment) Act, which came into force in April 1993. This Act provides constitutional sanction to establish "democracy at the grassroots level as it is at the state level or national level". The institutional infrastructure for this is already in place. At present there are about 3 million elected representatives at all levels of the panchayat, one-third of whom are women. This has given a tremendous boost to women’s empowerment at the grass roots level. These new panchayats cover about 96% of India’s 6 lakh villages.- However, given the federal structure of India’s polity, most of the financial powers and authority to be devolved to the panchayat is at the discretion of the concerned state legislatures. Consequently these powers vary from one state to the other.

My purpose in going into this issue in some detail is to illustrate the relevance of Gandhiji’s vision. Some aspects of it have been realised, in key areas such as panchayati raj, where it has contributed significantly to the empowerment of women and the upliftment of the individual at the village level.

With man at the centre of Mahatma Gandhi’s view of the universe, he attached the highest value to full employment. For Gandhiji, work and gainful employment for every individual is an important right as well as a moral duty. Work provides every individual the all-important sense of self-respect and dignity together with selfdiscipline, self restraint and a measure of social recognition. Social welfare payments or the dole are, according to Gandhiji, no substitute for work. It is through work that each individual participates in and contributes to society. Without this he becomes a ‘social parasite’. Full employment is the most appropriate means consistent with the end objective of poverty eradication.

This focus on full employment led Gandhiji to oppose indiscriminate industrialisation and urbanisation. He was not opposed to the utilisation of scientific and technological developments, but insisted that the deployment of these must not lead to mass unemployment or displacement of people from their traditional life-styles and homes. These, he said, are unacceptable costs which mitigate against the objectives of human development and social justice by making the profit motive and the pursuit of wealth the sole criteria or yardstick.

With prescient reasoning far ahead of his times, Gandhiji opposed large scale industrialisation also because he felt it to be ecologically unsustainable and destructive of the equilibrium between man and nature. Decades later in 1987 the World Commission on Environment and Development’s Report, commonly known as the Brundtland Commission Report, defines sustainable development as’ "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". This concept, sometimes encapsulated as "we (the present generation) have -inherited the earth from our children" mirrors Gandhiji’s concept of trusteeship, namely that all of us are Trustees of the land and other wealth of the nation for future generations. The Report further states that in defining the concept of needs, the essential needs of the world’s poor should be given overriding priority.

Mahatma Gandhi firmly believed in the perspective of economic growth, development and poverty eradication that focused not on the elite or the’ ‘haves’ but the poorest individual among the ‘havenots’. He would have completely rejected the presently fashionable ‘trickle down’ theory of growth that supports the policy of providing tax-cuts or other benefits to businesses and rich individuals in the belief that this will indirectly benefit the poorest sections of society. This theory, based on supply side economics, believes that any increase in gross domestic product, no matter what its source, will help the poor. The glaring inequalities of wealth that this process brings in would be considered unethical, even morally repugnant to Gandhiji. Wiping the tear from every eye meant reaching out directly to the deprived millions, not through remote control.
.------------------------------------------------------------

The Global Financial Meltdown and Gandhian Philosophy-II Second Naro Udeshi Commemoration Lecture by Prof. Veena Sikri
"The world has enough for everyone’s needs, but not for everyone’s greed",
Mahatma Gandhi


The global financial crisis that has engulfed nations across the world has brought renewed focus on the oligarchy of multinational financial institutions driven by the sole objective of maximising profit without caring for the negative consequences or strong downside to their activities. Derivatives, hedge funds, financial futures, credit default swaps, and similar financial instruments emerged from the turmoil of the 1970s after the oil shock, double digit inflation in the US and the fall of 50% in the US stock market. The finance industry created these instruments as a means of managing risk. Then people started making money buying and selling these instruments on the open market in ways never seen before. As people became successful quickly these financial instruments were used not to reduce their risk but to take on more risk in order to make more money. Greed started to kick in. Corporate houses started getting into activities that were not part of their core businesses.

The most recent sub prime crisis that was the immediate cause of the global financial meltdown came about largely because of financial instruments such as securitization where banks would pool their various loans into saleable assets, thus offloading risky loans on to others. Commentators4 have described how rating agencies were paid to rate these products (could this have been a conflict of interest?) and the invariably good ratings these products received encouraged people to buy them. Banks borrowed more money to lend out so they could create more securitization. Some investment banks started buying mortgages in order to securitize them and then sell them on. Once again, securitization began as an attempt at managing risk but when greed and unethical practices took over the whole process boomeranged. At the first whiff of difficulties relating to the way in which the banks had over-extended themselves, public confidence started falling rapidly. Lending slowed, investors stopped buying, asset values plummeted, individuals wanted their money back. This led to the collapse of some of the world’s largest financial turned institutions, who then to their governments for bail outs.

According to Bloomberg US dollars 14.5 trillion, or 33% of the value of the world’s companies have been wiped out in the present global financial meltdown. It is estimated that by February 2009, US taxpayers have spent around US dollars 9.7 trillion in bailout packages and plans. The UK and other European countries have spent close to US dollars 2 trillion on similar rescue packages.

Look at the irony of the situation. To quote economist-writer Anup Shah, this is a ‘crisis so severe, those responsible (for it) are bailed out’! ‘Money is flowing to those who caused the problem, rather than to the victims’- Nobel Laureate Joseph Stiglitz. It is no less surprising to see that some senior economic advisers with the previous US Administration, under whose watch the global financial meltdown began, are continuing in various advisory capacities with the present US Administration. At the other end of the economic spectrum, however, the average individual, the common man is suffering because of unemployment and job losses, the bursting of the housing bubble, the inability to make mortgage payments, soaring commodity prices, stock market volatility and failing consumption which leads the downward spiral in economic activity. For this avoidable anguish and suffering, there is no one ready to take responsibility,* no accountability at all. To add insult to injury it is this ordinary taxpayer who has to pick up the tab for the financial bail-outs I

In this era of globalization the adverse fallout of this global financial crisis have been rapidly transmitted across frontiers and oceans to impact the lives of millions of poor people in developing countries. In today’s interconnected world nobody is immune from such consequences, no matter how poor you are and how uninvolved and distant you are from the world’s financial markets. The knock-on effects from the financial instability and uncertainty in industrialised nations that have been particularly debilitating for the poor have been higher food prices, higher fuel costs, declining market for exports, and increasing unemployment. The plunging value of many currencies has meant that the costs of essential imports including life- saving drugs and pharmaceuticals have risen inexorably.

What is worse international donor organisations are now facing the financial crunch. As a result the availability of resources for plans and strategies crafted to address global poverty, hunger, literacy, health and education, for example through the UN Millennium Development Goals, is also under threat. Developing countries remain crippled by huge debt burdens. Requests to the industrialised nations for debt relief or debt write-off have gone largely unheeded, even though in monetary terms the entire Third World debt is but a fraction of the amounts that have been made readily available for financial bail-outs over the last one year by these very same developed countries.



The ongoing global financial meltdown has already ignited fierce debates about the nature of the ‘free market’, its relationship with democratic governments, and the place and role of ethics in economic theory and practice. Economic theorists beginning with British economist John Maynard Keynes, considered to be the father of modern macroeconomics, have for long emphasised that unfettered markets cannot be self-correcting, some regulation is needed, and there is an important role for democratic governments to play in this regard, in order to avoid destructive cycles of recessions, depressions and booms. After the Great Depression of 1929 and after the Second World War Keynesian theories helped stabilise and rebuild the world economy. This worked until the first oil shock of the 1970s after which the Keynesian view of regulated markets were abandoned and the ‘free market’ system rapidly came into full play. For the next three decades the neoliberals vehemently held that unfettered markets are selfcorrecting, so governments need not intervene at all.

This belief has now been shattered. Nobel Laureate Joseph Stiglitz, describing the discussions in February 2009 at the annual World Economic Forum in Davos, noted that there was a "Striking ... loss of faith in markets. In a widely attended brainstorming session at which participants were asked what single failure accounted for the crisis, there was a resounding answer: the belief that markets were self-correcting115. Joseph Stiglitz goes on to say- ‘this crisis raises fundamental questions about globalization which was supposed to help diffuse risk. Instead, it has enabled America’s failures to spread around the word, like a contagious disease. Still, the worry at Davos was that there would be a retreat from even our flawed globalization and that poor countries would suffer the most’. Ironically, those countries that did not fully liberalise and reform their capital and financial markets, such as India and China, have been spared the major brunt of the present crisis.

The ongoing global financial crisis has led to much introspection and discussion about what is the best way forward in order to rebuild trust and bring growth back into the system. There seems to be unanimity on the need for regulatory reforms in the international banking and financial systems so-as to prevent risky financial practices and place, strong restraints on the build up of excessive risk. Inadequate competition and inadequate procedures to ensure transparency and accountability have been recognised as among the major causes of the systemic failure. Reform of the international financial institutions such as the World Bank and the IMF are being called for in order to give more voice and power to the emerging economies and the poorer countries. Worsening poverty for millions of the world’s poor is being recognised as an important impediment to the recovery of the world economy. In November 2008 when former US President Bush called for an emergency meeting to discuss the worsening global financial crisis, he invited not just the G8 group of industrialised nations but the much larger G 20, which includes the G8 and 12 emerging economies such as China, India, Saudi Arabia, South Africa, Mexico and Turkey.

The global financial meltdown has focused attention on the systemic breakdown in the world economic structures. This crisis coincides with several other major crises facing the world. There is the environmental crisis caused by global warming and degradation brought on by the irrational over-exploitation and pollution of the world’s water and other natural resources. Then there is the cultural crisis brought on by intolerance and the sharp rise in violent clashes, by the loss of traditional life-styles and value systems, and growing religious fundamentalism. There is also the crisis of security brought on by the alarming rise in extremist and terrorist activities, by the ever increasing national expenditures on armaments and the resultant control exercised by the military-industrial-complex, and the negative influence of the drugs mafia involved in the manufacture and trade of narcotics.

Is there anything that we can do, as individual citizens of our respective countries, to ameliorate and overcome these daunting challenges? The need of the hour is to go back to the man-centred economics, the village-centred approach that forms the core of the Gandhian philosophy. This means following the Gandhian ethic based on simplicity, self-sufficiency and self-reliance to be achieved through gram-rajya, sarvodaya and satyagraha, which has ahimsa as its core. Our first effort should be to imbue the younger generation with the Gandhian ethic, to convince them that there is something beyond the profit motive and the monetary incentive. Maximising Gross National Happiness should be considered as desirable an objective as maximising Gross National Product (GNP). This should be our contribution, the people’s contribution, as distinct from whatever policies the government-of-the-day in our respective countries is implementing.

How do we go about achieving this objective? By joining hands with like minded individuals and groups within our respective nations and across national borders to create the Gandhian network.



www island.lk
------------------------------------------------------
The Global Financial Meltdown and Gandhian Philosophy-III
second Naro Udeshi Commemoration Lecture by Prof. Veena Sikri.


"The world has enough for everyone’s needs, but not for everyone’s greed", Mahatma Gandhi


Maximising Gross National Happiness should be considered as desirable an objective as maximising Gross National Product (GNP). This should be our contribution, the people’s contribution, as distinct from whatever policies the government-of-the-day in our respective countries is implementing.

How do we go about achieving this objective? By joining hands with like minded individuals and groups within our respective nations and across national borders to create the Gandhian network.

The centrality of ethics and morality is gradually being reorganised. The British economist Hazel Henderson has been writing for years about the need for mainstream economists to think about the broader economic system that includes the environment and ethics. She regrets that most universities and academics have actively avoided such alternative thinking from as far back as the 1920s. Considering the immediate causes that led to the present global financial meltdown, perhaps now is the right time for a change on such thinking.

Hazel Henderson is a tireless supporter of the Earth Charter Initiative. The Earth Charter, adopted by consensus in 2000, grew out of the Brundtland Commission Report that I have referred to earlier. The objective of the Earth Charter Initiative is to promote the transition to sustainable ways of living and a global society founded on a shared ethical framework that includes respect and care for the community of life, ecological integrity, universal human rights, respect for diversity, economic justice, democracy, and a culture of peace. Many of these objectives are an integral part of the Gandhian ethic.

I am deeply impressed by the work of the Mahatma Gandhi Centre in Colombo. The Naro Udeshi spirit of non-violence and peace, sacrifice and service to the community, bringing people together continues to motivate the President, committee members and all others to carry on with your efforts to bring Mahatma Gandhi’s ideals and principles to the settlement of all problems and differences.

The roadmap you have proposed, the -reconstruction strategy that you have suggested for rebuilding the Northern Province based on Gramarajya, maximising land productivity, skill improvement and focus on renewable energy and resource conservation is Gandhian in its simplicity, as well as versatile and flexible enough to be effective and implementable. I wish the Mahatma Gandhi Centre every success in this crucially important, necessary and significant endeavour that you are pursuing with such seriousness.

In India, we have the SEWA (Self employed Women’s Association) based in Ahmedabad and Lucknow which brought together and empowered tens of thousands of women by providing training, marketing and branded product outlets for their crafts and embroidery skills. These village women are today entrepreneurs in their own right, as co-owners of SEWA Trade Facilitation Centre in Ahmedabad.’

There is the Gandhi Ashram Trust located in Jayag (District Noakhali) in Bangladesh as well. The state of Bengal witnessed some of the worst communal riots in pre-independence India in Noakhali, now in Bangladesh, in November 1946. Mahatma Gandhi lost no time in visiting Noakhali, where he spent four months moving barefoot from village to village, bringing solace and courage to the affected from all communities, spreading his message of non-violence and peaceful co-existence6.

There is a touching and sensitive first-hand account of Mahatma Gandhi’s visit to Noakhali in 1946-47 by Philips Talbot in his book’ ‘An American Witness to India’s Partition’, published by Sage (India) fairly recently. In 1947 a prominent local citizen in Noakhali donated his land and resources to Mahatma Gandhi for the rehabilitation of all riot victims and development of the area.

A Charitable Trust was formed, which, after Independence, practically ceased operations due to the negative policies of the then Government in East Pakistan. After the Liberation of Bangladesh, the Trust was revived in early 1975 as the Gandhi Ashram Trust. The Government of Bangladesh runs it, with representation from India on the Executive Committee.

Even today, it continues to steadily increase and build upon its philanthropic and development activities with the rural poor, particularly women. The Gandhi Ashram Trust serves 40,000 of the poorest, primarily Muslim families, in three districts of the Noakhali region.

Nobel Laureate Professor M/uhammad Yunus, created Grameen Bank in Bangladesh 30 years ago to end what he describes as ‘financial apartheid’ where poor people were being systematically excluded from financial services provided by banks and other conventional financial institutions.

Over these years Grameen Bank has given collateral free loans to nearly 7,000,000 people, 97% of whom are women with a repayment rate of 99%. That he was awarded the Nobel Peace prize in 2006 is a powerful recognition that poverty is a threat to peace. In his words, it is impossible for us to think of a peaceful world when 60% of the world population lives on 6% of the world income, and half of the world’s population lives or on less than two dollars a day.

I would like to conclude by urging that we reach out to each other. On my part I am prepared to do my best to facilitate the Gandhian network among the countries of South Asia. [At my University Jamia Milli Islamic we held a Conference at the end of March 2009 on ‘Women of South Asia: Partners in Development’ where we set up seven South Asian Women’s Networks).

To quote Muhammad Yunus when he spoke in New Delhi at the Commemorative Seminar held to mark the centenary of the Satyagraha movement launched by Gandhiji, "Within a framework that encompasses Gandhiji’s philosophy of tolerance and nonviolence, compassion for all humanity and peaceful coexistence, we can work together to create a world that our grandchildren and our great grandchildren can be proud of’.


Concluded

www island.lk