Present Crises of Capitalism and Its Reforms

In exploring whether capitalism is an appropriate economic system for a country like India, this paper finds that its future prospects and long-run viability, in general, are delimited by the accentuating threats of ecological imbalance and growing inequality that it brings with itself.

This paper was delivered as a presidential address at the golden jubilee conference of the Gujarat Economic Association at the N S Patel Arts College, Anand, Gujarat on 3 January 2020. The author thanks the conference participants, particularly, Y K Alagh, Alaknanda Patel, Mohan Patel, A A Shaikh and Rohit Shukla, for their valuable comments and Jeet Aswani, Mark Lindley, Binod Nayak and Nalini Nayak for their comments on an earlier draft of the paper.

As India celebrated M K Gandhi’s sesquicentennial birth anniversary in 2019, I believe that we would be well advised to recall some of his core thoughts on India’s economic development. Gandhi had a very unique understanding of the political economy of India’s development. At the time he penned his Hind Swaraj on board a ship from London to South Africa in 1909, he was 40 years of age, and was unfamiliar with the writings of Smith, Ricardo, Mill and Marshall. However, he had been much inspired by John Ruskin’s (1860) “Unto this Last:” Four Essays on the First Principles of Political Economy, which he had read in 1904. According to his own admission, that book had changed his life forever. It presented a sharp critique of the classical school of political economy. Ruskin rejected Adam Smith’s “division of labour” as dehumanising and believed that it is social affection and not the unalloyed pursuit of self-interest, that binds communities together. Gandhi was captivated by this view and was determined to apply it in the Indian context.

With this as the context, the current paper attempts to critically assess capitalism today, and especially examine if it may be expected to deliver the most desirable outcome for all concerned stakeholders: individuals, communities, nations and, ultimately, the humankind in its relation to the global eco-system. I shall be focusing also on how the capitalist system relates to a developing country like India. I would be interested to check if one could think of viable alternative systems that may be better suited to our specific situation. Finally, I would be interested to assess if there are some obvious linkages between capitalism and the ecology. In particular, one would like to know if capitalism is destined to destroy the ecological balance, and if socialism, or yet some other system, has any better prospects in this regard. I will, in particular, consider the thoughts of John Stuart Mill as well as Gandhi in this context.