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Economy

How Gandhi Offered an Antidote to Our Sanitised Economic Inequality Discourse

Gandhi's letter to Irwin, sent exactly 92 years ago on March 2, 1930, is the first-ever published account of income ratios being used to measure economic inequality.

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The 2007 financial market meltdown, the most serious crisis that global capitalism has had to endure since the Great Depression, finally forced the world to confront, if not address, the economic inequality that had been rising for over a generation.

Inequality quickly became the new idiom in which elites ranging from academics across disciplines to billionaire plutocrats to politicians of every stripe pedalled their respective “save the world” wares. 

The elite rhetoric on inequality offers essential keys to one of the great puzzles of our time – important and isolated exceptions notwithstanding, there has been no effective large-scale political mobilisation around growing inequality. The rise of populist strongman authoritarians and the duplicity of the billionaire class has attracted much attention. However, the catalytic role played by the technocratic discourse on economic inequality in keeping the lid on political mobilisation is less well understood. 

Economists have developed compelling portraits of rising inequality around the world. Thanks to sophisticated metrics and especially new data sources, we have an unparalleled understanding of wealth and income distributions. However, the inequality numbers produced by the ivory tower have, for the most part, been disconnected from political mobilisations on the street (except perhaps for the 2011 “Occupy” movements in Western cities). Instead, technocratic institutions have co-opted and defanged the academic discourse on inequality. 

The Indian struggle against British colonial rule in the interwar period, especially the 1930s, offers a study in contrast. Indeed, a single “historic letter” encodes how economic inequality became the pivot of one of the 20th century’s most famous political mobilisations. On this day, 92 years ago, Gandhi “inaugurated” the Civil Disobedience movement by writing to the British Viceroy, Lord Irwin. The political weight of this letter rests on Gandhi’s clinical dissection of the economic inequality precipitated by a rapacious colonial state. 

Viceroy Irwin. Photo: Wikimedia Commons/Dutch National Archives CC BY-SA 3.0

By 1930, two generations of Indians had engaged with the economic foundations of colonial rule, following in the wake of Naoroji’s “Drain Theory.” In the months leading up to his missive to the Viceroy, Gandhi‘s journal, Young India had serialised a master’s dissertation written by the then relatively unknown J. C. Kumarappa, whom Gandhi had met for the first time less than a year back. Kumarappa, like Ambedkar before him, had studied with the pioneering public economics scholar Edwin Seligman at Columbia University.

In his historic letter that altered the course of modern Indian history, Gandhi drew on Kumarappa’s sharp critique of colonial public finance to develop an utterly original formulation of economic inequality that has sadly escaped the attention of the contemporary inequality discourse. 

Despite the great strides taken by inequality research over the last two generations, a simple, intuitive measure of economic (in)equality pioneered by the Nobel Memorial Prize-winning Russian-American economist and a pioneer of modern GDP accounting, Simon Kuznets, remains the most popular. The so-called Kuznets Ratio simply compares the income earned by the richest and poorest households in a society. While the Kuznets Ratio is most commonly used to compare the income earned by the richest 20% households and the poorest 20%, other ratios comparing the top 10% and bottom 50%, or the top 1% and the median income are also widely used. 

A full 25 years before Kuznets published his paper, in his March 2, 1930 letter to Irwin, Gandhi showed how income ratios measure economic inequality.  

“The iniquities sampled above are maintained in order to carry on a foreign administration, demonstrably the most expensive in the world. Take your [Viceroy Irwin’s] own salary. It is over Rs. 21,000 per month, besides many other indirect additions. The British Prime Minister gets £ 5,000 per year, i.e., over Rs. 5,400 per month at the present rate of exchange. You are getting over Rs. 700 per day against India’s average income of less than annas 2 per day. The Prime Minister gets Rs. 180 per day against Great Britain’s average income of nearly Rs. 2 per day. Thus you are getting much over five thousand times India’s average income. The British Prime Minister is getting only ninety times Britain’s average income.”

Gandhi’s letter is the first-ever published account of income ratios being used to measure economic inequality.

However, intellectual priority is the least of the reasons why we will do well to revisit the Kuznets Ratio and rightfully call it the Gandhi-Irwin Ratio.

Mahatma Gandhi. Photo: PTI

We must care about the Gandhi-Irwin Ratio because Gandhi constructed modern India’s most iconic political movement with economic inequality as a principal grievance. Unlike Kuznets Ratios that fill up numerous technocratic reports on inequality, the Gandhi-Irwin Ratio is inseparable from the political crucible that birthed it. 

For Gandhi, the extreme economic inequality that he recounted in his letter to the Viceroy was structural, and the response had to be decidedly political. Indeed, “[w]that distinguished the 1930 Civil Disobedience campaign [from] the Non-co-operation movement of 1920-21 was the stress” that Gandhi laid on “economic grievances.’’

During the interwar years, Gandhi and the Congress were especially consumed by how the large and illegitimate public debt incurred by the colonial government was a fundamental driver of extreme inequality. The Congress sessions at Gaya (1922), Lahore (1929), and Karachi (1931) all prominently debated public debt and its impact on economic welfare. Gandhi’s letter to Irwin only codified this abiding political concern. 

Billionaires committing to a “giving pledge” will not cut it for Gandhi. Indeed he acknowledged that the wealthy Viceroy perhaps probably donated the “whole of [his] salary [to ]charity.” However, for Gandhi,  a “system that provides for such an arrangement [high inequality] deserves to be summarily scrapped.”

Kuznets ratios and human development indices computed to three decimal places drive the logic of technocratic inequality tinkering with new-age philanthropy at its apogee. In contrast, the Gandhi-Irwin Ratio is firmly grounded in the politics of economic freedom and economic justice.

It is not surprising that some of the finest social and political movements in independent India have implicitly invoked the Gandhi-Irwin Ratio. Of course, the most notable example is the various farmer movements routinely comparing their precarious economic life with the pay-commission protected sarkari babus

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The 1930s represent the lull between two major direct political uprisings against the empire – the Civil Disobedience Movement and the Quit India Movement. Historiography of modern India has primarily mirrored the ebbs and flows of the freedom movement, and has thus simply glossed over the years between the end of Civil Disobedience and the beginning of the World War II.

The scholarly neglect of the decade of the 1930s is perhaps best reflected in Richard Attenborough’s eponymous feature film, Gandhi. In the motion picture, a frame shows Gandhi returning to India after the political failure of the Round Table Conference following the Gandhi-Irwin Pact. The next substantive frame shows Gandhi addressing the large Bombay crowd assembled to herald the beginning to Quit India. In the interim decade, Gandhi and his colleagues were not overtly taking on the empire’s might; they were engaged in an even more arduous task – one of forging the contours of the modern Indian nation, state, society, economy, and polity. 

A procession in Bangalore during the Quit India movement. Credit: Wikimedia Commons

A procession in Bangalore during the Quit India movement. Photo: Wikimedia Commons

While the Gandhi-Irwin Ratio from March 1930 provides us with a potent tool to confront the contemporary economic inequality, it is not without its blind spots that Gandhi himself recognised as the 1930s wore on. The “crucible years” of the 1930s saw Gandhi and Ambedkar clash on several questions that continue to reverberate to the present day. This clash transformed each man and developed the grammar for how independent India would engage with justice and injustice, freedoms and unfreedoms.

Ambedkar forcefully pointed out how India cannot even begin to think through questions of economic justice without addressing questions of grave social injustice codified in the deeply hierarchical caste structure. The conversation between Gandhi and Ambedkar resulted in the Indian preamble enshrining social and economic justice as the first two objectives of the newly independent republic. 

Contemporary India will do well to urgently move away from a technocratic Kuznets Ratio world and embrace the normative and political promise of the Gandhi-Irwin Ratio. The Gandhi-Irwin ratio gives us a shot at least partially redeeming the solemn pledge reflected in our constitution’s preamble. 

Deepak Malghan is on the faculty at IIM Bangalore. Views are personal. He tweets @Deepak_Malghan.

The author thanks Amit Basole, Sumanas Koulagi, and Siddharth Varadarajan for critical comments.