Tattva

If you have taken ECON 101, you would have read about the two most popular economic systems: Capitalism and Socialism. Most countries in the world today follow some variation of these economic systems or a mix of them both. In this article we survey these two economic systems, understand their limitations and finally propose a Hindu economic model for sustainable growth of the Individual as well as the Society. Let us begin by taking a brief history lesson on the origins of modern economic systems.

Rise of Capitalism and Socialism
After the fall of the Roman Empire and the subsequent decline in the influence of the Roman Catholic Church, many European nations arose. The idea of democracy was taking hold in the minds of the people. Capitalism replaced feudalism as the principal economic system in Western Europe. Industrial revolution and international trade led to the rise of the business community in these countries. In the process of industrialization,  workers migrated from rural areas to overcrowded cities, were exploited by industrialists and seldom had any rights. This period led to the rise of socialism which aimed at improving the plight of the workers. Karl Marx was the chief architect of this theory. His theory said that as long as the means of production was in the hands of a few private owners, exploitation was inevitable. The solution was to transfer power from the ruling class (bourgeoisie) to the working class (proletariat).

Fundamental flaws in these theories
In capitalism, the means of production are privately owned and are operated for profit. Capitalism asserts that it “distributes” wealth justly, i.e. to those who earned it, in proportion to how much they produced. This system insists that wealth is not a “collective resource,” but belongs to the individual who produced it. Capitalism’s focus on wealth maximization led to the rise of imperialism, slave trade, exploitation of workers, unequal distribution of wealth and monopolies. These in turn led to a higher crime rate, exploitation of natural resources, consumerism etc. Socialism, which was suggested as a response, was a system in which production and distribution of wealth is subject to control by the state. This led to greater government control over the people and made them into totalitarian states. It reduced the incentive of the people to innovate and made the countries poorer.

The world today is at crossroads. We cannot continue with either of these theories (or their mix) in the future. In just under a century, both these systems have revealed their inadequacies and have proved to be incapable of providing a sustainable solution. We all have read about the immense contributions of the Hindu civilization in various fields of science and mathematics. Are there any solutions we have to offer in the field of economics and politics? We dig deeper into the Hindu thought to find a solution to this problem. With its universal world view and timeless knowledge we may find a better solution. To develop a sustainable economic system that ensures the holistic growth of the individual as well as the society, let us begin with understanding the individual.

What makes an individual complete?
We normally think of an individual in the physical bodily form. If this were true, then physical comfort and luxury should lead to the happiness of the individual since all his/her needs are satisfied. Obviously this is not the case. Even if we have all the luxuries in the world and are healthy, we become unhappy when someone close to us is sick. For a person to be happy, he/she should have no mental worries; in other words, satisfying the mind of the individual is also important. Suppose we are both physically comfortable and have no mental worries, but are put in an isolated place where there is nobody and nothing to do; we are still not happy. This means there is also a third component: the intellect. Intellectual happiness is also required. This has been very well documented in prison stories, where the prisoners are provided with all their basic needs but face intellectual starvation. This is also the reason why people doing mundane jobs are not happy though they may be getting very well paid. The last component of the individual is the soul. Our job might satisfy us by ensuring physical comfort and intellectual challenges and we might have no worries, but if we are unappreciated or verbally abused at the workplace, we are not happy. It hurts our ego or self. Hence, the Body, Mind, Intelligence and Soul make up an individual. They are all integrated and cannot be separated from one another i.e. if any one of the components is unhappy the individual is unhappy.

The Western political and economic systems are not equipped to satisfy the individual completely. The political revolutions in Europe against the monarchy took place because the philosophers felt that “man is a political animal” and everyone should have a right to rule and the right should not be vested in just one king. This gave birth to the idea of democracy where everyone was given voting right to satisfy the political animal in man. This freedom then led to the growth of capitalism. As we read above, it resulted in lower rights and exploitation of the working class. At this time, Karl Marx proposed the theory of Socialism which gained wide popularity. He divided the society into “haves” and “have nots” and said that bread is the most important need of man. He saw man only in the physical form and felt that everyone should be satisfied physically. We have seen how this belief resulted in totalitarian states where the populace did not have either voting rights or bread. However, in the USA people have both voting rights and bread. In spite of this people there feel a void in life. There is no happiness, because the society does not focus on the soul or spiritual development. The answer is to look at man as an integrated being and not just the parts in exclusion.

Integral Approach
An important characteristic of the Hindu culture is that it looks at life as an integrated whole. How does it suggest the development of all four components of an individual as we have seen above? Hindu philosophy says that for the complete growth of an individual, one should pursue Dharma, Artha, Kama and Moksha. Artha includes political and economic growth. Kama relates to satisfaction of various desires which include material pleasures. Both Artha and Kama should be pursued within the limits of Dharma or righteous conduct. The final goal is Moksha or spiritual liberation. We can understand this pictorially as a wheel where Dharma is the rim, Artha and Kama are the spokes and Moksha is the hub. Dharma regulates Artha and Kama and directs us towards Moksha. We can immediately see how the western philosophies have broken this ancient rule and failed. When either political power, material wealth or pleasure is acquired by breaking the laws of Dharma, the system has failed. Dharma is the fundamental principle of civilized life. It is timeless and applicable to everyone. Following the fourfold aspirations of an individual leads to complete happiness. This is the integrated approach and Hindu philosophy has enunciated this clearly.

The Solution
The obvious question now is how do we devise an economic policy that ensures the integrated development of the society? Can we come up with a new economic system that is a “Third Way?” Before we present the theory, let us look at an example of its implementation.

Ralegan Siddhi : A village transformed
Ralegan Siddhi is a small village in the district of Ahmednagar, Maharashtra, India. It has become an example for various developmental activities throughout the country. In 1975, this village was caught in a web of poverty and illicit liquor trade. The per-capita income was unbelievably low, at Rs 271. The transformation took place when a retired army driver, Anna Hazare settled in the village.

To begin with, he donated Rs 3000 to renovate a local temple. In that temple, he instructed the villagers to follow 5 ways of living: (1) no liquor consumption, (2) family planning, (3) a ban on open grazing, (4) a ban on felling trees and (5) voluntary labor. Voluntary labor was necessary to ensure minimum dependence on the government for funds. It also inculcated a sense of service and responsibility in the community. Even those who were working outside the village contributed to the development by contributing a month’s salary every year. All elections to local bodies were held on the basis of consensus. “It made the community leaders complete representatives of the people,” says Ganpat Rai Avti, head of the village council. A system of Nyay Panchayats (informal courts) were also set up. Since then, no case has ever been referred to the police. A Rs 22 lakh school building was constructed using only the resources of the village. No donations were taken. Money, if needed, was borrowed and paid back. The villagers took pride in this self-reliance. A new system of sharing labor grew out of this infusion of pride and voluntary spirit. People volunteered to work on each other’s land. Landless labor also gained employment. Today the village plans to buy land for them in adjoining villages. Today, water is abundant, milk production is at record levels, and agriculture flourishes in Ralegan . Also, in the entire process, nature was not exploited; rather it was milked. This makes it sustainable in the long run. Anna says, “The process of Ralegan’s evolution to an ideal village will not stop. With changing times people tend to evolve new ways. In future, Ralegan might present a different model to the country.”

Lessons Learnt:
This is a brief summary of applying the Hindu economic model to a village. If it can be applied to one village, it can be applied to others as well. The integrated development of the individual as well as the society is ensured through this model. All four pursuits of man have been given total freedom to develop. The growth has been guided by the principles of Dharma, which are timeless and universal in nature. This shows that it can be implemented everywhere. It doesn’t have the deficiencies of the current economic models. However, the difficult part is to codify the model as a set of rules. Dharma is an essential guiding force in the implementation. There is no listed set of rules for Dharma. It is nature’s law and in-built in the “chitti” (soul) of India. Consequently, implementing such a system in Indian villages is much easier than elsewhere. However, this does not limit its scope.
In this article we understood the need for a new economic model to guide the world and presented the Hindu viewpoint as a solution to it. An “Integral Approach” is only way out for a sustainable and holistic development of the individual and the society at large. The views presented in this article are inspired by Pandit Deen Dayal Upadhyay’s theory of Integral Humanism. Any errors or misinterpretations are solely due to the limitations of my understanding.

Shobhit Mathur is a software engineer at Amazon.com in Seattle, WA. He is the youth coordinator of the “Yuva for Sewa” fellowship program of Sewa International, USA. You can contact Shobhit at shobhit.mathur@gmail.com. 

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