top of page
MDV-101: Introduction to Development and Development Theories

MDV-101: Introduction to Development and Development Theories

IGNOU Solved Assignment Solution for 2021-22

If you are looking for MDV-101 IGNOU Solved Assignment solution for the subject Introduction to Development and Development Theories, you have come to the right place. MDV-101 solution on this page applies to 2021-22 session students studying in MADVS, PGDDVS courses of IGNOU.

Looking to download all solved assignment PDFs for your course together?

MDV-101 Solved Assignment Solution by Gyaniversity

Assignment Solution

Assignment Code: MDV-101/TMA/2021-22

Course Code: MDV-101

Assignment Name: Introduction to Development and Development Theories

Year: 2021-2022

Verification Status: Verified by Professor

Marks: 100

Q1) What are the different views on economic development? Discuss the Non-economic factors influencing economic development.

Ans) Economic Development Views

The four main views on economic development are put forth by:

The Classical Views of Economic Development

Classical and neo-classical economists used to refer to economic development as "economic growth." Adam Smith, David Ricardo, John Stuart Mill, Karl Marx, and Alfred Marshall were among the economists of the eighteenth, nineteenth, and early twentieth centuries who were deeply concerned with understanding the origins of economic riches and the causes of poverty. In his book "The Progressive State," Adam Smith highlighted three key causes of growth:

  1. growth in the labour force and stock of capital;

  2. through an increase in the efficiency with which capital is allocated to labour increased division of labour and progress in technology; and

  3. foreign trade that widens the market and reinforces the other two sources of growth.

According to Adam Smith, growth can be aided by market institutions and competitive activity. For economic development, classical economists such as Adam Smith mainly relied on variables such as capital, population, and commerce.

Neo-Classical Views of Economic Development

Growth, according to neo-classical economists, is the outcome of long-term effects of capital formation, labour force expansion, and technical advancements. These are supposed to take place in a competitively balanced environment. They argue that shifts in demand and resource migration from one sector to another aren't necessary for development because labour and capital offer equal marginal returns in all applications. The central issues are markets, prices, and incentives. Aside from these three factors, neoclassical economists pushed for correcting all national policies in order to obtain a high rate of growth.

The Structuralist Views of Economic Development

Early developmental economists took a structuralist approach to solving development issues. They attempted to identify specific rigidities, delays, shortages and surpluses, poor supply and demand elasticities, and other structural characteristics of emerging countries that influence economic development. They believe that economic progress is driven by changes in the economy's structure, rather than by the flow of labour from one sector to another.

New Development Economists

Economic development, according to the new development economists, is defined as the reduction of poverty and inequality rather than an increase in growth rate and GDP (Gross National Product). They believe that increasing GNP is not a sufficient requirement for poverty eradication. Furthermore, there is little chance of income trickling down, and as a result, poverty and income disparities are widespread in many countries. They questioned the meaning of economic development and the utility of evaluating it in terms of gross domestic product (GDP). They expanded the development goals to include new dimensions.

The International Labour Organization (ILO) focused on basic human needs, while the World Bank prioritised redistribution with growth. Development economists are now putting a greater emphasis on the quality of the development process. People and the quality of their lives, they believe, are at the heart of progress. They propose that an economic development viewpoint that includes human development is necessary. The UNDP promotes the Human Development Index's idea and measurement (HDI). Not only does the HDI take into account per capita income, but also social variables like life expectancy and literacy. Gunnar Myrdal (1968), a Nobel Laureate from Sweden, stated that growth is implicitly founded on a sequence of modernised values, and hence entails achieving those modernization objectives. Myrdal's modernising ideals are as follows:

  1. rationality;

  2. planning for development;

  3. increases in production, production per capita, and production per worker;

  4. improvements in the standard of living;

  5. declines in social and economic inequalities;

  6. consolidation of national state and national integration;

  7. national independence;

  8. political democratization; and,

  9. increased social discipline.

Amartya Sen, a Harvard philosopher economist, emphasised that economic progress should be viewed as a process of increasing people's positive freedom. He believes that development is a process that increases people's 'entitlements' and 'capabilities,' and that development economists should focus on people's entitlements and the capabilities that these entitlements generate. Sizirmai neatly summarised economic progress as understood by modern economists in the following four points:

  1. Development is a normative concept comprising fundamental values and choices.

  2. Poverty reduction, higher economic welfare, improved health, and education are all development goals.;

  3. a growth in productivity and output per person in developing nations; and

  4. Finally, there are development goals or modernization ideas. It does not imply that all societies should evolve in the same way or that all societies should converge on a common norm.

Non-Economic Factors

Some non-economic factors influencing economic development are discussed


Developmental Social Attitude

Traditional societies are naturally conservative and resistant to change. They are hesitant to embrace change and modernisation. New ideas are viewed with scepticism in a traditional civilization and are seen as challenges to the old culture's integrity. Traditional civilizations are ruled by inherited ideas and values. These ideals and beliefs may be impediments to growth. Modernization is seen as a danger to rural people's culture, beliefs, and values; hence they oppose it. Outsiders and outside agencies pushing for change and modernisation are distrusted in traditional civilizations.

Changes in traditional communities, on the other hand, are frequently brought about by outsiders on purpose. The advancement that the society talked about in Goa was mostly due to Portuguese influence, whereas in Kerala it was due to the gulf, and in Punjab it was due to the NRI effect.


Nowadays, governments, particularly those in developing nations, prioritise entrepreneurship as an important factor of production after land, labour, and capital. In many nations, entrepreneurs are visionary and innovative development players. Both in agriculture and in the industrial sector, entrepreneurship is essential for capital formation. In comparison to the agriculture sector, the rate of industrial growth has increased since liberalisation, owing to an increase in entrepreneurship in this sector. In India's rural areas, the government is boosting women's business through microfinance. Bangladesh is a prime example of microfinance-fuelled female entrepreneurship. They are not only economic development actors, but also social development actors.

The Political Environment

Political instability, according to some academics, is one of the barriers to economic growth and progress. Economic progress is also influenced by political instability and election expenditures. The link between political instability and economic growth, on the other hand, is difficult to establish.

Instability is also linked to weak governance, which leads to widespread unrest, riots, and demonstrations. Investors are discouraged by an insecure environment. The stock market swings in India during the change of administration are an example of the link between political instability and the investment climate. One school of thinking contends that authoritarian rule promotes economic progress. China, South Korea, Taiwan, and Yugoslavia are listed as examples.


Governance is inextricably connected to economic progress. A speedy delivery mechanism is required in the administrative system. In the route of development, bureaucratic red tape creates roadblocks. Transparency in government is necessary for the successful implementation of economic policies and programmes. A corrupt government will not be able to foster rapid economic development. Rajiv Gandhi, India's previous Prime Minister, used to say that when we send one rupee for development, only 20 paisa truly reaches the people, with the rest being syphoned off by intermediaries. As a result, for speedier economic development, an effective and results-oriented administration is a must.

Q2) What is the Classical Philosophy of Development? Discuss J S Mill’s Theory of Development.

Ans) The classical school's intellectual underpinning is based on an individualised mindset. Individual activities were primarily of interest to classical economists. Classicists believe that it is the well-being of each individual that leads to the well-being of society, not the other way around. There is no conflict between individual and societal interests. The well-being of a society is defined as the sum of the well-being of all of its members. Classical economists arrived at their results using a variety of methods.

Smith claims that individualism is the result of the principle of natural liberty because he uses the inductive method. In the physical world, Adam Smith maintains that when each individual acts freely, according to the natural principles functioning within him, he optimises his own and society's welfare. The perfect economy, according to Smith, is a self-regulating market system that automatically meets people's economic requirements.

He came to this conclusion based on his observations of individual behaviour and societal functioning rather than any abstract theory. He characterises the market mechanism as a "invisible hand" that guides all individuals to generate the most benefit for society as a whole while pursuing their personal self-interests. Only three areas of government action are acceptable to him: defence, justice, and public works and institutions. Classical economists such as Ricardo and Bentham, on the other hand, rejected the conceptions of natural law and natural liberty in favour of the 'principle of utility.' In his many decisions, each individual seeks to maximise 'pleasure' according to this idea.

The doctrine of laissez-faire is another fundamental part of the classical school of development. Economic liberalism is upheld by the laissez-faire doctrine. To put it another way, it says that if you let the natural forces of the economic system work on their own, they will create results that are beneficial to both individuals and society. Smith promoted a programme of economic liberty, guided by his Naturalism and Optimism ideology. There are both positive and negative arguments for this policy. Negative arguments argued against government meddling in economic activities, while positive arguments argued for the benefits of free trade. Smith gave two arguments in support of the doctrine of laissez-faire:

  1. In a competitive economy, economic liberty allows for the full and unrestricted operation of the invisible hand mechanism, ensuring maximum national prosperity.

  2. Economic liberty allows the establishment of forces that are accountable for a country's wealth increase through time.

As a result, the theory of natural order operates in the economic realm through market and motion rules.

The laissez-faire doctrine is adhered to by classical economics. They chastised the protectionist mercantilist system. Some of the Physiocrats' principles, such as laissez-faire, were absorbed into Smith's economic theories, although he rejected the concept that only agriculture was productive. The Corn Laws were opposed by classical economists because they subsidised agriculture. They opposed the protectionist trade policies of the mercantilists. They were hostile to all types of economic restraints.

They believe that private initiative and competitive conditions, rather than government control, are the ideal conditions for all economies. Individual behaviour that is driven by enlightened self-interest and governed by competition tends to promote both individual and group wellbeing. Classical economists were opposed to the poor's system of relief, or subsidy, on the grounds that it encouraged idleness and increased family size. The classical school economists created their "magnificent dynamics" during a time when:

  1. The forces of self-interest and competitiveness govern individual actions.

  2. Private individuals organise manufacturing with a profit objective in mind.

  3. All commodities and services produced by productive factors are sold in the market..

The industrial revolution ushered forth significant social changes. The question of how a society could be constituted arose as a result of these changes. The market economy presented both theoretical and practical challenges. On the theoretical side, the challenge was to demonstrate how such an economy could grow and adapt to societal requirements. On the practical side of public policy, the question was whether private forces should be allowed to operate freely or should the government intervene to achieve social goals. These questions were sought to be answered by classical economists.

The Law of Market also governs the classical school of philosophy.

As previously stated, Smith believes that the market is governed by two forces.

  1. Self-interest (the chief stimulator of individual action)

  2. Competition (the beneficial outcome of the society).

In a society of equally motivated individuals, the natural sentiment of self-interest leads to rivalry. These individuals are compelled to provide the things that society desires, in the quantities that society desires, and at prices that society is willing to pay as a result of this automatic system of competition. Thus, the invisible hand of beneficial natural order is nothing more than a competitive market's inbuilt mechanism for regulating economic activities in order to maximise societal welfare.

Except for Malthus, almost all classical economists agreed Say's notion that "supply creates its own demand." Three things are implied by Say's law.

  1. Money is a veil: its only function is to serve as a medium of exchange

  2. General over production, or market glut, is impossible

  3. Full employment equilibrium is automatically ensured.

So, in this view, there can never be a market glut in the long run. As a result, in the long run, a free economy always achieves full employment equilibrium. The effect of an imbalance in the products market is an imbalance in the labour market. Free market forces restore full employment equilibrium automatically.

J.S. Mill’s Theory of Development

J.S. Mill made an important contribution to economic development theory. Economic progress, according to Mill, is a function of land, labour, and capital. He considered land and labour to be the original components of production, and capital to be the stock built up from the production of labour. According to him, a country's wealth boosts production faster than its labour force. He also made a distinction between productive and unproductive consumption. Consumption that boosts the community's productive power is referred to as productive consumption.

Mill's theory of development has several key components:

Control of Population Growth: Mill believed in the Malthusian Population Theory. According to Mill, a population's inclination is to grow faster than its means of subsistence. As a result, population growth must be limited in order to achieve speedier development.

The Wage Fund: According to Mill, the elasticity of labour supply in response to pay increases is quite high. Wages are frequently above the poverty line. Wages are paid from capital; hence they are constrained by the amount of capital available. Wages are also influenced by the demand for and supply of labour. Wage rate changes are influenced by changes in capital or population. As a result, wage growth is determined by whether capital expands faster than population or population increases faster than capital. An increase in consumption, according to Mill, leads to a decrease in investment. Increasing investment, on the other hand, leads to increased wage funds, which leads to economic advancement. The wage fund, according to Mill, is dependent on the total capital fund and the wages paid out of capital as advances.

The Role of Capital Accumulation: Capital is defined as the previously acquired stock of formal labour products: the bigger the capital, the larger the wage size and, as a result, the higher the demand for productive labour. Savings results in capital and saving entails foregoing current spending in order to invest in the future. Capital accumulation, according to Mill, is dependent on

  1. the size of the fund that savings can make, and

  2. the strength of the disposition to save.

As a result, capital is the kingdom of progress, and investment is the result of capital.

The Rate of Profit: According to Mill, the ultimate tendency in an economy is for the rate of profit to drop due to declining agricultural returns and a Malthusian rate of population growth. In the absence of agricultural technological advancements and a strong population growth rate, the rate of profit will inevitably drop, and the economy would approach a standstill.

The Role of State: J S. Mill was a staunch proponent of laissez-faire economics and pushed for the government to play a minimal role in economic issues. Mill advocated for free trade and opposed protectionism. Only infant businesses were to be protected, according to him. According to him, the government plays a critical role in civilising citizens through giving educational opportunities. He did not, however, believe education to be a capital investment that fosters economic progress.

The Stationary State: A stagnant condition is one in which neither the population nor the stock of capital can grow any further. Profitability plummets. However, due of improvements in lifestyle and increased leisure as a result of technological advances, the standard of living would continue to climb. The stationary state, according to J.S. Mill, is approaching. He favoured the stationary state because it results in improved income distribution and higher labour pay.

Q3) What are the different stages of development as described by Rostow?

Ans) Rostow’s Stages of Development

Traditional Society or Pre-industrial Stage

'Industrial Revolution' is a term used to describe a period of change in the industrial world. This was a time of stagnation, when society was still 'traditional.' Technical circumstances and economies of scale were unchanged, and birth and death rates were high. Whatever alterations occurred during this time period did not meet the criteria for being considered development symptoms.

Pre-conditioning phase

There was a need for 'the impulse to progress' in order to move forward and away from conventional civilization. This desire came from the upper crust, and an enterprising class arose to organise and invest savings. They supplied transportation, education, and medical services, among other things. There was also some progress in the communication system. Agriculture began to develop, and death rates began to decline, but not birth rates. During this period, only a few small-scale industries arose, and investment accounted for around 5% of GNP.

The ‘Take-off’ Stage

Rostow went into great length about this stage. It is explored in this unit in the following headings:

Meaning and Characteristics: The rate of investment grows from roughly 5% to 10% of GNP at this stage. The real output per capita is rising, and both the rate of investment and the real output per capita are on the rise. The formation of a group in society with the will and authority to lift the economy is also a feature of this period. Entrepreneurs, corporations, and governments gain the ability to mobilise financial and physical resources for continued development. A leading sector, often known as the 'growth pole,' emerges, and development occurs as a result of this leading sector.

Change in the rate of investment: The rate of investment rises to roughly 5% to 10% in economies that are seeking to take off. According to Rostow, up to 12.2 percent of GNP should be invested if population growth is greater than 1.5 percent per year or the capital output ratio is greater than 3:1.

Take-off as a function of entrepreneurial and elite class: The ability to take off is dependent on the entrepreneurial and privileged classes. They are classic savers who accumulate wealth to invest. They invest in new sectors and advancements in order to generate a profit. This class is critical in expanding the credit structure and changing the export-import pattern. They make use of natural resources and labour.

Leading sectors will lead: According to Rostow, leading industries are those that have high-productivity new production functions that generate a large amount of re-investable surplus that can be put back into productive investment. This will turn industrialisation into a mechanical process, triggering a spiral of effective demand for additional goods. A significant and necessary engine for economic transformation is the rapid growth of one or more new manufacturing sectors. Those with a high proclivity to save and reinvest their profits into highly productive assets receive more income.

As a result, new urban areas emerge, and their population and market structure contribute to the continued progress of industrialization. When the initial momentum of the take-off-leading sectors begins to dissipate, external economies are formed to the point where they assist in the production of new leading sectors. As a result, although the expansion of old sectors slows, the growth of new sectors accelerates, keeping the growth process going.

Time Period: A country's take-off period can last two or three decades. There are a few telltale signals that you're about to take off:

  1. Agriculture employs less than 40% of the population, with the balance migrating to urban and non-agricultural sectors.

  2. The rate of increase in national income outpaces that of population growth.

  3. The rate of accumulation goes up.

  4. Agriculture's relative contribution to GDP decreases, while the manufacturing sector increases.

Take-off is a result of a number of critical factors, including a stronger emphasis on manufacturing in the leading sectors, transitions from agricultural to industry, a high rate of savings of at least 10% of GNP, and clear fiscal, monetary, education, and income policies.

Stage of ‘Drive to Maturity”

During this stage, the rate of investment rises from 10% of GNP to higher levels of up to 20%. Many import-replacement and export-replacement industries emerge as important industries. Other industries benefit from technical knowledge. As the rate of expansion of the economy outpaces the rate of population growth, real income per person begins to rise. This stage might last anywhere from four to six decades in a country. Specialization and labour division grow more complicated. The production of nearly everything becomes conceivable.

Stage of Self-sustained Growth and of Mass Consumption

At this point, per capita real income has risen to the point where consumption has expanded beyond food, clothes, and shelter to include products of comfort and luxury on a big scale. Leading sectors alter society's fundamental structure, and new forms of durable consumer goods industries emerge as new leading sectors. The Gompertz or 'S' curve is used by Kindleberger to depict these stages. A classic growth curve is Gompertz's 'S' or learning curve, in which growth begins slowly, progressively accelerates, and then accelerates fast before slowing down at a later stage and becomes asymptotic at some limit or ceiling. At this point, the community has become prosperous, free of hunger and acute poverty.

Q4) What are the characteristics of dependent economy? Explain the structuralist Theory of Dependency.

Ans) Characteristics of Dependent Economy

Dependency is thought to have arisen as a result of the industrial revolution, as well as the growth of European empires around the world, and as a result of these empires' superior military force and amassed wealth. Some say that exploitation was internal prior to this growth, with the great economic centres dominating the rest of the country. Capitalism was able to develop globally thanks to the establishment of global trade patterns in the nineteenth century. Because imperialistic policies benefited the wealthy disproportionately, they were more detached from the poor. This management assures that all earnings made in developing countries are sent to developed countries. It discourages domestic reinvestment, resulting in capital flight and stifling economic progress.

The following are the basic conditions for any country's dependency:

  1. exporting firms are primarily owned by foreigners

  2. exports are dominated by one, or a few commodities

  3. the export sector dominates the economy, and imports are larger in relation to GDP

  4. mineral and petroleum products are produced under conditions of vertical integration.

The characteristics of a dependent economy are as follows:

  • economic growth is not self-activating

  • profits are normally repatriated, but not reinvested

  • the production of export industries is dependent on imported inputs

  • income, employment, and growth are determined by

i) the prices and the demand conditions of international market

ii) the willingness of transnational corporation to invest

e income, employment, and growth are conditioned by

i)  changes in the prices and types of imports

ii) economic fluctuation abroad

iii) changes in taste and fashion

iv) changes in technologically created substitutes

  • backward and forward linkages of export activities are very rare

  • oreign capital, foreign technology, and management are dominant economic actors.

According to Vernengo, the difference in technological competence is not the sine qua non of the reliance relationship, as orthodox dependency theorists claim. It refers to the financial disparity between core and peripheral countries. The peripheral countries, in reality, are unable to borrow in their own currencies.

The Structuralist Theory of Dependency

There is a group of non-Marxist structuralist dependency theorists. They oppose the stagnation viewpoint. Fernando Henerique Cardoso, an active Brazilian sociologist and economist with international renown, was the most well-known of them all. He claimed that countries on the periphery experience a form of 'peripheral capitalism.' Economic stagnation, or, in the words of Andre Gunder Frank, a famous dependence writer, "development of underdevelopment," is one of these economies' key characteristics. According to Cardoso, the dependent countries are not at a standstill. The economics and societies of the periphery are constantly changing. In the economic history of LDCs, there are three significant stages.

The first is the colonial period's agro-export stage, when economic dualism was widespread. Pre-capitalist sectors such as artisans, petty producers, and peasant producers accounted for the majority of economic activity during this time. Some industries, such as precious metals, minerals, and tropical products, are now fully integrated into the global market. These exportable are manufactured in modern and semi-capitalist enclaves.

The developmentalist alliance stage is the second. Following WWII, some LDCs underwent significant transformations as a result of import substitution industrialization (ISI). This stage sees the emergence of a new social framework of accumulation based on the common interests of industrial workers, peasants, and capitalists.

The third stage is a corporatist dictatorship, in which democracy, labour unions, colleges, and other areas of society where dissent can occur are severely restricted. The second stage's populist orientation (which includes enhanced social security, minimum wage legislation, public health care, and public education) is broken. The state's funding for public services has been drastically slashed. TNCs (transnational corporations) are especially welcome. They become fundamental to the growth process and pivotal in the new accumulation phase.

According to structuralists, some economic growth should not be surprising, nor should it be assumed that LDCs are powerless to determine their own fate. The third stage is also subject to change. There is no such thing as permanent stagnation. Some economic growth and progress occurs under this new regime, in which the authoritarian state and TNCs work together. In an era of global competition, TNCs keep costs low. GDP rises, and the average person's standard of living may rise as well. Cardoso refers to a new type of capital accumulation as 'related dependent development.'

During this stage, Cardoso dismisses the probability of a political change toward revolution in these countries. As the new alliance between domestic capital and TNCs generates more economic growth, new opportunities for the working class, the technocracy, and the state emerge.

The paradox is that in the 1980s and 1990s, Caribbean countries' actual dependence grew significantly. These LDCs' economic vulnerability was exacerbated by their rising foreign debt. It exposed them to widespread external interventions into domestic policymaking in the form of conditionalities imposed by international financial institutions and bilateral donors based in Washington. The advent of the World Trade Organization (WTO) in 1994 severely limited the policy flexibility formerly accessible to poor countries. The mantra of global integration has supplanted the recognised goal of national development during the decolonization era. In order to hide the inequities, the new dependency linked with globalisation is promoted as interdependence. As a result, the circle that began in the 1960s has come full circle.

This new orthodoxy, according to Girvan, necessitates a new critical analysis from an updated dependency perspective. These developing countries are mired in a post-colonial stupor. They continue to focus on just one or two raw material exports. These countries are considered as reliant economies on the outskirts of progress. A dependent development pattern comes from the relationship between the centre and the peripheral. They appeared incapable of modifying their economic structures on their own. The partnership of international and local capital characterises this. As an active partner, the state also joins this partnership. The resulting triple alliance plays a key role in the emergence of "updated dependent development."

A dependent system, according to the non-Marxist form of dependency theory,

  1. fosters financial /technological penetration by developed capitalist countries

  2. produces an unbalanced economic structure, both, within the peripheral societies, and between them, and the centers

  3. Ieads to limitations on self-sustained growth in the periphery

  4. favours structural imbalance and specific patterns of class relations

  5. requires modifications in the state’s role.

Thus, the main characteristics of a dependent economic system are

  1. the regression in both, agriculture, and small-scale industry

  2. the concentration of activities in export-oriented agriculture and/ or mining.

  3. chronic current account balance deficits in a fast-rising tertiary sector with concealed unemployment

  4. structural imbalances in political and social relationships

  5. the comprador element and rising importance of state capitalism and indebtedness

  6. strong and self-repeating ups and downs, called business cycles

Many economists believe that political independence is sufficient to overcome any social and economic obstacles. It eventually eliminates all development impediments. Outdated institutions and structures are being swept away by the development of capitalist manufacturing methods. Both advanced countries and LDCs will expand. As a result, there is no such thing as a zero-sum game in a dependent relationship. Warren claims that capitalism's quick spread into LDCs provides the populace with an incomparably greater level of living than any prior socioeconomic system. The facts of LDCs have trumped Warren's harsh analysis. Dependency economists were troubled by the persistence of retarding variables. As a result, many dependence theorists suggest that development necessitates sound judgments and policies.

It does not simply fall upon a country as manna from heaven or as a result of the expansion of capitalism. As a result, the only way for these LDCs to expand economically is for them to implement acceptable economic policies.

Q5) Discuss Gandhian Philosophy of Economic Concepts related to Development.

Ans) Gandhian Philosophy of Economic Concepts Related to Development

The following economic theories and concepts were developed by Gandhi and are consistent with his economic philosophy.

Capital: Capital is the source of all riches, according to Gandhi. It is essential for the production of goods and the payment of wages to workers.

Money capital and labour capital are the two types of capital. The expertise of a labourer is his capital. For production, both money and labour capital are required. 'Just as the capitalist cannot make his wealth fructify without the participation of labour, so the working man cannot make his labour fructify without the assistance of capital,' Gandhi noted.

Both capital and labour must be organised in order to improve industrial relations. Capital is simple to organise, while labour is more difficult. This lowers the bargaining power of workers and increases the risk of labour exploitation. The ability of an entrepreneur to exploit labour is determined by the amount of capital concentrated in the hands of capitalists. Gandhi proposed two approaches for reducing the negative impacts of capital concentration. He claims that:

  1. The ownership of capital should be decentralized; and

  2. If capital concentration is deemed necessary, the government should have complete control over capital use.

Labour: Labor exploitation is a flaw in the capitalist system. It creates unrest among workers, and if it lasts long enough, it can lead to a revolution against the system. According to Gandhi, labour exploitation is defined as the disparity between what a worker receives and what he deserves. A worker is said to be exploited if he gets paid less than the basic pay rate or the minimum living wage rate. Labor exploitation is a common aspect of capitalism. In order to raise profits, capitalists frequently lower wages. By keeping the wage rate stable at an acceptable level, the extent of exploitation can be reduced. Bridging the gap between capitalists and labour is the ultimate solution. Gandhi was adamantly opposed to turning a man into a gear in the massive industrial machine. People should not lose their freedom, personality, and consequently their creativity, in his opinion.

Profits: The term profit is employed in a residuary sense in Gandhi's opinion. Total revenue minus production costs equals profit. In this production model, capital depreciation and distribution costs are nil. As a result, the primary costs of manufacturing are the purchase of raw materials and the payment of personnel. The difference between total receipts and these costs is profit. Entrepreneurs benefit from technological advancements, but workers suffer as a result. The entrepreneur's profit improves as a result of the introduction of machinery, whereas workers risk job loss and wage decreases. Profit, according to Gandhi, is not necessary for a company's survival.

Employment: Gandhi highlighted the importance of employment. A country's principal need is for its human resources to be fully utilised. Gandhi used the term "full employment" to refer to the employment of each and every individual. The expansion of large-scale industry will not result in full employment. These industries are typically capital-intensive and labour-saving, and thus do not give enough job possibilities. Furthermore, the majority of unemployed people reside in rural areas. The seasonal nature of agriculture is the cause of rural underemployment. Agricultural labourers work on the land for six months and then are idle for the remaining six months. Employing such underemployed casual labour will be detrimental to automated businesses.

Again, underemployed farm labourers have religious, cultural, and social ties to rural life, and as a result, they are unlikely to readily leave their homes for work in urban businesses. Thus, in agriculture-based, over-populated economies, mechanisation and large-scale production provide no answer to the problem of unemployment. "Mechanization is good when the hands are too few for the task that needs to be done," Gandhi said. When there are more hands than are required for the job, like in India, it is a bad thing." According to Gandhi, the only way to solve the problem of unemployment is to promote rural and cottage industry. These are capital-saving and labour-intensive enterprises. They bring job possibilities to the doorsteps of the unemployed and are well-suited to rural settings.

Production: Gandhi advocated for mass production. He preferred the decentralisation of local production units to the concentration of large-scale production units in a few locations. He sought to bring the manufacturing equipment to the people's homes, particularly in rural. The village and cottage industries have the benefit of increasing employment.

Another benefit is that efficiency is taken into account. There are numerous reasons to conclude that producing any commodity in tiny and cottage industries is less expensive:

  1. no separate establishment charges are required

  2. integration of cottage industries with agriculture

  3. very few tools are needed;

  4. no problems of storage;

  5. negligible cost of transporting goods to the consumers

  6. no waste - duplication - due to competition, and

  7. no problem of over production.

All of these aspects contribute to the cost-effectiveness of small-unit production. It's true that small is lovely. The Gandhian system of decentralisation of village and cottage businesses is based on this rationale.

Technology: It is a fallacy to believe Gandhi was anti-technology. Obtaining information through experimentation is at the heart of science. Gandhi offered a prize of a lakh rupees on behalf of the Spinners ‘Association for the invention of a charkha, a spinning wheel that could be constructed and maintained in villages and produced four times the yarn spun on traditional charkhas. He had no objections to using machinery to expand productivity and improve labour conditions. He did not, however, approve of machinery that, in his opinion, created both goods and starvation. He was opposed to indiscriminate machinery multiplication. "What I oppose to is the craze for machinery, not machinery itself," Gandhi stated. The latest trend is for "labour saving" machinery. Men continue to ‘save labour' until tens of thousands are unemployed and pushed out onto the streets to starve to death." Gandhi prioritised human considerations over scientific and technological considerations.

Poverty and Inequality: Gandhi was not a financial expert. However, he was well-versed in the concerns of poverty and income inequality. Poverty is not the result of the poor man's own actions. Poverty and inequality, he believes, are intrinsically linked. Poverty is the physical embodiment of riches. Affluence looks to have a reasonable anatomy. However, the methods used to get this position are unequal and unlawful. As a result, the wealth of a few causes the poverty of many. Man's avarice has resulted in poverty, and it is the root of the economy's persistent poverty. "I suggest that we are robbers in certain ways," Gandhi stated. I steal from someone else when I take something I don't need for my own immediate use and retain it. I attempt to argue that it is a fundamental law of Nature, without exception, that Nature creates enough for our needs on a daily basis, and that if everyone took only what they needed and nothing more, there would be no pauperism in this world, no man dying of starvation."

Gandhi believes that economics that ignores moral values is false. Moral principles were established as a consideration in controlling all economic activities and international trade by him. He wasn't fighting for socialism in the traditional sense, but rather for humanistic principles. "My objective is fair distribution," he said, "but as far as I can tell, it is not to be accomplished." As a result, I advocate for a more equitable distribution."

The Principle of Satyagraha: As a form of civil disobedience and tax resistance, Gandhi adopted the philosophy of Satyagraha. Preconditions were established by Gandhi as being absolutely necessary for the practise of Satyagraha. The following are some of them:

  1. For starters, no Satyagraha may be held for an unfair purpose. Otherwise, the truth principle will be violated.

  2. Second, Satyagraha prohibits the use of violence in any form, whether in words or deeds.

  3. Third, Satyagraha assumes that there is a clear contrast between eager adherence to good laws and opposition to bad laws. The supremacy of the law of conscience must be established over all other laws.

  4. Fourth, Satyagraha is a tool that can only be used by individuals who have no animosity toward their opponents.

  5. Fifth, a Satyagrahi must be able and willing to make sacrifices. That is why Gandhi preferred a tiny revolutionary minority to a large revolutionary majority.

  6. Sixth, Satyagraha entails continuous participation in constructive social work so that Satyagraha does not become a negative battle.

  7. Seventh, Satyagraha requires complete humility from those who practise it.

  8. And, Last, Satyagraha is the expression of discipline and honesty. It calls into question one's honesty, ability to operate on a national level, and readiness to submit to punishment.

100% Verified solved assignments from ₹ 40  written in our own words so that you get the best marks!
Learn More

Don't have time to write your assignment neatly? Get it written by experts and get free home delivery

Learn More

Get Guidebooks and Help books to pass your exams easily. Get home delivery or download instantly!

Learn More

Download IGNOU's official study material combined into a single PDF file absolutely free!

Learn More

Download latest Assignment Question Papers for free in PDF format at the click of a button!

Learn More

Download Previous year Question Papers for reference and Exam Preparation for free!

Learn More

Download Premium PDF

Assignment Question Papers

Which Year / Session to Write?

Get Handwritten Assignments

bottom of page