The Economy of Permanence

Posted by Siddharth Sthalekar on Dec 1, 2013

Through time spent in the Gandhi Ashram eco-system, I've often come across writings and books that exposed me to radically different constructs. One of the authors I came across was J C Kumarappa - a Gandhian economist who did some stellar work in re-constructing the theories of economics in a decentralized, service oriented context. During his years as part of the freedom movement, he invested a great deal in understanding India, and the spirit that has sustained it's communities for millennia. 

There is an interesting story about his time in the Sabarmati Ashram. A group of professors from Harvard were visiting Gandhi to better understand this model of economics that contrasted so starkly to the those emerging in the Americas at the time. Gandhi, of course, directed them towards Kumarappa. As they entered his office, they saw him seated on a chair, under two pictures. The one right above his head, was Gandhi's. 'He's my teacher' he said plainly. And above Gandhi, was a picture of a group of ordinary, simple villagers. 

'And them? Who are they?', the visitors asked.
'Oh them!' They're my Teacher's, Teachers!'

And that, was the guiding principle behind the movement that emerged at the time. What happens when we 'Put people first', as economist Schumacher described his seminal publication 'Small is Beautiful'? During his one year spent in jail as part of the Quit India movement, Kumarappa wrote a book that shared some of these thoughts through an interesting model. The book, an Economy of Permanence is an effort to outline 5 different types of Economies in nature. Each one serves a different purpose, but inherently, they tend to support relationships that are either transient, or more permanent in nature. 

1. The first type of economy, is the 'Predatory Economy' - the best example of this, is a thief who might kill you for your wallet or purse. If you view this as a transaction, the thief has gained some money, but you have lost your life in the process. Clearly, a win-lose situation. 


2. A less harmful version of this, is a 'Parasitic Economy' where someone might just mug you for your money, but spares your life. You've lost out, but not to the extent as the previous case. In nature, you also see this with animals. A monkey will take a couple bites of a fruit of a tree and move on to the branch of another. Again, there is very limited gain for the tree in this case.

3. As we move more towards equitable distribution of benefit, we see a system we are most comfortable with. The 'Economy of Enterprise'. It's a pretty simple equation like Barter - in return for money, you can buy yourself some goods. Perhaps, a loaf of bread. More money equals more bread. The beauty of this system is that we see equal, tangible benefit on both sides.



Most of us know of Adam Smith's work - The Wealth of Nations. Through the book (which most argue has shaped modern-day economics) he describes that a man's output is most efficient when he works for gain. And to push this efficiency further, he developed the concepts of 'Economies of Scale' and 'Division of Labour'. We're all familiar with these principles, but in essence, he speaks of the benefit of dividing labour into water-tight compartments, based on skills, creating processes that can be broken down to mechanical thinking. No doubt these principles have brought us systems that work in incredibly efficient ways, that we could not imagine earlier. 

However, Kumarappa argues, that all these systems, assume we are disconnected, separate identities from our environment. It's built on the belief that one literally has to use means to 'gain' from his surroundings. "Man Vs. the Universe" But what if we were to assume that we could trust our surroundings. As Albert Einstein asks, 'Is the Universe a Friendly Place?' - if we could trust one another, and see ourselves in our community, what kind of economies would emerge? Kumarappa says there's two more economies to consider when we move towards one-ness.


4. And that brings us to the 'Gregarian Economy'. It's been practiced for thousands of years in local communities. We look out for our loved ones, or those in our community who we build ties of trust with. It could also extend to our country (supporting fellow Indians) or our faith (supporting a fellow Muslim or Sikh). While it's a tremendous display of love for another human being, its still a conditional offering - in that if I choose to change my faith, or nationality, or community, I no longer have access to these ties of generosity.


5. What if we were to extend these ties of trust and one-ness unconditionally? He says the fifth economy - i.e. The Economy of Service emerges. It might sound idealistic, but it's not something we witness through special beings once every few centuries - in fact, its prevalent all around us. He says the best example of such a relationship is that of a mother with her child. Observe a bird taking care of her young ones in a nest and you'll know just what he's talking about. The fledgling will eventually fly out of the nest, offering absolutely no return on the birds investment, but that doesn't seem to deter the mother. He goes on to say, it's not just in nature, but in fact it was a primary designing principle for most of the communities he spent time with in the country. A cobbler, or artisan creating products for his community was more rooted in values of service, and as a result you could see these decentralized models sustain for millennia, in contrast to the globalized, centralized models we see today.

The larger question that Kumarappa poses and explores, is 'How does one Design for the Economy of service?' He says the confusion arises because we don't hold internal capacities to ask the right questions in the first place. It's not that the Economy of Permanence goes against what Adam Smith has to say. It's simply, a realization that the Modern Economics does a great job of designing for efficiency. But what happens when we dare to move beyond the assumption that man is led by personal incentive and greed? If we do, we realize traditional metrics like Return on Investment, and Efficiency start falling away. We have to start asking different using different paradigms and metrics. 

For starters, we have to use a Different Lens. We often use the lens of 'Efficiency' which is great for the Economy of Enterprise, but doesn't make sense while evaluating the Economy of Service. A mother who feeds her son with food made with love in her kitchen won't hold back on the ingredients based on cost. It's a different set of metrics that determine her offering to her child. When we serve guests at a Seva Cafe, instead of looking at guests as potential revenue sources, we ask volunteers to serve them like family - irrespective of their economic capacity.‚Äč That means, we need to tune into far subtler aspects and stop looking for 'gain'. We would need to start asking 'What we can offer' as opposed to 'What we can get'.  

Secondly, we would need to focus on moving from a paradigm of 'Externalizing Costs' to 'Eternalizing Benefit.' Businesses that are focused on the bottom line, will very naturally work with the formula of maximizing revenue and minimizing costs. Manufacturing companies will therefore look towards taking costs like 'environmental damage' off their balance sheets. Service sector companies will reduce their involvement in their staff's well-being. But when we stop asking what's in it for us, the entire equation get's flipped around on its head. We start creating benefit, without seeking credit or profit in return, and that can potentially be more rewarding in the long term. 

While these are just some questions to begin with, the intention is to start taking a subtle leap of faith in the vast organizing capacity of nature. It's a shift away from a mind trained for profiteering, towards a paradigm that fosters  ties cultivated in unity. It's rooted in the belief that ripples we set forth in motion will eventually come around to hold our intentions. It's still early days, but we'll inevitably see that it's a shift that we're all familiar with - from Transaction to Trust, Consumption to Contribution, Scarcity to Abundance and Isolation to Community. 

~ For it is in Giving, that we Receive ~ 

Posted by Siddharth Sthalekar on Dec 1, 2013 | permalink


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  • Somik Raha wrote ...

    Wonderful transformation of language! Thank you so much for this enlightening post, Siddharth!

  • birju wrote ...

    thank you sir! reminds me a bit about mutualism as Janine Benyus talks about it - (see link). the question i've been sitting with more recently is about transition - what are the intervention points in the current storyline that offer a space to offer a new one? how can a company create conditions for this shift to happen from where they are standing now? look forward to hearing your thoughts on it soon!

  • nisha wrote ...

    Sid, thanks for sharing this lucid articulation.

  • Pavi wrote ...

    Beautifully articulated Sid! The example of the "investment" of the mother bird made me smile :) Such a perfect example of serving someone's journey and literally helping them soar :) And also made me wonder a little bit about how we humans sometimes fall into the trap of feeling exploited or gypped in our efforts to serve. "Oh -- if I give like that people will take advantage of me." Maybe part of the answer lies as you say in 'tuning into subtler realities' -- in really starting to get rooted in the built-in rewards (purpose, resilience, synergy, new possibilities) of unconditional love and the change it catalyzes and sustains in the depths of your own being. Thank you for sharing and looking forward to more of your writing!

  • ram wrote ...

    JCK was truly amazing and continues to inspire people, here is the story of one such panchayat leader - (see link)

  • Somik Raha wrote ...

    Siddharth, many thanks for sharing this! Kumarappa came up on my radar when reading Ivan Illich. Illich mostly sniggered at his contemporary thinkers in economics, except for Kumarappa, whose work he liked very much. Reading your note, I can see why. On a related note, I was having a chat with a dear family elder who spent 10 years of his life on a company that he was passionate about, as a CEO. Then, the VCs swooped in, and just like that, kicked him out with a bunch of untruths. It was heartb  See full.

    Siddharth, many thanks for sharing this! Kumarappa came up on my radar when reading Ivan Illich. Illich mostly sniggered at his contemporary thinkers in economics, except for Kumarappa, whose work he liked very much. Reading your note, I can see why.

    On a related note, I was having a chat with a dear family elder who spent 10 years of his life on a company that he was passionate about, as a CEO. Then, the VCs swooped in, and just like that, kicked him out with a bunch of untruths. It was heartbreaking to see this happen, and I felt moved to note, "This is where capitalism fails. When people think work is done just for money or efficiency, and human life is a fuel." We both agreed.

    On that note, did Kumarappa actually use the term "eternalizing benefit?" That term seems a little too grandiose to me, and what is more accessible to me is a humble "externalizing intrinsic values" as opposed to "externalizing costs." The implication is that we already have these intrinsic values in us, and we've got to stop requiring permission to externalize them. Intrinsic values cannot be internalized, for they are already at the root of our being. We need to turn it upside down, and externalize them so our systems honor them.

    Would love to hear your thoughts.

    Hide full comment.

  • George Kao wrote ...

    What an inspiring framework -- thank you Sid.

    Re: the mentions of loving others like a mother loves her offspring, I'm reminded of the Buddha's words:

    Even as a mother protects with her life
    Her child, her only child,
    So with a boundless heart
    Should one cherish all living beings;
    Radiating kindness over the entire world...

    from (see link)

    Also, in the framework the mention of "one-ness" as loving one's own family, countrymen, or fellow religionists, is really more "tribal".... true one-ness is more like the 5th economy, unconditional love.

  • George Kao wrote ...

    Also, the Economy of Service is perhaps the one with Truest insight, farthest Vision, because in the reality that encompasses not just the Material but also Spirit, there is Perfect Justice: we will all be recompensed for our service, whether in this life or another. (see link)