The need for a culture shift to orient consumers toward ethical spending is paralleled by the need for a culture shift to orient entrepreneurs –or whoever decides the location of economic activity—toward ethical investments. Gandhi advocated locating production operations in the decentralized rural settings where most of the people of India lived instead of concentrating production --and therefore employment-- in urban conglomerations. This issue relates to what Gandhi called swadeshi. Neighbors first.  

To illustrate the problems of decentralizing, I will temporarily leave khadi. I will enter the somewhat different context of the fate of Gandhi’s ideas in independent India after his death. I will follow Gunnar Myrdal’s account of the failure of attempts to spread small productive enterprises throughout India.  

Promoting small scale and decentralized industry in post-independence India fitted in well enough with the government’s plans for economic development, partly because something had to be done to keep people employed until the new jobs expected from industrialization materialized (an expectation which, with the benefit of hindsight, we know to have always been a mirage). Thus with a high degree of calculated ambiguity designed to bring dedicated Gandhians into the same consensus with hardnosed modernizers, and including everyone else in between, India’s five year plans, especially the third one, all called for promoting small enterprises in rural areas. But, Myrdal points out, whatever might have been the initial degree of sincerity of the planners, “…not only has small-scale industry sought out the big cities but various government support schemes have been adjusted to this trend, often in the face of clear programmatic declarations in favor of dispersion and rural industrialization. In general only the cities can offer industrial enterprises easy access to markets, manufacturing facilities, and external economies.” (19B)