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Dr. B. R. Ambedkar: His Economic Philosophy and State Socialism

Dr. B. R. Ambedkar: His Economic Philosophy and State Socialism

adv mahendra jadhav1


Adv. Mahendra Jadhav


adv mahendra jadhav1Dr. B. R. Ambedkar is undisputedly one of the greatest economists of all time. But unfortunately, his economic thoughts have not been read, followed or propagated. Today in the epoch of Privatization, Globalization and Liberalization, it has become important to understand the economic thoughts of Dr. B. R. Ambedkar, who is considered the father of ‘State Socialism’. He was of the opinion that the State should control all the resources of the nation, such as land, agriculture and industries through constitutional methods and work towards the overall development of the citizens. He robustly believed that the State can be instrumental in developing the common man’s life, if all the resources mentioned above are in its hands. This paper shall covenant with understanding his thoughts on State Socialism and constitutional provisions, which reflect Dr. Ambedkar’s idea of social, economic and political development of people.

Key Words: State Socialism, Fundamental Rights, Land Reforms,Insurance, Agriculture, Industries


India attained freedom on 15th August 1947 from the British, after more than 150 years of struggle and countless sacrifices by freedom fighters, and gained the status of a sovereign state. We adopted the Constitution on November 26th, 1949 which later came into force on January 26th, 1950. The Constitution of India is unquestionably the greatest constitution of the world and the same has been acknowledged by all nations. The biggest surprise to the world was that the greatest parliamentary democracy was given to those people who were enslaved for thousands of years in the name of caste, class, religion, race and gender – they were not even considered as humans and had not been treated as equal by the so-called upper castes since ages. Most of the people were illiterate. Despite thousands of castes, many religions, traditions, and linguistic differences in India, Dr. B. R. Ambedkar dared to give India a parliamentary form of government. The inception of the Indian Constitution in 1950 was a significant event, not only in the political history of India but also in the history of social justice and human rights.


To study Dr. Ambedkar’s extensive literature on economics and understand its spirit are increasingly difficult tasks. But the more difficult task is to accurately comprehend his speculative theories of economics. Due to the biased and caste-based mindsets of the people, Dr. Ambedkar’s image has always gone unnoticed! Among them, we have the so-called Ambedkarite intellectuals who write day in and day out on Dr. Ambedkar, but seem to ignore the spirit of Ambedkar’s economic thoughts altogether.

At the dawn of the 21st century, the common man is struggling to feed his family two square meals a day. The rich, educated and political leaders are busy in minting money and gaining power. The employed class of this nation is also handling/mishandling the problems of the poor and seems to feel no responsibility toward nation-building. In this milieu, Dr. Ambedkar’s economic thought seems to be the only alternative which can guide and save this great nation from possible social and economic disaster! Dr. Ambedkar’s economic thoughts have the greatest spirit of nationalism and propound the theory of overall development of all sections of society. But unfortunately, not only the common people of the nation, but even the so-called educated class do not have the intention and mindset to look at Dr. Ambedkar’s economic vision.

His thoughts are not like Germany’s Georg Friedrich List who attacked the open market and advocated a policy of protectionism[1]. Georg List fought for the German people, but they did not pay attention to him. Finally, due to economic worries and starvation, he committed suicide. On the other hand, Dr. Ambedkar’s economic thoughts speak about strong nationalism. During his lifetime, both before and after independence, he was assigned the most important portfolios as a Labour Minister, Chairman of the Drafting Committee, Law Minister and so on. Dr. Ambedkar drafted the Constitution, advocated the need for separate electorates and promulgated the best reservation policies for the upliftment of socially degraded communities, classes and castes. He dismantled traditional inequality and spearheaded the war for equal human rights and dignity. He did all this during his lifetime without any violence and without any use of weapons! He never led any violent methods of agitation but made the governments agree through his sheer intellect!

Looking back at 69 years of independence, it is implicit that, had his thoughts not been implemented, a caste/religious fundamentalist nation like India would have surrendered to any powerful nation by now. Our neighbouring countries are live examples of this, with so much of internal conflict. The nation must accept the fact that, despite having millions of castes, different religious beliefs, traditions and customs, if India is united without any internal conflicts, it is only because of the parliamentary democracy and the Constitution of India!

There is no doubt that India’s GDP is growing day by day and no doubt that India is a Three Trillion Dollar nation today. However, the Indian common man is frustrated and disappointed due to many social and economic problems. Due to financial scarcity and loan burdens, continuous exploitation in the hands of land lords and banks, farmers are committing suicides every day. The poor are becoming poorer and the rich becoming richer. I would like say very clearly that, if we do not stop the centralization of economy in the hands of few people, the poor common people will have no other alternative than to commit suicide along with their families!

The people who are gripped by the mindsets of social inequality and religious fundamentalism never felt the importance of nation building, and this is a serious disease this country has been infected with. After independence, India found the covers of nationalism and patriotism, and the innocent people of India never understood the hidden agendas of the so-called rulers who always boycotted the rights of larger sections of this country! Therefore, it is the high time to study, understand and implement Dr. Ambedkar’s social, economic and humanitarian thoughts.

Dr. Ambedkar strongly advocated industrialization. According to him, democracy meant more devices, more industrialization and higher economic benefits. He fiercely attacked the village system and wanted people to leave villages and settle in cities. He wanted to dismantle the social and economic system of the village which is the reason why he gave the call to leave villages and settle in cities, unlike Mr. Gandhi who gave a slogan of ‘Chalo Gaon Ki Aur’ (Let us go back to villages)[2]. Mr.Gandhi firmly believed that self-reliant villages formed a sound basis for a just, equitable and non-violent order and believed this could be a guiding principle for all citizens, constructive workers and policy makers in India. After returning from South Africa, Gandhiji developed his ideas on villages based on his direct experiences. He was convinced that “If the villages perish, India will perish too. It will be no more India.” For him, rebuilding of the nation could be achieved only by reconstructing villages.

But Dr. Ambedkar was against this vision of Mr. Gandhi. To him, the villages and their poor living standards only showed helplessness and a shameful picture of this great nation. Villages were strong protectors of the caste system and social inequalities. Therefore, he wanted to impart education to everyone and promote equality.

When the process of Constitution-making began, Dr. Ambedkar was sure that he would not be allowed to participate in the process. This is why he submitted a memorandum titled ‘State and Minorities’ to the Constituent Assembly on behalf of the All India Scheduled Castes Federation, in the year 1946[3]. He felt the inevitability of proposing a memorandum that spoke about the rights of minorities and duties of the state in safeguarding their rights. The memorandum gives a highly structured picture of Dr. B. R. Ambedkar’s concept of ‘State Socialism’. Dr. B. R. Ambedkar strongly advocated the duties of the state in safeguarding the fundamental rights of the citizens, which are enshrined in Part III of the Constitution of India. He not only provided fundamental rights to the citizens but also suggested necessary guidelines to the State under Part IV (Art.36-51) in the form of Directive Principles of State Policy. He strongly believed that if the state implemented the directives, the social, economic, political, cultural and educational development of allthe people would not be far from sight.

While framing the Constitution, Dr. Ambedkar enshrined several provisions through various articles. This shows his wisdom regarding economic and social development of the people[4]. Articles 15(4), 16(4), 17, 19(1) (d) and (e), 29(2), 275, 330 and 335 incorporated in the Constitution are clear reflections of his thoughts on social and economic justice. These Articles empower the state to make special provisions for securing the interests of socially and educationally backward classes, i.e., Scheduled Castes, Scheduled Tribes and Other Backward Classes. Apart from this, Art.29 and 30 speak about special provisions for all the Minorities of India, which give them the right to establish their educational and religious institutions and also promote and protect their script and literature. The Constitution of India comprises the vision of B. R. Ambedkar, which is particularly devoted to the principles of social and economic justice, non-discrimination, liberty, equality and fraternity.

Dr. Ambedkar was an economist by training and until 1921, his career was that of a professional economist. It was only afterwards that he became a political leader[5]. He wrote three scholarly books on economics – ‘Administration and Finance of the East India Company’, ‘The Evolution of Provincial Finance in British India’ and ‘The Problem of the Rupee: Its Origin and Its Solution’. The most significant book among his economic writings is ‘States and Minorities’. This book stands as one of his masterpieces, wherein he advocates Nationalization of all the major industries. He was of the opinion that private industries were a reason for the unequal distribution of wealth. If the major industries are given to private organizations, then there would be absolute exploitation of wealth and labour. Nationalization of industries would give security to the workers and help in equal distribution of wealth. He also advocated Nationalization of insurance, which would give greater security to the people.

To elaborate further, Clause 4 of Article II of ‘States and Minorities’ recommends:[6]

i) Agriculture shall be a state industry,

ii) Key and basic industries shall be owned and run by the State,

iii) Insurance policy shall be compulsory for every citizen and a monopoly of the state,

iv) The State shall acquire the subsisting rights in such industries, insurance and agricultural land held by private individuals,

v) The State shall divide the land acquired into farms of standard size,

vi) The farm shall be cultivated as collective farms,

vii) The farms shall be cultivated in accordance with rules and directions issued by Government,

viii) The tenants shall share among themselves the produce of the farm left after the payment of charges properly leviable on the farm,in the manner prescribed,

ix) The land shall be let out to villagers without distinction of caste or creed,

x) There will be no landlord, no tenant and no landless labourer,

xi) The collective farms shall be distributed the water, draft animals, implements, manure, seeds etc.,

xii) The State shall be entitled to levy the following charges on the produce of the farms:

 a) a portion for land revenue,

 b) a portion to pay the debenture-holders,

 c) Portion to pay for the use of capital goods supplied.

He urged the implementation of the above provisions as early as possible, so that the economic development of people and national development as a whole can be possible.

It is evident that The Reserve Bank of India (RBI) was based on the ideas that Dr. Babasaheb Ambedkar presented to the Hilton Young Commission. The world has always seen Karl Marx as the father of socialism – they never tried to study the economic and social thought of Dr. B. R. Ambedkar who went ahead of Karl Marx and propounded ‘State Socialism'[7]. Marx’s philosophy is based on Class-Struggle, in which he speaks about exploitation by the State. To stop this exploitation, Karl Marx proposes taking up violent methods to overthrow the dominants and capture power. On the other hand, Dr. Babasaheb Ambedkar’s State Socialism lies in his wisdom of democratic thought. To him democracy is “a form and method of government whereby revolutionary changes in the economic and social life of the people are brought about without bloodshed”. He held that the State can be an important factor in eliminating all inequalities. The aim of his democratic thoughts was to eliminate the extreme economic, social and religious inequalities and evils from the society. Consequently, his concept of State Socialism was based on principles of justice, liberty, equality and fraternity. Every citizen has the right to develop himself and his family economically, and he wanted the state to distribute the resources in an equal manner.

Dr. Ambedkar’s thoughts had a great impact on the current Indian currency system. A significant contribution in that direction was made in his celebrated book ‘The Problem of the Rupee: Its Origin and Its Solution’, published in 1923[8]. Before its publication,the London School of Economics had awarded him D.Sc. Degree in Economics in 1921. The second edition of the book was published in 1947. This book proves that he was an authority in economic policy and currency problems. He analyzed very meticulously the problem of Indian currency from 1800 to 1920 and suggested a currency system for India. In doing so, he sharply differed with the ideas of John Maynard Keynes.

Dr. Ambedkar advocated the gold-standard, while Keynes prescribed the gold exchange-standard in his treatise ‘Indian Currency and Finance’, published in the year 1909. Dr. Ambedkar argued in favour of gold-standard because in this system, the supply of currency could not be done too easily, and as such, it ensured better stability of prices so that poorer sections could get some relief. Though Dr. Ambedkar’s suggestion was not taken up by the Imperial Government, his intention of protecting the interests of the poor was clear.

What is the difference between Dr. Ambedkar and the world philosophers? The conditions that made Dr. Ambedkar the greatest among all the universal thinkers is a matter of study. If we study the world philosophers and their personal lives, we will understand that almost allthose thinkers and philosophers belonged to the highest social groups. Aristotle was the son of Nicomachus, who was the personal physician to King Amyntas of Macedon. He spent his time within the Macedonian palace. His father sent him to Plato Academy for his studies. Aristotle spent almost eighteen years in the academy,studying physics, biology, zoology, metaphysics, logic, ethics, poetry, theatre, music, politics and government. He later influenced Alexander the Great by becoming his teacher/guide.

If we glance toward the modern thinkers, we see that one of the great economists, Karl Marx (5th May 1818 – 14th March 1883) was born into a wealthy middle-class family in Trier, in the Prussian Rhineland. Marx studied at the universities of Bonn and Berlin and wrote several books, the most important of which were ‘Das Capital’ and ‘Communist Manifesto’. His economic exploitation theory based on class struggle influenced the world and as a result, we see how the Russian Revolution took place almost 30 years after his death! Apart from Karl Marx, there are many other European thinkers such as John Locke (29th August 1632 – 28th October 1704), Thomas Hobbes (5th April 1588 – 4th December 1679), Immanuel Kant (22th April 1724 – 12th February 1804), Jean Jacques Rousseau (28th June 1712 – 2nd July 1778), David Hume (7th May 1711 – 25th August 1776), Max Muller (6th December 1823 – 28th October 1900) and Alfred Marshall (6 July 1842 – 13 July 1924). People have accepted their thoughts and philosophies several years after their respective deaths. Almost all western thinkers propagated their theories within their limitations and as per the prevailing conditions.

But Dr. Ambedkar, though born as an untouchable (a community of people who were not even considered as living beings) who was never allowed to sit even in the classrooms, emerged as a towering personality. He studied by sitting outside the class. He was treated unequally wherever he went. As a student, and in every walk of life, he suffered humiliation worse than what was meted to animals! And yet, despite all the odds, he earned the highest Degrees of education that no one else in the country acquired at the time! Not only this, he gave this nation a new direction based on liberty, equality, fraternity and justice and gave a new future to millions of people. He gave life to the communities that were living in slavery since thousands of years, suffered under the hands of upper castes and had no hopes of life and future due to living under mental and physical slavery. He liberated millions of people, and that too “without shedding a single drop of blood!” This is the reason why Dr. Ambedkar proves to be greatest among all philosophers and thinkers of the world. His wisdom of foreseeing the future is unmatched! This is probably the reason why Columbia University honoured him as a ‘Symbol of Knowledge’- a matter of pride for all Indians!


It is high time we started understanding Dr. Ambedkar’s social, economic and political thoughts and let everyone know how they are beneficial for the overall development of people and nation as a whole. The basic needs of any human being are food, shelter and clothing. The Constitution of India provides enough guidelines to provide basic needs to the common people and help them to develop. The duty of the state is to distribute the resources equally among all and see that no injustice is done to them. If India wishes to become a super power and a strong economy, it must implement the Constitutional provisions. Only then will this country grow, only then will this nation stand tall and only then will the principles of liberty, equality, fraterntiy and justice be saved!



[1] Georg Friedrich List – Wikipedia Page

 [2] Gandhi on Villages – Divya Joshi ( Page 3)

 [3] States And Minorities – By Dr.B.R.Ambedkar ( 1947)

 [4] Constitution of India

 [5] B.R.Ambedkar – Wikipedia Page

 [6] States And Minorities – Dr.B.R.Ambedkar ( 1947)

 [7] Buddha or Karl Marx – Dr.B.R.Ambedkar

[8] The Problem of the Rupee: Its origin and Its Solution – Dr. Ambedkar



Sri Mahendra Jadhav is an Advocate, Social Activist and writer. He has authored “Guide To Constitution­ I” and he is running a Nationwide Indian Constitution Awareness Campaign working towards enlightening the common people over their constitutional and legal rights, Human Rights, the procedural aspects of Police Station and Courts, Information on RTI and the ways to utilize the act etc. His legal firm is located in Hyderabad and he can be contacted here Email :, Ph: 08008754848