According to Gandhi, people who are poverty-stricken, destitute and homeless have to focus on issues of livelihood and cannot be blamed for not taking part in his moral exhortations. He said that people cannot ignore basic biological needs like hunger and sleep and they had to take care of their health. The moral development of people could come only after they had satisfied their basic needs and were not at the mercy of hunger and destitution. He said that for such people 'liberty, God and all such words are merely letters put together without the slightest meaning'. He thus insisted that in a good economy, everyone's basic needs are met first.
Gandhi made a sharp distinction between the Dharma of the common man or the masses and that of the power elite. He said that although “primary virtues” can be cultivated by “the meanest of the human species,” the more austere ones were to be followed by the elite. The more power a person had the greater the demands that Gandhi made on him which is the opposite of what happens today. He said in Young India on 15-10-1931, 'It is good enough to talk of God whilst we are sitting here after a nice breakfast and looking forward to a nicer luncheon. But how am I to talk of God to the millions who have to go without two meals a day? To them God can only appear as bread and butter.'
He subscribed to the thesis that power corrupts but he also stressed the fact that powerlessness corrupts even more. He insisted that if political independence is achieved without restructuring the society, it would be an empty prize. 'It would be folly to assume that an Indian Rockefeller would be better than the American one.' The voluntary poverty that he adopted was to identify with the way of life of millions who suffered from forced poverty and to serve as a constant reminder to the elites about the existence of these millions. Being a master at communicating through symbols, he used his own person as a symbol.
He also did not ignore the institutional constraints that prevent people from pursuing their moral choices. He asserted that only choices that an individual makes out of his own free will without any outside pressure has any moral worth. Gandhi finds that in the modern economy individuals increasingly lose control of the productive process. He felt that modernity renders individuals impotent by making them subservient to institutions and unable to act according to the dictates of their conscience. He emphasizes that things are not always what they seem and continually draws attention to what is ignored.
He recognizes that the costs involved for a person in pursuing his moral principles are often high. Although theoretically it is possible for a person to be fearless and resist domination (as he himself did), he recognized that it is not possible for most people to bear the costs of such resistance. You may be free to pursue pleasures and comforts but you may not be free to make moral choices as you see fit. You will always be captive to fear and live at the mercy of the powerful. But while institutions often compel people to act dishonestly, he was also not in favour of anyone being forced to perform a good act. He said in Harijan on September 29, 1946:
The mind of a man who is good under compulsion cannot be good; in fact it gets worse. And when compulsion is removed all the defects well up to the surface with even greater force.
He argues that in any economy, 'the individual is the one supreme consideration'. He fears that when abstract principles like economic growth or the benefit of firms become the focus of attention then people become means for some glittering but elusive end. Keeping the same principle in mind, he rejects machinery when it ceases 'to help the individual and encroaches upon his individuality'. He thought that the drive for power is innate in human beings and the only way to control it was to have it as widely distributed in the society as possible. He considered both modern capitalism and communism inadequate for the task because though they distributed goods differently, they relied on the same productive process.
Both capitalism and communism share a deep commitment to the centralized, urban industrial model as the the solution to all economic ills – only the power-wielders change and most people are reduced to being mere cogs in the wheel in both systems. Both result in what Max Weber calls the 'separation of the worker from his means of production' – the worker is dependent upon the implements that the state or a few individuals put at his disposal. In an interview in September, 1940, he said, 'Pandit Nehru wants industrialization because he thinks that, if it is socialized, it would be free from the evils of capitalism. My own view is that the evils are inherent in industrialism, and no amount of socialization can eradicate them.'
Gandhi was always concerned about ownership of an asset because power would be in the hands of whoever owned it. To a socialist friend who queried him on his views on electricity he said: 'If we could have electricity in every village home, I should not mind villagers plying their implements and tools with the help of electricity. But then the village communities or the state would own power houses, just as they have their grazing pastures.' All the ongoing well-meaning efforts to generate livelihoods and reduce poverty may be futile without challenging the pyramidlike structure of the economy where power is concentrated in the few at the top who own the productive assets.