Trusteeship is a socio-economic philosophy that was propounded by Mahatma

Gandhi. Trusteeship, as applicable to the corporate world, refers to the act of

holding and managing resources on behalf of the stakeholders of the firm. Whats
new about that, one may query. Given that the traditional take on wealth has
almost always been tilted towards owners of corporations, this concept brings in an
element of equity, by placing other stakeholders such as employees, customers and
society on the same rung as large and small shareholders. The idea is that all
wealth, including human, financial and technological resources, belongs to society
and the rewards accruing from their use must revert to society at large. The
principles of trusteeship can be traced to the concept of collective endeavour and
community living. Briefly, these are: Resources must be held and utilised for the
benefit of society. Managers are the trustees of the stakeholders and must work
towards optimizing stakeholder value, not merely maximising shareholder value.
The small investor has as much a say in decisions as the large investor. the overall
approach is towards the macro and the long-term perspective, rather than the shortterm, micro perspective which is often geared exclusively to suit the shareholder
and top management. At first sight, this seemingly idealistic concept invariably
raises a few protests. The owner/s must be rewarded for bearing risks and
supplying expertise: Definitely. But the reward must be in proportion to the skills
and expertise supplied.
The Gandhian Philosophy of wealth management is based on the principal that a
wealthy man does not truly have the right to hoard wealth solely for the self; the
only right he has is that to an honorable livelihood. Gandhian Philosophy of wealth
management is based on the Servodaya principles of Truth, Non-Violence and
Trusteeship; wherein class harmony between labour and management reigns
supreme. According to Gandhiji, managers and proprietors of business firms are

only the trustees of wealth of society. The idea of trusteeship advocated by

Gandhiji, is based on and has its origin in the Bhagaved Gita-in the principles of
aparigraha (non-possession) and Sambhawa (equalism) which were ardently
followed by Mahatma Gandhi. Gandhi believed that the rich people could be
persuaded to part with their wealth to help the poor. Putting it in Gandhiji's words
"Supposing I have come by a fair amount of wealth either by way of legacy, or
by means of trade and industry I must know that all that wealth does not belong
to me; what belongs to me is the right to an honourable livelihood, no better than
that enjoyed by millions of others. The rest of my wealth belongs to the community
and must be used for the welfare of the community." [1] Gandhiji along with his
followers, after their release from the prison formulated a "simple" and a
"practical" formula where Trusteeship was explained. On the social plane, this
principle implied that the wealthy could not justly claim their possessions to be
theirs entirely. The reason was that they could not accumulate their wealth without
the labour and cooperation of workers and the poorer sections of society.
Hence, they were logically and morally bound to share their wealth in a fair
measure with their workers and the poor. But instead of ensuring this through
legislation, Gandhi wanted wealthy people to voluntarily surrender part of their
wealth and hold it in trust for those working for them.
Principles of Trusteeship
1.
2.
3.
4.
5.

Common Good
Welfare for others
Non violence
Economic Equity
Kindness

Inherent in this philosophy are entrenched solutions to many of the challenges of

the 21st century:

Sustainable consumption consume what is enough for your needs

without doing harm to others

Utilization of natural resources in a sustainable way you are a

trustee and you need to take care of what has been freely provided by
nature
Dignity of labor and equitable distribution of wealth wealth alone is
not the answer, to feel happy you need to ensure that the people who
work for you and society at large is taken care of
Sustainable livelihoods and not charity are a key to ensuring
human dignity, growth and satisfaction

Principle of trusteeship
Reduce Inequalities : This concept tries to reduce inequalities. It tries to reduce
the gap between the rich and poor. It tries to reduce exploitation.
Change of Attitude of Businessmen : According to Mahatma Gandhi,
businessmen should change their attitude. They have no morale right to accumulate
unlimited wealth while most of their countrymen live in poverty and misery. Each
businessman should take enough wealth to live honourably. He should distribute
the remaining wealth back to the society. Gandhiji advised the rich businessmen to
voluntarily surrender their surplus wealth. If not done so, the poor masses may
revolt (fight) one day and plunder their entire wealth by force.

Social Pressure : People must put social pressure on businessmen to follow the
principle of trusteeship. They should boycott (not purchase) the products of those
who do not practice trusteeship.
Legal Pressure : If voluntary measures and social pressure do not work, legal
pressure must be put on the businessmen to follow the principle of trusteeship.
Socialism : This concept gives more importance to socialism. That is, the society
is given much more importance than an individual. So, the wealth of the society
should be distributed equitably to all its members.
Consider Social Needs : Businessmen should produce only those goods and
services which are useful for all members of the society. They should not produce
goods and services, which are used only by few individuals.
Equal distribution of wealth : According to Gandhiji, all the wealth of the society
should be distributed equitably. There should not be concentration of wealth in few
hands.
Earn money by Hard work : A person should earn his living by doing hard work.
Earning money without doing hard work is just like stealing.
No Right to Private Ownership : This concept does not give the right to private
ownership except when it is necessary.
Government Regulation : The Government should regulate trusteeship. No
Individual should be allowed to use his wealth for selfish satisfaction or against the
interest of society.
Limitations of Principles of Trusteeship

Critical Evaluation / Limitations / Applicability of the Principles of Trusteeship is

highlighted in following important points :1. This concept is not relevant in today's competitive business world because
every businessman tries to earn maximum profits and accumulate huge
wealth.
2. It demotivates the hardworking businessmen. The businessmen will loss
their creativity, and they will become lazy. This will slow down the
economic development of the country.
3. This concept is based on the concept of Socialism. However, today socialism
is outdated.
4. Businessmen feel that the welfare of the society is not their responsibility. It
is the responsibility of the Government.
5. This concept is not accepted by shareholders who invest their money to earn
the highest dividend.
6. This concept is against capitalism. Today, capitalism is proving very
successful all over the world. Poverty levels are very low in capitalist
countries when compared to the poverty statistics of socialist nation