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Why it’s time India goes back to Kautilya’s idea of ‘dharmic capitalism’

Don’t limit Kautilya to antiquarian studies. His Arthashastra is for the modern world shows Sriram Balasubramanian in his book Kautilyanomics.

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Chanakya, or more correctly, Kautilya has been seen by many as a political theorist and analyst of international relations wedded to the realist school. Kautilya’s philosophical contributions and his views on political economy have not been widely studied or emphasised. But the trends in scholarship have been changing slowly and steadily. Author and economist Sriram Balasubramanian with his new book Kautilyanomics has produced a much-needed corrective. In fact, he does more than that. He actually restates Kautilyan ideas in a modern, even contemporary context. He also provides valuable insights into the problems inherent in translating dense poetic texts and the challenges involved in meaningfully engaging with universal ideas where cultural foundations and accoutrements are not understood with sensitivity. Balasubramanian can take credit for coining the new expression “dharmic capitalism”, which I suspect is going to gain wide currency.

The problem with Western translations

Let us start with the translation. Students of the history of Indian economics and business have a problem not usually faced by scholars of religion or mysticism as the conventional orientalist paradigm has relegated Indian intellectual traditions primarily to “other-worldly” affairs. We can talk easily about the atman and about moksha. But apparently, we should avoid expressions such as shreni and shadbhaga and constantly seek Western equivalents even when linguistically, and more importantly culturally, these equivalents do not make much sense. Polymath scholar Bibek Debroy makes the point that referring to Indian “shrenis” as guilds can be problematic. Nevertheless, all of us use this translation for convenience and ease. Personally, I have felt now for some years that even in the area of religious studies, the Western orientalists of the 18th and 19th centuries did us all a great disservice by translating “devas” as “gods”. Western acquaintance with Zeus and Jupiter made them fall into this trap. I would prefer to refer to “devas” as “luminous immortals”. And this simple change can result in a whole set of intended and unintended consequences. If this is the case when dealing with religious matters that we have been told is our primary civilisational interest, how much more difficult is it to do so in mundane fields like political economy, where we have been summarily caricatured as babes in the wood?

I remember reading years ago a Western scholar’s assessment that India had many saint poets but had failed to produce a Plato or a text like The Republic. As we revisit our classics—the Shanti Parva of the Mahabharata, the Tirukkural and even parts of Valmiki’s Ramayana in today’s ambience, we can safely assert that the ancient Indian contribution to economics and political philosophy is not only significant but possesses universal value that all humans can benefit from. Kautilya’s Arthashastra is, in many ways, a compendium of such traditions and an eye-opener for fresh ideas.

Assessing a text that at a minimum is 2,300 years old, a text written in verse form and not in staccato prose as is common for philosophical tomes of the West, a text which is clearly embedded in a tradition that goes back at least a few more centuries further in time, a text written in a language possessed of complex etymological and semantic boundaries, a text that is a summary of ideas with a hoary lineage and which is simultaneously meant to be a primer for readers—in short, a book that deserves multiple commentators or bhashyakaras in our tradition cannot be subject to the simple process of translation as demanded by today’s publishing houses. It is heartening to witness the efforts of different translators and commentators who have engaged with Kautilya’s Arthashastra over the last 120 years. Balasubramanian joins the group of distinguished bhashyakaras. He successfully places Kautilya’s work in its proper linguistic, cultural, and historical contexts. He, in fact, sets out a good framework that perhaps all translators of classical Indian works can include in their works as an introductory chapter. I look forward to such chapters in future translations of the Tirukkural and the Rajatarangini.

Also read: Kautilya was no Machiavelli, he’s the most pre-eminent economist in history

Kautilya for the modern world

On the internet, it has become a fad to keep trying to prove that India and Indians invented something-or-the-other before the rest of the world. Such efforts are foolish and pointless. Balasubramanian does not waste time on the issue of who passes the paternity test for economics or, more properly, for the subject of political economy. Suffice it to say that across considerable distances in time and space, Adam Smith and Kautilya share much in common. The fact is that there is amazing synchronicity in play when we deal with great minds. Smith and Kautilya were both ethicists of the highest order. Any thinker who puts forth the proposition that a king does not become great because of his power or pelf, but if the subjects of the kingdom are happy and prosperous, has perforce to be referred to as a moral philosopher and Kautilya was certainly one. Many do not know that Smith was first a moral philosopher before he emerged as an economist. Smith published his Theory of Moral Sentiments 10 years before The Wealth of Nations.

Kautilya’s primary concern, as the title of his magnum opus suggests, is with “artha” another untranslatable word that I shall leave as is. Simply speaking, in the absence of prosperity, progress and political stability, humankind cannot pursue other objects (spiritual salvation of course may be one such object, even the final object), and therefore we need to come up with a manual of how best prosperity, progress and stability can be pursued. And that is what the wise Kautilya attempts in his classic text. While he does not have answers for all questions in the controversy-ridden field of political economy, the point that Balasubramanian repeatedly makes is that Kautilya’s thoughts actually provide a wide range of insights into the pressing issues of today.

The rule of law, enforcement of contracts, protection of individual property rights not only from other contestants, but even from the sovereign, protection of the rights of lawful inheritance, protection of the interests of consumers, time value of money, need for orderly bankruptcies, importance of free and fair trade, importance of financial incentives, challenges associated with taxation including the problem of how a sensible sovereign avoids rapacious taxation, role of the State and the need for it to be limited and not intrusive, importance of standards in transactions (for instance, standard weights and measures), significance of efficient transportation, requirement to be fair, even indulgent of foreign talent and foreign investors, and, of course, need for effective penalties when incentives fail—all of these are meticulously catalogued by Kautilya. His incessant concern about the possibility, nay certainty, of government officials indulging in corruption and tyranny presciently anticipates the 20th-century work of economists like Nobel Laureate James Buchanan. No wonder, Balasubramanian concludes that today’s public domain would benefit a whole lot from paying attention to Kautilya and his masterful text. Their significance is not limited to antiquarian studies.

Also read: Why China is the Kautilya of international politics

Dharmic capitalism and ‘danda’

One item that I found both significant and fascinating was the fact that Kautilya did not arise sui generis as a one-off. In fact, he was part of a long-existing tradition of thought. Quotations from so many texts that preceded Kautilya make this clear. It is from here that Balasubramanian jumps to his very profound idea of “dharmic capitalism”. He rightly points out that the concept of dharma (again properly left untranslated) is derived from and related to the idea of sustenance—sustenance of society, State, and indeed the world at large. Kautilya perceives the importance of moral equilibrium to make the social undertaking viable. The search for a moral basis for human society and our economy is a universal one. The prophet Isiah of the Hebrew Bible felt its need, as did Adam Smith. And this endeavour has been an obsession with our ancients.

Kautilya followed the traditions of earlier Indic thinkers in continuing this pursuit and making it a central concern. Selling market capitalism or State socialism to different constituencies merely on the basis of their efficiency is not going to work over time. Human beings are instinctively drawn towards moral concerns and a love of justice. While market capitalism may be efficient, its moral worth needs to be separately engaged with and its proof provided.

Balasubramanian makes the case that Kautilya’s dharmic capitalism may provide an approach that departs from tyrannical central planning or the frequently criticised untamed selfishness of markets. It is the task of today’s political economists to pay tribute to their intellectual forebear, Acharya Kautilya, and further develop this idea of dharmic capitalism. Kautilya’s prescient concerns with the environment and inter-generational and inter-temporal trusteeship of the commons are strikingly relevant to the debates and discussions of today. Present-day scholars like Balasubramanian are in exalted company when they engage with the subject of environmental economics.

The common image of Kautilya (or Chanakya as our Left-influenced schoolbooks refer to him) as a Machiavellian strategist is inadequate and incomplete, and almost a caricature of this noble, wise, and far-sighted thinker. It would be sensible for our schools and universities to include extracts from Balasubramanian’s book as a corrective. Having said that, one need not shy away from Kautilya’s clear vision that when incentives fail, societies and States need to take recourse to penalties. While more sanguine than Thomas Hobbes, ancient Indian thinkers were always wary of the world degenerating into one where “matsya nyaya” prevails and big fish eat smaller fish. Kautilya confronted this issue in a straightforward manner. What is interesting is Kautilya’s methodology for gradation of offences and the fines appropriate for the offences and his preference for fines over other punishments. “Danda” or penal action is required from the state. Kautilya’s challenge to all of us is whether we can use our intelligence to construct a system where danda is used infrequently but society functions and progresses harmoniously. A good problem for today’s philosophers to grapple with.

Also read: Russia-Ukraine conflict has a ‘Kautilyan’ side to it. And pointers for India

A feast for the soul

As an aside—the fact is that the Arthashastra was lost and Kautilya was forgotten until R. Shamasastry discovered a manuscript in the Mysore Oriental Research Institute’s library in 1905. We need to acknowledge our civilisational debt to those Britons who helped with the recovery of our lost heritage. Without Sir Mark Cubbon there would have been no stable Wodeyar rule in Mysore. Without such a dispensation, there would have been no Oriental Research Institute—it was established in 1891. No manuscript would have been preserved or discovered. All of us would be poorer.

I am making a strong plug for Balasubramanian’s book. Read it quickly once, skipping some dense parts. Go back and read it again slowly, without skipping any part. Sit back and contemplate the fact that with all our cherished notions of progress and all our arrogance, how small we are in comparison to the greats who lived before us. Sit back and think some more about what could be the contours of dharmic capitalism, which might help us avoid the blind alleys that seduce us so much. Spending time in Acharya Kautilya’s courtyard is a feast for the intellect and the soul. We should not deprive ourselves of this opportunity.

Jaithirth Rao is a retired businessperson who lives in Mumbai. Views are personal.

(Edited by Neera Majumdar)

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