Economic Sutra

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Title: Economic Sutra – Ancient Indian Antecedents to Economic Thought

Author: Satish Y. Deodhar

Publisher: Penguin Random House, 2019 (First)

ISBN: 9780670092864

Pages: 199

 

The field of economic theory and ancient India was long thought to be an oxymoron as the latter was well known for its overarching spirituality in all walks of life. References to ancient non-Western antecedents do not find mention in mainstream literature on the history of economic thought. This is actually an error in perception of the nature of ancient Indian thought which was secular in all aspects affecting ordinary life. This book examines the antecedents of modern economic thought, behaviour and policy as found in the treatises of the ancient Indian subcontinent. This is a part of the IIMA book series on relevant economic concepts organized by the Indian Institute of Management Ahmedabad (IIMA). It offers an engaging perspective on ancient Indian economic thought by focusing on original and secondary sources. Satish Y. Deodhar teaches economics at IIMA. He is the author of the bestselling book ‘Day to Day Economics’.

 

The first glimpse to ancient Indian thought was facilitated by colonial scholars who learnt Sanskrit as part of their official work. Enquiries in the Islamic period were sporadic and few, like in the lifetimes of Akbar or Dara Shukoh. In that sense, it was the English scholars who lifted the veil on ancient India after a gap of eight centuries. However, they focused only on the other-worldly stream of Indian thought. They interpreted this to be instrumental in the denial of economic betterment and alleviation of poverty in India. Marx was also influenced by this biased opinion, arguing that lack of class conflict prevented India from progressing. As a sequel, Indians were stereotyped as highly spiritual people with a fatalistic outlook. This helped to explain away the abysmal rate of GDP growth in post-independent India as almost a genetic trait inherited from the ancients. This was also disparagingly called the ‘Hindu rate of growth’ when the reason for the slow growth was Nehru’s flawed economic policy which engendered an all-pervasive, state-controlled command economy that shackled the country. When these policies were scrapped in 1991, economic growth shot up to world standards.

 

Deodhar makes a detailed analysis of ideas in ancient Indian thought that specifically deals with economic concepts. Buddha comments householders to acquire wealth through lawful and honourable means. He advised shopkeepers to be shrewd, alert to market conditions and to make a morally justifiable profit (p.31). Even before that, Shukla Yajurveda recognizes four types of commercial activities – agriculture, trade and commerce, animal husbandry and lending at interest. Kautilya, the great political economist of ancient India argued that the ruler must protect the choices of the people in the attainment of purusharthas (goals of man at different stages of life), of which artha (amassing of wealth) was the foremost in his opinion. A charming feature of this book is the great care it lavishes on Tamil classics, which boast of a pedigree comparable to Sanskrit. Thirukural has 700 aphorisms related to wealth. Thiruvalluvar reiterates the Sanskrit purusharthas of dharma, kama, artha and moksha (rightful living, accumulation of wealth, love and happiness and salvation). The idea that wealth brings about further accession of wealth expresses the importance of capital as an input to create more wealth.

 

A superficial discussion on varna and jati and the way Indian society was categorized into numerous jatis (castes) is seen in this book. Varna system was not based on birth and Deodhar claims that it was not hierarchical (p.72). It was the teacher who initiated his pupils into different varnas after studies which the children underwent for many years. Megasthenes, who served as Greek ambassador in Mauryan India mentions that all Indians were free and they did not even consider using foreigners as slaves. This was in stark contrast to Aristotle’s world view which held that some men are by nature slaves and that slavery is both expedient and right. When various crafts and guilds developed, the technology had to be guarded as a secret. This was conveniently done by way of intra-class marriages and dining restrictions. Over time, it got cast into vocations and jatis. Law books such as Manu Smriti caused degeneration of varna system into endogamous groups. It made families perform upanayana (initiation) at an early age of the child rather than a teacher performing it as a commencement ceremony at the end of a 12-year study. The British mixed the concept of race into jati and made them watertight in the bargain.

 

Any discussion on economic thought in India would sooner or later delve into the rich compendium included in the Arthashastra of Kautilya. Luckily, the author spends only a cursory look at the injunctions of Kautilya. He also correlates the concepts with modern society. The ancient preceptor recommends that taxes should be collected the way bees collect honey from flowers. It is also seen that a large differential existed between the top and bottom rungs of imperial jobs. The wage of a minister was 48,000 panas a year while the lowest level public servants received only 60 panas a year. This ratio of 800:1 is an indicator of the large asymmetry in household income. Some amount of state intervention in trade can also be discerned in Arthashastra. It stipulates that the director of trade is to ascertain the cost price after taking into account investment, production, rent, interest, duty and others. For determining the sale price of goods, a 5 to 10 per cent profit for domestic and foreign trade respectively is recommended. Penalties were in place for sale price greater than the permitted markup. Such close intervention in the functioning of markets, if it was indeed in existence, would have resulted in corruption rather than the common folk getting a fair deal.

 

‘Sutra’ is a Sanskrit word that means a string or a thread that holds jewels together. In ancient times, philosophical thoughts, principles and rules were expressed in the form of aphorisms and were written on palm leaves sewn together with a thread. Thus, both figuratively and literally, these writings were called sutras. This book provides a bridge between the elements of pre-Kautilyan economic thoughts and Kautilya’s Arthashastra which is the usual starting point for most researchers on economic theory. Thus we see Panini (700 BCE) mentioning debt and repayment with interest. The notion of expressing interest as a ‘per cent’ of the principal originated in India. Kautilya also talks about varying interest rates for various modes of trade. Higher interest rate was prescribed for money borrowed for risky ventures like overseas trade.

 

The author claims expertise in Sanskrit which he learned at school. This does not seem to be sufficient to extract ideas from ancient texts. In that sense, the author’s claim that he has referred original texts would be in doubt. Still, the amount of research Deodhar has done with secondary sources is impressive. The book takes care not to make the discussion too technical which would have scared the readers away. Readers are also advised not to put too much a premium on the opinions expressed in this book as it is oriented more towards lay people. It includes a crossword at the end in which the clues refer to concepts enunciated in the narrative. Readers are encouraged to try it before and after reading the book and compare the results. Though it looks like comprehension questions in a text book, this provides a measurable parameter of the book’s utility.

 

The book is highly recommended.

 

Rating: 3 Star