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Review: Kautilyanomics: For Modern Times

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Excerpts from the book Kautilyanomics: For Modern Times by Sriram Balasubramanian

Modern economic thinkers make a binary distinction between economic paradigms – either the laissez-faire approach or the Keynesian interventionist approach to policy-making. laissez-faire is broadly defined as “a doctrine opposing government interference in economic affairs beyond the minimum necessary to maintain peace and property rights”.

Its proponents believe that state intervention should be minimal and that markets should determine how the economy works. The Keynesian approach, on the other hand, is broadly defined as one where “optimal economic performance could be achieved – and economic collapses averted – by influencing aggregate demand through militant policies of stabilization and economic intervention”. of the government “.

In simpler terms, they advocate that the state intervene when the market is not functioning properly and that this intervention is necessary for the proper functioning of the economy.

In my opinion, Kautilyan’s thought lies somewhere between these two economic paradigms with the particularity of being underpinned by the foundation of dharma. Some scholars argue that Kautilyan’s thought is akin to a state-controlled economy, something similar to the old Soviet-style planning commissions. As we will see later in this chapter and the rest of the book, this is far from the case.

I tend to agree, to a large extent, with other scholars, who have defined Kautilya governance through four main components: varta (economic policy), dandaneeti (law and enforcement), anvikshiki (framework philosophical and ethical) and trayi (cultural context). . These are well thought out and valid interpretations of Kautilyan’s approach and provide a basis for other researchers to explore further.

That said, I tend to disagree on a few points of this approach. First of all, I find the tray to be a common feature across the various pillars rather than a separate pillar on its own. I try to highlight these cultural elements in the different pillars of dharmic capitalism later in the chapter. Second, and most importantly, the idea of ​​dharma as a fundamental principle was central to his view of the economic world. Without the philosophy of dharma, Kautilya’s economic principles are a baseless skyscraper. This has to be the most important element of any Kautilyan economic framework. I define this detailed framework as dharmic capitalism.

Dharmic Capitalism

Kautilyan’s dharmic capitalism rests on three pillars: a rule-based but non-intrusive state, wealth creation with a global perspective, and the need for sustainable growth and well-being.

State based on rules but not intrusive

The role of the state, as conceptualized by Kautilya, is a firm and rule-based role, but not intrusive in its implementation. The plethora of rules and regulations for various industries indicates a rules-based governance framework as opposed to an overly planned economy. Take, for example, trade policy. As we detail later in the book, Kautilya wanted fixed duties and tariffs for goods and exempted some for imports in order to stimulate trade between the borders of the different kingdoms. Although the basic principles are strictly followed, there is no kind of “executive planning” in its execution.

There seems to be no limit to the productive capacities of companies regarding what they produce and how they produce. The main focus seems to be on establishing a strong and strictly enforced regulatory and legal framework. Otherwise, the detail of the processes is flexible enough to ensure that they work correctly and according to the interests of the consumers. All of Kautilya’s thinking about implementation centers on the best interests of the consumer, which is contrary to the role of what is called a “planned economy” in modern parlance.

Does this mean that the state is not at all interventionist? Not really. Kautilya seems to feel the need to step in when the market fails to fix certain things. For example, as we detail in the “Sustainable Growth and Wellbeing” chapter, Kautilya believes in the need for matsya nyaya, which means ensuring that small businesses are not overwhelmed by larger or dominant corporations. . In this particular case, he feels the need to intervene so that the richest companies/people pay their fair share of income so that inequalities are not exacerbated. This is a case where he believes the state needs to “push” policy in a way that provides parity for people in the kingdom.

Wealth Creation through a Global Perspective

At the macro level, Kautilya seems to be inclined to take a broad view of the economy. This has three components: a dynamic international business environment through the ease of doing business, the use of natural resources and population characteristics, and the opportunity to invest from savings to drive growth in various areas, including infrastructure.

International trade was integral to the functioning of the Mauryan dynasty and the free exchange of knowledge and trade seems to be rooted in its approach. Although he is aware of the need to protect national interests as well, his policies seem to indicate an expansionist view of the economy. For example, its import exemptions and incentives and efforts to make “ease of doing business” a reality in the kingdom indicate its world view on this subject.

Also, the emphasis on creating a friendly trading environment is evident with its focus on streamlining tax measures for all traded products.

The development of infrastructure through highways, roads and sea routes further reiterates that he viewed trade as more of a boon to his kingdom than anything else. It is important to note that key highways such as the Uttarapath and the Dakshnipath (discussed later in the chapter “Wealth Creation”) were improved and strengthened significantly during Maurya’s rule. Kautilya felt the need to improve trade infrastructure to enable better trade between trading partners. In short, he felt the need to create wealth through an internationalist mindset and approach.

About the book

Title: Kautilyanomics: for modern times

Author: Sriram Balasubramanian

Published: Bloomsbury Publishing

The author is an economist based in a leading international monetary institution. Excerpt published with permission from the publisher, Bloomsbury

Check it out on Amazon.