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A Review of Trautmann’s Arthashastra

Posted by Alex M Thomas on 22nd May 2016

Kautilya’s Arthashastra is considered to be one of the earliest treatises on economics (roughly 2000 years old), more precisely, on economic administration. But note that it is ‘a compendium of earlier treatises’ (p. 9); there were several Arthashastras besides Kautilya’s but none of them survived (p. 16). Kautilya’s Arthashastra was thought to be lost until ‘an anonymous pandit brought a manuscript copy of it to R. Shamashastry, librarian of the Mysore Government Oriental Library, who published a translation in 1906-08 (p. 19).’ R. P. Kangle produced a critical edition in 1960. Kautilya ‘is a Brahmin gotra (clan) name’ (p. 21). ‘This Kautilya … is identified with Chanakya, minister to the first Mauryan king, Chandragupa’ (p. 21). However, the text ‘does not make a single reference to Chandragupta or to the Mauryan Empire or its capital city, Pataliputra’ (p. 23). But this does not suffice as proof that the text was not compiled by Chanakya because Arthashastra is about ‘a hypothetical king ruling a hypothetical kingdom’ (p. 24). The text is dated at about 150 CE.

Thomas Trautmann, being the author of Kautilya and Arthashastra (1971), was chosen to contribute to ‘The Story of Indian Business’ series which is edited by Gurcharan Das. The complete title of Trautmann’s book in this series is: Arthashastra: The Science of Wealth published in 2012. The book has 6 chapters including the introduction and conclusion. The 4 main chapters are titled ‘Kingdoms’, ‘Goods’, ‘Workplaces’ and ‘Markets’ which together come up to a little over 100 pages. This review does not focus on the ‘Kingdoms’ chapter which discusses the then two predominant models of political organization – kingdom (rajya) and republic (sangha).

Arthashastra comes from the Sanskrit word artha – material wellbeing (p. viii). Arthashastra, the ‘science of wealth’ (p. 1), is really the ‘science of kingship, the business of running a state’ (p. 2). Similar to political economy, but different from mainstream economics, ‘in the concept of artha, economics and politics were conjoined as a unit’ (p. 2). As Trautmann writes,

The source of the livelihood (vritti) of men is wealth (artha), in other words, the earth inhabited by human beings. The science which is the means of the acquisition and protection of the earth is Arthashastra. (p. 4)

The main forms of livelihood were farming, herding and trading (p. 99). The military formed the largest class after agriculturists (p. 46). Farming was considered the most productive and luractive (see p. 139).

The pre-eminence of the king arose from his ‘power to tax the productive people living in the territory he possesses’ (p. 4). The king’s share of the crop was one-sixth (p. 18, also see p. 88). Moreover, kingship ‘had the greatest capacity to form pools of capital to undertake large enterprises such as monumental architecture, empire-building through warfare, diplomacy and maintaining peace in the kingdom’ (p. 4). To put it in surplus terms, the agricultural surplus was appropriated by the king which was subsequently spent on empire-building – ‘for social order’ (p. 18). However, to characterize taxation as ‘the foremost enterprise in which the concept of sharing was applied’ is problematic because taxation is an enforcement of power (p. 121). The king was involved in direct production too; he was involved in (1) the care of cattle, horses, elephants; (2) mining; (3) manufacturing weapons for the army; (4) making cloth; and (5) the maintenance of law and order.

From the previous paragraph, it can be seen that the surplus approach to economics (that found in the classical economists and Marx) can provide a conceptual framework to understand economic processes in the Arthashastra. I mention this because the marginalist approach to economics (rational choice theory, marginal productivity theory of income distribution) appears to be an alien frame of reference – both then and now. As in classical economics, wages are at customary subsistence and not at biological subsistence: ‘provisioning depends not only on what we absolutely need to barely live, but what we desire, in order to live richly’ (p. 11). As Trautmann rightly writes: ‘while workers strike the best bargains they can get, there is a notion of customary rates of wages’ (p. 112). More importantly, these were dictated by social norms as the following passage attests.

As regards the quantity of rations to be issues to inmates in the king’s household: for upper-caste (Arya) males, the measure is one prastha of rice, one-fourth prastha curry (supa), salt one-sixteenth of the curry and butter or oil one-fourth of the curry. For lower castes, the measures are less. It is one sixth prastha of curry, and half the butter or oil. For women the measure is less by one quarter, and for children, it is less by one half. Thus ration units are proportionate to the status of the person and the body size. (pp. 57-58)

The social discrimination along the lines of caste and gender is visible from the above excerpt.

Chapter 3 deals with the management of goods to ensure that there are sufficient buffer stocks in terms of famine and to maintain stability of prices. Therefore,

Kingship requires detailed and expert knowledge of goods and the raw materials from which they are made, for provisioning the palace and the army as also for distributing food to people in times of famine. (p. 50)

Therefore, the duties of the director of store include building storehouses for ‘receiving, evaluating and dispensing goods’ (p. 51). Each granary has its own overseer. The stocks come from the king’s own farms and also ‘from produce in lieu of land tax’ (p. 53). The inventory had to be managed: ‘changes in volume have to be understood and tracked so that the total quantity of inventory items is known at all times’ (p. 56). Since Arthashastra is written from a ‘royal point of view’, it ‘reveals a lot about the economics of kingship’ (p. 84).

Chapter 4 discusses the nature of workplaces. The ‘kings arranged the land they inherited or acquired into different economic zones to provision the royal household and to defend the kingdom’ (p. 85). The most important economic zone was the farm, ‘the root of the king’s wealth’ (p. 87). According to Trautmann, the farmers, mostly Shudras, ‘have true private property rights in their lands, being able to sell, mortgage and bequeath’ (p. 91, p. 94). Here, the tendency to find ‘private property rights’ as in capitalist societies is unwarranted. Also, this needs to be qualified because there were social constraints on the way land was bought and sold (p. 125; see below). Akin to the director of stores, the overseer of royal farmland’s duty was ‘to coordinate, oversee and discipline a large and complex body of labourers’ (p. 91). Overseers were there for the mines, mints, salt, gold and textiles (pp. 100-101, pp. 106-107). As is to be expected, the priority was given to farmlands.

The settlement of farmland comes first. The next chapter is “Disposal of Non-agricultural Land”, the title of which tells us that all other economic zones are secondary to farmland. Pasture is the next of these zones. (p. 94)

…all other economic zones are designated only after land suitable for farming has been set aside. (p. 95)

A very similar conception is to be found in William Petty (1623-1687), the founder of the surplus approach to value and distribution. Although farming was mainly for subsistence, a surplus was required in order to pay taxes (p. 109). Who laboured on the farms? Arthashastra mentions the existence of ‘slavery, forms of debt servitude and the wage-labour or share-cropping by people who do not own farmland’ (p. 110). Landlessness was the prime reason for pushing people into ‘temporary servitude’ (p. 111).

The concern for sustainability/environment is visible in the administration of forests. A strict separation between pasture and forest land is seen in the following sentence: ‘While pasture land is for domestic animals (pashu), forests are for wild animals (mriga)’ (p. 103). Arthashastra also talks about ‘the active protection of elephants and harsh punishment of poachers, the keeping of an ongoing census of elephants in the forest, of different classifications and the use of forest people for the work’ (p. 105).

The next chapter on markets (chapter 5) discusses the idea of a proper price and the administrative ways of curbing extreme price volatility (also p. 140). As Trautmann notes earlier, ‘the text has an underlying idea of the fair or true price of things sold in markets’ (p. 99) as indicated by the following extract from Arthashastra.

In the case of commodities distant in place and time, the Overseer of Trade, expert in determining prices, shall fix the price after calculating the investment, the production of goods, duty, interest, rent and other expenses. (p. 130)

The concept of the true price is found in the classical economists in the form of ‘necessary price’, ‘intrinsic value’ and ‘natural price’. Similar to proper price, there was a notion of proper profits too.

The notion of fair profit is implied in the advice that the overseer of trade should fix a profit for traders of five per cent above the permitted purchase price of local goods, and ten per cent for foreign goods. (p. 129)

In terms of policy, ‘the king is supposed to act to contain the extremes in price to protect merchants and the people in general’ (p. 116).

The overseer of trade had to be knowledgeable about prices. In case of a fall in prices, ‘the overseer of trade is to concentrate goods in one place by establishing a single marketplace for it and raise the price, so as not to ruin the traders who are the sellers’ (p. 128). However, on examining the way in which land was sold, Trautmann observes that priority was given to ‘a kinsman, neighbor and creditor over the stranger’ (p. 123). In addition, the transactions were transparent (pp. 123-124). Moreover, ‘the King not only levies a tax on the transaction … but he also confiscates the excess amount if bidding among buyers pushes the price above the true value’ (p. 124). After describing the process of land sales, Trautmann concludes ‘that there is true private property in the hypothetical kingdom of the Arthashastra. But it is conditioned by the prior claims of kinship, neighbourhood, indebtedness and other conditions, and it is biased against strangers’ (p. 125). Yet again, there is a tendency to impose alien frameworks of analysis on Arthashastra. Rather than imposing alien concepts, what is required is an understanding of the extant nature of land ownership by examining surviving archival sources. And as Trautmann rightly notes, ‘ancient literary works are mainly written by and for elites and do not often give us a true picture of the lives of people in the lower echelons of society’ (p. 146).

To conclude, Trautmann’s introduction to the Arthashastra is accessible (in language and price) and informative to the interested reader. However, I think that this is not ‘a definitive introduction to the classic text, the Arthashastra’. A definitive introduction would require more than a simple analysis of the text. It warrants a critical engagement with the text by drawing on archival sources. Finally, the tendency to impose alien frameworks must be resisted.

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2013: A Round-Up

Posted by Alex M Thomas on 28th February 2014

January: Wages in Economic Theory and Reality: Some Issues

February: Reflections on Chayanov’s The Theory of Peasant Economy

March: The 2012-13 Economic Survey of India (with Raghuram Rajan)

April: On Economic Growth and Development

June: Thomas Tooke: An Introduction

July: Understanding India’s Economic Growth and Development [book review]

August: Misunderstanding Economic Growth and Development [book review]

September: Robert Torrens: An Introduction

October: Two Fundamental Objections to Marginalist Economics

November: Towards an Objective Understanding of Scarcity [book review]

December: A Review of Dipankar Gupta’s Revolution From Above: India’s Future and the Citizen Elite [book review]

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2012: A Round-Up

Posted by Alex M Thomas on 28th January 2014

January: Alfred Marshall (1842 – 1924)

February: Is Marx (Ir)relevant?

March: Short Introductions to Keynes: Skidelsky vs Clarke [book review]

April: Malthus: The Scope of Political Economy

May: Kaushik Basu’s Economic Methodology and the Economic Survey of India 2011-12

June: Introductory Macroeconomics: On Crowding Out

August: Rosa Luxemburg: An Introduction

September: A Foreword to Keynes’s General Theory

November: The Character and Role of Economic Theory

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To Economists: please pay attention to the ‘real’ problems

Posted by Alex M Thomas on 1st September 2010

A talk by Arundhati Roy and watching Peepli Live has motivated the contents of this post largely. I have been forced to rethink what ‘economics’ as a discipline should do in a country like India. How can it contribute to economic growth and human development. It is often forgotten that, economics studies the big black box that transforms the labour of the labourers into commodities for consumption by the labourers. People or rather, people who work, appear at both the ends of the tunnel. The black box or the tunnel consists of varied actors, markets, institutions, laws, power groups, social classes, etc.

Some economists try to make sense of this complex interaction using tools such as game theory, which throws light of certain aspects of the interaction. This in turn is supposed to aid in the design of better institutions. A few study labour, the main actor in the whole economic process. Some look at institutions and how various legal arrangements affect the economic outcomes. It remains to be asked: outcomes for whom? In this manner, the entire profession of economics has been divided into various sub-disciplines, each specialising in a particular aspect of the economy. And it is evident that communication between the above mentioned sets of economists happen rarely. Very often, the larger picture is forgotten. Each group presents their results with a tremendous sense of certainty, which is entirely misplaced. And, the joke that economists love their ceteris paribus clause comes true here. Except that, the clause in this case, assumes as constant the remaining processes or aspects of the economy!

Who are the real producers in an economy? What role do farmers (small, marginal and large) play in our society? Do they live in dignity? When inflation occurs, do these farmers get more incomes? Or do the intermediaries pocket the increase? Are proper institutions in place to provide them with adequate credit? Can these formal institutions compete with the informal ones, such as money lenders and chitti funds?

It is accepted that farming is not a profitable enterprise any more. Policy makers are calling for industrialisation. They want the farmers to come away from their lands and work in industries. And so arises the slums in and around major cities, where their living conditions are perhaps worse than in the villages. Or, most of them are forced to become construction workers. Urbanisation implies buildings, which creates construction jobs in plenty. Once the space in big cities are exhausted, the urbanisation will take place in small cities. Workers will be in demand. In short, labour migration and increasing labour distress, owing to improper housing conditions will become even more intense. It is time, serious attention is paid to farmers and the role of farming in the development of India.

To conclude, it is time we paid more attention to the condition of India and not blindly follow academic fashions. It is the duty of the civil society and especially, the academicians to study the problems and issues thrown up by the society. When the problems of the majority of the population in India –those who live in the rural areas, those who work in the informal sector and those who are farmers– are forgotten and relegated as “deviations from the normal” or “problems of the Indian economy” and not as characteristics of the society we live in, it is indeed a pitiable situation.

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