Kautilya's economic thoughts and lessons on ethics

Abstract

Kautilya’s Arthasastra is one of the most widely known treatises of ancient India. Arthasastra which was written primarily as a book of codes for efficient administration by the monarch also includes issues pertaining to wealth creation both for sovereign and his subjects. It deals explicitly with taxation principles, international trade issues, labour theory of value, etc. Earlier research papers have mainly focused on the political and governance issues of the treatise often neglecting the economic issues it covers. However, Kautilya set forth his valuable opinion on economic management in ancient India. The term artha used by Kautilya has a broader meaning beyond personal wealth. Unlike the modern capitalist system where individual is the prime focus, Kautilya regards society above the individual interest. Kautilya’s Arthashastra identifies a crucial role for state/government for the material well-being of the nation and its people. He regards money as valuable only to the extent it serves as a means to acquire goods. It is not desirable for its own sake. And thus the Arthasastra guides individuals to mould their lives for ethical wealth generation. In modern times, corporate scandals like Enron, Tyco and Satyam have time and again brought forth the importance of ethics in economic and corporate affairs. The present paper is an attempt to examine ethical aspects of Indian society in light of the economic principles enuntiated by Kautilya’s Arthasastra. The paper addresses issues like: relation of economics and ethics; economic rules in ancient India to preserve ethics in society and relevance of such ethics to present times. This is done by research study of available sources of literature on Kautilya’s Arthsastra. In view of seamless integration of economics with ethics, Kautilya’s Arthashastra is as relevant today, if not more, as compared to Adam Smith’s Wealth of Nations.