The Ancient Indian Economic Thought & the Concept of Welfare State

Abstract

It is generally believed that the systematic study of economics and its principles was started in 1776 with the publication of An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith, who has been universally held as the founding father of economics. Prior to Adam Smith, many economic concepts and theories were developed from the early 16th century to the middle of the 18th century. Economics as a science trails its origin from the perennial philosophy of great ancient and medieval thinkers from the Buddhist literature to Kautilya. The research paper attempts to dwell into ancient economic and political theories, bringing to the forefront their relevance even today. A polymath of diverse abilities, Kautilya was one of the defining forces responsible for shaping not just the Mauryan Empire, but Indian history itself. Considered the most comprehensive account of economic principles, ideologies, and thought, Kautilya’s Arthashastra provided an important precursor to classical economics. As the text abounds in generalities, Chanakya seeks to make his ideas relevant across situations and eras. Regrettably, for the development of ancient economic thought, Kautilya’s ideas were unknown to Renaissance philosophers and thinkers who are largely credited for the creation of modern economic thought. While the modern economic theory focuses on the pursuit of self-interests and material pleasures, Indian texts have treated ethics and welfare as one of the important life objectives. The lacuna created due to ignorance and lack of awareness has prevented individuals and corporations in acknowledging and implementing the economics practices mentioned in ancient religious and political texts. The text addresses this issue and evaluates the Indian economic thought. Of course, the objective here is not to advocate Indian economics as a separate economic thought process. Laws of economics are universal. Economic agents, irrespective of their culture, country, and know-how, would respond to incentives and coercion in almost the same way.