The purpose of this paper is to explore the status of economic analysis of laws relating to property and contracts during ancient times in India.
Abstract
Purpose
The purpose of this paper is to explore the status of economic analysis of laws relating to property and contracts during ancient times in India.
Design/methodology/approach
Modern research tools are used to present Kautilya's ideas on contracts and property.
Findings
Kautilya implicitly proposes a labor theory of property. He devised economic laws related to contracts, property and tort, which promoted economic efficiency and encouraged ethical behavior.
Research limitations/implications
Current approaches ignore the role of ethics in designing legal rules for promoting economic efficiency.
Practical implication
Unless laws are designed to encourage and promote ethical conduct optimum economic efficiency is unlikely to be achieved.
Originality/value
Kautilya advocated a contract theory (between the ruler and the ruled), which was utilitarian in nature, however, unlike Bentham, he still appealed to the moral motivation.
The purpose of this paper is to explore the origin of economics as a separate science.
Abstract
Purpose
The purpose of this paper is to explore the origin of economics as a separate science.
Design/methodology/approach
A very comprehensive approach is presented for determining the origin of economics as a science. Three kinds of inter‐related issues are discussed: how to interpret and evaluate earlier, particularly ancient, writings, the specification of the requirements for declaring economics as a science and the definition, scope and methodology of economics.
Findings
Application of the most stringent requirements for declaring economics as a separate science to Kautilya's Arthashastra validated A.K. Sen's claim that it is the first book on economics.
Research limitations/implications
According to Kautilya, economics is a separate science but not independent of other disciplines and particularly of ethics. Whereas, most of the current research ignores this inter‐dependence and consequently does not fully capture reality.
Practical implications
It implies that the inter‐dependence between economics and other disciplines should be encouraged and vigorously explored.
Originality/value
It validates Redman's assertion, “The history of economics as a science is, in my view, still waiting to be properly written”.
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Keywords
The purpose of this paper is to present Kautilya's ideas on international trade.
Abstract
Purpose
The purpose of this paper is to present Kautilya's ideas on international trade.
Design/methodology/approach
A non‐technical descriptive approach is followed.
Findings
Kautilya implicitly proposes a theory of gains from trade and recommends imports promotion rather than export promotion.
Research limitations/implications
It is indicated that our current understanding regarding international trade during ancient times is quite inadequate.
Practical implications
There will be no need for current endless negotiations if countries commit themselves to Kautilya's policy of import promotion.
Originality/value
The paper provides insights into trade patterns during the ancient times.
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Sages and seers in ancient India specified dharma, artha, kama and moksha as the four ends of a moral and productive life and emphasised the attainment of a proper balance between…
Abstract
Sages and seers in ancient India specified dharma, artha, kama and moksha as the four ends of a moral and productive life and emphasised the attainment of a proper balance between the spiritual health and the material health. However, most of their intellectual energy was directed towards the attainment of moksha, the salvation from birth‐death‐rebirth cycle. Kautilya, on the other hand considered poverty as a living death and concentrated on devising economic policies to achieve salvation from poverty but without compromising with ethical values unless survival of the state was threatened. Kautilya's Arthashastra is unique in emphasising the imperative of economic growth and welfare of all. According to him, if there is no dharma, there is no society. He believed that ethical values pave the way to heaven as well as to prosperity on the earth, that is, have an intrinsic value as well as an instrumental value. He referred the reader to the Vedas and Philosophy for learning moral theory, which sheds light on the distinction between good and bad and moral and immoral actions. He extended the conceptual framework to deal with conflict of interest situations arising from the emerging capitalism. He dedicated his work to Om (symbol of spirituality, God) and Brihaspati and Sukra (political thinkers) implying, perhaps, that his goal was to integrate ethics and economics. It is argued that the level of integration between economics and ethics is significantly higher in Kautilya's Arthashastra than that in Adam Smith's Wealth of Nations or for that matter in the writings of Plato and Aristotle.
The purpose of this paper is to present Kautilya's principles of taxation during the fourth century BCE.
Abstract
Purpose
The purpose of this paper is to present Kautilya's principles of taxation during the fourth century BCE.
Design/methodology/approach
Modern tools of economic analysis are used to present Kautilya's principles on income taxation.
Findings
Kautilya implicitly suggests a linear income tax. He emphasizes fairness, stability of tax structure, fiscal federalism, avoidance of heavy taxation, ensuring of tax compliance and subsidies to encourage capital formation.
Research limitations/implications
According to Kautilya, some linkage between the ability to pay (i.e. provision of a safety net to the poor, old and the sick) and the benefit principle may be better than the current approaches, which treat the ability to pay and the expenditure side of the taxation separately.
Practical implication
Ensuring tax compliance and avoidance of heavy taxation are the most important ingredients of a sound fiscal policy.
Originality/value
The paper presents the very first growth‐oriented fiscal policy along with a provision of a safety net.
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The purpose of this paper is to establish Kautilya as a genuine contender to be a forerunner of the neoclassical price theory.
Abstract
Purpose
The purpose of this paper is to establish Kautilya as a genuine contender to be a forerunner of the neoclassical price theory.
Design/methodology/approach
Rational reconstruction approach is used to present Kautilya's understanding of several most basic concepts in economics.
Findings
Kautilya's understanding of the law of diminishing returns is at par with the classicists. His applications of concepts like opportunity cost, and of demand and supply framework, are closer to those of the neoclassicals. His understanding of the rules (axioms) of comparison and consistency and the exploration of substitution possibilities is way ahead of the classicists.
Research limitations/implications
The current research in the history of economic thought concentrates too heavily on the exploration of Western history of economic thought.
Practical implications
Kautilya's Arthashastra is a new source of knowledge and the profession should encourage the exploration of other ancient contributions outside of Europe.
Originality/value
The paper revises the history of economic thought.
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Both researchers and policy makers have increasingly focused their energies in exploring the sources of economic growth. The purpose of this paper is to explore the very first…
Abstract
Purpose
Both researchers and policy makers have increasingly focused their energies in exploring the sources of economic growth. The purpose of this paper is to explore the very first ideas on the sources of economic growth of Kautilya during the fourth century BCE.
Design/methodology/approach
Kautilya's non‐technical statements on economic growth are presented as a formal model of economic growth.
Findings
Kautilya believed that institutions are a prerequisite to economic growth and good governance, knowledge, ethical conduct and economic growth are interdependent. That is, Kautilya believed in the virtuous cycle of economic growth.
Research limitations/implications
Kautilya's model of virtuous cycle implies that Kaufmann and Kraay specify an incorrect model to test the virtuous cycle model of economic growth.
Practical implications
Although it is a challenge to empirically estimate Kautilya's model if estimated appropriately, it could help in partitioning the Solow residuals into contributions made by technical progress and good governance towards economic growth.
Originality/value
The paper amounts to rewriting the history of economic thought.
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Since the mid‐1980s focus has shifted from stabilization to economic growth as a national goal. A large number of studies have been undertaken to explain economic growth. It is…
Abstract
Purpose
Since the mid‐1980s focus has shifted from stabilization to economic growth as a national goal. A large number of studies have been undertaken to explain economic growth. It is intended to show that the current debate between those who claim only institutions matter to economic growth and others who claim that only governance matters is totally unproductive.
Design/methodology/approach
Econometric methods are used to evaluate the recent empirical studies on linking the quality of institutions or governance to economic growth.
Findings
It is shown that the empirical model specification as well as the estimation methods used by important studies are inappropriate.
Research limitations/implications
Future research needs to incorporate not only the institutions, and governance but also the desire to save, invest and innovate to explain economic growth.
Practical implication
The existing theories of economic growth do not fully capture the complex process of economic growth implying that these theories should not be used as a guide to the screening of developmental aid to the developing countries.
Originality/value
The researchers need to change direction away from data mining and towards developing a better understanding of the growth process. Policy makers should be careful in crafting their policies.