Can traditional Indian knowledge secure the future of ‘economics’?

Hindu economics represents the manifestation of the Holy Vedas in economic.

(Sanghnomics is a weekly column that tracks down and demystifies the economic world view of Rashtriya Swayamsevak Sangh (RSS) and organisations inspired by its ideology.)

What is the future of economics? Can tradition ancient Indian knowledge help to secure this future which looks increasing uncertain with escalating trade wars and the failure of post-Keynesian economic models to bring greater stability and distributive justice.

Professor D. Fusefeld, in his review of European economic history in The Age of the Economist, references the Upanishads as a source of economic knowledge. In his analysis of the evolution of economic thought, he identifies the debates between the English (Cambridge) school and the American school, particularly focusing on monopolistic practices in market economics.

With the disintegration of post-Keynesian systems, economics is entering a new era of dramatic change. Joan Robinson also highlighted the crisis in economics, noting how European economic thought has been paralysed for an extended period.

In this context, Hindu economics merits exploration. Central to Hindu economics is the concept of abundance, which classical economists touched upon but did not further analyse in modern Western economic theory. This could offer valuable insights into the economics of the future.

Hindu economics, as outlined by MG Bokare in his seminal work Hindu Economics, represents the manifestation of the Holy Vedas in economic thought, focusing on abundance in a manner consistent with modern economic theories.

Upon exploring Hindu economics, three key insights emerge:

1. Economics as a discipline of the market was first conceived in ancient India (BC), predating other economic thought.

2. The earliest books on economics were written in ancient India (BC).

3. The first definitions of economics were presented by Shukracharya and Kautilya.

The Holy Vedas contain clear references to markets, supply and demand, prices, trade, interest, profit, and tax. By interpolation, we can also deduce concepts like lease-rent and wages for those without property. Mercantile laws were codified, with the economic thought flowing from the Vedas through the Mahabharata (especially Shanti-Parva and Vidura-Niti), and further articulated in the Smritis of Yajnavalkya, Gautama, Manu, Shukracharya, and Kautilya.

These Smritis codify economic activities and quantify variables such as cost of production, market prices, profit margins, tax percentages, wage rates, and interest rates. Competition and monopoly are clearly recognised, and foreign trade is explained. Kautilya’s Arthashastra represents the final phase of this economic thought in ancient India.

In line with the Bharatiya tradition, Kautilya begins his Arthashastra by paying homage to Shukra, Brihaspati, and other predecessors. He mentions his predecessors 114 times, often to express differences with them, indicating the evolution of Hindu economics in response to changing times.

Hindu economics was well-developed long before the Western economists. It systematised self-employment and wage employment, with regulations on the employer-employee relationship in place thousands of years before industrialisation in the West. Shukraniti provides detailed regulations on wages, including piece-rate, time-rate, and efficiency bonuses, along with provisions for annual leave, sickness benefits, provident funds, and the psychological handling of employees. These regulations reflect an economy of full employment, a concept Western theories could not fully address at the time.

While many intellectuals dismiss the idea of 'Hindu Economics' as a serious body of knowledge, believing that ancient seers did not engage with mundane affairs like trade practices, the detailed legal provisions in ancient texts, such as Kautilya’s Arthashastra and the Manusmriti, demonstrate otherwise. These texts laid down legal measures to protect consumers from unfair trade practices, with Hindu economics placing responsibility on sellers, unlike the Western classical approach of "Caveat Emptor" ("Buyer beware"). In contrast, Hindu economics advocates "Caveat Venditor" ("Seller beware"), holding sellers accountable for quality, weight, price, and fairness.

Furthermore, ancient Indian economic principles strongly opposed monopolistic and oligopolistic practices. Producers, traders, and sellers who engaged in such practices were punishable under Hindu economic laws, reflecting a keen awareness of fair market dynamics.

Thus, Hindu economics offers a holistic framework that can inform future economic systems, providing valuable insights for addressing current global challenges.

Earlier Sanghnomics columns can be read here.