Kautilyanomics: New Book Underscores Arthashastra's Relevance To Modern Economic Challenges

Kautilyanomics for Modern Times. Sriram Balasubramanian. Bloomsbury. 2022. Rs 599. Pages 266.

Ever since Rudrapatna Shamasastry discovered an old manuscript of Kautilya’s Arthashastra in the library of the Mysuru State Oriental Research Institute, the man and his work have fascinated many.

For Indians, our special interest flows partially from the fact that long before Adam Smith, Karl Marx or Niccolo Machiavelli, someone from our part of the world had written a deep tract on statecraft, governance, wealth creation and rule of law in which economics plays a key part.

So, it is no surprise that Sriram Balasubramanian, an economist and author working with one of the global financial institutions, should rediscover an urge to write on this timeless classic titled Kautilyanomics for Modern Times.

The book is a worthy read for those who want to see which parts of the Arthashastra are eternally relevant, for Kautilya — a.k.a. Chanakya — lived at the times of Chandragupta Maurya and is widely credited with being his mentor and adviser in the establishment of what was India’s largest empire before the Common Era.

At its peak, the Mauryan empire was larger geographically than the Mughal one that came nearly two millennia later.

A caveat is in order here.

Even though the Arthashastra has been written or compiled by Kautilya, it would be wrong to attribute the entire text to one person, just as it would be the case with any voluminous sacred or ancient text, whether it be the Vedas, the Upanishads, the Puranas, or the Dharmashastras.

The Arthashastra itself, as Balasubramanian points out in his introductory chapter, makes references to two earlier works by authors called Brihaspati and Ushanas, though these earlier works have been lost to us.

In fact, governance and statecraft are essential components of every one of our epics and the Dharmashastras.

In the Ramayana, governance and public welfare are topics Sri Rama discusses with his brother Bharata before leaving for his 14-year exile, and in the Mahabharata, the dying Bhishma gives advice on statecraft to the grieving Yudhishtira.

At the outset, it is worth mentioning that the Arthashastra is more about an approach to statecraft and governance, and not just economics.

One sutra attributed to Chanakya but not part of the Arthashastra, starts like this…

Sukhasya moolam Dharmah, Dharmasya moolam Arthah, Arthasya moolam Rajyam…”

The meaning: the basis of happiness is Dharma (right conduct, or doing one’s duty), the basis of Dharma is Artha (wealth), and the basis of Artha is Rajyam (ie, the state).

The close linkage between individual happiness, individual responsibilities, and the existence of a just and efficient state is key to welfare and good governance. If one goes out of the window, the whole balance of conflicting objectives collapses.

Equally important, as Bibek Debroy, Chairman of the Economic Advisory Council to the Prime Minister, notes in his foreword, the reference to “We, the People” mentioned in the Constitution’s preamble implies that “the responsibility for ensuring good governance, however defined, is not that of the government alone.”

Hence, the addition to Narendra Modi’s governance slogan of Sabka Saath, Sabka Vikas, Sabka Vishwas — which is Sabka Prayas (everyone’s efforts). The nation cannot progress, unless every shoulder is behind the wheel.

Debroy adds: “In that day and age (ie, the Kautilyan age), “the king’s role was limited — ensuring external and internal security, ensuring an efficient dispute settlement mechanism, punishing the wicked and protecting the virtuous. The rest of governance was ensured by individuals and the community.”

This, in fact, is what has gone wrong with the “liberal” state, where individual rights are emphasised excessively, and the state has emerged with overwhelming power as the guarantor of those rights.

The liberal state has effectively delegitimised all other informal and social institutions — family, tribe, caste, etc — and citizenship has been reduced to an endless claim of rights and whining about what is wrong without any reference to duties.

Balasubramanian’s book offers good insights on Kautilyan ideas that have found resonance in today’s world, where we can see deteriorating governance across geographies.

Kautilya did not have all the answers, but he had some insights and approaches that remain valid despite the progress of time.

The three most important chapters to read are Debroy’s foreword, which offers insights that go beyond the book, the author’s own introductory chapter, and the chapter on “An overview of the Arthashastra”, which is written in question-and-answer form, and thus easily digestible.

In this chapter, Balasubramanian answers questions on the Arthashastra’s complexity, on whether Kautilya had all the answers to political and economic issues for all time (no, not quite), and what his legacy was compared to later political thinkers and the ideas they brought to the fore.

The author leaves no one in any doubt that Kautilya was ahead of his time.

In my view, the book is divided into five broad segments.

The first segment is the Debroy foreword, the author’s introduction and the Arthashastra overview, which together give you a great preview into what is coming.

The next four core chapters form another composite, covering Dharmic capitalism and its components, wealth creation, sustainable growth and welfare, and the rule of law.

The last part holds two chapters, linking Kautilya’s ideas to a post-pandemic world, and a summary.

Only a few scholars will have the time and resources (intellectual, time and material) to plough through Kautilya’s original works, for which some knowledge of Sanskrit is essential.

For the remaining 99 per cent of people interested in the Arthashastra, Sriram Balasubramanian’s book is a great introduction.