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Institutions, Social Order and Wealth in Ancient India

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Institutions, Social Order and Wealth in Ancient India Journal of Institutional Economics (2020), 1–14 doi:10.1017/S1744137420000296 RESEARCH ARTICLE Institutions, social order and wealth in ancient India Jim Rooney1* and Vijaya Murthy2 1School of Business, The University of New South Wales, Canberra, Northcott Drive, Campbell, ACT 2600, Australia and 2Discipline of Accounting, Business School, Coddrington Building, The University of Sydney, Sydney, NSW 2006, Australia *Corresponding author. Email: [email protected] (Received 14 November 2019; revised 22 May 2020; accepted 23 May 2020) Abstract Orthodox economic theorising on ancient societies emphasises the absence of market institutions, in con- trast to advanced contemporary economies. However, this may downplay the influence of non-economic interests in the generation of wealth. Consequently, this paper examines an ancient civilisation identified as economically successful namely, the Mauryan Empire (322 to 85 BCE) centred on the Indo-Gangetic plains. Drawing on translations of books collectively known as the Arthasastra (lit. the science of wealth) as well as contemporaneous Greek and Roman texts, this paper examines the role of institutions in gen- erating wealth within societal norms of income distribution and the preservation of social order. Given the importance of trade to this society, comparisons are made with medieval European institutions in terms of market coordination and the maintenance of generalised trust in trading markets. As a consequence, the role of institutions in addressing social and economic uncertainty affecting an ancient society is highlighted. Key words: Formal institutions; guilds; Mauryan Empire; social order; wealth 1. Introduction Institutions1 have been identified by scholars as a crucial organising structure in recent economic development (Amin, 1991; Spohn, 2010). Polanyi and Finley further argue that present-day societies and institutions exhibit a social and economic preference for markets (Finley, 1973; Polanyi, 1944). At the same time, sociologists distinguish economic structures that emphasise broader ‘human over eco- nomic interests and the value of collective before self-interest’ (Whitehead and Crawshaw, 2014: 20). Given notions of economic freedom and the separation of economic and socio-political interests resplendent in the institutional literature (Graafland, 2020: 2), exploring the implications of this con- cern with social values and the effect on economic development in an ancient historical context is the overarching motivation for this paper. In particular, we agree that to ‘understand why people act as they do, we must first know what they value’ (Bruce, 2013: 37). In one ancient society, the Mauryan Empire, institutions evolved with a focus on balancing wealth generation, social order, and individual wellbeing. Eventually, shaping a substantial part of what is present-day India in a period contemporaneous with the Macedonian polity of Alexander the Great, Mauryan institutions comprised of both market and public order control practices (Rahman et al., 2014: 654). At the same time, individual wealth creation was not just tolerated but actively encouraged within a formally prescribed ethical framework (Murthy and Rooney, 2018). Furthermore, the range of market goods was extensive (Khanna, 2006: 10), supporting lifestyles that was seen as extending beyond subsistence (Mahapatra, 2012). 1In particular, market-supporting institutions are defined by the World Bank (2002: 4) as ‘Rules, enforcement mechan- isms, and organizations supporting market transactions’. © Millennium Economics Ltd 2020 2 Jim Rooney and Vijaya Murthy Mauryan society was founded on formal state institutions that exerted control though codified rules and processes over business and trade such that they were ‘the largest employer of labour … The state also entered the market as a trader’ (Rahman et al., 2014: 654). At the same time, however, private merchant and occupational guilds promoting trade and commerce also thrived. These institutions and their members were largely free from state interference to pursue economic outcomes as long as they operated within societal norms (Khanna, 2006: 35). As highlighted by noted guild historian Sheilagh Ogilvie (2014: 170), ‘Debates about guilds are not just historical quibbles, but have wider implications for a very modern topic: the role of institutions in economic growth’. Here, arguments explored by Robson and Beadle (2019) concerning moral agency within institutions are consequential. This prompts the question germane to this paper, namely: within the constraints of an ancient economy, how did institutions facilitate functioning markets within a codified system of collective social values that were considered ancient and enduring even at that time? Here we agree with Fitzpatrick (2011: 28) in that ‘Despite Finley’s attempts to separate trade from economics and from Roman imperialism, it seems sensible to treat seriously not only the commercial endeavours of antiquity as a form of economics, but also to value their own reflections’. In this academic endeavour, the claimed contribution of this paper in relation to ancient Mauryan institutions is to explain coexistence of economic success and social cohesion based on generalised trust generated by interactions between state and private institutions examined in relation to uncer- tainty and expectations. Although Mauryan economic activity and legal frameworks have been explored by historians and Sanskrit scholars, we believe that this is the first specific examination of the importance of socio-economic institutions in achieving this apparent co-existence of wealth and cohesion. 2. Mauryan polity and the Arthasastra In existence from approximately 322 to 185 BCE, the Mauryan Empire is estimated to be comparable in size and population with the contemporaneous Macedonian kingdom of Alexander (Turchin et al., 2006: 223). Despite similarities in terms of the existence of urban societies (Chase et al., 2014; Kenoyer, 2006) and trade with other civilisations (Kenoyer et al., 2013), the historical literature iden- tifies the Mauryan polity as being distinct from the earlier Indus Valley or Harappan Civilisation. However, these characteristics of Harappan society may have persisted into Mauryan times (Kenoyer, 2006), beyond its decline in the presence of climatic and environmental change (Dutt et al., 2019). In terms of location, Harappan urban sites are identified largely with the West and North-Western political boundaries of present-day India and into Pakistan (Witzel, 2019), and in terms of political organisation (Trautmann and Sinopoli, 2002), Mauryan Empire is generally identi- fied as being pan-Gangetic (Chakrabarti, 2000). In terms of the Mauryan economic system, state institutions were instrumental to the promotion of agriculture, production, mining, tax collection, trade, commerce and maintaining socio-economic sta- tistics. In particular, international trade in goods and services was recognised as a vehicle for increasing the sovereign’s wealth and that of his subjects (Mukherjee, 1976). This system was described in a sutra (prose-poem) style treatise called the Arthasastra (trans: the science of wealth). The importance of the Arthasastra derives from the fact that it is the only treatise devoted entirely to statecraft and wealth in ancient India to have survived (McClish and Olivelle, 2012). As such, it is an invaluable resource for understanding how intellectuals and rulers of that time understood the project of running an ancient economy. The text contains details of business practices, including, for example, account keeping by government record keepers. It provides details of matters to be recorded, a system of examination of accounts, and details of punishments for non-compliance. Framed in terms of clas- sical economic theory, Waldauer et al.(1996: 106) found that the Arthasastra provides advice on how the wealth and wellbeing of the subjects could be advanced by a fair system of taxation. In addition, development economist Marinko Skare explored links between the Arthasastra and recent labour wage theory, noting the role assigned to labour productivity within the text (Skare, 2013:4–7 and 12). Journal of Institutional Economics 3 The Arthasastra was initially translated to English in 1915 by Sanskrit scholar and librarian at the Oriental Research Institute of Mysore, Rudrapatna Shamasastry. Until this translation, the Arthasastra was known only through references in works by earlier Indian authors such as Dandit and Vishnusarma. Therefore, this work is the main reference for our study. Later translations, namely by R.P. Kangle and L.N. Rangarajan, are also cited in this paper to reflect the different motivations of these Sanskrit scholars. The Kangle translation includes a scholarly discussion of the text. The Rangarajan translation rearranged the original text by topics. Reference to these three translations was necessary to order to identify common themes. Although written in Sanskrit (a sacred language that only the elite Brahman class used and taught), the literary style adopted in the Arthasastra was also aimed at society in general. As Sanskrit scholar Mark McClish identified, it was not explicitly influenced by orthodox Brahmanical ideology, lacking the pro-Brahmanical bias found in other Sanskrit works (McClish, 2009). The Arthasastra emphasised that all individuals should follow moral standards demonstrating due respect to the happiness and prosperity of others, refraining from injury
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