Arthashastra: The Science of Wealth

While the rest of the world was still in transition and civilisations were in their budding stages, our ancestors were delving into complex ideas of statecraft and economics. One such example is Arthashastra, a scientific text that imparts the art of wealth, economics, and statecraft.

Ancient manuscript of Arthashastra. Source: Wikipedia Commons

Long ago, India was referred to as the Golden Bird. People from different parts of the world were fascinated by our immense wealth. But this wealth was not merely materialistic; it encompassed our culture, tradition, and most importantly, our knowledge, which made us wealthy. Even today, people from across the globe travel to partake in this ancient wisdom. One of these pieces of knowledge has been passed down through generations and is known as Arthashastra.

The expansive scope of the book allows the term Arthashastra to be interpreted in several ways, including economic science, political science, and statecraft. The book has even been compared to Sun Tzu's Art of War, although both books deal with military strategies and a leader's responsibility. However, while Art of War only focuses on the military aspect of statecraft, Arthashastra is a comprehensive blueprint that addresses the political, economic, social, cultural, and military aspects of a kingdom.

Kautilya, also known as Chanakya, was a teacher, economist, and highly talented individual credited with the rise of his student Chandragupta Maurya and subsequently the Mauryan Empire. Arthashastra is believed to have been penned by Kautilya between the third and fourth century B.C. However, both the authorship and date remain open to debate. Some even claim that Kautilya/Chanakya was the name of a group of scholars and not an individual.

Arthashastra comprises 150 chapters divided into fifteen books. The Arthashastra states that the ultimate goal of economics is to enhance the well-being of the king's subjects.

"In the happiness of his subjects lies his happiness; in their welfare lies his welfare; whatever pleases himself he shall not consider good, but whatever pleases his subjects he shall consider good,"

Consequently, the monarch must always be active and execute his duties; the foundation of prosperity is activity, while inactivity is the root of evil. Without action, both present and future gains would cease; with activity, he can achieve his goals and abundant wealth.

Arthashastra delves into international trade, demand and supply, profit and interest, and taxation. It also mentions the Sapta Siddhant, or seven divisions of the state structure: Swami (king), Amatya (Ministerial Council), Janapada (People), Durg (fortified town), Kosa (treasury), Danda (Army), and Mitra (Friendly states).

The text outlines three pivotal kinds of policies essential for governing a kingdom: Arthaniti (economic policies) that encourage economic growth and prevent natural and man-made disasters, Dandaniti (judicial policies) that govern how justice is administered, and  Videshniti (foreign affairs policies) that aid in the kingdom's independence and expansion. Kautilya also proposed a mixed economy with private property rights, coupled with an active government role. According to him, the government should work for the prosperity, security, and service of the public. He advocated not only for national security but also for income security, shielding the public not only from foreign aggression but also from poverty, diseases, and famines. He stressed the creation and administration of a fair judicial system and the promotion of economic activity. He advocated for the regulation of monopoly, monopsony, and externalities.

In summary, Arthashastra paints a clear picture of universal human inclinations such as risk aversion, rent-seeking, and greed, and argues that we should constantly explore ways to decrease risk and limit excessive greed and rent-seeking behaviours. It is a testament to the advanced knowledge possessed by our ancestors. Arthashastra is a scientific blueprint for individual betterment and, by extension, societal progress.