6. CONCLUSION
THE ARTHASHASTRA IN THE LONG VIEW
THE ARTHASHASTRA GIVES us a king-centred perspective on wealth and power. In it we see a concern for provisioning the royal household and army, and of alleviating famine in the kingdom, through the building and stocking of storehouses of different kinds. Its way of evaluating goods puts the emphasis upon treasure for warfare, foreign relations and for making visible the king’s pre-eminence through the display of luxury. The organization of the kingdom into different economic zones gives first place to farming and the farming village. Its market policies try to sustain ideals of fair price and contain extreme fluctuations of price. It has two kinds of courts that provide for the peaceful settlement of disputes over transactions and the ‘removal of thorns’ from the kingdom.
We have seen that, in its time, kingship and the sangha or republic are the main political forms. The great advantage of the republic is the solidarity of its governing class, each member having a strong sense of responsibility for the whole. This makes the republic a formidable enemy and a desirable ally, and it could only be defeated by destroying the strong fellow-feeling of its members through ‘sowing dissent’. Kingship, by unifying power in a single royal family is less cohesive and vulnerable to overthrow by assassination or army coup. But its economic advantage over republics is superior and outweighs the disadvantages. In the long run kingdoms prevailed over republics.
The long reign of kingship
The main advantage of kingship over a republic is economic. It rests on a greater ability to amass capital. The king is able to tax the three branches of vartta or production of livelihood—farming, rearing of livestock and trading. The king also participates in these branches through his agents, a kind of householding on a grand scale, and regulates them as well. However, it requires employing people with expert knowledge, the very knowledge that the Arthashastra captures for us in Book Two, which is both a rare and a very hard record to decipher because of its expert nature. The king maintains public order by resolving disputes and imposing fines and court costs, which also adds to the treasury. In so doing he creates an internal peace. The king licenses the working of mines and the production of salt, another source of royal income. The king has the right to impose additional taxes in an emergency, and can use hidden means to replenish a depleted treasury. At every step, then, the Arthashastra shows that the success of the king rests on a robust economy, in which he participates through undertaking economic enterprises, through regulation and fines, and above all through taxation.
At every step we meet, not the idea of despotism and the royal ownership of everything, but the idea of the king’s share (bhaga). We meet, not Aristotle’s tendentious assessment of the constitution of the Persian Empire, according to which the king owned all and everyone was his slave, but a more entrepreneurial concept according to which the king is a co-sharer with the people of the kingdom in various wealth-making enterprises, resorting to language drawn from fathers and sons working their agricultural land together or partnership of traders and merchants. The focus is not on ownership of a resource but of a share of what is produced. The co-sharers are by no means equal, but there is at the heart of the idea of the share a certain sense of mutual interest among co-sharers to promote production, as then all shares will be larger. This concept seems to motivate, for example, the advice that the king should take away land that the farmer does not cultivate and give it to someone who will.
The formidable powers of the king to amass wealth are also powers to advance the general prosperity of the kingdom by prudent policies of extending farming, herding and trading, or to lessen profiteering by the imposition of punitive taxes and fines. There is no magic formula by which the king can ensure his success and avoid catastrophe. Everything depends upon his finding a proper balance among overlapping and sometimes competing ends: a full treasury, a strong army, a prosperous people and effective means of resolving disputes to maintain the peace of the kingdom. The Arthashastra cannot guarantee success but it shows kings and their ministers the way to a rational approach in making choices. Finally, the notion of the king having a share in the productive enterprises of his people promotes a kind of enlightened self-interest, and not the unlimited extraction of wealth and resources. Finding the balance is the aim of the Arthashastra.
How well was this balance kept in actual ancient kingdoms? It is impossible to know directly, and every case is unique. But we have indirect evidence of the success of kings, of royal families and of kingship itself in the tenure of their reign. While the ancient period, as seen through the record of inscriptions, gives us a picture of more or less constant warfare over the control of farming populations and other assets, and of succession disputes within the royal family, this picture of endless change occurs within a largely stable political and economic structure. And the wars of succession and territorial expansion seem not to have been too disastrous for the kings who undertook them.
In the late classical period, following the gradual dissolution of the Gupta Empire in about 550 CE till the establishment of the Turkish Sultanate of Delhi shortly after 1200 CE, we find a pattern of more or less durable regional centres governed by dynasties that were very long-lasting. To be sure, the regional powers were engaged in warfare with their rivals contesting control of intervening regions, but the kingdoms themselves endured for centuries. The average length of reign for kings of this period was a long twenty years, giving substantial political stability. As the average length of a king’s reign (twenty years) was not much less than the average length of generation (twenty-five years), it is evident that succession disputes were not so frequent as to upset the stability of rule. Many royal dynasties ruled for hundreds of years. Among the longest are the Eastern Chalukyas, a buffer state in the Deccan, which lasted 400 years. The reign of the Palas of Bengal and the Cholas of the south endured for over 300 years, which gave a great deal of political stability amid changing kings and constantly shifting boundaries between kingdoms.1 We can infer from this political stability that the economic policies that financed the kingdoms making up this interstate structure must have been effective on the whole.
It is the technical detail of the Arthashastra’s economic prescriptions that give us some insight into the economic underpinnings of the long reign of kingship, which has only recently come to an end. On the other hand, the Arthashastra does not tell us everything we might like to know about the ancient economy. There are some aspects of the economy that are obscure or even invisible in the Arthashastra, because they are thrown into the shadows by its king-centred point of view. Let us consider a few examples of the aspects of the economy that the Arthashastra, from its particular angle of view, does not illuminate so well, but which we can learn about from other ancient sources.
In the Arthashastra, we read a fair amount about working people and artisans (as discussed in chapter five) for which we are grateful because ancient literary works are mainly written by and for elites and do not often give us a true picture of the lives of people in the lower echelons of society. We learn about artisans of various kinds, under the rubric of keeping watch over their misbehaviour, such as weavers, washermen, tailors, goldsmiths and other metalworkers. But the potter is practically invisible in the Arthashastra simply because of the low valuation of pottery in the text, and the evident absence of luxury pottery at the time, even though the potter’s works were a necessity for everyone and a virtually indestructible product of the ancient economy that archaeology relies upon to construct its chronologies. Indeed archaeology is one of the best means we have to learn new things about the ancient economy and the lives of ordinary people that we cannot get by consulting Sanskrit texts.2
Traders and merchants are visible in the Arthashastra, but are somewhat in the background and appear as persons to be regulated, taxed and kept under watch for sharp practices. The measures adopted by the overseer of trade to correct a crash in prices due to a glut imply recognition of the social value of the trader’s work, but the overall attitude is that traders’ tendencies are to cheat customers and take profits in ways the author deems to be antisocial.
What the Arthashastra does not show us is the way in which the widening circulation of trade and money served to create a new phenomenon, the rich merchant, whose wealth began to rival that of the king. The Buddhists celebrated such a merchant, Anathapindaka, because he used his vast wealth to support the religion. What is intriguing about the stories of Anathapindaka is the confrontation between the rich merchant and the king in a sort of contest of wealth. Anathapindaka wished to purchase a wooded tract of land from prince Jeta, called the Jetavana, as a gift for the order of monks, a place for their rainy season retreat. The prince, who did not want to sell, named what he thought was an impossible price—as many coins as would cover the ground of the Jetavana. Images of Anathapindaka on Buddhist monuments such as the sculptures at Barhut in Madhya Pradesh, now in the National Museum in Kolkata, show Anathapindaka bringing bags of coins by ox cart and laying the rectangular coins of the time on the ground, like tiles on a floor, as the purchase price.3 The story celebrates the piety of the merchant, but it also signals for us the possibility of private citizens possessing large fortunes, rivalling the wealth of the king.
The wealth of the rich merchant, then, might exceed that of the king. Generation of wealth by merchants did not arise independent of the king, but on the contrary, it arose through interactions of merchants with kings, especially through the luxury trade. As we have seen, the post-Mauryan age is the age of an acceleration in trade between Rome and India, to which the Arthashastra attests by mentioning the sources of certain luxury goods, without stating it explicitly. (The Arthashastra’s preference for the value of the southern route over the northern route is an additional testimony to the importance of this trade.) We have three very good sources of further information about the trade: a Greek sailor’s manual about the trade between Roman Egypt, Africa, Arabia and India (the Periplus of the Erythraean Sea); reference to Greek traders in classical Tamil poetry (the Sangam literature); and an archaeological site in Tamil Nadu (Arikamedu). While the Arthashastra is oriented to the interior of north India, these sources give us a clearer window on long-distance trade through their orientation toward the coast of the Indian peninsula.
E.H. Warmington, examining this trade on the basis of the Roman author Pliny, the Periplus and the Tamil sources, concluded that the trade between Rome and India was more favourable to India, and caused a severe drain of Roman gold and silver coins to India.
Not only did Italy consume more than she produced, not only was Rome a city and Latium a district poor in manufactures, so that neither is mentioned in the lists of exports in the Periplus, but the [Roman] Empire taken as one unit was often unable to offer to foreign regions in general and to oriental nations in particular sufficient products of its own to balance the articles imported from them in large quantities, and the result of this was the draining away from the Empire of precious metals in the form of coined money without any adequate return.
A large proportion of this drain of gold and silver coin went to south India and the east and west coasts of the Deccan, as indicated by the find-spots of many buried hoards of Roman coins.4 Gold shows up frequently in the Tamil poems of the Sangam literature.
The Tamil poems call Greeks engaged in the Roman trade with India yavanar (Ionians), mentioning them in contexts of luxury, trade, royalty, and royal gift-giving. Here is one such passage, in a poem by Nakkiranar praising the Pandya king Maran, likening him to the gods, in the translation of George Hart and Hank Heifetz:5
. . . May you live on, with a sweet life,
giving away precious ornaments to all those who come to you in need
and never running out of them, while every day you take your pleasure as women
wearing their shining bangles bring you the cool and fragrant wine
carried here in their excellent ships by the Greeks and the women pour it
for you out of pitchers made of gold that have been fashioned with high
artistry, O Maran, you whose sword is raised on high, like the sun
with its rays of heat driving away the darkness that has filled in
the spaces of the beautiful sky, like the moon that spreads
out its cool rays in the west, may you live
long and as firmly established as they are together with the world!
The poem paints a word picture of the king, or rather two word pictures. In the first, he is at leisure in the palace, and in the second, his sword is raised to signify war. In the first, wine is spoken of, and Greek ships are mentioned to signify the richness and rarity of the wine, that it comes from the faraway Mediterranean. Martha Selby, a leading scholar of the Sangam poetry, observes that Greeks figure in this poem as also in others, ‘as a matter of fact, as a part of royal material culture’, remarkable for being normal.6
We see here how luxury is portrayed to display the king’s greatness by his consumption of expensive and exotic products such as wine from the Mediterranean, in a vessel whose richness and rarity is conveyed by it being made of gold and poured by richly adorned serving women. The overall theme of the passage is the king’s practice of giving precious ornaments to those who come to him in distress—including, in all probability, the poet. Luxury is turned into the royal virtue of liberality by gifting it away. Royal magnificence and royal gift-giving is the subject of many poems of the Sangam anthologies. The Roman trade in luxuries coincided with this efflorescence of courtly poetry, and the early days of kingship in the Tamil country when the ‘three crowned kings’ of the south, Chola, Pandya and Chera, were forming alliances with lesser chiefs and supporting new court poetry through their gifts of luxury goods. Kingship, poetry and the foreign trade in luxuries grew together and fed one another.
Archaeological excavations at Arikamedu, near Pondichery in Tamil Nadu, further confirm this picture. Arikamedu was the site of a trading station of the Indo-Roman trade, which is to say, a warehouse for the storage of goods arriving from the Mediterranean and a collection-point for Indian goods to be exported. Among the finds were Roman wine-vessels, called amphoras, and other ceramics of a kind called Arretine, shipped from Italy, giving material evidence of the trade which brought Italian wine in Greek ships to the Pandya king. The amphoras date to the first century BCE. Accompanying the site report is an inventory of hoards of Roman coins from India and Sri Lanka, numbering eighty different finds, some of them large. Roman coinage is found at many find-spots along the coast of the peninsula, and further inland near sites of ancient gemstone mining. It seems this coinage circulated in Indian markets. Later Roman emperors debased the coins, that is, they adulterated them with cheaper metals. When the standard of Roman gold coinage was debased, Indian kings such as the Guptas began issuing gold coins from their own mints.7
This account could be greatly lengthened. Enough has been said, however, to make the point that the Arthashastra shows quite clearly the association of the economy of ancient India with kingship, but it does not tell us everything we may wish to know about this relationship, and to fill in some of the details we need to resort to other surviving texts, to archaeological excavations and even to poetry to shed light on what the Arthashastra leaves obscure.
Kings, royal families and kingship itself have been very successful in India, as judged by their long duration, and superior in wealth and power to the ancient republic. Kingship is the old regime which has been replaced by the modern republic. We need now to ask why kingship, so successful for such a long time, is fading away and how the transition came about.
The long view
How does the picture of the ancient economy relate to the present day? What changes have occurred from the ancient system of the relationship between kingship and the economy that we read of in the Arthashastra and in other sources? If kingship was so successful then, why is it dying now? It will help us track the changes if we separate them into political and economic ones for purposes of analysis (although, as the Arthashastra teaches, they are intimately connected in fact), and then bring them together to examine their interaction in the present. This will give us a picture of the long view that joins the time of the Arthashastra with our own time space by means of the transformations that have come between.
To take the political side first, the long reign of kingship intervenes between the ancient republics, discussed in Book Eleven of the Arthashastra, and the republic of India.
The republic was reinvented in modern times by the American Revolution (1776) and the French Revolution (1789). Their leaders invoked the history of the ancient Roman Republic and the democracy of Athens as models, and the framers of the Indian constitution, likewise, invoked the history of the sanghas or ganas of ancient India as they created the new republic of India. Continuity with ancient republics is implied in the official name of India’s government: Bharat Ganarajya. What the ancient republics and the modern republic of India have in common are the deliberative assemblies that take collective decisions. Even after the ancient republics disappeared there were deliberative assemblies with power to make laws at the local level in many different places, and so we can truly say there has been a long tradition of collective lawmaking in India.
But there are significant differences. The republic of India is vastly larger in population and in territory than any of the ancient republics. This largeness is achieved in ways we can specify. The ancient republics belonged to named peoples whose polities rested on a high degree of cultural sameness—Durkheim’s ‘mechanical solidarity’—and, because cultural sameness was so important for this political form, the republics showed little tendency to expand, conquer, rule and tax foreign populations and thus dilute this sameness, although some of them had slaves that might have been acquired by war. It was left to kingship to form larger political systems than the ancient republics could, bringing foreign tax-paying farmers under their rule by conquest. Thus kingdoms had a more heterogeneous population, and a more complex division of labour as well, greatly expanding the scale of political units and the internal complexity of the societies they ruled. The republic of India recreated the republic, but on the enlarged scale that the long tenure of kingship had accomplished. It did so by adding the new ideas of sovereignty of the people as a whole, the legal equality of the people, the representation of the sovereign people in parliament, and the ballot box as the means by which representatives are chosen. The republic of India is a republic, and it is also a democracy, for the ancient republics did not adhere to popular sovereignty (the rule of all the people), but instead to the sovereignty of the warrior–landowner class, and it did not have the device of representation to create a deliberative assembly of the people’s representatives. These devices are now the devices of modern republics everywhere. They make them very different from the ancient republics in India, Rome and Athens.
Turning to the economic side, the picture of continuities with and changes from the ancient system is complicated. Let us begin with the drain of Roman gold and silver coins to India. Warmington presents it as a simple matter of an adverse balance of trade on the Roman side (or a favourable balance of trade on the Indian side). But there must be another way of looking at the phenomenon, because India has had for long, and continues to have, the reputation of owning the largest personal holdings of gold of any country in the world. Such a reputation is hard to quantify, because the holdings in question are dispersed and private; consequently, estimates of the size of such holdings vary wildly and are impossible to verify. But the judgement of the experts that Indians as private purchasers take more of world gold production than any other nation cannot be wholly wrong, even if we cannot be certain of the exact quantities. Now of course many people across the world value gold and silver highly, which is what makes these metals very useful for international transactions. But the evidence is that Indians have a demand for gold that is greater than the international average, and that gold flows toward India as a consequence. How do we account for this added increment of value for gold in India? I suggest it has to do with the institution of women’s wealth (stridhana) that a woman takes with her into marriage, in lieu of farmland, which (among many castes, though not all) is divided among the sons to the exclusion of the daughters. This practice continued from ancient times till the revision of the inheritance law, post independence. Though a much smaller proportion of Indians today hold their wealth in the form of farmland, the socially constituted need for gold as woman’s wealth continues of its own momentum. The personal holdings of gold are mainly by women in the form of jewellery which constitute their wealth. Equally notable is the taste in India for the red coral of the Mediterranean, which continues to this day. Here, the explanation certainly lies in the role this precious material plays in the concept of the navaratnas and its significance for health and fortune.
When Europeans established direct trade with India by sailing around Africa, they found it necessary to bring silver and gold, acquired from New World mines and bought on exchanges in Amsterdam, because Indians continued to demand precious metals for their goods as they had in the period of the Roman–Indian luxury trade. Thus the India–Europe trade of early modern times was structured, broadly speaking, largely in the same manner as the India–Rome trade of ancient times had been, with a net inflow of gold and silver from Europe to India, in exchange for gems, silk, spices and other luxuries. An especially prominent part of that trade was Indian luxury textiles. The names of many Indian textiles entered the English language, words such as calico, muslin, chintz and bandana.
The effects of the long-distance trade of India in early modern times appears to have been advantageous to India. The economic effects of British rule, however, changed this pattern dramatically.
Dadabhai Naroroji, economic historian in the early days of the nationalist movement, developed the theory that British rule caused a drain of India’s wealth to Britain in speeches and writings that were hugely appealing to the nationalist leaders, and intensely annoying to the British. In a broader sense this is a stark reversal of the India–Europe trade and the India–Rome trade preceding it, which had a net drain of gold and silver to India.8 How and why did this reversal come about?
Whereas previous invaders stayed and made India their home, the British did not settle. Their administrators and military men retired to Britain, and drew pensions from the Government of India, which required a transfer of funds from India to Britain. That is, not only did Indians have to pay for their own rule by foreigners, they had also to send a tribute to Britain in the form of pension payments, as a structural requirement of this new form of imperial rule. The ‘drain theory’ of Indian economic history gave weight to the critique of colonial rule and the cause of independence.
A second great departure from the ancient pattern of trade was caused by steam-driven machinery, which brought about a sharp drop in the cost of manufacturing and transportation. When the British began to form their empire in India, before the advent of steam power, the terms of trade between India and Europe were substantially the same as they had been since the great days of the trade with Rome. That is, India was a supplier of luxury goods, including cloth manufactured by artisans using handlooms. But Britain, by pioneering machine-based factory production become the first industrial country of the world soon after it had become a territorial ruler in India, and due to reduced transport costs, it was able to import cotton from America and the Middle East, produce cotton cloth in Britain, and sell it in India at a price so low it was cheaper than the cloth made by handloom methods of artisan weavers in India from cotton grown and spun by Indians. This caused a considerable social disruption in India, but also, it should be said, in Britain itself, and indeed wherever mass production was introduced, machine-made goods benefited consumers but displaced artisan weavers except at the most skilled and luxurious end of the trade, an ever-shrinking market. The overall effect was a huge shift in the terms of the trade that had prevailed for nearly two thousand years. India now became a supplier of raw materials and a market for cheap cloth manufactured in Britain.
The new terms of trade, however, were not as stable and long-lived as the ones established by the luxury trade with Rome. Had Indians been in control of their government they could have taken protective measures to soften the blow of falling prices, much as the Arthashastra urges the king to do in order to protect merchants who perform a social service by bringing goods to market, though it could not have prevented the disappearance of most artisanal weaving. Resistance to British rule drew some of its most potent political symbols of the evils of foreign empire from the evident harm to the Indian economy. This took the form of the Swadeshi movement to boycott cheap foreign imports that were destroying artisanal manufacturing, and spinning and the wearing of khadi as a political act promoted by Mahatma Gandhi. But the new manufacturing technology was being established in India itself at the time of the nationalist struggle, and in the long run the low wages of India allowed it to grow and expand at the expense of British manufacturing—and also artisanal weaving in India. The wheel has come a full circle by now, since the British textile industry has decayed because of the growth of the textile industry in India due to a price advantage, without, however, re-establishing artisanal production. Artisanal manufacture of cloth survives only in small niche markets such as luxurious silk saris or block-print cotton goods for those who can afford their higher prices.
Many other economic changes came in the wake of this main one. Cheap transport in the form of railroads served to integrate the Indian subcontinent as a single market. Slavery and other forms of forced labour (debt servitude, bonded labour and indentured labour) were abolished and the problems of labour driven by landlessness were mitigated by new laws. Support of caste hierarchy under kingship gave way to steps to actively oppose it under the ideal of equality of citizens under the law. There was a massive shift of population from country to city, from farm to factory, the opposite of the pattern we see in the Arthashastra, which sought to direct population growth into farming. Industrial labour led to trade unions, bringing together labourers of different castes and regions. The volume and geographic scope of the economy grew, and continues to grow. Finally, the middle class and its purchasing power became the centre of the economy, rather than an aristocracy of landowners and the courts of kings. Ideas of luxury now attach to consumer durables such as cars and TV sets, made in great numbers in factories—mass luxury, we could say. Only two features of the old pattern remain fully in force: the demand for red coral, and for gold.
Putting the two pieces together, the political and the economic pieces, in the present, what is the relation between the two halves of the picture? And will the new republic be as long-lived as kingship was? It is hard to say, because the polity and the economy of India have been changing rapidly and consequently the relation between the two has not settled into a stable pattern.
Jawaharlal Nehru, the first prime minister of the republic of India, put in place a mixed economy with private and state ownership of industry, state economic planning, heavy regulation of private enterprise and import substitution, that is, protective barriers limiting imports and the promotion of India-made substitutes for foreign goods. The great turning-point in the relation of the political and economic parts came about with the market liberalization of 1991 under Manmohan Singh, who was the finance minister then. In the time of Nehru it was said, in support of state planning, that in a developing country the government, through its power to tax, is the only effective agency for the formation of the large pools of capital needed to create the basic industries that India lacked, much as kingship was a leading site of capital formation in ancient times. That may well be so. But with the passage of time the policy served to keep India behind the tide of technological change, and slowed economic growth. In the end, economic crisis of the existing system forced the liberalization of the market and ended the import-substitution policy. There was no going back. The only thing that remains to debate is whether Nehru’s policy had been the right one for its time. Events had shown that it was no longer viable. The state was virtually bankrupt, even while the economy had started growing smartly.
The future
For most of the problems we face in the near future we will not turn to the Arthashastra, expecting to find advice about what we should do today to make a better tomorrow, for the reason that what is good advice for a king of ancient India is not necessarily good advice for the government of a modern republic. To face the future, what we most need is intense study of the conditions of the present by experts of many kinds. But for some, and perhaps all, the problems we face we can benefit by looking at them in the long-term perspective as well. We read the Arthashastra not for advice, but to help us see our present circumstances in a larger field of vision.
Taking the long view, it is clear that kingship was successful for a very long time, and this simple fact implies that it was somehow suited to the social and economic conditions of its age. But the social and economic conditions of the present age are so very changed that kingship is no longer suited. There is no going back.
Likewise there is no going back to the republics of ancient times which, as we have seen, were based upon much simpler social systems dominated by a homogenous group of warrior–farmers. The capacity of such republics to create larger political units and govern more complex and heterogeneous populations had definite limits beyond which the republican form was not able to go. The greater capacity of kingship extinguished the ancient republic.
Our present circumstances are quite different from those of the long reign of kingship, in the scale and complexity of society and economy. The division of labour is so very complex and ramified; the number of different social groups and classes so greatly increased; the population is so much larger than it was even a few centuries ago; the preponderance of farming over every other form of livelihood has so greatly declined; the preponderance of the countryside over the city has tilted to such an extent in the city’s favour; and, with all this complexity and increase of scale, we are so very interdependent upon one another for our needs, that the political forms of the past cannot contain them.
Representative democracy seems suited to our age in ways that kingship is not. It provides means for all interests to have a voice and get a hearing, and government forms that can find a balance among competing interests and can hold the centre. It suits a large and socially complex society in which no one group can have sufficient knowledge to face difficult problems and have the wisdom to find the right balance among competing interests. Everyone recognizes that the package of popular sovereignty, representation of the people in parliament, and the ballot box has become a universal norm since the time of India’s independence, such that even governments that are authoritarian or are one-party states feel the need to claim to derive their authority from the will of the people and to hold elections of some kind. But the path of representative democracies has been bumpy, and there is no magic formula to make them work well.
Will the modern republic, based upon popular sovereignty, representation and the ballot, be as successful and long-lasting as kingship has been? Another way of putting this question is the way it was put to the Chinese leader Zhou Enlai: what has been the effect of the French Revolution? He is said to have replied that it is too soon to say. That seems to be right. Part of the reason it is too soon to say is that economies, populations and political forms have been changing so rapidly that a stable relationship between them has not yet formed. At this writing, for example, and looking to the future from the long perspective the Arthashastra enables us to form, it is clear that both the modern republic and its economy, and the relation between the two, continue to change, and to change at a pace that is much more rapid than ever seen in the ancient period. In India, the economy is charging ahead and government is struggling to keep pace. The lack of coordination between government and economy shows itself in many ways. Among these are a demand for infrastructure that outpaces the government’s ability to supply it; still-high levels of illiteracy and inadequate availability of education for the poorest; growing disparity of incomes—despite considerable job creation by the private sector, and a noticeable rise in wages.
One would like to think that in a modern, large and complex society and economy, the freedom of people to speak up, so notable in India and so lacking in authoritarian states, is essential to the identification, understanding and solution of complex problems, whether of degradation of the environment, misconduct by government officials, unintended bad consequences of newly enacted laws, crime or dangers to the public health and safety. A complex society with a complex economy requires an abundance of information for it to function well. When people fear to speak out problems are likely to fester and grow in silence One would like to think that a representative democracy is best suited to an age with the social and economic characteristics of ours. But some authoritarian and one-party polities are performing very well economically, if not in terms of environmental degradation, malfeasance of officials and other measures. We must see whether modern republics can prevail in the long run. To this end we need to frankly acknowledge shortcomings and strive to overcome them.
What remains constant over the long run is the need for government to hold the balance among overlapping and sometimes conflicting ends, performing functions the market does not: a treasury adequate to the tasks of the state; an army sufficient to defend the people; social order; prosperous people with effective means of peacefully settling disputes; assistance for those who are harmed by the economic process and the rapid social change it entails.
What the Arthashastra teaches us that is of use today is that the economy and the polity are intimately related, indeed that they are inseparable. The economy cannot exist independent of the state. The state is essential to the economy. It has the important task of making the economy work for the good of all by finding a balance among different interests. It can carry this out well or poorly, and the people must see that it is carried out well.