The idea that an ancient Indian concept might offer insight into the nature of markets is, on the face of it, bizarre. The word ‘dharma’ is employed sixty-four times in the first text on the Indian subcontinent, the Rig Veda, created around 1500 BCE, and I believe it is capable of deepening our understanding of the market system, especially its relationship to morality. While focusing on this relationship I shall also provide the context—both historical and contemporary—to the place of markets on the Indian subcontinent.
That India is rising in the twenty-first century on the back of free markets is not surprising. It has a long tradition of encouraging and promoting markets. Since ancient times the merchant was a respected member of society, one of the ‘twice born’, a high caste in the social hierarchy. Merchants and bazaars, however, emerged even earlier as centers of exchange in the towns of the Indus Valley (3300–1500 BCE) or even in the Neolithic age, soon after Indians first engaged in agriculture and there was a surplus.
India historically had a weak state but a strong society, unlike China, which had a strong state and a weak society. India’s history has been that of warring kingdoms and China’s is that of empires. Early on dharma placed limits on the power of rulers. Unlike the Chinese emperor who was the source and the interpreter of the law, dharma in India existed prior to the Raja or king, who was expected to ‘uphold dharma for the benefit of the people’; the Brahmin, not the Raja was the interpreter of dharma; thus a ‘liberal’ division of powers was created early in Indian history which placed a check on state power, and weakened the power of the state. Oppression did not generally come from the state but from society (particularly from the Brahmins). And the answer to that oppression was a guru, like the Buddha, who came along periodically to deliver the people from the Brahmins.
Because the state was weak, regulation in India was generally light. An exception to this was the heavily regulated state in the political economy text, the Arthashastra. The king’s dharma, we are told in the Mahabharata, was to nurture the productive forces in society, including the market: ‘The king, O Bharata, should always act in such a way towards the Vaishyas [merchants, commoners] so that their productive powers may be enhanced.
Vaishyas increase the strength of a kingdom, improve its agriculture, and develop its trade. A wise king levies mild taxes upon them’ (Mahabharata,XII.87). Practical advice indeed—for otherwise, the epic goes on to suggest, vaishyas will shift to neighbouring kingdoms and the king will lose his tax base.
There was purpose to economic activity and the ancients were acutely aware of it when they posited artha, ‘material well-being’, as one of the goals of life. They believed that the pursuit of money was proper because it created the material conditions for the pursuit of other goals. That good life also had other goals, in particular, dharma, ‘moral well-being’, which was higher than artha. This meant that there was a right and a wrong way to pursue wealth. Moreover, the pursuit of artha was meant to make the world a better place. In today’s language we might interpret this to mean that business has a purpose—to lead a society from poverty to prosperity.
The merchant was generally well thought of. He is often the hero in the animal and human stories of the Panchatantra, Hitopadesha and the Kathasaritsagara, which travelled to the West via the Arabs, some of them becoming part of Aesop’s Fables. In them the merchant is often a figure of sympathy and other times of fun.
The Mahabharata speaks of Tuladhara, a respected trader of spices and juices in Varanasi, who surprisingly instructs an arrogant, high Brahmin about dharma and on how to live. Speaking modestly, he compares his life as a merchant to a ‘twig borne along in a stream that randomly joins up with some other pieces of wood, and from here and there, with straw, wood and refuse, from time to time’.
The analogy of the twig brings to mind the picture of a real-life trader in a competitive market who has multiple suppliers and buyers, and whose gains and losses, prices are not under his control but depend on the impersonal forces of the market.There is an irony here--a petty trader is teaching a high caste Brahmin how to live.
The worldly merchant, who presumably ought to covet wealth, is being held up as a model of behavior for a forest dwelling ascetic. Tuladhara is happy to go with the flow like a twig, suggesting in this case that a person who is distrustful of worldly achievement is less likely to step on the toes of others and be less violent.
Ancient India seems to present a world quite different from that of ‘Oriental despotism’, a term that the ancient Greeks used contemptuously to refer to the states of Asia and the Middle East, and particularly their enemy, the Persian Empire, where ‘the king owned all and everyone was his slave’. By characterizing Asians in this manner, the Greeks were flattering themselves--they were contrasting their own status as free citizens versus slavish Asian states.
Marx took up the idea of Oriental despotism, calling it the ‘Asiatic mode of production’ to explain why ‘Asia fell asleep in history’. The Asiatic mode referred in particular to the agrarian empires of ancient Egypt and China, where an absolute ruler often farmed out the right to collect tribute from peasants to a hierarchy of petty officials, and where extorting tribute from village communities became the mode of enrichment for the ruling nobility.
It was Megasthenes (ca. 350 – 290 BCE), the Greek ambassador to the Maurya court in India, who created the confusion, suggesting that Indian kings owned the entire land of the country. But Megasthenes was not a reliable reporter, and some of what he wrote was fantastic nonsense, including an account of gold digging ants in India that were the size of foxes.
When the British came to India they continued the historical mistake, believing that India too was under ‘Oriental despotism’, and this guided their thinking about land tenure with some terrible consequences. The recent work of historians suggests that property rights to land were generally more secure in India and the major Eurasian agrarian societies--China, Japan, Ottoman Empire, and Europe—than was once believed.