The Social Contract in Kautilya's Arthasastra and the Mauryan Empire of Ancient India

By Smith, Lawson R. | Indian Journal of Economics and Business, December 2005 | Go to article overview
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The Social Contract in Kautilya's Arthasastra and the Mauryan Empire of Ancient India

Smith, Lawson R., Indian Journal of Economics and Business


The taxation base articulated in Kautilya's Arthasastra has attracted renewed interest by economists. Their assessments have generally been positive. That it coheres with modern taxation principles and is indicative of the benign social contract Kautilya devised for his idealized state of territory-cum-people or janapada. The developmental, hegemonic Kautilya-Mauryan state was in fact a domain as well as a tax state, endeavouring to monetize, marketize and expand the economy. However, its over" extensive public sector, close alignment with the higher classes, excess socio-economic regulation and revenue needs, resulted in a combined property, taxation and transfer regime that likely retarded entrepreneurship, private capital accumulation and long-run economic growth prospects. Thus the social contract subsisting in the Kautilya-Mauryan state was not as benign as frequently portrayed, despite laws, principles and doctrines in Dharmasastra and Arthasastra delimiting the constitutional metes and bounds of monarch and state.


This paper comprises a partial critique of the social contract--the revenue base and main categories of expenditure in particular--(i) as articulated by the Indian Brahmin Kautilya in his Arthasastrs for an idealized king and state, and (ii) which can be posited as subsisting between the expansionary Kautilya-Mauryan state (K-M state) and its polyglot peoples from about 324 BC on the dynastic ascendancy of Chandragupta Maurya to the Magadhan empire of northern India, with Kautilya's assistance. This composite term is employed hereafter since Kautilya, his Arthasastra and the Mauryan dynasty of the Magadhan empire accordingly present the most probable historic connexion (Rapson 1962; Jha and Jha 1998; cf Goyal 1985). Kautilya's Arthasastra comprises an ad hoc fact-norm complex. The socioeconomic base that it devises being largely Mauryan in origin while its normative prescriptions utilize and rework existing Dharmasastra and Arthasastra material (1). By way of parallel, the set of laws that Plato (c.427-347 B.C.) outlined in The Laws for his proposed new utopian colony of Magnesia, 'are in general based on those of contemporary Athenian Law ... Plato has to adapt contemporary law to suit the special conditions of the new utopia' (Saunders 1986, p.31).

This approach is in contradistinction to the broad thrust of recent economic appraisals of Kautilya's Arthasastra (Mehta 1998; Sen 1990; Waldauer et al. 1996). In addition to arguably over abstracting the K-M state from its historic context, they: (i) largely decouple the income and expenditure aspects of Kautilya's public finance regime to focus principally on the revenue base; (ii) consider that the Kautilyan revenue base largely conforms with modern taxation canons or principles; and (iii) most importantly, assert that Kautilya's denotation of the relationship between king and society coheres with, 'the ideas of the modern social contract theory of the state' (Sen 1990, p. 135) in which taxes are nothing but a quid pro quo for 'services rendered to the people.' In this paper, these three related matters are critically examined as part of a broad-based endeavour to better ascertain the nature and character of the K-M state.

Social Contract of The Kautilya-Mauryan State

In articulating his celebrated four maxims of taxation, equality, certainty, convenience of payment and economy of collection, Adam Smith (1981 Vol II, pp. 825-828) hazarded the view that their justice and utility had, 'recommended them more or less to the attention of all nations.' In actuality, in the pre-modern era "taxation proper" was the least objectionable means by which private assets were obtained for the purposes of the state. The contemporary systems of public finance relied upon by the Greek city-states, and in particular Athens, were unsound and precariously based (Andreades 1933, Chapter 4; Michell 1957, Chapter 10).

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