Paper short abstract:

Alternative macro-economic systems of ancient times such as erstwhile civilizations in modern day India, China and South-East Asia were based on a common set of behavioral principles broadly defined as Dharma. This paper will provide a qualitative framework that incorporates Dharma, beyond the contours of the state and the market, highlighting its role in capability expansion and sustainability.

Paper long abstract:

Macro-economic answers to the question of sustainable economic development have been largely focused on tweaking current models to suit top-down prescriptive solutions. While these are noteworthy, the criticisms of the macro-economic frameworks, which include excessive indulgence on profit maximisation, inherent pricing biases (Bernstein, 2019) and market mismatches between supply and demand, persist without any fundamental change.

The relevance of alternative macro-economic systems of ancient times and their influences on life have been a much admired but seldom studied area. Many researchers have attempted to understand indigenous ways of life through a historical lens and have constructed theories around them. While the historical lens offers an informative perspective, the key to making it useful is to draw linkages to contemporary challenges and learn appropriate lessons from it. The application of such lessons centres around establishing the necessary connections between alternative economic systems, their socio-economic worldview, and the relevance of such systems to modern day challenges such as sustainability and human development.

Alternative economic system is a broad term, but here we will take it in its narrow meaning in the context of erstwhile civilizations in modern day India, China and South-East Asia among others, which were based on a common set of principles of behaviour broadly defined as Dharma. They also include the economic systems in indigenous kingdoms such as Maurya, Chola, Pallava, Pandya, Khmer, Vijayanagar, Srivijaya empires , which were thriving in the common era prior to being colonized in the 17th century by western nations. All these systems are connected by the umbrella of Dharmanomics (Balasubramanian, 2022) which has been the pillar of sustainable development for thousands of years. Dharmanomics is defined as the economic philosophy that uses the foundation of Dharma to supplement both the state and market in economic activities. The economic system elaborated in texts such as Kautilya’s Arthashastra, Niti Sastra and other scriptures, which was prevalent in these empires, provides the basis for the idea of Dharmanomics. Western capitalism has an incentive structure based upon the three Ps: (1) prices determined by market forces, (2) a profit-and-loss system of accounting and (3) private property rights. In all of these three buckets, there is no inherent incentive to have a sustainable world that encompasses and protects nature. Therein lies the essence of Dharmanomics and its fundamental difference from western capitalism.

The idea of Dharmanomics is underpinned by the concept of a Dharma-based life at its core. A shloka from Manusmriti (Ekvastra, n.d.) states that dharma is defined by patience, forgiveness, control over mind, non-stealing, cleanliness of body, mind, and soul, restrain on senses, proper use of intellect, proper knowledge, honesty, and control over anger. Another shloka from Mahabharata (Wisdomlib, n.d.) says “Non-violence, Truth, Absence of anger, Charity, these four qualities constitute eternal Dharma”. In simpler terms, as the phrase ‘Dharayate iti Dharma’ connotes, ‘Dharma sustains, integrates and holds everything together’.

Dharma forms the basis of value systems in the four major oriental traditions - Hinduism, Buddhism, Jainism and Sikhism. Sri Aurobindo says that Dharma in the Indian conception is not merely the good, the right, the morally correct, the just and the ethical; it also concerns the whole government of all the relations of humans with other beings, with Nature, with God, considered from the point of view of a divine principle working itself out in forms and laws of action, forms of the inner and outer life, orderings of relations of every kind in the world.

Dharmic economies are defined as economies that keep Dharma as foundational to their economic philosophy. These economies use Dharma in addition to the state and the market to formulate their economic prescriptions for their societies. Most of this integration of Dharma is done in an organic way rather than a structured approach. The components of Dharma, mentioned in the quotations above, are integral to the ‘way of life’ in these economies. They are not only in alignment with the ‘leave no one behind’ principle of sustainable development goals but are also capability enhancing, as Dharmic principles are fundamentally based on mutual respect and harmony.

This paper will propose a framework for analysing economies on the basis of Dharma by examining the key components of Dharma and dwelling on their influence on the functioning of the economy. This would include providing an overall structural framework and understanding of the Dharmic economies with examples of their practical functioning in today’s Bharat (India). Central to this framework would be the notion of Dharma being a complement to the role of the state and markets in economic activity. It will also present a mapping of the components of Dharma onto different capability domains, through a study of their relationship with the different dimensions of wellbeing freedom. Questions that we intend to address include: what makes the idea of Dharma distinct in a macro-economic context? How does it map onto different capability domains? Intrinsically, how does the idea of Dharma integrate different capability domains?

Further, we will be addressing how this framework, and the Dharmic way of life, intrinsically help to address many current macro-economic challenges such as sustainable development and climate change. For example, how do the components of the Dharmic way of life help solve the issue of sustainability from a behavioural lens? What are some practical examples of living communities that are illustrations of such a solution? Finally, we will show how Dharma-based perspectives naturally lead economies on a path of sustainable human development as they encompass living practices that are in harmony with all beings and nature. Thus the main goal of the research paper is to provide a qualitative framework that incorporates the idea of Dharma, beyond the contours of the state and the market, and highlights its ability to intrinsically address issues pertaining to capability expansion and sustainability.

References

Balasubramanian, S. (2022). Kautilyanomics for modern times. New Delhi: Bloomsbury Publishers.

Bernstein, J. (2019, October 11). The climate crisis and the failure of economics. Retrieved from Vox: https://www.vox.com/2019/10/11/20906786/climate-change-economics-price-signal-future-discounting

Ekvastra. (n.d.). Retrieved from Ekvastra: https://wiki.ekvastra.in/doku.php/subhashita/धृति_क्षमा

Wisdomlib. (n.d.). Retrieved from https://www.wisdomlib.org/hinduism/book/mahabharata-sanskrit/d/doc1036202.html