Thoughts on economics and liberty

Tag: Chankya

Sabhlokniti = Chanakyaniti + a little more liberty => FTI policy (?)

I find myself agreeing with many things Chanakya wrote (if these are taken broadly, not precisely: e.g. when he says that Ministers must be paid 800 times more than the lowest government functionary, I'm considering the broad recommendation to pay Ministers well, not the precise figure of 800).

Policies on which I agree with Chanakya

This is purely illustrative.

1. There must be a state.  [This rules out any form of anarchy.]

2. The king /ruler must be strong and powerful. [This is absolutely crucial, in order to provide stability, security, and peace.]

3. Maintaining law and order is a key function of the government. Chankya said, "Government by Rule of Law, which alone can guarantee security of life and welfare of the people, is, in turn, dependent on the self-discipline of the king".

4. The government must be minimal (taxes must not be too high or too little).

5. Taxes must include income tax (he opposed a lump sum poll tax. I agree).

When there was no order in society and only the law of the jungle prevailed, people [were unhappy and being desirous of order] made Manu, the son of Vivasvat, their king; and they assigned to the king one-sixth part of the grains grown by them, one-tenth of other com-modities and money. The king then used these to safeguard the welfare of his subjects. Those who do not pay fines and taxes take on them¬selves the sins of kings, while kings who do not look after the wel¬fare of the people take on themselves the sins of their subjects

6. Income tax should have some level of proportionality built into it:

Kautilya suggested a graduated tax (although only during an emergency but on top of the existing income tax, which was one-sixteenth of the produce) on land holdings according to the yield from them. He suggested that the king “should demand a third or a fourth part of the grains from a region, whether big or small in size, that is not dependent on rains and yields abundant crops; from a middling or inferior one, according to yield.

7. The government must remove obstacles to economic growth ("remove all obstructions to economic activity"). This will result in wealth. ("In the absence of fruitful economic activity, both current prosperity and future growth are in danger of destruction. A king can achieve the desired objectives and abundance of riches by undertaking productive economic activity").

8. To ensure high quality advice from men of integrity, Ministers must be paid very well, but then held to account. Punishment for corruption must be sharp and swift. Those who bribed under duress – and complain to an investigating offer – should be reimbursed their costs.

9. The treasury must not just be balanced, it must be in significant surplus.

10. There should be detailed accounts of all government expenditure (accountability).

11. The government must invest significantly in infrastructure [e.g. state should have good roads and waterways; roads are essential for national security as well as for promoting commercial activities; and ports, etc.]. Not more than 25 per cent of all government expenditure must go on salaries.

12. People must work hard and strive to become rich ["Wealth will slip away from that childish man who constantly consults the stars"].

13. Trade must be promoted, and foreign traders given shelter.

14. Prohibition doesn't solve problems. Regulation does (e.g. alcohol, prostitution, gambling).

15. There shall be a social minimum (in my view, as part of social insurance). Chanakya said: "King shall maintain, at state expense, children, the old, the destitute, those suffering from adversity, childless women and the children of the destitute women".

Policies on which I differ with Chanakya

1. Chankya allowed for some government production (e.g. monopoly over alcohol). I disagree with ANY state production. Anyway, even where a government does decide to produce something, it must ensure profitability. That would have definitely been Chanakya's approach – thus being totally inimical to Nehru's loss making public enterprises. Chankya would have OPPOSED SOCIALISM TOOTH AND NAIL.

2. Chankya does get involved in setting wages and some prices. This is unnecessary and should be left free to markets.

3. Chanakya believes that happiness of citizens should be a goal for the king. In my view, liberty of citizens should be the goal. Free people can work out their own happiness.

That's it for now. More later. I'll keep adding to this blog post.

Much of this material will find its way into the Hindu Capitalism book project.

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Be rich, get up and succeed! Chanakya’s exhortation to India.

Chanakya exhorts India to be wealthy and work hard to achieve goals.

These are four sutras (equivalent to 3.2 (Garde) ,4.3 (Garde), 4.5 (Garde), 7.11 (Garde))
1)      Protecting/improving your project leads to accomplishment of goals.
2)      To be strong you must exert yourself to achieve the goal
3)      The lazy can’t even protect what they have achieved
4)      Desiring artha (wealth/ resources) is not a vice!

There are many, many more sutras and verses by Chanakya that motivate people to SUCCEED in this real world.
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Chanakya’s well regulated system of prostitution in ancient India

I'm amazed at the advanced thinking of Kautilya. In the West, the systematic regulation of prostitution (which was brushed under the carpet in the past) has occurred only very recently (for instance, the state of Victoria in Australia legislated the Sex Work Act only in 1994). 

India, on the other hand, had a well-regulated prostitution system 2300 years ago

My father keeps suggesting that Hinduism should go back to the Vedas. Indeed, I believe there is much that modern India can learn from its past, particularly from its greatest (Mauryan) empire.

I'm not suggesting that we should follow these texts verbatim, but there is undoubtedly much value in their spirit of innovation and freedom.

Unfortunately, Victorian prudishness coupled with socialist policy has led to a rapid spread of AIDS in India. More than anything else today we need realism, not utopia.

The answer is classical liberalism which includes appropriate regulation.

I am providing below a few extracts from Rangarajan's famous translation of Arthashastra on the subject of prostitution. Time permitting, I'll comment on the HUGE difference between Chankya's policies and what socialist India has followed.

I'd like to know what Baba Ramdev or Anna Hazare, the great paragons of Indian "culture", have to say on Chankya's MODERN approach to civilised society.

Extracts from Arthashastra


Providing sexual entertainment to the public using prostitutes (ganika) was an activity not only strictly controlled by the State but also one which was, for the most part, carried on in state-owned establishments [2.27.1]. Women who lived by their beauty (rupajivas) could, however, entertain men as independent practitioners [2.27.27]; these could have been allowed to practice in smaller places which could not support a full-fledged state establishment. A third type of women of pleasure, mentioned in a few places, is pumsachali, perhaps meaning concubines [3.13.37].
As befits a treatise on the economy of a state, the emphasis in the Arthashastra is on collection of revenue. The state enabled the setting up of establishments with lump sum grants of 1000 panas to the head courtesan and 500 panas to her deputy, presumably to enable them to buy jewellery, furnishings, musical instruments and other tools of their trade [2.27.1]. The madam of the establishment had to render full accounts and it was the duty of the Chief Controller of Entertainers to ensure that the net income was not reduced by her extravagance [2.27.10]. Independent prostitutes, who were neither given a grant nor required to produce detailed accounts, had to pay a tax of one-sixth of their income [2.27.27]. In times of financial distress, both groups had to produce extra revenue with the independents having to pay half their earnings as tax [5.2.21,23,28].
The establishments were located in the southern part of the fortified city [2.4.11]. Whenever the army marched on an expedition, courtesans also went with them; they were allotted places in the camp, alongside the roads [10.1.10]. During battle, the women were stationed in the rear with cooked food and drinks, encouraging the men to fight [10.3.47].
It would seem that courtesans not only provided sexual pleasure but also entertained clients with singing and dancing. In specifying their duties, the Arthashastra makes a clear distinction between two types of misdemeanours—showing a dislike towards a client visiting her for normal entertainment and refusing to sleep with him, if he stayed overnight [2.27.20,21]. The description of the training given to a couresan, at state expense, indicates how wide her accomplishments had to be—singing, playing on musical instruments, conversing, reciting, dancing, acting, writing, painting, mind-reading, preparing perfumes and garlands, shampooing and, of course, the art of lovemaking [2.27.28]. A courtesan’s son, who had to work as the king’s minstrel from the age of eight, was also trained as a producer of plays and dances [2.27.29].
It would appear from the above that some families specialized in the entertainment business. However, the Arthashastra specifically states that any beautiful, young and talented girl could be appointed as the head of an establishment, irrespective of whether she came from a family of courtesans or not [2.27.1].
Once appointed, the madam became a very important person. She could aspire to become the personal attendant of the King or Queen [1.20.20, 2.27.4]. Even otherwise, a very high price – 24,000 panas—had to be paid for obtaining her release from her post [2.27.6]. We must note that the amount was the second highest annual salary paid only to the five top officials (like the Chief of the King’s Bodyguards, the Chancellor and the Treasurer). Only such people could afford to buy a madam off as an exclusive concubine.
If a courtesan was promoted to attend on the King, her annual salary was fixed as 1000, 2000 or 3000 panas, depending on her beauty and qualifications [2.27.4]. 1000 panas was the same salary paid to the King’s personal advisers and attendants such as the charioteer, physician, astrologer, court poet, etc.
An interesting point is that the courtesan’s establishment could not be inherited by her son. On the death, retirement or release of the head of an establishment, her daughter (or sister) could take her place or she could promote her deputy and appoint a new deputy. If neither the daughter nor the deputy succeeded her, the establishment reverted to the state [2.27.2,3].
The state not only imposed obligations on prostitutes but also protected them. Having been given a grant by the state and having been allowed to spend a part of her earnings on personal adornment, a prostitute could not sell, mortgage or entrust her jewellery and ornaments to anyone except the madam [2.27.11]. Prostitutes were obliged to attend on any client when ordered to do so, be pleasant to them and not subject them to verbal or physical injury [2.27.12]. In return, stiff punishments were prescribed for anyone cheating or robbing a prostitute, abducting her, confining her against her will or disfiguring her [2.27.14]. Special punishments were also prescribed for depriving a prostitute’s daughter of her virginity whether she herself consented or not; the right of the mother was recognized by making the man pay not only a fine but also a compensation to the mother of sixteen times the fee for a visit [4.12.26].
An imbalance in punishments has to be noted. The penalty for killing the madam of an establishment was three times the release price and that for killing a prostitute in her establishment or her mother or daughter was only the Highest Standard Penalty [2.27.17]. On the other hand, if a prostitute killed a client, she was burnt or drowned alive [2.27.22].
The expression bandhakiposhaka (keeper of prostitutes) occurs thrice in the text, associated always with ‘young and beautiful women’. The keepers were obliged to use the women to collect money in times of emergency [5.2.28], sow dissension among the chiefs of an oligarchy [11.1.34] and subvert the enemy’s army chiefs [12.2.11].
Professions to be supervised:
(i) The regulations regarding courtesans and prostitutes also apply to actors, dancers, singers, musicians, story-tellers, bards, rope dancers [acrobats?], jugglers, wandering minstrels, people who deal in women and women who follow a secret profession.3 [2.27.25]
The wives of actors and similar entertainers shall be taught languages and the science of signs and signals. They shall be employed, using the profession of their relatives [as a cover], to detect, delude or murder the wicked. [2.27.30]
Training of prostitutes and courtesans:
(ii) The state shall bear the expenditure on training courtesans, prostitutes and actresses in the following accomplishments: singing, playing musical instruments (including the vina, the flute and the mridangam), conversing, reciting, dancing, acting, writing, painting, mind-reading, preparing perfumes and garlands, shampooing and making love.
Their sons shall also be trained [at state expense] to be producers of plays and dances. [2.27.2 8,29]
Management of brothels:
(iii) A beautiful, young and talented woman, whether a member of a courtesan’s family or not, shall be appointed as the ‘madam’ of a brothel; she shall be given, on appointment, a grant of 1000 panas [for setting up the establishment].
A deputy shall be appointed, with a grant of 500 panas.
If the madam of a brothel dies or goes away, her daughter or sister shall take over the establishment. Or, the madam can [before her departure] appoint a deputy [promoting her own deputy to be the head].
If no such arrangements are possible, the establishment shall revert to the King [and the Chief Controller shall place it under the charge of someone else]. [2.27.1-3]
Court attendants:
(iv) Courtesans shall be appointed to attend on the King in one of three grades, according to their beauty and the splendour of their make-up and ornaments. The lowest grade, on a salary of 1000 panas per month, shall hold the umbrella over the King, the middle grade, on a salary of 2000 panas per month, shall carry his water jug and the highest, on a salary of 3000 panas per month, shall be his fan bearer. In order to add distinction, courtesans of the lower grade shall attend on the King when he is carried in his palanquin, the middle grade when he is seated on his throne and the highest shall accompany him in his chariot.
Courtesans who are no longer beautiful shall be put in charge of supervising court attendants.
Sons of courtesans shall work as the King’s minstrels from the age of eight. [2.27.4,5,7]
[Reference has been made in III.iv to preventing dangers to the King from Queens by ensuring that only trusted courtesans attended on them.]
Courtesans shall cleanse themselves with baths and change into fresh garments before attending on the Queen. [1.20.20]
Release and retirement:
(v) The payment for obtaining the release of a courtesan [the head of an establishment] shall be 24,000 panas and for her son, 12,000 panas.
When they can no longer work prostitutes under a madam in an establishment shall be given work in the pantry or kitchen. Any one who does not work but is kept by someone shall pay 1 1/4 panas [per month?] as compensation. [2.27.6,8,9]
Obligations of a prostitute:
(vi) A prostitute shall not hand over her jewellery and ornaments to anyone except the madam and shall not sell or mortgage them.
(vii) A prostitute shall not show dislike [and refuse service] to a client after receiving payment from him.
She shall not abuse a client, disfigure him or cause him physical injury. She shall not refuse to sleep with a client staying overnight, unless the client has physical defects or is ill.
(viii) She shall not disobey the King’s command to attend on a particular person.  [from 2.27.11,12,19-22]
Protection of prostitutes:
(ix) The proper procedure shall be used to take a virgin daughter of a prostitute, whether she is willing or not; coercive methods shall not be used.
(x) No one shall abduct a prostitute, keep her confined against her will or spoil her beauty by wounding her.
(xi) A client shall not rob a prostitute of her jewellery, ornaments or belongings nor cheat her of the payment due to her. [2.2 7.13,14,23]
(xii) In establishments:
Every prostitute shall report the persons entertained, the payments received and the net income to the Chief Controller.
The Chief Controller shall keep an account of the payments and gifts received by each prostitute, her total income, expenditure and net income. He shall ensure that prostitutes do not incur excessive expenditure. [2.27.24,10]
(xiii) Independent prostitutes:
Women who live by their beauty (rupajiva) [not in state-controlled establishments] shall pay a tax of one-sixth of their earnings. [2.27.27]
[The special taxes levied in times of financial distress on prostitutes and brothel keepers are described in [5.2.21, 28] in V.iii.]
Foreign entertainers:
(xiv) Foreign entertainers shall pay a licence fee of 5 panas per show [2.27.26]
And so on…
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Would Anna Hazare dare beat Chanakya with an army belt for promoting alcohol?

On many matters, the approach of Anna Hazare is at loggerheads with Chankya's (Kautilya).

Chankya is India's MOST RESPECTED ancient thinker and philosopher who not only wrote India's most famous book, but also built the world's largest kingdom of the ancient world (the Mauryan empire was FAR GREATER than the Roman empire). Hazare has not written a single book (to the best of my knowledge). 

Chankya was not a man preached non-violence but he would NEVER have beaten anyone with an army belt. Chankya was too intelligent for such low level thuggery. And he would have ensured that  anyone with Anna Hazare's violent tendencies would have been brought to book.

Here's a nice PDF summary of Kautliya's society. Very short. Do read it.

I'm going to provide a few extract from Rangarajan's famous translation of Arthashastra. First I'll discuss alcohol. Then prostitution.

Finally, when time permits, I'll discuss the HUGE difference between Chanakya and Anna Hazare. I would challenge Anna Hazare to try to beat Chankya with an army belt and see the consequences.

Extracts from Arthashastra


The manufacture of alcoholic liquor was predominantly a state monopoly. Specific exemptions were, however provided for: physicians making different kinds of arishtas, i.e. alcohol-based medicines, types of liquor like fermented fruit juices not made by the state, home-made alcohol-based medicines, ‘white’ liquor for own consumption and a special exemption, during fairs and festivals, to make liquor for a maximum of four days.
Liquor was manufactured by the state in a number of places near the points of consumption. It is clearly stated that liquor shall be made in the city, the countryside and the camps, in one place or as many places as required [2.25.1].

The following kinds of alcoholic drinks were made—medaka from rice, prasanna from barley flour, asava from sugarcane juice, maireya from jaggery, madhu from grape juice and arishtas for medicinal purposes [2.25.16,21]. Many varieties of liquor were made. The basic types were: sara and kinva. From kinva, another liquor made from fermented bean pulp, two kinds of sura could be made. These were then flavoured with different spices or fruit juices. A type of liquor was made without using kinva by fermenting wood apple or bark, mixed with jaggery or honey. Grape wine was also consumed. The complete list of all types, along with recipes for making, clarifying and flavouring them is given in Appendix 10.

The manufacture and sale of alcoholic drinks was a state monopoly, private manufacturing being very limited and strictly controlled [2.25.36]. Alcoholic drinks were widely sold in many places in the city, the countryside and the camps [2.25.1]. These were drunk mainly in drinking halls built for this purpose. The Arthashastra prescribes:
‘These shall have many rooms, with beds and seats in separate places. The drinking rooms shall be made pleasant in all seasons by providing them with perfumes, flowers and water’ [2.25.11].
Only persons of good character could buy and take away small quantities of liquor; others had to drink it on the premises. Moving about while drunk was prohibited [2.25.5). The liquor seller employed beautiful female servants, who were used to find out information about customers who might have been imposters [2.25.15].
The duties and responsibilies of the Chief Controller of Alcoholic Beverages may be seen in Details of the types of liquor made are given in Appendix 10.
The prevalence for drinking gave rise to opportunities for poisoning with narcotics or stupefiants during a fight between the chiefs of oligarchies instigated by the king [11.1.24] or for disabling the enemy’s troops during a siege [12.4.4).
State Manufacture:
(i) The Chief Controller shall make arrangements for the manufacture of alcoholic beverages in the city, the countryside and the camps, with the help of experts in brewing and fermenting. 12.25.11
Women and children shall be employed in searching for special ingredients (such as herbs and spices) used in the industry and in preparing them [by roasting, grinding, etc.]. [2.25.38] 
Private Manufacture:
(ii) Physicians can make arishtas [medicines based on alcohol] for different illnesses. [2.25.21]
Types of liquor, including fermented fruit juices, not made in the state units, can be made by [private] manufacturers, on condition that they pay 5% of the quantity as royalty. [2.25.39]
Householders shall be permitted to make white liquor for special occasions, arishtas for medicinal purposes and other liquor [for similar needs].
Permission to make and sell liquor shall be given on special occasions such as festivals, fairs and pilgrimages, for a period of four days [only]. Those who make liquor without permission shall pay a daily fine, till the end of the festive period. [2.25.35-37]
(iii)  The Chief Controller shall organize, through appropriate persons, the sale of liquor (in the city, the countryside and the camps) in as many places as are necessary. [2.25.1]
(iv) Drinking places: The Chief Controller shall be responsible for the construction of drinking places. These shall have many rooms, with beds and seats in separate places. The drinking rooms shall be made pleasant in all seasons by providing them with perfumes, flowers and water. [2.25.11]
(v) Liquor sellers: Vintners shall sell liquor only for cash at the price fixed’ and shall not sell for credit.
Spoilt liquor may be sold at a different price [i.e. less than the fixed price,] but only at a different place [and not at the drinking house itself]. Alternatively, spoilt liquor may be given to slaves and labourers, or used to feed draught animals and pigs. [2.25.7-10]
(vi) At the end of each day the Chief Controller shall ascertain the quantity sold, the transaction tax collected, the out-go on manasrava (sticking allowance), the cash received and the countervailing tax collected; he shall strike the balance accordingly [i.e. the net profit for remitting to the Treasury]. [2.25.40]
[Since the trade measure for liquids was 6.25% smaller than the revenue measure (in which liquor manufactured or bought in from private manufacturers was measured), for every litre of liquor sold 62.5 millilitres of liquor should have been in stock. On the other hand, the customer was entitled to 1/50th or 2% for all liquids sold by measure as sticking allowance; hence, the surplus stock would actually been only 42.5 millilitres.
Thus, the stock verification of each kind of liquor was to be calculated according to this formula:
Closing stock = Opening stock – quantity sold + transaction tax -sticking allowance.
The money to be accounted for by the vintner was the sale price multiplied by the quantity sold at the trade measure for each kind of liquor.
The net profit was:
Net profit = Sale realisation – cost of production of liquor manufactured by the Crown – 95 % of the sale realisation on private liquor paid to private manufacturers – wages and other expenses.
Since the retail outlets had to maintain daily accounts, the Chief Controller was obliged to submit the accounts for a given month before the end of the following month; if he failed to do so, he was fined 200 panas for each month’s delay [2.7.26,27] in V.iii.]
Control over movements and stock:
(vii) Liquor shall only be drunk in the drinking house, and no one shall move about while drunk.
Liquor shall not be stored [in large quantities] nor taken out of a village. The dangers in allowing large stocks or unrestricted movement are that workers may spoil the work allotted to them, the Arya may behave immodestly and assassins may be encouraged to behave rashly.
However, persons known to be of good character may be allowed to take away small quantities in certified containers of 1/2 kuduba, 1 kuduba, 1/2 prastha and 1 prastha. [2 .2 5.3-5].
Law and order:
(viii) Some people may try to buy liquor by misappropriating articles entrusted to them [for manufacture or repair] or by selling a pledged or stolen article. If anyone is found in a drinking place with an article or money that is not his, he shall be arrested elsewhere [i.e. not in the drinking house itself].
A watch shall be kept over those who spend lavishly and those who spend without having a known source of income.
Secret agents shall be posted in drinking houses to note whether the spending by customers is normal or abnormal and they shall gather information about visitors [to the village or city].
Secret agents shall also make a note of the ornaments, clothes or cash of customers who are drunk or asleep. Any loss suffered by these customers shall be the responsibility of the liquor seller who shall repay the loss and pay a fine.
Liquor sellers shall be responsible for finding out correct information about strangers and natives who may pretend to be Aryas. Beautiful female servants shall find out the information when the client is drunk or asleep in a secluded place. [2.25.6,12-15]
Making, selling or buying liquor other than in the authorized places: 600 panas [2.25.2]
Loss suffered by customers: Vintner to pay compensation to client and fine equal to loss [2.25.14]
Appendix 10
1 part rice to 3 parts beans with added spices; for example:
1 drona of pulp of raw or cooked masha beans.
1/3 drona of rice.
l karsha of each of the six mixed spices.
2 parts rice to 3 parts ferment and 16 parts water; for example: Rice-wine – 3 prasthas of kinva
1/2 adhaka of rice
1 drona of water
PrasannaFlour wine (white)
2 parts rice to 3 parts ferment and 16 parts water; for example: 5 prasthas kinva
12 adhakas flour
24 dronas of water
Back and fruit of kramuka (?)
Addition to Medaba and Prasanna
5 karshas each of the following: patha, lodha, tejuvati, cardamom, valuka, liquorice, grape juice, priyangu, daruharidra (turmeric?), black pepper and long pepper.
Clarifying agent for Medaka and Prasanna
A decoction of liquorice and jaggery.
Varieties of Prasanna
Mahasura – White liquor and mango juice, replacing in part the spice mixture given above. This is to be clarified with a handful of mixed spice, burnt jaggery and pulp of herbs, like partha, etc. The liquor can he made sweeter by adding 5 palas of jaggery. [2.25.17,18,26-28,31-34]
(for 8 tulas of water)
1 tula wood apple
5 tulas treacle
1 prastha honey
This is for average quality; for superior quality add one quarter more of each of the three ingredients and for lower quality less.
Spices to be added-1 karsha each of cinnamon, chitraka, vilanga, quarter of the quantity of each of these is to be kept in the liquor (tied up in a piece of cloth). [2.25.19,20,29,30]
A decoction of the bark of the meshashringi with jaggery; spices to be added: long pepper and black pepper or tripala (nutmeg, arecanut and cloves). [2.25.22,23]
Grape wineKapishayana imported from Afghanistan.
Harahuraka—imported from Arachosia. [2.25.24,25]
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