Ancient to Modern : Exploring the connection between India’s cultural heritage and its modern day economic system. Part 1

    Not many factors in culture simply because it is immeasurable or too qualitative a variable to measure. But it can be factored in by corrobrating it with historical evidence and corresponding economic conditions.

    Not many factors in culture simply because it is immeasurable or too qualitative a variable to measure. But it can be factored in by corrobrating it with historical evidence and corresponding economic conditions.
    Not many factors in culture simply because it is immeasurable or too qualitative a variable to measure. But it can be factored in by corrobrating it with historical evidence and corresponding economic conditions.

    A person was required to direct all his efforts into those which he was suited for and could create something for himself and for the society, by taking calculated risks.

    The Hindu newspaper daily, on the 17th of December, 2017, reported that India was on the path to become the fifth-largest global economy in 2018 surpassing the United Kingdom and France. Its population, currently at 1.34 billion people, is exploding and is soon poised to take over China in becoming the most populous country in the world. Some people argue that it has already reached its inflection point in economic growth, while there are many others who differ and say, India’s potential is too huge to ignore and that its GDP can grow at more than 10% year-on-year.

    Did its culture and social factors, pre-invasions, provide the fuel for running the economic growth engines?

    In such a scenario of raging debates among governments, economists and policymakers, on how to enthuse the hard-working middle class and encourage entrepreneurship, control agricultural distress, make farming an option to be reckoned with, increase proportion of skilled-labour force, the following question needs to be asked :

    India was a global economic super-power before. For centuries, it held that position and the decline commenced post Invasions from the Western neighbors in the subcontinent and was having less than 2% share in World’s GDP at the end of the 20th Century. So, what made it such a powerful economic superpower?

    Did its culture and social factors, pre-invasions, provide the fuel for running the economic growth engines?

    If so, what were the cultural economics behind it? How does it affect present-day India? Does it provide the password required to unlock the hidden power of Indian entrepreneurs? Does it provide the key to open the lock to India’s long-inherent yet dormant prerequisites?

    Culture and Economics, India and Hinduism

    It is known that culture affects economic activity through the choices that people make about how to allocate scarce resources (GrowthEconBlog, 2014). Many a model of growth, consider many obvious variables like availability of capital, flow of capital between countries, labour productivity differences, etc., but not many factors in culture simply because it is immeasurable or too qualitative a variable to measure. But it can be factored in by corrobrating it with historical evidence and corresponding economic conditions.

    It acts as catalyst for pushing up many other variables such as savings, investments and
    consumption pattern.

    A likeness can be drawn to people in India investing in gold not just because it is a safe
    investment but because of the sentiment attached to it. It is treated as family heirlooms, status symbols and therefore, it is not uncommon to hear that so and so politician donated so and so the amount of gold to so and so temple. Sri Venkateshwara Swamy temple in Tirumala in Andhra Pradesh gets annual gold donations in tonnes!

    No wonder this penchant for gold and other precious metals meant that India was a leading manufacturer and exporter of precious metals thus attracting many Invaders and colonial powers!

    Scriptures like Bhagavad-Gita, Ramayana and Mahabharat and the Upanishads, told him that it would be the kind of actions he would undertake that would determine his varna and place in society, irrespective of his caste.

    Culture also creates a conducive environment for trade, economic stability and uniformity in an economy. For instance, Judaism holds hard-work, perseverance and total commitment to a task as sacred and necessary for mankind. A reflection in seen in Israel’s remarkable story of being a small nation in an extremely hostile neighborhood to becoming the world’s Innovation Nation and strong military power; modern banking as we know, was initially started by jews like the Berenbergs; Facebook was started by a Jew – Mark Zuckerberg. This way, their 5000-year-old culture-religion made them pursue their goals with total dedication and in the way, came outstanding results.

    Varna-Jati Vyavastha and Guru-Shishya Parampara

    Similarly, in India’s case, in the Vedic period and post it, the Varna system along with the
    influence of holy scriptures and traditions and the Guru-Shishya parampara played a key role in its economic transformation. No other ‘vyavastha’ has been more targeted and abused in recent times than the Varna system. By linking it with Jati or caste, a division has been created that can take many more years to be healed. (Munshi, 2017) interestingly notes that the caste networks will disappear when the market economy starts to function efficiently. On the contrary, after a closer look, it has to be noted that the system of Varnas is actually based on the division of labor and not any compromise on human dignity. Jati or caste was usually a reference to the family a person was born into.

    Those who would sacrifice everything and only address matters of knowledge were called the Brahmins and according to Purusha Sukta in Rig Veda, anyone could become a brahmin, no matter which family he was born into. Similarly, those who would protect the country and administer it were the Kshatriyas and those who engaged in business and commerce were the Vaishyas and those who would take up skilled labour and production of different goods for daily consumer use were the Shudras. No one was forced to take up only one form of occupation and there existed complete freedom for a person to take up whatever he wanted to and the scriptures like Bhagavad-Gita, Ramayana and Mahabharat and the Upanishads, told him that it would be the kind of actions he would undertake that would determine his varna and place in society, irrespective of his caste. This is strikingly similar to the concept of division of labour in modern economics, where there is advocation of division and specialization of tasks in an economy.

    A person was required to direct all his efforts into those which he was suited for and could create something for himself and for the society, by taking calculated risks. This kind of a free flow/flexibility and an encouragement of risk-taking was later observed in Adam Smith’s advocation of free-markets and hence, Hinduism provided and still provides an environment of free-pursuit of innovative ideas and zero restrictions on people to think for themselves and trains them to take risks, which are pre-requisites for any entrepreneur. As a result scriptures like Bhagavad-Gita can inculcate the spirit of entrepreneurship amongst youth irrespective of their ‘caste’. The ancient scriptures also formed the basic reference for the Arthashashtra, a treatise written by Kautilya in 300 BC, which talks topics like comparative advantage, export-import etc. The fact is that this was written 2000 years before David Ricardo, J.S Mill and Adam Smith started talking about them as part of modern economic theories! Similarly, Arthasastra reveals aspects of good governance of royalty, states international trade principles, principles of taxation and labor theory.

    To be continued…

    Note:
    1. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.

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