Third Edition Spring 2013 - Institute of East Asian Studies, UC ...

these Kautilyan guidelines would, in theory, benefit corporationsinstitutionally deficient in ethical behavior. The fourth componentof Kumar and Rao’s framework for value-based management is theaccomplishment of organizational purpose. This component of theframework builds off of the previous three components becausean organization can easily achieve its goals if it has a well-definedorganizational philosophy, a capable leader who exists primarilyfor the accomplishment of organizations goals, and an organizationalenvironment that promotes ethical behavior. The final componentKumar and Rao discuss in their framework on Kautilyanvalue-based management is feedback on performance. Because thecentral tenet of both value-based management and the Arthashastra’sdefinition of the ideal king is that a leader and organization existprimarily for the benefit of stakeholders, getting feedback fromthese stakeholders is essential. Kumar and Rao claim that “throughsuch feedback, the leader is supposed to sustain various activitiesand thus fulfill the organizational philosophy.” 23 The concept offeedback from stakeholders not only completes the Kautilyan totalframework for value-based management, but synthesizes theother components and applies them directly to the main principleof value-based management. Kumar and Rao have shown that theArthashastra’s strategies do indeed have practical applications, soKautilya’s ideas remain as relevant to the modern corporate worldas they were to the world of ancient Indian kingdoms.The Arthashastra’s contemporary relevance does not, however,lie solely in its potential for application to the world of themodern corporation. The treatise is also important for its similaritiesto the classical economics school of thought developed in theeighteenth and nineteenth centuries primarily by European economistsAdam Smith, John Stuart Mill, David Hume, Thomas Malthus,David Ricardo, and Jean-Baptiste Say. Although Kautilya hadno influence on these economists because his work was lost duringthe 18th and 19th centuries, his work is significant in what CharlesWaldauer, William J. Zahka, and Surendra Pal call a “neglectedprecursor to classical economics.” 24 Kautilya’s text was centuries23 Ibid., 42124 Charles Waldauer, William Zahka, and Surendra Pal, “Kautilya’s Arthashastra:A Neglected Precursor to Classical Economics,” Indian Economic Review, 31, no. 1ahead of Western economics and anticipated many of the ideas ofthe great European classical economists. As Waldauer, Zahka, andPal point out, the three principal economic ideas contained in theArthashastra are (1) the value of international trade and recognizingthat imports are just as important—if not more important—than exports, (2) a fair and efficient tax system that supplies thestates with income, but does not stifle economic growth, and (3) a“just” wage system rewarding workers for the economic value theycreate, while paying them based on the amount of time put in andthe skills necessary for their work. 25 All three of these ideas arenot only central to Kautilya’s Arthashastra, but to the classical economicsschool of thought developed over two thousand years afterKautilya’s death. The Arthashastra was clearly ahead of its time,and anticipated the ideas that Smith, Hume, Ricardo, Mill and othersdeveloped independently of Kautilya. If Kautilya’s work had notbeen lost, it may have had a huge influence on classical economics.One can only speculate that trade theory, principles of taxation,and the labor theory of value associated with classical economicthought might have evolved much earlier (perhaps in thefourteenth or fifteenth century) if Kautilya’s views had been knownto scholars such as St. Thomas Aquinas in the late middle ages orearly Mercantilists in the Renaissance. 26Unfortunately, Kautilya’s work remained lost for a great periodof time, so the Arthashastra was never able to realize its possiblecontribution to world economic thought. However, India stillfinds great pride in the fact that it “beat” the West to many of thepolitical and economic concepts laid out in Kautilya’s text.Because his political and economic ideas were well aheadof his Western counterparts like Niccolò Machiavelli and AdamSmith, Kautilya earned a special place among Indian nationalistsduring the Indian independence movement of the first half of the20th century. The timely discovery of the Arthashastra by Sanskritscholar-librarian R. Shamasastry in 1904 allowed Kautilya’s text toattain prominence in the independence movement. Various viewsdeveloped regarding the salience of Kautilya for India’s indepen-(1996), 101.25 Ibid., 10226 Ibid., 10763 Ramanathan Veerappan Kautilya’s Arthashastra 64