Showing posts with label ethics. Show all posts
Showing posts with label ethics. Show all posts

Tuesday, June 23, 2026

Governance Lessons from the Story of Raja Harishchandra



The story of Rāja Hariścandra occupies a special place in the Indian imagination. He is remembered not merely as a truthful king, but as a ruler who held on to *satya* even when every worldly support collapsed around him. His kingdom, wealth, status, family, and personal comfort were all taken away, yet he refused to abandon truth. For governance, this story is not only a moral tale; it is a profound reflection on public responsibility, integrity, accountability, and the inner character required for leadership.


At the heart of the story is a king who is tested beyond ordinary limits. Hariścandra loses his kingdom, becomes separated from his wife and son, and is forced to work in a cremation ground. Yet, even in the most painful circumstances, he does not use his suffering as an excuse to compromise his duty. This is the first major governance lesson: leadership is tested not when systems are comfortable, but when values become costly.


Many leaders speak of truth, justice, and public service when these values bring prestige. Hariścandra shows that values are meaningful only when they survive pressure. Governance requires this kind of moral stamina. A ruler, administrator, or public servant must remain committed to the right course even when there is political pressure, personal loss, public misunderstanding, or institutional difficulty. Truth cannot be a slogan; it must be a discipline.


The second lesson is that public office is a trust, not a possession. Hariścandra does not treat kingship as personal property. When he is required to give up his kingdom, he does not cling to power for its own sake. This is deeply relevant to governance. Power, in the Indian civilizational imagination, is not meant for self-expansion but for the protection of *dharma*. A ruler is not the owner of the state; he is its custodian.


Modern governance often suffers when leaders begin to confuse office with entitlement. Public resources become personal resources, institutions become instruments of loyalty, and authority becomes a means of self-preservation. Hariścandra offers the opposite model. He shows that the dignity of leadership comes not from holding power, but from being worthy of it.


The third lesson is the importance of accountability. Hariścandra does not exempt himself from the rules that bind others. Even when he works at the cremation ground, he performs his duty without favour or discrimination. The most painful moment comes when his own wife arrives with the body of their dead son, unable to pay the required fee. Hariścandra is torn between personal grief and official duty. Yet he does not misuse his position.


This episode is central to governance ethics. A just system cannot function if rules apply only to the weak and exceptions are created for the powerful. The ruler must be the first person to submit to the law. Hariścandra’s conduct teaches that legitimacy comes when those in authority are visibly bound by the same standards they expect from others.


The fourth lesson is that governance requires inner restraint. Hariścandra is not portrayed as emotionless. He suffers deeply. He feels pain as a husband, father, and former king. Yet he does not allow private emotion to destroy public duty. This is not cruelty; it is disciplined responsibility. Good governance requires the ability to distinguish between personal attachment and institutional obligation.


In public life, decisions often involve competing claims: family, community, political loyalty, law, justice, and public welfare. A weak leader bends rules for personal reasons. A harsh leader hides behind rules without compassion. Hariścandra represents a more difficult ideal: to uphold duty while fully experiencing the pain of doing so. He reminds us that ethical leadership is not free from anguish; it is the capacity to remain upright within anguish.


The fifth lesson is that truth creates moral authority. Hariścandra loses everything externally, yet his moral stature grows. This is a crucial governance insight. Institutions are not sustained by law alone. They are sustained by trust. Trust is built when people believe that those in authority will not lie, exploit, manipulate, or betray. Once public trust collapses, even efficient systems become fragile.


Truthfulness in governance is therefore not merely a private virtue. It is a public asset. Honest communication, transparent processes, financial integrity, truthful data, and clear accountability are all forms of *satya* in administration. A state that repeatedly distorts truth eventually weakens its own foundations. Hariścandra teaches that truth is not ornamental to governance; it is structural.


The sixth lesson is the dignity of labour. When Hariścandra loses his throne, he does not collapse into bitterness. He accepts work at a cremation ground, a place associated with sorrow, impermanence, and social discomfort. A king becomes a worker, but his dignity does not diminish. This challenges a shallow view of status. True nobility is not in the role one occupies, but in the integrity with which one performs it.


For governance, this is an important reminder. Public systems depend not only on ministers, judges, and senior officials, but also on clerks, sanitation workers, field officers, teachers, nurses, police constables, and countless invisible workers. A dhārmic model of governance must honour every form of work that sustains society. Hariścandra’s story dissolves the arrogance of rank and brings attention to the sacredness of duty.


The seventh lesson is that personal sacrifice is sometimes necessary for public credibility. Hariścandra does not ask others to bear costs that he himself is unwilling to bear. His life becomes the evidence of his principles. In governance, people quickly detect hypocrisy. Leaders who preach austerity while living in excess, speak of sacrifice while protecting privilege, or demand discipline while evading scrutiny lose moral authority.


Hariścandra’s example shows that the credibility of leadership comes from alignment between word and conduct. When speech, action, and intention are integrated, authority becomes luminous. Such leadership does not depend only on command; it inspires confidence.


The eighth lesson is that *dharma* is larger than immediate success. In ordinary political thinking, Hariścandra might appear to be a failed king: he loses his kingdom, suffers humiliation, and cannot protect his family from hardship. But the story does not measure him by short-term success. It measures him by fidelity to *dharma*. This offers a deeper metric for governance.


Not every ethical decision produces immediate popularity. Not every truthful action produces immediate reward. But governance rooted only in short-term gain becomes opportunistic. Hariścandra reminds us that leadership must be judged by civilizational standards, not merely by temporary applause. A ruler must ask not only, “Will this succeed now?” but also, “Will this preserve justice, trust, and moral order?”


Finally, the story teaches that governance is ultimately an inner discipline before it is an external system. Laws, policies, procedures, and institutions are necessary. But their quality depends on the character of the people who operate them. If the ruler is corrupt, even good laws can be misused. If the administrator is truthful, even difficult systems can retain dignity.


Rāja Hariścandra’s story is therefore not a simple call to rigid idealism. It is a call to moral seriousness. It asks leaders to cultivate truthfulness, restraint, accountability, humility, and courage. It reminds us that governance is not only about managing resources or exercising authority. It is about protecting the moral fabric of society.


In an age where public life is often shaped by optics, convenience, and compromise, Hariścandra stands as a demanding ideal. He shows that the highest form of governance is not merely efficient administration, but trustworthy stewardship. A state becomes strong when its leaders are not for sale, not easily shaken, and not willing to sacrifice truth for comfort.


The lesson of Rāja Hariścandra is simple, but severe: power without truth becomes dangerous; duty without integrity becomes mechanical; and governance without *dharma* loses its soul.

Tuesday, October 31, 2023

Kautilya and Modern Economics by Balbir S Sihag

Introduction to Kautilya and his Arthashastra 

Kautilya was a learned, ethical, wise, experienced, secular, progressive, independent and original thinker. He believed that poverty was death while living. His Arthashastra is a manual on promoting Yogakshema—peaceful enjoyment of prosperity—for all the people. It is shown that his approach is more suitable to our economy than the currently adopted western approach. He understood the economic system as an organic whole with interdependent parts. He undertook an in-depth and detailed analysis of each part at the micro level without losing sight of the macro goal of engineering shared prosperity. He believed in the power of persuasion, moral and material incentives and not in coercion or force to elicit effort. He designed material incentives in such a way that no crowding-out occurred, that is without weakening the moral incentives. He advanced a holistic yet logical and comprehensive approach to bring shared prosperity. 

In fact, a stakeholders-model in which the businessmen, workers and consumers share prosperity, is discernible in his Arthashastra. He relied both on the invisible hand (the market) and the direct hand (principles, policies and procedures) to enrich the people. Kautilya was deeply influenced by the Mahabharata (3102 BCE) and it appears as if it had happened in not too distant a past. Secondly, Rao (1973) points out that the measurements used in the Arthashastra are very similar to those prevalent during the Sindhu-Sarasvati Civilization (2600 BCE-1800 BCE).1 

 According to the new research, Chandragupta Maurya ruled around 1534 BCE and not during the 4th century BCE. The preponderance of emerging evidence indicates that Kautilya wrote his Arthashastra—science of wealth and welfare—several centuries earlier than the fourth century BCE which has been advanced by the Western Indologists. They had taken upon themselves the selfless and tortuous task of dating, without any margin of error, all the historical events, such as the Aryan Invasion Theory and providing authentic interpretations of our ancient texts. They really need their well-deserved retirement from this demanding responsibility and leave it to the native amateurs. 

Kautilya was far-sighted, foresighted, ethical but not very religious, believed in designing an efficient organizational structure but was not a bureaucrat. Kautilya: The True Founder of Economics The following table lists some of the concepts innovated and used by Kautilya. It also provides the time-periods of their re-emergence. 

Table 1: Concepts Developed and Used by Kautilya 

On the other hand, Adam Smith did not innovate a single concept in economics. Barber (1967, p17) observes, “Little of the content of The Wealth of Nations can be regarded as original to Smith himself. Most of the book’s arguments had in one form or another been in circulation for some time.” 

Kautilya as a One-Man Planning Commission and More 

Kautilya's Arthashastra is comprehensive, coherent, concise and consistent. It consists of three fully developed but inter-dependent parts. 

(a) Principles and policies related to economic growth, taxation, international trade, efficient, clean and caring governance, moral and material incentives to elicit effort and preventive and remedial measures to deal with famines. 

(b) Administration of justice, minimization of legal errors, formulation of ethical and efficient laws, labour theory of property, regulation of monopolies and monopsonies, protection of privacy, laws against sexual harassment and child labour. 

(c) All aspects of national security: energetic, enthusiastic, well trained and equipped soldiers, most qualified and loyal advisers, strong public support, setting-up an intelligence and analysis wing, negotiating a favourable treaty, military tactics and strategy, and diet of soldiers to enhance their endurance. 

II Kautilya’s Ethics-based economics Versus Modern Self-interest based Economics 

Modern Economics Based on Self-interest: Complex contracts are written to safeguard against potential harm that might be caused by the partners’ opportunism. It seems that propensity for opportunism is the dominant phenomenon everywhere. Economists and organizational scholars believe that it is not possible ex ante to differentiate a trustworthy person from an untrustworthy one, so it is prudent to adopt a ‘calculative’ approach to trust, that is, treat trust as a risk and suggest taking necessary protective measures. 

Kautilya’s Ethics-based Economics: Ancient sages realized that genuine trust was an ethics-intensive concept since non-violence, truthfulness, honesty and benevolence were the foundation for trust. Kautilya accepted that insight wholeheartedly. That is, trust flourished only in an ethical environment. How to make sure that children grow-up to be ethical adults? Kautilya suggested teaching ethical values at an early age. Kautilya believed that dharmic (ethical) conduct paved the way to bliss and also to prosperity. That is, according to Kautilya, a society based on contracts alone is less productive and more anxiety prone than the one based on conscience and compassion. If the social environment is predominantly ethical, there is less of a need to take defensive measures to protect against opportunism. He emphasized ethical anchoring of the children for replacing the ‘culture of suspicion’ with a harmonious and trusting one. 

Critical Role of Trust in a Knowledge-based Economy: Trust may be an intangible asset/good but has the most tangible role in creating and sustaining the social, economic, cultural and political structures. It is the brick and mortar to the building of inter-personal relationships. In an industrial economy, trust (a) reduces transaction costs by reducing opportunism, enhances a feeling of wellness by reducing anxiety and (b) also might increase GDP by reducing the demand for lawyers and turning them into engineers. 

Trust is the most valuable asset in a knowledge-based economy. Both creation and sharing of ideas depend on trust. The distinguishing characteristic of a knowledge-based economy is a frequent sharing of tacit knowledge and exchange of information among the cognitive labor. As soon as a person codifies his/her tacit knowledge everyone has access to it. Knowing this fact a person will share tacit knowledge only if s/he is sure of not getting fired. Creating ethical-based trust is the key to realizing all the potential gains from creating and sharing of knowledge. 

Adam Smith focused only on invisible hand. But economists now deal with cases II and III also. Kautilya was the only one discussed all four cases. 

Table 1: Interests and Incentives 


Dharma and Prosperity 

Since the mid-90s, a considerable amount of intellectual effort has been devoted to study the nature of relationship between institutions, good governance and economic growth. One group of economists argues that institutions are the most important determinant of economic growth. In fact these economists call institutions as the ‘deep determinants’ of growth. For example, Dani Rodrik, Arvind Subramanian, and Francesco Trebbi (2004) (2004) claim, “This exercise yields some sharp and striking results. Most importantly, we find that the quality of institutions trumps everything else.” 

The other group of economists gives primary importance to good governance and only secondary to institutions. Edward Glaeser, Rafael La Porta, Florencio lopez-de-Silanes and Andrei Shleifer (2004, p 298) conclude, “But institutional outcomes also get better as the society grows richer, because institutional opportunities improve. Importantly, in that framework, institutions have only a second-order effect on economic performance. The first order effect comes from human and social capital, which shape both institutional and productive capacities of a society.” 

Apparently, economists, even now in 21st century, are debating about the relative importance of institutions versus to that of good governance. Kautilya settled this debate more than two thousand years ago. He argued that good governance created opportunities and institutions allowed them to be availed of implying that both were essential to prosperity and it was futile to compare them. However, according to Kautilya, most important was the ethical environment, which improved the quality of both. 

Kautilya on Importance of Institutions: Kautilya believed that poverty was a living death and also not conducive to the practicing of ethical values. He argued that maintenance of law and order was a prerequisite to economic prosperity. He (p 108) observed, “By maintaining order, the king can preserve what he already has, acquire new possessions, augment his wealth and power, and share the benefits of improvement with those worthy of such gifts. The progress of this world depends on the maintenance of order and the [proper functioning of] government (1.4). 

Importance of Good Governance: Similarly, according to Kautilya, good governance was needed for prosperity. He (p 149) suggested, “Hence the king shall be ever active in the management of the economy. The root of wealth is economic activity and lack of it brings material distress. 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 (1.19).” 

Kautilya’s ideas if expressed in today’s language imply that quality of institutions reduced risk and good governance increased return on investments. This may be captured by the following figure. 

The risk-return possibility frontier, AB shifts to A'B' and also becomes more concave. That makes it possible for an investor to move from point E to point E'. U1 and U2 are the indifference curves. Two points may be noted. Kautilya’s insights may be expressed not only as a shift in the feasibility frontier but also as a change in its curvature.

Table 8.1: Conceptual Framework on Dharma and Prosperity 


Conduct and Prosperity: Kautilya argued that a king, whether he fulfilled his moral duty or followed his enlightened self-interest, had to enrich his subjects. However, he understood the major differences between them: according to the moral duty, the king wanted to enrich the public whereas according to the enlightened self-interest, the king had to enrich the public. He preferred an ethical king rather than a king motivated by his enlightened self-interest. The following figure may be used to express his ideas on comparing the relative consequences of following moral duty to those of enlightened self-interest. 

AB is the income possibility frontier. Point M denotes the combination (high public income, low king’s income) if the king follows his moral duty. Point F denotes the combination (very low income for the public, very high income for the income) when the king is immoral. Point S denotes the combination (somewhere in between points M and F) when the king is amoral, that is, follows his enlightened self-interest 

Kautilya specified three possibilities. (i) His argument based on moral duty implied that a rajarishi (king, wise like a sage) would take a very modest amount for his own consumption, that is, point M would not be too far away from point A on the vertical axis.8 Such a king would promote ethical behavior, use almost all the tax revenue on the provision of public goods and welfare programmes and follow judicious polices to encourage economic growth. As a consequence there would be both spiritual and economic (i.e. over time the income possibility frontier would shift outwards) enrichment of his subjects. 

(ii) A king motivated by his enlightened self-interest would promote public interest to the extent that it promoted his own interest, that is, promotion of public interest was merely a means to the promotion of his own interest (whereas in the above-mentioned case (i) promotion of public interest was an end in itself). Kautilya’s argument based on enlightened self-interest implied that the king might choose a point like, S. 

(iii) According to Kautilya, a myopic and unethical king would try to grab almost all the resources for himself. This is indicated by point F on the possibility frontier. Such a king would ruin himself as well as the economy. This is comparable to Olson’s ‘roving bandit’. Since such a king would leave very little for the public, that is, point F would be very close to point B on the horizontal axis. Such extortion and myopic behavior would adversely affect future economic growth (i.e., most likely, the income possibility frontier would shift inwards). 

Minimal and Maximal Economic Growth: Thus two types of growth models are discernible from The Arthashastra: one based on moral duty and the other based on enlightened self-interest. Kautilya preferred the one based on moral duty since that would lead to the highest possible growth in income of the people. Whereas the growth rate based on enlightened self interest was the minimum required of a king to stay in power. That is, so long as the king managed to keep income above the poverty line, y > yPl, (the poverty level of income) and judicial fairness, J > JR at a reasonable level of fairness (that is, punishment somewhat proportionate to the crime and low probability of judicial errors), there would be law and order and the king could stay in power. However, the king had to provide some infrastructure and have pro-growth policies to promote economic growth. Thus, even in this model, both institutions and governance were needed for generating economic growth and institutions alone could not be labelled as the ‘deep determinant’ of growth. 

III Ethical Anchoring of Children 

According to Kautilya, it is better to pass on good values rather than ill-gotten wealth to the younger generation. If we insist on labeling reforms as the ‘first generation’ reforms and ‘second generation’ reforms, Kautilya might suggest a more appropriate distinction: to undertake reforms of the ‘old generation,’ which is running the country at the moment and whose unethical behavior could be casting a long shadow on the character building of the younger generation. Kautilya (pp 155-156) wrote, “‘There can be no greater crime or sin’, says Kautilya, ‘than making wicked impressions on an innocent mind. Just as a clean object is stained with whatever is smeared on it, so a prince, with a fresh mind, understands as the truth whatever is taught to him. Therefore, a prince should be taught what is dharma and artha, not what is unrighteous and materially harmful (1.17).” In a democratic country every child is a prince. Moreover, he (p 123) pointed out, “Whatever character the king has, the other elements also come to have the same (8.1).” 

IV Kautilya’s Insights 

(a) An ounce of ethics was better than a ton of laws. Ethical anchoring could be more effective in preventing systemic risk than a heap of rules and regulations. (b) Principles were only as good as the people who practiced them, and policies were only as good as the people who formulate and implement them. (c) Material incentives should complement and not substitute moral incentives so that there is no crowding- out. (d) Education should include ethical education also. Secular values, such as non-violence, honesty, truthfulness, compassion and tolerance do not violate the separation between religion and state. (e) Market failure is bad, government failure is worse but moral failure is the worst since moral failure is true cause for other failures. (f) Ethics and foresightedness could improve governance and bring sustainable prosperity for the whole of humanity. (g) Sound organizational design could complement the ethics-based approach by enhancing specialization and reducing the scope for conflict of interest situations. (h) Wisdom is the most valuable asset and knowledge-management is a subset of management by wisdom. References: Kautilya: The True Founder of Economics, 2014, Vitasta Publications, New Delhi, India

Article courtesy: https://ignca.gov.in/invitations/About_the_lecture.pdf

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*Updated : 2026