Interpreting Ancient Indian Economic Institutions and their Modern- Day Relevance

Abstract

The all-pervasive character of institutions and their ramifications across fields once prompted Nobel Laureate Douglass C. North to quip that, ‘institutions, being humanly devised constraints that structure political, economic, and social interaction, consist of both informal constraints (sanctions, taboos, customs, traditions, and codes of conduct), and formal rules (constitutions, laws, property rights) which throughout history, institutions have been devised by human beings to create order and reduce uncertainty in exchange’ (North, Structure and Change in Economic History; 1981). This idea of thus modeling human behaviour bears direct resonance with economic thought prevailing in ancient India, with consequences on fields as varied as economic welfare, industrial organization, economic rights and agents’ behaviour. This paper attempts to analyze some of the most significant theoretical underpinnings in modern day economic sciences in the light of Indian Knowledge Systems (IKS), whilst examining their present-day relevance and applicability.