Was Bharat Capitalist or Socialist?

Was the India of past capitalist or socialist?

Photo by Remi Clinton on Unsplash

Capitalism is not bad, it has its flaws. Socialism seems idealistic but unworkable. Many thinkers and intellectuals gravitate towards the socialist system. When Indian Constitution was created, India was not socialist. The first Prime Minister, Nehru, was, and he seeded the country with many socialist institutions. His daughter, Indira Gandhi, messed up the Indian Constitution by adding “Socialist” to our preamble. That stifled jobs and opportunities. As we liberalised (shed our socialist tendencies in 1991), India started growing and is now the fifth-largest economy in the world.

But was India of old capitalist or socialist?

In short, neither and both! We make the mistake of viewing the economic and political system through the lens of the West. Indic system designed institutions as per their dharma.

The Raja was capitalist.

Raja was the head of the government. Investment, employment and such other functions were carried out per the capitalistic orientation.

Raja ensured infrastructure development, including roads, dams and ponds. Raja used the funds at this disposal for common infrastructure. Industry-specific infrastructure needed to be financed by the industries themselves. Raja, however, had certain funds to be investible at the discretion of his council - sort of like a Sovereign fund.

Trade was important method of acquiring wealth. The relevant training and technical development was done under a capitalist system by the trade and industrial groups themselves. Thus, polytechnics, vocational training institutes were owned and managed by trade and industrial groups.

Raja also had the responsibility of general administration and law and order - police and army.

The government was financed through taxes.

But Mandirs were socialist.

Mandirs were financed through donations and fees.

Those employed by the mandir were taken care of for life but did not build individual wealth. These employees were provided residences, food, clothing and all necessities free of cost. But all the wealth created belonged to the temple. The employment was for life.

Mandirs organised food for all. They provided a community kitchen so that all the homeless and unfortunate were fed.

The local Mandirs organised and partly financed disaster relief activities. Mandirs from other areas, the Raja and others with means were encouraged to join.

Some Mandirs also operated dharma-shalas (guest houses) where people could shelter for a few nights.

Mandirs were the schools and university and centres for advanced learnings. They housed the experts, teachers and books and manuscripts. Thus they were also libraries.

Mandirs were also centres for professional practice in law, banking, medicine etc. They housed legal experts, medical experts and banks. Contracts were signed and validated by professionals in the mandir.

This structure allowed the professionals to be unbiased and dispassionate while being true to their expertise and dharma.

In Sum

Today we have created socialist enclaves in Universities with tenures and donations. We worry about professionals having wrong incentives. Doctors aligning with pharma companies, lawyers creating frivolous litigation, banks engaged in usuary, etc. At the same time, we are using taxpayers’ funds to bailout rogue capitalist institutions.

It is already clear that certain aspects of the capitalist economy do not lend themselves to a foolproof system of incentives to work flawlessly. While capitalism works in most aspects of the economy, it does not work in others. (Journalism is another area).

I am impressed by the institution design of ancient India. Ancient Indians had a principle that meant - institutions should be designed per their dharma. Probably, that is where we are headed.

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