The Dharma of Business (Commercial Law in Medieval India)

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The idea that an ancient Indian concept, dharma, might offer insight into the nature of the modern competitive market is, on the face of it, bizarre. But this is precisely Donald Davis’ ambition in this exciting book. He justifies his purpose, explaining that ‘encounters with the unfamiliar often produce helpful changes in our own thinking. Sometimes we remember values that we have lost sight of; sometimes we are surprised by a simple idea that gets obscured.’

Dharma is a difficult word to translate into English. Duty, goodness, justice, law, custom and religion have something to do with it, but they all fall short. Since Professor Davis is concerned with insights from premodern commercial law in India, his, primary usage of the moral aspects of dharma- he uses the word in the sense of ‘doing the right things, both in private and public life’. And because this sense often has the authority of religion behind it, he often evokes the meaning of dharma as ‘ religion’.

At the heart of the market system is the idea of exchange between ordinary, self-interested human beings, who seek to advance their interests peacefully in the marketplace. What makes dharma suitable for understanding commercial exchanges is that dharma does not seek moral perfection, unlike popular and religious notions of morality in the West, which have been derived from the Judeo-Christian tradition. Dharma is pragmatic; it views men and women as sociable but imperfect. Thus, dharma’s world of moral ambiguity and uncertainty is far closer to our experience as ordinary human beings, and it lends itself to market regulators and utility maximizing policymakers. Because it is not given by God in the form of commandments, dharma does not claim a monopoly on truth, the pursuit of which leads inevitably to theocracy Or dictatorship and to narrow and rigid positions that seem to have defined debate in these fundamentalist times.

This book makes us aware that the market system depends ultimately not on laws but on the self-restraint of individuals and trust between them. Dharma provides that restraint by offering the underlying norms of a society, creating obligations for citizens and rulers, thereby bringing a degree of trust and coherence to our everyday life. Dharma places limites on buyers and sellers in the marketplace and this allows strangers to trust and transact with each other. Because of a shared notion of dharma, I readily accept a check from you. In the same way, a taxi driver takes me in as a passenger because he knows that the curbs of dharma will ensure he will get paid at the end of the journey. Thus, millions of transactions are conducted daily based on the same belief in the self-control of human beings in the global economy without written contracts of judges and policemen to enforce them. Dharma acts like invisible glue between transacting persons in the marketplace, allowing them to trust each other. The same glue also holds society together, bringing predictability to the uncertain lives of human beings.

If more people understood that markets are sustained by moral notions (such as dharma), capitalism and the business world would not have such a poor image in the public mind. It is a mistake to think that the market is based solely on greed and profit-maximizing behavior. In fact, Adam Smith, the profoundest thinker about the market, was clear about this. The dharma texts constantly remind us that there is a right and wrong way to conduct business dealings. Dharma derives from the Sanskrit root dhr, meaning to ‘sustain’ or ‘holding up’ , it carries connotations of balance, harmony, and cosmic order. It is the moral law that sustains an individual, a society and the cosmos (a bit like the word maat in ancient Egypt). At an individual level, it means ‘moral well-being’, and was thus elevated to one of the four goals of the good human life in classical India, along with artha, ‘material well-being’, kama, ‘sexual well-being’, and moksha, ‘spiritual well-being’.

When individuals behave with dharma, they create trust in society and harmony in the cosmic order. ‘The god Indra then showers sweet rain and the seasons follow; harvests are bountiful, and the people thrive’ ( Mahabharata [1.58.14]). Dahrma has its limits, however, because every society has its crooks. Therefore, Bhishma instructs Yuddhishthira in the Mahabharata that a rular cannot rely purely on the self-restraitn of individuals and he must enforce dharma (understood as law) with danda, the ‘rod’of the state, to punish those of low dharma. Even the most peaceful, dharmic ruler must then exercise force. The epic says that when dharma is low in a society, the dependence on danda is weak suffers from pervasive corruption of public official and ineffective public administration.

Just as America founding fathers were obsessed with liberty, so were many of india’s founders attached to dharma, so much so that they placed the dharmachakra, ‘the wheel of dharma’, in the centre of the nation’s flag and the great Sanskrit scholar P.V. Kane referred to the Constitution as a ‘dharma text’. For these men and women, nation building was a profoundly moral project. The ideal that continues to exist in the Indian Imagination is that of a ruler guided by dharma. Hence, each time fresh scandal broke out during the corruption-ridden Congress-led government of 2009 to 2014, it was a common sight to find an outraged headline ‘Dharma has common sight to find an outraged headline ‘Dharma has been wounded’ in a Hindi newspaper.

The book provides a new perspective on business law in medieval and early modern India as it developed through ancient texts called the Dharmashastras. These texts laid down rules of business for merchants, traders, guilds, farmers, and individuals, and they did so in terms of the moral ideals of dharma. To this end, the book examines the views on commerce and business in the works of authors such as Vijnaneshvara, Devannabhatta, Mitra Mishra and Chandeshvara, all of whom wrote long commentaries on aspects of commercial law as part of a legal dharma tradition.

India historically had a weak state but a strong society, unlike China, which had a strong state and a weak society. India’s history has been that of warring kingdom and China’s is that of empires. Early on, dharma placed limits on the power or rulers. Unlike the Chinese emperor who was the source and the interpreter of the law, dharma in India existed prior to the raja or king, who was expected to ‘uphold dharma for the benefit of the people’; the Brahmin, not the raja was the interpreter of dharma; thus a ‘liberal’ division of powers was created early in Indian history which placed a check on state power, and weakened the power of the state. Oppression did not generally come from the state but from society (particularly from Brahmins). And the answer to that oppression was a guru, like the Buddha, who came along periodically to deliver the people from their oppressors.