Journal of Institutional Economics (2020), 1–14

doi:10.1017/S1744137420000296

RESEARCH ARTICLE

Institutions, social order and wealth in ancient India

Jim Rooney1* and Vijaya Murthy2
1
School of Business, The University of New South Wales, Canberra, Northcott Drive, Campbell, ACT 2600, Australia and
2
Discipline of Accounting, Business School, Coddrington Building, The University of Sydney, Sydney, NSW 2006, Australia
*Corresponding author. Email: james.rooney@adfa.edu.au

(Received 14 November 2019; revised 22 May 2020; accepted 23 May 2020)

Abstract
Orthodox economic theorising on ancient societies emphasises the absence of market institutions, in con-
trast to advanced contemporary economies. However, this may downplay the influence of non-economic
interests in the generation of wealth. Consequently, this paper examines an ancient civilisation identified
as economically successful namely, the Mauryan Empire (322 to 85 BCE) centred on the Indo-Gangetic
plains. Drawing on translations of books collectively known as the Arthasastra (lit. the science of wealth)
as well as contemporaneous Greek and Roman texts, this paper examines the role of institutions in gen-
erating wealth within societal norms of income distribution and the preservation of social order. Given the
importance of trade to this society, comparisons are made with medieval European institutions in terms of
market coordination and the maintenance of generalised trust in trading markets. As a consequence, the
role of institutions in addressing social and economic uncertainty affecting an ancient society is
highlighted.

Key words: Formal institutions; guilds; Mauryan Empire; social order; wealth

1. Introduction
Institutions1 have been identified by scholars as a crucial organising structure in recent economic
development (Amin, 1991; Spohn, 2010). Polanyi and Finley further argue that present-day societies
and institutions exhibit a social and economic preference for markets (Finley, 1973; Polanyi, 1944). At
the same time, sociologists distinguish economic structures that emphasise broader ‘human over eco-
nomic interests and the value of collective before self-interest’ (Whitehead and Crawshaw, 2014: 20).
Given notions of economic freedom and the separation of economic and socio-political interests
resplendent in the institutional literature (Graafland, 2020: 2), exploring the implications of this con-
cern with social values and the effect on economic development in an ancient historical context is the
overarching motivation for this paper. In particular, we agree that to ‘understand why people act as
they do, we must first know what they value’ (Bruce, 2013: 37).
In one ancient society, the Mauryan Empire, institutions evolved with a focus on balancing wealth
generation, social order, and individual wellbeing. Eventually, shaping a substantial part of what is
present-day India in a period contemporaneous with the Macedonian polity of Alexander the
Great, Mauryan institutions comprised of both market and public order control practices (Rahman
et al., 2014: 654). At the same time, individual wealth creation was not just tolerated but actively
encouraged within a formally prescribed ethical framework (Murthy and Rooney, 2018).
Furthermore, the range of market goods was extensive (Khanna, 2006: 10), supporting lifestyles
that was seen as extending beyond subsistence (Mahapatra, 2012).
1
In particular, market-supporting institutions are defined by the World Bank (2002: 4) as ‘Rules, enforcement mechan-
isms, and organizations supporting market transactions’.
© Millennium Economics Ltd 2020
2 Jim Rooney and Vijaya Murthy

Mauryan society was founded on formal state institutions that exerted control though codified rules
and processes over business and trade such that they were ‘the largest employer of labour … The state
also entered the market as a trader’ (Rahman et al., 2014: 654). At the same time, however, private
merchant and occupational guilds promoting trade and commerce also thrived. These institutions
and their members were largely free from state interference to pursue economic outcomes as long
as they operated within societal norms (Khanna, 2006: 35). As highlighted by noted guild historian
Sheilagh Ogilvie (2014: 170), ‘Debates about guilds are not just historical quibbles, but have wider
implications for a very modern topic: the role of institutions in economic growth’. Here, arguments
explored by Robson and Beadle (2019) concerning moral agency within institutions are consequential.
This prompts the question germane to this paper, namely: within the constraints of an ancient
economy, how did institutions facilitate functioning markets within a codified system of collective
social values that were considered ancient and enduring even at that time? Here we agree with
Fitzpatrick (2011: 28) in that ‘Despite Finley’s attempts to separate trade from economics and from
Roman imperialism, it seems sensible to treat seriously not only the commercial endeavours of
antiquity as a form of economics, but also to value their own reflections’.
In this academic endeavour, the claimed contribution of this paper in relation to ancient Mauryan
institutions is to explain coexistence of economic success and social cohesion based on generalised
trust generated by interactions between state and private institutions examined in relation to uncer-
tainty and expectations. Although Mauryan economic activity and legal frameworks have been
explored by historians and Sanskrit scholars, we believe that this is the first specific examination of
the importance of socio-economic institutions in achieving this apparent co-existence of wealth and
cohesion.

2. Mauryan polity and the Arthasastra

In existence from approximately 322 to 185 BCE, the Mauryan Empire is estimated to be comparable
in size and population with the contemporaneous Macedonian kingdom of Alexander (Turchin et al.,
2006: 223). Despite similarities in terms of the existence of urban societies (Chase et al., 2014;
Kenoyer, 2006) and trade with other civilisations (Kenoyer et al., 2013), the historical literature iden-
tifies the Mauryan polity as being distinct from the earlier Indus Valley or Harappan Civilisation.
However, these characteristics of Harappan society may have persisted into Mauryan times
(Kenoyer, 2006), beyond its decline in the presence of climatic and environmental change (Dutt
et al., 2019). In terms of location, Harappan urban sites are identified largely with the West and
North-Western political boundaries of present-day India and into Pakistan (Witzel, 2019), and in
terms of political organisation (Trautmann and Sinopoli, 2002), Mauryan Empire is generally identi-
fied as being pan-Gangetic (Chakrabarti, 2000).
In terms of the Mauryan economic system, state institutions were instrumental to the promotion of
agriculture, production, mining, tax collection, trade, commerce and maintaining socio-economic sta-
tistics. In particular, international trade in goods and services was recognised as a vehicle for increasing
the sovereign’s wealth and that of his subjects (Mukherjee, 1976). This system was described in a sutra
(prose-poem) style treatise called the Arthasastra (trans: the science of wealth).
The importance of the Arthasastra derives from the fact that it is the only treatise devoted entirely
to statecraft and wealth in ancient India to have survived (McClish and Olivelle, 2012). As such, it is an
invaluable resource for understanding how intellectuals and rulers of that time understood the project
of running an ancient economy. The text contains details of business practices, including, for example,
account keeping by government record keepers. It provides details of matters to be recorded, a system
of examination of accounts, and details of punishments for non-compliance. Framed in terms of clas-
sical economic theory, Waldauer et al. (1996: 106) found that the Arthasastra provides advice on how
the wealth and wellbeing of the subjects could be advanced by a fair system of taxation. In addition,
development economist Marinko Skare explored links between the Arthasastra and recent labour wage
theory, noting the role assigned to labour productivity within the text (Skare, 2013: 4–7 and 12).
 Journal of Institutional Economics 3

The Arthasastra was initially translated to English in 1915 by Sanskrit scholar and librarian at the
Oriental Research Institute of Mysore, Rudrapatna Shamasastry. Until this translation, the Arthasastra
was known only through references in works by earlier Indian authors such as Dandit and
Vishnusarma. Therefore, this work is the main reference for our study. Later translations, namely
by R.P. Kangle and L.N. Rangarajan, are also cited in this paper to reflect the different motivations
of these Sanskrit scholars. The Kangle translation includes a scholarly discussion of the text. The
Rangarajan translation rearranged the original text by topics. Reference to these three translations
was necessary to order to identify common themes.
Although written in Sanskrit (a sacred language that only the elite Brahman class used and taught),
the literary style adopted in the Arthasastra was also aimed at society in general. As Sanskrit scholar
Mark McClish identified, it was not explicitly influenced by orthodox Brahmanical ideology, lacking
the pro-Brahmanical bias found in other Sanskrit works (McClish, 2009). The Arthasastra emphasised
that all individuals should follow moral standards demonstrating due respect to the happiness and
prosperity of others, refraining from injury or perfidy (Bandyopadhyaya, 1982).
In this paper, we also refer to contemporaneous works by Greek and Roman historical figures such
as Megasthenes and Strabo, as well as archaeological research to further mitigate potential differences
in interpretation. We start with Mauryan archaeology and the Ashoka edicts.
Erected throughout the geographic range of the Mauryan Empire during the reign of its most note-
worthy King, Ashoka,2 a series of edicts carved in rocks (31 sites identified to date) or stone pillars (19
sites) ‘describe the social, religious, and political reforms he instituted, as well as details of his life’
(Sugandhi, 2012: 145). Of interest to this paper, they document ‘his attempts to spread his dhamma
or “righteous rule” through his kingdom and beyond3 … (where) … individual locations and edicts
appear to have played varying roles, rather than just representing propaganda near subdued cities
or marker stones at the edges of the empire’ (Coningham and Young, 2015: 445). The later claim
is contested (see, e.g. Cheatham, 2012) given the many examples of ancient panegyric works such
as the Res Gestae Divi Augusti, to use a Roman example (Parmar, 2016: 73). However, this form of
epigraphic record has been noted as important in other South Asian empires. For example, in his
study of the Kusana (or Kushana) Empire active between the first and third centuries CE, Skinner
(2017: 47) notes that ‘a pattern emerges that … the emergence of inscriptions … marked the transition
from an emergent political entity to an entrenched power’.
Greek as well as Roman historians and geographers writing about India in or near this period also
documented knowledge of the Mauryans and their institutions. Foremost amongst these historic fig-
ures is Megasthenes’ and his treatise titled ‘Indika’. He was said to be present in the Mauryan court as a
representative of far eastern Greek-speaking polities following the death of Alexander the Great. As
Arora (1991: 308) identifies, ‘In the Graeco-Roman world, it was the main text through which
India was understood’. Foremost among classical authors who quote from Megasthenes includes
Strabo, Diodoros, Arríanos and Plinius.
With this background in mind, we next explore the culturally rich organisations articulated in this
ancient manuscript and other contemporaneous texts.

3. Trade and commerce in the Mauryan Empire

Trade and commerce were important to Mauryan society and its economic success, the extent of
which are ‘… revealed by widespread artifactual deposition of Indian material in the Gulf of Aden,
2
Ashoka ruled the Indian subcontinent from circa 268 to 232 BCE reigning over territory stretching from present-day
Afghanistan in the west to Bangladesh in the east. It covered the entire Indian subcontinent except for parts of present-day
Tamil Nadu, Karnataka and Kerala (Kalam and Tiwari, 2006: 47).
3
Selvanayagam (1992: 64) interprets the concept as follows: ‘Asoka’s dharma has a twofold aspect: one is practical, con-
cerning interpersonal relationships and emphasizing the duties of each individual at home and in society; the other is doc-
trinal in a general sense and includes a special concern for sanctity of animals, tolerance of other faiths, discipline and moral
progress’.
4 Jim Rooney and Vijaya Murthy

Persian Gulf and Southeast Asian regions’ (Gupta, 2005: 140).4 In the Arthasastra, trade is recognised
to the extent that ‘The king shall promote trade and commerce by setting up market towns, ports and
trade routes, both by land and water’ (2.1.19, Rangarajan, 1992: 155). Taking advantage of natural
endowments, the Mauryan Empire intensified historical commercial activities within its borders as
well as with other sovereign states (Lahiri, 1992), including those beyond direct geopolitical control
(Srivastava, 1968).
Paralleling this development, Horace, the Augustan Roman poet and biographer who lived during
the end of the Mauryan Empire, illustrates the perceived significance of the trade between Rome and
India in concluding that ‘… most men are fools; as idle as they are (impiger), they are ready to sail as
merchants to the end of the world (extremos Indos); in order to escape poverty ( pauperiem fugiens),
they are happy to face a number of perils at sea’ (Parmar, 2016: 62). Furthermore, ‘Augustan poets
frequently associated India with a set of luxury items and there was a generalized feeling that the
wealthy and ultimately the state were lavishing far too much money in purchasing such articles’
Parmar (2016: 54). Summarising finds at excavation of an ancient port in present day Gujarat,
Parmar (2016: 63) lists some of the Mauryan luxury items traded with Rome such as ‘… spices
(long pepper, costum, spikenard), medicines (lycium), textiles (cotton, silk and molochinon cloths,
silk yarn), ivory, minerals (agate, onyx) and aromatics (bdellium)’. Fitzpatrick (2011: 31) summarises
the trade relationship:

Rome was said to have been running a trade deficit to the East of 100 million sesterces per year,
half of which went to India. This should be seen against the backdrop of a recent estimate of
Roman GDP of 10 billion sesterces in the first century C.E.

Given the importance of trade to the Mauryan Empire, understanding key institutional character-
istics influencing that trade is pertinent: specifically, hierarchical state organisations, guilds and the
caste system. Each is discussed in turn.
As described in the Arthasastra, there was a clear demarcation of roles for each state appointed
administrator. For example, the Superintendent of the Marketplace was responsible for protecting con-
sumers from ‘irresponsible’ actions by individual traders. He (the job was not open to female candi-
dates) was charged with ensuring that goods were sold ‘so as to favour the subjects and avoid making
profits that would be injurious to the subjects’ (2.16.5/6, Kangle, 1986: 146). This is consistent with the
concept of dhamma found on the Ashokan Edicts which, as highlighted by Bloch (1950: 31) include
truthfulness and charity as well as social welfare.
The need for this institution is evidenced in Book Four of Arthasastra titled, ‘Keeping watch over
traders’, whereby ‘Merchants … are all thieves, in effect, if not in name; they shall be prevented from
oppressing the people’ (4.1.65, Rangarajan, 1992: 67). In particular, they are identified as tending to
manipulate the prices of goods by joining together (8.4.36) in order to make excessive profits
(4.2.28) or to trade lost and stolen articles (4.6.3). The expectations described in the Arthasastra
appeared to be of economic exchange at fair prices, taking ‘into account the investment, the quantity
to be delivered, duty, interest, rent and other expenses’ (4.2.36, Shamasastry, 1963: 303). Hence, the
‘profit margin allowed to merchants shall be 5% for locally produced goods and 10% for imported
goods’ (4.2.28, Rangarajan, 1992: 207). In the Arthasastra, breaches of this controls were punishable
with heavy fines.
However, despite this mistrust, the Arthasastra also envisaged protection for traders in the form of
the provision of shelter and security for the goods of travelling merchants (4.13.7/8, Shamasastry,
1963: 334). Losses sustained by such merchants were ‘made good’ by local village leaders and govern-
ment officials (4.13.9-12, Rangarajan, 1992: 206), as long as they stayed within the sanctuary of a
4
Here, reference is to Sanskrit manuscripts generally referred to as the Jakatas in English language publications. These
manuscripts are accounts of the life of Buddha, most likely Brahmin in origin (Cowell, 1990: 2).
 Journal of Institutional Economics 5

village and let ‘the village officers know of the value of their merchandise’ (4.13.7/8, Shamasastry,
1963: 334).
Foreign trade was encouraged with imported goods ‘sold in as many places as possible [in order to
make them readily available to people in the towns and the countryside]’ (2.16.4, Rangarajan, 1992:
207). Furthermore, financial incentives were provided in the form of tax concessions (2.16.12,
Rangarajan, 1992: 207) such that ‘[local] merchants who bring in foreign goods by caravans or by
water routes shall enjoy exemptions from taxes, so that they can make a profit …’.
Provision of transport routes for trade purposes was also a state activity. Long distance roads were
constructed and maintained by the state, facilitating greater mobility and easy transportation of goods
and surplus production from one region to another. The Mauryan state financed other infrastructure
works such as agricultural irrigation, as indicated by Megasthenes, Stabo and the Dharmaśaśtras5
(Singh, 2017: 151). The state also provided separate areas in the towns for the operation of different
trades and crafts.
In controlling trade, the Collector of Customs and Tolls was responsible for establishment and
management of the customs house, appointing collectors who check merchants arriving into cities
with their merchandise. Goods were not sold at the place of production but were to be brought to
a local market as the State found it convenient to control the turnover of goods, prices and profits,
and to help ensure that duties were not evaded (Kangle, 1986). Trade movements were recorded,
along with merchant identification and merchandise quantities (2.20.1-5, Kangle, 1986: 162).
Possible physical evidence of this trade control structure has been found in the Goayaya shipwreck
of the coast of Sri Lanka where ‘two well-preserved clay sealings on which a lion is depicted …
may have been used for merchandise, as described in Kautilya’s Arthasastra’ (Dimucci, 2015: 4).
Although the lion has been identified as a representation of Ashoka on a number of the pillar edicts
(Coningham and Young, 2015: 444), caution is needed as it was also the symbol of a fourth century Sri
Lankan king. Regardless, ‘… clay and lead sealings are well represented throughout the Mediterranean
world’ (ibid.), pointing to persistent trade control practices.
Since all trade was under State control, there was limited scope for large scale individual traders or
private industry. Instead, elites within the Mauryan Empire encouraged artisans and craftsmen to form
private institutions known as sreni.6 Sreni (or guilds) were a multi-faceted form of economic and social
organisation that combined the functions of a professional association, political institution, trade
union and a court of justice (Mahapatra, 2012). The srenis enabled individual occupational groups
to specialise in particular trades and businesses.
Encouragement of srenis was built on examples of similar private institutions in earlier periods of
Indian economic history. Ancient sources of Indian law frequently refer to the system of guilds which
began prior to, and continued after, the Mauryan period (Thapar, 2015: 73). In his study of commer-
cial activities in pre-Mauryan periods, historian Ramesh Majumdar found that co-operation among
traders was likely to be a necessity forced upon them by physical dangers. In having long distances
and insecure roads to traverse, they could, when united, physically resist these dangers (Majumdar,
1969: 13). This included a form of local regulation for their occupation. For example, the Gautama
Dharmasutra7 stipulates that ‘Cultivators, traders, herdsmen, money-lenders and artisans (have
authority to lay down rules) for their respective classes’.
Estimates vary between 18 and 150 sreni at various times in the Mauryan Empire, covering both
trading and craft activities. Indicating a high level of occupational specialisation, sreni covered profes-
sions ranging from carpenters, ivory workers and bamboo workers to money-lenders, barbers, jewel-
lers and weavers (Khanna, 2006: 10). Of particular interest to this paper, Mauryan guilds safeguarded

5
For further detail, see Olivelle and Davis (2018).
6
Guilds were labelled using several terms in Vedic literature – sreni, gana, puga, vrata and nigama. The term sreni is more
abundant in Sanskrit, Buddhist and Jain literatures as well as official seals.
7
Generally identified as one of a number of ancient Sanskrit texts describing personal responsibilities, duties and ethics.
The origin and date of this text is contested, being dated from as early as 500 BCE to 100 BCE (Olivelle, 2006: 64).
6 Jim Rooney and Vijaya Murthy

the interests of traders and craftsmen against oppression by the King (Thaplyal, 2001). The chief con-
cern of members of the sreni appears to have been to maintain a distinct identity, status and power
within the operation of state legal systems, physical protection and societal norms (Thapar, 2015:
143). This is similar to the institutional aims of the Roman occupational guilds known as the
Collegia Opificum, although the intent of the Roman king who first codified them, Numa
Pompilius, appears to be more akin to the control of competing ethnic groups (Gabba, 1984: 81).
The internal processes of srenis were outside of direct State control, allowing producers organise a
working system and assuring customary rights and obligations of the guild (Thapar, 2015: 72). For
example, srenis prescribed punishment for violation of its institutional rules (Mahapatra, 2012)
where aberrant behaviour by members was censured through a court within an individual sreni.
They also maintained elements of societal and legal functions for their own group, eventually includ-
ing marriage services where guilds become patrons of religious sects. Sreni intervened in the private
lives of its members in other ways. For example, Thapar (2015: 249) identified that if a married
woman wished to join a Buddhist Order as a nun, she had to obtain permission not only from her
husband but also from the sreni to which she belonged. Nevertheless, when problems with individual
behaviour were not addressed by the sreni (such as damage to, or appropriation of, customer goods),
state institutions took control (Kangle, 1986).
Srenis seem to perform an intermediate social and economic role between an occupational or busi-
ness association and a caste with the scope of its influence dependent on the specific sreni. However,
although caste is necessarily hereditary, guild membership was not always so. For example, continu-
ation of a profession within a family was more common with members of craftsmen’s guilds than with
members of traders’ guilds (Majumdar, 1969). Despite the potential for work/caste conflict, an indi-
vidual could be a member of only one caste but could be a member of more than one guild.
Hence, examination of Mauryan institutions also requires an understanding of the caste structure.
The social practices variously known as caste, jaati or Varna is an institutionalised expression of social
order (Majumdar, 1969). Varnas prevailed in a form prescribed by the Vedas8 and, as such, were con-
sidered divinely ordained and immutable. The State didn’t create it, nor did it have the right to modify
it. Access to its teachings was restricted to the Brahman caste, being transmitted in oral form at the
time of the Mauryan Empire (Witzel, 2003: 68). However, the State did have the duty to preserve social
order prescribed in the Vedas (Kangle, 1986). Its importance to social and economic control is con-
firmed in Greek and Roman texts on social layers in India (Bosworth, 1996: 124).
For example, concepts of right and wrong (dharma and adharma) were based on Vedic principles.
The Mauryan state expected every citizen to discharge their social obligations according to the dharma
of their caste and punished individuals (danda) who interfered with the dharma of other communities
(Dikshitar, 1993). Within the established Varnas, individuals were expected to keep to their assigned
social roles, adhering to their respective duties and occupations (Ilaiah, 2001: 103).
The Arthasastra describes the specific duties of four Varnas, designated in terms of their occupa-
tion – Brahmans, Kshatriyas, Vaisyas and Shudras (Murthy and Rooney, 2018). In contrast, prior to
the Mauryan Empire the four Varnas were based on ethnicity (Verma, 1959). Over time, occupations
tended to become hereditary and, consequently, functional groups began to form into hereditary
classes. The Dharmasutras9 repeatedly advised people to earn their livelihood by performing their
caste duties or Varnadharma (Srivastava, 1968). Over time, caste-based allocation of occupation
was accepted as a divine decree and was not regarded as a social injustice (ibid.).
Nevertheless, though the Dharmasutras laid down strict rules regarding the occupations to be fol-
lowed by the four different castes, at the time of the Mauryan Empire, some individuals may not have
adhered to them (Verma, 1959). This can be attributed to three specific socially acceptable

8
The Vedas are a large body of knowledge texts originating in the ancient India, composed in Sanskrit language. According
to Radhakrishnan and Moore (1957), they constitute the oldest scriptures of Hinduism dating from circa 1500 BCE.
9
The Dharmasūtra is a Sanskrit text and likely one of the oldest Hindu texts (600 to 200 BCE), whose manuscripts have
survived into the modern age (Olivelle, 2006).
 Journal of Institutional Economics 7

circumstances. First, during times of economic distress, a person belonging to a higher caste was per-
mitted to perform the occupation of the lower caste. For example, Brahmanas could take up military
duties, trade or agriculture and Kshatriyas could take up agriculture or trading (the usual occupation
of a Vaisya). Second, the progeny of inter-caste marriages has a choice of occupations. Finally, traders
(Vaisyas) could become prosperous, attracting both Brahmans and Kshatriyas to engage in trade and
commerce.
Hence, the institutional practices of the sreni and castes first seen in earlier Vedic times worked in
unison with other social practices to influence the trade structures and practice of the Mauryan
Empire. In considering the distinction between castes and sreni, Thaplyal (2001) identified that though
similar in some respects, sreni were primarily occupational institutions whereas castes were primarily
social groups. However, in populated areas where caste and sreni membership coincided, the head of
the guild presided over the meetings of both sreni and caste (ibid.).

4. Discussion
Recognition of the concurrent existence of state-controlled alongside private institutions in the
Mauryan Empire is consistent with a range of studies on ancient societies. Comparisons can be
made, for example, with chronologically proximate ancient states such as the Persian Achaemenid
Empire, where occupational structures operate within a hierarchical state (Farazmand, 1998: 76).
Consistent with much of the orthodox literature on economic development (Castellani, 2019: 702),
hierarchical state institutions may constrain potential economic outcomes available to private
Mauryan institutions and individuals. However, recent studies on subjective well-being also indicate
positive interactions between institutions, economic performance and cultural norms specifying
good conduct towards other members of society (Algan and Cahuc, 2010). Gorodnichenko and
Roland (2011) isolate these interactions to economic systems where static efficiency and coordination
of relatively stable production technologies are paramount, suggesting lower levels of innovation.
However, in considering lack of available historical records, investigation of rates of innovation in
the Mauryan Empire would be necessarily problematic despite prior claims in areas such as metal-
lurgy, agriculture and social developments such as increased urbanisation and the diffusion of religious
practices (Kirk, 1975).
The interest here is in the role of the sreni in light of the importance of trade to the Mauryan econ-
omy. Accordingly, this section explores the significance of sreni as institutions within the ancient
Mauryan Empire. In particular, Mauryan subjects associated safety from economic and social risk
with membership of a specific Varna and, for the appropriate occupations, to srenis as institutions
allowing members to claim rights recognised in Mauryan social symbols and rituals. An individual
had no economic status without these organisations. If an individual ignores the boundaries and social
constraints of these institutions, this may have dramatic consequences for them and society. Mauryan
institutions emphasised that the ‘natural order’ of the society was expressed in the occupation bound-
aries of these institutions. At the same time, Mauryan subjects gained assurance in expert knowledge
associated with the occupations supported by Varna symbols, rites and rituals exhibited within the
institutional boundaries of the srenis.
Hence, Mauryan subjects working within the boundaries of both state and sreni institutions accept
risk as long as decisions are justified either by state representatives or by occupational experts within
the sreni. Here, although state expert elites were Brahmin, Brahmins did not directly control the opera-
tions of sreni. As a result, experts operated within the srenis on the basis of their occupational knowl-
edge rather than the judgement and authority of Brahmins. For individuals within a sreni, behaviour
consistent with sreni symbols, knowledge and processes, formed within societal norms, were rewarded
by employment, remuneration and status.
Apart from institutional boundaries, another important difference between groups is the amount of
control their members accept. More comprehensive regulation is likely to result in groups that are
more hierarchical. Reaching across Mauryan society, formal processes enforced by state institutions
8 Jim Rooney and Vijaya Murthy

provided a basis for market pricing by placing ethical and price constraints on market outcomes. The
ethics of the Vedas were enshrined in market processes and institutions. This aspect of the Arthasastra
as well as in the Ashoka Edicts reaches beyond impersonal market processes identified as ideal in mod-
ern capitalist economies to explicitly embrace social cohesion and fairness. Consistent with both avail-
able evidence, Mauryan state and private institutions aimed to manage social needs as well as
measurable economic outcomes. This is simultaneously consistent with, as well as in contrast to,
the development and operation of markets in medieval Europe and, to the extent at which guilds oper-
ated, in Greece (Tridimas, 2019) or Rome (Temin, 2001), as discussed below.
Corresponding to market matching institutions and processes described by Boerner and Quint
(2010), the Mauryan state established places for trade as well as regulation to control market activities
in order to address risks inherent to trading and consumer relationships. Relevant market processes
included the enabling of credit transactions and exchange, ‘a necessary precondition for the market-
making activities’ (ibid.). In contrast to medieval European institutions, however, the economic pro-
cesses of market matching involving buyers and sellers across long distances between the manufacture
and consumption of goods was not facilitated by private brokers in Mauryan economy. This was a
joint responsibility of the state and sreni. For example, the market space for suppliers of labour and
goods was provided and regulated by the state. However, within social constraints monitored by
state institutions, goods were provided and priced by relevant sreni. This contrasts with ancient
Greece and Rome where price making was facilitated on basis of individual commercial contracts
and the law; in Rome, being the legal concept of the notion of ‘just price’10 or justum pretium
(Maniatis, 2003: 131) and in Greece being citizenship laws emphasising notions of individual respon-
sibility (Tridimas, 2019: 7).
Similar to medieval European market brokers, sreni were a ‘multifunctional institution which per-
formed commercial intermediation certification of the quality of goods …’ (Boerner and Quint, 2010:
2). However, they were not responsible for ‘tax collection for the town, and the notarization of deals’
(ibid.). That, again, was a state responsibility. In addition, unlike medieval market brokers, they were
also developers and providers of specialist industry labour, a role fulfilled by separate institutions in
Europe (i.e. guilds). Furthermore, sreni fulfilled social and political roles consistent with the religious
caste to which members of the sreni belonged. Although some European guilds also fulfilled these
roles, unlike sreni, they were separate social organisations to the private market brokers of Europe.
A summary of the comparative roles of these institutions and the Mauryan state is provided in
Table 1.
In examining the multilayered social relations present in Mauryan society, we find a consistent
theme of integration between institutions and societal norms in Mauryan society in comparison
with ancient and medieval European societies. The importance of this distinction in understanding
the values and risks promoted in a particular society can be seen in comparative studies. Here, we
find substantive differences in the role of spirituality and social values in constructing the economic
status of individuals. For example, in an examination of ‘defiled trades and social outcasts’ in
German-speaking kingdoms of the 16th–18th centuries, social and cultural historian Kathy Stuart
(2006: 9) identifies the importance of understanding the role of societal norms on economic activity:
‘A striking difference between caste pollution in Japan and India or Polynesian mana/taboo and early
modern German dishonor lies in the ideological legitimation and the effects of pollution. In India and
Japan, pariah groups were described as religiously and spiritually defiled …’. In other words, for
Mauryan institutions, cultural adherence explicitly included both an economic and spiritual or ethical
dimension.
Furthermore, although the enforcement of Varna and sreni institutional constraints effected social
and occupational status in Mauryan society, medieval European workers were not always bound to
social institutions, leaving room for the slow development of individual character only loosely
bound to institutional identity such as can be found in the European journeyman (Stuart, 2006:

10
A term more recently invoked in recent debates on Healthcare costs, particularly in the USA (e.g. Kantarjian et al., 2013).
 Journal of Institutional Economics 9

Table 1. A comparison of Mauryan and Medieval European market institutions

Medieval Medieval Medieval

Social and Mauryan European European European Medieval
economic state trades and market market European
role Sreni institutions journeymen town broker guild

Specialised X X
labour
Creation of X X
goods
Transport of X X
goods
Physical X X
market
Price setting X X (price X
control)
Certification X X
of goods
Tax collection X X
Notarise X X
trades/
deals

15). Hence, private institutions such as the sreni were crucial within Mauryan society to the social sta-
tus as well as the economic survival of individuals. Accordingly, we next contrast the social and eco-
nomic plurality of sreni with the largely economic focus of guild institutions that developed in Europe.
The rationale for European guilds was as institutions that ‘arise and survive as a result of political
conflicts over distribution’ (Ogilvie, 2014: 170). The notion here is largely one of economic rent seek-
ing of the type referred to as ‘occupational licencing’ by labour economist Morris Kleiner (2015). This
is seen as economically inefficient in both the neo-Marxist and neo-classical economic literature
(ibid.). The suggestion is that European ‘guilds enabled their members and political elites to negotiate
a way of extracting rents in the manufacturing and commercial sectors, rents that neither party could
have extracted on its own’ (ibid.). Stuart (2006: 16) identified the economic focus of European form of
guilds in the similar terms, whereby ‘Artisans masterfully invoked the norms of honor and common
weal in their effort to maintain areas of corporate autonomy against the encroachments of increasingly
authoritarian governments’. Here, honour and fairness were largely defined in terms of the risks of
failing to achieve economic rents rather than as a socially acceptable trade-off between wealth and
social norms.
In contrast, sreni fostered behaviour that reinforced social as well as economic duties, being strongly
associated with identities supported by the Varnas and found in the Arthasastra. In the Mauryan
economy, guilds addressed risks associated with both wealth creation and social/religious duties.
Hence, although we do agree with Ogilvie that guilds are ‘not a modern phenomenon’ (Ogilvie,
2014: 176), we argue that their characterisation as institutions for ‘occupational licensing’ (ibid.) is
demonstratively less relevant to Mauryan guilds. As mentioned earlier, sreni were multi-faceted insti-
tutions that, with the support of formal state institutions and in contrast to European guilds, ‘encour-
aged a generalized trust across the wider economy’ (Ogilvie, 2014: 186) as long as they adhered to the
social norms, values and ideology of Mauryan society. If they did not, Mauryan state institutions,
through their direct involvement in economic activity, were able to monitor and sanction the particu-
lar sreni whose members had failed in their duties.
10 Jim Rooney and Vijaya Murthy

This is an important distinction as ‘economic growth requires a generalized trust that makes people
willing to transact on an equal footing with everyone, even strangers …’ (ibid.). The distinction here is
that European guilds exhibited ‘a particularized trust among its own members, as insiders in the closed
and multiplex social network of that guild’ that ‘gave rise to rent-seeking, demarcation struggles, and
hostility towards outsiders, diminishing rather than fostering the trust in strangers that might have
made markets and states work better’ (ibid.). It was economic brokers under local licence who pro-
vided the generalised trust required to facilitate the functioning of local medieval European trade
markets.
Emphasis on the differences in the role and scope of the State in relation to medieval European
guilds and Mauryan sreni can be seen in empirical evidence cited by Ogilvie (2014: 176) to the effect
that ‘The most successful medieval and early modern trading locations – the Champagne fairs, Venice,
Bruges, Antwerp, Amsterdam, London – were ones where the political authorities made such general-
ized security guarantees to all merchants rather than issuing particularized safe-conducts as privileges
to members of favored guilds’. Here, Ogilvie was referring to individual city authorities. This distinc-
tion is instructive, as the co-founder of the Annales School, Marc Bloch, emphasised in Feudal Society.
In medieval Europe, ‘despite the persistence of the idea of a public authority superimposed on the
multitude of petty powers, feudalism coincided with a profound weakening of the State, particularly
in its protective capacity’ such that ‘a considerable part of the political authority exercised by innumer-
able petty chiefs had the appearance of a usurpation of “regalian” rights’ (Bloch, 1961: 443). He asserts
that feudalism resulted in ‘an unequal society, rather than a hierarchical one – with chiefs rather than
nobles; and with serfs, not slaves’ (ibid.).
In contrast, security, protection and preferential price protection for foreign traders and
Mauryan subjects engaged in trade was explicitly arranged, provided and enforced by national
state institutions. Furthermore, we argue that a key explanation for the differences between medi-
eval European guilds and Mauryan sreni is the social norms embedded in the rituals and symbols of
respective social and private institutions. In particular, social outcomes were pursued alongside
economic success, achieving trade through state and private market structures. This pluralism con-
trasts with medieval European markets where privileging ‘impersonal exchange’ practices is seen as
economically efficient.
Similar arguments have been advanced in related studies of economic development and the role of
legal systems in other ancient societies. For example, in a study of economic growth in ancient Greece,
political economist George Tridimas (2019: 3) suggests that ‘contrary to the primitive view, farmers
ran their business with the aim of improving yields and profits …’. However, he does go on to identify
‘cultural traits’ such as ideals of self-sufficiency, freedom and individual rather than collective rights as
part of an ‘anti-development’ culture that limited the potential for capital intensive technology and
economies of scale (Tridimas, 2019: 21).
Consequently, we assert that human actions expressed and reinforced in the form of institutions
were essential aspects of Mauryan economic success. Here, market integration is ‘an important mech-
anism by which institutions affect growth’ (Keller and Shiue, 2016: 2). In contrast to the European
guild system, where market integration beyond particular city-states was considered to be low until
the 19th century (ibid.), the pluralist institutional structures of the Mauryan state and the sreni pro-
vided sufficient market integration to expand trading routes and economic relations that had existed
prior to the Mauryan Empire.
Hence, although academic writing on the Mauryan Empire is significant, past scholarship has
tended to focus on the histography of economic, political, societal or legal constructs (e.g. Goyal,
1995; Gray, 2014; Skare, 2013), this paper has concentrated on an examination of Mauryan institu-
tions as both economic and social phenomena. Accordingly, we argue that our findings have
important implications for understanding of economic development in ancient societies. In par-
ticular, understanding of structural, processual and behavioural dynamics of economic action in
ancient societies can be advanced by more nuanced analysis of the forms of collective action
 Journal of Institutional Economics 11

based on a range of human interests, rather than a singular form of economic self-interest (Carballo
et al., 2014: 110).11
Echoing a recent call by Logue et al. (2016: 18), further examination of the role of institutions and
institutional processes in achieving economic outcomes in ancient societies needs to consider the
multi-layered constitution of social and economic interaction effects. This includes consideration of
the role of public order institutions identified in a review of research on the links between institutions
and economic growth by Ogilvie and Carus (2014: 428). In the case of the Mauryan polity, the import-
ance of a ‘variegated social structure’ encouraging development of commerce and trade integrating but
not completely dependent on private institutions known as sreni was reinforced by state-owned eco-
nomic and public-order institutions (Ogilvie and Carus, 2014: 435).
Hence, Mauryan economic development is not explained simply in terms of the modern construct
of market ideology shaped by the ‘degree of autonomy an individual has over the selection of their role
(s) in society’ (Linsley and Shrives, 2009: 499). This suggests the need for a pluralist definition of eco-
nomic freedom that encourages scholars to explore social phenomenon beyond the privileging of eco-
nomic outcomes derived from ‘conditions unique to modernity’ (Carugati et al., 2015: 4).
Consistent with the empirical findings in this paper, Klein (2015: 329) notes that a focus on values and
the ‘transubstantiation’ of these values ‘through domains of practice’ within organisations is a character-
istic of the institutional logics perspective first articulated by Friedland and Alford. This focus highlights
that ‘institutional rules thus provide for stability in a world of uncertainty’ (King, 2012: 300). In particular,
both state and private institutions have a key role in economic success that, overall, ‘helps convert uncer-
tainty into calculable risk’ (King, 2012: 303). Here, shared social values and economic expectations across
Mauryan society were instrumental in helping to facilitate private institutions and economic activity. This
is partly as a consequence of relationships between societal values, their expression within institutional
symbols or rituals and their effect on Knightian uncertainty (Lavoie, 2014: 74).

5. Conclusion
In summary, this paper highlights the role of social values in institutions found in an earlier time and
place. It has examined the role of these institutions in the control of social and economic uncertainty
within an economically successful ancient society. It has also examined the characteristics of social
order that identify where state and private institutions support individual wealth creation within pub-
lic order norms across society.
Given an absence of economic statistics we are unable to make any claims on the relative economic
performance of Mauryan institutions.12 Hence, the paper has focussed on understanding the struc-
tures and processes identified with Mauryan institutions to achieve a balance between wealth gener-
ation and ethical behaviour. Social structures have been shown to engage with ‘modern’
representations of economic markets that allow for individual wealth creation. Accordingly, we
agree with classics scholar Sarah Morris (2006: 67) in that ‘we have outgrown the lame use of
“trade” as a self-explanatory force, to capture instead patterns of production …’.
Accordingly, historical analysis can play a role in terms of understanding economic path depend-
encies (David, 1994), such as those seen is an examination of the medieval antecedents of industrial
clusters (Akoorie, 2011). Historical studies examining perceived uncertainty and resulting values
embedded in social processes and structures can also help improve theorisation of interaction between
private institutions and broader societal values, symbols and rituals.
In considering the results of this paper, key limitations should be considered. First, the extent to
which the translated script demonstrates the exact meaning of the original Sanskrit text may not be
11
For example, a recent study by Liu et al. (2014) of behaviour with regards markets for ‘sin’ products such as tobacco and
gambling found that social values and norms, expressed as rituals and processes, can provide a focus for understanding the
societal values and meaningful interaction between a range of individual interests, motivations and economic incentives.
12
See Harris (2009) for a comparison of the role of the corporations (originating as European institutions) and the
Commenda (arguably, originating in Arabia in the late-11th and 12th centuries).
12 Jim Rooney and Vijaya Murthy

clear, despite the efforts of the learned Sanskrit scholars. Although mitigated through the use of three
separate translations, the reliability of this translated work cannot be objectively guaranteed. Second,
modern terminologies (such as social order and economic freedom) have been used in this paper to
explain ancient Indian institutional practices. This is unavoidable but problematic, especially in light of
the arguments regarding the assumptions of scholars adopting a pre-modern/modern dialectic in
understanding ancient societies. Finally, readers should note that the Arthasastra was a book written
for the King and is not a descriptive history. Although supported by contemporaneous inscriptions
and archaeological finds, this paper largely projects an ideal society as depicted in the Arthasastra.
Hence, although patterns of economic behaviour are supported by alternate sources, in reality, daily
routines may have varied.

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Cite this article: Rooney J, Murthy V (2020). Institutions, social order and wealth in ancient India. Journal of Institutional
Economics 1–14. https://doi.org/10.1017/S1744137420000296