Ratan Lal Basu
Dr. Ratan Lal Basu is a Ph. D. in Economics – on Price Control Mechanism of Kautilya’s Arthasastra. He did his Bachelors and Masters Degrees from Presidency College, Calcutta (now Presidency University, Kolkata), the most prestigious college in India. Till his retirement from service in December 2008, he was the Teacher-in-Charge of a Government-Sponsored College at Kolkata. He has published around hundred articles on Arthasastra and other branches of Economics in Indian and foreign journals. He has edited a volume of articles on Arthasastra and written a book on modern relevance of Arthasastra and Manusmriti (the Hindu Law Book). He has published several e-books on all branches of Yoga & Tantra-cult, Economics in Arthasastra, Manusmriti & Mahabharata, Lord Krishna Mystery and Western Economic Concepts (ancient & modern). He is also a fiction writer in Bengali and English and he has keen interest in Music (Indian & Western Classical) and modern sciences. He is member of different economic associations and at present the Treasurer of the Bengal Economic Association.
Address: Kolkata, West Bengal, India
Address: Kolkata, West Bengal, India
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Papers by Ratan Lal Basu
Now let us come to price control. Price control does not imply fixation by the State of prices arbitrarily, disregarding market forces, but to see to it that traders and producers cannot manipulate prices to make exorbitant profits, cannot cheat the buyers or cannot create crisis and instability by taking advantage of shortages. Perfect competition enabling free play of market forces of demand and supply does not exist in the real world. Real world markets are characterized by the dominance of monopolistic, duopolistic or oligopolistic firms where prices are manipulated in order to earn exorbitant profits by the monopolistic or oligopolistic firms at the cost of the consumers. Here comes the necessity of State intervention.
Ancient authors, particularly Kautilya, prescribed price control measures by the State in this sense. Successful implementation of price control could be possible in Kautilyan economies because of the small population, small number of commodities and small number of markets. But the matter is extremely complicated in a modern economy with a vast population, innumerable buyers and sellers, innumerable markets and millions of commodities. Therefore, it is impossible to implement price control measures in such a vast economy by the State. Here comes the importance of AI. The technical problem of vast magnitude and complicacy as regards price control in a modern economy can be resolved by computer intelligence. This paper highlights how the AI can be utilized for proper implementation of price control mechanism in a modern economy.
It should be mentioned in this connection that an integral part of price fixation in Arthaśāstra were the measures associated with its proper implementation. So we are to discuss these measures which made the price fixation policy in Arthaśāstra realistic and free from utopian degeneration. These measures included:
i) Administrative measures; ii) Espionage mechanism; iii) Accounting and iv) Buffer stock.
The short run and long run aspects of Arthaśāstra price policy are also of importance. All the above matters are discussed in detail in the following sections.
The superintendent of commerce was entrusted with the task of enforcing the price policy. The prices of different commodities were to be fixed by him. He, however, did not fix prices arbitrarily. In fact, a uniform rule was followed throughout the country to determine the just prices of all the commodities. To quote from Arthaśāstra:
4/2/36: “In the case of commodities distant in place and time, however, the (Director of Trade), expert in fixing prices, shall fix the price after calculating the investment, the production of goods, duty, interest, rent and other expenses.”
Thus,
Just Price = Average cost of production + Tolls and Taxes + Transport and associated costs + Profit margin.
Now, one may be tempted to compare this ‘just price’ with other similar concepts available in the jungle of modern economic literature. But a little reflection will make one realize that such comparisons do not make sense. There are innumerable normative approaches and value judgements as regards determination of ‘fair price’ or ‘just price’. But in Arthaśāstra, ‘just price’ was simply a guideline that automatically came up from the general set up. It was, in fact, an integral part of the politico-economic system inherent in Arthaśāstra implementation of all other state policies as delineated in Arthaśāstra.
Now let us come to price control. Price control does not imply fixation by the State of prices arbitrarily, disregarding market forces, but to see to it that traders and producers cannot manipulate prices to make exorbitant profits, cannot cheat the buyers or cannot create crisis and instability by taking advantage of shortages. Perfect competition enabling free play of market forces of demand and supply does not exist in the real world. Real world markets are characterized by the dominance of monopolistic, duopolistic or oligopolistic firms where prices are manipulated in order to earn exorbitant profits by the monopolistic or oligopolistic firms at the cost of the consumers. Here comes the necessity of State intervention.
Ancient authors, particularly Kautilya, prescribed price control measures by the State in this sense. Successful implementation of price control could be possible in Kautilyan economies because of the small population, small number of commodities and small number of markets. But the matter is extremely complicated in a modern economy with a vast population, innumerable buyers and sellers, innumerable markets and millions of commodities. Therefore, it is impossible to implement price control measures in such a vast economy by the State. Here comes the importance of AI. The technical problem of vast magnitude and complicacy as regards price control in a modern economy can be resolved by computer intelligence. This paper highlights how the AI can be utilized for proper implementation of price control mechanism in a modern economy.
It should be mentioned in this connection that an integral part of price fixation in Arthaśāstra were the measures associated with its proper implementation. So we are to discuss these measures which made the price fixation policy in Arthaśāstra realistic and free from utopian degeneration. These measures included:
i) Administrative measures; ii) Espionage mechanism; iii) Accounting and iv) Buffer stock.
The short run and long run aspects of Arthaśāstra price policy are also of importance. All the above matters are discussed in detail in the following sections.
The superintendent of commerce was entrusted with the task of enforcing the price policy. The prices of different commodities were to be fixed by him. He, however, did not fix prices arbitrarily. In fact, a uniform rule was followed throughout the country to determine the just prices of all the commodities. To quote from Arthaśāstra:
4/2/36: “In the case of commodities distant in place and time, however, the (Director of Trade), expert in fixing prices, shall fix the price after calculating the investment, the production of goods, duty, interest, rent and other expenses.”
Thus,
Just Price = Average cost of production + Tolls and Taxes + Transport and associated costs + Profit margin.
Now, one may be tempted to compare this ‘just price’ with other similar concepts available in the jungle of modern economic literature. But a little reflection will make one realize that such comparisons do not make sense. There are innumerable normative approaches and value judgements as regards determination of ‘fair price’ or ‘just price’. But in Arthaśāstra, ‘just price’ was simply a guideline that automatically came up from the general set up. It was, in fact, an integral part of the politico-economic system inherent in Arthaśāstra implementation of all other state policies as delineated in Arthaśāstra.
Abstract
Ever since the Nobel Prize in Economics was awarded to Amartya Sen, there has been much endeavour to highlight Sen’s Shantiniketan background and affinity of his world outlook with that of Rabindranath Tagore. Unfortunately, a deeper analysis is likely to reveal that Amartya Sen’s views (based on western world-outlook) are diametrically opposed to that of Tagore (based on ancient Indian world-outlook), particularly as regards sustainable development and eco-ethical human living. This article endeavours to highlight these contrasting aspects of the world-outlooks of two Bengali Nobel Laureates.