Values pervade Indian economic systems

One of the most remarkable aspects of our economy is the pervasive influence of values and ethics in the economic and business systems. It is because the Indians were taught to follow the ethical principles in all their activities of life since the ancient periods. Evidences indicate that our forefathers strongly believed that means were as significant as the ends.
The sages and saints of our country emphasized higher values and the scriptures and texts exhorted people to follow them in all their day to day activities, including those that are related to economics and business. Thiruvalluvar allotted an entire chapter entitled ‘means of wealth’ to advise people as to how the higher ideals should guide them while creating and dealing with wealth. He cautioned people to avoid making wealth through wrongful methods and underlined that earning wealth without human principles would be a disgrace.
The ancient Indian texts and teachings of the gurus also emphasized fair business practices. As a result the traders and businessmen were guided by the higher principles. Hence people practiced higher values not only in matters involving ordinary economic transactions between them, but also in activities relating to businesses and trade, where profit making was the main purpose of the entire exercise.
Ancient India had various types of business organizations. The most common among them being sreni, which was similar to the modern corporate form of organization. There were rules called sreni dharma for those organizations, covering a number of topics including production practices, prices and quality controls. Arthasashtra prescribed clear rules for fair business practices.
A large number of traders in western India during the eleventh to thirteenth centuries were from the Jain community. The Jainese texts advised their community men ‘to follow truthful and peaceful means of earning wealth’. Jineswara Suri, in his Satsthanakaprakarana discussed the code of conduct which the merchants were expected to follow.
Records show that the foreign merchants preferred to do business with the Indians for their good character and helpful nature. Writing in the context of western India, Jain writes: “The character and conduct of traders in western India generally receive high acclaim from foreign travelers. Al Idrisi tells us that a large number of Muslim merchants visited Nahrwara ( Anahilavada) because the people of the town were ‘ noteworthy for their excellence of their justice, for keeping up their contracts, and for the beauty of their character’, and adds that the people of the region practiced truth and abhorred falsehood. Marco Polo bestows yet more generous praise on the merchants of Lata, …….. He says, ‘you must know that these Abraiaman are the best merchants in the world, and the most truthful, for they would not lie for anything on earth,’……. These observations of the foreign travelers may reflect the general ethos of the mercantile community in western India.”
The businessmen were advised to follow ethical principles not only in earning money, but also in using them. There was a moral compulsion to distribute wealth for good purposes and share it with the less privileged, instead of using it only for the self. Rabindranath Tagore noted: “In the old time when commerce was a member of the normal life of man, there ruled the spirit of Laxmi who with her divine touch of humanity saved wealth from the unseemliness of rampant individualism, mean both in motive and method”.
It is unfortunate that the social and administrative systems that were put in place to help practicing the traditional value systems were seriously disturbed by the Britishers during their period of domination. As a result the recognition and support required for their effective functioning from the state and the society became scarce. Subsequently India had to lose much of her well established systems during the past two centuries. The state apparatus of independent India had failed to recognize this aspect and rectify the mistakes.
But in spite of the severe disturbances to our native economic model, the basic value systems still dominate the economic and business transactions to a reasonable extent. Studies conducted in different parts of the country reveal that higher features such as goodwill, faith, norms and fair practices remain the basis of business transactions across the country.
Studies undertaken in the well known textile export centre of Karur in Tamil Nadu showed that even in the high-risk business of finance, funds are advanced by the financiers on the basis of faith and goodwill. They do not require documents from the borrowers. A study conducted among the entrepreneurs from the ghee and butter industry in Tamil Nadu showed that they do not enter a locality where already one of their persons operates.
Entry of new persons into the businesses are encouraged and facilitated by the existing entrepreneurs. Studies in different places show that the majority communities provide encouragement and support to the people from the most-backward and scheduled communities for promoting new ventures.
It is common to see people coming from different backgrounds - such as castes, region and religion - doing business by sharing norms and practices that are unwritten and common for everyone. Kanagasabapathi notes: “Studies of business practices in different industrial and business centres show the prevalence of higher human values and unwritten norms in the contemporary Indian business systems, especially at the non-corporate sector levels.”
Even at the corporate levels where the western systems have a wider sweep, the undercurrents seem to be dictated by the Indian thought process. The competition is not as bad between companies at the top levels, as it exists in the western economies such as the US. Indian businessmen do not prefer to take over the businesses of others in a hostile or secret manner.
The corporate sector is increasingly being recognized and appreciated by the west and the rest of the world in the recent years for its ‘Indian-ness’. A team of professors from the United States under Peter Cappelli of the Wharton Business School interviewed the senior executives of about hundred largest India based companies to find out how they drove their organizations to higher performance. The researchers found that the approach of the Indian companies were much superior to that of the western corporations and urged the leaders of the western corporate sectors to understand and adapt the managerial approaches followed here. While presenting the reason for the superiority of the Indian approach, they note: “The Indian leadership approach arose from the unique circumstances of the Indian economy and society.”
In fact the emergence of Indian economy as a global power during the recent years has been fuelled and facilitated by the values systems prevalent across the country among the people as a whole.
1. V.K.Jain in Ranabir Chakravarty, Trade in Early India, Oxford Univeristy, New Delhi, 2001
2. P.Kanagasabapathi, ‘Ethics and Values in Indian economy and business’, International Journal of Social Economics, Special Issue on India, Part I Vol.34, Issue 9, 2007
3. P.Kanagasabapathi, Unorganised finance sector: the engine for economic growth – A study with reference to Karur, Tamil Nadu, Swadeshi Academic Council, 2002
4. Peter Cappelli and others, ‘Leadership Lessons from India’, Harvard Business Review, March 2010
(Yuva Bharati, Vivekananda Kendra, Vol.39, No.4, Nov.2011)