Economics of Kautiliya Shukra and Brihaspati.pmd
Economics of Kautiliya Shukra and Brihaspati.pmd
Economics of Kautiliya Shukra and Brihaspati.pmd
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situation, Market Price = Normal price + non-availability effect or<br />
Market price > Normal price.<br />
Value/Price<br />
Value/Price<br />
Value/Price<br />
Fig.5.1. Equilibrium in the Market<br />
Value=Price<br />
o Dem<strong>and</strong><br />
Fig.5.2. Availability Effect<br />
Value<br />
Price<br />
o Dem<strong>and</strong><br />
Fig.5.3.Non-Availability Effect<br />
Price<br />
Value<br />
o Dem<strong>and</strong><br />
This theory is similar to cost <strong>of</strong> production theory propunded<br />
by classicists. Universaliness <strong>of</strong> this theory is beyond doubt but it is<br />
unfortunate that this reference is not included in the text-books in the<br />
universities to be read by the scholars. It is also has been neglected in<br />
the history <strong>of</strong> economic thought.<br />
72<br />
Limitations <strong>of</strong> Marshallian Price Theory<br />
Although Marshallian theory <strong>of</strong> price is considered the most<br />
satisfactory price theory. But the limitations <strong>of</strong> this are as follows-<br />
1. According to dem<strong>and</strong> <strong>and</strong> supply theory a consumer tries<br />
to purchase goods in minimum price. But this assumption may be<br />
criticized on two grwoundsa)<br />
It is not possible to purchase a commodity in low price<br />
than its cost <strong>of</strong> production in normal situation.<br />
b) It will be unjust to a seller if any consumer gets the<br />
commodity in less than cost price.<br />
2. A producer can charge high price than its cost price but<br />
this will be unjust to consumer.<br />
Factor Pricing in <strong>Kautiliya</strong> Arthashastra <strong>and</strong> <strong>Shukra</strong>-niti<br />
In Neo-classical Theory <strong>of</strong> Distribution Euler's Theorem 7 is<br />
applied. According to this theory if factors are paid according to their<br />
contribution, total production is exhausted. The Factor Price that is<br />
determined by Kautilya, <strong>Shukra</strong> <strong>and</strong> Manu theoretically <strong>and</strong> practically<br />
can be compared with the Neo-classical Theory <strong>of</strong> Distribution.<br />
They have fixed the rent 16.67 percent <strong>of</strong> the produce on an<br />
average.They are <strong>of</strong> the view that interest rates were to be rigidly<br />
fixed by the state (considering the degree <strong>of</strong> risk involved) so as to<br />
prevent usury <strong>and</strong> exploitation <strong>of</strong> the weak borrowers. Maximum<br />
limitation <strong>of</strong> total payment was fixed as the double <strong>of</strong> the principle<br />
amount. Kautilya has fixed interest rates on the basis <strong>of</strong> risks as follows,<br />
'Five Panas per month percent is commercial interest, 10 Panas per<br />
month percent prevails among forest, 20 Panas per month percent<br />
prevails among sea traders. Persons exceeding or causing to exceed<br />
the above rate <strong>of</strong> interest shall be punished'.<br />
73