Thursday, October 18, 2012


COURTESY: bharatkalyan97

Hindu social corporate form and śreṇi dharma: cure for greed 

S. Kalyanaraman (October 2012)


For nearly 3000 years since 800 BCE and perhaps earlier, śreṇi has been the corporate form of Hindu industrial, arts, crafts, business and civic entities. This śreṇi corporate form pre-dates the earliest proto-Roman corporations; śreṇi was widespread in Ancient India in business, social and civic activities; this corporate form continues to exist even today in Independent India, despite the adoption of a written Constitution governed by principles of Roman jurisprudence and laissez-faire economic principles governing the wealth of the nation. Indian ethical pluralism is called dharma ; śreṇi dharma is dharma applicable to a corporation. The laws governing śreṇi are called śreṇi dharma , emphasizing social responsibility of corporations. śreṇi dharma provides the mechanism to embed 'social ethic' enhancing the corporate model of capitalism or socialism either of which operates within the framework of 'rational, materialistic economic ethos'. Hindu society attaches importance to ethical values, ātman (innate cosmic energy) as also to the creation of wealth of a nation. An ascetic is as respected in Hindu society as a just ruler of a state. This remarkable integration of materialistic ethos with the social ethic is unique in the story of human civilizations. śreṇi dharma as social capital can supply the missing element of trusteeship. This śreṇi dharma constitutes an impressive contribution of Hindu civilization to economic thought, adding spiritual value to materialistic ethos.
The monograph is presented in three sections:

1. Evolution of śreṇi dharma as social corporate statute over 3 millennia;
2. Economics of śreṇi as ethical cure for lobha, ‘greed’;
3. Incorporation of Hindu śreṇi in economic thought and practice.

1. Evolution of śreṇi dharma as social corporate statute over 3 millennia

1.1 Background and definition of terms

This monograph is premised on the thesis that, while profit-making is a necessary concomitant of the pursuit of 'materialistic ethos', combating greed in corporations will help ensure that the beneficial activities of a corporation's core business also impact positively on the imperative of social ethic.

The focus of this monograph is on curing the cancer of lobha, ‘greed’ in economic activities.

Dharma refers to laws and also to fundamental duties or responsibilities governed by global ethic, leading to righteous conduct, and performance of righteous duty. The root of the word is dhṛ meaning ‘that which upholds or supports’, and is generally translated into English as the "law". Gautama, the Buddha, uses the term ‘eṣa dhammo sanantano’ or ‘this dharma eternal’. He explains dhamma as "dependently arisen phenomena" (paticca-samuppanna-dhamma ). In addition to signifying the overarching ethical order, the quintessential functions of a given profession (say, of artisans or merchants) are signified by the word 'dharma': (e'g. kṣatriya dharma, vaiśya dharma, etc), the dharma of relationships (e.g., āśrama dharma 'responsibilities inherent in a particular stage of life'), Thus dharma binds a community to discipline, highlighting social responsibility.

Indian ethical pluralism is called dharma ; an Indian state may be neutral as regards pantha nirapekṣatā (i.e. neutrality as to religious preferences or paths or ideologies related to political economy), but has to be bound by dharma. At a corporate level, śreṇi dharma is dharma applicable to a corporation and is a contribution of Hinduism to economic thought and practice. It provides the mechanism to embed 'social ethic' enhancing the corporate model of capitalism or socialism – either of which operates within the framework of 'rational, materialistic economic ethos'.

śreṇi is a corporate form which evolved from the four-fold ordering of early society (often referred to as varṇāśrama dharma , comprising śūdra, vaiśya, kṣatriya, and brāhmaṇa – 1. artisans and service providers; 2. merchants and agriculturists; 3. rulers and soldiers; and 4. scholars, teachers and priests. This four-fold set of institutions made a clear-cut demarcation of functions providing for checks and balances in a republican form of governance. The four-fold division of a society itself served as a preliminary check against greed in political economy. śreṇi is an ancient Indian guild – a corporate form -- of community groups such as artisans, craftsmen, traders, municipal workers, para-military or political entities. Synonyms used in ancient texts are: gaṇa, paṇi, grāma, sangha, vrata, pūga, nigama. 

śreṇi, in common parlance, is associated with hierarchy. But, it has no association with hierarchy in Hindu social formations. Many catholic church entities and many corporate forms of both socialism and capitalism have hierarchy. śreṇi means NOT ‘hierarchy’ but ‘a ladder with stairs’; that is, it is a mechanism for climbing up the ladder of wealth. Lexical meanings: 

śrēṇiḥ 1 A line, series, row; 2 A flock, multitude, group; 3 A guild or company of traders, artisans &c., corporate body; -dharma (m. pl.) the customs of trades or guilds; -śrēṇibaddha a. forming a row, being in a line; śrēṇībhū 1 To be arranged in regular order (MSD: 1102). 

Cognate lexemes in other Indian languages are: 

ēṇi, n. < šrēṇi. 1. Number; 2. Tier; (Tamil) 3. ēṇi Ladder (Kannada. Malayalam. Tulu. Tamil) ; 4. Limit, boundary; 5. Country, territory.

šrēṇi. 1. Street, row of houses; 2. Herdsmen's street; 3. Line, row, series; 4. The eighteen castes in a society. (Tamil) (Tamil Lexicon) A variant of the word also means a 'tent' in a variant form, śrēṇikā-- f. ʻtentʼ (Comparative Dictionary of Indo-Aryan Languages: 735). 

The meaning used in this monograph is related to śreṇi as a ladder – metaphorically, as a corporation of artisans, merchants or financiers which leads to step-wise creation of wealth in various facets of a political economy. "The guild in ancient India was not merely the means for the development of arts and crafts. Through autonomy and freedom accorded to it by the law of the land, it became a center of strength and abode of liberal culture and progress, which truly made it a power and ornament of the society". (Majumdar1920: 63) It should be underscored that a guild is a trade organization of workers -- not of capitalists. Recommendation of this corporate form does not mean suggesting that all businesses and enterprises must be worker-owned. This concept will be elaborated further elsewhere in this monograph.

1.2 Historical evolution of śreṇi as a social corporate form

The four-fold organization of varṇa in society with well-defined, checks-and-balances, but non-overlapping division of responsibilities – without impeding movement from one varṇa to another, based on one's potential -- related to the creation and administration of nation’s wealth, may have contributed to the emergence of śreni as the corporate form with clearly stipulated rules of ethical behavior exemplified by the directive in a Vedic text, the Bṛhadāraṇyaka Upaniṣad: datta, ‘give’! It is only after ethical rules (yama and niyama) are followed, ātmajñāna or self-realization (nihśreyas) can be attained. nihśreyas and abhyudayam (social welfare) constitute the twin facets of dharma , the inviolate, universal, eternal ethic.

In implementation of śreṇi as a corporation, the extended kinship system practiced in India is the foundation to cover almost every kind of corporate business and also aspects of municipal activity. According to Kauṭilya, there were two kinds of janapada ‘republics’: ayudhiya-praya, those made up mostly of soldiers, and sreni-praya , those comprising guilds of craftsmen, traders, and agriculturalists. (Agrawala 1963: 436-439). śreṇi based on an economic interest were often both part of the armed force of a state and recognized as having jurisdiction over their own members. (Majumdar 1920: 18-29; 60-63; Drekmeier 1962: 275-277).

“During the Gupta period in India (300–600 CE), craftmen's associations, which may have had archaic antecedents, were known as śreṇi. Greek organizations in Ptolemaic Egypt were called koinon, starting from their 3rd century BC origins of Roman collegia, spread with the extension of the Empire. The Chinese hanghui probably existed already during the Han Dynasty (206 BCE - 220 CE):, but certainly they were present in the Sui Dynasty (589 - 618 CE). Roman craftsman's organizations continued to develop in Italy of the Middle Ages under the name ars. In Germany they are first mentioned in the 10th century. The German name is Zunft (plural Zünfte) for guilds of craftsman and Gilde (plural Gilden) for guilds of merchants.Métiers in France and craft gilds in England emerged in the 12th century. Craft organizations (senf, sinf) stemmed from the 10th century in Iran, and were seen to spread also in Arabia and Turkish regions under the name futuwwah or fütüvvet .”(Wikipedia, Guild).

1.3 Corporate organization of artisans and traders

It is difficult to determine, with any amount of definiteness, whether the śreṇi institutions or corporations, corresponding to guilds of Medieval Europe, had developed in the early Vedic period. At present the sole evidence on this point consists of the use of the words śreṣṭhī (Aitareya Br. III,30,3. Kauṣītaki XXVIII,6. Taittirīya Br. III,1,4,10.) and gaṇa (Pañcavimśa Br. VI, 9,25; XVII, 1,5.12. Vs XVII 25l TS 1.8,10,2) in Vedic literature.

It is well known that the word śreṣṭhin in later literature denoted the 'headman of a guild.' The Vedic Index: 403 remarks that the word may already have that sense in the Vedic literature. Again, the word gaṇa means any corporate organization, although in later literature it is almost exclusively used with reference to political and religious bodies. Roth, however, points out that it is used in the sense of a 'guild' in Vedic literature. (St. Petersburgh Dictionary, s.v. Gaṇa).

Pali literature, thousands of epigraphs and ancient texts of ancient India, like those of Kauṭilya point to the role played by guilds in self-regulation of group activities -- through democratically agreed 'articles of association or incorporation' -- to minimize greed in public life. Rules and regulations of the corporation are called sāmayika. The rules were enforced on violators: e.g., "those who cause dissension among the members of an association shall undergo punishment of a specially severe kind; because they would prove extremely dangerous, like an (epidemic) disease, if they were allowed to go free." (cf. Nārada X.1, 6). Yājñavalkya samhita lays down in an emphatic dictum of political economy: kartavyam vacanam teṣāṁ samūha hitavādinām (enforcers of the word of honor and those bound by the responsibility for social welfare). "The corporate spirit of a guild is most strikingly manifested in verse 190, which lays down that everything acquired by a man while engaged in the business of the guild (apparently including even gifts from king or other persons), must be paid to the guild itself, and anyone failing to do this of his own accord, will have to pay a fine amounting to eleven times value." (Majumdar 1920: 38). 

One passage in Ṛgveda refers to the organization of society in four classes. There is nothing to show that these corresponded to four castes or formation of castes based on birth. The closest comparison may be to classes of clergy, the noble, the middle class, and the laborers in the European context. These were not rigid classes. A teacher could confer ārṣeyam, ‘brahmanhood’ upon a student. (Kauṣītaki 55), thus prescribing apprenticeship to become a member of a guild, say, of priests; they alone were a corporation of priests who possessed knowledge of the sacred texts. If prosperity attended a kṣatriya he could engage in his service any kṣatriya, brāhmaṇa, vaiśya and śūdra. Similarly any rich man belonging to any of the other three classes could employ a kṣatriya, brāhmaṇa, vaiśya and śūdra and all of them would be equally zealous in the services of their master -- irrespective of the caste to which he belongs. (Majumdar 1920:339) kāṭhaka (28,5) clearly states that kṣatriya are superior to brāhmaṇa; it was performance of responsibility which counted. (Majumdar 1920:345). The sippa (craftsmanship or competence), not jāti was the distinguishing determinant. Manu notes: "(The king) should carefully compel vaiśyas and śūdras to perform the work ( prescribed) for them ; for if those two ( castes ) swerved from their duties, they would throw this ( whole ) world into confusion." (Manu VIII.418). śukranīti reinforces the same dictum: "Every caste should practise the duties that have been mentioned as belonging to it and that have been practised by ancestors, and should otherwise be punished by kings." (Ch. IV, sect. IV, 82-83, translated by Binoykumar Sarkar) (Majumdar 1920:359). 

Mūgapakkha jātaka refers to a ruler who assembled the four varṇas and 18 śreṇi. Such extended families of the same or different jāti included: "1. Workers in wood (carpenters, including cabinetmakers, wheel-wrights, builders of houses, builders of ships and builders of vehicles of all sorts).2. Workers in metal, including gold and silver. 3. Leather workers.4. Workers in stone.5. Ivory workers.6. Workers fabricating hydraulic engines (Odayantrika).7. Bamboo workers (vasakara)8. Braziers (kasakara).9 Jewellers.10. Weavers.11. Potters.12. Oilmillers ( Tilapiṣaka).13. Rush workers and basket makers.14. Dyers.15. Painters.16. Corn-dealers (Dhamñika).17. Cultivators.18. Fisher folk.19. Butchers. 20. Barbers and shampooers.21. Garland makers and flower sellers. 22. Mariners.23. Herdsmen.24. Traders, including caravan traders.25. Robbers and free-booters.26. Forest police who guarded the caravans. 27. Money-lenders 28. Rope and mat-makers.29. Toddy-drawers. 30.Tailors.31. Flour-makers." (pp.15-17). One śreṇi of vēḷaikkāra of chola agreed thus: "We protect the villages belonging to the temple, its servants' property and devotees, even though, in doing this, we lose ourselves or otherwise suffer. We provide for all the requirements of the temple so long as our community continues to exist, repairing such parts of the temple as get dilapidated in course of time and we get this, our contract, which is attested by us, engraved on stone and copper so that it may last as long as the Moon and the Sun endure." (Government Epigraphist's Report. 1913, p. 101) (p.29). Such voluntary statutes -- with perpetual endowments made by members of the guilds -- emphasizing social, ethical responsibility, explain the role played by such corporate forms for creation of the wealth of the nation and the dotting of the entire nation with thousands of public or secular and religious structures like temples, performance of samskāras (religious observances) public assembly buildings, gardens, tanks and irrigation systems. A Chola inscription of the 10th century states that the villagers agreed ro contribute towards the repair of the tank. 'The committee for Supervision of Tanks' in the village levied the contributions and agreed to arrange for the removal of silt annually.” (G.Ep.R. No. 178 of 1902)( Majumdar 1920:182).

Members of the guilds thus transformed themselves into trustees responsible for using public money for public good. The key operational principle of the functions of a corporation was democratic discussion, secret ballot to elect officers of the corporation to enforce the ethical laws integral to the incorporation of a corporation. " inscription from Marudāḍu, belonging to the 8th year of Rajaraja I registers that a certain Kalipperumān lost his life in the act of affording protection, against ruin, to his native village. The good residents of the district provided for a permanent lamp to burn in the local temple in order to secure merit for the martyr." (G.Ep.R., 1913, p.96, para 21; Majumdar 1920:197).

Allahabad Pillar Inscription informs us that the mighty corporations like those of the Yaudheyas, the Malavas, and the Arjunayanas had to pay taxes and make obeisance to the great emperor Samudragupta. (Majumdar 1920:269) Sangha or Gaṇa mukhya (Chief of a corporation) was responsible for implementing action approved by the Sangha (community as corporation). This clinched the essence of the corporate form of ancient India which contributed to making ancient India one of the wealthiest regions of the globe upto the 17th century. During the days of the Bauddham, the formula was: "I take my refuge in the Buddha, I take my refuge in the Dhamma , I take my refuge in the Sangha." This vow, this dharma - dhamma regulated corporate life and continues to regulate the corporate social ethic which constitutes the social capital of the nation of India in a stunning dharma - dhamma continuum which informs the global ethic in corporate behavior carried out to a level of integrity and consistency, unprecedented in history of human civilizations.

1.4 Co-operation to acquire wealth combined with social ethic

A remarkable tradition of Hindu civilization is the promotion of pilgrimages. This is exemplified by the Tamil word, 'makamai'. n. < mahat n. < U. mahkama. 1. Contribution in grain for a temple or free lodging places for pilgrims (chattram), levied from cultivators now given optionally; tax or contribution levied for a religious or charitable purpose bearing a certain definite proportion to the rent payable 2. Donation for charity consisting of a fixed percentage on the profits of commercial transactions; 3. An ancient land tax (South Indian Inscriptions Vi:187.)
“The spirit of co-operation was a marked feature in almost all fields of activity in ancient India and was manifest in social and religious as well as in political and economic life. The well-known 'jāti' (caste) and the sangha (the community of the Buddhist monks) are the most notable products of this spirit in the first two spheres life. The same spirit, however, played an equally important part in the remaining ones, and its effect may be seen typified in gaṇa (political corporation) and śreṇi (guild)...There can be hardly any doubt that the caste organization assured the advantages of corporate life to its members, although it may be difficult to support the system as it exists at present...In ancient India corporate activity seems to have been manifest, in a marked degree, first in the economic field. This appears from a passage in the Bṛhadāraṇyaka Upaniṣad (I.4.12) when read along with śankarācārya's comments thereon. [Sa naiva vyabhavat, sa viśam asṛjat yāni etāni devajātāni gaṇaśa ākhyāyante vasavo rudrᾱ ᾱdityᾱ viśvedevᾱ maruta iti. The comment of śankarāchārya elucidates the meaning of this passage : kṣātra sṛṣṭopi sa naiva vyabhavat karmaṇe Brahma tathā nu vyabhavat vittopārjayiturabhāvāt. Sa viśamasṛjat karmasādhana vittopārjanāya. Kah punarasau viṭ ? Yānyetāni devajātāni, svārthe nisṣṭhā ya ete devajātibhedā ityarthah gaṇaśah gaṇam gaṇam ākhyāyante kathyante gaṇapāyā hi viśah. prāyeṇa samhatā hi vittopārjanasamarthāh naikaikaiśah. Translation: We are told that on the analogy of the brāhmaṇas, kṣatriyas, vaiśyas and śūdras in human society, Brahma created similar classes among the gods. But he was not content by bringing into existence the first two classes alone, because they could not acquire wealth. Hence were created the vaiśyas who were called gaṇaśah owing to the circumstance that it was by co-operation and not by individual effort that they could acquire wealth. The passage thus clearly refers to a fairly developed form of corporate activity in economic life as early as the later Vedic period.” (Majumdar 1920:1-10; Madhavananda 1950: 177)

Most of the over 600,000 villages of India with about one billion Hindus, are studded with public monuments, mostly temples. In the Hindu civilization tradition, temples are the centers of socio-cultural and community activity, including charities for calamities such as famine relief, or flood relief. “Take the Swaminarayan movement. Its 14 hospitals serve over six hundred thousand patients annually; it runs 10 schools, eight colleges, 14 hostels; it has built 55 schools in disaster-hit areas; it aids 20 schools financially; gives 5000 scholarships annually. In Punjab, not a single man, woman or child would have gone hungry in the last three centuries, thanks to the langar in Gurudwaras feeding millions every day. Jains run huge charities all over the country. So do religious Muslims and Christians. Even the freedom movement was sustained by philanthropy. Lala Lajpat Rai gave all his properties to the movement; Chittaranjan Das and many others went bankrupt funding the movement... Traditional Indian business communities allocate a fixed share of their turnover for charity. The makamai, an informal charity tax among the Nadars in Tamil Nadu has funded hundreds of the community's educational institutions. The Nagarathars in Tamil Nadu too, through their makamai, run huge charities. The Marwaris and others do so through the dharmada. Even today this informal system prevails in non-corporate business in India. So charity is by the community as a whole, not by individuals.” (S. Gurumurthy, August 2009.)

A good example of the full engagement of civil society in the construction and operations of a Hindu temple may be seen from a thousand-year-old temple of Thanjavur, South India: "The great temple of Thanjavur was built in a few years, from 1003 to 1010, during the reign of the great king Rajaraja (985-1014 CE), true founder of the Chola Empire which spread throughout the whole of southern India, part of Ceylon and the Maldive and Laccadive archipelagos. Richly endowed by the sovereign, the sanctuary, which also bears his name - it is sometimes called Rajarajesvaram - had a permanent staff of several hundred priests, 400 devadasi (sacred dancers), and 57 musicians, according to inscriptions and chronicles. The Brihadisvara's income in gold, silver and precious stones during the Chola period has been precisely evaluated. These vast resources were efficiently managed and provided not only for the upkeep and improvement of the buildings (which was continued until the 17th century) but also for real investments to be made. The temple lent money, at rates which could sometimes reach 30%, to ship-owners, village assemblies and craft guilds." (UNESCO,1987) 
Another example of a public monument is the Ellora cave temple. The work was started around 750 - 800 CE by the Rashtrakuta rulers. At least two-three generations of artisans, about several thousands in number, worked on this temple. It took about 150 years to complete. (Ellora, 2010).

1.5 Corporate laws comparable to laws of guilds or śreṇi in India

A corporation is a legal entity that is created under the laws of a State designed to establish the entity as a separate legal entity having its own privileges and liabilities distinct from those of its members. British East India Company typifies a corporation, which evolved new methods of business that were both brutal and exploitive. (John Keay). The role of a corporation in Hindu civilization is similarly delineated in the context of a state and its ruler: pāṣaṇḍa naigama śreṇi pūga, vrata, gaṇādiṣu samrakṣet samayam rāja durgam janapade tathā (Narada Smṛti. . Sacred books of the East Series: 153-2). "The ruler should afford protection to compacts of associations of believers of Veda (naigamas) as also of disbelievers in Veda (pāṣaṇḍis) and to others." This was rājadharma , for an egalitarian society, and the constitutional law to be obeyed by the kings (states).

2. Economics of śreṇi as ethical cure for greed

2. 1 Nature of self-realization linked to ethical behavior: dāna; datta ‘[humans], give’!

Ancient sacred texts, law-books and practices of ancestors in Hindu traditions, were the foundations for the social ethic and related behavior prescribed for everyone:
An ancient vedic text, Bṛhadāraṇyaka Upaniṣad (V.2.2) exhorts: datta ‘[humans], give’! (cf. Kazanas, 2011)

Manusmṛti 1.86 emphasizes: dānam ekaṃ kalau yuge ‘giving alone in the kali yuga.’
astāṅga-yoga of Patañjali (2.29) emphasizes that ethical behavior is the foundation which leads to self-realization, ātmajñāna – realizing [ahaṃ brahma-asmi (Bṛhadāraṇyaka Upaniṣad I.4.10) trans. 'I am brahman, the supreme ātman'; yas tu sarvāṇi bhūtāny-ātmany-eva-anupaśyati sarvabhūteṣu ca-ātmānam (Īśā Upaniṣad 6) 'who sees all beings in oneself and oneself in all beings’.]

2.2 Framework of rules for ethical behavior

Yoga was a popular form in ancient India, its foundations were based on rules of ethical behavior. Ethical behavior and self-realization were complementary, inseparable, and hence, the following eight stages (limbs) of Yoga are enunciated:

8) samādhi absorption
7) dhyāna meditation
6) dhāraṇā concentration of the mind
5) pratyāhāra withdrawal of the senses
4) prāṇāyāma breath regulation
3) āsana body position
2) niyama internal rules
1) yama external rules (code of conduct)

astāṅga-yoga of Patañjali prescribed yama (1) and niyama (2) (external and internal rules of conduct): ethical behavior – yama and niyama – were the firm, first steps, fundamental and involved: dharma , sukṛtāni, dāna. [righteous duty, good deeds, liberality.] Thus, without the first steps of social ethic, no self-realization was attainable through subsequent steps. The external rules of conduct, yama, are: ahiṃsā satya asteya brahmacarya aparigraha [non-injury; truth; non-stealing; life of purity; non-grabbing; non-amassing.]

Patañjali notes: yogaś citta-vṛtti-nirodha; trans. yoga effects the cessation of mind-movements. All such movements of thinking and feeling are caused by 5 kleśas ('negative human afflictions'). These are: avidyā asmitā rāga dveṣa abhiniveśa [ignorance; egoism (separate ego); attachment; passion; abhorrence; attachment to the world.]

In this background of Hindu gestalt – tradition and practices, the trusteeship principle can be appreciated. In the Nov. 26, 1932 issue of Young India, Gandhiji made the following observations with regard to doctrine of trusteeship. 'My idea of society is that while we are born equal, meaning thereby that we all have a right to equal opportunity, all have not the same capacity. It is in the nature of things impossible. For instance, all cannot have same height, color or degree of intelligence. Therefore, in nature of things, some will have ability to earn more and others less. Normally, people with talents will have more. Such people should be viewed to exist as trustees and in no other terms…Suppose I have earned a fair amount of wealth either by way of legacy or by means of trade and industry. I must know that all that belongs to me is the right to an honorable livelihood no better than what is enjoyed by millions of others, the rest of my wealth belongs to the community and be used for the welfare of the community.'

Gautama Dharma sūtra notes: “Laws of districts, castes, and families, when not opposed to sacred texts, are an authority…Ploughmen, merchants, herdsmen, money-lenders, and artisans (are also authority) for their respective classes.” Manu dated to earlier than the Common Era, notes: "A king should enforce his own law only after a careful examination of the laws of castes and districts, guild-laws, and family-laws."

Yājñavalkya emphasizes that "the king must discipline and establish again on the path (of duty) all such as have erred from their own laws, whether families, castes, guilds, associations, or (people of certain) districts."

Viṣnu-smṛti or Vaiṣṇava Dharma sâstra or Viṣṇu-sûtra refers to guilds of metal workers and smiths of silver and gold. Some specific laws may be cited:

X.3. The beam of the balance should be made of strong wood (such as that of the khadira or tinduka trees), five hastas long, and the two scales must be suspended on both sides of it, (and the whole suspended upon the transverse beam by means of an iron hook).
X.4. A man out of the guild of goldsmiths, or of braziers, should make it equal on both sides.

[Note: According to the received chronology which, however should be revised, the dates of Viṣṇu-sûtra and Gautama Dharma sūtra are ca. 3rd cent. and 5th cent. BCE).
The śreṇi was a separate legal entity which had the ability to hold property separately from its owners, construct its own rules for governing the behavior of its members, and for it to contract, sue and be sued in its own name. Some sources make reference to a government official (bhāṇḍagārika) who worked as an arbitrator for disputes amongst śreṇi from at least the 6th century BCE onwards.

śraddhayā iṣṭam ca pūrtaṁ ca nityam kuryād atandritah 
śraddhākṛte hy akṣaye te bhavatah svāgatair dhanaih
dānadharmaṁ niṣeveta nityam aiṣṭika paurtikam 
parituṣṭena bhāvena pātram āsādya śaktitah (Manusmṛti 4.226-227)

226. Let him, without tiring, always offer sacrifices and perform works of charity with faith; for offerings and charitable works made with faith and with lawfully-earned money, (procure) endless rewards.

227. Let him always practice, according to his ability, with a cheerful heart, the duty of liberality, both by sacrifices and by charitable works, if he finds a worthy recipient (for his gifts.)

The terms 1) iṣṭam and 2) pūrtam are explained as related to both religious and charitable acts: 1) yajña and hospitality; 2) building works of public utility such as tanks, wells, groves, gift of food, setting up of dharma śālas (‘free hostels for pilgrims), schools, relief for sick, gifts to promote education, donations to temples.
There is little doubt that most of ancient India’s economic and civic activity was managed through corporate forms known as śreṇi which contributed to the creation of wealth of ancient India. The wealth of ancient India was phenomenal on a global scale: India had the world's largest economy from the first to 11th century, and in the 18th century, with a (32.9%) share of world GDP in the 1st century to (28.9%) share in 1000 CE, and with (24.4%) share in 1700 CE. Angus Maddison (2003) estimates that India's share of the world income, 24.4% in 1700, was comparable to Europe’s share of 23.3%. In over 200 years, the 24.4% share of India in world GDP, got reduced to a devastating low of 3.8% in 1952 owing to a variety of factors such as colonial rule, colonial loot, recurrent famines and failure to introduce in India, technological innovations of the industrial revolution era. 

EW Hopkins (1901), in his path-breaking survey of mahajan community in Mumbai and Gujarat establishes how the millennia-old śreṇi dharma continued to be practiced by the guild even in the beginning of the 20th century. This practice of śreṇi dharma continues even today.

Vaidyanathan (2006) demonstrates the role of unincorporated sector in modern Indian economy. This sector consists of categories such as Proprietor and Partnership (P&P) firms and self-employed persons. This sector has the largest share in India’s National Income, manufacturing activities, services, savings, investment, direct and indirect taxes, the credit market, employment, foreign exchange earnings and every other segment of Indian economy. Whatever growth ranging from 5% to 9% per year which has occurred in independent India, is significantly due to the contribution made by this India unincorporated, which is essentially a continuum of śreṇi dharma .

Providing a perspective of the Indian economy, Vaidyanathan (2009) summarizes the contributions to GDP of agriculture (20%), government (20%), incorporated sector of 8000 companies listed under the 1956 Companies Act (15%), and unincorporated sector (45%). Even in manufacturing activities, the unincorporated sector contributes to 40% of the value addition. The unincorporated sector is the real engine of economic growth in India, with a dominant presence in activities like construction, trade, hotels and transport and has contributed to an annual growth rate of more than 8% in the first decade of 2000. The rates of gross domestic capital formation in the unincorporated sector varied between 16 to 27% during 1960-61 to 1984-85. Most of the entities in this unincorporated sector are exemplars of śreni dharma . (Vaidyanathan, 1988, p.55) 

The śreṇi as corporate form is not merely a historical reality but continues to exist even today in Independent India, despite the adoption of a written Constitution governed by principles of Roman jurisprudence and laissez-faire economic principles governing the wealth of the nation, through laws of corporate governance such as 1956 Companies Act. According to a UNIDO survey of Indian Small Scale Industry (SSI) clusters undertaken in 1996, there were 350 SSI clusters and approximately 2000 rural and artisan based clusters in India. It is estimated that these clusters contributed 60% of the manufactured exports from India (UNIDO, 1997). These clusters had evolved out of the śreni corporate network. Voluntary organizations called Ekal Vidyalaya (Single-teacher schools) operate in over 30,000 villages in India as a splendid example of reaching education to the unreached people of India. Many religious institutions run thousands of hospitals to reach health-care to the unreached. Vaidyanathan (2011) notes: “A lot of our education, healthcare, arts, literature and spirituality efforts/ventures have been fully financed by businessmen who are even shy to talk about it. Herein is the secret to the fundamental ethos of giving in India. It is done without advertisements and trumpets. Actually in our tradition the giver is reluctant to talk about it since it embarrasses the receiver.” National Sample Survey Organization (NSSO, 2005) counted over 42 million small and tiny units, out of which 45 per cent were owned by backward castes, scheduled castes, and scheduled tribes providing employment to 90 million people. (Gurumurthy). Goundar śreni of Sankagiri and Namakkal own the largest fleet of lorry, tanker, and tipper transport vehicles in the whole of India. Two-thirds of the global diamond trade is organized by Patel śreni. Three-fourths of the retail trade, match works, and fireworks in Tamil Nadu are with Nadar śreni. Goundar śreni of Tirupur manages annual export of knitwear garments valued at over $2 billion (World Bank’s World Development Report 2001).

2.3 Guild Laws (śreṇi dharma )

Guild-laws, based on customs and usage, covered aspects of organization, production, determining prices of commodities. Manu enjoins upon a king, to acquire knowledge of laws of the srenis. Manu enjoins that a guild member who breaks an agreement must be banished from the realm by the ruler.

Gautama Dharma sūtra explains the law, that "cultivators, traders, herdsmen, moneylenders, and artisans have authority to lay down rules for their respective classes and the ruler was to consult their representatives while dealing with matters relating to them." Gautama Dharma sūtra also enjoins upon the ruler to consult guild representatives while dealing with matters concerning guilds.

Kauṭilya's Arthaśāstra refers to guilds of a cooperative nature as samutthachara and notes that a Superintendent of Accounts (karanika) kept a record of the customs and transactions of corporations. Profits and losses were to be shared by members in proportion to their shares and severe punishment was prescribed for those who embezzle guild property (Yājñavalkya Smṛti). 

2.4 Guild Structure

The corporate form had three components: (a) the General Assembly, (b) the Guild Chairman or the Head, and (c) the Executive Officers, each component with its well-defined sphere of jurisdiction.

(a) The General Assembly
All the members of the Guild constituted the General Assembly. 
(b) The Guild Head

The concept of a “manager” of a Joint, or Hindu Undivided Family has been in existence for more than two thousand years or more. This manager is called kartha in Hindu Law. A comparable position is that of a manager or president of a guild who was called a śreṣṭhin. This position is comparable to the Chairman of Board of Directors in a modern corporation.

śreni was the guild, śreṣṭhin, was the 'guild Chairperson'. In Gupta age (2nd century to 5th century) śreṣṭhins, sārthavahas, prathamakulikas (Head of a local guild) and prathamakāyastha (Head Accounts – Officer) figured in town and district councils. Some guilds maintained armies which accompanied trade caravans; śreṇibala or āyudha śreṇis (guilds of arms) also existed.

The guild head was elected by members of the śreni. He could also be removed by the general assembly. The head could punish a guilty member by removing him or her from membership. Setthis were merchant-cum-bankers, who also headed merchant guilds. Early Buddhist texts refer to the head of a guild as the jetthaka or pamukkha e.g. 'head of garland makers' (malakara jetthaka), 'head of carpenters' guild' (vaddhaki jetthaka). 
(c) Executive Officers

To assist the guild head and to look after the day-to-day business of the guild, two to five Executive Officers kāryacintakas were appointed. (Yājñavalkya Smṛti ). They were to be persons of honesty governed by self-lessness, but with ability and knowledge of law-books. They were elected by the general assembly.

2.5 Fundamental duties of the Guilds

The corporate form, the śreṇi was widely in vogue in ancient India. Harivamśa, refers to a wrestling match between Krishna and Kamsa. The arena for the match was constructed with pavilions of different guilds and banners showed emblems signifying their craft.
The economic śreṇi had many functions: banking, adjudication, charity and civic responsibility. The key operative principle was: dispersed ownership to avoid the creation of monopolies. Each śreṇi had a corporate structure with a headman and executive officers (jetthaka and kāryacintaka) to implement or enforce the law -- governing ethic -- called śreṇi dharma . śreṇi dharma was debated among members, put in writing and registered with provisions for avenues of redress to unhappy members (appeal to śreṇi, appeal to ruler, insulation from liability). The economics of śreṇi was premised on mutual confidence, democratic institutions, shared assets and liabilities, division rules of capital contributions and profits and apprenticeship to build up skills. Thus relative contributions of members (skill, labor and capital) were recognized in the entity of craft people, called śreṇi. 

Epigraphs from Sanchi, Bharhut, Bodhgaya, Mathura and the sites of western Deccan refer to donations made by guilds such as those of flour-makers, weavers, oil-millers, potters, manufacturers of hydraulic engines, corn-dealers, bamboo-workers. 

Guilds used part of their profits for preservation and maintenance of assembly halls, watersheds, shrines, tanks and gardens, as also to help those in need such as widows, the poor and destitute. Guilds loaned money to artisans and merchants. Guilds engaged in works of piety and charity and offered donations to alleviate situations of distress in the society. A Mathura Inscription (2nd century CE) refers to the two permanent endowments of 550 silver coins each with two guilds to feed Brahmins and the poor from out of the interest money. Nasik Inscription (2nd century CE) records the endowment of 2000 kārṣapaṇas at the rate of one percent (per month) with a weavers' guild for providing cloth to bhikṣus and 1000 kārṣapaṇas at the rate of 0.75 percent (per month) with another weavers' guild for serving meals to them. 

2.6 śreṇi dharma , or social capital, the missing element of economics

"The examination reveals that business people on the Indian subcontinent utilized the corporate form from a very early period. The corporate form (e.g., the śreṇi) was being used in India from at least 800 BCE, and perhaps even earlier, and was in more or less continuous use since then until the advent of the Islamic invasions around 1000 CE. This provides evidence for the use of the corporate form centuries before the earliest Roman proto-corporations. In fact, the use of the śreṇi in Ancient India was widespread including virtually every kind of business, political and municipal activity. Moreover, when we examine how these entities were structured, governed and regulated we find that they bear many similarities to corporations and, indeed, to modern US corporations. The familiar concerns of agency costs and incentive effects are both present and addressed in quite similar ways as are many other aspects of the law regulating business entities. Further, examining the historical development of the śreṇi indicates that the factors leading to the growth of this corporate form are consistent with those put forward for the growth of organizational entities in Europe. These factors include increasing trade, methods to contain agency costs, and methods to patrol the boundaries between the assets of the śreṇi and those of its members (i.e., to facilitate asset partitioning and reduce creditor information costs). Finally, examination of the development of the śreṇi in Ancient India sheds light on the importance of state structure for the growth of trade and the corporate form as well as on prospects for some kind of convergence in corporate governance." (Khanna 2005:1). 

2.7 Definition of proprietorship 

We will begin discussion with philosophical underpinnings and then discuss practical aspects in the context of corporate behavior. The philosophical underpinning for trusteeship, as the statutory framework to set apart a pre-determined percentage of wealth for social causes, is derived from the injunction of an ancient sacred text, against excessive accumulation of wealth:

yāvad bhriyeta jaṭharam tāvat svatvam hi dehinām 
adhikam yo 'bhimanyeta sa steno daṇḍam arhati

"One may claim proprietorship to as much wealth as required to maintain body and soul together, but one who desires proprietorship over more than that must be considered a thief, and he deserves to be punished by the laws of nature." (Bhāgavatam 7.14.8)
This stunning definition of proprietorship is the defining dharma for a corporation in Hindu traditions which produced the śreṇi dharma . We are not suggesting that property ownership laws should be done away with. For example, the house belongs to the owner as his or her property but its USE is constrained by social responsibility of the owner as a member of a śreṇi, a social corporation.

2.8 Discussions to operationalize śreṇi dharma for a paradigm shift in economic thought and practice

This section evaluates the corporate forms of ancient India which provide for a merger of spirituality with materialistic ethos. These forms largely continue in modern India and provide a framework for re-defining the modern corporate form with spiritual content of dharma (righteous conduct, avoiding greed and avoidance of aggrandizement by excessive acquisition of wealth to the detriment of the social cause). This section is important because the ethical values are blended integrally, unambiguously with materialistic values; these ethical values strengthen the material foundations of economic thought to minimize the evil effects of greed which constitute an aberration in human behavior. In Hindu thought, the aberrant human behavior are referred to as ṣaḍripu (six enemies): 1. kāma , ‘lust’; 2. lobha, ‘greed’; 3. krodha , ‘anger’; 4. mada , ‘arrogance, intoxication’; 5. moha , ‘delusion’; and 6. matsara , ‘envy.’ 
2.9 Is greed good?

A by-product of the 'materialistic economic ethos' is the repeated occurrence of corrupt practices in some modern corporations, of accumulating illicit wealth, caused principally by a natural human behavioral trait of greed. There are some who claim that 'greed' is a welcome trait as a motivator for creation of wealth. Ivan Boesky defended greed in a May 18, 1986, commencement address at the UC Berkeley's School of Business Administration, in which he said, "Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself".[Gabriel Satya] A1987 film , 'Wall Street', was inspired by this speech; the quotable line of the movie was: "greed, for lack of a better word, is good".[Brian Ross] A contra, traditional, view is St. Thomas Aquinas', who wrote that greed was "a sin against God, just as all mortal sins, in as much as man condemns things eternal for the sake of temporal things."

An extreme example of greed in a state is provided by a remarkable law which has come into force in Switzerland from February 1, 2011. It is about 'restitution of illicit assets' to the people of a state freezing such illicit assets held by state operatives in Swiss banks. (loc.cit., a law of Swiss Federation in: Switzerland, 2011)
Restitution of illicit assets of politically exposed persons (PEPs), who are a legally recognized category in international law, which includes specifically heads of state or governments, high-ranking politicians, high-ranking members of the administration, judiciary, armed forces or national political parties, and senior executives of state-owned corporations of national importance, or 2. natural or legal persons who are closely associated with politically exposed persons for family, personal or business reasons (close associates). Illicit assets of Moammar Gaddafi of Libya were frozen and the objective of the law is to enforce restitution of the wealth to the people to whom the wealth really belongs. This is one example of a state acting to enforce the social ethic to combat/cure greed.

2.10 Fault-lines of greed, corruption and excesses of state or corporate power
Corporate forms of capitalism or socialism have developed fault-lines of greed, corruption and excesses of state or corporate power governed by unethical human behavior under the cover of excessive emphasis on individual rights with reduced emphasis on fundamental duties of corporations. 

Functions of śreṇi as a corporation, should be distinguished from philanthro-capitalism with concentration of power in a few capitalists. (Naren Karunakaran, 2011). In a śreṇi, philanthropy is controlled by the elders of civil society and decisions about charity are not ‘individual’ decisions, but the democratic decision of members of a śreṇi . An example may be cited: Alliance for a Green Revolution in Africa (AGRA) - is a philanthropy initiative of Rockefeller Foundation and the Bill & Melinda Gates Foundation. The Gates Foundation alone has committed $264.5 million to AGRA. The $23.1-million investment by the Gates Foundation in Monsanto, the world's largest producer of GM seeds is an example of intersection of growth strategies of corporations and philanthropy. Since 1994, the foundation has invested over $13 billion in healthcare alone, representing 60% of its giving in about 2 decades. The criticisms of such initiatives arise from the lack of involvement of farmers or civil society members.

Fukuyama’s macro level theory of economic conditions refers to trust a society displays in terms of non-kin relationships -- defined as voluntary associations. Fukuyama (1995) who identifies culture as the “20 per cent missing element” of economics, however, fails to notice that such institutions for social capital already exist in śreni dharma practiced by Hindus in extended kinship systems as socio-economic networks of families (kula) with the śreni providing for social insurance to the members of the guild and śreni as a corporate form which automatically generates social capital. 

3. Incorporation of Hindu śreṇi in economic thought and practice

3.1 Embedding social ethic in capitalism and socialism

Corporate models of both capitalism and socialism operate within the framework of 'rational, materialistic economic ethos' premised on ‘rational self-interest’ of an individual, endeavoring to make the best choices with the available information. The corporate model of śreṇi dharma is a paradigm shift – taking the rational individual self-interest to an extended-kinship-system-interest beyond an individual ‘self-interest’ -- and is premised on ‘social ethic’, mandating the imperative of trusteeship to set apart and to ensure distribution of a pre-determined portion of the proceeds of economic activity to service social needs – to provide for social insurance of the members of the corporation and to build up social capital as śreṇi dharma fund. Thus, ‘rational self-interest’ gets modulated by ‘social ethic’ imperative of mandatory contributions to the society. It is mandatory because it is the repayment of ṛṇam (debt) śreṇi owes to the society, because the śreṇi gets its unique identity as a legacy from the forefathers (pitṛs) of Hindu samajam (society). The ‘rational self-interest’ gets elevated to self-realization – ātmajñāna, elevating the joy of living to ecstasy of being. It is a realization of the ecstasy of being: yas tu sarvāṇi bhūtāny-ātmany-eva-anupaśyati sarvabhūteṣu ca-ātmānam (Īśā Upaniṣad 6). [trans. 'who sees oneself in all beings and all beings in oneself'.]

The corporate model under capitalism or socialism results in a monopoly entrusted to the state for the legitimate use of force. The consequence is a model of political economy, with a fault-line, which typically survives in USA and other developed states of the world, even today. 

This model has the fault-line created by greed leading to impoverishment of many nations and aggrandizement of a few select groups controlling the commanding heights of economies.

In the global ethic of dharma in the context of Hinduism, no such monopoly was possible. Each village functioned as an independent republic, avoiding the need for the state as an axis between the corporation involved in economic activities and the state operatives’ exercise of state power. Kauṭilya’s Arthaśāstra is a treatise on the creation of the wealth of a nation; the accumulation and deployment of wealth for social benefit is the center-piece of this remarkable system which evolved in ancient India and continues even today in many parts of India, be it in Tiruppur producing cotton hosiery products or in Haryana producing woolen garments. 
Weber (1958) notes that 'other-worldly' (nihśreyas) in Hindu thought was directed towards release from 'the wheel of rebirth' which meant escaping from the encumbrances of the material world (unlike Puritanism which called for rational mastery of that world itself). He also notes that caste is a closed status group of a type found in many places throughout the world, not only in India. "Caste is the fundamental institution of Hinduism...Without caste, there is no Hindu." (Weber 1958:29) Unique development of caste in India was support by the extended kinship system exemplified in śreṇi dharma . The extended kinship system or family (kula) constituted a caste and became social capital for the community and a social security system for that jāti (caste).

It should be underscored here that we are NOT arguing for a reversal of organizing societies based on castes related to birth, but a division of labor and skills taking into account, variations in human potential and attempt to eliminate or mitigate the evils of greed, acquisitive tendencies or evils of aggrandizement.
It is imperative to underscore the importance of egalitarianism in Hindu society which was valid in Pāṇini’s time as it is today. This is relevant to ensure that in focusing on a corporate form, the democratic principle of equality and equal treatment of the law, is not in any way undermined. According to Pāṇini, egalitarianism was an important element in the fifth century BCE: he preserves a special term for the gaṇa where "there was no distinction between high and low." (Agrawala 1963: 428). What may be the clearest statement of egalitarian political ideology only comes to us through many intermediaries, as a tantalizing passage in Diodorus Siculus (2.39; Classical Accounts : 236) which seems to derive from Megasthenes: "Of several remarkable customs existing among the Indians, there is one prescribed by their [sc. Indian] ancient philosophers which one may regard as truly admirable: for the law ordains that no one among them shall, under any circumstances, be a slave, but that, enjoying freedom, they shall respect the principle of equality in all persons: for those, they thought, who have learned neither to domineer over nor to cringe to others will attain the life best adapted for all vicissitudes of life: since it is silly to make laws on the basis of equality of all persons and yet to establish inequalities in social intercourse." Megasthenes (who was a contemporary of Kauṭilya) is often criticized for the good reason that slavery and other forms of inequality did indeed exist among the Indians. But perhaps he correctly presented the views of "their ancient philosophers."
In the Hindu corporate ethic, practiced by śreṇi or socio-economic guilds, as decentralized, democratic institutions, creation of wealth was a necessary and desirable enterprise -- but, with in-built safeguards to subdue the evil of greed. (cf. the Uttaramerur epigraph showing the detailed procedures for democratic elections of village assemblies entrusted with civic responsibilities such as maintenance of village republic’s tanks, gardens, roads, temples etc. The remarkable feature of this process was that selection of candidates was NOT based on caste but based only on character of the chosen candidates, as perceived and certified by the elders of the village republic.) Tendencies of greed are tempered by the imperative of reaching out to the society through a trusteeship system and social insurance for an extended kinship system of the śreṇi. śreṇi dharma gets reflected in the adoration of Lakshmi as the feminine divine form of wealth, celebrated every year on Deepavali day by lighting up an array of lamps symbolizing the corporate citizens’ resolve to move away from darkness to light and by identifying the supreme divinity in every ātman. śreṇi dharma thus embodied two active, meshed facets: nihśreyas (release from the material world) and abhyudayam (social welfare). (kaṇāda’s vaiśeṣika sūtra).

3.2 Control by committee of elders of civil society in Uttaramerur

Chola King Parakesarivarman, who conquered Madurai, about 1000 years ago, has left behind a remarkable inscription which explains how corporate forms were structured to combat greed and to ensure effective functioning of democratically-elected civic/social corporate institutions. The key excerpts from this inscription of Uttaramerur are as follows: 

3.2.1 Settlement

Sitting with us and convening the committee in accordance with the royal command, made a settlement as follows according tothe terms of the royal letter for choosing once every year from this year forward members for the “Annual Committee”, “Garden Committee”, and “Tank Committee”:

3.2.2 Constitution of the Committee

Of the thirty men thus chosen, those who had previously been on the Garden committee and on the Tank committee, those who are advanced in learning, and those who are advanced in age shall be chosen for the Annual Committee. Of the rest, twelve shall be taken for the Garden committee and the remaining six shall form the Tank committee. These last two committees shall be chosen by showing the Karai.

3.2.3 Duration of the Committees

The great men of these three committees thus chosen for them shall hold office for full three hundred and sixty days and then retire.

Removal of Persons Found Guilty

When one who is on the committee is found guilty of any offence, he shall be removed at once: for appointing the committees after these have retired, the members of the Committee “for Supervision of Justice” in the twelve streets of Uttaramerur shall convene an assembly kuri with the help of the Arbitrator. The committees shall be appointed by drawing pot-tickets according to this order of settlement. (Venkayya 1904).

Yes, there were social inequities during the historical period, during the colonial regime in particular which accentuated ‘caste’ identities by linking them to state patronage, but not all inequities were caused exclusively by the caste identities. Many were caused by the inherent weaknesses of any society in creating untenable distinctions among classes of people in a society, principally related to economic status resulting from wealth accumulated due to performance of a profession. 
It will be a gross error in evaluation to stereotype a society as large as a billion Hindus into rigid castes and it will be a gross error to classify every report or anecdote of social inequity as related to castes. No occupation was exclusively caste-based. Brāhmaṇas engaged in occupations such as shop-keeping, selling meat, lending money, tending cattle, acting in theatres. For example, in educational institutions, "the rules and regulations about the life of a student in his teacher's house, as laid down in the ancient Dharma śāstras, fully harmonize with the corporate character of the educational institutions as deduced from the Jataka stories." (p.365) "An inscription on a pillar in a temple at Nandavaram in Kurnul District, dated Saka 1492, records the resolution of the Vidvanmahājanas of Nandavaram on the occasion when their agrahāra village was restored to them and they were reinstated in it by the authorities, that they would take to the study of the Vedas and the śāstras and would abstain from levying dowries for marriage of girls in their community." (Annual Report on South Indian Epigraphy, 1913-5, p. 10, No. 4)

3.3 Duty of care and duty of loyalty

Khanna (2005) in his lucid evaluation of the corporate form of śreṇi in Hindu tradition notes: "There also appears to have been obligations that mirrored the duty of care and duty of loyalty that are such a common feature of today's fiduciary duties. For a cause of action based on a pattern negligently causing harm to the partnership the partners sat in judgment on their co-partner and decided whether such negligence in fact occurred. If the partner was found negligent he had to make good the losses. This bears some similarity to today's duty of care. Moreover, if the allegation was fraud then the accused partner would face some kind of ordeal or oath. If the partner failed then he would have to make good the losses to the partnership, forfeit his profits and be removed from the partnership. This bears some similarity (except for the method of proof) to today's duty of loyalty."

These twin duties: duty of care and duty of loyalty is the means to enforce śreṇi dharma -- a remarkable facet of auto-regulation by the corporate entity in discharging its social responsibility.

Thus the two-faceted ethic of dharma resulted in a combination of economic activity meshed with the imperative of building social capital.

3.4 śreṇi dharma fund administered by elders of civil society
The reality that the extended kinship system of the śreni provides for insurance cover to the members has obviated the need for a state-administered social security system which, together with interest on sovereign debt, has become a major burden on many developed states’ annual budgets. 

The incorporation of śreṇi dharma in a modern corporation can be accomplished by incorporating the social ethic as an integral function of a corporation, AND, by voluntary consensus, stipulating a percentage of the annual expenditure to be spent on contributions to social insurance of the members of the corporation and for trusteeship functions related to civic responsibilities of a corporation, donations to charitable, social causes and to provide relief measures to communities during situations of acute distress such as the devastation caused in Japan, in 2011, in the wake of an earthquake measuring 8.9 on the Richter scale and resultant tsunami in eastern Japan. Such specified percentage of annual expenditure of a corporation should be accumulated in a social ethic corpus fund called śreṇi dharma fund. The inflow and outgo from the fund should be monitored and administered by an independent śreṇi authority specific to the economic sector to which the corporation belongs. In Tamil Nadu, such a trust fund is referred to as aṟa-k-kaṭṭaḷai 'dharma institute or statute'.

The key ingredient in śreṇi structure as a corporation which prevents the pitfalls of philanthro-capitalism is the institution of committees (following the Uttaramerur model cited earlier) with civic elders from the society to guide the democratic decisions on use of śreṇi dharma funds.

The advantages of śreṇi dharma are that a high trusteeship model is created as an integral part of a corporate structure and behaviour, subject to the laws of the state, with:

a. lower administration costs, higher institutional reliability, with little need for state-sponsored regulation;
b. effective and efficient organizations with members of śreṇi committed to the social ethic; and
c. substantial mitigation of the effects of greed misappropriating i) wealth created by economic progress and ii) profits of a corporation.

Hindu economic thought and practice of śreṇi dharma offers a just, clear, unambiguous method to remove the fault-lines of 1. greed and corruption in the capitalism or socialism model of economic organization and 2. excesses of state or corporate power. 
The ecstasy of being by ‘social ethic’, will be more satisfying and will overtake the mere joy of living by ‘rational self-interest.’

śreṇi dharma as social ethic, social insurance and social capital thus 
• supplies the missing element – of dāna,‘giving, liberality’-- in the economic progress imperative, 
• dramatically mitigates the deleterious effect of greed resulting in misappropriation of wealth created by economic progress, 
• obviates the need for state-sponsored regulation or interventions, and
• results in a socially responsible corporate form as an economic engine.

Practical questions arise and have to be deliberated further: How exactly is the ethical value added to the materialistic ethos? Exactly how does the additional value jump the fault lines? Are we suggesting legal reform of company law? What are the rules of enforcement of śreṇi dharma to ensure that members of a corporation to do their job?
Yes, we are suggesting the reform and amendment of company law by incorporation of a śreṇi dharma clause in the articles of association. This clause should specify a percentage, say 5 to 10 per cent of the turnover of a corporation to be accumulated into and spent as śreṇi dharma fund for social causes, beyond the core business of the corporation. By making the operations of the fund auditable and subject to public scrutiny through financial sentinels such as regulators of the marketplace, a legally binding process can be achieved, by adding the spiritual value of ethical responsibility to the financial balance sheet of a corporation. The Chairperson and Board of Directors of such a corporation incorporating śreṇi dharma will be responsible to make disclosures in their annual reports to shareholders the contributions made into and outgo from the śreṇi dharma fund. The fault-line of lobha, ‘greed’, will be gradually jumped with such mandated provisions of incorporation, periodical reporting to share-holders and voluntary enforcement of the provisions by the officers of a modern śreṇi. 

We are suggesting that modern high-growth sectors like the Information Technology (IT) sector should include a clause of incorporation which can be called śreṇi dharma . Such an incorporation will help incorporate in a fast-growing technology sector of the economy of the world the ethic of social responsibility. There is evidence that many SSI clusters continue to be governed by written trust deeds (in Sanskrit, śreṇi dharma or in Tamil, aṟakkaṭṭaḷai – the dharma statute). This form of incorporation can be extended to large scale or global level industry or enterprise. One reason why this salutary form has not been introduced is the excessive reliance on Roman jurisprudence with emphasis on individual rights without a corresponding emphasis on social responsibility and duty of a corporate entity. The deficiency can be remedied by calling for a mandatory incorporation clause stipulating a pre-determined percentage of the turnover of an incorporated corporation to be set aside as social security and as social capital to be exclusively used for social welfare.

In Maslow’s (1943) hierarchy or pyramid of human physiological needs which are at the bottom to the need of self-actualization which is at the pinnacle, the expectation is that every member of a corporation will be motivated and resolve to reach the pinnacle, up the ladder. This resolution has to be a vow, a dedication in the process of understanding the essential unity of the ātman (spark from the divine) with the paramātman (the supreme divine). 

In the tradition of Hindu civilization, this unity is dharma -dhamma, the eternal, ethical ordering principle.

A modern śreṇi can evolve into a dharma corporation, exemplifying economic justice in a moral order. 

śreṇi dharma is a voluntary and spontaneous fulfillment of social ethic of a corporation in a polity. śreṇi dharma , a unique contribution to economic thought and practice, should reform corporations world-wide – to jump the fault-lines of greed, corruption and excesses of state or corporate power while adding value to materialistic ethos, upgrading the joy of material living to ecstasy of being and sharing as bliss.
The acceptance of śreṇi dharma in modern India, as one of the youngest nations on the globe (accounting for 70% of the population as less than 35 years of age), will result in a paradigm shift introducing social ethic in global economic thought and practice. Acceptance may involve reforms in Companies Act or Memoranda of Association or Incorporation of Companies, with specific, non-fuzzy ethical rules such as an agreement to set apart 5 to 10% of the income of a corporation for social causes. The enforcement of the rules has to be voluntary and by the corporation itself. The corporate tribunals will judge the deviant behavior from the agreed ethical norms and social responsibilities including specifications of punishment for disregard of the rules and procedures for legal redress by appeal against the verdict, say, of a śreṇi tribunal.
A rich civilizational tradition that India represents – in the comity of nations -- is destined to contribute to economic justice in a sustainable, global, moral order. 
As India, free from colonial domination, emerges as a global economic power, it is time to recognize and reinstate śreṇi dharma, or social capital, as the missing element of economics to create, nurture and enhance the wealth of nations, while making śreṇi dharma an integral part of modern economic paradigm. 

With dharma, yes, we can. We can be the agents of change of the world economy, reaching out to the unreached, endeavoring to achieve the ethical imperative: sarve bhavantu sukhinah (let all beings be happy)(ādi śankarācārya).

I am grateful to Hrishikesh Vinod (2011) for his insight on greed as a cororate behavioral pattern. Hrishikesh Vinod also referred to an interesting article of Max H. Bazerman and Ann E. Tenbrunsel (2011) which discussed lapses in behavioral ethics – among regulators, prosecutors, auditors, journalists -- caused, sometimes, by their self-interest to protect reputation of corporate clients. Bazerman and Tenbrunsel make a fine distinction between such willful actions or ignorance. Maybe it is human nature to condone such lapses, but the organizational structure should provide for honest discussions within a corporation about ethical transgressions which result in excessive greed. The structure and function of Hindu corporate form has shown how a commitment can be achieved by corporate clients and regulators alike by setting up a standard percentage of śreṇi dharma. This overarching corporate ethic with built-in behavioral ethic expected from all corporate actors and incorporation of this mandatory social welfare contribution in the memorandum of incorporation will help mitigate the effects of excessive greed.


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***Expected to be a chapter in a forth coming book on the –Hindu Economics
S. Kalyanaraman

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