TITLE:
Confucius and Kautilya on Establishing Moral Order for Prevention of Government and Market Failures
AUTHORS:
Balbir S. Sihag
KEYWORDS:
Bounded Rationality, Ethical Anchoring, Ethics-Based Approach, Government Failure, Knowledge-Based Economy, Legalistic Approach, Market Failure
JOURNAL NAME:
Theoretical Economics Letters,
Vol.6 No.1,
January
29,
2016
ABSTRACT: The main objectives of
this paper are of two kinds: first one may be described as historical in the
sense of correcting more than two thousand years of misinterpretations of the
ideas of Confucius and Kautilya on establishing a moral order and the nature of
its relationship to the legalistic approach; the second one is to highlight the
relevance of moral order not only to create peace and harmony but also enhance
the creation and sharing of knowledge and lowering of transaction costs. Since
both creation and sharing of knowledge depend on genuine trust, which
flourishes only in an ethical environment, and not in a “culture of suspicion”.
It is indicated that their insights or pearls of wisdom are actually more
relevant to today’s knowledge-based economies than they were to economies
during their own times. They would have emphasized the warming of hearts to each
other to solve the problem of global warming.