ABSTRACT
The traditional Indian economy was characterised by what we would call today an ‘appropriate technology’ geared to small-scale production in family units of peasants and artisans. Land and labour as factors of production were abundant, and therefore the third factor-capital-which is substituted for the other factors whenever they are scarce, was not required. There was, of course, some capital formation in trade and also in terms of the construction of wells and tanks for local irrigation, but there was no capital accumulation that would lead to a concentration of the ownership of the means of production. The tools and implements were simple and could be made locally and cheaply. The manufactures sponsored by some rulers for the making of arms or of luxury goods were very rare indeed. Wealth was sometimes amassed by successful merchants or victorious warlords, but such wealth was usually lost as quickly as it had been gained.
