Though Kautilya devotes a section (Book XI) of his work to republican states (sanghas), he is no friend of the non-monarchical states and devotes less attention to a description of their working than to suggesting methods by which the prince might promote dissensions among them with a view to getting them under his power. The State of Kautilya and Manu was thus a monarchy, and Kautilya anticipates Louis XIV by several centuries and roundly affirms : The King is the state (raja rajyam).
Kautilya makes only an oblique reference to the origin of the state and records the tradition that men troubled by the fish-law (of the bigger fish eating up the smaller fry) agreed to set up Vaivasvata Manu as king who undertook their protection from injustice in return for a sixth part of the produce from land and a tithe of the returns of trade. Elsewhere he points out that in the absence of a king (danda-dhara) the strong devour the weak, whereas with his protection the weak hold their own against the strong. This view of the origin of the state comes close to the contract theory as it was developed by Hobbes. But while Hobbes was free to press his theory to its logical conclusion and advocate monarchical absolutism, the Indian milieu in which Kautilya wrote was an effective bar against such a course on his part. Yet of all the Indian writers on polity, Kautilya stands closest to Hobbes as he exalted royal power much more than any other author before or after him.
To understand the full force of the term danda-dhara by which Kautilya designates the king in the significant context cited above, we must turn to Manu. When the world was without a king it was much agitated with fear; and for its protection the lord Brahma created a king, says Manu, to protect the good and destroy the wicked. He follows this up with the statement that for the king's sake the Lord created His own son Danda, the protector of all creatures. Danda is full of Brahma's glory (tejas); through fear of him all created beings observe the law of their nature; Danda is leader and ruler, and surety for the four asramas observing their dharma; he keeps awake while others are asleep, and is the embodiment of dharma. Properly directed by a wise king, danda pleases the subjects; it is by danda that gods and other superhumans contribute to the universal welfare. Danda declines to be a tool in the hands of an uncultured king (a-krtatman) and turns against an unrighteous ruler, destroys him together with his kith and kin; and then everything and everybody would suffer not only within the kingdom but even the sages and gods in heaven.
Danda is often translated as punishment; though this is indeed one of its meanings, it is inadequate in the present context where danda is seen to be the embodiment of the principle of universal law and order, the descendant of the Vedic rta. The common saying “the king makes the age" (raja kalasya karanam) is true in the sense that a righteous king aided by danda brings about universal prosperity and happiness, while a bad king fails in the task and brings ruin on himself and his kingdom.
Though monarchy is a divinely ordained institution, the king himself is by no means a god. No Indian king ever called himself "Theos" or "Epiphanes," and none was worshipped as a god in his life-time. It has been rightly pointed out that "in Asia there was little soil for deification of rulers to germinate" and that this was a native product of Greece, evolved to meet "the need of finding a legal basis in a constitutional state for an extra-constitutional authority." Manu, indeed, says, "Even an infant king must not be despised (from an idea) that he is a mere mortal, for he is a great deity in human form', But the verse occurs in the midst of the long passage which gives the basis for our commentary in the last paragraph, and the context shows beyond a shadow of doubt that the statement is what Mimamsakas call an artha-vada meant only to stress the necessity of upholding monarchy.
