Buddhist Economics Beyond Schumacher

Buddhist Economics that is Beyond that of Schumacher’s and Sufficiency Economy By

Professor Apichai Puntasen Dean Faculty of Management Science, Ubon Rajathanee University, Thailand December 12 – 13, 2006 1

Main Issues to be Presented. 1. Buddhism as a Mind Based Science 2. Definition of Buddhist Economics and Its 3. 4. 5. 6. 7. 8.

comparison with Mainstream Economics Production in Buddhist Economics Consumption in Buddhist Economics Distribution in Buddhist Economics Definition Sufficiency Economy Sufficiency Economy and Buddhist Economics Epilogue

2

Buddhist as a Mind Based Science  The teaching of Buddha known as Buddha

Dhamma is neither a religion nor a philosophy in western context. It does not subscribe to any specific faith or believe from what have been taught, have been practiced, have been told, because it is in the text book, because it is logical, because it can be hypothesized, because it is rational, because it fit to one’s own theory, because it looks convincing, and because the person is our teacher. It is not a philosophy because its actual status is a tested theory. 3

Buddhist as a Mind Based Science  Differently from Newtonian Physics that

implies the study of matter and energy. Buddha Dhamma is mind based science that goes beyond western physics.  The mind based science explains that the

“truth” can vary according to different levels of mind development.

4

Buddhist as a Mind Based Science  The concept of “mind” cannot be clearly

understood unless the concept of “emergence” into a completely new thing from existing things is clearly understood. Most forms of training related to animals and a human beings are part of the training of mind. However, the best form of the training of the mind is the training to purify the mind. This fact implies that things are different according to the degree of mind purification. For example, happiness can vary according to each perception or the level of purification of the mind of each person. 5

Buddhist as a Mind Based Science  It remains to be scientific because

persons with the same level of mind purification can have common agreement on the “truth” that they have perceived. Also, each one has unlimited potential to be developed, and there is an explicit way to do so for almost everyone.

6

Definition of Buddhist Economics  The words was first introduced in Chapter

4 of E.F. Schumacher’s book “Small is Beautiful” in 1973. After then the concept has been elaborated by many well known scholars all over the world.

7

Definition of Buddhist Economics  The most noted one in Thailand was by Venerable P.A.

Payutto first edition in 1982 and the more completed version came out in 1984. His book called “Buddhist Economics: A Middle Way for Market Place.” This book actually reinterpreted most economics terms the way it should be interpreted in Buddhist economics. Examples of those terms are value, consumption, production, work, competition, and choice. After then, the technical terms in Buddhist economics such as moderation, non-consumption, over-consumption, cooperation etc. are also discussed. 8

Definition of Buddhist Economics  The author’s book on “Buddhist

Economics: Evolution, Theories, and Their Application to Various Economic Subjects”, first published in 2001 has further enlarged the concept explained by the two prominent pioneers, Schumacher and Venerable P.A. Payutto. The third edition was published in 2004. The forth edition is forth coming. 9

Definition of Buddhist Economics  Buddhist Economics is the infusion of two

words, “Buddhist” and “economics”. “Economics” is a subject developed in the West. It is generally defined as the subject explaining “ economics activities (production, distribution, and consumption) with the aim for individuals to achieve maximum utility under the condition of resource constraint and for the society to reach maximum welfare under the same condition”. 10

Definition of Buddhist Economics  Following the similar line of thought,

“Buddhist economics is the subject explaining economic activities with the aim for both individuals and society to achieve peace and tranquility under resource constraint”.

11

Definition of Buddhist Economics  The difference between Buddhist economics

and mainstream economics is due to different paradigms on human nature. Under the scientific materialism paradigm, mainstream economics observes that each human being normally follow his/her self-interest. Therefore, following self-interest of any individual is a “rational” behavior. Also, according to Thomas Hobbes, an ultra materialist philosopher of the 17th century, the ultimate goal of human life is to avoid pain and to seek maximum “pleasure”. 12

Definition of Buddhist Economics  “Pleasure” in this case has been translated

into economics as “utility”. Under this scientific materialism paradigm, the typical way for a human being to gain more “pleasure” or “utility” is “to have” more materials.

13

Definition of Buddhist Economics  The economic subject also adopts Darwinian

Theory of the “survival of the fittest” to imply that competition will lead to progress. Hence, the core value of the mainstream economics or more popularly known as “capitalism” consists of the core value of “self-interest” and “competition”.

14

Definition of Buddhist Economics  This core value fits very well with the concept of

capitalism that explains capital as the mode of production. The only way to increase production in order to increase “utility” and “welfare” is to accumulate more capital. Capital can be accumulated more from profit through more production given the necessary and sufficient conditions that all products are sold out for profit. Such process of production under control by human beings is “industrialization”. At the same time, to make sure that all products are sold for profit, consumption must be stimulated through “consumerism”. 15

Definition of Buddhist Economics  As a result, capitalism, industrialism, and

consumerism come into one package. The main purpose is for capital to be generated more through increased production and consumption. This way, individuals will achieve maximum utility under budget constraint and the society will achieve maximum welfare.

16

Definition of Buddhist Economics  The question to be raised is whether the above claim

is always true without any adverse consequences. It should be noted that according to the Second Law of Thermodynamics, production is similar to destruction. Production process actually transforms resources and energy from low order entropy into a higher one. Under such stimulating process of production under capitalism, resources, environment as well as ecological system conducive to lives, will be turned into products and waste in relatively short period time. It is the process of self-destruction for humankind. As a result, capitalism is not a viable option for long term sustainability. 17

Definition of Buddhist Economics  Under such depressing scenario of

humankind under capitalism, Buddhist Economics can offer a much more promising alternative. The concept of production, consumption, and distribution in Buddhist economics should be explained in order to show clearly why the concept of sustainability with peace and tranquility is possible under such scenario. 18

Production in Buddhist Economics  Before discussing production, the mode of

production in Buddhist economics will be defined as paňňa-ism instead of capitalism in mainstream economics. Paňňa is one supreme quality of the mind. It means the ability to understand everything at its own nature. Most of the time people do not have paňňa because of the person’s own ignorance or the person distorts fact for his/her own liking or not liking. Such special quality of mind known as paňňa must be continuously trained to achieve its status of neutrality so that it can learn and understand everything at the object’s own nature. 19

Production in Buddhist Economics  Paňňa cannot be trained alone, it is conditioning to

the training of “sila” shortly known as “good conduct” and samadhi or concentration. The training of the three known as sikkhattaya simultaneously is the sufficient condition. It begins with some basic faith that always having a good conduct (clean mind) will result in a calm mind or the mind with concentration or samadhi. Samadhi will support the neutrality of the mind (clear mind) that will be able to learn and understand everything at its own nature. This latter of mind is similar to the quality of right intention and right views, two of the Noble Eightfold Path known as paňňa. 20

Production in Buddhist Economics  Given the above quality, there will be

increasing understanding why good conduct is necessary for better life. The three components of good conduct or sila are right action, right speech, right livelihood. They are the three additional components of the Eightfold Path. Given the right conduct the mind can be more concentrated because it will not be disturbed by bad thinking and bad conduct. 21

Production in Buddhist Economics  This quality of mind is known as samadhi. It

consists of the remaining three of the Eightfold Path or magga. They are right effort, right mindfullness, right concentration. The sikkhattaya is the training of the three function of mind sila, samadhi, and paňňa. They form into magga or the way to be relieved from dukkha, or conflict, alienation, pain, misery, or suffering that all human beings try to avoid. 22

Production in Buddhist Economics  According to Buddha Dhamma, a human being who

has paňňa will not seek to maximize pleasure or utility but will seek to be relieved from pain as much as possible. With less pain will be more peace or happiness. Pain is Buddha Dhamma is like a temperature. It contains both heat and cool at the same time with more heat their will be less cool and vice versa. Similarly, with less pain there will be more peace or happiness in the sense of Buddha Dhamma. Happiness in this case can be equated to peace rather than joy or glad. 23

Production in Buddhist Economics  With the full understanding of the above concept,

production in Buddhist economics can be clearly explained.  Since paňňa is the mode of production in Buddhist economics, paňňa should be used to control all factor inputs, such as technology, capital and natural resources. The production process should be done in such a way to enhance good quality of human inputs. The process should generate human skills and creativity as well as to have a sense of fulfillment from the product of their work. 24

Production in Buddhist Economics  A worker should not feel that a person is

being exploited but given opportunity to do something worthwhile for him/her self as well as the others. Non-renewable resources should be used in any production process at their minimum amount, while renewable resources should be encouraged to replace the use of non-renewable resources as much as possible. 25

Production in Buddhist Economics  Waste from production process should be

kept at its minimum. There should be utmost attempt to improve nature and environment at the same time. The reason for production to be increased to meet more demand for consumption will not be needed in Buddhist economy, since consumption will be also at moderation.

26

Consumption in Buddhist Economics  The main objective of consumption in

Buddhist economics is not to maximize pleasure or utility but to maintain good physical and mental health, the strong foundation for the generation and accumulation of paňňa, the fundamental tool to be relieved from dukkha. Maximizing pleasure or utility will not always lead to less pain. Most of the time it leads to more pain. 27

Consumption in Buddhist Economics  Consumption being controlled by paňňa will

only lead to moderate consumption, because it is the optimal consumption needed. For example, in case of food consumption too much food intake can result in health problem both in short and long run. Too little consumption will lead to nutrient deficiency that can be harmful to physical health as well as mental health. Similarly, too much accumulation of material wealth will bring more pain as a result of craving. 28

Consumption in Buddhist Economics  As only moderate consumption in everything is

needed, the rest can be given or donated to the other who are still in need. On the other hand, peace and tranquility can be obtained from the ability to understand everything at its own nature or having paňňa. Such knowledge will result in more understanding of the world, as well as the understanding of “nothingness” or “void” or no self to cling on to, the main cause for pain. This way excessive production is not needed.

29

Distribution in Buddhist Economics  The main purpose of Buddhist economics

is to reduce pain or suffering for all living things as much as possible. The reason behind this goal is once any living thing is born or existed, it will never be free from pain. Therefore, it does not make much sense to inflict more pain or to cause more burden to each other. Contrarily, helping each other or loving and kindness should be more of a standard practice. 30

Distribution in Buddhist Economics  Instead of insisting on just distribution, namely, to

each according to a person’s ability or technically known as each factor should be paid at its marginal productivity, Buddhist economics insists that all living things who are still in pain because of inadequate materials received to support their lives should have the priority. Those who have more paňňa should produce more than what they need to maintain their own living and give the rest to the more needy ones.

31

Distribution in Buddhist Economics  The interaction among production,

consumption, and distribution in Buddhist economics for sustainability can be summarized by the diagram below.

32

Consumption and Production Theories of Buddhist Economics. The system of production and consumption under the condition of sustainable development and the promotion of peaceful life.

Consumption process Waste

Net product after the deduction of waste from consumption

Goods and services for net consumption

peaceful life

pañña 1. Unsustainable development 2. Sustainable development 3. Sustainable development and the reduction of conflict or contraction for more peaceful body and mind

intelligence

brain muscle capital technology

human resources

energy

renewable

process of the three trainings

man-made resources

renewable none-renewable

nirvana

resources natural resources

production process

product (+) waste (-)

net production

other natural resources.

1. Unsustainable development is the condition when net goods and services produced are not sufficient for the maintenance of the production process to continue at the same rate. 2. Sustainable development is the condition when net goods and services produced are just sufficient for the maintenance of the production process to continue at the same rate. 3. Sustainable development and the reduction of conflict or contradiction for more peaceful body and mind is the condition when net goods and services produced are more than enough to maintain the existing system of production. The rest can be used to reduce pain 33 and suffering of those who are needed. With the help of technology production efficiency can be improved.

Distribution in Buddhist Economics  In conclusion while the core value of

capitalism is self-interest and competition, the core value of paňňa-ism is no-self and compassion leading to cooperation. Which one will result in a better world. Given the two difference ways of thinking discussed above, it is up to each one to choose one among the two Capitalism or Paňňa-

ism. 34

Official Meaning of Sufficiency Economy  “Sufficiency Economy” is a philosophy that

stresses the middle path as an overriding principle for appropriate conduct by the populace at all levels. This applies to conduct starting from the level of the families, communities, as well as the level of national development and administration so as to accommodate change in line with globalization.

35

Official Meaning of Sufficiency Economy  “Sufficiency” means moderation, reasonableness,

and the need of self-immunity for sufficient protection from impact arising from internal and external shocks. To achieve this, an application of knowledge with due consideration and prudence is essential. In particular, great care is needed in the utilization of theories and methodologies for planning and implementation in every step.

36

Official Meaning of Sufficiency Economy 

At the same time, it is essential to strengthen the ethical integrity of the nation, so everyone, particularly public officials, academics, businessmen at all levels, adheres first and foremost to the principles of honesty and integrity. In addition, a way of life based on patience, perseverance, diligence, wisdom and prudence is indispensable to create balance and be able to cope appropriately with critical challenge arising from extensive and rapid socioeconomic, environmental and cultural changes in the world.

37

Way of Thinking

38

สัPeaceful งคม ร่มเย็Society นเป็นสุข สติ ปัand ญญาethical คุณธรรม Sati paňňa integrity Way วิถofีชีวlife ิต Way of วิธthought คี ิด Method วิธกี าร Self ภู ม ิคุ้มกัน Immunity

ความพอประมาณ Moderation ความมีเหตุผล

Reasonableness Knowledge and Ethical Integrity

ความรู้ + คุณธรรม Peaceful สังคมร่มเย็Society นเป็นสุข

39

สัPeaceful งคม ร่มเย็Society นเป็นสุข สติ ปัand ญญาethical คุณธรรม Sati paňňa integrity Way วิถofีชีวlife ิต Way of วิธthought คี ิด Method วิธกี าร Self ภู ม ิคุ้มกัน Immunity

ความพอประมาณ Moderation ความมีเหตุผล

Reasonableness Knowledge and Ethical Integrity

ความรู้ + คุณธรรม Peaceful สังคมร่มเย็Society นเป็นสุข

40

สัPeaceful งคม ร่มเย็Society นเป็นสุข สติ ปัand ญญาethical คุณธรรม Sati paňňa integrity Way วิถofีชีวlife ิต Way of วิธthought คี ิด Method วิธกี าร Self ภู ม ิคุ้มกัน Immunity

ความพอประมาณ Moderation ความมีเหตุผล

Reasonableness Knowledge and Ethical Integrity

ความรู้ + คุณธรรม Peaceful สังคมร่มเย็Society นเป็นสุข

41

สัPeaceful งคม ร่มเย็Society นเป็นสุข สติ ปัand ญญาethical คุณธรรม Satipa paňňa ňňa and ethical integrity Sati integrity Way Way วิถofofีชlife ีวlife ิต Way Wayof of thought วิธthought คี ิด Method Method Method วิธกี าร Self Self Self ภู ม ค ิ ม ้ ุ กั น Immunity Immunity Immunity

ความพอประมาณ Moderation Moderation Moderation ความมีเหตุผล

Reasonableness Reasonableness Reasonableness Knowledge and Ethical Integrity

ความรู้ + คุณธรรม Peaceful สังคมร่มเย็Society นเป็นสุข

42

Sufficiency Economy and Buddhist Economics  Not like capitalism, Sufficiency Economy does

not sanctify greed as economic virtue.  Since it has its origin in Thailand, it draws heavily from many concepts in Buddhism such as wisdom or more correctly, paňňa, due consideration and great care or sati. In other word, paňňa must be controlled by sati in order to maintain ethical integrity. The concept of middle path, moderation and self-reliance are the ones available in Buddha Dhamma. It can be also found in Buddhist economics. 43

Sufficiency Economy and Buddhist Economics  Like Buddhist economics, Sufficiency Economy

also has a status of a grounded theory. Both have their theoretical basis built from actual practices. Such theoretical basis is now known as a grounded theory.  Both stress on human security and not human wealth, the strong foundation for mental peace and happiness. Human wealth does not warrant peace and happiness. Most of the time it leads to more pain.

44

Sufficiency Economy and Buddhist Economics  Sufficiency Economy can be validly called

ethical economics. It has its root in all major religion since it is anti greed. However, it does not require back up from any religion.  If Buddha Dhamma is qualified not to be a region, then both Sufficiency Economy and Buddhist economics also share the same feature. 45

Sufficiency Economy and Buddhist Economics  Both Sufficiency Economy and Buddhist

Economics do not confront or reject capitalism and globalization out right but looking for a device to survive and flourish under the two, and in the process lessening their undesirable influences. It is a peaceful means of struggle against the evil giant.

46

Sufficiency Economy and Buddhist Economics  Although, Sufficiency Economy has a

higher ethical ground than that of capitalism, the depth in its theoretical analysis is less than Buddhist economics. It has the advantage over Buddhist economics in that it can be more appeal to a broader base of population who do not seek in-depth understanding of Buddha Dhamma. 47

Epilogue  Because of the said nature of Sufficiency

Economy, it has a better chance especially in Thailand where problems created by capitalism is so severe. The odd to reduce the undesirable influences of capitalism of Sufficiency Economy is better than that of Buddhist economics especially as King Bhumibol of Thailand who has advanced the concept of Sufficiency Economy, has been highly severe by the Thai people. 48

Epilogue  On the other hand, because of the seminal

work of Schumacher, Buddhist economics is better known globally. Because of its scientific nature based on mind as well as physics. It has much better chance to be increasingly understood in the West as Buddha Dhamma also gains better understanding than before.

49

Epilogue  The existing world population have not

much choice to choose from if they want to survive human catastrophe brought about by capitalism and globalization. Any reasonable alternatives with strong scientific back up will definitely gain much stronger ground in the future. Among the ones existed, Buddhist economics can provide such an option. 50

Thank you for your attention

51