Wednesday, October 15, 2008

Buddhist Economics – Part III

Let us continue with our discussion on Buddhist Economics based on E. F. Schumacher’s book, ‘Small is Beautiful’. Part I discussed about Labor whilst Part II discussed on Mechanization. In this post, we shall discuss about how Buddhist Economics opinion on Unemployment differs from Orthodox Economics.

On Unemployment
A modern economist may engage in highly sophisticated calculations on whether full employment ‘pays’ or whether it might be more ‘economic’ to run an economy at less than full employment so as to insure a greater mobility of labor, a better stability of wages, and so forth. His fundamental criterion of success is simply the total quantity of goods produced during a given period of time.

‘If the marginal urgency of goods is low,; says Professor Galbraith in The Affluent Society, ‘then so is the urgency of employing the last man or the last million men in the labour force.’

And again: ‘If . . . we can afford some unemployment in the interest of stability—a proposition, incidentally, of impeccably conservative antecedents—then we can afford to give those who are unemployed the goods that enable them to sustain their accustomed standard of living.’

Buddhist Viewpoint
From a Buddhist point of view, this is standing the truth on its head by considering goods as more important than people and consumption as more important than creative activity.

It means shifting the emphasis from the worker to the product of work, that is, from the human to the subhuman, a surrender to the forces of evil. The very start of Buddhist economic planning would be a planning for full employment, and the primary purpose of this would in fact be employment for everyone who needs an "outside" job: it would not be the maximization of employment nor the maximization of production.

Women, on the whole, do not need an ‘outside’ job, and the large-scale employment of women in offices or factories would be considered a sign of serious economic failure. In particular, to let mothers of young children work in factories while the children run wild would be as uneconomic in the eyes of a Buddhist economist as the employment of a skilled worker as a soldier in the eyes of a modern economist.

Surely an economic system should put People First, not Profits! Yet, in our current capitalist system, it is Profits First and People Last. In good times, workers are overworked whilst being told not to claim overtime. And during difficult times, they are also the first to be retrenched, through no fault of their own; whilst Top Management go laughing all the way to the bank.

Is an economic system that accepts unemployment acceptable? Before you say yes, put yourselves in the shoes of the unemployed and think about how you would feel; if the whole world told you that you are USELESS and therefore, UNEMPLOYABLE!


Damien Tan

Hmmm...there is a similar theory that characterizes work as a social activity and that the conditions and forms under and through which people work are socially determined as opposed to capitalist determined. The author of that theory is Karl Marx, whose ideas form the main thrust of socialist worker parties around the world.

Post 20th century, only the capitalist method seem to have survived. Money is firmly in control. Maybe that's what the Buddha termed as samsara.


Dear Damien,

The main problem is the majority of human beings are inherently selfish. For us to co-operate in any form of complex ventures, capitalism seems to be the only realistic system (for now).

However, the capitalist system seems to be breaking down due to excessive greed of a few. Let's hope it doesn't deteriorate further.


Marketing Deviant

There should be more regulation by the government on some business standards and procedures. Also, the government should look at it in a more humanistic view in order to benefit the workers more.

Shravasti Dhammika

I found your three part essay on Buddhist economics interesting and with a few good ideas. However, as it was supposed to about 'Buddhist' economics I was surprised that there was not a single reference to anything the Buddha himself said about money, work, investment, interest, production, etc. Like many people you have simply told us what you think the Buddha should have said about economics rather that let him speak for himself. Have a look at for a few of the Buddha's comments on the subject and then rewrite your essay taking into account his insights and ideas. Bhante Dhammika


I haven't read enough about the socialist model to comment much but I have to say that Russia, China and much of Eastern Europe have proved that it is not the way to go.

The capitalist system is so well received because it feeds into our desire of always wanting to improve ourselves. There are plenty of opportunities to get a better paying job, to try out a business idea or to invest. It's not a bad system but there's a need to recognise that up to a point that what you have is enough and be content (and this is the hard part). This is where spirituality comes in I guess and helps you to put a stop to discontent.

Also I think there is enough work for everyone in a capitalist system. It's how you define work. Work could mean being employed as a volunteer for a social cause such as organiser. Being a homemaker is hard work too and contributes to the economy-save on maid costs and help keep money from flowing out of the country besides the obvious social benefits to families. Heck, selling nasi lemak by the roadside is work.

Generally I think it's best to let supply and demand work by themselves but there should be constant monitoring and intervention by the government of the day to correct things and put policies in place to benefit as many sections of society as possible. Basic fundamentals such as food, shelter, education and healthcare must be assured as inalienable and equal rights.....for all. However too humanistic an approach, we can see, also breeds abuse such as the dole system has shown in Europe and elsewhere.

Hopefully out of this crisis, we can clearly see the consequences of naked greed and take steps to curb our discontent for the greater good of our souls in still more challenging times to come.
At the end of the day,while we need the system and we live within it, there is a better return on investment to put blind faith in the Almighty than man made financial markets or so-called money 'gurus'.


The Constructed Life

You have a little bit of dualistic thinking here. Just because women might be employed in factories does not necessarily mean that their kids will run wild; just because people are unemployed does not mean that they will interpret this as the whole world calling them unemployable and useless.

Fundamentally, Buddhism is less concerned with the level of employment than it is with the level of consciousness.


I don't think further regulations or laws will improve the situation. Corporations will always find loopholes to exploit. We need to change the mindset of people to see any lasting changes.

@Shravasti Dhammika
This post is the third part of a series. It's my attempt to share the ideas of E. F. Schumacher in his book ‘Small is Beautiful’, who [presumably] first coined the term 'Buddhist Economics'. All the essays here are credited to him.

I agree with you completely that the Buddha did not directly discuss about Economics. It is modern authors such as Schumacher and Ven.P. A. Payutto that have attempted to expand on the Buddha's ideas to the modern economy. My hope is that we can discuss and expand on his ideas. I would appreciate if you could share with us your opinion here.

I'll definitely drop by the site you recommended. BTW - Thanks for dropping by and commenting :)

You've made some valid points. Arguably, communist or socialist systems have failed. Currently, our capitalist system based on the demand and supply is the best working system we have.

As you mentioned, the Government plays an important role is maintaining balance between the greed of corporations and the common interests of humanity. Yet, what if the Government itself is tainted with greed and becomes subservient to commercial interests? Who will be the guardians of the downtrodden, then?

@The Constructed Life
It's true that most kids turn out fine without having their mothers taking care of them. However, I honestly believe there would be less problematic kids today, if mothers were not forced to work due to their economic situation. BTW - I am not against mothers working. What I am against is the fact that mothers may be economically *coerced* into working due to the current economic system.

Again, I agree that not everyone would consider themselves useless just because they can't find a job. However, I think that it would be fair to assume that a large number of unemployed people that find themselves in such a situation [through no fault of their own] would sometimes feel thus.

Yes, Buddhism is concerned with individuals and the attainment of enlightenment. That's why, as Shravasti Dhammika pointed out, the Buddha did not talk about the Economy in his time. Yet, I fervently hope that such discussion may prove fruitful and provoke people thinking about the current system we live in.



You may find this article by Ven. M. Pannasha Maha Nayaka Thera interesting: The Buddhist Way to Economic Stability.

A quote from it: "In recent times many books have been written on the subject of economics and economic theory, all of them either from the Capitalist or Socialist point of view. Neither of these systems pays attention to, nor considers the inner development of man as an important factor in the growth of society."

As a Buddhist I see the creation of wealth as an opportunity to practice compassion. It creates jobs that nourish people and reduces suffering through innovate products. From a compassionate pt of view, this is why I view wealth creation through share trading as less "superior" than those that provide real value add. From a greed perspective, getting something from nothing but pure speculation (T+1 or T+3) is fantastic of course. But unless one buys shares with the intent to capitalize a business and use the gains to relieve the suffering of others, it only ends up satisfying selfish desires and driving one further away from mental purification.

Although he didn't use that specific term, I do think the Buddha touched on economics two ways, one thru Right Livelihood, and two, thru some suttas about how a householder must avoid squandering wealth. Both were in the context of householders (arguably the stream-enterers have no use for material wealth). And those are microeconomic issues that are as valid today as they've been 2,500 years ago.


Further to my entry, the six ways of squandering wealth is mentioned in the Sigalovada Sutta and the causes of downfall in the Parabhava Sutta.


Dear Damien,

Thanks for sharing. Although I'm familiar with the Sigalovada Sutta, I have not read the other two yet.

Kind rgds


Dear Damien,

You have raised a rather interesting question here. Is wealth creation through share trading inferior to those that add value?

I do have some reservations on this. If we look back at the purpose of stock markets originally, they were intended to allow companies to raise large amounts of capital to carry out complex ventures.

Briefly, I believe that the creation of public listed companies by pooling the resources of the public via issuance of shares via the stock exchange to be great achievement. With it, companies could carry out massive development projects and fund innovations that would not have been possible otherwise.

So, I think wealth generation by investing one's capital in the stock market is not *inferior* in that sense. Unfortunately, due to greed, the valuation of shares have been the subject of speculation and gambling. Gains made this way are no different from gambling and are perhaps, *inferior*. As investors, we have no way of knowing the difference.

So, I have to conclude that whilst investing in shares may not be the most *superior* way to generate wealth, it's not truly inferior either, unless you treat the stock market as a casino.



Actually we are about the same thing. I did put a caveat, "... unless one buys shares with the intent to capitalize a business and use the gains to relieve the suffering of others..." See my 2nd last para.

So yes, the original intent of share issuance is to raise market cap. I was just refering to the other world of share trading - the game of speculation. In the "contra" game of T+1 or T+3, you don't need capital. You buy on credit and sell it off before the deadline, let the buy/sell price cancel off each other and hope there's profit left over. The intent is not to lend your capital to anyone but to make a quick buck from transitory price differences. The focus is on minute-to-minute ticker movement, not fundamentals and as long as its profitable, most of these gamblers couldn't care less about what happens to the companies concerned.

That was what I meant by "inferior." Of course, there are some who treat shares as genuine investments. They do turn up at company AGMs and say something about operational concerns. They are the genuine investors.

When I walk into my stockbroker gallery and look at the people staring at the ticker panels, sometimes I wonder. How of them are gamblers and how many are real investors?


Dear Damien,

Oops, I missed out on your caveat. I was too preoccupied with the question of whether profits from share investment are an inferior form of wealth creation.

Yes, playing "contra" is similar to the derivatives used by hedge funds to earn excessive profits. Those are gains made purely on speculation. I believe Warren Buffett termed these instruments as "Financial Weapons of Mass Destruction".

I do not think many retail investors bother to base their investment on fundamentals. Hopefully I'm wrong. As to AGMs, I attended one where the shareholders were more interested in the buffett spread than the AGM itself :)



avatar : gettin' a little sidetracked here. "Financial WMD"? there was this book by a couple of PLA generals, "Unrestricted Warfare". You oughta check it out. Methinks it's in PDA format somewhere.

Embarrassin', but yours truly has little knowledge of these things (this blog of yours is where I learn 'bout financial tools).


Dear YT,

Thanks for the book recommendation. I've been planning on catching up with reading books, but got side tracked with *other* leisure activities.

Well, I hope what little I know about Finance helps my readers. Do let me know if you find it useful or otherwise.

Thanks for all the comments.

Kind rgds

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