Monday, July 30, 2012

Buddhist Economics

E. F. Schumacher (1911-1977)

From E. F. Schumacher, Small Is Beautiful. Copyright (C) 1973 by E. F. Schumacher.

"Right Livelihood" is one of the requirements of the Buddha's Noble Eightfold Path. It is clear, therefore, that there must be such a thing as Buddhist economics.

Buddhist countries have often stated that they wish to remain faithful to their heritage. So Burma: "The New Burma sees no conflict between religious values and economic progress. Spiritual health and material well-being  are not enemies: they are natural allies."[1] Or: "We can blend successfully  the religious and spiritual values of our heritage with the benefits of modern technology."[2] Or: "We Burmans have a sacred duty to conform both our dreams and our acts to our faith. This we shall ever do."[3]

All the same, such countries invariably assume that they can model their
economic development plans in accordance with modern economics, and they
call upon modern economists from so-called advanced countries to advise
them, to formulate the policies to be pursued, and to construct the grand
design for development, the Five-Year Plan or whatever it may be called. No
one seems to think that a Buddhist way of life would call for Buddhist
economics, just as the modern materialist way of life has brought forth
modern economics.

Economists themselves, like most specialists, normally suffer from a kind
of metaphysical blindness, assuming that theirs is a science of absolute
and invariable truths, without any presuppositions. Some go as far as to
claim that economic laws are as free from "metaphysics" or "values" as the
law of gravitation. We need not, however, get involved in arguments of
methodology. Instead, let us take some fundamentals and see what they look
like when viewed by a modern economist and a Buddhist economist.

There is universal agreement that a fundamental source of wealth is human
labor. Now, the modern economist has been brought up to consider "labor" or
work as little more than a necessary evil. From the point of view of the
employer, it is in any case simply an item of cost, to be reduced to a
minimum if it cannot be eliminated altogether, say, by automation. From the
point of view of the workman, it is a "disutility"; to work is to make a
sacrifice of one's leisure and comfort, and wages are a kind of
compensation for the sacrifice. Hence the ideal from the point of view of
the employer is to have output without employees, and the ideal from the
point of view of the employee is to have income without employment.

The consequences of these attitudes both in theory and in practice are, of
course, extremely far-reaching. If the ideal with regard to work is to get
rid of it, every method that "reduces the work load" is a good thing.

The most potent method, short of automation, is the so-called "division of
labor" and the classical example is the pin factory eulogized in Adam
Smith's Wealth of Nations. Here it is not a matter of ordinary
specialization, which mankind has practiced from time immemorial, but of
dividing up every complete process of production into minute parts, so that
the final product can be produced at great speed without anyone having had
to contribute more than a totally insignificant and, in most cases,
unskilled movement of his limbs.

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The Buddhist point of view takes the function of work to be at least
threefold: to give man a chance to utilize and develop his faculties; to
enable him to overcome his ego-centeredness by joining with other people in a common task; and to bring forth the goods and services needed for a
becoming existence. Again, the consequences that flow from this view are
endless. To organize work in such a manner that it becomes meaningless,
boring, stultifying, or nerve-racking for the worker would be little short
of criminal; it would indicate a greater concern with goods than with
people, an evil lack of compassion and a soul-destroying degree of
attachment to the most primitive side of this worldly existence. Equally,
to strive for leisure as an alternative to work would be considered a complete misunderstanding of one of the basic truths of human existence, namely that work and leisure are complementary parts of the same living process and cannot be separated without destroying the joy of work and the bliss of leisure.

From the Buddhist point of view, there are therefore two types of
mechanization which must be clearly distinguished: one that enhances a
man's skill and power and one that turns the work of man over to a
mechanical slave, leaving man in a position of having to serve the slave.
How to tell the one from the other? "The craftsman himself," says Ananda
Coomaraswamy, a man equally competent to talk about the modern West as the
ancient East, "can always, if allowed to, draw the delicate distinction
between the machine and the tool. The carpet loom is a tool, a contrivance
for holding warp threads at a stretch for the pile to be woven round them
by the craftmen's fingers; but the power loom is a machine, and its
significance as a destroyer of culture lies in the fact that it does the
essentially human part of the work. "[4] It is clear, therefore, that
Buddhist economics must be very different from the economics of modern
materialism, since the Buddhist sees the essence of civilization not in a
multiplication of wants but in the purification of human character.
Character, at the same time, is formed primarily by a man's work. And work,
properly conducted in conditions of human dignity and freedom, blesses
those who do it and equally their products. The Indian philosopher and
economist J. C. Kumarappa sums the matter up as follows:

If the nature of the work is properly appreciated and applied, it will
stand in the same relation to the higher faculties as food is to the
physical body. It nourishes and enlivens the higher man and urges him to
produce the best he is capable of. It directs his free will along the
proper course and disciplines the animal in him into progressive channels.
It furnishes an excellent background for man to display his scale of values
and develop his personality.[5]

If a man has no chance of obtaining work he is in a desperate position, not
simply because he lacks an income but because he lacks this nourishing and
enlivening factor of disciplined work which nothing can replace. 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 ensure 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 labor force."[6] 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.

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.

While the materialist is mainly interested in goods, the Buddhist is mainly
interested in liberation. But Buddhism is "The Middle Way" and therefore in
no way antagonistic to physical well-being. It is not wealth that stands in
the way of liberation but the attachment to wealth; not the enjoyment of
pleasurable things but the craving for them. The keynote of Buddhist
economics, therefore, is simplicity and non-violence. From an economist's
point of view, the marvel of the Buddhist way of life is the utter
rationality of its pattern-- amazingly small means leading to
extraordinarily satisfactory results.

For the modern economist this is very difficult to understand. He is used
to measuring the "standard of living" by the amount of annual consumption,
assuming all the time that a man who consumes more is "better off" than a
man who consumes less. A Buddhist economist would consider this approach
excessively irrational: since consumption is merely a means to human
well-being, the aim should be to obtain the maximum of well-being with the
minimum of consumption. Thus, if the purpose of clothing is a certain
amount of temperature comfort and an attractive appearance, the task is to
attain this purpose with the smallest possible effort, that is, with the
smallest annual destruction of cloth and with the help of designs that
involve the smallest possible input of toil. The less toil there is, the
more time and strength is left for artistic creativity. It would be highly
uneconomic, for instance, to go in for complicated tailoring, like the
modern West, when a much more beautiful effect can be achieved by the
skillful draping of uncut material. It would be the height of folly to make
material so that it should wear out quickly and the height of barbarity to
make anything ugly, shabby, or mean. What has just been said about clothing
applies equally to all other human requirements. The ownership and the
consumption of goods is a means to an end, and Buddhist economics is the
systematic study of how to attain given ends with the minimum means.

Modern economics, on the other hand, considers consumption to be the sole
end and purpose of all economic activity, taking the factors of
production--land, labor, and capital--as the means. The former, in short,
tries to maximize human satisfactions by the optimal pattern of
consumption, while the latter tries to maximize consumption by the optimal
pattern of productive effort. It is easy to see that the effort needed to
sustain a way of life which seeks to attain the optimal pattern of
consumption is likely to be much smaller than the effort needed to sustain
a drive for maximum consumption. We need not be surprised, therefore, that
the pressure and strain of living is very much less in, say, Burma than it
is in the United States, in spite of the fact that the amount of
labor-saving machinery used in the former country is only a minute fraction
of the amount used in the latter.

Simplicity and non-violence are obviously closely related. The optimal
pattern of consumption, producing a high degree of human satisfaction by
means of a relatively low rate of consumption, allows people to live
without great pressure and strain and to fulfill the primary injunction of
Buddhist teaching: "Cease to do evil; try to do good." As physical
resources are everywhere limited, people satisfying their needs by means of
a modest use of resources are obviously less likely to be at each other's
throats than people depending upon a high rate of use. Equally, people who
live in highly self-sufficient local communities are less likely to get
involved in large-scale violence than people whose existence depends on
world-wide systems of trade.

From the point of view of Buddhist economics, therefore, production from
local resources for local needs is the most rational way of economic life,
while dependence on imports from afar and the consequent need to produce
for export to unknown and distant peoples is highly uneconomic and
justifiable only in exceptional cases and on a small scale. Just as the
modern economist would admit that a high rate of consumption of transport
services between a man's home and his place of work signifies a misfortune
and not a high standard of life, so the Buddhist economist would hold that
to satisfy human wants from faraway sources rather than from sources nearby
signifies failure rather than success. The former tends to take statistics
showing an increase in the number of ton/miles per head of the population
carried by a country's transport system as proof of economic progress,
while to the latter-the Buddhist economist--the same statistics would
indicate a highly undesirable deterioration in the pattern of consumption.

Another striking difference between modern economics and Buddhist economics
arises over the use of natural resources. Bertrand de Jouvenel, the eminent
French political philosopher, has characterized "Western man" in words
which may be taken as a fair description of the modern economist:

He tends to count nothing as an expenditure, other than human effort; he
does not seem to mind how much mineral matter he wastes and, far worse, how
much living matter he destroys. He does not seem to realize at all that
human life is a dependent part of an ecosystem of many different forms of
life. As the world is ruled from towns where men are cut off from any form
of life other than human, the feeling of belonging to an ecosystem is not
revived. This results in a harsh and improvident treatment of things upon
which we ultimately depend, such as water and trees. [7]

The teaching of the Buddha, on the other hand, enjoins a reverent and
non-violent attitude not only to all sentient beings but also, with great
emphasis, to trees. Every follower of the Buddha ought to plant a tree
 every few years and look after it until it is safely established, and the
Buddhist economist can demonstrate without difficulty that the universal
observation of this rule would result in a high rate of genuine economic
development independent of any foreign aid. Much of the economic decay of
Southeast Asia (as of many other parts of the world) is undoubtedly due to
a heedless and shameful neglect of trees.

Modern economics does not distinguish between renewable and non-renewable
materials, as its very method is to equalize and quantify everything by
means of a money price. Thus, taking various alternative fuels, like coal,
oil, wood, or water-power: the only difference between them recognized by
modern economics is relative cost per equivalent unit. The cheapest is
automatically the one to be preferred, as to do otherwise would be
irrational and "uneconomic." From a Buddhist point of view, of course, this
will not do; the essential difference between non-renewable fuels like coal
and oil on the one hand and renewable fuels like wood and water-power on
the other cannot be simply overlooked. Non-renewable goods must be used
only if they are indispensable, and then only with the greatest care and
the most meticulous concern for conservation. To use them heedlessly or
extravagantly is an act of violence, and while complete non-violence may
not be attainable on this earth, there is nonetheless an ineluctable duty
on man to aim at the ideal of non-violence in all he does.

Just as a modern European economist would not consider it a great economic
achievement if all European art treasures were sold to America at
attractive prices, so the Buddhist economist would insist that a population
basing its economic life on non-renewable fuels is living parasitically, on
capital instead of income. Such a way of life could have no permanence and
could therefore be justified only as a purely temporary expedient. As the
world's resources of non-renewable fuels--coal, oil and natural gas--are
exceedingly unevenly distributed over the globe and undoubtedly limited in
quantity, it is clear that their exploitation at an ever-increasing rate is
an act of violence against nature which must almost inevitably lead to
violence between men.

This fact alone might give food for thought even to those people in
 Buddhist countries who care nothing for the religious and spiritual values
of their heritage and ardently desire to embrace the materialism of modern
economics at the fastest possible speed. Before they dismiss Buddhist
economics as nothing better than a nostalgic dream, they might wish to
consider whether the path of economic development outlined by modern
economics is likely to lead them to places where they really want to be.
Towards the end of his courageous book The Challenge of Man's Future,
Professor Harrison Brown of the California Institute of Technology gives
the following appraisal:

Thus we see that, just as industrial society is fundamentally unstable and
subject to reversion to agrarian existence, so within it the conditions
which offer individual freedom are unstable in their ability to avoid the
conditions which impose rigid organization and totalitarian control.
Indeed, when we examine all of the foreseeable difficulties which threaten
the survival of industrial civilization, it is difficult to see how the
achievement of stability and the maintenance of individual liberty can be
made compatible. [8]

Even if this were dismissed as a long-term view there is the immediate
question of whether "modernization," as currently practiced without regard
to religious and spiritual values, is actually producing agreeable results.
As far as the masses are concerned, the results appear to be disastrous--a
collapse of the rural economy, a rising tide of unemployment in town and
country, and the growth of a city proletariat without nourishment for
either body or soul.

It is in the light of both immediate experience and long-term prospects
that the study of Buddhist economics could be recommended even to those who
believe that economic growth is more important than any spiritual or
religious values. For it is not a question of choosing between "modern
growth" and "traditional stagnation." It is a question of finding the right
path of development, the Middle Way between materialist heedlessness and
traditionalist immobility, in short, of finding "Right Livelihood."


1. The New Burma (Economic and Social Board, Government of the Union of
Burma, 1954).

2. Ibid,

3. Ibid.

4. Art and Swadeshi by Ananda K. Coomaraswamy (Ganesh & Co., Madras).

5. Economy of Permanence by J.C. Kumarappa (Sarva-Seva Sangh Publication,
Rajghat, Kashi, 4th edn., 1958).

6. The Affluent Society by John Kenneth Galbraith (Penguin Books Ltd.,

7. A Philosophy of Indian Economic Development by Richard B. Gregg
(Navajivan Publishing House, Ahmedabad, India, 1958).

8. The Challenge of Man's Future by Harrison Brown (The Viking Press, New
York, 1954).

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