Buddhist economics and mainstream Western economics are not as radically opposed as suggested by their stereotypes, the monk and the stockbroker. Like its Western sibling, the Buddhist model is based on individual rational choices concerning material wellbeing. The accumulation of wealth is allowed, and in many cases even encouraged. Significant differences emerge, however, upon closer examination of economic objectives, productive activities or work, and attitudes toward wealth—particularly how to consume and disperse it.
Although economic objectives in both Buddhist and mainstream Western models involve satisfying self-interest through rational choice, these concepts hold different meanings in each perspective. The enlightenment era “Economic Man” model based on the neoclassical theory of methodological individualism presents an atomistic individual using instrumental or means-to-ends rationality, calculating choices of comparable value to arrive at the optimal outcome: maximization of self-interests, whether for profit or some other form of satisfaction.
But a Buddhist version of this model (call it the Rational Buddhist Householder) based on the theory of conditionality or dependent origination (paticca-samuppada) and the law of causality looks a bit different. The Buddhist sense of self is connected to other entities rather than being isolated, and an individual’s actions have consequences arising in a non-linear fashion, possibly resulting in a karmic boomerang. This undoubtedly expands an individual’s notion of “self-interest.”
As such, where the neoclassical Economic Man’s rational process stops at satisfying a demand, the Rational Buddhist Householder would first factor into his or her choices the possible effects on all spheres of human existence: individual, society and nature.
Readers who think that worrying about karma is irrational are urged to reconsider their basis of rationality. Sociologist Max Weber distinguished two kinds of rationality: formal or instrumental rationality (on which Economic Man is based) and substantive or value rationality, which constitutes acting in accordance with one’s values or that which is intrinsically valuable, perhaps of an ethical, aesthetic or religious nature.
Economic anthropologists such as Gudeman and Rivera further argue that rationality is contextually dependent. Take for example a woman on her way to the market who refuses to sell her heavy load to a foreigner offering more than the market value; she may be perceived as behaving irrationally until one considers that she places greater value on long-term social relationships with market trading partners than a one-time monetary gain.
Mainstream Western and Buddhist models also differ in their objectives of achieving wellbeing and the desire that stimulates efforts toward that aim. Although the former promotes material wellbeing for its own sake, the latter considers it a necessary condition for the ultimate goal, nirvana. That is, in Buddhist economics, the provisioning of basic material needs—food, shelter, clothing and medicine—serves as the foundation for human spiritual advancement.
With this minimum material comfort as its objective, it may seem that there is scant motivation to be productive. The capitalist economy, after all, is driven by desires, and Buddhists are supposed to rid themselves of this source of suffering.
Yet Buddhism distinguishes between two kinds of desires and views only one negatively. Tanha, the subject of the Second Noble Truth, is ignorant craving for pleasurable feelings associated with both the tangible and in-tangible such as status or fame, whereas chanda is positive desire for wellbeing and benefit. It is based on pañña or intelligent reflection and leads to right effort and action. A Buddhist would argue that economic activity can and should be prompted by this form of desire—and possibly by the more specific desire to turn money into merit.
To satisfy such desires, an individual must perform some productive or livelihood activity. E.F. Schumacher, the first Western scholar to explore this subject, observed that because the Eightfold Path included right livelihood, “there must be such a thing as Buddhist economics” (56).
Right livelihood is guided by chanda and allows the individual to keep the five basic householder precepts (to abstain from killing or harming life, lying, stealing, engaging in sexual misconduct, and consuming sense-altering substances).
Right livelihood also requires diligence, an important Buddhist virtue captured in the Buddha’s last words, “work out your own salvation with diligence,” and in the Buddha’s directives for householders to achieve happiness in the present life-time: diligent acquisition, followed by careful conservation, having virtuous friends and living within one’s means.
Finally, implicit in the notion of right livelihood for the householder is self-reliance. Because Theravada Buddhists technically cannot look to an array of gods or celestial bodhisattas for help, they must make their own way in this life. The Buddha even counseled that followers should not blindly accept his teachings, but prove their truthfulness for themselves. In terms of material self-reliance, householders must meet their own subsistence plus generate enough surpluses to support the monastic community that depends on them.
Yet, work may be more than just the means to satisfy material needs. Some Buddhist schools and sects, most notably Zen, define work as an opportunity to practice samadhi or meditation. Concentration prevents distractions, thereby allowing people to work more efficiently and carefully with fewer mistakes and accidents. Ideally, they can also work together more harmoniously by controlling thoughts, feelings, speech and action according to the Eightfold Path. In theory, as individuals’ mental states improve, so too does the quality of their work and social interactions.
When most Buddhist householders work, however, they simply receive a paycheck and may even accumulate wealth, just like their capitalist counterparts. The Buddha did not forbid wealth as long as it was gained according to dharmic norms (for example, through right livelihood).
In fact, Buddhists may perceive wealth to be favorable for two reasons. First, wealth is a sign of virtue because it is partly a result of good karma. That is, wealth accumulated through right livelihood is good; therefore, it is a suitable reward for meritorious actions. Second, surplus wealth is necessary to make more merit or good karma.
Wealth accumulation is not so much the issue for Buddhists as is what happens afterwards. Along with the benefits of wealth come increased potential for attachment to money, material goods and the resulting status as well as the craving for more.
With this in mind, the Buddha specified five uses of wealth: to provide for oneself and one’s family, to share with friends, to save for emergencies, to make the five-fold offerings (to relatives, guests, the departed, the government and the deities) and to support spiritual teachers and monks.
Of these, two uses warrant further consideration: personal consumption and giving. Although a monk’s personal consumption is certainly minimal, the Buddha did not advocate deprivation. As noted above, material well-being is necessary for spiritual advancement. Moderation is a better approach to consumption, because it is in line with the teachings of the Middle Way of neither extreme luxury nor extreme asceticism. The question of what is sufficient—not merely to sustain life but to give a sense of wellbeing—is to be continually re-evaluated by each individual at different levels of spiritual attainment. The aim, though, is to consume less.
Assuming a steady rate of diligent wealth accumulation (and no debt), reduced consumption permits greater opportunity for giving. This is desirable not simply because generosity is a householder virtue, but because giving allows Buddhists to practice non-attachment to material objects and possessive feelings; it is training in selflessness, non-self or anatta.
According to Phra Rajavaramuni, an esteemed Thai scholar monk, lay training in Theravada countries emphasizes religious giving or charity (dana), in addition to morality (sila) and mental development (bhavana) as the three bases of meritorious action (rather than higher monastic training in sila, samadhi and panna). Phra Rajavaramuni suggests the stress on giving has to do with lay concern for good social relationships, whereas other scholars point to the reciprocal relationship between monasteries and households: material support flowing one way (that is, donations to temples) and spiritual support flowing the other to create the optimal conditions for salvation.
From the lay perspective, however, giving may simply be the easiest way to earn merit, the currency of spiritual wealth, which can be viewed as an investment for a better future in this lifetime and an even better rebirth.
The Rational Buddhist Householder wanting to maximize spiritual wealth must choose among “fields of merit” for the best return. According to the hierarchical concept of dana, the more noble and accomplished the recipient, the higher the field of merit. And, of course, the more one donates, the greater the merit, such that funding the construction of a new temple ranks higher than giving daily alms to monks.
Although the doctrinal definition of dana as religious giving is rather narrow, in practice many “socially engaged” Buddhists aim to benefit the wider community of monastics and lay people as well as their environment.
This approach to giving may be inspired by the ideal individual characteristics, known as the Four Sublime States: goodwill (metta), compassion (karuna), sympathetic joy (mudita) and equanimity (upekkha). Or it may be an evocation the idea expressed to me by one Thai nun: simply, “Giving is the heart of Buddhism.”
Returning to the original question, is Buddhist economics an oxymoron? The answer is clearly no. It’s simply an alternative economic model based on Buddhist values, meaning that these values inform economic decision making and action on any level (individual, communal, national, or global).
*A version of this post was originally published as Essen, Juliana (2009). “Buddhist Economics,” in Handbook of Economics and Ethics, edited by Jan Peil and Irene Van Staveren. Cheltenham, UK: Edward Elgar Publishers.