Literature Review of Buddhist Economics

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Ch. 2: A Literature Review of Buddhist Economics.

From: Senior Thesis: The relevance of Buddhist Economics: Capitalism, Morality, and the Global Financial Crisis. By Timothy Allen Golden, 1033690. Dept. of Economics, Lingnan University. Submitted: May 4, 2009


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(text without footnotes of original)

Timothy Allen Golden:


Buddhist economics first gained widespread attention with the publication of E.F. Schumacher’s book Small is Beautiful. To Schumacher, Buddhist economics is a “Middle way” of development, aiming to achieve maximum well-being with minimum consumption. Accordingly, the function of work should act as educational toward development of skills, a sense of community, and satisfaction through meaningful work. Monotonous or overly specialized work, thus, is a grave indignity to humanity. Labor should instead serve as the individual’s sense of fulfillment and satisfaction (Schumacher 1973, 2-4).

The process of mechanization, too, should be beneficial to humans through technology utilized to augment the individual’s capacity, rather than for it to serve as the central element of production. Buddhist economics serves to purify human character through challenging and meaningful labor, as opposed to a focus on maximizing production and consumption. He argues unsustainable consumption is a “destroyer of cultures”. Instead, mindfulness promotes resource conservation and environmental protection. Thus, he proposes small-scale, localized economies as the means to alleviate the world of the problems created by a system devoid of moral values.

Frederic Pryor analyzes Buddhist economics according to the Buddhist canon in the Theravada tradition, and how it should function according to the scriptures. In A Buddhist Economic System-in Principle (1990), he outlines Buddhist economic behavior personal and social ethics, aligned economic institutions, and the attitude toward property and wealth. In A Buddhist Economic System-in Practice (1991), he highlights applications of such principles, in redistribution of income, radiation, trade, competition, and economic policy. The canonical basis for his work serves as an important reference for further research in the field.

He discusses the divisions in Buddhism based on monks and laity (householders, those still with worldly attachment), and draws much attention to the methodology of each (Pryor 1990). To him, both Theravada and Mahayana schools align with Buddhist economics (341).

As for his mentioned economic implications of Buddhist economics: impermanence requires the acknowledgment that wealth and possessions will not last and unduly attachment to these will only bring suffering. Causality is based on radiation, a function which suggests that the moral actions of a group of individuals can have a positive influence on the happiness and prosperity of the larger community in both the short-run and the long-run. (1990, 1991). He concludes that poverty is in no way virtuous as it leads to immoral actions such as stealing and violence. Wealth should be attained and maintained, however, in the principle of Right Livelihood and the consideration of generosity. Generosity, he argues, causally leads to greater wealth and social status in the future (345).

In A Buddhist Economic System-in Practice (1991), Pryor asserts that the State’s ultimate aim should be to promote the “spiritual improvement” of a population. Income redistribution is one means, through reducing poverty which restricts spiritual growth. Pryor cites that dhammic action, such as generosity and other merits, supporting redistribution of wealth lead to an inevitable increase in the material wealth of the community (18). At the same time, regulation of the market is limited to activities which do not abide by right livelihood (no arms, drugs, etc). Additionally, market competition is accepted as long as It is based on Right Intent and Right Action (19-21).

Simon Zadek’s article The Practice of Buddhist Economics? Another view (1993) takes an economic development approach. To him, the practical nature of Buddhism is not reflected in the Buddhist canon. It is only knowable through direct, practical experience (2, 9). A decision-making methodology based on Buddhism is not particular to any certain organizational structure or approach; the most important thing is to remain balanced and free from both aversions and desires. Pressures will always be present, in any system or structure. A balanced mind is then most important. He points out that Buddhism is a “practice of being” not a “philosophy of becoming”, it is “real-time,” not reactively rational, thus nternal development is the key (p. 4).

He discusses a community organization in Sri Lanka known as the Sarvodaya Shramadana Movement. Sarvodaya works to alleviate poverty through developing self-sustaining communities at the village level based on Buddhist methodology. Examining Sarvodaya’s decision-making process he concludes that Sarvodaya’s lack of consensus or public consultation in their decision-making process is in fact consistent with Buddhism based on a measure he calls the, “state of receptivity,” or a state of compassion. While from the formal perspective, the decision may appear to take no consideration what-so-ever for the view points of others, the “state of receptivity” suggests that good intentions, awareness of the facts, and general concern for others’ well-being will ensures the best outcome. Zadek lastly argues that donations to monks are significantly used toward offering social services, such as: health-care and education, even construction and other economic activities. Drawing reference to traditional development theory as well as public policy theory, he suggests the role that such donations play in long-term investment strategies (p. 6-7).

Glen Alexandrin’s article on Elements of Buddhist Economics (1993) suggests Buddhist economics acts as an ethical policy. He suggests that it enhances traditional economics in that it sees individuals as they are, not as an abstract concept (e.g. Homo economicus). Additionally, the system itself is a process of education and recognizes the capacity for humans to change. To him, Buddhist economics is a guide rather than a theory, and is to be developed experimentally (1). It too, urges for spiritual happiness, not a happiness based solely on material conditions. Economists, he argues, can benefit the most from these values in determining viable applications to the present economics.

Alexandrin asserts that co-operation, not competition is the basis for such a system, proposing that at the core of the competitive mindset is self-interest, and is socially wasteful and unproductive. However, he acknowledges that co-operation may be more monetarily costly in the long-run. Ultimately, it is capable of providing a necessary reevaluation of human nature, and to emphasize the importance of ethical policy in broader theoretical concepts of economics – a crucial need for our changing economy and society (p. 5).

Priyanut Piboolsravut’s An Outline of Buddhist Economic Theory and System (1997), developed the first theoretical framework for Buddhist economics. Her work discusses Thailand’s Buddhist Economic Movement (BEM) and the many efforts to support economic development and support in the rural sector (2-3). She constructs two theories: The Positive theory is an analytical tool developed on the basis of the first two of Buddha’s Four Noble Truths around principles of non-self, impermanence, and unsatisfactoriness (or “suffering”, dukkha in Pali). The Normative Theory is based on the third and fourth of the Four Noble Truths and lays out the criterion for economic institutions to evaluate and determine the right action. The work has set grounds for more pragmatic evaluation and development of the subject.

Peter Daniel’s Economic systems and the Buddhist world view: the 21st century nexus (2005), demonstrates the intrinsic and integral economic nature of Buddhism (264). His work is a comparative review which clarifies Buddhist economics in light of neoclassical economics. Buddhism’s central emphasis of interconnectedness helps to create a more balanced and meaningful economic system by filling the gaps by accounting for externalities and well-being outcomes, such as happiness and quality of life, or the capacity for sustained human fulfillment and well-being. He suggests that Buddhist economics broadens the concepts of welfare and human nature as a means to shift the fundamental assumptions in policy and development (264). With a value-based economic structure, economic growth is not necessarily at an expense (p. 263). He suggests that trends and shifts in economic structure have led to a greater relevance of Buddhist economics in modern society.

Apichai Puntasen’s book Buddhist economics: Evolution, Theories and Its Application to Various Economic Subjects (2008) serves as the first textbook on the subject. He thoroughly and comprehensively accounts for the scientific methodology of Buddha’s enquiry into human nature and how it can be directly applied to economics. He clarifies that Buddhism is not a religion but instead a science based on the development of the mind (66). The primary emphasis is the development of a calm mind, a clean mind, and a clear mind. He suggests that the fundamental difference between the modern economics and Buddhist economics is the understanding of human beings (9).

In the first chapter, he demonstrates the difficulty of developing Buddhist economics in a traditional academic form given the highly experiential nature of Buddha Dhamma (The teachings of the Buddha) and its place as practical knowledge (9-10). In chapter nine (the subsequent chapter in the translated version of the book) emphasis is placed on the understanding of human beings. He suggests that any economy structured on an inaccurate assumption of human nature will only create conflict. The failure to understand real human nature, he suggests, is the root cause of the world’s problems. What is required is an analytical mechanism for systematic analysis of the mind, allowing the capacity for internal observation and analysis. This critical enhancement will develop greater understanding of human nature by allowing individuals to identify the actual causal and evolutionary nature of the mind, and its true function. It is the process to understanding human nature.

Puntasen asserts that Buddha Dhamma emphasizes that human nature seeks happiness. However, happiness is in many levels. The ‘happiness’ derived from hedonistic gluttony is not the same that is derived from altruistic nurturing. Happiness is roughly defined as sukkha and is made of multiple levels (42). All things are dynamic and impermanent, not static and definite (58-59). Puntasen argues that the fixed assumptions of homo economicus, that all people are self-interested and rational and they define happiness as such, is the source of the deteriorated morality (42-43).

He writes that Buddha Dhamma suggests that a moral good is based on the intention and subsequent act which is carried out (61). According to Puntasen, mainstream economics requires Buddha Dhamma in order to correct the problems it has inspired and to serve the needs of humankind, as it should (62).

He suggests introducing the application of Buddhist economic thought in real sector economics which are directly related to people, in order to demonstrate their world. To him, the more mechanistic economics of finance and trade should be developed only after a firm foundation of the system can be tried and proven. He presents seven preliminary theories for Buddhist economics which serve as a framework to demonstrate viability and inspire further theoretical development and expansion. His contributions cover the core economic components of production theory, consumption theory, utility theory, and distribution theory. Additionally he offers three other theories which apply to time use, economizing, and work satisfaction. The central focus of his theories is the vivid depiction of human nature based firmly on the concepts of panna and sukkha."


More Information

Selections from Tag's Bibliography

  1. Alexandrin, Glen. "Elements of Buddhist Economics." International Journal of Social Economics 20, no. 2 (1993): 3-12.
  2. Daniels, Peter. "Economic systems and the Buddhist world view: the 21st century nexus." The Journal of Socio-Economics 34 (2005): 245-268.
  3. Piboolsravut, Priyanut. An Outline of Buddhist Economic Theory and System. PhD Dissertation, Unpublished, 1997.
  4. Pryor, Frederic. "A Buddhist Economic System - in Principle." American Journal of Economics and Sociology 49, no. 3 (1990): 339-349.
  5. Pryor, Frederic. "A Buddhist Economic System—In Practice." American Journal of Economics and Sociology 59, no. 1 (1991).
  6. Puntasen, Apichai. Buddhist Economics: Evolution, Theories and Its Application to Various Economic Subjects. Bangkok: Amarin Press, 2004.
  7. Schumacher, E.F. "Buddhist Economics." In Small is Beautiful, by E.G. Schumacher. London: Blond and Briggs, 1973.
  8. Zadek, Simon. "The Practice of Buddhist Economics? Another View." American Journal of Economics & Sociology 52, no. 4 (1993): 433-445.

Selection from Zsnolnai's Bibliography

  1. Banjaree, N. V. 1978: Buddhism and Marxism: A Study in Humanism. New Delhi: Orient Longman.
  2. Daniels, P. 2003: “Buddhist Economics and the Environment – Material Flow Analysis and the Moderation of Society's Metabolism”. In: International Journal of Social Economics, Vol. 30. pp. 8-33.
  3. Daniels, P. 2005: ”Economic Systems and the Buddhist World View: the 21st Century Nexus”. In: Journal of Socio-Economics, Vol. 34. No. 2. pp. 245-268.
  4. Daniels, P. 2006: “Reducing Society’s Metabolism” In: Zsolnai, L. and Knut J. Ims (eds.): Business within Limits: Deep Ecology and Buddhist Economics. Oxford: Peter Lang Academic Publishers. pp. 103-148.
  5. Daniels, P. 2007: “Buddhism and the Transformation to Sustainable Economies”. In: Society and Economy, No. 2. pp. 155-180.
  6. Essen, J. 2009: ”Buddhist Economics: How to Achieve Material Well Being and Still Have Good Karma”. In: Peil, J. and van Staveren, I. (eds.): Handbook of Economics and Ethics. Cheltenham, UK: Edward Elgar Publishing.
  7. Gardner, G. 2006: Inspiring Progress: Religions' Contributions to Sustainable Development, New York: W.W. Norton and Company.
  8. Gowdy, J. 2006: “Business Ethics and the Death of Homo Oeconomicus”. In: Zsolnai, L. and Knut J. Ims (eds.): Business within Limits: Deep Ecology and Buddhist Economics. Oxford: Peter Lang Academic Publisher. pp. 83-102.
  9. Inoue, S. 1997: Putting Buddhism to Work. A New Approach to Management and Business. Tokyo, New York, London: Kodansha International Ltd.
  10. Inoue, S. 2002: “A New Economics to Save the Earth: A Buddhist Perspective”. In: Badiner, A. H. (ed.): Mindfulness in the Marketplace: Compassionate Responses to Consumerism. Berkeley: Parallax Press. pp 49-58.
  11. Norberg-Hodge, H. 2002: “Buddhism in the Global Economy”. In: Badiner, A.H. (ed.): Mindfulness in the Marketplace: Compassionate Responses to Consumerism. Berkeley: Parallax Press. pp. 15-27.
  12. Payutto, Ven. P.A. 1994: Buddhist Economics: A Middleway for the Market Place. Bangkok: Buddhadhamma Foundation.
  13. Payutto, Ven. P. A. 2009: Buddhism and the Business World – The Buddhist Way to Deal with= Business. Bangkok: Mahachulalongkornrajavidyalaya University.
  14. Prayukvong, W. 2005: “A Buddhist Economic Approach to the Development of Community Enterprises: A Case Study from Southern Thailand”. In: Cambridge Journal of Economics, 29, pp. 1171-1185.
  15. Pryor, F.L. 1990: “A Buddhist Economic System – In Principle”. In: American Journal of Economics and Sociology, Vol. 49. No. 3. pp. 339-350.
  16. Pryor, F.L. 1991: “A Buddhist Economic System – In Practice”. In: American Journal of Economics and Sociology, Vol. 50. No. 1. pp. 17-33.
  17. Puntasen, A. 2007: “Buddhist Economics as a New Paradigm towards Happiness"”. In: Society and Economy, Volume 29, Number 2, (August) pp. 181-200.
  18. Wickramasinghe, J. W. 2000: People Friendly Economic Development: An Introduction to Buddhist Theory of Development Economics. Colombo, Sri Lanka: Dharmavijaya Foundation.
  19. Zadek, S. 1993: ”The Practice of Buddhist Economics: Another View”. In: The American Journal of Economics and Sociology, Vol. 52. No. 4. pp. 433-46.