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Economics of Inner Life

Mazhar Farid Chishti

Economic science focuses on our material activities, studying how we can get the
maximum satisfaction through material goods and services, religion draws humanitys
attention in the opposite direction: towards God, who is above and beyond all matter;
indivisible, inaudible and untouchable; although penetrating all, the creative force of all.
Religion is about mankinds inner life; economic is about our outer life.
This antinomy expresses itself in different forms in the great religions and has naturally
often been an impediment to economic progress.
In Buddhism there is strong emphasis on the transient character of material life there is
birth and death, growth and decay all in Samsara: illusion. Peace and salvation can only
found in truth, which is eternal and everlasting. The truth is realized in Buddha. The
gospel of Buddha therefore admonishes the faithful. Extinguish in yourself every desire
that antagonizes Buddha, and in the end of your spiritual evolution you will become like
Buddha. To come to this end, where all sorrow ceases, we are instructed to follow the
eightfold path of right comprehension, right resolution, right speech, right acts, and right
way of earning a livelihood, right efforts, right thoughts and the right state of peaceful
In Hinduism, for example in the Bhagavad-Gita, there is a clear recognition that action in
the world is necessary. But the necessary work should be done without attachment to the
fruits of the work. We are all forced to act, but we should act with self-control and the
results of the work should be renounced. Mankinds aim should not be the satisfaction in
its own needs, as is assumed in economics, but in doing ones duty. This duty is seen as
given for every individual according to his or her situation in life, and is worked out in
the caste system which has been a serious impediment to economic development.
In Islam the believer is told that life in the hereafter is preferable to the life in this world.
This gain draws the attention and longing of the faithful in a direction opposite to worldly
life. Recently some writers have tried to develop Islamic Economics. Drawing from
Quran and other Islamic sources, they are trying to restructure economic thought and
practices on the basis of Islamic teaching. Many economic practices like the payment of
interest, insurance, arbitrage, speculation and indexation are considered as un-Islamic.
But the injunctions to avoid these economic activities will either impede economic
growth or will not be followed, creating hypocritical arrangements as in Islamic banking
where interest on deposits is disguised as a mark-up or commission.
Christianity also teaches that humanitys aim should be a heavenly not an earthly
treasure. Medieval Christianity imposed some restriction on economic activities. There
were injunctions for just prices and interest on loans was forbidden. Economics was
subordinated to religion, just as science, ethics and aesthetics were. This was a serious
hindrance for the development of market capitalism.

Seeing how religion guided mankind in a direction opposite to the striving for the
satisfaction of material needs, the question arises of how the breakthrough of these
religious barriers came about in the West. The great German sociologist Max Weber has
shown that this crucial support came from Protestantism, and notably from its Calvinist
version, developed by John Calvin in the 16th century. That was the beginning of the
modern area of economics. This Calvinist spirit became very influential in the Protestant
world. In Roman Catholicism it was weaker, as the spiritual ideal if inner contact with the
divine sphere was kept alive in the monasteries. And the Roman Catholic Church
reconciled itself with certain qualifications to market capitalism only in the late 20th
century with Pope John Paul IIs encyclical Centesimus Annus. The different influence of
Protestantism and Roman Catholicism on economic growth has also been statistically
confirmed in a research papers. Bradford de Long, an economist and econometrician, has
carried out a striking study of nations comparing their perforce during the period 18701979, he discovered that protestant nations showed higher growth rates than Roman
Catholic nations.
Once the opening for economic forces had been created, market capitalism developed
with great power, with industrial Revolution in England it moved from the field of
trading to that manufacturing industry. And under the protection of colonialism the
market-system spread from Europe to other parts of the world.
The Russian Communist system has completely collapsed as an inefficient and brutal
Socialist attempts to plan economic development have generally also failed because of
inefficiency, lack of innovation and the dangers of corruption.
Thus the debate over the best form of economic organization in this situation has been
won by market capitalism. The strength of the system is that it uses the individual selfinterest for material gain in the best way-stimulating effort, investment and
entrepreneurship and thus brings all economic activities together in market equilibrium
that creates a growing material welfare to all. This inspired Francis Fukuyama, the bestselling sociologist who described market capitalisms impressive victory, to call his wellknown study The End of History.
The question has often been asked: is this a truthful picture of mankind? Is this picture
not in conflict with the religious and spiritual nature of mankind? Certainly there are
many motivations at work in human interrelationships other than material self-interest.
Adam Smith, the founding father of classical economics, clearly realized this. As well his
best-known work, The wealth of Nations, he also wrote The Theory of Moral Sentiments,
a moral and psychological work in which he emphasized the importance of sympathetic
feelings, culminating in universal benevolence. The new approach of behavioral
economics introduces many psychological elements into macro-economics theories, as
had been done in J.M. Keyness famous General Theory of Employment, Interest and
Money of 1936.

Fukuyama points out in his famous book Trust, that classical economics with its
fundamental model of rational self interested human behavior is correct about 80% of the
time. But that leaves a missing 20% of human behavior which is not fully explained. In
fact, we have what is called bounded rationality. For example, as all spending
possibilities are not known to everyone certain docility in following advice and
information in society can play a role. Generally accepted social values can also be
influential. Thus in contrast to home economics a homo sociologicus has been proposed
whose behavior is determined by social norms.
The crucial question, therefore, is how could the gradual reintegration of religion in our
life influence the economy? Here we can find a source of moral values that is both
universal and rooted in the depth of our own being, so that we can find and allow its
guidance in freedom. That brings us to the spiritual approach. The solution is to become
conscious of our soul, the divine spirit of our true being. That spirit pervades the whole
universe and is in all human beings. It is the same spirit in all: it is really universal. When
we open our heart to this spirit, forgetting our limitations, we discover that real happiness
lies in maintaining harmony with all our fellow-beings and with the conditions
surrounding us. Harmony brings peace, and that reflects the inner unity of creation.
Therefore it is fundamentally good and fills our heart with deep happiness. This is living
source of all moral and social values as they have been expressed and worked out in
different cultures by the great religions. From this source a harmonizing influence can
flow into the economy and the whole society.
But the question remains: how can this be built into economic theories? We cannot
always say, this economic action is right, and therefore legitimate, and that one is not. It
is often very difficult to create and maintain harmony. It is constantly threatened by
different views and interests of the people around us. Harmony can only be maintained if
we try to understand these different views and interests. Then we can rise above our
limitations and built bridges. It requires an open heart and self-control. Attunement to
God can give us inspiration and long lasting inner peace. Such an attunement will also
help to maintain between activity and repose, which is so necessary to keep to the right
constructive rhythm.
In fact some of more enlightened management consultants now make recommendations
that are exactly in the line with what was described earlier as the natural approach of
more spiritual leadership. Dana Zohar in Rewiring the Corporate Brain stresses the need
for leaders to develop emotional and spiritual intelligence besides their mental
understanding. Instead of dictatorial leadership she favors a leader who relies on trust and
Peter Senge, in his inspiring and practical book The Dance of Change, stresses that a
leader should not see his organization as a machine but as a living system, a human
community. Senage points out how important it is that leaders on all levels should get as
much responsibility as is possible in their part of business. There should be harmony
between the purpose of the organization and the values felt by leaders and workers. That

will create motivation what Senage calls emotional engagement. Issues relating to the
environment can also find their place in visionary business-leadership.
Certainly God is always present, but by invoking God we have a powerful means of
attunement, of opening heart to the Divine Will that guides the ?unfolding future?. All
beneficial features of a new responsive and serving leadership will grow naturally from
the awakening heart of spiritual leaders.
The writer is teaching Economics and Finance.
E-mail: al-farid@hotmail.com