Buddhist Economics Beyond Schumacher

Buddhist Economics that is
Beyond that of Schumacher’s

and Sufficiency Economy
By
Professor Apichai Puntasen
Dean
Faculty of Management Science,
Ubon Rajathanee University, Thailand
December 12 – 13, 2006
1
Main Issues to be Presented.
1. Buddhism as a Mind Based Science
2. Definition of Buddhist Economics and Its
comparison with Mainstream Economics
3. Production in Buddhist Economics
4. Consumption in Buddhist Economics
5. Distribution in Buddhist Economics
6. Definition Sufficiency Economy
7. Sufficiency Economy and Buddhist
Economics
8. Epilogue
2
Buddhist as a Mind Based Science
 The teaching of Buddha known as Buddha
Dhamma is neither a religion nor a philosophy in
western context. It does not subscribe to any
specific faith or believe from what have been
taught, have been practiced, have been told,
because it is in the text book, because it is
logical, because it can be hypothesized, because
it is rational, because it fit to one’s own theory,
because it looks convincing, and because the
person is our teacher. It is not a philosophy
because its actual status is a tested theory.
3
 Differently from Newtonian Physics that
implies the study of matter and energy.
Buddha Dhamma is mind based science
that goes beyond western physics.
 The mind based science explains that the

“truth” can vary according to different
levels of mind development.
4
 The concept of “mind” cannot be clearly
understood unless the concept of “emergence”
into a completely new thing from existing things
is clearly understood. Most forms of training
related to animals and a human beings are part of
the training of mind. However, the best form of the
training of the mind is the training to purify the
mind. This fact implies that things are different
according to the degree of mind purification. For
example, happiness can vary according to each
perception or the level of purification of the mind
of each person.
5
 It remains to be scientific because
persons with the same level of mind
purification can have common agreement
on the “truth” that they have perceived.
Also, each one has unlimited potential to
be developed, and there is an explicit way
to do so for almost everyone.
6
Definition of Buddhist Economics
 The words was first introduced in Chapter
4 of E.F. Schumacher’s book “Small is
Beautiful” in 1973. After then the concept
has been elaborated by many well known
scholars all over the world.
7
 The most noted one in Thailand was by Venerable P.A.
Payutto first edition in 1982 and the more completed
version came out in 1984. His book called “Buddhist
Economics: A Middle Way for Market Place.” This book
actually reinterpreted most economics terms the way it
should be interpreted in Buddhist economics.
Examples of those terms are value, consumption,
production, work, competition, and choice. After then,
the technical terms in Buddhist economics such as
moderation, non-consumption, over-consumption,
cooperation etc. are also discussed.
8
 The author’s book on “Buddhist
Economics: Evolution, Theories, and Their
Application to Various Economic
Subjects”, first published in 2001 has
further enlarged the concept explained by
the two prominent pioneers, Schumacher
and Venerable P.A. Payutto. The third
edition was published in 2004. The forth
edition is forth coming.
9
 Buddhist Economics is the infusion of two
words, “Buddhist” and “economics”.
“Economics” is a subject developed in the
West. It is generally defined as the subject
explaining “ economics activities
(production, distribution, and consumption)
with the aim for individuals to achieve
maximum utility under the condition of
resource constraint and for the society to
reach maximum welfare under the same
condition”.
10
 Following the similar line of thought,
“Buddhist economics is the subject
explaining economic activities with the
aim for both individuals and society to
achieve peace and tranquility under
resource constraint”.
11
 The difference between Buddhist economics
and mainstream economics is due to different
paradigms on human nature. Under the
scientific materialism paradigm, mainstream
economics observes that each human being
normally follow his/her self-interest. Therefore,
following self-interest of any individual is a
“rational” behavior. Also, according to Thomas
Hobbes, an ultra materialist philosopher of the
17th century, the ultimate goal of human life is
to avoid pain and to seek maximum “pleasure”. 12
 “Pleasure” in this case has been translated
into economics as “utility”. Under this
scientific materialism paradigm, the typical
way for a human being to gain more
“pleasure” or “utility” is “to have” more
materials.
13
 The economic subject also adopts Darwinian
Theory of the “survival of the fittest” to imply
that competition will lead to progress. Hence,
the core value of the mainstream economics
or more popularly known as “capitalism”
consists of the core value of “self-interest”
and “competition”.
14
 This core value fits very well with the concept of
capitalism that explains capital as the mode of
production. The only way to increase production in
order to increase “utility” and “welfare” is to
accumulate more capital. Capital can be accumulated
more from profit through more production given the
necessary and sufficient conditions that all products
are sold out for profit. Such process of production
under control by human beings is “industrialization”.
At the same time, to make sure that all products are
sold for profit, consumption must be stimulated
through “consumerism”.
15
 As a result, capitalism, industrialism, and
consumerism come into one package. The
main purpose is for capital to be generated
more through increased production and
consumption. This way, individuals will
achieve maximum utility under budget
constraint and the society will achieve
maximum welfare.
16
 The question to be raised is whether the above claim
is always true without any adverse consequences. It
should be noted that according to the Second Law of
Thermodynamics, production is similar to
destruction. Production process actually transforms
resources and energy from low order entropy into a
higher one. Under such stimulating process of
production under capitalism, resources, environment
as well as ecological system conducive to lives, will
be turned into products and waste in relatively short
period time. It is the process of self-destruction for
humankind. As a result, capitalism is not a viable
option for long term sustainability. 17
 Under such depressing scenario of
humankind under capitalism, Buddhist
Economics can offer a much more promising
alternative. The concept of production,
consumption, and distribution in Buddhist
economics should be explained in order to
show clearly why the concept of
sustainability with peace and tranquility is
possible under such scenario.
18
Production in Buddhist Economics
 Before discussing production, the mode of
production in Buddhist economics will be defined as
paňňa-ism instead of capitalism in mainstream
economics. Paňňa is one supreme quality of the
mind. It means the ability to understand everything
at its own nature. Most of the time people do not
have paňňa because of the person’s own ignorance
or the person distorts fact for his/her own liking or
not liking. Such special quality of mind known as
paňňa must be continuously trained to achieve its
status of neutrality so that it can learn and
understand everything at the object’s own nature.
19
 Paňňa cannot be trained alone, it is conditioning to
the training of “sila” shortly known as “good
conduct” and samadhi or concentration. The training
of the three known as sikkhattaya simultaneously is
the sufficient condition. It begins with some basic
faith that always having a good conduct (clean mind)
will result in a calm mind or the mind with
concentration or samadhi. Samadhi will support the
neutrality of the mind (clear mind) that will be able to
learn and understand everything at its own nature.
This latter of mind is similar to the quality of right
intention and right views, two of the Noble Eightfold
Path known as paňňa.
20
 Given the above quality, there will be
increasing understanding why good conduct
is necessary for better life. The three
components of good conduct or sila are right
action, right speech, right livelihood. They
are the three additional components of the
Eightfold Path. Given the right conduct the
mind can be more concentrated because it
will not be disturbed by bad thinking and bad
conduct.
21
 This quality of mind is known as samadhi. It
consists of the remaining three of the
Eightfold Path or magga. They are right effort,
right mindfullness, right concentration. The
sikkhattaya is the training of the three
function of mind sila, samadhi, and paňňa.
They form into magga or the way to be
relieved from dukkha, or conflict, alienation,
pain, misery, or suffering that all human
beings try to avoid.
22
 According to Buddha Dhamma, a human being who
has paňňa will not seek to maximize pleasure or
utility but will seek to be relieved from pain as much
as possible. With less pain will be more peace or
happiness. Pain is Buddha Dhamma is like a
temperature. It contains both heat and cool at the
same time with more heat their will be less cool and
vice versa. Similarly, with less pain there will be
more peace or happiness in the sense of Buddha
Dhamma. Happiness in this case can be equated to
peace rather than joy or glad.
23
 With the full understanding of the above concept,
production in Buddhist economics can be clearly
explained.
 Since paňňa is the mode of production in Buddhist
economics, paňňa should be used to control all
factor inputs, such as technology, capital and
natural resources. The production process should
be done in such a way to enhance good quality of
human inputs. The process should generate
human skills and creativity as well as to have a
sense of fulfillment from the product of their work.
24
 A worker should not feel that a person is
being exploited but given opportunity to do
something worthwhile for him/her self as well
as the others. Non-renewable resources
should be used in any production process at
their minimum amount, while renewable
resources should be encouraged to replace
the use of non-renewable resources as much
as possible.
25
 Waste from production process should be
kept at its minimum. There should be
utmost attempt to improve nature and
environment at the same time. The reason
for production to be increased to meet
more demand for consumption will not be
needed in Buddhist economy, since
consumption will be also at moderation.
26
Consumption in Buddhist Economics
 The main objective of consumption in
Buddhist economics is not to maximize
pleasure or utility but to maintain good
physical and mental health, the strong
foundation for the generation and
accumulation of paňňa, the fundamental tool
to be relieved from dukkha. Maximizing
pleasure or utility will not always lead to less
pain. Most of the time it leads to more pain.
27
 Consumption being controlled by paňňa will
only lead to moderate consumption, because
it is the optimal consumption needed. For
example, in case of food consumption too
much food intake can result in health problem
both in short and long run. Too little
consumption will lead to nutrient deficiency
that can be harmful to physical health as well
as mental health. Similarly, too much
accumulation of material wealth will bring
more pain as a result of craving.
28
 As only moderate consumption in everything is
needed, the rest can be given or donated to the
other who are still in need. On the other hand,
peace and tranquility can be obtained from the
ability to understand everything at its own nature
or having paňňa. Such knowledge will result in
more understanding of the world, as well as the
understanding of “nothingness” or “void” or no
self to cling on to, the main cause for pain. This
way excessive production is not needed.
29
Distribution in Buddhist Economics
 The main purpose of Buddhist economics
is to reduce pain or suffering for all living
things as much as possible. The reason
behind this goal is once any living thing is
born or existed, it will never be free from
pain. Therefore, it does not make much
sense to inflict more pain or to cause
more burden to each other. Contrarily,
helping each other or loving and kindness
should be more of a standard practice.
30
 Instead of insisting on just distribution, namely, to
each according to a person’s ability or technically
known as each factor should be paid at its marginal
productivity, Buddhist economics insists that all
living things who are still in pain because of
inadequate materials received to support their lives
should have the priority. Those who have more
paňňa should produce more than what they need to
maintain their own living and give the rest to the
more needy ones.
31
 The interaction among production,
consumption, and distribution in Buddhist
economics for sustainability can be
summarized by the diagram below.
32
Consumption and Production Theories of Buddhist Economics.
The system of production and consumption under the condition of sustainable development and the promotion of peaceful life.
Consumption process
Waste
Net product after the deduction of waste
from consumption
Goods and services
for net consumption
peaceful life nirvana
pañña
1. Unsustainable brain process
development human of the
2. Sustainable intelligence resources three
muscle trainings
development
3. Sustainable
development capital
and the man-made
reduction of resources
conflict or technology
contraction for product (+)
renewable production net
more peaceful resources process production
body and mind energy waste (-)
natural
none-renewable resources
other natural
renewable resources.
1. Unsustainable development is the condition when net goods and services produced are not sufficient for the maintenance of the
production process to continue at the same rate.
2. Sustainable development is the condition when net goods and services produced are just sufficient for the maintenance of the
production process to continue at the same rate.
3. Sustainable development and the reduction of conflict or contradiction for more peaceful body and mind is the condition when net
goods and services produced are more than enough to maintain the existing system of production. The rest can be used to reduce pain
33
and suffering of those who are needed. With the help of technology production efficiency can be improved.
 In conclusion while the core value of
capitalism is self-interest and competition,
the core value of paňňa-ism is no-self and
compassion leading to cooperation. Which
one will result in a better world. Given the
two difference ways of thinking discussed
above, it is up to each one to choose one
among the two Capitalism or Paňňa-
ism.
34
Official Meaning of Sufficiency Economy
 “Sufficiency Economy” is a philosophy that

stresses the middle path as an overriding principle
for appropriate conduct by the populace at all
levels. This applies to conduct starting from the
level of the families, communities, as well as the
level of national development and administration so
as to accommodate change in line with
globalization.
35
 “Sufficiency” means moderation, reasonableness,

and the need of self-immunity for sufficient
protection from impact arising from internal and
external shocks. To achieve this, an application of
knowledge with due consideration and prudence is
essential. In particular, great care is needed in the
utilization of theories and methodologies for
planning and implementation in every step.
36
 At the same time, it is essential to strengthen the

ethical integrity of the nation, so everyone,
particularly public officials, academics, businessmen
at all levels, adheres first and foremost to the
principles of honesty and integrity. In addition, a way
of life based on patience, perseverance, diligence,
wisdom and prudence is indispensable to create
balance and be able to cope appropriately with critical
challenge arising from extensive and rapid
socioeconomic, environmental and cultural changes
in the world.
37
Way of Thinking
38
สัPeaceful
งคม ร่มเย็Society
นเป็นสุข
สติ ปัand
Sati paňňa ญญาethicalคุณธรรม
integrity
วิถofีชีวlife
Way ิต
Way of วิธthought
คี ิด
วิธกี าร
Method
ภู ม ิคุ้มกัน
Self
Immunity
ความพอประมาณ
Moderation
ความมีเหตุผล
Reasonableness
Knowledge and Ethical Integrity

ความรู้ + คุณธรรม
สังคมร่มเย็Society
39
Peaceful
สัPeaceful
สติ ปัand
integrity
Way ิต
คี ิด
Method
Self
Immunity
Moderation
Reasonableness

40
Peaceful
สัPeaceful
สติ ปัand
integrity
Way ิต
คี ิด
Method
Self
Immunity
Moderation
Reasonableness

41
Peaceful
สัPeaceful
งคม ร่มเย็Society นเป็นสุข
Satipa
Sati สติ ปัand
paňňa
ňňa ญญาethical
and คุณธรรม
ethical integrity
integrity
Way
Way วิถofofีชlife
ีวlife
ิต
Way
Wayof วิธthought
of คี ิด
thought
Method
Method
Method
ภู ม
Self
ค
ิ
Self
Self
Immunity
Immunity
Immunity
ม
้ ุ กั
น
Moderation
Moderation
Moderation
Reasonableness
Reasonableness
Reasonableness
42
Peaceful
Sufficiency Economy and Buddhist
Economics
 Not like capitalism, Sufficiency Economy does
not sanctify greed as economic virtue.
 Since it has its origin in Thailand, it draws heavily
from many concepts in Buddhism such as
wisdom or more correctly, paňňa, due
consideration and great care or sati. In other
word, paňňa must be controlled by sati in order
to maintain ethical integrity. The concept of
middle path, moderation and self-reliance are the
ones available in Buddha Dhamma. It can be also
found in Buddhist economics.
43
Sufficiency Economy and Buddhist Economics
 Like Buddhist economics, Sufficiency Economy

also has a status of a grounded theory. Both have
their theoretical basis built from actual practices.
Such theoretical basis is now known as a
grounded theory.
 Both stress on human security and not human
wealth, the strong foundation for mental peace
and happiness. Human wealth does not warrant
peace and happiness. Most of the time it leads to
more pain.
44
 Sufficiency Economy can be validly called

ethical economics. It has its root in all
major religion since it is anti greed.
However, it does not require back up from
any religion.
 If Buddha Dhamma is qualified not to be a
region, then both Sufficiency Economy
and Buddhist economics also share the
same feature.
45
 Both Sufficiency Economy and Buddhist

Economics do not confront or reject
capitalism and globalization out right but
looking for a device to survive and
flourish under the two, and in the process
lessening their undesirable influences. It
is a peaceful means of struggle against
the evil giant.
46
 Although, Sufficiency Economy has a

higher ethical ground than that of
capitalism, the depth in its theoretical
analysis is less than Buddhist economics.
It has the advantage over Buddhist
economics in that it can be more appeal to
a broader base of population who do not
seek in-depth understanding of Buddha
Dhamma.
47
Epilogue
 Because of the said nature of Sufficiency
Economy, it has a better chance especially
in Thailand where problems created by
capitalism is so severe. The odd to reduce
the undesirable influences of capitalism of
Sufficiency Economy is better than that of
Buddhist economics especially as King
Bhumibol of Thailand who has advanced
the concept of Sufficiency Economy, has
been highly severe by the Thai people.
48
Epilogue
 On the other hand, because of the seminal
work of Schumacher, Buddhist economics
is better known globally. Because of its
scientific nature based on mind as well as
physics. It has much better chance to be
increasingly understood in the West as
Buddha Dhamma also gains better
understanding than before.
49
Epilogue
 The existing world population have not
much choice to choose from if they want
to survive human catastrophe brought
about by capitalism and globalization. Any
reasonable alternatives with strong
scientific back up will definitely gain much
stronger ground in the future. Among the
ones existed, Buddhist economics can
provide such an option.
50
Thank you for your attention
51

Buddhist Economics Beyond Schumacher

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Buddhist Economics Beyond Schumacher

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Buddhist Economics that is

Beyond that of Schumacher’s

 The mind based science explains that the

peaceful life nirvana

 “Sufficiency Economy” is a philosophy that

 “Sufficiency” means moderation, reasonableness,

 At the same time, it is essential to strengthen the

Knowledge and Ethical Integrity

Knowledge and Ethical Integrity

Knowledge and Ethical Integrity

 Like Buddhist economics, Sufficiency Economy

 Sufficiency Economy can be validly called

 Both Sufficiency Economy and Buddhist

 Although, Sufficiency Economy has a

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