Buddhist Economics (Payutto)

Source:  THE NATION (Thailand newspaper), September 17, l998                                                     http://www.nationmultimedia.com/

Bhuddist economics: Adhering to ethical standards

With the current economic order in turmoil, ideological
forces have renewed their battle. And a Thai thinker of
Buddhist economics has surged into the international
spotlight. Thanong Khanthong
(thanong@nation.nationgroup.com) reports.

THE impending collapse of the global capital system
could heighten the interest of economists and thinkers on
buddhist economics, expounded by Thailand's candidate
for this year's Nobel Peace Prize, the Venerable Prayudh
Payutto.

A distinguished monk and a foremost buddhist scholar,
Payutto has devoted his service to the layman's
understanding of the buddhist doctrine, the foundation of
which he rigorously combines with other disciplines,
including economics.

In his remarkable, and very readable, work, ''Buddhist
Economics: The Middle Way for The Marketplace'',
Payutto combines his interpretation of Dhamma with the
force of economics at work to illustrate a profound way in
which economics should be treated, understood and
practised.

From the outset, buddhist economics evokes a
self-sufficient, stoic-like society, where the buying and
selling, the production and consumption of goods and
services adhere to strict ethical standards. But Payutto
goes so far as to embrace the Buddha's teachings as the
foundation of truth, relative truths or ultimate truth, which
are related to good and evil. In this sense, Dhamma is
used to describe the conditions or the cause and effects,
the process by which all things exist and function.

In conventional economics, when there is a demand for,
say, whisky, it is supplied by production -- growing grain,
distilling it into liquor and distributing it to the consumers.
''When it is consumed, demand is satisfied. Modern
economic thinking stops here, at the satisfaction of the
demand. There is no investigation of what happens after
the demand is satisfied,'' Payutto says.

By contrast, he says economics inspired by Dhamma
would be concerned with how economic activities
influence the entire process of cause and condition, which
will essentially affect the three interconnected spheres of
human existence: individual, society and nature or the
environment. ''In the case of the demand for a commodity
such as whisky, we would have to ask ourselves how
liquor production affects the ecology and how its
consumption affects the individual and society,'' he
argues.

''These are largely ethical considerations and this brings
us back to the more specialised meanings of Dhamma,
relating to matters of good and evil. It is said in the
Buddhist scriptures that good actions lead to good results
and bad actions lead to bad results.''

In conventional economics, the value of goods and
services is determined by the consumers' perception as to
whether it serves the satisfaction or the desire. In Buddhist
economics, there are two kinds of desires or two kinds of
value, true value and artificial value. ''True value is created
by chanda (good desire). In other words, a commodity's
true value is determined by its ability to meet the need for
well-being. Conversely, artificial value is created by tanha
(bad desire) -- it is a commodity's capacity to satisfy the
desire for pleasure,'' Payutto says.

It follows that goods and services in the Buddhist society
are consumed only to maintain the well-being and not to
serve the pleasure of the flesh or the senses, without any
specific purposes. Spiritual enlightment is the ultimate
purpose of a Buddhist society, whereas in capitalism, ever
higher standards of living, material possessions or more
wealth is the final tenet.

Payutto's explanation of production is also revealing. In
general, production is understood as a process by which
new things are created. But Payutto argues that in fact
production is simply a conversion of one substance to
another.

''These conversions entail the creation of a new state by
the destruction of an old one. Thus, production is always
accompanied by destruction. In some cases the
destruction is acceptable, in others it is not.''

On this front, Payutto's approach is quite different from
what Alan Greenspan tried to explain in a recent speach at
the University of California, Berkeley. Greenspan argued
that the accumulation of American wealth is not a work of
a ''new economy'' or any miracle, but a continuing process
of ''creative destruction'' whereas the old regimes are
destroyed to give way for the new.

Greenspan said the American economy, like all advanced
capitalist economies, is continually in the process of what
Joseph Schumpeter decades ago called ''creative
destruction''.

''The capital stock -- the plan and equipment that facilitates
our production of goods and services -- can be viewed,
with only a little exaggeration, as continuously being torn
down and rebuilt.

''Our capital stock and the level of skills of our workforce
are effectively being upgraded as competition presses
business managements to find increasingly innovative and
efficient ways to meet the ever-rising demands of
consumers for quantity, quality and variety. Supply and
demand have been interacting over the generations in a
competitive environment to propel standards of living
higher.

Buddhist economics will find that this American version of
capitalism not sustainable since the wealth and the
satisfaction of artifical desires, without taking into account
the consequences, cannot be met forever for it defies the
law of nature. Greenspan believes that innovative
technology, which helps American firms to hold down their
costs, and the underlying sound financial system will
continue to drive this American wealth well into the next
century. But to what end?

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