Buddhist Economics


Applying principles of Buddhist economics is about innovating and choosing a unique path to development.

Right livelihood’ is one of the Buddha’s noble eightfold paths. But what does that mean for a Nepali, and can such concepts hold any relevance in these difficult times brought about by COVID-19? The human disaster brought about by the Pandemic, political bickering amongst our leaders, and Nepal falling prey yet again to geopolitical whims, could change Nepali society in unprecedented ways and redefine what right livelihood can be.

Students and migrant workers who have been abroad adopt new ideas and seek to adapt them back home. Similarly, our exposure to international influences and the Internet allows us to borrow tidbits of practices from here and there. But even if we can pick what we like from the outside to help leverage the changes around us, to build right livelihood we still must look inside ourselves.

Shaping the right livelihood is the essence of Buddhist economics. By extending the teachings of the Buddha, Buddhist economics, first articulated by EF Schumacher in Small is Beautiful, can help us find our own unique path to prosperity. Buddhist economics concentrates on the purification of character instead of the multiplication of human wants, and assumes people to be absolutely rational. It promotes physical wellbeing and the enjoyment of pleasure rather than a craving for it. But how do these abstract Buddhist concepts help us think economically? Let us find the difference between Buddhist economics and modern economics and see how this can be useful in the land where the Buddha was born.

Optimise, not maximise
Modern economics focuses on goods rather than people or their creative abilities. The consumption of goods, therefore, is taken as a crucial indicator of the quality of life. According to Buddhist economics, however, a focus on consumption is considered irrational. It can only be a means to an end; the final aim should be to maximise wellbeing while minimising consumption.

Indeed, this idea of maximising wellbeing can be appealing to Nepalis as well as the world at large. As Schumacher puts it, “Modern economics tries to maximize consumption by the optimal pattern of production, while Buddhist economics tries to maximize human satisfactions by the optimal pattern of consumption.” Clearly, there is less effort needed to maintain an optimal pattern of consumption than to sustain maximum consumption. After shifting from maximal to optimal consumption instead, more effort can be spent on meaningful activities such as innovation. Instead of consuming costly imports, we can focus on activities that promote self-fulfillment and productivity, for example, making music, creating art, or learning a new skill.

An optimal pattern of consumption, in Buddhist economics, would furthermore imply sustenance through the harvesting of local resources. Meeting one’s desires with resources from far away places can be considered a form of greed and a failure to adjust our relations with the environment and the community. Though a modern economist may refute such a proposition, citing the benefits of trade and economies of scale, self-fulfillment through the harvesting of local resources can mitigate Nepal’s dismal trade balance. Covid-19 decimated the global supply chain lacking any kind of slack, and there is even stronger economic reasons for shorter and more circular supply chains becoming mainstream.

Circular economy chain 

Three functions of labour
Another fundamental difference between modern and Buddhist economics relates to labour. Modern economics thinks of labour as a ‘necessary evil’; the less of it in production, the better. Automation that minimises labour in production processes is considered efficient. For Buddhist economists, on the other hand, labour has three very different functions to fulfill: give one the chance to use and develop his/her capabilities, reduce one’s ego by collaborating with others, and produce the goods and services needed for right livelihood.

These functions attributed to work have deep social and economic implications. The quality of work of an individual can, in fact, have a profound impact on his/her existence. But automation and extensive division of labour reduce the meaning an individual can get from working. According to Schumacher, “work properly conducted in conditions of human dignity blesses those who do it and equally their products.” These are messages being echoed by investment professionals increasingly applying a social justice lens when allocating capital to companies.

Furthermore, in modern economics, labour is assumed to strive for leisure. But this assumption misses an essential argument about right livelihood: work and leisure are complementary elements of human existence and separating them diminishes the satisfaction one can get from both. Such a distinction has blurred for some of us with the luxury of working from home remotely.  Now, as Nepal seeks to rehabilitate from the impacts of COVID-19, there is an even stronger focus needed on inculcating entrepreneurship while maintaining the integrity of the agrarian system. If we are to succeed in either of these two endeavors, the three functions of work alluded earlier must be heeded seriously.

Three functions of the Buddhist economy

Managing natural resources
A third difference between modern and Buddhist economics relates to how natural resources are used and managed. Human beings depend on the healthy functioning of ecosystems that provides them and other life forms with many services. This interdependence translates into a fundamental difference between renewable and non-renewable resources. By banking on fossil fuels, humans have been living off capital, rather than off income. Nepalis are heading in the same direction with their use of resources.

We consider our rivers to be renewable — rainfalls brought by the monsoon and westerly winds recharge them. However, climate change is resulting in irreversible consequences on rainfall patterns, Himalayan glaciers, and mid-hill springs. Together with the unregulated mining of hill slopes and riverbeds for construction materials, we have become parasites living off our natural capital. Our management of natural resources will ultimately determine our livelihoods and values. Do we want to use our values to manage our resources, or let our resources determine our values? Global investors and companies today are building strong targets to hit a net-zero carbon emissions target. Why can’t Nepalis explore even more aggressive environmental targets?

Applying principles of Buddhist economics does not mean abandoning modern economic models in favour of tradition. Instead, it is about innovating and choosing a unique path to development. Since the COVID-19 pandemic began, great experts of modern economics and finance are re-evaluating their models and applying elements of Buddhist economics to re-examine how work, consumption, and sustainability are viewed. Here in Nepal, we have great opportunities, as we not only have access to knowledge from across the world but also embody Buddhist values. We can bypass failed models, create new ones, and encourage others to follow our example. But first, we must critically examine the resources that are available to us, and use them to develop our own meaning of right livelihood.

Ashraya Dixit is a Senior Fellow at the Nepal Economic Forum and a Financial Analyst with Deerhold Ltd. He was most recently in Boston’s investment industry allocating capital to impactful companies and impact investment funds.  Previously, he worked with Nepal’s private sectors and with community electricity groups. Ashraya is a graduate of The Fletcher School, Tufts University, where he focused on international finance and financial law, and of Grinnell College, US.

This article is an updated version of one that first appeared in The Kathmandu Post on 19/10/2014.

28th May 2021