Prof. J.W. Wickramasinghe
Vice Chancellor
University of Sri Jayewardenepura

380/7 Bauddhaloka Mawatha
Colombo 07, Sri Lanka
Tel: + 94 1 698870 Fax: + 94 1 683016

12 January 2000 (2543 B.E)


The subject of Buddhist Economics has gained the attention of economic theorists and practitioners, environmentalists and scholars from the time E.F. Schumacher wrote his epoch making book "Small is Beautiful". In more recent times, Dr. Amritya Sen, the Nobel Prize winner for Economics, has referred to the deep influence Buddhism has had on developing his thoughts.

The clarion call of the Buddha, who pre-empted by over 2500 years the present day consumerist society, which exploits the unquenchable greed of human beings, was that "Contentment is the Greatest Wealth" (santutthi paramam danam). Strive and earn as much as possible by righteous means, protect what has been earned, fulfill one's duties by others and be economically productive by shunning wasteful expenditure, follow a balanced and contented lifestyle, and cultivate good friendship are the Buddha's words of wisdom.

It may also be noted that an International Buddhist Conference on the theme 'The Timeless Message of the Sammasambuddha' was convened jointly by the Ministry of Buddha Sasana and the Ministry of Foreign Affairs on behalf of the Government of Sri Lanka in November 1998. It was attended by 185 delegates from 26 countries. The Conference came up with 17 recommendations. Concerning Economic and Social Development, its recommendation was as follows.

"From a Buddhist perspective, development is a holistic process which should be directed to meeting the material, social and spiritual needs of human beings. A feasible plan of development should also recognize that human society exists in essential dependence on the broader environment, and developments should not be pursued in ways which threaten the sustaining capabilities of the ecosystem. The current dominant economic model based on unregulated market economics and rampant consumerism has proved to be inadequate for meeting the above objectives. To the contrary, this model has led to massive human suffering, the degradation of society, and the unrelenting exploitation of nature. The model has also encouraged narrow fixation on short term economic gains for a privileged few at the expense of the long-term welfare of humanity as a whole.

It is recommended that a new model be evolved which will ensure that no one is deprived of the basic material needs consistent with human dignity. At the same time such a plan of development should recognize that there are natural limits to the fulfillment of peoples material needs and that the pursuit of material consumption beyond these limits is harmful both to the individual and society. A healthy plan of development would encourage human relations governed by a spirit of cooperation, kindness and compassion rather than competition and exploitation in the pursuit of private gains.

For the purpose of evolving such a new model, it is recommended that a committee of innovative Buddhist economic thinkers should be convened to produce, in collaboration with other organizations working out alternative models of development, the. outlines of an ethically guided programme of economic and social development." (Recommendation No. 5)

The Paper presented by Professor J.W. Wickremasinghe, Vice Chancellor of the University of Sri Jayewarenepura, Sri Lanka at the invitation of the Dharmavijaya Foundation has to be taken in this broad perspective. The organizers are thankful to Professor Wickremasinghe for having prepared an excellent working paper for future deliberation. In the words of Dr. Gamani Corea, former Secretary General of UNCTAD who responded to the Paper, "Professor Wickremasinghe has done a major service by launching what, I hope, would be a major process of reflection and thinking. But the process has to be built upon to take account of its many dimensions and to be translated into new policies and priorities.'

This is the challenge before us and in publishing the Paper and the Response, the earnest wish of the organizers is that it will set the wheel in motion for the betterment of humanity.

Olcott Gunasekera

by Prof. J.W. Wickramasinghe Vice Chancellor, University of Sri Jayewardenepura, Sri Lanka


Modem economic science originates from the great theoretical revolution that occurred between 1750-1780 in Europe (Eighteenth-century "Enlightenment"), which reached its peak in 1776 with the publication of Adam Smith's "The Wealth of Nations" . Smith's economic thinking was backed by his moral philosophy , which was partly the development of eighteenth-century British reaction to the political theorist Hobbe's philosophy of 'selfish system'.

There was a controversy over whether human beings would be essentially selfish or benevolent. According to Hobbes everyone is motivated entirely by self-preservation, which is simply selfishness. Hobbes warned that this basic approach of man should not be allowed to guide his action, as it was dangerous and warned, if allowed, the result would be a kind of universal disruptive state of war between man and man, whereas the real need is co-operation.


Great political theorist Locke while dissenting Hobbes pointed out that any conflict between men would result due to niggardliness of nature, rather than wickedness of man. According to Locke 'state of nature' is essentially good. His prescription, as against that of Hobbes, who prescribed state interference mainly to preserve order, was that state should step in to help the society to overcome scarcity, which is the very basis of all conflicts.

However, Hume and Hutcheson believed that sentiments would be an important motive force in guiding human actions. They believed man was essentially benevolent and for man it is a pleasure to be benevolent. Accordingly social and individual interests should coincide.

Adam Smith, father of modern capitalism, however, modified this basis and operation of this 'invisible hand' of his predecessors to the effect that benevolence or altruism would not bring about a harmonious state of affairs. Smith believed that every one would act according to his selfish interests and that itself would lead to the benefit of both the individual and the society. He gave an example, "it is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest." This simply shows that the butcher and the others supply our requirements not through kindness or compassion towards us, but because if they do so they are personally benefited by being able to earn private profits. With his theorem of invisible hand Smith simply aimed at demonstrating that individuals serve the collective interest precisely because they are guided by self-interest. In other words, craving for profits motivates them to use their labour and resources to produce something which some through ignorance believe was produced through benevolence. However, the implications of Smith's analysis are that the social benefits arise as an adjunct to the individual satisfaction. Adam Smith went to the extent of maintaining that unless individuals are selfishly motivated, the very process of economic development would come to an end.

Earlier, Smith in his Theory of Moral Sentiments, showed another system that builds links among men in a society. Individuals' mutual sympathies and desires for each other's sympathies interconnect and thus control the evaluations in their minds. They are responsible for the make up of their individual systems of moral sentiments, which control their conduct in such a way that they tend to evolve moral consensus and a legal order expressing and supported by it. These more or less impartially define and protect a consistent system of rights and liberties for all and reciprocal duties among all.

However, later in "The Wealth of Nations" he explained that within this moral climate and legal framework, which evolved in the manner explained earlier, the presence of a different additional series of connecting links among the wealth seeking behaviour pattern of individuals ie those involved in the competitive economic process, so interconnect and control those behaviour patterns that although they result from and serve the acquisitive self-interest of the individuals, they fit together and make up a social-economic process of unconscious cooperation which tend to maximise the aggregate wealth and economic welfare of the entire society. Some, for example Taylor, try to develop a theory that moral sentiments and self-interest in Smith are consistent as the latter is to be operated within a social framework conditioned by the former. But in view of Smith's expression that, 'unless individuals are selfishly motivated, the very process of economic development would come to an end', selfish motives should dominate in economic activities. In economic behaviour the self-interest emerges as the driving force of human beings, hence earlier mentioned moral sentiments lie dormant.

However, what follows from Smith's philosophy is that the purpose of human being's possessing or using material objects is not just satisfaction of human needs, but much more, craving or attachment to these material objects (wants)- believing that the pleasure human beings enjoy from using these objects is permanently available, subject to the operation of the law of diminishing marginal satisfaction or utility, (a later addition by Evans , Walrus and Manger in the nineteenth century) completely disregarding its unpropitious effects on other fellow beings. Smith had a trust in the efficacy of the 'invisible hand' and did not perceive the fact that with the progress of capitalism income and wealth inequalities and other class conflicts develop.

Sometimes wants may be things which are really not necessary, for example, stock-piling arms on the fear of aggressive attempts by neighbours. (Wants are frequently based on the 'demonstration effect" ie, do as Jones' do - wanting something not because one really needs it, but simply because somebody else is having or using it. When the neighbour buys a car one buys a car to show "status" or economic strength, for so called snob value whether one really needs it or not). This philosophy of Smith is the bone of contention in this exercise. Here, as we saw earlier, he was greatly influenced by the Physiocrats concept of natural order, "Laissez Faire," coupled with optimism, individualism, self interest and a blending of the ideal and material aspects of social life, which are just scratching the surface of the real issue rather than penetrating to the core.

The leading thinkers in this group (naturalists) believed that the pace of progress in physical and other sciences would equip the human race to solve its problems. Newton's theory of universal gravitation contributed to the diffusion of the idea of an ordered and rational universe. Natural phenomena, according to this idea, are reducible to the movements of atoms regulated by laws, which are intrinsic to the state of nature. They were convinced that human society is also subject to the same natural laws as physical world. Thus this system of natural scientific, ethical, and social scientific natural law, so ordained by a wise and benevolent God, designer of all nature and human nature ensures a harmonious orderly functioning of both the non-human natural universe and all human societies. This belief was the basis of the conversion of earlier political economy to an independent economic science.

This analysis is in diametric opposition to the Buddha's philosophy. In Titthayatana Sutta the Buddha dismissed the theory of creation. You are your own creator. You yourself must take the initiative (Dhammapada Verse 160). The Buddha's role is to make known the way (Dhammapada Verse 276). In Attakcira Sutta the Buddha has explained that man has his own autonomous strength, he has the power to initiate things, power to proceed, power to win over obstacles, power to be firm. A person must do things for his improvement because he has the power to do and because he should do it. Accordingly Buddhists do not believe in a benevolent God. Buddhism centers on the strength and autonomy of man.

In Agganna Sutta the Buddha showed how private property system originated. Laziness, craving, scarcity of resources, enticed people to grab well in advance more than what they really need and accumulate exclusively for their personal use. This type of private property was responsible for the development of stealing of others property and other social evils, which led to the degradation of human beings. The contradiction in Smith's thinking is that selfish interest which led to originate private property and ensuing a stream of social evils such as stealing is expected to bring about improvements in social harmony and welfare.

Human action in Smith's model is guided by certain desires and instincts such as self - love, sympathy, desire to be free, a sense of property, a habit of labour and the propensity to truck and barter one thing for the other. He emphasized heavily on self-love than sympathy and a prominent place was given to propensity to truck and barter.

Here human beings are treated as rational economic animals. This is the philosophy underpinning the capitalist economic reasoning in the modern society. This propensity to truck and barter leads to division of labour and through that to economic development. (However, as stated earlier, in his earlier work Smith showed sympathy among men as the basis of common morality in a sense constitutive of each human community).


In this sense Smith's prescription represents a systematic attempt to explain that unfettered economic behaviour of individuals, driven by their selfish motives, (rational behaviour), under certain given conditions would give rise to the development of the socio-economic structure. The condition Smith contemplated was identical with perfect competition. (A market is perfectly competitive when there is large number of consumers as well as producers and each consumer or producer commands only a very minute portion of the market. In other words each one, whether he is a consumer or a producer is a very insignificant operator. He cannot influence the market price. All the producers and consumers together at the macro level determine market price. Each producer or consumer has to accept that price and remain small.) This is only a conceptual model and it does not operate in practice anywhere in the world.

Assumption of a system similar to perfect competition in a process, which is driven by the egoistic emotions of individuals, is a contradiction by itself. A major flaw in his argument is his contention that mutual competition itself would provide the necessary conditions for an optimal system by eventually equating profit margins. In such an eventuality it is not clear what prevents the "wiser" and stronger men from swallowing the weaker through craving and dominating over the latter deteriorating the system to one of extreme disparities with malpractices leading to a most inefficient system? Most of the transnational corporations have had their small beginning, but owing to lack of an autonomous force within themselves to create a limit to grab wealth from other organisations and countries, they expanded tremendously to achieve their personal selfish motive and started even controlling, not only the world supply of some very important commodities but also some poor developing countries as well. Law, both local and international has failed to stop these small "Lilliputians" from becoming "Gullivers".

The crux of the problem is whether any external force can contain the driving force of craving of human beings. The very self-centered force itself facilitates some to earn more than others; and guarantee of the retention with him what has already been acquired, would allow some people to grow stronger than others. However, Smith did recognise the possibility of employers, traders and merchants joining hands for the exploitation of the workers and consumers but he never perceived the type of "wild cat" competition and animal behaviour of strong people and institutions of exploiting the weaker ones for the former's advantage; and getting bigger and bigger through craving to the size of becoming anti-social.

It is true that when people are driven by the power of selfish pursuits, total goods and services available to a society will increase rapidly and hence material welfare too, as alleged by Smith, but this could happen only by making a large number of others destitute. However, it is pertinent to state here that just as much as all the attempts made to improve technology to produce new and better things, faster and more efficient, have been motivated by egoism, (mainly private profits, prestige, patriotism, jealousy, and envy) any benefits that came to ordinary people were a by-product of the whole exercise. As Adam Smith had predicted, we should not disregard the fact that this very same driving force has enticed human beings, even to manufacture destructive weapons such as nuclear bombs and chemical weapons, which would annihilate the whole human race in a few seconds.

Moreover, this very same driving force has paved the way to intensify terrorist activities by utilizing the equipment produced by high-tech. This system enticed man to produce, in such a manner that living amidst these so called cherished achievements of man, which are intended to provide a more comfortable life on earth, has generated risk and anxiety among people to such an extent that the agony and the displeasure generated by terrorism deprive even the privileged people to enjoy what has been achieved. This is relevant to both developed and developing countries equally, although poverty has not been a serious problem in developed countries. The predictions of Smith's model hold only in an extreme situation, perfect competition. Generally, perfect competition is not present in any economy; hence, his arguments should fail.

According to Adam Smith , the fruits of development is the private property of the individuals who contribute towards it. They have the exclusive right to use them for their personal satisfaction. This facility to own wealth exclusively to satisfy one's own personal desires is the driving force of individuals according to Smith. However, quite contrast to this contention, in Kosambiya Sutta the Buddha discoursed that when a person consumes wealth only by himself, without sharing with others, social unrest generates through jealousy and ill will; stealing and civil commotion results. The important phenomenon is that a central feature of Buddhism is that people should contain greediness and be prepared to share wealth, which is lacking in western philosophy. It is important to comprehend here that the Buddha never envisaged a total egalitarian society where every body would get equal share of the national wealth. What he demonstrated was the adverse consequences of severe mal-distribution of wealth and income, for which forces driven by peoples' selfish motives are responsible. Even under the system envisaged by the Buddha, certain extent of inequitable distribution of wealth could exit. It is unfortunate that this truth the western philosophers have not been able to understand in its proper perspective. Most of the modern social problems originated because of this greediness.

One could argue that the state can extract some of the wealth through taxation and distribute it among the needy. However, there too, it is argued that taxation would discourage investment and effort. Hence, the amount that can be distributed will be insufficient. On the other hand, when people were to be persuaded by selfish motives whether they belong to the government or private sector, they could easily be persuaded to frustrate the attempt to redistribute wealth by means of government policy. From a materialistic point of view the availability of a large quantity of goods and services can be treated as development. However, another very important phenomenon these philosophers have not been able to grasp in its proper perspective was that when large scale poverty and misery prevail along with affluence, that situation could not be treated even in materialistic terms as development.

Here the justification for private property and exclusive personal use of its benefits is the lack of positive correlation between motivation to work and altruism. Accordingly, the western economic philosophy prescribes that people should be given a stake in the work they engage in and allowed to retain the fruits of one's effort exclusively for oneself, to motivate them. If motivation could be generated devoid of this greediness, this conflict can be reconciled. The spiritual teaching of the Buddha deals with this aspect quite extensively. Compassion is the key to this conduit. On the first sight, this looks utopian in approach, however going by historical records one could argue that it is practicable provided a proper plan is available. Take an example, if one wants to be professional one has to prepare a plan and work towards achievement of that goal. When you are a student in the high school a brain surgery successfully completed by a surgeon looks a miracle. But gradually when the same person moves towards that end and reaches the status of a surgeon, a complicated surgery becomes a normal routine activity. That is because he reached that status through prolonged hard work. Similarly, if we persistently make efforts to cultivate compassion, one day practicing of it becomes a normal routine work. What is required is the commitment. If one feels its worth attempting, it would never be an impossible task.

If these self-centered arrangements were to offer the type of welfare status which Smith contemplated, presence of inherent forces that would prevent any one player in the system from getting bigger by transgressing on to other's rights and endowments motivated by craving, must be shown. However, as shown earlier the inevitable consequence of this process is mal-distribution of resources and its ensuing widening of the gap between 'haves' and 'have-nots', which increases poverty. In Cakkavattisihanada Sutta the Buddha has reiterated the main consequences of mal-distribution of resources. Mal-distribution of goods and services is likely to create economic inequalities, resulting in the division of the world into rich and poor or the haves and have-nots. In such an eventuality it is practically impossible to meet each other's demands. Tension and organised violence result between the two factions and there is a gradual loss of values in society.

Certain clarification is required about our contention that people remaining small is always beneficial to the society. One could argue that this type of a system would prevent the realisation of benefits of large-scale operations. If more than one person operate together to realise benefits of large-scale production, it cannot always be considered as leading to mal-distribution of wealth; even if it were to generate a certain degree of inequality it is highly unlikely that such a system would create extreme maldistribution as the motive is altruistic. What is relevant here is the motive behind such amalgamation. If the motive is to obtain more personal profits, which that person retains with him and deprive others from sharing the fruits of amalgamation, or to deprive another of his enjoyment of wealth by annexing other's property with his, the outcome would be the deterioration of the social system. However, amalgamations for the sake of increasing production that would be utilised for the benefit of people at large are acceptable, as the motive is altruistic. In other words, what determines outcome of an action is the motive that is responsible for such action. If the motive is altruistic the consequences will be benevolent to the society.

The craving for accumulation of wealth and investing them for further increase of wealth is the basis of capitalism. Although the Buddha too has stated that one should invest half of one's earnings to improve one's earning capacity that has to be implemented within the fundamental framework of His teaching, ie, with neither attachment nor craving towards wealth. Hence, there is a difference between the two. The inevitable outcome of the former process is the inequitable distribution of resources, as in terms of the Buddha's analysis, a system which operates on the basis of craving cannot ensure an equitable social structure for human happiness.

However, neither Smith nor any other economist has been able to convince us that there is an inherent force operating in the society which would ensure a system similar to perfect competition in our markets, or any autonomous force which would annihilate craving and limit accumulation of wealth. On the other hand, Karl Marx criticising capitalism has stated that sustenance of capitalism lies on the ability to introduce new innovations to the market, in order to reinvigorate the interest of the consumers to the system. In fact, Smith was clinging on to craving as the driving force. However, the Buddha discoursed the existence of a similar driving force with the development of spiritual values devoid of self-centered attitudes, which will be discussed later.

As will be shown later, it is the cultivation of desire to enjoy material wealth without lustful attachment towards them (bhoga sukha mentioned in Attalla Sutta that would limit the acquisition of goods and services to the extent of one's real need. This will stand as a deterrent preventing human beings from transgressing on to others' spheres; and loving kindness, or universal compassion towards others motivates them to produce the "maximum" wealth with the idea of sharing it with others, a virtue highly valued in Buddhism as danasamvibitaga. Then people will remain "small" as if they were operating in a perfectly competitive market. In Ariyavamsa Sutta for bhikkhus, and in Rasiya Sabbasava Nivapa and Kamabhogi Suttas for the laity the Buddha discoursed that enjoyment of mundane pleasures without craving is not an evil.

The Buddha was never against laymen enjoying worldly pleasures without attachment towards them. What keeps human beings roaming in samsara is craving. By trying to satisfy worldly pleasures man is engaged in a futile endeavour of attempting to satisfy insatiable desires. Santutthi, ie, contentment implies acceptance of conditions and situations as they arise with equanimity and without grumbling. Here the criterion used is to see whether what one possesses brings one anxiety and worry. He may possess things with santutthi, so long as they do not generate anxiety and worry. This does not in any way suggest that human beings should not work hard and be satisfied with what is available. One should make every effort to be industrious. In Mala Sutta the Buddha discoursed that a layperson without persuasion is useless like the rust in a rod of iron.

Major criticism leveled against an economic system that discards the selfish motive, as the main driving force of human activity, is that such a system cannot produce any other phenomenon, which would equally and forcefully drive human beings to offer their optimum effort to produce maximum wealth. Unfortunately, the price that has to be paid to sustain this system of self-centered efforts is its inevitable mal-distribution of income and wealth, and the ensuing sufferings of the poor and disadvantaged; and also the development of terrorism that makes peaceful living impossible. What we should strive towards is a system, which would generate the same enthusiasm while retaining a reasonably acceptable equitable distribution of wealth and income.

However, now we know that the cultivation of universal compassion would generate a more powerful driving force for human beings to give their utmost contribution for the development of the society at large. A number of examples can be presented from a Buddha aspirant's (Bodhisatta's) life to prove how a human being could be motivated through universal compassion to sacrifice for the development of others as well as the country.

In the absence of inherent autonomous forces to ensure a system similar to perfect competition in our markets or annihilate craving, this selfish interest to aspire for material benefits alone, while ignoring spiritual objectives would make room for the growth of anti-social, inhuman types of market; either monopoly, oligopoly or some such other system such as globalisation with transnational corporations, with all vicious inhuman features, which would bring in a system completely at variance of the prediction of Smith; that when a person's economic activities were guided by selfish motives, both individual and society would be benefited thereby. Earlier colonialism and present globalisation are cases in point.

Colonialism is notorious for treacherous acts committed by the masters. The resources of the colonies were plundered for the sole benefit of the metropolitan country. Indigenous industries of the colonies were either ruined directly and indirectly by the economic policies of the masters. Implanting of colonial economic structure, which produced raw materials for the industries of the metropolitan country, ruined indigenous socio-economic structure. Now these countries find it almost impossible to get out of these clutches and are subject to the vagaries of the international market. They are eternally in the clutches of international aid organizations and widespread poverty would be the inevitable outcome.

Globalisation is not an immutable or automatic process. It is a process resulting from policy decisions of transnational corporations, international financial and trade institutions and governments of the first world. The free market envisaged in globalisation excludes those who lack skills or training and those who are not in a position to compete effectively in the market. It rewards the most powerful and daring and discards the weak and the meek. Globalisation increases job and income insecurity for majority of workers, mainly in developing countries. While technological advances, mergers, acquisitions, downsizing and relocation of industries tend to create unemployment and lower wages in some sectors, mostly in developing countries; unrestricted imports are threatening the livelihood of rural peasant farmers, craftsmen and small and medium size industrialists. Clare Short, British Secretary of State for International Development addressing UN in 1997 (as reported by Kelegama showed the crux of the problem of globalisation thus, "I do not believe globalisation is beneficial to every body. It is causing gross inequality and marginalisation within the rich world as well as for many of the poorer countries of the world.... Our view is that we need to create new models of development; we need more optimistic models of development... But not any economic model will do. Some economic growth increases inequality. We need pro-poor economic growth and we need much clearer strategies and ideas to ensure that we deliver pro-poor economic development programmes…."

World Trade Organisation (WTO), the latest addition to international economic organisations, which is responsible for the enforcement of rules governing global trade, is being accused of a coup against democratic governance worldwide. A report published in advance of the WTO's ministerial summit, scheduled to be held in Seattle last December, by Public Citizen, a public interest group founded by Ralph Nader accuses that in WTO forum global commerce takes precedence over democracy, public health, equity, environment and food safety. Signatories to this trade body are allowed to challenge other countries' domestic laws, if they feel those laws violate the principles of free trade. Once the WTO dispute panel rules against a country's law, that nation must either repeal the regulation or face perpetual fines to the country that brought the challenge. For instance, the United States initiated about half of the challenges, as it has economic resources to aggressively pursue and defend challenges unlike many developing countries.

After one such challenge by the US, Guatemala has to give in to the US baby food-manufacturing company, Gerber. Guatemala had to weaken the implementation of the United Nations Children's Fund (UNICEF) -World Health Organisation (WHO) code on the marketing of breast milk substitutes, which banned infant formula packaging depicting plump and healthy babies. The code was created to ensure that illiterate mothers did not associate the formula with healthy babies. Health experts were also concerned that advertisement would sway mother away from breast-feeding. The baby-food manufacturer Gerber threatened to bring the case before the WTO, stating that fat babies was part of its trade mark and was protected by WTO intellectual property rules. This example shows to what extent the international economic system, based on self-centered approach, has deteriorated to inhuman levels.

The driving force behind the desire of a human being to work or not to work was shown by a utilitarian, Bentham. In Bentham's system 'pain and pleasure' are the basic forces, which guide people's actions. However, Smith's selfish motive is applicable only to economic activities but Bentham's 'pain and pleasure' guides all activities. In effect, in terms of the final outcome Bentham's explanation is the same as Smith's selfish interest, self-centered approach.

Lionel Robins has made economics a scientific study by his definition that economic is a science of choice. Human wants, according to Robins, are innumerable. However, means of satisfying these wants are limited. Hence, not only one has to choose what is best for him but also to maximize returns from the available limited resources to' maximize his welfare. When all follow the same method, eventually social welfare will be maximised. Thereafter economics became a positive science after shedding the normative aspects; ethics, spiritual values that are involved in value judgment, and also changing the criterion used in welfare economics. However, he is neutral to the quality of the needs a human being would like to satisfy. Adam Smith, earlier defined economics as a study of wealth. J.S. Mill considered economics as the 'practical science' of production and distribution of wealth. According to Alfred Marshall economics is the study of wealth.

However, in this science of choice even ethical, spiritual and religious needs could be treated as competing needs with more material needs. In other words, ethical, spiritual or religious needs of human beings can be a part of the schedule of priorities. Here the assumption is the desire of a human being for something backed by ability to pay is the mandatory criterion determining its supply, irrespective of the destructive nature of the thing supplied. The assumption that consumer is the 'king' and economic science is an amoral discipline devoid of moral and ethical connotations has paved the way for bringing in this 'wild cat' competitive economic system of the day. The resulting turmoil and degradation has reduced the human race to a consumerism worshiping brutish clan. Newspapers are full of stories of father raping his own daughter; middle-aged mothers eloping with young fiances leaving innocent small children in the lurch, gang rape in the presence of the husband and children, and in foreign cities, youth shooting on high streets indiscriminately killing innocent people and also raping girls as young as five years.

In Nivapa Sutta the Buddha has rejected over indulgence in sensual pleasures with craving, which is presented in Dhammacakkappavattana Sutta as kaniasukhallikaimyoga. In effect, what is put into practice in the modern society is exactly the kainasukhallikanuyoga, under consumerism, which has been discarded by the Buddha. He discarded the other extreme of attakilamathanuyoga or self-mortification as well. Both these refer to the pursuit of the religious or spiritual path: pabbayitena. What is recommended is the middle path.

In actual practice, spiritual and religious factors were left behind by modern economic science owing to the inability of quantifying them, thereby compromising the human values for the expediency of accuracy and precision. This theory of science of choice, ie, economics, has degenerated the religious, ethical and spiritual factors to the level of material objects. Now all activities are judged by examining whether such an activity would result in any net material benefits to the doer or not. What come to dominate human activity are the material cost-benefit objectives. The use of cost-benefit analysis may be useful in evaluating efficient use of natural resources as it helps to obtain maximum results from a given quantity of natural resources. However, after Robins definition of economics, the distinction between dignity of human values and their superiority over inanimate objects disappeared.

Another serious threat to the survival of human beings in this planet is environmental degradation. If the environmental deterioration that is taking place today continues at the same rate for another couple of decades, earth would definitely become uninhabitable. Major causal factor for this destruction is the insatiable craving of the man.

Now it is well known that interaction between poverty and environmental degradation can lead to a self-perpetuating process in which as a result of ignorance or economic necessity, which individually or collectively generate insatiable craving, people may destroy or exhaust the natural resources on which they survive. Population explosion on marginal land, which again is caused by unlimited carnal desires, is also responsible for severe environmental degradation, which has led to deforestation, falling farm' productivity and per capita food production. Since people involved in cultivation of marginal land are lower income groups unfortunately those who could least afford them suffer losses,

The Buddha's concern for environment, trees and forest is highlighted in the Vanaropa Sutta wherein it is stated that the planting of gardens and forests are meritorious acts. Monks are prohibited in the Vinaya to cut down trees, citing a popular belief that trees are living organisms. According to Cakkavattisihanada Sutta public policy should contain provisions for environmental protection. In another instance, Kutadanta Sutta prescribes that government plans must cover, among other things, protection for the plants and animal species. Improvement of environment is considered as one of the four factors that facilitate economic welfare (Cakka Sutta).

The purpose of this essay is to show that there are internal contradictions in the western economic rationale, philosophy and reasoning and are inappropriate guidelines in the voyage of discovery of solution to complex socio-economic problems of the modem society; and also they misdirect human beings in their endeavour of achieving "human happiness". In fact, it is extremely clear that the responsibility for the creation of the current economic morass, in which we live in, lies on the western philosophy, rationale and reasoning.

Now we are at crossroads: either we flounder on a ill-fated search for the type of development based on universal consumption and technology building up; a system of social segregation on a global scale driven by self centered power, or else branch off on to fresh ground by accepting the challenge to build a new order in which economic system is governed by moral, ethical and spiritual principles, a framework in which respect for nature and containment of human wants would be key social objectives. It is intended to prove that the Buddha has penetrated far more deep into the working of the socio-economic system than the western economists were able to and his teaching would provide the required framework for people to remain small actors in the economy, aiming to satisfy their needs only, without compromising with perseverance. The main objective of this work is to enlighten the western reader who may be unfamiliar with Buddhist philosophy, which is more people friendly, and the application of Buddhist principles, which is more humanistic in approach, to economic development and would provide lasting solutions to modem burning socio-economic problems.

Without subverting the western traditional notion of development it will be impossible to grapple with problems of growing poverty and inequality and also impossible to incorporate ecological balance into social purpose. Western economic reasoning will perpetrate the problems by creating a large number of new problems once a solution is found to one problem in view of the Buddha's discourse that there is no limit to craving of human beings and craving is an insatiable phenomenon. (Ratthapala Sutta) Even if a shower of kahawanu (gold coins) were to fall on one's premises the owner would not be satisfied with those kahawanus.

If the material things one get could satisfy one's wants, when more is available he should be satisfied. However, what we see today is when more is available people would aspire to have further more. Notion of unlimited wants reinforces this aspiration. When a man gets the opportunity to associate his wife he should get his carnal desires satisfied. Then why do they go after other women and contract AIDS? How can the institution of marriage and brothels or infamous houses be reconciled? Why should a person try to annex the adjoining parcel of land owned by a poor family, depriving that family to a habitat when he has his own nice residence?

Thus, the issue of economic development demands a fresh theoretical approach founded on three principles: ethics, morals and spiritual values for redefining the very objective of development; a new definition of objects and field of study capable of taking in the spiritual and ethical plus ecological dimensions and a new rationale for economics as a discipline.


A clear consensus is gradually emerging now that the very basis of the rationale of the western economic reasoning, ie, acceptance of the self centered driving force as the basis of all economic action and concentration only on material aspect of life, would push the socio-economic system to such a deleterious status as one which we live in where, hatred, ill-will, enmity, and cruelty reign. Turmoil rather than peace and tranquility prevail. The Buddha has analysed the social system more rigorously, and has meticulously presented the availability of a number of inherent self-equilibrating forces to human beings, which if properly grasped and manipulated would bring in a system similar to one Adam Smith was baselessly contemplating, ie, perfect competition, and bring back even such a deteriorated society to a more benevolent one.

Let us try to analyse the inevitable outcome of the social system emanating from conceptual self centered motivated human economic endeavour, and the application of restrictive analytical framework for economic behavior, limiting that human beings aspire only to achieve material aspects of human needs. Let us then study the more stable and lasting alternative, the Buddhist system based on enjoyment of material wealth without lustful attachment (bhoga sukha) coupled with universal compassion (karuna) to all living beings


We saw earlier that in the economic system in which we live there aren't any deterrent forces preventing a strong individual from pushing the weaker counterparts to the brink of poverty, destitution, ignorance and misery. When Smith's selfish motive is coupled with Robins' science of choice as conceptual guiding principle of economic activities of human beings, the material net benefit the doer expects from such activity overrides any other phenomenon; urgency and gravity of the need of the receiver do not carry any weight to persuade the parties to determine those as the basis of transaction. Always individuals will compare the material benefits he derives from the action with involved cost and if the former is higher he will do it.

Now what will happen to ethics, morals, sentiments and loving-kindness to fellow citizens, which are the very basis of human society? According to this philosophy, weakness of the counterpart is the basis of the success of the stronger. Misery of a person is the breeding ground of success of the affluence. Providing services to the war front enrich number of people and thereby their personal welfare is improved. Does that mean war increases welfare of a country? When more people are sick pharmaceutical companies will be happy and is good for the society, as their profits will grow because of higher sales. In this system, human beings and inanimate objects are treated as having equal values. No consideration is given to the superiority of the higher mental status of the human beings. Dignity of the human being is completely ostracized.

Theoretically, if those companies engage on a project on preventive measures, which will benefit the lot of people but no selfish motive is satisfied of the doer in terms of higher private profits, welfare is reduced. When more and more deaths occur income of funeral undertakers will go up along with their welfare and social welfare too increases. Even if a person shows sympathy towards mourning relations of the deceased that will reduce their sorrow, the welfare remains unchanged. It is not clear whether selfless activities such as charity, where no selfish motive is backing the action, would reduce or increase welfare. This is nothing short of 'the law of the jungle' and in fact we live in a society where 'the law of the jungle' prevails. This system has evolved for more than two centuries. Can we describe this as development?

The impact of the technological development on human degradation can be gauged from a statement of Prof. Jan Tinbergen , a Noble Laureate. The great thinkers of the past... could not foresee the discovery of nuclear energy... development of chemical industries consequence of a large number of chemical discoveries ranging from medicine and preservatives to detergents and pesticides... They could not foresee the resulting destruction and pollution of environment that would become such a threat to our lives and future…."

The biggest threat to the survival of humanity today is terrorism, both by individuals and states. If the root cause of modern terrorism is examined one would see that the main causal factor is either exploitation of one group or a nation by another or annexing or capturing another nations' or ethnic group's land by another. Under colonialism the western capitalist countries forcefully acquired economically valuable resources from Middle East and other developing countries. This is nothing surprising as the higher stage of development of capitalism is colonialism.

Present globalisation is a special type of further development of capitalism to exploit weaker members of the world community by the more affluent "brothers". These developments would further deteriorate the social process and the existing turmoil and disruptions will get further intensified. The unfortunate outcome is that even the material developments that have resulted from technological advancement cannot be enjoyed peacefully by the people who are privileged to have access to them, because of the creation by the social system itself of such self-destructive forces as terrorism. These evil forces have negated so-called development.

One might ask the question as to why socialism and communism are not dealt in this study. Although socialism was very popular and was a forceful economic system sometime back now it has become a spent force with the fall of the Russian system in 1989. Some aspects of socialism and communism have similarities with the Buddhist thinking, but there is a fundamental contradiction. The basis of both socialism and communism as enunciated by Marx and Lenin is materialism as in capitalism;- the difference is in the ownership of means of production and the role of the state.


The modern economic system has not only aggravated the poverty and mal-distribution of income both at local and global levels, but it has also made the life for millions of people miserable, and this process is still continuing. If the structure of the world economy in 1984 is examined the skewness of the global pattern of production and consumption can be observed; 50% of the world population has per capita national product that is less than 3% of the per capita national product of the 15% of the world population living in the industrialised western nations. When the whole world is taken as a whole, 75% of the total world population live in the developing countries, and they enjoy less than 20% of the world total product; and 15% of the world population living in the industrial countries, enjoy 70% of the global income. Infant mortality rate in developing countries is seven times higher than that of developed countries. (Human Development Report 1998)

World Bank has introduced a simple index to estimate poverty, in which poverty is defined as a receipt of less than $1 per day ie, less than 72 Sri Lankan Rupees, In South Asia 474 million people in 1987 were poor and this rose to 522 million in 1989. Poverty in Southern Africa rose from 277 million to 291 million people in 1989. Total world poverty has increased from 1195 million people in 1987 to 1290 million people in 1989. More than 1300 million people in 1993 were receiving less than $1 per day, an increase of more than 100 million between 1987-93 periods. Between 1990-95 per capita income in low-income countries fell from 1.79 % of GNP of per capita in high-income countries to 1.72%.

In 1993, more than 160 million children in the world are moderately or severely malnourished. Some I 10 million children were out of school. Half a million women in developing countries die each year in childbirth, which is 10-100 times those in industrialised countries. Among the developing countries, the ratio of the income of the richest 20% to those of poorest 20% lies between 20 to I and 10 to 1. (Human Development Report 1998)

The least developed countries with 10% of world population have only 0.03% of the world trade, which was a decline by almost half over the past two decades. The share of the poorest 20% of the world population now gets only 1. 1% of the global income and this fell from 2.3% in 1960, to 1.4% in 1991. In 1996, the value of exports of all developing countries amounted to $ 26 billion, only 10% of the value of UK exports. Developing countries are loosing up to $ 700 billion in annual export earnings because of trade barriers maintained by industrialised countries. Had the poorest countries been able to maintain their share of world market at mid- I 980s level, their average per capita incomes would be $32 a year higher, a significant increase over today's figure of $228 a year. The export earnings of developing countries could rise by $ 127 billion a year if developed countries opened their markets to textiles and clothing imports. In 1998, alone total agricultural support in the industrialised countries amounted to $ 353 billion more than triple the value of official development assistance. (Human Development Report 1998)

The ratio of income of top 20% to that of poorest 20% which was 30 to I in 1960 rose to 61 to I in 199 1, and startling 78 to I in 1994. World debt position looks alarming. In 1982, more than $ 647.2 billion was owed to the developed countries from the developing countries and this rose to more than $ 1162 billion in 1993. Net external debt as a percentage of GNP rose from 37.1 % in 1982 to 43.6% in 1993. In 1987, the highest for the recent period of 58.8% was found. External debt as a percentage of exports shows an alarming picture; in 1982, it was 237.3% and 337.4% in 1986. However, it has tapered out now to 235.2% in 1993. (Human Development Report 1998)

Global defense spending in 1995 was $ 800 billion of which South Asia spent $ 15 billion more than what it would cost annually to achieve basic health and nutrition for all, worldwide. Total of twelve countries, including United States, Soviet Union, Germany, Britain, France, Sweden and China are the major producers in this field. Sub Sahara Africa spent $ 8 billion, about the same as the estimated annual cost of achieving universal access to safe water and sanitation in all developing countries. East Asia spent $ 51 billion, nine times the annual amount needed to ensure basic education for all worldwide. (Human Development Report 1998)

Both United States of America and the European Union stockpile millions of metric tons of beef, wheat and other basic food items while millions of men; women and children die of starvation in Ethiopia, Somalia and other sub Saharan countries. Millions of tons of wheat are dumped into the Atlantic Ocean by these two countries in order to stabilise the world market price of wheat. If these stocks are released to the market the market price of wheat will fall so that people in the developing countries also can afford to buy them. However, the producers and their governments are more concerned about their private profits rather than the sufferings of the poor people in the developing world. Here the market price of wheat is stabilised at the cost of lives of millions of poor people of the third world.

An average American citizen consumes five times the average consumer it! developing countries. Industrial countries together consume 20 times more resources per capita than poor countries together. Eighty percent of what is consumed in the world is consumed by the twenty percent of humanity who live in the rich world. From these examples what transpires is that sustenance of the present economic system lies on the shoulders of poor people.

There were estimated 37,000 transnational corporations in early 1990s controlling about 170,000 affiliated organisations. The proportion of trade that is carried out between transnational (intra-corporation trade) was 36% for exports and 43% for imports in 1993. The triad, European Union, United States, and Japan which has 14% of population in 1990 attracted 75% of foreign direct investment (FDI) and with ten most developing countries they account for 91.5% of FDI for about 43% of the world population. When part of China, which is not affected very much from FDI, is deducted, 91.5% of this FDI goes to only 28% of the world population. On this basis between 57 and 72 percent of the world's population is in receipt of only 8.5% of the global FDI. In other words, nearly two third of the world population is virtually written off from any benefits arising out of this sort of investment. These few countries accounted for between 84 and 79 percent of trade in 1992 an incredible inequality in terms of population involved.

One third of the world's population has inadequate sanitation and billion of people, ie, 22% of the world's population is without safe water. 1.3 billion people are exposed to unsafe condition caused by soot and smoke. 300-700 million women and children suffer from severe indoor air pollution from cooking fire, green house effect and ozone depletion.

In 1985, the appearance of a dramatic spring ozone reduction over Antarctica was confirmed. Ozone depletion is mainly the result of increasing atmospheric concentrations of chlorine originating from CFCs. This will continue for at least for a decade before it can be reversed. The long-term consequences will be harmful for health and for productivity of marine terrestrial systems. An important consequence of ozone depletion is an increase in solar ultraviolet radiation received at the earth surface.

Benefits of trade and investment associated with globalisation are unevenly distributed. Majority of developing countries risks marginalisation. Africa consisting of some of the poorest countries in the world, has apparently have not derived any benefit from globalisation. Her share of the world trade fell from 3% in 1950 to little over 1 % in 1995. (Human Development Report 1998)


Sri Lanka is an island of 65,610 square kilometers with a population of little over 18.5 million. In 1996, foetal death rate was 7.7 per thousand live births. Infant mortality rate was 16.3 per 1000 live births. Maternity mortality rate was 0.3 for 1000 live births. Little more than 800,000 people were unemployed. Out of 132,520 marriages registered 2732 divorces were recorded in 1988. Animals slaughtered only by licensed slaughterhouses were 349,054 in 1994. We should not forget the fact that many more were slaughtered out side these legal places .

The number of prisoners in 1988 was 48,515 and this rose to 79,534 in 1994. Total expenditure on prisons was Rs 270.5m in 1988, which rose to 433.9 m in 1994. Convicted prisoners for narcotic drugs and excise offences rose from 8,299 in 1988 to 18,241 in 1994, more than 100% increase within 6 years. Narcotic offences alone rose from 2,337 to 5,660, more than 10 % within the same period. Total number of grave crimes was 523,344 in 1994, of which 518 were rape cases, 1336 were homicides, and 847 were cattle stealing.

Alcohol consumption has become a major social problem in modem Sri Lanka. Per capita alcohol consumption has been increasing. In 1989 it was 2.864 liters. This rose to 4.812 in 1995, an increase of 68% over a period of six years . These figures refer to licit liquor. It is estimated that a similar quantity of illicit liquor is also consumed. Average per capita alcohol consumption in Industrial Countries in 1995 was 7.4 liters. When illicit liquor consumption too is added the per capita consumption in Sri Lanka must be more or at least the same as that of Industrial countries.

Number of licensed alcohol outlets rose from 1824 in 1990 to 1887 in 1995. Chronic death rate from chronic liver diseases and cirrhosis of liver per hundred thousand people rose by almost hundred percent within a period of twenty years. Death rate from this cause in 1975 was 3.76 and this rose to 7.43 in 1995.

Per capita consumption of tobacco in 1990 was 294.25 grams and this fell to 280.26 grams in 1995. This was a salutary development. However, quite apart from the health problems tobacco consumption creates, for a relatively low per capita income country such as Sri Lanka this value is too high. The adverse impact of tobacco consumption on health is shown by the high death rate of males from cancer, which can be directly related to tobacco. In 1989, 16.60 deaths per hundred thousand males occurred from this cause. This rose to 19.76 in 1995. Smoking is not popular among females in Sri Lanka.

Apparently the government must be pleased with the spread of alcohol and tobacco consumption as its tax revenue from these two products has ballooned over the years; in 1989 total excise revenue from these two was Rs. 5812 million and this rose to Rs. 21775 million in 1996, which is a 374% growth from 1989. The total revenue collected from these two products rose from 10.77% of the total government revenue in 1989 to 14.69% in 1996.

Drop out up to year 9 in government schools in 1991/92 was 116,152 and was 3.9%. It is estimated that there are 54,000 beggars and 30,000 prostitutes in the country. Of this, 30,000 prostitutes 10% or 3000 are child prostitutes. (Liyanage, 199 1) However, some unreliable sources suggest that there are up to 30,000 child prostitutes in the country.

Degree of mal-distribution of income within Sri Lanka can be clearly observed from Consumer Finance and Socio-Economic Survey data. In 1973 lowest income recipients decile got 1.8% of the total, which fell to 1.19 in 1978-79 and in 1982 it further fell to 1. 19%. Thereafter, it further fell to the incredibly worst post- independent Sri Lankan value of 0.40% in 1985-86. On the other hand, the highest income receiving decile got 29.98% in 1973, which rose up to 38.73% in 1978-79 and a further increase is found in 1985-86 to 49.30%. Concentration of national income among few is shown by an index called Gini Coefficient. If the total national income is concentrated in a single group of people Gini coefficient value is 1. If the value of the coefficient is high then concentration too is high. In 1973, Gini coefficient value was 0.41. This rose to 0.49 in 1978-79. The highest ever Gini Coefficient value in independent Sri Lanka was found in 1985-86 of 0.58. In 1990-91 this value fell somewhat to 0.47.

In international perspective Sri Lanka has the second worst distribution of income, becoming second only to Brazil. In Brazil total income of the lowest 20% of households fell from 2.4% in 1983 to 2.1 % in 1989, while that of the highest 20% rose from 62.6 % to 67.5 %. In Sri Lanka (1996/97) the ratio of highest income receiving 20% to that of lowest income receiving 20% was 14:1 (56%/4%) where as in Brazil it was 32: 1 At least 22.36% of Sri Lankan population is under poverty. 27.91 % of the population has no access to safe water; 56.23% are without electricity and 23.84% are lacking sanitation. (Abstract of Statistics 1996) In per capita wise there are some improvements in Sri Lanka. However, worsening of distribution of income has overshadowed such gains. Poverty is increasing amidst affluence. Can this be considered as development?

The biggest problem Sri Lanka faces today is the war created by the ethnic conflict. The root cause of this dispute is the allocation of land and the use of language. Each group is intoxicated with these egoistic perspectives that neither is willing to allow even an iota of the things that one uses to the other. This intransigent approach of the parties has created a situation that thousands had to pay by the supreme sacrifice. Through ignorance and greediness people try to own impermanent natural objectives believing that they permanently remain with them. The solution to this lugubrious situation is to make involved parties to practice universal compassion to all. Loving-kindness is the only way out of this pathetic situation.


Some believe that the Buddha's teaching is purely based on spiritual considerations, which would postpone happiness for the future births, and his followers are expected to be constantly brooding on the ills of life, so that always they make their lives unhappy. This is a sad misunderstanding of the Buddha's teaching, particularly in view of the following. In Anda Dvicakkhu Sutta an important explanation in this respect is offered. The Buddha has discoursed about a two-eyed person (dvicakkhu); this person used the first eye to acquire wealth, which he did not acquire earlier, and to improve such acquired wealth. His second eye he used for spiritual development. He showed that a two-eyed person is superior to one having either the first eye or the second eye only. In other words spiritual development alone is not sufficient to lead a happy life.

This shows that Buddhism is not against enjoyment of worldly pleasures. Here the Buddha was making two very important points. First that human happiness cannot be achieved either by spiritual uplift alone or material advancement alone, both these aspects have to be equally developed to acquire happiness. King Bimbisara after attaining the state of sotapan (stream-winner) continued to rule the country. Visakha led a successful married life after attaining the state of sotapan. The Great Emperor of India, Dharmasoka (264 BC) ruled with love and compassion and his rule was very successful.

Further, the Buddha explained that an one-eyed person (meaning a person who concentrates only on material aspects) engages in stealing, unwholesome professions, and lying, to acquire wealth. This is exactly what is happening in the modern capitalist system. People today for their personal benefits practice all these vices. Although some advocate the imposition of severe penalties to minimise these social evils it is not possible to do so without eradicating the root cause. Only way out is to facilitate the change of attitudes of the people to balance their aspirations by having both material and spiritual developments as their social objectives.

According to Buddhist philosophy, a person must earn his wealth through righteous means. Righteous way of accumulating wealth is shown by thee Buddha in the Vyaggapajja Sutta as proficient, diligent, prudent, competent and expertise in management. Perseverance of individuals was highlighted by the Buddha for economic progress of people. In Alavaka Sutta the Buddha has stated that a person who does the relevant things intelligently would acquire wealth through perseverance. According to Buddhism, five types of trade are prohibited to a person. They are: trade in arms, animals or human beings, flesh, liquor and poison.

What has been stated earlier about the world and Sri Lankan economies confirms indisputably the Buddha's preaching that the development of one aspect, the material aspect alone, would keep the people unhappy by creating more problems than solving them. In Vaddhi Sutta possession and improvement of ten aspects of life are enumerated which would help a person to develop his personality of which five, development of property and wealth, having a wife and children, enhancing competence and possessing of animals, are meant for a person's material development.

According to Buddhism the path of liberation, Noble Eightfold Path is a graduated process leading from mundane to the transcendental. It covers Right Understanding, Right Thought, Right Speech, Right Action, Right Livelihood, Right Effort, Right Mindfulness and Right Concentration. One link in the Path, in fact the fifth link, samma ajiva, which means Right Livelihood, touches upon the economic aspect of life. Schumacher believes that the basis of Buddhist economics is this Right Livelihood .

Right Understanding is the knowledge of four noble truths. The first truth deals with dukkha or unsatisfactoriness or contemptible void. (All are subject to birth and consequently decay disease and finally death. Impeded wish is suffering. We do not wish to associate with things or persons we detest; nor do we wish to be separated from things we love; and in short, the five groups of existence, which form the objects of clinging, are suffering.)

One could argue whether in this busy world a person could lead such a righteous life and prosper or whether such a person could command his due place in such a society. It is true that such behaviour would not entail with it any economic values. However, if a person's objective in life is "happiness" this is the best way to achieve it. The "happiness" so achieved would not only be permanent but also less expensive in material terms.

Jothiya Dhirasekara (now Ven. Prof. Dhammavihari) shows how the Buddha has enumerated ajiva parisuddha in Samanamandika Sutta as purity in life. Here the prominence is given to sila or moral discipline. Buddhist economics is interwoven with both material and spiritual development. Another interesting feature of Buddhist economics, as against classical and neoclassical western economics, is that the former prescribes that one should do something only if it benefits both the doer and the society at large (Ambalatthika Rahulovada Sutta) . It is pertinent to grasp the fact that Buddhism has not completely discarded the importance egoism for ordinary people. What the Buddha preached was that one should not get too much attached to his ego because it is not a permanent phenomenon. Social benefits arise not as an adjunct as stipulated by Smith.

This is the point of departure of Buddhist economic philosophy from the western economic philosophy. Adam Smith assumed that when a person seeks self-centered interests his activities would bring benefits to the entire society. As we saw earlier what dominates is the selfish interest and social benefits were calculated by adding welfare of individuals. In other words, arithmetical addition of individual's welfare was taken as total social welfare. Negative effect of some who loose profits which could be the other side of any transaction, which gives an opportunity for a stronger person to make profits by dominating over a weaker person, is completely ignored. When negative welfare is deducted, it may be that the society's total welfare ends up with a negative figure, as the value of marginal loss of welfare of the poor are higher than the marginal increase in welfare by the rich.

In Rasiva Sutta the Buddha has discoursed on production, consumption and distribution and consumption philosophy, which will take into account the salient aspects, which the modern economic philosophy seems to have not comprehended.

According to Buddhism, accumulation of wealth must be carried out without violating any of the five precepts; refrain from killing, stealing, adultery, lying and taking intoxicants. All living beings value their lives. If any one takes other's life, he does that with the utmost selfish motive. The Buddha has recommended six professions for livelihood in Vyaggapajja Sutta . They are agriculture, trade, animal husbandry, security service, government service and using other skills (small industries, domestic industries etc). It is pertinent to state here that the Buddha was living in an agricultural society and hence all illustrations were attributed to agricultural pursuits. What is important is the rationale behind them. Very same rationale can easily be applied in the modern context. According to this prescription livelihood has to be not only righteous but also blameless. A good example is the medical profession. It is a righteous form of livelihood, but if any medical professional earns his livelihood by exploiting patients, his livelihood is not blameless.

There is a great deal of details about agriculture in Accayika Sutta . The Buddha showed how a good fanner's activity schedule, patience, and methodical approach to work and living as a friend of nature could be imitated by a progressing bikkhu. In Vepulla Sutta a discourse is available referring to the characteristics of a progressive trader. Accordingly, he should be intelligent, industrious and worthy of credibility. He should know the correct buying price and selling price. In this process he should be able to estimate his profits. Buddhism is against traders cheating customers.

Bhoga sukha in Buddhism deals with how a person should enjoy his acquired wealth. Righteously earned wealth one can consume, distribute to others, and use to acquire merit. When he consumes he should do so thinking of the impermanence of those things. First, a person would put wealth for his personal use, then for the use of parents, spouse and children and friends. According to Buddhism, wealth is not meant for hoarding or for exclusive personal use of the earner. All should share wealth. This is a significant departure from the western orthodoxy. In the Parabhava Sutta it is stated that if a person uses his wealth exclusively for himself it is a cause for degradation. In Kosambiya Sutta the Buddha has stated that wealth has to be used collectively rather than individually as otherwise poverty spreads.

In Ina Sutta the Buddha has analysed the impact of poverty. Poverty is a suffering for a layman and he advised people to make every effort to accumulate wealth when they are young and strong.

From this discourse, it is very clear that western orthodoxy is in diametric opposition to the Buddhist philosophy. If people resort to use wealth exclusively for their personal satisfaction without sharing, such a society makes way for the creation of hatred, ill-will, jealousy and commotion (Vyaggapaj Ja Sutta) . Main objectives of consumption according to Buddhism are mentioned in the Sabbasava Sutta .

Clothes - to protect the body from cold and heat, wind and sun, from gadflies mosquitoes
and snakes and cover the sensitive parts of the body.

Food - to maintain the body, to still the hunger, avoid old suffering due to previous
hunger and to prevent new suffering by over eating.

Shelter - to protect the body from cold and heat, insects and mosquitoes, from wind and
sun, from snakes, and rigours of climate.

Medicine - to cure diseases and to maintain a healthy life.

It is a consumer philosophy, which shows the demerits of tight attachment to consumption. Once a person is caught, it is difficult to redeem oneself due to attachment.

Here it is very important to distinguish between consumable objects and craving. Craving is a phenomenon appearing in one's mind. These consumable objects are impermanent. Once they interact with the five sensory organs, attachment originates. With that, arise desire or displeasure, and the want to keep desirable things permanently in that status for his enjoyment. However, the universal truth is that they are subject to change and decay, which no one can stop. Once desired things change their status against the wishes of the person, he becomes unhappy. Mahasaccaka Sutta states that it is perfectly in order even for a person who has reached higher status to enjoy these objects without craving. What Buddhism is against is not enjoyment of these objects but lustful attachment towards them. Consumption according to Buddhist principles is not the final goal of a society. It serves another objective if taken in proper perspective (without craving towards them), ie; it permits achievement of the higher status of Nirvana, the ultimate goal of Buddhists. When a person is overpowered by greediness, he completely forgets these objectives and go to the extreme. These objectives clearly go against consumerism prevailing in modern capitalist societies. It is unrealistic to go to the extreme extent of pronouncing that wealth is evil and poverty is a blessing. Of course, as Karunaratne has stated all these objectives of consumption go beyond fulfillment of mere basic needs, The level of consumption in accordance of these objectives would depend on the cultural status of the societies, and would definitely permit a comfortable life, as the Buddha has dismissed both extremes, namely, over indulgence in sensual pleasures and self-mortification.

What is relevant here is that Buddhism is against the type of consumerism followed by our modern societies, but not against people's enjoyment of wealth and improvement of happiness. Of course, the reality is that happiness is impermanent. It would not last long. Once it fades away one faces suffering. This phenomenon is unavoidable. By making efforts to make them permanent, people fall into unwholesome situations. However, the permanent happiness is Nirvana. That is what all Buddhists strive to achieve. That is supra mundane and in economics what has to be determined is mundane objectives, short of this ultimate objective, which we try to attempt in this exercise.


In Buddhism labour is categorised under three headings, ie manual labour, mental labour and spiritual labour. First two are self-explanatory hence need no details. The third one deals with the attempts made by humans for spiritual purification. In the modem world, motivation of labour has become a serious problem for most of the managers. According to western economic philosophy people have to be rewarded to motivate them to work. This is true to some extent, as people need income for survival.

De-motivating factor for the workers to offer their maximum for the work they are engaged in is the existing unethical distribution of the produce. The owner extracts the surplus. Workers feel the owner is an enemy who wants to grab all what is available with the workers for his advantage. The root cause of this dichotomy is the owner's greediness of chasing after maximum profits by minimising what is available to workers. Until this unholy situation is changed to a more equitable system this struggle will continue causing serious damage to both mind and property.

Even the Buddha has accepted the fact that people will have to work for their honourable living. In Pancha Itthadhamma Sutta the Buddha has addressed Anatapindika, the banker, stating that life, complexion, happiness, prestige and heaven cannot be achieved through praying or by demanding. People will have to work hard to obtain them. These facts reinforce one's self-confidence. Another important teaching is that people should not expect results instantaneously. This refers to the gestation period of different activities.

The notion of profit maximisation as the prime objective of the entrepreneurs has brought in a situation where they are cost conscious. Cost consciousness is not a bad motive. However, in practice it is attempted in most cases by retrenching labour. Mergers and downsizing of business in the modem set up contributes towards this end in a big way. This means a large number of people's main source of livelihood is deprived for no fault of theirs. Sometimes this system appears to be inhuman as when surplus arises owners takes it and when losses occur workers have to sacrifice.

According to Schumacher, in the Buddhist point of view the function of work is threefold; ie "to give a man chance to utilise and develop his faculties; to enable him to overcome his egocentredness by joining with other people in a common task; and to bring forth the goods and services needed for becoming existence".

As against the western economic philosophy which demonstrates that people are motivated by selfish interest, Buddhism prescribes four forces which would motivate people to work; viz, yatharthavabodhaya - belief that the existing situation is unsatisfactory and man has power to change that for better, ie, to improve his economic status, (under this, basic needs and spiritual purification have to be achieved); punnacetana and kusalacetana - acquiring of merit to achieve salvation and to help some one by some work or use the proceeds of work to perform a meritorious deed; sila or moral discipline in the society; and the desire for vimutti or deliverance - the altruistic nature of human behaviour. This last concept is extremely important, as that would deter human beings from accumulating too much through craving for their personal use. Such a person economically becomes small.

He would accumulate only what is necessary for him and nothing more. He will allow others to make their living peaceful. He will use out of the production only what is sufficient for him and when it comes to exchange or trade he will be very considerate and altruistic. He will be by definition generous. Through altruistic motive he will remain small and allow others also to obtain their requirements and be happy. This is the crux of the difference between modern economic and Buddhist economic philosophies. Former assumes selfish motive for engaging in economic activities, whereas the latter's assumption is altruism as the driving force. This altruistic attitude along with realisation of the prevailing suffering status that could be changed for better, push a person to engage on right speech, right bodily action, and right livelihood and generate moral discipline into one's action and keep one contended when one gets what is really necessary. In other words, he will remain a small actor as in the case of a perfectly competitive market.

This is the missing link in Adam Smith's philosophy. Some would feel that law could achieve the requirements for perfect competition. It is true that discipline can be reestablished to some extent by imposing legal penalties. But we have experienced instances of violation of these rules. When the authorities are motivated by craving it is easy for anti-social elements to corrupt them to pollute the law. Government action is only a partial solution. What is required is voluntarily building up of such qualities by individuals themselves. The Buddha has shown how a successful business could be carried on. General education on ' business (bahusacca), skill in some trade or industry (sippa), business without mental or manual conflicts (anakulaca kanimanta) are mentioned in the Mangala Sutta and without defects in his product in the Sigalovada Sutta as features of a successful business. The latter deals with the maintenance of quality of the product. This has been recognised by even the modern disciplines dealing with business as one of the crucial areas of success of a business.

In Vyaggapajja and Sigalovada Suttas the Buddha has shown ways how wealth could be destroyed. Womanising, alcohol, gambling, loitering, too much craving for singing and dancing, association of bad friends and laziness are the main causal factors of losing wealth. A person's means of livelihood has not only to be righteous but also blameless. He should not cheat when weighing and measuring. He should not pronounce people who are not entitled to a thing as being entitled by accepting bribes. He should not cheat others by various ways. He should not deceive people by exaggerating on something that is not in the product. Accordingly, Buddhism covers a gamut of activities of every day life and also shows the way that these activities be manipulated to enjoy happiness and minimise suffering and displeasure.


The term economic development may mean different things to different people. Traditionally development means the capacity of a national economy to generate and sustain an annual increase in real per capita national income ie, increase in income rising higher than the population growth. In 1970s, economic development came to be redefined in terms of reduction or elimination of poverty, inequality and unemployment within the context of growing economy. In 1990s, the World Bank defined development as improving the quality of life by better education, higher standard of health and nutrition, less poverty, cleaner environment, more equal opportunities, greater individual freedom and a richer cultural life. Accordingly, present day development is treated as a multidimensional process encompassing significant changes in social structures, popular attitudes and national institutions, as well as the acceleration of economic growth, reduction of inequality and poverty.

There are at least three constituents or core values, which serve as the conceptual foundation of socio-economic development. They are sustenance, self-esteem and freedom. Sustenance means ability to meet at least basic needs such as food, shelter, health and protection. Without sustained and continuous economic progress at both individual and societal level development of human potential would not be possible. One has to have enough in order to have more.

Next important component is self-esteem, a sense of worth and self-respect or not allowing oneself to be used as a tool by others for his or her own ends. The nature and form of this self-esteem may vary from society to society and from culture to culture. Freedom here means freedom from servitude or enjoying freedom of choice in the sense of emancipation from alienating material conditions of life and from social servitude to nature, ignorance, other people, misery, institutions and dogmatic beliefs. Arthur Lewis's has shown his version of relationship between economic growth and freedom from servitude in his statement that economic growth more than increasing happiness increases the range of human choice.

Wealth, in most cases can enable people to gain greater control over nature and the physical environment than they would have if they remained poor. It also permits them the freedom to choose greater leisure, more goods and services, or deny the importance of this material wants and live a life of spiritual contemplation. The concept of human freedom should also be wide enough to cover various components of freedom including, but not limited to personal security, rule of law, and freedom of expression, political participation and equality of opportunities. In brief, objectives of development according to the western philosophy are threefold. Viz.: 'To expand the availability and widen the distribution of basic life-sustaining goods, to raise levels of living, and to expand the range of economic and social choices' (Todaro 1997) .

All these mainly encompass on material aspect of life. These objectives are highly salutary pronouncement of ideals, achievement of which would lead to the 'golden age'. Assumption here of the possibility of leading a life of spiritual contemplation as an aspect of freedom one would enjoy with development suggests that material advancement would facilitate furtherance of spiritual needs as well. The contradiction here is that altruistic objectives of development are to be achieved by means of selfish methods.

The strategies adopted to achieve these objectives vary from one country to another but in all countries, the main emphasis is placed on capital accumulation and investment. Investment has been identified as the key factor because economic development entai Is economic growth as well. Growth depends mainly on investment. Liberal trade strategies also have been recommended to expand exports and increase inflow of foreign exchange. Direct foreign investment (FDI) through transnational corporations is also adopted as a strategy. This is facilitated through a process of economic liberalisation, which in turn would pave the way for globalisation with its all-reprehensible features. Import-substitution industrialisation has also been adopted by most of the developing countries at some stage. Human resource development through education and training, health, and nutrition as a strategy of development is adopted in most of the countries.

The interesting issue in the development theory is that the attitudes and behaviour of the people living, particularly in the rural sector, are treated as obstacles to development. These attitudes are mainly based on religious and spiritual values. Most of the development theorists believe eradication of these attitudes and behaviour are also a pre-requisite of economic development. For instance, living a life in accordance with the Noble Eightfold Path (Ariya Atthangika Magga) of Buddhism is treated as an obstacle for development. Here lies the greatest contradiction. Slaughtering of animals for human consumption is against the Buddhist way of life. However, modem theorists would argue that by not eating animal meat the people are not utilising a valuable scarce resource, a cheap means of acquiring protein and other nutrients; because of this attitude the system is said to be sub-optimal. The answer to that criticism is that that type of optimisation has damaged the environment and also people have been subjected to various sicknesses due to this type of over consumption (obesity) and optimal use of resources.

Easy contentment is also treated as an obstacle to development and as a remedy new attractive commodities are to be introduced to the market, tempting people to buy them, by earning through hard work. When new commodities are introduced to the market it is assumed that people will work hard to earn more income to buy those goods. However, when new attractive things are introduced to the market there is a possibility that lazy people would resort to anti-social activities such as stealing to purchase them. This is a more realistic response from the majority than hard work. In fact, modern society is flooded with such instances. This in other words, is promoting consumerism with its ugly face.

Although advancement of technology and ensuing so called socio-economic progress has raised the level of material comforts to some, majority of the people, particularly living in the third world, have been overlooked. To some people life has become more difficult. Risk to life is getting more and more increasing day by day. Environment has been destroyed to the extent of making healthy living practically impossible. Wars and civil commotions are increasing than ever before. How can such a turbulent society be described as a developed one? That is why easy contentment is a blessing.

Unsuitability of the modern theory of development for the problems of the developing countries lies on their dismissal of religious and spiritual values as a guiding principle of behaviour of individuals. The rational of the reasoning of these theories is the efficacy of self-centered approach. Of course, there are certain mythical beliefs and rituals, which are a hindrance to development, but as far as the Buddhist way of life is concerned we must emphasize that they are 'growth' promoting rather than 'growth' retarding. Here 'growth' refers to the growth of both spiritual and material advancement, which is long lasting, and human friendly.


We saw earlier that the latest notion of objectives of modem economic development are salutary developments, much superior to the previous belief that development means increase only in national income. However, even there the fundamental assumption of western economic analysis, namely self-centered activity, has not been shelved. In a conceptually self-centered economic environment, achievement of these salutary objectives is practically impossible, as the basic orientation of the model does not permit the achievement of the objectives.

This is a serious contradiction in these models. Although cultural and spiritual developments are also taken as aspects of total development, the main thrust of development, according to western orthodoxy is material advancement. The cultural, social and spiritual advancement are taken as facilitators to improve material well- being. The main reason for the failure of these models over the last fifty years or so, I believe, is this contradiction. The experience in application of such models in developing countries over a period of half a century, shows that although certain overall gains, in terms of higher per capita income and consumption have been able to achieve over the last half a century, the main objective of ensuring a reasonably higher level of living to the majority of people in these countries has not been realised. Judging by the data presented earlier one could conclude that poverty has increased; lack of basic amenities for a decent living for millions of people is more real today than some years ago. Accordingly, we have failed in ensuring sustenance, self- esteem or economic freedom to a majority of the people living in developing countries. The crux of the problem lies on the conceptualisation of self-centered economic approaches to these development models and strategies adopted to suit them, which are quite in conflict with the cherished objectives.

This situation demands not only redefining the accepted objectives of economic development but also reforming the strategies adopted. The conceptual modeling on the assumption of achieving only material targets has to be discarded in favour of Buddhist perception of material development not as the ultimate objective but as a goal facilitating the achievement of ultimate spiritual objective, Nirvana. In other words, both material and spiritual aspects of life must form the objectives.

Project evaluation in the western system treats improvement of per capita income as the main objective aiming to achieve by a project. Among other objectives reduction of income disparities, unemployment and regional disparities take a prominent place. A factory manufacturing arms or any other lethal weapons could be preferred from this criterion if its net present value (NPV) or internal rate of return (IRR) is higher than one which produces infant food. The main criterion they adopt here is the financial benefits arising out of the project over its lifespan. Other adverse social consequences are not taken into account. This criterion has to be modified to incorporate atthi sukha, bhoga suka and anavajja sukha into the objective function.

The project evaluators should not only look into the highest rate of return on investment but also into the social consequences of the project. Whether such a project would encourage the consumption of liquor or tobacco or any other harmful consumer product; or such a product would lead to the production of destructive weapons etc as against the monetary and other benefits that are expected of a project. They could be incorporated into the project either as an objective to achieve or as a cost in the cost function to discourage the production. Although a monetary value cannot be attributed to these factors, a certain weightage system could be worked out to internalize their impact on to the project. This will permit the continuation of the acceptable features of the rationale of the western economic philosophy, such as maximisation of the returns on investment, within the constraint of Buddhist social objectives. This type of approach makes way for the shedding of the inhuman aspects of the capitalists system.

It is true that in social cost-benefit analysis which is used to evaluate projects and programmes in development planning covers wider spectrum of aspects of social life than what is considered under financial cost-benefit analysis, which is used in the commercial sector, but the most relevant factors such as ethical, spiritual and moral factors have not been incorporated in their proper perspective. No provision is made to consider the impact of these factors in the final outcome of the project nor provision is there to consider how a project would affect the achievement of these factors. For instance, an economic project might result in less material benefits while enhancing the moral qualities of life. According to the existing method this is overlooked in favour of another project which is expected to promise higher material benefits. Difficulties of quantifying these phenomena should not be taken as the deciding factor as the noninclusion of these phenomena create a serious bias towards material development perpetuating the social evils already existing. Unless this change is made, the expected results would not facilitate the achievement of our objectives.

Basic assumption in people friendly development model is the recognition, that there are sufficient resources in the individual countries, as well as the world as a whole, to meet all the needs (not wants) of the people, physical, mental and spiritual, but resources are insufficient to meet the greed of the people. Hence, conceptual framework of the model must concentrate only on human needs but not on human wants, as is the case in the western orthodoxy. By no means these needs are limited to basic needs only. They cover much more depending upon the status of the society (Karunaratne) . These needs are not only conditioned by economic situation of a country but also by the ethical and moral standards of such a society. Animal behaviour of human beings assumed in western models is shelved here.

Objectives of people-friendly development have to be twofold: achievement of material goals enumerated earlier under modern development theory plus achievement of the final goal of spiritual advancement, Nirvanic bliss. These material objectives should facilitate rather than stand on the way of achievement of the final goal. More mundane objectives, a proxy for Nirvana, atthi sukha, bhoga sukha, anana sukha and anavajja sukha has to be introduced.

Atthi sukha is the satisfaction one derives from possessing wealth. Here possession has to be devoid of attachment or craving towards such wealth, and eternal contemplation of ways of ensuring exclusive use of such wealth for one's own satisfaction, believing that such wealth would permanently remain with oneself. Significance of this atthi sukha is that when one gets sufficient wealth to lead a comfortable life one needs not worry too much on future instability and on economic woes that might occur in the future. When one enjoys atthi sukha one is economically independent. This is what economic stability means. This economic independence facilitates an individual to concentrate on the development of both intellectual and spiritual aspects of life.

Bhoga sukha is the satisfaction derived by enjoying and donating the wealth earned righteously, ie sharing wealth with others. Buddhism does not preach that the wealth one has earned should be enjoyed only for one's own satisfaction. It has to be shared. This is the basis of socialism. However, western socialist theories do not touch upon the significance of means of acquiring wealth except on unfairness of exploitation of labour.

Anana sukha is the satisfaction one derives by being not in debt. (Practical meaning of this sukha is not that one should not get into debt at all. It is impracticable in the modem society. What it means is to minimise borrowings and restrict them to absolute needs). In Samannapala Sutta the Buddha explained how a person could borrow money and develop economically and be happy. What the Buddha emphasised here was the importance of utilising the credit for a productive purpose and also the wisdom of repayment of loans at the earliest possible opportunity without cheating the lender. Buddhism discourages obtaining credit for consumption. If one does not repay loans one is harassed by the lender and one has to undergo humiliation. According to Buddhism one should not only use credit for a productive purpose in which he would obtain return of more than what he had invested so that savings or surplus so earned could be used to sustain the family; but also one should make every effort to repay the loan without undue delay. The satisfaction one gets from being free from debt in this sense is Anana Sukha. If one who possesses economic strength does not repay loans he is always suffering and is not in a position to enjoy this sukha.

Anavajja sukha is the enjoyment derived by righteous and blameless action of body, word and mind. This sukha must be enjoyed in all stages of economic activities ie, production, distribution and consumption. The difference here is that enjoyment does not refer to enjoyment of wealth acquired by any means or use of wealth in the consumption of anything as envisaged in western models; but the strategy adopted to acquire wealth has to be rightful means and the use of wealth for consumption has to be on blameless things. Righteous and blameless activities are those which do no harm either to the doer or to others. This would provide solutions to most of the evils of the modern society. This enjoyment has to be cultivated not only in the process of building the economic foundation but also after achieving economic stability.

In the Sigalovada Sutta it is stated that one gathers wealth little by little as bees collect honey. Such accumulated wealth should be divided into four parts; one portion for day-to-day expenses, two portions for investment, and the balance to be kept as a precaution against contingencies. Some would argue whether this is feasible. It could be considered as feasible these days in view of the high saving rates in some countries; take for example, far-eastern countries where savings rate exceeds 35% of national income and much higher rate of investment, even in the set up of the consumerism. Once the Buddhist concept of consumption is introduced restricting consumption to one fourth of income does not appear to be an impossible task.

Morality (sila) is only the preliminary stage and is a means to an end itself. It is very essential but it alone does not lead to one's deliverance or perfect purity. It is only the first stage on the path of purity. Beyond this morality, is wisdom. The base of Buddhism is morality, and wisdom is its apex. The criterion used to test morality according to Buddhism is to examine whether any deed one does is conducive to one's harm or others harm or to both; if it is so, it should not be done. Through wisdom one could understand dhamma, ie, doctrine of reality or that which really is. This is the ultimate deliverance. Material development should facilitate the achievement of this goal.

The strategy suitable here to achieve above objectives is the application of the Noble Eightfold Path, of which what is more meaningful here are, the development of samma kammanta (right bodily action) and samma vaca, (right speech) which together determines samma ajiva or right livelihood. This in other words, demands sila or better moral behaviour in economic activities. Practicing of samma ajiva is the factor which individuals are kept away from transgressing into other's domain in order to achieve personal profits. This is the missing link in Adam Smith's model.

In such a society we can see a reasonably equitable distribution of wealth and income for the majority, and any mal- distribution that will be there may be due to past kamma or laziness and ignorance of individuals. There are certain past kammas (garuka papa kamma) whose effects cannot be avoided by any type of meritorious activities of the present. On the other hand, some people leave everything to past kamma and lead a lazy life. Such people also would not achieve economic progress. All the others will use their efforts to earn what is necessary for a reasonably comfortable life while allowing others also to do the same.

It should be understood that Nirvanic bliss is not associated with any kind of feeling. Nirvanic bliss is certainly the highest happiness; it is the happiness of relief from suffering. It is very important to understand that Nirvanic bliss is not the enjoyment of any pleasurable object. In Mahanidana and Kalahavivada Suttas social suffering is analysed from spiritual point of view. Accordingly, because of craving search is done, because of search something is got, because of getting something inquiring is done, because of inquiry desire originates, because of desire attachment results, because of attachment a need to own arises, because of ownership stinginess results, because of stinginess protection is required, because of need of protection lying and slandering occur, such suffering as commotion and fighting among people arises. In brief it shows that because of craving all social disruptive fights originates. This is diametrically opposite to Adam Smiths reasoning.

As the sukhas (happiness) mentioned earlier as conceptual objectives in our model are blessed with loving kindness, optimal welfare for the entire society could be guaranteed. Material objectives in this model are defined in terms of enjoyment only, without lustful attachment towards them. Hence, it is not difficult to couple these objectives together. Suitable strategy to achieve these objectives is the engagement in economic activities according to samma ajiva. This looks utopian to the modern man. However, Buddhist literature is full of examples of successful application of samma ajiva for successful worldly living; King Bimbisara and Visakha are very fitting examples.

The strategies suitable for the achievement of material objectives are fairly well known. However, the strategies suitable for spiritual objectives will have to be worked out and an environment that is conducive for this has to be established. As these lopsided economic activities have been in application for centuries, it is not easy to erase them instantaneously. What is required is the 'stages approach'. Initially, the existing materialistic biased economic strategy has to be gradually modified by implementing restrictive aspects of economic activities announced by the Buddha. Drastic changes in attitudes of the individuals are not feasible. A rigorous study has to be made about the psychological aspect of these changes.

One important constraint in this endeavour is the backlash that would result from the international set up. If this system were experimented in one country only, leaving others alone, the backlash from the rest of the world would totally swallow the new system. Hence, this system has to be simultaneously applied in all countries together to avoid retardiness. This is no easy task. However, the purpose of this exercise, as stated earlier is only to enlighten the western reader the availability of an alternative system. Buddhism respects the individual's freedom of choice, hence, the acceptance or the rejection of the alternative system.


Modem western economic orthodoxy is based on self-centered motivation. This notion of private profit maximisation has been responsible for rapid technological development and increase in material wealth. However, these achievements brought along with them unbearable mal-distribution of wealth and income. This mal-distribution has brought untold misery and agony for millions of poor people. Another up shoot of this maldistribution is the emergence of terrorism, both state as well as individuals. Environmental degradation as a result of this senseless struggle has created a risky unhealthy atmosphere for human living. However, this system has been allowed to continue on the assumption that motivation and altruism have no positive correlation.

Life has become more and more risky because of environmental degradation and terrorism, which has intensified day by day. These developments have created a situation in which even those who have access to improved material advancement cannot enjoy them peacefully. Continuation of this self-centered approach to economic development will while increasing availability of material comforts to some, reduce the human society into a clan of greedy animals.

The advancement of modem development theory has brought in salutary notions of objectives of economic development. The solution is the middle path discoursed by the Buddha. That middle path would provide the necessary positive co-relationship between motivation and altruism. The material objectives accepted by development theorists have to be modified to suit the Buddhist way of life in that what we should aspire to achieve is atthi sukha, bhoga sukha, anana sukha and anavajja sukha. The strategy to achieve these objectives has to be right livelihood (sanuna ajiva). These are not utopian concepts but a real way of life. However, as the modern society is deeply engrossed in consumerism it is not easy to change the economic behaviour. Application of this strategy has to be worked out by stages. The problem world faces today is bow to combine altruism with motivation to work to achieve material benefits to 'all'. The Buddhist People Friendly approach will facilitate that.


Basic assumption - Available resources and present technology are sufficient to
meet all the needs of the people living in the world.

Objectives of Development - Sustenance, self-esteem and freedom in the context of atthi
sukha, bhoga sukha, anana sukha and anavaja sukha.

Strategies - Noble Eightfold Path in particular, Right Livelihood. Samma


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