From Capitalism to a Buddhist Economy
Capitalism which has propelled the world into a new age rapidly just in centuries is finally cracking down. The developed countries are seeing stagnation in their growth while developing stay underdeveloped or get stuck in the middle-income trap. Inequality is steadily rising in the world while globalization is under threat with ideas of nationalization.
Can we expect the so-called Buddhist Economy will replace the beloved capitalism? What did Buddha say about the economy? If it becomes the new norm, how will that affect the market and the countries that practiced capitalism for centuries? Let dive deep
Buddhism is very simply a path explained by Buddha to end all suffering. It shows a spiritual path you have to follow to find enlightenment that is the state of being without suffering.
Because of this, the emphasis in Buddhism on materialistic well-being and of other physical world aspects is not as elaborative as the main objective of Buddhism, which is enlightenment.
But this path to enlightenment is a gradual process with many steps. In this path, Buddha does provide some valuable advice on how to live in this world and more importantly on the topic, of how to manage your finances and change the economy.
Apart from virtues such as living in harmony, non-violence, and sustaining life with fewer desires and attachments, let's look at Buddha’s teachings on personal money management and how through this simple technique, we can change the entire economic system in the world.
In Singalowada Sutta, the income of a person is to be divided into four parts.
- Two parts to invest
- One part to save
- One part to Spend
It's a simple method, yet practical for everyone to follow to attain financial freedom.
At the same time, the idea that you should only spend a quarter of your income may be frightening to some. But Buddha teaches to achieve this by limiting consumption and spending to which are actually valuable to life.
With minimalists around the corner, Youtubers, Bloggers, and new world entrepreneurs who only follow passion over money, Tourists traveling the world with no money, and people who admire leisure over a pension fund; the world is gradually yet surely moving away from old consumer-centric capitalistic lifestyles to something else, something new…
So, if we are to imagine the needs and wants of people are gradually changing and we are moving away from a classical capitalistic economy, what does it mean on a macroeconomic level? It’s an interesting topic to discuss.
Here, we will assume that the majority of the world population has knowingly or unknowingly started to follow Buddhist principles for prosperity and financial betterment.
Supply and Demand Behavior in a Buddhist Economy
Investing half of your income means a very large bulk of the income of the world going into investments. That means investments will go up significantly. This is good news for developing countries as investments and low consumption tend to boost the economy of a poor country towards prosperity. Hence we can predict a boost in the supply side of economics.
What about the income levels in a particular society?
For lower and middle-income people, investing half of their income would be a difficult process that can be succeeded only by moving away from consumerism. But these investments, in the long run, would mean that these people in the society get a better chance of moving up the ladder of financial freedom, which would improve the overall mobility between the classes.
Upper-income people investing half of their income will mean more labor markets will be open for lower and middle-income populations. We might even see a true trickle-down of economics, where wealth passed down from upper class to lower classes, during an era where the upper class invests half of their wealth back into the market.
But the question is what kind of investments can we observe in a society where high consumerism is rejected and personal and spiritual happiness is valued more than anything in the society.
To look closely at this, we have to look at the demand side of the economy.
We can expect a significant drop in the demand for goods and services as people understand the drawbacks of high consumerism and move into simple lifestyles. This could be huge and devastating to some markets in the modern world. This would in turn gradually affect the supply side as well, by urging investors to shift the investments to higher demand categories.
What would be higher demand categories in a society which rejects consumerism and lives with Buddhist principles of non-attachment, compassion, and developing individual spirituality?
That is a good question indeed. Until society truly realizes to maneuver in the market with the Buddhist principles, we can expect an overall drop in GDP and other growth matrices currently used in today’s world. It is up to the invisible hand introduced by Adam Smith to find new markets to cater to new human needs.
Manufacturing, Agriculture and Service Sector
My guess is fields like personal development, education, spiritual development would come out as profitable business sectors. Even during and aftermath of Lord Buddha, world-famous universities like Nalanda University in India held a prominent place in society and attracted a lot of great minds from all over the world.
Overall service sector may find new profitable markets (contrary to what Adam Smith believed, as he neglected the service sector as a productive business). Keep in mind that these services will only survive if they truly add value to customers, as the consumers will demand only services with true benefits.
The agriculture sector can be assumed to be less affected compared to manufacturing. Although, people will demand more natural products which are more environmentally friendly. True effect on agriculture due to the introduction of Buddhist economics is a whole another sector worth discussing. Probably later.
When it comes to manufacturing, we can argue that science and technological improvement for true and value-adding steps to improve human lifestyle will prevail while non-value-adding and destructive aspects of technology will see a drop in the demand.
Contrary to many beliefs I don’t think the development of humankind as a whole will hold still in a Buddhist economic structure. However, it can be safely assumed that spiritual development will be given more prominence.
Free Trade and Free Markets
Buddhism elaborates on selflessness and impermanence. Once you identify there is no self, why worry about national requirements?
We can assume open borders and free trade when it comes+
to a society working under Buddhist principles. People in different countries will be able to trade goods and services with other countries without worrying too much about national interests. As famous economist David Ricardo pointed out, economies flourish with open trade facilities.
Not just with other humans, people will also trade goods and services to nature as well. Animals will also have a say in our agricultural systems through human compassion and understanding about nature, like in the old days.
All in all, how the economy will change going forward into the new world of humankind from consumerism-centric capitalism to a more spiritual happiness-focused society, is largely mysterious and unknown which can only be speculated with limited data we currently have.
The Revolution in the mind
Karl Marx assumed the end of capitalism through a revolution from the working class. He also predicted the revolution to be violent and sudden. Maybe that’s where he got it wrong.
As Mahatma Gandhi believed, non-violent movements lead to winning your opponent's mind and heart. And change is definitely gradual.
The revolution that will shift the current economic system to something better than capitalism is going to happen in the minds of the people. It will take place non-violently and gradually.
But the economic change to sustain and grow spiritual happiness over materialistic possessions is definitely on the horizon. But what the implications of that will be to current society is indeed something to ponder about.
