Buddhist Economics – An Overview

Clair Brown, & Laszlo Zsolnai ‘Buddhist Economics – An Overview.’ Society and Economy, 2018, vol.40, no. 4, pp. 497-513

Over the centuries, Buddhist monks applied economic models in the operations of their monasteries to make them sustainable while also observing Buddhist principles. The large variety of economic practices observed demonstrate the creativity of monastics in acquiring the resources to support their large monasteries in a way that was viewed as compatible with Buddhist ethics embodied in the Noble Eightfold Path. Researchers have analyzed the integration of faith-based and financially related monastic needs for different countries in different eras.

The Buddhist economics approach as it has been developed in the last 40-50 years aims to create an alternative mindset that challenges the main underlying assumptions of Western economics. Mainstream Western economics model, also called the free market economic model, is based on the following assumptions:  rational, selfish behavior; profit-maximization; perfect information; competitive markets with no firm having market power; and instrumental use of the environment. Buddhist economics is based on a different set of assumptions: dependent origination (“pratityasamutpada”), where people are interdependent with each other and with earth; people are aware of enlightened self-interest based on interdependence and thus are altruistic; firms care about the well-being of workers, customers, shareholders, and community; and all activities include caring for the environment. With these assumptions, the free market model maximizes average per capita income as its goal, and the Buddhist economic model has shared prosperity in a sustainable world with minimal suffering as its goal.

These two economic models represent different world views and imply different economics policies to maximize social welfare. Their approaches to evaluating economic performance reflect their fundamental differences. The free market model evaluates economic performance by the growth of average income (or output) per person, and income distribution and environmental degradation are ignored. Buddhist economics suggests evaluation of economic performance by measuring well-being of people (prosperity) and the environment (sustainability), and fairness of resource distribution (justice).

Buddhist Economics – An Overview