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Schumacher’s ‘Buddhist economics’

I’ve been talking to a colleague recently about developing a project on religion and economics under the auspices of the Religion and Political Culture Network (RPCN) at the University of Manchester. This has got me thinking about Buddhism, economics and Buddhist economics, and has led me to reread Ernst Friedrich Schumacher’s classic essay Buddhist economics, first published in 1966, and available online here:

http://www.centerforneweconomics.org/buddhist-economics

It’s a fascinating piece, and though Schumacher’s arguments have become commonplace among critics of mainstream economics, it’s interesting just how current most of what he has to say sounds. Much of what he has to say about the irrationality of certain assuptions in academic economics is still being said today, for example by students who are demanding changes in the way the subject is taught in universities, tackled in a recent BBC radio documentary: http://bbc.in/1pBBGW9, and in another broadcast last year: http://bbc.in/1y94uHF.

Only one of his claims about economics is arguably anachronistic: the claim that economics considers only price in the use of different natural resources, not whether they are renewable or not. I think that, at least at the level of the economics of nations, the idea of sustainability has gained significant traction since he was writing, though he probably wouldn’t approve of the idea that the impact of production on the environment can be ‘priced in’.

Here is a summary of Schumacher’s main points:

1. Economics is not value-free

He begins by regretting that leaders of Buddhist countries such as Burma simultaneously say they want to retain and develop their Buddhist traditions and ways of life, but seek advice from what he calls ‘modern’ and ‘materialist’ economists.

This might make sense if Buddhism and economics goverened two completely distinct spheres of life. However, he argues that Buddhism, which teaches Right Livelihood as part of the Eightfold Noble Path, must have its own ideas about economics. On the other hand, he claims, economics is not value-neutral, but is based on unacknowledged metaphysical presuppositions that might be–and in fact are–in conflict with the aims and premises of Buddhist teachings.

2. The meaning of labour

Schumacher discusses attitudes to work as an example of the (mostly unspoken) assumptions that distinguish modern economics from Buddhist economics.

For the ‘modern’ economics, labour is an evil. For the worker, its something that destroys leisure and for which compensation in the form of wages is required. For the employer, it is a cost of production. The more production (in the case of the employer) or income (in the case of the worker) can be had for the less work the better. So one central aim of modern economics is to reduce the quantitity of work required for a given amount of production through mechanisation and the division of labour.

For Buddhist economics, in contrast, work is not a necessary evil, but something that leads to a number of good outcomes apart from the product itself, including the opportunity for the development of character, and the opportunity to cooperate with others and in the process overcome ‘ego-centredness’. Labour-saving innovations are not necessarily bad, but their value depends on the extent to which they free people from the heavy work to focus on more creating tasks, or to the contrary, make work meaningless and repetitive.

3. The Middle Way and consumption

Modern economics, Schumacher writes, assumes that wellbeing can be measured by consumption, and therefore that greater annual rates of consumption correspond to increased wellbeing. A Buddhist economist,

‘… would consider this approach excessively irrational: since consumption is merely a means to human well-being, the aim should be to obtain the maximum of well-being with the minimum of consumption.’

(This is reminiscent of Southwold’s (1983: 188) opposition between Buddhist ‘sapientalism’, ‘a rational strategy for ameliorating experience by altering the mind rather than the environing world’, and instrumentalism.)

This approach could easily be misunderstood. One might assume that the opposite of materialism is anti-materialism, or the pursuit of poverty. But Schumacher points out that Buddhism is not about the rejection of wealth, but the rejection of excessive attachment to wealth. The Buddha tried and rejected ascetic austerities and then promoted instead the moderation of the Middle Way.

4. Localism, simplicity and non-violence

Schumacher argues that treating consumption as a means not an end in itself means living simply (in order to leave oneself time to do what is really important) and in accordance with non-violence (presumably because consuming in a way that leads to violence would undermine the proper goal of all consumption: liberation).

Using less in the way of resources also minimises the causes of violence as it reduces the competition for resources. Schumacher also claims–perhaps the this is the most debatable claim in the essay–that trading across large distances brings people into potentially hostile contact so that Buddhist economics would advocate local self-sufficience and minimal dependence on international trade:

‘dependence on imports from afar and the consequent need to produce for export to unknown and distant peoples is highly uneconomic and justifiable only in exceptional cases and on a small scale.’

5. Non-renewable resources

Finally, Schumacher argues that Buddhist economics and modern economics take a different view on non-renewable resources. For modern economics, all resources are reduced to a money price, and whatever resource is the cheapest price for each unit of output is preferable. For Buddhist economics, in contrast, using non-renewables is living parasitically off capital.

As I said above, this final point of criticism does sound rather anachronistic now.

References

Schumacher, E. F. 1966. “Buddhist Economics”. In Asia: A Handbook, edited by Guy Wint. London: Anthony Blond Ltd.

Southwold, M. 1983. Buddhism in Life. Manchester: Manchester University Press.


2 Comments

  1. Schumacher’s essay is littered with doubtful unexamined assumptions.
    * That the product matters less than the workman. But what if the product is food and without it someone starves? Surely both matter?
    * That individualism is bad. OK, it’s a core Buddhist belief, perhaps it’s something we need to accept for the essay to make sense.
    * That the early industrial parable of the pin factory is sound in a post-industrial world.
    * That the weaving machine eliminates the human part of the work, which the loom left intact. I’d argue the work eliminated here is the repetitive soul-destroying part that we should be largely happy to see go, perhaps to a Buddhist repetition is not so bad and an opportunity for meditation, etc. but this needs to be examined. The Western weaver made unemployed by the machine maybe ended up in a service industry, is that a human job? It at least has human contact in it. Again, this needs to be examined and not just accepted.
    * That we, or perhaps some authority, can say which styles of clothing are beautiful and which ugly. The Western paradigm is to be more modest about our wisdom, to accept that we cannot tell and instead to trust the individual to know what they like and learn from their mistakes. These ideas need to be compared.
    * The casual sexism of women not needing outside jobs would be breathtaking today and I think disturbing even in the 1970s.
    * Most striking of all, that Burma is a good model and non-violent.
    I guess this all looked better in the late industrial 1970s than it does in a post-industrial regime. But today we need something better thought out. To put it forward as an exemplar today

    • Hi David, thanks very much for taking the time to comment.

      Let me answer your points one by one…

      Schumacher’s essay is littered with doubtful unexamined assumptions.

      Yes, I agree — if I get round to it, I plan to write a follow-up post arguing that Schumacher is a good starting point, but that it is based on a number of debatable claims about Buddhism, and discussing how it might be developed. So let me clarify that I’m not committed to him being right about all of the details, but I find his basic approach interesting and I do find most of what he says sympathetic.

      • That the product matters less than the workman. But what if the product is food and without it someone starves? Surely both matter?

      If Schumacher had argued that the product never matters or is insignificant in comparison to the worker, I would agree, but that’s not my reading of the essay. In fact, he lists as one of the three ways in which Buddhism finds work valuable that it ‘bring[s] forth the goods and services needed for a becoming existence’.

      I think his point is that the focus of modern economics on consumption as the locus of value means that it’s difficult to acknowledge that work has a value for the worker as a worker and not just as a consumer of the products s/he can buy with the wages of work.

      • That individualism is bad. OK, it’s a core Buddhist belief, perhaps it’s something we need to accept for the essay to make sense.

      Is this a prominent issue in the essay? I don’t see it. To say that there’s value in work and cooperation is not necessarily saying that one needs an anti-individual ethic to appreciate these things, and in fact I don’t think Schumacher claims anything of the sort.

      • That the early industrial parable of the pin factory is sound in a post-industrial world.

      The division of labour may indeed be more or less applicable in different contexts. I don’t think it’s completely irrelevant in post-industrial contexts — think of the specialisation of call centre employees for example. I read Schumacher as addressing developing Buddhist countries (or economists working with them?) in the 1960s, though, so his main audience would not have been post-industrial in that sense.

      • That the weaving machine eliminates the human part of the work, which the loom left intact. I’d argue the work eliminated here is the repetitive soul-destroying part that we should be largely happy to see go, perhaps to a Buddhist repetition is not so bad and an opportunity for meditation, etc. but this needs to be examined. The Western weaver made unemployed by the machine maybe ended up in a service industry, is that a human job? It at least has human contact in it. Again, this needs to be examined and not just accepted.

      Again, I agree with you, but I think Schumacher probably would do too.

      In the essay he approvingly quotes Ananda Coomaraswamy, who says a craftsman can always tell the difference between a tool and a machine…’The carpet loom is a tool, a contrivance for holding warp threads at a stretch for the pile to be woven round them by the craftsmen’s fingers; but the power loom is a machine, and its significance as a destroyer of culture lies in the fact that it does the essentially human part of the work.’

      • That we, or perhaps some authority, can say which styles of clothing are beautiful and which ugly. The Western paradigm is to be more modest about our wisdom, to accept that we cannot tell and instead to trust the individual to know what they like and learn from their mistakes. These ideas need to be compared.

      Yes, you’re right that a certain approach to beauty, widely accepted in the West and elsewhere, holds that beauty is purely subjective, that there is no subject-independent standard of beauty. However, that premise is certainly not universally accepted. In recent history, Europeans too believed that the purpose of intellectual activity was to refine one’s objective knowledge of the true, the good and the beautiful.

      Beauty has an important place in Buddhist traditions, both in creativity and art and in accounts of the bodies of buddhas and other spiritually advanced beings, so I don’t think Schumacher is traducing Buddhism by bringing beauty into the equation.

      • The casual sexism of women not needing outside jobs would be breathtaking today and I think disturbing even in the 1970s.

      Agreed — that’s so beyond anachronism I didn’t even mention it when I was speaking about the anachronistic aspects of the essay.

      If I were to look for a defensible point in that passage, though, I’d say it was that not all important labour is wage labour, and it would be a good idea to organise society in such a way that some of the people who do that important labour are not required to abandon or neglect it in order to participate in wage labour.

      • Most striking of all, that Burma is a good model and non-violent.

      You could read it that way, but I don’t think he says Burma is a model.

      He says Burmese workers are under less pressure than Americans despite the fact that they fewer labour-saving machines. I don’t think that has anything to do with Buddhism.

      He says the Buddha’s teachings are non-violent, not that Burma is not a violent place.

      I guess this all looked better in the late industrial 1970s than it does in a post-industrial regime. But today we need something better thought out. To put it forward as an exemplar today

      Agreed!

      Jon

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