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Theravada . Macroeconomics. Peter Calkins, Chiang Mai University and Ngo Anh-Thu, Laval University. Why macro? . Less frequently studied than micro as a means to harmonizing the relationships between man and nature

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theravada

Theravada

Macroeconomics

Peter Calkins, Chiang Mai University

and

Ngo Anh-Thu, Laval University

why macro
Why macro?
  • Less frequently studied than micro as a means to harmonizing the relationships between man and nature
  • Less obvious how to create atmosphere where spiritual growth is nurtured.
  • Cannot be completely understood without reference to 3 other levels
    • nano- (development of individual soul)
    • meso- (samgha, village)
    • pan- (world religion)
why theravada
Why Theravada?
  • fidelity to the Buddha’s original teachings
  • requires each person in society to make his or her own spiritual progress
  • more explicit relationship between individual spiritual growth and the maximization of gross domestic happiness per capita
  • any policies that will work in Theravada Sri Lanka, Myanmar, Thailand, Lao and Cambodia should operate a fortiori in Japan, South Korea, Taiwan, Vietnam and India.
  • adoption as State religion in a more historical cases
  • completes gaps in developmentg theory. Buddhist freedom from desires complements Sen’s freedom to minimum standard of living.
new traditionalism
New traditionalism

return to spiritualized economies:

  • “familistic groupism” of the Japanese economy
  • top-down imposition of ideas as in Islam
  • self-sufficient spinning wheels of Ghandian India
  • kibbutzim communities of Israel
  • environmental stewardship and emphasis on helping the poor of Catholicism
  • respect authority in Confucian Taiwan, post-Deng mainland China, and modern Japan.
other policy contributions of buddhism
Other policy contributions of Buddhism
  • Iinternally consistent model among ecological, social and economic dimensions of sustainability
  • Contrary to Keynes, in the eternal run we are doomed to unhappy rebirth unless we perform good kamma, including economics.
  • State socialism has shown that only individual freedom applied from the bottom up can create the critical mass of individuals necessary to permeate and transform social values.
  • Daniels [7] proves with positive statistical trends that Buddhism has positive features consistent with growth in economic welfare, and modern ecological sustainability
macro policies in suttas
Macro policies in suttas
  • Goal is to create an environment where laypeople can
    • accomplish persistent effort, good friendship and balanced living,
    • use wealth to make oneself, one’s family, workers, and friends happy and pleased;
    • protect oneself against losses
    • give alms to ascetics and Brahmins.
  • Education to use surplus to give alms
    • Teach that any other use of wealth is waste
    • “happiness includes freedom from debt.. [so] a family man knows his income and expenditures and leads a balanced life, neither extravagant nor miserly…delighting in relinquishment, devoted to charity, delighting in giving and sharing.” (Anguttara Nikaya 4, 8)
  • Policies to prevent crime and feed population at minimum cost
    • Give seed corn and food to farmers
    • Give capital to businessmen to promote entry and economies of scale
    • Promote spiritual entrepreneurship
the wheel turning monarch raja cakkavatti
The wheel turning monarch (raja cakkavatti)
  • benevolent governor with highest ethical norms (dhammiko dhammaraja)
  • peacefully unites the world under a reign of universal justice and prosperity:
  • (Digha Nikaya 26: Cakkavatti-Sihanbada Sutta;l III 59-63

“Yourself depending on the Dhamma, honouring it, revering it, cherishing it, doing hommage to it, … venerating it, having the Dhamma as your badge and banner, acknowledging the Dhamma as your master, you should establish righteous guard, ward and protection of your own household, your troops, your khattiyas and vassals, for brahmins and households, town and country folk, ascetics and Brahmins, for beasts and birds. Let no crime prevail in our kingdom, and to those who are in need, give wealth.

good governance
Good governance
  • wheel-turning monarch must take Dhamma as his necessary co-regent.
  • pursue openness, democratic decision-making, consistency, popular consultation and morality in government.
  • 4 of seven keys to social stability reflect good governance
    • hold frequent and regular assemblies
    • meet, breakup and carry out business in harmony
    • maintain policies
    • avoid greed and corruption

(Digha Nikaya 16: Mahaparinibhbana Sutta; II 72-77)

law and order
Law and order
  • To prevent crime, the King must help the poor, not impose harsher punishments.
  • Meeting the minimum basic needs for all is basis of peace and tranquility.

“With this plan you can completely eliminate that plague [of thieves and brigands]. To those in the kingdom who are engaged in cultivating crops and raising cattle, let Your Majesty distribute grain and fodder; to those in trade, give capital; to those in government service assign proper living wages. Then those people, being intent on their own occupations, will not harm the kingdom. Your Majesty’s revenues will be great; the land will be tranquil and not beset by thieves, and the people, with joy in their hearts, playing with their children, will dwell in open houses.”

Digha Nikaya: Kutadanta Sutta: I 134-36

social and economic justice
Social and economic justice
  • Spiritual equality across caste.

“No Brahman is such by birth. No outcaste is such by birth. An outcaste is such by his deeds. A Brahman is such by his deeds.” (Sutta Nipata, verse 136).

  • Buddha (reluctantly) allowed women to undertake monastic life.
  • So Buddhism arose in India as a spiritual force against
    • social injustices
    • degrading superstitious rites, ceremonies and sacrifices
    • tyranny of the caste system
  • Buddhism advocated the equality of all humans, emancipated woman and give her complete spiritual freedom.”
employment
Employment
  • Jobs and wages
    • Buddha: Since teaching a man distracted by hunger will give no results, the wheel-turning monarch should provide the poor with employment and fair wages for their services
    • Schumacher: “The very start of Buddhist economic planning would be planning for full employment … for everyone who needs an ‘outside’ job. It would not be the maximization of employment, nor the maximization of production.” [23, p. 130]
  • Income distribtuion
    • Buddha: “Economic justice is integral to social harmony and political stability.”
    • Galbraith “An affluent society, that is both compassionate and rational, would, no doubt, secure to all who needed it the minimum income essential for decency and comfort. …. The misfortunes of parents, deserved or otherwise, [would not be] visited on their children. It would help insure that poverty was not self-perpetuated.”
  • Choice of profession
    • Wealth must be “acquired by energetic striving … righteous wealth righteously gained.”
    • “But these five trades, O monks, should not be taken up by a lay follower: trading in weapons, trading in living beings, trading in meat, trading in intoxicants.”
india s king ashoka
India’s King Ashoka

Respect of human rights

  • reduced severity of torture (i.e.,)
  • three-day stay to those condemned to death to go and see their loved ones
  • total amnesty to someone once per year
  • eliminated capital punishment.

Fiscal policy in both current and capital expenditures.

  • provided for the aged, the indigent and the Samgha,
  • cut back on wasteful national holidays,
  • created employment through infrastructural public work projects
  • invested in free public education about dhamma.
  • taxes at about 25% of agricultural output not far from the tax rates in modern economies

.

ashoka s policies
Ashoka’s policies

Information economy

  • 33 pillars, inscriptions on boulders and cave walls beyond frontiers
  • four languages: Magadhi, Kharoshthi, Greek and Aramaic
  • social and moral precepts rather than religious practices
  • Asoka’s conversion
  • right behaviour, benevolence, kindness to prisoners, and respect for animal life;
  • religious precepts, belief in the next world, religious exchange;
  • social and animal welfare
  • promoted piety, forbade huntsman and fishermen from taking animals, and intemperance in drink
ashoka s policies1
Ashoka’s policies
  • Ecumenism among religions

“One should listen to and respect the doctrines professed by others. [Asoka] desires that all should be well-learned in the good doctrines of other religions.”

  • Spread Theravada Dhamma by own children and Dhamma officers to other peoples:

“In the past there were no Dhamma Mahamatras but such officers were appointed by me thirteen years after my coronation. Now they work among all religions for the establishment of Dhamma, for the promotion of Dhamma, and for the welfare and happiness of all who are devoted to Dhamma. They work among the Greeks, the Kambojas, the Gandharas, the Rastrikas, the Pitinikas and other peoples on the western borders. They work among soldiers, chiefs, Brahmans, householders, the poor, the aged and those devoted to Dhamma – for their welfare and happiness – so that they may be free from harassment.”Rock Edict N. 5

two thai kings
Two Thai Kings

Ruang (14th century)

  • tax exemption on commercial profits
  • interest-free loans to promote entry into commerce
  • more abstemious court than Asoka, which allowed him to lower taxes
  • taxes were further reduced in drought to give people the continued ability to give alms and to benefit from building kamma

Mongkut (19th century)

  • lived 27 years in a monastery.
  • made Samgha part of the Thai Civil Service
myanmar s u nu
Myanmar’s U Nu

Alexandrin: Buddhist economics has been created “on demand” with the post-World War II independences of Buddhist economies.

Power: post-independence Burma saw Buddhism as “an ideal accompaniment to socialism, reinforcing the moral and ethical dimension of a materialist political philosophy.”

U Nu

  • saw himself in the tradition of the classical Buddhist kings
  • often evoked Asoka’s name
  • instituted Buddhist-based policies for education, health, rice pricing, and nationalization of transport.
  • tried to create a Buddhist socialism under which the basic material needs of all citizens would be met by the state, freeing them to purse higher spiritual ends.
thailand s king bhumibol
Thailand’s King Bhumibol
  • After 1997 Asian financial crisis, he elaborated his “sufficiency economy philosophy”
  • Based on sutta concepts of self-immunization:

“By protecting oneself (e.g. morally), on protects others; by protecting others, one protects oneself.”– Samyutta Nikaya

and knowledge and compassion,

“He who has understanding and great wisdom … thinks of his own welfare, of that of others, of that of both, and of the welfare of the whole world.”– Anguttara Nikaya

Current State policies in Thailand

  • favour research in improved meteorological and conservation technology,
  • include programs to achieve sufficiency economy in each tambol and province
  • fund social research institutes, educational curricula, and public conferences to educate lay people, government officials and business leaders
slide23

Sufficiency economic indicators

  • Reasonableness
      • % of chemical costs in total output value of agricultural activities
  • Self-immunization
      • % income from migration
      • % of interest payments on debt in VA
  • Savings per capita
  • Debt per capita
  • Knowledge
      • % salaried employment in total employment
      • % of annual value added spent on schooling
utilitarianism
Utilitarianism

Bentham 1789: Utilitarian macroeconomic policy goal is to achieve the “greatest happiness for the greatest number.”

Derided as infeasible because must choose between

a) greatest number of people who are made at least weakly happier through a Pareto improvement

b) greatest happiness of a subset of individuals, in the extreme equal to one, implying a drastic Pareto decline.

It is both desirable and feasible if we are careful to specify the maximand as Gross Domestic Happiness per Capita (GDHC).

mathematical economics pryor and daniels
Mathematical economics (Pryor and Daniels)
  • Maximize the “monk share” of the population
  • State creates environment where greatest number of individuals can seek nibbana in monasteries
  • Remaining lay sector seeks to improve chances for better future life through good works (kamma).
  • These two groups are connected through the giving of alms by lay society to the monastery.
  • Monks should, for their own enlightenment, minimized their own consumption of alms.
  • The remainder is then passed on through the monastery to the poor, the ill and the aged of society.
  • Percolating up to macro level, equity and efficiency become complements.
mathematical economics pryor and daniels1
Mathematical economics (Pryor and Daniels)
  • “radiation” like X-efficiency: in order to give more in charity, people must work longer and harder to harness the energy of their souls to their every act (“right effort.”)
  • Schumpeterian entrepreneurship and hence technical changes through innovations should be fostered by Buddhist macroeconomic policy to
  • provide gifts to the monks and the poor with greater productive efficiency, and
  • feed the population at a lower cost so that they too can give alms.
  • 80-90% at the bottom (farmers, labourers, shop keepers, traders, clerks and low ranking civil servants) materially poor because lacked knowledge.
  • 10-20% at the top (politicians, senior civil servants, academics, major business and bankers) felt poor psychologically due to insatiable tanha.
a mathematical model of happiness maximisation in a theravada state
A mathematical model of happiness maximisation in a Theravada State

Maximize the cardinal indicator GDHC because:

  • One of the connotations of nibbana, in addition to perfect detachment, is “happiness.”
  • Society must realise its maximum carrying capacity of those advanced souls directly seeking nibbana.
  • To do so, lay persons must also become maximally happy through karma growth.

This implies

  • right livelihood in the choice of profession
  • right effort in the motivation to work as hard as possible to support as many monks as possible and
  • right action in giving alms to the monks.
what is the buddhist macroplanner trying to accomplish
What is the Buddhist macroplanner trying to accomplish?

“A Buddha arises in the world for the welfare of the multitude, for the happiness of the multitude… out of compassion for the world, for the good, welfare, and happiness of devas and humans.”

  • Anguttara Nikaya (1:xiii, 1,5,6;I22-23):

Min D = Dukkha [1]

However, political leaders shy away from minimization. So trivially re-express [1] as:

Min (- D) = - Dukkha [2]

Or more simply,

Max H = Domestic happiness per capita

slide32

Max H = S [m H1 (Monks) + w H2 (Wealthier lay persons) +

(1-m-w) H3 (Poorer lay persons)][4]

Subject to

H1 (Happiness of monks) = f [d, 1-w, v, d, o] [5]

H2 (Happiness of wealthier lay persons) = f[i, w, v, d, r, o] [6]

H3 (Happiness of poorer lay persons)] = f [v, d, r, o] [7]

m (Monk share in the population) = f[h, w, c – o, p, t] [8]

p (Average output/capita) = f[a, e, k, (1-m), f, v] [9]

s (Disposable output/capita) = f[c + o] [10]

o (Nonessential consumption) = s - c = f[r, i] [11]

r (Radiation)= f [d, t, 1 - k, all other macro policies] [12]

i (Right effort) = f [d] [13]

e (Economies of scale) = f [k, a] [14]

w (Time spent in income earning work) = f [f, a] [15]

1 – w (Time spent in good works, meditation) = f [d] [16]

d (Dhammic education) = f [1 – k] [17]

v (Environmental capital) = f [1 – w, c– o, d, h] [18]

theravada policies to a converge on steady state and b increase monk share
Theravada policies to a) converge on steady state and b) increase % monk-share
  • reduce tshould be as much as consistent with government programs to increase the remainder of the social surplus freely given to the poor directly or through monastery.
  • education of two types:
  • Raisef to build human capital for maximum X efficiency,
  • Promoted, spiritual capital for maximum radiationr.
  • investment in technological researchi and start-up capital transfer k to optimise productive efficiency and economies of scale.
  • Sustainable environmentally-friendly technologies
  • ban on the consumption of tobacco and drugs.
  • Government-administered poverty reduction programs totally eliminated
  • universal health carel should be provided to all for free.
  • Birth rate policybmust achieve middle way between zero population growth (two children per couple) and zero births to endogenously seek optimum steady stateb*
    • the system needs lay people to provide food and robes for the increasing percentage of monks in the society, whose number will increase with successive incarnations
    • a necessary condition for such incarnations is new births.
further research
Further research
  • Expand and fine tune the mathematical model and test it against empirical data.
  • Analyse, deepen, and promote the potential role of Theravada Buddhism as a recipe for
    • Asian macroeconomic policy and
    • a positive ingredient in Western macroeconomic policy
  • Conduct theological work to integrate Buddhist, Confucian, Gandhian, Catholic, and Judaic forms of new traditionalism.
slide38

Thank you for your attention!

Questions or comments?

potential to improve non buddhist economies alexandrin
Potential to improve non-Buddhist economies (Alexandrin)
  • Buddhist economics answers key questions being asked both from the East and West.
  • By reintroducing ethics into western economics, broadens theoretical discussion of supply and demand, monetary, micro and macro economics, credit, interest rates of interest, modelling and forecasting.
  • Theory can be set out in terminology standard to economics and business.
  • Historical applications to Marxism and Buddhism makes ‘western toolbox’ more available
  • Allows socialists to use Buddhism or Buddhists to use socialism, as in Burma
  • The main use of Buddhist economics at this time is education.
objectives of this research
Objectives of this research
  • Explore sources of macroeconomic ideas from Buddhist writings (deduction).
  • Recount historical record of macroeconomic policies implemented by Buddhist Kings (induction).
  • Mathematically formalize and extend earlier models[i] of happiness maximisation in a Theravada state (retroduction).
  • Synthesize steps 1 through 3 above as a partial guide to macroeconomic policy in a modern Buddhist state (meta-analysis).
potential to improve non buddhist economies alexandrin1
Potential to improve non-Buddhist economies (Alexandrin)
  • Buddhist economics answers key questions being asked both from the East and West.
  • By reintroducing ethics into western economics, broadens theoretical discussion of supply and demand, monetary, micro and macro economics, credit, interest rates of interest, modelling and forecasting.
  • Theory can be set out in terminology standard to economics and business.
  • Historical applications to Marxism and Buddhism makes ‘western toolbox’ more available
  • Allows socialists to use Buddhism or Buddhists to use socialism, as in Burma
  • The main use of Buddhist economics at this time is education.
convergence of new traditionalist paradigms
Convergence of new traditionalist paradigms

Kitson “Economics for the Future”

  • combine models into a new Third-Way paradigm to spiritualize Western economic policy.
    • Thai Theravadin Sulak Sivaraksa,
    • Vietnamese Mahayanan Zen master Thich Nhat Hanh,
    • Dalai lama of Tibet

Alexandrin and Zech: Buddhism and Catholicism

  • human dignity, voluntarism, and universalism is equally true of Buddhism.
  • non-negative impacts on the poor in taxation and spending
  • common use of public goods
  • protect lower level communities from interference from higher level communities, assistance. against the idea of a welfare state as such.
  • this-worldly good works (~ kamma) plus other-worldly concern with the afterlife (~ nibbana).
slide43

New traditionalistm

Utilitarianism

Mathematical logic

Religious econometrics

military tensions
Military tensions
  • Asoka successfully brought lasting peace by applying “Discourse on the Lion’s Roar of a Universal Monarch.”
  • two Koreas, the two parts of China, within Myanmar and now possibly Thailand.
  • Armies were abolished by Buddhist Kings for 400 years in Japan and in 17th century Tibet.
  • Sumanatissa: “If among the problems of today, the arms race and wasteful military expenditures constitute the biggest stumbling block to a more liberal sharing of financial and material resources globally, it is interesting to note that this sutta envisions a universal monarch who wins over a kingdom and expands his domain by righteous means without recourse to the force of arms or intrigue.”
caste and ethnic discrimination inoue
Caste and ethnic discrimination (Inoue)
  • Asoka’s Buddhist social policies promoted respect of others’ religion 1800 years before John Locke.
  • Buddhist economics could overcome the discrimination of the colonialist “Vasco Da Gama epoch of Asian History” (1498-1945).
slide46

Ethics of sharing

Middle way

Happiness / capita

Give away/ keep

Million baht

religious econometrics barro and mccleary
Religious econometrics (Barro and McCleary)

Data: World Values Survey, International Social Survey, Gallup Millennium Survey

Dependent variables

  • real GDP per capita (in logarithm form),
  • urbanization
  • average years of schooling
  • life expectancy.

Independent variables

  • frequency of worship (- because overspending on places of worship)
  • belief in hell (+)
  • belief in the after-life (+)
  • economic and demographic variables,
  • government policies and institutions related to religion
  • religious pluralism.
  • dummies for religion (but none for Buddhism and only Thailand Theravadin!)

Durlauf et al. [8] also question the stastical robustness