Economics as If People Mattered?

That is kind of where all of this Buddhist Economics stuff started. Schumacher was an acknowledged fan of Mohandas Karamchand Ghandi. (Look for more history of the development of Ghandi’s beliefs and of Schumacher’s understanding of Buddhist Economics.)

It seems that Schumacher might have gotten things regarding Buddhism confused although it could happen considering the similarities between Hinduism and Buddhism. Historically, Schumacher’s 1955 trip to Burma as an economic consultant lead to his writing of his treatise on Buddhist Economics. By this time, Ghandi had already been assassinated and his ideas on local development and the use of appropriate technology well understood. Schumacher’s synthesis of the ideas into a unified whole have been responsible for influencing several generations of Buddhist Economists and I believe the King Of Thailand in his development of the Sufficiency Economy Philosophy of development.

I am a lecturer in the Faculty of Management Science here at Ubon Ratchathani University. I have been teaching a class entitled “Different Economics Paradigms for Business Management.’’ The faculty has a stated mission of framing its program in Buddhist Economics.

Although the first paper on Buddhist Economics was written in English and the second in Thai and translated to English, the only textbook on Buddhist Economics has been written in Thai and is only now being translated.

When I first heard about Buddhist Economics I was taken by it. It is indeed economics as if people mattered. Not many regular lay people here in Thailand can understand why someone from The US would be interested in Buddhist Economics and Sufficiency Economy.

It is hard to explain the beauty of Buddhist Economics to people who are living in developing nations (Thailand, Burma, Kenya and Uganda) where they are busy striving to be like western nations and have all that western nations have. Maybe you have to have lived in that out of bounds, over the edge capitalist, consumerism to understand the problems with it. To really understand that it is not satisfying. It is not economics that develops well-being. It develops production with negative externalities like water pollution, air pollution, global warming, deforestation, over use of pesticides, herbicides and fertilizer. It promotes a society where people have lost sight of who they are and what makes life valuable and worth living. It promotes a life style that is not healthy, stressful and not sustainable even if just on mental emotional terms.

Very often talks on Buddhist Economics are loaded with Buddhist catch phrases: sila, sammhadi, panna. Even the use of the term “Middle Way” while it is meaningful and carries a huge depth of meaning for a Buddhist, is empty for a Christian or a Muslim. That is not to say that there is nothing in Buddhist Economics that can and perhaps should speak to people outside of Buddhism, it just means that we need to think of how to communicate this so that it can push Adam Smith off the highway.

I have joked with Ajarn Apichai that I felt sometimes like I was called to take the Buddhism out of Buddhist Economics. I have worked for 2 years now to figure out how to explain this to westerners who know no Buddhism.

This week-end as I was reading an essay entitled “Faustian Economics: Hell Hath no Limits.” By Wendell Berry I had a flicker of light. It led me back to a couple of power point slides I had made for a lecture this week.

The light made it clear to me that these slides are graphing the wrong thing.

They are looking only at units of production and maximizing units and efficiency while never considering the real reason the “stuff” is being produced.

Economics is a social science. I don’t think that most economists would be unhappy if people just dropped the social part but the fact remains that it has to do with the actions of people. Neo-classic economics holds that man makes his economic decisions about what will be produced, how it will be produced and for whom it is being produced with a traditional model that has a lot of very basic assumptions:

With just this list we can go through and point to each of the fields of heterodox economics that has developed because of the total inadequacy of this model based on its oversimplified model.

Individual actors? What about families and groups, companies and governments?

Limited activities? Only production, exchange in markets and consumption by households? What about production for self use or care of communities, be they families or more extended communities where we volunteer? What about all of that “consumption” by business and government (the fiscal 2009 US budget is 3 TRILLION dollars while the US GDP estimate for 2010 is 13 TRILLION).

Restricted behavior? Where is charity work? When was the last time you heard an American indicate that they were satisfied? Everything is motivated by self-interest? What happened to all of the work done for the common good? And let’s not even start on perfect rationality with perfect information. What was the movie I watched the other night call “Thank You for Smoking”? Current marketing, advertising and lobbying lays aside the concept of perfect information.

Randy Pausch, a former professor at Carnegie Mellon University has a well distributed video lecture on time management. He indicated in that video that there is one economic term that every single person needs to understand and that is Opportunity Cost. He doesn’t talk about how many computers you have to give up producing for ever unit of food you decide to produce. He talks about the fact that once you have spent an hour of time doing something, you can never have that hour back.

That put all of this into perspective for me.

Economics is theoretically about how to provide people with well being in a climate of scarce goods. We are looking at the wrong thing!

I have no doubt that people have unlimited desires and wants but people do not have unlimited needs. Many of the problems existing in the west today are a function of catering to wants rather than needs. Obesity, hypertension, heart attacks, stress etc.

We all are really pretty simple and really pretty much alike. We want to live happy fulfilling lives. We want to raise our families in peace and be able to provide them what they need. When we provide children with all that they want rather than what they need, we are criticized as overindulging and spoiling them. But when we make faster cars that stressed people can drive while talking on their cell phones and watching TV in the car - that is called progress.

Let’s talk about production possibility curves that show the more critical trade offs….work and making more money to buy more stuff for time: quality time with ourselves, our families and our communities.

How do we rework economics and management science so that it helps provide people with blue prints for leading more enjoyable, less excessive and sustainable lives? We have to have compelling presentations if we want all of those people in the west who are used to making purely rational decisions, based on self-interest with perfect information to change their ways.