Adam Smith and the Buddha

October 27, 2012

This week we read Joanna Macy’s Dharma and Development for Dr. Joshi’s Politics of Development class. It’s a quick read and would appeal to anyone tired of hearing the arguing between neo-liberals, protectionists, and Marxists about who’s got the best approach (unless you’re Robert Gilpin, then you can choose all three).

Dharma and Development is the story of a development organization in Sri Lanka that uses modern reinterpretations of traditional Buddha-Dharma ideas to make grassroot improvements. In the book, Macy argues that religions are an under-appreciated avenue for development. Her descriptions of the Sarvodaya Movement really hit on a lot of my experiences as a Peace Corps Volunteer in Thailand, although she underestimates the frustrations of bottom-up community development by a long shot.

So in the spirit of promoting world harmony, here’s my “Short List of Arbitrary Comparisons of Adam Smith and the Buddha”. This list is just-for-fun and unapologetically specious.  I hope it mends some of the gaps Macy points out between the capitalist system and the Buddhist approach to human development.

Neo-liberal economics is a religion (so is Buddhism)
Inclusive definitions of religion often tend to include political and economic systems. Talk to any far right economist for a while and they might tell you the ultimate goal of neo-liberal economics is Utopian: to open borders and liberate humanity from  the shackles of war and poverty. Buddhism is also considered a religion by most definitions, but lacks the implicit belief in an ultimate guiding power so may not be included in all definitions of religion.

Buddhism is an economic approach (so is neo-liberal economics)
Macy believes the Buddha’s teachings are holistic in their approach and include economic concerns of the individual alongside social and spiritual ones. The Buddha teaches Right-Livelihood, which “sets human labor within a context of character formation and life-enhancement”. Neo-liberal economics is the modern version of the classical kind taught by Adam Smith that promoted less regulation and more open trade.

Self-reliance: Everyone is able to be responsible for themselves
Buddhists use the phrase ehi, passiko (come, see), which roughly means “Don’t listen to teachers, come and experience this reality for yourself.” Neo-liberal economists also assert that individuals are able to make decisions based in reality (See Milton Friedman). They assert that the gift of rational decision-making is available to all people and is independent of factors like culture and external institutions. Buddhist teachings also emphasize the universal accessibility of the Dharma, no matter their situation or background.

Impermanence and the Consequences of its Denial
This is the concept of anatta on a global economic scale. Anatta is the Buddhist idea that basically says people change so much over a lifetime, it would be misleading to say a person remains a singular individual for all of his or her life and beyond (how much could you relate to the newborn version of yourself?). Buddhism argues that there are costs to asserting your own individuality, costs that manifest themselves negatively.

On the economic side, Frieden & Rogowski in The Impact of the International Economy on National Policies argue that sovereign nations are not truly individual but belong to a global economy that essentially constitutes an undifferentiated and immediate connection between all nations. They argue that countries that assert their individuality through economic protections tend to suffer by paying higher prices. Citizens in those countries act out by emigrating elsewhere or tapping into the global economy through black markets. In global economics, like Buddhism, there is no individual economic self, but a self that is constantly blending with its surrounding environment, that is, “economic anatta“.

The “Invisible Hand” and Karma are both natural self-correcting mechanisms
Adam Smith argued that markets in capitalism tend to self-correct as firms and consumers react to changing prices and costs in the marketplace. In the long-term, prices and supplies reach a harmonious equilibrium, all other things being equal.

Buddhism has its own self-adjusting mechanism of harmony called karma. Karma is the aggregate bundle of negative and positive consequences that naturally builds up over a person’s lifetimes. Like in economics, karma will continue building pressure till it’s released in the form of a self-correction.

Inequality is in both systems: karma from past lives is unfair
Social democrats believe that the economic benefits of capitalism are not shared equally. My personal belief is that it might be possible for all individuals in a free market economy to gain some wealth, but it’s more likely that the majority of wealth will go to the handful of winners willing or able to take the entrepreneurial risks. The losers either start over from the bottom, or, as some have argued, get stuck in a poverty trap and never get a chance to start (See Jeffrey Sachs).

Like in the economic world, Buddhism has its own inequalities. Negative Karma affects certain groups more than others so that self-improvement is much harder from some than others. Even the Buddha conceded that “you can’t follow the Dharma on an empty stomach”, which means those in poverty will have trouble even getting started on the path. Like in the capitalist system, inequality is inevitable.

However, both systems provide mechanisms to transcend economic and karmatic poverty. Free market folks argue that social mobility is possible when restrictions and protections are removed. I believe that could be true, but I also acknowledge that poor people can get stuck for generations. The same could be true for those stuck in a “karma  trap”.

Comments are welcome!

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