Buddhist Economics was first coined by E. F. Schumacher, an English heterodox economist. A protege of John Maynard Keynes, Schumacher’s essay “Buddhist Economics” was first published in 1966 in Asia: A Handbook and republished in the collection Small Is Beautiful (1973).
At its core, Buddist economics considers the difference between money and wealth, something that the philosopher Alan Watts expounded upon at length. He noted that societies often invented and used symbols extensively. Concluding that humans confused “reality as is” with their own interpretation via the use of symbolic language, he noted that:
Money is a measure of wealth, and we invent money as we invent the Fahrenheit scale of temperature or the avoirdupois measure of weight… By contrast with money, true wealth is the sum of energy, technical intelligence, and raw materials.
Buddhist economics works on different tenets, compared to Western schools of thought. Bitcoin, being both disruptive and enjoying tremendous potential and growth in emerging economies, is highly relevant to discussing Buddhist economics. The major difference lies in the views on consumption and growth.
In Buddhist economics, optimal consumption leads to an optimal consumption pattern and beneficial lifestyle, where ethical behaviour is balanced against consumption needs and right conduct. In the growth economics of Western schools of thought, more consumption is viewed as a positive development, with consumption to be the outcome of all economic activity, taking factors of production — land, labour and capital — as the means.
The fundamental source of wealth is human labour, but modern economists are conditioned to consider labour as a “necessary evil”, rooted in consumerism. Employers desire maximum output with minimum employees, while employees desire income without employment. Sacrificed leisure is compensated by wages.
Buddhist economics interprets work in three ways:
- To give humans a chance to utilize and develop their faculties;
- To enable them to overcome ego-centeredness by joining with other people in common tasks;
- To bring forth the goods and services needed for a positive and meaningful existence.
Buddhist economics considers traditional growth economics irrational. Optimal patterns of consumption ought to aim for high degrees of human satisfaction through relatively low rates of consumption, enabling individuals to live without psychological distress, while benefiting from eustress (i.e. beneficial stress). This aligns with the primary injunctions of Buddhist teaching: “Cease to do evil; try to do good.”
Buddhist economics emphasises maximising human satisfaction by optimal patterns of consumption, while Western economics maximises consumption by optimal patterns of productive effort. With finite resources, people satisfying their needs by optimal resource use are unlikely to engage in interpersonal aggression, compared to excessive consumers.
More importantly, a central tenet of Buddhist economics is “Cease to do evil; try to do good”. And this is where the blockchain becomes relevant, especially in terms of financial transactions and business conduct.
The Buddha, The Blockchain & Bookkeeping
Where does Bitcoin and Buddhist economics intersect? There are three points of intersection:
- The growing digital economy and infrastructure
- The growing traction of Bitcoin in emerging economies
- The greater transparency available via the blockchain’s public ledger mechanism
Bitcoin’s finite supply preserves wealth as a digital commodity, especially in its role as commodity money. Using Watts’ definition of money, Bitcoin is a commodity possessing a value in terms of the technical intelligence and inherent utility bound within it as a commodity.
Bitcoin is a finite digital commodity with finite supply. Over time, it preserves value like hydrocarbon commodities, by virtue of finite supply and inherent utility, with a range of possible applications. Bitcoin is a digital resource, with application in seamless bitcoin-based online economies and synthetic versions of financial assets traded on the blockchain.
The breakthrough lies in its triple entry public ledger functions of the blockchain. All transactions are cryptographically secured and published for public review, rather than stored as separate entries in independent records. They’re recorded within the blockchain, as an interlocking chain of mutually exclusive and incorruptible records.
Corruption, Bitcoin & Business Integrity
Corruption costs the EU 120 billion euros per annum, according to Al-Jazeera. Corruption in emerging economies inhibits economic growth and taxes the private sector. The triple entry public ledger of Bitcoin enables the amelioration of corruption risks, especially in vulnerable emerging markets. With the growth and expansion of emerging market MNCs based in major emerging economies like China and India, minimising corruption in emerging economies is critical.
Bitcoins finite supply and inherent utility produces and preserves wealth, enabling Bitcoin’s use as an instrument that ensures a higher likelihood of business integrity. It’s a vehicle for enforcing Buddhist economic principles and ethical business conduct in a responsible manner.
Practically, it protects the integrity and brand strength of firms conducting business in these economies allowing them to function as responsible corporate citizens. With that integrity comes trust, credibility and a brand strength indicating reliability. Bitcoin as a protocol is a vehicle for ethical business conduct and the assurance of integrity in a business that uses it.