Buddhist Economics is a spiritual and philosophical approach to the study of economics. It examines the psychology of the human mind and the emotions that direct economic activity, in particular concepts such as anxiety, aspirations and self-actualization principles. In the view of its proponents, Buddhist economics aims to clear the confusion about what is harmful and what is beneficial in the range of human activities involving the production and consumption of goods and services, ultimately trying to make human beings ethically mature. The ideology’s stated purpose is to “find a middle way between a purely mundane society and an immobile, conventional society.”
Sri Lankan economist Neville Karunatilake wrote that: “A Buddhist economic system has its foundations in the development of a co-operative and harmonious effort in group living. Selfishness and acquisitive pursuits have to be eliminated by developing man himself.” Karunatilake sees Buddhist economic principles as exemplified in the rule of the Buddhist king Ashoka.
Bhutan’s King Jigme Singye Wangchuck and its government have promoted the concept of “gross national happiness” (GNH) since 1972, based on Buddhist spiritual values, as a counter to gauging a nation’s development by gross domestic product (GDP). This represents a commitment to building an economy that would serve Bhutan’s culture based on Buddhist spiritual values instead of material development, such as being gauged by only GDP.
U.S. economics professor Clair Brown sets up a Buddhist economics framework that integrates Amartya Sen’s capability approach with shared prosperity and sustainability. In her Buddhist economics model, valuation of economic performance is based on how well the economy delivers a high quality of life to everyone while it protects the environment. In addition to domestic output (or consumption), measuring economic performance includes equity, sustainability, and activities that create a meaningful life. A person’s well-being depends on cultivation of inner (spiritual) wealth even more than outer (material) wealth.
Buddhist economics holds that truly rational decisions can only be made when we understand what creates irrationality. When people understand what constitutes desire, they realize that all the wealth in the world cannot satisfy it. When people understand the universality of fear, they become more compassionate to all beings. Thus, this spiritual approach to economics doesn’t rely on theories and models, but on the essential forces of acumen, empathy, and restraint. From the perspective of a Buddhist, economics and other streams of knowledge cannot be separated. Economics is a single component of a combined effort to fix the problems of humanity and Buddhist economics works with it to reach a common goal of societal, individual, and environmental sufficiency.