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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » A Buddhist Point of View regarding the Failure of Capitalism

A Buddhist Point of View regarding the Failure of Capitalism

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A Buddhist Point of View regarding the Failure of Capitalism


Prof. N.A.deS.Amaratunga

The economy in the developed countries, particularly in the West, seems to be in deep crisis and its repercussions are felt world wide. Some say this is due to poor management and wrong government policy. Others say there is an intrinsic fault in capitalism which needs to be dismantled if a solution is to be found (R.A.Postner, P.Mattick). Some Sri Lankan commentators too do not see the evil in capitalism (R.M.B.Senanayaka). There are yet others who say a lot of pent up greed had been released in the Western culture and this is the cause of the present crisis (J.Sachs). Though the West seems to have finally realised the ill effect of human greed their understanding of this phenomenon and its ramifications are superficial to be of any benefit to the world. They haven’t understood for instance that greed is not the effect but the cause of capitalism and that the other two major defilements mentioned in Buddhism, hatred and delusion, are also causative factors in the genesis and growth of capitalism. Therefore the Buddhist point of view in this regard has to be taken into consideration.

First let us look at what Richard Posner and Paul Mattick have to say about this matter for they are not ordinary commentators. Posner is one of the most respected judges in the US, famous for his advocacy of free-market. Posner was at one time considered the late Daniel Patrick Moynihan’s successor as the country’s leading proponent of free-market capitalism. In his book titled "Failure of Capitalism", however, he calls for the development of alternatives to capitalism. His thesis is not that government, politicians or bankers primarily caused the depression, but rather that the capitalist system is to blame for its own fault. He says quite categorically "the financial crisis is indeed a crisis of capitalism rather than a failure of government".

Paul Mattic’s book titled "Business As Usual – The Economic Crisis and The Failure of Capitalism" has been acclaimed as the best written about the present crisis. He has shown in lucid style that the problem of capitalism is intrinsic and could be historically traced back to the post World War II period. He proves that the recurrent depressions are due to the pursuit of growth by means of profit. He also focuses on the looming environmental crisis that overshadows everything. The solution he says would be to move away from production for profit and to move towards the pursuit of human ends.

Now let us take a brief look at the growth of capitalism and its many evils in order to clearly understand the role of greed, hatred and delusion in this process. Capitalism at its beginning in the 16th century had received a spiritual endorsement for the disparity between the rich and the poor. The Puritan Ethic which formed the basis for the early spirit of capitalism justified economic inequality among people on the grounds that the wealthy were also the virtuous! Credit (or blame?) could be given to Reformers like John Calvin for this Ethic which was one of the main contributory factors for the rapid advancement of capitalism at the beginning. In the Ethic encouraged by the Protestant Reformation of the 16th century, traditional disdain for acquisitive effort was diminished. Max Weber has analyzed this phenomenon in his work titled "The Protestant Ethic and the Spirit of Capitalism" published in 1904. Weber concluded that traditional religions had a restraining influence on economic development. He says Europe was freed from restrictive Christian traditionalism by reinterpretation of Protestant prophecy. The fact that these reinterpretations saw the wealthy as more virtuous compared to the poor cannot be justified before the altar of Jesus Christ’s preaching which exhorted equality and had not seen the poor as less virtuous.

The ideology of classical capitalism was expressed in Adam Smith’s "Inquiry into the Nature and Causes of the Wealth of Nations" published in 1776 which recommended leaving economic decisions to the free play of self regulating market forces, and also free trade and minimum levels of poor relief. Division of labour and technological advancement was recommended as measures to reduce labour costs. These measures have rendered the worker, in Adam Smith’s own words, "as stupid and ignorant as it is possible for a human creature to become".

The basic tenet of capitalism is production for profit and all aspects of production and profit making are supposed to be governed by free market forces. It could be shown that these market forces are not entirely free but are manipulated to ensure a flow of wealth from the poor to the rich. It is claimed that the disparity between the rich and the poor had always been there from the time of feudal societies. But the point here is instead of rectifying that anomaly, capitalism has made it worse. The trend continues causing havoc in the lives of the people if one was to go by the "Occupy Wall Street" demonstrations. It is also claimed that the rich had got richer not at the expense of the poor. If there had been equitable distribution of the wealth that capitalism produced, it would not have caused the poverty that the people in the rich countries experience today. Capitalism is not geared to bring about a fair distribution of the wealth it creates. In 1986 the lowest 20% of income earners in the USA received only 4.6% of the national income while the top 20% got 43.7%. This disparity is much worse today as proclaimed by the Wall Street occupiers. This sad state of affairs is not brought about by free market forces but by design.

Imperialism, the wars and the lack of peace in the world could all be the results of rampant capitalism practiced by the rapacious West. John Hobson in his work titled "Imperialism, a study" (1902) has said that financial interest of the capitalist class was the "governor of the imperial engine". Lenin has said imperialism is the inevitable highest stage of capitalism (see Imperialism, the Highest Stage of Capitalism-1917) He has further said that imperialism and militarism and the resultant wars were a natural outcome of capitalism. The congested capital which could not be consumed by its producers, the workers, had to be exported to new territories by several means - political, social, cultural, psychological and last but not least warfare. According to Lenin competitive capitalism was replaced by monopoly capitalism, a more advanced stage in which finance capital, an alliance between large industrial and banking firms, dominates the economic and political life of society.

Joseph Alois Schumpeter, one of the best known economists in the first half of the 20th century stated that at the root of imperialism is a persistent tendency to war and conquest and this tendency is sustained and conditioned by the domestic interests of individuals who have most to gain economically. He argued that monopoly capitalism can only grow and prosper under the protection of high tariff walls without which there would be no cartels or other monopolistic arrangements. Even today there are trade barriers in the developed countries against finished products of the poor countries which force them to export raw materials and discourage them from venturing into industrialization.

Thus what we have, instead of a free market, is a manipulated monopolistic market designed to ensure the flow of wealth from the poor to the rich, from the underdeveloped countries to the imperialist countries. Thus there is no economic freedom for the poor countries as well as the poor people in the rich countries. Further there is no economic security for the working people in the poor as well as the rich countries.

Finances in the capitalist society is managed in such a way that when there is an economic boom the benefits largely accrue to the rich and at times of economic recession however, the hardships are largely shifted to the poor. In recession the executives seldom take salary cuts but instead the workers are retrenched as a routine practice. In the recent economic crisis in the USA it was found that 87% of employees who lost their jobs were from the lowest salary earners. Executives who drew salaries 50 – 100 times more than these workers neither lost their jobs nor took a salary cut.

When the large majority of people live under these circumstances it is meaningless to say that there is total freedom in capitalist societies. What meaningful benefit could accrue to the people due to this freedom? What is the use of freedom of expression when there is no dignity that comes from secure employment?

Jeffry Sachs one of America’s best known economists has commented on greed in his new book; ‘"Price of Civilization…". He says lot of pent up greed has been released in the American society resulting in harmful consumerism. People are busy shopping, eating junk, watching TV and such other harmful activity. Obesity, mental illness, crime, violence, sex orgies are the result of these activities. What Sachs and other like minded commentators say is that it is capitalism that has caused this excessive greed. Therefore corrective measures have to be taken in relation to capitalism.

From the Buddhist point of view, however, it is human greed which is the primary causative factor and not capitalism. Capitalism is the effect rather than the cause. Western thinkers say the opposite; capitalism is the cause and greed is the result. This is a misconception and solutions based on it are bound to fail. Marxism which was an alternative to capitalism failed because the basic fault had not been identified. Human greed is not a secondary character that comes to occupy the mind due to environmental factors. Rather it is a primary feature that is entrenched in the consciousness (vignana) which according to Buddhism needs to be got rid of to achieve enlightenment.

According to Buddhism all man made evil has its origin in delusion (moha) which could be defined as lack of perception of the true nature of life and matter. The fact that life and matter have no self and permanency and therefore attachment to such things could only bring sorrow (dukkha) is the true nature of the world. The lack of this understanding results in attachment to physical and mental phenomena. Thus the greed for, and the attachment to, arise not only for sense pleasures, wealth and power, but also for ideals, theories and conceptions. Greed has one force as its effect - the force to continue. Greed that cannot be satisfied or contained is the result. The acquisitive culture that is seen in the world at present is the result of this force.

"According to Buddha’s analysis all the troubles and strife in the world, from little personal quarrels to great wars arise out of greed (Majjhima nikaya). From this point of view all economic political and social problems are rooted in this selfish greed" (Walpola Rahula). Hatred (dvesha) which is defined in Buddhism as the wish to eliminate what one does not like or agree with, and which is part of human consciousness is also brought forth and becomes a force that drives capitalism. When there is competition among powerful countries for markets, resources and exports hatred that dwells in the consciousness comes to the surface and conflict results. Capitalists would like to eliminate socialists and vice versa. Thus delusion, greed and hatred, (loba, dvesha, moha), the three major defilements that need to be got rid of to achieve enlightenment, are in operation in the pursuance and propagation of capitalism.

Greed, hatred, and delusion have a special place and importance in Buddhist philosophy. They are not minor thoughts that come to mind due to the influence of external factors. But they are components of consciousness (vignana) which is one of the five ‘skandas’ (rupa,vedana,sangna, sankara, vignana) that form the human being. According to Buddhism there are four planes of consciousness, three of these are mundane; the sense sphere, the fine material sphere, and the immaterial sphere; the fourth plane is the supramundane. Consciousness rooted in greed, hatred and delusion are unwholesome ‘cittas’ that belong and occur in the sense-sphere. Therefore greed, hatred and delusion are the most powerful and dominant of the unwholesome ‘cittas’. They are not the result of capitalism but are its cause and have to be got rid of if the ills of capitalism are to be eradicated.

Buddha did not advise the removal of the material world from the six senses of the being as a solution to the problem. Rather he advocated the development of a detached attitude towards the temptations of the material world. The major part of his preaching, the way of life he showed by example and the ‘sanga samajaya’ he developed were aimed at producing a detached person and consequently a detached society. This dhamma is more relevant to the world today than at any other time, engulfed as it is in an all consuming capitalism with all its evils grown to their zenith.

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