Economic Principles in Early Buddhism

In the Samyutta Nikaya we find this famous saying by King Pasenadi who – being physically in a bad shape –
is surprised as to how much the Buddha was able to help in his wordly affairs:

Indeed the Buddha has shown me
Compassion in two different ways:
For my welfare right here and now,
and also for in the future. (SN, en)

Besides the fact that Siddhartha Gotama as the heir to a royal clan enjoyed proper education, culture and prosperity one other very important event in his life shaped his understanding of Samsara more than anything else: The first watch of meditation during that night of enlightenment, when he – by the power of the 4th jhana and his gift of recollection – started to remember innumerable previous lifetimes:

“With his mind thus concentrated, purified, and bright, unblemished, free from defects, pliant, malleable, steady, and attained to imperturbability, he directs and inclines it to knowledge of the recollection of past lives.3 He recollects his manifold past lives, i.e., one birth, two births, three births, four, five, ten, twenty, thirty, forty, fifty, one hundred, one thousand, one hundred thousand, many aeons of cosmic contraction, many aeons of cosmic expansion, many aeons of cosmic contraction and expansion, [recollecting,] ‘There I had such a name, belonged to such a clan, had such an appearance. Such was my food, such my experience of pleasure and pain, such the end of my life. Passing away from that state, I re-arose there. There too I had such a name, belonged to such a clan, had such an appearance. Such was my food, such my experience of pleasure and pain, such the end of my life. Passing away from that state, I re-arose here.’ Thus he recollects his manifold past lives in their modes and details. (MN 27 et al., en)

This sounds like the most profound in-depth (and at the same time pragmatic, real life based) education anyone could dream of. It would give you all worldly wisdom condensed in a nutshell. You must feel like the oldest human being around.

Now, especially in the current economic and financial turmoil inflicted upon our samsaric world, it may be of some interest to look at some of the timeless principles the Buddha shared with his friends and followers. Below you will find a few suggestions drawn from the suttas.

What advice did he give?

For one, he was definitely not in favor of anyone leveraging 80:1 :-), which in other words, could be called a form of deception. But, at the same time, and probably to the astonishment of many mainstream Buddhists, there are a lot of principles which today would be identified as favoring a free / open market system with minimal governmental oversight. Lets have a closer look at a couple of these texts.

1. Step ladder to wealth.

In the famous Jataka story of the mouse merchant, the Bodhisatta in his rebirth as the minister of the royal treasury inspires a young man to pick up a dead mouse and selling it to a tavern using the profit in turn to build a fortune. One step after the other.

Lets look at this story of careful wealth building  (abbrev. with comments):

Once upon a time, an important adviser to a certain king was on his way to a meeting with the king and other advisers. Out of the corner of his eye, he saw a dead mouse by the roadside. He said to those who were with him. “Even from such small beginnings as this dead mouse, an energetic young fellow could build a fortune. If he worked hard and used his intelligence, he could start a business and support a wife and family.”

A passerby heard the remark. He knew this was a famous adviser to the king, so he decided to follow his words. He picked up the dead mouse by the tail and went off with it. As luck would have it, before he had gone even a block, a shopkeeper stopped him. He said, “My cat has been pestering me all morning. I’ll give you two copper coins for that mouse.” So it was done.

This is a very humble start indeed. Now, taking each step on the ladder one by one this young man utilizes the gains of one (business) operation to launch the next bigger one.

With the two copper coins, he bought sweet cakes, and waited by the side of the road with them and some water. As he expected, some people who picked flowers for making garlands were returning from work. Since they were all hungry and thirsty, they agreed to buy sweet cakes and water for the price of a bunch of flowers from each of them. In the evening, the man sold the flowers in the city. With some of the money he bought more sweet cakes and returned the next day to sell to the flower pickers.

It is interesting to note, that he just utilizes the gains of his one activity to build on that success. He is not getting into debt to finance his business, so to speak, but uses his gains as thoroughly as possible. Another trait is his knowledge of processes. He knows what others are in need of. Making money by generating a win-win situation for both parties. But again, his beginnings are painstakingly slow. His success grows exponentially though (the power of compounding, 🙂

This went on for a while, until one day there was a terrible storm, with heavy rains and high winds. While walking by the king’s pleasure garden, he saw that many branches had been blown off the trees and were lying all around. So he offered to the king’s gardener that he would clear it all away for him, if he could keep the branches. The lazy gardener quickly agreed. The man found some children playing in a park across the street. They were glad to collect all the branches and brush at the entrance to the pleasure garden, for the price of just one sweet cake for each child.Along came the king’s potter, who was always on the lookout for firewood for his glazing oven. When he saw the piles of wood the children had just collected, he paid the man a handsome price for it. He even threw into the bargain some of his pots.

With his profits from selling the flowers and the firewood, the man opened up a refreshment shop. One day all the local grass mowers, who were on their way into town, stopped in his shop. He gave them free sweet cakes and drinks. They were surprised at his generosity and asked, “What can we do for you?” He said there was nothing for them to do now, but he would let them know in the future.

He seems to like the beverage industry (inspired by the tavern?)…and he is networking and showing generosity. Quite a bit actually.

A week later, he heard that a horse dealer was coming to the city with 500 horses to sell. So he got in touch with the grass mowers and told each of them to give him a bundle of grass. He told them not to sell any grass to the horse dealer until he had sold his. In this way he got a very good price.

This is funny. He is creating a shortage on the market to profit from it. Good for him that they did not have price gouging laws back then 🙂

Time passed until one day, in his refreshment shop, some customers told him that a new ship from a foreign country had just anchored in the port. He saw this to be the opportunity he had been waiting for. He thought and thought until he came up with a good business plan.First, he went to a jeweler friend of his and paid a low price for a very valuable gold ring, with a beautiful red ruby in it. He knew that the foreign ship was from a country that had no rubies of its own, where gold too was expensive. So he gave the wonderful ring to the captain of the ship as an advance on his commission. To earn this commission, the captain agreed to send all his passengers to him as a broker. He would then lead them to the best shops in the city. In turn, the man got the merchants to pay him a commission for sending customers to them.

Now his networking and all the money earned so far come in handy. He sees and seizes this opportunity becoming quite wealthy as a customs broker 🙂

Acting as a middle man in this way, after several ships came into port, the man became very rich. Being pleased with his success, he also remembered that it had all started with the words of the king’s wise adviser. So he decided to give him a gift of 100,000 gold coins. This was half his entire wealth. After making the proper arrangements, he met with the king’s adviser and gave him the gift, along with his humble thanks.

The adviser was amazed, and he asked, “How did you earn so much wealth to afford such a generous gift?” The man told him it had all started with the adviser’s own words not so long ago. They had led him to a dead mouse, a hungry cat, sweet cakes, bunches of flowers, storm damaged tree branches, children in the park, the king’s potter, a refreshment shop, grass for 500 horses, a golden ruby ring, good business contacts, and finally a large fortune.

Hearing all this, the royal adviser thought to himself, “It would not be good to lose the talents of such an energetic man. I too have much wealth, as well as my beloved only daughter. As this man is single, he deserves to marry her. Then he can inherit my wealth in addition to his own, and my daughter will be well cared for.”

This all came to pass, and after the wise adviser died, the one who had followed his advice became the richest man in the city. The king appointed him to the adviser’s position. Throughout his remaining life, he generously gave his money for the happiness and well being of many people.

2. Financial Freedom and debtlessness.

In a few instances the Buddha discusses debt explicitely and although noting that debt may not always be
avoided, one should make up one’s mind and always remember the peace of mind which goes along with debtlessness. Hence Buddhist lay people were incouraged to “earn more than you spend“. A life based on credit ratings is for those who may believe that this one life is their one and only. Those who do belief in a future and past beyond this particular life may show more patience and equanimity when it comes to material necessities and – at times – frugality. Which does not mean that they won’t enjoy riches (think of Anathapindika and other rich Buddhist devotees in the days of the Buddha) or strive for them (but for different reasons, see below) and who will probably know that their wealth is a result of giving and turn their life to philanthropic goals. Through their own intention, that is, not forced.

ThenAnathapindika the householder went to the Blessed One and, on arrival, having bowed down to him, sat to one side. As he was sitting there the Blessed One said to him: “There are these four kinds of bliss that can be attained in the proper season, on the proper occasions, by a householder partaking of sensuality. Which four? The bliss of having, the bliss of [making use of] wealth, the bliss of debtlessness, the bliss of blamelessness.

“And what is the bliss of having? There is the case where the son of a good family has wealth earned through his efforts & enterprise, amassed through the strength of his arm, and piled up through the sweat of his brow, righteous wealth righteously gained. When he thinks, ‘I have wealth earned through my efforts & enterprise, amassed through the strength of my arm, and piled up through the sweat of my brow, righteous wealth righteously gained,’ he experiences bliss, he experiences joy. This is called the bliss of having.

“And what is the bliss of wealth? There is the case where the son of a good family, using the wealth earned through his efforts & enterprise, amassed through the strength of his arm, and piled up through the sweat of his brow, righteous wealth righteously gained, partakes of his wealth and makes merit. When he thinks, ‘Using the wealth earned through my efforts & enterprise, amassed through the strength of my arm, and piled up through the sweat of my brow, righteous wealth righteously gained, I partake of wealth and make merit,’ he experiences bliss, he experiences joy. This is called the bliss of wealth.

“And what is the bliss of debtlessness? There is the case where the son of a good family owes no debt, great or small, to anyone at all. When he thinks, ‘I owe no debt, great or small, to anyone at all,’ he experiences bliss, he experiences joy. This is called the bliss of debtlessness.

“And what is the bliss of blamelessness? There is the case where a disciple of the noble ones is endowed with blameless bodily kamma, blameless verbal kamma, blameless mental kamma. When he thinks, ‘I am endowed with blameless bodily kamma, blameless verbal kamma, blameless mental kamma,’ he experiences bliss, he experiences joy. This is called the bliss of blamelessness.

3. Taxes and the reason not to rely on government

In the AN of the Suttanipata are a couple of suttas in which the Buddha specifically outlines how Buddhist lay people could best utilize their money. The Buddha splits the income into 4 parts.

The first part is supposed to be reserved for taxes and insurance. The first quarter is used as a buffer to protect ones wealth against the king / government or anyone else trying to get a hold on ones money backed by laws. A 25% tax rate is something most people can only dream of. Anyway, the remainder of the money should be equally divided between saving for your business (re-investment), enjoying life (making friends and family happy), and finally enough money to contribute it to donation or higher purposes, like supporting poor people or those who forsake an amenable life for the purpose of gaining enlightenment, i.e. the Sangha.

Talking about the 25% overall taxation rate. In another very interesting Jataka story the Buddha outlines to King Pasenadi why a “nanny-state” type government, even if it intents to do good, will produce inferior results than individual (private) effort. Here is the funny Jataka story debunking Socialism 2550 B.C:

“Thou that of late,” etc. — This story the Master while at Jetavana told concerning the Feast of Friendship.

In the house of Anathapindika, they say, five hundred Brethren were constantly fed. The house was continually like a place of refreshment for the assembly of the Brethren, bright with the sheen of their yellow robes and blown upon with saintly odours. So one day the king in making a solemn procession around the city caught sight of the assembly of the Brethren in the Treasurer’s house, and thinking, “I too will grant a perpetual alms to the assembly of saints,” he went to the monastery and after greeting the Master he instituted perpetual alms for five hundred Brethren.

Thenceforth there is a perpetual giving of alms in the king’s house, even choice food of rice with the perfume of the rain upon it, but there are none to give it with their own hands, with marks of affection and love, but the king’s ministers dispense the food, and the Brethren do not care to sit down and eat it, but taking the various dainty foods, they go each to the house of his own retainers, and giving them the food, themselves eat whatever is set before them, whether coarse or dainty.

Now one day much wild fruit was brought to the king. The king said, “Give it to the Order of the Brethren.”
They went to the refectory and came and told the king, “There is not a single Brother there.”
“What, is it not time yet?” said the king.
“Yes it is time,” they said, “but the Brethren take the food in your house, and then go to the abode of their trusty servitors, and give the food to theiu, and themselves eat whatsoever is served up to them, whether it be coarse or dainty.”

The king said, “Our food is dainty. Why in the world do they abstain from ours and eat some other food ? ” And thinking, “I will inquire of the Master,” he went to the monastery and asked him.

The Master said, “The best food is that which is given in love. Owing to the absence of those who by giving in love establish friendly feeling, the Brethren take the food and eat it in some friendly place of their own. There is no flavour, Sire, equal to that of love. That which is given without love, though it be composed of the four sweet things, is not worth so much as wild rice given with love. Wise men of old, when sickness arose amongst them, though the king with his five families of leeches provided remedies, if the sickness were not thus assuaged, repaired to their intimate friends and by eating broth of wild rice and millet, without salt, or even leaves without salt, sprinkled with water only, were healed of their sickness.” And with these words at their request he told them a story of the past… (Kesava Jataka, IV.346)

4. Proper Insurance

“And what does it mean to be consummate in vigilance? There is the case when a lay person has righteous wealth — righteously gained, coming from his initiative, his striving, his making an effort, gathered by the strength of his arm, earned by his sweat — he manages to protect his wealth through vigilance thinking, ‘How shall neither kings (i.e. government) nor thieves make off with this property of mine, nor fire burn it, nor water sweep it away, nor hateful heirs make off with it?’ This is called being consummate in vigilance. (Probably the best sutta on this topic by far: AN 8.54)

There are many more texts focusing on economic/financial advice in the suttas. Please take these few passages as a (first) glimpse.
As is evident from these passages the ideal of self-emancipation which reverbarates in early Buddhism (and partially in Theravada today) is closer in its nature to a lean government which does not interfere too much with its citizens. However, the importance of personal responsibility based on virtue and understanding the vast implications of the law of karma are all pervasive. The lay follower of the Buddha depicted in the suttas cited above seems to be best reflected as a very hard working individual trying to gain wealth for the sole benefit of all around him (the poor and needy, friends and family, his spiritual community) using it in the form of right livelihood and as a part of his practice.

“Tumhehi kiccaṃ ātappaṃ akkhātāro tathāgatā,
Paṭipannā vimuccanti jhāyino mārabandhanā”ti. Dhp 276


Note: Buddhism spread in the first few centuries mainly along the merchant routes within India and beyond turning the countries along the silk road (Pakistan, Afghanistan, etc. etc. into prosperous and mainly peaceful Buddhist nations…that was quite some time ago 🙂

A suggested reading for people interested to work on their personal finance is Dave Ramsey’s program to ‘financial freedom’.

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    • theravadin

      agreed. switching between those two life styles is possible at any time and not too difficult…but whatever side you choose for your spiritual practice you are supposed to do it properly. thanks for the comment.

  1. Tim Beaudoin

    Did someone forget the Digha Nikaya sutta in which the Buddha clearly makes the case that a king (the state) should provide both to entrepreneurs and working people in order to prevent the degradation of human society? Instead, focusing on (the admittedly dubious) Jataka tales to justify a personal predilection against “Nanny States”?

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