The Buddhist Economics of E.F. Schumacher

The noted economist E.F. Schumacher was the first to develop the concept of Buddhist Economics, based on his experiences as an economic consultant to the Burmese government in 1955. In contrast to most economists of his time, Schumacher was concerned with both the internal and external consequences of the economic system, and its affect on the individual as well as on society and the environment. He talked about the philosophical, psychological and spiritual dimensions of work, rather than focusing solely on quantities of production and percentages of profit.

In his paper, Buddhist economics, first published in 1955 and later republished in his influential book Small is Beautiful, he begins by talking about how “Right Livelihood” is one of the requirements of the Buddha’s noble eightfold path, and therefore that work is a central tenet to Buddhist philosophy, and not considered at all deviant from a spiritual path. Despite the spiritual stance towards work, however, Schumacher observed that the Burmese, as well as other developing countries that he visited, including India, tended to

invariably assume that they can model their economic development plans in accordance with modern economics, and they call upon modern economists from so-called advanced countries to advise them, to formulate the policies to be pursued, and to construct the grand design for development, the Five-Year Plan or whatever it may be called. No one seems to think that a Buddhist way of life would call for Buddhist economics, just as the modern materialist way of life has brought forth modern economics.

He went on to talk about some of the key philosophical differences between the modern economic system and Buddhist economics, specifically the way they view work. The concept of labor in the modern economic system is that it is little more than a ‘necessary evil,’ being a cost to the employer that he would prefer to eliminate entirely, if possible, through automation or some other means. And to the worker, labor is a ‘disutility’; to work is to sacrifice one’s leisure and comfort, and one works only in order to receive wages. Therefore, he says, “the ideal from the point of view of the employer is to have output without employees, and the ideal from the point of view of the employee is to have income without employment.”

On the other hand, in the Buddhist perspective, work has a much wider-reaching function: it is viewed as a means to give the worker a chance to utilize and develop his or her faculties, to enable the worker to overcome his or her self-centeredness by working with other people to achieve a common goal, and to produce the goods and services necessary for a ‘becoming existence’. Here work is an integral part of human activity, necessary not only for producing the things we need and use, but also to attain self-actualization, enjoy community participation and experience the satisfaction of creation.

Schumacher explored several other differences in the philosophical perspectives of modern and Buddhist economics, which contributed to the formation of his ideas on Intermediate or Appropriate Technologies, which shall be dealt with in a separate post later this week.


  1. Is there a Buddhist theory of innovation? What would it look like?

    Also, why is there no Hindu economics?

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