Adam Smith and the Buddha

Ronald Wintrobe Western University Buddhism and Economics

• “Adam Smith” means both Adam Smith and sometimes is also a shorthand for modern economics • “The Buddha” is a name for Buddhism in general but also sometimes specifically contemporary Zen Buddhism. Zen Buddhism is often thought to be the “purest” form of Buddhism.

Structure • Part 1 (The Buddha): interprets Buddhism in terms of rational choice, and tries to show that it has a useful message for economic theory

• I focus on those aspects of Buddhism which can be related to economics and illuminate it.

• It follows that I am leaving a lot out!

• In particular, religious aspects of Buddhism are not in

• Part 2: (Smith): economics can be useful for understanding Buddhism. Previous work by economists

There is not much of it: • Chapter 2 of Schumacher’s Small Is Beautiful (1973) • Serge Christophe Kolm’s Le Bonheur Liberte Frederic Pryor’s 2 articles (1990, 1991) “A Buddhist economy: In principle and In practice • That is the entire economics literature that I know about. But they have definitely influenced me, especially the idea of “The Middle Way”

Other literature Suzuki and others assert that Zen is incompatible with reason. But many classical Buddhist masters take the rational point of view eg the Japanese masters Dogen (13thc) and Hakuin (17th c) . So do modern scholars like: • G. Sorgen Victor Hori, (Religious Studies) • Stephen Heine, Toshihuro Isutzu, Steven Katz (Philosophy) • Preston (Sociology} • Schnitke (Architecture)

What might the Buddha say to Adam Smith? • Buddhism is like economics! • The Buddhist point of view is the same as the economic one in that it takes as its central question the key to human happiness, or rather, the relief of human suffering. • Buddhism is individualistic, like economics • And Buddhism, like economics, is empirical: you are the judge of whether it works or not

Buddhism is NOT like economics

• In Buddhism, desires or “cravings” for goods and services are just like addictions. Buying more goods and services does little or nothing to reduce the cravings. The only way to reduce suffering is to reduce the cravings themselves.

• How do you extinguish desire? The key is to lose yourself. Desires are illusory because the self is illusory. This is the Buddhist doctrine of Anatman—the self does not really exist….really that it is impermanent and fleeting.. Nothing from something: Times Square, if you look long enough

Atta Kim, Times Square, New York City (8 hour exposure) from the exhibition “Grains of Emptiness” at the Rubin museum, NYC Something from nothing

• A cup In a vacuum might look empty, but it turns out to contain “something” (particles—but they are themselves empty) • The universe is Something from Nothing in quantum physics: Virtual particles are subatomic particles that form out of nothing for extremely short periods of time and then disappear again

• So it looks like the world is “Neither a something nor a nothing either” (Wittgenstein) Everything

• Computer simulation of the so- called “Cosmic Web” (the known universe) “What did the Dalai Lama say to the hot dog vendor?” • “Make me ONE with everything!” • A little crude, but, essentially, this is the goal of Buddhism. • But, you can’t get to nirvana by eating hot dogs. And there is a highly specific and ritualized program for getting there….

• But it is easy to think of ways in which people approach this state of mind in their daily life. One way is identification with an activity. Robert M. Pirsig’s classic Zen and The Art of Motorcycle Maintenance: What I’m talking about here in motorcycle maintenance is “just fixing”, in which the idea of a duality of self and object doesn’t dominate one’s consciousness. When one isn’t dominated by feelings of separateness from what he’s working on, then one can be said to “care” about what he’s doing. That is what caring really is, a feeling of identification with what one’s doing. When one has this feeling then he also sees the inverse side of caring, Quality itself (381-2). Kensho = to become one with • a writer will become completely immersed or “lose herself” (or himself) in the book she is writing. • A reader can also feel that he “loses himself” in reading a book. • This “disappearing” was the goal Jeff Bezos says his company, Amazon, had in designing the screen of the kindle e- reader. • People go to the beach with their kids on a beautiful day, feel the sun, look at the beach and the beautiful water, and take photos of everything with their cellphone. If they were happy that day, they might say they felt completely together with their family and with the sun and the water.

You can also be one with others • The eighth century poet Santideva, in the course of celebrating the ‘perfection of meditation’ urged the practice of contemplative identification with other beings. • “Primarily one should zealously cultivate the equality of self and other. …. All sorrows, without distinction, are ownerless…..Whoever wishes to quickly rescue himself and another, should practice the supreme mystery: The exchanging of self and other”

An economics definition of “oneness” from Becker • A person’s “social income” is the sum of personal income plus the value to him or her of the “relevant characteristics of others (R).“

• Suppose that R = Ij where Ij = the income of some other family membern j whom the head cares about.

• If it is costless to make transfers within the family, the head’s social income is just

• Sij = Iij = Ii + Ij

• The head’s social income is just “the family’s income” – the sum of his own income plus the income of the other family members whom he cares about.

• If the head could take an action that would raise his own income (I ) by some amount b, but lower that of another familyi member (I ) by more than that, c, he would not take that action,j because it would lower his own (social) income (I ). Thus, the family is a solidary unit, that is, theij family is one.

• One can also be one with the environment

Mindfulness • A man traveling across a field encountered a tiger. He fled, the tiger after him. Coming to a precipice, he caught hold of the root of a wild vine and swung himself down over the edge. The tiger sniffed at him from above. • Trembling, the man looked down to where, far below, another tiger was waiting to eat him. Only the vine sustained him. • Two mice, one white and one black, little by little started to gnaw away the vine. • The man saw a luscious strawberry near him. Grasping the vine with one hand, he plucked the strawberry with the other. How sweet it tasted! But there is more to it…No mind “One cannot become water because one is observing it from the outside. that is to say, because the ego is, as an outsider, looking at the water as an “object” Instead….one must first learn to ‘forget one’s ego subject’ and let oneself be completely absorbed into the water. One would then be flowing as the flowing river. No more would there be any consciousness of the ego. Nor would there be any consciousness of the water. Strictly speaking, it is not even the case that one becomes the water and flows on as the water. The water flows on. No more, no less.” (Izutsu) Mindfulness is not enough; 3 things are necessary for No mind (1) Mindfulness: Focus on the present moment; different from Economics with its emphasis on accumulation

(2) Be one with your environment

(3) Be in the right “place” i.e., Have a harmonious and wise Relationship to the environment. (You can feel “one” with the environment if you are drowning….)

Implications for economic theory

1. Suppose that, for many people, their happiest moments are those when they follow the Buddhist approach (perhaps without being conscious of the idea that it is Buddhist at all!) And lose rather than gratify themselves, when they are conscious of nothing, when they are “one” with an activity or people they love or a group (family, firm, army, nation) or the environment Then this might explain why they find much ordinary consumption unsatisfying

• 2. Aggrandizing the ego by accumulating more and more wealth so that you can consume more and more just distances you from other people and from the objects of consumption themselves.

• The more you have, the more your ego gets inflated, and the more you have to feed it to keep it happy.

• And the more things you have, the more difficult it is to focus on one Finally

3. You can’t buy nirvana How do you get there?

1. Zazen 2. Koans 3. The noble eightfold path

Focus on koans here The koan

• Initially from the Chinese kung-an = public case, • used in medieval Chinese jurisprudence

• The literal meaning is the “table” or “bench” (an) of • a “magistrate” or “judge” (kung). • The most famous is “The sound of one hand” • There is a huge literature about the meaning of particular koans, • No interpretation is correct –it depends on the monastery

There are 2 opposing views : 1. They are meaningless, designed to stop you from thinking by driving you nuts (eg Suzuki). You repeat and repeat the koan to yourself, asking what it means, but it has no meaning. And so the mind becomes paralyzed in some sense, and deeper powers take over from the intellect. 2. They have a rational interpretation

I will go for the second… A simple rational framework

• The idea is that koan can often be interpreted in terms of no mind or “nondualism”

• The insight into the koan often involves a poetic way of realizing this, of seeing something from a new angle which reinforces the idea of the world as one.

• It goes without saying that the interpretations which follow are too simple to satisfy any Zen roshi. But they might be useful for Adam Smith.

Once Te Shan came to visit Master Lung T’an asking for instructions, and stayed there til the night settled in. T’an said: ‘The night has advanced. Why don’t you retire and repose? Shan made a deep bow, lifted the blind, and went out. But it was all darkness outside. He came back and told the Master that it was utterly dark out there. T’an lit a candle and handed it to him. Shan was about to take it, when all of a sudden T’an blew the light out. On the spot, Shan attained enlightenment.

At Zen Master Nansen's place one day the monks of the east and west halls were arguing about a cat. Seeing this, Nansen held up the cat saying, "If you can say a word, I won't cut it in two." The assembly made no response. Nansen cut the cat.

• The assembly is divided: they are two, not one. Zen Master Nansen, as leader of the monastery, had to confront the problem directly to save the community from itself. • Nansen is saying “if you can be one I will not cut the cat in two.” Possibly both sides love the cat. At any rate, they certainly do not want to see it killed.

• But the assembly cannot unite. So he cuts the cat in two.

• Are there now two cats? No. For the cat to live, it must be one. The same goes for the assembly.

The master of Kennin temple was Mokurai, Silent Thunder. He had a little protege named Toyo who was only twelve years old. Toyo saw the older disciples visit the master's room each morning and evening to receive in which they were given koan to stop mind-wandering. Toyo wished to do sanzen also. "Wait a while," said Mokurai. "You are too young." But the child insisted, so the teacher finally consented. • "You can hear the sound of two hands when they clap together," said Mokurai. "Now show me the sound of one hand."

Toyo bowed and went to his room to consider this problem. From his window he could hear the music of the geishas. "Ah, I have it!" he proclaimed.

The next evening, when his teacher asked him to illustrate the sound of one hand, Toyo began to play the music of the geishas. "No, no," said Mokurai. "That will never do. That is not the sound of one hand. You've not got it at all."

……He heard the cry of an owl. This also was refused. The sound of one hand was not the locusts. For more than ten times Toyo visited Mokurai with different sounds. All were wrong…..

At last little Toyo entered true meditation and transcended all sounds. "I could collect no more," he explained later, "so I reached the soundless sound.”

Toyo had realized the sound of one hand. John Cage’s 4”33’ performed at Barbican Hall, London http://www.youtube.com/watch?v=hU Jagb7hL0E

Many other interpretations are possible, and, as we have seen, no interpretation is correct. Here is what the inventor of the koan, the 17th c Japanese Zen Master Hakuin says:

When the (Sound of the ) Single Hand enters the ear to even the slightest degree, the sound of the Buddha, the sound of the gods, the sound of the boddhisattvas, sravakas, pratyyeka-buddhas, hungry ghosts, fighting demons, the sound of beasts, of heaven and of hell, all sounds existing in this world, are heard without exception…”

This agrees with the framework I have suggested:

• The sound of one hand clapping is the sound of the universe clapping. Everyone and everything are clapping… …The universe is one. Can you hear it? Be careful: the sound can be deafening… Everything and Nothing

• So the sound of one hand clapping is both • Silence • and • The loudest sound imaginable.

What might Adam Smith say to the Buddha?

Enlightenment n What is enlightenment? Adam Smith

• Enlightenment consists in the application of reason to solve society’s problems

The secret of the wealth of nations can be seen in the humble pin factory • One key to making a society wealthy is the division of labor. • Productivity rises because of repetition

• But, as Smith also said, the division of labor builds narrowness of interest, lack of wisdom: “The minds of men are “contracted

• And of course…what is now referred to as the fundamental theorem of welfare economics: Under certain circumstances, selfishness is good for society

What is enlightenment? The Buddha: Enlightenment is an individual matter,and means liberation, freedom from desire

In Buddhism, repetition of koans and sutras itself builds consciousness of interdependence and wisdom, leads to mystical insight or

“expanded” awareness

Repetition and wisdom

• 1. It is interesting that both kinds of enlightenment are produced through repetition

• In Smith’s “pin factory” repetition of tasks leads to gains to productivity via specialization

• But it also means lack of consciousness of interdependence. Smith favored free public education to remedy this

Enlightenment as a final state of pure consciousness?

• 2. Smith might point out that Enlightenment as a final state of “pure consciousness” is not logical. The act of perception is always structuredn (Hori, Katz). What would perception be like without structure? Whirring and buzzing, flashing lights …

• Even Suzuki and others who talk about the final state say you have to continue to make progress after

3. Equilibrium zen.

• The most fundamental idea in economics is that decisions are made at the margin. A person compares the benefits of consuming a little bit more or working a bit more or saving a bit more with its costs n

• Is this true of Zen Buddhism? Is Zen divisible? But to do this, the activity has to be divisible, with no increasing returns

Is Zen divisible? n If the goal of Zen is enlightenment, and the state of enlightenment is really fundamentally different from ordinary life (One is either enlightened or one is not) Zen Buddhism would be subject to increasing returns And there would be a corner solution But Zen is divisible • At one extreme there is enlightenment or satori or kensho. In this, you feel at one with everything all the time. This is hard to understand.

• But it is easy to understandn short experiences of feeling totally satisfied with, say, chopping an onion. • A fully “awakened” individual has this experience more often than others, possibly life is like that all the time for her. But they are the same experiences, it seems to me. Zen is divisible At the other end of the spectrum is something recently christened “micro mindfulness”. You can do a moment’s zazen, once you have trained yourself to do it. n

In between are all possible levels of Zen oneness. You can have a little, or a lot.

Equilibrium Zen: The Middle Way

With both consumption and zen Buddhism subject to diminishing or at least not increasing returns, we can apply the standard marginal analysis: an individual behaves as if he equated the marginal benefitsn of zazen or koan study or other zen –related activity to its marginal costs in terms of consumption foregone

• Zen Buddhism is very time intensive. Time is fixed. But income is variable. So as income

and consumption rise, MUZB/MUC necessarily increases and consumption is less and less satisfying relative to ZB

• The accumulation of goods also makes it difficult to be one with what you have…

So Adam Smith and the Buddha agree

4. You can’t buy nirvana Optimal Zen Will people choose the right amount of zen from the social point of view?

Does the choice of zen result in externalities?

5. Economics and Buddhist management • Japanese firms were the first to adopt ideas originated by the American Edward Deming with the adoption of practises like quality circles, zero defects, • Buddhist-like behavior within organizations eg iron discipline, attention to quality, can raise productivity. • Promotion of identification with the firm can raise productivity (Akerlof and Kranton model this: the firm can internalize these externalities)

6 Externalities of religious Zen groups on the rest of society

Should be POSITIVE for environment (though there is nothing great about the Japanese record, Bhutan may be better, or not) n7 But NEGATIVE for war (because of discipline) Record of Buddhist groups during WW2 not good, see Brian Victoria, Zen at War.

It depends on what you kensho….

But everything is interdependent!

When the nun Chiyono studied Zen under Bukko of Engaku she was unable to attain the fruits of meditation for a long time. At last one moonlit night she was carrying water in an old pail bound with bamboo. The bamboo broke n7 and the bottom fell out of the pail, and at that moment Chiyono was set free!

7. Coase and Interdependence

• Why did she attain enlightenment? Because she realized the interdependence of everything.

• Just like Coase: A railroadn7 emits sparks onto a neighbouring farm: Who should be liable?

Answer: There is no causation: Everything is interdependent.

• So why not subsidize the environment directly?

Should trees have standing? Should pit bulls have representation? • Coase theorem only works if all parties have property rights. • Could the idea that “trees should have standing” be a completion of Coase? • What about dogs? Kno, the dog attacked a 5 year old child, the Georgia Supreme Court appointed a lawyer for him • As long as the environment itself has no independent value (ie apart from its value to humans) it will continue to be destroyed. Conclusion • There is a logic to Zen Buddhism. It is different from Economic logic, and different from ordinary logic. It is the logic of nonduality, of seeing the one in the many and the many in the one. • A person can acquire this ability, just as one can acquire the ability to use economic logic • Applied to oneself, this is the ability to lose yourself. The moment you gain that capacity is the moment of (initial) enlightenment.

Summary of Propositions • 1. Zen can be rational: To lose yourself is better than to gratify yourself • 2. In Zen, you focus on the present but not on consumption. These two things are the same in economics but not in Buddhism. • 3. Too much inequality is bad for the rich as well as the poor • 4. You can’t buy nirvana

• 5. The middle way--- zen is divisible, there is no final enlightenment, there is an equilibrium level of Zen • 6. Education and mindfulness (instead of ritalin for ADD) should be subsidized, but not Buddhism • 7. Optimal Zen 1: Buddhist-like behavior within organizations eg iron discipline, attention to quality, identification with the firm can raise productivity. • 8. Optimal Zen 2 Coase: Everything is interdependent. You can subsidize the environment instead of Buddhism. BUT maybe Trees and Pit Bulls should have rights

THE END