The Dialogical Space Between Buddhism and Economics

The Meaning of Sufficiency Economy International Conference 16-17 February 2012 Plaza Athénée Bangkok, A Royal Méridien Hotel, Wireless Rd., Bangkok The Meaning of Sufficiency Economy International Conference Copyright © 2011 by King Prajadhipok’s Institute Number of copies: 300 Publisher: King Prajadhipok’s Institute The Government Complex 5th Fl., Ratthaprasasanabhakti Bldg. (Southern Zone) 120 Moo 3, Chaengwattana Rd., Laksi, Bangkok, Thailand 10210 Tel: 02-141-9550, 02-141-9558 Fax: 0-2143-8174 http://www.kpi.ac.th Printer: Charansanitwong Printing Co.,ltd. 285-292 M.4 Petchakasem Rd., Laksong, Bangkae, Bangkok 10160 Tel. 02-809-2281-3 Fax : 02-809-2284 All right reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of the publisher. The Meaning of Sufficiency Economy International Conference Table of Contents The Meaning of Sufficiency Economy International Conference IV Sufficiency Economy : View Point and Experiences from Thailand 1 Grou 1: Sufficiency Economy and Mainstream Economic Theory 23 Sufficiency Economy and the Economics of Enough Why alternative approaches to development are needed and how sufficiency economy can contribute? The place of Sufficiency Economy within a unified theory of social betterment Modern Mainstream Economic Science: a Science without Gratuitousness. The case of the Economy of Communion Sufficiency Economy and Gross National Happiness: Integrated Value for Sustainable Development Non-monotonic Utility Functions for Microeconomic Analysis of Sufficiency Econom Sufficiency Economy: A Pathway to Sustainable Development Grou 2: Sufficiency Economy and Grassroots Development Grassroots Development and Sufficiency Economy Strengthening Sufficiency: Interdependent Selves within Community Economies The Thai social capital of the people in Inpaeng network, Sakonnakhon Thailand The Village Economy: Capitalist AND Sufficiency-based – A Northeastern Thai Case Bunniyom Buddhist Economics Of The Asoke Group An Exploratory Research Study on the Economics of Deploying Integrated Local Alternative Energy Solutions as a Sufficiency Economy Concept of Sustainable Development at Community Grassroots Level Impact Of Micro Credit On Women Empowerment – A Study In Mysore District, India “Tha Kham”: Tambon Administration Organization of Learning toward Self Sufficiency Economy Model Sufficiency Economy Practices in Hill Area of India: Case of Uttarakhand Grou 3: Sufficiency Economy, Business and Ethics The Dialogical Space between Buddhism and Economics Arguments for peer production in the context of sustainability and neotraditional self-sufficiency. 25 43 55 85 111 135 145 155 157 177 191 213 231 245 277 301 315 331 333 393 III IV The Meaning of Sufficiency Economy International Conference Table of Contents Bangko Kabayan: an experience of an Economy of 407 Communion Enterprise Corporate Fraud in Thailand 417 The Sufficiency Economy and Business Ethics 435 Economy of Communion as a Model of Entrepreneurship in East Asia 449 Sufficiency Economy Practices in Business: 457 Enlightening the Ways through the Hindu Philosophy Sustainable Development for Common Man: 469 Case of Indian Companies Grou 4: Sufficiency Economy, Education, Values and Alternatives to Globalization 485 Creating sustainable economic systems – 487 contributions from the Buddhist world view Inherited Values and Sufficient Economy 501 Self-reliance and Self-sufficiency: 531 nationalist reaction to globalist imposition Autocentric Development and Sufficiency Economy 545 Enoughness: Beyond Sufficiency Economy 571 A Self-Sufficient Economy Attract more Foreign Direct 587 Investment Inflows: A Case Study of Indian Economy Alternatives to Globalization : Sufficiency Economy 607 Sufficiency Economy; Understanding and Value of the Philosophy 619 Biographical Information 631 The Meaning of Sufficiency Economy International Conference The Meaning of Sufficiency Economy International Conference 18-19 October 2011 Royal Orchid Sheraton Hotel, Bangkok Thailand 1. Introduction On the Celebrations on the Auspicious Occasion of His Majesty the King’s 7th Cycle Birthday Anniversary, 5th December 2011, Thailand’s leading institutions (the National Assembly, King Prajadhipok’s Institute, Thammasat University, Office of the National Economic and Social Development Board, Thailand Development Research Institute, Research and Development Institute of Sufficiency Economy Philosophy Foundation, and the Pridi Bhanomyong Institute) have joined together to hold an international conference on sufficiency economy, titled “The Meaning of Sufficiency Economy: Theory and Practice in Society, Economy and Business”, to take place on 18-19 October 2011 at Royal Orchid Sheraton Hotel, Bangkok Thailand. 2. Rationale Since HM the King introduced the idea of ‘sufficiency economy’ in his birthday address in December 1997, the idea has gained currency among Thailand’s political institutions, academics, and the wider public. The rapid circulation of sufficiency economy owed much to the experiences and disillusionment during the unfolding Asian economic crisis in the same year. However, the meaning of the philosophy remained unclear to many for years following the speech. Its features gradually took shape after the adoption of sufficiency economy as Thailand’s national development paradigm. The UNDP Report on Thailand in 2007 aimed to outline the concept more clearly by citing the application of the philosophy in various societal sectors, namely the grassroots level, business, and the national economy. Sufficiency economy, taking form through the contributions of various institutions and academics, has seen a wide range of interpretations of its aim and origins, as well as different views about its application. Today there is widespread agreement that sufficiency economy is meant as a development alternative based on an attitude towards life that encompasses three components: moderation, reasonableness, and self-immunity. Questions however remain, such as: What makes sufficiency economy different from other development alternatives, notably those that stress sustainability and empowerment of communities? Is it applicable by all the actors as are cited in the UNDP Report? To what extent can it be incorporated in a country firmly integrated in the globalized economy?  VI The Meaning of Sufficiency Economy International Conference The conference aims to explore the state of research and practice of the sufficiency philosophy on various levels. Moreover, as initiatives such as the “Commission on the Measurement of Economic Performance and Social Progress” (since 2008) by the French government show, there is increasing awareness globally about a need for development indicators beyond GDP and about development goals beyond economic development. Thus, in order to further define the meaning of the sufficiency economy concept the conference encourages academics and development actors from relevant theoretical backgrounds to share their experiences and express their views on sufficiency economy. This will bring together different views and “sharpen the edges” of sufficiency economy vis-?-vis similar approaches. 3. Venue The international conference on Sufficiency Economy will be held Plaza Athénée Bangkok, A Royal Méridien Hotel, Wireless Rd., Bangkok, on 16-17 February 2012. 4. Working Language The working language of the meeting is English. Interpretation into Thai will be provided only in plenary session. 5. Organized By • The National Assembly • King Prajadhipok’s Institute • Thammasat University • Office of the National Economic and Social Development Board • Thailand Development Research Institute • Research and Development Institute of Sufficiency Economy Philosophy Foundation • Pridi Bhanomyong Institute 6. Keynote Speakers: Dr.Supachai Panitchpakdi The Secretary-General of UNCTAD (United Nations Conference on Trade and Development) The Meaning of Sufficiency Economy International Conference 7. Conference Subthemes: Group 1: Sufficiency Economy and Mainstream Economic Theory Sufficiency Economy and Sustainable Development The Economics of Enough – A Viable Alternative? Happiness and Alternative Development Indicators Panelists: Dr. Peter Warr from Australian National University Dr. Peter H. Calkins from Chiangmai University Dr. Luigino Bruni from University of Milan-Bicocca, Italy Dr. Sauwalak Kittiprapas from International Research Associates for Happy Societies (IRAH) Group 2: Sufficiency Economy and Grassroots Development Sufficiency Economy and Related Approaches on the Community Level Projects and Practices Bottom-up vs. Top-Down: The Question of Project Ownership Panelists: Dr. Charles Keyes from University of Washington Dr. Vandana Shiva, winner of the Right Livelihood Award Linda Nowakowski from Ubon Ratchathani University Juliana Essen from Soka University of America Dr. Sutee Suksudaj from Thammasat University Dr. Adis Israngkura from National Institute of Development Administration (NIDA) Dr. Marja-Leena Heikkila-Horn from Mahidol University Group 3: Sufficiency Economy, Business and Ethics Sufficiency Economy: Beyond Corporate Social Responsibility? Entrepreneurship, Business Ethics, and Religion Panelists: Dr.David Bubna-Litic from University of Technology, Sydney Michel Bauwens from P2P Foundation Teresa M. Ganzon from Bangko Kabayan Dr. Oranuch Pruetipibultham from National Institute of Development Administration (NIDA) Dr. Deunden Nikomborirak from Thailand Development Research Institute (TDRI) VII VIII The Meaning of Sufficiency Economy International Conference Group 4: Sufficiency Economy, Education, Values and Alternatives to Globalization Buddhist Economics Developing Self-Immunity: Deglobalization and Delinking (National Autonomous Development), and Community Economies Panelists: Dr. Donald K. Swearer from Harvard Divinity School Dr. Wolfgang Hein from The GIGA German Institute of Global and Area Studies Dr. Peter Daniels from Griffith University, Australia The Meaning of Sufficiency Economy International Conference The Meaning of Sufficiency Economy International Conference 16-17 February 2012 Plaza Athénée Bangkok, A Royal Méridien Hotel, Wireless Rd., Bangkok Schedule February 16, 2012 08.30 – 09.00 Registration 09.00 – 09.15 Gen. Teeradej Meepien President of the Senate presides over opening ceremony 09.15 – 10.00 Opening Keynote address on “Sufficiency Economy and the Direction of Sustainable Development” by Dr. Supachai Panitchpakdi Secretary-General of UNCTAD (United Nations Conference on Trade and Development) 10.00 – 10.20 Coffee Break 10.20 – 12.30 Plenary Discussion on “Sufficiency Economy: Thailand’s Point of View and Experience” by Mr. Prayong Ronnarong Ramon Magsaysay Award laureate 2004 Prof. Dr. Apichai Puntasen Economist and Director of Rural and Social Management Institute M.L. Jirapan Davivongs Deputy Secretary-General of the Royal Development Projects Board Dr. Songkiert Tansamrit Secretary – General of the Sustainable Energy Foundation Moderator: Ms. Suwanee Khamman Deputy Secretary General of the National Economic and Social Development Board 12.30 – 13.30 Lunch Break IX  The Meaning of Sufficiency Economy International Conference 13.30 – 17.00 Group Discussion Group 1. Sufficiency Economy and Mainstream Economic Theory Chair: Dr. Peter Warr Australian National University Panelists: Dr. Sauwalak Kittiprapas International Research Associates for Happy Societies (IRAH) Group 2. Sufficiency Economy and Grassroots Development Chair: Juliana Essen Soka University of America Panelists: Linda Nowakowski Ubon Ratchathani University Dr. Sutee Suksudaj Thammasat University Dr. Adis Israngkura Thailand Development Research Institute February 17, 2012 08.45 – 09.00 Registration 09.00 – 12.00 Group Discussion Group 3. Sufficiency Economy and Business Ethics Chair: Dr. David Bubna-Litic University of Technology, Sydney Panelists: Michel Bauwens P2P Foundation Teresa M. Ganzon Bangko Kabayan Dr. Oranuch Pruetipibultham National Institute of Development Administration (NIDA) Dr. Deunden Nikomborirak Thailand Development Research Institute (TDRI) The Meaning of Sufficiency Economy International Conference Group 4. Sufficiency Economy, Education, Values and Alternatives to Globalization Chair: Dr. Peter Daniels* Griffith University, Australia Panelists: Dr. János Mátè University of West Hungary Dr. Issa G. Shivji University of Dar es Salaam Tanzania 12.00 – 13.00 Lunch Break 13.00 – 15.00 Plenary Session: Discussion of group discussion results Group 1 Dr. Peter Warr Australian National University Group 2 Juliana Essen Soka University of America Group 3 Dr. David Bubna-Litic University of Technology, Sydney Group 4 Dr. Peter Daniels* Griffith University, Australia Moderator: Dr.Seri Phongphit 15.00 – 15.15 Closing address By Prof. Dr. Somkit Lertpaithoon Rector Thammasat University * To be confirmed The Meaning of Sufficiency Economy International Conference XI Sufficiency Economy : View Point and Experiences from Thailand Professor Dr.Apichai Puntasen Director Rural And Social Management Institute (RASMI) Foundation for Thailand Rural Reconstruction Movement Under Royal Patronage (TRRM) The Meaning of Sufficiency Economy International Conference Sufficiency Economy : View Point and Experiences from Thailand By Professor Dr.Apichai Puntasen Director Rural And Social Management Institute (RASMI) Foundation for Thailand Rural Reconstruction Movement Under Royal Patronage (TRRM) 16 February 2012 To be presented 1. Introduction 2. The Real Culprit is Business Politics. 3. Some Bright Spots along the Path of Sufficiency Economy Movement. 4. Some Other Areas of Advancement 5. What should be done next 6. Conclusion   The Meaning of Sufficiency Economy International Conference Introduction Sufficiency Economy has been used as the guiding principle of King Bhumibol Aduyadej in conducting his own life from the beginning of his reign as well as all his own works. He introduce this concept to the public for the first time on July 18, 1974 from his speech granted to students of Kasetsart University. Introduction “National development must be carried out step by step, starting with laying the foundation to ensure that the majority of people have enough to live on and live for as a basic step, using economically yet theoretically sound methods and equipments. When the bases are securely established, higher levels of economic growth and development should be promoted.” The Meaning of Sufficiency Economy International Conference Introduction The keywords related to Sufficiency Economy in this speech are step-by-step, people have enough to life on and life for. The approach in doing thing should be economically yet theoretically sound. The key meaning to this speech is for us to do anything that must be done through step-by-step, selecting the method that is economically yet theoretically sound. The end result is for everyone to have enough to live on and live for. Introduction Twenty one years passed after this speech, in 1995 during the middle of the period of rapid growth of the economy (1987-1996), the King was not much impressed by such economic performance. He came out and warned the Thai people to be cautious about the so called economic growth.   The Meaning of Sufficiency Economy International Conference Introduction “What others may say does not matter, whether they say that Thailand is old fashioned or that we are outdated. Anyhow, we have enough to live on and to live for, and this should be the wish and determination of all of us to see sufficiency in this country. It is not that we will attain supreme prosperity, but we will have a sustainable and peaceful country” From the Royal speech on Monday, December 4, 1995 Introduction The above Royal Speech quoted, has clearly indicated that the King wished Thailand to be developed along the path of Sufficiency Economy rather than that of the growth oriented. The Meaning of Sufficiency Economy International Conference Introduction After the major economic crisis in Thailand officially acknowledged by the government announcement of the managed float of the Thai currency on July 2, 1997, the King’s speech on December 4, 1997 was heard loudly and cleanly. Yet, the progress towards this direction of national development is not up to the King’s anticipation. The Real Culprit is Business Politics The growth oriented development for more than four decades in Thailand together with the force of globalization propelled by capitalism has made the situation to be very difficult if not impossible for Thailand to be deviated from such growth oriented trend. Thailand increasingly depends more on export growth led. The rate of openness of the country has been in the direction of increasing all the time. The openness of the Thai economy is currently ranked the fifth in the word. This had made the country vulnerable to any major economic crises from outside. The example was the sub-prime crisis in the U.S. in 2008 and 2009 and still continues presently as well as the looming crisis in EU recently.   The Meaning of Sufficiency Economy International Conference The Real Culprit is Business Politics Supporting factor to the country’s development in this direction is of course, business politics. Although business politics is not unique phenomenon for Thailand, the fact that it thrives on income and knowledge gaps among the Thai people has made it the worse kind. On the surface most governments in Thailand after 1997, would announce that they would adopt Sufficiency Economy as their overriding policies. In actual practices such announcements were used more as lip service or a camouflage to show that they too are willing to follow the King’s advice. The Real Culprit is Business Politics In fact business politics is the major obstacle to the national development in the direction of Sufficiency Economy. In turn, business politics has a strong support from those who conduct “business as usual” namely, the businesses that try to make a big and quick gain as much as possible in a short period of time and business politics is one of the means for achieving that devious objective. On the other hand, local politics also serve as a scaffold for the national politics. As a result, government officials who must carry out the policies dictated by the government, must perform accordingly. The Meaning of Sufficiency Economy International Conference The Real Culprit is Business Politics In my previous studies those who are very slow or even being obstacle to the national development in the direction of Sufficiency Economy are national government, local government and government agencies in the said order. They are the ones that are needed to be improved, if the national development direction should be on the path of Sufficiency Economy. Some Bright Spots along the Path of Sufficiency Economy Movement While “business as usual” is behind business politics, progressive businesses actually follow the Sufficiency Economy path. Their motivation has derived from their own good practical experiences conducted during the 1997 economic crisis. The other group that performs equally well is the so called “civil society”. This group ranges from an individual, individual farmer, various community groups, people organizations as well as the whole community up to a sub-district level and networks of communities.  10 The Meaning of Sufficiency Economy International Conference Some Bright Spots along the Path of Sufficiency Economy Movement Both groups used to share a common experience in having their hard time in the past. For business organizations, it started from the fact that they suffered from the severe loss resulting from the 1997 economic crisis in Thailand. Those who survived the crisis were the ones who did not try to use higher proportion of investment fund from external sources more than their ability to manage within acceptable safety margin. Those who had mismanaged, tried very hard to keep their employees with them, during the most difficult time as well as being honest to all stake-holders. As the crisis began to subside, these companies rebounded very quickly, because with their skilled and loyal employees, they are ready for increasing orders afterward. Some Bright Spots along the Path of Sufficiency Economy Movement There are three levels of classification for a business that practices Sufficiency Economy, and one that is considered for not practicing it. This one is called “business as usual”. They are the ones who support business politics discussed before. The Meaning of Sufficiency Economy International Conference Some Bright Spots along the Path of Sufficiency Economy Movement The first level of the practice of Sufficiency Economy is known as ‘partial’ practice. At this level, profit is still important but the business aims more at a long-term profit. It only takes a moderate risk and avoids to cause environment and social problems. Some Bright Spots along the Path of Sufficiency Economy Movement The second level is known as ‘comprehension’. The business must already passed the first level of partial practice. What it is aiming in addition is for a happy workplace rather than profit. Fortunately, by doing so the business usually gains more profit as well. 11 12 The Meaning of Sufficiency Economy International Conference Some Bright Spots along the Path of Sufficiency Economy Movement At this level of “comprehension”, the business will take extra care of their employees by providing them with both trainings of production skills and life skills. The business also treats their employees more as its extended family. This way the business that usually has a niche market for its products especially the niche that has been created by product quality, and the customers also prefer quality and do not mind to pay more, this business usually fares well, even though it pay its employees more than the average. The reason is because the marginal productivity of its employees is still higher than the pay that these employees receive, and all of them work happily for that business. Some Bright Spots along the Path of Sufficiency Economy Movement At the top level of this category is known as “inspiration”. The business must pass through the two levels before. At this level the goal of the business apart from being a happy organization, its main aims is to attain happiness from being more useful to the public and the society. At this level profit is neither the goal nor a by-product, instead the kind of happiness that the business has received, is from giving or being useful for the public and the society. Profit is only something to keep business going. At this level a business has turned into what so called “social enterprise”. The Meaning of Sufficiency Economy International Conference Some Bright Spots along the Path of Sufficiency Economy Movement In Thailand quite a few business of various sizes, small, medium and large are practicing Sufficiency Economy at this level. In the near future there will be additional standard and more popular standard for business practice in Thailand that is the Sufficiency Economy Business Standard (SEBS). This fact demonstrates how far Sufficiency Economy has been practiced among business enterprises in Thailand and will be more in the near future. Some Bright Spots along the Path of Sufficiency Economy Movement As for the civil society, especially among the farmers with small holding of farm land. Most of them who practice mono-culture and depend fully on the external markets for their survival, they all end up in debt and finally lose their farm lands and turn to be tenant farmers. According to the principle of Sufficiency Economy applied to a farmer, the farmer must not depend on external market that is beyond his control. He should aim to produce everything needed to support his own family. After then, individual farmers should organize themselves into a cooperative to sell their surplus produce directly to external markets. 13 14 The Meaning of Sufficiency Economy International Conference Some Bright Spots along the Path of Sufficiency Economy Movement Better still, if they can process their surplus produce, these processed products will generate more employment and they can earn more income as well as having more bargaining power because the shelf-life of the products will be longer, as well as the farmers themselves have no problem with their daily living, as it has been already taken care of by his own produce. After the cooperatives are getting stronger, they may start to bargain and work with big businesses and/or financial institutions to export their processed products directly overseas. Some Bright Spots along the Path of Sufficiency Economy Movement There have been various cases of success stories of this nature appearing in various places all over Thailand. In some case, it is for a few individual farmers that are successful. In other cases, it can be the whole community at a village level. There are also few successful cases for the whole sub-district at a sub-district level. So far, most of them have not progressed to the third level as to export to overseas directly yet. However, many of them are working with medium size businesses that export their processed products. The Meaning of Sufficiency Economy International Conference Some Bright Spots along the Path of Sufficiency Economy Movement The successful business and civil society cases are now spreading on its own momentum, because the practice of Sufficiency Economy actually serves their needs real well. The major obstacle to this movement is national politics that has been influenced by business politics which is in turned influence by structural greed globally. This business politics is supported by businesses who support the “business as usual” model, as well as local politics that serves as scaffold to corrupted national politics. Local politics also serves as the hindrance to Sufficiency Economy movement in the rural area. Some Other Areas of Advancement Since 1999, the Crown Property Bureau is one of the organizations who has been actively promote the movement of Sufficiency Economy. One of the areas that its has been associated with apart from that of the Office of National Economic and Social Development Board who has been directly involved with the National Development Planning, is in the area of education. At a higher education level, the prominent member of this Bureau has an association in personal capacity with the National Institute for Development Administration (NIDA) which is a graduate institute providing education at post graduate level. 15 16 The Meaning of Sufficiency Economy International Conference Some Other Areas of Advancement At the same time, the United Nations Development Programme (UNDP) in its 2007 issue on “Sufficiency Economy and Human Development” has helped propagating this concept further at the international level, followed by many books and papers in English from the web-site of the Bureau of the Crown Property. Some Other Areas of Advancement The most effective area in supporting the Sufficiency Economy movement is education at a basic level. In 2007 the Ministry of Education with the strong support from the Crown Property Bureau began to promote schools at basic education level, vocational and technical colleges and centers for non-formal education to develop their curriculum based on Sufficiency Economy to generate understanding of the concept as well as its practical aspects to teachers and students involved. Up to date (09/9/2011), there have been altogether 1,092 schools, 72 colleges and 70 centers participating this programme. This movement serves as a solid foundation for further progress in this direction in the future. The Meaning of Sufficiency Economy International Conference Some Other Areas of Advancement There is an attempt for a movement of Sufficiency Economy among Buddhist monks in the Northeast led by a group of monks at Mahachulalongkornrajawithyalai University of Ubon Ratchathani Province Campus. Thailand Research Fund, has created the research platform on Sufficiency Economy since 2004 and has produced invaluable research works. Unfortunately, this platform will be terminated at the end of March this year. Some Other Areas of Advancement The National Research Council has adopted Sufficiency Economy to be its top research agenda beginning from next year. Unfortunately, all these scattered attempts have not received adequate support from the Thai government because they either do not want to know or understand the concept clearly or lack of political will to implement it or both. 17 18 The Meaning of Sufficiency Economy International Conference Some Other Areas of Advancement Other education institutions that appears too slow to embrace this Sufficiency Economy concept in Thailand is higher education. There are various reasons for such outcome. Firstly, the kind of mainstream economics taught in all universities in Thailand cannot well accommodate Sufficiency Economy which goes much deeper in term of human spirituality. Secondly, as most top government officials in Thailand tends to follow the policy guidelines set by politicians, the Secretary General of the Office of Higher Education Commission has not yet put enough effort to encourage universities in Thailand to do more researches and to develop more curriculum based on Sufficiency Economy. What should be done next As explained above, the main obstacles against Sufficiency Economy Movement are in the following order, the national government as the result of business politics, the local government as the result of being a mutual sport of national politics, business as usual, government agencies, and higher education institutions. The Meaning of Sufficiency Economy International Conference What should be done next It is not easy to deal directly with the national politics that is thriving on knowledge and income gaps of the Thai people, under existing condition of globalization being dominated by capitalism. The roundabout way in dealing with this problem is to weaken its supporters. What should be done next As businesses organizations in Thailand are increasing attracted to the concept of Sufficiency Economy, the more the business organizations practice Sufficiency Economy, the less will be the business as usual type. At the same time more focus in improving local politics can be done through empowering more of various “civil society” groups, as well as trying to persuade more of the local government agencies to switch more to Sufficiency Economy practice. 19 20 The Meaning of Sufficiency Economy International Conference What should be done next As for government agencies and higher education institutions, there should be more researches on how to change from their existing practices toward more of the Sufficiency Economy in the future. Strategic research in this direction is needed if Thailand wishes to be developed along the Sufficiency Economy path in the future. Conclusion Actually, Sufficiency Economy is not only good for Thailand. Any global problems created by human greed can be dealt adequately with Sufficiency Economy. However, it should be cautioned that Sufficiency Economy has been developed from the cultural root based on most religious ethics. Countries that want to adopt this concept must be able to find their own cultural roots and develop the concepts that go with them. The Meaning of Sufficiency Economy International Conference Conclusion The names of the new concepts do not have to be Sufficiency Economy, as long as it can be used to fight the problems caused by human greed. This war is not only for Thailand to progress in the direction for the world with wellbeing and less utilization of resources at the same time. It is the war for survival with “good life” for all mankinds. Because the stake is very high in wining this war, it is a good reason to understand why we should all keep fighting to the end. Our arch enemy is, in fact, our own ignorance. 21 Group 1 Sufficiency Economy and Mainstream Economic Theory Group Sufficiency Economy and Mainstream Economic Theory Sufficiency Economy and the Economics of Enough Peter Warr Australian National University 1 The Meaning of Sufficiency Economy International Conference The Meaning of Sufficiency Economy International Conference Sufficiency Economy and the Economics of Enough* “To be a tiger is not important. The important thing for us is to have a sufficiency economy, which means to have enough to survive.” H.M. King Bhumipol Adulyadej, Abstract The ‘Sufficiency Economy’ philosophy has many components, but one is a direct application of Buddhist philosophy - an argument for the moderation of the Middle Way. Recent events in Thai history show the wisdom of this approach and the dangers of disregarding it. A review of these events also provides perspective on both the timing of H.M. King Bhumibol’s important speeches on the subject and their central message. This set of ideas is strongly supported by modern developments in the economics and psychology of happiness. Key words: Sufficiency economy; Buddhist philosophy; economic growth; happiness Introduction Since the 1970s, Thailand’s King, H.M. King Bhumipol Adulyadej, has delivered a number of highly influential speeches whose content has come to be known within Thailand as the ‘Sufficiency Economy’ philosophy. The ideas contained in His Majesty’s speeches have had a considerable impact within Thailand. Today, essentially all major institutions in the country claim to be adopting ‘Sufficiency Economy’ principles, although there are different views about what the principles mean and how they should be applied. * Helpful discussions with Chintana Sandilands of the Australian National University are gratefully acknowledged. The author is solely responsible for the views presented. Email address: Peter.Warr@anu.edu.au. 27 28 The Meaning of Sufficiency Economy International Conference The issues raised in His Majesty’s speeches on the Sufficiency Economy have broad applicability, and not just for Thailand. The purpose of this paper is to offer an ‘outsider’s’ understanding of some aspects of these concepts. The interpretation presented here is not comprehensive. There are several dimensions to the Sufficiency Economy debate, only some of which are addressed by this paper. There is also no suggestion here that the ideas offered in this paper are the correct way to understand the King’s thoughts. That would be presumptuous. It is hoped merely that the paper offers one way of understanding some aspects of the Sufficiency Economy discussion, which might be of interest for others in reaching their own understanding of these vital issues. The paper attempts this by looking at the Sufficiency Economy discussion in the following four ways: 1. Extracting key themes from Royal speeches on ‘Sufficiency Economy’ 2. Relating these concepts to Buddhist philosophy 3. Relating these concepts to economic events in Thailand 4. Relating these concepts to modern developments on the economics and psychology of ‘happiness’. The following four sections of the paper adopt each of these four perspectives in turn. The theme of this paper is that the essence of the Sufficiency Economy perspective reflects a basic human wisdom that is supported by fields seemingly as different as Buddhist philosophy, experimental psychology and modern economics. Moreover, it is a message that is relevant not only for Thailand, but for other countries as well and deserves to be studied more closely by Thais and non-Thais alike. 1. Key Themes from Royal Speeches on ‘Sufficiency Economy’ In early December of each year, H.M. King Bhumipol delivers a major speech on the occasion of his birthday. These speeches are reported widely in the Thai press and are studied carefully. Taxi drivers, school children and academics listen to the radio or television broadcasts of these speeches and reflect upon them. Most, but not all, of the speeches associated with the Sufficiency Economy concept first appeared in this format and were subsequently elaborated upon by the King in graduation addresses to students and in other forums. The King’s first major speech on the subject was apparently delivered in 1974, but the most important was his birthday address in December 1997. It will be important for my account that this speech was delivered just five months after the onset of the 1997 Asian financial crisis, which, as everyone knows, began with the collapse of the international value of the The Meaning of Sufficiency Economy International Conference Thai baht. In these speeches, five central themes can be discerned: the importance of establishing sensible, non-excessive, material goals; the importance of avoiding unnecessary risk in the pursuit of material aspirations; the desirability of attaining self-reliance; doing all this while still maintaining concern for the protection of others; and also not losing appropriate attention to the non-material aspects of life. I will provide below quotations from the King’s speeches and references to his other writings which illustrate each of these five themes. The relevance of these Sufficiency Economy themes can be understood at several levels. At the level of the individual, they provide guidance for a sensible approach to economic life. They provide also helpful guidance at the firm and community level. Finally, they are highly relevant at the national level for a country struggling to adjust to a rapidly changing global environment. a. Establishing sensible (non-excessive) material aspirations… “…Development of the nation must be carried out in stages, starting with the laying of the foundation by ensuring the majority of the people have their basic necessities through the use of economical means and equipment in accordance with theoretical principles. Once a reasonably firm foundation has been laid and in effect, higher levels of economic growth and development should be promoted…”. 18 July 1974 “…no matter what others say –whether they will accuse Thailand of being oldfashioned or obscurantist. So long as we have enough to live on and to live for – and this should be the wish and determination of all of us – without aiming for the apex of prosperity, we shall already be considered as the top in comparison with other countries in the present world…” 4 December 1974 A book entitled Mahajanaka, written by H.M. King Bhumipol, described the destructive effects of (a) greed and (b) ignorance or delusion. 1992 ‘To be a tiger is not important. The important thing for us is to have a sufficiency economy, which means to have enough to survive.’ 4 December 1997 ‘I may add that full sufficiency is impossible. If a family or even a village wants to employ a full sufficient economy, it would be like returning to the Stone Age… This sufficiency means to have enough to live on. If everyone has enough to live on, everything will be all right.’ 1998 29 30 The Meaning of Sufficiency Economy International Conference b. … while avoiding excessive risk… The King provided the ilustrative example of a diversified farm with thirty percent of land for a pond to collect water to be used for cultivation in the dry season, and to raise fish; thirty percent for rice cultivation sufficient for all year round home consumption; thirty percent for integrated field and garden crops, and fruits; and ten percent for housing and other activities such as livestock enclosures, mushroom nursery, and roads. 1994 c. …combined with self-reliance… ‘This sufficiency means to have enough to live on. Sufficiency means to lead a reasonably comfortable life, without excess, or overindulgence in luxury, but enough. Some things may seem to be extravagant, but if it brings happiness, it is permissible as long as it is within the means of the individual…’ ‘Some people translate ‘sufficiency’ from the English as: to stand on one’s own feet… This means standing on our own two legs planted on the ground, so we can remain without falling over, and without asking others to lend us their legs to stand on…’ 1998 D. …with concern for the protection of others… ‘Sufficiency Economy is a philosophy that stresses appropriate conduct and way of life while incorporating moderation, due consideration in all modes of conduct, and the need for sufficient protection from internal and external shocks. 21 November 1999 E. … and with attention to the non-material aspects of life ‘Progress is not just about planting enough rice to eat. There must be enough to create schools, even works of art, so that Thailand prospers in every way, with no hunger or poverty, food for body and soul, and many other things.’ and ‘The driving force for development has to come from within, based on accumulation of knowledge. In summary: Self-reliance. Moderation. Resilience. Inner dynamic. Knowledge.’ 2003 The Meaning of Sufficiency Economy International Conference 2. Relationship to Buddhist Philosophy Since H.M. King Bhumipol is a practicing Buddhist, and since Buddhist philosophy has a great deal to say about economic life, especially as it relates to the individual, it would be surprising if the King’s speeches on this subject were not influenced by Buddhist thinking. At the core of the Buddhist understanding of human suffering is the role of three poisons: - greed; - hatred; and - delusion. Greed arises from a distorted perception of the happiness that can be derived from greater material wealth. Hatred or anger arises when these distorted aspirations are unrealized or frustrated. All this is supported by a misconception about the nature of the self - as an isolated, independently and inherently existing entity which is the core of the Buddhist notion of delusion or ignorance. The presence of these three poisons leads to an endless vicious cycle of frustrated pursuit of happiness from material things – samsara. The antidotes to these poisons are the recognition of: - the unsatisfactoriness of purely material attainments, the impermanence of human life itself and the pleasures that material attainments can provide; and the illusory nature of our concept of the self, also referred to as emptiness. Together, these three antidotes lead to wisdom in one’s own life and compassion towards others. The close relationship between these concepts and the five themes of the Sufficiency Economy philosophy, as summarized above, is very clear. 3. Relationship to Economic Events in Thailand Thailand’s economic performance over the past four decades is summarized in Figure 1, showing the level of real GDP per capita in each year (vertical bars) and its growth rate (solid line) for the period 1968 to 2011. The figure distinguishes four periods of Thailand’s recent economic history, drawing on Warr (2005). These periods are as follows, with period average annual rates of growth of real GDP per person appearing in square brackets [.]. I – Pre-boom: 1968 to 1986 [3.9 per cent per year]. II – Boom: 1987 to 1996 [8.0 per cent per year]. 31 32 The Meaning of Sufficiency Economy International Conference III – Crisis: 1997 to 1999 [-3.6 per cent per year]. IV – Recovery: 2000 to 2011 [4.32 per cent per year]. During period I, from 1968 to 1986, the average annual growth rate of Thailand’s real GNP was over 6 per cent, compared with an average of 2.4 per cent for low and middle-income countries (World Bank 1998). Then, over the decade 1987 to 1996 (period II) the Thai economy boomed, growing at 9.5 per cent per year in real terms. Over this decade, the Thai economy was the fastest growing in the world and this is when Thailand came to be called, in some quarters at least, Asia’s ‘fifth tiger’, following Singapore, Hong Kong, Korea and Taiwan. The stability of Thailand’s growth over the long period of economic expansion ending in 1996 was remarkable. Not a single year of negative growth of real output per head of population was experienced over the four decades from 1958 to 1996, a unique achievement among oil importing developing countries. Thailand’s performance was often described as an example others might emulate. Its principal economic institutions, including its central bank, the Bank of Thailand, were often cited as model examples of competent and stable management. The crisis of 1997-99 (period III) reversed these assessments. Domestically, the economy was in disarray: output and investment contracted; poverty incidence increased alarmingly; the exchange rate collapsed, following the decision to float the currency in July 1997; the financial system was largely bankrupt; the government was compelled to accept a humiliating IMF bailout package; and confidence in the country’s economic institutions, including the Bank of Thailand, was shattered. Internationally, Thailand was now characterized as the initiator of a ‘contagion effect’ in Asian financial markets, undermining economic and political stability and bringing economic hardship to millions of people, both in Thailand and its neighbours. The economic damage done by the crisis of 1997-99 and the hardship that resulted were both substantial. The crisis eroded some of the gains resulting from the economic growth achieved during the long period of economic expansion, but it did not erase them. At the low point of the crisis in 1998 the level of real GDP per capita was almost 14 per cent lower than it had been only two years earlier, in 1996. Nevertheless, because of the long period of sustained growth that had preceded the crisis, this reduced level of real GDP per person in 1998 was still higher than it had been only five years earlier, in 1993, three and a half times its level in 1968, and seven times its level in 1951. King Bhumibol’s December 1997 speech was delivered at a time when the magnitude of the economic devastation of the crisis was acutely apparent. His Majesty was pointing out that the causes of the crash were to be found in the economic boom that had gone before it. As the decade of boom progressed, the thinking of many Thai people had changed. They were led increasingly to take excessive risks in the pursuit of economic gain, thinking that the boom would The Meaning of Sufficiency Economy International Conference continue indefinitely. This took many forms, including: the willingness of previously conservative Thai banks to borrow short-term abroad in foreign currency in order to finance long-term lending domestically in Thai baht; speculative real estate investments by ordinary Thai people; and on the part of Thai farmers, excessive specialization in lucrative cash crops financed by borrowing, leading to high levels of indebtedness and for large numbers of these farmers, the eventual loss of their land. This behavioural pattern of excessive risk taking during periods of prolonged economic boom is not unique to Thailand. In the context of the United States, it was subsequently called ‘irrational exuberance’ by Alan Greenspan, then chairman of the US Federal Reserve (Shiller 2000). More recently, it has been recognized as an underlying cause of the global financial crisis, originating in the United States and Western Europe, and erupting in late 2008. Another way of describing ‘irrational exuberance’ is being captured by greed to an extent that sober judgment becomes clouded. According to my interpretation, in his pivotal speech of December 1997 King Bhumibol was explaining the economic events that had just occurred in Thailand, only months before, drawing upon the insights of Buddhist philosophy. His message pointed out that when we allow ourselves to be carried away by greed, good judgment vanishes and a fall is likely. This was not only a way of understanding what had just happened, but also suggested a way of avoiding such mistakes in the future. According to my understanding, the Sufficiency Economy message is not that economic growth is unnecessary, or that it is incapable of producing improvements in human welfare. The message is that excessive emphasis on this goal, to the exclusion of other important matters, including the prudent management of risk, can lead to suffering. In short, it is an argument for the Middle Way. 4. Relationship to Recent Developments in Economics and Psychology Economists and other social scientists have lately become interested in the determinants of human happiness, based largely on the analysis of large-scale surveys of self-rated happiness of individuals. Major contributions to this literature have included Easterlin (2004), Layard (2005) and Frey (2008). Two central empirical observations lie at the heart of this literature. The first observation is based on time series data for particular high income countries. In the richest countries, the only ones for which long time series of data are available, increases in average incomes per capita over fifty years have produced no discernable increases in average levels of reported happiness. 33 34 The Meaning of Sufficiency Economy International Conference The second observation is cross-sectional - based on looking across countries at a particular time. If countries are arranged by average income per capita in each country, then when we look across these countries at average levels of self-rated happiness, as income increases, self-rated happiness at first increases, then reaches a peak at an income per person of about US$20,000 to $30,000 – roughly half the income per person of the richest countries. Beyond this level of income, further increases in average income produce no further discernable increases in reported happiness. This second observation is illustrated in Figures 2 and 3, drawing on data from the World Values Survey. Figure 2 shows data on self-reported ‘Life satisfaction’, and Figure 3 shows self-reported ‘Happiness’. Unfortunately, Thailand is not one of the countries included in the World Values Survey data set available for this analysis. Each figure shows the author’s estimated regression equation, based on the data available for these countries. The estimated value of ‘Life Satisfaction’ and ‘Happiness’ that would be predicted for Thailand based on Thailand’s actual level of income per person and the estimated relationship for the countries for which data are available is shown by the square data point in each diagram. Thailand is included in the Roper Reports data set on self-reported happiness and the data are shown in Figure 4. It is notable that Thailand’s level average level of income is well below the $20,000 to $30,000 at which happiness levels taper off, and that its level of self-reported happiness is well above the regression line estimated from the data for all other countries. Thailand is seemingly a happier country than its level of income would suggest. There is every reason to expect that further increases in income could raise average levels of happiness, but at a diminishing rate. Two kinds of hypotheses have been offered to explain these empirical findings. First, individuals adapt psychologically to higher incomes, becoming accustomed to affluence, a phenomenon known as the ‘hedonic treadmill’. Second, at low incomes people spend on necessities, such as food, basic shelter, education for their children and medical care. At higher incomes, they spend increasingly on status goods or positional goods. The crucial point is that if all members of the society obtain these positional goods there is no net gain in ‘status’ for anyone and hence no net gain in average happiness. The analogy is that all ships in the harbour rise as the tide comes in, and their relative positions (read: status) remain the same. If one individual (or group) does gain in status, it is at the expense of reduced status for someone else. The central message is that beyond a certain level of income, economic growth fails to produce further increases in happiness. Indeed, among individuals who have met their basic needs, further improvements in happiness depend primarily on other matters, especially social factors such as family and community relations. If the pursuit of material gain distracts from proper attention to these matters it may actually reduce happiness. The Meaning of Sufficiency Economy International Conference Experimental data from the Harvard psychologist Daniel Gilbert provide further insights into these issues. Gilbert has studied what he calls ‘affective forecasting’. When individuals make decisions, they attempt to predict the happiness or unhappiness they will experience under alternative future states of the world. He finds that when we do this, we consistently make the same kinds of errors, again and again, a phenomenon he calls ‘impact bias’. When we imagine how we would feel under some favourable future state of the world, we over-estimate the degree of happiness we will experience from it. Conversely, when we imagine how we would feel under some unfavourable condition, we over-estimate the amount of suffering it would involve. The interpretation that Gilbert offers is that the mind eventually adjusts to whatever happens, favourable or unfavourable, so that the difference between the way we actually end up feeling in favourable or unfavourable circumstances is consistently less than we expect. But for some reason, when we are thinking about the future we do not recognise that the mind has this adaptive capacity, so we consistently make the same kinds of mistakes. In short, we are deluded. We consistently over-estimate the importance, in terms of the feelings of happiness that we will actually experience, of having good things happen and of avoiding bad things. The point is that our outlook on the future and our decisions about it are based on the way we think we will feel under this or that circumstance, not on the way we will actually feel. The result is that we are greedier to ensure that favourable external circumstances are experienced in the future than we should be and we are more fearful to avoid unfavourable external circumstances than we should be. The modern financial market, alternating between periods of excessive greed and excessive fear, is an illustration of this phenomenon in action. The essence of this psychological argument, reinterpreted in economic terms, is presented in Figure 5. The observed relationship between real income and happiness is represented by the solid line, labeled ‘actual’. This is the empirically observed relationship shown in Figures 2 to 4, above. Suppose we are initially at point , where income is and realized (actual) happiness is . When the possibility of higher future incomes (such as ) or lower future incomes (such as ) are imagined the prefrontal cortex of the brain forms an expectation of how this would feel. Decisions about actions that might be taken now are based on these expectations of the psychological consequences of alternative outcomes, rather than the actual consequences that will later be experienced, which are unknown at the time the decisions are taken. But these expectations suffer from a consistent bias – Gilbert’s impact bias. The difference between happiness that is actually experienced when good things happen (higher income in this case) and when bad things happen (lower income) is systematically exaggerated by our expectations-forming process. These expectations are represented by the dashed line in Figure 5, labeled ‘expected’. We think it is 35 36 The Meaning of Sufficiency Economy International Conference much more important to attain ‘good’ outcomes and to avoid ‘bad’ ones than turns out to be the case. What is the solution? Buddhist teaching offers an antidote to the delusion that lies at the heart of the impact bias – wisdom – and a means for acquiring it. The recognition of unsatisfactoriness, impermanence and the illusory nature of the self enables the individual to overcome impact bias and facilitates the development of compassion for oneself and for others. According to my understanding, the Sufficiency Economy philosophy should be understood in this light. 5. Conclusions: The Economics of the Middle Way This paper has argued that while the ‘Sufficiency Economy’ philosophy has many components, one component is a clear application of Buddhist philosophy. It is essentially an argument for the moderation of the Middle Way. Recent events in Thai history show the wisdom of this approach and the dangers of disregarding it. This set of ideas is strongly supported by modern developments in economics and psychology. A review of recent Thai history helps in understanding the timing and the content of H.M. King Bhumibol’s important speeches on the subject. In most countries, public policy has yet to catch up with these insights. The human value of economic growth in the rich countries is greatly over-estimated but in the poorest countries, it is vital. In middle income countries like Thailand, still well below the levels of income per person at which the gains in well-being from further increases in national income are exhausted, economic growth is capable of generating genuine improvements in happiness, but diminishing returns applies. Other things are also important and it is easy to over-estimate the benefits that will actually accrue from improvements in material circumstances. Wisdom is needed to keep these matters in proper perspective and this wisdom lies at the core of the Sufficiency Economy philosophy. The Meaning of Sufficiency Economy International Conference References Easterlin, Richard A. (2004). ‘The Economics of Happiness’, Daedalus vol. 133, no. 2, 26-33. Frey, Bruno S (2008). Happiness: A Revolution in Economics, MIT press, Cambridge, Mass. Gilbert, Daniel (2007). Stumbling on Happiness, Kindle Books, New York, NY. Layard, Richard (2006). Happiness: Lessons from a New Science, Penguin, Harmondsworth, Middlesex. National Economic and Social Development Board (2005). ‘Sufficiency Economy: An Introductory Note’, Bangkok. Roper Reports. Data available at: http://www.gfknop.com/customresearch-uk/ expertise/consumertrends/rrw/index.en.html Shiller, Robert J. (2000). Irrational Exuberance, Princeton University Press, Princeton, NJ. United Nations Development Program (2007). Thailand Human Development Report 2007: Sufficiency Economy and Human Development, UNDP, Bangkok. Warr, Peter (2005). ‘Boom, Bust and Beyond’, in Peter Warr (ed.) Thailand Beyond the Crisis, Routledge, London, 1-65. World Bank (1998). World Development Report, 1998, Oxford University Press, New York, NY. World Values Survey. Data available at: http://www.worldvaluessurvey.org/ 37 The Meaning of Sufficiency Economy International Conference Appendix Figure 1 Thailand: Real GDP per capita and its annual growth rate, 1968 to 2007 Figure 1 Thailand: Real GDP per capita and its annual growth rate, 1968 to 2007 Level of real GDP per person 140000 I 120000 II Growth rate of real GDP per person 20 III IV 15 2006 2004 2002 2000 1998 1996 1994 1992 1990 -15 1988 0 1986 -10 1984 20000 1982 -5 1980 0 40000 1978 60000 1976 5 1974 80000 1972 10 1970 100000 1968 38 Level of real GDP per capita at 2003 prices, baht, per year - LHS axis Growth rate of real GDP per capita at 2003 prices, per cent, per year - RHS axis Source: Author’s calculations, using data from National Economic and Social Development Source:Board, Author’s calculations, using data from National Economic and Social Development Board, Bangkok. Bangkok. 18 The Meaning of Sufficiency Economy International Conference Figure 2 Life Satisfaction andPerson Income Per Person Across Countries Figure 2 Life Satisfaction and Income Per Across Countries (World Values Survey) (World Values Survey) Life satisfaction, WVS (1 = Dissatisfied to 10 = Satisfied) Life Satisfaction = -0.9 + 0.8*ln(GDP) 7.7 6.7 THA 5.7 4.7 3.7 0 10000 20000 30000 40000 50000 60000 GDP per capita in US$ at PPP Source: Data from World Value Survey, available at: http://www.worldvaluessurvey.org/ Regression equation from author’s calculations using these data. Thailand data point (shown by square Source: Data from World Value Survey, available at: http://www.worldvaluessurvey.org/ symbol) estimated from the regression equation, not from actual data on life satisfaction for Thailand. Regression equation from author’s calculations using these data. Thailand data point (shown by square symbol) estimated from the regression equation, not from actual data on life satisfaction for Thailand. 19 39 The Meaning of Sufficiency Economy International Conference Figure 3 Self-reported Happiness and Income per Person Figure 3 Self-reported Happiness and Income per Across PersonCountries Across Countries (World Values Survey) (World Values Survey) Happiness = 2.3 + 0.08*ln(GDP) Happiness, WVS (1 = Not at all happy to 4 = Very happy) 40 3.5 3.3 3.1 THA 2.9 2.7 2.5 2.3 0 10000 20000 30000 40000 50000 60000 GDP per capita in US$ at PPP Source: Data from World Value Survey, available at: http://www.worldvaluessurvey.org/ Regression fromWorld author’s calculations theseat: data. Thailand data point (shown by square Source: equation Data from Value Survey, using available http://www.worldvaluessurvey.org/ symbol) estimated from the regression equation, not from actual data on happiness in Thailand. Regression equation from author’s calculations using these data. Thailand data point (shown by square symbol) estimated from the regression equation, not from actual data on happiness in Thailand. 20 The Meaning of Sufficiency Economy International Conference Figure Figure 4 Self-rated Happiness and Income Per Person AcrossAcross Countries 4 Self-rated Happiness and Income Per Person Countries (Roper Reports) (Roper Reports) Happiness, Roper reports (1 = Very unhappy to 4 = Very happy) Happiness = 0.68 + 0.24*ln(GDP) 3.5 3.3 AUS IND EGY THA MEX SAU 3.1 CAN GBR SWE USA BRA IDNVEN PHL ARG 2.9 CHN TUR 2.7 ZAF POL CZE HUN KOR ESP ITA FRA HKG DEU 2.5 0 10000 20000 30000 GDP per capita in US$ at PPP Source: Data from Roper Reports, available at: http://www.gfknop.com/customresearch-uk/expertise/consumertrends/rrw/index.en.html Regression from author’s calculations Source: equation Data from Roper Reports, availableusing at: these data. Thailand data point (shown by square symbol) is from actual data on happiness in Thailand. http://www.gfknop.com/customresearch-uk/expertise/consumertrends/rrw/index.en.html Regression equation from author’s calculations using these data. Thailand data point (shown by square symbol) is from actual data on happiness in Thailand. 21 41 42 The Meaning of Sufficiency Economy International Conference Figure 5 Actual and Expected Happiness: The Impact Bias Figure 5 Actual and Expected Happiness: The Impact Bias Group Sufficiency Economy and Mainstream Economic Theory 1 The Meaning of Sufficiency Economy International Conference Why Alternative Approaches to Development are Needed and How Sufficiency Economy can Contribute? Dr. Sauwalak Kittiprapas International Research Associates for Happy Societies (IRAH) Why Alternative Approaches to Development are Needed and How Sufficiency Economy can Contribute?1 The Meaning of Sufficiency Economy International Conference Why Alternative Approaches to Development are Needed and How Sufficiency Economy can Contribute?1 Based on objectives of the Conference sub-theme “Sufficiency Economy and Mainstream Economic Theory”, the paper will demonstrate how alternative humancentered economic approaches (i.e., Buddhist economics, happiness, and sufficiency economy) contribute values and attitudes in addition or contrary to mainstream economic assumptions about human nature, human motivations, and economic activity. The paper discusses the differences between mainstream economics and these alternative approaches as well as depicts how these alternative approaches can make sustainable development effective. 1) The differences between mainstream economics and alternative approaches. As weaknesses of mainstream economics on human assumptions and the limitation in GDP are well-known, there have been discussions on the need for alternative paradigms for development. Buddhist economics, sufficiency economy, and happiness economics have been discussed as alternatives. Obviously, there are main differences between the mainstream and these alternative economics in key values/ perspectives, assumptions, analysis, and development goals and results. Table 1 summarizes key differences between the two lines of thoughts. The paper prepared for the International Conference “The Meaning of Sufficiency Economy: Theory and Practice in Society, Economy and Business” , organized by King Prajadipok’s Institute and Thammasat University. Bangkok, February 16-17,2012. 1 45 46 The Meaning of Sufficiency Economy International Conference Table 1. The different perceptions and core values between alternative and mainstream economics Key differences Mainstream economics Happiness, Buddhist economics and sufficiency economy Utility component Neo-classic theory of utility excluded subjective aspects: feelings, happiness/ subjective wellbeing. Utilities based on choices of goods/ services. Happiness economics refer to utilitarianism (of Jeremy Bentham) that used to include happiness in the utility: “the greatest happiness principle”. Self vs non-self focus Self-interest, with the assumption that humans are rationale. Non-self (emptiness / impermanent in Buddhism). Reduce selfishness Development driven by Competition, specializations Cooperation\ compassion; moderation, diversification for immunization; integrated approach Development values Materials / economic prosperity: more consumption/ services and production Add values for spiritual wellbeing, ethic, goodness, giving, concerns about nature and subjective aspects. Wisdom or insight is essential Narrow VS broad meaning of happiness Higher consumption => higher utilities (used as happiness ), higher satisfaction of needs and happiness Happiness from lower to higher levels depends on materials, mind, and wisdom, respectively. Mind and intellectual development lead to real and sustainable happiness. Satisfaction is the state of mind. Key analytical factors Limit to only objective indicators and choices Open for subjective wellbeing determinants and processes Development Indicators/ Measurement Development measurement based mainly on economic indicator – GDP Development measurement should also be include happiness/ well-being or alternative indicators The Meaning of Sufficiency Economy International Conference Key differences Mainstream economics Happiness, Buddhist economics and sufficiency economy Perspectives Human well-being depends on material wealth. Broader perspectives of human well-being (not limited to material wealth), More limited to assumptions more holistic and balanced to explain human mind and development. Realize societal well-being. interdependence of humanhuman and human-nature, moral, self-immunization, peace of mind, etc. Goal Economic growth Results Can have social conflicts and Social benefits from peace unsustainable development and sustainable development State of mind happiness, livings in harmony between human beings and nature, social/global peace. The main differences in the above Table are utility concepts and assumptions of human behaviors that drive development, perspectives and values. All these lead to different analytical framework and indicators for the development and, consequently, different kinds of development goals and results. With the mainstream economics’ assumptions that utility derived by concrete choices of good and services and human being are rational for self-interest, individual lives can be happier by more getting consumption and production. Development has been driven by economic growth from competition and specialization. People have to complete to earn more and get more goods and more accumulation, etc. This led to different goals and development results from alternative approaches. Sufficiency economy, in contrast, focuses on balanced life with moderated life-style and consumption. For production, in stead of specialization for commercial purpose, the production diversity primarily aims for self-immunization, security for basic needs or social protection, and the recognition of relationship among various lives and nature. At social level, the society should live in harmony, empathy, compassion, generosity, and “middle way” life style. The sufficiency economy philosophy fits well with the Buddhist philosophy of avoiding greed, hatred, and ignorance, which can be cured by compassion, wisdom (pañña), and rec ognition of suffering. The sufficiency economy is in line with Buddhism that places the emphasis on knowledge or insight to know what is “appropriate” for happy living and development. Happiness (driven by wisdom or “panya”) is the ultimate goal of development under these approaches. In present conventional economic theory, happiness- which is subjective, has been ignored in the utility function and economic analysis. However, happiness 47 48 The Meaning of Sufficiency Economy International Conference economics with the emphasis in subjective well-being has recently gained more recognition. In fact, happiness was once included in the utility concept since classical economist, Jeremy Bentham (1748-1832) introduced utilitarianism principle “the greatest happiness of the greatest numbers”. This approach advocated that society should aim to maximize the total utility of individuals, aiming for the greatest happiness for the greatest number of people. In other words, government or the society should try to maximize net effect of happiness from activities. This principle was more developed by later economist such as John Stuart Mill who also considers happiness in quality perspectives (i.e., higher level of happiness from wisdom and morality). However, with the difficulty to quantify this subjective aspects, happiness later be excluded from the utility in neo-classical theory which presently depends only on bundles of tangible goods and services. Consequently, the idea of development depends mainly on economic growth. As development process has been under the objective framework, in which objective indicators, such as GDP per capita, GDP growth, and material consumption have been used as the sole indicators of how well a nation is performing. The development paradigm has ignored the importance of other subjective elements in human nature, social and environment2. As development mainly aims for growth driven by competition, possible tensions or conflicts as well as social and environment problems can happen in the development process. However, in the past several years, efforts have been made to develop indicators for measuring national well-being which will drive the development for a better direction and results. Subjective well-being is increasingly concerned at global, national, community, and human level. Human mind is more sophisticate than objective process, therefore, subjective well-being indicator is recommended to complement objective ones . Happiness indicator and alternative indicators are suggested. The essence of using these indicators is to cover the importance of noneconomic aspects such as spiritual well-being which are essential to human life and development. Buddhist economics as well as sufficiency economy place the emphasis on spiritual well-being with mind and wisdom as key factors for good living and development. In Buddhism, the highest level of happiness can be achieved only by wisdom or “pañña”. In this respect, sufficiency economy, Buddhist economic and happiness development approach have similar focus on wisdom or intellectual development. With these differences in attitudes and values, the above alternative approaches would not focus only on economic growth, but also the growing in happiness of individual and society - which can also lead to sustainable development. The following section will explain this argument. Extracted from Kittiprapas. S., et. al (2009). Happiness: New Paradigm, Measurement, and Policy Implications. The synthesis from the International Conference “Happiness and Public Policy”, July 2007, Bangkok. 2 The Meaning of Sufficiency Economy International Conference 2): How happiness in Buddhist perspective and sufficiency economy approach can support the world peace and effective sustainable development? The happiness (in Buddhist perspective) discussed here can also represent subjective well-being in sufficiency economy. In Buddhist’s happiness meaning, there are different levels of happiness: from the lowest to the highest level. Beyond the basic material need for happiness, higher levels of happiness are more subjective based on mind and wisdom development. Individual happiness can be developed into higher levels and more dynamic than what discussed in general Western happiness studies. Therefore, the happiness meaning in the following discussion includes the subjective essence in sufficiency economy that focus on moderation, contentment, and morality. The higher happiness level in Buddhism (or can be called sustainable happiness) can be generated through mind and wisdom development. Individuals can be developed towards higher level of happiness, which is less dependence on materials. Therefore, if this type of happiness can be practiced, less material would be required. Then, the more resources can be released to help others in needed or more resources can be saved. The whole society would benefit from this type of happiness. The givers are happier from giving, and those who suffer become happier from receiving helps. Resources can be allocated for appropriate uses and reduce exploitation and over-consumption3. To explain the above idea, I have tried to put together similar thoughts to be explained in an economic manner with clear pictures. The relationship of happiness to material, or represented by income level, has long been a subject of discussion among thinkers, philosophers, academics/ researchers, and development practitioners. The diminishing return of happiness to income that economists have now come to realize indicates that, to maximize happiness, way of life based on sufficiency economy philosophy makes sense as excessive gain in materials may not necessary. Figure 1 and Figure 2 are examples4 to show that individual happiness and the feeling of contentment can lead to societal happiness and sustainable development; while excessive material accumulation including consumption and production may not bring in more happiness. The ideas are summarized from the Dhamma book by Phra Brahmagunabhorn (P.A. Payutto), “Perfect life” (in Thai), Wat Nyannavesakavan. 4 The pictures were illustrated by adaptation from the idea in the “Perfect life” Dhamma book. However, the author is responsible for any error or misinterpretation that might be occurred. 3 49 50 The Meaning of Sufficiency Economy International Conference Figure 1. The relationship between materials and happiness at different levels Figure 1. The relationship between materials and happiness at different levels Happiness H2*** H2 H2 * H2** H0 Hq H’’’ H1 H1 H’’ H’ M1 M0 M2 Material From the Figure, line H’H* is supposed to show the relationship between happiness and material levelsisfor ordinarytopersons. Therelationship relationship between shows that, at From the Figure, line H’H* supposed show the happiness the low level material,persons. the relationship between shows happiness is of and material levels forofordinary The relationship that,and at materials the low level positive with increasing return. However, moving to higher levels of materials, the material, the relationship between happiness and materials is positive with increasing return. relationship to happiness is still positive but with decreasing returns. Happiness line However,H’’H** movingis to higher levels of materials, the relationship to happiness is still positive supposed to represent those who require less material than ordinary but withperson decreasing returns. supposed represent those who to be happy. For Happiness happiness atline H0, H’’H** ordinary is person wouldto depend on material require less material to berequired happy. less For M happiness at H0, person at M0 (alongthan H’H*ordinary line), butperson those who to be happy (i.e,ordinary those who are self-reliant and contentment, Dhamma-oriented) would need only M1 (along would depend on material at M0 (alongorH’H* line), but those who required less M to be H’’H**) theare same happinessand levelcontentment, at H0. This makes their happiness line stays need happy (i.e, those for who self-reliant or Dhamma-oriented) would persons’ happiness line. Therefore, with the same level of happinessonly M1 above ( alongordinary H’’H**) for the same happiness level at H0. This makes their happiness line H0, this type of persons would need less M – leading to resource saving for M1 M0 stays above ordinary persons’ tohappiness Therefore, the same levellevel, of happinesswhich can be released give awayline. for others. Withwith happiness at mind they H0, this type of persons would need less M – leading to resource saving for M1 M0 would be happy from giving or helping people, and those needy who received helpswhich can be released to from give away for others. With happinessTherefore, at mind level, they would beishappy are happy the remedy or less deprivation. the whole society happier this people, kind of happiness human behavior, addition to the from giving or from helping and thosedevelopment needy whoand received helps areinhappy from lessless utilization of natural resources. individuals’ happiness remedy or deprivation. Therefore, theWith whole society ishigher happier from in thismind kind of from giving and helping others, individuals’ happiness line then lift upward to happiness development and human behavior, in addition to less utilization of natural H’’’H***– that represent the happier level to H2 level (with materials only at M1). resources. With individuals’ higher in mind this from givingin social and helping others, If this happiness line also reflecthappiness societal happiness, increase happiness individuals’ happiness thenuse liftofupward to (H1 H’’’H***– that represent the happier level benefits from line the less resource H0) and from giving (H0H2), and, as a to H2 level result, (with materials onlybeatsaved M1). for If this happiness line also reflect societal happiness, resource can M1M2 or resources abundance for M1M2 can be this distributedbenefits to others. If the hasresource ability to(H1 produce increase released in socialorhappiness from theindividual less use of H0) M2, and then fromhegiving can donate or benefit others for M1M2, leading to social benefit and upward (H0H2), and, as a result, resource can be saved for M1M2 or resources abundance social for M1M2 happiness line. The development for higher and higher level of happiness which The Meaning of Sufficiency Economy International Conference happens inside oneself can lead to less and less material dependence and, consequently, social benefits continue to rise. The society would gain positive effects from this type of sustainable happiness-led development, which is much more than basic/ physical development. This example shows how sufficiency economy concept can raise social happiness, as sufficiency economy related to this happiness at mind level. People, who live with moderation and feel contentment with what they have, would be less selfish and generous enough to share resources with other. As explained above, the whole society would become happier. In addition to Figure 1, there are more explanations in the case of excessive gains or uses of materials. For example, there are also some studies indicating that, over time, the continued higher income cannot lead to the rise in happiness, as evident in the case of US., Japan, and recent study of both developed and developing countries including transitional countries (Easterlin, 1974, Kusago, 2007, Clark et.al (2006), and Easterlin and Angelescu, 2009). Furthermore, some thought that the continued rising in income may lead to the drop in happiness, after the relationship of happiness to income reach the peak. I make a simply graph to represent the two ideas in the Figure 2. To represent the first group of thought, when material gain reaches a certain level (i.e. at Md), happiness would no longer increase. Then, after Hd, the happiness line will be parallel with M. For the second group of thought (i.e., from some thinkers/ writers, and monks), after the relationship of happiness to materials rise to the peak (i.e., Hd), happiness starts to decline. The happiness line after material level Md continues to decrease. The idea behind this is that too much materials beyond appropriate level can bring in suffering (i.e., cases of unhappy millionaires, happy living with moderation, etc.) that is in line with Buddhist teaching. However, both cases bring in the same conclusion that will be explained in the Figure 2. Figure 2.2.The relationship between happiness and materials (inmaterials case of excessive Figure The relationship between happiness and materials) (in case of excessive materials) Happiness Hd H2** H2** H2 H0 H3 H2 * H4 Hq H’’’ H1 H1 H’’ H’ M1 M0 M2 Md M3 M4 Material This picture demonstrates happiness after it reaches a large amount of material, such as Md, that it may have 2 types of slope from the two thoughts discussed above. From the picture, at the lower level of material gain, happiness can increase with the increased in materials. But when happiness reaches a peak (Md), the more materials cannot bring in more 51 52 The Meaning of Sufficiency Economy International Conference This picture demonstrates happiness after it reaches a large amount of material, such as Md, that it may have 2 types of slope from the two thoughts discussed above. From the picture, at the lower level of material gain, happiness can increase with the increased in materials. But when happiness reaches a peak (Md), the more materials cannot bring in more happiness. Suppose there is a possibility that there would be a negative slope of happiness and income relation (after Hd and Md), the over-consumption to level M3 can lead to happiness only at H2 level. That means that we have used unnecessary resources and over-consumption for M2M3 (for ordinary people) or M0M4 (for Dhamma-oriented or self-sufficient persons), which do not result in the increase in happiness. On the other hand, suppose the relationship between happiness and income is parallel instead of negative, this has not changed the main conclusion above; that is, when happiness to material reaches a peak, more materials cannot increase happiness but only over-exploitation of resources. They both show that sometimes we use unnecessary resources for a certain level of happiness. If the higher materials at some point cannot bring in more happiness, there may be a misleading in development direction that has resulted in over consumption and excessive natural resource exploitation The implication of both cases is that we have to be moderate and reasonable in consumption or material need, which is the sufficiency economy concept. The peak point, Hd, reflects the fact that we should know what level of material accumulation is “enough”, and at what level it can turn to be a burden or suffering. We should know: what is “appropriate” or optimal level; overconsumption and accumulation are not necessary; or the more we have, the more burdens we may face and lead to suffering. That is why people can be happy and feel contentment of what they have. This is sufficiency economy life style which people must have happiness in mind (beyond material level). Buddhist principle on the middle-way can explain that both two extreme points of having nothing and excessive material accumulation/ burden can bring in suffering in different ways. Thus, the middle path way of life is suggested. It also indicates that our previous development, driven by conventional approaches, have weaknesses in the over uses of natural resources, unbalanced and unsustainable development. Therefore, the development guided by this sustainable happiness approach or sufficiency economy concept offer a new way to a balanced and sustainable development for both individual and social levels. The Meaning of Sufficiency Economy International Conference 3) The contributions of these alternative approaches to add values to mainstream economics The higher level of happiness (towards mind and insight, with less material dependence) a human can achieve, the more resources can be allocated to help others - leading to compassion, cooperation, and sharing. The society will have less conflict than the idea of development by achieving higher materials with high competition. This is why the new approach can lead to a more peaceful society. This type of approach can also make sustainable development effective because with this higher level of happiness, the less resources people will use or exploited for themselves. Sufficiency economy concept, in line with Buddhist’s happiness concept, focuses on moderation, will not exploit or over-use of resources and that is why it supports sustainable development and social peace. Sufficiency economy, with the middle way of life, feeling of contentment, and peaceful mind, can lead to the development of life balance. Overall, sufficiency economy is more balanced development, covering not only economic development but also other elements in life necessary for a better living, higher quality of life, happiness, and sustainable development. In contrast to the conventional economics approach indicating that the more we consume, the higher utility (and happiness) we have, the sufficiency economy focuses on moderation and reasonableness with knowledge and morality. Therefore, sufficiency economy is not only economics, it’s about life. It’s a principle how to leave peacefully within society and nature. However, sufficiency economy or happiness development approach do not reject the importance of economic development which is also relevant and can alleviate poverty, inequality, and provide basic needs, but it advocates economic growth with caution, selfreliance ability, economic security, and wisdom (to know what is appropriate or balance). It also aims towards higher goals in life. It cultivates spiritual well-being to human and social development, or aim to achieve well-being at higher level. It lays a strong foundation for livings in harmony for personal and social development. Therefore, the development that guided by happiness and sufficiency economy would lead to a more sustainable goal and is a way to develop both human-being and the society as a whole. The introduction of Buddhist economics, that sufficiency economy philosophy is based on, and happiness economics into economics will make economics more human-nature concern with values for human happiness and social development. The sufficiency economy philosophy focuses on moderation, selfimmunization, and reasonableness, with morality and knowledge, are necessary factors for higher level of happiness of human/ societal development. These are missing values in mainstream economics. 53 54 The Meaning of Sufficiency Economy International Conference References Clark, A.E., P. Firjters, and M.A. Shields (2006), “Income and Happiness: Evidence, Explanations and Economic Implications,” Journal of Economic Literature. Easterlin, R. (1974), “Does Economic Growth Improve the Human Lot? Some Empirical Evidence”, in P.A. David and M.W.Reder (Eds.), Nations and Households in Economic Growth: Essays in Honour of Moses Abramowitz, New York and London: Academic Press. Easterlin, R. and Angelescu, L. (2009), “Happiness and Growth the World Over: Time Series Evidences on the Happiness-Income Paradox”, paper presented at the 9th ISQOLS conference, Florence, July 2009. Kusago, T. “Japan’s Development: what economic growth, human development and subjective well-being measures tell us about?,” paper presented at International Conference on Happiness and Public Policy, Bangkok, 18-19 July, 2007. Group Sufficiency Economy and Mainstream Economic Theory 1 The Meaning of Sufficiency Economy International Conference The Place of Sufficiency Economy within a Unified Theory of Social Betterment Peter Calkins Professor, Faculty of Economics, Chiang Mai University, Thailand; and Member, CREA, Laval University, Quebec, Canada. Pimpimon Kaewmanee Doctoral candidate, Faculty of Economics, Chiang Mai University, Thailand. The Meaning of Sufficiency Economy International Conference The Place of Sufficiency Economy within a Unified Theory of Social Betterment Abstract The true aim of applying any social philosophy should be to increase the tangible well-being and intangible happiness of the population. In today’s world, however, there is a tendency to pit one theory of economic development against another as if they were competitors, instead of emphasizing their complementarity within a unified theory of social betterment. The present paper suggests where the King of Thailand?s sufficiency economy philosophy could fit within such a unified theory. Although “knowledge” as an essential input to the achievement of sufficiency economy is well-covered by Hinduism, Judaism, and the mainstream theories of human capital and technical change; the King?s concept of “selfimmunization” brings insights into risk analysis and the theory of safety nets. While Plato, Aristotle, Hume, Smith, Keynes and the world?s religions complement sufficiency economy by helping to define and fill out the concept of “ethics;” the King?s concept of “sufficiency” is given important new meanings as compared to mainstream economy theory. Finally, since “moderation” is only weakly present in the theory of the second best in mainstream economics; the sufficiency economy philosophy shows how to restore it to a central place in a manner consistent with the worlds? religions, notably Buddhism, Confucianism and Islam. Key words: sufficiency economy, mainstream economics, Hinduism, Buddhism, Confucianism, Judaism, Christianity, Islam, Baha?i faith, Plato, Aristotle, Confucius, Mencius David Hume, Adam Smith, J.S. Mill, Karl Marx, J. M. Keynes, E. M. Schumacher, King Bhumibol 57 58 The Meaning of Sufficiency Economy International Conference Introduction The real world problem The problems of massive environmental destruction, failure to predict and respond to natural disasters, destitution, food insecurity, starvation, fraud, crippling financial volatility, market failure, growing inequalities in the distribution of income, civil unrest, tyrannical governance, the inefficacy of policies, nuclear threats by unstable governments, terrorism, and religious intolerance have been all too visible in the first 11 years of the 21st century. Any impartial spectator 1 would agree that humanity needs to apply a unified strategy to mitigate and overcome these problems, as encapsulated in the United Nations’ Millenium Development Goals (MDG) for the year 2015.2 But that strategy must in turn logically depend upon the emergence, based upon man’s higher nature, of a unified theory of the premises, processes, and outcomes of social betterment. The sources of that theory could be mainstream economics (including developmental, natural resource, and welfare economics), the rediscovered moral dimension of historical economists, the great ancient philosophers, the world’s religions, and modern alternative development theories,3 including the His Majesty King Bhumibol Mahadev’s sufficiency economy philosophy. The scientific problem The problem is that these richly-developed viewpoints are rarely seen as complementary; worse still, they are frequently set in opposition to each other, as if some exclusive choice had to be made. On the one hand, mainstream economics is frequently sneered at, both in the press and in the rhetoric of demonstrators against the G11 and the World Trade Organization as “neo-liberal,” capitalist, and anti-poor; and attributed a single-minded concern for corporate profit maximization based upon control/destruction of the earth?s natural resources. Economics’ extensive contributions to poverty analysis, trade-led development, and sustainable natural resource management are either completely ignored or glossed over. In this, there is clearly confusion about what is taught in economics graduate programs vs. business schools. But it is true that, in the way it is actually applied, mainstream economics does have four glaring failings: • an inability to solve the key socioeconomic problems of the 21st century • a self-centered maximizing view of production, consumption and exchange • a polarization of income distribution into a handful of very rich and a vast majority of very poor This term is taken from Adam Smith and refers to the individual conscience within each of us. http://www.un.org/millenniumgoals. 3 Other modern theories include but are not limited to Gandhian self-sufficiency, the Sri Lankan sarvodaya movement, and the King of Bhutan?s call for maximizing Gross National Happiness. 1 2 The Meaning of Sufficiency Economy International Conference • an underestimate of human nature In terms of the last failure, for example, such writers as Adam Smith and J.M. Keynes are viewed, respectively, as the cynical fathers of self-centered profit-taking and Big Government. It is conveniently forgotten that Adam Smith’s greatest book, as Professor of Moral Philosophy at Glascow University, was the Theory of Moral Sentiments; and that Keynes in his Economic possibilities for our grandchildren expressed the poignant hope of the end of the need for all government by the year 2030. On the other hand, it is equally easy to caricature the King’s Sufficiency economy. Foreigners and many Thai citizens seem confused by the exact definition and daily applicability of its key concepts. For example, Standard & Poor’s director of sovereign ratings after a meeting with Thai Ministry of Finance officials about the need for “more sufficiency,” noted, “No one knows what [sufficiency economy] really means.”4 Within religions as well, Judaism, Christianity, and Islam, although springing from the same roots, are frequently pitted against each other in both doctrine and bomb delivery. Fortunately, the theory of progressive revelation espoused by the Baha’i Faith integrates these three religions along with Zoroastrianism, Buddhism, and Hinduism5 to demonstrate the inherent unity of all religions. And the simple fact that religions and philosophies ask the same three questions -- a) the purpose of life, b) the secret of happiness, and c) our responsibility toward others -- is also frequently overlooked. Put simply, the main difference between philosophy and religion is that the former attempts to answer these questions without reference to a supreme being; but philosophical and religious answers are largely consistent. Goal and specific objectives of the paper The present paper therefore seeks to suggest how the King’s Sufficiency Economy philosophy could both contribute to and benefit from an emerging unified theory of social betterment. As much scholarly work has already been written on the overall scope, two pre-conditions and three operating principles of the King’s philosophy; this paper will focus instead on exploring a subset of issues regarding ethics, self-immunization, sufficiency and moderation raised by the King’s philosophy that have not yet been reconciled with the history of economic or religious thought. We shall seek to pinpoint the overlaps and complementarities among mainstream economics, sufficiency economy, the world religions other ancient or third-way philosophies, the neglected thought of the great historical economists, and the Millenium Development Goals (MDGs, Figure 1.) Asia Times, In Thailand, a return to ‘sufficiency’, 5 October 2006. Hinduism also recognizes the founders of most other religions as avatars of Vishnu (God-theProtector). 4 5 59 60 The Meaning of Sufficiency Economy International Conference 5 Figure 1 Contributing currents of thought to the emerging unified theory of social betterment. Economic philosophy Other ancient or third-way philosophy Sufficiency Economy Religion Mainstream economics Millenium development goals Based on these diverse sources, we seek to broad-brush a skeletal but Figure 1 Contributing of thought to the emerging unifieddynamics theory of and social betterment. integrated model of currents social betterment, suggest the internal recursive feedbacks that would animate such a model if it were actively implemented in developed and less developed highlighta the overlaps with andmodel unique Based on these diverse sources, weeconomies, seek to broad-brush skeletal but integrated of social contributions of the King’s philosophy, and suggest avenues for further social research into the policies that dynamics might effectively implement the greater happiness of such a betterment, suggest the internal and recursive feedbacks that would animate all. model if it were actively implemented in developed and less developed economies, highlight the Why this focus on increasing happiness? Because there appears to be a 3000year-oldwith consensus thatcontributions greater happiness the requisite goaland of all socialavenues evolution. overlaps and unique of the is King‟s philosophy, suggest for further In addition to the world’s early religions and philosophers, Adam Smith for example believed thatinto our the ownpolicies interestthat and happiness regulate our conduct; that happiness there should social research might effectively implement the greater of all. be no conflict in thought or action between the government and the citizen,6 and that we should therefore follow the golden rule and treat our neighbours as ourselves.7 Why thisand focus on increasing happiness? there appears to betoa make 3000-year-old consensus Marx Engels said that our actions Because should always endeavour the greatest 8 number of people happy. Mill explained those actions in the pursuit of happiness as that greater happiness is the requisite goal of all social evolution. In addition to the world‟s early The Theory of Moral Sentiments; Smith, Adam, Part VI. Of the Character of Virtue, Chap. II Of the which Societies are Smith by nature to our that Beneficence, religionsorder and in philosophers, Adam for recommended example believed our own http:// interest and www.econlib.org/library/Smith/smMS6.html#VI.II.42, February 16, 2011. 7 Theregulate Theory ofour Moral Sentiments; Smith,should Adam,be PartnoII.conflict Of Meritinand Demerit, Of happiness conduct; that there thought or Section action III between the the Influence of Fortune upon the Sentiments of Mankind, with regard to the Merit or Demerit of Actions, Chap. II Of the extent of this Influence of Fortune (II.III.22), http://www.econlib.org/ library/Smith/smMS2.html#II.III.22, February 12, 2011. 8 Karl Marx, Reflections of a Young Man on The Choice of a Profession, Marx Engels Collected Works(MECW) Volume 1, Written: between August 10 and 16, 1835, http:// www.marxists.org/archive/marx/works/1837-pre/marx/1835-ref.htm, February 23, 2011. 6 The Meaning of Sufficiency Economy International Conference the prevention/mitigation of unhappiness;9 he defined what Buddhists term right conduct as the promotion of happiness, which in turn must be used as the test to judge all human conduct and as a criterion of morality; 10 and he asserted that ultimately happiness may be viewed as the sole end of human action.11 The Baha’i Faith asserts that happiness in the world depends upon humans themselves,12 so that we must show a light and bright face in action and deed. Research questions To realize the above goals, the present paper seeks to provide answers to six specific questions: 1. How can the King?s philosophy, mainstream Western economics, historical economic philosophies, the major world religions, and other modern variants of alternative economics be used to construct a unified theory of social betterment? 2. How could understanding the concept of “ethics” in the King’s philosophy in turn benefit from imports from such a unified theory? 3. How does the King?s concept of “self-immunization” enrich such a unified theory by contributing unique insights and interpretations that go well beyond risk analysis and social safety nets? 4. How does the King’s philosophy build upon and extend the concept of “sufficiency” in mainstream economic theory? 5. How could the concept of “moderation” in the King’s philosophy enrich such a unified theory by portraying moderation as a final result rather than as an initial behaviour? 6. What are the implications for further research and social action that flow from the answers to the above questions? (1-5) John Stuart Mill, 1863, Utilitarianism Chapter 2, http://www.utilitarianism.com/ mill2.htm, February 22, 2011. 10 John Stuart Mill, 1863, Utilitarianism Chapter 4, http://www.utilitarianism.com/mill4.htm, February 22, 2011. 11 John Stuart Mill, 1863, Utilitarianism Chapter 4, http://www.utilitarianism.com/mill4.htm, February 22, 2011. 12 The Promulgation of Universal Peace, Pages 239-243: 240, http://reference.bahai.org, February 19, 2011. 9 61 62 The Meaning of Sufficiency Economy International Conference Methods Table 1 lists by time period the six religions and great economic and general philosophers to be used in this analysis. This timeline is instructive because in most cases later philosophers and religious prophets were aware of previous writings.13 To increase both insight and objectivity, each co-author of the present paper performed independent content analysis of the original sources listed in the References section before combining our results. Table 1: The sources for the current research Before 0 AD Before 1000 1700s 1800s 1900s 2000s Hinduism Christianity Hume Baha’i Faith Keynes MDGs Buddhism Islam Smith Mill Schumacher Marx-Engels SEP Judaism Confucius-Mencius Plato Aristotle Note: religions are highlighted. Results Question 1. How can the King’s philosophy, mainstream Western economics, historical economic philosophies, the major world religions, and other modern variants of alternative economics be used to construct a unified theory of social betterment? Figure 2 presents a first skeletal draft of what may eventually become a unified, recursive14 model of social betterment. It is inspired by the pioneering work of Puntasen (e.g., 2003, 2007) into the inputs, process, output, outcomes, and impacts of the King’s sufficiency economy philosophy; as well as the uplifting content of the Baha’i Universal House of Justice document Toward a Prosperous Humanity (1994). The process of social betterment flows from left to right. The more tangible dimensions (environmental, physiological, and economic) are portrayed in the lower half, while the more intangible dimensions (social, political, spiritual) are portrayed in the upper half. As humanity evolves, the problems of the lower half will increasingly be resolved, allowing society to “mature” and to focus more exclusively on improving the upper half. As a well-educated monarch, the King of Thailand is clearly no exception to this rule. The model is “unified” in the sense that it combines a representative sample of religions, philosophers and economic thought (Table 1). It is “recursive” in the sense that the process has both internal feedbacks and is completely repeated over time. 13 14 2_Science Knowledge Science Know-how Sharing of knowledge Scripture / philosophy Universal education Press freedom 1_Consciousness of unity Ethics Goodness Virtue Patience Honour Freedom Individual responsibility Benevolence, charity Mind Karma Free will Logical consequences Localism 4_ Reasonableness Search for truth Expression of justice Actors meet beneficiaries Reduced contestation, negotiation, compromise Middle path 5_Consultation 3_Spirituality/religion/philosoph y Human nature: sinful/good/neutral After-life Existence of Supreme Being/Evil Suffering Process Better, unified theories Sufficiency in consumption of luxuries and total possessions nature of rural life Temperance in drink, drugs, gambling, debt Work as adoration and service Environmental conservation Gender-balanced employment 8_New economics Sufficiency Moderation Gender equality Democratic participation Global perspective Inter-state regional integration Reciprocity Preserve cultures, rights 7_ Self-immunization Structure Justice, universal laws Prestige among nations Limited military/use of force Trust in democracy 6_Governing institutions Output Absence of war Global, positive peace 10_Peace Balance Impact 12_Economy Prosperity Reduced extremes of wealth and poverty Corporate social responsibility Pro-globalisation, pro-immigration Demilitarisation of national budget Faster economic growth Increased international trade Reduced inflation Knowledge-based job creation Provided GDP is used to increase health, education, international cooperation 9_Happiness Well-being Purpose of life Kinds of happiness Pleasure in the 11_Civil society/Community Social organization Women and men, family Castes and ethnic groups Sharing and volunteering Active but stable social structure Human rights Outcome Note: Elements of the King‟s philosophy are highlighted in green, and the three institutions for its implementation are highlighted in red. Figure 2. A Recursive model the Sufficiency Economy Philosophy enriched by mainstream economics, the world‟s religions and past philosophers Material/tangible axis Economic Physiological Environmental Spiritual/intangibl e axis Religious Social Political Inputs 9 The Meaning of Sufficiency Economy International Conference 63 64 The Meaning of Sufficiency Economy International Conference After each left-to-right iteration of the model, positive impacts on the economy, government, and society ensue; as well as a complete return to the ethics and knowledge with which the process begins at the left-hand side of the figure. The key concepts of the King’s sufficiency economy are highlighted in green in the figure. While it is hoped that Figure 2 is largely self-evident, five specific points within it are worth highlighting. First, more consultation (stage 5) is a pivotal point in the model in that it constitutes the meeting place for the consciousness of unity, informed knowledge, spirituality, and reasonableness. Although mentioned in passing by earlier philosophers and religions, consultation attains a prominent place in both the Baha’i Faith and King Bhumibol’s philosophy.15 The King explains the strong dynamic role of consultation as follows: People possessing similar knowledge must pool their ideas. Some people are knowledgeable in the same area but are different in their viewpoints. These people have to exchange views in consultations rather than argue. Consultation and argument are different. Arguments involve mostly emotion, whereas consultations involve the intellect. By using sound reasoning in discussions, the problems will be solved, because there is only one truth… and is usually the only way to success.16 Second, some find it difficult to distinguish knowledge (stage 2) from reasonableness (stage 4). The latter term in the King’s philosophy implies a strong feature of localism. After all, it is only “reasonable” that a) to conserve the environment, one should reduce the production of goods to those necessary for individual consumption, b) to reduce transportation costs, an effort should be made to produce those goods close to home but that of course c) to achieve efficiency, international trade based on comparative advantage may also be necessary. It follows that the King’s philosophy is by no means anti-globalisation. Third, the sufficiency economy clearly mentions the tripod of institutions upon a balanced economy must rest: private business firms who meet in the market (stage 12), the community or civil sector (stage 11), and the government (stage 6), highlighted in red in Figure 2. The relative strengths of threes institutions must be coordinated to connect sustainable supply from the natural resources (environment) with the growing demand for basic necessities from the population (people, Figure 3). This latter point is not frequently recognized. Royal Speech Given to the audience of well-wishers on the occasion of the Royal Birthday Anniversary at the Dusidalai Hall, Chitralada Villa, Dusit Palace on Friday, December 4, 1998. 15 16 11 The Meaning of Sufficiency Economy International Conference 65 business Figure 3. The tripolar model of institutions for social betterment. Environment Environment community business government community 11 People People Figure 3. The tripolar model of institutions for social betterment. government Other thinkers through the ages in economics and psychology have also grappled with formulating such tri-polar of ages thefornecessary conditions for sustainable social evolution Figure 3. Other The tripolar model ofvisions institutions social betterment. thinkers through the in economics and psychology have also grappled with formulating such tri-polar visions of the necessary conditions for (Table 2). Regrettably, their thought was often ignored by their contemporaries and never carried sustainable social evolution (Table 2). Regrettably, their thought was often ignored by their enriched, contemporaries andornever carried enriched, deepened or applied to may be forward, deepened applied to theforward, extent the King‟s Balanced Other thinkers through the ages in economics and that psychology have also economy grappled with the extent that the King’s Balanced economy may be today in an era of global communications. today in ansuch era of global communications. formulating tri-polar visions of the necessary conditions for sustainable social evolution (Table 2).Table Regrettably, their thought was often ignored their contemporaries and never carried 2. Tri-Polar Visions of Well-being inby Economics and Psychology Table 2. Tri-Polar Visions of Well-being in Economics and Psychology forward, enriched, deepened or applied to the extent that the King‟s Balanced economy may be Author ↓ /Axis → Material-economic Political-social Spiritual today inBhumipol an era of global communications. King Sufficiency/reasonableness Knowledge/self-immunization Ethics Adam Smith Wealth/inv.hand Nation Sympathy Leon Walras Market equilibrium Cooperation Spirituality Table Tri-Polar of Well-being in Economics and Psychology John2.M. KeynesVisionsMarkets Fiscal-monetary Morality Kenneth Boulding Exchange Threat Gift Author ↓ /Axis → Material-economic Political-social Spiritual Mahatma Gandhi Self-sufficiency Village economy Spirituality Shigeto Tsuru Rich Strong Warm-heart King Bhumipol Sufficiency/reasonableness Knowledge/self-immunization Ethics French Revolution Liberty Equality Fraternity Adam Smith Wealth/inv.hand Nation Sympathy Sigmund Freud Id Ego Superego Leon Walras Market equilibrium Cooperation Spirituality Modern psychology Markets Left brain Right brain Whole brain John M. Keynes Fiscal-monetary Morality Kenneth Boulding Exchange Threat Gift Mahatma Gandhi Self-sufficiency Village economy Spirituality Shigeto Tsuru Rich Strong Warm-heart French Revolution Liberty Equality Fraternity Sigmund Freud Id Ego Superego Modern psychology Left brain Right brain Whole brain 66 The Meaning of Sufficiency Economy International Conference Fourth, the recursiveness of the model of Figure 2 is expressed by the positive after-effects of increasing happiness (stage 9) and peace (stage 10) at the end of the each iteration of the model. These impacts fall upon the three sectors just noted: the economy, the community and the government. In addition, the increase in peace and happiness generates the thirst and potential for more ethics (stage 1), more knowledge (stage 2) etc, which improve the fundamental conditions of the model; permitting the cycle to restart. Finally, the King is not advocating the complete replacement of the mainstream economic model and its institutions by a sufficiency economy, but rather a mixed socio-economy enriched by the sufficiency economy philosophy particularly at the local level of firms, communities, and government offices. On December 4, 1998, he suggested that the sufficiency economy might constitute about one-quarter of the mix: This Sufficiency Economy can be implemented for only half, not the entire economy. Even one fourth is good enough, not one fourth of the area, but one fourth of the action. In other words, “sufficiency economy” is meant to be “partial” localism. It is true that many parts of Thailand still enjoy capitalism. “Sufficiency Economy” calls on those to practice “some” localism particularly those in the rural areas. However, the oppositions see no difference between “Sufficiency Economy” and “Self-sufficient economy”, i.e., they are the same as Localism.17 Question 2. How could understanding the concept of “ethics” in the King’s philosophy in turn benefit from imports from such a unified theory? As noted, Box 1 (consciousness of unity through ethics) is the starting point for the process of social betterment in the model given in Figure 1, which is also one of the first two great pillars of the SEP. Clearly, without a sincere intent to improve human society that respects such universal principles as the golden rule, any attempt to create a balanced guideline for social evolution will seem doomed to failure. But although the King’s philosophy is absolutely correct in positing ethics as an essential precondition for any theory of social betterment, it shows a surprising lack of specificity as to what the term actually means. According to a website on the sufficiency economy18 such morality means “honesty, patience, perseverance” as the fundamentals of life, but again no details are given as to their content. The King implicitly advocates using morality (righteousness), as well as ethics and compassion in dealing with others. It may be inferred from this that compassionate ethics ( คุ ณ ธรรม ) involves the direct incorporation of the utility function of other http://en.wikipedia.org/wiki/Localism_in_Thailand http://thailand.prd.go.th/thailand_illustrated/content.php?s_id=284. Wisdom was also mentioned, but that actually refers to the separate concept of khwamru (knowledge). 17 18 The Meaning of Sufficiency Economy International Conference people into our own. Indeed, showing compassion to others is a necessary condition to applying knowledge, self-immunization, reasonableness, and moderation. Ethics must be simultaneous to each of these decisions, or like justice (a subcategory of ethics) it may be divided into two periods. Ex ante justice (commutative equity) provides equality of access to jobs and productive resources before economic processes begin. It is therefore synonymous with equality of opportunity. Ex post justice (distributive equity) helps to equalize the final fruits of economic opportunities so that all have at least their minimal needs met. It is therefore synonymous with equality of results. Western welfare economic theory and policies have been developed to deal primarily with the latter. But, again, the King’s philosophy does not elaborate much further than this. It is therefore at this point in Figure 1 that the King’s philosophy can be substantially enriched by referring to the other theories and philosophies within the unified model. These point to the importance of such characteristics as goodness, patience, virtue, honour, benevolence/righteousness, freedom, and individually responsible action. Without such virtues, it would be difficult to strengthen the moral fibre of the nation so that everyone, particularly public officials, academics, and businessmen at all levels adheres first and foremost to the principles of honesty and integrity. In addition, a way of life based on patience, perseverance, diligence, wisdom and prudence is indispensable to creating balance and being able to cope appropriately with critical challenges arising from extensive and rapid socioeconomic, environmental, and cultural changes in the world. Goodness Early on, Hinduism clearly stated that happiness is situated in the “mode of goodness.” 19 Plato observed that a rich man is never happy unless he is also “good and gentle.” 20 In Judaism, joy and enthusiasm increase every time we perform a “good deed.” 21 Mill remarked that each person’s happiness is not only a good to that individual, but also contributes to the aggregate general good for all persons. 22 Keynes warned that we must limit our enjoyment to the class of things which also “happen to be good,” while bearing no harm in mind. 23 We infer from this consensus that goodness is part of the คุณธรรม of the sufficiency economy. Bhagavad Gita 14.6 See appendix III, Law Book V 21 Shab. 30b 22 John Stuart Mill, 1863, Utilitarianism Chapter 4, http://www.utilitarianism.com/mill4.htm, February 22, 2011. 23 John Maynard Keynes, Economic possibilities for our grandchildren, 1930, http:// www.econ.yale.edu/smith/econ116a/keynes1.pdf, March 1, 2011. 19 20 67 68 The Meaning of Sufficiency Economy International Conference Virtue Virtue is also one of the most prevalent themes in historical philosophy and religion. Since, like ethics in general, it is left an undefined, aggregated concept; it is important for enriching the King’s philosophy to identify its more specific content. The Buddha taught that virtue should be motivated by good will and compassion, Plato that it actively involves practicing virtuous behaviour.24,25 Aristotle agreed that happiness is an activity that emerges from virtue, which in turn is an activity of the soul. 26 Indeed, he stated that the more virtue exists in its entirety, the greater the happiness27 and the more complete the life.28 Mill, echoing Aristotle, said that the desire of virtue is the desire of happiness; that happiness itself is composed by virtue desired and cherished.29 Hinduism states that virtue means striving that no one is put into difficulty or disturbed by anyone. 30 Similarly, Adam Smith 31 admonished humans to walk in the paths of virtue:32 i.e., prudence33 (concern for others), justice and beneficence (to refrain from hurting), and the love of virtue, most permanent and secure.34 The Baha’i Faith interprets virtue as being the willingness to sacrifice oneself/everything for each other, even life itself; and the attainment of a state of self-sacrifice,35 excellent character, and high resolve.36 Similarly, Marx and Engels See appendix III, Charmides The Republic, Book I, 352d-354a, quoting 354a1 in Plato’s Ethics and Politics in The Republic, Stanford Encyclopedia Philosophy, http://plato.stanford.edu/entries/plato-ethics-politics/ ,January 19, 2011. 26 See appendix IV, Nicomachean Ethics Book I (9), (13) 27 See appendix IV, Nicomachean Ethics Book III (1) 28 See appendix IV, Nicomachean Ethics Book I (9) 29 John Stuart Mill, 1863, Utilitarianism Chapter 4, http://www.utilitarianism.com/mill4.htm, February 22, 2011. 30 See appendix I, Bhagavad Gita 12.15 31 This side of Adam Smith’s thought will come as a surprise to some. 32 The Theory of Moral Sentiments; Smith, Adam, Part I. Of the Propriety of Action, Section III Of the Effects of Prosperity and Adversity upon the Judgment of Mankind with regard to the Propriety of Action; and why it is more easy to obtain their Approbation in the one state than in the other, Chap. III Of the corruption of our moral sentiments, which is occasioned by this disposition to admire the rich and the great, and to despise or neglect persons of poor and mean condition (I.III.35), http://www.econlib.org/library/Smith/smMS1.html#I.III.35, February 12, 2011. 33 The Theory of Moral Sentiments; Smith, Adam, Part VI. Of the Character of Virtue, Conclusion of the Sixth Part, http://www.econlib.org/library/Smith/smMS6.html#VI.III.54, February 16, 2011. 34 The Theory of Moral Sentiments; Smith, Adam, Part VI. Of the Character of Virtue, Chap. I Of the Order in which Individuals are recommended by Nature to our care and attention, http:// www.econlib.org/library/Smith/smMS6.html#VI.II.21, February 16, 2011. 35 The Promulgation of Universal Peace, Page 218: gr1, http://reference.bahai.org, February 19, 2011. 36 The Secret of Divine Civilization, Pages 21-40: gr6, http://reference.bahai.org, February 20, 2011. 24 25 The Meaning of Sufficiency Economy International Conference advocated sacrifice for the benefit of all37 based upon simple morality, striving for excellence, and unselfishness.38 Schumacher felt that virtue involved mainly selfrespect, courage in the face of adversity, and the ability to bear hardship.39 Patience Of course, developing the multiple facets of virtue takes time. Patience, therefore, is praised by both Islam 40 and the great English philosopher David Hume. 41 Hume said that sustainable happiness depends upon the ability to resist temptation of present ease or pleasure, and to carry one’s efforts forward to future profit and enjoyment.42 The King of Thailand also seems to emphasize patience as clearly necessary to implementing reasonableness and balance within the sufficiency economy. In a royal address on 11 July 1980, he proclaimed: In bringing about progress and prosperity, it is imperative to build up gradually, one step at a time, implementing measures, while contemplating and improving them. Never make the efforts with haste, spurred by the eagerness to bring novelty, just for the sake of novelty. In fact, nothing is really new. All the novelties are just the continuation of the old. Honour Buddhism feels it is important to build both honour and fame as one improves one’s karma. In this sense, fame refers to serving as a well-known model of ethical actions.43 Adam Smith added that we must be recognized as honourable not only by others but particularly by ourselves.44 He explained that the best way to make sure one is living honourably Karl Marx, Reflections of a Young Man on The Choice of a Profession, Marx Engels C o l l e c t e d Wo r k s ( M E C W ) Vo l u m e 1 , W r i t t e n : b e t w e e n A u g u s t 1 0 a n d 1 6 , 1 8 3 5 , http://www.marxists.org/archive/marx/works/1837-pre/marx/1835-ref.htm, February 23, 2011. 38 M a r x a n d E n g e l s , T h e G e r m a n I d e o l o g y, O n C o m m u n i s m a n d M o r a l i t y, h t t p : / / www.marxists.org/archive/marx/works/1845/german-ideology/ch03f.htm, February 25, 2011. 39 E.F. Schumacher, Small is beautiful, p.133 40 Fussilat, Chapter #41, Verse #35, refer in http://www.searchtruth.com/search.php?keyword= happiness&translator=5&search=1, January 31, 2011. 41 Enquiry Concerning the Principles of Morals, section VI: of qualities useful to ourselves, part I, http://www.anselm.edu/homepage/dbanach/Hume-Enquiry%20Concerning%20Morals.htm#sec6a, February 7, 2011. 42 Enquiry Concerning the Principles of Morals, section VI: of qualities useful to ourselves, part I, http://www.anselm.edu/homepage/dbanach/Hume-Enquiry%20Concerning%20Morals.htm#sec6a, February 7, 2011. 43 Buddhist economics, Chapter 3, p.a. Payutto, http://www.urbandharma.org 44 The Theory of Moral Sentiments; Smith, Adam, Part I. Of the Propriety of Action, Section II Of the Degrees of the different Passions which are consistent with Propriety Chap. II Of those Passions which take their origin from a particular turn or habit of the Imagination (I.III.35), http:// www.econlib.org/library/Smith/smMS1.html#I.III.35, February 9, 2011. 37 69 70 The Meaning of Sufficiency Economy International Conference is to confirm that others’ unsolicited approbation45 is consistent with the internal approval given by our own inner Impartial Spectator. Freedom Freedom is of course an essential precondition to choosing to behave ethically. In Hinduism, freedom has the sense of moksha or liberation from bad thoughts and actions. Judaism extols the fact that the human being is the only creature with free will. Christianity encouraged its followers to be free from the love of money. 46 Hume asserted that an ethical person expresses his happiness by freedom, ease, confidence, and calm enjoyment diffused over their countenance.47 Adam Smith said that liberty itself is the freedom from fear and anxiety.48 The Baha’i faith stresses the importance of the freedom of the spirit.49 Individually responsible action Once the good, virtuous, patient, honourable individual is free to act, it is important to do so responsibly. Hinduism admonishes its followers to be active and rejoice within,50 and to do one’s duty to improve one’s karma. Buddhism emphasizes industriousness. 51 Plato counsels righteously doing the good things. 52 Aristotle elaborates this in some detail: we should be engaged in virtuous action and contemplation; 53 exertion, 54 acting justly to preserve happiness; 55 while avoiding vicious actions 56 and aiming for the highest of all goods achievable by action, 57 The Theory of Moral Sentiments; Smith, Adam, Part III. Of the Foundation of our Judgments concerning our own Sentiments and Conduct, and of the Sense of Duty, Chap. II Of the love of Praise, and of that of Praise-worthiness; and of the dread of Blame, and of that of Blame-worthiness http://www.econlib.org/library/Smith/smMS3.html#III.I.10, February 14, 2011. 46 Hebrews 13:5, refer in Bible Verses about Happiness Source: http://www.bible-verses-bysubject.info/bible-verses-by-topic-starting-with-h/bible-verses-about-happiness.htm, January 30, 2011. 47 Enquiry Concerning the Principles of Morals, section V: why utility pleases, part II, http:// www.anselm.edu/homepage/dbanach/Hume-Enquiry%20Concerning%20Morals.htm#sec5b, February 5, 2011. 48 The Theory of Moral Sentiments; Smith, Adam, Part VII. Of Systems of Moral Philosophy, Chap. II Of those Systems which make Virtue consist in Prudence, http://www.econlib.org/library/ Smith/smMS7.html#VII.II.60, February 16, 2011. 49 Some Answered Questions, Pages 227-229: gr3, http://reference.bahai.org, February 19, 2011. And The Promulgation of Universal Peace, Pages 239-243: 240, http://reference.bahai.org, February 19, 2011. 50 See appendix I, Bhagavad Gita 5.24 51 Buddhist economics, Chapter 3, p.a. Payutto, http://www.urbandharma.org 52 Euthydemus 53 Nicomachean Ethics Book I (10), Book X (6) 54 Nicomachean Ethics Book X (6) 55 Nicomachean Ethics Book III (1) 56 Nicomachean Ethics Book IX (9) 57 Nicomachean Ethics Book I (4) 45 The Meaning of Sufficiency Economy International Conference something final. He says that the best, noblest, pleasantest thing in the world is found through good action;58 a good life and good actions thus go hand in hand.59 Judaism explains that the responsible actor will feel joy and enthusiasm over the performance of a good deed,60 that we should channel the energy of evil inclination in the direction of good; that people should seek joy (in their daily work and especially in their youth) by doing the right thing and acting ethically.61 Christianity agrees: There is nothing better for men than to be happy and do good while they live;62 indeed, practicing and doing good63 is the best thing for mankind, especially since it is never too late to be forgiven. Islam holds that happiness is conditional upon who one is and how one acts;64 but all should concentrate on the five pillars (God, prayer, poor-tax, fasting, and pilgrimage). Schumacher stressed the need to have adequate energy to act in life.65 All of these ideas concerning action underlie the remaining stages in Figure 1. In the King’s case, this implies that action is inherent in self-immunization, applying the new agricultural theory, and following the sufficiency economy philosophy. Benevolence, righteousness Among all such actions we may contemplate, benevolent and righteous giving is surely among the loftiest. Hinduism advocated benevolence in the forms of performing acts of sacrifice and penance,66 while never condemning or seeking to convert non-believers. Buddhism agreed that benevolence and charity should be sincere, motivated by true good will and compassion rather than a grudging sense of duty. Judaism goes so far as to say we must be ready to sacrifice anything for God.67 Specifically in the economic sense, Christianity stated that it is better to be poor, to g i v e a l l o n e ’s w e a l t h a w a y a s a m e a n s o f d e m o n s t r a t i n g a n d a c h i e v i n g righteousness. Islam formalized this sentiment in the concepts of sadaqat and zakat, the idea being that it is righteous to build a surplus and to give of it to the poor. Smith agreed that mutual kindness and benevolence are prominent moral sentiments. Nicomachean Ethics Book I (8) Nicomachean Ethics Book I (8) 60 Shab. 30b 61 Does Judaism really lead to greater happiness? Frum (religious) people don’t seem happier to me?, http://www.simpletoremember.com/articles/a/man-self-development-commitment/#0987, January 27, 2011 62 Ecclesiastes 3:12, refer in Bible Verses about Happiness Source: http://www.bible-verses-by-subject.info/bible-verses-by-topic-starting-with-h/bible-versesabout-happiness.htm, January 30, 2011. 63 Peter 1 and Galatians 6-10, refer in The Christian life, http://www.bibleed.com/ bibleteachings/christianlife/happiness.asp, January 29, 2011. 18 64 Oliver Leaman, Ibn Rushed on happiness and philosophy, studia islamica, no.52 (1980), p.173 65 E.F. Schumacher, Good work, p.89, http://www.scribd.com/doc/563164/Goodwork-EFSchumacher, March 3, 2011. 66 For example in Bhagavad Gita 4.31, 4.33, 17.24, 17.28,18.5 67 “Since the destruction of the Temple God Himself lacks complete happiness” (‘Ab. Zarah 3b) 58 59 71 72 The Meaning of Sufficiency Economy International Conference The Baha’i Faith makes the direct link between charity and happiness, stating that eternal happiness is contingent upon giving; service to humanity, sharing with the poor and helping “every helpless one.” Marx-Engels of course advocated unselfishness as the very basis of giving according to one’s ability/receiving according to one’s need. Schumacher extended the concept of benevolence to loving kindness towards the plants and animals of “lower creation.” Question 3. How does the King’s concept of “self-immunization” enrich such a unified theory by contributing unique insights and interpretations that go well beyond risk analysis and social safety nets? Of course, seeing to the needs of all in the above way is a first step towards protecting all in society from going without their basic needs. Self-immunization (ภูมิคุ้มกัน) thus covers, but is not limited to, what is often referred to as “social safety nets” in Western economic thought. The safety net of the sufficiency economy should also embrace self-immunization in economy, community and government. It implies that the production and consumption processes of the balanced economy should cultivate the inner resilience to deal with unexpected shocks; and immunize the consumer, the producer, the seller, and the exporting and importing firm from what Western economists might call “down-side risk.” It will no longer be enough that a village has enough to eat on average over a ten-year period; each individual must have enough to eat every day of every year, consistent with the concept of food security. The philosophy holds that both the rich and the poor should consume resources only at the level that do not incur any loan. Although the King of Thailand has given new meaning and popularity to the concept of self-immunization, measures to protect the individual and the community have actually been a theme in philosophy and social policies for millenia. In ancient China, the philosopher Mencius, following on Confucius, devised the “well-field system,” whereby every eight farmers would set aside a commonly owned and managed back-up ninth field for surplus production and storage as a protection against crop failure. Among other non-religious sources, Hume advised not being affected from other’s happiness, Smith the complete enjoyment in own’s selfapplause. Hinduism further clarifies the concept of self-immunization with the idea of doing one’s hereditary job well, augmented by the practice of yoga, bathing, vegetarianism, and other rituals. Buddhism adds the need to detach oneself; to share wealth through alms-giving, to protect the people and animals in one’s entourage and to practice right speech and right action. Consistent with this advice, Plato argued for promoting the greatest happiness of the whole, not the disproportionate happiness of any one class, Judaism advocated obedience to God, eye-for-eye justice; and protecting oneself from religious and economic persecution. Christianity, meanwhile felt that the greatest form of self-protection was to love one’s neighbor. Islam more actively promoted zakat (charity during Id), love and mercy, tolerance, honesty, justice, human rights, compassion, and equality for all. The Meaning of Sufficiency Economy International Conference The Baha’i faith, as noted, felt that self-protection proceeded primarily through consultation and the unity and harmony of the human race. Question 4. How does the King’s philosophy build upon and extend the concept of “sufficiency” in mainstream economic theory? Contrary to most philosophers, the King gives two definitions for sufficiency. The first is narrow self-sufficiency of a community or nation in the standard western sense, which is no longer possible in a modern exchange economy; it would, however, be good to improve the balance between the feelings of sufficiency within a mixed economic system. The second is the whole set of philosophical principles that allow that portion of the economy to remain self-sufficient, to flourish and to be efficient. Indeed, there is no contradiction between efficiency and sufficiency within a system that mixes partial self-sufficiency with positive globalization. The King carefully distinguished these two definitions68 The term sufficiency economy does not exist in the textbooks; there has never been a sufficiency economy. There are other terms but not this one. The application of the [self] sufficiency economy does not necessarily mean full sufficiency, and I may add that full sufficiency is impossible. …The application of only one-fourth of the sufficiency economy should be enough, and it can be done. This is one point that I would like to clarify what I said last year. The word sufficiency has another meaning, a wider meaning. It does not only mean self-sufficiency but also means to have enough for the individual to live on. This sufficiency was mentioned to those who were present here, in this hall-when was it? 20 or 24 years ago, in 1974, [when] some individuals had plenty, but some had practically nothing. In the past, there was enough to live on, but today, impoverishment is creeping in. Some things may seem to be extravagant, but if it brings happiness, it is permissible as long as it is within the means of the individual. This is another interpretation of the sufficiency economy or system. Question 5. How could the concept of “moderation” in the King’s philosophy enrich such a unified theory by portraying moderation as a final result rather than an initial behaviour? Sufficiency or moderation (พอประมาณ) challenges the very first assumption in mainstream economics that “wants are unlimited.” 69 According to the King’s philosophy and many other sources, they can be satisfied; and one will be happier if one can control one’s desires. For example, 2500 years ago at Mrigadava Forest in Vanarasi, the Buddha explained that life is full of suffering precisely because we are An excerpt from the royal speech given to an audience of well-wishers on the eve of the royal birthday anniversary at Dusit Hall, Chitralada Villa, Dusit Palace, on Thursday, 4 December 1997. 69 Bade and Parkin, 2006, Foundations of Economics, page 1: “All economic questions arise because we want more than we can get”; “Everyone ends up with some unsatisfied wants”; and “Our inability to satisfy all our wants is called scarcity.” 68 73 74 The Meaning of Sufficiency Economy International Conference tempted by the unlimited desires now enshrined in the Western definition of economics; and that the only way to avoid suffering is to avoid greed for things and situations we don’t need. These themes are present in the Koran, the Bible, and all other world religions. King Bhumibol explains that70 The word to have enough is sufficient; sufficiency is moderation. If one is moderate in one’s desires, one will have less craving. If one has less craving, one will take less advantage of others. Being moderate does not mean to be too strictly frugal; luxurious items are permissible, but one should not take advantage of others in the fulfillment of one’s desires. Moderation, in other words, living within one’s means, should dictate all actions. Act in moderation, speak in moderation; that is, be moderate in all activities. If we contain our wants, with less greed, we would be less belligerent towards others. and clearly extends the concept to the macro-economic and international level: If all nations hold this concept - I don’t mean sufficiency economy - this concept of moderation, without being extreme or insatiable in one’s desires, the world will be a happier place. If all countries entertain this - this is not an economic system - the idea that we all should be self-sufficient, which implies moderation, not to the extreme, not blinded with greed, we can all live happily. One misconception is that moderation means a pro-active, voluntary reduction in production, income and consumption as the first step in the application of the King’s philosophy. In fact, moderation is the result of applying the other principles of ethics, knowledge-acquisition, self-immunization, and balance. Moderation is therefore not the objective but the by-product of the dynamic process of Figure 2, whose true objective is the people’s well-being, peace, happiness, and prosperity of each individual at all times and in all parts of the country. What could be termed “Net Happiness per Capita” (NHC) is thus operationally quite different from the concept of Gross National Happiness (GNH) put forward by the King of Bhutan. The need for moderation is not just limited to Buddhist nations, however. The Confucian concept of xiaokang (lesser prosperity) has been re-introduced into China at the same time as the sufficiency economy philosophy has been implemented in Thailand. Both seek to moderate the single-minded search for wealth. Even in mainstream economics, the concept of moderation is gaining ground. The well-known Easterlin paradox has found for the United States that great wealth does not increase happiness; and that income alone is both an inadequate and indeterminate measure of happiness and subjective well-being. The King’s theory of An excerpt from the royal speech given to an audience of well-wishers on the eve of the royal birthday anniversary at Dusit Hall, Chitralada Villa, Dusit Palace, on Thursday, 4 December 1997 70 The Meaning of Sufficiency Economy International Conference sufficiency-cum-benevolence contributes one possible explanation of that paradox. Figure 4 portrays the relationship between income (horizontal axis) and happiness (vertical axis) for both the giver and receiver, and how happiness (utility) can shift upward for both through voluntary charitable donations. Happiness curves Hi rise quickly at low levels of income, but the marginal contribution of income to happiness (dH/dI) eventually becomes zero (potentially even negative) in accordance with the Easterlin paradox. Rich Person starts on the H1 curve with a large amount of income, and has the choice of giving away his income or remaining at point r by keeping it. If he gives it away, he will shift first to point r’ (the income effect) but will feel good about himself (the altruism effect), which will shift him to r” on happiness curve H3. He has become distinctly happier. This type of behavior has been empirically confirmed by the world-wide tendency of wealthier people to give to charity. Meanwhile, Poor Person starts at a very low level of happiness p on H1. Upon receiving charity, she also enjoys a two-step effect. The first step shifts her along the H1 curve to p’ (the income effect), but her happiness is further increased by the joy of receiving a gift and of feeling cared for (the altruism effect), which shifts her to p”. It is further posited that the altruism effect for the receiver is less than the altruism effect for the receiver (i.e., it is more blessed to give than receive). The process narrows the gap in incomes between the two persons and may also potentially narrow the gap between happiness levels depending on the exact shapes of the curves and the extent to which bridging social capital is created (this must be confirmed by empirical research). Both types of narrowing are subsumed under the Buddhist concept of the “middle way” emphasized by the King. Empirical research must also establish the approximate percentage of income at each level that must be given away or received (neither too little nor too much) to have a significant effect on happiness. The size of gifts themselves must also achieve a kind of “middle way” to avoid offending the receiver through either niggardliness (trivial gift) or implied condescension (exaggerated gift). 75 76 The Meaning of Sufficiency Economy International Conference Figure 4. The income and altruism effects of charity on happiness 25 Happiness (H) b2 b1 p'' p' a2 a1 H3 r'' r' r (rich) H2 H1 p (poor) Give away money Get money Income Source: Songsak Sriboonchitta, Aree Wiboonponse, and Peter Calkins. 2007. Presentation entitled “Sufficiency Economy” at the National Economic and Social Development Board, Figure Bangkok 4. The income and altruism effects of charity on happiness Thailand. Source: Songsak Sriboonchitta, Aree Wiboonponse, and Peter Calkins. 2007. Presentation Figure 5, reproduced from the magazine provides support entitled“Sufficiency Economy” at Economist the National Economic and anecdotal Social Development Board, 71 forBangkok this interpretation based upon the results of a new well-being indicator Thailand. combining 20 dimensions in eleven sectors for 34 OCED countries. It is obvious that although the first derivative of the relationship between income and well-being is positive, the second derivative is negative. The figure suggests, for example, that Figure 5, average reproduced from the USD Economist magazine provides anecdotal support for this Norwegians almost 40,000 of income per year, but they are less happy than Canadians with approximately 30,000 USD.72 interpretation based upon the results of a new well-being indicator73 combining 20 dimensions in eleven sectors for 34 OCED countries. It is obvious that although the first derivative of the relationship between income and well-being is positive, the second derivative is negative. The figure suggests, for example, that Norwegians average almost 40,000 USD of income per year, but they are less happy than Canadians with approximately 30,000 USD.74 The indicators range from tangible air pollution to intangible life satisfaction. Unfortunately, thefrom newtangible well-being index currently onlylife covers the 34 member countries, so The indicators range air pollution to intangible satisfaction. 74 Unfortunately, the new well-being index mediumcurrently or only covers the 34countries member countries, so that we cannot see that we cannot see where Thailand and other less-developed stand. 71 7372 where Thailand and other medium- or less-developed countries stand. The Meaning of Sufficiency Economy International Conference 77 26 Source: Well-being and wealth: The pursuit of happiness. May 24th 2011, 14:44 by The Source: wealth: The pursuit of happiness. May 24th 2011, 14:44 by The Well-being Economistand online. http://www.economist.com/blogs/dailychart/2011/05/wellEconomist online. http://www.economist.com/blogs/dailychart/2011/05/well-being_and_wealth being_and_wealth Consistent with the urgings of Plato (“temperance”), Smith (“good temper” or “sobriety”) and the the urgings strictures Buddhism, Islam, and the(“good Baha’itemper” faith, moderation Consistent with of of Plato (“temperance”), Smith or “sobriety”) and must also extend to alcohol, drugs, gambling, debt, usury, and possessions. It is the the of Buddhism, Islam, and the Baha‟i faith,humility, moderation also extend to alcohol, verystrictures entry point into Buddhist detachment, Christian the must “self-renunciation” of J.S. Mill, and the art of putting oneself “beyond the reach disappointment” of drugs, Keynes.gambling, debt, usury, and possessions. It is the very entry point into Buddhist detachment, Christian humility, the “self-renunciation” of J.S. Mill, and the art of putting oneself “beyond the reach disappointment” of Keynes. 78 The Meaning of Sufficiency Economy International Conference Conclusion Question 6. What are the implications for further research and social action that flow from the answers to the above questions? This modest introduction to the idea of a unified model for social benefit acceptable to all philosophies and religions of course leaves as many questions unanswered as it does answered. If this kind of model is of interest, at least four suggestions might be made for further research and social action: 1. Encourage Thai scholars to flesh out the ethics sections of the King’s philosophy from Thai and other sources beyond the scope of the present study. 2. Fill in ideas from the many historical philosophies and or religions that have been left out of this introductory paper. 3. Publicize the King’s philosophy at home and abroad as a convenient vehicle for summarizing the unified model for social betterment. 4. Appoint an international Commission to debate and agree upon the economic, governmental, and social strategies and policies most consistent with promoting the model of social betterment in an efficient and timely way. This process must also involve deciding the weighting, sequential ordering, and timing of the strategies and polices. The very formation of such a Commission would seem the first step in alleviating the many realworld problems noted in the Introduction. The Meaning of Sufficiency Economy International Conference References Abbas, Abdul-Baha, O thou maid-servant of God!, Tablets of Abdul-Baha Abbas, p. 673- 674: gr 2, http://reference.bahai.org/en/t/ab/TAB/tab-736.html, February 19, 2011. Abbas, Abdul-Baha. Selections From the Writings of ‘Abdu’l-Baha, Page 109, 125127, 283-295: gr1, http://reference.bahai.org, February 20, 2011. Abbas, Abdul-Baha. Some Answered Questions, Pages 227-229: gr3, http:// reference.bahai.org, February 19, 2011. Abdul-Baha Abbas, Tablets, Pages 40-48, 319-320: 375-382gr4, http:// reference.bahai.org, February 20, 2011. Abbas, Abdul-Baha. The Promulgation of Universal Peace, 16 April 1912 Talk at Hotel Ansonia to Baha’i’ Friends of New Jersey Broadway and Seventythird Street, New York, http://reference.bahai.org/en/t/ab/PUP/pup-8.html, February 19, 2011. Abbas, Abdul-Baha The Secret of Divine Civilization: gr6, http:// reference.bahai.org, February 20, 2011. Aristotle, Nicomachean Ethics, Appendix IV, Books I (4, 7, 8, 10, 9, 13), Book VI(12), Book VII (13), Book VIII(v), Book IX (9), Book X (6,7) Asia Sentinel. Thailand’s Royal Wealth, 1 March 2007. Asia Times, In Thailand, a return to ‘sufficiency’, 5 October 2006 Bade, R. and M. Parkin. Foundations of Economics. 3rd Edition. Addison-Wesley. Bangkok Post, PM earmarks B10bn for well-being,10 March 2007 Bhagavad Gita, chapters 2. 4, 5,10, 12, 13, 14, 18, 10.4-5 Bible, 2: 9-10, 3:13-18, Proverbs 15:13, http://www.gnpcb.org/esv/search/?q= Proverbs+2, January 29, 2011. Bible, Genesis 30, http://www.gnpcb.org/esv/search/?q=Genesis+30, January 30, 2011. Bible, Hebrews 13:5, refer in Bible Verses about Happiness Bible, Matthew 11-28, refer in The Christian life, http://www.bibleed.com/ bibleteachings/christianlife/happiness.asp, January 29, 2011. Bible, Peter 1 and Galatians 6-10, refer in The Christian life, http:// www.bibleed.com/bibleteachings/christianlife/happiness.asp, January 29, 2011. Bible, Psalms 37 and 68, http://www.gnpcb.org/esv/search/?q=Psalm+37, January 29, 2011. 79 80 The Meaning of Sufficiency Economy International Conference Bible. Ecclesiastes 2, 3 http://www.gnpcb.org/esv/search/?q=Ecclesiastes+2, January 29, 2011. Bilaterals, FTA BACKLASH: Farmers petition the King, 7 July 2004 Carabelli, Anna M. and Mario A. Cedrini, John Maynard Keynes, Virtue and Happiness, 1905, Refer in „The economic problem of happiness Keynes on happiness and economics’, 2009, http:// semeq.unipmn.it/files/The_Economic_Problem_of_Happiness__Carabelli_and_Cedrini.pdf, March 1, 2011. Chaipattana Foundation Journal. Sufficiency Economy, undated. Crispin, Shawn W. Thailand’s new economic logic, Asia Times, 2 February 2007. De Bary, William Theodore. 2002, Sources of East Asian Tradition: Premodern, 909 pages. [Used in this paper for a description of Confucian and Mencian philosopohy.] Engels, Frederick. Deutsch-Franz ösische Jahrbücher — The Condition of England, A review of Past and Present, by Thomas Carlyle, London, 1843, http://www.marxists.org/ archive/marx/works/1844/df-jahrbucher/carlyle.htm, February 25, 2011. Fieser, James. http://www.iep.utm.edu/humemora/, February 7, 2011. Frum, no initial. Does Judaism really lead to greater happiness? (religious) people don’t seem happier to me?, 1. http://www.simpletoremember.com/articles/ a/man-self-development-commitment/#0987, January 27, 2011 Fussilat, Chapter #41, Verse #35, refer in http://www.searchtruth.com/ search.php?keyword=happiness&translator=5&search=1, January 31, 2011. Hewison, Kevin Localism in Thailand a study of globalisation and its discontents, 1999. H u m e , D . A Tr e a t i s e o f H u m a n N a t u r e , b o o k s 1 , 2 , 3 , 5 , a n d 6 . h t t p : / / w w w. c l a s s . u i d a h o . e d u / m i c k e l s e n / t e x t s / H u m e % 2 0 Tr e a t i s e / hume%20treatise1.htm#PART%20III, February 7, 2011. Hume, D. Enquiry Concerning the Principles of Morals, section I: of the general principles of morals, http://www.anselm.edu/homepage/dbanach/HumeEnquiry%20Concerning%20Morals.htm, February 3, 2011. Kantabutra, S. (2005), Applying Sufficiency Economy Philosophy in business organizations: A case of Sa Paper Preservation House. Unpublished manuscript, Sufficiency Economy Unit, Office of National Economic and Social Development Board, Thailand. The Meaning of Sufficiency Economy International Conference Kantabutra, S. (2006), Relating vision-based leadership to sustainable business performance: A Thai perspective. Kravis Leadership Institute Leadership Review, 6 (Spring): 37-53. Keynes, John Maynard. Economic possibilities for our grandchildren, 1930, http:// www.econ.yale.edu/smith/econ116a/keynes1.pdf, March 1, 2011. Keynes, John Maynard. The Economic Consequences of the Peace 1920, CHAPTER II EUROPE BEFORE THE WAR, section III. The Psychology of Society, www.gutenberg.net, February 27, 2011. Khunthongjan S. and A. Wiboonpongse (2010) A Study of Performance of SMEs In their Application of Sufficiency Economy Philosophy. GMSARN International Journal , Vol. 4, No. 3 , September 2010. Khunthongjan, S. (2009), A Study of the Characteristics of Small and Medium Size Enterprises Embracing the Philosophy of Sufficient Economy. Journal of Global Management Research. Vol. 5, No. 1, June 2009. King, Henry Churchill. The fundamental conditions of happiness, Bible world, Vol.23 No. 3 (Mar, 1904) Kohler, Kaufmann and Adolf Guttmacher, (1-3) HAPPINESS, The Jewish Encyclopedia. Vol. 12. New York: Funk and Wagnalls, 1905-26., http:// www.jewishencyclopedia.com/ view.jsp?artid=271&letter=H&search= happiness#ixzz1C7LTSBes, January 27, 2011 Kohler, Kaufmann HAPPINESS, and Adolf Guttmacher, The Jewish Encyclopedia. Vo l . 1 2 . N e w Yo r k : F u n k a n d Wa g n a l l s , 1 9 0 5 - 2 6 . , h t t p : / / www.jewishencyclopedia.com/view.jsp? artid=271&letter=H&search= happiness#ixzz1C7LTSBes, January 27, 2011 Kusumavalee, S. (2005), Applying Sufficiency Economy Philosophy in business Organizations: A case of Siam Cement Group. Unpublished manuscript, Sufficiency Economy Unit. Office of National Economic and Social Development Board, Thailand. Leaman, Oliver Ibn Rushed. On happiness and philosophy, Studia islamica, no.52 (1980), pp. 167-181. Leelavechaboot, D. (2010), White Ocean Strategy: Scope of Application for Sustainable Achievement of Business Among Thai Companies. Independent Study, MBA in International Program, Naresuan University. Mahidol University Leadership Research Group (2006), An ongoing examination of Sufficiency Economy Philosophy in business: A case of Theptarin Hospital. College of Management, Mahidol University. 81 82 The Meaning of Sufficiency Economy International Conference Marx , Karl. Lead Article in No. 179 of the Kölnische Zeitung, Marx Engels Colle cted Works (MECW) Volume 2, p. 184. Marx, K. and Engels, F. On Communism and Morality, The German Ideology, http:/ /www.marxists.org/archive/marx/works/1845/german-ideology/ch03f.htm, February 25, 2011. Marx, Karl Does the Reign of Augustus Deserve to be Counted Among the Happier Periods of the Roman Empire?, Marx Engels Collected Works (MECW) Volume 1, p. 639, Written: between August 10 and 16, 1835, 5 http:// www.marxists.org/archive/marx/works/1837-pre/marx/1835aug.htm, February 23, 2011. Marx, Karl Letter from Heinrich Marx to son Karl in Berlin, Marx Engels Collected Works (MECW) Volume 1, pg 670-673., Written: Trier, March 2, 1837, http://www.marxists.org/archive/marx/letters/papa/1837-fl2.htm, February 23, 2011. Marx, Karl Reflections of a Young Man on The Choice of a Profession, Marx Engels Collected Works (MECW) Volume 1, Written: between August 10 and 16, 1835, http://www.marxists.org/archive/marx/works/1837-pre/marx/1835ref.htm, February 23, 2011. Marx, Karl. Chapter One: A Scientific Discovery, The Poverty of Philosophy. http:// www.marxists.org/archive/marx/works/1847/poverty-philosophy/ ch01c.htm, February 25, 2011. Marx, Karl. Notebooks on Epicurean Philosophy, Seventh Notebook, I. Cicero, On the Nature of the Gods, Book I, Chapter XIX, http://www.marxists.org/ archive/marx/works/1839/notebook/ch07.htm, February 24, 2011. Marxists website. http://www.marxists.org/archive/marx/works/1842/07/10.htm, February 25, 2011. Marxists website. First Manuscript, Karl Marx’s Economic and Philosophical Manuscripts, http://www.marxists.org/archive/marx/works/1844/epm/ 1st.htm, February 25, 2011. M i l l , J o h n S t u a r t , 1 8 6 3 , U t i l i t a r i a n i s m C h a p t e r s 2 , 3 , 4 , h t t p : / / w w w. utilitarianism.com/mill2.htm, February 22, 2011. M o s s , Wa l t e r G . T h e Wi s d o m o f E . F. S c h u m a c h e r, 2 0 1 0 , h t t p : / / w w w. wisdompage.com/ Schumacher Essay.pdf, March 3, 2011. National Economic and Social Development Board (NESDB) of Thailand. Sufficiency Economy :implications and applications. http:// www.nesdb.go.th/Md/book/booksuffwork_eng.pdf. Retrieved 6 May 2010. New Mandala. Interview with Professor Kevin Hewison where he discusses sufficiency economy. Undated. The Meaning of Sufficiency Economy International Conference Nuttavuthisit, K. (2005). Applying Sufficiency Economy Philosophy in business organizations: A case of Pranda Jewelry. Unpublished manuscript, Sufficiency Economy Unit. Office of National Economic and Social Development Board, Thailand. Payutto, p.a. Buddhist economics, Chapter 3, http://www.urbandharma.org Plato, Republic, Stanford Encyclopedia of Philosophy, http://plato.stanford.edu/ entries, January 19, 2011.] Prachachat business newspaper, Bea-Kud-Chum as a new currency, 15 February 2007. Prachachat Business Newspaper. Self-Sufficiency Economy Topic, Chaweewan Saiboa , 8 February 2007. Prachachat Business Newspaper. WTO doubts Thailand , 19 April 2007. Puntasen, Apichai, S. Premchuen, & P. Keitdejpunya, (2003), Application of the royal thought about the Sufficiency Economy in SMEs. Thailand Research Fund. Puntasen, Apichai. (2007). Formulation and Evaluation of Sufficiency Economy Indicators and the Economic and Social Report on the National Performance in the Direction of Sufficiency Economy. Office of the National Economic and Social Advisory Council (NESAC) , Ubon Rajathanee University, Thailand. Puntasen, Apichai. http://issuu.com/volunteerspirit/docs/apichai001?viewMode= magazine&mode=embed, March 6, 2011. Qu’ran. Al-Anaam, Chapter #6, Verse #135, refer in http://www.searchtruth.com/ search.php?keyword=happiness&translator=5&search=1, January 31, 2011. Qur ’an, 16:97, refer in The Way To Achieve Happiness By Abdurrahman Demashqeyyah, http://www.islam-guide.com/way-to-happiness.htm, January 31, 2011. Qur’an, Sûrah al-Infitâr: 13-14, refer in Happiness and Faith in Islam, http:/ /xeniagreekmuslimah.wordpress.com/2010/09/02/happiness-and-faith-inislam/, January 31, 2011. Santiprabhob, V. (2005). Applying Sufficiency Economy Philosophy in business organizations: A synthesis. Unpublished manuscript, Sufficiency Economy Unit. Office of National Economic and Social Development Board, Thailand. Sasin Graduate Institute of Business Administration of Chulalongkorn University. (2010). Corporate Sustainability under the Sufficiency Economy Philosophy. Thailand. . 83 84 The Meaning of Sufficiency Economy International Conference Schumacher, E.F., Small is beautiful, pp. 17, 31, 62, 64,71,75,80, 89, 133, 232. Smith, Adam, The Theory of Moral Sentiments; Parts I through VII. http:// www.econlib.org/library/Smith/ smMS1.html#I.II.16, February 9, 2011. Thailand National Economic and Social Development Board (NESDB), Sufficiency economy (in Thai), http://www.nesdb.go.th/portals/0/about/suriyanuwat/ room/05/room05.pdf, March 6, 2011. Thaingo.org, 31 March 2007 The Economist. Rebranding Thaksinomics, 11 January 2007 Thongpakde, N. (2007) Thailand’s Economics Development and the Philosophy of Sufficiency Economy, Manuscript. Universal House of Justice. 1994. Toward a Prosperous Humanity. Haifa, Israel. Vathanophas, V. (2005). Applying Sufficiency Economy Philosophy in business organizations:A case of Thai. Com. Unpublished manuscript, Sufficiency Economy Unit. Office of National Economic and Social Development Board, Thailand. Examined how a dot-com stat – up firm Wehrfritz, George. Buddhist economics, Newsweek International Edition, 22 January 2007. Xeniagreekmuslimah, Happiness and Faith in Islam, http://xeniagreekmuslimah. wordpress.com/ 2010/09/02/happiness-and-faith-in-islam/, January 31, 2011. Group Sufficiency Economy and Mainstream Economic Theory 1 The Meaning of Sufficiency Economy International Conference Modern Mainstream Economic Science: a Science Without Gratuitousness. The Case of the Economy of Communion Luigino Bruni Milan Bicocca and IU Sophia (Florence) The Meaning of Sufficiency Economy International Conference Modern Mainstream Economic Science: a Science Without Gratuitousness. The Case of the Economy of Communion We do not seek out companions by some natural instinct; rather, we seek the respect and utility they bring us: we first desire advantage, then companions. THOMAS HOBBES Premise The world economy in these last few years is facing the most serious crisis since 1929, and all the protagonists of the economic community are called for a new and greater responsibility and commitment in order to overcome this crisis and finding a new sustainable ways for the market economy. The processes of globalisation can offer new opportunities to many who are still excluded from material well-being but, at the same time, there is the real risk of transforming the world into a place in which the only form of human relationship is the “cash nexus”, where everything becomes a commodity. Our market economy has two possible ways forward: (1) to build a ‘global village’ where, as in every village, more principles are at work (redistribution, gift and market exchange); (2) or, instead, to transform the world into a ‘global supermarket’ where everything becomes commodity and where there is no room for genuine and non-instrumental relationships. In this context, the main challenge of the Economy of Communion both at a theoretical and a practical level - is to show that it is, here and now, possible to build business and communities for authentic relationships where reciprocity has right of citizenship also within the economic domain. I am convinced that today the capitalistic economy has brought fantastic achievements along these last two century, but nowadays is obsolete and not able to fulfil its traditional promises of wellbeing and human development. Not only the environmental crisis, but also the social and spiritual crises today say clearly that we have to save market economy by going further this capitalistic financial capitalism. There are many concrete signs of hope, the socalled social and civil economy, among those experiences such as fair trade, ethical banks and social enterprise. In my presentation I will refer in particular to the Economy of communion (EoC), 87 88 The Meaning of Sufficiency Economy International Conference developed within ghe Focolare spiritual movement, but my reference to this project is mainly a way for indicating a new paradigm of business and economy for this new search of a new economic system. The structure of my paper is the subdivided in three parts: 1) an outlook of the present global financial and economic crisis; 2) an excursion into the history and philosophy mainstream economy, starting from Adam Smith, in order to underlying the challenges of the modern political economy, showing also some new experiments that say that the philosophical assumptions of standard economics are not so robust as we thought in the past, referring in particular to the key issue of reciprocity; 3) finally some hints of new signs of hope, in the light of the economy of communion and the new season of social/civil economy. The Meaning of Sufficiency Economy International Conference PART 1: CRISIS AND HOPES IN THE WORLD ECONOMY Crisis of trust and confidence (before economics and finance) Behind the financial and economic crisis we are experiencing there is, above all, a grave crisis of confidence. No one knows any longer where to find reliable investments; therefore people sell stocks preferring cash (or gold and safe havens). Today it is clearer than ever how true that the word credit comes from “believe,” from trust. In 1936 the great British economist J. M. Keynes well described, in its essence, what is happening now, a phenomenon that depends very little on sophisticated financial instruments and more on simple psychological mechanisms: we have fallen into a “trap of negative expectations” a situation in which a serious crisis of confidence (in this case in the public debts of “sovereign” States) that the economic agents have strong preference for liquid assets and lack of confidence in financial stocks. And when one falls into these traps, the only effective policy is to recreate that missing trust, recreate positive expectations. The current capitalist economic system does not have - and here is the point - anthropological and ethical resources before techniques, in order to raise these expectations, because they lack cultural perspectives to the challenges posed. In times of crisis, the memory is always an important resource to imagine and draw scenarios of hope. Trust comes from the Latin fides, a word that means confidence, reliability, tie (rope) and religious faith. I trust you, I will give you credit (you are credible), because we share the same fides, that faith which was the main guarantee of reliability and loan repayments, especially when trading with strangers. On this fides-trust-credibility-reliability-bond-faith, the first European single market between the fourteenth century and modernity was born. With the Protestant Reformation fides enters in crisis, the rope breaks (Christian fides was no longer enough for businesses and for peace), then Europe found new forms of trust in order to support the emerging markets: it is in fact in the seventeenth century that central banks, stock exchanges, which became the new “secular” guarantee of the new fides-free market. Parallel to these new economic institutions the national states were also born, which became the new “places of trust,” the great safeguards for markets and currencies, as were the cities in the Middle Ages. This brief historical overview is just to say that the secular modern economy comes from a very close relationship between economics and national policy, between finance and national states. Behind exchanges and finance there were the states, peoples, ethnic communities, territories, affiliations. The political and economic democracy as we know it was based largely on national markets and economic institutions. This national capitalism, in its two great Anglo-Saxon and 89 90 The Meaning of Sufficiency Economy International Conference European versions, has held up until a few decades ago, when we entered in a more accelerated way in the era of globalization and financial capitalism.?? This crisis is telling us that we still do not know nor understand nor govern the globalized capitalism, because while the economy and finance have changed radically, the policy and its instruments are still those of early capitalism, including creation of huge public debt without control and guarantees, an expression of ancient idea of sovereignty of nation States. Not to mention the tax issue: to fight tax evasion seriously we should at least acknowledge that there is a mega “tax issue” and of justice that plays in the global financial markets, where they create huge profits and returns that escape tax systems and are still too anchored to the national dimension, which may be used as ex post to the dangerous and immoral trick of tax amnesties.?? It is enough to observe that the guarantees offered by Obama in the U.S. have become inadequate. In reality, we would need a political dimension of globalization, a policy that does not yet exist nor does any one have a glimpse of. That’s why in this crisis the new market economy in the era of globalization is in play, which should be different from what we have created thus far. The global financial economy needs trust but, as in the case of energy, it consumes without being able to recreate, because its tools create reputation (which is a standard commodity buyable in the market) which tends to displace the trust (which is instead a relational good).? What is certain today is that the old politics based on national governments, partisan balance and sovereignty no longer works. What will emerge from this failure we do not know: we can only predict a few years of fragility, systemic risk, uncertainty, and sacrifices for all, hopefully with bit of fairness. And we must above all raise the hope which is the great virtue in all times of crisis, it is the fertile ground from which even confidence can flourish. But which are the cultural and philosophical roots (or at least some of them) of the capitalistic market economy? The Meaning of Sufficiency Economy International Conference PART 2 Adam Smith’s ‘Original Sin’ Let us start our analysis by taking a closer look at what Adam Smith was trying to do; from this point of view, he is truly the father of modern economics.1 Let us begin with his most famous phrase: It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages (Wealth, I.ii.2). Not only is the logic of this passage at the heart of classical liberal economics, it remains today an important key to understanding the humanism that lies behind the confidence in the expansion of markets and globalization. Smith wanted to emphasize the independence from the “benevolence of our fellow citizens” as a positive virtue related to the new form of sociality introduced by the market. Market relationships allow us to satisfy our needs without having to depend on others’ love; by all depending impersonally and anonymously on the ‘Invisible Hand’ of the Market (with a capital ‘M’), we do not personally depend on anyone else, nor do we have to encounter anyone personally (and potentially painfully). In depending on many, we depend on no one with a name: “Each tradesman or artificer derives his subsistence from the employment, not of one, but of a hundred or a thousand different customers. Though in some measure obliged to them all, therefore, he is not absolutely dependent upon any one of them” Wealth, III.iv.12). We depend anonymously, and without the risk of injury, on the Market. This is why for Smith the market economy is an immediately civilizing factor: it is civil society, it is civilization, though a civilization based on immunitas. In this respect a famous passage from his Lectures on Jurisprudence is emblematic: Whenever commerce is introduced into any country, probity and punctuality always accompany it. These virtues in a rude and barbarous country are almost unknown. Of all the nations in Europe, the Dutch, the most commercial, are the most faithfull to their word. The English are more so than the Scotch, but much inferiour to the Dutch (Smith, Lectures, “Of Police”). Though the founders of political economy would not have admitted it, there is a close continuity between Hobbes’ and Smith’s designs. Hobbes was perhaps the most radical author to theorize the necessity of the death of the communitas to give birth to a modern society founded on a social contract between free and equal. Smith was less explicit about it, but no less radical. We find a similar intent at the heart of the cultural project that he put into practice to found political economy: the contract takes the place of the munus, or better yet, the form of reciprocity of the contract (which derives from cum-trahere, to bind together) is seen as a form of reciprocity or relationality that is the opposite of that of the munus. The munus obligates, binds and creates a dependence on the generosity of others, while the contract frees people and makes them independent. 1 91 92 The Meaning of Sufficiency Economy International Conference To do justice to the complexity of Smith’s thought, we should immediately add that the social and cultural target he has in mind is a social relationship typical of asymmetric and unequal pre-modern societies, in which the benevolence of some (the powerful and affluent) towards others (the poor and beggars) in reality conceals what G.W. Friedrich Hegel called a ‘master-slave’ power relationship, an asymmetric social relationship that is a direct cultural consequence of a certain understanding of the Absolute. This then is the ethical justification of his humanism of independence: “Nobody but a beggar chuses to depend chiefly upon the benevolence of his fellow-citizens” (Wealth, I.ii.2). The benevolence that Smith has in mind more closely resembles the munus about which Marcel Mauss wrote (that is, a gift that expresses and reinforces an asymmetry of power and of status in social relationships, which in turn obligates the recipient to return the gift) rather than the gift as an expression of gratuitousness and mutual freedom. The ‘other’ that Smith has in mind when he imagines life in pre-modern societies is not an other that blesses me and makes me happy, rather, in continuity with Hobbes, an other that is above or below me, not beside me as an equal. In other words, for Smith the direct and personal relationship with the other in the public sphere is synonymous with the feudal world; as such it must be overcome by a new anonymous and mediated sociality, which for Smith is more civil because it is free from dependence on the benevolence and gift–munus of others. The humanistic inspiration of Smith—or of Antonio Genovesi or Pietro Verri—cannot be understood unless one understands his enthusiasm for the market together with an indignation for the suffering and humiliation inflicted by a few feudal masters on the many servants in pre-modern communitas. For these reasons, there is in Smith not only the recognition that friendship is not sufficient to live in society at large (“In civilized society he stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons”, (Wealth, I.ii.2), but we also find in his thought the argument that, were we ever to have sufficient friends to obtain the things we need (as can happen in small village communities), the broad commercial society allows a more civil relationality, a new form of philia, which is morally higher because it is freely chosen.2 In summary, Smith takes recourse in the mediation of the market (and in a certain sense he invents it, at least theoretically), because, as he said, an unmediated relationship is synonymous with an uncivilized, feudal, asymmetric, and vertical relationship. The other harms me because he or she is a powerful person or a master Allan Silver writes: “According to Smith, the replacement of necessitudo with commercial society brings with it a morally superior form of friendship—voluntary, based on natural sympathy, unconstrained by necessity” (1990, p. 1481). On this basis the conditions can be created for the emergence of civil society free from the categories of indifference or foreignness: the other is neither my enemy nor my ally, he or she is simply indifferent to me: the “stranger is not a friend from whom we can expect any special favor and sympathy. But at the same time, he is not an enemy” (Ibid., p. 1483). 2 The Meaning of Sufficiency Economy International Conference who rules me, one who does not contend with me on equal terms. The market thus avoids this unmediated, uncivilized relationship and constructs a higher one that is more humane: when the beggar enters the butcher shop with money in hand, when, that is, he or she can effect an equal exchange with the seller, that relationship— precisely because it is mediated by the market—is for Smith more humane with respect to the dependent relationships in a world without markets. Of course Smith does not deny that in private life there may be an unmediated face to face relationality, but precisely and only in the private sphere, among one’s family and close circle of friends. In civil society, including the market (for Smith, the market is civil society only from this standpoint), it is good to meet others anonymously because the other with a face is not a ‘brother’ who is like me, but a superior (or an inferior). Economics without ‘Beneficence’ There is also a second aspect to Smith’s ‘error’. In his The Theory of Moral Sentiments Smith reminds us that “Beneficence, therefore, is less essential to the existence of society than justice. Society may subsist, though not in the most comfortable state, without beneficence; but the prevalence of injustice must utterly destroy it” (Smith, Theory, II.ii.3.5). And on this basis Smith states that Society may subsist among different men, as among different merchants, from a sense of its utility, without any mutual love or affection (Smith, Theory, II.ii.3.4, italics mine). This is an important argument that is finding increasing consensus in a global society, and one that apparently we can agree on; in reality it conceals a snare, represented by the idea that civil society can function and develop without gratuitousness (which can be viewed as a synonym of beneficence, or charity), or that a contract can take the place of a gift. It is said that the gift of oneself and of friendship are important in the private sphere, but in the market and in civil society we can easily do without them; rather, as we have seen, we do well to do without them, precisely because of their burden of pain and injury. Actually, as the growing loneliness and misery of our affluent economies are telling us, a society free from gratuitousness is not a habitable place, much less a place of joy. This is especially true in post-modern societies, where the boundary between ‘private’ and ‘public’ is disappearing: in our societies, if we do not live in gratuitousness in public (work, politics, associations, and so forth), neither will we live it in private. Nothing like Smith’s idea is currently posited within the core of economic science. Smith’s economic theory is not taught in most universities (except for a few references to the ‘Invisible Hand’), but the idea of economic exchange as mutual indifference and of the market as the place of virtuous, anonymous and impersonal relationships still sustains the entire system of contemporary economics that, from this point of view, is heir to ‘Adam’ Smith and his ‘original sin’. 93 94 The Meaning of Sufficiency Economy International Conference In summary, the wound that Smith saw and wanted to avoid by recourse to the mediation of the market is not the wound I receive from friendship and horizontal relationality between peers, but the wound I receive from power asymmetry and by forces objectively present in the field. And who can deny that this wound should be avoided to build a more civil and humane society? Why, then, should this mediation by the market represent a problem? The rest of this book is an attempt to answer these questions. One consideration should suffice for the moment. If the market were limited in scope and distinct from the rest of life—such as sports or opera, or as were the markets of the ancien régime—we could, with less concern and perhaps even with some enthusias m, accept the existence of this zone where we could encounter each other without injury and pain. Indeed, we would view it (as we once did and as we still do in areas where there is excessive communitas that entangles and ensnares people) as a means of growth and liberation. But—and this is the point—if the market becomes the principal means of organizing community life, that is, if it permeates the whole of civil society from health care to schools, from child care to elder care, as is increasingly happening, then entrusting social relationships to the market contract alone is insufficient and dangerous. Nor could the Leviathan State, which incorporated the same mediated, impersonal logic, heal such a failure in interpersonal relationships. Smith’s ‘original sin’ (unintentional, thus at most a venial sin), then, was to consider interpersonal relationships as always uncivilized and asymmetric (which is not all that different from Karl Marx’s theories), and therefore to have held that every mediated relationship is more civilizing than an unmediated relationality. To use a popular and slightly crude expression, he threw the baby (the interpersonal relationship) out with the bath water (the asymmetric and feudal personal relationship, which is but one type of relationship). If then we want to recover a positive relationality within markets—and I believe that this is a decisive challenge for our quality of life in coming years—then economic theory must surpass Smith’s methodology and envision an economic science capable of gratuitousness, beyond a merely contractual and immunizing relationality. Reciprocity We conclude this second part by mentioning an important debate that is assuming a normative dimension in economic science in the last few years, which will open some interesting perspectives for our discussion. This path of research is more and more showing that the standard neoclassical homo oeconomicus anthropology does not exist in the practice. In fact, the hypotheses about the psychological and anthropological characteristics of economic models are basically a priora that have never had empirical evidence. When instead economists in the last three or two decades have begun to text the hypothesis of self-interest and rational The Meaning of Sufficiency Economy International Conference behavior they have discovered that real people in the lab act in a different matter, much more open to relationality, sociality, social norms, and in particular reciprocity. The process of re-foundation of the economic theory begun in the 70’s, during a very creative and alive period of heterodox economic science, when most of the papers and books that are today considered classics of the non-mainstream economics of their time that, however, are rediscovered today as classics of the new paradigm that is emerging now. In 1970 A. O. Hirschman published his Exit Voice and Loyalty, a little book, and mostly misunderstood by his fellow economists, that opened a new season of dialogue (at least in his desires) between the tools of politics (voice) and those of market (voice). Hirschman claimed the importance of bringing more “voice” into market and economy, and more “exit” into organizations and politics. In 1971 N. Georgescu Roegen published his book The Entropy Law and the Economic Process, where he brought into the attention of the economic discipline (that nevertheless remained very inattentive) the innovative issue of the natural limits of natural resources and of the planet, by applying the laws of the thermodynamics to economics, a methodological step that could have changed radically the economic paradigm and that, instead, remained totally unattended. In the 1974 the American economist and demographer Dick Easterlin published the seminal paper on the so-called “the paradox of affluent happiness”, showing that US and western society have reached a sort of steady state in subjective wellbeing or happiness. Three years later Tibor Scitovsky published a book in the same topic, The Joyless Economy, denouncing the American way of life as not anymore able to produce happiness of its people, who substitute the lack of authentic happiness with consumption of comfort goods. Today we know, with the present crisis, how true this prophecy was, because of the most deep root of our economic and financial crisis is the poverty trap of American society who, facing a great fall of social and civil life, replace the lack of sociality and relational goods with commodities: this search for commodity has brought the Western society and family (and the US in particular) to increase their debts in order to foster increasing rate of consumption, up to the explosion of the subprime in 2008, that was, however, a finishing line of a wrong relationship between happiness-sociality-consumption. In the 1977 the Indian economist Amartya Sen wrote his paper “rational fools”, showing that the king of the assumption of economics, i.e. the “rationality of the economic man” is naked, opening in this way a season of deep reflection on the nature of rationality in economics, following something similar to what happened in psychology thanks to the works of H. Simon few years before. Fred Hirsh in his book “Social limits to growth” in 1976 introduced into the social sciences the issue of “positional goods”, and launched the central issue of the positional competition as one the key element of the modern economy and society, that brings people to compete one another in a sort of zero sum game, new forms of “prisoner dilemma” 95 96 The Meaning of Sufficiency Economy International Conference games where the social scarcity of most of the contemporary goods (i.e. the “positional ones”) does not allow that the market competition can bear its traditional benefit in terms of efficiency and welfare, but only mutual destruction of natural, economic and relational resources. A topic, this, that has old roots in the works of T. Veblen and later of K. Galbraith, and that has been developed later by economists such as Robert Frank or Richard Layard. In recent years there is also a new theoretical interest in reciprocity by economists. In the lively debate that recently opened on the topic, a number of innovations stand out that move in the direction of a serious recovery of the dimension of personal relationality, with its risks and dangers. The development of the literature on reciprocity is tied to the emergence and growth of experimental economics and cognitive economics (or behavioral economics), which have shown the importance of behaviors that differ from those foreseen by conventional economic theory, the heir to Smith’s legacy.3 This new phase of study has been generated mainly by empirical and experimental analyses that bring to light behavior that could not be explained by standard economic theory. Among the first anomalies to be studied were some cooperative choices that came to light in interactions in which the theory predicted opportunism, while the experiments registered cooperative attitudes.4 According to this theory of reciprocity people are neither generous nor ungenerous without distinction toward anyone, but they demonstrate selectivity in their actions and are conditioned in their actions by the actions of others: “Indeed, the same people who are altruistic to other altruistic people are also motivated to hurt those who hurt them” (Rabin, 1993 p. 1281).5 The analysis of the role of intentions is particularly important in this line of study. By now many empirical studies have shown that a subject attempts to understand the intentions of others and thus to judge his or her degree of kindness; that is, a subject observes not only what others have in fact done, but also what they might have done and did not do (or the alternatives that were available).6 The differences in approach between behavioral economics and experimental economics, both developed in the late 1970s, essentially consist in the role of trust (which is greater in the experimental approaches of Vernon Smith, Ken Binmore or Charles Plott), the role of the a priori in rational choice, and the role of self-interest in the behavioral economics of Daniel Kahneman or Robert Sugden) for the investigation of the psychological dynamics that lie behind one’s choices. For a comparison between this debate and the similar one between the late nineteenth century Vilfredo Pareto and Francis Edgeworth (and Maffeo Pantaleoni) cf. Bruni and Sugden (2007). 4 One of the first authors to directly bring up the concept of reciprocity was Matthew Rabin in 1993. In his by now classic article that appeared in the American Economic Review, the opening lines read: “people may care not only about their own well-being, but also about the well-being of others. Yet psychological evidence indicates that most altruistic behavior is more complex. People do not seek uniformly to help other people; rather, they do so according to how generous these other people are being” (p. 1281). 5 In particular, Matthew Rabin based his theory on two assumptions: a) people are willing to sacrifice their own material well-being to help those who have been kind to them; b) people are willing to bear a material sacrifice to ‘punish’ those who acted unfairly toward them. 6 For a overview of theoretical and experimental results see Vittorio Pelligra (2002, 2007). 3 The Meaning of Sufficiency Economy International Conference The theory of reciprocity has undergone many developments, thanks to the fact that these dynamics lend themselves well to being tested in laboratory experiments, and the paradigm of rational egoism is coming into serious discussion. This has resulted in a less abstract and aprioristic theoretical approach to studying people’s actual behavior. New models and theories have emerged from this experimental literature that today are part of the toolkit of anyone involved in game theory, decision theory and, in general, behavioral analysis. In such theories reciprocity is at once an empirically studied phenomenon and a theoretical hypothesis that gives a means of explaining anomalies in the theories based on the hypothesis of self-interested behavior. In this way new models, or games, have emerged that have provided the means of revealing behavior in which the players tend to respond more generously than standard economic theory would predict. This is explainable precisely on the basis of the theory of reciprocity. In particular, many experiments show that economic agents (at least in the laboratory) are willing to earn less money in order to reward or punish the other players on the basis of a rule of reciprocity: this hypothesis is called strong reciprocity. The basic game of such experiments is the trust game, in which a subject, A, receives a sum of money from the tester (say, $10), and A can either give it to the other player, B, or keep it for him- or herself. If A trusts B and gives the money, the sum is multiplied (say, by 3) and B in turn decides whether and how much to give back to A. According to standard economic theory, there is only equilibrium: A keeps the money and the game ends after the first move. The experimental evidence shows instead that more than half of all A choose to trust and give the money to B, who, in the majority of cases, give back some part (X) of the sum to A. B responds to A by rewarding the trust, or kindness, received at A’s expense. The other player is rewarded (or punished) on the basis of the belief that he or she was (or was not) kind, fair, or just toward oneself. Thus, in this approach, intentions matter. Another widely used game is the ultimatum game. A receives a sum (say, $10) and the game permits that A can keep the money only if A succeeds in convincing B to accept whatever sum is offered (if B does not accept the offer, neither one receives anything, just as in a contract). On the basis of the assumptions of rational choice, A should give B the smallest amount possible (say, $1), on the basis of the hypothesis that for B something is better than nothing (1 > 0). In fact, experiments show that B frequently does not accept A’s offer if B does not think it is fair (that is, if the offer is below some threshold, which varies from culture to culture), punishing A at B’s own expense because B also gives up any gain. This type of reciprocity is called ‘strong reciprocity’ precisely for the characteristic of entailing a costly punishment or reward for the subject that rewards or punishes: in an ultimatum game, if I do not accept an offer that I consider unfair, I punish you (you receive nothing), but I do so at my expense (I give up whatever small sum was offered to 97 98 The Meaning of Sufficiency Economy International Conference me). So when I respond favorably in a trust game, according to a criterion of reciprocity, I reward your trust by giving up a greater gain. Kevin McCabe and colleagues (2003) conducted an interesting experiment. They played the trust game in two very different contexts. In the first game, A (the giver) did not have the possibility to choose between trusting and not trusting; A could only give (an involuntary trust game). In the second game, leaving all other conditions unchanged, A instead had the option not to give to B (a voluntary trust game). Thus in the second game, A intentionally trusts B and accepts the risk at A’s own expense. What were the results? In the first game, the percentage of B who had an attitude of reciprocity toward A was low (33%), which data confirm James Buchanan’s (1975) famous Samaritan’s Dilemma: if the Samaritan’s gift to a poor person has the effect of reducing his or her incentive, then the Samaritan is good if he or she does not give, since the donation increases the propensity to opportunism by the poor person, and it impedes his or her growth. In not giving, the Samaritan lives out what Buchanan calls ‘strategic altruism’ (see the diagram). However, the interesting aspect comes from the second game, the voluntary trust game. The data from the second experiment (with a ‘wound’) in fact show a reversal: 65% of B respond with an attitude of reciprocity. The awareness alone on the part of B, that A had the possibility of not taking a risk and instead risked an act of trust, doubled the reciprocated response—though it should be noted that opportunism was not eliminated (see diagram). This and other experiments have important implications for economic and social life, even in areas characterized by indigence and misery. They tell us that the relational signal that my behavior sends counts greatly: if I risk injuring myself in relationship with you, this risk increases your reciprocity, thus our mutual blessing. The sole knowledge that A could have freely not trusted B, and instead extended that trust, transformed for B the meaning of A’s gift from welfarism into reciprocity. Trust, which is risky and costly, impels the recipient to behave in a worthy manner, greatly reduces opportunism, and markedly encourages growth. I am convinced that the secret of solidarity in fair trade, of the Economy of Communion, and of the Grameen Bank of Muhammad Yunus, the 2006 laureate Nobel Peace Prize (a Nobel prize not for economics, but for peace, as a demonstration that “development is the new name for peace”), is precisely in neighborliness: 7 someone who helps another is someone whose intentions are known, someone who risks his or her own to help the other. Aid without neighborliness, even with the best of intentions, can feed the traps of dependency and welfarism. Interestingly, the parable of the Good Samaritan is told by Jesus to explain neighborliness (“who is my neighbor?”, Luke 10:25-37): in choosing this metaphor, I wonder if Buchanan was aware of this?! 7 The Meaning of Sufficiency Economy International Conference These theories and experiments on reciprocity have important things to say for our discussion. In the studied relationships, we enter into a risky relationship with the other that can harm us when the other does not respond: for example, if in a trust game B does not respond, A loses what he or she has. On the other hand, the literature tells us that A’s wager to entrust him- or herself to B increases the probability that B will respond, benefitting A as well (in many experiments B’s response leads to A’s being in a better situation than at the beginning)8. I conclude this section, which had the objective of showing a few reasons that have determined how economic science has been shaped as a reciprocal immunitas, with the (perhaps noble) goal of avoiding being wounded by the other. At the same time, these games still have considerable limitations. First, all interaction is mediated by money: the rewards and losses are monetary, which could be considered a somewhat crude yardstick when dealing with reciprocity. In fact, we could be more generous in interpreting the use of money as a reward. One possible reading of these experimental results could be the following: if we observe a behavior in which the choices show other than material components, we are also indirectly saying that monetary elements are not the only ones that count in people’s choices. Second, if it is true that A’s offer to B is risky, it can be understood as an offer in a contract (without guarantees or enforcement). If in fact B accepts and responds fairly, A will also gain with respect to his or her initial situation; in other words, the risk can be understood as a classic entrepreneurial risk, without a motive of gratuitousness by A toward B. To further examine this point, which is central to our discourse, together with two colleagues I conducted an experiment (Luca Stanca et al, 2009), designed in such a way that A’s choice to give something to B could be unequivocally interpreted at an act of pure gratuitousness, and we compared the results with the standard trust game results (also interpretable, as noted, as a self-interested contract). The results showed that the correlation between the offers by A and the responses by B is significantly greater when B knows that A was motivated by pure generosity toward B. It seems, then, that people respond more when they think that the generous behavior of the other is motivated by gratuity and their own intrinsic worth. In other words, beyond a motivational ‘crowding-out’ effect within a person, (as reported by the studies by Bruno Frey (2005) and Edward Deci and Richard Ryan (2001), when I am paid to do a task which I had done freely until then, from that moment on gratuitousness, replaced by the contract, is reduced), our data show that there is a specific crowding-out effect as well between the motivations of the other (either instrumental or gratuitous) and my behavior; if I see that the other acts on intrinsic motivations, my reciprocity toward him or her increases. 8 99 100 The Meaning of Sufficiency Economy International Conference PART III The Economy of Communion was born of an intuition that came to Chiara Lubich, the foundress of the Focolare Movement, in a little Movement town near S?o Paulo, in Brazil, in May 1991. While landing on the airplane on the city of São Paulo, Chiara Lubich was struck by the extreme poverty and the many favelas (slums) around the city; a strong impression due mainly to the enormous contrast between the shacks (where a number of people from our Movement also lived) and the many and modern skyscrapers. Faced with this scenario, the idea, or the inspiration, consisted in extending the dynamics of communion from individuals or families (already present in the Focolare) to business enterprises, inviting people to start up new businesses and to transform existing ones, all within the fullness of freedom - actually, the full name of the project is ‘The economy of communion in freedom’. These firms, therefore, are not non-profit organizations, but the business profits are to be pooled and used for three precise goals: first, to finance the development of the business itself; second, to spread the culture of communion by means of press, conferences and various infrastructures; and third, to help people in need with projects, by beginning with those who are in contact with the Focolare communities, according to the principle of subsidiarity. Another Economy of Communion element was part of the very first intuition: the pulsating heart of the new Economy of Communion would be the ‘business parks’, innovative ‘industrial districts’ which would rise up near the little towns of the Focolare Movement. Today the more developed parks are in Brazil (three), Argentina, the USA, Belgium, Portugal, Italy and the Netherlands. Taking off from the few dozen pioneer businesses that joined in 1991, today almost 800 businesses of various sizes are part of the Economy of Communion throughout the world. During these years, the Economy of Communion project has been the object of academic research (including more than 300 theses for degrees and various PhDs in different disciplines in many countries of the world), conventions, seminars, papers and books in various languages (see the international website: www.edc-online.org). The logic behind this “vital experiment” is straightforward: it is an attempt to take seriously reciprocity and Christian reciprocal love (agape) also in the economic domain. The Economy of Communion takes reciprocal love or agape as a powerful driving force not less effective than self-interest even within the market and business. This logic can be seen, for example, in the way that business people express their own rationale for business: building a better world without exclusion are more important than becoming individually richer. When observed within the economic The Meaning of Sufficiency Economy International Conference sphere, this reciprocal love (also called reciprocity or fraternity) results in communion. This reciprocity is not just contract or exchange, the more familiar category of economic reasoning (although the two forms of reciprocity can go hand in hand). The basic difference is that classical market exchange is instrumental and conditional. Relations of reciprocity, instead, presuppose the knowledge of the identity of the other, need genuine (non- instrumental) concern for the others and cannot be fully conditional. This kind of reciprocity can be considered to be synonymous with communion, intended as a way of understanding and living out social behaviour. Communion has important consequences on the way we understand the relationship between businesses and the poor, helped by sharing of life and later by sharing profits. The ‘governance’ of the economy cannot be based on the market alone, but takes into account the needs of the poor. This can be seen in the Economy of Communion most clearly in the willingness to share profits with the poor. Within the project, however, this logic of communion extends far beyond the distributive dimension. It relates to he way customers are dealt with, the pricing structure, coping with crises, managing debtors and so on. Whilst clearly, overall efficiency is essential, the ‘case by case’ approach dominates and is governed by a desire to understand the needs of the other. The way EoC understands and lives poverty is one of the building stone of the project: the poor are the first protagonists of their own lives and developments, and the help coming from the resources given by the firms are just a secondary help, in line with the “principle of subsidiarity” of the Catholic social doctrine: the external help does not take the place or substitute the protagonism of the poor. What are the consequences of this logic of communion applied to business life? What does it mean to love in economic life? And, in particular, in the life of a business enterprise? The logic of reciprocal love in the Economy of Communion is not manifested only by freely accepting the invitation to give away profits (which is the more visible aspect), but also in many other daily choices: from employing workers who, in particular situations, do not guarantee economic returns, to showing confidence and trust in suppliers or customers even in circumstances in which the ordinary logic of business would advise against it. Because it is something more than, and different from, simply giving or doing things gratuitously, love-communion is able to find room to express itself even when the correct performing of one’s role - as a buyer on behalf of others, as supervisor, as administrator of capital entrusted by another – would not seem to leave any such space: love finds space for personalised, otheroriented, gratuitous actions even in situations that are usually considered instrumental, anonymous and self-interested, as are market relations. Love-communion can imply the will to make use of the margins for manoeuvre at everyone’s disposal, assuming burdens and responsibilities in order to look for solutions to economic dilemmas: supporting a supplier in difficulty without 101 102 The Meaning of Sufficiency Economy International Conference taking on excessive risks to one’s own business (and therefore, to owners, creditors and employees) or coming up with a solution different from that which would seem to be the best as far as profits are concerned, but which would necessitate a reduction in personnel. In this regard, a manager in a Filipino business had the following experience: ‘Some time ago we discovered that one of our men working in the distribution section had difficulty in carrying out his job because he was having trouble with his eyesight. He didn’t want to tell us this out of fear of losing his job. We understood that he needed to work in order to sup- port his family and we found a solution. We transferred him to a new warehouse where he is now working proficiently.’ These businesses live the ‘culture of love’ while immersed in the market economy. They produce and sell goods and services working side by side with other businesses in today’s globalised economy: they do not work in ‘alternative’ or informal economies. This aspect too has important implications, because in past centuries, those who assigned a role of love to economics chose to operate outside of the market (for example, charities, non-profit organizations, NGO’s and foundations). The Economy of Communion introduces the concept of free-gift and communion inside the market and thus stakes a claim for a ‘multi-dimensional’ market: not only a place of efficiency, but also a place in which to practice the culture of reciprocity, the culture of love, and fraternity. What the implications of this project for economic theory? In the second part of my presentation I will focus on just two points that I consider relevant in both the contemporary theoretical and business debate. Love and reciprocity as an economic categories We said that in the EoC love, i.e. reciprocal love or reciprocity, occupies the central place. To affirm that love can occupy this central position in economic life is a revolutionary thought which goes against the current. In fact, the hypothesis that people are motivated by their own self-interest is still the cornerstone of the theoretical framework of mainstream economic science. During its classical period, however, political economy was based on a more complex anthropological postulate than the self-interested homo oeconomicus. In fact, even though Adam Smith did not rely on ‘the benevolence of the butcher ’ for the functioning of the market, nonetheless he attributed ‘sympathy’ and ‘fellow-feeling’ with a central role in his vision of both people and society. The Neapolitan Antonio Genovesi, on the other side of Europe, went even further when he depicted the market as a matter of ‘mutual assistance’, mutual love or reciprocity. After the neo-classical methodological revolution at the end of the XIXth century, economics was defined as a domain of human life whose effective performance requires only ‘indifferent’ - in the sense of ‘morally neutral’ - selfinterest: ‘The hypothesis that the individual is motivated by personal interests has become the dominating thought in economics today, and it has often been considered The Meaning of Sufficiency Economy International Conference an adequate explanation both of human behaviour and the efficient behaviour of the market economies’ (Sen, 2001, 4). The economic man (homo oeconomicus) is not necessary supposed to be selfish: for standard economics what is needed is just indifference to the other’s welfare, or, as the famous Enghish economist (and Pastor) P. H. Wicksteed (1910) used to say, ‘non-tuism’, that is, not interested in the welfare of the other person, of the ‘you’ in a market transaction (non-tuism comes from the Latin ‘tu’: you). Therefore, market relations need to be ‘ethically neutral’, relational indifferent: in economics there is no place for love or for hate: economic exchange is presented as a sort of third way between “love” and “war”. This is a ‘parsimonious’ or prudent conception of human beings, in A. Hirschman’s words. According to this economist, the exclusion of love from contemporary economics is also a consequence of its methodological parsimony. He recalls the well-known thesis of the English economist Dennis Robertson, according to whom the economist’s job is to help to create an institutional pattern of motivation where as small a burden as possible would be placed, for the purpose of society’s functioning, on ‘love’ (Hirschman 1984, p. 93). In other words, according to mainstream economics an efficient market economy must economize the use of love because love is the scarcest resource in human life, and economics must teach people to economize love in the market in order to have enough of this precious resource in other domains where it is really needed (family, friends, etc.). Therefore, it comes that the more an economic system utilises love the more it is inefficient. Others less sophisticated economists, instead, exclude love from economic analyses simply on the grounds of realism, holding that it is useless to discuss the matter because the fact is that people in economic life act out of self-interest and not out of love (this is what the majority of professional economists think). Love can perhaps come into play - under the form of philanthropy - only in a second step, when the entrepreneur as private human being; but during the productive process, in ordinary business dynamics, love is seen as a foreign word to economic reasoning. According to standard economics and business Bill Gates (for instance) as entrepreneur serves the common good by making good computer; Bill Gates as private citizen, in a second moment, creates a charity for Africa; but during the ordinary business activity business is business, or, in the words of the founder of General Motors, “the business of business is business”. Hirschman, and EoC with him, criticise this approach - today still very popular in economics - on the basis of a very simple consideration: ‘Robertson did his position a disservice: he opened his flank to easy attack when he equated love to a factor of production in strictly limited supply that needs to be economized. But what about the alternative analogy that equates love, benevolence, and public spirit to a skill that is improved through practice and atrophies without it? ... like the ability to speak a foreign language or to play the piano, these moral resources are likely to become depleted and to atrophy if not used’ (Hirschman 1984, pp. 93-94). 103 104 The Meaning of Sufficiency Economy International Conference The idea of business and entrepreneur. Speculation or innovation? The second issue is about the vision (and the practice) of business and entrepreneur coming from EoC. The attainment of a good and prosperous life on the part of great numbers of people – and, at least in theory, by all – would be unimaginable were it not for business leaders who create jobs, wealth and new products, and for innovations which are constantly expanding human opportunities and freedom. At the same time, like other aspects of human life and perhaps even more so, the sector of economics and labour is prone to the temptations of selfishness and narrow self-interest. However we see the world of economics, labour and business in a positive light as a significant sphere for creativity and service to society, a positive and civilizing element in human affairs. But what does the EOC, together with Church’s social teaching have to say in particular to the business community? First and foremost, as we are reminded in particular in these days of crisis, by sound economic theory the business leader is not a speculator, but essentially an innovator and a builder of projects. As the classical economics reminds us, the “speculator” makes it his goal to maximize profit; for him, business activity is merely a means to an end, and that end is profit. For the speculator, building roads and establishing banks or schools is not the goal, but merely a means to the goal of maximum profit. It should be immediately clear that the speculator is not the model of business leader that the EoC holds up as an agent and builder of the common good. The true entrepreneur is a different actor. The entrepreneur then is first and foremost an innovator, a creator, who generates and pursues projects: for him, for her, business activity is never merely a means or a tool, but is an essential part of the goal itself. It is not possible to separate the activity from its goal, since business activity has intrinsic value, it has value in itself. The exclusive pursuit of profit proves inadequate as the economy and society nowadays have to deal with new challenges, including the environment, “common goods” and globalization. When the market functions correctly, it is a place in which innovation and human creativity are favoured and awarded. True market competition can be, and if we want to understand it in its truest nature, should be seen as a race to innovation. Those who innovate grow and live, while those who do not innovate remain behind and leave the economic and civil game. The author who has most caught this virtuous dynamic of the market (the capacity to innovate is undoubtedly a virtue, because it is an expression of ar?te, of excellence) is the Austrian economist J.A. Schumpeter. In 1911, he published a The Theory of Economic Development, a classic text of the 20th century. In that book, Schumpeter masterfully describes the dynamic of the market as a “run” between innovators and imitators. To explain the nature and role of innovation, Schumpeter The Meaning of Sufficiency Economy International Conference draws upon a model where the starting point is the “stationary state”, the situation in which businesses only carry out routine activities and the economic system perfectly replicates itself over time, without there being creation of true wealth. Economic development then beings when an entrepreneur breaks from the “steady state” by introducing an innovation, which can be a technical invention, a new organizational formula, the creation of new products or new markets, which on average reduce costs and makes it possible for the business to create new wealth. The entrepreneur-innovator is the protagonist of economic development, as he creates real added value and makes the social system dynamic. The innovator is then followed by a “swarm” of imitators attracted by that created added value, just as bees are attracted by nectar. When they enter into those sectors that verify the innovation, they cause the market price of that given product to decrease, to the point that all the profit generated by the innovation is entirely absorbed. The economy and society return to the steady state until a new innovation restarts the cycle of economic development. Therefore, for Schumpeter, profit has a transitory nature, as it subsists as long as there is innovation, in that time lapse between the initial innovation and the imitation. What does this century-old theory still have to tell us today? Above all, it reminds us that the truest nature of the entrepreneur and the entrepreneurial function is the capacity to innovate. The entrepreneur is not necessarily a profit-seeker: profit is only a signal that innovation is present. When the entrepreneur (including the social entrepreneur) complains because he is imitated, his vocation is already in crisis. He must be reminded that imitation also plays an important role, as it makes sure that derivative advantages that come from an innovation do not remain in the innovating business alone but are spread to the entire society (for example, through the reduction of market prices, which increases collective well-being). Imitation is important and plays a role in the common good: the positive way to respond to imitation is to start the race again, continuing to innovate. This is particularly important in this era of globalization, where the innovation-imitation dynamic is very fast and global. Even today in this age of global crisis, the answer to living and growing is not complaining or turning to protectionist measures. Rather, it lies in a new start and new investment in the art of innovation. Besides, this theory of innovation tells us that when an entrepreneur stops innovating, he dies as an entrepreneur (perhaps transforming himself into a spectator), and so blocks the run or the innovation-imitation relay race, which is the true virtuous dynamic that pushes society ahead, not only the economy. One of the deepest reasons for the current crisis was the progressive transformation of many entrepreneurs and speculators, which took place in the past decades following the financial boom. 105 106 The Meaning of Sufficiency Economy International Conference The entrepreneur-innovator, compared to the speculator, thanks to his vocation, sees the world as a dynamic place that can be changed. He doesn’t simply think of increasing his own piece of a given “pie”. He creates new “pies”, welcomes new opportunities, looks ahead and not beside him in search of rivals to battle so that he can hoard the pie. The law of the market as a mechanism that awards innovation places the accent on people and not so much on capital, finance or technology. Innovation is first of all a matter of vision, of a different “eyes” on things and on the world, and therefore a matter of people that see reality differently. And, in fact, in the 1940s, Schumpeter himself foresaw that the passage of innovation from persons to research offices and development of large businesses would have changed the nature of capitalism. It would cause capitalism to lose contact with the personal dimension – the only one that can really innovate. And still today, after decades of getting drunk over what’s “big” and anonymous, we’re realizing that the businesses that are able to grow and be leaders in the globalized economy are, more and more, those where there is one or more persons capable of seeing reality differently, capable of innovation. The only true key to innovation and every economic value is people’s intelligence (that is, knowing how to “read and see within” things), as an Italian economist even older than Schumpeter said. I’m referring to Carlo Cattaneo from Milan, who, in the mid 19th century, wrote one of the most beautiful and humanistic theses on economic action, in which he reminds us that the virtue of innovation is founded on an even more radical virtue (because more universal): creativity. “There is not job or capital that does not begin with an act of intelligence,” he said, “Before every job, before all capital…it’s the intelligence that begins the work and stamps the character of wealth into it.” Finally, the dynamic, the run, the virtuous relay race of innovation-imitation is greater than just the economic environment. This gives us a beautiful and original key to understanding not only the market but also the civil history of peoples. When societies and markets favor people who innovate, when these people do not lament but are delighted in being imitated, when even institutions universalize these innovations, then common living and the market work, and they are beautiful places in which to live. BEYOND CSR This vision of business brings us to the great theme of business and social responsibility. Ethical theories concerned with business and social responsibility abound, but not all of them are acceptable. This is especially true of those cases where socially responsible practices are adopted primarily as a marketing device, without any effect on relationships inside and outside the business itself, the destination of its profits, the demands of justice, worker participation, and so forth. Nowadays business The Meaning of Sufficiency Economy International Conference leaders who want to take social responsibility seriously will need to be more daring, not limiting themselves to socially responsible practices and/or acts of philanthropy (positive and meritorious though these may be), but striking out into new territories. I shall mention just one. Entrepreneurs use their innovation and creativity to address challenges above and beyond the economy and the market. Specifically, there is a growing demand today for labour on the part of entire countries with great numbers of young people and few jobs: innovation and new initiative are needed if business, the economy and the market are to include those presently excluded. Today as in the past, the economy and the business sector fulfil their duty to serve the common good when they manage to incorporate broad sectors of the marginalized (one need only think of the factory workers of the last century) and to ensure that these people become, not problems, but resources and opportunities: for themselves, for business, and for society as a whole. Economic and commercial activity, when carried out along the lines indicated by the Church’s social teaching, is clearly “ethical” activity, since there cannot be a common good without business leaders that we would describe as “civil”. Business leaders are either “civil”, in the sense that their commercial activity serves to build up the common good, the good of all and of every individual, or else they are the reverse, as when they fail to produce quality products, ignore innovation, fail to create wealth and jobs, and pay no taxes. Conclusion: An economy (and economics) reconciled with life and well-being A multi-dimension economy and economics: this is the challenge of the Economy of Communion. An economy reconciled with life, because it says that love and reciprocity do not only have a place in family, affective and spiritual life, but also in the spheres of work, business enter- prises, production and commerce. Life is recomposed based on unity and becomes happier. An economic activity which wants to contribute towards well-being, to help people and also, through material goods, to ‘flourish’ must make room for the dimension of gift, of love, of communion. Otherwise, economic life becomes the road to serfdom, serfdom of commodities, of self-interest: human beings are seekers of genuine interpersonal relations even in the economic domain, mainly because in the post- industrial society the distinction between the economic domain and other domains does not work any- more. The various dimensions of life are becoming more and more interdependent, and human beings are experiencing a strong feeling of urgency in the quest to find a unified logic for existence. The ‘paradoxes of happiness in economics’, that is, more income associated with less happiness in advanced market economies, describe exactly the current unsustainability of the philosophy of separating the logic of non-economic (or private) life from economic life. 107 108 The Meaning of Sufficiency Economy International Conference The experience and culture of the Economy of Communion, born from a spiritual approach to life and economy, is one road, among others, towards a unified logic of existence in the era of globalisation and, I hope, also for the alive and creative Asian society and economy who must find its own way to market economy that on the one hand keeps its communitarian and spiritual roots, and, on the other, is able to innovate and grow in the globalised economy and society. Maybe in this great and passionate challenge the experience and culture of communion can offer its humble help. The Meaning of Sufficiency Economy International Conference Bibliography (to be completed): Bruni, L. (ed.), 2002. The Economy of Communion, New York, New City Press. Bruni, L. 2008, Reciprocity, Routledge, London. Bruni, L., Sugden, R., 2000. ‘Moral canals: trust and social capital in the work of Hume, Smith and Genovesi’, Economics and Philosophy, 16, pp. 21-45. Bruni, L., Zamagni, S., 2004. Civil Economy, Peter Lang, Oxford. Hirschman, A.O., 1984. ‘Against Par- simony: Three Easy Ways of Complicating Some Categories of Economic Discourse’, American Economic Re- view, 74, Papers and Proceedings No. 2. Robertson, D.H., 1956. ‘What Does the Economist Economize?’, in: Economic Commentaries, London, Staples Press Limited. Sen, A.K., 2001. Development as Freedom, Oxford, Oxford University Press. Wicksteed, P., 1910, The commonsense of political economy, MacMillan, London. 109 Group Sufficiency Economy and Mainstream Economic Theory 1 The Meaning of Sufficiency Economy International Conference Sufficiency Economy and Gross National Happiness: Integrated Value for Sustainable Development Mr.Tunchalong Rungwitoo1 D.B.A. Student, Doctor of Business Administration Program, Faculty of Business Administration, Chiangmai University. 1 Acknowledgement The author is thankful to Associate Professor Dr. Siriwut Buranapin, Head of Management Department, Faculty of Business Administration, Chiang Mai University, who inspires the idea of researching this topic and encourages me to writing down this conceptual paper. This paper would not have been possible without his expert insight, and excellent advice and guidance. The acknowledgement also goes to my colleagues for their review, comments and supports. The Meaning of Sufficiency Economy International Conference Sufficiency Economy and Gross National Happiness: Integrated Value for Sustainable Development ABSTRACT The paper aims to conceptualize the integrated value between the philosophy of Sufficiency Economy and the concept of Gross National Happiness as the key contribution to Sustainable Development, as well as to operationalize the philosophy and the concept. Sufficiency Economy, similarly to Gross National Happiness, attempts to promote balance among economy, society, environment, and culture. Guidance for Sufficiency Economy and variables of Gross National Happiness are introduced and converged for Sustainable Development. The indicators for Gross National Happiness not only comply with the philosophy of Sufficiency Economy through process factors, including moderation, reasonableness and self-immunity, moderated by condition factors, including knowledge and morality, but also introduce happiness indicators as ultimate goal for Sustainable Development. KEYWORDS: Sufficiency Economy, Gross National Happiness, Sustainable Development 113 114 The Meaning of Sufficiency Economy International Conference 1. Introduction: Consistency between Sufficiency Economy, Gross National Happiness and Sustainable Development It is now very clear that goal for all economic units is not only to achieve economic development, but also to gain human living development. In capitalism world, countries, organizations, communities, households, and people employ monetary indicators, such as gross domestic product, income, revenue, profit and value on asset, as their achievement criteria. However, using only financial indicators could lead to imbalance development because they measure only the side of increasing wealth but not the human lives, such as social security, peace, mindfulness, health, well being, and especially “Happiness”; which is considered the most important goal for human existence. The concept of Sustainable Development is introduced to promote the balance between economic, and humanity development among others. It is defined as development that meets the needs of the present generation, without compromising the ability of future generations to meet their own needs (WCED, 1987). The development is to enhance balance of 4 pillars, including economy, society, environment, and culture (Sufficiency Economy Organization 2009 and UNESCO 2007). Economic pillar considers skills to earn a living as well as sensitivity to the impact of economic growth on society and on the environment (UNESCO 2007). Social pillar calls for an understanding of social institutions and their roles in change and development, as well as participatory systems which provide opportunity for the expression of opinion (UNESCO 2007). In addition, balance within society implies that the choices people make should be wise in that they consider their impact on others and society at large (Wibulsawasi, Piboolsravut and Pootrakool 2010). Also, Sustainable Development requires people to be mindful of the common good and willing to make contribute to it (Wibulsawasi, Piboolsravut and Pootrakool 2010). Environmental pillar focuses on an awareness of resources, the fragile nature of physical environment and effects of human activities and decisions on environment (UNESCO 2007). Cultural pillar concerns ways of being, relating, and believing that reinforce harmonious living and differ according to context, history and tradition (UNESCO 2007). To build and maintain Sustainable Development, the philosophy of Sufficiency Economy, introduced by His Majesty the King of Thailand, is accepted worldwide as guidance for people, communities, organizations, and nations to conduct their balance life toward the middle path (Isarangkul and Pootrakool 2002, Pantasen et.al. 2003. Piboolsravut 2004, Curry While Thailand introduces the philosophy of Sufficiency Economy as the guidance for Sustainable Development, there is another approach to The Meaning of Sufficiency Economy International Conference determine such development, In Bhutan, happiness is considered as indicator to achieve ultimate goal for the development of the country. Initially, Bhutan develops Gross National Happiness, consisting of various development indicators to maintain sustainable development (Wangchuk, 2008) instead of employing only monetary and financial indicators. From these, Sufficiency Economy proposes the optimal approach for Sustainable Development, as well as Gross National Happiness that introduces indicators to ensure Sustainable Development. Conceptually, both are consistent in that indicators for Gross National Happiness measure not only outcome but also input and process of Sustainable Development. Sufficiency Economy and Gross National Happiness therefore share the common value for Sustainable Development. The objectives of this study are to conceptualize the relationship between the philosophy of Sufficiency Economy and the concept of Gross National Happiness, and Sufficiency Economy, and to operationalize the philosophy of Sufficiency Economy and the concept of Gross National Happiness. The following sessions portray the philosophy of Sufficiency Economy and its guidance, as well as the concept of Gross National Happiness and its indicators. Moreover, the relationship between Sufficiency Economy, Gross National Happiness and Sustainable Development are illustrated in details. Finally, the integrated relationship between Sufficiency Economy and Gross National Happiness is unfolded as the path for Sustainable Development. 2. Relationship between Sufficiency Economy and Sustainable Development and the Guidance for Sufficiency Economy The philosophy of Sufficiency Economy was addressed by His Majesty King Bhumibol Adulyadej to provide guidance to meet the challenges from globalization and other changes, for sustainable development, for economic recovery, and for revitalizing imbalance development (Piboolsravut 2004). The clear meaning of the philosophy is defined as follows (NESBD 2007: 7-8) “Sufficiency Economy stresses the middle path as an overriding principle for appropriate conduct by Thai people at all levels, from family to community to country. It calls for national development and administration so as to modernize in line with the forces of globalization. “Sufficiency” means moderation, reasonableness, and the need of self-immunity for sufficient protection from impact arising from internal and external changes. 115 116 The Meaning of Sufficiency Economy International Conference To achieve this, the application of knowledge with due consideration and prudence is essential. In particular great care is needed at every step in the utilization of theories and methodologies for planning and implementation. At the same time, it is necessary to strengthen the moral fiber of the nation, so that everyone, particularly public officials, academies, businessmen, adhere first and foremost to the principle of honesty and integrity. In addition, a way of life based on patience, perseverance, diligence, wisdom, and prudence is indispensable to create balance and be able to cope appropriately with critical challenges arising from extensive and rapid socioeconomic, environmental, and cultural changes in the world. The philosophy of Sufficiency Economy has been constructed and conceptualized as the development process. This philosophy takes the middle path approach as an overriding principle for appropriate conduct, integrating 3 key elements including Moderation, Reasonableness, and Self-Immunity. In addition, the process is under 2 underlying conditions including Knowledge and Morality. Moderation draws on Buddhism and stresses the middle way between want and extravagance, and between over-consumption and under-consumption (Kantabutra 2006 and Sachayansrisakul 2009). If consuming too much, people can create waste and suffer at the end. Too less, may be people can’t reach their objectives of doing things. People therefore should consume just enough for the right purpose or necessity (Sufficiency Economy Organization 2009). The only way to avoid suffering is to avoid greed or over demand for unnecessary things and situations (Calkins 2006). Reasonableness is about reasoning prior to making decision (Sachayansrisakul 2009). Its principle is not only emphasizes causes and effects in terms of making a decision (Calkins 2006 and Pantasen 2006), but also means being conscious and aware of what and why the decision is made (Calkins 2006 and Sachayansrisakul 2009). In addition, thinking for long term benefit is preferable as the reasonableness (Issarangkun and Pootrakool 2002). Self-immunity is about preparation for the protection for risk or unexpected shocks (Calkins, 2006) as well as ability to with stand shocks (Kantabutra 2006), to deal with internal and external environment (Issarangkun and Pootrakool 2002 and Kantabutra 2007), to adjust to events that are uncontrollable or unpredictable, and not to mange for short term gains (Kantabutra 2006). The Meaning of Sufficiency Economy International Conference According to the literature, the philosophy of Sufficiency Economy is proposed as the pathway for Sustainable Development (Isarangkul and Pootrakool 2002, Pantasen et.al. 2003. Piboolsravut 2004, Curry and Sura 2007, Bunyasrie 2009, Pruetipibultham 2010, Supadhiloke 2010). Once the Sufficiency Economy is implemented, the Sustainability Outcome will be built with regards to the four pillars, including economic, social, environmental, and cultural pillars. (P1) The three elements of Sufficiency Economy, including Moderation, Reasonableness, and Self Immunity therefore have simultaneous positive effect on Sustainability Outcomes in economic, social, environmental, and culture pillars. (P1a) The three elements of Sufficiency Economy, including Moderation, Reasonableness, and Self Immunity, have simultaneous positive effect on Sustainability Outcome in economic pillar. (P1b) The three elements of Sufficiency Economy, including Moderation, Reasonableness, and Self Immunity, have simultaneous positive effect on Sustainability Outcome in social pillar. (P1c) The three elements of Sufficiency Economy, including Moderation, Reasonableness, and Self Immunity, have simultaneous positive effect on Sustainability Outcome in environmental pillar. (P1d) The three elements of Sufficiency Economy, including Moderation, Reasonableness, and Self Immunity, have simultaneous positive effect on Sustainability Outcome in cultural pillar. With two underlying conditions, knowledge and morality are necessary to achieve the three elements of Sufficiency Economy (Supadhiloke 2010). Notably, these two factors have to go together all the time. Without morality, knowledge may cause harm; and without knowledge, people may not do things proper nor progress (Sufficiency Economy Organization 2009). Knowledge is required for the improvement of human capital on individual level, and the promotion of the knowledge economy at social level (Calkins 2006). The principle of knowledge requires breadth and thoroughness in planning, and cares in applying knowledge and in the implementation of plans, and also giving mutual assistance and collaboration (Pruetipibultham 2010). Unlike creating competitive advantage to compete with competitors, Sufficiency Economy focuses on sharing knowledge with competitors to develop market because doing so will benefit customers (Kantabutra 2007). In terms of Morality, people uphold honesty and integrity while conducting their lives with harmlessness, perseverance, and generosity (Issarangkun and Pootrakool 2002, Kantabutra 2007, and Pruetipibultham 2010). 117 because doing so will benefit customers (Kantabutra 2007). In terms of Morality, people uphold honesty and integrity while conducting their lives with harmlessness, perseverance, and generosity (Issarangkun and Pootrakool 2002, Kantabutra 2007, and Pruetipibultham The Meaning of Sufficiency Economy 118 2010). International Conference Build upon the explanations, (P2) Knowledge and Morality will simultaneously strengthen theupon relationships between(P2) the action of Moderation, Reasonableness, and Build the explanations, Knowledge and Morality will simultaneously strengthen the theThe action of Moderation, Reasonableness, Self-Immunity andrelationships Sustainabilitybetween Outcomes. relationship between the elements and The relationship between the and Self-Immunity and Sustainability Outcomes. the conditions of Sufficiency Economy and Sustainable Development can be illustrated in the elements and the conditions of Sufficiency Economy and Sustainable Development can Figure 1. be illustrated in the Figure 1. Figure 1 Relationship between Sufficiency Economy and and Sustainability Figure 1 Relationship between Sufficiency Economy Sustainability Outcome Outcome Knowledge Moderation Reasonableness P2 Self-Immunity P1 Sustainability Outcomes - Economic Pillar (P1a) - Social Pillar (P1b) - Environmental Pillar (P1c) - Cultural Pillar (P1d) Morality The elements and conditions of Economy Sufficiency can be simultaneously The elements and conditions of Sufficiency can Economy be simultaneously applicable to applicable to people in various level including household level, level and people in various level including household level, community level andcommunity organizational level. organizational level. At household level, Issarangkun and Pootrakool (2002) provide guidelines and key concerns for implementing the Sufficiency Economy concluded in the followings: (1) Utilizing their own resources to satisfy their basic needs before using 6 their surplus resources to generate more benefits. (2) Encouraging collaboration to other household in order to lower the cost of raw materials, consumer and social products, as well as to increase bargaining power. (3) Being aware of growing too fast by over borrowing. (4) Being aware of uncertainty by thinking of medium or worst –case scenario. They should conduct self-immunity by thinking of medium-cases or worstcase scenario rather than the best-case scenario. They would be adhering to the selfimmunity principle if they could still survive even if the worst-case scenario occurs. At community level, there is Community Development Plan (CDP), which is the process to strengthen community participation and to build capacity for community’s management, and encourages communities to implement Sufficiency Economy (Piboolsravut 2004). The process of the CDP encourages community members to The Meaning of Sufficiency Economy International Conference organize a consultative meeting. This supports the learning process of communities. Members will explore information and data related to situations of community, present and discuss the obtained information and data. For such discussion, they will learn the strengths and weakness of their community. The process of meeting will articulate a shared vision for the community, identify problems or opportunities for the community, and support making work plan to solve the problems or take advantage from opportunities. In the case where community members cannot figure out the solutions, they may need to visit other communities. In the most advance stage, the community can be encouraged to expand their activities through reaching out cooperative firms, bangs, and other outside sources. The expansion across different levels of organizations or activities can be compared to the development of a value-chain in production. The expanded activities include raising funds, creating direct sales channels, and seeking funds for establishing community rice mill or cooperative stores among others. This process provides communities an ensuring of their knowledge, an assurance to community members that their decision making is reasonable, and an encouragement to create self-immunity from discussion and making plan from step to step. At organizational level, organizations are encouraged to grow from a strong foundation and to establish their niche in the market with improving quality and competitive costs (Isarangkun and Pootrakool 2002). Based on the concept of selfimmunity, organizations, especially in business sector, are advised to not grow too fast by over-borrowing because uncertainty or external unfavorable factors could easily trigger their downfall (Isarangkun and Pootrakool 2002). Instead of this, they should expand their business gradually by obtaining a reasonable loan and so be able to manage liability without going bankrupt (Sachayansrisakul 2009). In addition, they should think of the medium-case or worst-case scenario rather than the best-case scenario. They would be adhering to the “self-immunity” principle if they could still “survive” even if the worst-case scenario occurs. To support this, Pantasen (2006) studies keys to enhance sustainability for small and medium enterprises in difficult situations. Ten guidelines for Sufficiency Economy at organization level are presented in the followings: (1) Adopt a long-term perspective to management and decision making. Do not manage for short-term gains, but consider cause and effect in the long run. (2) Genuinely value and continuously develop human resources. Avoid laying off employees even in a time of economic difficulty, but consider them as an investment. (3) Be honest, genuinely concern with and be accountable for a wide range of stakeholders, including the society, the environment and future generations. This often suggests stakeholders’ involvement in business decisionmaking and social contribution. (4) Nurture both incremental and radical innovation throughout the entire organization, including products and processes. This often means 119 120 The Meaning of Sufficiency Economy International Conference promoting cross-functional teams. (5) Utilize resources effectively and efficiently. (6) Adopt/develop effective, but not expensive, technology. Usually, this technology is developed from local materials and wisdoms. (7) Expand business because of its actual growth, as opposed to a surge in market demand. This often means a careful and gradual expansion. (8) Carefully diversify products, markets and investment portfolios to minimize risks. (9) Share knowledge to develop market. This often means knowledge sharing with competitors because doing so helps develop the market to benefit consumers. (10) Be truly ethical, perseverant and diligent. Despite different applications in various levels, they share the same goal of balanced and sustainable development (Bunyasri 2009) and also provide practices to implementing the philosophy. The guidance for Sufficiency Economy can be summarized into the mix of three components, moderation, reasonableness, and selfimmunity, and two conditions of knowledge and morality, as presented in Table 1. The Meaning of Sufficiency Economy International Conference Table 1 Guidance for Sufficiency Economy 1) Utilizing their own resources to satisfy their basic needs before using their surplus resources to generate more benefits (Issarangkun and Pootrakool 2002) 2) Utilize resources effectively and efficiently (Pantasen 2006) 3) Being aware of growing too fast by over borrowing (Issarangkun and Pootrakool 2002) 4) Expanding business because of its actual growth, as opposed to a surge in market demand (Pantasen 2006) 5) Developing technology from local materials (Pantasen 2006) 6) Adopting and developing effective, but not expensive, technology (Pantasen 2006) 7) Developing technology from local wisdoms (Pantasen 2006) 8) Conducting plan providing step for development (Piboolsravut 2004) 9) Being conscious of the thing is done (Bunyasri 2009) 10) Being sensible and insightful in taking decisions (Bunyasri 2009) 11) Discussing the obtained information and data for making decision (Issarangkun and Pootrakool 2002) 12) Adopt a long-term perspective to management and decision making (Pantasen 2006) 13) Encouraging communication and discussion among members (Issarangkun and Pootrakool 2002 and Piboolsravut 2004) 14) Encouraging stakeholders’ involvement in business decision-making and social contribution (Pantasen 2006) 15) Carefully diversify products, markets and investment portfolios to minimize risks (Pantasen 2006) 16) Building protection against shocks despite different applications (Bunyasri 2009) 17) Being aware of uncertainty by thinking of medium or worst –case scenario (Issarangkun and Pootrakool 2002) Morality Conditions Self-Immunity Reasonableness Moderation Guidance for Sufficiency Economy Elements Knowledge Table 1 Guidance for Sufficiency Economy X X X X X X X X X X X X X X X X X X X X 9 121 The Meaning of Sufficiency Economy International Conference 18) Nurture innovation throughout the entire organization, including products and processes. This often means promoting cross-functional teams (Pantasen 2006) 19) Encouraging collaboration with others (Issarangkun and Pootrakool 2002) 20) Sharing knowledge with competitors (Pantasen 2006 and Kantabutra 2007) 21) Exploring information and data related to situations of community (Piboolsravut 2004) 22) Genuinely value and continuously developing human resources (Pantasen 2006) 23) Having responsible activities to contribute to society (Issarangkun and Pootrakool 2002) 24) Being honest (Pantasen 2006, Bunyasri 2009 and Pruetipibultham 2010) 25) Being truly ethical, perseverant and diligent (Pantasen 2006, Bunyasri 2009 and Pruetipibultham 2010) Morality Knowledge Conditions Self-Immunity Guidance for Sufficiency Economy Reasonableness Elements Moderation 122 X X X X X X X X From Table 1, Twenty five items of the guidance—7 Moderation items, 7 Reasonableness items, 5 From Table 1, Twenty items of the guidance—7 Moderation items, 7 Reasonableness Self-Immunity items, five 6 Knowledge items, and the other 3 Morality items—can be proposed as overlapping variables of the 3 elements and 2 conditions. . items, 5 Self-Immunity items, 6 Knowledge items, and the other 3 Morality items—can be proposed as overlapping variables of the 3 elements and 2 conditions. . 3. Relationship between Gross National Sustainable and 3.Happiness Relationship betweenand Gross National Happiness and Development Sustainable Development and the Indicators for Gross National the Indicators for Happiness Gross National Happiness The ultimate goal for development nowadays is not to achieve economic purpose but instead The ultimate goal for development nowadays is not to achieve economic purpose tobut sustain balanced development economy, society, environment, andenvironment, culture. Grossand instead to sustain balancedamong development among economy, society, National is introduced and accepted as the new development. culture.Happiness Gross National Happiness is introduced and direction acceptedfor as such the new direction for “Gross National Happiness” or National GNH was Happiness” initiated by King Jigme Wangchuck of Bhutan in such development. “Gross or GNH was initiated by King Jigme Wangchuck of Bhutan in 1972. GNH is based Buddhist theologyisand the belief 1972. GNH is based on Buddhist theology and on theonbelief that happiness the on supreme that is the supreme2010). aim for all humanity (Suphadilok It implies aim forhappiness all humanity (Suphadilok It implies the gross happiness of2010). the people in the the gross happiness of the people in the nation as the ultimate development goal (Wangchuk 2008). nation as the ultimate development goal (Wangchuk 2008). 10 The Meaning of Sufficiency Economy International Conference In Bhutan, the national development plan focuses on the contentment both physical and mental of the people, consisting of the four pillars of GNH, including equitable and sustainable socio-economic development, preservation and promotion of its culture, conservation and environment, and promotion of good governance. From such pillars, indicators of happiness are constructed and divided in 9 core dimensions including (1) psychological well-being, (2) time use, (3) community vitality, (4) culture, (5) health, (6) education, (7) environmental diversity, (8) living standard, and (9) governance (Wangchuk 2008). Psychological Well-Being Dimension measures satisfaction with all elements of life, life enjoyment, and subjective well-being, as well as general psychological distress rate, rebalance rates of both negative emotions, including jealousy, frustration, selfishness, and positive emotions, covering generosity, compassion, calmness. Moreover, spiritual activities such as meditation, prayers, and consideration of karmic effects in daily life are measured. Time Use Dimension analyzes the nature of time spent and type of activity within a 24-hour period. The value of non-work activities such as sleeping, personal care, community participation, education and learning, religious activities, social and cultural activities, sports and leisure, travel, provide more diversity and contribute to higher level of happiness instead of only work activities. These indicators consist of sleeping hours and total working hours. Community Vitality Dimension focuses on the strengths and weaknesses of relationships and interactions within communities. The happiness in society can be measured by trust, belongingness, and vitality of caring relationships, personal safety, volunteering, together with family vitality, safety, reciprocity, social support, socialization, and kinship density. Cultural Diversity and Resilience Dimension focuses on the diversity and strength of cultural traditions, including the nature and number of cultural facilities, language use patterns and diversity, participation in community festivities, traditional recreations. These indicators estimate core values and perception of changes in values and traditions: dialect use, traditional sports, community festival, artisan skill, value transmission indicator, and basic precept indicator. Health Dimension assesses health status, the determinants of health and health system, information on self-rated health, disabilities, body mass index, number of healthy days per month, as well as the prevalence of knowledge about health. Education Dimension measures the effectiveness of education to reach the goal of collective well-being, including the level of education, skills among others, education attainment, and national language and folk and historical literacy. 123 well-being, including the level of education, skills among others, education attainment, and national language and folk and historical literacy. 124 The Meaning of Sufficiency Economy Ecological Diversity and Resilience Dimension evaluates the impact of domestic supply International Conference and demand on ecosystems. The indicators are ecological degradation, ecological knowledge and afforestation. Ecological Diversity and Resilience Dimension evaluates the impact of Living standard involves the basic economic status are of the people. The measures domestic supply Dimension and demand on ecosystems. The indicators ecological degradation, ecological knowledge and of afforestation. in this dimension are levels income at individual and household level, sense of financial security, room standard ratio, and food security and house the ownership. involves basic economic status of the people. Living Dimension The measures in this dimension are levels of income at individual and household level, sense Governance of financial security, ratio, and food security and house ownership. Good measuresroom how people perceive various government functions in terms of their efficacy, honesty, and quality. This index includes human right and leadership,functions and trust Good Governance measures how people perceive various government in levels. in various terms of their efficacy, honesty, and quality. This index includes human right and leadership, and trust in various levels. The Centre of Bhutan Study (2008) indexes and indicators measure the Gross The Centre of Bhutan Studyintroduces (2008) introduces indexes and to indicators to measure National Bhutan. These can beThese categorized 9 dimensions in as the GrossHappiness National of Happiness of Bhutan. can beinto categorized intoas9 presented dimensions Table 2. in Table 2. presented Table 2 Variables of Gross National Happiness in Each Dimension Table 2 Variables of Gross National Happiness in Each Dimension Dimensions Psychological Well-Being Indexes Mental health index Spirituality index 2 Emotional balance index 7 Time Use Time Index Community Dimensions Vitality Community trust index Indexes Social support index Reciprocity index Socialization index Family index Kinship index Safety index Cultural Diversity and Resilience Dialect Index Traditional recreational index Artisan skill index Value transmission index Community festival index Basic perception index Health Number of Examples of indicators indicators 1 General Health Questionnaire Frequency of meditation Frequency of feeling of selfishness 2 Total working hour and Number sleeping hour 1 Sense of trust inofneighbors of Examples indicators 2 Availability of social support indicators 3 Amount of donation in cash value 1 Socializing with friends 12 5 Members of your family really care about each other 1 Number of relatives living in the same community 3 Feelings of safety from human harm 1 Speaking first language 1 Frequency of playing traditional games 1 Zorig chusum skills 2 Teaching children importance of discipline 1 Knowledge of mask and other dances performed in tshechus 2 Attitude towards killing Health index 4 Self reported health status Health knowledge index 2 Health barrier index 1 Knowledge of transmission of HIV/AIDS virus Walking distance to health care centre Cultural Diversity and Resilience Safety index 3 Dialect Index Traditional recreational index Artisan skill index Value transmission index 1 1 Community festival index Dimensions Health Indexesindex Basic perception Reciprocity Health indexindex Health knowledge index Socialization index Family index index Health barrier Education Cultural Diversity Ecologicaland Resilience Diversity and Resilience Living standard Health Kinship index Education index Dzongkha language index Safety index Historical literacy index Dialect Index Traditional recreational Ecological degradation index Artisan skillknowledge index Ecological Value index transmission index Afforestation index Community festival index Living standard index Basic perception index Hardship index Health index Good Governance Health knowledge index Government performance index Health barrier Freedom indexindex Education Education index Institutional trust index 1 2 the same community Feelings of safety from human harm Speaking first language Frequency of playing traditional The Meaning of Sufficiency Economy games International Conference Zorig chusum skills Teaching children importance of discipline Knowledge of mask and other dances performed in tshechus Examples of killing indicators Attitude towards 1 Number of 2 indicators 34 Amount of donation in cash Self reported health status value 2 Knowledge of transmission of 1 Socializing with friends HIV/AIDS virus Membersdistance of your family really 15 Walking to health care care about each other centre 12 Number Literacy of raterelatives living in the same community 13 Ability lozey Feelingstoofunderstand safety from human harm 2 Knowledge on local legend and 1 Speaking folk storiesfirst language 13 Frequencyofofrivers playing traditional Pollution games Zorig chusum skillsof plants 1 Names and species 2 Teaching children importance and animals of discipline 1 Tree plantations around your 1 Knowledge of mask and other farm or house dances performed 4 Income sufficiencyintotshechus meet 2 Attitude towards everyday needs killing 3 Postponement of urgent repairs 4 Self maintenance reported health status and of house Knowledge ofoftransmission of 2 Performance fighting HIV/AIDS corruption virus 12 Walking distance of to speech health care Right to freedom and centre opinion 23 Literacy rate ministries Trust in central Concluded from Wangchuk (2008), URAindex (2008), and the of Bhutan Study (2008) Dzongkha language 1 Centre Ability to understand lozey Concluded from Wangchuk (2008), URA (2008), and the Centre of Bhutan Study (2008) Historical literacyconducted index for macro 2 level, Knowledge on local legend The operational definitions of GNH, can be categorized into 4 and folk stories pillars of Sustainable Development; including economic, environment, and culture. The operational definitions of GNH, conducted for macro level, can be Ecological Ecological degradation 3 social, Pollution of rivers 13 Diversity and index categorized 4 pillars of categorized Sustainable including economic, social, The dimensionsinto of GNH can be in Development; line with the pillars of Sustainable Resilience Ecological knowledge 1 Names and species of plants environment, culture. The dimensions of GNH can be categorized in line with the Development asand presented index in Table 3. and animals pillars of Sustainable Development Afforestation indexas presented in1Table 3.Tree plantations around your farm or house Table of Gross National in4the Pillars Sustainable Table3 standard 3Dimensions Dimensions ofstandard Gross National Happiness inIncome theofPillars of Sustainable Living Living indexHappiness sufficiency to meet Development everyday needs Development Hardship index 3 Postponement of urgent repairs and maintenance of house Pillars of Sustainable Development Dimensions of GNH Good Government performance 2 Performance of fighting Economic Pillar index Living Standard Governance corruption Social Pillar Community Vitality Freedom index 2 Right to freedom of speech and Good Governance opinion Health Institutional trust index 3 Trust in central ministries Education Concluded from Wangchuk (2008), URA (2008), and the Centre Well-Being of Bhutan Study (2008) Psychological Time Use Environmental Pillar Ecological Diversity and Resilience Cultural Pillar Cultural Diversity and Resilience 13 4. Integrated Value between Sufficiency Economy and Gross National Happiness towards Sustainable Development Thailand’s Sufficiency Economy philosophy and Bhutan’s Gross National Happiness 125 126 The Meaning of Sufficiency Economy International Conference 4. Integrate d V alu e be tw e e n Su fficie ncy Economy and Gross National Happiness towards Sustainable Development Thailand’s Sufficiency Economy philosophy and Bhutan’s Gross National Happiness concept, introduced by the Kings of the two Buddhism countries, both are alternative models for Sustainable Development in balancing the four pillars including economic, social, environmental, and cultural. Through the action of moderation, reasonableness and self-immunity, moderated by knowledge and morality, Sufficiency Economy conceptually promotes development outcomes in economic, social, environmental, and cultural pillar. Also, the indicators of Gross National Happiness are key measures to ensure the development in the four pillars. The integrated model between Sufficiency Economy and Gross National Happiness for Sustainable Development is drawn in the Figure 2. Figure 2 Integrated Model between Sufficiency Economy and Gross National Figure 2 Integrated Model between Sufficiency Economy and Gross National Happiness Happiness for Sustainable Development for Sustainable Development The guidance for implementing Sufficiency Economy provides operational definitions to measure the three elements and the two conditions of Sufficiency Economy, as presented in Table 1. The practices can be applied to build, enhance and maintain sustainability outcomes in economic, social, environmental, and cultural pillars as the model proposed in Figure 1. For Gross National Happiness, its indicators can be categorized into the pillars of Sustainable Development, as presented in Table 3. Using matrix table to integrated the relationship between Sufficiency Economy, Gross National Happiness, and Sustainable Development. With interpretation from the definitions The Meaning of Sufficiency Economy International Conference The guidance for implementing Sufficiency Economy provides operational definitions to measure the three elements and the two conditions of Sufficiency Economy, as presented in Table 1. The practices can be applied to build, enhance and maintain sustainability outcomes in economic, social, environmental, and cultural pillars as the model proposed in Figure 1. For Gross National Happiness, its indicators can be categorized into the pillars of Sustainable Development, as presented in Table 3. Using matrix table to integrated the relationship between Sufficiency Economy, Gross National Happiness, and Sustainable Development. With interpretation from the definitions of the variables in Sufficiency Economy, GNH indexes can be classified into the elements of moderation, reasonableness, self-immunity, and the conditions of knowledge and morality. In addition, the GNH indexes can be noted as Sustainability Outcomes. The matrix table is presented in Table 4. 127 The Meaning of Sufficiency Economy International Conference Table 4 Integrated Matrix between Sufficiency Economy and Gross National Happiness for Sustainable Development Table 4 Integrated Matrix between Sufficiency Economy and Gross National Happiness for Sustainable Development 128 16 The Meaning of Sufficiency Economy International Conference From Table 4, the relationships between the GNH indexes are founded. Because GNH indexes can be categorized in the elements and conditions of Sufficiency Economy, their relationships should be consistent with the philosophy of Sufficiency Economy. From this, (P3) the indexes of GNH are correlated in consistent with the philosophy of Sufficiency Economy. In Economic Pillar, Hardship is defined as the indicators in Moderation, while Living Standard is regarded as sustainability outcome. Build upon the philosophy of Sufficiency Economy, Hardship should have positive association with Living Standard. In Social Pillar, Mental Health is defined as the sustainability outcome for Psychological Well-Being. Emotional Balance is regarded as Reasonableness. Spirituality is proposed as Morality. According to the proposed relationship for Sufficiency Economy, Emotional Balance, strengthened by Spirituality, is associated with Mental Health. The same pattern in other dimensions, Community Trust and Safety are proposed as sustainability outcomes for Community Vitality Dimension. Social Support, Socialization, Family, Kinship are categorized as Self-Immunity. Reciprocity is defined as Morality. From this, Social Support, Socialization, Family, Kinship, strengthened by Reciprocity, should have positive association with Community Trust and Safety. As well as these, people health status will be good from having health barrier. This relationship is strengthened by health knowledge. For Ecological Diversity and Resilience dimension, the relationship between indexes is converse. Ecological degradation will be reduced by from planting trees, Afforestation. The relationship is positively moderated by ecological knowledge. Notably, Education is defined in Knowledge and Time is categorized in Moderation. From the concept of Sufficiency Economy, Education Dimension may play moderating roles to straighten the achievement in other dimensions. As well as Time that can be an antecedent in the model of the every relationship in Social Pillar. Moreover, the indexes in Table 4 are incomplete in some elements and conditions of Sufficiency Economy. For example, in Economic pillar, the indicators for knowledge, morality, reasonableness and self-immunity are missing. Although there are missing factors in blank column for the Sufficiency Economy, GNH remains maintain the Happiness of people. This can be explained by the implication of Sufficiency Economy that complete application is not prerequisite but only 25 or 50 percent is adequate to gain benefit from implementing Sufficiency Economy (Royal Speech, 1998). Consider the implications of the philosophy of Sufficiency Economy that the practices can be implemented in various levels and aspects, the guidance for Sufficiency Economy, exhibited in Table 1, should be supplement in the missing cells that they are belongs to. For example in Living Standard Dimension, to gain balance of living standard, people should not only reduce their hardship but also moderately utilize their 129 130 The Meaning of Sufficiency Economy International Conference own resources to satisfy their basic needs, be conscious of what they are doing and also encourage communication and discussion among members, and also being aware of worst case scenario. Accumulate knowledge about data and information effective their life and consider morality with honesty and integrity as their part of living, are keys conditions to maintain their happy living status. Since the guidance for Sufficiency Economy and the Gross National Happiness indicators are convergent, (P4) Practices of Sufficiency Economy are correlated with achieving indicators for Gross National Happiness. In addition, both Sufficiency Economy and Gross National Happiness provide key value to maintain Sustainable Development and introduce happiness as the ultimate goal for such development. Therefore, (P5) households, communities, organizations, and nations that continuously practices Sufficiency Economy and that aim at achieving indicators of Gross National Happiness will be more sustainable than those who do not. Consequently, (P6) the members of those that gain sustainability will be happier than those who do not. 5. Conclusion This conceptual paper has provided explanations for the philosophy of Sufficiency Economy, the concept of Gross National Happiness, and also conceptualized their relationship towards Sustainable Development. The Philosophy of Sufficiency Economy and Gross National Happiness both provide integrated contribution to Sustainable Development. Operational definitions of the philosophy and the concept are presented. The practices to implement Sufficiency Economy are proposed, as well as the indicators for Gross National Happiness are summarized. S u ff icien cy Eco n o my p r o v id es th e o p timal ap p r o ach f o r S u s tain ab le Development. The Guidance for Sufficiency Economy can be implemented for Sustainable Development and achieving indicators of Gross National Happiness. Gross National Happiness introduces indicators as the path way to ensure Sustainability. The indicators are consistent with the philosophy of Sufficiency Economy, through the three elements of moderation, reasonableness, and self-immunity, and the two conditions of knowledge and morality. In addition, Gross National Happiness introduces happiness indicators as the sustainability outcome in economic pillar, social pillar, and environmental pillar. The Meaning of Sufficiency Economy International Conference 6. Limitations and Recommendations for Future Research The guidance for Sufficiency Economy and the indicators for Gross National Happiness are categorized into three elements and two conditions based on the explanation of Sufficiency Economy interpreted by the researcher viewpoint. Viewpoint from different researchers can be various. Notably, there are several practices of Sufficiency Economy that are not classified in only one group. Therefore, empirical study should be employed to examine the validity of the operational definitions if they are consistent with the concept of Sufficiency Economy. In addition, this paper provides practices for Sufficiency Economy from literature in various levels, including household level, community level, and organizational level, while variables for Gross National Happiness are at only national level. This is because the practices for Sufficiency Economy can be applied in multilevel whereas Gross National Happiness is introduced as in national indicators. Future research should explore operational definitions on Gross National Happiness in household level, community level and organizational level and also examine how the concept can be generalized. In addition, the development among four pillars, including economic pillar, social pillar, environment pillar, and cultural pillar is not operationalized in this study. Future research should introduce measures to indicate to what extent of such balance. 131 132 The Meaning of Sufficiency Economy International Conference REFERENCES Bunyasrie, V. 2009. The Thai Financial Crisis and the Sufficiency Economy Philosophy. International Business & Economics Research Journal. Aug 2010, Vol.9 Issue8, p7-13. Calkins, P. 2006. The Sufficiency Economy at the Edges of Capitalism [online] Available at: <http://www.sufficiencyeconomy.org/old/en/files/25.pdf> [Accessed 1 August 2011] Curry, RL. And Sura, K. 2007. Human Resource Development (HRD) theory and Thailand’snSufficiency Economy concept and its ‘OTP’ program. Journal of Third World Studies. vol. 24. no. 2: 86-94. Isarangkun, C and Pootrakool, K., 2002. Sustainable Economic Development through the Sufficiency Economy Philosophy, Paper for internal discussion, Crown Property Bureau and NESBD. November. Kantabutra, S. 2006. Relating vision-based leadership to sustainable business performance: A Thai Perspective. Leadership Review. No.6: 37-53. Kantabutra, S. 2007. Development of the Sufficiency Economy Philosophy in the Thai Business Sector: Evidence, Future Research & Policy Implications [online] Available at: <http://www.sufficiencyeconomy.org/old/en/files/ 26.pdf> [Accessed 1 August 2011] NESBD (Office of the National Economic and Social Development Board), 2007. Sufficiency Economy Implications and Applications. Bangkok: NESBD. Piboolsravut, P. 2004. Sufficiency Economy. ASEAN Economic Bulletin. vol. 21, no. 1:127-134. Pantasen, A., Premchuen, S. & Keitdejpunya, P. 2003. Application of the royal thought about the Sufficiency Economy in SMEs. Bangkok: Thailand Research Fund. Pantasen, A., and Prayukvong, W. 2006. Buddhist Economics that is beyond that of Schumacher’s and Sufficiency Economy. Paper presented at the Sufficiency Economy and Global Transformation seminar. Bangkok, Thailand, 20-21 April. Pruetipibultham, O, 2010. The sufficiency economy philosophy and strategic HRD: a sustainable development for Thailand. Human Resource Development International. Vol.13, No.1, Feb: 99-110. Royal Speech, December 4, 1998. [online] Available at: <http://www.kanchanapisek. or.th/speeches/1998/1204.en.html> [Accessed 1 August 2011] The Meaning of Sufficiency Economy International Conference Sachayansrisakul, N. 2009. Sufficiency Economy: A Reasonable Approach for Thailand’s Future. Journal of Nida. Vol.49. No.2/2549. Sufficiency Economy Organization, 2009. Thoughts on Sufficiency Economy, interview with Dr.Priyanut Piboolsravut. [online] Available at: < http:// www.sufficiencyeconomy.org/userfiles/imagesfiles/Thoughts%20on% 20Sufficiency%20Economy.pdf> [Accessed 1 August 2011] Suphadilok, B, 2010. Synergy of ‘Gross National Happiness’ and ‘Sufficiency Economy’ as an Imperative Paradigm for Communication and Sustainable Social Change. Paper accepted for presentation at International Conference Future Imperatives of Communication and Information for Development and Social Change, Bangkok December 20-22. The Centre of Bhutan Study, 2008. GNH Index Variables [online] Available at: < h t t p : / / w w w. g r o s s n a t i o n a l h a p p i n e s s . c o m / g n h I n d e x / g n h I n d e x Variables.aspx> [Accessed 1 August 2011] UNESCO (United Nation Educational, Scientific and Cultural Organization), 2007. Education for Sustainable Development: Linking learning and happiness, Bangkok: UNESCO Bangkok. Ura, Karma, 2008. Explanation of GNH Index [online] Available at: <http:// www.grossnationalhappiness.com/gnhIndex/intruductionGNH.aspx> [Accessed 1 August 2011] Wangchuk, Lily, 2008. Facts about Bhutan: the land of the Thunder Dragon, Absolute Bhutan Books. Wibulswasi, C., Piboolsravut, P., and Pootrakool, K., 2010. Sufficiency Economy Philosophy and Development. Sufficiency Economy Research Project, Bureau of The Crown Property: Bangkok. WCED (World Commission on Environment and Development), 1987. Our common future Oxford, Oxford University Press 133 134 The Meaning of Sufficiency Economy International Conference Group Sufficiency Economy and Mainstream Economic Theory 1 The Meaning of Sufficiency Economy International Conference Non-monotonic Utility Functions for Microeconomic Analysis of Sufficiency Economy Komsan Suriya Faculty of Economics, Chiang Mai University The Meaning of Sufficiency Economy International Conference Non-monotonic Utility Functions for Microeconomic Analysis of Sufficiency Economy Abstract This study invents four types of non-monotonic utility functions that suit the sufficiency economy. With these utility functions, an individual may not get higher utility when consume more goods. Therefore, an individual requires an optimal level of income rather than a maximized level of income to achieve the highest utility. Keywords: sufficiency economy, utility function, microeconomic analysis, consumption, optimality JEL: D11, Q01, B59 1.Introduction Traditional economics assumes monotonic utility function for the calculation of the equilibrium of consumption (Varian, 1999; Binger and Hoffman, 1998; Pindyck and Rubinfeld, 1998; Mas-Colell, et al, 1995). It ensures that the higher consumption level yields the higher utility. This monotonic utility function encourages people to consume as much as possible. However, it may be unrealistic such that an individual may obtain negative marginal utility (MU) after passing a threshold of consumption. Sufficiency economy encourages people to consume at optimal levels (Piboolsravut, 2000). Mathematically, the optimal point cannot be reached without the presence of the peak of utility function. Monotonic utility function has no decreasing part which means it has no peak. Therefore, traditional utility function cannot yield the optimal consumption. It does not fit for microeconomic analysis of sufficiency economy. Non-monotonic utility function is more suitable for sufficiency economy. The function does not guarantee that the more units of consumption will yield the more 137 138 The Meaning of Sufficiency Economy International Conference pleasure or higher utility to an individual. The optimality obtained by using nonmonotonic utility function can be considered as the ‘middle path’ of consumption which follows the philosophy of sufficiency economy (Sachayansrisakul,2009; Piboolsravut, 2000). Only a few academic works emphasize on technical details of microeconomic analysis of sufficiency economy. Suriya(1999) used non-monotonic utility function to find the optimal working productivity to achieve the happiness of life. However his work described the idea using graphs but not mathematical equations. After that, the works of Piboolsravut (2000), Calkins-2-(2008) and Sachayansrisakul (2009) elaborately interpreted the philosophy of sufficiency economy but in descriptive style. This article, therefore, may be possibly among the first academic works that Only a few academic works emphasize onsufficiency technical details of microeconomic analysis of present the microeconomic analysis of economy by mathematical sufficiency economy. Suriya(1999) used non-monotonic utility function to find the optimal approach. working productivity to achieve the happiness of life. However his work described the idea using graphs but not mathematical equations. After that, the works of Piboolsravut (2000), Calkins (2008) and Sachayansrisakul (2009) elaborately interpreted the philosophy of sufficiency economy but in descriptive style. This article, therefore, may be possibly among the first academic works that present the microeconomic analysis of sufficiency economy by mathematical approach. Indifference curves (IC) are located like a mountain seen from an air- plane. 2. Microeconomic theory of consumption The larger oval is the lower altitude of the mountain and also the lower level of pleasure. The smaller oval is the higher altitude of the mountain which yields greater pleasure. Acurves combination X* and brings anseen individual anplane. altitude which Indifference (IC) areoflocated likeY* a mountain from antoairThe largerisoval is stilllower not the peak of Thealso peak at a point the smallest oval.oval is the the altitude of the the mountain. mountain and theislower level inside of pleasure. The smaller 2. Microeconomic theory of consumption higher altitude of the mountain which yields greater pleasure. A combination of X* and Y* Figure 1: Non-monotonic utility function brings an individual to an altitude which is still not the peak of the mountain. The peak is at a point inside the smallest oval. Goods Y Y* Uo X* Goods X Figure 1: Non-monotonic utility function An individual has a limit of budget. In figure 1, he or she can choose his or her budget for a combination of goods X and Y. A straight line combining two points represents the spending of all money to Y on the y-axis and the spending of all money to X on the x-axis. Points along the line are the combinations of goods X and Y. This line is called the budget line. An equilibrium is at X* and Y* where the utility function is tangent to the budget line. An individual chooses to consume X* units of goods X and Y* units of goods Y. The individual gets The Meaning of Sufficiency Economy International Conference 139 An individual has a limit of budget. In figure 1, he or she can choose his or her budget for a combination of goods X and Y. A straight line combining two points represents the spending of all money to Y on the y-axis and the spending of all money to X on the x-axis. Points along the line are the combinations of goods X and Y. This line is called the budget line. An equilibrium is at X* and Y* where the utility function is tangent to the budget line. An individual chooses to consume X* units of goods X and Y* units of goods Y. The individual gets the utility at Uo level. -3- Figure 2: Higher income yields greater pleasure Goods Y U2 Y* Uo X* Goods X Figure 2: Higher income greater An increasing income makes the budget lineyields expand to thepleasure right hand side of the initial line. In figure 2, the tangency between the new budget line and the indifference curve yields a higher utility level which is U2. People perceive that the An increasing income makes the budget line expand to the right hand side of the initial line. In higher income yields the higher pleasure for their lives. Therefore, people spend all figure 2, the tangency between the new budget line and the indifference curve yields a higher efforts tolevel compete income.that It will happen like this as the long as the utility whichtois gain U2. higher People perceive the higher income yields higher pleasure for utility function is monotonic. their lives. Therefore, people spend all efforts to compete to gain higher income. It will happen like this asthe long as the utility function monotonic.the higher income may not yield Under non-monotonic utilityisfunction, higher pleasure for an individual. In figure 3, the higher income drives the budget Under the non-monotonic utility function, the higher income may not yield higher pleasure for lineanfurther to theInright hand side. Theincome combination new line tangency, andright Y4,hand side. individual. figure 3, the higher drives at thethe budget further X4 to the yields same pleasure U2. It means meaningless Thethe combination at the at new tangency, X4that andthe Y4,higher yields income the sameispleasure at U2. for It means that happiness. the higher income is meaningless for happiness. Law of diminishing marginal is behind the decreasing occurs Law of diminishing marginal utilityutility is behind the decreasing utility. Itutility. occurs Itwhen an individual when an individual consumes a good or a combination of goods too much in a short consumes a good or a combination of goods too much in a short period of time. An individual period of time. Anthe individual willThe getlaw bored by the as consumption. The lawofiseconomics. will get bored by consumption. is concerned an important principle However, it is ignored when an economist solve the equilibrium of consumption by imposing the assumption of monotonic utility function. An individual achieves the highest pleasure at the combination of X3 and Y3 in figure 4. This combination requires less income than that of combination X4 and Y4. This idea shows that an individual does not need too much income. They can live by the optimal consumption as well as the optimal income in the sufficiency economy. 140 The Meaning of Sufficiency Economy International Conference concerned as an important principle of economics. However, it is ignored when an economist solve the equilibrium of consumption by imposing the assumption of monotonic utility function. An individual achieves the highest pleasure at the combination of X3 and Y3 in figure 4. This combination requires less income than that of combination X4 and Y4. This idea shows that an individual does not need too much income. They can live by the optimal consumption as well as the optimal income in the sufficiency economy. -4-4Figure 3: Higher income may yield the same pleasure Goods Goods YY U2 U2 Y4 Y4 Y2 Y2 U2 U2 X2 X2 X4 X4 Goods Goods XX Figure 3: income may yield the pleasure Figure 4: The optimal income yields Figure 3: Higher Higher income may the yieldhighest the same samepleasure pleasure Goods Goods YY Y4 Y4 Y3 Y3 Y2 Y2 U2 U2 U2 U2 X3 X3 X2 X2 X4 X4 Goods Goods XX Figure Figure 4: 4: The The optimal optimal income income yields yields the the highest highest pleasure pleasure The Meaning of Sufficiency Economy International Conference 141 -5- 3. Monotonic utility functions-5- functions A famous class 3. ofMonotonic monotonicutility utility functions is the constant elasticity of 3. Monotonic substitution (CES). utility functions A famous class of monotonic utility -5functions is the constant elasticity of substitution (C A famous class of monotonic utility functions is the -5constant elasticity of substitution (CES). 3. Monotonic utility functions -5where U functions = Utility level 3. Monotonic utility where A famous U class = Utility level of monotonic utility functions is the constant elasticity of substitution (CES). α, β = Share parameters where U = Utility level X = Unitutility consumption X A famous class ofparameters monotonic functionsofisgoods the constant elasticity of substitution (CES). α, β = = Share Share parameters 3. Monotonic utility functions Y = Unit consumption of goods Y X = Unit consumption of goods X s = elasticity of Y substitution. Unit consumption of goods X YX = =Unit consumption of goods A famous class of monotonic utility functions is the constant elasticity of substitution (CES). where U = Utility level s = elasticity of substitution. whereY Uα,=When consumption goods Y (ES) is 1, it is Cobb-Douglas utility function, β =Unit = Utility Share parameters the elasticity substitution level ofof X β= Unit consumption α, Share parameters When the Selasticity of substitution (ES)ofisgoods 1, it isXCobb-Douglas utility function, = ==elasticity of substitution. Y Unit consumption of goods X = Unit consumption of goods Y X . s = elasticity of substitution. where U = Utility level Y = Unit consumption. of(ES) goods When the elasticity of substitution isY1, it is Cobb-Douglas utility α,When β== elasticity Share parameters ES is zero, it is Leontief utility function, s of substitution. function, When theXelasticity substitution (ES) is 1,X it is Cobb-Douglas utility function, = Unitofconsumption of goods When ES is zero, it is Leontief utility function, = Unitofconsumption of goods . When theYelasticity substitution (ES) is 1,Y it is Cobb-Douglas utility function, s = elasticity of substitution. .. Marginal utility (MU) of .all functions do not follow the law of diminishing margin WhenES theisTherefore, elasticity substitution (ES) is 1, it is Cobb-Douglas utilityoffunction, When zero, itof isofLeontief the utilityutility function not contain thediminishing peak the marginal function. utility. The optima Marginal (MU) all functions dofunction, notdoes follow the law of When ES isutility zero,consumption it is Leontief utility function, cannot be When ES zero, function it is Leontief function, Therefore, the isutility doesutility notachieved. contain the peak of the function. The optimal level of . . consumption cannot be achieved. . When ESutility is zero, it is Leontief utilityfunctions function, Marginal (MU) of all functions do not follow the law of diminishing marginal utility. 4. Non-monotonic utility Therefore, the utility utility function does not do contain the peak theoffunction. The marginal optimal level of Marginal utility (MU)functions of all functions not follow theoflaw diminishing utility. 4. Non-monotonic Marginal utility (MU) of all functions do not follow the law of diminishing consumption cannot be achieved. . section will present four types the of peak non-monotonic utilityThe functions micro Therefore, This the utility function does not contain of the function. optimal for level of marginal utility. Therefore, the utility function does not contain the peak of the analysis. Marginal utilities of them follow the law of diminishing marginal utility. achieved. This consumption section willcannot presentbe four types of non-monotonic utility functions for microeconomic E Marginal utility (MU) of all not the lawmarginal ofthediminishing marginal utility. function contains thefunctions peak of the function. Therefore, optimal ofutility consumpti function. The optimal levelutilities of consumption cannot belaw achieved. analysis. Marginal of them follow thedo offollow diminishing utility.level Each 4. Non-monotonic utility functions Therefore, the utility function does not contain the peak of the function. The optimal level achieved. function contains the peak of the function. Therefore, the optimal level of consumption can be of cannot be achieved. 4.consumption Non-monotonic utility functions achieved. This section will present four types of non-monotonic utility functions for microeconomic analysis. Marginal utilities of them follow the law of diminishing marginal for utility. Each utility Type Linear marginal utility This section will1: present four types of non-monotonic utility functions microeconomic contains the peak of Therefore, the optimal level of consumption be 4.1:Non-monotonic utility functions analysis. Marginal utilities of the themfunction. follow the law of diminishing marginal utility. Each can utility Typefunction Linear marginal utility achieved. The first type of utility function has linear marginal utility functions. Marginal utility This section present non-monotonic functions forconsumption can beca functionwill contains the four peak types of the of function. Therefore, utility the optimal level of Thistype section will present four types of non-monotonic utility functions forcan by taking the partial derivative ofthe the utility subject tomicroeconomic each microeconomic analysis. Marginal utilities ofmarginal them follow law of function diminishing The achieved. first ofobtained utility function has linear utility functions. Marginal utility be goods, analysis. Marginal utilities of them follow the law of diminishing marginal utility. Each utility marginal utility.by Each utility function contains theutility peak function of the function. obtained taking the partial derivative of the subject toTherefore, each goods, Type 1: Linear marginal function contains the peakutility of the function. Therefore, the optimal level of consumption can be and . the optimal level of consumption can be achieved. achieved. Type 1: Linear marginal utility and . The first type utilityfunction functionofhas utility functions. Marginal utility can be func Theofutility thislinear classmarginal can be obtained by the integral of marginal utility Type 1: Linear marginal utility obtained by taking the partial derivative of the utility function subject to each goods, The first type ofofutility function hasobtained linear marginal utility functions. Marginal utility can be The utility function this class can be by the integral of marginal utility functions, Type 1: Linear marginal utility obtained byutility takingfunction the partialhas derivative of the utility function subjectMarginal to each goods, . The first type of linear marginal utility functions. and . utility can be obtained by taking the partial derivative of the utility function subject The first type of utility function hasand linear. marginal utility functions. Marginal utility can be . to each goods, obtained taking of thethis partial of the utility to each goods, The utilityby function classderivative can be obtained by thefunction integralsubject of marginal utility functions, The utility function of this class can be obtained by the integral of marginal utility functions, and . . . The utility function of this class can be obtained by the integral of marginal utility functions, 4. Non-monotonic utility functions . achieved. Type 1: Linear marginal utility 142 The Meaning of Sufficiency Economy International Conference The first type of utility function has linear marginal utility functions. Marginal utility can be obtained by taking the partial derivative of the utility function subject to each goods, and . The utility function of this class can be obtained by the integral of marginal utility functions, The utility function of this class can be obtained by the integral of marginal utility functions, . -6-6Type 2: Parabola marginal utility with one goods in a term -6- -6-6- Type2: Parabola marginal utility with one goods in a term Type2: Parabola withhas oneparabola goods inmarginal a term utility functions. In The second typemarginal of utilityutility function Theterm second typemarginal of utilityutility, function has one parabola marginal utility functions. In each term of the each of the isinpresented, Type2: Parabola marginal utilityonly with onegoods goods a term Type2: marginal Parabola Type2: marginal Parabola with marginal goods utility in with a term one goods in afunctions. term The second type ofutility utility function has parabola marginal utility In each term of the utility, only one goods isone presented, marginal utility, only one goods is presented, The second type of utility function has parabola marginal utility functions. In each term of the The second type ofThe utility second function typehas of utility parabola function marginal parabola functions. marginalInutility each functions. of theIn each term of the and has utility . term marginal utility, only one goods is presented, marginal utility, only marginal one goods utility, is presented, only one goods isand presented, . TheThe utility function is is and . utility function and and . . The utility function is . The utility function is The utility functionThe is utility function is . . . . Type3: Parabola marginal utility with two goods in a term Type 3: Parabola marginal utility with two goods in a term Type3: Parabola marginal utility with two goods in a term The third typetype ofmarginal utility function also parabola utility functions. However, in each The third of utility function also has parabola utility functions. Type3: Parabola utility withhas two goods inmarginal a termmarginal Type3: Parabola marginal Type3: Parabola utility with marginal two goods utility with a term two goodsthat inutility aanterm Theboth third type of utility function also hasinparabola marginal functions.will However, in each term, goods X and goods Y are presented. It means individual have However, in each term, both goods X and goods Y are presented. It means that an greater term, goods X function andboth goods Y has areYparabola presented. It means thatthe an first individual will have greater pleasure whenof consume Xalso and at the same time.utility In and second type, an The third both type utility marginal functions. However, in each individual have greater pleasure when consume bothtime. Xmarginal and Ythe atHowever, the same time. The third type of will utility The third function typeutility also of utility has parabola function marginal also has same parabola utility functions. utility functions. inthird eachtype, However, in each pleasure when consume both X and Y at the In first and second type, individual can get the from the consumption of only one goods. In this the both and goods X and goods Y are presented. Itthe means thatfrom an individual will have greater an Interm, the first second type, an individual can get utility the consumption of term, both goods X term, and both goods goods Y are X presented. and goods It Y means are presented. that an individual It means that will an have individual greater will have individual can get the utility from the consumption of only one goods. In this third type, the consumption only one goods will Y yield than consuming both them because the greater pleasure whenjust consume both X and at less the utility same time. In the first andof second type, an only one goods. In this third type, the consumption just only one goods will yield pleasure when consume pleasure both when X consume and Y at both the same X and time. Y at In the the same first time. and second In the type, first and an second type, an consumption just one goods will yield thanone consuming both themtype, because interaction term between X and Y will be zero.less utility individual can get theonly utility from the consumption of only goods. In thisofthird the the individual can getthan individual theterm utility can fromget the consumption from oftheonly consumption goods.ofIn only thisbetween one thirdgoods. type, In thethis third type, the less utility consuming both ofutility because the one interaction term X and interaction between X the and Ythem will zero. consumption just only one goods will yieldbeless utility than consuming both of them because the consumption just only consumption one goods just will only yield one less goods utility will than yield consuming less utility both than of consuming them because both the of them because the Yinteraction will be zero. The marginal of this typeYof utility function is as follows: termutility between X and will be zero. interaction The termmarginal between interaction X and term Y will between be zero. X and Y will be zero. utility of this type of utility function is as follows: The marginal utility of this type of utility function is as follows: and is as follows: . The marginal utility of this type of utility function The marginal utilityThe of this marginal type of utility utility of function this typeisofasutility follows: function is as follows: and . The utility function is The utility function is and and and . The utility function is The utility function is is The utility function The is utility function . . . . . . . Type4: Parabola marginal utility with flexible terms Type4: Parabola marginal utility with flexible terms The last type of utility function haswith parabola marginal functions. In each term of MU, it is Type4: marginal utility flexible terms utility 4: Parabola Parabola marginal utility with flexible terms Type4:Type Parabola Type4: utility with marginal flexible utility terms with flexible terms The last type of Parabola utility function has parabola marginal utility functions. In than each the term of MU, possible tomarginal present only one goods or both goods. This type is more flexible third type,it is possible to present only one goods or both goods. This type is more flexible than the third The last type of utility function has parabola marginalmarginal utility functions. In each term MU, it type, is last utility function has has parabola utility InInof each The last typeThe of utility Thetype function last of type has of utility parabola function marginal utility parabola functions. marginal Inutility eachfunctions. term functions. of MU, iteach is term of MU, it is possible to present only one goods or both goods. This type is more flexible than the third type, term of MU,possible it isone possible to oneortype goods or both goods. This istype, more possible to present only togoods present orpresent both only goods. oneonly goods This both isgoods. more flexible This type than is more thetype third flexible than the third type, and . flexible than the third type, and . The utility function is The utility function is and and and . . The utility function is The utility functionThe is utility function is . . . . . . Type4: Parabola marginal utility with flexible terms The last type of utility function has parabola marginal utility functions. In each term of MU, it is possible to present only one goods or both goods. This type isThemore flexible thanEconomy the third type, Meaning of Sufficiency 143 International Conference and . Theutility utility function The function is is . 5. Conclusion This study invents four types of non-monotonic utility functions for microeconomic analysis of sufficiency economy. The utility functions allow an individual to find an optimal level of consumption and income. It supports the concept of sufficiency economy such that people need not to gain too much income for their livings because the higher income may not yield greater pleasure to their lives. People only find the optimal level of income, the middle path, to achieve the highest happiness of life. 144 The Meaning of Sufficiency Economy International Conference References Binger, Brian and Elizabeth Hoffman. 1998. Microeconomics with Calculus. 2nd ed. Massachusetts: Addison-Wesley. Calkins, Peter. 2008. The Sufficiency Economy at the Edges of Capitalism. [online] www.sufficiencyeconomy.org/old/en/files/25.pdf Mas-Colell, Andreu, Michael Whinston and Jerry Green. 1995. Microeconomic Theory. New York: Oxford University Press. Piboolsravut, Priyanut. 2000. Sufficiency Economy: An Introductory Note. Excerpt partly from the conference of 10th UNCTAD, February 2000, Bangkok. Pindyck, Robert and Daniel Rubinfeld. 1998. Microeconomics. 4th ed. New Jersey: Prentice Hall. Sachayansrisakul, Navarat. 2009. Sufficiency Economy: A Reasonable Approach for Thailand’s Future. NIDA Development Journal 49, 2, pp. 1-22. Suriya, Komsan. 1999. Optimal productivity for a happy life. Journal of Economics Chiang Mai University 3, 3 (September – December), pp. 12-15. (in Thai) Varian, Hal R. 1999. Intermediate Microeconomics: A Modern Approach. 5th ed. New York: W.W. Norton & Company. Group Sufficiency Economy and Mainstream Economic Theory 1 The Meaning of Sufficiency Economy International Conference Sufficiency Economy: A Pathway to Sustainable Development Amit Kumar College of Information Science and Technology, Nanjing Forestry University, Nanjing, China Manav Bharti University, Solan, Himachal Pradesh, India Dr. Yunfei Liu College of Information Science and Technology, Nanjing Forestry University, Nanjing, China Tanvir Singh Department of ECE, I.E.T. Bhaddal, Ropar, Punjab, India Dr.Sawtantar Singh Khurmi Deptt. of Computer Science & Engg., Bhai Maha Singh College of Engineering, Muktsar, Punjab, India The Meaning of Sufficiency Economy International Conference Sufficiency Economy: A Pathway to Sustainable Development Abstract: Globalization and economic integration are giving more consumers access to more products and services. Local and national boundaries are breaking down in the setting of social standards and aspirations in consumption. Also, Rapid urbanization, population explosion and increase in income and consumption inevitably lead to mass generation of waste. Traditional environment management pursues reactive policies with monitoring, legal regimes to reduce pollution, which is not sustainable. In order to achieve sustainable development, a paradigm shift is needed from reactive policies towards more preventive policies. In this paper we have addressed the Philosophy of “Sufficiency Economy” which takes a middle path approach towards sustainable development and is based on the foundations of moderation, reasonableness and resilience. The philosophy is underpinned by knowledge and morality. Keywords: Sustainable Development, Sufficiency Economy. 1. Introduction Advances in science and technology have made the world smaller through rapid communication, faster and accurate information flows, and reliable knowledge exchanges, among others. Over the past decade, the world has witnessed rapid economic growth. This growth has put enormous pressure on the environment in the form of water shortage, air and water pollution, depletion of natural resources, biodiversity loss, and land degradation [5]. World population is projected to reach 9 billion by 2050, driven largely by growth in developing countries and countries with lower per-capita incomes (see Figure 1). Recent studies show that we are already exceeding the Earth’s ability to support our lifestyles, and have been doing so for approximately twenty years [6]. 147 aspirations in World population is projected to reach 9 id urbanization, billion by 2050, driven largely by growth in nd increase TheinMeaning of Sufficiency developing countries and countries with Economy 148 Conference nevitably leadInternational to lower per-capita incomes (see Figure 1). aste. Traditional Recent studies show that we are already pursues reactive exceeding the Earth’s ability to support our 1: World population is projected reach 9 billion by 2050; legal regimes to Figurelifestyles, and have been todoing so for unsustainable at a middle income level (global average). s not sustainable. approximately twenty years [6]. able development, ed from reactive eventive policies. addressed the ency Economy” path approach elopment and is s of moderation, esilience. The d by knowledge Development, FigureInstitute 1: World population Source: World Resources (WRI)/Earthtrends, 2008. is projected to reach 9 billion by 2050; unsustainable at a Action is needed to enhancelevel innovative partnerships between governments and middle income (global average). civil society including the private sector. Action is also needed to build capacity to Source: World Resources Institute mainstream environment in the decisionmaking processes to sustain adequate supply technology have (WRI)/Earthtrends, 2008. of ecosystem services from local, national to global levels. More should be done to r through rapid promote regional cooperation to collectively address common and transboundary and accurate challenges. Given the population and the rate present a linear growth model Action is needed togrowth enhance innovative of “grow now and clean up later”, whichgovernments is not sustainableand [5]. According to World liable knowledge partnerships between civil Business Council of Sustainable Development (WBCSD) Current global . Over the past society including the private sector. Action consumption patterns are unsustainable. Efficiency gains and technological advances alone will not be sufficient to bring global consumption to a sustainable level; changes will also be required to consumer lifestyles, including the ways in which consumers choose and use products and services [6]. In order to achieve sustainable development, a paradigm shift is needed from reactive policies towards more preventive policies, which should integrate ecological principles into development. There are numerous practices and examples of policy responses around the globe but “Sufficiency Economy” in Thailand is a stupendous success of them all, which leads the way to sustainable development [5]. 2. Sustainable Development Sustainable development encompasses economic, social, and environment perspectives of conservation and change and may be defined as “development that ding to ainable global ainable. ological ient to ainable ired to ways in roducts achieve m shift owards should into ractices around my” in f them ainable mpasses onment change ent that without future ds” [7]. ned to gh and damage agricultural or industrial production. 2.2. Environmental An environmentally sustainable system must maintain a stable resource base, meets the needs of the present without compromising the ability of future generations to meet their own needs” [7]. Sustainable development is designed to avoiding over-exploitation of renewable serve the needs of all peoples, enough and forever [5]. Sustainable development does not preclude thesystems use of exhaustible resources but requires that any use resource ornatural environmental sink be appropriately offset [9]. functions, and depleting nonrenewable There has been a growing recognition of three essential aspects of sustainable development (see Figure 2) [12]: resources only to the extent that investment isEconomic made in adequate substitutes. This 2.1. includes maintenance An economically sustainable system mustof be ablebiodiversity, to produce goods and services on a continuing basis, to maintain manageable levels of government and atmospheric other external debt, and to avoidstability, extreme sectoraland imbalances whichecosystem damage agricultural or industrial production. functions not ordinarily classed as 2.2. Environmentalresources. economic The Meaning of Sufficiency Economy International Conference An environmentally sustainable system must maintain a stable resource base, avoiding over-exploitation of renewable resource systems or environmental sink functions, and depleting nonrenewable resources only to the extent that investment is made in adequate substitutes. This includes maintenance of biodiversity, atmospheric stability, and other ecosystem functions not ordinarily classed as economic resources. 2.3. Social A socially sustainable system must achieve fairness in distribution and opportunity, 2.3. Social adequate provision of social services A socially sustainable system must achieve fairness in distribution and including andservices education, gender opportunity, adequate health provision of social including health and education, gender equity, andand political accountability equity, politicaland participation. accountability and Figure 2: Sustainable Development [13] participation. Figure 2: Sustainable Development [13] Technically, sustainable development can 149 150 The Meaning of Sufficiency Economy International Conference Technically, sustainable development can be defined as a development path along which the maximisation of human wellbeing for today’s generations does not lead to declines in future well-being. Attaining this path requires eliminating those negative externalities that are responsible for natural resource depletion and environmental degradation. It also requires securing those public goods that are essential for economic development to last, a healthy environment and a cohesive society. Sustainable development also stresses the importance of retaining the flexibility to respond to future shocks, even when their probability, and the size and location of their effects, cannot be assessed with certainty. Sustainable development also emphasizes the importance of taking a longer-term perspective about the consequences of today’s activities, and of global co-operation among countries to reach viable solutions. [11]. 3. Philosophy of Sufficiency Economy The philosophy of the Sufficiency Economy guides the people to a balanced way of life and to be the main sustainable development theory for the future. The theory is based upon a Middle Path between society at the local level and the market in the global context. By highlighting a balanced approach, the philosophy allows the nation to modernize without resisting globalization, but provides a means to counteract negative outcomes from rapid economic and cultural transitions. The Sufficiency Economy became critical during the economic crisis in 1997, in which Thailand needed to maintain stability to persist on self-reliance and develop important policies to recover. By creating a self-supporting economy, Thai citizens will have what they need to survive but not excess, which would turn into waste [2]. The Sufficiency Economy Philosophy proposed by His Majesty King Bhumibol Adulyadej to the people of Thailand, can be applied to the individual level, the community level and the national level. According to his Majesty the King, Sufficiency Economy is a philosophy that stresses the middle path as an overriding principle for appropriate conduct by the people at all levels. This applies conduct starting from the family, community, as well as national level in development and administration so as to modernize in line with forces of globalization. “Sufficiency” means moderation, reasonableness, and the need for self-immunity for sufficient protection from impact arising from internal and external changes. To achieve this, an application of knowledge with due consideration and prudence is essential. At the same time, it is important to strengthen the moral fiber of the nation, so that everyone, particularly public officials, academicians, businessmen at all levels, adheres first and foremost to the principles of honesty and integrity. In addition, a way of life based on patience, perseverance, diligence, wisdom and prudence to create balance and be able to cope appropriately with critical challenges arising from extensive and rapid socioeconomic, environmental, and cultural changes in the world [3]. onomy guides the people to a balanced diligence, wisdom and prudence to create y of life and to be the main sustainable balance and be able to cope appropriately elopment theory for the future. The with critical challenges arising from ory is based upon a Middle Path extensive and rapid socioeconomic, The Meaning of Sufficiency Economy ween society at the local level and the environmental, and cultural changes in the International Conference rket in the global context. By world [3]. hlighting a balanced approach, the losophy allows the nation to modernize The philosophy of the sufficiency economy hout resisting globalization, butThe provides comprises three pillars: moderation, philosophy of the sufficiency economy comprises three pillars: means to counteract negative outcomes reasonableness and self-immunity (as moderation, reasonableness and self-immunity (as illustrated in the figure 3), and m rapid economic and cultural illustrated in the figure 3), and requires two requires two conditions for the philosophy to work: knowledge or wisdom and ethics nsitions. conditions for the philosophy to work: i.e. hardwork and honesty [3, 5, 10]. knowledge or wisdom and ethics i.e. e Sufficiency Economy became critical Figure hardwork and pillars honestyof[3,sufficiency 5, 10]. 3: Three economy ing the economic crisis in 1997, in ch Thailand needed to maintain stability persist on self-reliance and develop portant policies to recover. By creating a -supporting economy, Thai citizens will e what they need to survive but not ess, which would turn into waste [2]. e Sufficiency Economy Philosophy posed by His Majesty King Bhumibol ulyadej to the people of Thailand, can be lied to the individual level, the mmunity level and the national level. cording to his Majesty the King, Figure 3: Three pillars of sufficiency ficiency Economy is a philosophy that or the 3.1. Moderation middle path economy sses the middle path as an overriding The Thai term for sufficiency (pho phiang), just like the English, has the dual meaning of both not too much and not too little. The right course avoids extremes of both extravagance and excessive economy. 3.2. Reasonableness It is the sense of being aware of both the causes and consequences of any planned action. 3.3. Self-immunity or Resilience It is the ability to deal with unexpected shocks. 3.4. Knowledge or Wisdom The knowledge condition requires thorough study of all available information and experience in order to make prudent decisions. 3.5. Ethics or Morality The morality condition stresses integrity, trustworthiness, honesty and the hard-work of individuals. 151 152 The Meaning of Sufficiency Economy International Conference 4. Conclusion The world has witnessed rapid economic growth over the past decade. This growth has put enormous pressure on the environment in the form of water shortage, air and water pollution, depletion of natural resources, biodiversity loss, and land degradation. Traditional environment management pursues reactive policies with monitoring, legal regimes to reduce pollution, which is not sustainable. In order to achieve sustainable development, a paradigm shift is needed from reactive policies towards more preventive policies. Sustainable development means attaining a balance between environmental protection and human economic development and between the present and future needs. It requires an integration of economic, social and environmental approaches towards development. The Sufficiency Economy Philosophy, discussed in this paper, takes a middle path approach towards sustainable development and is based on the foundations of moderation, reasonableness and resilience. The philosophy is underpinned by knowledge and morality. Thus, by practicing Sufficiency Economy, people would live in harmony and with security in a sustainable society and environment; and they would be able to tolerate and cope with all kinds of malign impacts of globalization. The Meaning of Sufficiency Economy International Conference References [1] “Corporate Sustainability under the Sufficiency Economy Philosophy”, Project Report, Sasin Graduate Institute of Business Administration of Chulalongkorn University, March, 2010. [Online] Available: http:// social.nesdb.go.th/social/Portals/0/DocumentsCorporate%20 Sustainability%20under%20the%20Sufficiency%20Economy%20Philosop hy_76.pdf [2] Brown L. “Sustainable Development Pathways: Concept”, UNEP RRCAP resources, TERI report; 2005. [Online] Available: http://www.rrcap.unep.org/ nsds/pub/SUSTAINABLE% 20DEVELOPMENT%20PATHWAYS.pdf [3] Dr.Vilasinee Bunyasrie, “The Sufficiency Economy and Creative Economy: Substitutes or Compliments for Thailand?”, Executive Journal, 2010, pp:158-168 [4] “H.M. King Bhumibol’s Philosophy of Sufficiency Economy” Thaiways Magazine, Vol.24, No. 13, [Online] Available: http://www.thaiways magazine.com/thai_article/2413_sufficiency_economy/sufficiency_ economy.html [5] The Nation (2006), “What does Sufficiency Economy mean?”, [Online] Available: http://www.nationmultimedia.com/2006/10/30/opinion/ opinion_30017429.php [6] “Sustainable Consumption Facts and Trends from a Business Perspective”,World Business Council of Sustainable Development. [Online] Available: www.wbcsd.org/DocRoot/.../WBCSD_Sustainable_Consumption_web.pdf [7] Robert W. Kates, Thomas M. Parris, Anthony A. Leiserowitz, “ What ia Sustainable Environment? Goals, Indicators, Values and Practise”, Environment: Science and Policy for Sustainable Development, Volume 47, Number 3, pp: 8–21. 2005. [8] Monthip Sriratana Tabucanon, “Sustainable Development and the Sufficiency Economy: Role of Science and Technology”, UNU/UNESCO International Conference Globalization: Challenges and Opportunities for Science and Technology, August 23 - 24, 2006, Yokohama, Japan [9] Jayant Sathaye, P. R. Shukla, N. H. Ravindranath, “Climate change, sustainable development and India: Global and national concerns”, CURRENT SCIENCE, VOL. 90, NO. 3, 10 FEBRUARY 2006 [10] Prasopchoke Mongsawad, “Sufficiency Economy: A contribution to Economic Development”, International Journal of Human and Social Sciences 4:2 2009. 153 154 The Meaning of Sufficiency Economy International Conference [11] Organisation for Economic Cooperation and Development (2001), Sustainable development: Critical issues”, [Online] Available: www.oecd.org/dataoecd/ 29/9/1890501.pdf [12] Jonathan M. Harris (2003), “Sustainability and Sustainable Development”, [Online] Available: http://www.ecoeco.org/pdf/susdev.pdf [13] Sustainable Development, [Online] Available: http://www.susdev.gov.hk/html/ en/sd/index.htm