The Sufficiency Economy at the Edges of Capitalism

The Sufficiency Economy at the Edges of Capitalism 

“Capitalist” Western Economics The first sentence of Parkin and Bade’s Economics, the most popular undergraduate textbook in North America, states: “All economic questions arise because we want more than we can get.” The authors add that “everyone ends up with some unsatisfied wants” and “our inability to satisfy all our wants is called scarcity.” Based on these premises, Western microeconomics goes on to study the choices that individuals make under scarcity; while macroeconomics studies the growth performance of the national and world economy in creating more goods and services to choose from (GDP/capita). 

 

While the progressive addition of welfare dimensions to neoclassical microeconomics and post-Keynesian macroeconomics now means that Western economic thought can no longer be restricted to the term “capitalist”, it is still based on a model of monetary self-interest played out on capital-driven markets. Household heads and firm managers at the micro-social level and government policy-makers at the macro-social level are assumed to marshal their land, labor, energy, material, capital, and management resources to create ever-increasing levels of net monetary value, as defined by market prices. Their utility function does not subsume or reflect the utility function of others. They are assumed to dislike work, and to maximize their leisure if given the chance. Although this capital-based, self-centered vision is statistically convenient, it leaves out such non-marketed goods and services as environmental quality, housework, child-rearing at home, and the psychic income that comes from sharing among friends, gift-giving, bargaining, and the joy of work.

 

The Edges of Capitalism

There is no inherent contradiction between modern economics and the Sufficiency Economy philosophy; the two are fundamentally complementary. We will show, however, that the emphases are different in four ways that pull economics either upward or backward from its extreme edges. The extreme edges of capitalism are

v    an inability to solve the key socioeconomic problems of the 21st century

v    a self-centered maximizing view of production, consumption and exchange

v    a polarization of income distribution

v    an underestimate of human nature

 

Edge number 1: Unsolved problems of 21st century society

Economics has either failed to solve, or has even caused, an entire array of material, economic, political, sociological and even religious problems in modern society.  Lying between the physical world described by natural science and the social prescriptions of political science, sociology, and religion – economics has backward and forward linkages with other branches of human knowledge and activity. To date these have been largely founded on capital driven markets, so that the environmental, political, social and moral results have been frequently negative or ambiguous.

 Table 1. Problems of the 21st Century “Capitalist” World as identified by the main disciplines of human knowledge.

Natural science	Economics	Political science	Sociology	Religion
Waste	Greed	Corruption	Tyranny	Imposition
Hunger	Risk	Powerlessness	Prejudice	Atheism
Destruction	Short-run thinking	Campaign promises	Despair	Intolerance
Myth	Low human K	Passivism	Illiteracy	Ignorance
Extinction	Theft	Imprisonment	Persecution	Extremis

We shall see that the King’s philosophy replaces each of the five major problems in the Economics column of table 1 with three principles and two conditions that will help to promote the positive conversion of the world social system.

 

Edge number 2: Self-centered, maximizing production, consumption and exchange decisions

One reason that economics has not been able to solve the above problems on its first edge is the second edge of an extremist rationale for production, consumption, and exchange.  Production is currently viewed as the full use of land, labor, capital and entrepreneurship to maximize the production of short-run goods and services, whether necessities or luxuries.  (As we shall see, the King’s Philosophy would counter that it should be the more abstemious use of time, energy, renewable resources, knowledge and spirit to supply long-term necessities.)

Consumption is currently based on one’s self-interest, the maximization of utility and of leisure. (The King’s philosophy would counter than any sentient social being’s utility function should includes the  utility function of others and value sharing, working for oneself and others, and joint consumption activities.)

Meanwhile, Exchange is currently viewed as an Edgeworth box of power struggle, where each party tries to maximize his or her utility at the expense of the other.  (The King’s philosophy would counter that, as long as both parties meet their basic needs, they can gain psychological and moral benefit from seeing to the needs of others through voluntary price reductions and compromises.)

 

Edge number 3: The extreme tails of income distribution

The inevitable results of the capital-based economy operating at edge number 2 have led in turn to edge number 3: frequently unacceptable extremes in the distribution of income and lifestyles. We shall see that the King’s philosophy mirrors modern experimental economics and psychology, which have established that the unhappiest people are the very rich and the very poor.  While the very poor lack shelter, food and clothing, the very rich have 

psychological burdens of worrying about excessive wealth, investment management, theft, overweight, substance addiction and the psychological problems associated with an affluent, urban existence.  Giving away part of their wealth will make them happier.  If that wealth is given to the poor, both groups will leave the extreme edges and will approach each other, while not completely at the “happy medium.”

 

Edge number 4: View of human nature

Finally, the most important and crippling edge of is its very limited view of man’s fundamental nature. While economists can elegantly measure the summit of selfishness with the sophisticated tools of quantitative analysis, this glass ceiling also prevents the capitalist view from seeking or reflecting the equally real1 happiness that derives from things one cannot buy or sell with money on markets. Economic Man in the capitalist view is limited to man’s lower nature, that which psychologists term the “child”. When two such children find themselves in the same box (whether that of sand or of Edgeworth), they are assumed to fight jealously until the child with greater bargaining power or economies of scale wins. This view of the lower nature of Man has been paradoxically reinforced over the past 300 years by (the Calvinist branch of) the Protestant religion,

 In both senses of a) true and b) not nominal.  Nominal happiness is inflated by false desires created by advertising which assumes that the clearest sign of God’s favor for the after-life is success in capitalist accumulation in this life! Man’s lower nature is also reflected in The Wealth of Nations, the better-known work of Adam Smith. 

 

But Smith was hired by the University of Glasgow as a professor not of Economics, but of Moral Philosophy. He therefore wrote a second book, The Theory of Moral Sentiments, which took as its premise not Man’s lower nature, but his higher nature, not the willful child of psychologists but the responsible “parent”. In this book, he spoke not of the Invisible Hand of self-interest that pushes us to do what we desire, but of an Impartial Spectator (or “conscience”) that leads us to do what is right by improving the moral image of ourselves in our own and other’s eyes. Upon these quite different premises, Smith elaborated a vision of world citizenship, proposed abolishing passports, and hence forgetting entirely about the “Nations” in the Wealth of Nations. He foresaw a day when the world could be united peacefully by universal morality. 

 The Sufficiency Economy

Over the past decade, the King’s Sufficiency Economy has enriched these themes of man’s higher nature, carrying them to even greater heights above the glass ceiling edge of capitalism. This is all the more vital in that the modern world is much more complex than Adam Smith’s, with many added problems.  Food insecurity, massive environmental destruction, nuclear threats by unstable governments, growing inequalities in the distribution of income, crippling financial crises, market failure, and the inefficacy of policies based upon capitalism have led His Majesty King Bhumipol Mahadev of Thailand to renew the search for a whole new theory of economics based on man’s higher nature. His Majesty has elaborated his philosophy into a succinct and cogent set of principles called the Sufficiency Economy, an economic paradigm that can be viewed, for the sake of comparison with other  theories, as resting upon the tripod of two principles (moderation and immunization), and one condition (ethics) (Table 2):

Author ↓	/Axis →	Material-economic	Political-social	Spiritual
King Bhumipol		Moderation	Immunization	Ethical compassion
Adam Smith		Wealth/inv.hand	Nation	Sympathy
Leon Walras		Market equilibrium	Cooperation	Spirituality
John M. Keynes		Markets	Fiscal-monetary	Morality
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

(to be continue)