Buddhist Economics: money & interest

How money and charging interest debased Buddhism

Vietnamese Buddhist monk Thích Quang Ðu'c burned himself to death at a busy Saigon intersection on June 11, 1963. David Halberstam, a New York Times reporter, witnessed his self-immolation: " I was to see that sight again, but once was enough. Flames were coming from a human being...human beings burn surprisingly quickly. Behind me I could hear the sobbing of the Vietnamese who were now gathering. I was too shocked to cry, too confused to take notes or ask questions, too bewildered to even think.... As he burned he never moved a muscle, never uttered a sound, his outward composure in sharp contrast to the wailing people around him."

Early Indian to Medieval Chinese Economies

Economic ethics in Mahayana Buddhism show both continuities and differences with those in Theravada Buddhism. Many of the changes are related to transformations in Mahayana understandings of nirvana/Samsara, enlightenment, and the bodhisattva ideal (delaying one's salvation to save others).

For example, within Mahayana the absolute difference or separation between nirvana and Samsara disappears. As a result, charitable activities within Samsara grow to have more value in themselves and the bodhisattva idea becomes the ideal.

• Hong Kong investors protest financial losses (1:25)

At the same time, a more positive view of Samsara tends to lead to an acceptance of status quo conditions "in the world," while the primary focus of efforts toward enlightenment are put upon change in one's perception of things. This focus on enlightenment as primarily a change in one's way of perceiving things implied that the main effort towards enlightenment must be made towards effecting such perceptual change (through meditation and the like), rather than Theravada Buddhism's focus on change in individual ethical/moral behavior leading to a gradual betterment of karma.29

Economics

Another implication of these shifts in Mahayana versus Theravada [metaphysics] was a greater acceptance of economic activity by the Sangha. The most obvious instances of this were the increased economic activities of the Buddhist monasteries in China and Japan and the acceptance of monk labor in the Ch'an/Zen school. At the same time, in terms of lay economic ethics, values toward wealth continued to remain focused upon religious giving (dana). Accumulation and possession of wealth was "good" as long as one remained unattached to it. In terms of the Buddhist Sangha's relationship with the state, the previous pattern of cooperation and a comforting approach to social change, along with support for the status quo distribution of wealth, remained the governing outlooks.

An excellent example of both these continuities as well as differences with Theravada [views] can be found in the Indian Mahayana work by Nagarjuna called the "Jewel Garland of Royal Counsels." In this work Nagarjuna presents counsel to his friend and disciple, King Udayi, about the ideal Buddhist state. In such a state the enlightened king begins with his understanding of the truth of egolessness and based upon this understanding acts benevolently and without "self" [selfishness, egotism, self-aggrandizement, greed, etc.] to carry out compassionate measures for the sick, elderly, farmers, children, mendicants, and beggars, based upon the karmic premise that such giving of wealth will produce more prosperity and wealth for the kingdom in the future. He also cooperates with the Sangha to spread the Dharma.30

In this way Nagarjuna takes up the themes of karma, egolessness, compassionate giving, and Sangha/state cooperation and puts them into an overall viewpoint of how Mahayana economic and social ethics should be carried out by the benevolent king. In the process, he also presents both the continuities and differences between Mahayana and Theravada: the similarities consisting of a common stress on Sangha/state cooperation and doctrinal ideas, the differences being a much greater stress on the importance of the initial perceptual change in an individual's thinking as the key to all later benevolent actions.

Confucian Heritage
In China, Mahayana continued along similar lines of Sangha/state cooperation. However, it must also be understood in terms of Buddhism's entry into China as a foreign religion and its efforts to accommodate itself to an already existing Confucian heritage.

This accommodation ultimately resulted in a Chinese transformation of Buddhism which left much more Confucian influence and less Indian, although it was still clearly recognizable. Specifically, what this meant was a greater emphasis on filial piety (dedication to parents and elders) -- the cornerstone of Confucian ethics -- as well as on the values of social harmony and hierarchical social relationships between ruler and subject, husband and wife, teacher and student, and so on.

This Confucian influence was seen most strongly during the beginning of the introduction of Buddhism into China, in the translations of Indian sutras during the Later Han (25-220 C.E.) and Eastern Chin (317-420 C.E.) periods. But it continued even after Buddhism was established and accepted in the more cosmopolitan atmosphere of the Sui (581-618) and T'ang (618-907) periods.31 As a result, filial piety, although not unknown in earlier Buddhism and already praised as a virtue there, came to be much more emphasized in the Chinese environment.

For the Chinese Buddhist laity, this fit in well with social expectations for behavior. For the monk, it presented a huge challenge in terms of justifying such seemingly unfilial behavior as following the traditional Buddhist ideal of leaving home and joining the Sangha, in the process cutting ties and obligations to parents.32

Buddhism's position in China and the need for accommodation also led to a greater emphasis upon those strands of earlier Buddhist ethics (for monk and laity) referring to gratitude and loyalty, especially to family and sovereign.33 The ideal of harmony, so strong in Confucianism, was adopted by Chinese Buddhists and applied to all social relationships, as well as becoming the cornerstone of some Chinese Buddhist metaphysical systems, such as the Hua­Yen school established in the seventh century.

In this way, both Chinese Buddhist ethics and metaphysics were subtly transformed in the process of assimilation and accommodation to indigenous Confucian ideas, and as a result diverged somewhat from their Indian Mahayana predecessors.

There were large areas of continuity between Chinese Mahayaana and earlier Indian Mahayaana (and Theravada) lay and monastic social ethics. For example, giving to the Sangha (dana) remained the most virtuous and merit­making activity for people. Also economic ethics for the monk in the form of Vinaya rules governing economic matters generally were the same as in Indian Mahayana. Moreover, for both monk and layperson karuna ("compassion") as an individual virtue continued to be an extremely important.

Midieval temple splendor (photo)

Temple Economics: Charging interest

Yet in practice, Chinese Buddhist economics took on new forms. These new forms could be seen in various commercial activities of Chinese temples which had not existed in India: grain milling, oil seed pressing, money lending, pawnshops, loans of grain to peasants (charging interest), mutual financing associations, hotels and hostelries, and rental of temple lands to farmers in exchange for some percentage of the crop.

In other areas, Chinese temples carried over previously existing Indian Mahayana commercial practices such as loans (with interest) against pledges, auction sales of clothing and fabrics, use of lay servants within the monastery to carry out commercial transactions on behalf of the Sangha, and allowing goods donated to the Sangha that were not used by the monks to be sold or loaned out to earn profits for the Sangha. Even in these practices, which were carryovers from India, new forms developed in China as monks came to be allowed to handle gold and silver and carry out commercial transactions including usury (charging interest) on an individual basis. In most cases such transformations were less a result of changes in the Indian Disciplinary Rules (Vinaya) than a disregarding of it in practice in China.34

Of all the commercial activities of the Chinese monasteries, usury in one form or another was clearly one of the most profitable. Part of such interest-charging was from loans to peasants in the form of grain at the beginning of the farming season, with repayment of principal along with a 50 percent interest due at the harvest. Other loans with interest went out in the form of cash to members of the upper classes, soldiers and others, except in the case of those with whom the monastery had a close relationship (based upon lay giving), who would get their loans interest­free.

Loans were also made to temple serfs attached to the monastery. They were not charged interest due to the risk­-free nature of such transactions since serfs were bound to temple lands anyway. Due to misuses of usury (not only by monasteries but by other lenders) leading to hardships for peasants, the government during the T'ang period (618-907 C.E.) put limits on interest rates at 4 to 5 percent per month. But both private moneylenders and the temples often went beyond these limits.35

As time passed such usury was not only undertaken by the monastery itself but by individual monks and became a major activity of many of them. Monasteries apparently condoned such individual usury because even though it led to the development of wealthy individual monks, these monks tended to practice religious giving to the monastery, and after their death their assets usually were inherited by the monastery.36 In this way individual monk usury was justified in terms of its ultimate benefit to the Sangha.

As a result of such usury activities, as well as generous donations from wealthy clans and the Imperial family from the fifth to the seventh centuries in particular 37, Buddhist monasteries in medieval China became extremely wealthy and the number of monasteries and monks increased considerably. Such wealth resulted in turn in monasteries coming to wield a significant amount of political power as well.

From the state's point of view, however, all of this brought about a considerable loss of tax revenue due to the tax­free status of monastic lands, and a considerable loss of unpaid government service and tax-like labor (corvée) brought about by the huge increase in monks (exempted from such labor), many of whom were former peasants. In addition, there was an increasingly lavish consumption of wealth occurring in Buddhist festivals and feasts and construction of temples, burial mounds (stupas), family mortuaries, and statues.

Urged on by Confucians and Taoists, who decried these trends as leading to the impoverishment of the empire, the state engaged in periodic persecutions of Buddhism by forcibly reverting monks to lay status (laicization), seizure of monastery wealth (especially gold, silver, and copper), and placing limits on the number of monasteries and temples. Major persecutions of this type occurred in the years 446, 574, and 845. In each case the main goal was to shore up the finances of the empire by forcibly returning monks to peasant life (some of whom had taken up monkhood to avoid taxes and tax-like labor), converting some temple lands to taxable status, and melting down some of the enormous numbers of gold, silver, and copper Buddhist statues, the making of which had led to extreme shortages of these materials available for coinage of money by the empire.38

Another reason behind some of the persecutions was the occasional political involvement of monasteries in rebellions or intrigues against the state. This occurred even though "official" Buddhism in the form of state-­sponsored temples and monasteries tended to support the state unequivocally. Smaller regional temples and those tied to local great families, however, occasionally got involved in political movements against the state and thus provided a very different example of Buddhist/state relations than the traditional cooperative Sangha/state ideal.39

The occurrence of rebellions during the Sui, T'ang, and later periods tied to worshipers of Maitreya (the future Buddha) illustrated how particular Buddhist sects or movements using Buddhist symbols for their own purposes could adopt adversarial relationships with the state and use advocacy of greater economic equality (or at least relief from heavy taxation) as part of their appeal for rebellion against state authority.40

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WQ edited excerpt from Continuity and Change in the Economic Ethics of Buddhism: Evidence From the History of Buddhism in India, China, and Japan

By Gregory K. Ornatowski, Boston University, appropriate-economics.org