The aim of Western economics is to maximize "standard of living" by the amount of annual consumption, with more being better.This quote comes from Small is Beautiful (the current values for the US would be 25% of world's resources and less than 5% of population).
The aim of Buddhist economics is to maximize well-being while minimizing consumption.
An industrial system which uses 40% of the world's primary resources to supply less than 6% of the world's population could be called efficient only if it obtained strikingly successful results in terms of human happiness, well-being, culture, peace and harmony.
What are the implications of the Buddhist economics philosophy? What exactly is well-being and how do you measure it? What are the benefits of reducing natural resource usage? How does it change one's behavior as a consumer, as a worker and as an investor?
Lets take a closer look at these questions.
What is well-being and how do you measure it?
Adapted from Beyond Money:
- Having a good life: a life that is enjoyable, meaningful, engaging, and fulfilling.
- Having material well being: food, clothing, shelter, and medicine.
- Having good health and a long life.
- Having a good education and the opportunity to always be learning.
- Having safety and stability at both the personal and larger community level.
- Having good mental health: positive emotions, happiness, trust, optimism, and contentment.
- Live in a democratic and stable society that provides material resources to meet needs.
- Have supportive friends and family.
- Have rewarding and engaging work and an adequate income.
- Be reasonably healthy and have treatment available in case of mental problems.
- Have important goals related to one’s values.
- Have a philosophy or religion that provides guidance, purpose, and meaning to one’s life.
Mahbub ul Haq, Pakistani economist who pioneered the annual Human Development Index explains the difference between income and development as such:
The basic purpose of development is to enlarge people’s choices. In principle, these choices can be infinite and can change over time. People often value achievements that do not show up at all, or not immediately, in income or growth figures: greater access to knowledge, better nutrition and health services, more secure livelihoods, security against crime and physical violence, satisfying leisure hours, political and cultural freedoms and sense of participation in community activities. The objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives.To measure well-being, what kind of attributes should we be collecting statistics on?
On the individual level, examples include: health, education, material well-being and quality of work. Additionally from a mental perspective: positive and negative emotions, depression, engagement, purpose and meaning, optimism and trust, and the broad construct of life satisfaction.
On the societal level examples include: life expectancy, literacy rate, unemployment rate, homelessness rate, crime rate, suicide rate, marriage and divorce rates, bankruptcy rates, community vitality, citizen engagement, environmental quality, land set aside for nature, amount of natural resources used, and stability of government.
There are many examples of statistics measuring different aspects of well-being. In the US, Redefining Progress calculates the Genuine Progress Indicator (GPI) which distinguishes worthwhile growth from uneconomic growth by subtracting the negatives out of GDP such as resource depletion, crime and family breakdown. Ed Diener and Martin Seligman are creating a national well-being index looking at positive and negative emotions, engagement, purpose and meaning, optimism and trust, and the broad construct of life satisfaction. The Calvert-Henderson Quality of Life Indicators look at education, employment, energy, environment, health, human rights, income, infrastructure, national security, public safety, re-creation and shelter.
Many other countries have their own metrics. Bhutan has a Gross National Happiness statistic. The EU monitors psychological well-being with the Eurobarometer. All regions of New Zealand submit regular reports on their environmental, social, cultural and economic wellbeing. Canada is working on an Index of Well-being. The UK's conservative party suggests scrapping Gross Domestic Product (GDP) as a measure of the nation’s success in favor of a model that measures people’s happiness drawn up up by Friends of the Earth.
There are also some statistics collected comparing well-being between nations. The UN developed the Human Development Index (HDI) ranking countries by life expectancy, literacy and GDP. The World Value Survey has assessed happiness and life satisfaction in about 70 nations. The OECD is working toward metrics on well-being and societal progress. WWF has graphed HDI with ecological footprints as a way of looking at both development and resource usage.
While well-being is easy to describe, it is difficult to measure. But good measurement is necessary to determine how countries are doing. While GDP and GDP per capita are easy to measure, they are an inexact proxy for well-being. Current well-being measurements are still a work in progress and are steadily being improved. While they might not be as accurate as one would wish, as Keynes said "It is better to be roughly right than precisely wrong".
Why minimize natural resource use?
Buddhist economics attempts to minimize consumption (natural resources). There are four main reasons to minimize natural resource consumption.
First, using less leaves more for others. Reducing our consumption of natural resources ultimately allows the the size of the human population on Earth to be larger and more people experiencing a quality life is a good thing. By not using natural resources, you allow them to be used by someone else. As can be seen in a standard supply/demand diagram, lowered demand reduces the price for everyone. Those with the least will be able to afford more.
Second, natural resource usage leads to pollution and environmental damage. Fossil fuel usage leads to greenhouse gas emissions which lead to global warming. Fertilizer and pesticide runoff from agriculture pollutes rivers. Mining removes entire mountains and pollutes surrounding rivers with runoff and toxic chemicals. Limiting natural resource usage reduces these environmental damages.
Third, it allows more room for nature. Less land for farming, less land for tree harvesting, and smaller cities means more land for wilderness. Many species are being driven to extinction by human encroachment. Increases in agricultural land in Brazil are causing the Amazon rainforest to be cut down. And as stated above natural resource usage means leads to pollution which is also not good for wild animals.
Forth, natural resource extraction often leads to corruption and violence. While you would think discovering natural resources in a poor country would lead to economic development, in fact the opposite is likely to occur, a phenomenon known as the natural resource curse. One variety is the oil curse which has afflicted many countries including Azerbaijan, Angola, Chad, Russia, and Iraq. Blood diamonds are used to support wars in Africa. Forests in Burma are cut down to support the military dictatorship. While these problems do not typically afflict first world countries, using fewer of these natural resources decreases demand, lowering the global price and giving less money to the offending regimes (and making it easier to boycott goods from them completely).
How should one consume?
While Western economics aims is to maximize consumption, Buddhist economics aims to maximize well-being from our consumption while minimizing the natural resources they took to produce.
Buddhist economics is about maximizing the well-being return on natural resources of every purchase. The first way to do this is to add more meaning to each of your purchases. Items given as gifts often have additional sentimental value. No additional natural resources are need, but it adds to your well-being.
The second way is to decrease your natural resource usage while maintaining your well-being. This is done by minimizing the Material Intensity Per Service Unit of your purchases. It means shifting your purchases to products and entire segments of the economy that use fewer resources, purchasing more services and less goods, and substituting virtual goods for real items. Examples include: substituting video conferencing for air travel, vacationing closer to home, purchasing a fuel efficient car, and eating more vegan food and less meat.
Buddhist economics is a philosophy of better not more. Instead of trying to eat the most you can without getting fat, you want to eat the least you can while still thoroughly enjoying your meals and maintaining your health. In the US so much food is consumed that it has a negative impact on health. Well-being in the US could be improved if Americans shifted their consumption to a lower quantity of higher quality foods.
Rather than purchasing inexpensive items that would need to be replaced many times, you want to spend extra for higher quality goods that last longer. You also want to make your purchases last as long as possible and then, if feasible, find a new home for them when you no longer use them. Another way to get the most out of natural resources is to rent goods or share a purchase with multiple people, such as with car sharing or eBay renting.
Buddhist economics is about substituting human ingenuity for natural resources: cars that get higher gas mileage, houses that are designed to use less energy to heat, or computers that need less electricity to run. It is about paying more for items that use less natural resources (like hybrid cars and CFL light bulbs), or use renewable resources in place of non-renewable resources (like green electricity that comes from the wind rather than coal).
It is a philosophy of voluntary simplicity. Instead of trying to buy the largest house you can afford, it is about trying to find the smallest house you can live in and still be completely satisfied. Fight Club summed it up best: the things you own end up owning you. Owning more means spending more time cleaning, maintaining and fixing things. Instead of enjoying our things they become a source of work and headaches. Streamline what you own to just what gives you the most happiness and well-being.
Buddhist economics is about maximizing well-being through smart consumption. Many aspects of happiness and well-being are counterintuitive and we need to adjust our purchases accordingly. One example is that people tend to adapt to improvements in goods and no longer get additional happiness from them, but they don't take this into account during purchasing. While an HD TV at first is breathtaking, after enough views the quality of the picture will be taken for granted. In the Happiness Hypothesis, Jonathan Haidt says that we will adapt to power, status, freedom, health, and sunshine but not to (street) noise, commuting, lack of control, shame, or relationships (interpersonal conflict). Spending more of our money on purchases we don't adapt to will increase well-being. Variety is the natural enemy of adaption, and adding it to our purchases increases our enjoyment.
Considerable evidence suggests that if we use an increase in our incomes, as many of us do, simply to buy bigger houses and more expensive cars, then we do not end up any happier than before. But if we use an increase in our incomes to buy more of certain inconspicuous goods–such as freedom from a long commute or a stressful job–then the evidence paints a very different picture. The less we spend on conspicuous consumption goods, the better we can afford to alleviate congestion; and the more time we can devote to family and friends, to exercise, sleep, travel, and other restorative activities.The more we can substitute inconspicuous goods for conspicuous ones, the more well-being we will get out of our purchases.
In order to minimize your natural resource usage, you need to be able to track it. It would be great if there was a Quicken like piece of software which could track the natural resource expenditures of all of your purchases. Every time you used your credit card, information on what you purchased and what natural resources it required would be recorded and later download into the Quicken like software. Ideally, it would measure many different types of natural resources: land usage, water, metals, minerals, energy, CO2 emissions and pollution. With this knowledge you could then try and adjust your purchases to lower natural resource consumption each year while maintaining your well-being.
Having so many different types of natural resources makes it difficult to determine how best to minimize your usage. One solution is to aggregate them into a single score using a weighing mechanism such as Ecoindicator '99.
Another way to aggregate the natural resource consumption is the Ecological Footprint measurement. It looks at the amount of land needed to provide the resources required to manufacture the good and to absorb its wastes. Hopefully in the future grocery stores will have environmental rewards cards that track the footprints of all your food purchases. It would be even more useful if it split the footprint into energy and land usage components as acres and gallon scores. The footprint concept is good but currently there are some methodology issues with how it handles energy use and increased productivity of land meed to be addressed for its results to be accurate.
Buddhist economics is concerned about the well-being of future generations and therefore supports sustainability. It seeks to eliminate the non-sustainable use of resources such as fossil fuels, clear cutting of forests, depleting aquifers, soil loss due to farming, and over harvesting of fish stocks. It seeks to maximize use of recycled goods to minimize the need for additional mining or harvesting of forests. It even seeks to minimize sustainable use of natural resources as this allows others to substitute their non-sustainable resource usage for a sustainable one.
Buddhist economics takes into account the well-being of others as well as yourself and supports good jobs for workers. You want your purchases to make the largest positive impact on the workers, possibly by supporting higher wages for workers or possibly by supporting workers in poor countries where additional money would go farther. As consumers we should try and support products that generate good jobs and likewise avoid products that lead to bad jobs.
Buddhist economics is about taking the entire backstory into account instead of just purchasing based on price and quality. What kind of jobs did my purchase support? What impact on the environment did it have? If you get a good deal but it comes at the expense of workers or the environment, then it is not a good deal.
Improved labeling helps us to better see the backstory. There are more and more examples of environmental and social labeling appearing every day. The Fair Tracing Project is developing a digital tag that would tell the backstory behind the food you eat, and the Dole Organic Farm label allows you to view the farm the banana was raised on and certifications of that farm. Green Office has a "green screen" which rates products based on the amount of recycled content they contain, their biodegradability, their chemical content, and third party verification of products and companies. JVC Manufacturing's label shows energy usage, CO2 emissions, water usage, air and water pollution, chemicals used and waste created. Carbon labeling by Carbon Trust and Tesco calculate the CO2 impact of items like potato chips. Timberland has a "Our Footprint" label, Home Depot has an Eco Label and Wal-Mart is adding an environmental sustainability scorecard to electronics. The Hekhsher Tsedek label ensures workers of kosher foods are treated fairly and Fair Trade sets standards for international labor and environmentalism.
Hopefully in the future, customers will be able to use their cellphones to access this information about products they are purchasing like they do in Japan.
In conclusion, consumption in Buddhist economics is about maximizing the well-being return on natural resources, substituting human ingenuity for natural resources, maximizing well-being through smart consumption, taking the entire backstory into account, and supporting good jobs for workers. It is a philosophy exemplified by the concepts of better not more, voluntary simplicity, and sustainability.
How about work?
From Small is Beautiful:
To strive for leisure as an alternative to work would be considered a complete misunderstanding of one of the basic truths of human existence, namely that work and leisure are complementary parts of the same living process and cannot be separated without destroying the joy of work and bliss of leisure.While GDP goes up the more you work, at a certain point individuals would get greater well-being from more leisure than from additional income. Overwork leads to stress and illness, decreasing well being as this research finds:
Whereas the goal of Western Economics is to minimize and hopefully eliminate all work, Buddhist economics sees that having a good job is a necessary component of well being, and as a goal to create good jobs for everyone.
Despite the weak relationship between income and global life satisfaction or experienced happiness, many people are highly motivated to increase their income," the study said. "In some cases, this focusing illusion may lead to a misallocation of time, from accepting lengthy commutes (which are among the worst moments of the day) to sacrificing time spent socializing (which are among the best moments of the day).And while not having a job might sound ideal, it has negative impacts on well-being as well. From Reality Check:
But unemployment brings just as many health problems and hidden costs as overwork. The unemployed suffer higher rates of physical and mental illness than those with jobs.
Attributes of good jobs:
- Meaningful to worker
- Opportunity for using skills and creativity
- Variety of tasks
- Respect and status
- Interpersonal contact
- Opportunity for personal control
- Limited stress and safe
- Good pay and benefits
Po Bronson writes in What Should I Do With My Life that:
We still cling to the idea that work should not only be challenging and meaningful -- but also invigorating and entertaining. But really, work should be like life: sometimes fun, sometimes moving, often frustrating, and defined by meaningful events. Those who have found their place don't talk about how exciting and challenging and stimulating their work is. Their language invokes a different troika: meaningful, significant, fulfilling. And they rarely ever talk about work without weaving in their personal history.Instead of striving for jobs with the highest pay, we should strive for those that give us the greatest increase in well-being, opportunity to display our talents and allow us the greatest potential to improve the world.
Being selective as to where you work can have an impact on companies as well. Jeffrey Sachs says that businesses can't recruit top talent anymore unless they are doing corporate philanthropy. The first thing many candidates ask is what the company is doing in Africa. These recruits want to work at a place that is meaningful, a place that is making contributions to do good in the world. For corporations then philanthropy and doing good make business sense in order to attract top talent.
The term "good job" is too often defined solely by its salary. Boring, repetitive manufacturing jobs are considered good because they pay well and have good benefits. But, while they capture the last bullet point for attributes of a good job they often miss all the others. These jobs frequently pay well to compensate for the fact that the others are lacking. Jobs should be redesigned to meet all the bullet points and ones that can't make it should be eliminated. Boring repetitive work should be outsourced to computers and machines, and the interesting and challenging part should be left for humans.
As a society (and as consumers) we should try to give everyone the opportunity to work and make jobs as good as possible. While all jobs can't pay well, they can meet the other conditions of being a good job. If a job is made better but not more productive, this isn't captured by traditional economic metrics, but it is still a good thing. We want an economy that allows as many people as possible to follow their dreams and get paid to do it full time. GDP might not be affected, but well-being would be increased if more people can pursue professions they are passionate about.
What about investing?
Western economic investing allocates capital to maximize return on investment while Buddhist economics takes additional social and environmental issues into account.
If you are following Buddhist economics principles, your self-worth is not based on the size of your bank account and you are attempting to minimizing your consumption. Therefore, while you will still need to invest for retirement, for financial security, and for large purchases, your overall need for wealth will not be that great (then again, you might take a job that pays less, so you will have less to invest in the first place). You will likely have more money then you will consume yourself and the extra money will be given away. Accordingly, you are not solely focused on maximizing returns and are able to take other social and environmental issues into account when investing. Just like you are willing to spend more for socially/environmentally conscious products, you are also willing to accept a lower return on investment for companies that handle more than their fair share of social and environmental issues.
Buddhist economics investing is about long term, non-zero-sum game investing. Short term investing, such as day trading, is more gambling than investing as one person has to lose money for another to gain. From a societal standpoint this is a waste of time, as all the effort of the investors goes into trying to outsmart their competitors rather than creating new wealth. Since you are concerned not just about maximizing your own wealth but also about societal well-being, you want to avoid short term zero-sum game investing.
Universal investing is one form of long term investing where you invest as broadly as possible in the world economy. A universal investor therefore aligns himself with what is best for the entire world economy over the long run.
Investing can also be an alternative to donating money to non-profits. It is more effective to invest in a company that is less profitable because it is stopping problems from ever occurring than to donate to an NPO to help fix the problems that were created.
For example, suppose there are two companies, one which would give you a slightly higher return (say 10%) but have higher environmental costs (for example, coal companies with air pollution) and another which has a slightly lower return (say 8%) but fewer environmental costs (solar power). You can think of the 2% lower rate of return as a donation. But, this "donation" is likely to have much greater impact than donating to a charity, for it is stopping the environmental and health issues of coal, such as asthma and respiratory diseases, from ever happening rather than donating to an NPO to provide medicine to fix the problems it caused.
Loaning can have a greater impact than giving. You can only give your money away once, but if you loan it out instead it comes back and then you can loan it out another time (and on and on) greatly increasing its leverage. One way is through microfinance where you loan to someone in the 3rd world who wouldn't have access to capital otherwise. Created by Grameen bank, microfinance is now prevalent and anyone with $25 and internet access can be a banker to the poor via kiva.org. Because a small amount of money has a larger impact to someone in the 3rd world than in the 1st, microfinance's impact on well-being is greater than a similar amount invested in the first world.
Investing in 4th sector companies, those that are run for-profit but with a nonprofit mission, can have a greater impact than donating to a non-profit. They are more sustainable than non-profits as they fund themselves through their business and are not dependent on fundraising to cover their expenses. For example, the Greyston Bakery employs those recently released from jail and gives them the opportunity to gain job skills and increases their employability. If an NPO attempted to teach the job skills instead, it would cost money to run, requiring donations, and the opportunities of the workers wouldn't match that of being on a real job.
Buddhist economics is about getting companies to think long term. This really is no different from Western economics as the best companies (such as Google) and investors (Warren Buffet) think long term, but not all companies do. Managers at many firms are focused on short term goals to the detriment of the longer term. Long term focused companies are ethical, honest and act legally as to not do so will severely damage companies in the long term. One take on corporate social responsibility (CSR) is just to get a company to think in its enlightened long-term self interest.
You also want companies to internalize the externalities. An externality is a positive or negative impact on anyone not party to a given economic transaction, in this case a social or environmental impact that goes beyond the company and the consumer.
Examples of negative externalities include: pollution, clearcutting forests, exploiting workers, and greenhouse gas emissions. Examples of positive externalities include: hiring workers that are otherwise unemployable, creating knowledge through R&D (that isn't covered by patents), improving safety for workers, and providing access to credit to those that otherwise wouldn't get it.
While a smart, long term focused company can internalize many externalities without additional costs, at some point there is a trade off between externalities and profitability. The costs can be absorbed by consumers in the form of higher prices, workers in the form of lower salaries, or investors in the from of lower returns. As seen above, it is cheaper from society's standpoint for a company to handle the externalities itself rather than having citizens pay more in taxes or donations to fix the problem later. Therefore you want to support companies that internalize their externalities even if this leads to a lower rate of return.
To see which companies are handling their externalities, Buddhist economics is about supporting corporate transparency and greater environmental and social reporting. Instead of just reporting about the bottom line, you want companies reporting about the triple bottom line: "People, Planet, Profit". The additional information allows you to value them on more than just profits.
Many corporations are already doing this as shown by the 2271 CSR, Sustainability, and Environment reports released in 2006 as tracked by Corporate Register. In order that these reports can be compared with each other, the Global Reporting Initiative specifies a set of reporting guidelines.
Making this information available allows non-profits and financial institutions to compare companies. For example, Climate Counts ranks companies based on carbon reporting and actions being taken, Greenpeace has a Green Electronics Guide that ranks leading mobile and PC manufacturers on their global policies and practice on eliminating harmful chemicals and on taking responsibility for their products once they are discarded by consumers and Goldman Sachs, the Wall Street investment bank, has a four-member research team that assesses the environmental, social and management performance of companies in the same way that more traditional colleagues analyze financial performance.
You can get companies to think long term, internalize the externalities and support transparency by rewarding companies that do this with higher valuations and by putting pressure on companies that don't to move in the right direction.
Instead of basing the value of a company on just its earnings you want to add in additional social and environmental externalities. If a company is making $2 a share but has positive social and environmental externalities that equate to an additional $2 a share, then you want to value this company as if it was earning $4 a share. Taking these positive externalities into account will cause the company's stock to go up and have a higher P/E ratio. This increased price gives an incentive to managers of competing companies to change their behavior so they too will get the premium put on their stock.
The increased price also means more capital is allocated these companies and it signals others to invest in similar companies or to create new companies like them. For example, because cleantech companies are currently being given high valuations, venture capitalists have more incentive to fund cleantech companies. Between 2005 and 2006, investments in the clean-tech sector jumped from $623 million to $1.5 billion.
Alone you might not have much impact on a stock price, but by banding together with like minded investors, you can make a big difference. One such way is investing through socially responsible investing (SRI) mutual funds which aim to maximize both financial return and social good. Today, $2.3 trillion, nearly one out of every ten dollars under professional investment management in the United States, is involved in SRI.
While it is possible to raise a stock price to reflect the positive externalities a company brings, it is not possible to do the opposite and lower the stock price of a company that has negative externalities as long as some investors value companies only on earnings. To nudge bad companies in the right direction you need other techniques.
Ownership can be used to influence companies:
"Responsible investing requires responsible ownership," said Amy Domini, Founder and a Managing Principal of Domini Social Investments. "By filing shareholder proposals on social and environmental issues, and through constructive dialog with companies, we are helping to make corporations more accountable to their stockholders, employees, communities and the environment."Another possibility would be to take a company private. A SRI private equity firm could be created that looks to purchase social and environmental laggards in hopes of reforming them. For example, a coal company that uses inefficient and polluting power plants could be bought out completely. The plants could then be replaced with more efficient IGCC versions which also remove 90-95% of mercury, and greater than 99% of sulfur dioxide (SO2). The CO2 could be captured and sequestered. Looking strictly at the bottom line this sort of purchase might not make sense, but if investors are motivated by improving the environment as much as making money and see the transaction as part donation, part investment, then it does.
While it might seem counter-intuitive to invest in "bad" companies, they have more potential for change, as the "low hanging fruit" that other companies have already picked are still available. It is easier to make a positive impact for the environment by working with Wal-Mart than it would be with Whole Foods, since Whole Foods has already implemented many of the changes and Wal-Mart is a larger company so the impact would be greater.
Some ethical investors use screens to avoid investing in certain companies that produce products that society would be better without such as alcohol, tobacco and weapons. But, not investing in these companies does nothing to reduce demand for their products or make them go away. If ethical investors shun these companies they would be owned solely by people looking to maximize profits regardless of externalities who see no reason to change.
Instead, while people are still purchasing these products, you want to use your influence as an owner to make sure those companies are producing them in the most responsible way possible. As long as people are still smoking, you want tobacco companies to do their best to stop underage smoking, make cigarettes that are as easy as possible to quit and attempt to create electric toxin free cigarettes. You want alcohol companies that don't target teenagers with their advertisements.
Another way you can change these companies is to change their definition of their business. For example, getting oil or coal companies to think of themselves as energy companies, where the energy could be generated in a more environmentally friendly way.
To summarize, Buddhist economics investing is about long term investing and using investing as an alternative to donating. It is about trying to get companies to think long term, internalize externalities and practice transparency by supporting good companies and nudging bad ones in the right direction.
While Western economics attempts to maximize standard of living, Buddhist economics attempts to maximize well-being. Whereas Western economics is agnostic toward natural resource use Buddhist economics attempts to minimize it. The key reasons for decreasing resource use are: leaving more for others, reducing pollution and environmental damage, leaving more room for nature and reducing corruption and violence. The point of the economy is more than just maximizing output or productivity, it is to create meaningful jobs that create the goods and services that allow us to maximize well-being.
As individuals, Buddhist economics changes the way we consume, work and invest. Consuming is about maximizing well-being while minimizing natural resources usage. Working is about finding the job that gives us the most well-being, the best opportunity to display your talents and the greatest potential to improve the world. Investing is about long term investing and using investing as an alternative to donating.
Some people like to blame society's problems on corporations. If only corporations cared about more than just maximizing profits then many of the worlds problems wouldn't exist. If we could just get corporations to change, the thinking goes, then these problems would be solved. But, the way a corporation acts is determined by the values of its customers, workers and investors. If a company's customers are just looking for the lowest price, its workers just looking to maximize their salary and its investors just trying to maximize their return, then you will find a company that is not concerned about greater social and environmental issues. If you forced that company to make changes but their customers weren't willing to pay more, they would just go to a competitor, the company would flounder and no real change will have taken place. Likewise, a company whose customers, workers and investors take greater social and environmental issues into account will be able to focus on more than just the bottom line. Therefore to enact change, instead of targeting the managers of a corporation, the key is getting its consumers, workers and investors to change.
As a society, Buddhist economics changes the way we measure success. Instead of using GDP as the measure of progress, you use statistics on the well-being of society. It has been reported that:
In the early stages of a climb out of poverty, for a household or a country, incomes and contentment grow in lockstep. But various studies show that beyond certain thresholds, roughly as annual per capita income passes $10,000 or $20,000, happiness does not keep up.Once an economy gets to a certain level, mental impacts of well-being are much more important than the ability to obtain more stuff. At this level certain policies, such as reduced work hours or greater environmental regulation, that reduce GDP might actually raise well-being. At the societal level, natural resource use can be discouraged by taxes on resources such as taxes on carbon and mineral extraction.
The Buddhist economics philosophy works well within a democratic capitalist system. Individuals have the freedom to choose how they consume, work and invest. They are able to vote for the politicians that would best follow its principles. They are free to lobby and convince their fellow citizens to follow these principals as well.