The Sigalovada Sutta and Buddhist Economics — Right Livelihood and Ethical Commerce

In today’s modern world, whenever ‘Buddhism’ is spoken of, only one image arises in people’s minds—an ascetic sitting in a forest with his eyes closed, a monk in yellow robes begging for alms, or a sermon urging one to renounce everything by calling the world ‘suffering’ and ‘ephemeral’!

This is an exceedingly one-sided, incomplete, and distorted view of Buddhist philosophy.

Tathagata Buddha was not merely a teacher of ascetics; he was also a guide to the world’s millions of householders, merchants, farmers, and kings. He never said that a householder ought to remain impoverished or a beggar. On the contrary, the Buddha profusely praised wealth creation, entrepreneurship, and commerce!

In the celebrated ‘Sigalovada Sutta’ of the Digha Nikaya—which scholars have termed the ‘Vinaya of the Householder’ (vinaya [code of conduct/discipline])—the Buddha offered a young householder named ‘Sigala’ such a remarkable and practical economic model of earning wealth, its equitable distribution, investment, and workers’ rights, that the great 20th-century German-British economist E.F. Schumacher named it ‘Buddhist Economics’ in his immortal book ‘Small Is Beautiful’!

Analysing this economic philosophy in Part 2 of his timeless book ‘Buddha Dhamma and India’ (dhamma [righteous path/teachings of the Buddha]), N. Singh asks: Today, when rampant crony capitalism, climate crisis, and corporate greed have driven the entire earth to the brink of destruction, is not Tathagata Buddha’s principle of ‘Right Livelihood’ (samyak ajiva) the only alternative left to save humanity?

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Tathagata Buddha’s Four-Part Financial Management Formula (4-Fold Budgeting)

In the ‘Sigalovada Sutta’, Lord Buddha explains to Sigala how a prudent merchant or householder ought to divide their net income into four parts:

‘Ekena bhoge bhuñjeyya, dvīhi kammaṁ payojaye.
Catutthañca nidhāpeyya, āpadāsūpa hoti ti.’
(“One part should be enjoyed for living, two parts invested in business;
The fourth part should be treasured away, to serve in times of adversity.”)

1. One part (25%) — Consumption and Livelihood: Spend one-fourth of your total income simply on food, clothing, housing, and the daily needs of yourself and your family.
2. Two parts (50%) — Business and Productive Investment: Reinvest half of your income (50%) in your business, agriculture, industry, and the expansion of new enterprises so that more employment and wealth can be created!
3. The fourth part (25%) — Emergency Reserve: Save one-fourth as a secure reserve fund to cope with any crisis, famine, illness, or economic downturn.

Just think, 2,600 years ago, the Buddha provided such an infallible balance of corporate finance and wealth management that is taught in today’s modern business schools (Harvard, IIM)!

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‘Right Livelihood’ of the Eightfold Path: Prohibited Trades

The Buddha made it clear that the means of earning wealth must be ethical and non-violent. For merchants, he declared five types of trade to be completely prohibited (unethical trades):

1. Trade in weapons: Manufacture and sale of arms that cause human slaughter.
2. Trade in living beings and human beings (human trafficking and slavery): Buying and selling of human beings, bonded labour, or the business of prostitution.
3. Trade in flesh and slaughter (trade in meat): Slaughtering voiceless animals and selling their meat.
4. Trade in intoxicants: The business of liquor, opium, and intoxicating drugs that destroy people’s intellect and ruin families.
5. Trade in poisons and pesticides: Trading in chemicals that poison nature and living creatures.

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Modern Western Capitalism versus the Buddha’s Spiritual Economics

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Workers’ Rights in the Sigalovada Sutta (Labour Rights)

The duties towards labourers that the Buddha prescribed for masters in that feudal era go even beyond the charter of today’s International Labour Organization (ILO):

• Assigning work strictly according to the worker’s physical capacity.
• Providing adequate and dignified wages and food in a timely manner.
• Arranging medical treatment for workers during sickness and granting them paid leave (sick leave).
• Distributing an extra bonus out of profits during festivals and special occasions.

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Hard Truths from the Book: N. Singh’s Philosophical Insight

The author, N. Singh, writes in Part 2 of his book ‘Buddha Dhamma and India’:

“Buddhist economics teaches that earning wealth is no sin, but amassing fortunes by sucking the blood of others and destroying nature is the greatest crime. Modern economics treats man merely as a ‘consumer’ whose desires can never be sated. It is this blind lust that has plunged the entire earth into the fires of global warming and wars. The Buddha says: just as a bee gathers nectar and makes honey without harming the flower or breaking its petals, in the very same manner, a merchant should earn his livelihood without causing harm to society or nature. When compassion, justice, and balance are infused into commerce, that very commerce becomes Right Livelihood!”
— N. Singh (Buddha Dhamma and India, pp. 186–187)

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Four Principles of Buddhist Economics for 21st-Century India

1. Eco-friendly and circular economy: Rather than a blind race for GDP alone, ‘Gross National Happiness’ (GNH) and carbon-neutral production should be made the benchmark of development.
2. Mandatory profit-sharing for workers: It should be legally binding on corporate houses to distribute at least 10% of their net profits directly as bonuses to their lowest-paid employees.
3. Strict curb on speculation and financial gambling: Strict regulation must be imposed on financial syndicates that loot the hard-earned money of youth in the name of the stock market and online gaming.
4. Social practice of simplicity and non-possessiveness (aparigraha [non-accumulation]): Breaking free from the blind craze for unnecessary luxury, ostentation, and branded goods, and cultivating the ethic of living a simple, dignified, and debt-free life.

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A Thought-Provoking Question (The Message of the Book)

Shall we remain such slaves to wealth and profit that we devour our own earth and humanity, or shall we walk upon Tathagata Buddha’s path of Right Livelihood to build a balanced, peaceful, and prosperous society?

To comprehend the complete path of this wondrous economic philosophy, financial management, and ethical commerce found in the Sigalovada Sutta, every merchant, economist, and young entrepreneur must read this chapter from N. Singh’s acclaimed book ‘Buddha Dhamma and India’.