Economic KarmaJanuary 28, 2022
Smith was one of the few Western intellectuals to hint at the concept of dharma, or the natural and sustainable activities of humans, and apply it both for moral and economic purporses.
Instead of the word dharma, however, he named his concept the invisible hand. This had economic applications in The Wealth of Nations and moral applications in The Theory of Moral Sentiments.
Weaponizing the Invisible Hand
The main difference between Smith’s invisible hand and Eastern dharma is that the former has moral, spiritual, and practical uses, while the latter emphasizes only its moral and spiritual use.
Eastern philosophers did not dare teach the practical use of dharma because they knew that it would merely lead to corruption and evil.
For example, the Chinese discovered the principles of gunpowder which the Europeans took and weaponized in order to enslave Africa, South America, and Asia and even take Hongkong. Similarly, Western physicists discovered the nuclear fission and weaponized it to drop atom bombs on Japan.
Smith and the Physiocrats discovered the principles of wealth created by knowing one’s own self-interest or purpose in life or svadharma. But this was soon “weaponized” by the merchants to enrich themselves via Mercantilism and trade wars instead of enriching all humans.
Those merchants merely brushed aside the warnings by Smith against the pursuit of utility and avarice that the principles might bring. Later economists such as John Stuart Mill and Jean Baptiste Say even built economic theories around selfishness instead of dharma or morality:
Of course, the flaw in Mill’s philosophy is that personal happiness is subjective. If pursued without thinking of others, then it becomes arbitrary.
For example, it might bring happiness to a rich country to invade a poorer country for oil as the former would think that it would bring happiness and progress to both countries. Or conversely, it might bring happiness to terrorists to attack a rich, extravagant country thinking that it would bring it closer to simplicity and austerity which are foundations for religious happiness (For example, Jesus himself said it will be difficult for the rich to enter the Kingdom of God).
Utilitarianism is useful only when one is alone. It, however, creates problems when one comes into society because people have diverse experiences, opinions, and moral standards. It’s the type of thing that works only in thought experiments but fails in the real world.
Smith’s invisible hand, on the contrary, works both personally by tapping into one’s conscience, or “the man within the breast”, and socially by knowing what others are interested in, through selling and market research.
Why did later economists miss out on the invisible hand or dharma?
The first reason is because Say and Mill lived during the start and the height of the Industrial Revolution which lasted from 1760 to 1840. The increase in productivity increased the number and variety of products available for use or utility and for satisfying the senses which were not available before. Thus, utility and all its shallow and short-term benefits came to dominate the field of morality.
Another more important reason is because both dharma and the invisible hand are naturally invisible or not obvious to shallow observation. Both can only be seen by highly-penetrating and highly-evolved minds that can look far beyond the obvious.
In Hinduism, the concept of dharma naturally leads to the concept of karma. Anything that has a self will want to act to express that self. This action is called karma. Other selves will then react to this karma to create a reaction or another karma that boomerangs on the intial actor or self. This is why in English, karma is loosely translated as “What goes around, comes around.”
Smith on Economic Karma
Since karma is universal and timeless, it works the same way regardless of time and location, whether in the distant past, distant future, or in a very distant place. Selfish actions always and everywhere bring about something hurtful, or opposite of what was intended, in the long-run or even short-run:
History is full of examples of narrow-minded economic policies going back to hurt the intended beneficiaries or producing opposite effects:
Tariffs were created in the 1930’s in the US to protect their local industries. Instead, they contributed to the Great Depression that destroyed them
Credit derivatives were created in the 90’s to increase the wealth of investment banks. They instead led to bankruptcy and the Great Recession
The Greek government borrowed massively for the Athens Olympics to make their country richer. It however led to the Greek debt crisis and plunged the country into austerity
Those policies were created to increase wealth rapidly, but ended up destroying it. The more people study Smith and his ideas, the better will be humanity’s chances in avoiding bad economic karma from selfish motives.