“Lessons in Spiritual Economics from the Bhagavad-gita –
Part 1 Understanding and Solving the Economic Problem”

by Dhanesvara Das


In September 2008, the Financial markets were in a tailspin. Stock values were plummeting, companies collapsing, and the bastion of free enterprise and capitalism, the United States, began socializing its largest economic institutions. In an unprecedented move, the Federal Government took control of the two U.S. mortgage giants Freddie Mac and Fannie Mae, who had been battling since the previous July to stave off crisis. Indeed, in August 2008 congress passed special legislation allowing the Treasury Department to come to their aid with billions of dollars. That month we also saw the failure of two of the largest investment banks—Lehman Brothers and Merrill Lynch. Lehman filed the biggest bankruptcy in history on September 15, but Merrill Lynch was saved from the same fate by Bank of America’s purchase reported the same day. Then, two days later the U.S. government essentially bought an 80 percent stake in the largest insurance company in America, American International Group, Inc. (AIG), for $85 billion. The drama continued as investment banks Goldman Sachs and Morgan Stanley were put under Federal control with the idea that this move would help rescue the ailing U.S. finance system. The Securities and Exchange Commission also did their part by temporarily banning short-selling of 799 financial institution stocks.

As breathtakingly spectacular as it all is, there were a prescient few who could see it coming. They even warned us! Less than a month earlier a former chief economist of the International Monetary Fund predicted that some “big” investment banks would go belly up.1 The men on the inside of the game of course always know more, so get ready—what we have seen so far is just the beginning. The current IMF director general Dominique Strauss-Kahn, speaking just the day after U.S. authorities arranged the rescue of AIG, told us: “The consequences for some financial institutions are still in front of us. We have to expect that there may be in the coming weeks and coming months other financial institutions with some problems.”2

It’s being described as the worst financial crisis since the Great Depression of the 1930s, and perhaps heralding another depression just as great, or even worse. It is likely that by the time you read this you will know the full truth of that prediction.

However well our financial experts can accurately predict these crises they don’t seem to know quite what to do about them, either before or after the fact. On September 18th Senate Majority Leader Harry Reid said the U.S. Congress was unlikely to pass new legislation to overhaul financial regulations  because “no one knows what to do.”  He added that neither Federal Reserve Chairman Ben Bernanke nor Treasury Secretary Henry Paulson “know what to do but they are trying to come up with ideas.”3 It seems that Reid was uninformed because the very next day Paulson produced a plan – “the mother of all bail outs” – $700 billion to allow the government to buy bad loans, taking them off the books of financial firms. Over the weekend the measure was given to lawmakers who were told “give us the money – and NOW!” The White House insisted that there was no time to debate the measure, or consider alternatives that might benefit Main Street and not just Wall Street, and that Congress must authorize it immediately or there was risk of further “unsettling global financial markets.” When all is said and done, the price tag for this fix, including Freddie Mac, Fannie Mae and AIG, will be well over $1 trillion. But worse yet, after giving away such an unfathomable sum of money it is uncertain whether this will fix the problem once and for all. Some economic writers suggest that the plan vastly underestimates the exposure that needs to be covered, and predict that the problems may well continue.

“What exactly is the economic problem?” is the question of the hour; a problem that is not understood cannot be fixed. Is the problem the millions of bad mortgage loans, or is it the less-mentioned outstanding $1 quadrillion (1,000 trillion) in derivatives trading that also threaten many banks and brokerage firms?4 Do the problems stem from the fact that safeguards established in the 1930s depression, such as the Glass-Steagall Act separating commercial banks and investment banks, have foolishly been rescinded? Is the problem isolated in an individual sector of the financial markets or is it systemic? Should the government step in and take control of these failing institutions? But, isn’t that socialism? What about all of that rhetoric of the “invisible hand of the free market” so widely propagated during the rush to a global economy over the past two decades? If the free market works the magic we were led to believe why don’t we just let the free market sort out the mess? There are many immediate problems that can be dealt with on a piecemeal basis, but the complete and final solution can only be found once we understand the very root of the problem. What exactly is the economic problem and where does it originate? That is the question answered by this book.

Thousands of people working long hours in the corridors of power in Washington DC and financial markets in New York are busily trying to find solutions; yet they overlook the most significant aspect of the problem. They are treating the issue as a money problem, or perhaps a lack of regulatory oversight, and they offer money and regulatory solutions accordingly. But money alone didn’t create the problem and money and regulations cannot completely solve it.

Where did the problem actually start? Well, modern economics is not a system of nature, like gravity, whose laws are infallible. It is a man-made system, and human beings are fallible, if nothing else. Therefore at the root of a faulty economic problem we find: people. More specifically, many if not most of our economic problems are caused by a people who have a particular consciousness that leads them to cheat, exploit, defraud, and steal in order to enhance their wealth. Good old-fashioned greed, for example, is being credited as one of the primary causes of the current economic crisis. The consciousness of others leads them to competitive economic activity, and yet others to cooperative and egalitarian methods of solving the economic problem. Therefore if we want to fully understand the current economic problem and how to solve it we must first understand people and the nature of consciousness.

To some, that sounds even more complex than solving the financial mess. We’ve been trying to understand people for millennia and to this day there is no satisfactory gestalt.

Fortunately there is hope. The Vedas, the world’s oldest scriptures, offer a very clear understanding. Overlooked or misunderstood by Westerners, they explain human behavior very well. They do so by adding the single most important element that has been missing from most Western models—that we are spiritual beings who have a dual material-spiritual nature; the Vedas further inform us how the material energies of this world affect the consciousness of human beings.

Although we are spiritual beings we have chosen to live in this material world to fulfill our desire to contact the material energy. We want to touch it, taste it, feel it, and see it, in all of its innumerable permutations. That fact figures significantly into the manner in which we handle our economic affairs. It is also the key that will allow us solve our economic problems.

The basic spiritual truths on which we base our economic analysis are found in the Bhagavad-gita. Although it is relatively unknown in the West the Bhagavad-gita is revered as one of the foremost scriptures in the world by more than one billion people. The Gita itself explains that the speaker, Sri Krishna, is none other than God. According to Vedic tradition the Lord Himself visits this world periodically to instruct human beings in the spiritual science, and did so just 5,000 years ago. If we do not accept the speaker of the Gita as God then  all manners of convoluted interpretation are required for it to make sense. Saints in the line of the Gaudiya Vaishnavas encourage us to accept the speaker of Bhagavad-gita, Krishna, as God, if only theoretically, in order for us to learn the truths of the Gita, and we follow that recommendation herein.

Still, understanding the Bhagavad-gita is not so easy. Our efforts to do so are hampered by our cultural conditioning. We may read the words of the Gita but the meaning may remain inaccessible to us because we try to understand it in the context of our current culture. We necessarily interpret what we read according to the material conceptions of life by which we are conditioned. Instead the Gita is meant to be understood in its own context. Therefore we need a method that will help us to achieving the proper understanding. My approach herein is to look at words that are familiar to us in a particular cultural context, to strip them of their familiar meaning, and then show their essence in a different way.

Economics is one such word. In this work I discuss what I call “spiritual economics,” or economics based on the Bhagavad-gita. The idea that economics is discussed in the Gita often brings quizzical looks since there is nothing in the text for translators to render as the word “economics”. Moreover the two words together seem to constitute an oxymoron. But economics and economic activity are definitely found there. For example, everyone can appreciate that all economic activity has a result. In our current culture that result is measured in terms of money and so economics is typically understood as the dealings of money. I would like to point out that this understanding of economics is a relatively recent one since money as a transactional currency did not make its appearance until some time around 8-600 BCE, and then only in some parts of the world. Prior to that time economic activity also had a result, but it was measured differently. Economics therefore is not inherently synonymous with money. While the speaker of the Gita, Sri Krishna, does not say anything specifically about economics or money, He certainly has a lot to say about the results of activity. As it turns out, how we get and what we do with the results of our activity has a very significant relationship to our spiritual growth and development.

Another item of economic interest is demand. Almost everyone is familiar with the economic relationship between supply and demand: the supply will increase or decrease as the demand changes, according to the “law of the marketplace”. Sri Krishna also says quite a lot about demand in the pages of the Gita. Many times He refers to the desires and longings of the person in materialistic consciousness. Our desires, which can be thought of as “demands” for material things, also have a very significant relationship to our spiritual growth and development.

Not coincidentally, this same method of “reframing” familiar concepts is employed throughout the Gita itself. The best example is our own existence. People typically think of themselves as the body but Sri Krishna reframes our existence as the spiritual element, or soul within. There are other phenomena that we think of in a particular way according to the dictates of our culture that are similarly reframed by the philosophy of the Gita.

It is these lessons about activity and desires, among others, that I gather together to provide the understanding of spiritual economics. The term “spiritual economics” means two things: first, an understanding of the spiritual nature of the human being and how the influences of the material energy affect his consciousness, which provides a basis for analyzing past and present economic activity; and second, the economic system that is created by the Lord and offered to humankind as a method for dealing with the material necessities of life. By following its precepts we can easily satisfy our material needs. But this is actually a side-benefit, not the objective of the endeavor, which is to bring us closer to God. His methods of economics are not a matter of money and commerce. Rather, they are an exchange of love—love that is demonstrated by the interactions between the Lord and His devotees. It is a method by which we can develop a pure state of consciousness that will allow us to enter into the higher spiritual realms. Actions performed under the banner of spiritual economics are not at all material activity. They are entirely spiritual and constitute the practice of bhakti yoga, or the yoga of devotion.

Some Elements of Economics

Generally economics is thought of as the workings of global finance and commerce by highly-trained specialists, but it can also be much less than that, and for most people it is. The word economics comes from the Greek oeconomia, which means household. Originally it referred simply to the manner in which people satisfied their most basic needs of food, clothing and shelter. This is what constitutes economics for the average person. How we solve our economic problem of obtaining food, clothing and shelter is the basic economic question and history offers us many examples of ways to do that. The present method of a cash economy is only one of many possible options.

Another simple way of understanding the idea of economics is to consider it in terms of our relationships. In our everyday relationships we generally do not put money (cash transactions) between ourselves and those we love, such as family members and close friends. People generally see close relations as extensions of themselves, and exchanges are typically offered as gifts of love. This is particularly so in what we call the “nuclear family”—parents and children, and perhaps other blood relatives, living under the same roof. However, as our relationships become more distant we introduce money into exchanges. Why? Because modern Western culture does not provide us with a mechanism for relating to those not who are not close to us.

Western philosophy has raised the individual to the pinnacle of importance in society and has further set him apart from all others, even isolating him, by defining the concept of unlimited private ownership and fixing that concept in law. By legal definition what is “mine” is not “yours”, and vice-versa. People become separated and isolated from each other, contributing significantly to a sense of alienation and impersonalism. Individuals are thus set against each other in their interests. This fact alone is responsible for much of the neuroses and strife in today’s world. There is no longer any social contract consisting of duty or obligation between the members of society. It is every man, or rather, in today’s “progressive” culture, it is every person for himself.

Taking is not always a brute business. In many ways it has become a “civilized” affair in which some people take the productive efforts of others by means of creating an unfair advantage. This is considered shrewd business in the capitalist way of thinking. In this valueless concept “successful” people who have achieved wealth through any means are highly respected. In modern society we now value things over people. Wealth and money are important, and our relationships are determined by it. If we can demonstrate good ability to get or control wealth we are offered respect regardless of any other personal shortcomings. Such is the nature of a materialistic society.

By contrast, under the concept of spiritual economics, the functions of the economy are based on social relationships and an informal social contract with corresponding duties. This system is secured not by laws created by men, but by voluntary personal commitment by all sections of the social body to the principles given by God. It is their understanding of the spiritual nature of life, and their dedication to the service of the Lord that serves as the binding contract. Never-ending legislation that is ever-evaded by the conniving is not required.

The Concept of Spiritual Economics

In writing about spiritual economics my purpose is to distinguish it in its character, application and results, from traditional or “material economics”. Spiritual economics is understood in light of spiritual knowledge, particularly the definitions and teachings of the Gaudiya Vaishnava tradition of India, and based primarily upon Sri Isopanisad, Bhagavad-gita As It Is, Srimad-Bhagavatam and Sri Chaitanya-charitamrta as translated and commented upon by Bhaktivedanta Swami.

Spiritual and material economics are to be distinguished by the same differences that separate or characterize the qualities of matter and spirit, to wit: the spiritual element is personal, eternal, fully cognizant and blissful, complete in every respect without lack of any kind and is eternally connected with the Supreme fountainhead of all that be. The material element is impersonal, temporary, existing in a state of ignorance and is without happiness or bliss. It is perceived to be incomplete in itself, due to its being separated from the efficient or supreme cause. Material economics is characterized by the qualities of matter: it is temporary and always changing, founded and maintained in deception and ignorance, and results in misery; Spiritual economics on the other hand, based on a spiritual conception of life, is eternal in nature, it increases and supports our knowledge of spiritual truth and reality, and results in happiness, even bliss, for all of its practitioners.

All living beings are spiritual in nature and are complete with all spiritual qualities. However, when they are born into the material realm and identify with the material coverings of the body and mind, that identification causes them to assume the qualities of the material energy as described above. The living beings attempt to compensate for the resulting quality of incompleteness by possessing increasing amounts of material things. The present economic system is arranged to aid those in material consciousness in their development of a material conception of life. On the other hand, spiritual economics is arranged to aid those in spiritual consciousness in the development of a spiritual conception of life. Material economics promotes a consciousness of lack and the need to “get.” Spiritual economics promotes a consciousness of completeness and the joy of giving. It is important to understand that spiritual economics refers to more than an economic system; it reflects a state of consciousness. It is the consciousness of an individual who is fully abiding by the principles of the Bhagavad-gita, and the individual’s practice of spiritual economics is the most visible hallmark of such.

Readers Interested in Spiritual Economics

We might ask why those interested in the Bhagavad-gita would be interested in economics, or if indeed economics can be made to be spiritual. To many the expression is a contradiction of terms. Those who study the Bhagavad-gita are generally interested in spiritual pursuits, not economics. Yet there are several reasons why they should be interested. First of all, modern society is arranged in such a way as to force everyone to deal with economics. For most people, taking care of their bodily needs and desires consumes all of their waking energy, leaving little time for anything else. The self-realized sages advise us to live simply and save time for self-realization, but for many, modern life simply doesn’t permit that. Most people don’t earn enough to take care of life’s most basic demands even if they work the majority of their waking hours. There are some who want to give more attention to their personal or spiritual interests but cannot due to their work commitments. Whether we like it or not we live in an economic culture. Are we simply meant to work for a lifetime and then die? While in our current culture many people do, that is not the recommended use of this rare form of human life. What’s the solution to this problem? Following the method of economics as suggested by Sri Krishna in the Bhagavad-gita. This method of spiritual economics can solve our economic problems easily, and simultaneously provide a good amount of free time to be used for spiritual and other personal pursuits.

This book will be of interest to several other groups of people, beginning with those who are concerned with the social issues of the day, which are first and foremost the economic ones. The massive protests wherever the World Bank, and IMF meet, are due to the disadvantages these institutions foist upon the weaker elements of society. The economic analysis made in Spiritual Economics shows in the most practical way how our economic affairs can be managed to achieve a better world. Another group interested in social issues who would find this book of interest are feminists who conclude that the current state of affairs arises from what has been identified as a patristic culture. Is it true that the male energy is overly aggressive? No. But the male who is overly influenced by the energy of ignorance is. There is such a thing as a male influenced by the energy of goodness, which gives us the shining hero who uses his strength to protect, who does good and punishes evil. The human psychology explained in Spiritual Economics reframes the masculine-feminine debate into one of spiritual beings (both male and female) behaving in different ways according to the various influences of the material energy.

Others who can find solutions in this book are environmentalists who struggle for a wholesale, not piecemeal, solution. By saving one forest or one species here and there, the work will never be done in time. Environmental issues are, first and foremost, issues of consciousness, and secondly economic issues. People pollute because their consciousness is polluted. This leads them to use the environment as a dumping ground for “externalizing” the costs of cleaning up after industrial and social practices. The environment is the place where all of our refuse goes when we throw it “away,” but as the graffiti philosophers poignantly remind us “there is no away.” It all stays here on earth, with us. As we too often hear, the environment cannot be cleaned up because it will “cost too much.” Why, for example, is the Amazon rain forest being cut down at an alarming rate, and who is going to pay the estimated $33 billion to repair it? Who gets and keeps the money resulting from this activity (economics) is the answer to both of those questions. Solving the economic problem by the method of spiritual economics simultaneously offers a solution to all environmental problems.

Additionally Spiritual Economics will be interesting to students of psychology, the social sciences and religion, due to the novel and unique manner in which the human psychological-spiritual condition is explained. Other interested readers will include those who analyze the shadowy side of central banks, the machinations of paper money and its controllers, the IMF, etc. and find conspiracies. For those who are willing to go where others are afraid to even look, Spiritual Economics reveals the answer to “whodunit” and explains why it is happening the way it is.

The Plan of the Book

Human behavior has puzzled thinkers for centuries. Animals everywhere follow the same instincts of nature—dogs anywhere in the world behave like dogs, as do cats, sparrows or deer. The human being on the other hand is all over the map. He is both saint and sinner, loving and hateful, greedy and generous. Philosophers have speculated endlessly about why man behaves as he does, but the speculation needn’t go on any longer. The Bhagavad-gita and Srimad Bhagavatam very capably explain the full spectrum of human behaviors. Since our concern here is man’s economic activity we begin with first understanding man and his dual material-spiritual nature; we look at the nature of his original spiritual consciousness and how it is affected by contact with the material energy. We learn how the material energy can be categorized as a combination of three qualities of nature: goodness, passion and ignorance. How the human being is conditioned by contact with these energies explains why he can behave either as a divine or demonic personality. Other aspects of human nature, such as lust, envy and greed, figure into his economic behavior, especially in light of the current day and present economic turmoil, and we will examine the origins of these in the second chapter.

In the next three chapters we will examine in detail how the material energies of goodness, passion and ignorance affect man’s economic behavior. Formerly, due to the influence of goodness, there were all-inclusive egalitarian societies all over the world where no person is left without. Very few or any of these remain intact today, and deliberately so. The influences of the modern age erode the values on which they are based and we will trace out that process at the end of the chapter on the economics of goodness. Passion characterizes the modern era, a quality that encourages us to be more, do more, and have more. Those passionate influences replace cooperation with competition, the idea that ‘may the better man win’, and a winner-take-all mentality. This way of approaching economic activity however, has corresponding negative influences on people, society, and the environment.

From the modern era to the post-modern era our economic practices vary from those of passion to ignorance. It is the influence of ignorance that inspires predatory economic practices that wring profit from suffering, chaos and death, practices that are now observed all over the world. Excessive greed, profiteering at others’ expense, exploitation of the earth, the animals and the people, are all symptoms of the influence of the quality of ignorance. The observable trend over the past six centuries has been from goodness, to passion, and to the present influence of increasing ignorance, a trend that has no opposing influences. We trace out that path and how it has been deliberately created despite the continued protestations of the mass of people. If the people don’t want it, how then can it happen? Due to the influences of the age, which can be changed if we so will.

The economics of the late twentieth century have been described as predatory capitalism or vulture capitalism. It is a system of exploitation and is founded on atheism. In chapter six we examine the economics of atheism, the illusions on which it is based, and the machinations of the monetary system that are the tools of its expression.

The trend and its influences has an apparent cause which are those whom we might call the “agents of destiny” or the “powers-that-be.” In fact they have led society down a path of destruction and have manipulated the economic system over the centuries into a weapon that is now being used to control and exploit anything and everything, causing great harm, even large-scale death, to people and the environment. It would seem as though those who deliberately create destruction and death for economic gain are mad, or even worse, demonic. We want to know: what is the consciousness that gives rise to such deadly and destructive behavior? To understand that we examine the two major types of consciousness in chapter seven—the divine and demonic.

In the final chapter of this first volume we return to the question “what is the economic problem and how can we solve it?” Having examined the nature of consciousness and its influence on economic behavior throughout history we can clearly answer the question. Moreover, we now understand what is needed to fix the economic problems—all of them—and create an economics that is beneficial to all, that cares for the environment, and for all future generations. The answers are all there, given in the time-tested Vedas, the operating manual for the universe. The only thing left to resolve then is if we will apply the solution.

An explanation of the spiritual nature of human beings, the influences of the material energy on the behavior of economic man, the historical trends and our present economic course, the factual economic problem, and its solution, together constitute Part One of Spiritual Economics: “Understanding and Solving the Economic Problem.”

In Part Two of Spiritual Economics: “Creating a Culture of Satisfaction to Heal the World,” we present the concept of a spiritual economics as prescribed by the Bhagavad-gita and Srimad-Bhagavatam. We begin with essential background material explaining the nature of karma (action and reaction), its relationship to our economic endeavors, and its implications for the bondage or evolution of the soul. We then examine the nature of, and differences between material and spiritual love, and how they are actual bases for all economic activity. Next we carefully examine the instructions for action in Bhagavad-gita and find in them an explanation for a complete economy of abundance, providing sufficiently for the needs of all living beings, and by which our very ordinary activities can become acts of devotion that carry us to a life of happiness and satisfaction, and ultimately, spiritual emancipation. In the next chapter, in explaining how spiritual economics can be practiced, we examine the Vedic scientific social system known as varnashrama dharma. This social system is a method of organizing society such that everyone’s needs—both material and spiritual—are met, all people have a place, a function, security, and the satisfaction that arises from proper spiritual engagement and the opportunity to make a significant contribution to society according to one’s ability. The varnashrama dharma social system is the means of curing the alienation and anomie that so plagues modern man.

Since the first two volumes constitute an introduction to the concept of spiritual economics and are directed toward those unfamiliar with the Bhagavad-gita, there is need to examine the influences of economic activity in relationship to spiritual practices and progress beyond the treatment given therein. The impact of economic activities on spiritual evolution will therefore be treated in detail for experienced, practicing vaishnavas in the Part Three of this work, titled “Advanced Lessons in Spiritual Economics for Vaishnavas.” This volume will also include a detailed discussion of the concepts of varnashrama dharma, and daiva-varnashrama.

Living is nothing more than doing one thing instead of another. How then shall we live? Shall we live in a way that ultimately destroys our social fabric, our planet, our own spiritual understanding and finer sentiments, and ultimately our own lives? Or shall we live in a way that heals and supports the planet and all of its inhabitants, eliminating the need or desire for poverty, fear, exploitation, degradation and destruction? To live in the current dominant culture participating in the economics of atheism is to choose the former. To live according to the instructions offered to us in the Bhagavad-gita, following the principles of spiritual economics is to choose the latter. This book is meant to make you think about how you live in this world, and why.


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