Sufficiency Economy Philosophy: A Model for Sustainable Development Mario T. Tabucanon
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Transcript of Sufficiency Economy Philosophy: A Model for Sustainable Development Mario T. Tabucanon
Sufficiency Economy Philosophy:Sufficiency Economy Philosophy:
A Model for Sustainable DevelopmentA Model for Sustainable Development
Mario T. TabucanonVisiting Professor, UNU-IAS
Professor, Asian Institute of Technology
Presentation at the 3rd ASEAN-Plus-Three Leadership Programme on
Sustainable Production and Consumption6-7 October 2010, Bayview Park Hotel, Manila, Philippines
The Sufficiency EconomyThe Sufficiency Economy Philosophy (SEP)Philosophy (SEP)
His Majesty, the King of Thailand His Majesty, the King of Thailand developed SEPdeveloped SEPHM introduced SEP in all Royal HM introduced SEP in all Royal Projects in Thailand (Since 1974)Projects in Thailand (Since 1974)SEP is a model for achieving SDSEP is a model for achieving SDSEP is the overarching principle in the SEP is the overarching principle in the 99thth and current (10 and current (10thth) Thailand National ) Thailand National Economic and Social Development Economic and Social Development Plans, 2001-2006 & 2007-2012Plans, 2001-2006 & 2007-2012
Philosophy of “Sufficiency Philosophy of “Sufficiency Economy”Economy”
“Sufficiency Economy” is a philosophy that stresses the middle path as an overriding principle for appropriate conduct at all levels of society -. individuals, households, community, organizations or government
”
•1992: During economic boom, HM warned against hastily jumping into the wind of “Asian NICs” and “Asian Tigers.”.
•1997: Indeed, Thailand suffered during the Asian financial crisis. But due in part to the application ofSEP, Thailand had recovered relatively fast.
•Although His Majesty has been talking
about sufficiency economy since 1974, it
was only in 1997 at the height of the
financial crisis that HM began to use
the term “Sufficiency Economy”.
Components of SEPComponents of SEP
“Sufficiency has three components: moderation; reasonableness; and the need for built-in resilience against the risks which arise from unwanted internal or external change.”
Main Components of Sufficiency Main Components of Sufficiency
EconomyEconomy
Sufficiency
Economy
(1) Moderation
(2) Reasonableness
(3) Self-Immunity
Conditions: SEP Will work best if there is
(1) Application of appropriate knowledge and prudence
(2) Adherence to morality
สมดุ�ล/ม��นคง/ยั่��งยั่�นชี�วิ�ต/เศรษฐกิ�จ/ส�งคม
The Middle Path
Reasonableness “Immune” System
Moderation
Wisdom Condition(an application of knowledge with due consideration and
prudence )
Balance/Stable/Sustainable
Life/Economic/Social
Moral Condition (honesty, integrity, diligence, patience,
perseverance)
HM King’s Philosophy of "Sufficiency Economy”HM King’s Philosophy of "Sufficiency Economy”
Frameworks of the 9th & 10th PlansFrameworks of the 9th & 10th Plans
Leading to
PARTIAL INFORMATION
WRONG INFORMATION
MISINFORMATION
ICT ICT
KNOWLEDGE-BASEDDEVELOPMENT &
PROBLEM-SOLVINGCONTEXT, SITUATION, LOCATION,
& TIME DEPENDENT
KNOWLEDGE-BASEDDEVELOPMENT &
PROBLEM-SOLVINGCONTEXT, SITUATION, LOCATION,
& TIME DEPENDENT
KNOWLEDGE ACCESS KNOWLEDGE VALIDATION KNOWLEDGE VALUATION
GLOBAL KNOWLEDGE POOL EXPLODED & CONNECTED
GLOBAL KNOWLEDGE POOL EXPLODED & CONNECTED
Ethical Valuesgoverning
TECHNOLOGY ASSESSMENT
SUSTAINABILITY
Ethical Valuesgoverning
TECHNOLOGY ASSESSMENT
SUSTAINABILITY
Discoveries & InnovationsPatents & monopolyPricing of technology
Needs for technologyLimited resources
POORER
IMMUNITY ?
New Ethicseg. brain death, GMO, stem cells, global warming,
democracy, corporate social responsibility
“Uneducated person can do petty corruption,
Educated can do deliberate ones”.
PROHIBITIONS1. Dishonesty, plagiarism
2. Academic lie
SUSTAINABILITYNatural resources Environment
Consumption Production
SUSTAINABILITYNatural resources Environment
Consumption Production
How does SE relate to Neoclassical How does SE relate to Neoclassical
Economics?Economics?
Preference
Optimality
X
Y
Max (1)-t E[U(C,..,t)] Subject to Budget Constraints
A
How does SE relate to Neoclassical How does SE relate to Neoclassical
Economics?Economics?
Preference
Middle path solution
X
Y
“Satisfice” (1)-t E[U(C,..,t)] Subject to Budget Constraints
A
• Depend on Preference,
and Constraints to
Maximize Utility
Optimality Middle path
• Choose middle path
based on moderation,
reasonableness and
self-immunities –
“Bounded Rationality” or
“Satisficing”
Neoclassical Economics Sufficiency Economy
Difference between SE and Neoclassical Difference between SE and Neoclassical
EconomicsEconomics
Applications of Neoclassical Applications of Neoclassical
Economics Economics Neoclassical economics tries to understand human choices and
explains the observed pattern using the optimizing framework
Risk Loving
Short-sightedLong-sighted
Risk Averse
Social Status
Envy
Addiction
Prudence
Human behavior
PrudentPerson
Lack of Self Discipline
SE and Human BehaviorSE and Human Behavior
(1) Moderation
(2) Reasonableness
(3) Self-Immunity
The behavior of those who adhere to SEP will be similar to the behavior of “prudent
persons”.
Prudent Person
Misconceptions concerning SEPMisconceptions concerning SEP
1. Sufficiency Economy is about self-1. Sufficiency Economy is about self-sufficiency: This is a misconception. sufficiency: This is a misconception. SE concept entails a two-stage process: the first stage involves basic sufficiency, or relative self-sufficiency, and once a firm foundation is established, one can progress to a second stage of advanced sufficiency.
MisconceptionMisconception
2. 2. Sufficiency Economy is anti-globalization and leads to the closing-up of the economy: This is a misconception: This is a misconceptionThe two-stage principle of Sufficiency Economy suggests that in order to cope with globalization, we first need to build a strong foundation for the country and proceed cautiously with an awareness of the risks involved.
SEP strategic framework for a country in the globalization era
Build a strong domestic economy and improve networking at all levels (local, national & global)
Liberalization of key sectors has to be carried out in steps and to be consistent with the country’s state of readiness
Proper supply-side management policy to help withstand the shocks and volatility arising from external factors
Misconception
3. That ‘Economy’ in the term ‘Sufficiency Economy’ only refers to the conventional concept of ‘Economics’. This is a misconception.
‘Economy’ in SE encompasses the triple bottom line – Economics, Social & Way of Life, and Environmental.
MisconceptionMisconception
4. 4. Sufficiency Economy is only applicable in the agricultural sector and rural areas: This is a misconception: This is a misconception
Sufficiency Economy is a philosophy that helps guide the behavior of each individual and can be applied to all sectors of the economy
Sufficiency Economy
2. Economic Development
- Agricultural/Community Development
- Business Practices
- Government Policies
Applications of Sufficiency Economy Philosophy
1. Daily life
- Moderation
- Reasonableness
- Self-immunity
SEP Applications to Daily LifeSEP Applications to Daily Life
As guiding principle in daily activities:As guiding principle in daily activities:
Especially in answering questions such as : How should we act?
Which items should we buy?
How should we live our lives?
Together, the answers to these questions will help define what it means to “live according to a sufficiency lifestyle”.
Example: Buying a HouseExample: Buying a HouseIf we try to follow SEP, then we have to ask ou
rselves at least three questions: First, whether this house is a suitably moderate choice, given limited resources. Second, whether it is a reasonable thing to do to buy a large house just to show it off occasionally to our friends. Third, whether the financing of this particular house will leave the buyer vulnerable to adverse effects that might happen in the future.
AVOID EXCESSIVE OVERCONSUMPTION BEHAVIORS
UNNECESSARY DESIRE UNNECESSARY DESIRE
NATURAL DESIRELongest life
Youthfulness Beauty
Ease of livingEnjoymentRecreation
etc.
Anti-oxidant food supplements/ potions/ drugs
Cosmetic surgery
Addictions: drugs, non-drugs, sugar, lifestyles
Satiety for violence, sex, extremes
KNOWLEDGE & WISDOMFor Rational Decision
KNOWLEDGE & WISDOMFor Rational Decision
NECESSITIESIN LIFE
FoodEnergyWater
TransportationCommunication
Housingetc.
‘AFFLUEZA’
OBESITY
ELECTRICITY, FOSSIL FUEL, PETROLEUM
INFRASTRUCTURES
IMMUNITYagainst seduction
& addiction
IMMUNITYagainst seduction
& addiction
Prohibition of sale of junk food in schools.
Prohibition of sale of junk food in schools.
OBESITY
In Thailand, up to 30% of adults and adolescents reached “obese” range.
From 1986 to 2008, the situations were getting worse.
Change of food habits from rice, vegetables and fruits to Western style of food – food of high fat, protein & sugar
Soaring sale of “food supplements” claimed to control weight.Advertisement, promotion & direct sale
Booming of spa and exercise businesses
PublicExercise Programs
PublicExercise Programs
MOTIVATION
Advertisement
Luxurious houses
From 18.5 million baht
AdvertisementLuxurious cars from 10 million baht
International Watch Fair
over 1 million bahtTrade FairsTrendy fashion
Individuals: resisting me-too temptation
Society: virtue of saving, shame for showing off luxuries.
Individuals: resisting me-too temptation
Society: virtue of saving, shame for showing off luxuries.
SUFFICIENCY ECONOMYSUFFICIENCY ECONOMY
DESIRE-BASED TRADEDESIRE-BASED TRADE
BEAUTY
RECREATION
EXCITEMENT
GAMBLING
AGEING YOUTHFULNESS
IMMORTALITY
Advertisement, Sale Promotion
BUSINESSESCosmeticsHealth Health foodSpa Exercise Weight controlSport Lottery
SELF CONTROL OF DESIRERestraint against profit from desire-based trade
SELF CONTROL OF DESIRERestraint against profit from desire-based trade
Spiritual Dimension of SEPSpiritual Dimension of SEP
“If one is moderate in one’s desires, one will have less craving. If one has less craving, one will take less advantage of others. …Sufficiency means to have enough to live on. Sufficiency means to lead a reasonably comfortable life, without excess, or overindulgence in luxury, but enough….” (Royal Speech, given at
Dusit Palace, 4 December 1998)
Thai agriculture in the Thai agriculture in the
recent past - Monoculturerecent past - Monoculture
- Problems from Monoculture- Problems from Supply/Demand Adjustment- Weather- Debt Problem- Migration and weakness of the villages
New Theory of AgricultureNew Theory of Agriculture
Emphasizes diversified farming techniques and the need to develop the communities, stage by stage, by laying down a firm foundation first.
New Theory for New Theory for
AgricultureAgriculture 1. First step The aim is to let the farmers be
able to support themselves (self-sufficiency) especially concerning rice. If the main problem is water then they should dig a pond in their land to make sure that they have enough water for farming and household usages which they might need support from the government or private sector in digging the pond. (30% water, 30% rice, 30% vegetables/fruits/livestock, and 10% house of the total area)
New Theory
2. Second step Farmers should work together and create a cooperative to reduce the cost of production and for saving purposes as well as social security and together they will also have more negotiating power in selling their products to the markets.
New Theory
3. Third step For developed communities, further expansion of the production process and commerce such as cooperative stores or rice milling factories can rely further from the cooperation from commercial banks in improving their livelihood.
Procedure of the New TheoryProcedure of the New Theory
1st phase: Implementation / Production
Advising/Experimenting
Advising/Experimenting ImplementingImplementing Getting
results
Gettingresults
2nd phase: Expansion / Marketing
Better living conditions
Better living conditions Production / MarketingProduction / Marketing Joining
forces
Joiningforces
Supportfromoutside
3rd phase: Advancement / Processing / Adding Value
Cooperation/ Capital
Cooperation/ Capital Quality of lifeQuality of life Sustainable
development
Sustainable development
Supportfromoutside
Supportfromoutside
Benefits of the New TheoryBenefits of the New Theory
Agriculture in accordance with the New Theory
Agriculture in accordance with the New Theory
Steady and higher income marginSteady and higher income margin
Advice, consultations: Farmer-farmer Official- farmer
Advice, consultations: Farmer-farmer Official- farmer
Monitoring of news and information on farming practices
Monitoring of news and information on farming practices
Farmers and their children have better education opportunities
Farmers and their children have better education opportunities
Knowledge and learning on the job
Knowledge and learning on the job
Better learning/education
Better learning/education
Farm Families and Communities: Socio-economic Farm Families and Communities: Socio-economic ImpactImpact
More frequent harvestsMore frequent harvests
Diverse activities,perennial trees,fruits, vegetables,livestock
Diverse activities,perennial trees,fruits, vegetables,livestock
Job available the whole year round
Job available the whole year round Work in the localityWork in the locality
Family members joining activities, spending more time together, taking good care of children and the elderly
Family members joining activities, spending more time together, taking good care of children and the elderly
Steady and higher income marginSteady and higher income margin
Strengthened CommunityStrengthened Community
Diverse activities,perennial trees,fruit trees,vegetables,livestock
Diverse activities,perennial trees,fruit trees,vegetables,livestock
Members ofworking ageare kept in the locality
Members ofworking ageare kept in the locality
Different harvesttimes
Different harvesttimes
Increased and diverseproduction
Increased and diverseproduction
Resources in the rice fields are better utilized in turn
Resources in the rice fields are better utilized in turn
Working force is available for community workand other communal work in the rice fields and plantations
Working force is available for community workand other communal work in the rice fields and plantations
Steady incomesHigher incomesEquitabledistributionof income
Steady incomesHigher incomesEquitabledistributionof income
Sufficientfood
Sufficientfood
Strengthenedcommunity
Strengthenedcommunity
Organizing as groupsOr cooperatives for production, marketing, welfare
Organizing as groupsOr cooperatives for production, marketing, welfare
Dependence on outside sources is reduced
Dependence on outside sources is reduced
For the Corporate Sector SEP For the Corporate Sector SEP suggestssuggests
Greater emphasis on:
good risk management,
well thought-out business plans,
sustainable investment,
good corporate governance,
good corporate citizenship in terms of taking on corporate social responsibilities (CSR).
Siam Cement CaseSiam Cement Case
Decided to adopt SEP as its guiding principle. It restructured and refocused its activities on its core business, where it has strong competitiveness, and put more emphasis on risk management to build greater resiliency.
Siam Cement CaseSiam Cement Case
It now gives priority to its human resource development program to build a quality workforce that will provide the firm with greater immunity to future uncertainty; It also engages in a wide range of corporate social responsibility activities such as community development and environmental protection, as well as supporting other social causes.
Examples (Applying Examples (Applying
Immunity)Immunity)• Thinking about others Saha Farm
• Self immunity Hana - Prudence and not too greedy
• Thinking about staffs Seven Eleven
• Cautious expansion Golden Place
Pricing moderately
Do not borrow
unnecessarily Empathy
to your staffs
Building your
foundation
Pantasen, A et al: Application of Sufficiency Economy to Small andMedium-sized Industries, a survey of 296 enterprises, 2003
SufficiencyEconomyIndicators
6 groupsof
Industries
90% felt that “Sufficiency Economy” could be applied to their enterprises.
Production plan in line with their ability to manage,Honesty to customers and social responsibility
Risk taking and outside financing is difficult to avoid for medium-sized ones
Implications of SEP on Government Implications of SEP on Government PoliciesPolicies
1. Macroeconomic Management
2. Government Policy Design
3. Alternative Development Strategy
1. Macro Management
2. Gov. PolicyDesign
3. AlternativeDevelopment
Strategy
Moderation Reasonableness Self- immunity
Mega-project, Growth, Inflation, Budget Deficit
Adequate SavingEnergy Security National Risk Manag..
Design of governmental projects to make people to be more sufficient (Village funds, Debt ‘forgiveness’, Education reform etc.)
Balanced economic development frameworkRural along side with Industrial development; Strong communities; Quality growth; No need to go fast; Emphasis on public well-being
Implications of SEP on Government Policies
Infrastructures: services transportation
water energy
waste management recycling facilities
Pricing, Taxes, Choices, SanctionPricing, Taxes, Choices, Sanction
Regulations & Standards
SEP as an Approach to Sustainable SEP as an Approach to Sustainable DevelopmentDevelopment
The SEP path of development emphasizes a balanced use of material resources, social capital, environmental reserves, and cultural wealth as well as the balanced preservation of these four kinds of resources at all stages and levels of development.
SEP and SDSEP and SD
There are two distinct characteristics of the SEP approach to development:
a consideration of society and of
culture.
SEP and SDSEP and SDThe National Human Development Report 2007 – ‘Sufficiency Economy and Human Development in Thailand’ -- has come up with six key messages for future action.
1. Sufficiency Economy is central to alleviating poverty and reducing the economic vulnerability of the poor.
2. Sufficiency Economy is a means towards community empowerment and the strengthening of communities as foundations as foundations of local economiesof local economies
SEP and SDSEP and SD
3. Sufficiency Economy takes corporate responsibility to a new level by raising the strength of commitment to practices conducive to long-term profitability in a competitive environment.
4. Sufficiency principles are vital for improving standards of governance in public administration.
SEP and SDSEP and SD
5. Sufficiency Economy can guide national policy to immunize a country against shocks, to craft better policies, and to plan strategies for more equitable and sustainable growth.
6. Sufficiency thinking demands a transformation of human values, a revolution in the mindset, necessary for the advancement of human development.
EDUCATION FOR THE NEXT GENERATION
EDUCATION
FORMULATIONOf
PERSONALITYBEHAVIORMINDSET
SUFFICIENCYECONOMY
1. MODERATION2. RATIONALITY
3. IMMUNITY
SUFFICIENCYECONOMY
1. MODERATION2. RATIONALITY
3. IMMUNITY
RATIONALITY: (evidence-based, critical reasoning)INQUISITIVE MIND, CRITICAL MIND
BROAD MIND, OPEN MINDREFLEXIBILITY
RATIONALITY: (evidence-based, critical reasoning)INQUISITIVE MIND, CRITICAL MIND
BROAD MIND, OPEN MINDREFLEXIBILITY
ReferencesReferences
1. SUFFICIENCY ECONOMY PHILOSOPHY AND DEVELOPMENT
Chaiyawat Wibulswasdi; Priyanut Piboolsravut; Kobsak Pootrakool
Published by Sufficiency Economy Research Project Bureau of The Crown Property Bangkok, Thailand Website: http://www.sufficiencyeconomy.org
References
2. Charas Suwanwela, ‘Roles of Universities in Sufficiency Economy’, presented at the 11th UNESCO-APEID International Conference Reinventing Higher Education: Toward Participatory and Sustainable Development’, 12 December 2007, Bangkok, Thailand
3. Charas Suwanwela, ‘Sufficiency Economy Philosophy as an Approach for Sustainable Production & Consumption’, presented at the 2nd ASEAN+3 Leadership Programme on Sustainable Production & Consumption, Sirindhorn International Environmental Park, Cha-am, Petchburi, Thailand, 8 August 2009