Jainism and Ethical Finance

A Timeless Business Model

Atul Shah, Aidan Rankin

• Publisher: Taylor & Francis
• Year: 2017
• eBook ISBN: 9781317234203
• Edition: 1
• Topic: Business
• Subtopic: Accounting
• Index: Business

The financial crisis of 2008 has led to a re-evaluation of the role of financial institutions and their relationship with the wider economy and society. This process has meant an increased questioning of both the conduct of business itself and the principles behind commercial and financial activities. Yet non-western voices have been notably absent from this debate, as have alternatives to the dominant western-derived economic ideologies. From the ancient spiritual wisdom or Dharma of the Jains, there emerges a practical modern philosophy fully in tune with the re-emergence of India as a global economic power. Jain individuals, businesses and charities have played a powerful role in India's rise and within the global Indian Diaspora. Jain communities are noted everywhere for their contributions to business, the professions and science. These successes are based on the principles of interdependence and co-operation, with an emphasis on long-term consolidation rather than short-term bursts of growth. Researchers and students interested in the ethics of finance, accounting and economics will find Jainism and Ethical Finance a scholarly and illuminating evaluation of Jain Dharma as a non-western case study. In the light of current concerns about the way global finance and banking systems operate, this book offers a timely alternative perspective.

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1 Introduction

Aidan Rankin

I adore so greatly the principles of the Jain religion that I would like to be reborn in a Jain community.

Attributed to George Bernard Shaw (1856–1950), playwright, thinker and co-founder of the London School of Economics and Political Science

Rationale

The philosophy, faith and way of life of the Jains has been known to the world for many centuries through cross-cultural encounters ranging from travellers’ tales to the translation of texts to the experience of western colonialism and its aftermath. With the impetus of colonialism, trade and social change, Jain communities have expanded from their Indian base to many other regions of the world, East Africa in particular, but also South-East Asia and more recently Europe, North America and Australia. Nonetheless, with the exception of a relatively small community of scholars, knowledge of Jain culture is patchy outside the Indian sphere of influence. It is even limited within India itself, although Mahatma Gandhi (himself a Hindu) popularised many of Jainism’s core precepts, such as the commitment to non-violence. Understanding of the Jains is hampered in part by stereotypes associated with their asceticism. From a global (and especially western) perspective, these can appear negative, although they are practised by a tiny fraction of the overall Jain population. Also, the bias of academic research and scholarship both in India and the west has inclined towards hermeneutics and history. Our purpose here is to redress the balance towards the practical implications of Jain philosophy for its adherents. We aim to show how an ancient spiritual tradition is adapted with imagination and flexibility to the challenges and creative opportunities of the modern world. Specifically, we explore the relationship between the spiritual lives of the Jains and an ethical system applied to business and finance that differs markedly from the prevailing western paradigm.

The literature on ethical finance is relatively sparse compared to the huge growth and influence of finance as an academic discipline equipped with scholars, professional bodies, university courses and learned journals. Despite the ethical groundings of the science of economics (see Chapter 2), the current emphasis tends towards a sense of ethical detachment in the name of an elusive ‘objectivity’. With the notable exception of the growing body of literature on Islamic finance, the emphasis of most academic research leans towards current western philosophies. Often, an especially privileged position is accorded to themes associated with neo-liberal economics and other ‘universalist’ or ‘value-free’ approaches to financial and business management. This bias can appear especially acute to those who are approaching the discipline from the perspective and experience of non-western cultures.

There are, of course, exceptions, including some influential figures in this area of western academia. John Boatright’s influential treatise on financial ethics (1999) seeks to apply concepts of reason and natural justice to the activities of financial services and markets. Robert J. Shiller of Yale University, a Nobel Laureate and leader in the field of financial studies expresses profound concerns about the current direction of global finance, arguing for an ethical sea change from neutrality and narrow self-interest towards social responsibility and investment in a ‘good society’. Shiller examines the roles and responsibilities of professionals in the world of finance (and some aspects of modern finance theory) from the perspective of normative ethics: the quest for a framework based on moral properties which can be discerned and applied. However he does not examine the ideological limitations of much of finance theory, in particular its two-dimensional or mechanistic view of the individual and his or her economic interests and its failure to emphasise the importance of cultural diversity. These omissions make finance theory itself appear increasingly problematic (Frankfurter and McGoun 2002).

The 2008 global financial crash has inspired a number of books questioning the morality of modern finance (e.g. Das 2011; Santoro and Strauss 2013). Hendry (2013) develops a philosophical framework of normative ethics to analyse core financial activities such as lending and borrowing, trading and speculation. These works are not explicitly concerned with cultural approaches to financial ethics and nor do they consider non-western perspectives. The lack of diversity of thought and the trend towards conformity in financial studies is noted with regret by some observers, notably Gendron and Smith-Lacroix (2013). Many recent studies of ethical finance (again with the exception of analyses of Islamic banking) virtually ignore the role of faith-based philosophies in formulating approaches to economics. This is despite the well-known historical contributions of faith to financial ethics (Graeber 2014). Faith has often provided an ethical ‘grounding’ for business practice. In the context of Britain’s Christian history, for example, we may consider the role of the Methodists, Quakers and Unitarians in ameliorating the effects of the industrial revolution, along with the provision of workers’ housing and their promotion of educational and penal reform (Thompson 2013). We may also remember the role of devout Anglicans in opposing the slave trade and laying the foundations for a culture of human rights (Hague 2008). Such influences continue to exert a profound influence, direct and indirect, over a society that can appear predominantly secular in character. In a non-western society such as India (the home of Jain philosophy and so an important focus of this study), faith retains an important role in directing or guiding the behaviour and choices of individuals and communities. Ideas that have cultural roots stretching back uninterruptedly over millennia are being reinterpreted in the modern context of a re-emerging global power.

Our book therefore aims to fill an important gap in current discussion of financial institutions and practices by drawing from a successful non-western system of values and practice: that of the Jains of India and the Indian Diaspora. At the same time, we seek to re-unite financial questions with broader cultural and ecological issues. The language of our book and many aspects of its subject matter might seem initially unfamiliar within this discipline and its academic allies. For example, the connection between financial and ecological concerns is an important feature of our analysis. This is because Jain culture does not compartmentalise areas of human activity or interest. It is at times explicitly critical of material accumulation and even economic growth when they are pursued as ends in themselves, without a social context. This inclusive and interdisciplinary perspective forms the core of our book’s underlying philosophy.

Restraint and long-term thinking lie at the heart of what might reasonably be termed Jain economics. Crucially, the concept of ‘society’ extends beyond human communities to other species and ecosystems. This approach combines sustainable economics with prosperity, ecological responsibility with wealth creation. It also connects well with concerns, inspired by the environmental movement, that the conduct of economics has been too anthropocentric, i.e., human-centred. The results of this imbalanced thinking can be found, according to this argument, in pollution of the air, seas and soil on a global scale; the unplanned expansion of cities to the detriment of quality of life; as well as the unfolding crisis associated with climatic instability and the growing encroachment on the habitats of other species, threatening their survival and denying them the dignity they deserve. The green critique of anthropocentrism (Dobson 2007) is not identical to but converges with the Jain belief in the connectedness of all forms of life and the need for us to remember these connections in both our individual and collective decision making.

Whereas in emerging economies environmental problems such as pollution and deforestation induce greater material hardship, in the ‘developed’ world a sense of spiritual crisis or alienation often accompanies growing environmental awareness. Jain philosophy recognises an intimate link between spiritual practice and consciousness of the natural world. It reminds human beings that they are part of nature and not separated from it by their intelligence and inventiveness. Such separation is an illusion with dangerous psychological consequences, closely related to the consequences of excessive material accumulation without social responsibility. Environmental awareness is part of a Jain conception of social responsibility which demands, often quite rigorously, the avoidance of actions that increase inequality, pollute the environment or threaten other species and their habitats. The implications of this philosophy are, for its adherents, radical in the literal sense, for they require an examination of every action – and intention – from the roots upwards. For the conduct of business and finance, the effect is profound and offers a potent challenge.

The financial crisis of 2007–2008 has thrown into sharp relief the unpredictability of the neo-liberal model of capitalism, which has enjoyed political and intellectual hegemony for the past three decades. This model has encountered widespread criticism for its inability to redress inequality and is increasingly cited as a cause of widening social and economic disparities. It is sometimes dubbed ‘free market fundamentalism’, because it shares with extremist or iconoclastic expressions of religious faith a doctrinaire certainty and disregard for accumulated wisdom and cultural history. At the same time, the neo-liberal model is still perceived as the main engine of global wealth creation and its ideological hegemony remains unchallenged by countervailing forces of any power or substance. Even protest movements such as Occupy tend to present lists of single issues instead of an overarching critique. More theoretical studies of neo-liberalism (e.g. Klein 2008 and 2015; Standing 2014; Piketty 2014; Graeber 2014) have, despite their trenchant oppositional arguments, produced mostly incremental proposals for change rather than a counter-ideology. Graeber (2014), for example, argues that throughout history, culture and values have been at the centre of finance, although in the late modern era, they have been effectively stripped out of the discipline, with the qualitative approach giving way to a more abstract emphasis on quantification. Our book aims to move this argument on by drawing from the wisdom and experience of a long-established, non-western culture that has developed ways of understanding and practising finance sustainably and successfully.

Neo-liberalism’s ‘strange non-death’ (Crouch 2011) arises from the lack of a worldview such as that offered until recently by Marxism, which is no longer linked to an effective political movement spanning national frontiers, although its economic analysis remains pertinent and it is undergoing a process of intellectual renewal, not least in India (Bagchi and Chatterjee 2014). The future of Marxism as a political project is in flux. Meanwhile, social democratic parties and movements are undergoing a crisis of identity and purpose, scarcely able to navigate the economic turbulence unleashed by the neo-liberal ascendancy, the collapse of collective certainties and – in the west at least – the end of the industrial system as previously understood (Keating and McCrone 2015; Cramme and Diamond 2012). The terms ‘right’ and ‘left’ are increasingly anachronistic on a global level, and yet there remains in both the radical and conservative strands of political discourse an unspoken assumption that solutions are to be found within the familiar experience and intellectual traditions of the west. Our intention is to broaden the parameters of the discussion of global finance to examine a living non-western tradition that has proved durable and adaptable to the needs of a modern economy – and at least in theory is the polar opposite of fundamentalism. It has also had a vast record of sustained success in finance, dating back at least a thousand years. Jainism’s much vaunted commitment to ‘many-sidedness’ will be one of the principal themes of the ensuing chapters because of its impact on the way business is perceived and conducted. In both theory and practice, Jain philosophy provides a compelling and comprehensive critique of the prevalent Eurocentric models. It offers an alternative way of thinking about the underlying purpose and social role of financial institutions, money and material possessions themselves. Moreover, Jain communities have a strong historical record of combining financial success with rigorous ethical standards.

An exercise in thinking

This book is at once an exercise in thinking and a cross-cultural encounter. It aims to shed light on an Indic tradition whose doctrines and practices remain little known and under-reported. The belief system in question, known as Jainism, moves freely across the boundaries between secular philosophy and religious faith, abstract thought and practical action, including the commercial activities in which Jains have been productively engaged for many centuries. Statements such as ‘Jainism is an Indian religion’, ‘Jainism is a philosophy’, ‘Jainism is a practical guide to modern living’ are all partial truths or aspects of the truth. As we shall see, the term ‘Jainism’ is not fully descriptive of what is simultaneously a worldview, a distinctive culture and a way of life, lived for the most part unobtrusively in India and the extensive Diaspora.

Multivalence is a key feature of Jain culture. Reality is said to have many facets, like a diamond. Objective knowledge can be attained by an infinite variety of methods and by following many paths. In practice, few if any of us get there. From a Jain perspective, the closer we believe we are to the truth, the further we are likely to be from it and the more likely we are to be deluded by ‘one-sided’ absolutism. For this reason, Jains attach great importance to ideas being constantly tested against each other and respect for the viewpoints of others. It is easy to confuse this way of thinking with a form of extreme relativism, whereby nothing is ‘true’ in an absolute sense, but all possibilities are open to investigation. Jains, however, adopt a more subtle position than this and regard extreme relativism as a form of human self-deception. For them, there is an underlying reality to the universe and our task as conscious beings is to understand it as far as possible, so that we can apply its principles to our lives.

Hence it is precisely because objective reality exists that we are obliged to explore as many competing ideas as possible in the hope of getting closer to it. The philosophical aspect of Jainism promotes scientific methods for understanding the environment, human psychology and social organisation. The religious aspect promotes meditation and detachment from worldly concerns so as to distinguish more clearly between what is real and what is illusory or superficial. Meanwhile the practical guidelines of Jain doctrine by which most adherents live from day to day are based on the pursuit of knowledge, educational attainment and professional success including, crucially, success in commercial activities and the material rewards this brings.

The aim of such accomplishments is twofold. First, the individual is encouraged to realise as much of his or her potential as possible. In one sense, Jainism is a highly individualistic system centred on spiritual liberation for each person, indeed for each being. However it is also highly focussed on the way each individual interacts with the community around him, the environment as well as the society of humankind. Therefore the second goal of the Jains’ pursuit of academic and commercial achievement is that knowledge and material resources should be deployed for the benefit of the society as a whole. The definition of ‘society’ begins with the nuclear and extended family and then fans outwards to the whole human community, other species and the environment. The premise of wealth accumulation is that surplus wealth will be redistributed voluntarily. This form of social conscience underlies the practices of charitable giving and philanthropy that have become defining characteristics of Jain businesses and households. Wealth is defined inclusively to encompass knowledge, educational attainment or specialist skills, qualities held to be useless if not put to constructive use. Jains are enjoined to participate in educational programmes, both as participants and donors, and thus to challenge entrenched forms of ignorance and prejudice that hold back individuals and communities or damage environments. Scientific research is also highly prized, for there is no recognised dichotomy between religion and science, faith and reason.

This science of giving, or non-possessiveness, is known as Aparigraha. It is one of the vows made by lay men and women in Jain communities, and its relevance to business and finance is this book’s unifying thread. Just as critical to an understanding of how practising Jains think and behave, in the context of business as much as other areas of life, is the awareness that each being has its own ‘viewpoint’ that is worthy of respect. This is the basis for one of the defining characteristics of this Indic philosophy: the practice of non-violence, or the avoidance as far as possible of any action that will injure others. The first of Jainism’s vows, non-violence is predicated on the concept of interconnectedness of all life forms, which anticipates (although it is by no means identical to) the founding premises of ecological or green movements today. Non-violence, or more accurately the minimising of harm, is binding on commercial activities, as it is on the professions and crafts or the running of the household. Each business deal, each financial transaction, should be assessed in terms of its effects on others, including in some cases future generations. All life is interconnected, and so the concept of ‘others’ reaches beyond humanity to encompass animal and plant species and the environment as a whole. Although these injunctions are not always fully observed, they provide a rigorous backdrop against which commercial activities are played out.

For Jains, the speculative and philosophical, the faith-based and the practical or quotidian aspects of their tradition are part of a unified whole, the Dharma. The term Dharma means at once cosmic order, the structure and character of the universe and the codes of conduct or enlightened teachings that lead to spiritual liberation, equated by Jains with equanimity and objective knowledge. Thus Dharma is both the goal and the path towards it. It is also the thread that connects all areas of life and thought. An essential feature of the Jain way of life is its emphasis on balance. The individual is sovereign and so ultimately in charge of and responsible for his or her own spiritual progress and personal destiny. Yet this perspective is extremely far from laissez faire individualism, as it imposes obligations on individuals that increase in relation to their education, wealth and experience of life. A creative tension exists between individual and society. Self-interest is identified, ultimately, with the collective interests, just as ‘self-conquest’, the overcoming of personal and attachments, is viewed as the realisation of the ‘true’ or original self: the return to a point of origin. A similar balance is identified between continuity and change, equally important principles which interact continuously in the universe and our individual lives:

Reality does not admit of absolute predication, but is characterized by appearance and nonappearance in the midst of permanence. One can speak neither of an absolutely unchanging permanence [in Jainism] nor of absolute change without permanence. The reality, however, maintains its identity and permanence although it expresses itself in multiple forms. … [as] unity in multiplicity

(Prabhavananda 1979: p.167)

With considerable scientific foresight, Jains have for millennia understood the universe as cyclical in nature, alternating between long periods of expansion and contraction. This perception gives rise to a blueprint for the life of an individual as a cyclical pattern in which achievement and activity yield to renunciation and contemplation. A large part of the latter phase revolves around the divestment of possessions to the next generation or to charity and the retreat into simpler forms of living. Progress is also seen in cyclical terms, so that it includes regression to first principles or reinvention. This has an important bearing on commercial activity, for expansion is not automatically equated with advancement, as tends to be the case in the dominant business models. Instead, periods of consolidation and downsizing are often viewed as crucial to a firm’s success and well-being. Downsizing, in this context, means returning to first principles rather than necessarily shedding employees. Often, these methods enable the firm to preserve its family and community ties and its values, as well as avoiding absorption in larger enterprises or the creation of impersonal bureaucracies that induce alienation and sclerosis. In this study, we shall see examples of Jain businesses that have chosen not to be listed on the stock market and have consciously avoided the corporate model, preferring the extended family closely linked to the wider Jain community. Sometimes, because of the spread of Jain settlement, these family ties cross continents.

The ‘many-sided’ tolerance of Jains accompanies a way of life that is, in many respects, quite rigorous and demanding. Jains are asked to adhere to a worldview that puts them in a perpetual minority, whether in India or the many other parts of the world where they have settled. As such, they have survived through a process of simultaneous integration and retention of cultural practices and doctrines that differentiate them from surrounding populations. Far from segregating themselves, they play a full part in the economic, political and cultural lives of their surrounding communities. Historically, their bias has been towards skilled trades, accounting and finance and in the modern era medicine, law, pharmacy, dentistry, optometry a...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Foreword
• Acknowledgements
• A note on Jain names
• 1. Introduction
• 2. Learning to think like a Jain
• 3. Aparigraha: understanding the nature and limits of finance
• 4. Risk and return: careful action and relationships of trust
• 5. Obligation and interdependency: towards a Jain theory of organic growth
• 6. Ethical investment: social and environmental transformation and Jain business
• 7. The implications of ‘many-sidedness’
• 8. Faith beyond finance: cultivating detachment and humility
• 9. Conclusion: Jainism’s implications for finance research
• Glossary
• Bibliography
• Index