Client-Centered Ethical Leadership: A Recipe for Trust at Goldman Sachs

With its incentive-structure that rewards a quick profit on the next trade even at the expense of advising clients in line with their long-term interests, Wall Street has its work cut out for itself even in maintaining trust, which, after all, is the basis of a market. On March 15, 2012, the New York Times reported that over all, “the percentage of people who have little or no faith in the fairness of investment companies rose to 41 percent in 2011 from 26 percent in 2008, according to Yankelovich Monitor 2011.” Even banks and insurance companies fared better, and household income played no role in the findings. At the time, Goldman Sachs was doing its industry no favors in terms of reputation. Indeed, the “best and the brightest” on Wall Street had created or enabled a rather narrow and self-serving corporate culture and a lack of ethical leadership that could otherwise turn around the bank by transforming its dysfunctional culture.

For support, I am not going to use the SEC investigation into fraud at Goldman (a case which the bank settled without admitting wrongdoing), or to the findings of Sen. Levin’s committee in 2010. Nor am I basing my conclusions on a Delaware judge’s criticism of the bank over the multiple and potentially conflicting roles it played in brokering an energy deal. I not even going off the charges made by the hipsters in Occupy Wall Street movement. Rather, I have in mind what is in my judgment an honest report made publically by a well-placed insider in Goldman—something that is exceedingly rare and thus potentially extremely enlightening.

In his stinging opinion-piece in The Wall Street Journal on March 14, 2012 issued just shortly after he resigned from Goldman Sachs, Greg Smith excoriated the bank where he had worked for twelve years, accusing it of moral turpitude if not sordid, short-sighted, greed. “To put the problem in the simplest terms,” he writes, “the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.” He describes meetings in which the clients’ interests did not even enter into the equation. In fact, according to Smith, the grandson of Lithuanian Jews who had emigrated to Johannesburg, at least five of the executive directors at Goldman regularly refer to their clients as muppets. I suppose this means that the clients are deemed so stupid they can (and should) be easily controlled or managed by their “advisors” at Goldman, who are evidently the smartest kids in the room.

Even as government investigations and a protest movement can get far more press, an essay by an insider can be far more enlightening in terms of what is really going on behind a bank’s mission statement. Undoubtedly aware of this point, Lloyd Blankfein, the CEO at Goldman, and Gary Cohn, the bank’s president, referred in a letter to employees to Smith as “this individual” and to his essay as “an individual opinion.” Lest it be forgotten, leadership too is associated with individuals. Ironically, Smith rather than Blankfein and Cohn was exercising leadership—even ethical and I would say transformational leadership as against a ploy to deny and discredit in order to retain power. Leadership does not reduce to power. Indeed, the ethical, transformative leader must risk it, and Smith—being persona non grata on Wall Street—certainly risked more than that in having his essay published.

A Wall-Street executive said it was “unforgivable” for Smith to make his opinions so public; rather, he should have taken them privately to the firm’s senior managers. However, he had doubtlessly done so only to be ignored, given the weight of the bank’s culture going against him. Indeed, as a middle-level manager, his complaint would not have gained much play. So the Wall Street executive’s advice can be rendered as enabling a dysfunctional corporate culture rather than being constructive. Ethical or transformational leadership cannot contravene the logic of power in a firm’s hierarchy, and thus the intervention must be top-down rather than bottom-up.

As an alternative to ethical leadership, relying on customers to discern that they are not being adequately served and thus decide to leave may be advocated by others on Wall Street as the best solution as it makes use of the market mechanism. Thanks to Sen. Carl Levin’s committee, it was already widely known that at least one issue of the sub-prime-mortgage-based derivatives being sold by Goldman was referred to in internal emails as “crap.” The customers to whom it was sold had no basis to know that it was crap, or that Goldman’s sales people thought it was crap. It is not as if the marketing included: Tell the prospective customer that the security is crap. Perhaps the only customer buying that line would be a former governor of Alaska who could see Russia from her house.

Moreover, selling “crap” to “muppets” reflects not only a blatant disregard for customers, but also a marked level of disrespect of those who are ostensibly being served. It is as if the emails had read: “We could serve the idiots dog food and they wouldn’t know any different.” It is from such a haughty place that even the powerful today can fall so far and so unexpectedly fast. Yet it is not clear to me how many of Goldman’s muppets would walk from superior returns, if indeed Goldman has been out-performing its rivals, out of an overriding sense of self-respect. One would think that customers would prefer bankers who have their backs, but some undoubtedly believe in buyer beware (caveat emptor) and virtuously apply the strict doctrine to themselves as if in a Calvinist fit of self-discipline. The trade-off between even short-turn returns and self-respect is itself within a rather sordid corporate culture, and for it to be changed I think we need to consider the prospects for ethical, transformative leadership at the upper-echelons of the bank rather than rely on brave middle-managers or external protestors, investigators, or even customers. To make this case, I need to point to the salience of a firm’s culture—and in particular its ethical dimension.

Lest a firm’s culture be thought to be of marginal significance from the standpoint of the firm as a going concern financially, Smith attributes Goldman’s culture of yesteryear, which “revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients,” as the “secret sauce” that made the place work as a credible and trusted investment bank that thrived financially.  To be sure, the fact that partners had their own fortunes on the line gave them an incentive not to risk losing established clients by undercutting them by a focus on short-term profit über alles. Even so, a bank’s culture can play a large role in whether short-term or long-term greed is the order of the day. According to Gus Levy, who led Goldman Sachs in the 1960s and 1970s, with long-term greed, money was made with clients, not from them. Deciding whether to include or relegate customer interests is a decision or value that spreads like wildfire through an organization. This occurs by means of the organization’s culture. If Smith is correct, the culture at Goldman came to include a lack of regard for customers, or muppets. Because the customers were expecting that their interests would not only be considered, but also emphasized, Goldman’s violation of its corresponding obligation means that the ethical dimension of the culture is particularly salient here.

Lest the moral quality of a firm’s culture be presumed to be an unimportant element of a firm’s culture, Smith makes the startling claim concerning what had come of the bank’s culture: “I truly believe that [the] decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.” A single-minded effort to make money even at the expense of a customer’s immediate interests, such as in selling crap to muppets, turns out not to be a good strategy. Indeed, it is unethical. Indeed, I have been surprised at the positive correlations I have found in hearing of unethical companies, such as Days Inn for instance, being also not very competent, at least at the retail level. Unethical people tend not to be very good at their day jobs. Perhaps a character flaw is the common denominator behind unethical conduct at the expense of customers and incompetence.

However, Goldman Sachs has been financially successful even if its culture and leadership have been rather squalid. To be sure, Smith claims the bank is on borrowed time, given its lack of regard for its muppets. “People who care only about making money will not sustain this firm—or the trust of its clients—for very much longer,” he writes. In any case, the bank could doubtlessly be much better shape financially were ethical leaders installed who did not have such a vested interest in the extant dysfunctional culture.

Smith points the finger principally at Lloyd Blankfein, the sitting CEO who had bragged that Goldman was doing God’s work and yet defensively tried to discredit Smith as only an “individual.” More generally, Smith points to the dearth of ethical leadership at the bank. “The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.” Leaving the reference to axes aside, Smith’s point is that the ethical dimension of a firm’s culture is very important to the firm’s financial survival, and that ethical leadership is vital for the dimension. Culture, ethics, and ethical leadership are like a pyramid of sorts with the top setting the tone (and rewarding it). Promoting people for unloading toxic securities on unsuspecting muppets is not the way to build ethical leadership, and thus an ethical culture. Lest all this be reduced to practices of questionable legality—as if business ethics reduced to business law--Smith reports no such impropriety. The fatal flaw in Goldman Sachs was moral rather than legal.

If only the problem were legal in nature. Smith’s prescription is much more difficult to implement than catching cheats: “Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons.” This medicine attacks the extant culture itself, which, after all, is based on making money for the firm. Unfortunately, the effort must come out of that culture. Therein lies the rub.

How to interlard ethical leadership even at the board level in the midst of moral turpitude is to ask something to renounce what it is in order to become the opposite. Cultures normally resist that sort of thing. The board would have to be sufficiently distant from the managerial culture as to be willing to expunge the extant tip of the managerial iceberg and replace it with an ethical leader who is known as a change agent. It might be that the chair of the board must go to stockholders for support in order to make changes in the board. In any case, a new CEO, one taken from afar rather than even from stakeholders, would be necessary. Once installed, he or she would have to work downward, rooting out the rot; this cannot be done from the middle-level of management. In fact, opposition can be expected from throughout the management structure. Bringing in a powerful change-agent (preferably an ex-marine) in human resources, such as the guy O’Neal brought in at Bank of America, could help the CEO systematically find and extract elements of the old culture and quickly replace them with new, solid oak. That would be God’s work, borne of ethical rather than defensive leadership. The clients would come to appreciate it and reward the visionary victors handsomely, whether in terms of bonuses, profits, or dividends.

Sources:

Greg Smith, “Why I Am Leaving Goldman Sachs,” The Wall Street Journal, March 14, 2012. 

Nelson Schwartz, “Public Exit From Goldman Raises Doubt Over a New Ethic,” The New York Times, March 15, 2012.

Susanne Craig and Landon Thomas, “Public Rebuke of Culture at Goldman Opens Debate,” The New York Times, March 15, 2012. 

Ethical Leadership and Wealth: A Buddhist Perspective

According to Gunawardana (1979:170):"The Buddhist tradition placed great emphasis on the importance of the king as a leader of men. The stability of the social system as well as the proper functioning of the whole universe depend on the conduct of the king".   This essay describes two ideal leadership types, the Cakkavatti and Bodhisattva kings, from the Buddhist literature.  Each of these Buddhist kings will be shown to have unique ethical approaches to the issue of wealth.  Following a general discussion of wealth from the Buddhist perspective, the Cakkavatti and Bodhisattva  leadership types will be argued to capture the process of wealth generation and distribution, respectively, together providing a complete ethical approach to wealth. Thus, a particular leader may enact a particular mix of these two ideal leadership types to formulate a comprehensive ethical approach to wealth.

The Great Cakkavatti King

            Leadership in the Hinayana Buddhist view may be idealized in the form of the Great Cakkavatti King or of the Bodhisattva ideal. While the former is closer to the teachings of the Hinayana school of Buddhism, the latter is more closely associated with the Mayahana school.

            A Cakkavatti king is established as follows: "Those who have given alms, kept the precepts, and practiced the meditation concerning loving kindness, when they die, take their rebirth in heaven.  But sometimes the result is that they are born to be great rulers and kings who have splendor and majesty...this person is one who is called a great Cakkavatti king"(Reynolds and Reynolds, 1982:136). Already, the theme of merit accumulating for a future benefit is evident.  It will be argued below that this theme can be viewed within the acquistion of wealth.

            Specifically, acquiring merit and following the Dharma, the Great Cakkavatti  King practices the five precepts, modified for the context of leadership.[1]  The types of meritous activity giving rise to the Cakkavatti status include giving alms, observing the precepts, meditation, dedicating the benefit of one's merit to others, rejoicing in the alms-giving of others, service to others, respect shown to elders, preaching the Dhamma, listening to the preaching of the Dhamma, and having faith in the three jewels and in one's elders.[2]

            In general, the Cakkavatti king loves each of his subjects equally, exerts authority honestly, and acts righteously in accordance with the Dhamma(Reynolds and Reynolds, 1982:148).  The five precepts as applied to leadership are as follows.

            First, "if anyone does evil of any kind you should not kill him; instead you should teach him according to the Dhamma"(Reynolds and Reynolds, 1982:148).  Thus, thiis ideal leader would not kill subjects such as criminals.  If one were to break this precept, one would suffer grief and trouble in future lives, and be subject to others desiring to inflict harm.

            Second, "another kind of evil deed concerns the wealth and property of others that is not given by its owner-such things rulers must never take!   For another thing, in addition to not taking them yourself, you must not have other people take them for you.  Whoever is greedy, taking things that others do not give to him, when he is born in hell, suffers grief and anguish for a very long period of time"(Reynolds and Reynolds, 1982:149). For such a person, a cruel nature, destitution, and theft of his or her things are likely characteristics following from the karmic law.

            The law of kamma, or karma, is "a law which structures reality such that dhammic and antidhammic actions always have a predictable effect in determining one's future position in the sociocosmic hierarchy that constitutes ordinary samsaric reality"(Reynolds, 1990:66). 

            The story of Jotika (the rich man), Bimbisara (the king), and Ajatasattu (the son of the king), is relevant to this precept which regards the king's acquisition of wealth.  Ajatasattu pleads with his father to seize the rich man's fortune: "The extensive treasures of this great rich man are not appropriate for a rich man who dwells in our city.  It is appropriate that we, who are the rulers and kings, should seize these treasures and make them our own"(Reynolds and Reynolds, 1982:196).  The claim being made here is that a king can acquire wealth by any means from any subject, regardless of how the subject acquired his wealth.

            King Bimhisara replies:

            To urge me to go with you to seize the treasures of this great man Jotika is not right according to the way of the Dhamma.  Why do I say that? The reason is that this treasure was not generated by either your merit or mine.  This treasure was generated because of the merit of the great rich man Jotika when this great rich man made merit in his previous lives. Thus the Lord Vissukamma came to create it for the great rich man, and it wasn't obtained in any other way. Therefore it would not be appropriate for us to seize it"(Reynolds and Reynolds, 1982:197).

Thus, ethical restrictions are evident in the king's acquisition of wealth; not only must the king follow the precepts, but he must respect such practices by his subjects.

            Later in the story, Ajatasattu, having killed his father, the king, tries to take Jotika's wealth, yet he fails.  Jotika responds:  "None of my treasures...can be taken from me unless I give it"(Reynolds and Reynolds, 1982:198).  This is so because Jotika had acquired his fortune through merit in accord with the Dhamma, and the king was obliged to respect this acquisition.

                        The third precept concerns sexuality.  Applied to rulers, this precept is specifically oriented to the act of committing adultery with the wives of others.  Such an act would send the ruler to a hell of thorns and fire, after which rebirth would occur as a human, during which time one would be attacked by another.

            Fourth, "another kind of evil deed concerns lying- that is, saying things for which there is no basis; such things you who are rulers must never say!"(Reynolds and Reynolds, 1982:150).  Such an action will lead to anguish in hell, followed by rebirth as an ugly, odorous person.  Anyone wishing to do him harm will succeed.

            Fifth, one should not drink liquor.  Rulers should not associate with each other for the purpose of drinking.  If this precept is ignored, the ruler would go to hell, followed by rebirth as a phi s'u'a,

then as a mad dog, followed by rebirth as an insane, ugly human, being inferior, not knowing right from wrong.

            Besides these general guidelines, specific policies are linked to the Cakkavatti king.  For example, such a king compensates well those who work for him.  If they are assigned work, only an appropriate amount should be assigned:  "Do not use them too much so that they are pushed beyond what they are willing to do.  If there are any people who are elderly, do not use them-let them go as they will"(Reynolds and Reynolds, 1982:151).

            Such a king should not worry about sharing his wealth with his royal family, yet he should offer interest-free loans to the unemployed who want to start a business.  In addition, those who know the Dhamma should be fed and protected by the king.

            In regard to taxes, the amount collected should not exceed ten percent, or that collected by the preceding king.  Poor people, as well as the profits of business should not be taxed(Reynolds, 1990:65). These policies seem reasonable, yet the inclusion of taxes per se seems to conflict with the precept that the king should not take the wealth and property of others unless they are freely given.  Taxes are not freely given, and thus appear inconsistent with the principles behind the Cakkavatti king.

            How, then, does a Buddhist state fund its activities under such a king?  The gem treasurer of the Cakkavatti king illustrates the ideal attitude of a subject of such a king, which suggests how funds would be obtained:

            "If Your Highness wishes to have any amount of wealth and property may it please Your Highness to call for it from me alone. I, the slave of the Buddha, will myself gather everything and offer it to you. If Your Highness wishes to reward Your Highness' subjects who are slaves and free men, I, the slave of the Buddha, will gather whatever is needed and offer it to Your Highness.  Let your Highness give according to your own will and have no doubts"(Reynolds and Reynolds, 1982:168). [3]

Lastly, the Cakkavatti king must not speak too much.  Accordingly:

            "When you judge the affairs of the common people..., do not just say this or that in an offhanded way or just scold or beat them, but rather judge the affair rightly and completely in accordance with the Dhamma.  Thoroughly consider the pattern of the affair from beginning to end and then judge with an honest and unbiased mind"(Reynolds and Reynolds, 1982: 152).

Queen Srimala and the Bodhisattva Ideal

            The Cakkavatti king represents one Buddhist view of leadership and wealth which emphasizes the acquisition, rather than distribution, of wealth.  The Bodhisattva ideal is another such representation, which, as a complement to the Cakkavatti king, focuses on the distribution of wealth.  The essence of this ideal is altruism, benevolence, and compassion. First, the Bodhisattva concept will be discussed, after which it will be discussed in the context of leadership and wealth.

            The term, Bodhisattva, literally means 'Being of Wisdom', and was first used to refer to previous incarnations of the Buddha in which he gradually perfected himself by deeds of compassion and self-sacrifice(de Bary, 1972:75).  Later, the term referred as well to future Buddhas(Maitreya).[4]

            The Siksasamuccaya depicts the Bodhisattva:

            "All creatures are in pain...all suffer from bad and hindering karma...All that mass of pain and evil karma I take in my own body...I take upon myself the burden of sorrow; I resolve to do so; I endure it all...for I have resolved to save them all. I must set them all free...I care not at all for my own deliverance..."(de Bary, 1972:84).

            Queen Srimala fits the Bodhisattva ideal.  She made ten vows applicable to leadership.[5] She vowed not to permit any thought of violating morality, not to disrespect the teachers, not to allow thoughts of anger and ill will toward sentient beings, and not to allow thoughts of jealousy(A. Wayman and H. Wayman, 1974:64).

            Further, she vowed: "I shall not accumulate wealth for my own use, but shall deal with it to assist the poor and friendless"(ibid, p. 64).  She vowed to benefit the sentient beings, not converting them for her own sake.  Also, "when in the future I observe sentient beings who are friendless, trapped  and bound, diseased, troubled, poor and miserable, I shall not forsake them for a single moment until they are restored.  Lord, seeing them afflicted by suffering, I shall liberate them from each of those sufferings; having conferred goods upon them, I shall leave them"(ibid, p. 65). 

            The 'having conferred goods upon them' suggests that such a leader would not accumulate great wealth, but would spend it on others in need.  Moreover, the interests of the leader seem to be in helping others, rather than in her own self-interest.  This suggests that the emphasis here is on how to distribute, rather than acquire, wealth- thus being a complement to the acquisition-oriented theme in the Cakkavatti ideal.

            The last two vows concern the Mayahana doctrine, the 'Illustrious Doctrine', itself.  The Queen vows to foster that which supports the doctrine and destroy what is against it.  Thus, it seems as if war or conflict in general may be legitimate in this ideal type.  The tenth vow is simply not to forget the doctrine.

            These vows are linked to her three aspirations.  First, "by accumulating merit from bringing benefit to innumerable sentient beings, may I comprehend the Illustrious Doctrine in all my lives"(ibid, p. 67).  Second, she aspires to teach the Doctrine to the sentient beings.  Lastly, "without regard to my body, life force, or possessions, may I seek to protect and to uphold the Illustrious Doctrine"(ibid, p. 68).  Here are indications again that accumulated possessions and her own interests are de-emphasized, relative to higher principles such as compassion to suffering beings.

            In short, her aspirations are to embrace, teach, and explain the Mayahana doctrine.  The act of embracing has special qualities:  "that embracer of the Illustrious Doctrine is himself the Illustrious Doctrine"(ibid, pl 72).  As such, the person becomes the six perfections, here viewed as a recipe for leadership.

            First, by the perfection of giving(dana), other beings may be matured.  According to Reynolds(1990:72), "the dhammic order of society and nature is supported, the non-attachment of the giver is expressed and cultivated, and the merit of the giver is increased so that he or she will enjoy even greater wealth in the future". 

            Second, the perfection of morality(sila) purifies the actions of one's body, speech, and mind.  This brings 'dignified bearing', the possession of good behavior and lawful resort, to sentient beings. 

            Third, the perfection of forbearance(ksanti) suggests that "if these beings scold, insult, or threaten him- he shows not ill will but seeks to heal and thus to mature by the illustrious power of forbearance"(ibid, p. 73).  Again, the sense of compassion presiding over one's own interest is a theme in this ideal of the Bodhisattva.

            Fourth, the perfection of striving(virya) is as follows: "He matures these beings by not having a torpid mind, not being lazy, (but by) having great aspiration, and possessing great enterprise of striving(ibid, p. 73, brackets added). 

            Fifth, by the perfection of meditation(dhyana), one develops an undisturbed mind, not being sidetracked from helping others.   

            Sixth, the perfection of insight(prajna) permits one to respond confidently to questions about meaning as well as about the arts and sciences.  This seems especially pertinent to leadership,as followers seem to look to their leaders for meaning.  In this ideal, meaning would involve the merit of compassion for others above one's own interest.

            These general principles elicited by Queen Srimala can be seen in the life of Sirisanghabodhi, a ruler of Ceylon, who also epitomizes the Bodhisattva  ideal.  In fact, "the term mahasattva, used as an epithet of Bodhisattva, is applied in the Mahavamsa to Sirisanghabodhi who ruled during the third century and was considered to be a paragon of virtue and a zealous patron of the faith"(Gunawardana, 1979:173).[6]

            King Sirisamghabodhi reigned for only two years, keeping the five precepts of Hinayana Buddhism and the eight uposatha (Buddhist Sabbath days) vows.  His compassion for other beings is evident in his kingship.  Four episodes illustrate this quality.  First, when some subjects were hurting due to drought, he layed down on the ground, saying he would not get up until it rained.  When it rained, he got up.  This story illustrates that the Bodhisattva leader will sacrifice of himself to ease the suffering of others, such as was described in the case of Queen Srimala.

            Second, on one occasion when he caught rebels, he let them go secretly, and burned instead already dead bodies, such that his subjects would be put at ease without any suffering on the part of the rebels.  Such a leader is not concerned with the protection of his own power, wealth, and position, but acts to aid not only his loyal subjects, but the threatening rebels as well.

       Third, when a yakkha, a supernatural being, known as Ratakkhi wanted to continue devouring the king's subjects, Sirisamghabodhi said: "No other can I give up to thee; take thou me and devour me"(Geiger, 1986:262).  Ratakkhi refused, however, and the king continued to live.  This story indicates that the self-sacrifice of such a king may be offered.  In the next story, it is offered and given, without being asked for or accepted by the subject.

        When rebels came to attack the king's palace, Sirisamghabodhi left so as not to promote suffering.  He took only a water strainer.  A man on the road offered him some food.  In return, the king offered the man his head, since the rebels had placed a price on it.  When the man refused, Sirisamghabodhi died so that the man could obtain the money for his head.

     The theme of generosity is also found in the cases of King Asoka and King Vessantara.  Asoka is said to have given his possessions to the sangha, the highest form of giving in Buddhism.  Vessantara, said to be the Buddha in his last life prior to his birth as Gotama, gave up his kingdom, all his material wealth, and his wife and children, thereby epitomizing the generosity of the Bodhisattva.[7]

      Therefore, the Bodhisattva ideal leader, such as Queen Srimala, King Sirisamghabodhi, King Asoka, and King Vessantara, acts with compassion, spending his wealth and effort to relieve sentient beings from their suffering, even at the cost of self-sacrifice.  Whereas the Great Cakkavatti King may accumulate wealth as long as it is done through merit(emphasizing the merit), the Bodhisattva king concentrates on giving up the wealth to help others.  Hence, two ideals for leadership and wealth can be taken from the Buddhist perspective.

The Dhamma and Wealth

     The third precept of the Cakkavatti king declares that it is an evil deed for an such an ideal king to take another's wealth without it having been offered. Jotika maintains that wealth gained by merit cannot be taken by a king.  Finally, Queen Srimala maintains that one's wealth ought to be spent in relieving the suffering of others. What is behind these ethical principles pertaining to the acquisition and distribution of wealth?

      The key to understanding the Buddhist stance on wealth is in considering the notion of Dhamma, or Dharma, which "constitutes the structure and dynamics of all reality", and is "the normative truth that establishes guidelines for all forms of action"(Reynolds, 1190:61).  Dhamma is the teachings, or law, of the Buddha that ties together 1) the nature of reality(sunyata-all things are in essence empty, or void, and thus impermanent)- the 'is', and 2) proper conduct(non-attachment)- the 'ought'.  In short, why be attached to anything, since everything is in essence empty and impermanent? 'Ought' follows from 'is'.

       According to the Dhammapada, the world is like a bubble- a mirage.  Hence, it should not be clung to.  Moreover, "let no man ever cleave to things that are pleasant or to those that are unpleasant.  From pleasure comes grief, from grief comes fear; he who is free from pleasure neither sorrows nor fears"(Babbitt, 1965:34).  Thus, one should not become attached to worldly items, such as wealth.  Yet, such practices can increase one's wealth. 

     As suggested in the Cakkavatti ideal, the Dhamma principles have "a more or less positive valorization of wealth, including material resources, monetary resources, goods, and services(Reynolds, 1990:62).  Reynolds(1990:63) argues that adherence to the principles is conducive to the production of wealth. 

            "The actions commended to the monks for their own spiritual benefit constitute a kind of pure behavior that, because of the unity of the religiomoral, the societal and natural orders, also works to ensure the wealth of the community. In societies in which the monks violate the strictures of the vinaya and fail to practice the path the Buddha taught, group life will become fractitous, the rhythms of nature will become unpredictable and destructive, and- as a part of the same antidhammic process-wealth and prosperity will dissappear" (Reynolds, 1990:64, italics added).

        At the microsocial context, such as the village, the dhammic  activity of the laity is also important.  At the macrosocial context, however, dhammic actions are correlated with the actions of a good king.  Specifically, if a ruler acts righteously, he collects merit, thereby making society peaceful, stable, balanced, and prosperous. The king's "dhammic actions always lead to a higher status in the hierarchy of cosmic and social existence and, therefore, to the possession and enjoyment of greater amounts of material wealth"(Reynolds, 1990:67).

       Thus wealth is legitimate for those who perform dhammic  activities.  Legitimate wealth accrues for the community as a whole if the king performs such activities, as described in the ideal types above.  It can now be understood why subjects, such as the gem treasurer, would want to give some of their wealth to their king; the king helped them acquire it due to his good actions.

       So, dhammic  activity seems to lead to greater wealth via kammic law.  Leadership has been shown to play a role in this process in the macrosocial context.  Next, whether wealth leads to greater Dhamma will be considered.  This issue pertains directly to the Bodhisattva notion of leadership.

       According to Reynolds(1990:67): "wealth may serve either as a vehicle for achieving greater adherence to dhammic norms or as a factor that inhibits such adherence".  In general, Buddhists "have traditionally maintained that those who earn their living without killing, stealing, or lying facilitate the dhammic ordering of society will be personally rewarded in accordance with the law of kamma"(Reynolds, 1990:71). Further, the expenditure of wealth is held to be in line with the Dhamma as long as intoxicants are not used, and irresponsible or wasteful expenditures are avoided(Reynolds, 1990).

     At low levels of wealth, the effect is argued to be positive, providing context and substance for non-attachment, while at higher levels attachment or non-attachment may be evoked.[8]  The optimal amount is held to be a moderate amount. 

Such a level is sufficient "to make the practice of the Buddhist path a practical possibility at the same time that they are sufficiently aware of the reality of suffering and death that they are motivated to undertake its rigors. Thus, it is affirmed that whereas royalty may have the greatest amount of enjoyment and pleasure, it is the people who enjoy a moderate level of wealth and well-being who hold a position that is soteriologically the most advantageous"(Reynolds, 1990:68).

 This relative disadvantage of the king is countered in the case of the Bodhisattva king, who aspires to Buddhahood.

            Despite the compromise of an economic 'middle way', the key issue seems to be one's stance toward one's wealth.  "Wealth always provides both an opportunity for a new expression and cultivation of non-attachment and a temptation toward the kind of antidhammic self-indulgence that leads to increased entrapment in the web of worldly existence"(Reynolds, 1990:69). 

            It seems that one's attitude, or character, toward the use of one's wealth is more at issue than the level of wealth in determining whether attachment or non-attachment will be evoked.[9]

            For example, it is stated in the Dhammapada that for happiness, one should call nothing one's possession.  Further, "no sufferings befall the man who is not sunk in self, and who calls nothing his own"(Babbitt, 1965:36). This does not mean that one should not have any possessions; the key is in the word 'call', which signifies a certain perspective of non-attachment.  This view is apparent in the conception of the wise man in the Dhammapada: "If, whether for his own sake or for the sake of others, a man wishes neither for a son nor for wealth, nor for lordship, and if he does not wish for his own success by unfair means, then he is good, wise and upright"(Babbitt, 1965:14).

            Considering the role of dhamma  in the process of gaining wealth, and vice versa, Reynolds(1990:73) concludes:

            "Those who seek to establish the legitimacy of their wealth must convince the community that it has been acquired by virtue of meritorious activity done in the past and that it has been more immediately earned in ways that are in accord with the precepts...The possessors of wealth must convince the community that they have achieved a level of non-attachment and generosity that ensures that they will spend what they have acquired in accord with the dhammic norms."

This quote ties together the ethics of acquiring and distributing wealth.  This tie can also be made within a comprehensive framework of Buddhist leadership which includes the two complementary types.

Conclusion: Leadership and Wealth

            Two ideal types for leadership have been described from a Buddhist perspective.  The Cakkavatti king follows the five precepts, adapted to leadership.  In regard to wealth, this king does not take the income or wealth of his subjects unless it is freely given.  Because wealth is legitimately earned only if done so in line with the Dhamma, such a king would likely take from his subjects who earned their wealth immorally, by means such as lying or stealing, being attached to their income.

     The Bodhisattva king epitomizes compassion for all suffering beings.  Such compassion lends itself to generosity.  Thus, the model is one of giving of one's own wealth, regardless of one's own self-interest. Wealth can thus lead to greater Dhamma; non-attachment is gained in the spirit of compassion and generosity for another.

     While the ethics of the Cakkavatti king seems to be more attuned to the merit of acquiring wealth via the five precepts, that of the Bodhisattva king seems to emphasize ethical means of distributing one's wealth via compassion.

        Together, these two leadership ideals of Buddhism span the entire process of wealth-acquisition and distribution.  They provide a comprehensive model of the ethics of Buddhist leadership and wealth.  A leader could appropriate these types, mixing them together to create a unique ethical stance to wealth.

  

References

Buddhist Birth Stories(Jataka Tales) , (T. Rhys Davids, trans.)          NY(1977): Arno Press.

de Bary, W. The Buddhist Tradition in India, China and Japan        NY(1972): Vintage Books.

The Dhammapada (I. Babbitt, trans.) NY(1965): New Directions Books.

Dika Malai Deva Sutta (R. Lovin and F. Reynolds, trans.)    Bangkok(1971): Thambanakhan Press.

Gunawardana, R.A. Robe and Plough: Monasticism and Economic             Interest in Early Medieval Sri Lanka  Tucson(1979): The                 University of Arizona Press.

The Lion's Roar of Queen Srimala: A Buddhist Scripture on the                  Tathagatagarbha Theory (A. Wayman and H. Wayman,                     trans.) NY(1974): Columbia University Press.

The Mahavamsa (W. Geiger, trans.) New Delhi(1986): Asian                       Educational Services.

Reynolds, F. "Ethics and Wealth in Theravada Buddhism: A Study            of Comparative Religious Ethics" in Sizemore, R. F. and

            Swearer, D. (eds.) Ethics, Wealth, and Salvation: A Study 

          in Buddhist Social Ethics Columbia, SC.(1990): University

           of South Carolina Press: 59-76.

Swearer, D. "A New Look at Prince Vessantara" Journal of the

        National Research Council of Thailand 10:1(Jan-June):1-9.

Three Worlds According to King Ruang: A Thai Buddhist 

        Cosmology (F. Reynolds and M. Reynolds, trans.)

        berkeley(1982): Asian Humanities Press.

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[1]The five Hinayana precepts are non-killing, non-stealing, no promiscious sex, and no intoxicants.  Plus, three additional precepts are held on Uposatha, or holydays: no untimely meals, no frivolous amusements, and  no use of high seats or beds(Reynolds and Reynolds, 1982).

[2]The three jewels include the Buddha, the Dhamma, and the Sangha(monestary).

[3]In the section on wealth below, it will be explained in detail why a subject would have such an attitude.

[4]The perfections of a bodhisattva are: generosity(dana), moral conduct(sila), patience(ksanti), courage or energy(virya), meditation(dhyana), and wisdom(prajna).  These are the Paramitas.  Additional perfections are: skill in knowing the right means to lead individual beings to salvation(upayakausalya), determination(pranidhana), strength(bala), and knowledge(jnana) (de Bary, 1972:84).

[5]The first five vows are Hinayanian and the second five are Mahayanian.

[6]Other rulers of Ceylon such as Buddhadasa(337-365) led the life of a Bodhisattva.  In addition, Aggabodhi I (571-604) and Sena I (833-853) aspired to Buddhahood(Gunawardana, 1979:173).

[7]A brief account of Vessantara is found in Reynolds(1990:70).  Another account is in Swearer(1978) and Rhys Davids(1977).

[8]The effect of attachment as the amount of wealth increases is depicted in a story in the Phra Malai Sutta.  Before the coming of Matteya, the future Buddha, society evolves to a zenith of wealth and well-being.  When the humans forget reality, becoming attached to their condition, suffering increases until the arrival of Matteya(see Lovin and reynolds(1971).

[9]Reynolds(1990:69), too, is critical of the economic 'middle way' solution: "Despite such Theravada efforts to delineate and symbolize an economic middle way, the problematic relationship between the possession of wealth and further dhammic activitiy has never been fully resolved."