by Mieder van Loggerenberg
Source: https://bit.ly/3rwcHFC
What is the Sufficiency Economy Philosophy?
Sufficiency Economy Philosophy (SEP) was introduced in 1974 by His Majesty the late King Bhumibol Adulyadej of Thailand. SEP is an approach for sustainable development which adopts reasonableness (or wisdom), moderation, and prudence as a development framework that is based on knowledge and morality. A concept that contrasts with the primary objective of a company which is to maximize profits for the benefit of shareholders. SEP emphasizes maximizing the interests of all stakeholders and directing focus on long-term profitability instead of short-term gains.
SEP should be seen as a method of human development based on moderation, prudence, and social immunity, where the individual uses their knowledge and morality as a compass to living a fulfilling life. SEP is not a theory about how a country’s economy should be run, but rather a guide for helping make decisions that will produce outcomes that will promote development. According to Thailand's National Economic and Social Development Board:
“Sufficiency Economy is a philosophy that stresses the middle path as an overriding principle for appropriate conduct by the populace at all levels. This applies to conduct starting from the level of families to communities and to the nation in terms of development and administration, so as to modernize in line with the forces of globalization. 'Sufficiency' means moderation, reasonableness, and the need for self-immunity to protect from impacts arising from internal and external change. To achieve sufficiency, an application of knowledge with due consideration and prudence is essential. In particular, great care is needed in the utilization of theories and methodologies for planning and implementation in every step. At the same time, it is essential to strengthen the moral fiber of the nation, so that everyone, particularly public officials, academics, and businesspeople at all levels, adhere first and foremost to the principles of honesty and integrity. In addition, a way of life based on patience, perseverance, diligence, wisdom, and prudence is indispensable in creating balance and in coping appropriately with critical challenges arising from extensive and rapid socioeconomic, environmental, and cultural changes in the world.” [1]
SEP has been widely explained by Thai academics, promoted by the Thai government, used by banks that offer services to help business achieve sufficiency economy, and applied by thousands of villages across Thailand.
SEP shares the common principles and objectives of Sustainable Development Goals (SDGs), where the focus is on eradicating poverty and reducing inequality through sustainable development and promoting the right mindset towards striving for balance between the three elements of sustainable development.
Source: https://bit.ly/3GPQSr3
According to a group that drew up a formal definition of Sufficiency Economy Philosophy in 1999, which was approved by the King, SEP, consists of four statements.
Statement 1
“Sufficiency Economy is an approach to life and conduct which is applicable at every level from the individual through the family and community to the management and development of the nation.”
The first statement says that the philosophy can be applied by the individual, family, community, and organizations at a national level.
Statement 2
“It stresses a middle path, especially in developing the economy to keep up with the world in the era of globalization.”
The second statement introduces the concept of the middle path. This means that one should avoid extremities of thoughts, behavior, and conduct. In addition, it encourages the acceptance of globalization and using knowledge to promote civility.
Statement 3
“Sufficiency has three components: moderation; reasonableness; and the need for built-in resilience against the risks which arise from internal or external change. In addition, the application of theories in planning and implementation requires great care and good judgment at every step.”
The third statement focus on the three core elements of SEP: moderation, reasonableness, and self-immunity.
Statement 4
“At the same time, all members of the nation – especially public officials, academics, and businesspeople – need to develop their commitment to the importance of knowledge, integrity, and honesty, and to conduct their lives with perseverance, tolerance, wisdom, and insight, so that the country has the strength and balance to respond to the rapid and widespread changes in economy, society, environment, and culture in the world.”
The fourth statement emphasizes the two conditions under which the Philosophy will be most effective:
· Knowledge condition, if it is based on the application of appropriate knowledge.
· Moral condition, if it is enhanced by integrity, diligence, acceptance, and being involved in philanthropy.
The main features of SEP
1. Moderation
2. Self-Immunity and Risk Management
3. Knowledge
4. Ethics and Morals
5. Foundation-Building
6. Sufficiency Economy
1. Moderation
Moderation is an Eastern concept of not too much or too little, a contradiction to traditional Western economic theory of maximizing behavior. As the late King Bhumibol Adulyadej has stated:
“Sufficiency is moderation … Being moderate does not mean being too strictly frugal; consumption of luxurious items is permissible …. but should be moderate according to one’s means”
(Royal Speech, given at Dusit Palace, 4 December 1998)
When thinking of moderation in terms of an economic concept as “bounded rationality” or “satisficing”.
2. Self-Immunity and Risk Management
SEP understands that the circumstances that influence our lives are dynamic and in constant flux, so it advocates caution to any uncertainties through good risk management. This suggests that the three core principles of Sufficiency Economy conform to neoclassical economic thinking, a broad theory that focuses on supply and demand as the driving forces behind the production, pricing, and consumption of goods and services.
3. Knowledge
The concept of knowledge in SEP refers to having insight and wisdom that can be achieved through common sense, and the ability to think critically and analytically. This knowledge should reflect an appreciation of the effects of the myriad influences associated with globalization, but not lose sight of crucial geo-social differences that are rooted in local norms and cultures.
4. Ethics and Morals
Traditional economic theory does not address moral and spiritual considerations unambiguously. However, virtues such as sharing, caring and philanthropy are considered important to promote economic favor and support from the public for both business and governmental practices. SEP views an ethical foundation as vital to an economic system and will foster the development of humanity in a way that is successful and sustainable.
5. Foundation-Building
Building a strong foundation is one of the most important pillars of the Sufficiency Economy concept. SEP focuses on a bottom-up approach to allow people to become independent and less reliant on government handouts, a concept in contrast to the trickle-down approach to economic development. Best stated by the late King Bhumibol Adulyadej:
“Development of the country must proceed in stages. First of all, there must be a foundation with the majority of people having enough to live on by using methods and equipment which are economical but technically correct as well. When such a secure foundation is adequately ready, then it can be gradually expanded and developed to raise prosperity and economic standards
to a higher level by stages.”
(Royal Address, given at Kasetsart University, 18 July 1974)
6. Sufficiency Economy
Sufficiency Economy is neither a theory nor a policy but should be seen as a philosophy that can help guide the behavior of individuals, households, organizations, or government. It is distilled from the late King Bhumibol Adulyadej’s experiences in development and his observations of Thai people’s behaviors around the country as they struggled with the difficulties of the development process.
Common misconceptions regarding SEP
1. Sufficiency Economy is about self-sufficiency. The late King Bhumibol Adulyadej never advocated full self-sufficiency.
“.. self-sufficiency is not a sufficiency economy but a stone-age economy…. There must be some gradual development, some exchange and cooperation between districts, provinces and countries, something beyond self-sufficiency….”
(Royal Speech, given at Dusit Palace, 4 December 1998)
2. Sufficiency Economy is anti-globalization and leads to a country and economy cut off from the world. The late King Bhumibol Adulyadej himself corrected this misunderstanding in one of his statements:
“As we are in the globalization era, we also have to conform to the world…”
(Royal Speech, given at Dusit Palace, 4
December 1998)
The two-stage principle of Sufficiency Economy proposes that in order to cope with globalization, the people need to build a strong foundation whilst practicing caution and being aware of the risks involved. This means that SEP promotes building a strong domestic economy and develop competitiveness, based on the country’s potential resources and abilities. It further implies that the country should be gradually opened in stages to foreign investments or trade. The country also needs a sound supply-side management policy that will help withstand the shocks and volatility arising from external factors, like oil and commodities prices, exchange rates and inflation risks.
3. Sufficiency Economy is only applicable to agricultural. This misconception stems in part from the fact that early and well-known applications of the Sufficiency Economy concept focused on agriculture and diversified farming.
United Nations Development Programme
The National Human Development Report (UNDP, 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 of the local economy.
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.
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.
Conclusion
SEP shares common principles and objectives with SDGs, striving to eradicate poverty and reduce inequality as a means to achieve sustainable development, and a revolution in the mindset, both of which are necessary for the advancement of human development.
References
1. “Sufficiency Economy: Implications and Applications” (PDF). NESDB. Archived from the original (PDF) on 19 July 2011.
2. Sufficiency economy. Wikipedia. Retrieved 21 January 2022. https://bit.ly/3rwCbT6
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