Download the full version of the ebook at

https://ebookmass.com

PRINCIPLES OF MACROECONOMICS 5E 5E Edition

Ben Bernanke Et Al

https://ebookmass.com/product/principles-of-
macroeconomics-5e-5e-edition-ben-bernanke-et-al/

Explore and download more ebook at https://ebookmass.com

 Recommended digital products (PDF, EPUB, MOBI) that
you can download immediately if you are interested.

Book of Ebon Tides (5E) Wolfgang Baur

https://ebookmass.com/product/book-of-ebon-tides-5e-wolfgang-baur/

testbankdeal.com

Classroom Discipline nd Management 5e 5th Edition

https://ebookmass.com/product/classroom-discipline-nd-
management-5e-5th-edition/

testbankdeal.com

Business Analytics, 5e 5th Edition Jeffrey D. Camm

https://ebookmass.com/product/business-analytics-5e-5th-edition-
jeffrey-d-camm/

testbankdeal.com

Principles of Macroeconomics 8th Edition

https://ebookmass.com/product/principles-of-macroeconomics-8th-
edition/

testbankdeal.com
Survey of Operating Systems, 5e 5th Edition u2013 Ebook
PDF Version

https://ebookmass.com/product/survey-of-operating-systems-5e-5th-
edition-ebook-pdf-version/

testbankdeal.com

Contemporary Human Geography 5e 5th Edition James M.

Rubenstein

https://ebookmass.com/product/contemporary-human-geography-5e-5th-
edition-james-m-rubenstein/

testbankdeal.com

Principles of Macroeconomics 7th Edition Mankiw

https://ebookmass.com/product/principles-of-macroeconomics-7th-
edition-mankiw/

testbankdeal.com

Physique 3 ondes opt. 5e benson 5th Edition Harris Benson

https://ebookmass.com/product/physique-3-ondes-opt-5e-benson-5th-
edition-harris-benson/

testbankdeal.com

SPSS Statistics: A Practical Guide 5e 5th Edition Kellie

Bennett

https://ebookmass.com/product/spss-statistics-a-practical-
guide-5e-5th-edition-kellie-bennett/

testbankdeal.com
Table of Contents
1. Table of Contents and Preface
1. Half Title
2. Title Page
3. Copyright Page
4. Dedication
5. Contents in Brief
6. Contents in Full
7. Preface
8. Assurance of Learning
9. AACSB statement
10. About the Australian author
1. NILSS OLEKALNS
11. About the US authors
1. BEN S. BERNANKE
2. ROBERT H. FRANK
3. KATE ANTONOVICS
4. ORI HEFFETZ
12. Acknowledgments
1. ACKNOWLEDGMENTS
13. How to use this Book
14. Digital resources
1. Adaptive learning
2. SmartBook
3. LearnSmart
4. Proven effective
5. Connect support
6. Visual progress
2. Chapter 1 Macroeconomics: The bird's-eye view of the economy
1. Part 1 Issues in Macroeconomics
2. Introduction
3. 1.1 The major macroeconomic issues
1. 1.1.1 ECONOMIC GROWTH AND LIVING STANDARDS
2. 1.1.2 PRODUCTIVITY
3. 1.1.3 RECESSIONS AND EXPANSIONS
4. 1.1.4 UNEMPLOYMENT
5. 1.1.5 INFLATION
 6. 1.1.6 ECONOMIC INTERDEPENDENCE AMONG NATIONS
4. 1.2 Macroeconomic policy
1. 1.2.1 TYPES OF MACROECONOMIC POLICY
2. 1.2.2 POSITIVE VERSUS NORMATIVE ANALYSES OF
MACROECONOMIC POLICY
5. 1.3 Aggregation
6. 1.4 Studying macroeconomics: A preview
7. Summary
8. Key Terms
9. Review Questions
10. Problems
11. References
3. Chapter 2 Measuring economic activity: Gross domestic product and
unemployment
1. Introduction
2. 2.1 Measuring economic activity: Gross domestic product and unemployment
1. 2.1.1 GDP: THE FINE PRINT
1. Market value
2. 2.1.2 FINAL GOODS AND SERVICES
3. 2.1.3 PRODUCED WITHIN A COUNTRY DURING A GIVEN PERIOD
3. 2.2 Methods for measuring GDP
1. 2.2.1 THE NATIONAL INCOME ACCOUNTING IDENTITY
2. 2.2.2 GDP AND THE INCOMES OF CAPITAL AND LABOUR
4. 2.3 Nominal GDP versus real GDP
5. 2.4 Real GDP is not the same as economic wellbeing
1. 2.4.1 LEISURE TIME
2. 2.4.2 NON-MARKET ECONOMIC ACTIVITIES
3. 2.4.3 ENVIRONMENTAL QUALITY AND RESOURCE DEPLETION
4. 2.4.4 QUALITY OF LIFE
5. 2.4.5 POVERTY AND ECONOMIC INEQUALITY
6. 2.4.6 GDP IS RELATED TO ECONOMIC WELLBEING
7. 2.4.7 AVAILABILITY OF GOODS AND SERVICES
8. 2.4.8 LIFE EXPECTANCY
6. 2.5 Unemployment and the unemployment rate
1. 2.5.1 MEASURING UNEMPLOYMENT
2. 2.5.2 THE COSTS OF UNEMPLOYMENT
3. 2.5.3 THE DURATION OF UNEMPLOYMENT
4. 2.5.4 THE UNEMPLOYMENT RATE VERSUS ‘TRUE’
UNEMPLOYMENT
7. Summary
 8. Key Terms
9. Review Questions
10. Problems
11. References
4. Chapter 3 Measuring the price level and inflation
1. Introduction
2. 3.1 The consumer price index: Measuring the price level
3. 3.2 Inflation
1. 3.2.1 A COMMON MISPERCEPTION ABOUT INFLATION
2. 3.2.2 ADJUSTING FOR INFLATION
1. Indexing to maintain buying power
4. 3.3 Does the CPI measure ‘true’ inflation?
1. 3.3.1 THE COSTS OF INFLATION: NOT WHAT YOU THINK
5. 3.4 The true costs of inflation
1. 3.4.1 SHOE-LEATHER COSTS
2. 3.4.2 NOISE IN THE PRICE SYSTEM
3. 3.4.3 DISTORTIONS OF THE TAX SYSTEM
4. 3.4.4 UNEXPECTED REDISTRIBUTION OF WEALTH
5. 3.4.5 INTERFERENCE WITH LONG-RUN PLANNING
6. 3.4.6 MENU COSTS
7. 3.4.7 HYPERINFLATION
6. 3.5 Inflation and interest rates
1. 3.5.1 THE REAL INTEREST RATE
7. 3.6 Deflation
8. Summary
9. Key Terms
10. Review Questions
11. Problems
12. References
5. Chapter 4 Saving, investment and wealth
1. Introduction
2. 4.1 Saving and wealth
1. 4.1.1 STOCKS AND FLOWS
2. 4.1.2 CAPITAL GAINS AND LOSSES
3. 4.2 Why do people save?
1. 4.2.1 SAVING AND THE REAL INTEREST RATE
2. 4.2.2 SAVING, SELF-CONTROL AND DEMONSTRATION EFFECTS
4. 4.3 National saving and its components
1. 4.3.1 THE MEASUREMENT OF NATIONAL SAVING
2. 4.3.2 PRIVATE AND PUBLIC COMPONENTS OF NATIONAL
 SAVING
3. 4.3.3 PUBLIC SAVING AND THE GOVERNMENT BUDGET
5. 4.4 Is low household saving a problem?
6. 4.5 Investment and capital formation
7. 4.6 Saving, investment and financial markets
1. 4.6.1 THE EFFECTS OF NEW TECHNOLOGY
8. Summary
9. Key Terms
10. Review Questions
11. Problems
12. References
6. Chapter 5 Wages, employment and the labour market
1. Introduction
2. 5.1 The perfectly competitive model of the labour market
1. 5.1.1 WAGES AND THE DEMAND FOR LABOUR
2. 5.1.2 SHIFTS IN THE DEMAND FOR LABOUR
3. 5.1.3 THE SUPPLY OF LABOUR
4. 5.1.4 SHIFTS IN THE SUPPLY OF LABOUR
5. 5.1.5 EQUILIBRIUM IN THE PERFECTLY COMPETITIVE MODEL
OF THE LABOUR MARKET
3. 5.2 Explaining the trends in real wages and employment
1. 5.2.1 LARGE INCREASES IN REAL WAGES IN INDUSTRIALISED
COUNTRIES
2. 5.2.2 REAL WAGES GROWTH AND EMPLOYMENT IN
AUSTRALIA
3. 5.2.3 INCREASING WAGE INEQUALITY: THE EFFECTS OF
GLOBALISATION AND TECHNOLOGICAL CHANGE
4. 5.3 Unemployment
1. 5.3.1 TYPES OF UNEMPLOYMENT AND THEIR COSTS
1. Frictional unemployment
2. Structural unemployment
3. Cyclical unemployment
5. 5.4 Impediments to full employment
1. 5.4.1 MINIMUM WAGE LAWS
2. 5.4.2 LABOUR UNIONS
3. 5.4.3 UNEMPLOYMENT BENEFITS
4. 5.4.4 OTHER GOVERNMENT REGULATIONS
6. Summary
7. Key Terms
8. Review Questions
 9. Problems
10. References
7. Chapter 6 Short-term economic fluctuations: An introduction
1. Part 2 Short-run macroeconomics: The analysis of the business cycle
2. Introduction
3. 6.1 Contractions and expansions
1. 6.1.1 SOME FACTS ABOUT SHORT-TERM ECONOMIC
FLUCTUATIONS
4. 6.2 Output gaps and cyclical unemployment
1. 6.2.1 POTENTIAL OUTPUT AND THE OUTPUT GAP
2. 6.2.2 THE NATURAL RATE OF UNEMPLOYMENT
3. 6.2.3 OKUN’S LAW
5. 6.3 Why do short-term fluctuations occur? A preview and a parable
1. Lisa’s Ice-cream Store
6. Summary
7. Key Terms
8. Review Questions
9. Problems
10. References
8. Chapter 7 Spending and output in the short run
1. Introduction
2. 7.1 An introduction to the Keynesian model
3. 7.2 Aggregate expenditure
1. 7.2.1 PLANNED EXPENDITURE VERSUS ACTUAL EXPENDITURE
2. 7.2.2 CONSUMER SPENDING AND THE ECONOMY
4. 7.3 Planned aggregate expenditure and output
5. 7.4 Short-run equilibrium output
6. 7.5 Consumption and investment in the two-sector model
7. 7.6 The 45-degree diagram
8. 7.7 Withdrawals and injections
9. 7.8 The four-sector model
10. 7.9 Planned spending and the output gap
11. 7.10 The multiplier
12. 7.11 Stabilising planned spending: The role of fiscal and monetary policies
13. Summary
14. Key Terms
15. Review Questions
16. Problems
17. References
9. Chapter 8 Fiscal policy
 1.Introduction
2.8.1 Government purchases and planned spending
3.8.2 Taxes, transfers and aggregate spending
4.8.3 Fiscal policy as a stabilisation tool: Three qualifications
1. 8.3.1 FISCAL POLICY AND THE SUPPLY SIDE
2. 8.3.2 THE PROBLEM OF DEFICITS
3. 8.3.3 THE RELATIVE INFLEXIBILITY OF FISCAL POLICY
5. 8.4 Contemporary fiscal policy
1. 8.4.1 THE DISTRIBUTION OF INCOME
2. 8.4.2 MANAGING DEMOGRAPHIC CHANGE
3. 8.4.3 FISCAL POLICY AND THE PUBLIC DEBT
6. Summary
7. Key Terms
8. Review Questions
9. Problems
10. References
10. Chapter 9 Money, prices and the Reserve Bank
1. Introduction
2. 9.1 The financial system and the allocation of saving to productive uses
1. 9.1.1 THE BANKING SYSTEM
2. 9.1.2 BONDS AND STOCKS
1. Bonds
2. Stocks
3. 9.2 Bond markets, stock markets and the allocation of savings
1. 9.2.1 THE INFORMATIONAL ROLE OF BOND AND STOCK
MARKETS
1. Risk sharing and diversification
4. 9.3 Money and its uses
1. 9.3.1 MEASURING MONEY
5. 9.4 Commercial banks and the creation of money
1. 9.4.1 THE MONEY SUPPLY WITH BOTH CURRENCY AND
DEPOSITS
6. 9.5 Money and prices
1. 9.5.1 VELOCITY
2. 9.5.2 MONEY AND INFLATION IN THE LONG RUN
7. 9.6 The Reserve Bank of Australia
1. 9.6.1 INFLUENCING INTEREST RATES: OPEN-MARKET
OPERATIONS
8. Summary
9. Key Terms
 10. Review Questions
11. Problems
12. References
11. Chapter 10 The Reserve Bank and the economy
1. Introduction
2. 10.1 The Reserve Bank, interest rates and monetary policy
1. 10.1.1 THE IMPLICATIONS OF A CHANGE IN MONETARY
POLICY FOR THE MONEY SUPPLY
3. 10.2 Can the Reserve Bank control real interest rates?
4. 10.3 The effects of the Reserve Bank’s actions on the economy
1. 10.3.1 PLANNED AGGREGATE EXPENDITURE AND THE REAL
INTEREST RATE
2. 10.3.2 THE RESERVE BANK FIGHTS A RECESSION
3. 10.3.3 THE RESERVE BANK FIGHTS INFLATION
5. 10.4 The Reserve Bank’s policy reaction function
6. 10.5 Monetary policymaking: Art or science?
7. Summary
8. Key Terms
9. Review Questions
10. Problems
11. References
12. Appendix to Chapter 10
1. MONETARY POLICY IN THE BASIC KEYNESIAN MODEL
12. Chapter 11 Aggregate demand, aggregate supply and inflation
1. Introduction
2. 11.1 Inflation, spending and output: Aggregate demand curve
1. 11.1.1 INFLATION, THE RESERVE BANK AND THE AGGREGATE
DEMAND CURVE
2. 11.1.2 OTHER REASONS FOR THE DOWNWARD SLOPE OF THE
AGGREGATE DEMAND CURVE
3. 11.1.3 SHIFTS OF THE AGGREGATE DEMAND CURVE
1. (A) Exogenous changes in spending
2. (B) Exogenous changes in the Reserve Bank’s policy reaction
function
4. 11.1.4 SHIFTS OF THE AGGREGATE DEMAND CURVE VERSUS
MOVEMENTS ALONG THE AGGREGATE DEMAND CURVE
3. 11.2 Inflation and supply decisions
1. 11.2.1 INFLATION INERTIA
2. 11.2.2 OUTPUT GAPS AND INFLATION
4. 11.3 The aggregate demand–aggregate supply diagram
 5. 11.4 The self-correcting economy
6. 11.5 Sources of inflation
1. 11.5.1 EXCESSIVE AGGREGATE SPENDING
2. 11.5.2 INFLATION SHOCKS
7. 11.6 Controlling inflation
8. Summary
9. Key Terms
10. Review Questions
11. Problems
12. Appendix to Chapter 11
1. Aggregate demand curve
2. Shifts of aggregate demand curve
3. Short-run equilibrium
4. Long-run equilibrium
13. References
13. Chapter 12 Macroeconomic policy
1. Introduction
2. 12.1 What is the role of stabilisation policy?
1. 12.1.1 STABILISATION POLICY AND DEMAND SHOCKS
2. 12.1.2 STABILISATION POLICY AND INFLATION SHOCKS
3. 12.2 Inflationary expectations and credibility
1. 12.2.1 CENTRAL BANK INDEPENDENCE
2. 12.2.2 ANNOUNCING A NUMERICAL INFLATION TARGET
3. 12.2.3 CENTRAL BANK REPUTATION
4. 12.3 Fiscal policy and the supply side
5. 12.4 Policymaking: Art or science?
6. Summary
7. Key Terms
8. Review Questions
9. Problems
10. References
14. Chapter 13 The economy in the long run: An introduction to economic growth
1. Part 3 Long run macroeconomics: The analysis of economic growth
2. Introduction
3. 13.1 Introduction to economic growth
4. 13.2 Economic growth and potential output
5. 13.3 Growth rates and differences in living standards
1. 13.3.1 WHY ‘SMALL’ DIFFERENCES IN GROWTH RATES
MATTER
6. 13.4 Why nations become rich: The crucial role of average labour
 Visit https://ebookmass.com
now to explore a rich
collection of eBooks and enjoy
exciting offers!
 productivity
1. 13.4.1 THE DETERMINANTS OF AVERAGE LABOUR
PRODUCTIVITY
1. Human capital
2. Physical capital
3. Land and other natural resources
4. Technology
5. Entrepreneurship and management
6. The political and legal environment
7. 13.5 The costs of economic growth
8. 13.6 Promoting economic growth
1. 13.6.1 POLICIES TO INCREASE HUMAN CAPITAL
2. 13.6.2 POLICIES THAT PROMOTE SAVING AND INVESTMENT
3. 13.6.3 POLICIES THAT SUPPORT RESEARCH AND
DEVELOPMENT
4. 13.6.4 THE LEGAL AND POLITICAL FRAMEWORK
5. 13.6.5 THE POOREST COUNTRIES: A SPECIAL CASE?
9. 13.7 Are there limits to growth?
10. Summary
11. Key Terms
12. Review Questions
13. Problems
14. References
15. Chapter 14 The production function approach to understanding growth
1. Introduction
2. 14.1 Economists and economic growth
3. 14.2 The production function
1. 14.2.1 CAPITAL
2. 14.2.2 LABOUR
3. 14.2.3 BRINGING LABOUR AND CAPITAL TOGETHER: THE
PRODUCTION FUNCTION
4. 14.3 The Cobb–Douglas production function
5. 14.4 Growth accounting
1. 14.4.1 ECONOMIC GROWTH AND THE FACTORS OF
PRODUCTION
2. 14.4.2 THE SOURCES OF ECONOMIC GROWTH
6. Summary
7. Key Terms
8. Review Questions
9. Problems
 10. References
16. Chapter 15 Saving, capital formation and comparative economic growth
1. Introduction
2. 15.1 Saving, investment and economic growth
1. 15.1.1 SAVING, INVESTMENT AND THE INCOME ACCOUNTING
IDENTITY
3. 15.2 The neo-classical (Solow–Swan) model of economic growth
1. 15.2.1 A DIAGRAMMATIC TREATMENT
1. Implication number 1
2. Implication number 2
2. 15.2.2 EVIDENCE
4. Summary
5. Key Terms
6. Review Questions
7. Problems
8. References
17. Chapter 16 International trade
1. Part 4 Open-economy macroeconomics
2. Introduction
3. 16.1 Production and consumption possibilities and the benefits of trade
1. 16.1.1 THE PRODUCTION POSSIBILITIES CURVE
2. 16.1.2 CONSUMPTION POSSIBILITIES WITH AND WITHOUT
INTERNATIONAL TRADE
3. 16.1.3 COMPARATIVE ADVANTAGE AND INTERNATIONAL
TRADE
4. 16.1.4 SOURCES OF COMPARATIVE ADVANTAGE
4. 16.2 A supply and demand perspective on trade
1. 16.2.1 WINNERS AND LOSERS FROM TRADE
5. 16.3 Protectionist policies: Tariffs and quotas
1. 16.3.1 TARIFFS
2. 16.3.2 QUOTAS
3. 16.3.3 THE INEFFICIENCY OF PROTECTIONISM
6. Summary
7. Key Terms
8. Review Questions
9. Problems
10. References
18. Chapter 17 Exchange rates and the open economy
1. Introduction
2. 17.1 Nominal exchange rates
 1. 17.1.1 FLEXIBLE VERSUS FIXED EXCHANGE RATES
3. 17.2 The real exchange rate
4. 17.3 The determination of the exchange rate
1. 17.3.1 A SIMPLE THEORY OF EXCHANGE RATES: PURCHASING
POWER PARITY
2. 17.3.2 SHORTCOMINGS OF THE PPP THEORY
5. 17.4 The determination of the exchange rate: A supply and demand analysis
1. 17.4.1 THE SUPPLY OF DOLLARS
2. 17.4.2 THE DEMAND FOR DOLLARS
3. 17.4.3 EQUILIBRIUM VALUE OF THE DOLLAR
4. 17.4.4 CHANGES IN THE SUPPLY OF DOLLARS
5. 17.4.5 CHANGES IN THE DEMAND FOR DOLLARS
6. 17.5 Monetary policy and the exchange rate
1. 17.5.1 THE EXCHANGE RATE AS A TOOL OF MONETARY
POLICY
7. 17.6 Fixed exchange rates
1. 17.6.1 HOW TO FIX AN EXCHANGE RATE
2. 17.6.2 SPECULATIVE ATTACKS
3. 17.6.3 MONETARY POLICY AND FIXED EXCHANGE RATES
8. 17.7 Should exchange rates be fixed or flexible?
9. Summary
10. Key Terms
11. Review Questions
12. Problems
13. References
19. Chapter 18 The balance of payments: Net exports and international capital flows
1. Introduction
2. 18.1 The balance of payments
1. 18.1.1 THE CURRENT ACCOUNT
2. 18.1.2 THE CAPITAL ACCOUNT
3. 18.2 Capital flows and the relationship between the capital and the current
accounts
1. 18.2.1 CAPITAL FLOWS AND THE CURRENT ACCOUNT
BALANCE
4. 18.3 The determinants of international capital flows
5. 18.4 Saving, investment and capital inflows
6. 18.5 The saving rate and the trade and current account deficits
7. Summary
8. Key Terms
9. Review Questions
 10. Problems
11. References
20. Chapter 19 Macroeconomics: What have we learnt?
1. Part 5 Concluding thoughts
2. Introduction
3. 19.1 Lessons from the past
4. 19.2 Schools of thought in macroeconomics
1. 19.2.1 KEYNESIAN ECONOMICS
2. 19.2.2 MONETARISM
3. 19.2.3 NEW CLASSICAL MACROECONOMICS
4. 19.2.4 NEW KEYNESIAN MACROECONOMICS
5. 19.2.5 GROWTH THEORY AND THE REAL BUSINESS CYCLE
SCHOOL
5. 19.3 Some concluding thoughts
6. Summary
7. Key Terms
8. Review Questions
9. Problems
10. References
21. Answers to concept checks
1. Answers to concept checks
22. Glossary
1. Glossary
23. Index
1. Index
 PRINCIPLES OF
MACROECONOMICS

Page ii
 Page iii

PRINCIPLES OF
MACROECONOMICS
BEN BERNANKE ■ NILSS OLEKALNS ■ ROBERT FRANK KATE
ANTONOVICS ■ ORI HEFFETZ
 Page iv

Copyright © 2019 McGraw-Hill Education (Australia) Pty

Limited

Additional owners of copyright are acknowledged in on-page credits.

Every effort has been made to trace and acknowledge copyrighted
material. The authors and publishers tender their apologies should
any infringement have occurred.

Reproduction and communication for educational purposes

The Australian Copyright Act 1968 (the Act) allows a maximum of
one chapter or 10% of the pages of this work, whichever is the
greater, to be reproduced and/or communicated by any educational
institution for its educational purposes provided that the institution
(or the body that administers it) has sent a Statutory Educational
notice to Copyright Agency (CA) and been granted a licence. For
details of statutory educational and other copyright licences contact:
Copyright Agency, 66 Goulburn Street, Sydney NSW 2000.
Telephone: (02) 9394 7600. Website: www.copyright.com.au

Reproduction and communication for other purposes

Apart from any fair dealing for the purposes of study, research,
criticism or review, as permitted under the Act, no part of this
publication may be reproduced, distributed or transmitted in any
form or by any means, or stored in a database or retrieval system,
without the written permission of McGraw-Hill Education (Australia)
including, but not limited to, any network or other electronic
storage.

Enquiries should be made to the publisher via www.mheducation.c

om.au or marked for the attention of the permissions editor at the
address below.

Bernanke, B., Olekalns, N., Frank, R., Antonovics, K. & Heffetz, O.

Principles of Macroeconomics 5e
Print ISBN: 9781760424015
eBook ISBN: 9781760424053

Published in Australia by
McGraw-Hill Education (Australia) Pty Ltd
Level 33, 680 George Street, Sydney NSW 2000
Portfolio manager: Lisa Coady
Content developer: Apeksha Rao
Production editor: Genevieve MacDermott
Copyeditor: Rosemary Moore
Proofreader: Gillian Armitage
Cover and internal design: Simon Rattray
Typeset in NimbusRomDOT 9.5/12.5pt by SPi Global
 Visit https://ebookmass.com
now to explore a rich
collection of eBooks and enjoy
exciting offers!
To Georgina, Patrick and Lewis — NILSS OLEKALNS

Page vi
 Page vii

CONTENTS IN BRIEF

PART 1 ISSUES IN MACROECONOMICS

Chapter 1 Macroeconomics: The bird’s-eye view of
the economy 5
Chapter 2 Measuring economic activity: Gross
domestic product and unemployment 21
Chapter 3 Measuring the price level and
inflation 49
Chapter 4 Saving, investment and wealth 71
Chapter 5 Wages, employment and the labour
market 103

PART 2 SHORT-RUN MACROECONOMICS:

THE ANALYSIS OF THE BUSINESS
CYCLE
Random documents with unrelated
content Scribd suggests to you:
the recession to China of certain territories on the Continent, forty
men in the Japanese army, by way of protest, committed suicide “in
211
the ancient way.”
Tyrannicide is also looked upon by the Japanese as an heroic and
praiseworthy deed, provided the person committing the act makes
clear the self-sacrificing and patriotic character of his motives by at
once taking his own life.

Low estimation A marked defect of the moral standard of the

of the virtue of
truthfulness
Japanese is the low place assigned to the virtue of
truthfulness. Among the Japanese, to call a person a
liar is not to apply to him a term of reproach, but rather to pay him a
pleasant compliment as a person of tact and shrewdness.
This lack of reverence for truth probably springs in part from the
virtue of politeness as a root. The extreme emphasis laid upon
courtesy as the sign and expression of reverence and loyalty toward
superiors fosters the general habit of saying things which are
pleasant and agreeable whether they are true or not. This
complacent disregard of truth in social intercourse would seem to
have dulled the sense of obligation of truth-speaking in other
relations.

III. Some Significant Facts in the Moral History

of Japan

General The Japanese knightly ideal, which, as we have

influence of the
ideal of
said, constitutes the heart and core of theoretical
Bushido Japanese morality, has a history somewhat like that of
the ideal of European knighthood. It was a lofty ideal
very imperfectly realized, yet realized to such a degree as to make it
a chief motive force in the political and social life of Japan for several
 212
centuries. It left a permanent impress upon the moral
consciousness of the Japanese nation, an impress certainly deeper
and more enduring than that left by the ideal of European chivalry
upon the moral consciousness of the peoples of Western Europe.
New Japan is directly or indirectly the creation of Japanese
knighthood.
We have seen that loyalty to his chief was the preëminent virtue
of the samurai. Upon the downfall of feudalism this loyalty was
transferred to the Emperor. The spirit of the samurai came to inspire
the Japanese nation. Since the time when the loyalty of Scottish
clansmen to their chief was transferred to Scottish royalty, there has
not been seen a more remarkable example of the absolute devotion
of a people to their sovereign than that exhibited to-day by the
people of Japan.
The samurai were taught to despise the love of gain, and thus
these knights of Japan were strangers to those vices which spring
from the love of money. To this circumstance may be ascribed the
fact that the statesmen of Japan, who almost invariably are of the
samurai class, have been so notably free from venality and
213
corruption.
Finally, Bushido held aloft a high standard of truthfulness. The
true samurai regarded an oath as a derogation of his honor. It
cannot be affirmed that this Bushido virtue of veracity has yet
become the inheritance of the mercantile and peasant classes of
Japan, but it has at least been retained by the samurai as a class,
and is working to-day like leaven in the mass of Japanese society.

The Bushido There are two remarkable passages in recent

code in action
Japanese history which well illustrate in what way and
to what degree the spirit of the samurai, “the spirit of not living unto
one’s self,” has become an inspiration to the whole Japanese nation.
The first passage has to do with the Russo-Japanese War of 1904–
1905, which on the part of Japan was a struggle for national
existence. It was the samurai morality, a morality of loyalty, of valor,
of selflessness, of fidelity to duty, that formed a chief element of the
strength of Japan in that critical juncture of the nation’s life. The
Bushido code of honor showed itself equal to the Spartan code in
creating a race of invincible warriors. Since the Spartan Leonidas and
his companions died for Greece in the pass of Thermopylæ there has
been no sublimer exhibition of fortitude and self-devotion in a great
cause than that shown by Japanese soldiers in the trenches before
Port Arthur and on the battlefields of Manchuria.
This war for national independence also afforded proof of how the
gentle virtue of Japanese knighthood, courteous generosity to the
vanquished, has passed as a noble legacy to the nation at large; for
as an eminent Japanese statesman affirms, “In the tender care
bestowed upon our stricken adversary of the battlefield will be found
214
the ancient courtesy of the samurai.”

The moral The second passage shows the morality of the

standard of the samurai in competition with the morality of the
samurai in
competition common Japanese shopman. Now the morality of the
with that of the plebeian Japanese trader is about on a level with that
plebeian trader 215
of the ancient Greek shopkeeper. And a chief
cause of his low moral standard is the same, namely, the general
disesteem in which the trader’s business has been held. This social
stigma has resulted in the mercantile business being left in the
216
hands of the lowest class socially, intellectually, and morally. The
great mass of the people have from time immemorial been engaged
in the honorable business of agriculture; while the samurai class, as
we have seen, regarded it as degrading to engage in trade or even
to handle money. In these circumstances it was inevitable that the
mercantile class should evolve a very low code of business ethics;
for, as the author of Bushido very justly observes, “put a stigma on a
calling and its followers adjust their morals to it.”
 The strictly class character of this loose commercial morality is
shown by the experience of the samurai after the abolition of
feudalism in 1868. Upon that event many of them engaged in
mercantile business, carrying with them their high moral standard,
with results pathetically depicted by Nitobé in these words: “Those
who had eyes to see could not weep enough, those who had hearts
to feel could not sympathize enough, with the fate of many a noble
and honest samurai who signally and irrevocably failed in his new
and unfamiliar field of trade and industry, through sheer lack of
shrewdness in coping with his artful plebeian rival.... It will be long
before it will be recognized how many fortunes were wrecked in the
attempt to apply Bushido ethics to business methods, but it was
soon apparent to every observing mind that the ways of wealth were
217
not the ways of honor.” About ninety-nine out of every hundred
samurai who ventured into business are said to have failed.
This passage out of the history of New Japan carries with it
various lessons, but particularly does it teach how unjust it is to
218
judge the morality of a people by the morality of a class.
Notwithstanding the disastrous outcome of their first venture into
the mercantile field, the samurai still remain in business, so that
there is going on to-day in Japan in the commercial domain a
competition between two moral standards. The triumph of the
standard of the samurai over that of the plebeian trader would mean
the development in Japan of a matchless business morality, which, in
the increasing closeness of commercial relations between the East
and the West, might well act cleansingly on our own business
219
ethics.

Moral The rapid transformation in the institutions and

education in
ideas of Old Japan after the revolution of 1868
the schools; the
Imperial created a crisis in the moral life of the Japanese
Rescript people. The old basis of the national morality was
destroyed. Reverence for the Confucian teachings was lost. Respect
for ancestral customs was seriously impaired. Moral anarchy
impended. In this critical juncture some proposed that Buddhism,
others that Christianity, should be made the basis of the moral code.
Especially in the schools was the urgency of the need of some
new sanction for morality felt, because moral instruction and training
have always formed an essential part of the education of the youth
of Japan. The Japanese have ever believed that it is possible to mold
the character of the nation by education. “With us,” says a native
writer, “education has meant moral education more than anything
220
else for centuries.” “The object of teaching,” says the official
regulations for teaching in elementary schools, “is to cultivate the
moral nature of children and to guide them in the practice of
221
virtues.” Because of this central place assigned moral education
in the work of the schools, the necessity for removing all uncertainty
as to what should be inculcated was all the more exigent.
To meet the crisis the following imperial rescript was issued—
certainly one of the most remarkable state papers ever promulgated:

“Know ye, our subjects:

“Our imperial ancestors have founded our Empire on a basis
broad and everlasting and have deeply and firmly implanted
virtue; our subjects, ever united in loyalty and filial piety, have
from generation to generation illustrated the beauty thereof.
This is the glory and the fundamental character of our Empire,
and herein also lies the source of our education. Ye, our
subjects, be filial to your parents, affectionate to your brothers
and sisters; as husbands and wives be harmonious; as friends
true; bear yourselves in modesty and moderation; extend your
benevolence to all; pursue learning and cultivate arts, and
thereby develop intellectual faculties and perfect moral powers;
furthermore, advance public good and promote common
interests; always respect the Constitution and observe the laws;
should emergency arise, offer yourselves courageously to the
 state; and thus guard and maintain the prosperity of our
imperial throne coeval with heaven and earth. So shall ye not
only be our good and faithful subjects, but render illustrious the
best traditions of your forefathers.
“The way here set forth is indeed the teaching bequeathed by
our imperial ancestors, to be observed alike by their
descendants and the subjects, infallible for all ages and true in
all places. It is our wish to lay it to heart in all reverence, in
common with you, our subjects, that we may all thus attain to
the same virtue.
“The 30th day of the 10th month of the 23d year of Meiji”
222
[1890].

It would be almost impossible to exaggerate the influence of this

imperial edict. “Our whole moral education,” affirms Baron Kikuchi,
“consists in instilling into the minds of our children the proper
223
appreciation of the spirit of this rescript.” The children learn it by
heart just as the Roman children committed to memory the Twelve
Tables of the laws.
Japanese believe that the effect of this instruction upon the
national character, reënforcing the ancestral virtues of loyalty and
224
devotion to duty, was exhibited in the recent war with Russia.
A noteworthy feature of the rescript is that it is simply a
reaffirmation of the teachings of the ancient moralists and the
ethical traditions of the fathers—an inculcation of those virtues of
loyalty and filial piety which the Japanese people have held in
esteem and practiced from generation to generation.
A second feature of the edict which arrests attention is the
universalistic and secular character of the morality inculcated. The
virtues enjoined are universal benevolence, loyalty to duty, and self-
devotion to the common good—a morality of the universal human
heart and conscience, a morality, as the edict declares, good for all
ages and for all places.

Japanese The foregoing anticipates and gives answer to the

morals and
Western
questions: What will be the effect upon Japanese
civilization morality of those changes now going on in the life and
thought of Japan through contact with the civilization
of the West? What will be the effect upon Japanese public morality
when the common belief in the divine descent of the Emperor, which
is the root from which springs the primal duty of loyalty, is
undermined, as modern science is certain to undermine it? What will
be the effect upon Japanese domestic morality when Occidental
conceptions of the family and of woman’s place in it come to modify,
as they seem likely to do, those ideas and sentiments which from
time immemorial have formed the basis of the family ethics of the
East? What will be the ethical consequences when Western science
renders obsolete the Shinto learning and the Confucian classics,
which have hitherto formed the basis of so large a part of Japanese
morality? What will be the effect upon the ancient ideal of character
of the adoption of Christian ideas and teachings in place of those
which have so long nourished the ethical feelings and sentiments of
the Japanese people?
That the intrusion into the ancient culture of Japan of these
various elements of Western civilization has deep import for
Japanese morality cannot be made a matter of doubt. In the new
environment, so different from that in the midst of which the ancient
ideal of goodness was developed, this ideal must inevitably undergo
important changes. Some of those qualities of character which have
so long held high places in the ideal of excellence will cease to evoke
the old-time homage, while other qualities at present assigned low
places in the standard will be exalted. Virtues now practically
unrecognized by the Japanese as virtues, but which among us are
highly esteemed moral qualities, will certainly be incorporated in the
modified ideal, giving it a new cast, yet probably without changing
fundamentally the type; for the moral life of the Japanese people is
too virile and too essentially sound to permit us to think that the
new influences now coming in will produce such radical changes in
the ethical feelings and convictions of the race as to result in a
repetition of what happened upon the entrance of Christianity into
the morally decadent Greco-Roman world—the displacement of the
old ideal of character by a new and essentially different ideal.
 CHAPTER VII
THE ETHICAL IDEALS OF INDIA

PART I. THE ETHICS OF

BRAHMANISM—A CLASS MORALITY

I. Historical and Speculative Basis of the System

The conception As in Judea so in India the conception formed of

of the First the Supreme Being reacted potently upon morality.
Cause​— ​
Brahma Hence in naming the influences under which the moral
ideal of Brahmanism was molded we must speak first
of the Indian conception of the First Cause.
The Aryan conquerors of India originally held notions of the gods
in general like those held by their kinsmen, the early Greeks and
Romans. When they entered India they were ancestor worshipers
and polytheists. They had earth gods and sky gods. The gods of the
celestial phenomena gradually acquired ascendancy. Then, as in
Egypt, there came a tendency toward unity. The various gods came
to be looked upon by the loftier minds as merely different
225
manifestations of one primal being.
It is right at this point that we find the great antithesis between
Indian modes of thought and those of all or almost all other peoples.
When the thinkers of Egypt, of the Semitic lands, of Persia, of
Greece and Rome, had at last through reflection evolved the lofty
conception of a single great First Cause, they endowed this cause
with conscious personal life. This mode of thought is our heritage
from the past. It is to us almost or quite impossible to conceive of
conscious personal life as springing from an unconscious impersonal
cause. Hence we place behind the manifold phenomena of the
universe a conscious personal being as the origin and source of all
226
things and all life.
It is wholly different with the thinkers of India. They seem to be
able to postulate as the beginning of things an impersonal cause, a
cause without perception, thought, or consciousness. They affirm
that out of unconsciousness consciousness arises. They teach that
out of Brahma, the unconscious, impersonal, passionless One,
emanate all material worlds and sentient beings, gods as well as
men.
How profoundly this conception of the First Cause has reacted on
the ethical speculations of the Hindu sages and on the moral life of
India will appear a little further on.

The god But this incomprehensible, unconscious, passionless

Brahma
(Brahman)
Brahma is not the Brahma of the popular faith. The
masses and even the philosophers themselves must
have something more concrete. So this impersonal, neuter Brahma is
conceived as giving existence to the personal, masculine God
Brahma (Brahman), “the progenitor of all worlds, the first-born
227
among beings.”
It is very necessary for the student of Brahmanic ethics to keep in
mind the distinction between the uncreated, unconditioned,
impersonal Brahma and the created, conditioned, personal Brahma,
since there is here laid the foundation of a double goal for rational
moral striving: the goal of the ascetic whose ultimate aim is
deliverance from individual existence and absorption into the
absolute, unchangeable, impersonal Brahma, which means a state of
eternal unconsciousness—dreamless sleep; and the goal of the
multitude, whose hope and aim is blissful, though temporary, union
with the personal Brahma in the heaven of the mortal, conditioned
228
gods.

The system of The ethical evolution in India was also profoundly

castes
influenced by a prehistoric event, namely, the
subjection of the original non-Aryan population of the land by an
intruding Aryan people. As a result of the long and bitter struggle
the two races became separated by a sharp line of race prejudice
and hatred. The dark-skinned natives were reduced to a state of
servitude or dependence upon their conquerors. Intermarriages
between the two races were strictly prohibited, and thus the
population of the conquered districts of the peninsula became
divided into two sharply defined classes. These constituted a model
upon which Indian society was framed. Other classes were formed,
and these gradually hardened into castes, that is, into classes
between which marriages were prohibited. Four great castes arose:
namely, priests or Brahmans, warriors and rulers, peasants and
merchants, and sudras. Below these castes were the pariahs, or
outcasts, made up of the most degraded of the natives. As time
passed, still other divisions were formed, every occupation coming to
constitute the basis of a new caste, till society was stratified like a
geologic deposit.
Religion came in to consecrate this division of the people into
229
privileged and nonprivileged classes. The sacred scriptures
declare that the Brahmans sprang from the mouth of Brahma, the
warriors from his arms, the peasants and traders from his thighs,
230
and the sudras from his feet.
No institution known among men ever exercised a more fateful
and sinister influence upon morality than this caste system has
exercised upon the morality of the peoples of India. The rooted
belief and dogma of the natural inequality of men has made
Brahmanic ethics a thing of grades and classes, and has thus
rendered impossible the evolution of a true morality, which requires
for its basis genuine sentiments of equality and brotherhood.

The doctrine ofWe easily realize the importance for morality of a

transmigration
belief in a life after death. But a belief in preëxistence
may exert an even greater influence upon the moral code of a
231
people than a belief in post-existence. Now the morality of the
Hindus has been molded by both these doctrines, for according to
the teachings of Brahmanism a man has lived through many lives
before his “birth,” and may wander through “ten thousand millions of
232
existences” after death has freed him from his present body. The
class and the condition into which he is born here on earth is
believed to be determined by the sum total of his merits or demerits
earned in preceding existences. As a result of sin he may in his next
birth be reborn in a lower caste, or may be imprisoned in some
animal or vegetable form. He may pass a thousand times through
the bodies of spiders, snakes, and lizards, and hundreds of times
through the forms of grasses, shrubs, and creepers. And all this
experience may come after the soul has passed through dreadful
233
and innumerable hells for vast cycles of years.
This transmigration theory was framed by the thinkers of India to
explain among other things the seemingly unjust inequalities of
234
human life. It afforded an explanation why one man should be
born a Brahman and another a sudra, one born in a hovel and
another in a palace, by conceiving the place of every person born
into the world as being determined by the manner of his life in
235
former existences.
It is unnecessary to dwell upon the profound influence which this
doctrine of transmigration, or round of births, has exerted upon the
moral life of India. The tendency of this theory, as soon as
elaborated, was to render still more intolerable the position of the
lower castes, particularly that of the sudras, since it made their low
place and hard lot to be the merited punishment of crimes and
misdoings in previous lives; while at the same time it fed the pride
and enhanced the arrogance of the Brahmans, since their superior
lot was, according to the theory, attributable to merit acquired in
other existences. Thus did the theory tend to give a more sinister
aspect to the baneful caste system, to make it appear a part of the
unchangeable order of things, and to render impossible the growth
of any other than a class morality.

Indian Hardly less important than the doctrine of

pessimism
transmigration for Hindu morality is the Indian
conception of life—of all individual, conscious existence whether
here on earth or in other worlds—as inseparable from misery, pain,
decay, and death.
The Aryan immigrants into India seem to have been, like their
kinsmen the Greeks, a light-hearted folk, filled with a strong joy in
life. But as in their journeyings they pressed southward into the
valleys of the Indus and the Ganges and came under the influences
of the hot, depressing climate, and of an oppressive social and
236
political system, they appeared to have lost their buoyant spirits.
The skies seemed less bright and life less worth living, and, weary of
it all, they at last came to regard eternal death, annihilation, as the
greatest of boons.
This pessimistic view of the world and of life, as we shall see a
little further on, forms the basis of large sections of Indian ethics,
since it makes the ultimate goal of rational or moral effort to be the
getting rid of conscious existence.

The conception Another conception which has exerted a profound

of sacrifice
influence upon the religious ethics of Brahmanism is
that respecting sacrifice. This conception is that the gods need
sustenance, and can only exist through the gifts and offerings made
237
to them by men. “The gods live by sacrifice” say the sacred
scriptures; “the sun would not rise if the priests did not make
sacrifice.”
To understand this teaching we must connect it with the belief of
primitive man that the spirits of the dead have absolute need of
meat and drink offerings at the hands of the living, and remember
that in India there is no sharp distinction drawn between the gods
and the souls of men. The gods, like the spirits of the dead, are
dependent for life and strength upon the offerings laid on their
altars. Without these gifts they would die or pine away, and all the
238
movements of the universe controlled by them would cease.
From this conception of the gods came the emphasis laid by
Brahmanism upon sacrifice, and the prominence given the religious
duty of bringing rich gifts to the priests and keeping the altars of the
239
gods heaped with food.

II. The Various Moral Standards

A class morality The fundamental fact of Brahmanic morality is that

as a result of the caste system it is a class morality;
that is, there is a different moral standard or code for each of the
different castes.
In the account given in the Laws of Manu of the origin of the four
chief castes, the occupation and the duties of each class are
carefully prescribed. To the Brahman was assigned teaching and
offering sacrifice; to the warriors and rulers the protection of the
people; to the peasants and merchants the tilling of the ground and
trading; and to the sudras—“One occupation only,” reads the sacred
law, “is prescribed to the sudra, to serve meekly the other three
240
castes.”
241
The Brahman is by right the lord of the whole creation. His
name must express something auspicious, but the first part of the
sudra’s name must express something contemptible, and the second
242
part must be a word denoting service.
For a man of a lower caste to affect equality with a person of a
higher caste is a crime: “If a man of an inferior caste, proudly
affecting an equality with a man of superior caste, should travel by
his side on the road, or sit or sleep upon the same carpet with him,
the magistrate shall take a fine from the man of inferior caste to the
243
extent of his ability.”
For a Brahman to explain to a sudra the sacred Vedas is a sin:
“Let him [the Brahman] not give to a sudra advice nor the remnants
of his meal ...; nor let him explain the sacred law to such a man; ...
for he who explains the sacred law to such ... will sink together with
244
that man into hell.”
In the matter of punishments for crimes the laws are grossly
unequal, the punishment of a person of inferior caste being always
more severe than that of a person of a superior caste for the same
offense. Thus for a crime punishable with death if committed by a
person of an inferior caste, tonsure only is ordained if committed by
245
a Brahman; for a Brahman must never be slain, “though he have
246
committed all horrible crimes.” There is no crime in all the world
247
as great as that of slaying a Brahman.
A knowledge of the inequality of these sacred laws of the
Brahmans and the burdensomeness of this caste morality as it
pressed upon the lower classes is necessary to an understanding of
the rise and rapid spread of Buddhism, and the fervor with which its
teachings of equality and brotherhood were embraced by the
masses of Brahmanic India.

The highest Of the different standards of morality of the several

moral
excellence
castes that of the Brahman is of course the highest.
attainable in The study of the sacred books is for him the chief
general only by duty. “Let him,” says the sacred law, “without tiring
Brahmans
daily mutter the Veda at the proper time; for that is
248
one’s highest duty; all other observances are secondary duties.”
249
Knowledge of the Veda destroys guilt as fire consumes fuel.
Among the secondary duties are observance of the rules of
purification, the practice of austerities, and doing no injury to
250
created beings.
By austerities, that is, by ascetic practices, by hideous self-
torture, the Brahman may atone for all sins of whatsoever kind and
may become so holy that at death, having conquered all desires,
save only the desire for union with the Universal One, he may hope
to fall away into unawakening unconsciousness and be absorbed into
the absolute, impersonal Brahma, and thus escape forever from the
weary round of births. This way of full salvation, and it is the only
one, is open only to Brahmans and to the chosen few from other
castes who, having gone forth “from home into homelessness,” as
mendicants or forest hermits, follow this life of complete
renunciation of all that is earthly.

The moral code The duties, the faithful performance of which avail
for inferior
castes
most for persons of inferior castes, are those that
have to do with religion, and chiefly with sacrifice.
These duties are the bringing of gifts and offerings for the sacrifices
and the giving of generous fees to the priests. Through the faithful
performance of his assigned duties the man of inferior caste can
make sure of salvation—not the full and perfect salvation attained by
the Brahman through his austerities, but a qualified salvation. He
may hope for rebirth in some higher caste or in some better state
251
either on earth or in some other world.

Animal ethics Duty to animals seems to have formed no part of

the moral code of the early Indian Aryans. But chiefly through the
influence of the doctrine of transmigration respect for every living
thing became a high moral requirement. To take life wantonly
became a crime. To kill a kine, a horse, a camel, a deer, an elephant,
a goat, a sheep, a fish, a snake, a buffalo, insects, or birds is an
252
offense which must be expiated by penances.
In order that he may not harm any living creature, the ascetic is
enjoined “always by day and by night, even with pain to his body, to
253
walk carefully, scanning the ground.” Should he unintentionally
injure any creature he must expiate its death by penitent
254
austerities.
255
Animals may, however, be slain for food and for sacrifices,
since they were created for these special purposes. And then there is
compensation for the victims of the altars: “Herbs, trees, cattle,
birds, and all animals that have been destroyed for sacrifices receive,
256
being reborn, higher existences.”
The killing of animals for sport is an inexpiable sin: “He who
injures innoxious beings from a wish to (give) himself pleasure never
257
finds happiness, neither living nor dead.”
Under the influence of Buddhism we shall see this consideration
for animal life deepening into a genuine tenderness for every living
creature, and duties toward the inferior animals becoming one of the
most beautiful and characteristic features of the ethical ideal.

War ethics In Brahmanic as in Confucian ethics the military

virtues are assigned a low place. Brahmanism, however, concedes
the legitimacy of war and permits the employment of force by the
258
king in augmenting his possessions, even enjoining upon him to
be ever ready to strike; for “of him who is always ready to strike, the
259
whole world stands in awe.”
But the genuine spirit of Brahmanism is opposed to the fierce war
spirit of the Aryan conquerors of India, and the sacred law attempts
to ameliorate the cruelties and atrocities of primeval warfare,
instilling in the warrior a spirit of magnanimity and chivalry. Thus the
“blameless law for the warrior” forbids to him the use of barbed or
poisoned weapons; he must spare the suppliant for mercy; he must
not strike an enemy who has lost his armor or whose weapons are
broken, or who has received a wound, or who has turned in flight.
He must do no harm to the onlooker. The king must conduct war
260
without guile or treachery.

Natural At the heart of Brahmanism, as at the heart of

morality versus
ritualism
every other great religion of the world, there is a core
of lofty spiritual teachings and true morality. The
sacred scriptures of the Brahmans declare, “The soul itself is the
witness of the soul, and the soul is the refuge of the soul; despise
261
not thy own soul, the supreme witness of men.”
The sacred law teaches that he is pure who is pure in thought
and in deed: “Among all modes of purification, purity in (the
acquisition of) wealth is declared to be the best; for he is pure who
gains wealth with clean hands, not he who purifies himself with
262
earth and water.”
Repentance and resolutions of amendment free the soul from its
transgressions: “He who has committed a sin and has repented, is
freed from that sin, but he is purified only by the resolution of
263
ceasing to sin and thinking I will do so no more.”
 Brahmanism teaches the duty of forgiving injuries and of
returning blessings for curses: “Against an angry man let him [the
ascetic] not in return show anger; let him bless when he is
264
cursed.” “A king must always forgive litigants, infants, aged and
265
sick men, who inveigh against him.” “He who, being abused by
men in pain, pardons them, will in reward of that act be exalted in
266
heaven.”
Here is a morality as pure and lofty as any taught by Hebrew
prophets. But as in Judaism, so in Brahmanism, such was the stress
laid by the priests upon sacrifice, upon the observance of the rites
and ceremonies of the temple, and upon the performance of a
thousand and one morally indifferent acts, that as time passed there
resulted an almost complete overshadowing of natural by ritual
morality. It was such a triumph of ritualism as marked the postexilic
period in the history of Israel. As there came a protest and reaction
in Judea issuing in Christianity, so did there come a protest and
reaction in Brahmanic India issuing in Buddhism.

PART II. THE ETHICS OF

BUDDHISM; AN IDEAL OF SELF-
CONQUEST AND UNIVERSAL
BENEVOLENCE

I. The Philosophical Basis of the System

The four great Four tenets or principles, called the four truths,
truths 267
sum up the essentials of Buddhism. These are the
truth of pain, the origin of pain, the destruction of pain, and the
268
eightfold way that “leads to the quieting of pain.”
The first three of these truths form the philosophical basis of
Buddhist ethics, and to a brief exposition of these tenets we shall
devote the immediately following sections. The fourth truth is a
269
summary of the ethics of Buddhism, and therefore what we shall
have to say about it will appropriately find a place under the next
subdivision of this chapter when we come to speak of the moral
ideal of Buddhism.

The truth of The truth of pain, in the language of the sacred

pain
scriptures, is this: “Birth is pain, death is pain, clinging
to earthly things is pain.”
This is simply an expression, with added emphasis, of that world-
weariness, of that despair of life, which we have seen pressing like
an incubus upon the spirit of Brahmanic India. Buddhism teaches
that life is an evil, that misery and sorrow and pain are inseparable
from all modes of existence. We shall be able to get the Buddhist’s
point of view if we bear in mind how we ourselves sometimes look
upon this earthly life. In despondent moods we ask, “Is life worth
living?” and make answer ourselves by declaring that if this earthly
life is all, then there is in it nothing worth while. If now we extend
this gloomy view so as to make it embrace the life to come as well
as the life that now is, we shall have the viewpoint of the true
Buddhist. To him life not only in this world but in all other possible
worlds is transitory, illusive, and painful, and in utter despair and
weariness he longs to be through with it all and to lay down forever
270
the intolerable burden of existence. “As the glow of the Indian
sun causes rest in cool shades to appear to the wearied body the
good of goods, so also with the wearied soul, rest, eternal rest, is
271
the only thing for which it craves.”
 The truth of the origin of pain is this: “It is the
The origin of thirst for life, together with lust and desire, which
pain causes birth and rebirth.”
It should be noted here that there are different interpretations
given to this tenet. Some understand by it not that all desires, but
simply evil desires, cause and feed the flame of life; others interpret
it as teaching that desires or longings of every kind whatsoever
possess this sinister potency of recreating life and keeping one
entangled in the meshes of the net of existence.

The truth of the The truth of the destruction of pain is this: “Pain
destruction of
pain
can be ended only by the complete extinction of
desire.” Desire being the root which feeds life and
causes the round of births, existence can be ended only by getting
rid of desire.
Here again there are different acceptations of the dogma. To most
it means simply the getting rid of all unholy passions and desires,
while to the thoroughgoing Buddhist it means freedom from every
desire of whatsoever kind: “Not a few trees but the whole forest” of
272
desires must be cut down, together with all “the undergrowth.”

The doctrine of Besides these three philosophical principles,—the

karma
truth of pain, the origin of pain, and the extinction of
pain,—there are two other speculative doctrines of orthodox
Buddhism, a comprehension of which is necessary to an
understanding of the ethics of the system. The first of these is the
doctrine of karma. This is a denial of the soul theory. Orthodox
Buddhism denies that man has a soul separable from the body. It
teaches that when a person dies there does not go out of his body a
spirit which lives elsewhere a conscious life, a continuation of the life
just ended, but that all that goes out is karma, that is, something
which is the net product of all the good and evil acts of the person in
all his various existences—a sort of seed or germ from which will
 273
spring up here on earth or in some heaven or hell another being.
There is no conscious identity, however, between the two beings.
They stand related to each other as father to son.
Some illustrations will help us to seize the thought. The Buddhist
teacher likens the relation of the life going out here to the new life
beginning elsewhere, to the relation of two candle flames, the
second of which has been lighted from the first. Through the
transmission of karma the flame of life is passed on from one being
to another; but all these life flames are different. No abiding self-
consciousness binds them together and makes them one. Again, this
succession of lives is likened to the undulations of a wave in the
ocean. The successive undulations are not the same, yet the first
causes the second, the second the third, and so on.
Notwithstanding the important place this doctrine holds in
Buddhist speculative philosophy and theoretical ethics, it was neither
understood nor adopted by the masses. It was developed in the
schools, but the people in general held to their old Brahmanic belief
in the soul and its transmigrations, so that in most Buddhist lands
to-day belief in a conscious personal existence after death is the
274
prevailing one.

Nirvana and The other philosophical doctrine of which we have

the different
to speak is that of Nirvana. This term is used with
senses in which
the term is many different meanings. Often it denotes merely the
used extinguishment in the soul of lust and hate and
ignorance, and the state of quiet contentment and blissful repose
which results from such self-mastery. Buddha himself, says Rhys
Davids, meant by the term just what Christ meant by the kingdom of
275
God, that kingdom within the soul of calm and abiding peace.
Again, it is used to express a state of eternal, unchanging, blissful
rest and ineffable peace beyond all the realms—heavens and hells—
of transmigration.
 Still again the term is used to denote the absolute extinction of
existence, annihilation. This is the view of Nirvana held to-day by the
Buddhists of Ceylon, Siam, and Burma who claim to hold the ancient
276
faith in its primitive purity.

II. The Ideal

The truth of the The ethics of Buddhism is summed up in the

eightfold path 277
formula of the truth of the eightfold path. The
truth of the eight-membered way is this: the only path which leads
to the quieting of pain is the eightfold holy path—right belief, right
resolve, right speech, right behavior, right occupation, right effort,
278
right thought, right concentration.
The essence of all this expressed in familiar ethical phrase is that
the demands of morality are right thoughts, right words, and right
deeds. As the eight requirements are interpreted and expounded by
Buddhist teachers, they demand a mind free from all evil passions
and unholy desires (and, according to the thoroughgoing Buddhist,
279
of every desire whatsoever) and “a heart of love far-reaching,
grown great, and beyond measure.” This is the path leading to
deliverance from transmigration, this the path leading to the quieting
of pain, this the path leading to the sweet rest and peace of Nirvana.
It will be worth our while to note with some attention some of the
special primary duties and virtues which are included in these
general demands of self-conquest and unmeasured love.

Particular One of the primary duties of the true Buddhist is to

virtues and
duties of the
seek knowledge, for true knowledge, insight, is the
ideal cure for desire. This knowledge which quenches all
craving thirst is best attained, so Buddha taught,
 280
through meditation. One must meditate on the transitoriness of
life, on pain, on death, on truth, on gentleness, on love. It was
through profound meditation under the Bo tree that Gautama
became the Buddha, “The Enlightened.”
Another cardinal virtue of the Buddhist ideal of character is
universal benevolence. By no other ethical system has such stress
been laid upon the duty of gentleness to everything that has life.
The animal world is here brought within the sanctuary of morality
and safeguarded by ethical sentiment. It is of course the doctrine of
transmigration, which Buddhism inherits from Brahmanism, which
gives animal ethics the prominent place it holds in Buddhist
281
morality.
Still a third requirement of the true Buddhist is toleration, which
follows as a corollary from the virtue of universal benevolence. In
the prominent place assigned this virtue in the ideal of character,
Buddhism stands alone among the great world religions.
A fourth cardinal duty of the ideal is to make known to all men
the eightfold way to salvation. Buddha’s command to his disciples
was, “Go ye now and preach the most excellent Law, explaining
every point thereof, unfolding it with diligence and care.” This is a
duty which brings its own reward; for the exercise of compassion
and charity produces that serenity of spirit which is the aim of moral
striving; and hence nothing advances one more rapidly on the way
to salvation than preaching the good tidings and laboring to lessen
the sorrows and lighten the burdens of one’s fellow creatures. The
moral requirement to preach to all the most excellent way made of
Buddhism a missionary religion. In a few centuries after the death of
Buddha devoted missionaries had spread the new faith throughout
the Far East.

The different There are in Buddhism three grades of moral

degrees of
moral
attainment. The lowest is that which may be reached
attainment by any one in the ordinary life. Through purity of
thought and word and deed, through the exercise of universal
kindliness, and by the fulfillment of every duty pertaining to his
station in life, one attains such a degree of moral excellence that he
may at least hope at death to avoid painful rebirth.
The second degree of moral excellence is that attained by the
monk of Gautama’s Order. The idea of the Buddhist here is like that
of the Christian respecting the monastic life. For centuries in the
West the ascetic life was looked upon as more perfect than the
ordinary life, and as the better and surer way to salvation. It is the
same in Buddhist lands. The goal striven after, the extinction of
unholy desires, the Buddhist believes is most quickly and surely
reached by him who has rid himself of the cares and worries of
domestic life, and withdrawn from all the distractions of the world.
The prime duty of the Buddhist monk is meditation, which takes
the place of prayer in the code of the Christian recluse. Through
following faithfully and patiently all the rules of the Order he may
hope to attain such comparative perfection that at his death he will
be reborn in some better state.
The third and highest degree of moral attainment can be reached
only in the Arhatship. The Arhat is what we would call the perfect
man. He is one who, like the Buddha, reaches a state of perfect
insight or mental illumination and of perfect freedom from all
282
desires save the desire for Nirvana. This state is reached only
through absolute renunciation of the world. He who would be
perfect must leave all earthly pleasures behind, and calling nothing
his own, with all appetites stilled, passionless and desireless, go out
283
from home into homelessness. In such a one karma becomes
extinct, and for him there are no new births. “The living, moving
body of the perfect man is visible still,” says Rhys Davids in
explaining this state, ... “but it will decay and die and pass away, and
284
as no new body will be formed, where life was, will be nothing.”
 It is impossible to conceive a higher altruism than
The genuine that inculcated by the higher thoroughgoing
altruism of Buddhism. Since it denies the existence of the soul,—
Buddhist ethics
nothing save the seed (karma) of another but
different life remaining at death,—when one strives to break the
chain of existence, to make an end of the weary cycle of births, such
a one is seeking good not for himself but for another. In the words
of Dr. Hopkins, “It is to save from sorrow this son of one’s acts that
285
one should seek to find the end.” Thus orthodox Buddhism alone,
of all the great ethical systems of history, refuses to sully virtue with
promises of reward. Its morality stands absolutely alone,
unsupported by the hope of recompense either in this world or in
the world to come. “Buddhism alone teaches that to live on earth is
weariness, that there is no bliss beyond, and that one should yet be
286
calm, pure, loving, and wise.”
Another thing especially noteworthy regarding the ethics of
Buddhism is that it is the ethics of naturalism. “For the first time in
the history of the world,” in the words of Rhys Davids, “Buddhism
proclaimed a salvation which each man could gain for himself and by
himself in this world, during this life, without the least reference to
God or the gods, either great or small.” In this respect Buddhism is
somewhat like the present-day socialism of the materialistic school,
which ardently proclaims justice, equity, and universal brotherhood,
but says nothing about God.

III. Some Expressions of the Ethical Spirit of

Buddhism

Introductory Buddhism has been called the Christianity of the

Orient. Like Christianity, it has been a great moralizing
force in history. Its ethical ideal has been just such a factor in the
moral life of the East as the ethical ideal of Christianity has been in
the moral life of the West.
To portray even in scantiest outline the influence of this ideal
upon the different peoples who have accepted it as their standard of
goodness, or whose moral codes have felt its modifying effects,
would lead us far beyond the limits of our work. In what follows we
shall aim at nothing more—after having first remarked the ethical
kinship of the Buddhist reform with other contemporary reform
movements—than to note briefly the practical outworkings of the
ideal in three or four departments of the moral domain.

The ethical We shall understand best the import for the moral
relationships of
the Buddhist
evolution of humanity of that remarkable revolution in
reform Brahmanic India which resulted in the establishment
of Buddhism throughout the peninsula and in other
countries of the Far East, if we first notice its ethical kinship with
other reform movements which, about the close of the sixth pre-
Christian century, make a dividing line in the inner histories of so
287
many of the progressive societies and cultures of that age.
In Greece Pythagoreanism was rising. This movement was in its
essential spirit a social and moral reform. It was an attempt to
introduce a true ethics in Greek city life, and to find a basis for
288
morality in the deep intuitions of the human soul.
In Israel the Isaiah of the Exile was proclaiming the loftiest ethical
doctrines ever taught by Hebrew prophet, and in his interpretation of
the moral government of Yahweh was scattering the seed from
which was to spring up a new ethical life among men.
In Persia the great teacher Zarathustra (Zoroaster), with like
vision of moral things, was declaring to the followers of Ahura Mazda
that what God requires of men is purity of purpose, truthfulness in
word and act, and unceasing warfare against evil within and without.
 In China the Master, Confucius, reaffirming the teachings of
antiquity, was inculcating essentially the same truth—that the sum of
true morality is reverence, obedience, and right living.
It probably would be unhistorical to suppose that there was any
actual connection between these several ethical or religious reform
movements in these widely separated lands. They are brought
together here merely that they may be used to interpret one another
in terms of ethical progress, and that they may bear witness to the
substantial oneness of the expressions of the moral faculty of man in
response to the same or similar intellectual and social stimulus.

The ethical The question naturally arises, How could Buddha’s

content for the
masses of
dismal doctrine of annihilation as the ultimate aim and
Buddha’s end of moral striving—for this dogma was
message undoubtedly one of the fundamental principles of
primitive Buddhism—ever have been received by the multitude as a
word of consolation and hope? What is there of ethical authority or
appeal in such a doctrine to constitute it the motive force in a great
popular moral reform? The answer is that although Buddha himself
probably believed that death for the perfect man meant absolute
extinction of being, nevertheless he lay no emphasis upon this part
of his world philosophy. He knew very well that it would be a hard
doctrine for many to receive, and when questioned about it he was
reticent. It was his other doctrine, the way in which one may escape
painful rebirths, upon which Buddha laid the stress of his teaching.
And here his simple word to the people was this: Be gentle and
merciful and just; get rid of all impure and craving desires, and then
at death, instead of suffering some painful rebirth, you will be reborn
into a happier condition here on earth or in some other world. In a
word, he said, Follow after goodness and it will be well with you.
To be able to understand how this simple word should be received
with such enthusiasm by the multitude, we need to bear in mind
how hard the way of escape from painful rebirths had been made by
the Brahmans. They had taught the people that salvation was
possible only through ritual and ceremony, through costly offerings
to the gods, through the payment of liberal fees to the priests,
289
through penances and ascetic practices. Thus the way of
deliverance had been made so hard that few could follow it, and so
unethical that it left the heart cold and the conscience unsatisfied.
The situation was like that in Judea when the greatest of the
prophets, in opposition to the teachings of the scribes and Pharisees
who were laying upon men’s shoulders a burden of ritualism too
heavy to be borne, declared that man finds salvation not through
ritual or sacrifice, but through humility, obedience, and love—and
the people heard him gladly and followed him, because his yoke was
easy and his burden light.
So was it in India. Buddha interprets anew to men the divine
message that all which is required of them is purity and justice and
tenderness toward all creatures. The spirit of the heavy-burdened
multitude witnesseth with the spirit of the Prophet that this is indeed
a true and divine Word; and Buddhism, with its ethical enthusiasms
and fresh hopes, marks a new era in the moral evolution of the
peoples of the Eastern world.

Monasticism as In explaining the different degrees of moral

an ethical
expression of
attainment possible to the Buddhist, we spoke of the
Buddhism monastic ideal of virtue. This part of Buddhist ethical
theory has left a deep impress upon practical morality
in all those lands into which the faith of the Buddha has spread.
Monasticism has been, and is still to-day, just such a dominant factor
in the moral life of all Buddhist communities of eastern Asia as it was
in the moral life of medieval Christian Europe.
The causes that fostered the upgrowth of the system in the East
were essentially the same as those that fostered its development in
the West. Among these causes a prominent place must be assigned
that feeling of world-weariness to which we have already more than
once referred, a feeling evoked by the burden and ache of existence.
It was this predisposition of spirit that caused the doctrine of
renunciation of the world preached by the disciples of Buddha to
appeal with such persuasion to multitudes throughout all the Eastern
lands.
We may stop to note but one of various points of difference
between Buddhist and Christian monasticism. The latter, in general,
recognized the ethical value of labor. This feeling found expression in
various forms of activity among the monks, particularly in
agricultural labor and in the work of the scriptorium. It was this
which not only helped to keep life in the Western monasteries
morally wholesome for a period, but which also made the monastic
system such an efficient force in the conquest and redemption of the
waste lands of Europe and in the upbuilding of Western civilization in
the early medieval age. Now Buddhist monasticism never recognized
290
the moral value of work. Useful labor had no place among the
requirements of the monastic ideal. Here doubtless is to be sought
one cause of that lamentable moral degeneracy into which the
monastic communities soon fell in almost all the lands whither
Buddhism was carried by the missionary zeal of its early converts.

Practical We have seen that under the Buddhist system the

effects of the
whole animal and insect world is brought within the
animal ethics of
Buddhism domain of ethics. Buddhist morality has gone to a
greater extreme here than any other ethical system,
excepting that of Jainism. The inculcating of this sympathy with all
living creatures has developed one of the most attractive traits of the
291
Hindu character. But the extreme emphasis laid upon this branch
of ethics by Buddhism, Jainism, and modern Brahmanism or
Hinduism has had practical consequences of a very serious nature.
The scruple in regard to killing animals, even harmful creatures, has
cost India millions of human lives. It has been a contributory cause
of the country being overrun with dangerous animals, such as tigers
and venomous snakes, which destroy many thousands of human
beings annually, and has even fostered the propagation of forms of