Based on his philosophy, I wrote about Buddhist economics in a 1998 Nation article, criticising Alan Greenspan's mode of capitalism as unsustainable. But who cared then, as Greenspan was known as the champion of the free market? Now Greenspan is accused of causing the US bubble and the current global crisis. Greenspan has recently admitted that he erred by believing that (through liberalisation and less or no regulation) bankers would look after the interests of their shareholders. That is not the case.

The latest edition of Time magazine devotes its cover to Karl Marx and asks what has gone wrong with capitalism. European leaders are now very sceptical of US-style capitalism. But they aren't sure yet of the alternative, though they have been following social democracy and market economy. Former British prime minister Tony Blair said: "Ask the experts what to do, and the most honest reply is 'I don't know'."

But in Thailand we have Buddhist economics, which has been around for more than 1,000 years, and the sufficiency economy model as championed by His Majesty the King. Going forward, more people will come to appreciate Buddhist economics and sufficiency economy, as the world is facing, as one participant at the World Economic Forum in Davos pointed out, "boom and Armageddon".

Here is what I wrote in 1998:

"The impending collapse of the global capital system could heighten the interest of economists and thinkers on Buddhist economics, expounded by Thailand's candidate for this year's [1998] Nobel Peace Prize, the Venerable Prayudh Payutto.

"A distinguished monk and a foremost Buddhist scholar, Payutto has devoted his service to the layman's understanding of the Buddhist doctrine, the foundation of which he rigorously combines with other disciplines, including economics.

"In his remarkable, and very readable, work, 'Buddhist Economics: The Middle Way for the Marketplace', Payutto combines his interpretation of dhamma with the force of economics at work to illustrate a profound way in which economics should be treated, understood and practised.

"From the outset, Buddhist economics evokes a self-sufficient, stoic-like society, where the buying and selling, the production and consumption of goods and services adhere to strict ethical standards. But Payutto goes so far as to embrace the Buddha's teachings as the foundation of truth, relative truth or ultimate truth, which are related to good and evil. In this sense, dhamma is used to describe the conditions or the cause and effects, the process, by which all things exist and function.

"In conventional economics, when there is a demand for, say, whisky, it is supplied by production - growing grain, distilling it into liquor and distributing it to the consumers. 'When it is consumed, demand is satisfied. Modern economic thinking stops here, at the satisfaction of the demand. There is no investigation of what happens after the demand is satisfied,' Payutto says.

"By contrast, he says, economics inspired by dhamma would be concerned with how economic activities influence the entire process of cause and condition, which will essentially affect the three interconnected spheres of human existence: individual, society and nature or the environment. 'In the case of the demand for a commodity such as whisky, we would have to ask ourselves how liquor production affects the ecology and how its consumption affects the individual and society,' he argues.

"'These are largely ethical considerations and this brings us back to the more specialised meanings of dhamma, relating to matters of good and evil. It is said in the Buddhist scriptures that good actions lead to good results and bad actions lead to bad results.'

"In conventional economics, the value of goods and services is determined by the consumers' perception as to whether it serves the satisfaction or the desire. In Buddhist economics, there are two kinds of desires or two kinds of value: true value and artificial value. 'True value is created by chanda (good desire). In other words, a commodity's true value is determined by its ability to meet the need for well-being. Conversely, artificial value is created by tanha (bad desire) - it is a commodity's capacity to satisfy the desire for pleasure,' Payutto says.

"It follows that goods and services in the Buddhist society are consumed only to maintain the well-being and not to serve the pleasure of the flesh or the senses, without any specific purposes. Spiritual enlightenment is the ultimate purpose of a Buddhist society, whereas in capitalism, ever-higher standards of living, material possessions or more wealth is the final tenet.

"Payutto's explanation of production is also revealing. In general, production is understood as a process by which new things are created. But Payutto argues that, in fact, production is simply a conversion of one substance to another.

"'These conversions entail the creation of a new state by the destruction of an old one. Thus, production is always accompanied by destruction. In some cases the destruction is acceptable, in others it is not.'

"On this front, Payutto's approach is quite different from what Alan Greenspan tried to explain in a recent speech at the University of California, Berkeley. Greenspan argued that the accumulation of American wealth was not the work of a 'new economy' or any miracle, but a continuing process of 'creative destruction' whereas the old regimes are destroyed to give way for the new.

"Greenspan said the American economy, like all advanced capitalist economies, is continually in the process of what Joseph Schumpeter decades ago called 'creative destruction'.

"The capital stock - the plan and equipment that facilitates our production of goods and services - can be viewed, with only a little exaggeration, as continuously being torn down and rebuilt.

"Our capital stock and the level of skills of our workforce are effectively being upgraded as competition presses business management to find increasingly innovative and efficient ways to meet the ever-rising demands of consumers for quantity, quality and variety. Supply and demand have been interacting over the generations in a competitive environment to propel standards of living higher.

"Buddhist economics will find that this American version of capitalism not sustainable, since the wealth and the satisfaction of artificial desires, without taking into account the consequences, cannot be met forever, for it defies the law of nature. Greenspan believes that innovative technology, which helps American firms to hold down their costs, and the underlying sound financial system, will continue to drive this American wealth well into the next century.

"But to what end?"