Buddhist teachings on nation building & politics

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The clearest example of this that I can think of is in the Mahaparinibbana Sutta (DN 16) where the Buddha was asked (obliquely) by the brahman Vassakara on behalf of King Ajatasattu whether he had a chance at killing off an enemy nation. The Buddha replied with the seven "Conditions of a Nation's Welfare":

At that time the Venerable Ananda was standing behind the Blessed One, fanning him, and the Blessed One addressed the Venerable Ananda thus: "What have you heard, Ananda: do the Vajjis have frequent gatherings, and are their meetings well attended?"

"I have heard, Lord, that this is so."

"So long, Ananda, as this is the case, the growth of the Vajjis is to be expected, not their decline.

"What have you heard, Ananda: do the Vajjis assemble and disperse peacefully and attend to their affairs in concord?"

"I have heard, Lord, that they do."

"So long, Ananda, as this is the case, the growth of the Vajjis is to be expected, not their decline.

"What have you heard, Ananda: do the Vajjis neither enact new decrees nor abolish existing ones, but proceed in accordance with their ancient constitutions?"

"I have heard, Lord, that they do."

"So long, Ananda, as this is the case, the growth of the Vajjis is to be expected, not their decline.

"What have you heard, Ananda: do the Vajjis show respect, honor, esteem, and veneration towards their elders and think it worthwhile to listen to them?"

"I have heard, Lord, that they do."

"So long, Ananda, as this is the case, the growth of the Vajjis is to be expected, not their decline.

"What have you heard, Ananda: do the Vajjis refrain from abducting women and maidens of good families and from detaining them?"

"I have heard, Lord, that they refrain from doing so."

"So long, Ananda, as this is the case, the growth of the Vajjis is to be expected, not their decline.

"What have you heard, Ananda: do the Vajjis show respect, honor, esteem, and veneration towards their shrines, both those within the city and those outside it, and do not deprive them of the due offerings as given and made to them formerly?"

"I have heard, Lord, that they do venerate their shrines, and that they do not deprive them of their offerings."

"So long, Ananda, as this is the case, the growth of the Vajjis is to be expected, not their decline.

"What have you heard, Ananda: do the Vajjis duly protect and guard the arahats, so that those who have not come to the realm yet might do so, and those who have already come might live there in peace?"

"I have heard, Lord, that they do."

"So long, Ananda, as this is the case, the growth of the Vajjis is to be expected, not their decline."

http://www.accesstoinsight.org/tipitaka/dn/dn.16.1-6.vaji.html

Besides being one of the few examples of the Buddha offering advice on how to run a nation (he was the one who taught the Vajjis these conditions), it also shows how the Buddha never did take sides in political struggle; rather than chastising Ajatasattu, he just taught the dhamma as he always did.

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Nation building is achieve through giving capital, supporting agriculture, protecting the business and farming community, increasing and strengthening the military, being a virtuous and exemplary government and a leader, etc.

This is mainly covered in the Cakkavattisihanada Sutta as well as Mahaparinibbana Sutta (as in the above answer).

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A king who follows the ways of Buddhism, by role, perfectly, is called a Sakvithi King. He generally rules by consulting wise men on all of his decisions. Such a king, himself, is a very righteous person in a Buddhist context.

Such a king, is known to come to automatically possess a Sakvithi Gem which appears at his possession due to his worthiness (by character) to rule as a Sakvithi king.

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