There are different views of reality in Buddhism. Some teachers (e.g. mahasiddha Tilopa) even discouraged any intellectual activity including philosophy. See also Buddha Shakyamuni's position on some philosophical questions and his famous arrow parable.
Some views of reality in Buddhism are relevant to the issue of dependent origination and some relevant to teachings beyond cause and effect. For example
Different schools and traditions in Tibetan Buddhism give different explanations of the mechanism producing the illusion usually called "reality".
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The Theravada school teaches that there is neither a personal god, nor a spiritual or material substance that exists by itself as Ultimate Reality. The world as we know it does not have its origin in a primordial being such as Brahman. It exists only as a mental construction shaped by the senses. What we see is only a product of transitory factors of existence, which depend functionally upon each other. The Buddha said: “The world exists because of causal actions, all things are produced by causal actions and all beings are governed and bound by causal actions. They are fixed like the rolling wheel of a cart, fixed by the pin of its axle shaft.” (Sutta-Nipata 654) (*)
A word that is frequently associated with Buddhism and the nature of reality is "illusion" (Dictionary). Buddhism teaches that reality is a coin with two sides: impermanence or Anicca and the "not-self characteristic" or Anatta, referred to as "emptiness" in some Mahayana schools. In the Anatta-lakkhana Sutta, the Buddha taught this often misunderstood and misinterpreted concept of "not-self". In the sutta, the Buddha listed the characteristics that we often associate with who we are, and found that these characteristics, ultimately, are not who we are because they are subject to change. In the Anatta-lakkhana Sutta, he further illustrated the changing nature of our feelings, perceptions, and consciousness.
We can look at the concepts of impermanence and not-self in objective terms, we can deconstruct an object like a flower and see that the flower is made up entirely of non-flower elements like the soil, nutrients, photosynthetic energy, rain water, and the effort of the people who grew the flower. All of these things, according to the Diamond Sutra (Text ref. 1, Text ref. 2) inter-are with each other to manifest what we call "a flower". In other words, there is no essence arisen from nothingness that is unique and personal to any being - in particular there is neither a human soul that lives on beyond death of the physical body nor one that is extinguished since, strictly speaking, there is nothing to extinguish. The relative reality, i.e. the illusory perceived reality, comes from our belief that we are separate from the rest of the things in the universe and, at times, at odds with the processes of nature and other beings. The ultimate or absolute reality, in Buddhist thought, shows us that we are inter-connected with all things. The concept of non-discrimination expands on this by saying that while a chair is different from a flower, they inter-are because they are each made of non-flower and non-chair elements. Ultimately those elements are the same, so the distinction between chair and flower is one of quantity not of quality.
The Diamond Sutra has many passages that use the formula: A is made of what is not A, therefore A is truly not A. It means that the self is the non-self: self=non-self=self (Diamond Sutra text ref. 3.)
From a metaphysical standpoint, the Mahayana school has posited the idea of this ultimate reality of inter-connectedness as a unity with all things, a Buddha nature which illumiates or personifies the Ultimate Dimension of reality (Buddha nature doctrine.) The Mahayana Uttaratantra Shastra, one of the "Five Treatises", presents the Buddha's definitive teachings on how we should understand this ground of enlightenment and clarifies the nature and qualities of buddhahood (Dharmakaya doctrine.)
The non-essential difference between our dreaming state and our ordinary waking experience is that the latter is more concrete and linked with our attachment; the dreaming is slightly detached.
Also according to this teaching, there is a correspondence between the states of sleep and dream and our experiences when we die. After experiences of intermediate state of bardo an individual comes out of it, a new karmic illusion is created and another existence begins. This is how transmigration happens.
It is possible to do yogic practice while dreaming. In this way the yogi can have a very strong experience and with this comes understanding of the dream-like nature of daily life. This is also very relevant to diminishing attachments, because they are based on strong beliefs that life's perceptions such as objects are real and as a consequence: important. If one really understands what Buddha Shakyamuni meant when he said that everything is unreal, then one can diminish attachments and tensions.
The teacher gives advice, that the realization that the life is only a big dream can help us finally liberate ourselves from the chains of emotions, attachements, and ego and then we have the possibility of ultimately becoming enlightened.
Contrasting with some forms of Buddhism, the Buddha's teaching on Reality in the Tathagatagarbha Mahayana scriptures - which the Buddha states to constitute the very ultimate manifestation of his Mahayana Dharma - insists that there truly is a sphere or realm of ultimate Truth - not just a repetitious cycle of interconnected elements, each dependent on one another. That suffering-filled cycle of x-generating-y-and-y-generating-z-and-z-generating-a, etc. is Samsara, the prison-house of the reincarnating non-Self; whereas Liberation from dependency, from enforced rebirth and bondage is Nirvana or Reality / spiritual Essence (tattva / dharmata ). This sphere also bears the name of the Tathagatagarbha (Matrix of the Buddha). It is the deathless realm where Dependent Origination holds no sway, where non-Self is supplanted by the everlasting, sovereign (aishvarya) Self (atman) of Buddha (as a trans-historical, unconditioned, ultimate, liberating supra-worldly yet boundless and immanent Awakened Mind). Of this Real Truth, called Nirvana - which while salvationally infused into Samsara is yet not bound or imprisoned in it - the Buddha states in the Mahayana Mahaparinirvana Sutra:
"What is the Real (tattva)? Knowledge of the true attributes of Nirvana; the Tathagata, the Dharma, the Sangha, and the attributes of space ... is the Real. What is knowledge of the attributes of Nirvana? The attributes of Nirvana are eightfold. What are these eight? Cessation ignorance and suffering; loveliness/ wholesomeness; Truth; Reality; Eternity, Bliss, the Self *, and complete Purity: that is Nirvana."
He further comments: " ... that which is endowed with the Eternal, Bliss, the Self, and Purity is stated to be the meaning of 'Real Truth' ... Moreover, the Real is the Tathagata the Buddha; the Tathagata is the Real ... The Tathagata is not conditioned and not tainted, but utterly blissful: this is the Real ..."
Thus, in such doctrines, a very positive Goal is envisioned, which is said indeed to lie beyond the grasp of the five senses and the ordinary, restless mind, but which is only attainable through direct meditative perception and when all inner pollutants (twisted modes of view, and all moral contaminants) are purged and the inherently deathless, spotless, radiantly shining Mind of Buddha stands revealed. This is the realm of the Buddha-dhatu (popularly known as the Buddha nature) - inconceivable, beginningless, endless, omniscient Truth, the kaya (quintessential body-and-mind) of Buddha. This highest Reality is indicated to be empty of all falsehood, empty of all impermanence, empty of all ignorance, empty of all afflictions and pain, but filled with enduring happiness, purity, Knowingness (jnana) and omni-radiant Loving-kindness (maitri).
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"Reality in Buddhism".
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