Dharma = Doing the right thing.
Adharma = Doing the wrong thing.
Karma also looks similar.
Good Karma = Doing the right thing.
Bad Karma = Doing the wrong thing.
What is the difference between these two ?
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Dharma has many meanings. It could mean innate nature of something. It could also mean righteousness. It does not mean doing the right thing.
Practice of Dharma means doing only those things that benefit all creatures. If everyone follows the above precept then there will be peace, purity and prosperity.
Bhishma on Dharma
Bhishma said, ‘..it is difficult to say what righteousness is. It is not easy to indicate it. No one in discoursing upon righteousness, can indicate it accurately. Righteousness was declared (by Brahman) for the advancement and growth of all creatures. Therefore, that which leads to advancement and growth is righteousness. Righteousness was declared for restraining creatures from injuring one another. Therefore, that is Righteousness which prevents injury to creatures. Righteousness (Dharma) is so called because it upholds all creatures. In fact all creatures are upheld by righteousness. Therefore, that is righteousness which is capable of upholding all creatures. Some say that righteousness consists in what has been upheld in the Srutis. Others do not agree to this. I would not censure them that say so. Everything, again, has not been laid down in the Srutis.’
[This refers to the well-known definition of Dharma ascribed to Vasishtha, viz, “That which is laid down in the Srutis and Smritis is Dharma.” The defect of this definition is that the Srutis and Smritis do not include every duty. Hence Vaisishtha was obliged to add that where these are silent, the examples and practices of the good ought to be the guides of men, etc.]
Mahabharata, Santi Parva, Section CIX
Karma means action. A karma that is in accord with the principles of dharma is considered to be good. You can consider Dharma as the ideal standard by which our karma is judged. I have given below a passage in Mahabharata which shows how we have to do karma in order to be in accord with dharma.
Vrihaspati said, 'That man who practises the religion of universal compassion achieves his highest good. .. He who, from motives of his own happiness, slays other harmless creatures with the rod of chastisement, never attains to happiness, in the next world. That man who regards all creatures as his own self, and behaves towards them as towards his own self, laying aside the rod of chastisement and completely subjugating his wrath, succeeds in attaining to happiness. The very deities, who are desirous of a fixed abode, become stupefied in ascertaining the track of that person who constitutes himself the soul of all creatures and looks upon them all as his own self, for such a person leaves no track behind. One should never do that to another which one regards as injurious to one's own self. This, in brief, is the rule of Righteousness.
Mahabharata AnusasanaParva, Section CXIII
Few axioms I've made from my understanding of Vedas and Geeta.
Firstly, atma and bhramha are the one and the same thing. Not set and subset but the same thing. Realisation (not understanding) of this is moksh (one of the purusharth).
Second, Maya is the agent that creates an illusion of my ego. Maya makes me consider myself to be an individual, and a seperate entity (a part of collective consciousness, not the collective consciousness itself).
Third, because of Maya, atma's incarnation needs a purpose - that's purusharth (dharm, arth, kaam and moksh). While moksh deals with realisation of first axiom, the rest 3 purposes of current incarnation needs the playfield of Maya.
Forth, karma is action that leads to some consequences on this playfield of Maya. Every karma either propagates purusharth (good karma) or doesn't (bad karma).
Finally, a tricky one. Karm that is in accordance with dharm. Any action (karma) that sustains and maintains the rit (cosmic order - another feature of Maya) is dharmic.
Using these personal axioms I've come to a conclusion that my true self is the true self of universe itself. Incarnation of this true self needs a purpose on this playfield of Maya. And, my primary purpose is sustaining of cosmic order and realisation of true self.