It goes like this:
cetanāhaṃ, bhikkhave, kammaṃ vadāmiI first heard this in 2006 at Professor Richard Gombrich's Numata lectures (now published as What the Buddha Thought) and no doubt my thinking about it owes a great deal, if not everything, to him. He translates the phrase as "by kamma I mean intention".
I say, monks, that intention is action 
There are two key terms to consider: kamma and cetanā.
Karma (Pāli: kamma ) is a word which has strong religious associations pre-dating Buddhism by a thousand years at least. The word derives from a very common verbal root √kṛ 'to do, to make' and literally means 'action'. Specifically karma was, in the earliest Indian religious texts, the ritual action of the Vedic priest. This idea existed in a world view which saw knowledge as related to similarity; which is in contrast to our world view which sees knowledge as emerging out of difference. (Indeed the word 'science' comes from a root which means to separate things from one another.) Central to the Vedic religion were correspondences between things, but particularly between the macrocosm of the universe and the microcosm of the individual person. The ritual manipulation of a thing, or later a symbol, on this level affected its counterpart in the world of the gods. By changing something on earth a change was effected in the god realm, and this meant better fortunes on earth - primarily they were concerned to control and regulate the forces of nature especially the sun and monsoon rains. Rituals served to keep the balance of the natural order of the cosmos (called ṛta, brahman, or later dharma). These ritual actions or karma were a very important feature of life in the Vedic culture.
The Jains also had a use for the word karma. To them karma was not only ritual actions, but all actions what-so-ever. In Jainism the soul (jīva) is weighed down by the 'dust' created by actions. The response is to minimise not only harmful actions (they seem to have been the first to adopt the policy of ahiṃsa or non-harm) but all actions. The epitome of Jain practice is inactivity for long periods of time, while the acme is allowing oneself to starve to death.
It seems as though the Buddha's use of the word karma was a modification of this Jain idea with a hint of the Vedic use - though a reaction away from both. The modification is that only a certain class of actions, willed actions, had moral consequences. The Buddha may well have been drawing on the Vedic idea that certain actions had greater significance than others. By removing the blanket association he allowed some freedom to act. Still we don't have complete moral freedom - our actions do have consequences but before we can address this question we need to know about cetanā.
Cetanā derives from the root √cit which also gives us the words citta 'mind' and cetas 'thought'.  Citta is sometimes translated as 'mind' sometimes as 'heart' - from the point of view of English then the reference is somewhat confused. Some Buddhists invoke a combination of feelings and thoughts to convey the meaning. The root √cit is defined in the dictionary as "knowing; thought , intellect , spirit , soul", but also "to perceive , fix the mind upon , attend to , be attentive , observe , take notice of"; and "to aim at , intend , design; to be anxious about , care for; to resolve". So √cit concerns what catches our attention on the one hand, and what we move towards on the other; or, what is on our minds, and what motivates us (emotions are what 'set us in motion'). Cetas is the faculty which carries out these functions. In English we tend to separate out thinking and feeling, intellect and affect, partly because of a duality between mind and body which been influential in our intellectual history. Thought is the stuff of the mind, whereas feelings are the province of the body. Ancient Indians did not make such a distinction. The mind-body duality is now discredited in intellectual circles largely due to advances in philosophy, and discoveries in neuroscience. There is no activity of mind which is not embodied in some fashion, and no activity of the body which does not involve the mind. Cetanā is a more abstract way of referring to the function of cetas - i.e. thinking and emoting.
So coming back to the little phrase above we can see that the Buddha is equating karma (morally significant action) with cetanā (thoughts and emotions). Although cetanā is usually translated as 'intention' I think it is important to keep in mind that this is intended to include our deepest strongest urges and motivations which may well be subconscious, as well as our immediate conscious goals; our fears and hatreds, our desires and wishes. It doesn't pay to be reductionist about this. Our motivations for any action are complex and often largely unconscious. The point is not to set up one to one relationships between motives and consequences, but to look for patterns in how the exercising of our will (whether consciously or unconsciously) affects our experience of life. If we do undertake this kind of reflection then patterns will begin to emerge and there is no need to spell out in advance what they will be - we need to see it for ourselves in any case.
The Buddha is saying, in effect, that what makes an action morally significant is thoughts and emotions which drive it. This was a new and radical idea at the time. It is still a radical idea. It may be the most significant idea in all human history. It cuts through theistic arguments which rely on 'divinely revealed' (or transcendental) notions of ideal behaviour; and through moral relativism which denies any fixed standard of behaviour. The standard is universal and human. It applies in all cultures and all cases, and it is open to everyone regardless of status, or any other human divide. 2500 years on it still sounds fresh and exciting to me!
- It is relatively easy to search the Pāli canon these days thanks to the Pali Canon Online Database.
- AN vi.63
- In verbs of this class (V) the verb root forms a stem using the strong form of the vowel so kṛ > kar- and the 3rd person singular is karoti in both Pāli and Sanskrit. Karma is grammatically a neuter action noun: karman 'action'. There is a possible connection with our word 'create' via Latin creare "to make, produce". It is typical, though not universal, for Pāli to collapse a conjunct consonant such as rma down to a doubled consonant such as mma even though the r comes from the verbal root - and thus some important information is lost. (Interestingly √kṛ can function as verb classes I, II, V VIII > e.g. karanti, karṣi, kṛṇoti and karoti which gives rise to an enormous number of forms.)
- The etymology of citta/cetas is complex in that they are clearly linked concepts but traditional grammars say there are two roots: √cit 'to perceive, know'; and √cint 'to think'. However they are obviously originally one and the same. PED notes that cit is likely to be the older of the two forms since it is sometimes explained in terms of cint, but never the other way around. (sv Cinteti p.269a). Whitney (The Roots, Verb-forms and Primary Derivatives of the Sanskrit Language p.47) concurs suggesting that cint derives from cit.
image: Descartes brain diagram: from www.cerebromente.org.br