Small Is Beautiful: Economics as if People Mattered by Ernst F. Schumacher
Small is Beautiful is E. F. Schumacher‘s stimulating and controversial study of world economies. This remarkable book is as relevant today and its themes as pertinent and thought-provoking as when it was first published thirty years ago.
Small is Beautiful looks at the economic structure of the Western world in a revolutionary way. Schumacher maintains that Man’s current pursuit of profit and progress, which promotes giant organisations and increased specialisation, has in fact resulted in gross economic inefficiency, environmental pollution and inhumane working conditions. Schumacher challenges the doctrine of economic, technological and scientific specialisation and proposes a system of Intermediate
Technology, based on smaller working units, communal ownership and regional workplaces utilising local labour and resources.
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The book is divided into four parts: “The Modern World”, “Resources”, “The Third World”, and “Organization and Ownership”.
In the first chapter, “The Problem of Production”, Schumacher argues that the modern economy is unsustainable. Natural resources(like fossil fuels), are treated as expendable income, when in fact they should be treated as capital, since they are not renewable, and thus subject to eventual depletion. He further argues that nature’s resistance to pollution is limited as well. He concludes that government effort must be concentrated on sustainable development, because relatively minor improvements, for example,technology transfer to Third World countries, will not solve the underlying problem of an unsustainable economy.
Schumacher’s philosophy is one of “enoughness”, appreciating both human needs, limitations and appropriate use of technology. It grew out of his study of village-based economics, which he later termed Buddhist economics, which is the subject of the book’s fourth chapter.
He faults conventional economic thinking for failing to consider the most appropriate scale for an activity, blasts notions that “growth is good”, and that “bigger is better”, and questions the appropriateness of using mass production in developing countries, promoting instead “production by the masses”. Schumacher was one of the first economists to question the appropriateness of using gross national product to measure human well-being, emphasizing that “the aim ought to be to obtain the maximum amount of well being with the minimum amount of consumption”. In the epilogue he emphasizes the need for the “philosophy of materialism” to take second place to ideals such as justice, harmony, beauty, and health.
Listen to Small Is Beautiful: Economics as if People Mattered by Ernst F. Schumacher
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Small is beautiful – an economic idea that has sadly been forgotten
EF Schumacher’s Small is Beautiful was the first book on politics I ever read; it was the only book about politics I ever saw my father read or heard him talk about. It arrived in our cottage in rural North Yorkshire as a manifesto from a radical countercultural world with which we had no contact. Re-reading its dense mixture of philosophy, environmentalism and economics, I can’t think what I could possibly have understood of it at 13, but in a bid to impress my father I ploughed on to the end.
Looking back over the intervening almost four decades, the book’s influence has been enormous. “Small is beautiful” was a radical challenge to the 20th century’s intoxication with what Schumacher described as “gigantism”. For several decades, mass production methods were producing more cheap goods than ever before; the mass media and mass culture opened up new opportunities to a wider audience than ever. It was creating bigger markets and bigger political entities – his book came on the eve of the vote on the European Common Market in 1975 – but he believed such scale led to a dehumanisation of people and the economic systems that ordered their lives.
One of the recurrent themes through the book is how modern organisations stripped the satisfaction out of work, making the worker no more than an anonymous cog in a huge machine. Craft skill was no longer important, nor was the quality of human relationship: human beings were expected to act like adjuncts to the machines of the production line. The economic system was similarly dehumanising, making decisions on the basis of profitability rather than human need: an argument that played out most dramatically in the 80s coal miners’ strike. What Schumacher wanted was a people-centred economics because that would, in his view, enable environmental and human sustainability.
It was a radical challenge which, like many of the ideas of the late 60s and early 70s (feminism is another example), were gradually adopted and distorted by the ongoing voracious expansion of consumer capitalism. Niche brands such as The Body Shop in the UK or Ben & Jerry’s ice-cream in the US attempted to build a “small is beautiful” model of economic enterprise that put relationship, craft and environment at the heart of their way of working. They were later snaffled up by corporate giants. Small became cool but only as part of a branding strategy which masked the ongoing concentration of political and economic power. Gigantism has triumphed.
The power of the global multinational and the financial institutions was beginning to become apparent in the early 70s, but it has grown exponentially since, unaccountable to national governments. Schumacher warned that a city’s population should not rise above 500,000, but we are now living in an era of the megapolis and several cities around the world are heading towards 20m. Schumacher would be weeping over his herbal tea at the fate of his big idea.
However, small is beautiful is an idea that keeps reappearing – the latest incarnations are farmers’ markets, and local cafes baking homemade cup cakes – because it incorporates such a fundamental insight into the human experience of modernity. We yearn for economic systems within our control, within our comprehension and that once again provide space for human interaction – and yet we are constantly overwhelmed by finding ourselves trapped into vast global economic systems that are corrupting and corrupt.
Many of the issues Schumacher raises we are still wrestling with. He questioned the shibboleth of economic growth as the central preoccupation of politics; he talked of resource constraints on economic development. Above all, he insisted again and again that human happiness would not be achieved through material wealth. He had a vision of human need that would strike a 21st-century reader as oddly puritanical, and his frequent references to Burma as a model jar badly.
But his point is still valid as the wellbeing debate today demonstrates; despite our increased wealth since the 70s, we are no happier. Schumacher warned against exactly the issues we are now dealing with as levels of mental illness – depression, anxiety, panic attacks, stress – rise and the World Health Organisation predicts that depression will be the second most common health problem in western developed nations by 2020. This was what Schumacher feared, and his answer was “small is beautiful”. Go back to the human scale: human needs and human relationships, and from that springs the ethical response of stewardship to the environment.
What is most striking about the book now is its bold idealism. No one writes like that now; reading Schumacher’s bracing prescriptions for our future, it is chilling to realise how so many thinkers, politicians, academics have all signed up to a deadening pragmatic consensus and our thinking has been boxed into a dead end of technocratic managerialism. Small is beautiful is the cry of the romantic idealist, and there seem to be none left.