Small is Beautiful (Schumacher)

Small is Beautiful: Economics as if People Mattered
E.F. Schumacher, 1973
352 pp.
ISBN-13: 9780061997761

Noted British economist E.F. Schumacher proposed the idea of "smallness within bigness": a specific form of decentralization. For a large organization to work, according to Schumacher, it must behave like a related group of small organizations. Schumacher's work coincided with the growth of ecological concerns and with the birth of environmentalism and he became a hero to many in the environmental movement.

The book is divided into four parts: "The Modern World," "Resources," "The Third World," and "Organization and Ownership."

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."

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 GNP 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. (From Wikipedia.)

Author Bio
Birth—August 16, 1911
Where—Bonn, Germany
Died—September 4, 1977
Where—Romont, Fribourg Canton, Switzerland
Education—schooled in Bonn and Berlin, Germany; Rhodes
   Scholar at Oxford University, UK; Columbia University, USA.

Schumacher was a respected economist who worked with John Maynard Keynes and John Kenneth Galbraith. For twenty years he was the Chief Economic Advisor to the National Coal Board in the United Kingdom, opposed the neo-classical economics by declaring that single-minded concentration on output and technology was dehumanizing. He held that one's workplace should be dignified and meaningful first, efficient second, and that nature (and the world's natural resources) is priceless.

Schumacher proposed the idea of "smallness within bigness": a specific form of decentralization. For a large organization to work, according to Schumacher, it must behave like a related group of small organizations. Schumacher's work coincided with the growth of ecological concerns and with the birth of environmentalism and he became a hero to many in the environmental movement.

E.F. Schumacher was an internationally influential economic thinker with a professional background as a statistician and economist in Britain. He served as Chief Economic Advisor to the UK National Coal Board for two decades. His ideas became well-known in much of the English-speaking world during the 1970s. He is best known for his critique of Western economies and his proposals for human-scale, decentralized and appropriate technologies.

According to London's Times Literary Supplement, his 1973 book Small Is Beautiful is among the 100 most influential books published since World War II. It was quickly translated into many languages and brought international fame to Schumacher, after which he was invited to numerous international conferences, university guest speaker lectures and consultations.

Early years
Schumacher was born in Bonn, Germany in 1911. His father was a professor of political economy. The younger Schumacher studied in Bonn and Berlin, then afterwards in England as a Rhodes Scholar at New College, Oxford in the 1930s, and later at Columbia University in New York City, earning a diploma in economics. He became a professional economist, but his wide-ranging mind never confined itself to a single discipline.

Schumacher moved back to England from Germany before World War II, as he had no intention of living under Nazism. For a period during the War, he was interned on an isolated English farm as an "enemy alien." In these years, Schumacher captured the attention of John Maynard Keynes with a paper entitled "Multilateral Clearing" that he had written between sessions working in the fields of the internment camp. Keynes recognised the young German's understanding and abilities, and was able to have Schumacher released from internment. Schumacher helped the British government mobilise economically and financially during World War II, and Keynes found a position for him at Oxford University.

According to Leopold Kohr's obituary for Schumacher, when his paper "was published in the spring of 1943 in Economica, it caused some embarrassment to Keynes who, instead of arranging for its separate publication, had incorporated the text almost verbatim in his famous "Plan for an International Clearing Union," which the British government issued as a White Paper a few weeks later."

Coal Board
After the War, Schumacher worked as an economic advisor to, and later Chief Statistician for, the British Control Commission which was charged with rebuilding the German economy. From 1950 to 1970 he was Chief Economic Adviser to the National Coal Board, one of the world's largest organisations, with 800,000 employees. In this position, he argued that coal, not petroleum, should be used to supply the energy needs of the world's population. He viewed oil as a finite resource, fearing its depletion and eventually prohibitive price, and viewing with alarm the fact that, as Schumacher put it, "the richest and cheapest reserves are located in some of the world's most unstable countries" (Daniel Yergin, The Prize [1991], p. 559).

His position on the Coal Board was often mentioned later by those introducing Schumacher or his ideas. It is generally thought that his farsighted planning contributed to Britain's post-war economic recovery. Schumacher predicted the rise of OPEC and many of the problems of nuclear power.

1955 Schumacher traveled to Burma as an economic consultant. While there, he developed the set of principles he called "Buddhist economics," based on the belief that individuals needed good work for proper human development. He also proclaimed that "production from local resources for local needs is the most rational way of economic life." He traveled throughout many Third World countries, encouraging local governments to create self-reliant economies.

Schumacher's experience led him to become a pioneer of what is now called appropriate technology: user-friendly and ecologically suitable technology applicable to the scale of the community. He founded the Intermediate Technology Development Group (now Practical Action) in 1966. His theories of development have been summed up for many in catch phrases like "intermediate size," and "intermediate technology." He was a trustee of Scott Bader Commonwealth and in 1970 the president of the Soil Association.

By the end of his life, it can be said that Schumacher's personal development had led him very far afield from the ideas of John Maynard Keynes. Keynes, second only to Adam Smith, is widely regarded as the most influential modern orthodox economist. In contrast, Schumacher is one of the most widely recognized heterodox economists.

Schumacher wrote on economics for London's The Times and became one of the paper's chief editorial writers. At this post he was assigned the somewhat uncomfortable task of compiling information for the obituary of John Keynes many years before the event of his death. He also wrote for The Economist and Resurgence. He served as adviser to the India Planning Commission, as well as to the governments of Zambia and Burma — an experience that led to his much-read essay on "Buddhist Economics."

The 1973 publication of Small is Beautiful, a collection of essays, brought his ideas to a wider audience. Schumacher's work coincided with the growth of ecological concerns and with the birth of environmentalism and he became a hero to many in the environmental movement and community movement.

His 1977 work A Guide For The Perplexed is both a critique of materialistic scientism and an exploration of the nature and organization of knowledge.

Schumacher's rejection of materialist, capitalist, agnostic modernity was paralleled by a growing fascination with religion. His interest in Buddhism has been noted. However, from the late 1950s on, Catholicism heavily influenced his thought. He noted the similarities between his own economic views and the teaching of papal encyclicals on socioeconomic issues, from Leo XIII's "Rerum Novarum" to Pope John XXIII's "Mater et Magistra", as well as with the distributism supported by the Catholic thinkers G. K. Chesterton, Hilaire Belloc and Vincent McNabb.

Philosophically, he absorbed much of Thomism, which provided an objective system in contrast to what he saw as the self-centered subjectivism and relativism of modern philosophy and society. He also was greatly interested in the tradition of Christian mysticism, reading deeply such writers as St. Teresa of Avila and Thomas Merton. These were all interests that he shared with his friend, the Catholic writer Christopher Derrick. In 1971, he converted to Catholicism.

Schumacher gave interviews and published articles for a wide readership in his later years. He also pursued one of the loves of his life: gardening. He died during a lecture tour of a heart attack on 4 September 1977, in Switzerland. (Author bio from Wikipedia.)

Book Reviews
E.F. among the small number of writers whose ideas influence opinion and eventual public policy.... It is not at all difficult to comprehend Schumacher's immediate and enduring appeal. He asks us to start where we are—with ourselves and our immediate environment.... However much one may doubt the possibility of checking the momentum of modern technology, it is hard to deny Schumacher's anguished warning that at present rates of consumption, the world's inhabitants will soon exhaust existing stocks of nonrenewable resources and in the process poison the thin layer of atmosphere within which we subsist.
New York Times (5/20/1979)

Enormously broad in scope, pithily weaving together threads from Galbraith and Gandhi, capitalism and Buddhism, science and psychology.
The New Republic

Discussion Questions
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Also consider these LitLovers talking points to help get a discussion started for Small is Beautiful:

1. It has been over 35 years since Schumacher posited the central tenet of his work—that infinite economic growth is impossible within a finite system. Do you believe he has been vindicated?

2. Just how relevant are Schumacher's ideas today? Some argue Schumacher was a visionary—that his ideas are as important today as when he wrote them; others say his views are outdated and no longer apply to 21st-century conditions. Where do you stand—and on which ideas in particular?

3. Most economists and politicians believe that our consumption-based society has created unprecedented wealth in the West and, therefore, justifies a degree of inequality. How does Schumacher view consumption-based economies? What kind of alternative system or reforms does he propose?

4. Some of the book's insights are aimed at the scientific community, with Schumacher asserting that scientists are incapable of ethical decision-making regarding the direction of their research. Consider his arguments in light of recent advances in stem cell research, cloning, and bio-engineered agricultural products. Do you agree with Schumacher...or are scientists as capable as anyone else, perhaps even more so, to explore the consequences of their work?

5. Schumacher asks a simple but penetrating question: what is progress? How does he answer that question...and how do you? Do you agree or disagree with Schumacher?

6. What are Schumacher's views on assisting developing countries?

(Questions by LitLovers. Please feel free to use, online or off, with attribution. Thanks.)

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