Small is Beautiful: Economics as if People Mattered
by E.F. Schumacher
HarperPerennial, 1973
Available at the Yellowknife Public Library (Call Number 330 SCH)
Before reading this book, I knew of Schumacher by reputation only. Last week, I found a used copy of Small is Beautiful at Squatterz Books and Curiosities and decided to give it a try. I’m very glad I did. Though he wrote the book to solve the problems of 1973, Schumacher’s ideas are absolutely relevant today.
The book is a collection of essays on various topics in economics. The connecting thread is Schumacher’s willingness to question all the grand assumptions of his discipline. From third world aid to corporate taxation to world peace, Schumacher’s incisive analysis surprises on every page. I found myself underlining nearly every paragraph in some chapters, such as the one about “Buddhist Economics”:
From the point of view of Buddhist economics, therefore, production from local resources for local needs is the most rational way of economic life, while dependence on imports from afar and the consequent need to produce for export to unknown and distant peoples is highly uneconomic and justifiable only in exceptional cases and on a small scale.
This goal, for instance, is familiar to us from climate change and peak oil arguments, but Schumacher gives a more metaphysical reason for pursuing it. He writes that “the Buddhist sees the essence of civilisation not in a multiplication of wants but in the purification of human character” and “since consumption is merely a means to human well-being, the aim should be to obtain the maximum of well-being with the minimum of consumption.”
Schumacher is not entirely concerned with economic philosophy. He proposes practical measures for reforming our economic system and improving the lives of impoverished people. He proposes the idea of “intermediate technology” for the developing world – choosing technologies that can be produced and maintained locally from local resources by local people, rather than dropping alien technologies suited only for export products into the middle of pre-industrial societies. He writes about how to organize corporations to ensure they continue to serve the interests of society rather than a select group of shareholders. He proposes shifting from our current system of corporate taxation to a system of mandatory public shares in large enterprises. Radical? Yes, but also an eminently sensible way to ensure that everyone wins in our economic system.
I cannot deny that some of Schumacher’s proposals seem utopian: for example, he approves of placing limits on the ratio of highest to lowest salary within an organization – the highest-paid employee must not make more than X times what the lowest-paid employee makes. Our economic system has strayed so far into libertarian territory that such an idea seems ridiculous – but is it? Likewise, it feels sort of quaint when Schumacher talks about the advantages and disadvantages of nationalization of industries versus laissez-faire corporate capitalism – it is hard to remember that nationalization was ever practiced or discussed by the political and economic elites in the western world. It sounds like bolshevism because we’ve allowed our very range of possible economic models to be truncated by corporate interests in our society.
Schumacher is wrong about a couple of things: in spite of holding extreme faith in the ability of all people to attain the highest levels of enlightenment, he suggests that “women, on the whole, to not need an ‘outside’ job” because they should be home looking after the children. His underlying point is valid: society should allow parents the “luxury” to look after children as a matter of supreme importance; his error is in assuming that only women can nurture those children. Another of Schumacher’s errors is in his implicit assumption that religious faith is a necessary precondition for an equitable, evolved society. Schumacher takes his own Christian faith and uses its principles as the basis for a more sensible economic system. He himself recognizes that these principles are universal, liberally adopting parallel concepts from Buddhism, for instance, but never quite sees that such universal values don’t need the existence of a supernatural supreme being to be true.
Small is Beautiful is an extremely valuable book. It’s primary theme is that small, local, and practical are better than large, distant, and theoretical. For me, the book’s major contribution is the way it connects our economic system with our values: we already know that small, local, and practical measures are the solution to our environmental and social problems – Schumacher reminds us that the real reasons for doing these things will still exist even if our climate change and peak oil problems disappear tomorrow.