“Small Is Beautiful”/E.F. Schumacher

Exploring Sustainability – Fall 2008
Reaction – Small Is Beautiful by E.F. Schumacher

First published in 1973 Small Is Beautiful brought British Economist E.F. Schumacher’s essays to a wide audience, eventually selling over 700,000 copies. Schumacher was a respected economist, working with Keynes and Galbraith, and for twenty years was chief economic advisor to the National Coal Board in the UK. He was Rhoads Scholar with diplomas from Oxford and Columbia.

In 1955 Schumacher traveled to Burma as an economic consultant, where he developed a set of principals known as “Buddhist Economics,”, taking as a starting point the notion of Right Livelihood – that that good work is essential to proper human development.

The economic theory developed in Small Is Beautiful are as relevant today as they were in 1973, although they likely seemed more radical then, amid the first energy crisis. In fact, were we to substitute “climate change” for “pollution” the book could have been written today.

In Small Is Beautiful, Schumacher backs up to take on the hidden assumptions of neoclassical economics. “Economists themselves, like most specialists, suffer from a kind of metaphysical blindness, assuming that theirs is a science of absolute and invariable truths, without any presuppositions.” Then, rather than get tangled up in “arguments about methodology”, he suggests that we take a look ourselves, and discover what might be true. Using the method of discernment, he then takes apart many of the monolithic assumptions of neoclassical economics.

For example, the book opens with a discussion of “goods”, pointing out that rather than one abstract type of goods, there are several, with important distinguishing characteristics. The first distinction is between Primary goods, those supplied by nature, and Secondary goods, produced by humans, and utilizing primary goods. This simple distinction sets the stage for the containment of the economic sphere within the natural, for no matter how much we wish to, we cannot expand our production of Secondary goods beyond what the amount of Primary goods will support.

He follows this with the distinction between non-renewable and renewable resources, again pointing out that each, due to essentially different characteristics needs to be treated differently – that non-renewable resources are capital, and should not be spent except under extraordinary circumstances, whereas renewable resources are income, and as such may be spent as long as no deficit is incurred.

He then points out the flaw in the market – that the flaw in the market is that the concept of cost completely ignores these fundamental and essential distinctions between types of goods, treating all equally.

Or, starting again from the notion of Right Livelihood, seeing work as a fundamental right, and dignified, meaningful work as essential to human development and well-being. Starting from this point, then, we would structure our economic institutions around providing full employment first, letting the problem of sufficient production come as a natural side effect. Considering economic efficiency important enough to compensate for unemployment – or even underemployment – is seen as backwards, valuing goods more than people, and consumption more than meaningful activity; “shifting the emphasis from the worker to the product of work, that is from the human to the subhuman, a surrender to the forces of evil.”

Again and again through out the book, Schumacher combines classical economic tools with simple wisdom steeped in the spiritual traditions of Buddhism and unadorned Christianity to turn the subject of economics upside down. In doing so we return to human values through appropriately scaled technology, right sized economic institutions, and a return to human values.