Small Is Beautiful: Economics as if People Mattered [Paperback]

Schumacher responds with a broad, big-picture discussion of our economic culture, noting that sustainability is an impossibility when ever growing demands for increased production, "assuming all the time that a man who consumers more is 'better off' than a man who consumes less", expend an environment with finite resources. He notes that lasting peace is threatened by extraordinarily unequal distributions of power and access to resources, "what else could be the result but an intense struggle for oil supplies, even a violent struggle," and echoes Gandhi's disapproval of "dreaming of systems so perfect that no one will need to be good." Schumacher criticizes trump card economic judgments, arguing that "society, or a group or an individual within society, may decide to hang on to an activity or asset for non-economic reasons - social, aesthetic, moral, or political," and further noting that the judgment of modern economics is a fragmentary judgment, caring only "whether a thing yields a money profit to those who undertake it or not.... It is a great error to assume, for instance, that the methodology of economics is normally applied to determine whether an activity carried on by a group within society yields profit to society as a whole." The market, he argues, "is the institutionalization of individualism and non-responsibility.... To be relieved of all responsibility except to oneself means of course an enormous simplification of business. We can recognize that it is practical and need not be surprised that it is highly popular among businessmen." Commenting on this culture of self-interest, he quotes Tolstoy: "I sit on a man's back, choking him, and making him carry me, and yet assure myself and others that I am very sorry for him and wish to ease his lot by any means possible, except getting off his back."

While economics teaches us that "the ideal from the point of view of the employer is to have output without employees, and the ideal from the point of view of the employee is to have income without employment," Schumacher believes this perspective fails to understand that a persons acts both as a producer and consumer: "If man-as-producer travels first-class or uses a luxurious car, this is called a waste of money; but if the same man in his other incarnation of man-as-consumer does the same, this is called a sign of a high standard of life." Furthermore, "to strive for leisure as an alternative to work would be considered a complete misunderstanding of one of the basic truths of human existence, namely that work and leisure are complementary parts of the same living process and cannot be separated without destroying the joy of work and the bliss of leisure."  

Schumacher also comments on science and a set of nineteenth century scientific ideas which have become the lenses through which we have learned to interpret the world. He argues for care in selecting the direction of scientific research, since, "as Einstein himself said, 'almost all scientists are economically completely dependent' and 'the number of scientists who possess a sense of social responsibility is so small' that they cannot determine the direction of research."

In Part III, Schumacher explores third-world economic development. He notes the power dynamic inherent in the non-democratic system of free trade as it exists today: "It is a strange phenomenon indeed that the conventional wisdom of present-day economics can do nothing to help the poor. Invariably it proves that only such policies are viable as have in fact the result of making those already rich and powerful, richer and more powerful." He explores models for third world development, focusing on appropriate technology that can avoid creating a dual-economy, which affects the power structure and causes systemic migration: "It is always possible to create small ultra-modern islands in a pre-industrial society. But such islands will then have to be defended, like fortresses, and provisioned, as it were, by helicopter from far away." He argues instead for distribution of development resources to non-capital-intensive human-scale projects that can be maintained by local people, maximizing the level of useful employment rather than productivity per person. He emphasizes that appropriateness can be assessed only through learning local culture and working with and through local people: "As long as we think we know, when in fact we do not, we shall continue to go to the poor and demonstrate to them all the marvelous things they could do if they were already rich." He also warns against crippling dependence on foreign powers for supply or demand: "the role of the poor is to be gap-fillers fin the requirements of the rich," and focuses instead on small-scale development of local focus.

Overall, while I cannot agree with all of Schumacher's assessments, I doubt that "small is beautiful" can be a true universal claim, I question his assumptions of gender roles and his naïveté about realpolitik, and I also feel that his periodic appeal to religious rhetoric and "beauty" somewhat obstructs his message, I do feel that he makes a great many strong points and encourages the reader to question conventional economic wisdom and look for a deeper understanding of the world.

Schumacher responds with a broad, big-picture discussion of our economic culture, noting that sustainability is an impossibility when ever growing demands for increased production, "assuming all the time that a man who consumers more is 'better off' than a man who consumes less", expend an environment with finite resources. He notes that lasting peace is threatened by extraordinarily unequal distributions of power and access to resources, "what else could be the result but an intense struggle for oil supplies, even a violent struggle," and echoes Gandhi's disapproval of "dreaming of systems so perfect that no one will need to be good." Schumacher criticizes trump card economic judgments, arguing that "society, or a group or an individual within society, may decide to hang on to an activity or asset for non-economic reasons - social, aesthetic, moral, or political," and further noting that the judgment of modern economics is a fragmentary judgment, caring only "whether a thing yields a money profit to those who undertake it or not.... It is a great error to assume, for instance, that the methodology of economics is normally applied to determine whether an activity carried on by a group within society yields profit to society as a whole." The market, he argues, "is the institutionalization of individualism and non-responsibility.... To be relieved of all responsibility except to oneself means of course an enormous simplification of business. We can recognize that it is practical and need not be surprised that it is highly popular among businessmen." Commenting on this culture of self-interest, he quotes Tolstoy: "I sit on a man's back, choking him, and making him carry me, and yet assure myself and others that I am very sorry for him and wish to ease his lot by any means possible, except getting off his back."

While economics teaches us that "the ideal from the point of view of the employer is to have output without employees, and the ideal from the point of view of the employee is to have income without employment," Schumacher believes this perspective fails to understand that a persons acts both as a producer and consumer: "If man-as-producer travels first-class or uses a luxurious car, this is called a waste of money; but if the same man in his other incarnation of man-as-consumer does the same, this is called a sign of a high standard of life." Furthermore, "to strive for leisure as an alternative to work would be considered a complete misunderstanding of one of the basic truths of human existence, namely that work and leisure are complementary parts of the same living process and cannot be separated without destroying the joy of work and the bliss of leisure."  

Schumacher also comments on science and a set of nineteenth century scientific ideas which have become the lenses through which we have learned to interpret the world. He argues for care in selecting the direction of scientific research, since, "as Einstein himself said, 'almost all scientists are economically completely dependent' and 'the number of scientists who possess a sense of social responsibility is so small' that they cannot determine the direction of research."

In Part III, Schumacher explores third-world economic development. He notes the power dynamic inherent in the non-democratic system of free trade as it exists today: "It is a strange phenomenon indeed that the conventional wisdom of present-day economics can do nothing to help the poor. Invariably it proves that only such policies are viable as have in fact the result of making those already rich and powerful, richer and more powerful." He explores models for third world development, focusing on appropriate technology that can avoid creating a dual-economy, which affects the power structure and causes systemic migration: "It is always possible to create small ultra-modern islands in a pre-industrial society. But such islands will then have to be defended, like fortresses, and provisioned, as it were, by helicopter from far away." He argues instead for distribution of development resources to non-capital-intensive human-scale projects that can be maintained by local people, maximizing the level of useful employment rather than productivity per person. He emphasizes that appropriateness can be assessed only through learning local culture and working with and through local people: "As long as we think we know, when in fact we do not, we shall continue to go to the poor and demonstrate to them all the marvelous things they could do if they were already rich." He also warns against crippling dependence on foreign powers for supply or demand: "the role of the poor is to be gap-fillers fin the requirements of the rich," and focuses instead on small-scale development of local focus.

Overall, while I cannot agree with all of Schumacher's assessments, I doubt that "small is beautiful" can be a true universal claim, I question his assumptions of gender roles and his naïveté about realpolitik, and I also feel that his periodic appeal to religious rhetoric and "beauty" somewhat obstructs his message, I do feel that he makes a great many strong points and encourages the reader to question conventional economic wisdom and look for a deeper understanding of the world.

Ranging from the unique nature of land to our earth's fossil fuels, from education to buddhist economics, this book is the most important step you can take in thinking more deeply about economic issues.

Deep, lovely, lonely reading; sometimes this book makes me cry.