Small Is Beautiful: Economics as if People Mattered by E.F. Schumacher

* The education and Catholic conversion of E.F. Schumacher.

From the Amazon reviews:

* Small Is Beautiful is Oxford-trained economist E. F. Schumacher’s classic call for the end of excessive consumption. Schumacher inspired such movements as “Buy Locally” and “Fair Trade,” while voicing strong opposition to “casino capitalism” and wasteful corporate behemoths. Named one of the Times Literary Supplement’s 100 Most Influential Books Since World War II, Small Is Beautiful presents eminently logical arguments for building our economies around the needs of communities, not corporations.

* Schumacher’s perspective is informed by Gandhian and Buddhist concepts of scale, i.e., the appropriate scale for a business or a job is the scale that an individual can understand and enjoy. As such, he runs directly against the “bigger is better” philosophy of mainstream economics that argues in favor of increasing scale until marginal costs begin to rise. Further, Schumacher goes against the idea that profits, per se, are the only goal. As a free-market economist, I have strong doubts about these ideas; as an environmental economist concerned with sustainable systems, I have to agree that his ideas are more sensible than those that pursue profits at all costs.

If these ideas had displaced mainstream economics (to the extent that Gordon Gekko said “small is beautiful” instead of “greed is good”), we would be living in a very different world today. Schumacher is certainly aware that he is fighting an uphill battle, but his analysis never veers from good economics. He does not hope that people will just “do the right thing.” Instead, he pays attention to incentives and how they can be changed to accomplish his goals.

This book is full of wisdom, and the writing sparkles. Although you should read it to experience it yourself, I will leave you with this passage:
We are always having all sorts of clever ideas about optimizing something before it even exists. I think the stupid man who says “something is better than nothing” is much more intelligent than than the clever chap who will not touch something unless it is optimal.

Bottom Line: Economists study how humans use scarce resources. Their decisions are motivated by philosophies of why they want to use those resources. This book discusses those decisions with an important question: Is the goal more consumption or happier people? Since consumption does not appear to make us more happy, we have to ask what does, and Schumacher answers that question by noting that people living in communities and doing meaningful work are happier.

2014 update (after using the book to teach): Schumacher has a lovely vision for how a bottom-up system of production by the masses would work, but he does not describe a strategy for dealing with people(s) who prefer large and ugly, e.g., China, the US, Canada, et al. This weakness puts his advice into the aspirational rather than pragmatic section of my bookshelf.

* FROM MPCDOT.COM:

Our society is seriously out of scale. This fact has produced a range of dysfunctional behaviors that we have incorporated into our behavioral framework, creating further imbalance. The end result will be atomization, depopulation, and social chaos. The only remedy for this problem, long term, is reduction in scale, achieved by reorganizing nations into manageable and relatively homogenous populations, population and immigration control, and restraint of technological, economic, and social policies which give rise to problems of scale.

This remedy is not, I must stress, a devolution–it is not a reversion to the past, much less an idealized past free from worry. In any composition of society, there will be tension between traditional and progressive outlooks, there will be complacency and conflict and all the usual human evils. Nor is the primary concern Malthusian, that is to say an unsustainable growth in resource consumption (while this is a problem we face as a result of scale, it is not my focus here).

By scale I mean more than mere population growth; I refer also to the scale of complexity created by the West’s conversion to a multicultural, globalized social model. In this model, all distinctions including race (meaning ethnicity), nationality, culture, and religion are viewed as subordinate to the division between the managerial class and the managed class. Thus effective democracy is blunted and masses of people are shifted and reorganized in accordance with the decisions of a managerial class. Aside from the negative consequences brought about by heedless change, a second order of effects is seen in the dramatic increase in social complexity and the need for citizens to accomodate radically different (and in some cases incompatible) outlooks.

* Related link mentioned by Kevin.

About Luke Ford

I've written five books (see Amazon.com). My work has been followed by the New York Times, the Los Angeles Times, and 60 Minutes. I teach Alexander Technique in Beverly Hills (Alexander90210.com).
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