Econ-Atrocity {special History of Thought series} Small Is Beautiful: An Introduction to E. F. Schumacher

By Noah Enelow

Few economists of the last fifty years have offered more striking alternatives to mainstream economic thinking than Ernest Friedrich Schumacher. Born in Germany but spending the bulk of his working life in England, Schumacher’s career afforded him the ability to critique the economic system from within, and propose alternatives – not primarily through policy prescriptions, but through a radically different attitude towards life. He spent twenty years as the Chief Economic Advisor to the National Coal Board of Britain, and through that organization became intimately acquainted with problems of energy supply and environmental sustainability. Meanwhile, his interest in gardening, his study of Buddhist and Taoist thought, and his admiration for the work and philosophy of Gandhi led him to expand his economic thinking towards a wider set of values that he called “meta-economic.”

Several of Schumacher’s ideas are particularly relevant to contemporary economic life. Perhaps the foremost among these is the idea of decentralization. Schumacher’s idea of decentralization is more complex than simply breaking up a larger unit into smaller units. Rather, Schumacher proposed the idea of “smallness within bigness”; in other words, for a large organization to work it must behave like a related group of small organizations. In discussing economic development and poverty alleviation, this philosophy prescribes an orientation toward “regional” development strategies, which involve primarily local production for local use. In the era of globalization, this philosophy entails a radical rethinking of the orientation towards exports so often prescribed by international economic institutions.

Schumacher’s most radical break with the mainstream of economic thought, however, comes with his willingness to sacrifice economic growth – for so long the Holy Grail of economic policy and strategy – for a more fulfilling working life. Perhaps more than any economist since Karl Marx, Schumacher called attention to the quality of people’s lives as producers, even stressing its importance over their lives as consumers. Work, rather than being, as in neoclassical theory, a “disutility,” becomes in Schumacher’s philosophy a means towards satisfaction, fulfillment, and personal development.

In order to bring about these more fulfilling working lives, Schumacher proposes a radically different relationship between human beings and technology. The purpose of technology up until this point, he argues, has been to produce as much output per labor input as possible. The devices invented for this purpose, however, have not only served the dubious end of making many workers redundant, but their prohibitively high cost discourages self-employment. As a solution, Schumacher proposes an “intermediate technology,” one which can be easily purchased and used by poor people, and which can lead to greater productivity while minimizing social dislocation. Today, the Intermediate Technology Development Group works with agriculturists, food producers, small miners, and small manufacturers throughout the world to develop these tools.

Schumacher’s ideas have taken root in multiple forms and remain an ongoing and vital part of the discourse of economics. The E. F. Schumacher Society, in Great Barrington, Massachusetts, is the foremost center for the spread of Schumacher’s ideas in the United States. Founded in 1980 by a group of Schumacher’s friends and students, the Society contains a vast library of Schumacher’s works and a repository for communities currently putting his ideas into practice. The Society’s three top priorities are to stimulate the production of local currencies, to promote affordable access to and sustainable use of land through community land trusts, and to encourage and provide assistance to worker ownership and management of firms. Visit the website below to learn more.

Sources and Resources:

Schumacher, E. F. Small Is Beautiful: Economics As If People Mattered. New York: Harper and Row, 1973.

E. F. Schumacher Society. Special thanks go to Susan Witt, Executive Director of the E. F. Schumacher Society, for her assistance on this essay.

Intermediate Technology Development Group.

(c) 2004 Center for Popular Economics

Econ-Atrocities are a periodic publication of the Center for Popular Economics. They are the work of their authors and reflect their author’s opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

6 comments

  • I am in conformity with your philosophy especially in the light of the global financial crisis.

  • Mr Schumacher was way ahead of his time and he highlights how “progress” is not the “be all” and “end all” of our very existence.

  • I am astonished to have stumbled on the writings of E.F. Schmacher and Leopold Kohr and to learn that I am not alone in advocating smaller states and smaller institutions in contrast to the “bigger is always better” advocates. In the current economic crisis when “AIG is too big to be allowed to fail” and when European integration is crammed down peoples’ throats when they don’t want it what can be done to popularize the theories of Schumacher and Kohr so that people know there are alternatives to the pervasive concept of agglomeration at all costs?

  • John Glazebrook,Endeavour hills,Victoria.

    E.F.Schumacher is right:the domination of economics by neoliberal economic theory has created both global and community problems.In Melbourne,binge drinking,random assaults on individuals,and drug use is wide-spread.The Premier,the Police Commissioner,and the Lord Mayor do not have answers or strategies other than to say the community has to accept responsibility for finding solutions.Solutions have to come from people in leadership roles,too.It appears noone in public office reads anything apart from the tabloid press and propaganda from the conservative news media.”Small is Beautiful” should be compulsory reading for all those in public office!

  • I am not a Schumacher scholar, but I have dedicated my working life (40 some years) to development of the major engines of the economy to meet the needs of “energy and teh environment.” I completed the last major formal stage of my technical training a year before Schumacher published “Small is Beautiful”, and have regarded compatibility with its goals as essential for developments that serve the long-term needs of “energy and the environment.” However, I think a counter-productive polarization tends to develop over the issue of size.

    I think the essential idea of “small is beautiful” is appropriate size. Regional and distributed are consequences of what is appropriate. The distinction between “small for the sake of small” and “as small as possible for the sake of all” might be helpful.

    This distinction is especially important in the urgent need to come to grips with the energy needs of the world, and its inhabitants. There tends to be a mental disconnect between the desire (necessity) of replacing fossil fuels and the figment of personal control of our energy sources.

    Energy supply via regional sources is possible. This possibility involves, however, the obverse that the size of these sources must be that large, that is, the size of sources to meet the needs of “regions”, meaning population units of approximately 10 million people.

    The effects of implementing this available solution to the energy-environment-economy problem include nearly eliminating the shipment of energy across oceans, etc. But the size of these energy sources (safer and “greener” than any other kind) is perhaps the primary challenge to be overcome.

    I am not identifying this energy source here, in order to focus thought on the issue of size per se. That is, if an energy source would:

    make energy universally affordable as well as available,

    use much less of the Earth’s natural resources than any other kind of source,

    be safer than any other kind of source, but

    come in large units,

    the question is:

    how can the world come to embrace and implement this source?

    I first asked this question in 1974, soon after the size of the solution became apparent to me. While the energy-environment problem seemed quite obvious then, the solution has not been implemented in part because of size. Over the past decade, progress toward this solution has become perceptible, but the necessity of the unit size is not fully appreciated even in the prestigious scientific community at work on it. I would be very interested in any insights that might be offered into the psychology of largeness per se.

    Of course, I would not intend to keep the solution a secret from anyone who wishes to explore this.

    Sincerely,

    Robert J. Burke
    Santa Cruz, CA

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