Schumacher's Small Is Beautiful
E.F. Schumacher's Small Is Beautiful
Small Is Beautiful (1973) has been praised by so many that another book review would be gilding the lily somewhat. Instead, what I have provided is more than a book review; it is an interaction with the text. This presentation follows the book very closely. It is a summary of his ideas; ones that could transform our world. The book is subtitled Economics As If People Mattered and it is the most prescient and wise book on sustainability out there.
Part One: The Modern World
One - The Problem of Production
Schumacher begins the book by making a foundational statement: "One of the most fateful errors of our age is the belief that 'the problem of production' has been solved." What he means by that is that modern humans consider themselves apart from nature, set up against it to dominate it and exploit it through production. Humans have come to believe that they have unlimited power, nourished by scientific and technological advances. But, he says, this is an illusion.
He uses fossil fuels as an example. The problem is that fossil fuels are being treated as an income item instead of as a capital item. If it were treated as capital, there would be considerable effort to conserve it and towards building up a fund towards it's eventual replacement. But it is being squandered as fast as possible by this misunderstanding of its nature. But fossil fuels are just an example of a wider problem.
He notes that people are waking up to this reality, but notes that the problem is quite advanced. He says that people have been living on the capital of nature for quite some time now. Plus, there has ben a qualitative jump lately. Scientists have been compounding substances (think Agent Orange, Monsanto's Roundup, and Monsanto in general) against which nature is defenceless. We thought these compounds and GM products were our greatest successes until we began to realize just how much of nature's capital stock is being depleted. Other 'successes', he warned presciently before Chernobyl and Fukushima, like the nuclear industry would turn out to be poisonous beyond our wildest imaginations. The storage problem of nuclear waste is still not, and will never be, solved. Our greatest successes have contributed to our greatest problem; the depletion of nature's capital. And for what? He points out that GDP does not measure the substance of humans, and that this has been devaluated by our progress. Schumacher notes that the modern industrial system consumes the very base on which it has been erected. To summarize so far, he notes:
Two - Peace and Permanence
Schumacher summarizes the universal modern philosophy he opposes as follows:
First: that universal prosperity is possible;
Second: that its attainment is possible on the basis of the materialist philosophy of 'enrich yourselves';
Third: that this is the road to peace.
He then proceeds to take this philosophy to task. His first question is, "Is there enough to go around?" Consider the economists, the powerful, and their paid-for politicians, who all clamour for continued economic growth. Are they ever going to say, that's enough now? Well, perhaps, says Schumacher, this philosophy can be made to work if everyone only has 'more." And he investigates this proposition using the example of fuel - oil. He comes to the sad conclusion the even just 'more' will not work over the long term. Economic growth, which viewed from the point of view of economics, physics, chemistry and technology, has no discernible limit, must necessarily run into decisive bottlenecks when viewed from the point of view of the environmental sciences.
Schumacher states that, one can question the philosophy of unlimited economic growth, from a material perspective on two grounds: one, the availability of resources, and two, the capacity of the environment to cope with this scale of interference. It can also be questioned on non-material grounds. "If human vices: such as greed and envy are systematically cultivated, the inevitable result is nothing less than a collapse of intelligence." His prescience shines through when he states that the modern notion that the grave social ills which beset rich societies can be solved if only we get a really able government, is naive. He could be talking about the west today. Look at what we have wrought when successive governments have simply tried to make "faster use of science and technology or a more radical use of the penal system."
He says that what we need most desperately is wisdom: knowledge of spiritual and moral truth. And the central insight of wisdom is permanence, what we now call sustainability. "Nothing makes economic sense unless its continuance for a long time can be projected without running into absurdities." He quotes Gandhi, who said that earth provides enough for every man's need, but not for every man's greed.
Schumacher says, we need methods and equipment which are
- cheap enough so that they are accessible to virtually everyone:
- suitable for small-scale application; and
- compatible with man's need for creativity.
Our present science and technology, meshed with our economic system, is geared to provide the opposite of all three. The scale of the work ahead to change this towards systems imbued with wisdom is daunting. Schumacher again quotes Gandhi's spiritual principles behind his successes,
Three - The Role of Economics
Schumacher notes the importance of economic thought in modern society: "If an activity has been branded as uneconomic, its right to existence is not merely questioned but energetically denied." In economics something is uneconomic when it fails to earn an adequate profit in terms of money. He underlines the fact that this kind of thinking means that an activity can be economic although "it plays hell with the environment, and that a competing activity, if at some cost it protects and conserves the environment, will be uneconomic." He notes something crucial: it is inherent in the methodology of economics to ignore human dependence on the natural world. "In a sense, the market is the institutionalization of individualism and non-responsibility. Neither buyer nor seller is responsible for anything but himself."
Every science is fine within it's proper limits, but economics fails to realize that it is derived from what Schumacher calls 'meta-economics'. Because economics is so powerful, given that it related to the human drives of greed and envy, it is imperative for economists to understand and respect meta-economics. He says that meta-economics relates to the study of humans and the study of their environment. Economics has failed dismally at understanding either and takes no account of them. Therefore, Schumacher turns to meta-economics and asks what would economics look like if one abandons western materialism and chooses Buddhism as the basis of meta-economics. He points out that the choice of Buddhism is incidental; one may as well have chosen any of the world's enduring religions. I do suspect though, that choosing Buddhism makes things easier; it carries far less historical baggage than the theistic religions.
Four - Buddhist Economics
Schumacher notes that one of the Buddha's teachings was 'right livelihood', which would form the basis of Buddhist economics. In this kind of economics, the function of work is at least threefold: to give people a chance to utilise and develop their faculties; to enable them to overcome their egocentredness by joining with other people in a common task; and to bring forth the goods and services needed for a becoming existence. This has a myriad consequences. One of them is 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. Another is that to organize work into boring, nerve-racking, meaningless ways is criminal. Therefore, in Buddhist economics there are therefore two types of mechanization: "one that enhances a man's skill and power and one that turns the work of man over to a mechanical slave, leaving man in a position of having to serve the slave." Schumacher says this about work:
Materialist economics is mainly interested in goods, whereas Buddhist economics is mainly interested in liberation. It doesn't oppose wealth, what it opposed is attachment to wealth, not the enjoyment of things but the craving for them. Materialist economists think that annual consumption is the measurement; more is better than less. A Buddhist economist would say consumption is merely one measure of well-being: "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." Materialist economists try to maximise human satisfaction by the optimal pattern of consumption, while a Buddhist economist tries to maximise consumption by the optimal pattern of productive effort. Maximizing consumption takes a great deal more effort and resources. This leads to a great deal of stress, which is a feature of western societies.
All of this means that Buddhist economics would prefer local resources and consider huge transportation costs as inefficient. Same with great commuting distances. Buddhist economists, as opposed to materialist ones, would pay great attention to the difference between renewable and non-renewable resources. "Non-renewable goods must be used only if they are indispensable, and then only with the greatest care and the most meticulous concern for conservation." Schumacher deplores the heedless rush with which emerging economies are growing, without concern for moral and spiritual values.
Five - A Question of Size
This whole chapter is a treatise on the futility of giantism. Materialist economics prize economies of scale and a great deal of time, energy, and resources are spent on mergers and growth in order to achieve it. Schumacher disagrees. He says humans need two seemingly opposed things: freedom and order. "We need the freedom of lots and lots of small, autonomous units, and, at the same time, the orderliness of large-scale, possibly global, unity and co-ordination." In action, small autonomous units work best, but in the world of ideas, the larger the thinking the better, especially around ecology. He says there is no one-size-fits-all solution, yet moderns have made an idolatry of giantism. Therefor it is vital to insist on the virtues of smallness. The idolatry of giantism has caused mass transportation and communication. These, he says, have had an enormous effect on people, namely mobility of labour: it has made them 'footloose.' "Millions of people start moving about, deserting the rural areas and the smaller towns to follow the city lights, to go to the big city, causing a pathological growth." One of the effects of these mass migrations is that it makes all social structures less stable and it is a fount of many of modern societies' ills.
And nobody knows what to do about them. Materialist economics is all about scale, and can only produce development in massive cities with no regards for the human social costs of the process. We have to learn to think in different ways and then learn to teach that to everyone else. Schumacher says people can only be themselves in small units. Economics must learn to develop structures that can deal with lots of semi-autonomous small units.
Part Two: Resources
Six - The Greatest Resource, Education
"If western civilisation is in a state of permanent crisis, it is not far-fetched to suggest that there may be something wrong with its education." Schumacher notes that our education is good at transmitting know-how, but what is needed is for it to be good also at transmitting ideas about values. And not as dogma, that is worse than useless, but as instruments with which to look at the world.
One's mind must be able to bring to the world a set of powerful ideas, otherwise the world will sam strange and chaotic. The despair we find in western societies is not due to a lack of know-how but a lack of coherent ideas about value with which to engage in the world and make decisions. But what are the leading ideas of the times? Those derived from the 19th century. And it there lies the source of much of our problems. Schumacher identifies 6 main themes:
1. There is the idea of evolution - that higher forms continually develop out of lower forms, as a kind of natural and automatic process. The last hundred years or so have seen the systematic application of this idea to all aspects of reality without exception.
2. There is the idea of competition, natural selection, and the survival of the fittest, which purports to explain the natural and automatic process of evolution and development.
3. There is the idea that all the higher manifestations of human life. such as religion, philosophy, art, etc. - what Marx calls 'the phantasmagorias in the brains of men' - are nothing but 'necessary supplements of the material life process', a super- structure erected to disguise and promote economic interests, the whole of human history being the history of class struggles.
4. In competition with the Marxist interpretation of all higher manifestations of human life, there is, fourthly, the Freudian interpretation which reduces them to the dark stirrings of a subconscious mind and explains them mainly as the results of unfulfilled incest-wishes during child-hood and early adolescence.
5. There is the general idea of relativism, denying all absolutes, dissolving all norms and standards, leading to the total undermining of the idea of truth in pragmatism, and affecting even mathematics, which has been defined by Bertrand Russell as 'the subject in which we never know what we are talking about, or whether what we say is true'.
6. Finally there is the triumphant idea of positivism, that valid knowledge can be attained only through the methods of the natural sciences and hence that no knowledge is genuine unless it is based on generally observable facts. Positivism, in other words, is solely interested in 'know-how' and denies the possibility of objective knowledge about meaning and purpose of any kind.
So there you have it. It is with this set of ideas that people are educated and with which they set out to face the world. It is no wonder that the rich world is filled with so much depression and angst. None of this is to say one needs to return to patriarchal theistic religion. However. Schumacher points out that relativism and positivism are purely metaphysical philosophies that ironically deny the validity of all other metaphysics, including their own! What these 6 ideas have in common, he points out, is this:
This set of ideas that dominate humanities today, and which claimed to do away with metaphysics, are in Schumacher's words "themselves a bad, vicious, life-destroying type of metaphysics." Metaphysics and ethics, it turns out, cannot be thought away; what we ended up with underpinning western civilization was "bad metaphysics and appalling ethics." It is not so much the specialization of modern education that is bad, but the lack of depth and the lack of metaphysical awareness. Schumacher says that
Fortunately, says Schumacher, the heart is often more intelligent than the mind and refuses to accept these 6 ideas completely. "So the man is saved from despair, but landed in confusion." In order to lift the confusion, we should learn to accept metaphysical ideas that are pretty much the opposite of these 6 leading ideas of our time. That is not to say that one rejects evolution. Of course not. But it does mean that the bad metaphysics with which the struggle for the acceptance of evolution has left us can now be safely discarded. No one is bringing back paternalistic theism or creationism or any such thinking. So what are these metaphysical ideas?
The first is the re-acceptance (without theism) of levels of being in the universe.
As soon as we accept the existence of 'levels of being', we understand why the findings of physics - as Einstein recognised - have no philosophical implications. Schumacher further developed this concept in a remarkable book called A Guide for the Perplexed (1977).
The second new idea is the acceptance of opposites. Schumacher states that it is the nature of our human thinking to think in opposites, ones that cannot be resolved at that level of thought. He presents the example of the opposites of freedom and discipline in education. There's no one formula that can capture this, but countless parents and teachers do it everyday. "They do it by bringing into the situation a force that belongs to a higher level where opposites are transcended - the power of love."
The third new idea is that of ethics. The 19th century thinking encapsulated by the 6 idea noted above meant the diminished acceptance of the existence of levels of being and the idea that some things are higher than others. "This has has meant the destruction of ethics which is based on the distinction of good and evil, claiming that good is higher than evil." The result has been confusion. Schumacher asks what is the guiding image that young people have before them when the leading intellectuals claim that everything is relevant and ethics is treated with cynicism? The task of our generation is one of metaphysical reconstruction, using the age-old ideas in new formulation.
Seven - The Proper Use of Land
Schumacher provides this quote: "One man has given a brief outline of history by saying that 'civilized man has marched across the face of the earth and left a desert in his footprints.'" This has been one of the prime reason for the collapse of successive civilizations, necessitating the need to always move along. He notes that the questions posed by the "proper use of land" are metaphysical in nature and not technological. They belong to a higher order of thinking.
Land and its creatures are factors of production - means-to-ends, but this is their secondary nature. Before everything else, they are ends-in-themselves. Schumacher says they are meta-economic, "and it is therefore rationally justifiable to say, as a statement of fact, that they are in a certain sense sacred." This is where we run headlong into materialistic economics, which refuses to recognize anything as sacred because it cannot imagine that there are meta-economic facts that precede and should determine it. Schumacher notes that he can treat his car any way he likes, for it is human-made, but he cannot treat a cow the same way (as is down in industrial farming), for they are different levels of being, something that modern economics is incapable of understanding. The main danger to the soil, he says, is modern human determination to treat agriculture the same as industry; it is the prime danger to agriculture and civilization. We poison the earth, we poison ourselves. Again the fact that agriculture, which deals with living processes, is different from industry is a metaphysical, a meta-economic fact.
The materialist economist view sees agriculture as 'essentially directed towards food production'. However, says Schumacher, a metaphysical perspective sees agriculture as having to fulfil at least three tasks:
- to keep man in touch with living nature, of which he is and remains a highly vulnerable part;
- to humanise and ennoble man's wider habitat; and
- to bring forth the foodstuffs and other materials which are needed for a
"I do not believe that a civilisation which recognises only the third of these tasks, and which pursues it with such ruthlessness and violence that the other two tasks are not merely neglected but systematically counteracted, has any chance of long-term survival."
Eight - Resources for Industry
This is a chapter one may safely skip as it contains numerous technical calculations based on assumptions from 1973. The majority of the chapter is concerned with energy as the primary consideration in industry. Schumacher calculated that peak oil would arrive in the 80s. He was off by 30 years, but correct in the thrust of the argument.
Nine - Nuclear Energy - Salvation or Damnation?
I refuse to waste a breath of argument with people who hold that nuclear energy is anything but an unmitigated disaster. The evidence of human inability to manage this most dangerous of all human activity is so overwhelming that its continued existence is only due to human greed and metaphysical blindness. Schumacher builds the case, in the face of the early optimism of his era, about nuclear energy of its disastrous consequence with evidentiary precision such that one cannot but despair of human evil. If you have any doubts at all about nuclear energy, read chapter nine carefully. And remember, he wrote before Three Mile Island, Chernobyl, Fukushima, and countless studies of radioactive toxicity. Just think about it, is any venture worth it if the collective insurance industry of the world refuses to touch it? Here is how Schumacher concludes:
No cooperation with evil.
Ten - Technology With a Human Face
This chapter is a presentation of the need for changing how we create and apply technology. Schumacher notes that the modern world has been shaped by its metaphysics, which has shaped its education, which in turn has shaped its science and technology. And the world is in crisis in part because of its technology, which becomes more inhuman by the day.
For example, there is a great difference between the laws of nature and the laws of technology. Nature is characterized by the principle of self-limiting growth. "As a result, the system of nature, of which man is a part, tends to be self- balancing, self-adjusting, self-cleansing. Technology knows no such boundaries and is not self-regulating. As a result, Schumacher says our modern world as shaped by our present technology is immersed in 3 crises simultaneously:
What is technology good for? Well, it lightens some workloads while increasing others. It is very disruptive. Schumacher worries that what our technology seems to be most good at is reducing or even eliminating skilful, productive work of human hands in touch with real materials of one kind or another. Think of most physically productive, creative work, such as making clothes or furniture, cooking from scratch, any guild work, or farming. In advanced industrial societies such work is rare now and it is difficult to make a living. Our technology has vastly reduced the employment of actual producers.
Schumacher says the result has been that "the prestige carried by people in modern industrial society varies in inverse proportion to their closeness to actual production." Our reality is that "virtually all real production has been turned into an inhuman chore which does not enrich a man but empties him." Modern technology has deprived humans of the work we enjoy most: productive, creative work, and has multiplied immensely work of a kind that only relates to production incidentally. Karl Marx wasn't right about much, but he was right about this: "They want production to be limited to useful things, but they forget that the production of too many useful things results in too many useless people." Schumacher says it is time we take stock of the direction into which our technology is developing.
The number of people who believe that our technology is developing on the wrong track is growing. Such people are not against 'growth' but care about the quality of growth. It is a matter of what should grow and what should recede and do we have the right balance based on sound principles. Schumacher says it is important for ordinary people to take sides. To leave it to the 'experts' is to leave to those in 'charge' of the stampede. He is hopeful that change is possible because ordinary people generally take a more humanistic view than do the experts. He closes with this:
Part Three: The Third World
Eleven - Development
Nowadays we call the third world the developing world. Schumacher notes the great failures of the engagement of the rich world with the developing world. And naturally he looks to first principles for the reasons. He notes that our scientist have shown that evolution is how the world has developed; massive amounts of minute adaptations over long periods of time. Yet with development we tend towards central planning:
When developers tackle poverty they tend to look first to the material factors - lack of natural wealth, capital, infrastructure, etc. But the immaterial factors are vastly more important, especially these 3 factors: deficiencies in education, organization, and discipline. Schumacher notes that after the devastation of the Second World War, those countries with a high level of these 3 factors all produced economic miracles. So development is a matter of the removal of these obstacles. But this is why development cannot be an act of creation; education requires evolutionary growth, so does organization and discipline, none of them are able to 'jump' forward. Development work must be aimed at speeding this evolution. To focus on the material factors is simply to enrich those already rich. He notes that if new economic development is introduced which depends on special education, special organization, special discipline, it will remain a foreign body in a society incapable of assimilating it.
Twelve - Social and Economic Problems Calling for the Development of Intermediate Technology
Schumacher summarized his thought on the technology aspect of development as follows (Nowadays we speak of appropriate technology):
Thirteen - Two Million Villages
Schumacher begins this chapter with a prescient statement. He says that development requires a conscious and determined shift of emphasis from goods to people. Indeed, without such a shift the results of aid will become increasingly destructive. It is much easier to deal with goods - it has no mind and raises no communication problems.
There are three communication gulfs between development workers and the rural poor: "the gulf between rich and poor; the gulf between educated and uneducated; and the gulf between city-men and country-folk, which includes that between industry and agriculture." Poor people cannot suddenly adapt to the ways and methods of rich city people. Plus there a many features of the rich world that are questionable in themselves.
That means that the methods must be adapted to the people.
For Schumacher, the heart of world poverty lies in what he calls "two million villages." Development only in the cities lures great migrations from rural areas to the cities, where economic development occurs, but the accompanying social ills dwarfs the economic gains. Instead, development must make rural life feasible.
Schumacher says the best gift is intellectual - the gift of useful (!) knowledge. He notes that without some genuine effort and sacrifice among the recipients, there is no gift. Receiving material things requires no intellectual effort and helps minimally. Give a person a fish goes the saying, and you help him a little bit. Teach him how to fish and you help him for a lifetime. But then he is still dependent on you for replacement parts. Teach him how to make fishing tackle and you've made him self-reliant.
We have to be careful to understand clearly the nature of the problem and where our own knowledge is too long and too short. Schumacher says this:
Fourteen - The Problem of Unemployment in India
A talk to the India Development Group in London
This chapter is an application to the rural poor of 1970s India of appropriate technology as described above.
Part Four : Organisation and Ownership
Fifteen - A Machine to Foretell the Future?
This chapter consists of a technical discussion of the knowability of future events, the nature of forecasting, and the feasibility of development plans. Schumacher voices his doubts, in 1973, of the usefulness of computers to economics, given our inherent human confusion about assumptions. He concludes as follows:
Sixteen - Towards a Theory of Large-Scale Organisation
Schumacher notes that, while most economists praise large-scale organizations, most sociologists and psychologists warn of its inherent dangers. There are dangers to the individual through dehumanizing, as well as to efficiency and productivity through what he calls Parkinsonian bureaucracies (Parkinson's Law states, as we saw above, that work expands so as to fill the time available for its completion.) Yet the large-scale organization is here to stay, so we had better think about how to run them.
The fundamental task, says Schumacher, is to achieve smallness within large organization.
A large organisation has to strive continuously for the orderliness of order and the disorderliness of creative freedom, And the specific danger inherent in large scale organisation is that its natural bias and tendency favour order, at the expense of creative freedom.
Schumacher's theory of organizations is composed of 5 principles.
The first principle is that of Subsidiary Function.
The second principle is that of Vindication.
The third principle is that of Identification.
Schumacher insists that subsidiary units should have, not only a statement of profit and loss, but also a balance sheet.
The fourth principle is that of Motivation.
The fifth principle is that of the Middle Axiom.
It is very difficult for senior management to establish a happy balance between the opposite needs of every organization, namely order and freedom. It requires creative thinking and persistence.
Seventeen - Socialism
Schumacher was no dogmatic; he was ever the practical centrist, as can be seen from the following:
Eighteen - Ownership
The context for this chapter is 70s Britain, where the nationalization of large private companies was in vogue. First, let us see how Schumacher views private ownership:
As we have seen in our age, large-scale private ownership is responsible for the destruction of vast swathes of the environment and society. Schumacher goes on to argue in favour of nationalization, providing guiding principles to prevent it from becoming the same, soulless destroyer of public resources that large-scale private ownership is. In this he was a person of his time while remaining a practical centrist. I think there is sufficient evidence of the fact that nationalized companies end up behaving just as corruptly as their private versions. The solution is not public ownership, but in creative approaches to private ownership and giantism.
Nineteen - New Patterns of Ownership
Schumacher opens this chapter with the underlying rationale for his views on ownership. It is of the utmost importance that anyone who considers ownership take this rationale into account. Much of our societal misfortune stems from private ownership ignoring this reality. The principle is that the role of public expenditure must be accounted for in private profit. Here is how he frames it:
Following this principle, Schumacher discusses a British company that organized itself as a 'commonwealth', what we call a worker co-operative, to show how this type of ownership changes the underlying assumptions governing the enterprise towards the common good.
Thereafter he makes a detailed case for direct public ownership in large private companies, in order to account for the role of public goods in private profit. This type of ownership would replace income tax for these type of companies.
Schumacher concludes with this summary.
I think he would be pleased at how many people and organizations are using his philosophy today to fight for a better Earth.
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