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Small Is Beautiful, 25th Anniversary Edition: Economics As If People Mattered: 25 Years Later . . . With Commentaries

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In my college days I struggled with economics and barely passed. My economic professors and the course material were dull, ambiguous, and non-stimulating. None of these adjectives could be used to describe Schumacher's Small is Beautiful: Economics as if People Mattered.

Schumacher makes economics come alive with wit, humor, and practicality. His approach is qualitative, not quantitative. A recurring statement throughout the book epitomizes his philosophy, "Why use the computer if you can make the calculation on the back of an envelope"? He gives the science a personality when identifying the disparities between the rich and poor, the educated and uneducated, and the gap between city people and country-folk.

Small is Beautiful created a humanistic economics movement. It's a wholistic approach containing ethical, ecological, and metaphysical components that are missing from the statistical models that solely measure GNP. Schumacher sounded the alarm regarding globalization when asking "how much further 'growth' will be possible, since infinate growth in a finite environment is an obvious impossibility". He was critical of a society that generates unbounded materialism, and motivated by greed and envy.

Some of the more interesting of the 20 essays are: "Peace and Permanence", "The Role of Economics", "Buddhist Economics", "The Greatest Resource - Education", "Technology with a Human Face", "Development of Intermediate Technology", and "Two Million Villages".

Although the book was written in 1973, it is as timely now as it was then. The 25th anniversary edition contains provocative updates provided as sidebars by contributors such as Hazel Henderson, Peter Warshall, Amory Lovins, Godric Bader, et al.

When I was a student at Brigham Young University in the early 80's, I was introduced by my macroeconomics professor to what many economists of the time considered to be the "great heresy of economic theory." - a copy of Small is Beautiful. He warned me that quoting it in research papers would be most unwise, as the BYU economics department was, and continues to be, a strong proponent of the current economic orthodoxy of infinite economic growth and prosperity that dominates economics even today. He finished by saying that "Schumacher was a radical, no doubt about it. However, he will also turn out to be right in the end."

Truer words were never spoken. There are those who will point out detail errors in Schumacher's work. The book was, after all, written over 25 years ago, and Schumacher would never have considered himself a prophet. Yet the central theme of his work, that infinite economic growth is impossible within a finite system, and the inevitable consequences of ignoring this simple truth have been fully vindicated. Even the most orthodox economists are beginning to see the disasterous environmental and social consequences of their economic policies over the last 50+ years, which Schumacher describes in detail, and warn policy makers that major changes must be made. Schumacher also proposed a highly effective and practical method, Intermediate Technology, to help impoverished and developing nations make the best possible use of modern scientific and technological advances, without the vast (and for countless millions in the world impossible) financial investments and ecological/social consequences. In 1965 Schumacher and a few friends started the Intermediate Technology Development Group ...which continues to develop practical applications of his ideas in the developing world. Small is Beautiful - a Study of Economics as if People Mattered, along with his other two key books Good Work, which explores the question of the effects of modern economics on the individual and the very purpose of work itself, and A Guide for the Perplexed, which outlines the philosophical and spiritual underpinnings of Schumacher's work, provide a powerful and compelling alternative view of economics and our world - a view every bit as applicable today as it was in his lifetime.

An earlier reviewer who seemed to have no grasp of economics or recent history (Gen Ne Win is no more a Buddhist than Hitler was a Jew - he in fact deliberately set out to destroy the cultural and economic system of Burma - including Buddhism itself. To use this example to "invalidate" the chapter "Buddhist Economics" totally destroys this reviewer's credibility) stated that "a wise world has ignored his bad advice & prospered." Far from it. In the end, a wiser world will be forced to look back on Schumacher's book and conclude that he was, in fact, right.

"The whole point is to determine what constitutes progress." Fritz Schumacher published Small is Beautiful in 1973, but the vast majority of his text is still relevant today, if not more so. This book can be read as a response to the Washington Consensus and Chicago school economist perspectives of metric-based laissez faire economics driven by efficiency, often at the expense of class polarization and increasing inequality, that pervade the shallow "common-sense" understandings of amateur economists and the general United States population: "...growth of GNP must be a good thing, irrespective of what has grown and who, if anyone, has benefited." Schumacher recognizes that "...economists, for all their purported objectivity, are the most narrowly ethnocentric of people. ...since their world view is a cultural by-product of industrialism, they automatically endorse the ecological stupidity of industrial man and his love affair with the terrible simplicities of quantification."

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 naļveté 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.

This is one book that adds the perspective of the wider World (not just the technologically elite), when making decisions on engineering/business solutions (as well as other resource allocation decisions). When striving towards best solutions, some engineers & consultants may favour technology complexity and quality, when simplicity and fit-for-purpose are optimal. This book provides some inspiration and building blocks, to be coupled with the usual simulation toolkit including systems analysis, enabling development and implementation of appropriate solutions. Similarly, the book appeals to a much wider audience that can embrace such values in day to day life.

The inspirational well-written contents cover:

*Part I- The modern world- problem of production, peace and permanence, role of economics, Buddhist economics, and a question of size.

*Part II- resources- education, proper use of land, resources for industry, nuclear energy, and technology with a human face.

*Part III_ the third world- development, social and economic problems requiring intermediate technology, two million villages, and the problem of unemployment in India.

*Part IV- organisation and ownership- a machine to foretell the future, towards a theory of large-scale organisation, socialism, ownership and new patterns of ownership.

Improvements could include up-to-date case studies (perhaps including material from VSO) showing the benefits of the approach; and an update on where intermediate technology is today. Note- the book `Flexible Specialisation' by Pedersen et al (ISBN 1853392170 publ.1994) provides some such case studies for Africa, Asia and Mexico.

Personally, this reviewer was inspired by the book to lead an undergraduate team project with Intermediate Technology (the company) and Sri Lankan men designing and implementing a self-build fretsaw for educational toys in 1991. Overall a stimulating, worthwhile addition to any library.

This pioneering outlook is for green economics what Rachel Carson's "Silent Spring" is for the modern green movement.

OK, Shumacher gets some of his facts wrong, can be over idealistic and some chapters are less interesting than others but he often speaks in a highly quotable philosophical vein touching areas beyond the scope of intermediate technology.

For example, a great deal of his commentary is about the moral and spiritual decline and consequent rot in aspects of Western civilisation - judging by the standards of current media output and social values he is prophetic in his assessment that people may be marching into a fool's paradise poised to collapse. His statements, especially in the first few chapters are gold dust for social reformers and social scientists, trying to tap into words to express their frustrations with what we can sometimes see as errors and an odious hollowness to many things conventionally regarded as Progress or Laudible. Who indeed can name the 7 deadly sins or the 4 cardinal virtues?

Then there are those more practical ideas about the ethics of hard work, the fallacies in development planning and how many limitations set by money and raw materials are not limitations but excuses against small scale progressive schemes. This is often the antidote to Adam Smith.

The ethics in planting trees if applied to India and many other places could undoubtedly solve the world's problems en masse it seems as reccommended for India, especially in reducing Green house gasses.

The question remains if communities and societies can grasp the nettle and act out some of Schumacher's more workable schemes, especially if the USA for example collapses into an economic oblivion. Can we learn to live without mass capitalism and be happy?

The politics and philosphy of moderation and environmental economy is still in its infancy but thanks to Schumaker economists are trying to build in the environmental perspective.

This book is therefore a persuasive milestone.

It has been 25 years since I read this book as a young instructor of economics, and I still find this visionary book as the only clear path to economic sanity.

Few books can make you think in so profound and fundemenatal way than this one. I dont know whether it is a bit naive or we have already lost our innocence even to attempt to live by it..but one thing which really struck me was the utter simplicity and clarity in thought...

Only thing which matters is 'we are human' and 'nothing is as important as human happiness'..there is no other virtue than the attempt at allievating suffering and optmising happiness of all around us....Only people matter...! be it economics, management,technology, science,..arts,...any human endeavour....and unfortunately we are surprised when someone reminds us so.... tdcs@hotmail.com

If you think for your self, you may have always suspected that economists do not understand anything of value. Schumacher is one of those rare economists who did. In this classic book, he elegantly dsposes of Lord Keynes' idea that for the present economic needs of mankind, fair is foul and foul fair, that is, ends justify the means.

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.

Challenging accepted economic theory, E. F. Schumacher calls on world leaders to take a fresh, new approach to economic policy by considering the cost to humanity. In his book, "Small is Beautiful - Economics as if Humans Mattered", he outlines a series of proposals intended to save the planet from economic and environmental collapse. He validates his propositions through quotations from a collage of political, economic, and religious gurus ranging from Mao Tse-tung to Mohandas Gandhi, Karl Marx to Milton Keynes, Buddha to Jesus. Schumacher makes a compelling case - though admittedly oversimplified -- for what he calls "Buddhist economics." He heralds an Aquarian Age of peace and human creativity through nationalization of strategic industries, environment-friendly policies, use of intermediate technology, decentralized worker cooperation, and full, satisfying employment. He successfully creates an economic mission statement for the future.

Of late the bestseller lists have been filled with titles such as "Freakonomics" and "Predictably Irrational". Yet while the media fawns on these books, some people might find them strangely unsatisfying. It's not a matter of computing a statistic incorrectly or doing the analysis wrong. The problem is in the premise. The authors of these books are wrong from start to finish.

"If morality is the study of what people should do, economics is the study of what people actually do," proclaims Steven Levitt in Freakonomics. His definition is not found in any dictionary, but it makes it quite clear what he believes. Economics is a field with no bounds within human behavior. Economists have an absolute right to rule on what is right, proper, profitable, and rational, not only within business and finance, but everywhere. "I believe that any result can be achieved with the right incentive scheme," Levitt continues. So there you have it: people are simply tools, and it's up to economists to decide how these tools should be used.

If you find it odd that people should be changed to suit the desires of economics, rather than the other way around, then you might be ready for "Economics as if people mattered". E. F. Schumacher thinks very differently from the current crop of best-selling academics. For starters, he's clear about what economics can do and what it can't do. Economics can measure what is profitable, but that is only one aspect of human life. Humans are truly creatures with free will and independent desires, and cannot simply be made to live whichever way the authorities want.

Mainstream economists divide humans into producers and consumers. As consumers, consuming more will always be in our self-interest. As producers, efficiency is to be desired above all else. This breaks down, Schumacher says, as soon as we realize that producers and consumers are the same people with the same desires. Work need to be unenjoyable. Work that involves creativity, freedom, and love can be a good thing. Hence a sane economic theory doesn't mindlessly praise efficiency as a means of eliminating work. Likewise consuming more doesn't make things any better. When we consume in wasteful, unhealthy ways, we become less happy. A sane economic theory must acknowledge humanity's true desires, not invent imaginary ones.

Because most people are third-world and poor, "Economics as if people mattered" must focus on the poor, and Schumacher does exactly that. The past few decades have seen billions of poor people crammed into huge, unsafe, unhealthy cities all over the world. Wise business and government leaders have launched countless schemes to assist them, but success has been rare and failure common. Schumacher proposes a truly wise policy, focusing not on reshaping poor countries, but rather assisting them with the way of life they already have. Intermediate technology, concentrated at the level of families and villages, could actually raise standards of living without harming the social structure.

Lastly, Schumacher was a fore-runner of the modern environmental movement. He saw, early on, that industries which pollute the earth, endanger health, and use up limited resources cannot be sustained. In their place we need industry that respects the earth, and which has sustainability as a goal. Thankfully, much of what he envisioned is now becoming reality.

Overall, "Small is Beautiful" is one of the great underground books of the last century. Many of us know that our current way of life is wrong at a deep level. We are doing things on a huge scale, without accountability or forethought. It simply can't go on. As Schumacher says, "The environment is in revolt, and so is human nature." This book is a small but meaningful step towards sanity.