Small is Beautiful by E. F. Schumacher

L.P. Hartley in the opening line of his novel The Go-Between (1953) famously wrote: “The past is a foreign country: they do things differently there.” Whilst some in the modern parlance would take this as a given, is it so very true? If we take a brief look back at 1973 and all that we soon to discover that there many similarities between our own time and the world of forty years ago. The Arab – Israeli Crisis was in full swing, there was conflict over oil, tensions between India and Pakistan were as acute as ever and much of a sizeable part of the world was in the grip of profound economic malaise. Russia and the US glared at each other, China was profoundly mistrusted and Britain was wracked with division over Europe. Much of Africa’s post-independence promise was being stolen by kleptomaniac leaders, whilst in South America economic and social unrest was resulting in repression and in the case of Chile a violent military coup.

For some the economic orthodoxy was profoundly unjust and there was a continuing sense that those in leadership roles were happy to walk the corridors of power, but spared little thought for the corridors of responsibility. People felt disenfranchised and ignored. The political elite seemed incapable of talking to one another, let alone listening to those they were elected to serve (assuming of course that they had been elected at all). Inevitably there were people who frustrated by the status quo opted to take the route of violence and anarchy. It is worth remembering that the early 1970s was an era that witnessed a proliferation of terrorist groups, with their own splinter groups. Skyjacking and the threat of terrorism hung like a dark cloud, The IRA, the PLO and the Baader-Meinhof Gang were just some of those whose nefarious activities barged their way onto newspaper front-pages or dominated news bulletins. Fear and inflation made for a depressing mix, one that continues to exercise us to this day. Yet whilst much of our time is often given over to the wringing of hands over such situations there are always those who endeavour to see a way forward. One such person was E. F. Schumacher, a German émigré who lived in Britain.

Ernst Friedrich Schumacher (1911-1977) was born in Wilhelmine Germany. His childhood spanned an age of German Imperial swagger, the horrors of the First World War (1914 – 1918), Germany’s defeat, the threat of revolution, the devastating hyperinflation of the 1920s, mass unemployment and the rise of Hitler and the National Socialists. For all the maelstrom of political and economic events going on around him Schumacher managed to apply himself to his studies and in 1936 was awarded a Rhodes Scholarship to Oxford University.

As an enemy alien, he was interred for a time during the Second World War and afterwards chose to become a naturalised British Citizen and spent much of his time working for the National Coal Board. Always eager to broaden his understanding of social conditions and the wider world in 1955 he travelled to Burma where he spent a 3 month sabbatical as an economic advisor to the Burmese Prime Minister U Nu.

Schumacher’s studies, natural curiosity and time abroad awaked a keen interest in the economic and political superstructures and substructures. As an economist he followed of the development of Econometrics with interest (Econometrics is the application of mathematics, statistical methods and computer sciences to economic data. This branch of economics was developed by the Norwegian Economist Ragnar Frisch 1895-1973). Through the late 1950s and 1960s Schumacher came to the conclusion that Capitalism seemed to be at odds with the natural order of things, it was then that he came to formulate Buddhist Economics. Whilst not a Buddhist himself, the elements of his notion of what he dubbed Buddhist Economics were as follows:

• Anatta – or no-self
• Western Economics – maximise profits
• Buddhist Economics – minimise profits
• Wanting less will benefit the person, the community they live in as well as nature
• Ahimsa – non-violence
• Western Economics – bigger is better
• Buddhist Economics – small is beautiful
• Natural Capital – the earth’s resources are irreplaceable
• Trust
• Western Economics – Gross National Product
• Buddhist Economics – Gross National Happiness

Essentially Schumacher’s approach to economics was a spiritual one based upon acumen, empathy and restraint. He was concerned about a number of fundamental questions:

1. How are we managing natural capital?
2. Who is controlling natural capital?
3. Who is using natural capital?

“Economic development is something much wider and deeper than economics, let alone econometrics. Its roots lie outside the economic sphere, in education, organisation, discipline and beyond that, in a political independence and a national consciousness of self-reliance.” – E.F. Schumacher – Small is Beautiful (1973)

Eager to disseminate his ideas he wrote various papers and articles some of which he decided to collect and publish in 1973 in the book Small is Beautiful – Economics as if People Mattered. This remains a seminal work that continues to act as a clarion call to those concerned about unfettered Capitalism. Schumacher himself acknowledged that he had been greatly influenced by Mahatma Gandhi as well J.C. Kumappa. In 1973 whilst delivering the Gandhi Memorial Lecture at the Gandhian Institute of Studies at Varanasi (Benares), India, Schumacher described Gandhi as the greatest “People’s economist”.

For all the fact that in 2013 it many come across as rather quaint and as something of a period piece Small is Beautiful continues to raise pertinent questions. Essentially more about the ‘why’ than about ‘how’, it often appears to throw up more questions than answers. It also reminds us and those in Government and formulating future policies that technology is not a panacea to all out ills.

“An attitude to life which seeks fulfilment in the single-minded pursuit of wealth – in short, materialism – does not fit into this world, because it contains within itself no limiting principle, while the environment in which it is placed is strictly limited.” – E.F. Schumacher – Small is Beautiful (1973)

Schumacher challenged received economic wisdom and in so doing inspired others on their journey to find a more sustainable economic model. The legacy of Small is Beautiful is that it continues to shape attitudes to natural capital. Even 40 years on this collection of essays manages to act as a dissenting voice that is a rallying point for those who are uncomfortable with established economic orthodoxies.