After reading Deep Economy, I wanted something that went into more depth about what a small economy would actually look like, so I turned to the book Small is Beautiful: Economics as if People Mattered, by E. F. Schumacher. Schumacher was an economist who wrote this book in 1973. Although parts of it were dated, much of his general point is still frighteningly relevant to today. The book is divided in to four sections, titled “The Modern World,” “Resources,” “The Third World,” and “Organization and Ownership.” I had a mixed reaction to the book. When I started it I was initially quite engaged and read quickly through the first section, finding that Schumacher had many insightful observations about economics, growth, and related subjects. When I hit the second section, for some reason it did not initially hold my interest as well – I found that he was too critical of science, for one thing, and his specific discussions of oil, coal, and nuclear power were dated. However, I found his chapter on “Technology with a Human Face” quite illuminating, as the question of whether technology is progress is something I have struggled with. In the third section, Schumacher again grabbed my interest with his discussions of devlopment in third world countries, but he lost it again in the fourth section, which I found too technical and detailed about how exactly organizations and ownership should be structured.
The basic point that Schumacher is making appears right at the beginning, when he points out that economists treat limited resources such as oil and coal as income rather than capital. Essentially, classic economics ignores the fact that these resources are, in fact, limited. Schumacher’s point is that unlimited growth is simply impossible. This seems to be a lesson that we, especially in the United States, still have not learned. From this basic point Schumacher progresses along several paths, but the other aspect that particularly caught my attention is his discussion of work: he looks at the Buddhist attitude towards work, which says that creative work is important to the well-being of people, and that the goal is not to produce as much stuff as possible, but to ensure that as many people as possible are gamefully employed. This is another point that seems to be lost on Western culture, where the goal is only to make the most money, which is usually accomplished by increasing automation and putting people to work doing drudgery rather than meaningful, creative work. Along similar lines, when he discusses third world development, he points out that the third world does not need all the sophisticated technologies of the first world. It makes much more sense to use more basic technologies that require more people-power (and thus employ more people) and less capital than to use the latest technologies that require a great deal of capital but do not provide as much employment for the impoverished citizens.
As I was reading Small is Beautiful, it was easy to become utterly depressed about the current state of affairs. When you take a step back, most of what goes on in the Western world (and now often in the Westernized third world) seems so utterly meaningless. Many people do distasteful, meaningless drudgery each day simply to earn enough money to buy all the stuff that we produce, much of which is useless and does little to increase our happiness or standard of living. If people were the center of our economy rather than money, things would look very different. Imagine if our entire economic system were designed not for continual growth and profits, but rather to ensure that each individual had the following things: shelter, food, clean water, health care, and meaningful, creative work. This seems so unattainable, but I think it is a worthy ideal to keep in mind.
I was surprised to find that E. F. Schumacher actually explicitly discussed peace at a few places in Small is Beautiful. It did not seem out of place, and I do feel that this topic is closely related to that of peace, the most obvious relationship being that wars are frequently about resources. If we used fewer resources, then we would have less of a motivation to go to war. More generally, an economy that is people-focused rather than profit-focused would be more likely to promote peaceful resolution of conflict.
If you are interested in a rational, logical discussion of a different approach to economics, I recommend Small is Beautiful. I think it is an important book that should be read by all economists. Keep in mind that while parts of the book may seem dated or tedious, other parts are quite insightful and relevant.
I wrote down several quotes from the books. Here is a sample:
At present, there can be little doubt that the whole of mankind is in mortal danger, not because we are short of scientific and technological know-how, but because we tend to use it destructively, without wisdom.
What makes us think we need electricity, cement, and steel before we can do anything at all? The really helpful things will not be done from the centre; they cannot be done by big organisations; but they can be done by the people themselves. If we can recover the sense that it is the most natural thing for every person born into this world to use his hands in a productive way and that it is not beyond the wit of man to make this possible, then I think the problem of unemployment will disappear and we shall soon be asking ourselves how we can get all the work done that needs to be done.
No doubt, a price has to be paid for anything worthwhile: to redirect technology so that it serves man instead of destroying him requires primarily an effort of the imagination and an abandonment of fear.
It is of little use trying to suppress terrorism if the production of deadly devices continues to be deemed a legitimate employment of man’s creative powers. Nor can the fight against pollution be successful if the patterns of production and consumption continue to be of a scale, a complexity, and a degree of violence which, as is becoming more and more apparent, do not fit into the laws of the universe, to which man is just as much subject as the rest of creation. Equally, the chance of mitigating the rate of resource depletion or of bringing harmony into the relationships between those in possession of wealth and power and those without is non-existent as long as there is no idea anywhere of enough being good and more-than-enough being evil.