Book review: Small is Beautiful

Note: A substantially similar review is cross-posted at Books and Other Miscellany.

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.


5 Responses to Book review: Small is Beautiful

  1. Rod Adams says:

    Sarah:Thank you for the review of Small is Beautiful. It brought back memories of long ago when I first read the book and accepted some of its tenants. I agree with the importance of local interactions and enabling people to do creative work that enriches their lives rather than being employed in drudgery that enriches their bosses. However, I think Schumacher misses the mark by his failure to realize that some of the developments that he fights have enabled the removal of drudgery that frees up time for creative thought and activity. For example, reliable electricity and running water are often made available to individuals as a result of some massive technologies, but they make it possible for billions of people to avoid spending their days gathering firewood or carrying water that might be disease ridden to their families. They also make it possible for human interactions like this one – completely dependent on mass produced technology like electricity, microprocessors, fiber optic networks, and spinning hard drives, yet quite small scale in the way that it enables sharing of ideas and understanding.When reading Schumacher’s discussions on nuclear power, it can be useful to know that he was not just an “economist” but an economist whose career included a 20 year period of employment as the senior economic advisor to the British Coal Board. (Quoting from the linked article:)”After the War, Schumacher worked as an economic advisor to the British Control Commission charged with rebuilding the German economy. From 1950 to 1970 he was Chief Economic Advisor to the British Coal Board, one of the world’s largest organisations, with 800,000 employees. His farsighted planning (he predicted the rise of OPEC and the problems of nuclear power) aided Britain in its economic recovery.”In 1973, when he wrote his book, there was every reason to believe that nuclear power was going to push coal out of the electric power business in the UK and in the US. The same prediction was made for France, which had a much weaker indigenous coal industry. With the help of people like Schumacher, Lovins, and Nader, the coal industry in the US and UK effectively fought back against the growth of nuclear power and maintained their markets and prosperity. It is interesting to see in hindsight how the battle for markets is sometimes as important as the battle for resources.After all, though most of us think about energy fuels as a cost item in our budget, the companies organized to extract and sell that fuel think of it as their source of revenue.

  2. Sarah says:

    Rod,Thank you for visiting and for your thoughtful comment.I agree that there are certain basic technologies, such as electricity and accessible clean water, that do make a big difference in people’s quality of life. I think the main point I took away from Schumacher with regards to development, which may or may not be the exact point he was trying to make, is that we need to use creativity and involve the local people when doing development work, rather than blindly import first world industries. Sometimes simplicity is more effective than complexity. I have heard stories of well-intentioned development where the technology the organization brought in sat unused after they left because something broke and nobody knew how to fix it or they didn’t have the parts. I have read about a variety of creative ways to get clean water to people, and I recently read an inspiring article about women bringing solar technology to villages in India (you can read it here. Yes, it’s a modern technology, but it is being used and distributed in a manner distinct from the first world.I have thought quite a bit about the question of whether technology is progress; I certainly don’t claim to have figured it all out, but I did two exploratory posts on this subject back in January, which you may or may not have read: Is technology progress and Humanitarian technology?Thank you for pointing out Schumacher’s association with the British Coal Board. It is important to be aware of where authors are coming from and what biases they may have. I will admit I did not take much interest in his section on nuclear power, as he was clearly coming from a place 30+ years ago.

  3. […] Musings on Peace – “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.” […]

  4. Gerald says:

    Sarah, Thank you for a very nice review of Small is Beautiful. I have
    a deep respect for Schumacher and heard him speak in Chicago in
    the late 70’s, he was not only articulate but had a good sense of
    humor. Better humor, I would propose would be one of the advantages of a more decentralized and democratic economy. When a boss or owner knows all of the rascals who work for her or
    him, they would really laugh much more and so would everyone else, in turn.
    When shareholders demand greater profits over and above
    happiness in the workplace, evil enters the marketplace.
    Have you read: Loving and Leaving the Good Life by
    Helen Nearing ? A very inspiring book.

    • Sarah says:

      Gerald, thank you for your comment. More humor sounds like a good thing! I have not read that book by Helen Nearing; I will have to check it out.

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