The classic book by EF Schumacher small is beautiful was a product of the times in which he lived. The Club of Rome had warned of the consequences of unlimited economic growth. The measure of gross domestic product (GDP) was questioned for not counting externalities like the consumption of natural resources and not taking well-being into account by some liberal economists. Likewise, there was growing criticism of the role of transnational corporations and a questioning of the fundamental wisdom of foreign aid.
Schumacher questioned the wisdom of big government at a time when the European Community nurtured a mega-government that imposed regulation on the smallest village. Schumacher was one of the first to question the increasing regulation, which was accompanied by a massive increase in bureaucracy to enforce regulations dreamed up by bureaucrats. Schumacher also incorporated the values of work and organization developed at the Tavistock Institute; at one time they were considered radical.
Schumacher was revolutionary in his concepts of scarcity, limited resources, and the need for environmental sustainability, a precursor to today’s modern environmental movement.
More importantly, Schumacher challenged the fundamental notion of economic growth, pursued under the illusion that the Earth has infinite resources. He challenged the very heart of the economic problem postulated in the logics of Keynesian economics.
Schumacher criticized current consumption habits, which are based on wants rather than needs, postulating that the invisible hand is too important for societal choices to be left to chance.
The weaknesses of development economics
Schumacher was critical of economic development in the Third World and the role of the West in it. Standard development strategies mostly imitated Western industrial practices to create jobs.
However, this led to the creation of megacities and a massive drain on rural communities, as people flocked to cities to find jobs. This has decimated rural communities and the development of public infrastructure has shifted towards cities. Overcrowded megacities created slums, industry created relentless pollution, while the quality of life declined.
Foreign investment has increased development, but at the cost of severe environmental degradation. The technology transferred by the multinationals has not improved the skills of the workforce. The respective education systems focused on the production of industrial fodder, rather than creating a pool of skilled artisans and an educated professional class. Education clearly lacked the substance to develop critical thinking, creativity and innovation. The local education system has done little to support indigenous businesses.
Foreign aid was not designed to develop the economies of recipient countries, tending to improve donor programs. This has not been in the interest of the recipient countries.
Growing prosperity and publicity encouraged mass consumption based on wants rather than needs. This has repeatedly created markets for imported luxury goods, rather than local products.
Foreign investment provided inappropriate solutions for developing countries, where new solutions specific to the nature of the country’s situation were needed.
Even though the above observations about development economics were made in 1974, almost 50 years ago, there are distinct analogies with development today. Today, many rural and even urban areas around the world, including many within post-industrial societies, are in dire need of revitalization. This is especially the case after 40 years of globalization where countries with low labor costs have become the factories of the developed world.
Schumacher saw that in the current economic system, the poor would get poorer and the rich would get richer, thus increasing the wealth gap.
Consequently, Schumacher issued his alternative manifesto, calling for a new direction of development.
One of the biggest problems are mega-metropolises that absorbed national resources, became home to isolated conclaves, were unsustainable, and generated the majority of a nation’s pollution. Schumacher believed that cities of over 500,000 people were undesirable and that there should be gradual decentralization.
Emphasis could then shift back to revitalizing communities built on sustainable workforces, depending on the quality and scarcity of available hinterlands. These communities would engage in business development and food production that would sustainably serve their immediate communities. These enterprises could vary in the way they were owned, organized and operated, depending on empowering people and maximizing member welfare. Appropriate technology that could be built locally, was affordable, and connected people with their work and businesses is far more important than the established concept of economies of scale. Appropriate technology would create value and bring economic well-being to local communities.
A few legacies
Schumacher’s work brought the focus back to sustainable and organic agriculture after the world became dominated by the production of fertilizers from the green revolution. This has resulted in the formation of many small agricultural businesses around the world, where there are now a multitude of organic food products on the market.
Companies like The Bodyshop and Ben & Jerry’s Ice Cream were created and grown using Schumacher’s community principles, but were eventually taken over by multinational corporations. The Japanese One Village One Product (OVOP) and later Thai One Tambun One Product (OTOP) programs were based on Schumacher’s principles and successful in their time.
Schumacher’s pedagogical principles were taken up by scholars like Peter Senge in the 1990s with his seminal book The fifth discipline: the art and practice of the learning organization. The ideas were incorporated directly into education in the 2000s with Schools That Learn: A Fifth Discipline Field Manual for Educators, Parents, and Anyone who cares about education.
Schumacher highlighted the illusion of economy when resources were infinite, which led to a move towards using renewable inputs in products. Schumacher also alluded to the tendency of humans to accumulate a perception of unlimited powers and an assumption that humanity’s mastery over science gave control of the environment.
Schumpeter and “The Great Reset”
Schumacher challenges Keynesian economics, socialism and conventional forms of ownership in society. It also questions the public interest of transnational corporations and the dehumanizing aspects of displacement technologies. Large centralized governments are not making the best decisions for communities, and we are now in a vacuum of virtue, wisdom and morality in leadership and bureaucracy.
The World Economic Forum Great reset is the antithesis of Schumacher small is beautiful Notions. Many critics of the Great Reset say it is forced on societies stealthily, rather than after open discussion and debate.
The centralization of government, participation in corporate governance, science based on predictions rather than evidence-based research, the introduction of capital-intensive technologies that the poor cannot afford, and the rise of top-down authoritarianism, are all against what small is beautiful pleaded for.
This is the brave new world that Schumacher warned the world about.