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"Small is Beautiful-Economics as if People Mattered"

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"Small is Beautiful""Economics as if People Mattered"-

October 15, 2008

by Jerry Lobdill

A Reprise 30-plus Years Later

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I first read this book by E. F. Schumacher in 1976. A few days ago I picked it up again. I wondered if I'd see it in a different light more than 30 years later. I was amazed that the forecasts Schumacher had made had mostly come true in the interim.

Schumacher is not one of the economists that our modern economists like to quote. As a matter of fact they have all continued preaching the paradigm that Schumacher debunked. They'd like to forget about Schumacher.  And therein lies our problem.

Schumacher said, effectively, that the single-minded relentless pursuit of financial gain and methods by which these gains can be maximized in the minimum amount of time--the goal of modern economics, is insane. Further, the degradation of the environment or the depletion of irreplaceable natural resources as a result of economic activity cannot be considered to be zero cost effects as modern economics does. That is also insanity.

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Instead, Schumacher says the aim of economic activity should be to obtain the maximum of well being with the minimum of consumption. What a concept!

Is it any wonder that economists tried to relegate him to the dustbin of history?  Modern economists in 1976, and indeed, to this very day considered consumption to be the sole end and purpose of all economic activity and the maximization of production to be the cherished goal of it all.

Since 1976 the world's consumption of goods has grown very steeply in pursuit of this goal. There is absolutely no distinction made between consumption of renewable and non-renewable materials that are taken from the environment, converted to a marketable product, and sold. Even as we face the strong likelihood that China and India will soon demand a shocking increase in their consumption of oil while our own demands will continue to increase steeply, there is no substantive discussion of moderation of humanity's race to deplete the Earth's supply of this non-renewable resource. That would be uneconomic, and, by definition a heretical idea.

Our leaders have begun a perpetual war to gain and maintain control of the remaining reserves of the world's oil. That is what the invasion and occupation of Iraq is all about, and the problem of dwindling oil supply and the fears it engenders in our corporate elite was clearly the prime topic of discussion in Cheney's secret energy discussions with industry in 2001. So, the United States is pushing the world toward a conflict over the remaining oil reserves.

This is the worst case scenario envisioned by Schumacher in Small is Beautiful, though he doesn't go so far as to predict that it would be the US that would tip the balance of the world in that direction or even suggest that this scenario would be the likely outcome.

In defiance of Schumacher's warnings, we have attempted to modernize the third world at breakneck speed without concern for what Schumacher said that would do to the poor in such countries. We have done this because in so doing we have given our own financial elites new ways to profit. The IMF and World Bank and the WTO are merrily raping every developing nation they can, and the US taxpayers are being made to pay to bail out private investors when the inevitable scams collapse financially. Where possible, the poor and shrinking middle class of client states of the IMF and World Bank are made to shoulder the burden of whatever bad loans have been made to the governments of the client states.

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Also in defiance of Schumacher's warnings we have tried to make "trade"- with underdeveloped nations a major part of our economic activity, resulting in the impoverishment of most of the people not only in the developing nations, but also in the US. And, of course, it's not really trade; it's a scam to use their cheap labor and our capital to produce goods in their countries to sell to us at a much higher profit margin.

All this was foretold in a general way in Small is Beautiful as the result of the path we have chosen, and yet Paul Krugman, Joseph Stiglitz, and every other macroeconomist involved with the US government, including Robert Reich, has endorsed the globalization feeding frenzy that has taken place over the past twenty years. To this day, none of these people have admitted the reality of the damage they've done.

If we are to survive--and I mean humanity--we must face up to these failures, study Schumacher, and begin to behave in a sane and responsible manner.


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I am a retired physicist and hold a B.S. in Ch. E. as well. I have been an environmental activist since the early 1970s. I was a founding member of the Save Barton Creek Association in Austin, TX. In 2006 I was a member of a select committee (more...)

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