During the 35 years since the publication of Fritz Schumacher's bestselling Small Is Beautiful: Economics as If People Mattered, many of his prophetic warnings have come to pass. Schumacher brought a profound wisdom and humanity to bear on the practical challenges of our time and this briefing illuminates his thinking and shows how we can help to turn out present crisis into the opportunity to build a more kind, just, and ecologically sustainable society.
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About the Author
Diana Schumacher has served on the executive councils of numerous charities, including the New Economics Foundation, the Green Alliance, the Schumacher Society, and the India Development Group. She is a cofounder and remains a trustee of the Environment Law Foundation.
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Small is Beautiful in the 21st Century
The Legacy of E. F. Schumacher
By Diana Schumacher
Green Books LtdCopyright © 2011 Diana Schumacher
All rights reserved.
Who was E. F. Schumacher?
"Knowledge that does not help people to overcome their problems and to lead to a better and happier life is no use." – Dr A.T. Ariyaratne
Ernst Friederich (Fritz) Schumacher, the economist-philosopher, was an unlikely pioneer of the Green Movement. He was born in Bonn in 1911, studied at Oxford as a Rhodes Scholar and returned to England before the Second World War to avoid living under Nazism. He died prematurely on a lecture visit to Caux, Switzerland, in September 1977.
Coming from a distinguished intellectual background (his father was the first Professor of Economics at Berlin University), Schumacher himself experienced a short but meteoric academic career in Germany, England and America, becoming assistant lecturer in banking and international finance at Columbia University at the age of 23. However, he always believed that one should strive for practical outcomes to philosophy and economic theory which would benefit people and society. In both his outer and his inner life he was a searcher for truth and dedicated to peace and non-violence. Unlike so many of his contemporary academics, however, he wanted to see these ideals translated into practical actions and right livelihoods.
He saw the need to provide his colleagues and audiences with philosophical 'maps' and guidelines which related to reality. In the process, his life was one of constant questioning, including challenging most of the basic assumptions on which Western economic and academic theory have been based. What are the 'laws' that govern the 'science' of economics? What is the true value of money? What is the relationship between time and money? What is the real worth of work? And of development? These were the everyday questions which interested him most as an economist. Gradually he saw the need to expand the vision of contemporary economists to put human wellbeing at the centre of economic decision-making and everything within the context of environmental sustainability.
Part of Fritz Schumacher's personal sorrow – but analytical strength and objectivity – lay in the fact that he remained 'an outsider' for most of his life. He never fully integrated with his fellow students either in England or Germany, or with any particular community or sect. His original thinking and academic successes only set him further apart from his contemporaries, despite his humorous good nature and obvious talents. Early commercial assignments ranged from Wall Street to the City of London, to organising an independent and lucrative barter import-export enterprise run from Germany during the pre-war depression.
In 1937, owing to Hitler's frenzied ascendancy and his own feeling of the intellectual and political betrayal of Germany and its heritage by his nationalistic compatriots, he decided to abandon the majority of his social, family and business ties and to bring his young wife and son to London, where he was granted British citizenship. He was certain that until Germany could be purged of the Nazis' evil presence there would be no peace in Europe; but that ultimately the reconstruction of Europe might be led from England. He hoped that he would then be in a position to be the vanguard of social and economic reform in Germany. Because of anti-German feeling among the English at the time, his work was not recognised publicly.
A second son arrived during the war, and the young Schumacher family faced the hostility of being regarded as German aliens. They had to give up their home, and after being briefly interned, Fritz was hidden away with his family in Northamptonshire, working as a farm labourer, and was referred to by the very English name of James. At the same time and with the support of J. M. Keynes, Schumacher was seconded to do government research at the Oxford Institute of Statistics whilst at the same time working on his own 'world improvement schemes'. Throughout the war years he worked on ideas of debt relief, international debt clearing schemes and solutions to international trade deficits. Sometimes his ideas were appropriated by others, such as his contribution to the Beveridge Report in the early 1940s and to the Marshall Plan of 1947. Although he never received official recognition for his input to such prestigious schemes, this did not disquiet him. The most important aspect of all intellectual and research experience, in his view, was to get the necessary ideas implemented by whoever was best able to effect them.
During and immediately after the Second World War, Schumacher was also frequently invited to write for The Observer, The Times, The Economist and other mainstream publications, at first under pseudonyms, since the editors feared that the German name would offend. It was many years later that he was able to put his own name to his writing. Immediately after the war he was appointed Economic Adviser to the Allied Control Commission, and was sent back to Germany where many of his relatives and friends regarded the now naturalised English family as having 'deserted the sinking ship'. As he once sadly remarked, "I am a fellow without a fatherland."
Although the expanding family was again domiciled in England from 1950 onwards (Fritz was now Economic Adviser to the newly nationalised National Coal Board), his quest for patterns of sustainability took him all over the world. He had experienced poverty, social injustice and alienation first-hand, and felt that with his uniquely varied and practical background he had something useful to contribute. As an economist he was derided by his peers for pointing out the fallacy of continuous growth in a finite world dependent on limited fossil fuel resources, but at the same time he became a champion of the poor, the marginalised and those who felt misgivings over the shallowness of contemporary values. This made him a cult figure of the hippie movement in the late 1960s and early 1970s, with over 5,000 students attending some of the lectures he gave in California on his last visit to the United States in 1977.
Philosophy and religion
From his youth Fritz had always read prolifically. He was influenced by many different philosophers and thinkers and his personal library contained an eclectic selection of books – from Socrates to Shakespeare; from Marx to Chairman Mao; from R. H. Tawney to Einstein; from Adam Smith to J. M. Keynes. He also read widely the great sages of all the world's religions. Yet one of the people who influenced him most was Leopold Kohr, whose views on the appropriate size of nation states and political structures greatly informed his own philosophy of appropriate-scale institutions and technology.
At one stage or another during his life, Fritz questioned all the main traditions, whether intellectual, national, economic or religious. As a young man he claimed to be a dedicated atheist, lecturing that religion and morality were mere products of history; they did not stand up to scientific examination and could be modified if regarded as inappropriate. Politically he was a loving socialist, the antithesis to Hitler's fascism, and an idealist with a restless mind. His economic values were very modern, based on the speed, measurement, efficiency and logic of the industrialised Western world which he inhabited. It was only later that he understood that such criteria were too inflexible, and totally incompatible with the more subtle 'unconscious' rhythms of the natural world. As a commuter from suburban Caterham (where he eventually lived) to the National Coal Board headquarters in London's Victoria (where he worked from 1950 to 1970), he used the train travelling time to study comparative religions and, among other great thinkers, was greatly influenced by the German philosopher Fritjof Schuon's The Transcendent Unity of Religions.
This period of commuting to work proved a most fruitful turning point in Schumacher's inner life. He first studied notably those religions from the East, attending meetings and lectures on the spirituality of other faiths, and began to practise meditation. Gradually he came to relinquish the atheism of his youth, and to admit to the possibility of a 'Higher Order of Being'. His changing economic and metaphysical views (which sometimes seemed contradictory) chronologically mirrored his own spiritual struggles and development. There was, after all, a transcendent 'vertical perspective' to life – a hierarchy of orders from inanimate matter through different levels of consciousness to a supreme consciousness or Being.
In 1960 Schumacher's first wife died and he married Verena Rosenberg. The four children of each marriage were brought up in the Christian faith. After years of searching and inner struggles he had realised a way of bringing his lifelong paths of study and social concerns to a point of convergence, and had reached his own spiritual homecoming. Finally, to the astonishment of Schumacher's Marxist, Buddhist and Christian friends alike, he was received into the Roman Catholic Church in 1971, six years before he died. It was a formal renouncement of his previously cherished views of the supremacy of the intellect and reason over the Christian virtues of compassion, forgiveness, unconditional love, the acknowledgement of a Divine Creator, and the integrity of all creation.
Burma and 'Buddhist Economics'
In 1955, whilst working at the National Coal Board, Schumacher accepted a three-month assignment as Economic Development Adviser to the Government of the Union of Burma, where he immediately attached himself to a Buddhist monastery. He soon concluded that the last thing the Burmese people needed was economic development along Western lines. They needed an economics suited to their own culture and lifestyle – a 'middle way' between the Western model which sought to increase material wants and consumption, to be satisfied through mechanised production, and the Buddhist model which was to satisfy basic human needs through dignified work, which also purified one's character and was a spiritual offering. The tools of economic development therefore had to be adapted to people's needs and values, and not vice versa. Unsurprisingly, his report was not well received in official quarters and he was never invited back.
However, the Burmese experience proved a seminal turning point in Fritz's spiritual and intellectual development: it also brought together many of the separate strands in his life, particularly those relating to economic development in the Third World. He was later to coin the term 'Buddhist Economics' which, like Marxism, implies a complete rejection of the greed and materialism on which so much of modern economics is based, and also a respect for the value and dignity of meaningful work. This 'middle way' became the basis of Schumacher's approach to technology as well as development planning. His Buddhist experience also opened the door to his later studies of Eastern mysticism and Western religions, and eventually through St Augustine, Thomas Aquinas and the early Church Fathers, to Christianity.
In tandem with his job at the Coal Board, Schumacher also undertook an intensive programme of international travel, initially to give substance to his proposals to save the collapsing British coal industry. His aim was to encourage independence from the Western world's industrial reliance on cheap imported coal and oil imports from the Middle East. Alas – and to our cost today – he was successful in neither, and most UK coalmines were closed. Subsequent to his death, the North Sea oil and gas industries were developed and sold off, rendering the nation today dependent on imported fuels.
His aim was also to promote sustainable development strategies in the First and Third World alike, travelling extensively in the USA, Canada, Latin America, Africa and India, as well as to Japan and Russia (although he never lived to see the end of the Cold War). Fuel and food he saw as the two basic necessities for survival and sustainability. All communities and regions should strive to be self-sufficient in these as far as possible – otherwise they become economically and politically vulnerable. In this respect he was an early proponent of harnessing renewable energy in all its different forms, upgrading the existing traditional energy-generating technologies and exploring potential new developments and technologies.
Unfortunately Fritz was many years ahead of his time, and few policy-makers took much notice. Putting his own self-sufficiency theories into practice, his was one of the first UK houses to have solar panels installed on its roof. He also personally became involved in sustainable agriculture, an enthusiasm which he claimed had its seeds in his work as a farm labourer. He spent much time on his organic garden, was President of the UK Soil Association, and was an unflagging advocate of tree-planting and forest farming schemes wherever he went. He lost no opportunity to warn against soil impoverishment, the erosion and ecological degradation that follows forest-felling schemes, or of economic dependence of agricultural systems based on monocultures and oil-based chemical fertilisers. The last month of his life saw him making a film in Western Australia in the hope of defending the native forests from overseas logging interests. He viewed the clear-felling of forests – whether for timber, pulp or monoculture crops – as the very antithesis of sustainable development.
It was during an official visit to India in 1961 to advise the Indian Government on a Five-Year Development Plan, that Fritz became deeply moved by the hopeless poverty and deprivation of countless thousands of people. He realised that nearly all the official government and other Western aid schemes proposed so far were completely inadequate, as the money did not filter down to poor communities. What poor people needed was 'tool aid' and 'know-how' – simple improvements to their traditional tools and technical support to use their local assets more effectively. This concept became known as 'intermediate' or 'appropriate' technology, and is described in Chapter 3.
Industry and business in developed countries
In 1950 Schumacher joined the National Coal Board as their Economic Adviser. He had accepted the position partly because of his strong socialist convictions, his sympathy with the miners and his belief that true economic sustainability for industrial countries would most readily come about through the proper organisation and use of energy resources. He was also an early advocate of the principle of subsidiarity, and realised that the workers themselves needed to operate within 'human-scale' structures even in large organisations. The National Coal Board, he hoped, would be an excellent springboard for testing his ideas in practice. Schumacher was also particularly struck by the model of the Scott Bader Commonwealth, a plastics and polymers company located in Northamptonshire, whose Board he eventually joined in 1967. The innovative structures of ownership in this organisation are described in Chapter 7.
Despite growing recognition of Schumacher's ideas through numerous projects, broadcasts, writings, pamphlets and public lectures, the real breakthrough only came with the publication in 1973 of his first book Small is Beautiful: A Study of Economics as if People Mattered. This was written in layman's terms, since it was mainly based on previous lectures and articles, but it somehow caught the spirit of the times. Small is Beautiful was not just about appropriate size. It articulated what millions of 'little people' worldwide subconsciously believed: that unlike any previous culture or civilisation, twentieth-century Western society, whether agricultural or industrial, was living artificially off the Earth's capital rather than off its income. Its lifeblood was the ever-increasing use of non-renewable resources – primarily by the rich countries at the expense of the poor. The world could not continue sustainably on the increasing curve of production and consumption without material or moral restraint. His colleague George McRobie later followed this message up with the highly practical book of examples mainly taken from the Intermediate Technology Development Group (ITDG) in Small is Possible.
Schumacher's simple yet provocative style of communication inspired many people to question the future and the values of the market-led consumerist society, and to make radical changes in their own lifestyles. It was, however, his personal commitment and dedication which kindled enthusiasm and gave those whom he met the courage to change. This message of empowerment had unusual resonance worldwide: from President Carter of the USA, who summoned him to the White House in 1977, to Prince Charles and the Duke of Edinburgh and to countless thousands of dispossessed people in the Third World. He exhorted all to rely on 'people power' and their own mental and physical inventiveness, rather than basing their futures on imported capital and energy-intensive technologies which reduce need for the human workforce. The message still flies in the face of most prevailing political and economic policies today, but has had a profound influence on very many organisations and institutions including those represented in this Briefing.
Excerpted from Small is Beautiful in the 21st Century by Diana Schumacher. Copyright © 2011 Diana Schumacher. Excerpted by permission of Green Books Ltd.
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Table of Contents
Contents1. Who was E. F. Schumacher?,
2. The Schumacher Society Its origins and offshoots,
3. Third World development models Practical Action (formerly the Intermediate Technology Development Group) & Jeevika Trust (formerly India Development Group),
4. Food, agriculture and land use The Soil Association and other projects,
5. Small-scale technologies for local sustainability The Centre for Alternative Technology,
6. The call for a new economics nef and the E. F. Schumacher Society,
7. Transforming industrial work in the First World,
8. The relevance of E. F. Schumacher today,
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