Small is Beautiful – Economics as if People Mattered

Fritz Schumacher published “Small is Beautiful – Economics as if People Mattered” in 1973. According to The Times Literary Supplement, it is among the 100 most influential books published since World War II and rightfully so.

For the last 60 years or so our way of life has been based on the premise that so long as there is demand there will always be supply. Schumacher wisely challenges these assumptions when he writes that sustainability is an impossibility when we are, “assuming all the time that a man who consumes more is ‘better off’ than a man who consumes less”, in an environment with finite resources.

E. F. Schumacher is clear about what economics can do and what it can’t do.  Mainstream economists divide humans into producers and consumers. As consumers, consuming more will always be in our self-interest. As producers, efficiency is to be desired above all else. This breaks down, Schumacher says, as soon as we realize that producers and consumers are the same people with the same desires.

Schumacher criticizes what he calls the fragmentary judgment of economics, arguing that “society, or a group or an individual within society, may decide to hang on to an activity or asset for non-economic reasons – social, aesthetic, moral, or political.” For example, work does not need to be unenjoyable. Work that involves creativity and freedom can be a good thing even if it is not the most efficient method to produce a product or service. His “economics as if people mattered” doesn’t mindlessly praise efficiency as a means of eliminating work.

In Part III, Schumacher explores third-world economic development. Business, philanthropic and government leaders have initiated countless programs to assist the world’s poor, but success has been elusive. Schumacher proposes a truly wise policy, focusing not on remaking poor countries in our own image, but rather on assisting them with improving the way of life they already have.

Schumacher argues for distribution of development resources to non-capital-intensive, human-scale projects that can be maintained by local people. The beauty in his smaller, human scale technology is that it maximizes the level of useful employment rather than productivity per person. He also emphasizes that appropriateness of technology can be assessed only through understanding the local culture and working with and through local people.

Small is Beautiful is thought provoking and eye opening. While clearly dated in its view of gender roles and incorrect in a number of its predictions, Small is Beautiful is as relevant to the problems the world is struggling with today as it was in 1973. Perhaps more so.

One thought on “Small is Beautiful – Economics as if People Mattered

  1. This is really good – I’ve never heard of this book, but I found this review really interesting.

    I’ll try and dig out a copy.

Comments are closed.