Small Is Beautiful: Economics as if People Mattered

Ernst F. Schumacher

Book cover

This is a tough one for me to rate. There were parts of it that I found quite insightful, parts that seemed very dated, parts that felt like a big letdown.

Some thoughts:

-EFS writes clearly about the problem of the “hedonic treadmill” (though he doesn’t use that term) for materialist capitalism: “There are poor societies which have too little, but where is the rich society that says: ‘Halt! We have enough’? There is none.”

-He advocates a “third way” between laissez-faire capitalism and state socialism, which is not just a compromise between the two. Rather, it is a form of organization that I might call a true “ownership society”, with ownership being defined not by abstract property rights but by operational reality–that is, people should be able to own things when they can truly exercise personal ownership–so owning a neighborhood business makes sense, but owning a multinational company (or even worse, a share of one) does not. He doesn’t use this terminology, but I think his advocacy of small scale is closely tied to the ethics of caring: it is natural to want to care for things one owns, but this is only possible at the human scale on which care can operate.

-I appreciated his discussion of “convergent” and “divergent” problems. Briefly, a convergent problem is one where there is a solution that can be communicated to others, who can then carry it out–an example being a math or engineering problem–while a divergent problem is one where this is not the case, such as a social or political problem. Much of modernity, EFS argues, is dedicated to the attempt to reduce divergent problems to convergent problems (for instance, in political organization or education). Not only is this impossible, says EFS, but it actually represents a moral horror–imagine what a world would be like in which convergent solutions had been found to problems of human relationships: a living death, as many sci-fi novels will tell you. The way to deal with divergent problems is not to “solve” them but to live them out. I find this distinction to be pretty useful.

-Despite approaching it critically due to the New-Agey title, I actually liked the essay “Buddhist Economics”, and I wish he had called it something different as there is little in it that is specific to Buddhism–I think it was just a hot topic in 1973. It’s really just about the role of virtue in grounding economic organization. The main focus is on the logic of consumption. EFS notes that standard economic thought understands an increase in consumption as always and everywhere good. On the other hand, nearly all traditional virtue systems agree that “pleonexia” is bad (and this is a case where even classical Greek and Christian understandings of virtue agree). EFS argues that the main measure of interest is happiness per unit of consumption, and that the right way to maximize this is in ways that minimize the denominator while holding the numerator constant. In this essay he doesn’t much go into specific ways of doing that, so one could read it as insufferably preachy: “Just be content with less!” But I think that is an unfair reading. I think the argument finds a very powerful application, for example, in the trend away from public goods toward private goods in America–moving from using the municipal pool to everyone having a pool in their backyard. One could argue that this slightly increased individual utility (though I’d be skeptical), but certainly it represents a vast decrease in the happiness/consumption ratio.

I could go on but I should probably wrap it up. So, here’s my main problem with this book. Despite his avowed love for small-scale organization, EFS ultimately seems not to have the full courage of his convictions. He ends up advocating that more appropriate scale be brought about through a somewhat baroque large-scale technocratic method, involving forced equity participation by the state, “Social Councils”, special courts, etc. Throughout the book, whenever EFS was arguing that the status quo was unjust or destructive, I found myself agreeing with him but wondering what to do about it. So when he finally came to describe his prescription in this way, I felt pretty let down. I think that anyone making this type of critique of modern society needs to have the courage advocate actions that can be taken at the scale of individuals or communities, without recourse to the state’s monopoly on violence. This, of course, is the hard part, but having just read Dorothy Day I know that people have managed it–perhaps not in ways that are glamorous, but I think that is part of the point.

My Goodreads rating: 4 stars