65: Small Is Beautiful

Note: This post is the sixty-fifth in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs which inspired this series.

This week's post is on the book, 'Small is Beautiful', by E.F. Schumacher.

I'm not going to do a chapter by chapter summary of the book, since much of it has to do with questions of the scale of workplaces that only touch indirectly on the questions I'm looking into in this series. Instead I plan to highlight some of the comments throughout the book that show the sort of Guardian mindset that Schumacher has.

Although guardian-minded, Schumacher was also an economist so he was far from ignorant of the ways of the commercial mindset and there are many passages in the book that reflect his awareness of the differences between a commercial approach and a guardian approach. In some ways, he is like an anti-Veblen, keenly aware of both syndromes like Veblen was, but deeply hostile to the commercial mindset, whereas Veblen was deeply hostile to the Guardian mindset.

The most relevant passage to our inquiry is likely one on page 47 (of the Harper 1989 edition),

"The religion of economics has its own code of ethics, and the First Commandment is to behave 'economically'- in any case when you are producing, selling or buying. It is only when the bargain hunter has gone home and become a consumer that the First Commandment no longer applies: he is then encouraged to 'enjoy himself' in any way he pleases.

...

In the market place, for practical reasons, innumerable qualitative distinctions which are of vital importance for man and society are suppressed; they are not allowed to surface. Thus the reign of quantity celebrates its greatest triumphs in "The Market." Everything is equated with everything else. To equate things means to give them a price and thus to make them exchangeable. To the extent that economic thinking is based on the market, it takes the sacredness out of life, because there can be nothing sacred in something that has a price. Not surprisingly therefore, if economic thinking pervades the whole of society, even simple non-economic values like beauty, health or cleanliness can survive only if they prove to be 'economic.'"

Schumacher echoes Jane Jacobs a little bit further down in the same chapter when he say that,

"Economics operates legitimately and usefully within a 'given' framework which lies altogether outside the economic calculus. ... Every science is beneficial within its proper limits, but becomes evil and destructive as soon as it transgresses them."

How similar that is to Jacobs talking of the 'intractable corruption' that follows when commercial values are mixed with guardian values.

Later on, on page 272, Schumacher again tries to describe the commercial mindset,

"In this respect, the idea of private enterprise fits exactly into the idea of The Market, which, in an earlier chapter, I called 'the institutionalisation of individualism and non-responsibility.' Equally, it fits perfectly into the modern trend towards total quantification at the expense of the appreciation of qualitative differences."


Earlier on in the book (page 24), Schumacher provides an interesting discussion of a quote from Keynes during the depression,

"In 1930, during the world-wide economic depression, [Keynes] felt moved to speculate on the 'economic possibilities for our grandchildren' and concluded that the day might not be all that far off when everybody would be rich. We shall then, he said, 'once more value ends above means and prefer the good to the useful.'

'But beware!" he continued. 'The Time for all this is not yet. For at least another hundred years we must pretend to ourselves that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.'

...

There can be no doubt that the idea of personal enrichment has a very strong appeal to human nature. Keynes advised us that the time was not yet for a 'return to some of the most sure and certain principles of religion and traditional virtue - that avarice is a vice, that the exaction of usury is a misdemeanour, and the love of money is detestable.'

Economic progress, he counselled, is obtainable only if we employ those powerful human drives of selfishness, which religion and traditional wisdom universally call upon us to resist. The modern economy is propelled by a frenzy of greed and indulges in an orgy of envy and these are not accidental features but the very causes of its expansionist success."

Schumacher worries that there may be long term damage caused by this approach:

"If human vices such as greed and envy are systematically cultivated, the inevitable result is nothing less than a collapse of intelligence. A man driven by greed or envy loses the power of seeing things as they really are, of seeing things in their roundness and wholeness, and his very successes become failures. If whole societies become infected by these vices, they may indeed achieve astonishing things but they become increasingly incapable of solving the most elementary problems of everyday existence. The Gross National Product may rise rapidly: as measured by statisticians but not as experienced by actual people, who find themselves oppressed by increasing frustration, alienation, insecurity and so forth. After a while, even the Gross National Product refuses to rise any further, not because of scientific or technological failure, as expressed in various types of escapism on the part, not only of the oppressed and exploited, but even of highly privileged groups."

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At first glance, the fact that Schumacher spends a lot of time talking about energy supplies and why they (oil in particular) are likely to run short seems a bit odd. What does the energy supply situation have to do with whether small is beautiful or whether big is better?

But one of the dividing lines between a guardian mindset and the commercial mindset concerns the question of limits. Guardians typically believe that limits exist whereas commercial folks believe that innovation will provide a way around any perceived limits. I believe that Schumacher intuitively grasped that the existence of a limit presents a fatal weakness in the commercial approach to things and therefore chose to highlight one of the most pressing limits that mankind was approaching in his time (the 60s and early 70s).

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Even more than usual, I am only covering a small part of the ground Schumacher covers in his book. But reading 'Small is Beautiful' with Jane Jacobs 'Systems of Survival' in mind, the picture I get is of someone who sees the commercial mindset escaping its logical bounds and overrunning every aspect of society and who is looking for any way possible to put the commercial syndrome back to a more limited role. Of course, since Schumacher wrote 'Small is Beautiful' in 1973, it seems like the commercial syndrome mindset is stronger than ever.