Schumacher’s ‘Small is Beautiful’ is still relevant in our world today

In our present world, whenever a community or society is confronted with a problem, the solution has often been to come up with large or giant projects. We are all too familiar with the tendency to come up with mega projects that run into millions, or even billions, of ringgit.

Aug 11, 2016

By Anil Netto
In our present world, whenever a community or society is confronted with a problem, the solution has often been to come up with large or giant projects. We are all too familiar with the tendency to come up with mega projects that run into millions, or even billions, of ringgit.

Often it seems that these projects are chosen for the potential profits that can be reaped by large corporations. Sometimes, they also provide opportunities for bribes and kickbacks. Whether these projects serve the common good or the public interest, it would seem, is often just incidental.

The economist, journalist and entrepreneur EF Schumacher (1911-1973) argued that, often, a varied assortment of sizes or scale of undertaking is necessary to restore some kind of balance. Unfortunately, “today, we suffer from an almost universal idolatry of giantism,” he lamented. “It is therefore necessary to insist on the virtues of smallness — where this applies.”

This closer look at the virtue of smallness is the basis of one of the most significant books in the last few decades: Schumacher's Small is Beautiful – A Study of Economics as if People Mattered, published in 1973.

Schumacher embraced Catholicism just two years before his landmark book was published. His writings were inspired by Pope Leo XIII's encyclical Rerum Novarum (Rights and Duties of Capital and Labour) (1891) and Pope Pius XI’s Quadragesimo Anno (In the 40th Year) (1931).

Schumacher stressed that the principle of subsidiarity in Catholic Social Teaching is highly relevant in the world today. In effect, the principle states that decisions that affect the local community should, wherever possible, be undertaken by an organisation at that level, rather than, at any higher level.

Or, in his words, “It is an injustice and, at the same time, a great evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organisations can do.”

I thought it might be useful to highlight, in the coming weeks, some of the ideas in the 19 chapters of Schumacher’s book.

Today, we will look at The Problem of Production which Schumacher outlined in the first chapter of the book.

Long before our present era of climate change and global warming, Schumacher had warned of the danger of depleting our ‘natural capital,’ especially fossil fuels, to feed the voracious appetite of the industrial process.

If a business were to deplete its capital or assets, there would be concern by all those involved. We saw the loud outcry when 1MDB rapidly depleted its assets funded by large borrowings.

But why the deafening silence when the planet itself is rapidly depleted of its ‘natural capital?’ We don’t hear the same concern when hills are cut down, rivers are polluted and forests are cleared out.

Another irreplaceable asset we are using up is the tolerance margins of the planet. Scientists have created new compound substances that Nature is finding hard to break down. Think of plastic bags which are difficult to biodegrade.

Schumacher was also concerned about the turn towards nuclear energy as an alternative energy source. He pointed out that this would create new problems: radioactive waste would need to be sealed for thousands of years before it could be considered safe.

Finally, Schumacher felt a third category of natural capital was being depleted by the process of industrialisation — that of the very substance of the human being, which cannot be measured by GDP or any other economic indicators. Think of all the attendant social problems of the industrial era caused, perhaps, by alienation of the human person, such as the crime rate, drug addiction and mental illness.

In more recent times, thanks to the pioneering research in the book The Spirit Level by Kate Pickett and Richard Wilkinson, we know that the more unequal a country, the more we can expect to find such social problems.

Schumacher was well ahead of his time in his concern about the serious implications of the rapid extraction and use of fossil fuels in the industrial era. Today, we know that this rapid extraction of carbon from the ground has contributed tremendously to greenhouse gas emissions and climate change.

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