Revisiting 'Small is Beautiful'

EF Schumacher’s classic book Small is beautiful was a product of the times he lived in. The Club of Rome had been warning of the consequences of pursuing economic growth without limits. The measure of Gross Domestic Product (GDP) was being questioned for not counting externalities like the consumption of natural resources, and not factoring in wellbeing by some liberal economists. Likewise, there was growing criticism of the roles of trans-national corporations and questioning of the basic wisdom of foreign aid.

Schumacher questioned the wisdom of big government at a time the European Community was nurturing a mega-government that imposed regulation upon the smallest village. Schumacher was one of the early questioners of growing regulation, which was being accompanied by massive increases in bureaucracy to enforce the regulations bureaucrats thought up. Schumacher also incorporated the workplace and organizational values developed at the Tavistock Institute; at a time, they were considered radical.

Schumacher was ground-breaking in his concepts of scarcity, finite resources, and the need for environmental sustainability, a forerunner of the modern environmental movement today.

Most importantly, Schumacher challenged the basic notion of economic growth, pursued under the illusion that the Earth has infinite resources. He challenged the very core of the economic problem postulated within the logics of Keynesian economics.

Schumacher critiqued current habits of consumerism, which are based on wants rather than needs, postulating that the invisible hand is too important for society’s choices to be left to fate.  

Weaknesses in development economics

Schumacher was damming about economic development in the third world, and the West’s role in it. Standard development strategies have primarily emulated the Western industrial practices to create employment.

However, this led to the creation of mega-cities and a massive drain upon rural communities, as people flocked to cities for employment. This decimated rural communities and public infrastructure development became skewed towards cities. Crowded mega-cities created slums, industry created unabated pollution, while quality of life declined.

Foreign investment increased development, but at the cost of high environmental degradation. The technology multi-nationals transferred didn’t enhance workforce skills. Respective education systems focused on producing industrial fodder, rather than focus on creating a pool of skilled craftsmen, and an educated professional class. Education distinctly lacked any substance to develop critical thinking, creativity, and innovation. The local education system did little to nurture indigenous enterprises.

Foreign aid wasn’t crafted to develop the economies of recipient countries, tending to enhance the agendas of donors. This hasn’t been in the interests of recipient countries.

Rising prosperity and advertising encouraged mass-consumerism based on wants rather than needs. This time and time again created markets for imported luxuries, rather than local products.

Foreign investment brought inappropriate solutions for developing countries, where new solutions specific to the situational nature of the country was needed.