Is Small Beautiful?

“For at least another hundred years we must pretend…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 only they can lead us out of the tunnel of economic necessity into daylight.”

- John Maynard Keynes, 1963

E.F. Schumacher’s 1973 best-selling book, “Small is Beautiful,” questions the economic orthodoxy of growth at all costs over the value of more measured and equal growth to fit the needs and skills of local communities. Though Schumacher’s classic is 45 years old and was written with an eye toward emerging world economies and environmental conservation, I think it is more relevant than ever. The “Local is the New Global” trend that I write so frequently about is a direct pushback against the religion of growth and easily could have been a chapter in Schumacher’s book. Of all the books on economics that I have read, Schumacher’s comes closest to my own thinking.   

At one end of the capitalist spectrum, we have Ayn Rand’s economics of growth at all costs. At the other end, we have what Schumacher might call “Gandhi” economics, which encourages growth that is intentionally moderated and decentralized to best stabilize and preserve traditional ways of life. This isn’t socialism, but it isn’t pure free-market capitalism either.

Schumacher’s fear was that poor countries were being pushed into unsustainable production methods and consumption patterns that would become a form of “neo-colonialism and hopelessness.” He praised Gandhi’s holy trinity of “health, beauty and permanence” as bedrocks of any economic system and proposed “an entirely new system of thought…a system based on attention to people, and not primarily attention to goods.” In short, he advocated for a qualitative dimension to growth.     

I believe that Schumacher’s ideas make him the grandfather of the current “local is the new global” trend and a visionary for many of the problems currently plaguing local communities:

·        “The modern economist [who] has been brought up to consider ’labor‘ or work as little more than a necessary evil [is misguided].” A dignified job cannot be replaced by redistribution of income. “The foundations of peace cannot be paid by universal prosperity.”       

·        If people had more dignified work, there would be “little need for mindless entertainment or other drugs, and unquestionably much less illness.”  

·        “The religion of economics has its own code of ethics and the First Commandment is to behave ’economically’…As far as the religion of economics is concerned, the consumer is extra-territorial.”

·         “The Buddhist economist would hold that to satisfy wants from faraway sources than from sources nearby signifies failure rather than success.”

The recent boom of local businesses in Austin, Portland, Boston, Nashville, Denver, Fulton Market in Chicago, Arts District in Los Angeles, Third Ward in Milwaukee and Fells Point in Baltimore all are the progeny of Schumacher’s “dignified work” and “local is good” philosophies.

Schumacher digs into the local phenomenon further by comparing the traditional thinkers and economists to the “forward stampede…more, further, quicker, richer…for there is no alternative” to the “home-comers” who are looking for something more. “[The home-comers] take a good deal of courage to say ’no‘ to the fashions and fascinations of the age and to question the presuppositions of a civilization which appears destined to conquer the whole world.” Schumacher was prescient on the current pushback against supranational organizations and the “experts” since “to leave it with the experts means to side with the people of the forward stampede.” Local markets will continue to be run over by the global forward stampede unless they create a viable local alternative to the religion of growth that places negative value on local considerations.  

In addition to the grandfather of “local is the new global,” Schumacher also is the grandfather of “green.” He asks, “What is the point of economic progress, a so-called higher standard of living, when the earth, the only earth we have, is being contaminated?” If many environmentalists are prepared to retard growth to keep the earth clean, is it then irrational to want to preserve local cities and cultures at the expense of some growth?  Green is good and so is local.  

Ultimately, it is up to the elites to make this choice of “local” because they hold most of the cards. The “empathy gap,” which is my, the World Economic Forum’s and many other world organizations’ top culprit, is made plain by Schumacher: “This is not an economic problem, it is a political problem. It is basically a problem of compassion with the ordinary people of the world. It is basically a problem, not of conscripting ordinary people, but getting a kind of voluntary conscription of the educated...What is at stake is not economics but culture; not the standard of living but the quality of life.”   

Schumacher’s ideas will continue to be derided by the smartest people in the room, including Schumacher himself who called his own ideas “crackpot realism.” Well, if Schumacher is a crackpot realist, then so am I. Small is beautiful and local is the new global.