Small Is Beautiful: Economics as if People Mattered

I started by saying that one of the most fateful errors of our age is the belief that the problem of production has been solved. This illusion, I suggested, is mainly due to our inability to recognize that the modern industrial system, with all its intellectual sophistication, consumes the very basis on which it has been erected. To use the language of the economists, it lives on irreplaceable capital which it cheerfully treats as income. I specified three categories of such capital: fossil fuel

I started by saying that one of the most fateful errors of our age is the belief that the problem of production has been solved. This illusion, I suggested, is mainly due to our inability to recognize that the modern industrial system, with all its intellectual sophistication, consumes the very basis on which it has been erected. To use the language of the economists, it lives on irreplaceable capital which it cheerfully treats as income. I specified three categories of such capital: fossil fuels, the tolerance margins of nature, and the human substance. Even if some readers should refuse to accept all three parts of my argument, I suggest that any one of them suffices to make my case. (21)

There is wisdom in smallness if only on account of the smallness and patchiness of human knowledge, which relies on experiment far more than on understanding. The greatest danger invariably arises from the ruthless application, on a vast scale, of partial knowledge such as we are currently witnessing in the application of nuclear energy, of the new chemistry in agriculture, of transportation technology, and countless other things. (37)

Above anything else there is need for a proper philosophy of work which understands work not as that which it has indeed become, an inhuman chore as soon as possible to be abolished by automation, but as something "decreed by Providence for the good of man's body and soul." Next to the family, it is work and the relationships established by work that are the true foundations of society. If the foundations are unsound, how could society be sound? And if society is sick, how could it fail to be a danger to peace? (38)

The market... represents only the surface of society and its significance relates to the momentary situation as it exists there and then. There is no probing into the depths of things, into the natural or social facts that lie behind them. In a sense, the market is the institutionalisation of individualism and non-responsibility. Neither buyer not seller is responsible for anything but himself. It would be "uneconomic" for a wealthy seller to reduce his prices to poor customers merely because they are in need, or for a wealthy buyer to pay an extra price merely because the supplier is poor. Equally, it would be "uneconomic" for a buyer to give preference to home-produced goods if imported goods are cheaper. He does not, and is not expected to, accept responsibility for the country's balance of payments. (46)

[T]he task of education [should] be, first and foremost, the transmission of ideas and values, of what to do with our lives. There is no doubt also the need to transmit know-how but this must take second place, for it is obviously somewhat foolhardy to put great powers into the hands of people without making sure that they have a reasonable idea of what to do with them. At present, there can be little doubt that the whole of mankind is in mortal danger, not because we are short of scientific and technological know-how, but because we tend to use it destructively, without wisdom. More education can help us only if it produces more wisdom. (86)

Science cannot produce ideas by which we could live. Even the greatest ideas of science are nothing more than working hypotheses, useful for purposes of special research but completely inapplicable to the conduct of our lives or the interpretation of the world. If, therefore, a man seeks education because he feels estranged and bewildered, because his life seems to him empty and meaningless, he cannot get what he is seeking by studying any of the natural sciences, i.e. by acquiring "know-how." That study has its own value which I am not inclined to belittle; it tells him a great deal about how things work in nature or in engineering; but it tells him nothing about the meaning of life and can in no way cure his estrangement and secret despair. (92)

The ideas of the fathers in the nineteenth century have been visited on the third and fourth generations living in the second half of the twentieth century. To their originators, these ideas were simply the result of their intellectual processes. In the third and fourth generations, they have become the very tools and instruments through which the world is being experienced and interpreted. Those that bring forth new ideas are seldom ruled by them. But their ideas obtain power over men's lives in the third and fourth generations when they have become a part of that great mass of ideas, including language, which seeps into a person's mind during his "Dark Ages." (95)

The leading ideas of the nineteenth century, which claimed to do away with metaphysics, are themselves a bad, vicious, life-destroying type of metaphysics. We are suffering from them as if from a fatal disease. It is not true that knowledge is sorrow. But poisonous errors bring unlimited sorrow in the third and fourth generation. The errors are not in science but in the philosophy put forward in the name of science. (96–7)

The true problem of living—in politics, economics, education, marriage, etc.—are always problems of overcoming or reconciling opposites. They are divergent problems and have no solution in the ordinary sense of the word. They demand of man not merely the employment of his reasoning powers but the commitment of his whole personality. Naturally, spurious solutions, by way of a clever formula, are always being out forward; but they never work for long, because they invariably neglect one of the two opposites and thus lose the very quality of human life.... To have to grapple with divergent problems tends to be exhausting, worrying, and wearisome. Hence people try to avoid it and to run away from it. (104)

The most powerful ideas of the nineteenth century, as we have seen, have denied or at least obscured the whole concept of "levels of being" and the idea that some things are higher than others. This, of course, has meant the destruction of ethics, which is based on the distinction of good and evil, claiming that good is higher than evil. Again, the sins of the fathers are being visited on the third and fourth generations who now find themselves growing up without moral instruction of any kind. The men who conceived the idea that "morality is bunk" did so with a mind well-stocked with moral ideas. But the minds of the third and fourth generations are no longer well-stocked with such ideas: they are well-stocked with ideas conceived in the nineteenth century, namely, that "morality is bunk," that everything that appears to be "higher" is really nothing but something quite mean and vulgar. The resulting confusion is indescribable. (105)

What is to take the place of the soul- and life-destroying metaphysics inherited from the nineteenth century? The task of our generation, I have no doubt, is one of metaphysical reconstruction. It is not as if we had to invent anything new; at the same time, it is not good enough merely to revert to the old formulations. Our task—and the task of all education—is to understand the present world, the world in which we live and make our choices. (106–7)

The higher animals have an economic value because of their utility; but they have a meta-economic value in themselves. If I have a car, a man-made thing, I might quite legitimately argue that the best way to use it is never to bother about maintenance and simply run it to ruin. I may indeed have calculated that this is the most economical method of use. If the calculation is correct, nobody can criticise me for acting accordingly, for there is nothing about a man-made thing like a car. But if I have an animal&mdashy;be it only a calf or a hen—a living, sensitive creature, am I allowed to treat is as nothing but a utility? Am I allowed to run it to ruin? (113)

We know too much about ecology today to have any excuse for the many abuses that are currently going on in the management of the land, in the management of animals, in food storage, food processing, and in heedless urbanisation. If we permit them, this is not due to poverty, as if we could not afford to stop them; it is due to the fact that, as a society, we have no firm basis of belief in any meta-economic values, and when there is no such belief the economic calculus takes over. This is quite inevitable. How could it be otherwise? Nature, it has been said, abhors a vacuum, and when the available "spiritual space" is not filled by some higher motivation, then it will necessarily be filled by something lower—by the small, mean, calculating attitude to life which is rationalised in the economic calculus. (123)

As Gandhi said, the poor of the world cannot be helped by mass production, only by production by the masses. The system of mass production, based on sophisticated, highly capital-intensive, high energy-input dependent, and human labour-saving technology, presupposed that you are already rich, for a great deal of capital investment is needed to establish one single workplace. The system of production by the masses mobilises the priceless resources which are possessed by all human beings, their clever brains and skilful hands, and supports them with first-class tools. The technology of mass production is inherently violent, ecologically damaging, self-defeating in terms of non-renewable resources, and stultifying for the human person. The technology of production by the masses, making use of the best of modern knowledge and experience, is conducive to decentralisation, compatible with the laws of ecology, gentle in its use of scarce resources, and designed to serve the human person instead of making him the servant of machines. I have named it intermediate technology to signify that is is vastly superior to the primitive technology of bygone ages but at the same time much simpler, cheaper, and freer than the supertechnology of the rich. (163)

Strange to say, the Sermon on the Mount gives pretty precise instructions on how to construct an outlook that could lead to an Economics of Survival. (166)

It is always possible to create small ultra-modern islands in a pre-industrial society. But such islands will then have to be defended, like fortresses, and provisioned, as it were, by helicopter from far away, or they will be flooded by the surrounding sea. Whatever happens, whether they do well or badly, they produce the "dual economy" of which I have spoken. They cannot be integrated into the surrounding society, and tend to destroy its cohesion. (177)

It is a strange fact that some people say that there are no technological choices. I read an article by a well-known economist from the U.S.A. who asserts that there is only one way of producing any particular commodity: the way of 1971 [i.e., the way of the present]. Had these commodities never been produced before? The basic things of life have been needed and produced since Adam left Paradise. He says that the only machinery that can be procured is the very latest. Now that is a different point and it may well be that the only machinery that can be procured easily is the latest. It is true that at any one time there is only one kind of machinery that tends to dominate the market and this creates the impression as if we had no choice and as if the amount of capital in a society determined the amount of employment it could have. Of course this is absurd. (226)

The idea of intermediate technology does not imply simply a "going back" in history to methods now outdated, although a systematic study of methods employed in the developing countries, say, a hundred years ago could indeed yield highly suggestive results. It is too often assumed that the achievement of western science, pure and applied, lies mainly in the apparatus and machinery that have been developed from it, and that a rejection of the apparatus and machinery would be tantamount to a rejection of science. This is an excessively superficial view. The real achievement lies in the accumulation of precise knowledge, and this knowledge can be applied in a great variety of ways, of which the current application in modern industry is only one. The development of an intermediate technology, therefore, means a genuine forward movement into new territory, where the enormous cost and complication of production methods for the sake of labour saving and job elimination is avoided and technology is made appropriate for labour-surplus societies. (198)

Everything becomes crystal clear after you have reduced realit to one—one only—of its thousand aspects. You know what to do—whatever produces profits; you know what to avoid—whatever reduces them or makes a loss. And there is at the same time a perfect measuring rod for the degree of success or failure. Let no one befog the issue by asking whether aa particular action is conducive to the wealth and well-being of society, whether it leads to moral, aesthetic, or cultural enrichment. Simply find out whether it pays; simply investigate whether there is an alternative that pays better. If there is, choose the alternative. (272–3)

1. In small-scale enterprise, private ownership is natural, fruitful, and just.

2. In a medium-scale enterprise, private ownership is already to a large extent functionally unnecessary. The idea of "property" becomes strained, unfruitful, and unjust. If there is only one owner or a small group of owners, there can be and should be, a voluntary surrender of privilege to the wider group of actual workers.... Such an act of generosity may be unlikely when there is a large number of anonymous shareholders, but legislation could pave the way even then.

3. In a large-scale enterprise, private ownership is a fiction for the purpose of enabling functionless owners to live parasitically on the labour of others. It is not only unjust but also an irrational element which distorts all relationships within the enterprise. (284)

Some inequalities of wealth and income are no doubt "natural" and functionally justifiable, and there are few people who do not spontaneously recognise this. But here again, as in all human affairs, it is a matter of scale. Excessive wealth, like power, tends to corrupt. Even if the rich are not "idle rich," even when they work harder than anyone else, they work differently, apply different standards, and are set apart from the common humanity. They corrupt themselves by practising greed, and they corrupt the rest of society by provoking envy. (298)

In the excitement over the unfolding of his scientific and technical powers, modern man has built a system of production that ravishes nature and a type of society that mutilates man. If only there were more and more wealth, everything else, it is thought, will fall into place. Money is considered to be all-powerful; if it could not actually buy non-material values, such as justice, harmony, beauty or even health, it could circumvent the need for them or compensate for their loss. The development of production and the acquisition of wealth have thus become the highest goals of the modern world in relation to which all other goals, no matter how much lip-service may still be paid to them, have come to take second place. The highest goals require no justification; all secondary goals have finally to justify themselves in terms of the service their attainments renders to the attainment of the highest.

This is the philosophy of materialism, and it is this philosophy—or metaphysic—which is now being challenged by events. There has never been a time, in any society in any part of the world, without its sages and teachers to challenge materialism and plead for a different order of priorities. (313&ndash4)

Everywhere people ask: "What can I actually do?" The answer is as simple as it is disconcerting: we can, each of us, work to put our own inner house in order. The guidance we need for this work cannot be found in science or technology, the value of which utterly depends on the ends they serve; but it can still be found in the traditional wisdom of mankind. (318)