Small Is Beautiful: Economics as if People Mattered

by Ernst F. Schumacher

Public works are very desirable and can do a great deal of good; but if they are not backed up by the indigenous production of additional wages goods, the additional purchasing power will flow into imports and the country may experience serious foreign exchange difficulties.

One of the greatest teachers of India was the Buddha who included in his teaching the obligation of every good Buddhist that he should plant and see to the establishment of one tree at least every five years. As long as this was observed, the whole large area of India was covered with trees, free of dust, with plenty of water. plenty of shade, plenty of food and materials. Just imagine you could establish an ideology which would make it obligatory for every able- bodied person in India, man, woman and child, to do that little thing - to plant and see to the establishment of one tree a year, five years running. This, in a five-year period, would give you 2.000 million established trees.

It is the intrusion of human freedom and responsibility that makes economics metaphysically different from physics and makes human affairs largely unpredictable.

It is true that social phenomena acquire a certain steadiness and predictability from the non-use of freedom, which means that the great majority of people responds to a given situation in a way that does not alter greatly in time, unless there are really overpowering new causes.

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Crude methods of forecasting - after the current picture has been corrected for abnormalities - are not likely to lead into the errors of spurious verisimilitude and spurious detailing - the two greatest vices of the statistician.

Planning (as I suggest the term should be used) is inseparable from power. It is natural and indeed desirable that everybody wielding any kind of power should have some sort of a plan, that is to say, that he should use power deliberately and consciously, looking some distance ahead in time.

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In fact, all long-term forecasting is somewhat presumptuous and absurd, unless it is of so general a kind that it merely states the obvious.

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The Principle of Subsidiarity

The Principle of Vindication.

To vindicate means: to defend against reproach or accusation: to prove to be true and valid;

The Principle of Identification.

The Principle of Motivation.

The Principle of the Middle Axiom.

all real human problems arise from the antinomy of order and freedom, Antinomy means a contradiction between two laws; a conflict of authority: opposition between laws or principles that appear to be founded equally in reason.

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Mao Tse-tung. Go to the practical people, he says, and learn from them: then synthesise their experience into principles and theories; and then return to the practical people and call upon them to put these principles and methods into practice so as to solve their problems and achieve freedom and happiness?

The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations and has left no other nexus between man and man than naked self- interest….

The strength of the idea of private enterprise lies in its terrifying simplicity. It suggests that the totality of life can be reduced to one aspect profits. The businessman, as a private individual, may still be interested in other aspects of life - perhaps even in goodness, truth and beauty - but as a businessman he concerns himself only with profits. 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 nonresponsibility'. Equally, it fits perfectly into the modern trend towards total quantification at the expense of the appreciation of qualitative differences; for private enterprise is not concerned with what it produces but only with what it gains from production.

The point is that the real strength of the theory of private enterprise lies in this ruthless simplification, which fits so admirably also into the mental patterns created by the phenomenal successes of science.

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The modern private enterprise system ingeniously employs the human urges of greed and envy as its motive power, but manages to overcome the most blatant deficiencies of laissezfaire by means of Keynesian economic management, a bit of redistributive taxation, and the 'countervailing power' of the trade unions.

It is useless to pretend that the nationalised enterprise should be concerned only with profits, as if it worked for private shareholders, while the interpretation of the public interest could be left to government alone. This idea has unfortunately invaded the theory of how to run nationalised industries in Britain, so that these industries are expected to work only for profit and to deviate from this principle only if instructed by government to do so and compensated by government for doing so.

R. H. Tawney,

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remuneration for work within the organisation shall not vary, as between the lowest paid and the highest paid, irrespective of age, sex, function or experience, beyond a range of 1:7, before tax.

Bader 'system' overcomes the reductionism of the private ownership system and uses industrial organisation as a servant of man, instead of allowing it to use men simply as means to the enrichment of the owners of capital.

'new dogs' grow up all the time; and they will be well advised to take notice of what has been shown to be possible by The Scott Bader Commonwealth Ltd.

All the indications are that the present structure of large scale industrial enterprise, in spite of heavy taxation and an endless proliferation of legislation, is not conducive to the public welfare.

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.

the development of a life-style which accords to material things their proper, legitimate place, which is secondary and not primary.

The 'logic of production' is neither the logic of life nor that of society. It is a small and subservient part of both, The destructive forces unleashed by it cannot be brought under control, unless the 'logic of production' itself is brought under control - so that destructive forces cease to be unleashed.

The type of realism which behaves as if the good, the true, and the beautiful were too vague and subjective to be adopted as the highest aims of social or individual life, or were the automatic spin-off of the successful pursuit of wealth and power, has been aptly called 'crackpot-realism'.

'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.