Small Is Beautiful: A Study of Economics as if People Mattered

Ernst F. Schumacher


One of the founding texts of the environmental movement, and one that asks profound questions about the relationships between humanity and our environment. There are some great ideas about the nature and place of economics in deciding priorities for human investment and lifestyle. But taken as whole this isn't a book that's aged well.

Why not? I think there are three essential reasons. Firstly, there's a rather declamatory style to the presentation that presents as certainties things that are actually rather questionable. For example, Schumacher dismisses statistics: "and of course, nothing can be proven with statistics". I beg to disagree: in any physical or life science, one can only prove things with statistics, since there will always be noise and error in any set of observations that can only be properly analysed and quantified statistically.

Secondly, to continue from above, Schumacher is surprisingly dismissive of science as a useful cultural basis. He identifies six "large ideas" that – he claims – stem from the humanities and offer a broader and firmer foundation for living than any scientific ideas. And what do these "large ideas" consist of? Well at least two of them (evolution and natural selection) belong firmly within science after all; two more (class struggle and positivism) have been largely discredited, while another (Freudian sub-consciousness) has been changed beyond recognition; and the last (relativism), to the extent that it allows multiple opinions as to the Truth (with a capital T), is maybe the only one left standing – and can hardly be argued not to rest at least in part on scientific ideas of uncertainty and progressive refinement.

But the third problem is the most interesting. It seems to me that many of Schumacher's arguments are logical and well-supported by evidence – but have been proven wrong by events. A good example is his (again rather declamatory) assertion that economic growth must always be underpinned by increased energy consumption, which must necessarily come up against resource limitations. A plausible argument: but recent history shows growth decoupling from energy, with energy per unit GDP plummeting, driven in large measure by the rise of the service and digital economies. Schumacher could have dealt with the former, even if we accept he could have known nothing of the latter. But this lack of knowledge about future developments is not something that will ever disappear, and it renders his style of sweeping large-scale pronouncements permanently suspect.

It is always dangerous to make predictions, especially about the future (as Yogi Berra once observed). That doesn't mean we shouldn't continue to try to do so, but nor is it an excuse to dress up opinion as fact, or to claim that certain conclusions are inescapable and irrefutable. We won't get to the truth by literary means, and we need to accept that we continually over-estimate how quickly things will change when extrapolating from the present – and continually under-estimate how different from our predictions the long-term future will be. That's a level uncertainty that frustrates those looking for a single-issue "hook" on which to hang concrete action, but is nevertheless the world we actually live in.

Finished on Mon, 04 Apr 2016 13:39:29 -0700.   Rating 2/5.