Reflections on E. F. Schumacher’s Small is Beautiful by Ruth Potts

by | Mar 28, 2023

Our Head of Regenerative Economics reflects on the continuing and changing relevance of E. F. Schumacher’s influential book 50 years after publication.

Re-reading E. F. Schumacher’s vibrant mixture of philosophy, ecology and economics fifty years after publication, what is most striking about Small is Beautiful, is its bold idealism. It contains the kind of daring imaginative speculation that we need so much more of for the times we’re living through. What is also striking is that Schumacher was right. Scale does matter, ownership is critical, and we need to think very differently about what work could be.

We forget just how influential Small is Beautiful was. The book was one of the Times Higher Education’s 100 most influential books of the last century -a staple of the progressive bookshelf of the 1970s. In the decades that followed, small became cool but rather than transforming our economic system, it was taken up as a branding strategy which for a time masked the ongoing concentration of political and economic power. Gigantism triumphed, HSBC is marketed as a local bank, and Amazon, one of the world’s largest and most voracious corporations, is mediated through your local delivery driver.

But small is on the rise again. And small wasn’t the only thing Schumacher was interested in. It’s not even what he wanted to call the book. Yet as the economist Andrew Simms points out, if E. F. Schumacher’s great work had been called the Principle of Subsidiarity Function it might not have reached the millions it did.

Schumacher’s interest was not in smallness, per se. He was interested in “appropriateness of scale”. And not just appropriate scale, but democratic ownership. Nationalised industries, he argued, did not need to be nationwide, rather a collaborative of smaller democratically owned enterprises. While accepting the value of small private enterprise Schumacher thought that for large-scale enterprise, private ownership was a fiction for the purpose of enabling functionless owners to live parasitically on the labour of others. Think of Amazon, Walmart, Facebook. All delivering private affluence and public squalor.

Ruth Potts

Ruth Potts

Ruth Potts is head of our Regenerative Economics programme. She is a researcher, facilitator, artist and activist who also works on the Green New Deal in the office of Caroline Lucas MP.

Read More

The triumph of gigantism has left us increasingly alienated and alone, with rising and intolerable levels of inequality within and between nations, lower levels of trust and community, increased loneliness and depression. What big can’t provide, Schumacher instinctively recognised is relationship. Returning to scale brings us into contact with the human, with one another and with the natural world we are part of. It puts us into touch with the consequences of our actions and brings us into relationships of care and maintenance. This spills over into the realm of work, too.

One of the recurrent themes in Small is Beautiful is how modern organisations stripped the satisfaction out of work, making the worker no more than an anonymous cog in a huge machine. Skill was no longer important, nor was the quality of human relationship. Human beings were expected to act like adjuncts to the machines of the production line.  For Schumacher, drawing on Buddhist thought, work should be part of the good life. The cultivation of friendship, enjoyment of the arts, participation in useful work, caring for others, the pursuit of self-fulfilment and enabling the fulfilment of others were examples of the things that really mattered, not the acquisition of goods beyond basic needs. Schumacher’s answer was to go back to the human scale: human needs and human relationships, from which naturally springs the ethical response of stewardship for one another and of the ecosystem we share.

Schumacher was also clear about the impossibility of endless economic growth on a finite planet, and its undesirability: The “idea of unlimited economic growth, more and more until everybody is saturated with wealth, needs to be seriously questioned on at least two counts: the availability of basic resources and, alternatively or additionally, the capacity of the environment to cope with the degree of interference required”. The activist Greta Thunburg has more recently described this as the fairytale of endless economic growth.

The ideas set out in Small is Beautiful are deeply indebted to Gandhi and the economist J C Kumrappa. In 1955, Schumacher spent three months as economic advisor in Myanmar, where, under the influence of Gandhi, he became radically critical of the effects of Western-led ‘development’. Acutely critial of the World Banks imposition of expensive, grand projects, he sought to promote the use of simpler, less-expensive locally controlled technologies. In 1965 he set up the Intermediate Technology Development Group – now Practical Action – to advance human scale development and critique the continuation of colonialism through economic means implemented by the international financial institutions.

There are omissions in Small is Beautiful, of course. It is odd given the emphasis on relationship that Schumacher doesn’t address care, that basic function on which all life depends. Today, we might also expect Schumacher to acknowledge the colonial debt owed to India by the UK. According to the economist Utsa Patnaik, in research published by Colombia university press in 2018, $45 trillion was siphoned out of India over roughly 200 years. In any meaningful sense the United Kingdom didn’t develop India, India developed the United Kingdom.

Any alternatives we advance today must be rooted in global justice – they must be restorative and must involve reparations. The most exciting projects and proposals do just that and are locally rooted, but global in outlook. As a strident and unrelenting critic of the World Bank Schumacher would have supported the Barbadian Prime Minister Mia Mottley’s Bridgetown Initiative. At the heart of the proposal is the establishment of a climate mitigation trust underpinned by the release of $650bn from the IMF through a mechanism called special drawing rights, which allows members to borrow from each other’s reserves at very low interest rates.

Schumacher would also have been supportive of the many initiatives re-localising economic activity and rebuilding community from the grassroots up. From Co-operation Jackson in Jackson Mississipi, the growing global Via Campesina movement, Civic Square in the UK and Community Wealth Building from Preston to Torbay to the application of Kate Raworth’s doughnut economics to the life of cities around the world people are getting together to take meaningful control of their circumstances and their lives.

Our task is much more urgent now than when Schumacher was writing at the dawn of the 1970s. For those with any remaining doubts on that point, look to the IPCC’s latest synthesis report. Can we turn the world back to scale in time? We can’t know, but perhaps we can draw on the advice of the speculative fiction author Octavia Butler. In one of her essays she recounts an exchange with a young man who had asked her what the answer was to ending the suffering in the world. “…there’s no single answer that will solve all of our future problems. There’s no magic bullet. Instead there are thousands of answers – at least. You can be one of them if you choose to be.”

– Ruth Potts, March 2023

Find out more about studying MA Regenerative Economics and apply to join the programme in September via the button below.