Chapter 3 : The Role of Economics

I would be a terrible business man. I know that, from growing up with a couple of pretty good ones. Not to say I did not prosper from their labors, but what I do know is that money can buy a lot of things--in my case, a cozy upbringing and a full college education (which I may well have wasted on an Arts degree). What it does not buy is happiness. I suppose we all build our little Tower of Babels, only to have them crumbled and leave us more lost than ever.

Schumacher writes:

"To equate things means to give them a price and thus to make them exchangeable. To the extent that economic thinking is based on the market, it takes the sacredness out of life, because there can be nothing sacred in something that has a price."

How this resonates with me, for I often feel that anything I do is often poisoned when money is involved. In the arts, and probably anything I choose to labor over for whatever "spiritual" reasons I choose, discussion of money plays like a flat note in an otherwise beautiful arrangement. It hints that my labors are simply for the end result of fiscal gain, rather than for my own pleasure or altruistic motives.

I suspect that gift cards, in an odd way, serve to soften the blow. There is something more altruistic about a gift card to Olive Garden than receiving a wad of hard-earned cash, quickly stuffed in your pocket as if it never existed. I suppose then, the hard-lined economists that Schumacher distastefully speaks of would consider me an anomaly, or in his own words, "uneconomic."

As Michelle and the book thus far has spoke of, the economic theory is flawed since it presupposes an infinite supply and demand. We know now that the supply is actually quite finite, or could well become so.

And yet, do I believe that recognizing this fact would cause us, as bargain-hunting consumers, to discontinue our industries for greater spiritual causes, such as conservation? I think we can, but it certainly wouldn't be for the objective cause of conservation, but rather to ward off the dangers that we might make for ourselves if our recklessness continues.

I had just read a poll that said that Americans would reduce their driving habits if gasoline prices rose to $3.50. I suspect that similar polls may have taken place when gas neared a meager 2 bucks. In my cynicism, I'd believe that gas would have to rise much higher before middle America considered the bus to be a wise economic choice--almost to the point where a vehicle that runs on olive oil would actually be nominal.

Until then, Live Earth and Al Gore has a steep hill to climb--as steep as their rising temperatures charts. I should conclude that economics, and science alike, are amoral. People are not. But often their moral notions are muddied by economics--money as a divine creation. There are certain presidential candidates that believe that money is a gift from god--and to throw a stone in the gears of our economic system is to disobey god, endanger democracy, and create war, poverty, and terrorism.

Much of my motivation is not economic, or rather, "uneconomic," but I do live in a system that doesn't recognize such a thing--and forces upon me, again and again, the tacky exchange of dollars and cents, that so poisons everything I would rather leave to humble charity and good will.

Chapter 2-Peace and Permanence

Permit me to begin with a metaphor: this past weekend, Brad and I took our dogs to go swimming in the Willamette River. Now, the Willamette is so heavily polluted that it is not safe for humans to swim there. A recent study showed that it contains high enough levels of dissolved Prozac in the water to resolve most depressive complaints. (ok, not quite that high, but still pretty high.) But we go in anyway. Why? Because we grew up near Lake Erie (see Schumacher’s comments [pg. 17 of my edition]), and gosh darn it, if swimming in there didn’t kill us, nothing will.

We as human beings, if used to swimming in muck, will many times continue to swim in muck. Greed, envy, individualism (and a host of other –isms) can all act, to varying degrees, as muck. Perhaps one of Schumacher’s most important points in this chapter is best stated as a question. “Why must we continue to accept as a given the world situation when we are, at best, barely keeping our heads up, and at worst, poisoning ourselves?”

Schumacher opens “Peace and Permanence” by dismantling several false assumptions regarding conventional reasoning on how to establish peace. These erroneous beliefs include:

-universal prosperity will build peace
-universal prosperity is possible
-our science and technology will, at minimum, save us from disaster, and at maximum build universal prosperity. Translated for the poor, this amounts to “Just wait, and eventually the system will work for you too.”(trickle-down economic theory)

Schumacher’s personal conclusion on the matter is that if (and a big if at that) universal prosperity is possible, it cannot be achieved in the modern sense, as it would only be possible through greed and envy. (Schumacher, 19)

By and large, I agree with Schumacher’s perspective, although I find many of his points and assumptions to be a bit simplistic. Schumacher discusses how historically when the rich have taken aggressive action, it has been the result of their fear of the poor. I think that this explanation works, many times, at the local or national level, but it is not a wholly effective predictor of conflict at the international level. Think back in the history of this country, when plantation owners lived in fear of slave revolts. An additional example would be the constant fear that gripped the Russian aristocracy, especially leading up to the events of 1917/18. However, WWI and WWII were fought mostly between rich countries. There are additional scenarios, despite this hang-up, where I can see the Schumacherian perspective working. If Communism is seen as an action of the poor to reconcile their world perspective with that of the rich, then Vietnam/various interventions throughout Latin America (I’m thinking particularly of Guatemala, El Salvador and Chile) make sense. Applying this philosophy to today’s events, particularly the supposed “War on Terror”, becomes more tricky. I believe that perhaps Schumacher would say that this war resulted not out of fear of the poor, but out of greed and the need to acquire more natural resources (but that is pure conjecture).

I see a constant battle in this chapter between Humanism and man’s fundamental animal nature. Can we, as humans, with our ability to manipulate the environment, take steps to better our world? Or, by contrast, even with our technology/science, is “homo economicus” doomed to failure; the victim of her own desires? Schumacher adds a religious overtone to his discussion, believing that man must seek additional direction “wisdom” from a spiritual authority to temper his nature. I believe this to be one of the most controversial aspects of Schumacher’s work. What does “and God gave man dominion over the Earth” really mean? Would it be best, perhaps, to assume that there is no celestial help, and that we really must learn to care for ourselves? However, if we take this perspective, are we ultimately doomed to failure anyway? Does our search for religious perspective always force us into spiritual conflict with our fellow humans? These are questions for which there is little rational possibility of a complete answer.

Schumacher goes on to describe the conditions for which science and technology would be most helpful to humanity. These include the development of methods and equipment which are cheap enough to be accessible to the whole of humanity, suitable for small-scale application, and compatible with man’s need for creativity. (Schumacher, 20) I think that many times, at least in developed countries, our orientation is more toward wants than needs; the economy reacts in kind by producing many wants to the ignorance of needs. Consequently, when we innovate, much of this innovative energy is put into innovating more wants, not innovating for our needs. We are on the precipice of a great change, as it seems that some industries are beginning to realize that there is a demand for green products. The fact that it has taken so long to get to this point indicates just what all that change theory from back in the 60’s dictated-that people will hold on to their old ways as hard and as fast as they can. Can we innovate greed out of our industrial process? As Schumacher writes, our systems cannot do it for us.

There are many more items I could put out there for discussion, but one last point: I was routinely struck by how accurately Schumacher gazed into his crystal ball and was correct. The resource wars, the fears over the potential impact of uranium in the wrong hands, alienation and insecurity-these are our modern realities.

I look forward to your comments, as well as the direction our discourse takes over the rest of the book. Please do not feel that all posts have to be this long, that’s just how this one turned out. =-)

Chapter 1: The Problem of Production

Schumacher opens Small is Beautiful (1973) with a chapter on "the problem of production." As he sees it, "[o]ne of the most fateful errors of our age is the belief that 'the problem of production' has been solved" (3*). Such a fictitious belief sees the "rich countries" as essentially industrialized and able to produce goods and services in mass quantities (presumably available to all), with all that remains being a need to focus on "education for leisure" and the "transfer of technology" to the "poor countries" (3). Opposing this attitude, Schumacher's goal in the first chapter is to show that problems do indeed still exist.

MODERN MAN'S ATTITUDE TOWARD NATURE
(OR HUMANITY'S FORGETFULNESS OF IT'S OWN ROOTS)

For Schumacher, "The arising of this error, so egregious and so firmly rooted, is closely connected with the philosophical, not to say religious, changes during the last three or four centuries in [Western] man's attitude to nature" (4). What exactly is this new attitude? The following text is worth quoting in its entirety:

Modern man does not experience himself as a part of nature but as an outside force destined to dominate and conquer it. He even talks of a battle with nature, forgetting that, if he won the battle, he would find himself on the losing side. Until quite recently, the battle seemed to go well enough to give him the illusion of unlimited powers, but not so well as to bring the possibility of total victory into view. This has now come into view, and many people, albeit only a minority, are beginning to realize what this means for the continued existence of humanity. (4)

This perspective is quite fascinating and worth discussing. Schumacher's assessment rings even truer today in my opinion, as we grow increasingly dependent upon the digital world of computers and the web. Truly, where is the sense of vitality and connection to life in our modern mechanized milieu?

Despite Schumacher's valuable insights here, though, I also think more could have been said to make his case even stronger. He could have easily given historical examples of the frequency of imperialistic attitudes in both modern science and economics. For instance, consider even the earliest modern philosopher-scientists, Francis Bacon and Rene Descartes, with their talk of dominating and lording over nature.

Also, if time allows it, perhaps we can ask ourselves here another equally important unaddressed question: why exactly have we moved in this direction? Is it simply our increased technological ability to control nature that tempts us down this road, or are there additional factors? Are there religious or philosophical influences? Are evolutionary forces at play, and are they stronger in males than females, as many feminists have argued?

I don't have any sort of final answer, but I think these kinds of questions would be worth considering here, in addition to the diagnosis Schumacher has given.

NATURAL CAPITAL

Another one of Schumacher's central points is the notion that we have failed to see just how dependent we really are upon nature. Previous economic theorists tended to see capital only as that which is produced by humans, while the land and its resources were understood merely as income. Schumacher wants to completely reorientate this vision:

Far larger is the capital provided by nature and not by man--and we do not even recognise it as such. This larger part is now being used up at an alarming rate, and that is why it is an absurd and suicidal error to believe, and act on the belief, that the problem of production has been solved. (5)

In other words, we have failed "to recognize that 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 economist, it lives on irreplaceable capital which it cheerfully treats as income" (9). As far as I can tell, Schumacher was one of the first to speak of "natural capital," an idea that has become increasingly influential since the 1990s, with growing interest in another concept--sustainability--and numerous ecologists and economists in recent years giving estimates of the annual economic value of nature ($2.9 trillion U.S. dollars, according to one calculation).

Still, I wonder how far we can go with this method. Yes, it may be helpful in getting profit driven businesses and corporations (and even governments) to see the $ value of nature, but we still seem to primarily be looking at nature from the perspective of the market. Are there higher values than the almighty dollar (or pound or whatever else) that ought to be influencing our attitude toward nature and humanity?

Schumacher himself suggests higher values, but with little development. For example, after looking at our limited sources of fossil fuels, he makes the following poignant remark: "If we squander our fossil fuels, we threaten civilisation; but if we squander the capital represented by living nature around us, we threaten life itself" (6). Life itself then, seems to be a higher value. Are there others though, such as cultural values for example, that a mere market perspective seems to show little or no concern about (aside from whether they might bring in profit)?

A CLARION CALL

Schumacher closes the opening chapter then with a urgent call for us to change paths from our present "collision" course. He admits that humans "have indeed been living on the capital of living nature for some time, but at a fairly modest rate." "[T]he changes of the last twenty-five years, both in the quantity and in the quality of man's industrial processes," however, "have produced an entirely new situation"--"our present crisis" (7-8). As he sees it, we are now in the process of destroying the very foundations upon which we exist, yet many of us still don't even realize it.

Schumacher believes everyone needs to get involved in order to tackle these problems, for "[to talk about the future is useful only if it leads to action now" (9-10). What follows are a number of prescriptions which will presumably be elaborated upon throughout the book:

We must thoroughly understand the problem and begin to see the possibility of evolving a new life-style, with new methods of production and patterns of consumption: a life-style designed for permanence [much akin to the "sustainability" idea mentioned earlier]...

In industry, we can interest ourselves in the evolution of small-scale technology, relatively nonviolent technology, "technology with a human face," so that people have a chance to enjoy themselves while they are working, instead of working solely for their pay packet and hoping, usually forlornly, for enjoyment solely during their leisure time...

We can interest ourselves in new forms of partnership between management and men, even forms of common ownership. (10)

All of these potential remedies are worth exploring in greater detail, but I'm not sure we should do this now since they look to (hopefully!) be further developed in later chapters.

Lastly, Schumacher closes with the following remark--"we still have to learn how to live peacefully, not only with our fellow men but also with nature and, above all, with those Higher Powers which have made nature and have made us" (10). Again, I'm not entirely sure what he means here, but since it looks like he'll be dealing specifically with this in the next chapter, perhaps discussion of this too can wait until then.
_________
* Excerpts cited here come from the 25th anniversary edition: E. F. Schumacher, Small is Beautiful: Economics As If People Mattered, 25 years later . . . with commentaries (Point Roberts, WA: Hartley & Marks, 1999).

Introduce Yourself

Okay everyone, this is where you can introduce yourselves in order to help make these blog chats more friendly and personal.

So, especially for those of you who are reading/posting participants, a brief "introduction" of yourself in the comments section below will be quite helpful. You know, the usual stuff should suffice: name (first is sufficient), where you're from, perhaps a little personal background, as well as what if anything interests you initially about this book. Feel free to get more creative though...

Reading Schedule

The reading schedule for Small is Beautiful (1973) will be somewhat flexible, kicking things off with chapter one at the beginning of July. A post (and discussion) will be devoted to each chapter, with different people initiating them each time. Following my first entry a few days after July 4th, the goal will be for each new post to a week or so after the previous one. Considering there are 19 chapters total, that should have us wrapping things up sometime in the fall.

Here's the schedule then, currently updated through Part II of the book:

Part I - The Modern World

Ch. 1 - "The Problem of Production" - Chris
Ch. 2 - "Peace and Permanence" - Michelle
Ch. 3 - "The Role of Economics" - Steve
Ch. 4 - "Buddhist Economics" - Ben
Ch. 5 - "A Question of Size" - Eric

Part II - Resources

Ch. 6 - "The Greatest Resource - Education" - Mike
Ch. 7 - "The Proper Use of Land" - Chris
Ch. 8 - "Resources for Industry" - Michelle
Ch. 9 - "Nuclear Energy - Salvation or Damnation?" - Steve
Ch. 10 - "Technology with a Human Face" - Ben

Part III - The Third World

Ch. 11 - "Development" - Eric
Ch. 12 - "Social and Economic Problems Calling for the Development of Intermediate Technology" - Mike
Ch. 13 - "Two Million Villages" -
Ch. 14 - "The Problem of Unemployment in India" -

Part IV - Organization and Ownership

Ch. 15 - "A Machine to Foretell the Future?" -
Ch. 16 - "Towards a Theory of Large-Scale Organization" -
Ch. 17 - "Socialism" -
Ch. 18 - "Ownership" -
Ch. 19 - "New Patterns of Ownership" -

Epilogue -

Schumacher in the news...

In their April 9, 2007 cover story, "The Global Warming Survival Guide", Time magazine presented 51 things people can do to help protect and save the environment.

If you can make it all the way through to the end of the list, you'll come to the following for point number 51:

51. Consume Less, Share More, Live Simply

The chance to buy a carbon offset—in essence, an emissions indulgence—appeals to the environmental sinner in all of us. But there is an older path to reducing our impact on the planet that will feel familar to Evangelical Christians and Buddhists alike. Live simply. Meditate. Consume less. Think more. Get to know your neighbors. Borrow when you need to and lend when asked. E.F. Schumacher praised that philosophy this way in Small Is Beautiful: "Amazingly small means leading to extraordinarily satisfying results."

About the blog...

Over the next few months, this blog will serve as a virtual space for discussion of the philosophy and ideas of the famous 20th century economist E. F. Schumacher. Our focus will especially be upon his most well known book, Small Is Beautiful: Economics As If People Mattered (1973).

Posting will begin just after the 4th of July and should continue through September. Click here to meet some of the other participants and here to view the reading schedule.

All who are interested, feel free to join in.