Andrew Simms, policy director of nef (new economics foundation)
If EF Schumacher's great work on rethinking economics had been called the Principle of Subsidiary Function its audience, I suspect, might not have reached the millions that were touched by Small is Beautiful.
Yet the former is a more accurate description of the concept at the heart of his work and the latter, in spite of being key to his book's success, not only did Schumacher resist, but it became a caricature of his ideas, easier for opponents to dismiss than the subtlety of his actual arguments. Because Schumacher's interest was not in smallness, per se. That would, in every sense of the term, be small-minded. He was interested in "appropriateness of scale".
The more accurate, if cumbersome, term "subsidiarity" he borrowed from the teachings of the Catholic church. In a papal encyclical, Pope Pius XII put it like this: "It is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organisations can do."
Things are best done, in other words, at the smallest appropriate scale. Hence, Schumacher's vision wasn't that everything should be small and local, but that in all things, ranging from decision-making in firms, to growing and distributing food and generating energy, our default position should be toward human scale. In this, the distance between decision and consequence, production and consumption, is kept as short as usefully and practically possible.
Every neighbourhood might, therefore, have its own bakery, but not a factory making trains. He wrote: "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." In a warning that with the growth, concentration of ownership, power and market share of modern multinational corporations more, not less relevant Schumacher adds: "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."
The bitterly ironic phrase synonymous with the finance-driven economic collapse of the last four years – "too big to fail" – is a perfectly dark reflection of Schumacher's irresistibly optimistic vision for reinventing economics as if people (and the planet) mattered.
There couldn't be a better illustration of the failure of economics at the macro level to develop a theory of scale than the current crisis over the future of euro. How ironic that a European Union that designed in "subsidiarity" as a political insurance policy, is collapsing partly because its super-size currency is chronically incapable of meeting the needs of such a diverse range of economies.
In some ways Schumacher was culturally conservative. His understanding of the role of women in the economy was a poor reflection of his times. Marilyn Waring's classic work on feminist economics, If Women Counted, published a decade after Schumacher's death, is a necessary addition to Small is Beautiful. But, otherwise, the sheer breadth of his challenge to economics, and its bristling relevance to now is extraordinary.
Even with the benefit of far more sophisticated ecosystems modelling (which merely reinforces his analysis) his thoughts on how to re-engineer industry and work, the management of natural resources and the purpose of economics itself have not been bettered. He understood very clearly the need to make finance subservient to human needs, environmental imperatives and the real economy, and promoted democratic trusteeship as an ownership and management model to achieve it. This, he wrote, overcomes, "the reductionism of the private ownership system and uses industrial organisations as a servant of man, instead of allowing it to use men simply as means to the enrichment of the owners of capital".
As we look around the world at the backlash against inequality and the tyranny of casino finance, a passage from Small Is Beautiful's epilogue rings out. He quotes admiringly from a government report that concluded: "The fundamental questioning of conventional values by young people all over the world is a symptom of the widespread unease with which our industrial civilisation is increasingly regarded." Without a paradigm shift, it adds, "the downfall of civilisation will not be a matter of science fiction. It will be the experience of our children and grand-children".
Yet the former is a more accurate description of the concept at the heart of his work and the latter, in spite of being key to his book's success, not only did Schumacher resist, but it became a caricature of his ideas, easier for opponents to dismiss than the subtlety of his actual arguments. Because Schumacher's interest was not in smallness, per se. That would, in every sense of the term, be small-minded. He was interested in "appropriateness of scale".
The more accurate, if cumbersome, term "subsidiarity" he borrowed from the teachings of the Catholic church. In a papal encyclical, Pope Pius XII put it like this: "It is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organisations can do."
Things are best done, in other words, at the smallest appropriate scale. Hence, Schumacher's vision wasn't that everything should be small and local, but that in all things, ranging from decision-making in firms, to growing and distributing food and generating energy, our default position should be toward human scale. In this, the distance between decision and consequence, production and consumption, is kept as short as usefully and practically possible.
Every neighbourhood might, therefore, have its own bakery, but not a factory making trains. He wrote: "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." In a warning that with the growth, concentration of ownership, power and market share of modern multinational corporations more, not less relevant Schumacher adds: "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."
The bitterly ironic phrase synonymous with the finance-driven economic collapse of the last four years – "too big to fail" – is a perfectly dark reflection of Schumacher's irresistibly optimistic vision for reinventing economics as if people (and the planet) mattered.
There couldn't be a better illustration of the failure of economics at the macro level to develop a theory of scale than the current crisis over the future of euro. How ironic that a European Union that designed in "subsidiarity" as a political insurance policy, is collapsing partly because its super-size currency is chronically incapable of meeting the needs of such a diverse range of economies.
In some ways Schumacher was culturally conservative. His understanding of the role of women in the economy was a poor reflection of his times. Marilyn Waring's classic work on feminist economics, If Women Counted, published a decade after Schumacher's death, is a necessary addition to Small is Beautiful. But, otherwise, the sheer breadth of his challenge to economics, and its bristling relevance to now is extraordinary.
Even with the benefit of far more sophisticated ecosystems modelling (which merely reinforces his analysis) his thoughts on how to re-engineer industry and work, the management of natural resources and the purpose of economics itself have not been bettered. He understood very clearly the need to make finance subservient to human needs, environmental imperatives and the real economy, and promoted democratic trusteeship as an ownership and management model to achieve it. This, he wrote, overcomes, "the reductionism of the private ownership system and uses industrial organisations as a servant of man, instead of allowing it to use men simply as means to the enrichment of the owners of capital".
As we look around the world at the backlash against inequality and the tyranny of casino finance, a passage from Small Is Beautiful's epilogue rings out. He quotes admiringly from a government report that concluded: "The fundamental questioning of conventional values by young people all over the world is a symptom of the widespread unease with which our industrial civilisation is increasingly regarded." Without a paradigm shift, it adds, "the downfall of civilisation will not be a matter of science fiction. It will be the experience of our children and grand-children".
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