THE FUTURE OF FINANCE BLOG

The Relevance of EF Schumacher in the 21st Century

April 3, 2011

People often ask me to recommend “just three books” in order to study the ideas behind my current thinking.  While this is an impossible task, when forced I usually answer Small is Beautiful, by E.F. Schumacher, For the Common Good, by Herman Daly and John Cobb, and The Great Work, by Thomas Berry, listed in the order that I read their work. A more complete list of recommended reading can be found in our Resources Section.
In May of 2008, I wrote a paper titled “The Relevance of E.F. Schumacher in the 21st Century,” at the request of the E.F. Schumacher Society, now called theNew Economics Institute, a close partner of both the New Economics Foundation in the UK and Capital Institute.  That essay begins:

The inevitability of globalization and the dominance of increasingly large and powerful global corporations and financial institutions are accepted facts of contemporary economic life. Competitive forces pushing us further in this direction continue to build. The benefits of scale are real, furthered by accelerating technological advances. A former CEO of JPMorgan once proclaimed, “Size is not a strategy.” He was wrong. In 2001 that American banking dynasty came to a close with its takeover by Chase Manhattan Bank.

As industries mature, scale becomes more critical out of competitive necessity. The state capitalism of the emerging powers China and Russia raises the stakes further in our competitive global economy. Within this context Fritz Schumacher’s best-selling book, Small Is Beautiful, and his ideas about human scale, decentralization, and appropriate technologies might seem quaint and out of touch. We may believe that “small is beautiful” in our hearts, but our heads are teaching us that “big wins,” and experience has taught us to ignore our logical heads at our peril. Nevertheless, our conscience is telling us, now more than ever, that something is amiss. A new era is struggling to unfold. While the Obama phenomenon may in some ways reflect this change, it does not by any means define it. We need to pause and reflect carefully in light of what we see happening to the health and prosperity of individuals, whole populations, other species, oceans, the soil, rainforests, the atmosphere—indeed the entire planetary system—if we are awake enough to notice.

Something about our global economic system is broken…

Since writing that paper, I’ve been working to help “mainstream” some of the ideas of E.F. Schumacher, and am more confident than ever of their relevance in the 21st century.  So it was with keen interest that I read Robert McCrum’s essay, E.F. Schumacher: Cameron’s Choice” in the UK’s Guardian on March 27th.   The timely piece reveals Schumacher’s prescience regarding the risks of nuclear power and details how Schumacher’s ideas are enjoying a revival in the UK thanks suprisingly to conservative Prime Minister David Cameron.  While people will debate whether Cameron’s interpretation of Schumacher’s ideals are authentic, the relevance of these ideas to today’s multitude of complex and interconnected challenges should not be in doubt.  McCrum closes the essay with a reminder of Schumacher’s most foundational principle:

“Our task is to look at the world and see it whole.”

If only a similar Schumacherian renaissance might appear on the horizon in the United States.  Perhaps from the Tea Party which is in need of a coherent organizing philosophy?

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