Small is Beautiful: Economics as if People Mattered by E.F. Schumacher


1973. Harper Perennial. Paperback. 324 pages.

I saw this book in Eva‘s Library Loot back in March, and promptly added it to my to-read list because of that subtitle: Economics as if People Mattered. It’s a phrase I wish I heard more often.

I read Small is Beautiful over the course of three weeks near the end of summer and really liked it. So much of what Schumacher says is still painfully true today. Take this excerpt, where he derides society’s too-high valuation of economic growth:

Anything that is found to be an impediment to economic growth is a shameful thing, and if people cling to it, they are thought of as either saboteurs or fools. Call a thing immoral or ugly, soul-destroying or a degradation of man, a peril to the peace of the world or to the well-being of future generations; as long as you have not shown it to be “uneconomic” you have not really questioned its right to exist, grow, and prosper. p. 44

The excerpt above also shows Schumacher’s skill as a writer. Generally, I like my nonfiction to either be narrative or chock full of anecdotes and story. Small is Beautiful has none of that, and yet Schumacher’s passion for his subject and keen observation of economics in the modern world carried me through the book.

Still, this is a forty-year old economics book. I won’t pretend that its age didn’t show at times – in his discussion of energy and technology, for instance. And Schumacher’s throwaway contention that “women, on the whole, do not need an ‘outside’ job” (p. 60) had me fuming for a while: how could a man so forward-thinking about economics and the environment be so stodgy and traditional about women in the workforce? I know the man was born in 1911, but come on, at least have the decency to explain that position, instead of mentioning it briefly in two sentences, as if it’s not worthy of deeper discussion.

Certainly Schumacher’s unique background played a big part in the formation of his ideas, and I’d recommend reading a quick bio (wikipedia is fine) before reading the book. Born in Germany, Schumacher studied economics in England and eventually became an economic advisor to the Coal Board. He later was an Economic Development advisor in Burma. Though an atheist in his early life, he was interested in the tenets of other religions and converted to Catholicism two years before Small is Beautiful was published. This is how you get an author who champions coal as an energy resource, titles an essay “Buddhist Economics,” and alludes to both the Bible and Gandhi in his arguments. It’s actually a pretty fascinating mix of influences.

I think the best stuff is in the first section, The Modern World, and in the third section where he discusses international development in other countries. The first section is where I found many resonant and relevant passages.

We all know people who freely talk about the brotherhood of man while treating their neighbours as enemies, just as we also know people who have, in fact, excellent relations with all their neighbours while harbouring, at the same time, appalling prejudices about all human groups outside their particular circle. p. 70

Economic policies absorb almost the entire attention of the government, and at the same time become ever more impotent. The richer a society, the more impossible it becomes to do worthwhile things without immediate payoff. Economics has become such a thraldom that it absorbs almost the whole of foreign policy. People say, “Ah yes, we don’t like to go with these people, but we depend on them economically so we must humour them. p. 74

I feel a bit guilty that I’m writing such a quote-heavy review, but there really was so much in this book that hit home for me. Perhaps the idea that has lingered the most in my mind lately is this:

No one, of course, would suggest that output-per-man is unimportant; but the primary consideration cannot be to maximise output per man; it must be to maximise work opportunities for the unemployed and under-employed. p. 184

I have found myself mulling this idea over – what would the world look like if the priority was to increase employment opportunities rather than maximize profits? If the business world thought in terms of how they could provide more jobs for people who needed them?

There are a lot more ideas in this book, such as the way natural resources are treated as an unlimited resource and the problems of transplanting Western economic models into developing countries. However, I don’t have the motivation to make a super-lengthy post, much less an expectation that anyone would want to read a lengthier post.

In conclusion, then, here’s a quote I offer in light of the current government shutdown:

A generous and magnanimous intellectual effort – the opposite of nagging, malevolent criticism – can enable a society, at least for a period, to find a middle way that reconciles the opposites without degrading them both. p. 276


Excerpts from others’ reviews:

Don’t Panic – “There are sections that demand more of you as a reader in both thought and perseverance. The book is not consistently engaging to me, but as a stimulus for making me attempt to use my brain I find it valuable and I’m happy to have re-read it.”

Elemental – “I should point out, I expected the book to be more about ‘how’, but in fact it is more about the ‘why’. I’m still searching for a manual on ‘how’ all this would work in practice (any recommendations out there?). That said, I was definitely ‘engaged’ with this book, veering from complete agreement to total and utter disbelief – always a good sign for a book which will make you think.”

Musings on Peace – “I think it is an important book that should be read by all economists. Keep in mind that while parts of the book may seem dated or tedious, other parts are quite insightful and relevant.”

1 Comment

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One response to “Small is Beautiful: Economics as if People Mattered by E.F. Schumacher

  1. Norm Moyer

    Thanks for the review, Christy. I wonder if there could be a rating for companies/businesses which would give how well they care for people? They rate companies in other ways, why not for this. Maybe someone is already doing this.

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