Small Is Beautiful

by E.F. Schumacher (1973)


I greatly enjoyed Shumacher’s perspective and found this largely a pleasure to read. It does get bogged down a bit at the end IMO with its theoretical talk of the structural organization of companies, and it is a little repetitive with arguably a dearth of concrete examples. But those are small complaints with a book that remains perhaps more timely now than when it was first written 40-some years ago.

One of the strongest points I found — apart from the compelling main theme that we simply must begin to consider more than just profit as part of our economic model — was Shumacher’s criticism of how nationalization far too often does nothing but replace owners while maintaining the same profit-based model. He then loosely outlines some commonsense policies to ensure that nationalized enterprises will alter operations in order to emphasize the public benefit at least as much as profit.

Another of his strongest points toward the end of the book is a precursor to Elizabeth Warren’s (and Obama’s) recent “You didn’t build that” arguments, which aroused such misguided outrage when uttered 4-5 years ago. He irrefutably points out all of the publicly-funded infrastructure — roads, police, the education of their workforce, etc. — that private companies benefit from without ever having paid for, and reframes taxation as a more than fair (because so piddling) reimbursement for this infrastructure.

When viewed from this exceedingly rational perspective, you can’t help but feel outraged by the continual griping about (and evasion of) taxes by corporations. They are literally refusing to pay for the foundation of their businesses, which has been provided by the government and hence you and me. And we accept it because we’ve swallowed their propaganda about taxes being so burdensome and invasive. To drive home his point, Shumacher proposes that entrepreneurs attempt to start up the same business in a developing country to see how far they get without decent roads, reliable security/laws, or an educated workforce. The infrastructure that they take for granted and for which they avoid paying makes an inarguably drastic difference in their bottom line.

One last point that I would be remiss to omit is that of Intermediate Technology which Shumacher presents as a necessary way to include local populations in their own country’s development. If everything is focused on the newest technology and the most capital-intensive factories, everything (including labor and training) will have to be imported and the “development” will benefit nobody but a wealthy few in the urban centers, contributing to the “dual economies” phenomenon that can be so fatal in developing countries. This argument dovetailed nicely with the book I just finished, Progress Without People, which focuses exclusively on the role of technology in disenfranchising workers.

All in all this book is deserving of the encomia it still receives. It is an important book, and one that should be read by any student of Economics, Business, Political Science or Public Policy/Affairs/Administration. Sure you could argue that it’s too pie-in-the-sky, but then again you’d only be doing so from the traditional economic paradigm in which profit is the single-most important factor (which is kind of Shumacher’s entire point).


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