- Written by: Kamran Mofid
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'Over the last decade or so, I have been trying as hard as I can to highlight the rotten state of the value-free departments of economics and the many business schools around the world, and how they have been infected by the now discredited neo-liberalism and the “Washington Consensus”. Recently, a dear friend sent me a copy of a letter that had been published in The Times. This is a very important piece of evidence confirming that what I have been saying is true. I have re-typed it below. It says it all.
Unless, somehow, this rotten and destructive approach is reversed, I cannot see how we can change the world for the better. The key is education for the common good - what we have on offer now is all for the common bad! Lest we forget, it was the same establishment, the London School of Economics, that turned down the funding offered (see the letter) to set up a Chair in Business Ethics, which later on accepted millions from the Gaddafi family and sold a PhD to his son!
The Times, 8 March 2011
Sir, Around 1991 I offered the London School of Economics a grant of £1 million to set up a Chair in Business Ethics. John Ashworth, at that time the Director of the LSE, encouraged the idea but had to write to me to say, regretfully, that the faculty had rejected the offer as it saw no correlation between ethics and economics. Quite.
House of Lords
What a sorry state of affairs! Shame on those at the LSE, and all others like them elsewhere, bringing Economics into such disrepute, not to mention business and the world of education, and in the process so destructively short-changing their students.
I was born in Tehran, Iran in 1952. In 1971, after finishing high school, I came to England to further my education. In 1974 I married my English wife, Annie, and two years later we emigrated to Canada. I received my BA and MA in Economics from the University of Windsor in 1980 and 1982 respectively. We returned to England in 1982, and in 1986 I was awarded my PhD in Economics from the University of Birmingham.
From 1980 onwards, for the next twenty years, I taught economics in universities, enthusiastically demonstrating how economic theories provided answers to problems of all sorts. I got quite carried away by the beauty, the sophisticated elegance, of complicated mathematical models and theories. But gradually I started to have an empty feeling.
I began to ask fundamental questions of myself. Why did I never talk to my students about compassion, dignity, comradeship, solidarity, happiness, spirituality – about the meaning of life? We never debated the biggest questions. Who are we? Where have we come from? Where are we going to?
I told them to create wealth, but I did not tell them for what reason. I told them about scarcity and competition, but not about abundance and co-operation. I told them about free trade, but not about fair trade; about GNP – Gross National Product – but not about GNH – Gross National Happiness. I told them about profit maximisation and cost minimisation, about the highest returns to the shareholders, but not about social consciousness, accountability to the community, sustainability and respect for creation and the creator. I did not tell them that, without humanity, economics is a house of cards built on shifting sands.
These conflicts caused me much frustration and alienation, leading to heartache and despair. I needed to rediscover myself and a real-life economics. After a proud twenty-year or so academic career, I became a student all over again. I would study theology and philosophy, disciplines nobody had taught me when I was a student of economics and I did not teach my own students when I became a teacher of economics.
It was at this difficult time that I came to understand that I needed to bring spirituality, compassion, ethics and morality back into economics itself, to make this dismal science once again relevant to and concerned with the common good. It was now that I made the following discoveries:
Living happily is “the desire of us all, but our mind is blinded to a clear vision of just what it is that makes life happy”. The root of happiness is ethical behaviour, and thus the ancient idea of moral education and cultivation, is essential to ideal of joyfulness.
Economics, from the time of Plato right through to Adam Smith and John Stuart Mill, was as deeply concerned with issues of social justice, ethics and morality as it was with economic analysis. Most economics students today learn that Adam Smith was the ‘father of modern economics’ but not that he was also a moral philosopher. In 1759, sixteen years before his famous Wealth of Nations, he published The Theory of Moral Sentiments, which explored the self-interested nature of man and his ability nevertheless to make moral decisions based on factors other than selfishness.
In The Wealth of Nations, Smith laid the early groundwork for economic analysis, but he embedded it in a broader discussion of social justice and the role of government. Students today know only of his analogy of the ‘invisible hand’ and refer to him as defending free markets. They ignore his insight that the pursuit of wealth should not take precedence over social and moral obligations, and his belief that a ‘divine Being’ gives us ‘the greatest quantity of happiness’.
They are taught that the free market as a ‘way of life’ appealed to Adam Smith, but not that he distrusted the morality of the market as a morality for society at large. He neither envisioned nor prescribed a capitalist society, but rather a ‘capitalist economy within society, a society held together by communities of non-capitalist and non-market morality’. As it has been noted, morality for Smith included neighbourly love, an obligation to practice justice, a norm of financial support for the government ‘in proportion to [one’s] revenue’, and a tendency in human nature to derive pleasure from the good fortune and happiness of other people.
The focus of economics should be on the benefit and the bounty that the economy produces, on how to let this bounty increase, and how to share the benefits justly among the people for the common good, removing the evils that hinder this process. Moreover, economic investigation should be accompanied by research into subjects such as anthropology, philosophy, politics and most importantly, theology, to give insight into our own mystery, as no economic theory or no economist can say who we are, where have we come from or where we are going to. Humankind must be respected as the centre of creation and not relegated by more short term economic interests.
‘Economic rationality’ in the shape of neo-liberal globalisation is socially and politically suicidal. Justice and democracy are sacrificed on the altar of a mythical market as forces outside society rather than creations of it. However, free markets do not exist in a vacuum. They require a set of impartiality in government, honesty, justice, and public spiritedness in business. The best safeguard against fraud, theft, and injustice in markets are the cardinal virtues of justice, temperance, fortitude, and prudence, and the theological virtues of faith, hope, and charity.
Every apparently economic choice is, in reality, a social choice. We can choose a society of basic rights – education, health, housing, child support and a dignified pension – or greed, pandemic inequality, ecological vandalism, civic chaos and social despair. Modern neo-liberal economics ignores the first and promotes the second path as the way to achieve economic efficiency and growth.
The moral crises of global economic injustice today are integrally spiritual: they signal something terribly amiss in the relationship between human beings and God.
Where the moral life and the mystery of God’s presence are held in one breath – because the moral life is the same as the mystical life – the moral agency may be found for establishing paths towards a more just, compassionate and sustainable way of living. ‘Moral agency’ is the active love of creation (for oneself as well as for other people and for the non-human creation); it is the will to orient life around the ongoing well-being of communities and of the global community, prioritising the needs of the most vulnerable; it is the will to create social structures and policies that ensure social justice and ecological sustainability.
In contrast to this sensibility, which weds spirituality and morality, stands modern economics’ persistent tendency to divorce the two, in particular to dissociate the intimate personal experience of a close relationship with God from public moral power.
It is the belief in collective responsibility and collective endeavour that allows individual freedom to flourish. This can only be realised when we commit ourselves to the common good and begin to serve it.
There are three justifications for the common good which are not commonly discussed in economics:
- Human beings need human contact, or sociability. The quality of that interaction is important, quite apart from any material benefits it may bring.
- Human beings are formed in the community – their education and training in virtue (their preferences) are elements of the common good.
- A healthy love for the common good is a necessary component of a fully developed personality.
The marketplace is not just an economic sphere, ‘it is a region of the human spirit’. Profound economic questions are divine in nature; in contrast to what is assumed today, they should be concerned with the world of the heart and spirit. Although self-interest is an important source of human motivation, driving the decisions we make in the marketplace every day, those decisions nevertheless have a moral, ethical and spiritual content, because each decision we make affects not only ourselves but others too. We must combine the need for economic efficiency with the need for social justice and environmental sustainability.
The greatest achievement of modern globalisation will eventually come to be seen as the opening up of possibilities to build a humane and spiritually enriched globalised world through the universalising and globalising of compassion. But for ‘others’ to become ‘us’, for the world to become intimate with itself, we have to get to know each other better than we do now. Prejudices have to disappear: we have to see that the cultural, religious and ethnic differences reflect an ultimate creative principle. For this to happen, the great cultures and religions need to enter into genuine dialogue with each other.
It has been my pleasure and honour to put into practice these discoveries by founding the Globalisation for the Common Good Initiative.'- Reprinted from Vijayvaani
- Written by: Kamran Mofid
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Dr. Kamran Mofid, founder of the Globalisation for the Common Good Initiative, spoke at the invitation of the Youth Time and the World Public Forum Dialogue of Civilisations (WPFDC) which took place April 16-20, 2011. Mofid delivered a series of plenary speeches as well as a student-led seminar on “Education of My Dream” at Moscow State University and Moscow State Institute of International Relations (University) of the MFA of Russia.
You can watch the videos of Dr. Mofid's presentations below:
1- The Opening Ceremony..Dr. Mofid from the 42 minutes to 58 minutes:
2- Afternoon Session: 'Education of My Dream'
GCGI is our journey of hope and the sweet fruit of a labour of love. It is free to access, and it is ad-free too. We spend hundreds of hours, volunteering our labour and time, spreading the word about what is good and what matters most. If you think that's a worthy mission, as we do—one with powerful leverage to make the world a better place—then, please consider offering your moral and spiritual support by joining our circle of friends, spreading the word about the GCGI and forwarding the website to all those who may be interested.
We can all imagine the world we want to build; now's the time to start its construction. -Photo: Via the BBC
- Written by: Kamran Mofid
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First written on 11 April 2011
Updated on 9 November 2015
Small is Beautiful:
The Wisdom of E.F. Schumacher
16 August 1911-4 September 1977
"Perhaps we cannot raise the winds. But each of us can put up the sail, so that when the wind comes we can catch it."
- E. F. Schumacher,Small Is Beautiful: a study of economics as if people mattered
Kamran Mofid- (Written in appreciation of E.F. Schumacher and in celebration of his centenary)
It is nearly 50 years years since the publication of a slim volume of articles and essays titled Small is Beautiful: Economics as if people mattered. The year 1973, as Martin Hodgson writing in the Guardian has noted, was a timely one for radical environmental thinking. The first UN conference on sustainable development had been held the previous year, and soon after, within months of each other, Greenpeace, Friends of the Earth and the UK Green party were founded.
Small is Beautiful rapidly became a bestseller and the ideas that Schumacher popularised helped shape modern environmentalism, development theory and the global justice movement.
Equal parts economic analysis, spiritual tract and radical manifesto, the book reflected the contradictory nature of its author - a patrician academic who was also passionately interested in Eastern philosophy. What bound his work was a central belief that modern society had lost touch with basic human needs and values - and in doing so had failed both the planet and its people.
In the name of profit and technological progress, Schumacher argued, modern economic policies had created rampant inefficiency, environmental degradation and dehumanising labour conditions. "Ever bigger machines, entailing ever bigger concentrations of economic power and exerting ever greater violence against the environment, do not represent progress: they are a denial of wisdom. Wisdom demands a new orientation of science and technology towards the organic, the gentle, the non-violent, the elegant and beautiful," he wrote.
The remedy he proposed - a holistic approach to human society, which stressed small scale, localised solutions - flew in the face of economic orthodoxies of the time: "I have no doubt that it is possible to give a new direction to technological development, a direction that shall lead it back to the real needs of man, and that also means: to the actual size of man. Man is small, and, therefore, small is beautiful."
Schumacher’s Small is Beautiful is an appeal to the deep instinctive understanding of the common good that all people share. It is an appeal to our essential humanity. It deals with some of the most pressing concerns of people the world over, concerns which every generation must consider and answer. It is written in the hope of inspiring idealism and the desire to give the practical help the world so greatly needs. The book encourages us to reflect on and to understand things we all seem to have forgotten: What is Education? What is Knowledge? What is Wisdom? What is the source of true happiness and well-being? What is the good life? What is the purpose of economic life? What does it mean to be a human being living on a spaceship with finite resources? What paths can be recommended to shift the current destructive global political-economic order from one of unrestrained economic growth, profit maximisation and cost minimisation, to one that embraces material wealth creation, yet also preserves and enhances social and ecological well-being and increases human happiness and contentment?
I discovered Schumacher and “Small is Beautiful” in 1979. To be precise: on August 11, 1979. I had written the date I purchased the book on the first page. At that time I was an undergraduate studying economics at the University of Windsor, Ontario, Canada.
When I saw the book in the window of a second-hand book shop, I was, very much intrigued by the title and also the sub-title Economics as if people mattered which caught my imagination. Thus, I bought the book and began to read it immediately. I could not put it down and finished it in a few days.
For sure I didn't understand every word, indeed I suspect I was lost at times, but it thrilled me. Here was a new way of looking at many questions in my head about economics and the economy, an approach that I felt in my enthusiasm was so absolutely right that it couldn't possibly be opposed. I was instantly converted to a new way of looking at my personal life as well as the socio-political and economic concepts. I suspect I became a `small is beautiful' man!
Schumacher’s thoughts have never left me. Yes, I moved on, put the book to one side and no doubt compromised. Recently however, I've gone back to it. I have realised that its insights are more relevant than ever. I know again, as I did 32 years ago, that Fritz Schumacher was absolutely right and I hope that, in a modest way, we are being worthy of his legacy (See more below- Epilogue: E.F. Schumacher and I).
At present the wisdom of E. F. Schumacher seems more relevant than ever. As Walter G. Moss in an excellent article has observed, Schumacher’s wisdom is best displayed in his writings and talks of the 1970s. He was always a seeker after truth, an important quality that most wise people share. One wisdom scholar noted by Moss has written:
“Wisdom, maturity, and happiness seem to go hand in hand with figuring out how life and the world work — with discovering the nature of the rules, laws, and programming that dictate what will happen under what conditions. Wise people know that the more deeply and accurately they come to understand key processes within and without, the better able they are to live their personal lives in harmony with what is happening moment-to-moment. Wise people want to find out. Wise people are reality seekers.”
In A Guide for the Perplexed Schumacher comments that “the traditional wisdom of all peoples in all parts of the world . . . [has] become virtually incomprehensible to modern man.” He states that “traditional wisdom, including all the great religions, has always described itself as ‘The Way’ and given some kind of awakening as the goal.” He frequently refers to other religions or quotes varied religious thinkers and mystics like Buddha, the Muslim Sufi poet Rumi, Lao-tzu (founder of Taoism), as well as Christians like the medieval Thomas Aquinas and older Western philosophers such as Socrates, Plato, and Aristotle. He even includes writers like Dante and Shakespeare as “outstanding representatives” of traditional wisdom. By the final decades of his life, he had concluded that “it may conceivably be possible to live without churches; but it is not possible to live without religion, that is, without systematic work to keep in contact with, and develop toward, Higher Levels than those of “ordinary life” with all its pleasure or pain, sensation, gratification, refinement or crudity—whatever it may be.”
Schumacher thought that traditional wisdom provided answers to such questions as “What is man? Where does he come from? What is the purpose of his life?” Wisdom “was directed primarily ‘towards the sovereign good,’ i.e., the True, the Good, and the Beautiful, knowledge of which would bring both happiness and salvation,” and it “looked upon nature as God's handiwork and man's mother.” He thought it could “be found only inside oneself. To be able to find it, one has first to liberate oneself from such masters as greed and envy. The stillness following liberation— even if only momentary— produces the insights of wisdom which are obtainable in no other way.”
Schumacher shared Aquinas’s view that wisdom “rightly judges all things and sets them in order.” Whether considering economics, science, technology, politics, the environment, or our own personal life, he thought that wisdom based on the highest values should guide our choices.
He wrote of what he called “Divergent problems.” They involved reconciling opposites such as justice and mercy, “stability and change, tradition and innovation, public interest and private interest, planning and laissez-faire, order and freedom, growth and decay.” He believed that “everywhere society’s health depends on the simultaneous pursuit of [such] mutually opposed activities or aims” and that “no real understanding is possible without awareness of these pairs of opposites which permeate everything man does.” The way to reconcile them was through “such higher forces as love and compassion, understanding and empathy,” and most importantly, wisdom.
To Schumacher’s mind, achieving and being guided by wisdom was the key to solving modern problems. Unless they were guided by wisdom all the scientific and technological inventions and economic thinking of the modern age would do little good. And he gave an example of how wisdom would guide one field of knowledge (economics) when he wrote that “from an economic point of view, the central concept of wisdom is permanence,” which today we would label sustainability.
To summarize Schumacher’s thinking on wisdom:
- It can be found amidst the ideas of the great religious and philosophical systems of the pre-modern age.
- It deals with fundamental questions like “What is the purpose of life?” and how to discover and achieve Truth, Goodness, and Beauty.
- To find it one must first purify oneself from evils like greed and envy.
- It emphasizes and applies higher values such as love, compassion, understanding, and empathy.
- Being guided by it is the key to dealing with our most serious problems, whether economic, environmental, political, or personnel.
How Schumacher’s wisdom can help us in the 21st Century
Today, the world, developing and developed, North and South, East and West, is facing not one meltdown but many simultaneous meltdowns: financial meltdown, nuclear meltdown, ecological degradation, huge economic inequality and disparity, human rights abuses, family breakdown, child neglect, wars, terrorism, bloodshed and death. At the same time, consumerism and materialism has destroyed the fabric of society. The political, business, banking and yes, religious scandals have led to a total lack of trust. Every thing is centred on money.
What these crises have in common is a reckless disregard for the future--especially in the way the economy is run. Creating a sustainable economy--having enough to be happy without cheating the future—although not easy- is what is needed now. We need to learn again to love the world, nature, friendship, dialogue, laughter and joy. We must learn again what it means to be happy and which path to take to find it.
In short, as the world seems to teeter on the edge of catastrophe, we are fearfully beginning to wonder, “What on earth is to be done?” Particularly speaking, the disasters in Japan, the revolutions in the Middle East, the financial, economics and environmental crises, everywhere, demand an answer to this urgent, even desperate, question. There is no doubt that, we should see this multitude of crises as a wakeup call to see things as they are. We should search with an open mind for the wisdom we need to transform our economic system to a sustainable path, grounded in ecological reality, with respect for justice and dignity for all, and our appreciation for nature and our kinship for all living things. What is needed is nothing less than a new economic myth, grounded in wisdom to guide us safely to a better and more harmonious future.
Schumacher’s wisdom could not be more relevant at the time when the Doomsday Clock edges forward and we fear we are moving closer than ever towards nuclear Armageddon, irreversible global warming, financial meltdown and crises of amorality and spiritual breakdown, amongst others.
Schumacher always attempted to apply wisdom to numerous aspects of twentieth-century life, not only to economics and the environment, but to science, technology, culture, education, religion, and the relations of rich nations to poor nations. We shall return later to his ideas, but first a little bit of biographical and background is necessary.
E.F. Schumacher: A life in brief
Ernst Friedrich Schumacher was born in Germany in 1911. A Rhodes Scholar at Oxford in the 1930’s, he fled back to England before the Second World War to avoid living under Nazism. Although Schumacher was interned as an enemy alien during the War, his extraordinary abilities were recognized, and he was able to help the British government with its economic and financial mobilization.
After the War, E. F. Schumacher worked as an economic advisor to the British Control Commission charged with rebuilding the German economy. From 1950 to 1970 he was Chief Economic Advisor to the British Coal Board, one of the world’s largest organizations, with 800,000 employees. Schumacher's farsighted planning (he predicted the rise of OPEC and the problems of nuclear power) aided Britain in its economic recovery.
In 1955 Schumacher travelled to Burma as an economic consultant. While there, he developed the principles of what he called “Buddhist economics,” based on the belief that good work was essential for proper human development and that “production from local resources for local needs is the most rational way of economic life.” Schumacher also gained insights that led him to become a pioneer of what is now called "appropriate technology": earth- and user-friendly technology matched to the scale of community life.
E. F. Schumacher subsequently became a featured writer—along with Leopold Kohr, John Papworth, Danilo Dolci, Paul Goodman, John Seymour, and Satish Kumar in the British Journal Resurgence. He also extensively and frequently wrote articles for the Guardian and the Observer. His books and other writings have influenced many readers to re-examine societal and personal choices regarding the persistent demands of modern life.
Schumacher’s Wisdom on Education
As it has been noted by many observers including Moss, Schumacher believed that “more education can help us only if it produces more wisdom.” He was very critical of what has eventually became the dominant purpose of higher education—career preparation for work in our modern industrial societies, which he believed were deeply flawed.
The main problem he perceived with modern education was that it had abandoned the search for wisdom. In A Guide for the Perplexed, he indicated the difficulties he faced trying to discover how best to live. “All through school and university I had been given maps of life and knowledge on which there was hardly a trace of many of the things that I most cared about and that seemed to me to be of the greatest possible importance to the conduct of my life.” These “maps” he referred to were those “produced by modern materialistic scientism . . . [that left] all the questions that really matter unanswered.” He went on to note that the situation was “even worse now because the ever more rigorous application of the scientific method to all subjects and disciplines has destroyed even the last remnants of ancient wisdom— at least in the Western world. It is being loudly proclaimed in the name of scientific objectivity that ‘values and meanings are nothing but defence mechanisms and reaction formations.’"
Schumacher maintained that what people really needed were “ideas that would make the world, and their own lives, intelligible to them. . . . If the mind cannot bring to the world a set—or, shall we say, a tool-box—of powerful ideas, the world must appear to it as a chaos, a mass of unrelated phenomena, of meaningless events.”
According to Schumacher, “Our task—and the task of all education—is to understand the present world, the world in which we live and make our choices. The problems of education are merely reflections of the deepest problems of our age. They cannot be solved by organization, administration, or the expenditure of money, even though the importance of all these is not denied. We are suffering from a metaphysical disease, and the cure must therefore be metaphysical. Education which fails to clarify our central convictions is mere training or indulgence. For it is our central convictions that are in disorder, and, as long as the present anti-metaphysical temper persists, the disorder will grow worse. Education, far from ranking as man's greatest resource, will then be an agent of destruction”.
Science, he wrote, “cannot produce ideas by which we could live,” and it was “being taught without any awareness of the . . . place occupied by the natural sciences within the whole cosmos of human thought.” Although he recognized that the sciences conveyed important information “about how things work in nature or in engineering,” they conveyed “nothing about the meaning of life.” In regard to two “social sciences,” he wrote that economics was “being taught without any awareness of the view of human nature that underlies present-day economic theory,” and politics without considering the “metaphysical and ethical problems involved” in dealing with human interaction.
At first glance the humanities seemed to offer some hope, Schumacher notes—“here indeed he [the student] can find, if he is lucky, great and vital ideas to fill his mind, ideas with which to think and through which to make the world, society, and his own life intelligible.” Unfortunately, however, “even in the humanities we may get bogged down in a mass of specialised scholarship furnishing our minds with lots of small ideas just as unsuitable as the ideas which we might pick up from the natural sciences.” Or the humanities might present to us “a view of the world as a wasteland in which there is no meaning or purpose, in which man's consciousness is an unfortunate cosmic accident, in which anguish and despair are the only final realities.”
For education to help us develop the greatest wisdom as Moss notes, Schumacher thought it had to assist us in developing our values. “Education cannot help us as long as it accords no place to metaphysics. Whether the subjects taught are subjects of science or of the humanities, if the teaching does not lead to a clarification of metaphysics, that is to say, of our fundamental convictions, it cannot educate a man and, consequently, cannot be of real value to society.”
Schumacher continually emphasized the traditional values taught by the great world religions, but also emphasized that these “values do not help us to pick our way through life unless they have become our own, a part, so to say, of our mental make-up.” He added that individuals had to interiorize what they were taught, they had to “sift it, sort it out, keep the good and jettison the bad” in order to become inner directed. Education for wisdom, however, still had to help an individual accomplish one more task—“dying to oneself . . . to all one's egocentric preoccupations.” He went on to say that to be happy and wise there were three things that people “most need to do and education ought to prepare them for these things: To act as spiritual beings, that is to say, to act in accordance with their moral impulses. . . . To act as neighbours, to render service . . . . [and] to act as persons, as autonomous centres of power and responsibility, that is, to be creatively engaged, using and developing the gifts that we have been blessed with.”
To Schumacher our values lie at the core of our being, affecting how we approach all subjects. As he notes:
“All subjects, no matter how specialised, are connected with a centre; they are like rays emanating from a sun. The centre is constituted by our most basic convictions, by those ideas which really have the power to move us. In other words, the centre consists of metaphysics and ethics, of ideas that— whether we like it or not— transcend the world of facts. Because they transcend the world of facts, they cannot be proved or disproved by ordinary scientific method. But that does not mean that they are purely “subjective” or “relative” or mere arbitrary conventions. They must be true to reality, although they transcend the world of facts. . . .
Education can help us only if it produces “whole men”, Schumacher observed. The truly educated man is not a man who knows a bit of everything . . . but he will be truly in touch with the centre. He will not be in doubt about his basic convictions, about his view on the meaning and purpose of his life. He may not be able to explain these matters in words, but the conduct of his life will show a certain sureness of touch which stems from his inner clarity”.
Thus, he thought that the study of all subjects should be penetrated by the rays of our values, of our wisdom. “Unless that person has sorted out and coordinated his manifold urges, impulses, and desires, his strivings are likely to be confused, contradictory, self-defeating, and possibly highly destructive. The ‘centre,’ obviously, is the place where he has to create for himself an orderly system of ideas about himself and the world, which can regulate the direction of his various strivings.”
Rather than educating people to fit into modern economic systems that were unsustainable, Schumacher hoped that “higher education could be designed to lead to a different world of work.” It could help students “distinguish between good work and bad work and encourage them not to accept the latter. That is to say, they should be encouraged to reject meaningless, boring, stultifying, or nerve-racking work in which a man (or woman) is made the servant of a machine or a system. They should be taught that work is the joy of life and is needed for our development, but that meaningless work is an abomination.” He also believed that those lucky enough to receive higher education in poorer parts of the world should not use it to help them distance themselves from their poorer countrymen, but to help them.
Schumacher’s Wisdom on Economics and Industrial Society
As Moss has so eloquently observed, Schumacher stated that economics dominated government policies and “absorbs almost the whole of foreign policy” and the “whole of ethics” and takes “precedence over all other human considerations. Now, quite clearly, this is a pathological development.” It was so, Schumacher believed, because the dominant economics of his day had long deviated from any attempt at being guided by wisdom. In his chapter on “Buddhist Economics” in Small Is Beautiful he indicated his belief that the dominant Western economics was not the only possible approach to a field that many thought of as a science, or at least a “social science.” In writing about Western economics, he also made it clear that he believed it was not only contrary to Buddhist economics, but to some basic Christian principles, as well as to the world’s traditional wisdom.
He insisted that economics was essentially different than a science like physics— “the great majority of economists are still pursuing the absurd ideal of making their 'science' as scientific and precise as physics, as if there were no qualitative difference between mindless atoms and men made in the image of God.” He believed that economics was strongly influenced, whether one realized it or not, by one’s philosophical or religious views, by what he called meta-economics. By the term he meant to indicate “that economics must derive its aims and objectives from a study of man, and that it must derive at least a large part of its methodology from a study of nature.” In “Buddhist Economics” he attempted to indicate “how the conclusions and prescriptions of economics change as the underlying picture of man and his purpose on earth changes.”
Schumacher believed that modern Western economics reflected a materialist approach. “Out of the large number of aspects which in real life have to be seen and judged together before a decision can be taken, economics supplies only one—whether a thing yields a money profit to those who undertake it or not.” It does not even generally ask “whether an activity carried on by a group within society yields a profit to society as a whole. . . . In a sense, the market is the institutionalisation of individualism and non-responsibility.” With its emphasis on rapid change, economic growth, and increasing Gross National Product (GNP), Western economics failed to adequately consider “the availability of basic resources and, alternatively or additionally, the capacity of the environment to cope with the degree of interference implied.” By advertising and marketing, it also encouraged a “frenzy of greed and . . . an orgy of envy.” Schumacher observed that by ignoring wisdom humans were in danger of building up “a monster economy, which destroys the world.”
He also wrote that “the cultivation and expansion of needs is the antithesis of wisdom, . . . freedom and peace. Every increase of needs tends to increase one's dependence on outside forces over which one cannot have control, and therefore increases existential fear. Only by a reduction of needs can one promote a genuine reduction in those tensions which are the ultimate causes of strife and war.”
BUDDHIST ECONOMICS, he thought, would take a different approach. He wrote that “while the materialist is mainly interested in goods, the Buddhist is mainly interested in liberation. “Whereas a Western economist would measure “the 'standard of living' by the amount of annual consumption, assuming . . . that a man who consumes more is 'better off' than a man who consumes less,” a Buddhist economist would think that “the aim should be to obtain the maximum of well-being with the minimum of consumption.”
Another major difference was that, unlike most Western economic thinking, a Buddhist approach would take a more sustainable approach to natural resources—“Non- renewable goods must be used only if they are indispensable, and then only with the greatest care and the most meticulous concern for conservation.”
Given Schumacher’s approach to Western economics, his criticism of modern industrial society, whether capitalist, socialist, or communist, is understandable. In “the light of the Gospels,” he thought it guilty of “four great and grievous evils”:
- Its vastly complicated nature.
- Its continuous stimulation of, and reliance on, the deadly sins of greed, envy, and avarice.
- Its destruction of the content and dignity of most forms of work.
- Its authoritarian character, owing to organization in excessively large units.
In keeping with this perspective, he furnished five reasons why he thought modern industrial society should fail:
- It has disrupted, and continues to disrupt, certain organic relationships in such a manner that world population is growing, apparently irresistibly, beyond the means of subsistence.
- It is disrupting certain other organic relationships in such a manner as to threaten those means of subsistence themselves, spreading poison, adulterating food, etc.
- It is rapidly depleting the earth's non-renewable stocks of scarce mineral resources—mainly fuels and metals.
- It is degrading the moral and intellectual qualities of man while further developing a highly complicated way of life the smooth continuance of which requires ever-increasing moral and intellectual qualities.
- It breeds violence— violence against nature which at any moment can turn into violence against one's fellow men, when there are weapons around which make non-violence a condition of survival.
Such a sweeping critique, as Moss has remarked, was indeed radical because it challenged many of the premises of modern industrial societies, whether they called themselves capitalist, socialist, or communist. All three, for example, emphasized economic growth as demonstrated by GNP increases. Whereas they attempted to expand the production of material goods, Schumacher emphasized the spiritual and environmental consequences of constantly expanding “wants.” He recommended “resisting the temptation of letting our luxuries become needs; and perhaps . . . even scrutinising our needs to see if they cannot be simplified and reduced.” Of course, he distinguished between basic needs and what he considered artificial “needs” that were really “wants.” He worked hard to help meet the basic needs of poorer peoples, but he believed that “poor people have relatively simple needs, and it is primarily with regard to their basic requirements and activities that they want assistance.”
As fair-minded observers with an eye on natural justice, truth and reality, given the current global crises, we can only say how prophetic the above observations by Schumacher were and indeed, are. How tragic it must be that we did not heed his words and did not grasp the power of his wisdom. However, it is not too late to discover Schumacher and to heed to his wisdom and recommendations. They have stood the test of times.
Legacy and Concluding Remarks
Once again, referring to the excellent study by Moss, we can observe that everywhere we look; a decade into the 21st Century, Schumacher’s influence is readily evident for all to see.
In England there is the Schumacher Circle, which is described well on the web site of Resurgence, which is today a non-profit trust that oversees the publication of a magazine of the same name and one to which Schumacher contributed decades ago. The web site states:
There are many organizations that owe their existence to, or have been greatly inspired by, E.F. Schumacher. His books and other writings are still thought-provoking. . . . The range of his thinking is reflected in the diversity of the organisations that recognise him as their inspiration: they share a vision of social development that is sustainable and benign to both people and the environment.
The Schumacher Circle comprises:
- Green Books
- Practical Action
- The New Economics Foundation
- Resurgence Magazine
- Schumacher College
- The Schumacher Society
- Schumacher Book Service
- The Soil Association
“It is an informal network of organizations which in their different ways all build on Schumacher’s legacy. They have a common concern with developing ideas and approaches to the ecological, technological, social and spiritual predicament which is faced by the world’s population.”
Several of the groups mentioned above were ones that Schumacher founded or was very active in such as Practical Action, earlier called the Intermediate Technology Development Group, and the Soil Association. The editor of Resurgence, Satish Kumar, has recently described a bit of his involvement when still young with Schumacher and has written that his “Small is Beautiful gave a philosophical, spiritual and economic grounding to the environmental movement.” Besides the British organizations mentioned above, there are Schumacher societies in several other countries, including a very active one in the United States.
Besides Schumacher’s influence on the environmental movement, he has also had a noticeable effect on thinking about developmental aid to poor countries, though often not as much on official government aid programs as on non-governmental ones. Until recently, however, as Moss observes, his impact on main-stream economics has not been especially noticeable. But in recent years the ideas of some leading economists have come closer to those that he emphasized decades ago.
The best example of this is the 2009 report commissioned by French President Nicholas Sarkozy and headed by Nobel-Prize-winning economist Joseph Stiglitz with the able assistance of others including another recipient of the prize, Harvard economist Amartya Sen. Although, As Moss has noted, there is no mention of Schumacher in the 291-page document, sometimes called the Stiglitz-Sen report, it recommends many steps Schumacher first advocated decades ago.
In the “Executive Summary” before the body of the report, its authors pose the question: “What are the main messages and recommendations?” To which they reply:
The report distinguishes between an assessment of current well-being and an assessment of sustainability, whether this can last over time. Current well-being has to do with both economic resources, such as income, and with non-economic aspects of peoples’ life (what they do and what they can do, how they feel, and the natural environment they live in). Whether these levels of well-being can be sustained over time depends on whether stocks of capital that matter for our lives (natural, physical, human, social) are passed on to future generations.
The summary also states that “another key message, and unifying theme of the report, is that the time is ripe for our measurement system to shift emphasis from measuring economic production to measuring people’s well-being.”
Time and again Schumacher had insisted on conclusions this report arrived at more than three decades after his death: using economic growth rates as a measurement of a country’s success was misleading; countries placed too much emphasis on increasing production; and economists and government officials had to pay more attention to the environment and sustainability.
Besides the Stiglitz-Sen report, another long document that reflects many of Schumacher’s ideas—again without mentioning him—is the United Nations Environment Programme (UNEP) 2008 report of 352 pages entitled Green Jobs: Towards Decent Work in a Sustainable, Low-Carbon World. These two reports followed up on an increasing trend toward criticizing an over-reliance on economic growth (as measured by GDP increases) as a standard for improved well-being.
In a recent study in The Observer (Sunday 27 March 2011) Tony Helm and Robert McCrum in their articles, “Small is beautiful: the father of David Cameron’s big society” and “EF Schumacher: Cameron’s choice” respectively, have highlighted the impact of Schumacher on the British prime minister, David Cameron’s socio-political and economic philosophy and his vision of “The Big Society”. Only time can tell how truthful Cameron is in following Schumacher’s wisdom.
Most interestingly, it seems that some of the captain’s of industry and business gurus are heeding Schumacher’s call for social responsibility, ethics and serving various “stakeholders” and not just adhering to the interest of the shareholders. It appears that these business leaders are discovering the wisdom of Schumacher that a more radical approach is called for if humanity is to be best served by business and economic activity.
Writing recently in the Guardian Sustainable Business, Ian Cheshire, the CEO of one of UK’s largest DIY retail chain, Kingfisher/B&Q, in an article, “Imagining a new, sustainable capitalism” noted that:
…”I believe that we are now faced with the need for real reinvention of our high resource-impact business models, and that those leadership businesses that rethink their future will benefit in the next wave of change.
Starting with need for change, in a world of $100 a barrel oil, business models assuming an implicit abundance of free resources cannot by definition be sustainable. The stress on the natural capital in our world, the impacts on ecosystems such as forests, reefs and fisheries are producing major changes in costs and supply of materials for all businesses.
Infinite high resource intensity growth is simply not possible, and we are already living off our future capital. It may be gradual but most businesses will have to adjust to a very different reality.
…Instead of the goal of maximum linear growth in GDP, we should be thinking of maximum wellbeing for minimal planetary input. That starts to challenge business to go beyond efficiency gains, useful though they are, and really redesign their business models.
…The wellbeing challenge also forces us to think about our total impact as a business rather than the narrow shareholder value lens, since businesses that do not create broader social value will again not survive the longer term.”
In a further positive and timely development Sir Stuart Rose, outgoing chairman of Marks & Spencer, has warned that companies will need to radically alter their business models if they are going to cope with a perfect storm of climate change, a growing global population, and finite resources.
Speaking at the Royal Geographical Society as part of the 21st Century Challenges series, he said: "For all the hard work we have had to date, we probably only think we've done about 10% of what we need to do to build a truly sustainable Marks & Spencer, so the job ahead is pretty enormous.
"We have to change, not a little, but radically. Not later, but now. Not with today's business thinking but with a new set of skills. And we have to do this with energy and we have to understand that there is no plan B, as there isn't in Marks & Spencer.
"Certainly there will be some businesses that survive with unsustainable business models. They will survive for another decade, they may survive for two decades. But eventually, even those of us who recognise the need for change cannot underestimate the scale of change we need to make or the duration of time it's going to need to make the change we need to do. So we need to start now.
"We will have to deal with extraordinary complexity and ambiguity and there are, and will be, no simple answers. But there will certainly be less of the yes/no decision making.
"Business leadership in the future will be about discerning and communicating a direction through this minefield of complexities. There are going to be natural disasters, there are going to be uncertainties in supplies of resources, and these are problems that we are all going to have to deal with."
Rose echoed the views of others that there will need to be increasing collaboration between business, NGOs and governments as no single company had the answers to the range of problems they face.
"Now this in turn will allow us to innovate faster, to respond to the sustainability crunch, and it will turn risk into commercial opportunity ahead of the wave, and that's the challenge we've all got to face if we are going to be on a planet we want to live in 30, 40, 50 years time," Rose remarked.
He also said that City investors are starting to recognise the importance of taking a longer-term view, rather than just concentrating on short-term profits: "It was absolutely the case that when I first raised sustainability with some of my investors, they literally threw their hands up in horror and said 'how can you spend £200m without getting a guaranteed return on your capital invested?' Now they know that it's an imperative and it's going to be part of how businesses differentiate and succeed in the future. So I actually think it is changing. It's a bit behind but it's changing."
I do hope that many other CEOs will discover the wisdom of what Schumacher had shared with us all those decades ago and follow the examples of Ian Cheshire, Sir Stuart Rose and others like them.
In conclusion, paraphrasing the wise conclusion by Moss, today, more than three decades after Schumacher’s death, many of the problems he faced are similar to ones we now confront. At a time when technology, economics, and the environment continue to be as important as Schumacher believed they were decades ago, and at a time when decisions about them are still often made unwisely, we need to remind ourselves that such decisions need to be made as Schumacher insisted they should—in keeping with the highest human values.
Epilogue: E.F. Schumacher and I
“Gratitude is heaven itself”-William Blake
I owe my fascination with the inner workings of economics, business and capitalism to those who have inspired me both personally and professionally. I am a blessed man to have been inspired by so many sages and philosophers of love and compassion, amongst them:
E.F Schumacher, John Kenneth Galbraith, Henry George, George Bull, Herman Daly, John B. Cobb Jr, Dalai Lama, R.H. Tawney, Jeremy Bentham, John Stuart Mill, Aristotle, St Augustine of Hippo, St Thomas Aquinas, St Francis of Assisi, Abu Hamid al-Ghazali, Maulana Jalaluddin Rumi, and Shams-ud-din Mohammad Hafez Shirazi.
I have given my thanks and gratitude to many who have inspired me in my lectures, books and articles. Today, here, in this essay, I wish to convey my special gratitude to E.F. Schumacher in celebration of his centenary.
Above in my introductory remarks I noted how Schumacher became a source of inspiration to me from that day in 1979 that I bought his book, ‘Small is Beautiful: Economics as if people mattered.’ I know well with the philosophical and spiritual truths that I hold dear, how important Schumacher has been to my personal and professional development. I may not have known this fully. But, recently I have become more aware and more conscious of it. This is more so, since the time in late 1990s that I “rediscovered” myself when I changed direction, became a different, and I sincerely hope, a better economist, teacher, and overall, a better person. All these were manifested when I founded the Globalisation for the Common Good Initiative in 2002. See below for an example of Schumacher’s thinking on me:
Globalisation for the Common Good Initiative (GCGI)
Furthermore, and similar to Schumacher, I have also been much concerned about people’s happiness and general well-being. I, too, have been saying that economic policies are only successful if they enhance happiness and well-being. This is why I recently launched the GCGI “Happiness and Well-being Project”:
Moreover, like Schumacher I have been critical of the economics curriculum and the way it is taught at our universities. I have also been critical of the value-free MBAs. See below for my contributions in furthering the debate that Schumacher had begun in early 70s:
In Conclusion, for me, Schumacher’s charming innocence, universal compassion and thirst for true knowledge mark him out as a teacher in the great traditions of religious and philosophical sages who embrace the one universal truth. He was – and still is- a giant among men, who truly deserves to be described as a friend to mankind, renaissance man, and bridge of reconciliation between cultures.
I thank Schumacher for inspiring me and countless others. God grant Schumacher eternal rest; he was, in the old idiom, a lovely man, who if required, may still be a peacemaker in heaven.
References used in writing this article:
E.F. Schumacher, Small is Beautiful: Economics as if people mattered, Bland & Briggs, London, 1973
___ A Guide for the Perplexed, Jonathan Cape, London, 1977
___ Good Work, Jonathan Cape, London, 1979
Walter G. Moss, “The Wisdom of E.F. Schumacher” at http://www.wisdompage.com/SchumacherEssay.pdf (I am indebted to Moss for his excellent work which I borrowed much in this study on Schumacher’s wisdom)
Robert McCrum, “EF Schumacher: Cameron’s choice” in The Observer, Sunday 27 March 2011
Tony Helm, “Small is beautiful: the father of David Cameron’s big society” in The Observer, Sunday 27 March 2011
Jo Confino, “Stuart Rose warns companies must radically change – and work together” in the Guardian Sustainable Business, The Guardian, Thursday 2 December 2010
Ian Cheshire, “Imagining a new, sustainable capitalism” in the Guardian Sustainable Business, The Guardian, Tuesday 30 March 2011
Martin Hodgson, “Big, bad world” in The Guardian, Wednesday 27 August 2003
Small is Beautiful in the 21st Century: The Legacy of E.F. Schumacher (Schumacher Briefings) Paperback – 8 Oct 2011
By Diana Schumacher
Small is Beautiful in the 21st Century traces Fritz Schumacher’s legacy through the activities and outreach of those pioneers who, over the years, have been working on practical solutions to our interrelated global crises. In particular, it describes how several flourishing organisations, some large and some small, have remained closely linked with his ideas and work, and have since become associated as the Schumacher Circle.
The particular contribution of E. F. Schumacher was to bring a profound wisdom and humanity to bear on the practical challenges of our time, and the Briefing both illuminates Schumacher’s thinking and shows the ways in which each of us can help to turn our present crisis into the opportunity to build a more kind, just and ecologically sustainable society.
Who was Fritz Schumacher?
The Schumacher Society
Third World development models
Food, agriculture and land use
Small-scale technologies for local sustainability
The call for a new economics
Transforming industrial work in the First World
The relevance of E. F. Schumacher today
For more details and to purchase this book: