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Last Updated on May 5, 2015, by eNotes Editorial. Word Count: 1439

The subtitle of this book, Economics As If People Mattered, is more indicative of its content than is the title, for Schumacher is deeply concerned with the human condition. Modern science, with all the gains that it has brought the world, is often thought to be humanity’s greatest accomplishment. Modern capitalist economies, because of their application of science to the technology of industrial production and their emphasis on motivating economic activity through individual self-interest, are held by specialists to have brought about the greatest material comfort and individual freedom ever. In Schumacher’s view, however, the proponents of these claims have never really looked at what is happening to the people in those societies that have made the most progress. If they did look closely, they would find a different result:In the excitement over the unfolding of his scientific and technical powers, modern man has built a system of production that ravishes nature and a type of society that mutilates man. If only there were more and more wealth, everything else, it is thought, would fall into place. . . . The development of production and the acquisition of wealth have thus become the highest goals of the modern world in relation to which all other goals, no matter how much lip-service may still be paid to them, have come to take second place.

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Schumacher is concerned with showing that these goals are unhealthy for both human beings and the world as a whole.

He begins by debunking the notion that modern advanced societies have solved the problem of production through technological development. Because they have removed human beings from direct contact with nature, industrial methods of mass production also have negative side effects. When nature is thought of as something outside human activity, humans become careless about how they treat it. As a result, resources tend to be considered, to use economic terms, as an income (a flow of services) rather than as capital (a stock of goods). Resources such as petroleum and other forms of energy and minerals are used as quickly as possible in the creation of wealth instead of being thought of as something that should be conserved. This carelessness also applies to the environment, which is being polluted by the rapid use of material resources, and to the treatment of human beings, who are reduced to little more than appendages to the machinery they service in factories.

While science has abetted these deplorable conditions, Schumacher places most of the fault on economics. He finds that most current economic thinking is based on greed as manifested in the efforts of business to maximize profits. Economists who believe in the ability of markets to lead to sound social decisions place profits at the center of their philosophy because businesses can make profits only by serving the needs of the public. Because of the centrality of profits in economics, Schumacher finds it to be not a science but a religion, although a very influential one.

The canons of economics do not serve society well according to Schumacher. Individual consumers become bargain hunters who have no concern for what was needed to produce those bargains in terms of using resources, despoiling the environment, or harming workers. Schumacher finds shortsighted the idea that the profits of individual businesses can serve society as a guide to what is needed and what is not. Under that system, neither business nor the consumer has a larger responsibility beyond this to themselves.

According to economists, all those self-interested individual choices are supposed to benefit society ultimately—a result Schumacher considers highly problematic. Instead, there exists a system in which the world’s richest society, the United States, even with all of its resources, uses an inordinate share of the world’s resources. While other economists may recommend that all societies, especially the poorer ones, emulate the United States by increasing their standards of living, Schumacher holds that this would be impossible, given the world’s resource base and the amount of pollution the environment can tolerate. In place of profit-oriented economics, Schumacher proposes an economics of permanence, one that takes a long-term view.

A part of that economics of permanence is to be found in “Buddhist Economics.” Most economists consider human labor a burden, so humans must be paid to work. Buddhists, according to Schumacher, see life as a process of building character, with work being the main force for building it. Buddhists criticize economics for putting goods and consumption before creativity in work. For them, work undertaken with dignity is good, not a burden. Work should help humans develop and fully utilize all of their physical and intellectual facilities, it should help them overcome their egos by working with other humans in a common task, and it should produce the goods needed for existence. Machinery that can help humans in this sort of work is seen as good, but machinery that makes man a slave to it is not. The important point is to have production methods that are appropriate to human values.

In his search for a human scale in economics, Schumacher is concerned with the problem of balance. He finds all life to be a struggle to reconcile extreme visions of human behavior. In modern societies, for example, large-scale production is efficient and large organizations are suitable for controlling both it and the humans who work with it; yet people want to work in small-scale organizations, with as much freedom as possible. Schumacher’s espousal of intermediate technology aims at attaining this balance.

A part of the failure of present industrial societies to find balance has to do with education. Schumacher believes that there is too much emphasis on science, thus producing only people trained in how to do things. What is needed is an education in values, which will teach what to do as well as how to do it. This training would stress the humanities, for that is where values are to be learned. In striving for the good, each person needs a clear sense of values.

For the remainder of the book, Schumacher consistently applies his concept of balance to show how the modern world has gone wrong and what might set it right, to help it achieve balance. He shows, for example, how agricultural land is being ruined by too heavy an application of science to food production, with little emphasis on conservation for the future. He describes how modern technology cannot help poorer countries become richer, because that technology aims at reducing the needs for labor when labor is the most abundant resource in those places. Again, Schumacher opts for an intermediate technology that will both increase productivity and provide many jobs. For example, older methods, such as those that existed in the United States in 1900, would be more beneficial than modern automated technology.

Schumacher also endeavors to show how balance could be achieved between the need for control and the need for freedom within large-scale organizations and between private and public ownership of organizations. While he sees some potential for socialism and nationalization of industry, Schumacher is not doctrinaire. He believes individual ownership is beneficial as long as the units are small; once an organization becomes large enough to exert an influence over a wide region, however, it should be subjected to some form of public ownership or control. Nevertheless, if that public control is not guided by a broad social vision, then it would be best to leave the organization in private hands. Yet for Schumacher, maintaining production is merely the means. The ends to which it will be put are a matter of human values which cannot be derived from science or economics, but which can only come from religious values, the wisdom of the ages.

Economists would not accept as legitimate Schumacher’s critiques of their discipline. Although they do believe that an economy which produces more goods and services is better for its members, they also maintain that the decisions of what to produce, how much of it to produce, and how to produce it are best left to the individual, because that is the only way all the diverse human values that exist in society can enter into economic affairs. Thus, economists would argue that Schumacher, when he writes of religious values, is really imposing his own values on society. When values conflict, as they must, the marketplace is one arena, but not the only one, in which they can be mediated. Schumacher nowhere explains how one set of religious values can be chosen by society, an omission economists would find troublesome even if they were to agree with him.

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Critical Context