Celebrating the 50th Anniversary of Schumacher’s Small is Beautiful: An Eco-Socialist Perspective

An Unusual Text

Schumacher’s “Small is Beautiful” is an unusual book. It is not a standard academic text that has an overall and structured plan with each chapter fitting neatly as an elaboration of different aspects of the plan. It is a collection of papers previously published and texts of lectures delivered at different events. The collection covers the time span between 1961 and 1972. The book title conveys the unifying theme behind these papers and lectures. The beauty and significance of the book is that despite being a collection of papers and lectures and not a structured single text, it does convey a running theme, with different degrees of affinity of each chapter to the title of the book. The subtitle, “A Study of Economics as if People Mattered,” clearly indicates the author’s direction of thought in the book. As opposed to the traditional economics where “things” or “commodities” dominate theorising, policy, and practice, Schumacher’s study aims to centralise the human beings and social relations that make up the economy of “things.”

The next section provides a contextualisation of Schumacher’s work by comparing the two streams of orthodox economics that he critiques. I then go on to consider before a critical evaluation of Schumacher’s contributions and suggest an eco-socialist path that synthesises Schumacher’s contributions and their criticisms into framing a transition from ecologically-destructive and socially-unjust capitalism to an eco-socialist future of ecological sanity and social justice.

Two Streams of Orthodox Economics

Our attempt at identifying and critiquing the two streams of orthodox economics from an eco-socialist perspective is to capture the richness as well as the limitations of Schumacher’s engagement with conventional/orthodox economics. That is to say, there are two streams of economic orthodoxy that Schumacher critiqued. And while they were and are opposed to each other in their comparative view of the rationality of economic systems, they also share a common vision: the vision of big-ism or gigantism. Schumacher identified this trend towards support for “vastness” in economic theory and practice in both market-based systems as well as centrally-planned economies:

ALMOST EVERY DAY we hear of mergers and takeovers; … larger markets to be served by even larger organisations. In the socialist countries, nationalisation has produced vast combines to rival or surpass anything that has emerged in the capitalist countries. The great majority of economists and business efficiency experts support this trend towards vastness. (202)¹

The dominant stream of this orthodox economics celebrating gigantism or vastness is market-based economics or the bourgeois stream², and the other stream can be called the central planning-oriented economics or the Stalinist stream. Although Small is Beautiful launched a frontal attack on gigantism that is common to both these two streams of orthodox economics, Schumacher did point out a difference between the two streams by highlighting a critical distinction between a private profit-based economy and a public ownership-oriented economy. The focus of Schumacher’s attack was on profit-based economic system, and to the extent he criticised the centrally-planned economic system, which he equated with public ownership or socialism, it was concerning the idea shared by most socialists of his time that progress in a socialist economy was synonymous with economic growth.

Here, we have bracketed the planning-oriented stream with the Stalinist stream, even though belief in the efficacy of a centrally-planned organisation of the economy stretches beyond Stalin. The justification behind clubbing together the central planning and Stalinist streams is that Stalinist economic policies pursued in the Soviet Union are viewed both by its bourgeois critics and Stalinist supporters as the standard format for organising a centrally planned economy (Dunmore 1980).

It is necessary here to emphasise that the planning-oriented/Stalinist stream should not be equated with the entirety of the socialist or Marxist Left, because there are serious criticisms of the planning-oriented/Stalinist stream from some currents in the socialist or Marxist Left. Despite the planning-oriented/Stalinist stream claiming inspiration, not wholly unjustified, from Marxism (see Arnold 1989), a growing segment of the socialist/Marxist Left eschews the growth imperative at the heart of Stalinist planning, in favour of alternative – ecosocialist – visions and praxis for the organisation of post-capitalist political economies. Schumacher’s Small is Beautiful long ago gave this tradition of “marxisms” potent analytical framings that have echoed through subsequent cycles of struggle ever since.

Market-Based Economics or Bourgeois Stream

To appreciate Schumacher’s criticism of the profit-oriented, market-based economic stream, it is important to define the basics of the microeconomic and macroeconomic models, or ways of looking at the functioning of the market-based economic system. Schumacher, an economist himself, viewed micro-economics as analysing “the management of individual enterprises” (218) and “macro-economics” as focused on “the management of whole societies” (217).

In the micro-economic domain, bourgeois economists view the society as divided between firms and households. The behaviour of the firms and the households is assumed to be shaped by a maximising objective: a firm aims to maximise returns (or profits) and consumers aims to maximise utility. The market mechanism in which firms and households participate and interact “freely” is understood, in this theory, to establish economic equilibrium in the form of a price, where supply by the firms and demand by the consumers equalise. If this economic equilibrium is disturbed by a mismatch between supply and demand, the market forces – of supply by the firms and demand by the consumers – are supposed to establish a new equilibrium in the form of a new price.

The forces of supply and demand are themselves subject to change: supply mainly by changes in technology and demand mainly by changes in the taste and preference of consumers and their income level. Both firms and households are here idealised as rational agents taking decisions to maximise their objectives. In this model, existing property relations and patterns of unequal distribution of income resulting from those property relations are assumed as given and not subject to questioning.³

The macro-economic model incorporates the government (called the third sector) and international trade (the fourth sector). It functions on the same foundation as the two-sector micro-economic model described above, with the difference that the maximisation objective now shifts from firms and consumers to national income or gross national product (GNP) or gross domestic product (GDP) (Krugman and Wells 2021). In the macro-economic model, the annual increase in GDP is the key measure of economic growth and the task of every nation state is assumed to be maximisation of this economic growth. Similarly, rising global GDPs are assumed to lead to global prosperity. Existing economic inequality between nations is taken as given. That there is a history of colonialism and concomitant economic plunder that has led to this international inequality is not considered a legitimate economic question⁴. At best, social inequality is conceded as a moral or ethical question, but one to be dealt with by market forces, for example through investments in aid, development, and infrastructure industries. The force of market competition is here assumed to be the only way to rectify economic inequalities between nations.

In the macroeconomic model, each level of market equilibrium – national or international – is theorised as vulnerable to disruption caused by technological innovation. The future, therefore, is imagined to be incessantly moving upwards from one technological frontier to the next, with each technological frontier ideally establishing a corresponding market equilibrium.

Central to this imagined “progress” based on exponential economic growth propelled by the continuous upward technological march is the presumption of the power of economies of scale. Economies of scale allow for cost efficiencies which, in turn, become the basis for the economic dominance of large scale over small scale.

Economies of scale, whether seen from the angle of external economies of scale or internal economies of scale, further perpetuate gigantism. External economies of scale refer to the available infrastructure (transport networks, financial institutions, utilities such as energy and water, educational/training institutes and shopping facilities) that makes a spatial entity (an area, region, or city) attractive for capital investment. Such external economies of scale lead to the development of clusters and concentrations of capital investment and profit-making which give cost advantage to large economic units over relatively smaller economic units.

Internal economies of scale refer to per-unit cost reductions through scaling up the level of economic activity. These cost efficiencies comprise a major advantage of large-scale over small-scale. Additionally, the larger economic units, by affording more research and development expenditure and avenues for specialisation than what smaller units can do, are assumed to be in a better position than the smaller units to develop innovations that can reduce costs and improve labour productivity.

The market-based economics stream claims, therefore, that there is an irrefutable case for the superiority of large scale over small scale. Schumacher confronted this challenging claim by bringing the social and ecological concerns back into the equation, as we demonstrate later.

Central Planning-Oriented Economics or Stalinist Stream

Schumacher does not leave out of his analysis a criticism of state socialist economic assumptions, objectives, and outcomes.

This centrally planned or Stalinist economic stream is based on three interlinked foundations: ethical, economic, and philosophical. The ethical foundation is the idea that the market economy – operating through the system of private property ownership that generates a structure of exploitation through the surplus appropriation of the propertyless who, to earn their livelihood, work for the property owners – leads to the formation of a society based on unjust inequalities between property owners and the propertyless. A planned economy is held as an ethically superior mode of societal organisation, because abolishing private property and the market system based on it is supposed to lead to the abolition of the inequalities created by the private property ownership-market system (Hendler 1995; Campbell 2012).

The economic foundation of the centrally planned economies stream is the resolution of the conflict between the social nature of productive activity in a capitalist economy and the private appropriation of the products of this activity. Productive activity in a capitalist economy is social because many producers/workers are involved in different stages of the labour process to cooperatively create a final product. The conflict between the social nature of production and its private appropriation acts as a fetter on the further development of productive forces. The centrally planned economy, by socialising the appropriation of the surplus created in the production process, abolishes this fetter and is assumed to unleash the further development of productive forces (see Nove 1983 and Devine 2002)⁵.

Philosophically, the foundation of a centrally planned economy (or more correctly a state socialist/ Stalinist economy) is built on the Hegelian/Marxist dialectic of historical progress. A teleology of historical progress is assumed to operate, with each mode of production riven by internal contradictions creating a new synthesis in the form of a new or advanced mode of production embodying progress – that is a higher stage of historical development towards socialism. Similar to the bourgeois stream, what is seen as historical progress in this teleology gets translated in economic terms as exponential economic growth i.e., a continuous rise in GDP, as discussed further below.

The Commonality Between the Bourgeois and Stalinist Streams

Though the ethical, economic, and philosophical foundations of the centrally planned economies stream are opposed to those of the market-based economics stream, the two streams still share the idea of the economic superiority of large scale over small scale. In Stalinist Russia, the frenzied move towards forced collectivisation of agriculture and the ruthless destruction of family labour-based farming was justified by this acceptance of the rationale of the superiority of large-scale units over small-scale.⁶ The harsh industrialisation of the 1930s was also pursued on the premise of large-scale industrial units being more productive, and large-scale industrialisation as the key to a fast rise in GDP and economic growth. The alternative models of agricultural and industrial management in Russia, especially the one proposed by Bukharin which opposed squeezing the peasantry to ensure a faster rate of industrialisation, were murderously crushed (Erlich 1960).

Common to both these streams of orthodox economic theory – bourgeois and Stalinist – is also the idea that industrial economic activity ensures better incorporation of both external and internal economies of scale. Therefore, the path of technical progress and economic growth is viewed in both systems as one of transition towards industrialisation through the squeeze/ decline/destruction of the agriculture sector. This transition towards industrialisation is usually accompanied by urbanisation, though it is conceded in both streams that there could be some level of compatible agro-industrialisation, involving partial retention of the rural/agricultural sector or at least the slowing down of the total destruction of the rural/agricultural sector. This is sometimes theorised as a “balanced growth” model as opposed to the “imbalanced growth” model favouring the excessive reliance on the industrial sector for generating growth.⁷

The celebration of industrialisation and urbanisation in both economic orthodoxies is accompanied by the portrayal of the agricultural sector and the rural way of life as representing not only economic backwardness, but also social, cultural, and political backwardness, worthy of destruction. Modernity associated with industrialisation and urbanisation can be viewed as a critique of the purported social, cultural, and political backwardness of rural people and their agrarian economic activity. Some Stalinist and neo-Marxist accounts view industrialisation as indispensable to the development of socialism, because they see an industrial working class as the only class capable of overthrowing capitalism and realising the goal of socialism/communism. The destruction of the agricultural/rural civilisation in such accounts is considered inevitable and necessary to realise the goal of attaining socialism, even if it is sad and tragic. It would be difficult to find a Marxist today who would agree with Marx’s often quoted characterisation of the peasantry as a “sack of potatoes” but not difficult to find some Marxists who would support the onward march of industrialisation through destruction of farming and the peasantry, even if this destruction is carried out by a bourgeois regime.

During the Indian farmers’ struggle of 2020-2021 against farm laws, enacted by the Hindu nationalist government, which were aimed at strengthening centralisation and agro-business takeover of Indian agriculture, the farmers were generally supported by different currents in the Left. But there was also a dissident minority current within the Marxist Left that viewed as backward and reactionary the farmers’ opposition to the supposed onward march of agrarian capitalism and industrial consolidation. This current, though opposed to the authoritarian majoritarianism of the Hindu nationalist government, viewed positively the capitalist farm laws brought in by this government as a way of facilitating the faster transition to capitalism in India, thus the creation of the industrial working class with the purported sole power to overthrow the system (See Roy 2022 for an overview of such currents and Singh 2020; 2021; T. Singh 2021 for an eco-socialist position in support of the farmers’ struggle).

In China, Mao did deviate from the Soviet model of anti-peasant “socialist” industrialisation and articulated a different conception of the peasantry as a revolutionary class. But the subsequent political economy of China’s economic path in the post-Mao period, especially since the 1978 rise to power of Deng Xiaoping, has prioritised industrialisation on a large scale over agriculture as the path to China’s rise as an economic power (Knight 1985; Mackerras 1985). In Cambodia, the Khmer Rouge’s Pol Pot regime, in rejecting the pro-industrialisation path pursued in the Soviet Union, China, and Eastern European countries, went to a different extreme of genocidal annihilation of urban people in Cambodia/Kampuchea (Kiernan 2002).

In both streams of orthodox economics, capitalist and Stalinist, industrialisation leading to economic growth and resulting in an increase in GDP per capita is viewed as the path to economic prosperity. Such economic prosperity, enabling material abundance even if unequally, is in turn viewed as the source of human happiness. Even when the sole reliance on GDP and GDP per capita is criticised from a “human development” perspective, it is not only kept as one of the variables constituting “human development” along with literacy and life expectancy, but is also, in fact, considered essential to the achievement of the expected targets of literacy and life expectancy (Sen 2001; Nussbaum 2013; Singh 2022). Both orthodoxies generate, and then forget to count, ecological devastation and social injustice in pursuit of large scale industrialisation and economic growth.

Schumacher’s Critique of Orthodox Economics

Schumacher criticised both streams of orthodox economics, though he concentrated his attack on the market economy stream. His critique can be viewed through four interconnected lines of argument: 1. Infinite economic growth is not possible due to ecological limits; 2. Economic growth through increasing GDP does not lead to “prosperity” and improved quality of life for all; 3. Large scale economic activity is not necessarily more innovative and efficient than small scale economic activity; and 4. The unrestrained mechanisation of economic activities leads to dehumanisation and disconnection from nature.

On argument one, the impossibility of infinite economic growth, Schumacher summed up his argument in simple yet logically irrefutable words: “it does not require more than a simple act of insight to realise that infinite growth of material consumption in a finite world is an impossibility” (98). He rightly identified the centrality of energy in the functioning of the large-scale industrialisation and transport networks in a modern economy and the unique character of energy as destined to be finite:

the one material factor the availability of which is the precondition of all others and which cannot be recycled [is] energy … It is impossible to overemphasise its centrality. It might be said that energy is for the mechanical world what consciousness is for the human world. If energy fails, everything fails. (99, italics original)

In another formulation of his idea of the impossibility of infinite economic growth, he referred to the unavoidable ecological limits to such growth:

… the idea of unlimited economic growth, more and more until everybody is saturated with wealth, needs to be seriously questioned on at least two counts: the availability of basic resources and, alternatively or additionally, the capacity of the environment to cope with the degree of interference implied. (p.17-18)

He returned to this theme again while discussing the social culture of materialism where his argument resembled Marx’s dialectical argument that it was the success, and not the failure of capitalism, which leads to its crisis. Schumacher put it succinctly:

… a way of life that bases itself on materialism, i.e. on permanent, limitless expansionism in a finite environment, cannot last long, and that its life expectation is the shorter the more successfully it pursues its expansionism objective. (p.121)

On argument two, that economic growth does not lead to generalised prosperity, Schumacher referred to the US experience as an example of a “developed” country experience and to Peru as an example of a “developing” country experience. For the US example, he used Galbraith’s theorisation (Galbraith 1958) of “private affluence and public squalor” (p.230). Schumacher made his point by raising rhetorical questions:

If economic growth to the present American level has been unable to get rid of public squalor – or, maybe, has even been accompanied by its increase – how could one reasonably expect that further ‘growth’ would mitigate or remove it? How is it to be explained that, by and large, the countries with the highest growth rates tend to be the most polluted and also to be afflicted by public squalor to an altogether astonishing degree? (p.230)

He offered an answer to his own questions by stating that “under private ownership every bit of wealth, as it arises, is immediately and automatically privately appropriated” (230).

The pattern of economic growth based on increasing aggregate GDP through industrialisation and urbanisation in the less developed capitalist economies produced what he called “pathological development” (p.53):

In the poor countries, again most severely in the largest ones, it [economic growth] produces mass migration into cities, mass unemployment, and, as vitality is drained out of the rural areas, the threat of famine. The result is a ‘dual society’ without any inner cohesion, subject to a maximum instability. (p.53)

Schumacher characterised “pathological growth, unhealthy growth, disruptive or destructive growth” as economic growth measured merely through quantitative increase in GDP without taking into account “what has grown, and who, if anyone, has benefited” (p.33). He took the example of Peru to illustrate the path of “pathological development” followed in the developing capitalist economies. He argued that the uprooting of rural populations leading to mass migration to the country’s capital city, Lima, was leading to “The once beautiful Spanish city … infested by slums, surrounded by misery-belts that are crawling up the Andes” (54).

The area where Schumacher most forcefully confronted the orthodox economics head-on was questioning the central contention that large scale economic activity is unquestionably superior to small scale economic activity. This confrontation took two interconnected directions. One was the question of the comparative impact of large-scale versus small-scale activity on the environment. A brilliant formulation by Schumacher on this is worth citing here:

Small-scale operations, no matter numerous, are always less likely to be harmful to the natural environment than large-scale ones, simply because their individual force is small in relation to the recuperative forces of nature. There is a wisdom in smallness if only on account of the smallness and patchiness of human knowledge, which relies on experiment far more than understanding. The greatest danger invariably arises from the ruthless application, on a vast scale, of partial knowledge such as we are currently witnessing in the application of nuclear energy, of the new chemistry in agriculture, of transportation technology, and countless other things.

Although even small communities are sometimes guilty of causing serious erosion, generally as a result of ignorance, this is trifling in comparison with the devastation caused by gigantic groups motivated by greed, envy and the lust for power. It is moreover obvious that men organised in small units will take better care of their bit of land or other natural resources than anonymous companies or megalomanic governments which pretend to themselves that the whole universe is their legitimate quarry. (23)

Another direction of his questioning of orthodox economics was the almost faith-based contention that large scale economic activity has, unquestionably, a greater potential for innovation than small-scale economic activity has. Schumacher argued that innovation does not necessarily come through large-scale production and large-scale economic units, and criticised what he called “an unsurmountable bias in favour of large-scale projects on the level of the most modern technology” (p.156). To redress the imbalance in celebration of large scale, he highlighted the economic rationality and social and cultural virtues of smallness. In the chapter “A Question of Size” (47-58), Schumacher dwells at length on the strengths of small scale. He suggested that “if we make a list of all the most prosperous countries in the world, we find that most of them are very small; whereas a list of all the bigger countries in the world shows most of them to be very poor indeed” (48) and that this should be noted to think afresh about the falsity of bigger size as always better.

He went on to argue further that:

‘ … it is quite true that today there are more large organisations and probably also bigger organisations than ever before in history; but the number of small units is also growing and certainly not declining in countries like Britain and the United States, and many of these small units are highly prosperous and provide society with most of the really fruitful new developments (p.48).

Most often, innovations, especially those which Schumacher called “really fruitful” for society, take place in small units. Attracted by the profitability potential of innovations taking place in small units, larger units attempt a takeover of such small units. Such a takeover is not necessarily due to the technical superiority of large-scale units over small-scale units, but due to the dominance of the financial clout of the larger units over smaller units. This financial clout is used to take advantage of the technical efficiency of smaller units by taking them over. The celebrated research of the late Professor Ajit Singh of Cambridge University, who was internationally the most renowned scholar on mergers and acquisitions, demonstrated that it was due to their financial power that firms were able to take over other firms and not due to their technical efficiency (Singh and Whittington 1968; Singh 1971).

Schumacher criticised the excessive privileging of large-scale production activity and industrialisation for encouraging unrestrained mechanisation and automation, which he viewed as contributing to dehumanisation and disconnection from nature:

That soul destroying, meaningless, mechanical, monotonous, moronic work is an insult to human nature which must necessarily and inevitably produce either escapism or aggression. (24)

Schumacher’s critique of the central core of orthodox economic visions of economic growth generated by large scale industrialisation has been vindicated by the subsequent patterns of industrialisation and the concomitant decline of agriculture, especially in the developing capitalist economies. Large-scale industrialisation by destroying agriculture in such economies has not led to diffusion of prosperity but to clusters of economic activity resulting in the enrichment of the few and dispossession, unemployment, and underemployment of the many. The co-existence of massive mansions and degrading slums in many metropolitan spaces especially in the newly industrialising countries such as Brazil (São Paulo and Rio de Janeiro), India (Mumbai), Pakistan (Karachi) and Nigeria (Lagos) illustrate the falsity of agricultural decline and industrial upsurge leading to greater levels of prosperity. Such urban clusters of economic activity created through the operation of external economies of scale result also in spatial inequalities between regions with such clusters and the regions without such clusters. These spatial inequalities manifest through and overlap with further socio-economic inequalities (see Cypher and Dietz 2008).

The faith of orthodox economic theory in the possibility of continuous economic growth suffers from a foundational flaw in that it does not acknowledge the ecological limits to economic growth and further, the consequences for growth itself when these limits are crossed. When the ecological limits to economic growth are crossed, the ecological destruction caused by it interacts back on the economy by destroying or polluting economic resources which are necessary for economic growth. Pollution resulting from such ecological destruction causes human (and non-human) harm which adversely affects human capabilities and economically productive activities.

The speed of global heating and the scale of biodiversity loss is now forcing orthodox economic theory to acknowledge the ecological dimensions of economic growth. This acknowledgement is accompanied by trying to rescue the vision of continuous economic growth by arguing that such growth creates resources for the development of technologies that can “decouple” economic growth from environmental degradation. Decoupling, it is argued, implies generating greater output by using fewer resources through technological innovation. In other words, resource use intensity can be reduced while simultaneously increasing output. The decoupling argument is used not only to defend the claim that continuous growth is possible, but to suggest even more strongly that, in fact, economic growth is necessary to develop technologies for environmental sustainability.

There is a serious flaw in this argument; namely, that even if decoupling economic growth from environmental degradation is possible, it does not remove the risk of pollution caused by waste that inevitably results from increased output. Further, this pollution damages the quality of available resources – land, water, forests, air, minerals, and, above all, human resources. Decoupling resolves, if at all possible, only one part of the environmental degradation, i.e., resource use; it does not resolve the other part of environmental degradation, i.e., the consequence of increased output in the form of creating waste. Further, even if innovations can develop in waste management and treatment to recreate resources out of waste, the process of converting waste into resources through energy use is itself environmentally destructive. Therefore, there is no escape from the inevitability of environmental degradation caused by economic growth.

A Few Points of Criticism of Schumacher

Schumacher’s emphasis on human aspects of economics, which gets highlighted in the subtitle of his book, ends up ignoring almost completely the biodiversity loss associated with the economic growth initiated, theorised, and propagated by human beings. Human impact on biodiversity loss is presented today, respectively, through the lenses of the Anthropocene or Capitalocene; and in both approaches, despite their serious differences, the devastating human impact on the diversity of life in the ecosphere is put in the limelight (Angus 2016; Moore 2016; Thornett 2018). It is not clear whether this neglect on Schumacher’s part was a deliberate silence, indicating what I am tempted to characterise as an anthropocentric approach to economics, or the result of ignorance of this dimension of environmental degradation. I have deliberately used the words “almost completely” in characterising his overlooking of the biodiversity loss because he fleetingly does mention the need for protection of wildlife (p.25) and praises Buddhist teaching about the importance of planting trees (p.183).

His admiration for Buddhist economics, justifiable in some ways from an ecological perspective, led him to unjustifiably praise Burma (now Myanmar) as a country pursuing a desirable model of development (p 38). Apart from the political aspect, there is a conceptual error in deducing from an appreciation of the economic dimensions of the teachings of Buddhism to appreciating a country claiming to be following the teachings of Buddhism. A similar kind of error will occur if someone appreciative of the economic and philosophical foundations of Marxism were to praise Stalinist Russia, where the Stalinist regime claimed to be inspired by Marx’s work. The recent brutal persecution of Rohingya Muslims by the Buddhist-dominated Burmese regime and that of Tamil Hindus by the Buddhist-dominated Sri Lankan regime further proves the conceptual error involved in Schumacher’s unjustifiable praise of the Buddhist-inspired Burmese model of development.

Ecological sustainability requires the defence of small-scale economic activity as well as, where appropriate, large-scale (even international) collaboration e.g., on global climate change. The development of renewable sources of energy and their storage might involve developing not only local and regional but national, continental, and even global grid networks. The eventual outcome is likely to be a combination of local/small/decentralised electricity generation and large-scale green generating systems (Devine 2022, 274). Though the defence of small scale is justified in general as a critique of gigantism that characterises orthodox economic theory, it would be wrong in theory and policy to fetishise small scale. Jonathan Porritt mentions in his introduction to Schumacher’s book that “Small is Sometimes Beautiful” would have been a more appropriate title but the publisher “was very well aware” that such a title “would undoubtedly not have had such an impact as a title as ‘Small is Beautiful’” (x). It is quite ironic that the logic of market mechanism which attracted scathing criticism from Schumacher prevailed in picking the title of his book. To his credit, Schumacher did argue that small scale is not always justifiable. The following passage is the most succinct articulation of this view:

What I wish to emphasise is the duality of the human requirement when it comes to the question of size: there is no single answer. For his different purposes man needs many different structures, both small ones and large ones, some exclusive and some comprehensive. For constructive work, the principal task is always the restoration of some kind of balance. Today, we suffer from an almost universal idolatry of gigantism. It is therefore necessary to insist on the virtues of smallness where this applies. (p x)

Following this wholesome view on the size of economic activity, he chose, it seems as a historical scholarly duty, to “insist on the virtues of smallness” as a reaction against “an almost universal idolatry of gigantism” (x). However, the balance between small and big does not always characterise his work nor of many of his uncritical followers who tend to fetishise small scale.

Schumacher’s criticism did not use the important concept of “diseconomies of scale” as a negation of the economies of scale associated with orthodox economic activity. External diseconomies of scale and internal diseconomies of scale can be considered as counter-tendencies, respectively, of external economies of scale and internal economies of scale. External diseconomies of scale start operating where the spatial concentration of economic activities due to the external economies of scale lead to congestion and escalation of costs. The internal diseconomies of scale start manifesting when an expanding economic activity benefitting from internal economies of scale becomes so big that bureaucratisation and routinisation start producing inefficiencies. Schumpeter had especially highlighted this as the central contradiction of capitalism, where the growth of monopolies benefitting from the economies of scale placed enormous resources at their disposal for research and development aimed at innovation; but the same advantage emerging out of mammoth size of monopoly firms became a “diseconomies of scale” disadvantage, through bureaucratisation and the withering away of the spirit of enterprise that Schumpeter believed characterised the early non-monopoly stage of capitalism (Schumpeter 1987/1942).

Schumacher’s understanding of Marx, which appears to be based primarily on Marx’s Capital and Marx and Engels’s Communist Manifesto, is flawed because, when he calls Marx’s labour theory of value a “devastating error,” (3) and cites somewhat approvingly Marx’s view of capitalist technology (124, 214), he views Marx mainly from the sphere of production and industrialisation. Marx’s Economic and Philosophical Manuscripts (EPM), which emphasise alienation and dehumanisation in the capitalist production process, was close to Schumacher’s views on the adverse impacts of industrial civilisation on the human condition. Had he taken note of Marx’s EPM, Schumacher not only would have had a more holistic view of Marx’s work, but it would have added strength to his own work.⁸

Schumacher’s theorisation on the importance of leisure in human life did not sit well with his fetishisation of work in the way he presented work as unproblematically creative. Human beings as a species are perhaps the most creative species and give expression to their creativity through their labouring activity in relation to nature. But work, whether in capitalism or Stalinism, is not always creative. Even poets, musicians, and painters – just to take these examples of work which might be considered unproblematically creative – need a break from work. Schumacher mentions that “The stillness following liberation – even if only momentary – produces the insights of wisdom which are obtainable in no other way” (24). But he relates this stillness to liberation from “greed and envy” and not from liberation from work itself. Celebration of work – more so of hard work – is a bourgeois ethic. Schumacher, in trying to highlight the potentialities of small scale economic activities in creating employment opportunities and reducing unemployment created by large scale mechanised economic activities, ended up praising work itself in an uncritical way. What is needed is a dialectical understanding of work - work as creative but a break from work in the form of leisure (even “laziness”) as essential for human fulfilment.⁹ Devine (2022) highlights the importance of “free time” for “creative and human developmental activities” and also as “a necessary condition for the participation of working people in democratic discussion and decision-making in society and in the management of economic activity” (274), but views the possibility of such free time developing through productivity increases. This is certainly an improvement on Schumacher’s uncritical celebration of work, but the way this “free time” is seen as dependent upon productivity increases does raise a question mark over the quality of this imagined free time. If productivity increases are achieved through such technology which demands so intense concentration of labour effort that it leads to exhaustion, the quality of free time generated through such intensity of effort will be undermined. This highlights the significance of genuine and high-quality free time from work. Schumacher’s celebration of work reveals the weakness of his conceptualisation of the future of work in smaller economies.

Schumacher’s criticism of industrialisation and its association with gigantism led him to gloss over if not romanticise the character of agrarian work. Undoubtedly, agrarian work being close to nature is different from machine-related industrial work and does possess aspects of enjoyable creativity, but it can be very heavy work and, especially under the conditions created by orthodox economics destruction of rural life and agricultural economies, can involve drudgery and many unpleasant aspects. Colin Tudge, an agrarian scholar who passionately defends the social and ecological advantages associated with agrarian work, concedes that agrarian work can be backbreaking and suggests the need for diversity of work which involves agrarian work as part-time work.¹⁰ A more nuanced understanding of work – agrarian/rural and industrial/urban – is required as a critique of the unproblematic celebration of either rural or urban agrarian work. The global peasant farmers’ organisation, La Via Campesina, has perhaps done the most heavy-lifting in terms of reshaping notions of agrarian work, and changing the theoretical and practical applications of “small is beautiful” in the food system. They have done so by promoting and implementing “food sovereignty,” such that access and control over resources and decision-making, labour processes and trade are returned to producers’ hands, and the alienation of the current agricultural system is reversed to build a non-alienated food system of the future (see Giacomini 2018).

Schumacher viewed the social and economic phenomenon of women entering the labour force at the cost of household work very negatively. This was certainly a very socially conservative view of women’s place in society.

Schumacher's views on fossil fuels revealed an anthropocentric flaw in his ecological vision. He viewed fossil fuels positively and his worry was that their excessive use caused by unlimited growth will lead to their exhaustion and thus threatening “civilisation” (viii). His role as the Chief Economic Advisor to the British National Coal Board from 1950 to 1970 led him to similarly express fears about the exhaustion of coal resources. The fear now is not about their exhaustion but their use contributing to CO2 emissions leading to “global boiling” and, therefore, the need to combine cutting down energy use with replacing fossil fuels by renewable sources of energy.

A final critical evaluation of Schumacher might not view him as an ecological thinker at all. From the standpoint of contemporary ecological thought, his relative neglect of biodiversity loss marks him out as an anthropocentric thinker. He is seen as standing out more clearly in the company of the heterogeneous critics of technology which was current in the 1950s and 1960s, both in the USA and elsewhere, including people like Lewis Mumford, Jacques Ellul, Ivan Illich and, a bit later on, Langdon Winner. It is argued that many of these writers, like Schumacher, had a fundamentally religious motivation, and their critiques of modern technology intersected at various points with ecological ideas. But they are seen as distinct from ecological thought then and even more so now.¹¹

Conclusion

Schumacher’s articulation of small as beautiful has been a powerful corrective against the gigantism embedded in orthodox economic theory, both bourgeois and Stalinist. The development of ecological socialist thought bringing into the limelight many comparative advantages of small scale highlights the contemporary significance of Schumacher’s contribution. More nuanced criticism, such as that offered here showing the strengths and limitations of Schumacher’s contribution, can pave the way for his contributions to be incorporated into the development of eco-socialist thought and vision that, on one hand, criticises capitalism and the bourgeois economic theory as historically and ethically inappropriate, and, on the other hand, also criticises the Stalinist model of industrialisation as environmentally destructive and socially brutal. Eco-socialist economic theory, by integrating nature centrally into economic analysis, not only makes a theoretical advance over bourgeois and Stalinist economic theorising, it also paves the way for an eco-socialist politics that envisions modes of political organisation to bring about socio-economic change oriented towards ecological sustainability and social justice.

Acknowledgements

I am very thankful to Ted Benton, Leigh Brownhill, Meena Dhanda, Lucy Ford, Barbara Harriss-White, Neal Harris, Andy Kilmister, Laura Rival, and Verónica Isabel Sandoval for their comments on earlier drafts of the paper. The usual disclaimer applies.

Notes

1 All page references to Schumacher in this paper are to Schumacher (2011).

2 I am ignoring here the difference between the neoclassical/neo-liberal and Keynesian schools of thought in bourgeois economics because even though the Keynesian School argues for regulation of the market, it does not critique the assumption that large scale economic activity is inherently and always superior over small scale economic activity.

3 Mankiw (2017), along with many other orthodox economics textbooks, captures the standard micro-economics model of the traditional market-based bourgeois economics.

4 The standard orthodox macro-economic texts provide a description of an open national economy as an interactive network of households, firms, and a government sector; and then add chapters dealing with international trade, international currency movements, and the behaviour of international firms. It is very rare for an orthodox macro-economic text to even mention words such as colonialism or imperialism, leave aside incorporating an analysis of colonialism and imperialism into discussing the behaviour of households, firms, and governments. If there is a section that is devoted to ‘developing economies,’ that is merely to suggest economies that are at an earlier stage than the now existing ‘developed economies,’ which are characterised by a higher level of GDP per capita. Stages of economic growth theorised by the Nobel Economics Prize Winner W. W. Rostow best capture this dominant tradition in orthodox macro-economics (Rostow 1960). See Baran and Hobsbawm (1961) and Hunt (1989) for a sharp rebuttal of Rostow that focussed on the fundamental flaw in Rostow’s schema that ignored global imperialism in his theorisation.

5 Pat Devine is critical of Stalinist central planning but does argue for planning as a more efficient and democratic mode of economic organisation than private profit-oriented market economy, while Alec Nove allows for some form of market rationality of resource use but subordinated to an overall planned organisation.

6 That private plots of small sizes survived in the Soviet Union despite the state ideology of opposing such small sized private farming revealed both the resilience of small-scale farming as well as the limitations of state reach into that domain, especially in countryside territory as vast as the Soviet Union’s. Karl Kautsky (1988/1899) in his classical work had argued that small farming through overwork (by family labour) and underconsumption had a higher sustaining capacity against large (wage labour based) capitalist farming than small industrial firms had against large industrial firms. See also Banaji (1976, 1990).

7 For a competent review of balanced growth versus unbalanced growth models, see Cypher and Dietz (2008).

8 Marx’s EPM was first published in German in 1932. The first English edition of EPM published by Progress Publishers, Moscow (translated by Martin Milligan) came out in 1959. A revised English translation published in London became available in 1970 (Marx 1970). Schumacher, therefore, had access to both the German edition (being a German himself) and the English edition.

9 One of the most radical and original texts on critique of work and celebration of leisure is by Marx’s son-in-law, Paul Lafargue. First published in French in 1888, it has been available in English for a long and has recently been published along with Lafargue’s other writings by the New York Review of Books (Lafargue 2022).

10 Personal correspondence June 9, 2023.

11 This evaluation of Schumacher is articulated by Andy Kilmister (personal correspondence September 15, 2023). Jonathan Porritt in his introduction to Schumacher (2011) expresses a similar view especially on technology (p. vii-viii) but is largely appreciative of his ecological contributions.