Few realized when Small is Beautiful was published that E.F. Schumacher’s economic theories were underpinned by solid religious and philosophical foundations, the fruits of a lifetime of searching. In 1971, two years before the book’s publication, Schumacher had become a Roman Catholic, the final destination of his philosophical journey.
“It’s all very well to live simply and grow things and practice crafts… but what about the hundreds of thousands who can’t hope to be self-sufficient in property and craft?” This summarizes the complaint by modern critics against “Distributism”—the economic philosophy inspired by Catholic social teaching and developed, early last century, by Catholic thinkers such as G.K. Chesterton and Hilaire Belloc. According to Distributism, property should be spread widely, so that people can earn a living without having to rely on the state (socialism) or a small number of individuals (capitalism). According to the pessimistic view of critics, small-scale economies are fine in principle, but are no longer practical.
Such questions were central to the philosophical grappling of Dr. E.F Schumacher, who came to the conclusion that pessimism was self-fulfillingly prophetic. If one believes the worst one will probably get the worst. Negation begets negation. The antidote to such despair, Dr. E.F. Schumacher believed, was hope. It was in this spirit that he wrote Small is Beautiful in 1973, a book which, for a time at least, made Distributism the most fashionable economic and political creed in the world. Schumacher’s trained economic mind had resolved many of Distributism’s alleged problems so that its principles became applicable even to ‘the hundreds of thousands who can’t hope to be self-sufficient in property or craft.’ Schumacher had succeeded where Hilaire Belloc and G.K. Chesterton had failed.
Schumacher’s Small is Beautiful, subtitled ‘a study of economics as if people mattered’, was published in 1973 to immediate acclaim and became an international best-seller. At the time of its publication Schumacher was already well known as an economist, journalist and entrepreneur. He was Economic Adviser to the National Coal Board from 1950 to 1970, and was also the originator of the concept of Intermediate Technology for developing countries. In 1967 he became a trustee of the Scott Bader Commonwealth, a producers’ co-operative established in 1959 when the company’s owner, Ernest Bader, transferred ownership to his workforce. Bader, a Quaker, believed that establishing co-operative ownership was an expression of Christian social principles in practice. To the surprise of many sceptics, the Scott Bader Commonwealth prospered, becoming a pathfinder in polymer technology and a model of good labour relations at a time of considerable labour unrest throughout the rest of industry. Schumacher also served as President of the Soil Association, Britain’s largest organic farming organization.
Schumacher became famous throughout the world, idolized as a guru both by the Californian counter-culture and by a rising generation of eco-warriors.
Born in Bonn on 16 August 1911, Schumacher first came to England in October 1930 as a Rhodes Scholar to study economics at New College, Oxford, where he stayed until September 1932. At the age of twenty-two he went to New York to teach economics at Columbia University. Finding theory without practical experience unsatisfying, he returned to Germany and tried his hand at business, farming and journalism. In 1937, utterly appalled with life in Hitler’s Third Reich, he made his final move to England. During the way he returned to the academic life at Oxford and devised a plan for economic reconstruction which influenced John Maynard Keynes in the latter’s leading part in the formulation of the Bretton Woods agreement. After the war Schumacher became Economic Adviser to the British Control Commission in Germany from 1946 to 1950, before becoming Economic Adviser to the National Coal Board, a post he held for the next twenty years.
It was clear that Schumacher’s credentials as an economist were beyond question, but few realized when Small is Beautiful was published that his economic theories were underpinned by solid religious and philosophical foundations, the fruits of a lifetime of searching. In 1971, two years before the publication of Small is Beautiful, Schumacher had become a Roman Catholic, the final destination of his philosophical journey.
The journey began shortly after the war with a growing disillusionment with Marxist economic theory. ‘During the war he was definitely Marxist,’ says his daughter and biographer, Barbara Wood. Then, in the early fifties he visited Burma which ‘was really important in beginning the real changes in his economic thinking’. ‘I came to Burma a thirsty wanderer and there I found living water,’ he wrote. Specifically, his encounter with the Buddhist approach to economic life made him realize that Western economic attitudes were derived from strictly subjective criteria based upon philosophically materialist assumptions. For the first time he began to see beyond established economic theories and to look for viable alternatives. As an economist he developed a meta-economic approach much as Christopher Dawson, as an historian, had developed a meta-historical approach. This fundamental change in outlook was discussed in Small is Beautiful. Modern economists, Schumacher wrote, ‘normally suffer from a kind of metaphysical blindness, assuming that theirs is a science of absolute and invariable truths, without any presuppositions.’ This was not the case: ‘economics is a “derived” science which accepts instructions from what I call meta-economics. As the instructions are changed, so changes the contents of economics.’
To illustrate the point, in a chapter entitled ‘Buddhist Economics’ Schumacher explored the ways in which economic laws and definitions of concepts such as ‘economic’ and ‘uneconomic’ change ‘when the meta-economic basis of western materialism is abandoned and the teaching of Buddhism is put in its place’. He stipulated that the choice of Buddhism ‘is purely incidental; the teachings of Christianity, Islam, or Judaism could have been used just as well as those of any other of the great Eastern traditions’.
Taking the concept of ‘labour’ or work as an example, he compared the attitude of Western economists to their Buddhist counterparts. Economists in the ‘west’ considered labour ‘as little more than a necessary evil’:
From the point of view of the employer, it is in any case simply an item of cost, to be reduced to a minimum if it cannot be eliminated altogether, say, by automation. From the point of view of the workman, it is a ‘disutility’; to work is to make a sacrifice of one’s leisure and comfort, and wages are a kind of compensation for the sacrifice.
‘From a Buddhist point of view,’ Schumacher explained, ‘this is standing the truth on its head by considering goods as more important than people and consumption as more important than creative activity. It means shifting the emphasis from the worker to the product of work, that is, from the human to the sub-human, a surrender to the forces of evil.’
The Buddhist view, on the other hand, ‘takes the function of work to be at least threefold’: ‘to give a man a chance to utilise and develop his faculties; to enable him to overcome his egocentredness by joining with other people in a common task; and to bring forth the goods and services needed for a becoming existence.’
From the Buddhist standpoint, Schumacher continued, to organise work in such a manner that it becomes meaningless, boring, stultifying, or nerve-racking for the worker would be little short of criminal; it would indicate a greater concern with goods than with people, an evil lack of compassion and a soul-destroying degree of attachment to the most primitive side of this worldly existence.
For Schumacher there were three main culprits: Freud, Marx and Einstein.
In England, this view had been advocated already by Chesterton, Belloc, Gill and the other distributists, and also by Dorothy L. Sayers. Yet Schumacher appeared to be unaware of their writings at the time he visited Burma in the early fifties. His introduction to the religious basis of economics was, therefore, a Buddhist not a Christian revelation. Most importantly, however, he had discovered that economics was a derivative of philosophical or religious premises and this led to fundamental changes in outlook. Not only did he begin to see economics in a radically different light, he began to see the crucial importance of philosophy to an understanding both of economics in particular and of life in general.
In spite of the profound effect of Buddhist teaching upon his general outlook, Schumacher’s return to England ‘was not marked by an intensification of his study of Eastern religions’. Instead he concentrated his efforts on a thorough study of Christian thought, particularly St. Thomas Aquinas, and modern writers such as Rene Guenon and Jacques Maritain. He also began to read the Christian mystics and the lives of the saints.
Although he still did not consider himself a Christian his previously hostile attitude had softened. One result of this was that his wife, who came from a devout Lutheran background, could take their children to church without fear of her husband’s objections.
Schumacher first publicly stated his new orientation in a broadcast talk in May 1957 in which he criticized a much-acclaimed book by Charles Frankel, entitled The Case for Modern Man. He called his talk ‘The Insufficiency of Liberalism’ and it was an exposition of what he termed the ‘three stages of development’. The first great leap, he said, was made when man moved from stage one of primitive religiosity to stage two of scientific realism. This was the stage modern man tended to be at. Then, he said, some people become dissatisfied with scientific realism, perceiving its deficiencies, and realize that there is something beyond fact and science. Such people progress to a higher plane of development which he called stage three. The problem, he explained, was that stage one and stage three looked exactly the same to those in stage two. Consequently, those in stage three are seen as having had some sort of brainstorm, a relapse into childish nonsense. Only those in stage three, who have been through stage two, can understand the difference between stage one and stage three, This strange blend of mysticism empirically explained in the language of an economist was an early example of the winning formula which was to make Small is Beautiful such a huge success.
Schumacher’s broadcast provoked a huge response. He was indignant when a correspondent to the New Statesman and Nation criticized his talk as typical for a ‘Catholic economist’. He did not consider himself a Catholic at this time and resented the fact that anyone should mistake him for one. Yet his reading of Catholic writers was continuing. By the mid-fifties he had developed an interest in Dante and, through Dante, had been introduced to the writing of Dorothy L. Sayers. Schumacher described Sayers as ‘one of the finest commentators on Dante as well as on modern society’ and quoted at length from her Introductory Papers on Dante, which had been published in 1954:
That the Inferno is a picture of human society in a state of sin and corruption, everybody will readily agree. And since we are today fairly well convinced that society is in a bad way and not necessarily evolving in the direction of perfectibility, we find it easy enough to recognise the various stages by which the deep of corruption is reached. Futility; lack of a living faith; the drift into loose morality, greedy consumption, financial irresponsibility, and uncontrolled bad temper; a self-opinionated and obstinate individualism; violence, sterility, and lack of reverence for life and property including one’s own; the exploitation of sex, the debasing of language by advertisement and propaganda, the commercialising of religion, the pandering to superstition and the conditioning of people’s minds by mass-hysteria and ‘spell-binding’ of all kinds, venality and string-pulling in public affairs, hypocrisy, dishonesty in material things, intellectual dishonesty, the fomenting of discord (class against class, nation against nation) for what one can get out of it, the falsification and destruction of all the means of communication; the exploitation of the lowest and stupidest mass-emotions; treachery even to the fundamentals of kinship, country, the chosen friend, and the sworn allegiance: these are the all-too-recognisable stages that lead to the cold death of society and the extinguishing of all civilised relations.
‘What an array of divergent problems!’ Schumacher exclaimed after quoting this passage. ‘Yet people go on clamouring for “solutions”, and become angry when they are told that the restoration of society must come from within and cannot come from without.’