Thought Control in Economics

E.F. Schumacher

“Buddhist economics” didn’t allow for unlimited growth and consumption but emphasized the use of renewable resources.

E.F. Schumacher didn’t mind when fellow economists dismissed his unorthodox ideas and called him a crank. He chose to take it as a compliment, reasoning that “the crank is the part of the machine which creates revolution and it is very small. I am a small revolutionary!” Schumacher would in fact build his legacy around the idea of small, which in the world of economics is a revolutionary feat indeed.

Born in Germany in 1911, Schumacher studied in England as a Rhodes scholar and later taught economics at Columbia University and Oxford. A protégé of John Maynard Keynes, Schumacher influenced his eminent mentor’s proposal for the postwar currency system that would become the International Monetary Fund. After World War II he aided the British government in the effort to reconstruct the collapsed German nation. From there he moved to the Times newspaper – the heart of the British establishment – where he penned editorials criticizing the Labour government’s ambitious nationalization plans. In addition to all his endeavors in the private sector, Schumacher served as chief economist for the National Coal Board for 20 years. 

Early in his tenure at the Coal Board, Schumacher was sent on a mission to Burma to teach its citizens how to achieve progress by following the Western model of economic growth. Once there, he quickly surmised that the Burmese were better served drawing from their own traditions rather than from Western ones. He coined the term “Buddhist economics” to describe a model that, in complete opposition to its Western counterpart, didn’t allow for unlimited growth and consumption but emphasized the use of renewable resources.

To those who questioned the relevance of Eastern philosophy to economics, Schumacher replied: “Economics without Buddhism, i.e., without spiritual, human and ecological values, is like sex without love.”

He later returned to the Coal Board, but working at one of the largest commercial organizations of the day contributed to Schumacher’s deep-seated conviction that large-scale technologies were dehumanizing. His experiences had led him to conclude that “man is small and, therefore, small is beautiful.” It was this syllogism that inspired the title of his 1973 treatise Small Is Beautiful, a sweeping indictment of the neoclassical model. The work introduced Schumacher’s concept of “natural capital” and outlined an alternative economy based on human-scale, decentralized and appropriate technologies that has inspired generations of environmentalists. To the very end of his life, Schumacher lived by his own prescriptions. He baked his family’s weekly bread supply with locally procured organic wheat that he ground himself in a hand-operated flour mill.

Schumacher died in 1977 but his followers still advance his prescient economic vision through societies founded in his honor. The Intermediate Technology Development Group (itdg), founded by Schumacher, continues his work by promoting poverty reduction in the developing world through sustainable technology. Today itdg continues to demonstrate the wisdom of Schumacher’s words, proving that small is not only beautiful … it has the potential to be prosperous.