Small is Still Beautiful Review, Part I

For obvious reasons, questions of the environment are a hot topic. What a lot of people have trouble with are the economic implications of "saving the environment." But these concerns aren't nothing new, and start as late as the 1970s. One such person to approach this question is EF Schumacher.   conservative environmentalism
Small is Still Beautiful, by Joseph Pearce, is a summary of the views of economist and philosopher EF Schumacher, who influenced many of the early environmentalists. His central idea is that a smaller scale economy, in which people work, sell, and consume locally, is far healthier for the environment and in terms of people’s happiness. After critiquing contemporary economics, the author argues in favor of small-scale economics over large-scale economics, listing various solutions at the individual, local community, and governmental levels. Finally, the author challenges modern value systems, and examines how different values impact our personal, societal, economic, and environmental well-being.

This book is not only a summary of the economist EF Schumacher, but some applications to the world as it is now, and not in the 70s. social justice and environment social justice and environmentalism

In the next few days, I'll be posting up chunks of my outline and review of the book. Part I is down below:

Small is Still Beautiful as a summary of the views of economist and philosopher EF Schumacher, who influenced many of the early environmentalists. His central idea is that a smaller scale economy, in which people work, sell, and consume locally, is far healthier for the environment and in terms of people’s happiness.

The book begins with a criticism of neoclassical economics, the dominant framework in economics today, and outlines its flawed assumptions and missing considerations. They include:

1.      Economics do not take into account humanness: human nature, human values, human meanings, and sources of lasting and fulfilling human happiness.

2.      Economics assume infinite resources, as opposed to the reality of finite resources.

3.      Market pricing distorts true value. A mother’s preparation of dinner for her children is worth less than a chef’s preparation of dinner for customers at a restaurant, simply because one is priced higher than the other.

4.      Measures such as GNP or GDP do not take into account activity within family or self-sustainable lifestyles, such as growing a garden in one’s backyard. In contrast, societal problems such as having more people in prison increases GDP. [Click here to hear Nobel laureate Joseph Stiglitz talk about why GDP is actually harmful to use]. 

5.      The price mechanism is flawed – resources that are becoming exhausted don’t necessarily rise in price, such as oil, and therefore cannot prevent resource exhaustion. 

6.      Economists assume the “Micawber factor,” which is the belief that if a resource becomes exhausted, some sort of fortunate substitution, technological advancement, or resource discovery will be made just in time. Just like the Charles Dickens' character's life.

Schumacher argues for the encouragement of small scale industries and business in favor of large multinational corporations. Multinational corporations are able to exploit overseas cheap labor (known as outsourcing). However, because these wages are so low, the overseas workers hardly benefit materially. The consumers do receive cheaper products and have a temporary boost in purchasing power; unfortunately, in the long run, there is less employment at home, and taxes must be raised to compensate for social problems resulting from the increased poverty.

Schumacher makes a distinction between a large scale economy and a small scale economy. In large scale economies, which dominate both 20^th century capitalism and communism, mass production dominates and trade is conducted over long distances. Decisions are made in the hands of a few privileged elite, and imposed upon the masses. In contrast, small scale economies involve intermediate levels of labor, trade locally, and decisions are made on the most local level possible. Schumacher argues for the encouragement of small scale economies for the following reasons below.

Heavy industrialization is a critical aspect of large scale economies, which is environmentally and socially damaging, especially of third-world countries. Industrialization requires heavy capital investment and high energy/electricity input (think of how much resources it takes to build a factory), resulting in debt, resulting in a need for greater production to overcome the sum of debt, interest, and resulting inflation. The inevitable result is that debt and environmental destruction only increases, leaving the workers with little advances in material wealth, let alone happiness. In addition, heavy industrialization inevitably leads to high unemployment rates, since factories are designed to eliminate the need for manual labor. 

Click here for Part II of this book review