The author is a British economist and critic of capitalism, who wrote in the 1950s to promote an alternative economic system. The book focuses on how we must balance individual needs with practicality by making sure that our resources are used efficiently and not too much material goods are produced.
“The Small is Beautiful: A Study of Economics as if People Mattered” is a book by E. F. Schumacher who wrote about the difference between economy and society, in which he argues that it’s not money or material goods that make people happy, but rather quality of life.
Are you seeking for a summary of E. F. Schumacher’s book Small is Beautiful? You’ve arrived to the correct location.
After reading E. F. Schumacher’s book, I scribbled down a few essential points.
If you don’t have time, you don’t have to read the whole book. This book synopsis gives you a quick rundown of all you can take away from it.
Let’s get this party started right now.
I’ll go through the following points in this Small is Beautiful: A Study of Economics as if People Mattered book summary:
What Is It About Small Is Beautiful?
Small is Beautiful is a collection of writings by E. F. Schumacher, a notable British economist, addressing his criticism of Western economics. This classic collection, initially published in 1973, is now regarded one of the most significant works released after World War II. It is as relevant now as it was in the 1970s.
What are the names of the authors of Small is Beautiful?
Ernst Friedrich Schumacher was a well-known economist and a student of John Maynard Keynes. Between 1950 to 1970, he worked as the Chief Economic Advisor for the UK National Coal Board.
For Whom is Small Beautiful?
Reading Small is Beautiful is not for everyone. It could be perfect for you if you are one of the following categories of people:
- Politicians and economists are those who are interested in these topics.
- People who are concerned about the environment and want to learn more about how our economic system impacts them.
Summary of the Book Small is Beautiful
Introduction
Is larger necessarily better in terms of economics? A prominent economist, E.F. Schumacher, disagrees. On the contrary, he maintained that “little is beautiful” and that economics should prioritize life on Earth before profit and money.
You’ll discover about his criticism of the present Western economic system, which he claims depletes resources and devalues human life, in this book. In his works, Schumacher argues that capitalism legitimizes selfishness and places a premium on money above everything else. They’re as relevant now as they’ve ever been.
Lesson 1: In the current economic system, natural resources are exhausted.
Modern economic systems have delivered immense wealth to Western economies, but it has come at a hefty cost. We are so cut off from nature these days that we ruin it without remorse.
Because of the global industrial system, we squander a lot of precious natural resources like fossil fuels. Fossil fuels are treated more like income than capital in modern economies, despite the fact that they are a limited resource. It is wasteful to treat them in this manner.
If we treated fossil fuels as capital rather than income, we would be far more concerned about their protection. We, on the other hand, treat things as if they’ll never run out, which is obviously not the case.
Fossil fuels can’t be produced or regenerated, so once they’re gone, they’re gone forever. Because our contemporary economy is reliant on a consistent supply of energy, running out of it too soon would be dangerous.
The current economic system inherently threatens two sorts of natural capital: nature’s tolerance margins and human substance.
Since World War II, industrial output has expanded tremendously, putting nature’s tolerance margins in jeopardy. Our activities degrade the ecosystem at a far higher pace than the natural regeneration process.
Economic systems also devalue people, reducing them to nothing more than gears in an economic machine. Many individuals across the globe, for example, have unsatisfying occupations and spend their lives performing backbreaking work.
Furthermore, such issues endanger society as a whole, not just the contemporary economy. The economic machine will not be able to maintain itself if the individuals who operate it are unable to live.
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Lesson 2: Universal affluence is insufficient to ensure long-term peace.
History has shown that the wealthy are more peaceful than the poor, and that the wealthy are more successful. Economic equality and prosperity seem to be the bedrocks of peace, don’t they?
Let’s look at three aspects related to this concept:
It is feasible to achieve prosperity for everybody.
We may attain global wealth by following the materialist philosopher’s maxim “enrich yourself.” If we do so, we shall establish peace.
When we break down the thesis of peace via universal wealth into these three principles, it becomes evident that it does not hold up.
At the present, the only option to reach universal prosperity (point 1) is to use more fossil fuels, which would result in greater environmental harm. It is difficult to continue with endless economic expansion due to a scarcity of fossil resources and a fragile environment. If we continue to consume at our present pace, we will confront much more pollution.
The second premise is problematic, given that greed and jealousy are the fundamental sources of self-gain. Introducing these human vices to our economic system may temporarily improve GDPs, but it will leave people feeling more disgruntled, alienated, and insecure. Because meaninglessness will ultimately immobilize populations, GDP will finally plateau.
Finally, peace cannot be sustained by widespread affluence. The only strategies to create universal prosperity in the current meaning of never-ending economic progress are gluttony and jealousy. Those emotions, which themselves endanger peace, kill happiness and purpose. Furthermore, we will not be able to achieve widespread prosperity if we continue to harm the environment.
Lesson 3: In today’s economic mindset, acts that benefit the economy are prized above those that benefit the environment and society.
Economic development is sometimes misinterpreted. GDP growth is often thought to be always beneficial, however there is such a thing as unhealthy growth.
Those who think that economic growth is always beneficial believe that everything that isn’t economic is bad. Unprofitability is often thought to be a negative thing — anything that does not make money.
Anything that is lucrative, on the other hand, is regarded nice. However, this way of thinking is incorrect since we don’t consider the human cost or environmental harm when valuing economic activity simply in terms of profits. As a result, non-economic initiatives that help the poor or safeguard the environment may be overlooked.
Reduced pricing for lower-income clients, for example, would be unprofitable. Furthermore, importing things would be less costly than purchasing them locally.
As a consequence, money is considered more precious than any other economic resource. As a result, a frugal shopper is constantly on the lookout for a good deal. Despite the fact that his goods affect the environment, he seems unconcerned about the circumstances under which they were made. All that counts to him is getting the greatest bang for his buck.
When a customer rejects a deal because it is exploitative or harmful to the environment, she runs the danger of being labeled as uneconomic. As a consequence, we’re stifling acts that are crucial for both humans and the ecosystem. Things that cannot be quantified, such as our humanity and our houses, are valued by the economic system.
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Lesson 4: Education is the most valuable resource of all, but only if it instills the appropriate ideals.
History shows that education is more important than natural resources for economic success. Furthermore, contemporary cultures are founded on the conviction in the transformative potential of education.
Many individuals nowadays believe that education is the key to social advancement. This, however, is contingent on how we teach. It’s not only about getting young people ready for the workforce; we also need to inculcate the correct values in them.
In contemporary societies, we presume that greater higher education is always beneficial for everyone, but we also recognize that they are challenging conditions to exist in. We also anticipate science and technology to develop as a result of education.
Everyone, it is often assumed, should have a basic comprehension of fundamental scientific concepts such as electrons and be able to operate modern technologies.
Science, on the other hand, isn’t always valuable. The aim is to understand how to use scientific knowledge to improve society. This is when education comes in handy.
Values must be taught to children in order for them to live meaningful lives. The natural sciences do not give moral advice to scientists; even the most significant discoveries generally have only practical implications; they cannot advise us how to live.
We know a lot about a lot of things thanks to scientific development, but we have no clue what to do with it. Although studying the humanities seems to be beneficial, we will not be saved if humanistic education does not contain metaphysics or ethics, since these disciplines address the most potent concepts and go beyond simple facts.
Lesson 5: Nuclear energy may be humanity’s most deadly technology, yet it is only discussed economically.
Because fossil fuels are rapidly depleting, we will need new energy sources in the near future. Many people believed that nuclear energy was the solution when it was originally produced, particularly since it came just in time. Many people, on the other hand, were unaware of the true potential of nuclear power.
Nuclear radiation’s effects are well-known, and it is the biggest hazard to life on Earth. Radiation particles’ harm is governed by their nuclear dose and the sorts of cells they strike.
The atom bomb increased public knowledge of nuclear radiation. Nonetheless, the “peaceful” applications of atomic energy may end up posing a larger danger to mankind.
It is difficult to lower the radioactivity of radioactive elements after they have been generated. Only time may lessen its intensity, since neither chemical processes nor physical interferences can do so.
We have yet to discover a location on the planet where radioactive waste may be properly kept without endangering the ecosystem. Any error might have disastrous effects.
Despite the many disadvantages of nuclear energy, we continue to utilize it for economic reasons. This is an excellent illustration of how money influences everything we do. In the end, the decision to develop nuclear power plants or conventional power plants fuelled by fossil fuels is solely commercial, with no regard for the societal ramifications.
Nuclear energy has the potential to harm us if it is not used to rescue us.
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Lesson 6: Technology has robbed humanity of their most fulfilling employment.
We have a propensity to believe that future technical breakthroughs will always benefit us. However, in light of the social difficulties that contemporary technology has brought, we must rethink the worth of technological advancement.
Technological improvements have robbed humans of the pleasure of labor in a variety of ways. In the end, technology is intended to make our lives easier. To survive, we have invented technology, purportedly to allow us to concentrate on other activities, yet much of our technology has taken away our favorite pastimes, such as crafts.
Modern technology has almost eradicated almost all types of artistic craftsmanship, including weaving, pottery, and metallurgy. These creative forms are becoming more uncommon in technologically sophisticated countries, and earning a livelihood from them is practically impossible.
In reality, modern technology has spawned new types of occupations that no one wants, such as assembly-line labor in enormous factories.
One thing to keep in mind regarding technology is that it does not address the issues that are most important to us.
The contemporary world is in the midst of numerous major crises. We’ve seen how burning fossil fuels pollutes the environment, and it’s possible that the alternative – nuclear energy – will be much worse.
Furthermore, technology will not be able to eliminate poverty or unemployment. We’ve seen how it often deprives us of our most pleasurable job. Karl Marx meant exactly what he said when he remarked, “Too many helpful things lead to too many worthless people.”
Lesson 7: Funds alone should not be utilized for development, and the bulk of development assistance should go to rural regions.
Throughout the globe, the wealthy are increasing wealthier while the poor are becoming poorer. For this reason, wealthier nations offer help to poorer countries. However, achieving genuine economic progress is a difficulty.
Why?
Simply providing more money or material commodities will not allow a community to develop. Poverty is exacerbated by material issues such as a lack of natural resources and infrastructure.
Poverty stems from non-material factors. Inadequate education, political frameworks, and legal systems wreak havoc on societies. Natural resources are scarce in many prosperous nations, including Israel, demonstrating their relevance for economic growth.
Furthermore, history demonstrates that countries with a high degree of education and social order recover quickly after a conflict because the economic underpinnings are intact.
There is, however, another issue with development: it cannot be completed rapidly. It takes time to change things; you can’t hurry it.
Small towns and rural communities should also get development and help. In developing nations, dual economies are frequent, implying a significant split between rural and urban regions. In a typical developing nation, one or two large cities may account for 15% of the population, while the remainder lives in small villages.
The bulk of development funding, on the other hand, is sent to cities. As a result, it’s possible that 85 percent of the people will go without help. Furthermore, development assistance sent mostly to rural parts of a nation would be more successful. This would help to solve the issue of mass migration to cities.
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Lesson 8: Large companies must strike a balance between order and creative flexibility in order to create loyalty.
When Exxon and Mobil combined in 1999, Exxon Mobil was born. As a consequence, the business sector has seen an increase in the number of large corporations of this size since then. When a large company infiltrates our society, the individual is devalued and reduced to a pawn.
Every organization, no matter how large or small, should have some structure, but it should also be unstructured enough to allow for innovation. Organizations that become disorganized will fail to achieve their objectives; on the other hand, organizations that follow tight regulations will also fail.
Working in a free atmosphere is essential since it encourages team members to think creatively. They will be unable to come up with fresh ideas due to their displeasure with their task.
When given the opportunity to be creative, however, creative individuals have limitless potential. Creativity leads to innovation, which is critical to our society’s survival.
Large organizations, as a result, should be made up of multiple smaller, semi-autonomous entities. These organizations must be able to expand and innovate on their own.
Large-scale enterprises also need employee loyalty and drive.
In every company, the greatest approach to develop loyalty is to trust people who work at lower levels. Being a higher-ranking employee does not imply that you are brighter or more efficient at your work. High-ranking officials should avoid taking on lower-level jobs.
Motivation is also an important component of good, large-scale organizations. Top management is seldom motivated, but motivation at the lower levels of the company tends to wane.
People have a tendency to believe that higher management is primarily concerned with making money. To some extent, this is correct; yet, if workers are not pushed, their job will become meaningless.
Final Thoughts
The present Western economic system has a harmful impact on humans and the environment. It prioritizes money above people, in addition to depending on limited natural resources. To address this issue, we may change our educational system, assist disadvantaged communities in developing, and reorganize our businesses. We need to rethink how we think about economics.
Additional Reading
If you like Small is Beautiful, you may be interested in the following book summaries:
Purchase a copy of Small Is Beautiful.
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Small is Beautiful by E. F. Schumacher is a book that discusses the idea of how small businesses can be more efficient and successful than large corporations. The book also talks about how to achieve this through the use of “the principle of smallness”. Reference: small is beautiful quotes.
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