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Study Notes

E. F. Schumacher (1911-1977)

Level:
A-Level
Board:
AQA, Edexcel

Last updated 30 Dec 2018

German-born Ernst Friedrich Schumacher was a ground-breaking economist. A Rhodes scholar who studied at Oxford and Colombia, Schumacher worked with William Beveridge on his famous report that became the blueprint for the UK's Welfare State. He also worked with various British governments advising the coal industry after it was nationalised.

Perhaps surprisingly, for someone we see as an environmentalist, he was a strong advocate of continued coal production in the UK. However, he did stress the importance of both producing and conserving the coal (at a time when oil production elsewhere in the world had led many to suggest that coal production could be scaled down significantly). He was also an opponent of nuclear energy, because of the issue of dealing with nuclear waste.

His biggest contribution to environmentalism is in relation to his questioning of the need for ever-increasing growth, and the alternative that he developed: a smaller-scale, sustainable economics that required less capital and less energy: what he later came to call Buddhist economics.

His best known book - a collection of essays - was Small Is Beautiful: A Study of Economics As If People Mattered. The central principle of this was to develop an economics that sought to maximise people's wellbeing while at the same time as minimising their consumption.

He argued that traditional economics is based on the fallacy that commodities and goods, and money and materialism, are all more important than people and the good things that people can do and create. In that sense, his is a people-centred economics. He particularly applied it to developing countries, suggesting an alternative to the dominant modernisation theory of the period, that suggested that all countries should follow a path through industrialisation to eventually become based on mass consumption, like the UK or the USA. Instead, economics and technology should ensure that people have enough - there is no need to create excess and deplete resources beyond what is actually required. Developing world economics should be self-reliant and use the appropriate technology for their society (what he called intermediate technology). His ideas about the developing world were partly based on his personal observations on a trip to Myanmar (then Burma).

Influenced by people as diverse as Keynes, Marx and Gandhi, it is Schumacher's work on the finite nature of resources that has had the greatest impact on environmentalism. The economic orthodoxy of the 20th century was one that would lead to us running out of the natural resources upon which our economy was based: a sustainable economy needed to be based on quite different principles.

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