Small Is Beautiful

Small Is Beautiful: Economics as if People Mattered is a political nonfiction book by Ernst F. Schumacher. Published in 1973 by Harper, the book centers on the premise that economics should serve us, the people, as opposed to the other way around. The book has been very well received for its unique take on politics and environmentalism. Before authoring Small Is Beautiful, Schumacher served as a leading statistician and economist. He worked as Chief Economic Advisor to the UK National Coal Board for more than twenty years. He’s still regarded as a highly influential economist.

Schumacher’s work had timely publication. In 1973, globalization was in its infancy, and there was a worldwide energy crisis. It was the perfect moment to critique our understanding of economics and how inefficient our current methods were. Schumacher advocated more practical and appropriate technology that was smaller in scope over conglomerates and an economy which served no one.

Small Is Beautiful contains four broad sections: “The Modern World,” “Resources,” “The Third World,” and “Organization and Ownership.” The sections should be read in chronological order to make the most sense. Schumacher takes us from a discussion of our unsustainable economy all the way through to alternatives to capitalism. In his view, we are, quite literally, destroying our own foundations.



First, in “The Modern World,” Schumacher challenges our understanding of nature and our place within it. We see ourselves as seemingly above nature, and our goal is to conquer and control it. The irony is that, if we do conquer nature, it will be the end of us all. Schumacher doesn’t address why we think this way but, instead, asks us to consider why we’re moving in this direction. Otherwise, we will continue to exploit nature and its offerings until it has nothing left to give us.

For Schumacher, we currently have one overarching belief—universal prosperity is not only possible, but also the only way to ensure peace. This is a contradiction because we can’t achieve prosperity in the modern sense other than through greed and ill actions. We base our entire theory of economics on contradictions like this. What we need, instead, are smaller-scale methods which can be accessed by everyone, allowing us to be ourselves and to work in tandem with nature.

In “Resources,” Schumacher examines one vital resource which has different meanings for us all—education. Our understanding of the value of education depends on our social class. For example, the poor place little value on it, whereas the rich see it as an opportunity to network. Education is limited and problem solving-based, as opposed to teaching us wisdom and the ability to think deeply. All we do is apply pre-existing ideas, prejudices, and background theories to a situation, instead of truly thinking for ourselves.



“The Third World,” considers the fatal flaw in “solving” problems in developing countries. Our charity comes from the grave assumption that our way is the only way to build an economy. Distributing mass amounts of aid and assistance to countries in need doesn’t empower them to build a structure that suits them; it merely glosses over the real problems—no effort is put into supporting rural communities, which make up most of their population. Instead, there’s an expectation that industrializing their nation will effectively absorb them all into cities.

Schumacher takes us through this argument step-by-step. If rural workers have little to no employment, they move into urban areas. This creates a mass shift in population to an area that can’t sustain them all. Trying to “urbanize” a country cannot work in even the wealthiest nation because there simply aren’t enough jobs to go around. Our entire philosophy is causing the problem to only get worse.

The final section, “Organization and Ownership,” discusses why socialist theory doesn’t go far enough, and how we urgently must find alternatives to capitalism. The problem comes down to our own natures—we are greedy and envious and stop at nothing to ensure our materialistic growth. Our desires are at odds with our finite natural environment. It’s on us, then, to find a new system that supports our environment before we destroy it. Capitalism will, eventually, ruin us.



What we should be focusing on, according to Schumacher, is small-scale private enterprise and local sufficiency. If enterprise takes place on a far more manageable scale, then we can improve employment, sustain the economy, and place far fewer demands on the environment. This structure will not generate a lot of wealth, but that’s precisely the point.

Our current economy thrives on large-scale enterprises through which anonymous owners and leaders accumulate mass wealth through the fruitless and unfulfilling work of their “employees.” Schumacher calls this a “parasitical” relationship that can only deteriorate. Socialism on its own, however, is not an answer. Instead, we must reimagine our entire relationship with nature, building a global economy which will save us, not break us.