Students from a rural school in Rajastan, India, February 13, 2023 (Photo by Meunierd for Dreamstime.com)
David Boyle’s chapter-by-chapter study guide, “Small is Beautiful Revisited…50 Years On,” is introducing, and reintroducing, readers to E. F. Schumacher’s 1973 landmark text. As with any recognized classic work, the ideas expressed are proving as relevant today as when they were first written. Each chapter guide is available on the Schumacher Center’s website in addition to a full downloadable PDF.
In Chapter 14, Schumacher returns to the problem of unemployment in the Global South. Having made his critique of the modern, industrially-oriented
As David Boyle notes, Schumacher is advocating for a type of “full employment” by disseminating capital and organizing labor around producing relatively basic necessities at multiple sites in an easily replicable manner.
ACCESS THE GUIDE
Excerpt from the Guide to Chapter 14
“When considering productivity in any society it is not sufficient to take account only of those who are employed or self-employed and to leave out… all those who are unemployed and whose productivity therefore is zero.”
— E. F. Schumacher, opening lines of Ch. 14
Titled “The Problem of Unemployment in India,” Chapter 14 first appeared as a talk given to the Indian Development Group in London in 1971.
What the Chapter Says…
Schumacher starts by defining unemployment in economic terms.
“When speaking of unemployment I mean the non-utilIization or gross under-utilization of available labour. We may think of a productivity scale that extends from zero, i.e. the productivity of a totally unemployed person, to 100 per cent, i.e. the productivity of a fully and most effectively occupied person. The crucial question for any poor society is how to move up on this scale. When considering productivity in any society it is not sufficient to take account only of those who are employed or self-employed and to leave out of the reckoning all those who are unemployed and whose productivity therefore is zero.”
The rest of the talk is then organized around the four elements that Schumacher believes India will need to reach fuller employment:
- Motivation
- Some know-how
- Some capital
- An outlet
These are four essential conditions for getting more work done anywhere, but in India, we are not talking about a few people – we are talking about hundreds of millions of people.
1 + 2: Motivation and know-how
To motivate and share know-how is the provenance of education. So to reach a level where more people are productively employed will take a broad, nation wide, educational initiative. The problem in India – generally speaking – is the small educated elite regards the uneducated with disdain, so limiting the capacity to train and motivate.
“I think it was the Chinese, before World War II, who calculated that it took the work of thirty peasants to keep one man or woman at a university. If that person at the university took a five-year course, by the time he had finished he would have consumed 150 peasant-work-years. How can this be justified? Who has the right to appropriate 150 years of peasant work to keep one person at university for five years, and what do the peasants get back for it? These questions lead us to the parting of the ways: is education to be a ‘passport to privilege’ or is it something which people take upon themselves.”
Schumacher quotes Leo Tolstoy who was talking about the same problem when he wrote: “I sit on a man’s back, choking him, and making him carry me, and yet assure myself and others that I am very sorry for him and wish to ease his lot by any means possible, except getting off his back.”
Somehow, says Schumacher, we need to create an ideology which makes educated people feel they have taken upon themselves an obligation, and not simply acquired a ‘passport to privilege.’
“This ideology is of course well supported by all the higher teachings of mankind. As a Christian, I may be permitted to quote from St Luke: ‘Much will be expected of the man to whom much has been given. More will be asked of him because he was entrusted with more.’ It is you might well say, an elementary matter of justice.”
As Schumacher goes on to explain: “The whole matter can be summed up in the question: what is education for? ”
All educated people need to see themselves as servants of the nation – which “means after all as servants of the common people” – because that is the only way to generate enough leadership and communication of know-how to solve the problem of unemployment in the half million villages of India. It is. he says, “a matter of 500 million people.” If you need at least two people to look after a hundred, that means we somehow need to recruit 10 million helpers – about the whole educated population of India at time he delivered this talk:
“Now you may say this is impossible, but if it is, it is not so because of any laws of the universe, but because of a certain inbred, ingrained selfishness on the part of the people who are quite prepared to receive and not prepared to give. As a matter of fact, there is evidence that this problem is not insoluble; but it can be solved only at the political level.”
3. Capital
Schumacher then asks, “What proportion of national income might be available for a capital fund for job creation?” In 1972 the total national income of India was about £15,000 million.
“I would say, without going into any details, you are lucky if you can make it five per cent,” says Schumacher. “Therefore, if you have five per cent of £15,000 million for ten years you have a total of £7,500 million for the establishment of jobs. If you want fifty million jobs in those ten years, you can afford to spend an average of £150 per workplace. At that level of capital investment per workplace, in other words, you could afford to set up five million workplaces a year.
Let us assume, however, that you say: ‘No. £150 is too mean; it will not buy more than a set of tools; we want £1,500 per workplace’, then you cannot have five million new jobs a year but only half a million. And if you say: ‘Only the best is good enough; we want all to be little Americans right away, and that means £5,000 per workplace’, then you cannot have half a million new jobs a year, let alone five million, but only about 170,000.”
In a couple of deft moves, Schumacher defends himself against any number-crunchers who say that he has simplified his calculation too much – leaving out any increase in national income, partly as a result of the fund’s work. That is true, he says, but there will also be an increase in the population, which would cancel it out.
“The more sophisticated the technology, the greater in general will be the foregoing requirements. When the simple things of life, which is all I am concerned with, are produced by ever more sophisticated processes, then the need to meet [the] requirements moves ever more beyond the capacity of any poor society. As far as simple products are concerned – food, clothing, shelter and culture – the greatest danger is that people should automatically assume that only the 1963 model is relevant and not the 1903 model; because the 1963 way of doing things is inaccessible to the poor, as it presupposes great wealth.
Now, without wishing to be rude to my academic friends, I should say that this point is almost universally overlooked by them. The question of how much you can afford for each workplace when you need millions of them is hardly ever raised. To fulfill the requirements that have arisen over the last fifty or sixty years in fact involves a quantum jump, Everything was quite continuous in human history till about the beginning of this century; but in the last half-century there has been a quantum jump, the sort of jump as with the capitalization of Ford, from $30,000 to $6,000 million.”
He speaks of Ford because that was the example used by John Kenneth Galbraith, which Schumacher quotes approvingly, about how – at the beginning of an enterprise (1903 in the case of Ford) – the future is ‘near at hand’ because everything is simple:
“The choice of technology is the most important of all choices. It is a strange fact that some people say that there are no technological choices. I read an article by a well-known economist from the USA who asserts that there is only one way of producing any particular commodity: the way of 1971. Had these commodities never been produced before? The basic things of life have been needed and produced since Adam left Paradise.
He says that the only machinery that can be procured is the very latest. Now that is a different point and it may well be that the only machinery that can be procured easily is the latest. It is true that at any one time there is only one kind of machinery that tends to dominate the market and this creates the impression as if we had no choice, and as if the amount of capital in a society determined the amount of employment it could have. Of course this is absurd. The author whom I am quoting also knows that it is absurd, and he then corrects himself and points to examples of Japan, Korea, Taiwan, etc., where people achieve a high level of employment and production with very modest capital equipment.”
There are four stages for new thinking, he says – including ideas like the importance of technological choice:
“The first stage has been laughter and scornful rejection of anyone who talked about this. The second stage has now been reached and people give lip service to it, but no action follows and the drift continues. The third stage would be active work in the mobilization of the knowledge of this technological choice; and the fourth stage will then be the practical application…
“If there is a political ideology that sees development as being about people, then one can immediately employ the ingenuity of hundreds of millions of people and go straight to the fourth stage. There are indeed some countries which are going straight to the fourth stage…”
CONTINUE READING
In the second part of this chapter guide, David Boyle discusses how the local currency movement, which saw prolific momentum in the 1990s and 2000s, poses different means to achieve Schumacher’s aims of local production of basic necessities leading to fuller employment.
To explore more deeply the movement for local, complementary currencies, visit the Schumacher Center’s Local Currency program page featuring resources and examples from around the globe.
Many good wishes,
Staff of the Schumacher Center