Last month, we introduced our new study guide — “Small is Beautiful Revisited…50 Years On“, which looks afresh at Schumacher’s 1973 landmark. Chapter by chapter, it explains the context and looks ahead to “what happened next.”
Each chapter’s guide makes for generative discussions in college classrooms, workplaces, and places of worship. All chapter guides are available on our site (plus a downloadable PDF). This newsletter is advancing through excerpts of each chapter’s guide.
As author David Boyle tells us, Chapter 1 concerns the idea of ‘capital’— specifically, those irreplaceable forms of natural capital so critical to the book’s argument then, and to its continued relevance in our own time.
Excerpt from the Guide to Chapter One
There is a fundamental difference between production in the economy and production in nature. …[G]reen plants are called primary producers. By contrast, humans are strictly secondary producers. We use enormous inputs of high-grade energy and material resources extracted from… the ecosphere to produce and maintain our bodies and all the products of our factories…
[P]roduction by the human enterprise involves the consumption of a much larger quantity of energy and material first produced by nature. From this material perspective, economic activity is more an inefficient conversion process than… a productive process.
— William Rees, ecologist and co-author, Our Ecological Footprint, 25th anniversary edition (1989)
This chapter is about the idea of ‘capital’. Traditionally, this meant just land, labor and manufactured capital – the three bases for creating wealth according to traditional economics. We have become used since 1973 to authors and business writers trying out new forms of capital, whether that is ‘social capital’ (like Robert Putnam), ‘intellectual capital’ (like Annie Brooking or Thomas Stewart), ‘natural capital’ (Paul Hawken), or even ‘spiritual capital’ (perhaps Danah Zohar).
This is what Paul Hawken said 25 years ago:
The term natural capital, introduced to a broad audience by Schumacher… was not immediately taken up by economists or academics… Today, it is being used commonly, certainly in environmental circles… Schumacher defined natural capital both narrowly and amorphously: fossil fuels and the tolerance margins of nature and human subsistence.
Today we understand natural capital as the sum total of renewable and non-renewable resources, including the ecological systems and services that support life. It is different from conventionally defined capital in that natural capital cannot be produced by human activity. What was unimaginable 25 years ago was the speed with which the loss of natural capital would affect humankind.” (25th anniversary edition, 1999).
So, yes, Schumacher looked at natural capital, and first of all he looks at fossil fuel consumption – bear in mind that the Greenhouse Effect had yet to be identified when he was writing. What he wants to discuss is: why the effort to use this capital as if it was ordinary income?
He includes some figures looking ahead, explaining that by the 1970s, human beings were using about 7,000 million tons of coal equivalent. By the year 2000 – about half way back to 1973 – our energy consumption would triple, he said – and it had already tripled since the end of World War II…
In fact, fossil fuel consumption has increased significantly over the past half-century, around eight-fold since 1950, and roughly doubling since 1980.
…Schumacher’s point still stands: that, first, you can’t just carry on exponentially increasing fossil fuel consumption – which you can understand only when you grasp that humanity has been using up its natural capital as if it was a renewable resource:
All these questions and answers are seen to be absurd the moment we realize that we are dealing with capital and not with income: fossil fuels are not made by men; they cannot be recycled. Once they are gone they are gone for ever.
…The chapter ends with a call to arms:
What is my case? Simply that our most important task is to get off our present collision course. And who is there to tackle such a task? I think every one of us, whether old or young, powerful or powerless, rich or poor, influential or uninfluential. To talk about the future is useful only if it leads to action now. And what can we do now, while we are still in the position of ‘never having had it so good’? To say the least – which is already very much -we must thoroughly understand the problem and begin to see the possibility of evolving a new life-style, with new methods of production and new patterns of consumption: a life-style designed for permanence…