For two-thirds of mankind, the aim of a ‘full and happy life’ with steady improvements of their lot, if not actually receding, seems to be as far away as ever…
— E. F. Schumacher, clear statement near the beginning of Ch. 11
Another stumbling block is the belief that a greater degree of self-reliance in the North would undermine the economies of the ‘Third World,’ where people supposedly need northern markets to lift themselves out of poverty. The truth of the matter is that a shift toward smaller scale and more localized production would benefit both North and South, and allow for more meaningful work and fuller employment all around. Today, a large proportion of the South’s natural resources is delivered to the North, on increasingly unfavorable terms, in the form of raw materials. The South’s best agricultural land is devoted to growing food, fibers, even flowers for the North, and a good deal of the South’s labor is used to manufacture goods for northern markets. Rather than further impoverishing the South, producing more ourselves would allow the South to keep more of its resources and labor for itself.
—Helena Norberg-Hodge, director and founder of Local Futures, in the 25th anniversary book, (1999).
It isn’t the human-scale hardware flowing out of intermediate and appropriate technology centers around the world that has had the most profound impact on society. As Schumacher well recognized, it is the software of the industrial nations that needs to change if the world is to provide a just and equitable life for all. It is that ‘search for a new lifestyle’ and ‘return to certain basic truths about man and his world’ that is now on the verge of promising a bright new future for all of humanity.
— Bill Ellis, general co-coordinator of TRANET since 1977, and physicist, in the 25th anniversary book (1999)
As he did in the last section, Schumacher deals with an introductory big idea in the first chapter, this one at the beginning of a section he calls the ‘third world’ – but which we will refer to as the global south.
It was taken from an ‘anniversary address’ he gave at the general meeting of the Africa Bureau in London in March 1966.
What the chapter says…
Schumacher launches into a definition of development – the one used by the UK government in their 1965 white paper on development policy:
“To do what lies within our power to help the developing countries to provide their people with the material opportunities for using their talents, of living a full and happy life and steadily improving their lot.”
What is wrong with that, you may ask? Nothing except that it is hopelessly optimistic. As Schumacher says, there “may have been some disillusionment..?”
Then he explains why this matters – because nobody in authority appears to notice the two different worlds in the global south. This is what he calls the ‘dual economy’:
“There are two different patterns of living as widely separated from each other as two different worlds. It is not a matter of some people being rich and others being poor. both being utilized by a common way of life: it is a matter of two ways of life existing side by side in such a manner that even the humblest member of the one disposes of a daily income which is a high multiple of the income accruing to even the hardest working member of the other. The social and political tensions arising from the dual economy are too obvious to require description.”
Schumacher says he puts the under-educated basic class, in rural areas, at an average of around 85 per cent of the population. The educated urban class makes up around 15 per cent.
How long will it take for the 15 per cent to drag the 85 per cent up to their level, Schumacher asks? And he answers his own question with an emphatic: “They never will.”
“Could it be that the relative failure of aid, or at least our disappointment with the effectiveness of aid, has something to do with our materialist philosophy which makes us liable to overlook the most important preconditions of success, which are generally invisible?” he ask:
“Or if we do not entirely overlook them, we tend to treat them just as we treat material things – things that can be planned and scheduled and purchased with money according to some all- comprehensive development plan. In other words, we tend to think of development, not in terms of evolution, but in terms of creation… Our scientists incessantly tell us with the utmost assurance that everything around us has evolved by small mutations sieved out through natural selection. Even the Almighty is not credited with having been able to create anything complex. Every complexity, we are told, is the result of evolution.”
Either way, the effect of dual economy is that money is sucked out of the rural areas, so that the poorest people in the world have to leave to go to the cities in search of work.
“We may observe in passing that similar tendencies are at work even in some of the richest countries, where they manifest as a trend towards excessive urbanization, towards ‘megalopolis’, and leave, in the midst of affluence, large pockets of poverty-stricken people, ‘drop-outs’, unemployed and employable.”
Now he gets down to explaining why:
“Until recently, the development experts rarely referred to the dual economy and its twin evils of mass unemployment and mass migration into cities.
Worse, says Schumacher, it is likely to get much worse:
“Meanwhile, it has become widely recognized that time alone will not be the healer. On the contrary, the dual economy, unless consciously counteracted, produces what I have called a ‘process of mutual poisoning’, whereby successful industrial development in the cities destroys the economic structure of the hinterland, and the hinterland takes its revenge by mass migration into the cities, poisoning them and making them utterly unmanageable.”
Forward estimates made by the World Health Organization and by experts like Kings ley Davies predict cities of 20, 40 and even 60 million inhabitants. It is “a prospect of ‘commiseration for multitudes of people that beggars the imagination,” says Schumacher.
The ruling philosophy of development over the last twenty years has been: ‘What is best for the rich must be best for the poor.’ This is clearly nonsense:
“This belief has been carried to truly astonishing lengths, as can be seen by inspecting the list of developing countries in which the Americans and their allies and in some cases also the Russians have found it necessary and wise to establish ‘peaceful’ nuclear reactors – Taiwan, South Korea, Philippines, Vietnam, Thailand, Indonesia, Iran, Turkey, Portugal, Venezuela – all of them countries whose overwhelming problems are agriculture and the rejuvenation of rural life, since the great majority of their poverty-stricken peoples live in rural areas.”
Then, as if by magic, he comes up with three words which he believes the freedom to work in any society requires: education, organization, and discipline.
“There are prosperous societies with but the scantiest basis of natural wealth. and we have had plenty of opportunity to observe the primacy of the invisible factors after the war. Every country, no matter how devastated, which had a high level of education. organization, and discipline, produced an ‘economic miracle’. In fact these were miracles only for people whose attention is focused on the tip of the iceberg. The tip had been smashed to pieces, but the base, which is education, organization, and discipline, was still there.”
“Here, then. lies the central problem of development. If the primary causes of poverty are deficiencies in these three respects, then the alleviation of poverty depends primarily on the removal of these deficiencies. Here lies the reason why development cannot be an act of creation, why it cannot be ordered, bought, comprehensively planned: why it requires a process of evolution. Education does not ‘jump’; it is a gradual process of great subtlety. Organization does not ‘jump’; it must gradually evolve to fit changing circumstances. And much the same goes for discipline. All three must evolve step by step, and the foremost task of development policy must be to speed this evolution. All three must become the property not merely of a tiny minority, but of the whole society.”
It follows from that, says Schumacher, shouldn’t generally speaking be allowed into development:
It follows from this that development is not primarily a problem for economists, least of all for economists whose expertise is founded on a crudely materialist philosophy. No doubt, economists of whatever philosophical persuasion have their usefulness at certain stages of development and for strictly circumscribed technical jobs, but only if the general guidelines of a development policy to involve the entire population are already firmly established,” he says.
How will this be different from old style paternalistic aid?
“The new thinking that is required for aid and development will be different from the old because it will take poverty seriously. It will not go on mechanically, saying: ‘What is good for the rich must also be good for the poor.’ It will care for people – from a severely practical point of view.
“Why care for people? Because people are the primary and ultimate source of any wealth whatsoever. If they are left out, if they are pushed around by self-styled experts and high-handed planners, then nothing can ever yield real fruit.”
What happened next?
When Small is Beautiful was published, Robert McNamara had been leading the World Bank for just over five years. He had another eight years in the job after that, during which time, it massively increased loans to the global south and shifted its focus from industrialization to poverty reduction.
So far so good, thanks partly to the influence of Schumacher.
McNamara had presided over the Vietnam War as Secretary of Defense, and had become a clearly defined personality in the political world. Commentators watched his ability to issue streams of figures on television, and the hardness with which he dismissed searching questions.
There was a huge rise in the ambition and the status of the World Bank and McNamara brought his own system analysis to the problem of poverty – focusing then, as the bank does now, on the income levels of small farmers.
The tragedy of McNamara was not that he lacked ambition – quite the reverse. It was that he could not see clearly enough to make the difference he wanted. New high-yield crop varieties and mechanization were introduced from the 1960s onwards in a move dubbed by the US government as the ‘Green Revolution’. Intended to showcase what a peaceful revolution, rather than a Red one, might be like, it worked at first in India and Mexico by enormously increasing the yield of those countries’ crops.
It succeeded on its own terms, but that involved turning a blind eye to some of the unwanted side-effects – like rising debt, the loss of local know-how and, for example, the high levels of suicide among indebted small farmers in India which now suggest that all was not well even then. Yet even if it seemed to work in some pioneering locations, it didn’t work nearly as well everywhere, perhaps not surprisingly.
Brazilian farmers rejected the new crops because in their own dry climate the new varieties seemed to be bred only for yield, not hardiness. In sub-Saharan Africa, where the problems were particularly intense, and where the new crops would not grow, World Bank staff began to lend only on projects they knew would work towards meeting their targets. Roads were popular because they were easy to lend on, but they tended only to help the richest, and often forced poorer people off the land. Dam projects were even worse.
And so it was that McNamara could not understand why the poor in Latin America destroyed the homes they were given. He called it the ‘pathology of poverty’, and similar conundrums about the War on Poverty presented themselves back home in the USA. The urban poor in American ghettos also rejected their new housing because of the way they were described – as hopeless or feckless, or both.
‘Charity wounds,’ said the great anthropologist Marcel Gauss, and this is a real phenomenon. This rejection of welfare consistently confuses well-meaning officials, but is not necessarily surprising that poorer people might prefer to avoid the implication – and sometimes the description – that they are feckless.
Schumacher’s defense of development on a broader basis, without economists, was written on the background of McNamara at the World Bank. Since then, there is a sense in which development economics has been one corner of economics which has responded to Schumacher’s challenge. Not so much in international institutions like the World Bank, which was pressing loans so hard that the recipients were soon suffering a debt crisis. But it was Schumacherian types at the Jubilee Debt who led a successful campaign to cancel the unplayable debt which came to a head at the G8 summit in the second city in the UK, Birmingham in 1998.
Nor did he really believe in government-to-government aid, where everyone is obsessed with quantities. Does it matter, for example, that the UK government in 2015 withdrew from their commitment to put 0.7% of GDP into aid, when that figure included a number of self-interested items that no sane person could categorize as aid?
Mainly because of the involvement of governments – which are obsessed with numbers, which Schumacher warned against – development remains trapped in the numerical cage.
Despite his conviction that economists should leave development alone, economists like Amartya Sen or Jeffrey Sachs are, in some ways, academics from a new economics tradition to which Schumacher also belongs.
Sachs was involved in drawing up the Millennium Development Goals, which derived from the optimism of the 1990s, and were succeeded in 2015 by the Sustainable Development Goals.
In 1983, the United Nations had set up the World Commission on Environment and Development – later known as the Brundtland Commission – which defined sustainable development as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” In 1992, the first UN Conference on Environment and Development – later known as UNCED or Earth Summit – was held in Rio de Janeiro and which launched Agenda 21.
Two decades later, in 2012, the UN Conference on Sustainable Development – known as Rio+20 – was held as a 20-year follow up to UNCED. Colombia proposed the idea of the SDGs at a preparation event for Rio+20 held Indonesia in July 2011.
The outcome document proposed 17 sustainable development goals and associated targets. At the Rio+20 conference, a resolution known as ‘The Future We Want’ was reached by member states.
Even the World Bank has come a long way since the days of Robert McNamara four decades ago. But new initiatives in the far more pessimistic 2020s are scarce, unless they involve panels of expert technocrats busily measuring everything.
One of the most hopeful results of the UN’s COP process which emerged recently, in Paris in 2015 – the unexpected agreement to limit earth temperature rises to 1.5 degrees centigrade – has proved next to impossible to achieve in practice.
Questions for discussion…
- Is it possible to rescue technocratic development economics?
- Numbers alone simply blind officials and delude everyone else. But how can you organize any kind of global effort without learning whether you are succeeding or not?
- In practice, how might we go about healing the dual economies of the global south?
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