Publications / Responsibility in Economics and Business Conference

In Honour of E. F. Schumacher

The following remarks were made for the conference “Responsibility in Economics and Business: The Legacy of E. F. Schumacher” convened by the European Spirituality in Economics and Society Forum.

Last week I had the privilege of being at a lecture given by the Chief Rabbi Jonathan Sacks. He talked about the need for prophetic voices to speak out about the problems faced by the world today. He distinguished between prediction and prophesy. He said if a prediction comes true it is a success but if a prophesy is fulfilled it is a failure. This is because prophets are there to warn us to change our ways in order to avert disaster.

Many people have said that my father’s voice was prophetic. However, what he warned us of has come about. Does this mean he was a failure?

You would not expect me to answer yes to this question. And I don’t because as long as some people are still listening his voice is still being heard and there is hope.

There is no doubt that many still hear his voice in Small is Beautiful. Unfortunately few look to A Guide for the Perplexed.

Now, the role of the prophet is first to read the signs of the times, to look at what is going on and see where it is leading. My father was not born with that ability.  He had to learn how to read the signs of the times and how to interpret them correctly. This meant learning to see reality in all its fullness. Small is Beautiful and A Guide for the Perplexed belong together because in different ways they present us with that reality in its fullness: material and spiritual.

What I want to do tonight is to look at a few key times in his life which gave him a new perspective on reality and made it possible for him to develop the ideas contained in his two books. I believe this is important because if we understand how people like him came to think as they did it might help us to learn to think more clearly about what is going on now and make the right decisions about what to do about it.

It is also important because what he wanted above all is that we should learn to think clearly ourselves. His books area not so much guides as to how to act but rather how to think so that we make the right decisions about how to respond to the challenges of life.

The first moment concerns Nazi Germany. My father left Germany for Oxford in 1930 to study economics and then went to Columbia University in New York. During this time Hitler came to power. My father was a patriotic German who loved his country. He had experienced the economic chaos of post-World-War-I Germany and felt the humiliation of the punitive conditions the allies had imposed on Germany. He did not support the Nazis, but he felt that Germany needed a strong leader. When he heard the reports that were coming out of Germany he decided to go back to see for himself what was going on. This was 1934. He was horrified by what he saw and shocked that whenever he tried to discuss this with others he was always dismissed with the same answer: ‘Where there is planing (as in planing a piece of wood) there are shavings.’ In other words: Hitler is doing a good job getting the economy going and restoring Germany’s strength so we have to put up with a few unfortunate side effects.

This response taught him an important lesson. He saw that you couldn’t leave out some aspects of reality if they are inconvenient.  You have to take everything into account if you want to understand what is going on so that you can make a proper judgement and decide what to do about it.  Dismiss something as an unfortunate but inevitable “side effect” and you might miss the whole point of what is really going on.

For a long time we have put up with the unfortunate side effects of economic growth in the west: pollution, waste, depletion of the world resources, mind numbing work, global warming and of course millions who live in poverty.  He observed those so-called “side effects” and took them seriously and then had the courage to speak out before most people even recognised their existence.

So the first lesson is: observe everything – even ‘inconvenient truths’. The side effects may be more significant than that which everyone else thinks is the main point.

The second period that was important in shaping his thinking was the Second World War. In 1937 he left Germany and returned to England because he could no longer bear to live in Hitler’s Germany.  It was not easy to be a German in England especially once war broke out and he was classed as an enemy alien. He could no longer work as an economist and was lucky to get a job as a farm labourer. This was quite a shock to his system. After all he was an intellectual – a thinker – not a manual worker. That shock was followed by another. He was arrested and interned along with an extraordinary mixture of other Germans – refugees, anti-Nazi’s, Nazi’s and Communists.

My father always claimed that this wartime experience – working as a farm labourer and then living in the internment camp – was where he received his real education. On the farm he had to count the cows every day. One day he found that one cow had died. The farmer was furious and shouted at him: “Why didn’t you tell me that that cow was not well?” My father was shocked. He had just counted and not looked at the condition of the cows.

In the internment camp he had to look beyond the different types of prisoners and work to weld them into a mutually supporting community. He took the motto: “I never met a man I didn’t like”. He never forgot that lesson: That reality has an inner dimension. That there are more important things than numbers and the exterior of things.  It made him see that if he wanted to make a difference he would have to see people differently – not as people in the abstract but as real flesh and blood – who they are, their context, their needs, their way of doing things.

Thus far, he was a scientific rationalist and a convinced atheist. He had no time for the ‘mumbo jumbo’ of religion. But his wartime experience and then the shock of returning to Germany after the war began to make him question everything he thought he believed. He found that he could not answer the question of why the country that had produced the sublime works of people such as Bach and Beethoven and Goethe had gone so wrong. Reason and science was inadequate. It was as if he had to start learning everything all over again.

He said he felt like Dante in the Divine Comedy who says:

Midway along the journey of our life
I woke to find myself in a dark wood,
For I had wandered off from the straight path.

He started to ask new questions: What is man? What is the purpose of life? How does economics help in fulfilling that purpose? These were not easy questions for him to answer. For the first half of his life he had dismissed such philosophical questions as irrational and unscientific. Honesty now required that he gave them attention.

The final moment I want to mention is his visit to Burma in 1955 as an economic adviser with the UN. Again he observed carefully and reflected on what he saw and experienced. The Burmese seemed to be so happy. (It was a very different place from the Burma of today). There he saw that western economics was not adding to the happiness of the Burmese, but rather the reverse. It was making them want things they did not need. It dawned upon him that economics was not a science independent of values: what the economist believes to be the meaning and purpose of life is also relevant because it determines the kind of economics he or she will pursue. He wrote: “I came to Burma a thirsty wanderer and there I found living water.”

Burma brought into focus the spiritual side of life and was the beginning of a spiritual journey, which eventually led my father into the Catholic Church. Burma was where economics met the spiritual and from then on he wove the two inextricably together.

At the end of Small is Beautiful there is a brief epilogue, which refers to the Christian teaching of the Four Cardinal Virtues: Prudence, temperance, fortitude and justice. He writes: “There is perhaps no body of teaching which is more relevant and appropriate to the modern predicament …’Prudence implies a translation of the knowledge of truth into decisions corresponding to reality’. What, therefore, could be of greater importance today than the study and cultivation of prudence, which would almost inevitably lead to a real understanding of the three other cardinal virtues, all of which are indispensable for the survival of civilisation?” 1

The Cardinal virtue of prudence is the rigorously truthful apprehension of reality followed by the courage to act appropriately. Prudence requires absolute honesty in the way we look at reality. In the words of Joseph Pieper, it requires “the kind of open-mindedness which recognises the true variety of things and situations to be experienced and does not cage itself in any presumption of deceptive knowledge….A closed mind and know-it-allness are fundamentally forms of resistance to the truth of real things” 2

The thinking contained in my father’s two books was how he saw reality in the most rigorous and truthful way possible and its purpose was to inspire his readers to action. This is why they belong together.  Together they give picture of reality, as it were from the outside and the inside.

Small is Beautiful is a book that inspires people to take action. It is not prescriptive. It is prophetic because it describes the reality of the situation the world is in and leaves people to make their own decisions about how to respond.  That is why it is so liberating and empowering. A Guide for the Perplexed is an essential companion because it helps us to think about what we are aiming for as we work to make the world a better place for all who inhabit it. It teaches us how to think.

Often people ask me what I think my father would say about this or that happening in the world today. Well, I haven’t got his expertise, wisdom and insight to answer those questions but I hope that by giving you a few examples from his life I have thrown a bit of light on how he thought and was able to have such insight. He did not subscribe to any ideology but rather thought for himself. He took all the facts into account, even those that others thought ridiculous, and never left out anything that was inconvenient. He believed that, however small and insignificant people are, that they matter and are beautiful because they are made in the image of God. He believed in facing reality in its fullness and then taking appropriate action. In all this he was a prudent man.

All that remains is for all of us to learn from him and continue his work.



  1.  E. F. Schumacher. Small is Beautiful. p. 251
    Here Schumacher is drawing on two works of Joseph Pieper: Prudence. Faber and Faber ltd, London 1959 and Fortitude and Temperance. Faber and Faber, 1955.
  2.  Joseph Pieper. Prudence. Faber and Faber, 1959.

Publication By

Barbara Wood

Barbara Wood is the third of E. F. Schumacher’s eight children and his eldest daughter. She is a graduate in Economics and History from Bristol University, and also holds degrees in Theology. Before she married, she worked for the Intermediate Technology Development Group (now Practical Action, and founded by her father) and the Voluntary Overseas … Continued

Related Lectures

The Economics of Permanence
The Big Idol (Pamphlet by Richard B. Gregg)
The Generosity of Nature
E.F. Schumacher: An Appreciation
Community Forestry Associations