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“Small is Beautiful” Interview

Interview with Susan Witt by John Townes, Berkshire Trade and Commerce (November 1997).

Introduction:

Susan Witt is the executive director of the Schumacher Center for a New Economics based in Egremont, MA. The Schumacher Center is a nation wide, non-profit organization that promotes and supports grass-roots initiatives to develop more self-reliant regional economies and small-scale enterprises. It maintains a 6,000 volume computer-indexed library on these subjects, including the personal library of Fritz Schumacher. It also conducts an Annual Lecture program hosting such speakers as Wendell Berry, Jane Jacobs, Ivan Illich, David Ehrenfeld, and Winona LaDuke. Yale University Press just published a book of collected Annual E. F. Schumacher Lectures titled People, Land, and Community.

BERKSHIRE TRADE & COMMERCE: Who was E. F Schumacher?

SUSAN WITT: Schumacher was a German-born British economist whose 1973 book Small is Beautiful: Economics As If People Mattered marked an important cultural shift in our thinking about economics. He emphasized that values like concern for workers and environment integrity should be included in our business decisions. He called for an economy of permanence, based on human values and sustainable uses of natural resources. Schumacher introduced the concept of scale in modern economic planning. He argued that smaller-scale enterprises based on local production for local consumption would provide greater diversity, flexibility, and ultimately economic security. An economy based on face-to-face contact fosters the human relationships that make life richer and encourages responsibility to the community. His ideas helped to inspire the movement sometimes called decentralism. Decentralists are a diverse group but share a common belief in community self-reliance and bringing economic and other activities back to a more human scale. Decentralism isn’t radical — it’s based on many traditional economic and social values. Nor is it necessarily political. It has facets that appeal both to conservatives and to those on the left. It crosses cultures and borders. It shows its face in an inner city neighborhood when members of an immigrant community join together to make loans to each other to develop small businesses and provide other forms of mutual support. It lives in the hard work of volunteers cleaning the bank of a river running through their town rather than waiting for federal cleanup support.

BT&C: The prevailing trends seem to be going in the opposite direction, with the world’s economy is becoming more centralized and global. Do you feel discouraged or encouraged by current events?

WITT: Both, I guess. There’s no doubt that globalization is developing in ways we couldn’t even have imagined a decade or two ago. We’re seeing multinational corporations amass an enormous amount of power and influence. Standardized products are pushing out regional ones throughout the world. People feel a loss of power and control over their lives. But on the other hand, many inspiring things are happening too. People are becoming more aware of the problems these trends have created. They’re responding with a determination to take back control of their lives, and to strengthen the identity and economies of their regions. They’re working to support activities that protect their regions’ sense of community and resources. People are doing very inventive, creative and courageous things to accomplish this and they’re making a positive difference. That’s heartening.

BT&C: Many people would say economic consolidation and large corporate enterprises are more efficient because of modern technology, the demands of global competition and the “economies of scale.” Isn’t it impractical to want to reverse what seems like the natural course of society and economics?

WITT: Yes, some industries and aspects of the economy do work best on a larger scale. Large corporations do contribute a lot. And it’s true you can’t turn back the clock. But we’ve gone unnecessarily far in the direction of the standardization of our economy, to the creation of an international mono-culture. The goal is to get back to a healthy balance between large and small, and to encourage diversity. Schumacher (who died in 1977) always emphasized the importance of balance. He once said if every economist were promoting smaller enterprises he’d be advocating for big business. People justify centralized corporate power by citing reduced costs and greater efficiency.

However, when you calculate the other costs of economic activity, a highly centralized economy is very costly in terms of alienation of the workforce, the ease with which corporations can leave a community and other factors. Jane Jacobs, the regional planner and author of the book Cities and the Wealth of Nations, has pointed out that the basic goal of economic-planning should be to help regions develop in all their multiplicity. However, modern planning policies too often discourage regional uniqueness by focusing on bringing a few large corporations into a region–focusing on the number of jobs rather than the quality and staying power of those jobs. In addition modern planning and development policies tend to drain resources from rural areas to serve the growth of sprawling, elephantine urban centers. In contrast, small regionally based businesses build multi-faceted ties to a community that root them to that economy. For example, the recent decision by General Dynamics to move many of its operations out of Pittsfield, met the company’s larger corporate goals. But it was done at the expense of the local economy and workers. A locally-based company, on the other hand, would have a harder time leaving the community, because of a sense of responsibility to neighbors and by other practical commitments. So, if faced with the same situation, there’s a better chance it would look for ways to stay and make necessary changes–retooling, retraining–rather than simply shifting operations to a plant elsewhere.

BT&C: But the complicated nature of many modern products and services require the extensive resources of large corporations. A small company can’t manufacture such products. And large corporations do provide jobs.

WITT: Yes, that’s often true. But, again, it’s a matter of balance. There are other ways of doing things that can combine the benefits of both. For example, we’re seeing the emergence of small companies that specialize in the final assembly of products. In a VCR, for example, the complex electronic components might still be made by centralized industries. But the regional company can buy the parts and assemble them into a final product that’s their own brand of VCR. Another strategy is the use of flexible manufacturing networks, to make it possible for a group of smaller companies to have access to resources they couldn’t afford individually. This can include common production facilities that are shared by a number of smaller enterprises. For example, in Athens, Ohio, June Holley of the Appalachian Center for Economic Networks has organized a regional food-processing center. The building is outfitted with food-processing equipment that is shared on a time basis by several small companies. Because scheduling is flexible, the companies can work with food items as they come in season, buying locally. June has also helped these companies to market their products together, saving costs and sharing experience. The same approach can be taken with many other industries. In this region the Berkshire Food and Land Council is working with farmers to find ways to help build a market for Berkshire grown and processed foods.

BT&C: Can individuals do anything to effect all of this in today’s global environment?

WITT: As consumers we can begin by buying locally. We can ask, where was this product made and under what conditions. We can choose those made most closely to home under the most socially and environmentally sound conditions. Our lives are enriched when we have direct contact with the customers, producers and suppliers we deal with. It strengthens the whole web of interrelationships and connections that form a community. Can we picture the carpenter who made our kitchen table or her children who were fed by its purchase? Have we walked the forest which was the source of its wood? The associations and connections go on and on. And they continue to build into a much larger social and cultural fabric which defines our place and makes it unique. At the Schumacher Center we say that our quality of our life is dependent on the number of stories we know about the items we use in our daily life.

BT&C: However, consumers and business purchasers often buy from chains or from other outside sources because local businesses can’t match their price or selection. Isn’t it unrealistic to expect businesses and consumers to pay higher prices or do without the products they need?

WITT: There are many ways that consumers and suppliers can work together to make it beneficial for both. True, it does take a conscious effort. Sometimes it’s a stretch to buy locally. We have to train ourselves to look at such things differently. Our pursuits may not lead us to the cheapest product, but then we must begin to think not just in terms of home economics, but in terms of community economics. In the short term it may seem more cost-effective to buy a product from a source outside the region. But if you look at the whole picture, that isn’t necessarily the case. Buying locally can be seen as more cost-effective when you realize that you are strengthening the local economy, which benefits your own business and your neighbors and ultimately the quality of life of everyone in the region. People have come up with very inventive ways to make it practical to buy locally.

In Eugene, Oregon for example, Alana Probst came up with the straightforward idea of a matchmaking service which she called “Buy Lane County”. She met with businesses and asked what they buy vendors or manufacturers outside the region. Then she asked: “Would you be interested in buying the same product locally if we can find a comparable source here?” One bank, for example, previously had their check-deposit slips printed in California, even though there was a printer right down the street who could do the job as efficiently. The bank simply hadn’t considered them as a possible source of check-deposit slips. Alanna encouraged the printer to make a competitive offer. Both the bank and the printer benefited from the arrangement and jobs stayed local. In another recent example, Yale University recognized that the health of the University is tied to the health of New Haven’s inner city. As new students decide what college they want to attend they consider a multiple of factors, including the vitality of the whole city. Yale, as the largest business in New Haven could shape the city’s future. Yale’s food service operation uses a lot of pasta each year. Yale decided to give its pasta business to a local pasta-making company, but the company didn’t produce the kind of pasta the college needed. Yale then offered them a guaranteed long-term contract to buy the pasta, if the company would make the changes necessary to meet Yale’s needs. Yale also offered to help the company obtain financing for the retooling. As a result, by working together, the college was able to help a local business grow and create new jobs.

Local currencies are another important tool for strengthening local economies. In 1989 the Schumacher Center helped Frank Tortorielli issue Deli Dollars as a means to finance his popular Great Barrington restaurant. That was followed by Berkshire Farm Preserve Notes which helped Taft Farms and the Corn Crib raise support from their customers during the slow winter months and then 70 Great Barrington merchants joined together through the Main Street Action Association to issue BerkShares. That effort launched a national movement. There are now over 50 communities in the United States issuing local currencies. In June the Schumacher began publication of Local Currency News a quarterly newsletter. Local currencies can take many forms, and are legal as long as their value can be converted to dollars for tax reporting purposes. In Ithaca, New York, for instance, over $62,000 worth of “Ithaca Hours” are in circulation and may be spent on anything from a movie ticket to paying a parking fine. These local currencies are a great way to demonstrate the impact that buying locally can have on the region’s economy. They show very obviously how money flows through the economy when people buy and sell within the community.

BT&C: How do the social and economic characteristics of regions relate to these ideas in modern society?

WITT: Decentralized regional economies are most practical in areas where people both live and work in the same place, like the center of large cities and in smaller communities and rural regions. It’s more difficult in suburban areas where most people live in one area and work in another. Berkshire County is well suited to this. The Berkshires have an intrinsic understanding of these ideas because we have a long history of independence and self-reliance going all the way back to colonial times. With this tradition, we are well-placed to respond to shifting economic conditions. Our population is flexible, and we can adapt to changes. This characteristic provides a workforce that can handle multi-level tasks and meet the changing needs of employers. The population is responsive to entrepreneurial opportunities, note the good success of Bershire Enterprises. The nature of the Berkshire economy is also well-suited to regionally based development. For example, we still have a number of locally-based banks–Berkshire Bank, City Savings Bank, First National Bank of the Berkshires, Lee Savings Bank, Lenox Savings Bank, and Pittsfield Cooperative Bank. They are part of the community. They understand conditions here and are able to make decisions and policies based on that knowledge and involvement. Even the non-locally owned bank, BankBoston has, a strong commitment back to the local community in its support of Berkshire Capital Investment, a local venture capital fund, and its newly announced partnership with Berkshire-Taconic Foundation.

BT&C: So how do you envision the future of the concept of Small is Beautiful? Is it still relevant to mainstream economics or is it destined to be a smaller movement of idealists struggling upstream in a global environment?

WITT: I think we can achieve a more balanced economy, an “economy of permanence,” to use Schumacher’s phrase. People of all political beliefs realize that the question of appropriate scale is a fundamental consideration for our future and they recognize the urgent necessity of preserving our natural resources. There is a renewed appreciation of regional identities and the importance of protecting our communities’ sense of place. In some quarters it is even fashionable to buy locally. Ultimately the responsibility for our economic futures lies with all of us in our role as consumers. Multi-national corporations will respond to what consumers demand — but only if we make clear what we want. Local businesses can thrive, but only if we support them. It will take imagination, courage and a community ready to meet the initial inconveniences of a changing lifestyle if we are to build sustainable economies. Buying locally is an opportunity to enrich our lives by strengthening the fabric of our community. By making the effort to change our consumptive habits in the short run we can help bring about a lasting economy in which it is as easy and inexpensive to support local enterprises as it is to buy from a chain store.

Publication By

Susan Witt

Susan Witt is the Executive Director of the Schumacher Center for a New Economics, which she co-founded with Robert Swann in 1980. She has led the development of the Schumacher Center’s highly regarded publications, library, seminars, and other educational programs, which established the Center as a pioneering voice for an economics shaped by social and ecological principles. Deeply engaged … Continued

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