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The Critical Question of Size

Originally published in Resurgence Vol. 6 No. 2 (May-June 1975), p. 12-14.

Statisticians tell us that the proportion of ‘gainfully employed’ persons in the service industries is rising while that of industrial workers is falling. This is a development with far-reaching consequences. The production of goods can be and indeed has been, handed over to machines, and this has led to the so-called growth in productivity which in turn has made possible the growth of incomes. Where do the services stand with regard to the growth of productivity? Can the rendering of services be handed over to machines? The answer is an absolute No. If the human factor is taken out of the service, the service disappears and its place may or may not be taken by a labour-saving device. People’s need to render service to their fellows cannot be satisfied if machines take their place. The human element disappears.

Of course, it cannot disappear altogether, and where actual people continue to render actual services – teachers, nurses, and countless others — increases in productivity cannot be generally obtained, because they mainly depend on machines, not on people. To the extent that advances in wages are made dependent on advances in productivity, the service industries tend to fall behind. But the people in the service industries, not surprisingly, insist on keeping in step with the others. As a result, the service industries’ costs rise very much faster than those of other industries, and the pressure on them to ‘rationalise’ increases. But how can you rationalise services? Only by reducing the human element, by substituting machines, or by reducing the service. The drive for higher productivity and lower costs in the service industries therefore almost inevitably results in a further elimination of the human factor.

If my description is correct, it follows that our need to render service to our fellows is becoming more and more difficult to satisfy. The difficulty is compounded as the size of service organisations increases and as, in the pursuit of efficiency, they become more centralised and more ‘scientifically’ organised.

The bigger an organisation, the more difficult it becomes to keep the human touch.

This has many reasons, which have been more or less systematically identified by sociologists, systems analysts, and others. But you do not have to be an expert in sociology or systems analysis to be able to see that the human factor, as a person-to-person relationship, depends on a certain degree of intimacy, which no one can achieve with large numbers of people. How many people do we get to know as people in the course of a lifetime? If we made a list of them we should find the number surprisingly small— perhaps a few hundred, certainly not a few thousand. If I work inside a group of people, I need to know not only how I get on with each of them; I also need to know how every one of them gets on with, and relates to, everyone else. The number of person-to-person relationships within a group rises much faster than the number of group members as the group increases in size. Among three people, there are three bilateral relationships; among twelve, there are sixty-six; among a hundred, there are 4,950— more than anyone can keep in his head at the same time. In fact any large group of people will inevitably break down into small groups, whether such a breakdown is provided for in the organisation chart or not. Structures will emerge, and such structures are normally hierarchical, that is to say, there are a number of ‘levels’ between the top and the bottom. Everybody has a boss; the little bosses have bigger bosses and so on, if not ‘ad infinitum’, in general through quite a few layers of authority: the bigger the organisation, the more such layers there are likely to be.

Such structures cannot function without many rules and regulations which everybody, even the top boss, has to abide by. It follows that nobody, not even the top boss can act freely; though at each level there may of course be a certain amount of discretion.

One of our fundamental needs is to be able to act in accordance with our moral impulses. In a big organisation our freedom to do so is inevitably severely restricted. Our primary duty is to stay within the rules and regulations, which, although contrived by human beings, are not themselves human beings. No matter how carefully drawn up, they lack the flexibility of the ‘human touch’.

The bigger the organisation, the less is it possible for any member of it to act freely as a moral being; the more frequent are the occasions when someone will say: “I am sorry, I know what I am doing is not quite right, but these are my instructions” or “these are the regulations I am paid to implement” or “I myself agree with you; perhaps you could take the matter to a higher level, or to your member of parliament.”

As a result, big organisations often behave very badly, very immorally, very stupidly and inhumanely, not because the people inside them are any of these things but simply because the organisation carries the load of bigness. The people inside them are then criticised by people outside, and such criticism is of course justified and necessary, but it bears the wrong address. It is not the people of the organisation but its size that is at fault. It is like blaming a car’s exhaust gases on the driver; even an angel could not drive a car without fouling the air.

This is a situation of universal frustration: the people inside the organisation are morally frustrated because they lack freedom of action, and the people outside are frustrated because, rare exceptions apart, their legitimate moral complaints find no positive response and all too often merely produce evasive, meaningless, blandly arrogant, or downright offensive replies.

Many books have been written about moral individuals in immoral society. As society is composed of individuals, how could a society be more immoral than its members? It becomes immoral if its structure is such that moral individuals cannot act in accordance with their moral impulses. And one method of achieving this dreadful result is by letting organisations become too large. (I am not asserting that there are no evil individuals capable of doing evil things no matter what may be the size of organisations or, generally, the structure of society. It is when ordinary, decent, harmless people do evil things that society gets into the deepest troubles.)

There are three things healthy people most need to do to be creatively productive— to render service, and to act in accordance with their moral impulses. In all three respects modern society frustrates most of the people most of the time. Frustration makes people unhappy and often unhealthy. It can make them violent or completely listless. It makes them feel insignificant and powerless. As a sensitive British worker put it:

The factory I work in is part of one of those combines which seem to have an ambition to become the great provider, both in and out of work, for their employees. Recreational facilities abound; but the number of people using them is small in percentage. Perhaps others, like me, resent the gradual envelopment of recreation by the umbrella of factory life. Not only recreation either. The firm has a mania to appear responsible. Fingers of charity stretch ever further into communal life. The company bends over backwards to make amends for the lethargy that the factory has produced in the worker. The effect is treated while the cause is ignored. No wonder the worker is unappreciative.

“The alienating conditions of modern work,” says C. Wright Mills, “now include the salaried employees as well as the wage-workers. There are few, if any, features of wage-work . . . that do not characterise at least some white-collar work.” And David Jenkins in his recent book on Job Power comments: “White-collar and service work environments have been steadily degraded, with the growth of importance of these sectors and the refinement of management techniques, developed primarily for use in manufacturing, applied to other types of work … As a result of the refinements of dehumanising management techniques, white-collar workers have been rapidly catching up with blue-collar workers in terms of alienation.”

Work: A hateful necessity? 

Alienation, frustration, boredom, brutalisation, resentment, lack of appreciation… the greatest single failure of the modern scheme of things is what it has made of human work. Anyone who can say, honestly and convincingly, “I enjoy my work”, has become an object of astonishment and envy. Work, as the sociologists say, has become purely instrumental; unlike sport, it is not being undertaken for the joy of it, since for most people the joy has gone out of it; it is undertaken as a hateful necessity — because people have to make a living. Those who can get a living without doing work are being envied even more intensely than those who enjoy, actually enjoy, their work. This is where modern society has snookered itself. Its masters call upon the people to work harder, to do a fair day’s work for a fair day’s pay; but for most of them ‘a fair day’s work’ has become a contradiction in terms.

The people’s power derives from their power to work, to work creatively, to render service, to act in accordance with their moral impulses. Joyless, meaningless, ‘alienated’ work has no power. Let me again quote a British worker:

It is probably wrong to expect factories to be other than they are. After all, they are built to house machines, not people. Inside a factory it soon becomes obvious that steel brought to life by electricity takes precedence over flesh and blood. The onus is on the machines to such an extent that they appear to assume human attributes of those who work them. Machines have become as much like people as people have become like machines. They pulsate with life, while human beings become robots.

Too many people are imprisoned in organisations which, on account of their super-human size, make people insignificant and powerless.

If this is so— to the extent that this is so— people’s power is frustrated and paralysed. Neither the further development of this type of mechanisation nor the streamlining and perfection of this type of organisation can restore people’s power and lead us out of our predicament. Decent survival now depends on redesigning technology and redesigning organisations.

It strikes me as astonishing how little systematic study has been given to the all-pervading question of size. Aristotle knew about its importance, and so did Karl Marx who insisted that with changes in quantity you get at certain thresholds, changes in quality. Aristotle said: “To the size of states there is a limit, as there is to other things, plants, animals, implements; for none of these retain their natural power when they are too large or too small, but they either wholly lose their nature or are spoiled.”

Dangers of growth

Organisations, like these ‘other things’, may well grow to such a size that they wholly lose their nature or are altogether spoiled. An organisation may have been set up to render various services to all sorts of helpless, needy people; it grows and grows, and suddenly you find that it does not serve the people any more but simply pushes them around. There may be complaints that the organisation has become too bureaucratic’ and there may be denunciations of the bureaucrats. There may be demands that the ‘incompetent bosses’ of the organisation should be replaced by better people. But few people seem to realise that bureaucracy is a necessary and unavoidable concomitant of excessive size; that bureaucrats cannot help being bureaucrats; and that the apparent incompetence of the bosses has almost nothing to do with their personal competence.

A large organisation, to be able to function at all, requires an elaborate administrative structure. Administration is a most difficult and exacting job which can be done only by exceptionally industrious people. The administrators of a large organisation cannot deal concretely with real-life problems and situations: they have to deal with them abstractly. They cannot enjoy themselves by devising, as it were, the perfect shoe for a real foot: their task is to devise composite shoes to fit all possible feet. The variety of real life is inexhaustible, and they cannot make a special rule for every individual case. Their task is to anticipate all possible cases and to frame a minimum number of rules—a small minimum indeed!—to fit them all. We all know that life, all too often, is stranger than fiction; the dilemma of the administrators, therefore, is severe: either they make innumerable rules the enforcement of which then requires whole armies of minor officials, or they limit themselves to a few rules which then produce innumerable hard cases and absurdities calling for special treatment; every special treatment, however, constitutes a precedent which is, in effect, a new rule.

The organisation as a whole, at the same time, is faced with a further dilemma: either it draws its best brains into the administration whereupon they may be missed at operational level; or it uses its best talents at operational level, whereupon there may be serious frustration down below, owing to incompetent administration.

If there is any truth in this (very rough) analysis, the conclusion is obvious: let us organise units of such a size that their administrative requirements become minimal. In other words, let us have them on a human scale, so that the need for rules and regulations is minimised and all difficult cases can be resolved, as it were, on the spot, face to face, without creating precedents— for where there is no rule there cannot be a precedent.

The problem of administration is thus reduced to a problem of size. Small units are self-administrating in the sense that they do not require full-time administrators of exceptional ability; almost anybody can see to it that things are kept in reasonable order and everything that needs to be done is done by the right person at the right time.

I should add that, as Aristotle observed, things must be neither too big nor too small. I have no doubt that for every organisation, as for other things, there is a ‘critical size’ which must be attained before the organisation can have any effectiveness at all. But this is hardly a thought that needs to be specially emphasised, since everybody understands it instinctively. What does need to be emphasised is that ‘critical size’ is likely to be very much smaller than most people in our mass society are inclined to believe.

Excessive size not only produces the dilemma of administration, it also makes many problems virtually insoluble. To illustrate what I mean, imagine an island of 2,000 inhabitants— I have in mind an island of this size which a little while ago demanded total sovereignty and independence. Crime on such an island is a rarity; maybe there is one single full-time policeman, maybe there is none. Assume, however, that some crimes do occur, that some people are sent to jail, and that they return from jail at the rate of one person a year. There is no difficulty in re-integrating this one ex-prisoner into the island’s society. Someone, somewhere will find this person a room to live in and some kind of work. No problem.

A way to solve problems

The British Isles contain not 2,000 but 50 million inhabitants, and the number of people returning from prison every year is about 25,000. Arithmetic teaches us that 2,000: 1 equals 50 million : 25,000. But it is not true. Marx was more realistic than is dreamt of in arithmetic when he said that a change in quantity produces a change in quality. The problem of re-integrating 25,000 ex-prisoners into a society 25,000 times as large as that of the little island is quite a different problem, not only quantitatively but also qualitatively, a problem the solution of which escapes the devoted efforts of Home Office, Probation Service, and countless other organisations. Is it a matter of proportionately too little effort and money being devoted to this task of re-integration and rehabilitation? Could we solve the problem by having bigger prisoners’ aid organisations, more people, and more money? Maybe we can; maybe we cannot. I personally think we cannot. But the point is that the small island does not have the problem. The engine, as it were, is small enough to consume its own smoke. Or we might say: People’s power prevents the problem from becoming a problem. Not merely does it prevent crime from becoming a problem, it also prevents the consequences of crime from becoming a problem.

This, surely, is a matter of breathtaking importance. People’s power doesn’t solve problems: it avoids them. Of course, some work is needed to avoid problems; but this is the kind of work which people want to do. They want to do it because, to become real, they need to do it. They need to follow their moral impulses; they need to render service to their fellows, and they need to be creatively productive. So, when we need something, we do not expect to be paid for it. On the contrary, there are countless people who say: “This is what I want to do; I don’t expect payment for it, I don’t even want my expenses back: it is what I want to do.”

The question is: How can people’s power be ‘liberated’? By going for the small, the human scale. I do not wish to be dogmatic on this because I do not know how to define what, in any particular instance, is the ‘human scale’. When many people are doing exactly the same thing— as for instance in a large orchestra with twenty first violinists and twenty second violinists, etc.— the proper scale, expressed in numbers of people, will undoubtedly be different from that of a team in which everybody is doing something different from everybody else. So there is no easy, generalised answer. It is, as they say, ‘Horses for courses’. But it is horses for courses; it is not the bigger the better, which is the all too common assumption of the modern world.

Whether in governmental or voluntary, non-governmental organisation, the human touch and the mobilisation of people’s power remain wishful thinking unless the organisation is of the right size; both geographically and numerically. ‘Right size’ is a difficult concept: the touchstone is the reaction of people— can they still give or receive individual attention? My own guess is that we should accustom ourselves to thinking in terms of very much smaller units than we may be inclined to, conditioned as we are by a society addicted to ‘rationalisation by giantism’. On a small scale people’s power can be mobilised but when the scale becomes too large, people’s power becomes frustrated and ineffective. What, precisely, is the right scale, I cannot say. We should experiment to find out. I could imagine an arrangement whereby in this country, say, 20-25 units would be constituted, with an average of something like 2-2.5 million people each. All but a small percentage of the taxes raised in these units would be returned to them, to use as they saw fit. They would be the masters of their own fate, as if they were separate countries, and that there was no central ‘government’ to bail them out if they made a mess of things. The engagement of people’s power may then become a phenomenon all over Britain. I have seen this happening in some parts of the world, for instance in China, but also in communities under entirely different systems. The discovery and mobilisation of people’s power may be nothing less than the condition of survival for the hitherto affluent societies of the West.


Publication By

E. F. Schumacher

Ernst Friedrich Schumacher was an internationally influential economic thinker, statistician, and economist in Britain. His ideas became popularized in much of the English-speaking world during the 1970s. He is best known for his critique of Western economies and his proposals for human-scale, decentralized, and appropriate technologies. E. F. Schumacher was born in Germany in 1911. … Continued

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