"Angels can fly because they take themselves lightly." – G. K. Chesterton

Posts tagged ‘E. F. Schumacher’

Do I Really Hate Economics

Last year I wrote a couple of posts on my hatred of economics.  I haven’t written much on the topic since then, as the presidential election has grabbed more of my attention.  Just a few days ago, a commenter challenged me to consider whether I truly hate economics, or just certain schools of thought within the field.  I’ve considered the question, but rest assured: I still hate economics.

Of course, at some times I’ve expressed some liking for certain types of economics.  My previous post is about Biblical economics.  I’ve had high praise for E. F. Schumacher’s book Small is Beautiful: Economics as if People Mattered.  But the things that I like are so far outside the mainstream that most people wouldn’t even identify them as economics.  The type of economic thinking that actually influences our nation and most others is entirely loathsome to me.

The major economic debate right now concerns government spending.  Broadly speaking, President Obama and the Democrats offer a federal budget that grows by several trillion dollars over the next decade or so.  The Republicans prefer a proposal from Congressman Paul Ryan that also adds trillions of dollars to the budget, but fewer trillions than the Democratic proposal.  There were already several major fights about the budget last year.  Several more are shaping up for this year and the years ahead.  The details vary but the centerpiece is the same.  The Democratic plans always involve higher taxes on the wealthy and slightly more spending on education and other Democratic priorities.  The Republican plans never involve tax hikes and always involve a bit more for the military and other Republican priorities.  But both parties agree on the majority of government spending for the near term.  Both agree that we’ll have an enormous military, nearly ten times larger than that of any other country.  Both agree on hundreds of billions of dollars for transportation, agriculture, and other departments, money that mostly ends up financing wealthy individuals and corporations.

The debate is not really about spending.  The debate is about “growth”.  You can pick up almost any newspaper and magazine or turn on any news channel and see the talking heads arguing about growth.  Each side insists that their policies will produce growth while the other side’s policies won’t.  Each side points to individual incidents that supposedly support them.  Greece imposed austerity measures and unemployment got worse.  California has high taxes and suffered an economic disaster.

Neither side ever asks the question of whether growth is always good, or what type of growth we should aim for.  There are many types of growth.  Growth is Gross Domestic Product (GDP) is the most commonly used one, but there’s also growth in jobs, manufacturing, home construction, and countless other things.  What both the Democratic and Republican talking heads agree on is that growth in any of these areas is always good.  If we manufacture more stuff this month than last month, that’s a “positive reading”.  If we build more houses this year than last year, it can only be good.

A sensible economic policy would start with the question of what we want?  Do we always want growth?  Should we always want growth?  Is manufacturing more junk necessarily good for us?  Will more houses always be a good thing?  Over the past decade we built far too many houses and, as a result, the housing sector entered a tailspin that wrecked first our economy and then much of the world’s.  Few people would deny this, yet we see no mainstream economist suggesting that we revise our approach to growth.

If we were, as a society, to shift from loathsome economics to human economics, we’d start by broadening our aims.  We would consider all the consequences of growth in a particular sector.  We would consider how manufacturing affects the environment, supplies of limited resources, and the social structure as well as how it affects the amount of stuff we have.  We would consider the age-old question of whether owning more stuff actually makes people happier.  We would consider how any policy actually affects human well-being in its entirety rather than just how it affects narrow economic definitions.  Then there would be less reason to hate economics.

Day 24: A book that you wish more people would’ve read

I rant about the evils of economics often enough.  I won’t do it any more in this post.  One thing is obvious though.  We have an economic system because we need an economic system.  One can point out the flaws of our current economic system all day long, but there’s no hope of destroying it unless we have something to replace it with.  E. F. Schumacher’s Small if Beautiful: Economics as if People Mattered offers that something.

This is a book of sound economic principles whose guiding theme is summed up in the title.  We should not try to change people to meet the needs of economic theory, but should instead change economic theory to meet the needs of people.  Based on that guideline, Schumacher considers all kinds of issues in economics, including production and consumption, economies of scale, organization, and government, as well as specific topics such as nuclear power and agricultural policy.

One of his best decisions in writing the book was to write each chapter as an essay which can be read separately.  This not only helps keep it organized and readable, but also allows the individual chapters to be taken and used as needed.  As with any good book, the best way to introduce Small if Beautiful is to present a sample.  Perhaps the most famous chapter is Buddhist Economics.  (Few people know that Schumacher originally called the chapter Catholic Economics, but his publisher rejected the idea of saying anything positive about Catholicism.  He changed the title but added a note that an economic philosophy based on any religion would look similar.)  The chapter compares assumptions made by all modern economists to assumptions that would be made by a Buddhist economist working from traditional religious principles.  Here’s an excerpt:

There is universal agreement that a fundamental source of wealth is human labour. Now, the modern economist has been brought up to consider “labour” or work as little more than a necessary evil. From the point of view of the employer, it is in any case simply an item of cost, to be reduced to a minimum if it can not be eliminated altogether, say, by automation. From the point of view of the workman, it is a “disutility”; to work is to make a sacrifice of one’s leisure and comfort, and wages are a kind of compensation for the sacrifice. Hence the ideal from the point of view of the employer is to have output without employees, and the ideal from the point of view of the employee is to have income without employment.

The consequences of these attitudes both in theory and in practice are, of course, extremely far-reaching. If the ideal with regard to work is to get rid of it, every method that “reduces the work load” is a good thing. The most potent method, short of automation, is the so-called “division of labour” and the classical example is the pin factory eulogised in Adam Smith’s Wealth of Nations.  Here it is not a matter of ordinary specialisation, which mankind has practiced from time immemorial, but of dividing up every complete process of production into minute parts, so that the final product can be produced at great speed without anyone having had to contribute more than a totally insignificant and, in most cases, unskilled movement of his limbs.

The Buddhist point of view takes the function of work to be at least threefold: to give man a chance to utilise and develop his faculties; to enable him to overcome his ego-centredness by joining with other people in a common task; and to bring forth the goods and services needed for a becoming existence. Again, the consequences that flow from this view are endless. To organise work in such a manner that it becomes meaningless, boring, stultifying, or nerve-racking for the worker would be little short of criminal; it would indicate a greater concern with goods than with people, an evil lack of compassion and a soul-destroying degree of attachment to the most primitive side of this worldly existence. Equally, to strive for leisure as an alternative to work would be considered a complete misunderstanding of one of the basic truths of human existence, namely that work and leisure are complementary parts of the same living process and cannot be separated without destroying the joy of work and the bliss of leisure.

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