Economics, sustainability and the legacy of E.F. Schumacher

Almantas Samalavicius: I’d like to start by asking how you got interested in the ideas of the economist and social thinker Ernst Friedrich Schumacher. Was it of academic interest or some practical motivation? How has Schumacher influenced your own attitudes and understanding of a just economy, bearing in mind that we all grow up and mature intellectually in the context of dominant “mainstream” economic paradigms? What brought you to Schumacher and eventually to your post as president of the New Economics Institute?

Bob Massie: I went to university in the 1970s, during a period of considerable debate about the role of corporations in society, and in particular about the problem of investing in companies doing business in South Africa. During this period there were many people who were beginning to question the structure of our increasingly global economy because of its negative effects, in some places, on the environment and society. Like many of my peers, I read Small is Beautiful and was struck by its wisdom and vision. It helped contribute to a lifelong commitment to building a just and sustainable economy, a commitment that carried me through my service as the president of Ceres, the largest coalition of investors and environmentalists in the United States, as the co-founder of the Global Reporting Initiative, and as the initiator of the Investor Network on Climate Risk. I thus had many friends in the new economy field, and they invited me to consider accepting the leadership of the New Economics Institute, which I gladly accepted.

AS: The New Economics Institute has grown out of the E.F. Schumacher Society – a pioneering association that dedicated itself to the task of sustaining and disseminating the legacy of this extraordinary social thinker, whose pioneering vision and insight is winning more and more supporters around the globe. What are the most urgent long-term goals of New Economics Institute in forging an economic and monetary future based on the ideas of Schumacher? As the new president of the NEI, what tasks do you envision for the development of this important and venerable organization, both in US and in other countries?

BM: Since I have been in this position for less than two months, it is difficult to answer such an important question in detail. In the short term, we have a pressing need to expand the focus of the E.F. Schumacher Society in this new entity – the New Economics Institute – to provide to a more comprehensive review of the American economy. We will do this by building on the important initiatives and models launched by the Schumacher Society in the Berkshire region in Massachusetts, by communicating with the 13,000 people who follow our work regularly, and by convening a meeting of leaders from across the spectrum of the “New Economy” movement at our conference in June in New York State. From there we will be designing national and international programs that advance the core commitment of the NEI to creating a just and sustainable economy.

AS: There are other organizations that share the visions and goals of New Economics Institute, for example the British New Economics Foundation and other innovative organizational networks. How will your institute co-operate with these fellow organizations? How are you going to maintain and expand relations between the Institute and organizations of professional economists, as well as international academic communities, bearing in mind that a large number of professional economists have been educated using a paradigms of economics in which people do not matter at all? What can be done for re-educating economists, not to mention the need to change awareness among other professional groups?

BM: As you correctly point out, there are a number of other organizations that are interested in the “new economy” and “new economics”, some of whom have those terms in their title. We consider this a strength and a sign that the core ideas are steadily taking root in the national and international economy. We already have solid personal and professional relations with the other groups, and we are building a particularly close bond with the New Economics Foundation in the UK, whose leaders are going to be well represented at our June conference. We still have to work through our approach to academic communities around the country, both through supporting new academic research and building solid ties with groups like the Institute for New Economic Thinking. We supported a very successful student conference on the new economy at Harvard University in April and we are going to be looking to duplicate that effort at other universities around the country.

AS: In recent decades, the ideology of neoliberalism has been a dominant instrument in shaping the thinking of international financial organizations, government policies as well as professional associations of economists and a large number of other public institutions. Do you think that the present global financial crisis can teach us all some lessons? What can the New Economics Institute do in realistic terms to introduce significant changes in public consciousness and ways of thinking shaped by exhausted economic paradigms that seem to extend their power despite being dead long ago?

BM: It is quite remarkable that so many different parties have reviewed the recent financial crisis and come to the conclusion that traditional forms of capitalism are deeply flawed and major reform and restructuring are needed. One cannot help but be surprised that discussions about the future of capitalism flourished even at a centre of power such as the World Economic Forum, whose founder, Klaus Schwab, declared in his opening address to many of the most powerful economic actors in the world that capitalism required fundamental changes. As with many other movements that have sprung up around the world, the recognition that we need to create an economic system that respects planetary limits and pursues justice and sustainability will take time to establish itself. We can see evidence of this happening on many topics – from food to energy, from new forms of corporate governance to new forms of finance – and in many places, including small communities, national governments, global corporations and transnational gatherings such as the World Economic Forum and the UN Summit on Sustainable Development in Brazil. The Internet also has a role to play in this transformation by creating new learning, changing business models, opening up local regions to global information, and building international communities of like-minded people.

AS: As we know, contemporary public consciousness in Europe and elsewhere was shaped by a modernity that resulted from the project of Enlightenment, with all its contempt for the religious sphere, which in many cases was reduced to the status of private ideology or relic of prejudice. Schumacher made no secret of his religious beliefs and even called religion a re-legio – a restoration of the individual’s relation to reality. Besides, he had a deep affection for traditional religions as repositories of wisdom, humanity and other elements of humaneness. However, the question is whether present secularized audiences can embrace his teaching and wisdom per se, without ignoring these sources of his vision of society, humankind and the economy. How can a contemporary individual who dismisses religious traditions as something “stale”, “non-scientific” or even “false” be brought to accept Schumacher’s deep commitment to religions as forms of wisdom?

BM: I can only respond to this question from a personal and US perspective. I am a person of faith, having come to my commitment to global justice and sustainability in part through my Christian commitments. I agree with Schumacher that faith traditions are the repositories of enormously powerful wisdom about human ideals and problems, strengths and weaknesses. I have a deep respect and admiration for science and have never felt that there is an incompatibility of scientific learning with spiritual commitment: both should ultimately teach us curiosity, humility, generosity and awe about the universe. I understand that many in Europe have lost interest in some religious traditions; I am also aware that religious views are strong in my own country and on the rise in many other parts of the world. I believe that Schumacher phrased his beliefs in a manner that remained honest to his own spiritual insights while at the same time offering his views and conclusions to anyone to share, if they chose, based on their own values. I believe that one reason Schumacher’s work has remained relevant for nearly fifty years is that many people from many backgrounds find strength and spirit in his writings.

AS: Schumacher spoke about the beliefs of individuals whose minds are shaped by so-called progress and scientism, individuals who refuse to admit that whatever that can be called “absolute” has a right to exist and who, paradoxically, worship a variety of other abstractions, such as the “market”, “liberty”, “laws of economy” and so on. Do you see any chance of helping people leave the cage of mind constructed by scientism, atheism and other ideologies of the modern era. What I am aiming at is this: are there any relevant present-day guides for the perplexed (I allude to one of the most important of Schumacher’s books) that can help people come to terms with the legacy of religious traditions?

BM: We live in an immense universe made up of billions of galaxies, each with billions of stars. The capacity of the human brain to comprehend and to express this reality in its fullness through our vocabulary is very limited. As it is, we have great difficulty generalizing from our local experience to an understanding of how larger systems work, which is why economics has been stuck for so long in a paradigm that denies the physical realities and limitations of the earth as a single, modest-sized planet.

I think it is unfortunate when human beings select a particular phrase or ideology and insist that their approach must, to the exclusion of all other possibilities, be absolutely correct. The most appropriate intellectual stance for a species with limited capacities such as ours should be a combination of humility, generosity, and understanding. People who wish to generate terms that help them sort other individuals into “correct” and “incorrect” categories will inevitably succeed in their mission, but will find then themselves frustrated when this inherently divisive approach proves unattractive to others.

AS: My own acquaintance with Schumacher’s writings has resulted in opening up a wider range of extremely important works on different aspects of the economy such as Hazel Henderson, James Robertson, John B. Cobb and many others. They have helped me to reconsider a lot of the banal assumptions that are stuffed into our minds by the dominant ideological doctrines of mainstream economics. Eastern European societies, in general, became an easy prey for neoliberal dogmas after their liberation. What can be done in bringing more education and awareness of the need for new economic perspectives and new ways of thinking? How could university departments that educate future economists make use of new paradigms disseminated by your institute as well as its associate organizations?

BM: Overall, I think the pressure will come from young people, who are moving away from hierarchical structures of received wisdom towards a shared understanding of global relationships. This is a result of both the idea and the actual existence of the Internet. The old systems that are being taught do not work – except for the very privileged few. Eventually, a combination of intellectual, social, political and environmental pressures will give birth to new ways of thinking, both within universities and in society at large. Historically this has happened many times – think of the changes in medical education in the last fifty years – and we can already see it taking place around the world today.

AS: Reviewing a couple of standard books on the history of economic theory, I was struck by the fact that the account of the developments of the last century was full of renowned and less renowned economists who gave would-be neoliberalism and other ideologies a helping hand, however that a number of important names, including that of E.F. Schumacher, were missing. It is no secret that fashionable international discourses on economy often misinterpret or ignore Schumacher’s relevance. For example, I was struck while reading Richard Florida’s musings on the rise of “creative class” by a footnote reducing Small is Beautiful to a mere fantasy. What is the New Economics Institute present and future policy in changing narrow or simply unjust attitudes? How can one proceed from the sphere of right ideas to right actions?

BM: E. F. Schumacher was a visionary thinker who stressed important themes that were neglected in his own day, such as the difference between spending national capital and income, or the importance of designing systems at the appropriate scale. He wrote during a period of grand centralized development schemes which would, it was believed, create prosperity in a very centralized manner. This has turned out to be true only in fairly rare circumstances. The idea of appropriate technology and scale is now much more widely accepted. Because the trend in Schumacher’s time was towards the largest solutions, he advocated smaller, more localized thinking. He himself said that if the preoccupation were with small initiatives, he would be focusing on the large. The point is that the scale of the solution must be appropriate to the scale of the problem. Some people remain ignorant of this because the only thing they had read in his work is the title, Small is Beautiful, and so they jump to false conclusions. The best solution to this is, first, to get people to read what he actually said and, second, to advocate the solutions to our complex problems in a balanced manner at all scales.