Economic Ambitions Make Good Servants but Bad Masters: The Prescience of EF Schumacher

(First in a series of articles highlighting the ongoing relevance of EF Schumacher’s vision.)

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What does Technology Do to Work?

“Modern technology has deprived (humanity) of the type of work (it) enjoys most, creative, useful work with hands and brains, and given (humanity) plenty of work of a fragmented kind, most of which (it) does not enjoy at all.”

The primary effect of technology on work has been to greatly reduce or eliminate some kinds of work while increasing other kinds. Of particular concern is the fact “skillful and productive work of human hands in contact with real world materials” is the kind of work that 20th century technological advancement was most successful at eliminating.

Skillful productive work that engages human hands in contact with real world materials had already become exceedingly rare by the early 1970’s, when Schumacher published his most influential book.¹ By that time one would have needed to be wealthy to engage in such work, for “one (had) to be rich enough not to need a job, for the number of jobs that would be satisfactory in these respects (was) very small indeed.” It would be an understatement to note that the trends that Schumacher observed a half century ago have only accelerated: in the interim automation and other advances in digital technology have cancelled the need for human skillfulness in an ever-growing range of occupations.^{2, 3}

Does Technology Serve Human Ends?

It seems radical to assert that “economic and technological development should be oriented to the real needs of humanity.” Although almost everyone would agree with this statement, most would also acknowledge that our current economic and technological trajectory is diametrically opposed to meeting such needs. The impact of recent developments in technology is not limited to its tendency to degrade the quality of work experience: Although we tend to distract ourselves from relevant facts, we are occasionally reminded of the degree to which the continued existence of our species is threatened by several situations attributable to recent developments in technology. Climate change and mass extinction are among a range of existential threats entirely of our own making. How does technology – ostensibly devised by and for humans – become antithetical to the best interests of humanity?

Our Concept of Growth

“Economic ambitions are good servants, (but) they are bad masters.”

R.H. Tawney⁴

As an economist and statistician, Schumacher was exposed to unrelenting pressure to stimulate economic growth. He came to recognize that while there was a rational basis for our interest in growth – it is an essential part of life – our concept of growth grossly distorted our capacity to assess our situation because it lacked a qualitative dimension. The problem is not with growth itself but with our idea of growth, the concept we have of it. Growth is conventionally defined as the increase in market value of the goods and services produced by an economy over time: statisticians conventionally measure such growth as the percent rate of increase in the gross domestic product. This exclusive focus on quantitative measures obscures awareness of what, why and how we are producing. It also fails to account for the full range of impacts of such production.

The quality of work experience is a critically important aspect of life that is irrelevant to quantitative measures of growth. When increasing numbers that reflect growth becomes the predominant preoccupation of employers and decision-makers, reduction in the quality of work experience and destruction of the biosphere is expectable:

• Reduction in the quality of work experience is inevitable because it is not “counted”. Numbers reflecting the real or projected growth of an organization or nation are unaffected by what workers are actually doing. The concerns of employers and other decision-makers will be exclusively directed towards maximizing output and minimizing costs associated with such output. Such calculations do not “factor in” the experience of human workers whose jobs automation has not yet eliminated.

• Destruction of the biosphere is inevitable because of our “failure to distinguish income and capital where the distinction matters most”, namely, the irreplaceable capital which humanity has not made, but simply found – i.e., the air, water, climate, other species, and everything else that can be found in the biosphere. We will overlook our tendency to rapidly consume irreplaceable “natural capital” because the biosphere and its products are treated as “income” rather than “capital”. This tendency derives from our inclination “to treat as valueless everything we have not made ourselves.” While a businessperson would not consider her firm to be viable if it rapidly consumed all its capital, she might overlook this fact when it comes to the capital produced by nature. If we treated irreplaceable resources we consume or destroy as capital items rather than as income, we would conserve the capital upon which we depend.

Because our concept of growth lacks a qualitative dimension and because we fail to acknowledge that the biosphere is, in economic terms, most accurately considered a form of capital, we mistake our destructive path for “economic growth”.

“Progress” is another concept about which confusion reigns. Like growth, progress is an essential feature of life: we need to feel that we are accomplishing something, that what we are doing matters, both as individuals and as organizations. Workers rate a sense that they are advancing as the single most important factor determining their level of motivation for work.⁵ Schumacher reminded us that we should better determine what constitutes progress. By the 1950’s he began to recognize that the direction which technology was taking us was not only inconsistent with progress but diametrically opposed to it:

“We are destroying the very basis of our existence, and the reorientation that is required of us relative to technology is remembering what human life is really about.”

The Dominance of Quantitative Reasoning

“(The Economic and Technological development that) we have today … is not romantic and certainly not Utopian. But it is in very deep trouble and holds no promise of survival. We … have to have the courage to dream if we want to survive and give our children a chance of survival.”

The degree to which awareness of our situation is confounded by quantitative concepts can be grasped by asking: “What would be the cost of re-orienting ourselves around more accurate conceptions of growth and progress”?

Such a question reflects the perversity of our working concepts of growth and progress because it involves calculating the cost of the planet’s survival. Furthering survival – and the things that survival and prosperity make possible – is the proper objective of Economics. Survival and establishment of the material conditions necessary for human flourishing is the reason why it is important to study economics. The fact that it appears rational to calculate the costs of human survival epitomizes the degree to which conventional thinking about economics and technology has contributed to our present predicament. By the mid-twentieth century Schumacher had already observed that reducing concepts of progress and growth to unidimensional calculable quantities entailed an attitude of indifference to the type of work that humans perform and the relationship between the work we perform and the biosphere upon which we depend.

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Sources:

All italicized quotations are from EF Schumacher’s Small is Beautiful unless otherwise noted.

1. Schumacher, E.F. Small is Beautiful: Economics as if People Mattered. Harper & Row. New
   York. 2010. Originally published in 1973.
2. Brown, Andrew O. “Technology-Induced Workplace Change.” Bulletin of the Academy of
   Organizational & Occupational Psychiatry. April 2015.
3. Carr, Nicholas. The Glass Cage: Automation and Us. Norton & Company, 2014. Carr is
   former Senior Executive Editor of the Harvard Business Review.
4. Tawney, R.H. Religion and the Rise of Capitalism: A Historical Study. London. 1926.
   Schumacher introduces Small is Beautiful with this quotation from Tawney.
5. Tiggelaar, Ben. Mooi Werk. Stichting Collectieve Propaganda van het Nederlandse Boek.
   Amsterdam. 2016.