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Definition: Schumacher, Ernst Friedrich from BUSINESS: The Ultimate Resource

German economist. Author of Small is Beautiful (1973), a counterblast to the dominance of big companies. Schumacher developed his people-centered approach to life and business working alongside Reg Revans.

Summary Article: Ernst Friedrich Schumacher Internationally renowned economist, and environmentalist
from QFinance: The Ultimate Resource

Ernst Schumacher was a celebrated economic thinker, with a professional background as a statistician and economist in Britain. He was a Rhodes Scholar at Oxford and continued his studies at Columbia University, before returning to England before the World War II. Although he was interned during the war, his abilities caught the attention of John Maynard Keynes, who organized his release from internment. He was then able to help the British government mobilize both economically and financially during World War II. Keynes also found him a position at Oxford University. After the war, he worked as an economic adviser and then chief statistician for the British Control Commission, rebuilding the German economy. He then worked as chief economic adviser to the British Coal Board for many years, as well as starting his own business producing battery-operated vehicles. He was an author, and one of the chief editorial writers at The Times in London, as well as publishing articles in The Economist and Resurgence.

  • Ernst Schumacher is best known for his views on the unsustainability of current economic practices, his proposals for human-scale, decentralized, and appropriate technologies, and his economic planning during Britain’s post-war economic recovery.

  • He proposed the idea of “smallness within bigness,” a form of decentralization where large organizations behave like related groups of small organizations to become economically successful.

  • His work coincided with the development of mainstream ecology, and he became a renowned figure in the environmental movement.

  • His famous essay on Buddhist economics was based on his experiences as advisor to the India Planning Commission, as well as to the governments of Zambia and Burma.

  • In Small Is Beautiful, he proposed a system of regional economies based on social and ecological principles, and predicted the impending global fuel crisis.

  • This book was influential in the development of economics based on humanist principles, reflecting his views on sustainability, and his critique of society as being founded on materialism, greed, and envy.

  • While at the National Coal Board, he argued that coal should be preferable to petrol as the main energy source for the world’s population. This view was based on his analysis of oil as a finite resource.

  • Schumacher’s development theories were based around the concepts of intermediate size, and intermediate technology.

  • He argued that there should be a shift towards intermediate technologies based on the needs and skills of the people of developing countries, rather than the prevailing ideas of growth, and mass production for its own sake.

  • He felt the principles of Buddhist economics focus on the economic rationality of good work as essential to human development, and that production should use local resources, and revolve around local needs.

  • He proposed an economic, village-based framework, where human needs and limitations were understood, as was the appropriate use of technology.

  • He traveled throughout many developing countries, encouraging local government to form self-reliant economies, through his development charity, Intermediate Technology Development Group.

  • He thought that all major corporations should have a fund for research into, and development of innovative technology.

  • He argued against deforestation, and researched the future potential of trees, work that was taken up by the Soil Association after his death.

“Man is small, and, therefore, small is beautiful.”

Ernst Friedrich Schumacher
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