The Role of Economy

September 3, 2007

Backtracking to my re-reading of Small is Beautiful. I’m still not quite sure how this comes in but I know its important.
“One of the most fateful errors of our age is the belief that ‘the problem of production’ has been solved. Not only is this belief firmly held by people remote from production and therefore professionally unacquainted with the facts – it is held by virtually all the experts, the captains of industry, the economic managers in the governments of the world, the academic and not-so-academic economists, not to mention the economic journalists. They many disagree on many things but they all agree that the problem of production has been solved; that mankind has at last come of age. For the rich countries, they say, the most important task now is ‘education for leisure,’ and, for the poor countries, the ‘transfer of technology.’? E.F. Schumacher began Small is Beautiful with those words in 1973. The book seems to be ahead of its time (not only because the 1975 paperback was printed on 100% recycled paper, a fact advertised on the fly-leaf before the author’s name or the title of the book. It is no longer revolutionary to claim the continued existence of the ‘problem’ but the issue is far from the forefront of daily affairs. We could now say rather that the problem of production has been exported to China. But despite our continued enjoyment of cheap goods from omnipresent Targets and Walgreens stores, it is very clear to anyone who is looking that the associated problems have only been delayed and are accruing interest rapidly as we neglect them.
[I need to address briefly some of the associated problems but don’t want to get side tracked by the issue. As a first source see this article in Foreign Affairs September/October 2007.]
Schumacher argues that we have placed too much faith in the cult of finance as a way of judging our decisions and actions. When we allow economists to pass judgment on every activity (Schumacher goes further and says they deliver a “verdict? of “economically sound or uneconomic?), we give undue power to a field that ultimately has little to do with human health or welfare or happiness. He reminds us that John Stuart Mill one of the first political economists regarded his own specialization as very limited. He regarded it “not as a thing by itself, but as a fragment of a greater whole; a branch of social philosophy, so interlinked with all the other branches that its conclusions, even in its own peculiar province, are only true conditionally, subject to interference and counteraction from causes not directly within its scope.? [Continue this quote he goes onto some interesting other criticisms here.] Economy was never intended to be the only factor in our decision making. As Mill says, economy is so entangled in its sister disciplines that none of its decisions or ‘verdicts’ are valid if viewed in a vacuum. We make a grave mistake when we let economists be our moral compass. Keynes, another foundational economist acknowledged the danger of this but saw it as a means to an end. When he says, however, that “avarice and usury and precaution must be our gods for a little longer still,? I feel repulsed rather than persuaded.

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