Small is Still Beautiful, Pt. 1

The book, Small is Still Beautiful: Economics as if Families Mattered, was recommended to the readers of this blog not long ago. It’s my intent to provide a review of each of its five sections. The author, Joseph Pearce, builds off of the work of E. F. Schumacher, who wrote Small is Beautiful in the mid-1970s. Schumacher championed the idea of economic self-limitation. This virtue is enshrined in the everyday realities of family life—the family being “the smallest and most beautiful part of any healthy society.” In the home, we are taught to live selflessly and to sacrifice for others. According to Pearce, “Small is still beautiful, because families still matter.”

Part One is entitled, “At What Price Growth?”, and it details the problems with our contemporary economic principles and practices. The problems begin with our very definition of economics. The conventional definition views people as either producers or consumers of goods and services. The problem with this view is that it does not account for the spiritual dimension of human life. For Schumacher and Pearce, then, “economic problems cannot be solved using purely economic methods.”

Not only does conventional economics have a shaky foundation, it also has questionable goals. It worships economic growth as an end in itself—regardless of the spiritual, social, or ecological costs. “The health of persons, communities, and the land itself may be sacrificed so that desires may be satisfied more quickly, more cheaply, and more efficiently.”

At this point, Pearce offers statistics which illustrate the escalation of economic growth in recent decades. For example, Western economies grew as much in the two decades between 1950 and 1970 as they had in the entire millennium which spanned from 500 to 1500. Pearce points to the Sherman Antitrust Act as the main reason why the United States advanced well beyond the European economies during the 20th century. Large companies “outmaneuvered” the Antitrust Act through legal mergers and acquisitions. This dynamic in America gave birth to “the Big” and smothered “the Small”. Companies of enormous size now dominate our domestic economy.

The question to be asked concerning this cancer-like economic growth is straightforward: Benign or malignant? Initially, at least, we might be tempted to think that this economic growth is harmless. Its benefits seem to far outweigh any of its problems. After all, aren’t the “developed” nations better off than the rest of the world? But to diagnose this situation requires us to ask other questions: “What is wealth? Does money buy happiness? Can material possessions prevent personal sorrow or suffering?” The root problem of most economists is their mechanistic materialism. According to them, someone who is ten percent richer in money will generally be ten percent richer in happiness. But recent studies have actually demonstrated that the opposite is true: Greater wealth brings less happiness and more social upheaval. At the very least, we must recognize with Schumacher that economic judgments are “fragmentary”, since so many important factors are not included in the decision-making process.

Pearce exposes the “fundamental flaw” in the way in which economic growth is measured. Economists follow the gross national product (GNP). If GNP increases, then the economy is growing. And since growth is always good, an increasing GNP must be a sign of a “healthy” economy. According to these standards, it is more “economic” to eat your dinner at a restaurant, to have your car fixed at a garage, and to put your elderly parents in a nursing home. Because it is purely quantitative, GNP “makes no allowance for the quality of life.” GNP puts a strain on happy, self-sufficient families because it tells them that they are bad consumers.

To see the absurdity of measuring a healthy economy based on GNP, think of the tobacco industry. First, the companies themselves make a huge profit. Then, governments make billions through taxes. Also, because of cancer, there are billions spent on building hospitals and employing health care workers. All of these things add to the GNP, making us “wealthier”, technically speaking. But how much happier do cigarettes and cancer make people?

Pearce concludes this section of the book by explaining the “expand or die” mentality of modern economists. The burden of debt which we carry as a nation demands that our economy continue to grow, but this growth requires further investment and borrowing. It’s a vicious cycle; we’re constantly chasing our debt. Pearce quotes a modern economist: “In our present economic system, the choice is between growth and collapse, not growth and stability.” Of course, the problem with this economic system is that the kind of growth it demands cannot continue indefinitely. Our ecological resources are limited. “Imagine everyone in China owning two cars.” Economic theory demands “expand or die”, but ecological reality gives the warning, “expand and die”.

The solution, however, is not to stop growing. Schumacher also believed that there must be growth, but he thought of economic growth in a different way. He made the analogy to human growth. Physical growth is good for a child, but not for an adult. An adult cannot grow taller, only fatter. Thus, a different kind of growth is needed for an adult. The “developed” nations need to grow in cultural and spiritual areas. Instead, though, we have become overdeveloped (”obese”) economically.

Commentary
For the average citizen, economics is a familiar subject, but not necessarily an understood subject. We tend to idolize “the market” and “Wall Street”, but Pearce gives us reason to pause and reconsider what the pundits are telling us. Economics is far from an exact science. The economic growth for which all of our politicians like to take credit is actually a malignant growth. In the end, it’s going to kill us (unless something else does it sooner).

Yes, Pearce sounds an alarmist note in this book, but he also offers an alternative to the prevailing economic beliefs. The way forward from here is to recover the Small and the Beautiful. Self-control is the virtue most needed in our day, but how many people are talking about it? Is the church even talking about it?