From an Economy of Consumption to an Economy of Sustainability

E. F. Schumacher

In March 2009 President Obama’s chief economic adviser, Larry Summers, described the origins of what some called the Great Recession: “An abundance of greed and an absence of fear on Wall Street led some to make purchases — not based on the real value of assets, but on the faith that there would be another who would pay more for those assets. At the same time, the government turned a blind eye to these practices and their potential consequences for the economy as a whole. This is how a bubble is born. And in these moments, greed begets greed. The bubble grows. . . . In the past few years, we’ve seen too much greed.”

More recently, Roger Lowenstein in The End of Wall Street pointed to another cause of the Great Recession. “Banks and investors had plied the average American with mortgage debt on such speculative and unthinking terms that not just America’s economy but the world’s economy ultimately capsized.” Yes, average Americans had taken on debts, including mortgages, which could not be paid off if hard economic times hit, as they certainly have. Some have blamed us average Americans for not being prudent, for living beyond our means in earlier years. And yes, we deserve a share of this blame. But did not our very economic system constantly encourage us to spend more and more? And are we not told now — after many have lost their jobs and homes and become fearful and cautious — that the only way we’re going to emerge from our present mess is if we increase consumer spending?

In the mid-1950s a U. S. marketing consultant said: “Our enormously productive economy . . . demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfactions, our ego satisfactions, in consumption. . . . We need things consumed, burned up, worn out, replaced, and discarded at an ever increasing rate.” In the 1987 film Wall Street, Michael Douglas’s character gave his memorable greed-is-good speech, in which he proclaimed: “Greed, in all of its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind.”

Such statements might seem extreme, and some would claim that American capitalism and capitalists have accomplished great things. Others would modify Winston Churchill’s quote about democracy to read “capitalism is the worst form of economy except all those other forms that have been tried from time to time.” Certainly, the communist economic system I studied and witnessed on many trips to the USSR had even more failings than our own market economy.

Nevertheless, encouraging consumption (and to some extent greed) has been part of our American economic system for more than a century. How else do we explain the tremendous amount of money we spend on advertising, marketing, and packaging? In our most recent Super Bowl, almost seventy ads appeared, all but a few from corporations trying to sell us goods or services and costing them a few million dollars for each thirty seconds—a cost, of course, that we collectively pay when we buy the advertised products. And what did they attempt to convince us we needed in order to be happier? Everything from beer to weed killers. Many of them featured celebrities, the advertisers hoping to benefit from a media culture that seems obsessed with such individuals and rewards them handsomely.

Although a past presence in Super Bowl commercials, Tiger Woods was not present this year — for reasons we all know. A recent New York Times Magazine piece on him explained his appeal to admen: “Woods could sell financial services and Swiss watches. And as a golfer, Woods offered extra marketing opportunities. He could affix corporate logos to his shirt, hat and bag and even wear a watch on the course. Between his endorsements, appearance fees, prize money and golf-course-design deals, Woods became the first athlete to earn $1 billion.”

Constant inane advertising and promotions have become so much a part of our lives from childhood to death that many of us regard them as natural as day turning into night — the other day I walked by a college baseball game and heard the announcer telling fans that the seventh inning was brought to us courtesy of such-and-such a business. We have also become accustomed to enormous discrepancies in earnings. Parade magazine just listed its annual survey results for 2009. Top earners included athletes, media celebrities, and CEOs of major corporations–e.g. Woods, $110 million; Jay Leno, $32 million; Glen Beck, $23 million; Wells Fargo’s CEO, 18.7 million. At the other end were such people as a pastor ($5800), crossing guard ($5900), teacher’s aide ($19,800), and food-bank coordinator ($20,600). The real gap between rich and poor is even wider if we include top-earning hedge fund managers and the unemployed. The highest-paid 25 top hedge fund managers averaged about $1 billion apiece in 2009.

What do all these developments, and the sleazy behavior of some on Wall Street (e.g. Bernie Madoff), say about our national values? Is it possible that there is a disconnect between what we profess, including our religious values, and our economic system and behavior?

These questions occurred to me as I researched the thinking of economist/environmentalist E.F. Schumacher (1911-1977). In the 1950s and 1960s he was already practicing organic gardening and had solar panels on the roof of his house. In the 1970s he was popular with the youth of the counter-cultural movement, was invited to the White House to chat with Jimmy Carter, and influenced California Governor Jerry Brown, who spoke at his funeral in London. Today there are various Schumacher societies and other institutions that carry on his work, but among the general public he is rarely mentioned.

That’s too bad, because the questions he raised, as well as some of the solutions he proposed, are as relevant as ever. Whether we know it or not, we have already incorporated many of his ideas about the environment and aid to underdeveloped regions, ideas which he popularized in his book Small Is Beautiful (1973).

By that time, after moving from atheism to Catholicism, via Buddhism, he had gained an appreciation for the traditional wisdom of various cultures and religions. He believed, however, that the major modern economic systems had deviated from the ideals of all the great religions and reflected a materialist approach. “Out of the large number of aspects which in real life have to be seen and judged together before a decision can be taken, economics supplies only one –whether a thing yields a money profit to those who undertake it or not.” It also encouraged a “frenzy of greed and . . . an orgy of envy.”

He also wrote that “the cultivation and expansion of needs is the antithesis of wisdom. . . . Every increase of needs tends to increase one’s dependence on outside forces over which one cannot have control.” Contemplating a Buddhist economics approach, he contrasted it with Western thinking — “while the materialist is mainly interested in goods, the Buddhist is mainly interested in liberation.” Whereas a Western economist would measure “the ‘standard of living’ by the amount of annual consumption, assuming . . . that a man who consumes more is ‘better off’ than a man who consumes less,” a Buddhist economist would think that “the aim should be to obtain the maximum of well-being with the minimum of consumption.”

In addition to thinking that modern developed economies — and not just capitalist ones — were too materialistic, Schumacher believed they were unsustainable because they gobbled up natural resources too quickly and polluted too much. They failed to adequately consider “the availability of basic resources and, alternatively or additionally, the capacity of the environment to cope with the degree of interference implied.” As early as 1955, he wrote that “a civilization built on renewable resources, such as the products of forestry and agriculture, is by this fact alone superior to one built on non-renewable resources, such as oil, coal, metal, etc. This is because the former can last, while the latter cannot last. The former cooperates with nature, while the latter robs nature. The former bears the sign of life, while the latter bears the sign of death.”

In Small Is Beautiful he mentioned the “ever-increasing dependence of the United States economy on raw material and fuel supplies from outside the country,” and declared such a level of consumption unsustainable. He realized that “there could be simply enormous and altogether unheard-of discoveries of new reserves of oil, natural gas, or even coal,” and that nuclear energy use could be expanded to meet growing energy demands,” but that “this would just shift the energy shortage problem to a different level, one that produced “environmental hazards of an unprecedented kind.” He was most concerned with nuclear pollution. “Of all the changes introduced by man into the household of nature, large-scale nuclear fission is undoubtedly the most dangerous and profound.” He concluded that “no degree of prosperity could justify the accumulation of large amounts of highly toxic substances [nuclear materials] which nobody knows how to make ‘safe’ and which remain an incalculable danger to the whole of creation for historical or even geological ages.”

In the early 1970s, very few people were yet aware of the serious danger posed by still another result of unfettered industrialization and consumption—global warming. Even though Schumacher did not list it as one of the major environmental problems of his day, he did criticize severely one of its major causes — deforestation. Shortly before his death in 1977, he narrated a film, On the Edge of the Forest , devoted to the topic. That same year he laid out the religious-philosophical underpinnings of his economic and environmental thinking in A Guide for the Perplexed.

Thanks partly to his efforts, and those of other early environmentalists, many positive steps have been taken since his death more than three decades ago. But we’re still a long way away from answering some of the basic questions he raised. How do we take seriously his advice to deemphasize material consumption? How do we do this without hurting our economy (including our jobs, investments, pensions, school-funding, etc.)? Is not our economic recovery dependent on a pick-up of consumer spending? Would not a Buddhist or some other religious approach that minimizes or deemphasizes consuming hurt our economy and keep unemployment high?

There are no easy answers to these questions. Nevertheless, there are signs that a transition to a more sustainable economy is possible, one less dependent on things being “consumed, burned up, worn out, replaced, and discarded at an ever increasing rate.” New York Times columnist Thomas Friedman has often written of the employment and other economic opportunities provided by developing green jobs. In 2009, Nobel-Prize-winning economists Joseph Stiglitz and Amartya Sen issued a report critical of an over-emphasis on GDP growth and recommending steps that could improve both our well-being and environment.

In the late 1980s, Mikhail Gorbachev realized that the old Soviet foreign policy was inadequate for the times, and he called for a “new-thinking” approach. It played a major role in bringing the Cold War to an end. In 2008, “Yes We Can” became a slogan of the Obama campaign. As we face the simultaneous challenges of creating more jobs and a more sustainable environment for our children and grandchildren, are we not capable of new thinking? Are we not capable of demonstrating that yes, we can evolve toward an economy that evidences more of what Schumacher thought it should — Beauty, Truth, and Goodness?

Walter G. Moss

Walter G. Moss is a professor emeritus of history at Eastern Michigan University. His most recent book is An Age of Progress?: Clashing Twentieth-Century Global Forces (2008).

Crossposted with the author’s permission from The History News Network.

Published by the LA Progressive on April 23, 2010
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About Walter G. Moss

Walter G. Moss is a professor emeritus of history at Eastern Michigan University. His most recent book is An Age of Progress?: Clashing Twentieth-Century Global Forces (2008). For a list of all his recent books and online publications, including many on Russian history and culture, go here: http://people.emich.edu/wmoss/pub.htm