Continuing high unemployment, growing disparities in income, an Occupy Wall Street movement that continues to spread, bizarre weather that could be linked to climate change. These and other recent developments suggest that we are in the midst of a crisis that cries out for new thinking about our economic system.
For the sake of simplicity let’s call the system consumer capitalism. Doing so does not ignore the fact that from the Progressivism of the early twentieth century through Franklin Roosevelt’s New Deal up until the present this consumer capitalism has been modified. A U. S. State Department publication in 2001 declared that though “the United States is often described as a ‘capitalist’ economy,” it “is perhaps better described as a ‘mixed’ economy, with government playing an important role along with private enterprise.”
Thus, what we have might also be called modified consumer capitalism, or perhaps what Robert Reich has labeled Supercapitalism. Democratic liberals would like government to restrain and channel it so it best serves the common good, Republican conservatives are more inclined to favor a more laissez faire approach that lets the market operate with a minimum of government interference. But consumer capitalist values still dominate our economy. A majority of economists continue to emphasize that the health of our economy depends on increasing productivity, consumer demand, and our Gross Domestic Product (GDP). To meet these ends, vast amounts of money are spent to convince us that we need to consume more.
One marketing consultant of the mid-1950s stated: “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 early 1990s the American Advertising Federation wrote an open letter appearing in Time magazine to the U. S. president reminding him “of advertising’s role as an engine of economic growth. It raises capital, creates jobs, and spurs production. . . . It increases revenues since jobs produce taxable income, and greater sales increase sales taxes. . . . Incentives to advertise are incentives for growth.” Such thinking still dominates our economy.
How different this type of emphasis is to that of E. F. Schumacher, who once wrote that advertising and marketing encouraged a “frenzy of greed and . . . an orgy of envy,” and that “the cultivation and expansion of needs is the antithesis of wisdom.” As an economist and environmentalist, Schumacher was way ahead of his time, and I have already written several LA Progressive pieces on him (see, e.g. this link).
But last month I had the opportunity to see just how alive and influential his thinking continues to be, especially among some Europeans. The occasion was a conference in Antwerp on “Responsibility in Economics and Business: The Legacy of E. F. Schumacher (1911-1977).” Following the undogmatic example of Schumacher, my fellow speakers were not suggesting any easy answers from how we transition from our present economy to a more humane, just, environmentally-friendly one without wreaking economic havoc. When I asked Stewart Wallis, head of London’s New Economics Foundation and former International Director of Oxfam, how we could accomplish such a goal, he admitted that it was a central problem.
In his talk he stated that he believed “that much of economics, as it is now taught and practiced, is both intellectually and morally bankrupt,” and that our “fundamental problem is . . . overconsumption.” What he thought we needed was “an economy which has, as its main goal, to improve human needs, not wants. This economy needs to create and support sufficient good jobs and good work, and to do so in a way that is much more equitable–both between peoples alive now and between current and future generations. It needs to be an economy that recognises that it is but a subset of the ecosystem and which therefore works within planetary limits. Perhaps above all though, it needs to be an economy constructed with a bio-centric view of the world, not an anthropocentric one. We need to move from being consumers to stewards. Such an economy must also factor in the spiritual, the aesthetic and the symbolic.”
He recognized that exactly how we manage this “great transition” is still an open question, but that we need to “start to live differently; to buy differently, and above all, demand that our politicians change the ‘rules of the game’ and the incentive structures.” We need, he continued, to start “to measure, at the national level, the real goals of society, such as “national well-being.” The transition “means radically changing incentive systems, regulation and taxation systems. It means governments starting to ensure that markets are our servants, not our masters. It means reforming the financial and banking systems to ones that are stable, fair and socially useful. It means stopping the creation of money by commercial banks for non-productive and speculative purposes. It means Governments ensuring much greater equity within societies and much fairer distribution of not just incomes, but wealth, land, natural resources and time. It means companies moving from a prime purpose to make money for shareholders to ones which have a wider social purpose benefiting a wider group of stakeholders and which need to make more money to achieve this. It means much greater devolution of economic power and activity to the local level and many of us becoming food growers and renewable energy producers, whether individually or communally.”
After returning home, I read his organization’s The Great Transition, which offered more thought-provoking suggestions. Although written with Great Britain chiefly in mind, the work contains much that could be useful for Americans to ponder, and it recognizes the global nature of our present economic crisis. In the United States, the New Economics Institute, formerly the E. F. Schumacher Society, carries on work similar to that of London’s New Economics Foundation, and the Institute’s education director, Susan Witt, also spoke at the conference.
Besides Wallis several other speakers from England (including Schumacher’s daughter Barbara Wood) reflected Schumacher’s continuing influence. Simon Trace spoke on “Responsibility in Technology.” He is the Chief Executive of the England-based international development NGO Practical Action, which was formerly known as the Intermediate Technology Development Group and was founded by Schumacher in 1966 “with a mission to help poor people in the developing world use technology to fight poverty and transform their lives.” Today this organization works “across 10 countries in South Asia, Sub Saharan Africa and Latin America helping people improve food production, establish sustainable livelihoods and gain access to basic services such as water, sanitation, energy, housing and transport.”
Another speaker from England was Philip Bruce, CEO of the Scott Bader Company, who has attempted to remain true to the vision of its founder, Ernest Bader. In the 1950s and 1960s he had transformed his employees into partners who could not be fired except for “gross personal misconduct.” The company had the power to “confirm or withdraw the appointment of directors and also to agree to their level of remuneration.” And its members agreed that pay levels should “not vary, as between the lowest paid and the highest paid, irrespective of age, sex, function or experience, beyond a range of 1:7, before tax.” Schumacher sat on the Board of Directors of the company and praised it in his best-selling book Small Is Beautiful (1973), where he pointed out that “Bader set out to make ‘revolutionary changes’ in his firm, but ‘to do this by ways and means that could be generally acceptable to the private sector of industry.’ His revolution has been bloodless; no one has come to grief, not even Mr. Bader or his family; with plenty of strikes all around them, the Scott Bader people can proudly claim: ‘We have no strikes.’”
Schumacher thought that “in small-scale enterprise, private ownership is natural, fruitful, and just,” but in medium and large enterprises such ownership was more complex and often unjust. He believed the Bader Commonwealth was an example of a just medium-size enterprise, and he quoted the Quaker Bader, who stated that “the experience gained during many years of effort to establish the Christian way of life in our business has been a great encouragement; it has brought us good results in our relations with one another as well as in the quality and quantity of our production.”
Three other speakers at the conference, professors Luk Bouckaert (Catholic University of Leuven), Hendrik Opdebeeck (University of Antwerp), and Laszlo Zsolnai (Corvinus University of Budapest) have done much, as Schumacher had, to stress the necessity of spiritual values in economics and business. In 2004, they were among the founders of the European SPES [SPirituality in Economics and Society] Forum, which sponsored the 2011 Antwerp Schumacher conference. The Forum’s mission is “to make spirituality accessible as a public good to as many people as possible. It focuses on experience based spirituality that succeeds in making a connection between day-to-day activities and the inner quest for meaning.” But “Spirituality is deliberately defined in broad and pluralistic terms so that the Forum may bring together people from different spiritual backgrounds and traditions. The Forum defines spirituality as people’s multiform search for meaning interconnecting them with all living beings and to God or Ultimate Reality. Within this definition there is room for differing views, for spiritualities with and without God and for an ethics of dialogue.”
Thus, what the Forum encourages is not some narrow, dogmatic approach to spirituality, but the broadest method possible, yet one that recognizes the centrality of values to economics and life itself. One of the European SPES Forum founders, Zsolnai (who in 1990-91 studied at the University of California, Berkeley), has followed the example of Schumacher and written on Buddhist economics.
He has also joined with Bouckaert and Opdebeeck in editing the book Frugality. They start off their book with two quotes from unlikely sources, Adam Smith and Time. Smith wrote, “Every prodigal appears to be a public enemy, and every frugal man a public benefactor.” And Time (April 9, 2007): “There is an older path to reducing our impact on the planet that will feel familiar to Evangelical Christians and Buddhists alike. Live simply. Meditate. Consume less. Think more. Get to know your neighbors. Borrow when you need to and lend when asked.” The three editors then define “frugality as an ideal and an art de vivre, which implies low material consumption and a simple lifestyle, to open the mind for spiritual goods as inner freedom, social peace and justice or the quest for God or ‘ultimate reality.’ Frugality as a conception of the good life has deep philosophical and religious roots in the East and the West.”
Later on in their first chapter, they conclude: “The present unsustainable lifestyle of mankind requires drastic changes. Western-style consumer capitalism has failed. It has resulted
in global climate change, dramatic ecosystem degradation and biodiversity loss. Also, it has caused unhappiness and emptiness in rich countries and social disintegration worldwide.”
But, you might ask, would not such frugality if widely practiced subvert our consumer economy and if mishandled create economic chaos. Yes, as Hamlet said–in a different context–“there’s the rub.” And yet, as the poet, Wordsworth, wrote:
The world is too much with us; late and soon,
Getting and spending, we lay waste our powers;
Little we see in Nature that is ours;
We have given our hearts away, a sordid boon!
During the depths of the Great Depression, some people spoke of capitalism being outdated, but President Roosevelt and World War II revived it. Following the collapse of communist regimes in Eastern Europe and the USSR from 1989 to 1991, other people saw that collapse as marking the triumph of capitalism. Meanwhile, our environmental problems, including climate change, continue to worsen. Our present economic crisis and national malaise, coupled with governments and peoples puzzled about which steps to take, suggest we need bold new thinking, not just tired old nostrums. We need a transition fitting for a new century.
In his talk at the Antwerp Schumacher Conference, Stewart Willis suggested that such a transition from an economy of consumption to one of sustainability will begin to “happen if enough of us start to live differently; to buy differently, and above all, demand that our politicians change the ‘rules of the game’ and the incentive structures.” But to accomplish this in a democracy, enough of us have to want to wean ourselves from the infantile habit of always wanting more—from a consumer culture constantly encouraging the “cultivation and expansion of needs” in Schumacher’s words. In the final words of his Epilogue to Small Is Beautiful he wrote: “Everywhere people ask: ‘What can I actually do?’ The answer is as simple as it is disconcerting: we can, each one of us, work to put our own inner house in order. The guidance we need for this work cannot be found in science or technology, the value of which utterly depends on the ends they serve; but it can still be found in the traditional wisdom of mankind.”
Schumacher is correct that we need to emphasize wisdom more, that we need to rethink how our economy can best enable us to live happy lives in ways that will sustain our planet for future generations. But to reject an economic system and consumer culture that we have all become accustomed to will not be easy, either for ourselves or others. Resistance to meaningful change will be great, and the consumer capitalism of the 1960s and 1970s displayed enough adaptability to co-opt much of the countercultural movement of the times and then continue on its path of ever-increasing production.
The participants in the Occupy Wall Street movement that has now spread to so many cities are sometimes accused of lacking a clear focus. Perhaps that is because they know something is wrong with the present economic system, but offering concrete workable solutions to fixing it is terribly complex—and how many of the protesters really want fundamental changes to our economic system and not just a bigger share of the consumer capitalism pie? The days of believing in simplistic solutions like communism or state socialism are over, or at least should be, as Schumacher correctly perceived already in the 1970s. What label we pin on any newly emerging economic system is not as important as its ingredients. The problem with our present consumer capitalism is not the name. Critics do not desire an anti-consumer capitalism, just one that does not overemphasize consumption. Prior to the Civil War, we had capitalism, but also an emphasis on frugality. Consumer capitalism that emphasizes increasing consumption is not the only possible type of capitalism.
The only way forward is by open-minded trial and error. In democratic countries this can be messy and frustrating. Stewart Wallis told us that “he is pro-markets . . . pro-profits and pro-companies, but they “need to be managed . . . . for the wider good.” Steve Jobs, who contributed perhaps as much as any single individual to our consumer economy, was married in 1991 by a
Zen Buddhist monk and is quoted on the Spirituality in Economics and Society “Words of Wisdom” page. If consumer capitalism is indeed replaced by a new economic structure, many capitalist bricks may still be needed for any new construction. Whether we choose to attempt new building or just apply a little patching here or there is up to us. Wallis stated that “if we fail to get our voices heard and the necessary changes made then the world is heading for disaster of one kind or another. Perhaps those disasters will bring people to their senses, but they could equally do the opposite.”
Schumacher greatly admired Gandhi, and Gandhi’s central concept was Satyagraha, sometimes thought of as non-violent resistance but more literally rendered as “soul force” or “truth force.” The great Indian leader thought that truth could be a powerful force. Perhaps the best we can do in our present period of malaise is to seek the truth and wisely attempt to bring our lives and societies more in keeping with it. For myself, I am grateful to all the colleagues I met in Antwerp and to the resources they have provided to continue the search for a more humane economic system.
Walter G. Moss