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The New Economics: Economics As If…

Reprint: Originally Published in September 2011 Issue of Country Wisdom News

Small is Beautiful, the groundbreaking book by E.F. Schumacher, appeared in 1973. Its subtitle, Economics as if People Mattered, was as brilliant as the title itself. Small is Beautiful (so worth reading if you haven’t) was a passionate cry for thoughts and actions that go beyond the brutal faults and fallacies of our modern economic system. Though Schumacher has had enduring influence, the issues he so clearly pointed out are very much with us, and the ideas about solutions he proposed remain very much works in progress. Sadly, he died in 1977 just as his work was becoming well known. I don’t know if he would have wanted to be considered the father of a new economic paradigm, and others (notably Kenneth Boulding) were writing around that time about an economics that brought together social inclusion and justice with environmental and “systems” thinking. In any case Schumacher’s legacy has taken root. It’s still fresh and relevant, and it’s still evolving. It is no coincidence that the headquarters of the flourishing international Transition Movement is Totnes, England, also home to Schumacher College. 

As an economic thinker, I very much identify myself with this tradition that includes Schumacher and great economists and writers on economics, such as Herman Daly, Hazel Henderson, and many others. This column, the first in a monthly series for Country Wisdom News [Editor’s note: In September 2011], will be about their ideas and some of my own. We’ll explore the many compelling facets of economics in real time as events unfold. These are interesting times!

The column is going to be about economics as if our natural world mattered, as if social justice mattered, and as if all of us mattered—not just “investors” and not just those of us in the wealthy countries. It is also about economics as if we were in the 21st century, with all its complexities, dangers, and possibilities.

It’s also about economics as if new thinking were even possible in an era when corporate media dominates the conversation so completely that all people think about is stock market fluctuations and government budget fights.

One of the tremendous ironies and tragedies of our times is that people are still fighting the ideological battles of the 18th, 19th, and 20th centuries, even though the wreckage of the evident failure of these ideas is everywhere to be seen. Yes, I’m talking about Marxism, Socialism, and Capitalism. All failures, dear friends. I will not argue with whatever intelligence is expressed in any of these systems, but I do argue that they are flawed, incomplete, and pragmatically inadequate. And, they are seriously out of date.

There is, however, a whole body of economic thought out there that is not just a rehash of these failed dogmas. This new economics also sidesteps (but does not entirely dismiss) the economics profession itself. It has an activist dimension. The message is: Let’s wake up and engage our own intelligence on the subject. Let’s deepen the conversation.

Concurrently (or perhaps we should say co-dependently) with our general level of intellectual befuddlement on economics, we also live in a time of tremendous materialism. The creativity and opportunity of technology has been poisoned by the mass delusion inherent in consumerism, delusion that is goaded onward endlessly by the corporate propaganda story of “more, more, more.” In contrast to that, the new economy that many of us see is a post-materialist one. Most simply, it is an economy in which there is such a thing as “enough”. More expansively, post-materialism could point out a direction in which sharing and cooperation with each other, with future generations, and with nature herself take on exciting new possibilities. This outlook is by no means inimical to well-being, prosperity, and economic civilization. Indeed, it points the path to such a future.

And by the way, what does the phrase “small is beautiful” mean anyway, in economic terms? At the risk of oversimplifying it, we could say it is a rather poetic turn of phrase that means, most succinctly, “intelligent decentralization.” As such, it skewers the time-honored truisms of capitalism and socialism both. It sees decentralization, not in the sense of the atomized, anarchistic delusions of today’s right-wing ideologues, but instead in terms of localized, appropriate-scale systems run by conscious global citizens who acknowledge their profound interdependence with the natural world and with each other. In short: human values trump materialism.

David Korten, a passionate voice for change for many years, speaks convincingly in his book Agenda for a New Economy, to the point that we need a whole new economic story in our society. OK, let’s talk about that new story. Do you think maybe one is needed? I do. Not only could we talk about it—we could put it into practice with our activism, our community building, and our creativity.

David McCarthy has been studying classic and alternative economic theories for many years. His blog is trickle-in.blogspot.com. He welcomes your comments and discussion (tongdrol@gmail.com).