E.F. Schumacher: Small is Beautiful (Abacus, 1974) and Katrine Marçal: Who Cooked Adam Smith’s Dinner? (Portobello, 2015) notes Julia Clarke
Schumacher was economic adviser to the National Coal Board through the 1950s and 1960s. Small is Beautiful, published in 1974, is subtitled “A study of economics as if people mattered”.
Katrine Marçal is a Swedish journalist, writing on international politics economics and feminism. Her book is subtitled “A story about women and economics”.
The common thread between them can be found in Schumacher’s concluding reference to Christianity’s 4 Cardinal Virtues: prudentia, justitio, fortitudo and temperantia prudentia = not prudence, in the modern sense, but the virtue of taking time to assess the reality of a situation before wading in to do good (like us trying to understand money before deciding what action we need to take!)
Whose reality? I ask. Or whose analysis? (eg does Positive Money offer the only ‘true’ analysis?) Schumacher’s approach seems quite Zen. He says an appreciation of reality comes through “… an attitude of silent contemplation in which egocentric interests are silenced”. And this is where Adam Smith’s mother comes in, because, as Katrine Marçal argues, Adam Smith never considered what motivated her to cook his dinner every night while he was formulating a ‘science’ of economics based on the notion that ‘economic man’, is motivated entirely by those ‘egocentric interests’ which prudentia asks us to silence. He describes prudentia as the ‘mother’ of all other virtues (justitia relates to truth, fortitude to goodness and temperantia to beauty, or “knowing when enough is enough”).
So the feminist argument is that this self-interested individual is generally masculine, defined as male through attributes like objectivity, culture, mind and reason whose meanings depend on their opposition to ‘feminine’ characteristics of subjectivity, nature, body and emotion. She says quite a lot about women’s bodies and cites a whole lot of evidence to show how these constructions of masculinity and femininity have been used to perpetuate women’s exclusion from, or undervaluing in, the political and economic world. With reference to the undervaluing of domestic labour, Marçal cites an economists’ joke that, “… if a man marries his housekeeper, the GDP of a country declines. If, on the other hand, he sends his mother to an old-age home, it increases again” and comments that, “In addition to saying a lot about the perception of gender roles among economists, it also shows how the same kind of work can be counted or not counted as part of the GDP” (p.60)
Schumacher asserts the value of human integrity and social relationships, which are being lost in the pursuit of wealth, ‘growth’ and scientific progress. He warns of the social and ecological consequences of ‘… an industrial system which uses forty per cent of the world’s primary resources to supply less than six per cent of the world’s population’ (p98) and proposes the development of Intermediate Technology, for which he’s perhaps most well-known.
Marçal writes about Neumann & Morgenstern’s publication of Theory of Games and Economic Behaviour in 1944, in which human existence is reduced to a set of games played by rational participants making choices within a larger, mechanical system. Neumann then went on to develop the atom bomb and game theory informed the rationale for nuclear deterrence throughout the cold war.
Schumacher tells us about the Scott Bader Commonwealth, a company set up in the 1920s to produce polyester resins. By 1963, Bader had handed the company over to common ownership by a Scott Bader Commonwealth, established with a set of principles which limited its growth (maximum 350 people), restricted pay differentials to 1:7 before tax, allowed for 60% of net profits to be used for taxation and reinvestment and 40% to be paid in bonuses and/or given to charity. The Board of Directors are fully accountable to all members, who can hire, fire and decide of pay for directors. They also had a board of trustees from outside the company to mediate in the event of conflict between democratic and functional organs of the company. The provisions of the Commonwealth also stipulate that none of the company’s products can be used for war-related purposes.
Schumacher has a lot to say about the tension between democracy and efficiency, and challenges the private sector claim that you can’t expect to have both. Schumacher proposes a model for semi-nationalised corporations which, if they’re over a certain size, should be required to issue 50% of their shares to the state. Schumacher’s argument (reinforced powerfully in Owen Jones’ book) is that private corporations get a lot of handouts from the state in terms of infrastructure, education of the workforce etc but they don’t recognise this when they resent (and try to avoid) paying taxes. The deal is that all big corporations should be joint stock companies with ‘no par’ shares*. For every share they issue on the stock market, they must issue one to the state. So the state owns 50% equity and takes 50% of distributed profits. What constitutes “large” would be determined either by numbers of employees, or by capital assets or turnover, and if they find they pay more this way than they did under taxation, they’d be careful to stay small or break up into several, independent companies. Of course this would have been hard to achieve in the 1970s, but I think we’ve missed the boat now with global corporations.
(* the par value is a monetary value assigned to a share under a corporate constitution)
So while Schumacher didn’t have the benefit of a feminist understanding of the fact that women (like Adam Smith’s mother) have always been subject to the ‘silencing of egocentric interests’, he would surely agree with Marçal that it’s time to “Wave economic man off the platform and then build an economy and a society with room for a greater spectrum of what it means to be human”.
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