Some of us may remember the stir caused by the publication in 1973 of E. F. Schumacher's Small is Beautiful: A Study of Economics as if People Mattered. It so happens that we were just coming to the end of the idealistic post-war era, when those who had gone through the war were determined to have no more wars, no more slumps, which was named by the historian Eric Hobsbawm as 'The Golden Years'. We had established the United Nations and the European Communities, freed trade in goods and achieved a rising standard of living and some social justice, in our desire for a better world.
But within a decade we changed direction, with Milton Friedman's monetarism replacing Keynes, and the Reagan-Thatcher reforms.
Competition, maximising profits, income and consumption and a touching faith in the infallibility of market forces took charge as the guiding principles of the ideals of the western world, and economic growth was the measure of the success of economic policy.
However in the unofficial world of thought and charities, Schumacher's ideas were continued and developed. Intermediate technology provided poor people, rather than governments, with what they needed to improve their lives. And in the world of academic thought and research, the work was drawn together in the New Economics Foundation. This book, by two of its leading members, selects and summarises some 40 years of research and writing for the benefit of the 'general reader'. They trace the tradition back to Jonathan Swift, William Blake, Ruskin, William Morris, G.K. Chesterton, and even Gandhi, or way back to the Diggers or the Peasants' Revolt.
The middle of the book is mainly chapters about the perverse effects of the present system, with enticing titles, like: 'Why did Vanuatu come top of the Happy Planet Index?' People were satisfied with very little, and were not consumer-driven. Life is about community, family, goodwill and sharing. 'Why did China pay for the Iraq War?' It used its trade surplus to buy US government bonds. The US was hugely in debt, but could pay for the war on the proceeds. 'Why do Britons work harder than medieval peasants?' Archaeology shows that 12th century peasants were tall and well-nourished. Our system impoverishes. We need two good salaries to pay the mortgage. 'Why are Cuban mechanics the best in the world?' The US blockade ensures that cars must be made to last several decades. Waste must be eliminated. 'Why do fewer people vote when there is a Wal-Mart nearby?' Driving to a supermarket for the weekly shopping undermines the quality of the local community.
As you read on with dismay and amusement you get impatient to find the answer on what to do about it. That is relegated to an Appendix.
Some of the reforms seem familiar, like changing the rules of banking, and making taxation work. But it gradually brings in more daring ideas, like a financial transaction tax and a maximum incomes policy. Introducing local currencies, and protecting street markets.
Two previous books that have inspired me: Happiness by Layard, and The Spirit Level, which is now getting more publicity, presented a lot of evidence to support one major principle. This book is much more diverse, and perhaps more heavyweight. It is in a readable style, but still requires some effort. It is also a valuable reference book to have on the shelf, as ideas come into the news. It seems ironic that it may follow Small is Beautiful in that government policy now seems to be giving priority to fear of the financial bond markets over the interests of people.