The Contested Legacy of an Economic Prophet

“I came kicking and screaming. I was saying, “Rural area? No way!”[1]  Susan Witt remembers protesting her move from lively and diverse Cambridge, Massachusetts to a cottage overlooking rolling hills. “I had no connection or experience with place before moving to the Berkshires, and then it kind of hit me full tilt.”[2]

Susan Witt and her husband, Bob Swann at their Berkshires home, 1981.
Courtesy of the Schumacher Center for a New Economics

In 1980, Witt founded the E.F. Schumacher Society (now the Schumacher Center for a New Economics) in rural Massachusetts with her husband, land reform pioneer Robert Swann.[3] Today, the think-tank implements the economic vision of Ernst Friedrich Schumacher in the Berkshires area. Schumacher, a German-born economist “who for years had preached the virtues of a more modest lifestyle,” has faded from national name recognition.[4] Yet, the ideas in Schumacher’s seminal collection of essays, Small is Beautiful influenced a generation of activists in an economy based on institutions that are “too big to fail.” For a moment in the late 1970s, Schumacher’s ideas polarized national attention. Today, the legacy of their is still contested between conservatives and progressives.

In a chapter called “Days of Malaise” in a post-1945 American history book, American Dreams, H.W. Brands described a bleak climax to the oil crisis in the 1970s: “’[t]he party is over,’ Schumacher declared, and millions of Americans nodded in sad agreement.”[5] Schumacher steps into Brands’ history to pull the curtain closed on a dream of growth and consumption. In his preface, Brands observes that at certain points in American history, “the dreams weren’t always sunny and hopeful…[they] began to waver and lose focus”.[6]  Was the emergence of Schumacher and the movements he inspired the end of a dream as Brands frames, or an opportunity for rebalancing in American values?

Schumacher on “Buddhist Economics” (Courtesy of the Schumacher Center, YouTube)

Brands and other survey historians highlight Schumacher’s role in an anti-consumerist counterculture but “Schumacherism” was claimed by groups across the ideological spectrum. Looking back from a festival in 2011 honoring Schumacher’s 100th birthday and legacy, Green Party politicians, activists, and academics echoed a sentiment that economic crises are an opportunity for radical change.[7] For radicals, “the worse things got, the better for their cause”.[8] Celebrating the same occasion, a conservative commentator contrasts the image of a hippy Schumacher with the economist’s background in Catholic social teaching: “[Schumacher] pleaded that in dealing with the contradictions and tensions of the world we needed wisdom that only the traditional virtues, such as prudence and temperance, can furnish.”[9] These virtues excluded women who “do not need an outside job” in Schumacher’s economy.[10] Small is Beautiful has been interpreted as vindication for both the conservative values of individuality and tradition and the progressive values of collective action and equity. These apparent contradictions break up a familiar understanding of the “Schumacher moment” as a reactive, lifestyle counterculture (see transcript excerpt below). Brands fairly displays what Schumacher was against but a diversity of groups and individuals involved in this period better discuss what the movement stood for.

“My entry was a pretty personal approach but I entered right into…the beginnings of a national movemen, so I’ll describe my personal entry but that’s not as important as the work I moved into,” prefaces Witt.[11] She remembers when the impact and collective identity of the “Baby Boomer” generation was recognized as TIME Magazine’s Man of the Year in 1966. She felt that she could go anywhere in the world and feel safe amongst peers – a global citizen.[12] A cosmopolitan identity contrasted with a rejection of urban life for members of the “back to the land” movement. Witt’s generation, who “sought fulfillment in personal reconstruction” over materialism, added momentum to Schumacher’s message.[13]

A generational feeling of fellowship complemented Witt’s specific education. A literature teacher, Witt found appreciation for the communal in her reading of “great books,” from Beowulf to Dostoyevsky.[14] The economy tells a story but Witt wasn’t convinced by its abstraction during a time when “the American economy seemed to have careened right off the curve into uncharted territory.”[15] Brands is referring to the Philips curve, an economic narrative which reassured policymakers that high unemployment would balance with low inflation and vice versa. Stagflation, when inflation and unemployment increased together, broke the logic of this story. Schumacher’s proposal for economic development centered on labor rather than capital-intensive “appropriate technologies” appealed to an economy looking for new answers in uncharted territory.

Witt turned on the radio, heard this message, and her life changed. In 1976, Witt’s grandfather passed away, leaving an inheritance which allowed her to take time off from teaching to explore where heroism exists in American society. She identified alternative economists as agents for social change because “the element America swims in is the economic.”[16] So, when Witt heard Bob Swann speaking about Schumacher’s vision for development, she drove to Swann’s Institute for Community Economics in Cambridge. Here, she staffed a Community Investment Fund, which stands as a rejection of Brands’ negative depiction of “sad agreement.”

Socially responsible investing coordinated post-war wealth with community projects. Witt makes an important distinction between the Community Investment Fund and screened investment funds – the Cambridge project made positive investments in renewable energy, cooperative experiments, and local businesses. Far from shaking her head, Witt remembers “a bubbling up of enthusiasm” for these Projects. [17] Although the Fund folded in 1979, departing board members “encouraged efforts…that became major vehicles that started the movement around social investing.”[17] Yet like other experimental projects, critics point out that this model for change was driven primarily by wealthy donors. Witt remembers a generation of new wealth, twenty-somethings who would come to the Cambridge office and whisper, “I just inherited a lot of money and I don’t want to use it like my parents did. Do you have some place to invest?”[18]

“Guilt money” does not fully illuminate the momentum behind Schumacher’s impact. Interest rates peaked again in the 1980s, approaching 20 percent.[19] Witt and Swann had just moved to the Berkshires and found local businesses crippled by an inability to get low-cost bank loans. The fledgling Schumacher Center implemented a micro-credit program, Self-Help Association for Regional Economy (SHARE), in which “citizens in the region contributed to a community savings account that stood as collaborative collateral for small loans the bank wouldn’t normally make.”[20] Witt was astonished when she reviewed the account to find micro-contributions from poor members of the community eager to help borrowers like them. The revelation follows a similar logic to inner city immigrant communities or rural African-American cooperatives lending amongst themselves, Witt observes. This history of communal, low-income involvement complicates a narrative that Schumacher’s ideas have been primarily implemented by a new middle-class.

Witt (left) at the SHARE office (date unknown)

Schumacher’s impact was not limited to popular movements and start-ups – for a time these ideas drove national dialogue. Swann helped coordinate the Small is Beautiful book tour which brought Schumacher to America. Despite high-level endorsements, concert hall audiences, and best-seller status, however, his ideas did not drive national action. President Carter, (in)famous for his condemnation of consumerism, was well aware of the limits to growth as articulated by Schumacher and the Club of Rome.[21] Brands focuses on Carter’s critics but sociologist Amitai Etzoni identified the president’s mandate: at this time “31 percent of Americans were “anti-growth” and 39 percent were highly uncertain.”[22] On March 22, 1976, President Jimmy Carter hosted Schumacher in the Oval Office. Democratic Senators Lee Metcalf and James Abourzek followed up with the president, urging that “the government should instead be encouraging the development of those approaches that offer real long-term solutions to our environmental, social and energy problems.”[23] One year later, California Governor Jerry Brown spoke at the economist’s funeral. Schumacher’s legacy seemed secured when Ronald Reagan railed against inappropriate scale. “Bigness robs the average citizen of his rightful voice,” Reagan claimed as a radio commentator in 1976.[24] Despite cuts within the government, the pendulum swung back toward consumerism and unrestricted capital during the Reagan administration.[25] As Schumacher faded from national attention, critics and supporters alike wondered if his call to “put our inner house in order” was enough for radical change.[26]

President Carter on consumerism (Courtesy of YouTube)

From Todd Gitlin’s “Small is Beautiful: Brown’s Economic Guru” 1976

The Trump brand gained prominence during the pendulum swing toward consumerism and bigness during the 1980s. The introductions of “bigly” and “yuge” into presidential vocabulary could not be further from Carter’s recognition of limits. President Trump’s victory was driven in part by malaise in manufacturing communities with a lack of community development that Schumacher would have likely decried. Grassroots trends toward localism have restored Schumacher’s vision but his impact is felt beyond the activist left.

 

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Timeline:

[1] Phone interview with Susan Witt, April 14, 2017

[2] Phone interview with Susan Witt, April 14, 2017

[3] Biography of Susan Witt, Schumacher Center for a New Economics [WEB]

[4] H.W. Brands, American Dreams: The United States Since 1945 (New York: Penguin Books, 2010), 197

[5] Brands, 197

[6] Brands, ix

[7] Jonathan Watts, “Mood of possibility defines E F Schumacher centenary festival” (The Guardian, 2010) [WEB]

[8] Brands, 228

[9] Joseph R. Wood, “Retroview: A Countercultural Conservative” (The American Interest, Volume 6, Number 6, 2011) [WEB]

[10] E.F. Schumacher, “Buddhist Economics” Small is Beautiful (Harper & Row, 1975), 57

[11] Phone interview with Susan Witt, March 29, 2017.

[12] Phone interview with Susan Witt, March 29, 2017.

[13] Robert M. Collins, More: The Politics of Economic Growth in Postwar America (Oxford University Press, 2000) [GOOGLE BOOKS]

[14] Phone interview with Susan Witt, April 14, 2017

[15] Brands, 197

[16] Phone interview with Susan Witt, March 29, 2017

[17] Phone interview with Susan Witt, April 14, 2017

[18] Phone interview with Susan Witt, March 29, 2017

[19] Phone interview with Susan Witt, March 29, 2017

[20] PBS Business Desk interview with Paul Solmon, “What Led to the High Interest Rates of the 1980s?” (PBS News Hour, 2009) [WEB]

[21] Phone interview with Susan Witt, March 29, 2017

[22] W. Carl Biven, Jimmy Carter’s Economy: Policy in an Age of Limits (University of North Carolina Press, 2003), 257

[23] Bill McKibben, Eaarth: Making a Life on a Tough New Planet (Macmillan, 2010), 93

[24] Lee Metcalf and James Abrozek, “Letter to President Jimmy Carter” (United States Senate, 1976) [WEB]

[25] William Greider, “Ronald Reagan: The Giantism Killer” (The Washington Post, 1981) [WEB]

[26] Greider

[27] E.F Schumacher, 297

Todd Giltin, “Small is Beautiful: Brown’s Economic Guru” (Mother Jones Magazine, 1976) [GOOGLE BOOKS]

Selected Transcript: Who was Schumacher?

Susan: [Schumacher] was an economist – what motivated him was economic thinking. He once said that he was in London watching lorries with Scottish biscuits being delivered at the same time watching lorries leaving London for Scotland with English biscuits. He said, “that’s just not economically sound.” We should be producing locally for local consumption as much as possible. So that’s the kind of thing that motivated him. At the same time, he called himself an energy economist because he worked for the English Coal Board and headed it. He realized that fossil fuels were disappearing and an economic system dependent on them would also disappear. It’s more the economist in him that came to that [conclusion] rather than simple living prophet which suggests more from a more lifestyle concern. It was this economic awareness permeating his thinking and his actions.

Sam: Where are the trends that mobilize Schumacher’s way of thinking today? Some of his work has been marginalized, Schumacher is no longer a household name. How would you explain the movement to a new audience?

Susan: Well, the “buy local” movement isn’t marginalized, that’s huge. While originally someone like Schumacher had deep philosophical and economic reasons or analysis that brought him to this, often the “buy-local” movement has become just a quality of life movement. So, [the attitude is that] the local beer is better rather than it creating a broader intention of serving all people – the overarching vision of the brotherhood of all mankind. We do our work hoping all people will have a better life [but that] has not quite gotten there. It’s still my quality of life, my personal quality of life. So I think that’s up to all of us who work in this movement, if you will, to make the broader connections, to bring in the responsibility again to all humankind. The responsibility to all places, not just our place. That’s up to us to tease that out of the simply “buy local movement” …we blame ourselves or see it as our responsibility to bring that out.

Sam: The popular image is that lifestyle argument but you’re saying it’s about something bigger.

Susan: Right, and it’s also about the consumer taking responsibility to help the producer… Instead of just sitting back and saying “if they produced it locally, I’d buy it.” Instead, it’s actually creating the conditions where the producer can thrive – the land, the legal permits, the technology, the marketing – how can we help make that happen? So citizens as active members and engagers in the economic system rather than as passive consumers.


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