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What might Schumacher have thought about the current economic situation and how to get out of it

Dear Hazel,

Thank you for sending the essay for Schumacher College. In these dark, economic times, I have so often wondered what Fritz’s solution might have been and have been grappling with alternatives. It is certainly difficult to put thoughts and words into the persona of someone who is no longer with us, but Fritz did at least warn people about the impending financial crash. He, of course, thought it would come a great deal earlier than it did, and the delay in the UK was partly staved off by the discovery of North Sea Oil.

With love,
Diana Schumacher

By Hazel Henderson

hazel henderson

As one who was honored to help arrange Fritz Schumacher’s first lecture tour in the USA and to join him in making many presentations, I feel that he would be as appalled as I am by the stupidities of policy-makers and bankers following their self-imposed crises in 2008.

Firstly, if they had heeded Schumacher’s advice in Small Is Beautiful (1973), bankers and investment managers on Wall Street and in London would have realized the dangers of the “Big Bang” de-regulation of financial markets they foisted on politicians and society – egged on by Prime Minister Margaret Thatcher and US President Ronald Reagan. Schumacher warned of the social and environmental costs of big organizations chasing growth and profits as well as governments pushing continual growth of money-measured GDP. Schumacher and I saw these policies as cancerous on the body politic as well as on life-supporting biosphere, as he confirmed in his generous foreword to my first book, Creating Alternative Futures (1978). My ambitious subtitle “The End of Economics” has not yet occurred, but we are getting closer to understanding the truth: the economics profession is also overgrown and its entrepreneurial intentions to be legitimated as a “science” are now exposed by the Nobel family in repudiating the Bank of Sweden Prize in Economic Science “in memory of Alfred Nobel” as never approved by the Nobel Foundation. (See my editorials The Cuckoo’s Egg in the Nobel Prize Nest and The Nobel Prize That Wasn’t.)

Schumacher understood that the pretentions of the economics profession were justifying profit-maximizing at the expense of tax payers, society and future generations. Thus, after the financial meltdowns of 2008, Schumacher would have called for the break-up of too-big-to-fail banks, companies and globalized finance, production, consumption and supply chains – all unsustainable and doomed to fail. Schumacher would have joined me in calling for decentralizing economies and rebuilding home-grown prosperity, restoring organic agriculture and local markets, banking and job creation. He would have joined nef in calling for restoration of Post Office Savings Accounts and my friend James Robertson’s call for restoring money-creation to the public sector and the Treasury. We at Ethical Markets have also been calling for such reforms of money-creation and withdrawing this untoward privilege private banks have enjoyed in earning interest on money they create out of thin air as they make loans. Even former top financial regulator Lord Adair Turner spilled the beans in his lecture at the Cass Business School April 2012 and called for withdrawing of money-creation powers from private banks, thus allowing the public treasury to issue credit and loans for public infrastructure without charging interest.

Schumacher would have also pierced all the idiocies of EU politicians bailing out their reckless private banks with taxpayers’ money. He would have advised “bailing-in” the stockholders, bondholders and forcing these creditors to take their “haircuts” and absorb these losses due to excessive risk-taking and speculation. Similarly, Schumacher would have shown that austerity policies would only make matters worse – as we see in Cyprus where their collapsing economy is driving their debt higher and faster than ever. I am less sure how Schumacher would have responded to the travails of the single currency and whether the euro can survive. The European Union was a peace-making effort and has achieved much in reducing the use of war between its member states and as such must be recognized as a success. The premature adoption of the single currency by 17 of its 27 member states was an act of faith: that fiscal consolidation, Eurobonds and a deeper “United States of Europe” might follow. Sadly, this dream has turned into a nightmare and Britain is now less vulnerable with it own currency – even though the EU is its largest market.

I have been gratified to find one of the brightest observers of the financial crises Nassim Nicholas Taleb, in his The Black Swan and Anti-fragile, has espoused much of Schumacher’s message: small is indeed beautiful! This deeper relevance of Fritz Schumacher’s work is what we celebrate daily in our research at Ethical Markets in our Green Transition Scoreboard® and Transforming Finance initiatives and our TV programs including The Money Fix at and worldwide for colleges and libraries at We are especially delighted that Verena Schumacher, Diana Schumacher and Fritz’s other family members have welcomed our Henderson-Kay-Schumacher Library, with over 6,000 volumes covering all these issues and linked to the EF Schumacher Library, founded by Susan Witt and Robert Swann in Great Barrington, Massachusetts. We in the USA will continue keeping the Schumacher-Small is Beautiful flag flying!

Hazel Henderson, D.Sc.Hon., FRSA, president of Ethical Markets Media, is a futurist, evolutionary economist and author of award-winning Ethical Markets: Growing the Green Economy, among other books. She has a forthcoming monograph, “Transitioning to the Solar Age: from Economism to Earth Systems Science,” from the Institute of Chartered Accountants in England and Wales (ICAEW) and Tomorrow’s Company. Her editorials are syndicated by InterPress Service and articles appear in journals worldwide. She leads the Transforming Finance initiative, created the Green Transition Scoreboard®, co-developed with Calvert the GDP alternative now renamed the Ethical Markets Quality of Life Indicators and co-organized the Beyond GDP conference for the European Commission. In preparation and subsequent to the EC conference, Ethical Markets has funded three Beyond GDP surveys, finding strong support worldwide for ESG metrics in national accounting. In 2010, 2012 and 2013, she was honored as one of the “Top 100 Thought Leaders in Trustworthy Business Behavior” by Trust Across America. In 2012, she was named to the Post Growth Institute (En)Rich List as a top 100 luminary inspiring global prosperity beyond economic wealth; and, honored for her lifetime achievement with the Award for Natural Law and Order from the Maharishi University School of Management and with the Award for Outstanding Contribution to Development of ESG & Investing at TBLI Europe.

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