Rethinking Conventional Economics:
Thinking Cosmological, Yet Small and Local
by Victoria Rialp
This paper looks into the growing criticism of conventional economics, particularly of the concept of growth and of gross national product as meaningful measures of quality of life in human and ecological terms. It presents the positions of some of today’s prominent economists and social scientists who link the economy more directly with ecology and cosmology, and who point up the ruinous and disempowering effects of conventional economic thinking. Recognition of these direct linkages implies a call for smallness or intermediate technology and away from the concept of “bigger is better.” More importantly, the local community is increasingly seen as the appropriate unit of analysis and arena for planning and action, if one is to seriously work toward dignified and sustainable development.
In his book The Reinvention of Work, Matthew Fox cites economists E.F. Schumacher and Hazel Henderson, the cosmologist Brian Swimme, and cultural historian Thomas Berry among the most severe critics of the conventional concepts of economic growth and gross national product (GNP). He quotes the new-paradigm economist E.F. Schumacher : “To me, this concept of GNP means nothing at all….GNP, being a purely quantitative concept, bypasses the real question: How to enhance the quality of life.”
Schumacher questions along with GNP the notion that an economy must always be growing to be healthy, and asks at whose expense will the economy grow? He suggests that we cannot have infinite growth on a finite planet without someone or something having to pay dearly for such growth. Fox emphasizes that the result is that industrial societies have subjected the planet to an infinite plundering of limited resources of fossil fuels, forests, water, air, plants, animals, and people.
Brian Swimme and Thomas Berry likewise see the doctrine of GNP to be the dominant myth that drives our anthropocentric civilization in the name of progress. They believe that the “terminal phase” in which the Earth finds itself today “was caused by a distorted aspect of the myth of progress. Though this myth has a positive aspect in the new understanding that we now have of an evolutionary universe, it has been used in a devastating manner in plundering the Earth’s resources and disrupting the basic functioning of the life systems of the planet.”
Another economist Hazel Henderson (whose new worldview is seen in her books such as Politics of the Solar Age, Creating Alternative Futures, and Redefining Wealth and Progress) also criticizes the ideology of the industrial revolution for its abuse of the Earth and questions its reductionism in holding up the GNP as the measure of a healthy economy. “GNP values very highly bullets, tanks, and cars; and it values at zero the environment, clean air, clean water, etc. It also values at zero our children, who really are our future wealth.”
She laments that the contributions of women and unpaid workers are not counted in the GNP. “The raising of children, managing household activities, serving on the school board, and many other activities are not considered to be part of the formal economy….In so many countries in the world, the contribution of unpaid workers is far larger than the GNP.”
She criticizes both Marx (and communism) and Smith (and capitalism) for devising “a discipline that led to industrialism and materialism. Unchecked production, consumption, and continuous economic growth are common in their thinking.”
Like Henderson, Schumacher believes that one of the great evils of current economic theory is the idea that bigger is better. For him, impersonal bigness disempowers and leaves the worker out of touch with the decision-making level of the work world. Matthew Fox asserts that “Americans of late are beginning to grasp this fact as we wake up from the greed-driven eighties to a nightmare of unemployment, loss of tax base, widening gaps between the wealthy and the middle class, and increased poverty.”
Smallness, or intermediate technology, is therefore the path Schumacher suggests will put most people to good work, in a conscious effort to displace the giant technology that dominates conventional economics and to move toward a human-sized or green technology. “I can’t see anything that (humanity) really needs that cannot be produced very simply, very efficiently, very viably on a small scale with a radically simplified technology, with very little initial capital, so that even little people can get at it.”
Geologist Thomas Berry challenges economists to throw off their anthropocentrism and to wake up to cosmology and ecology. He warns, “When nature goes into deficit, then we go into deficit…At least in its present form, the industrial economy is not a sustainable economy…An exhausted planet is an exhausted economy.” Berry challenges the power brokers, including the economists, of the culture of the industrial era to take on a new vision.
For the past hundred years the great technical engineering schools, the research laboratories, and the massive corporations have dominated the North American continent, and even an extensive portion of the earth itself. In alliance with governments, the media, the universities, and with the general approval of religion, they have been the main instruments for producing acid rain; hazardous waste; chemical agriculture; the horrendous loss of topsoil, wetlands, and forests; and a host of other evils the natural world has had to endure from human agency. The corporations should be judged by their own severe norms. What exactly have they produced? What kind of world have they given us after a century of control?
The poet and social scientist Wendell Berry similarly points up the failures of both communism and capitalism in their striving for limitless growth. He views the standardless aims of industrial communism and industrial capitalism as having failed. “The aims of productivity, profitability, efficiency, limitless growth, limitless wealth, limitless power, limitless mechanization and automation can enrich and empower the few (for a while), but they will sooner or later ruin us all. The gross national product and the corporate bottom line are utterly meaningless as measures of the prosperity or health of the country.”
In writing about the United States economy, Wendell Berry states that “the most necessary question now – for conservationists, for small-scale farmers, ranchers, and business people, for politicians interested in the survival of democracy, and for consumers – is this: What must be the economy of a healthy community based in agriculture or forestry?” It would seem that the same question is even more necessary in the case of the Philippines. Already, the thinking of Filipino economists such as Sixto Roxas with respect to sustainable development of local communities parallels Wendell Berry’s focus of interest in local, community economies.
Berry asserts that the healthy local economy can no longer be the colonial economy in which only raw materials are exported and necessities and pleasures are imported. He insists that in order for the economy to be healthy, communities must value local products, supply local demand, and be reasonably self-sufficient in food, energy, pleasure, and other basic requirements.
“The real improvements then must come, to a considerable extent, from the local communities themselves. We need local revision of our methods of land use and production. We need to study and work together to reduce scale, reduce overhead, reduce industrial dependencies, we need to market and process local products locally; we need to bring local economies into harmony with local ecosystems so that we can live and work with pleasure in the same places indefinitely; we need to substitute ourselves, our neighborhoods, our local resources, for expensive imported goods and services; we need to increase cooperation among all local economic entities; households, farms, factories, banks, consumers, and suppliers… We must do everything possible to provide to ordinary citizens the opportunity to own a small, usable share of the country. In that way, we will put local capital to work locally, not to exploit and destroy the land but to use it well. This is not work just for the privileged, the well-positioned, the wealthy, and the powerful. It is work for everybody.
“I acknowledge that to advocate such reforms is to advocate a kind of secession – not a secession of armed violence but a quiet secession by which people find the practical means and the strength of spirit to remove themselves from an economy that is exploiting and destroying their homeland. The great, greedy, indifferent national and international economy is killing rural America, just as it is killing America’s cities – it is killing our country.”
In a paper discussing globalization and national development in the Philippines, the Filipino economist Sixto Roxas calls for a shift from a concept of national interest centered on the Philippines as a “nation-state” to one centered on Filipinos in different communities in their habitats and at different levels of development. This is necessary, he contends, if we are to have a framework for assessing the implications – the opportunities offered and threats posed by various international trade, finance, and investment transactions with other nations, institutions, enterprises and individuals. The analysis is most relevant to defining national interest in the face of globalization and the pressures for liberalization.
He echoes Wendell Berry when he cites as the starting point a process by which different communities in different regions of the country can define their respective priorities according to their respective natural endowments, given their present life conditions and their hopes and aspirations for the future. Instead of viewing local communities in mere conventional economic terms, he desires to define Filipino communities and their habitats according to their respective levels of development in objective structural as well as subjective psycho-social and cultural terms, and seeing their relevance vis-à-vis globalization and other international policy.
Roxas considers the problems of sustainable development that are peculiar to an archipelago like the Philippines, given the fragile ecosystems of islands and the vulnerability of their societies to an open, liberal economic regime and to the influence of outside life-styles ill-suited to their own ecosystems. Such an integral view of the development process highlights an aspect that goes beyond mere growth in macro indicators such as GDP and GNP and comparative levels by per capita income. It views national development as the integration of communities that are internally integrated, into larger communities.
Describing what he terms the national interest equations for the Philippines, Roxas maintains that:
“For the Philippines, the realities of ecology, demographics and socioeconomic political-cultural constraints, the following equations must prevail:
a) National interest = Sustainable Development = National Integration
b) National Sustainable Development = sum of sustainable development of local communities.”
It follows therefore that strategies for sustainable development (economic, social, ecological) must be tailor-made for each community given its ecological endowment, demographic circumstances, level of technological, cultural, psychological development in order for sustainable national development to equal the sum of sustainable development in each of the local communities.
According to Roxas, based on these assessments of the conditions of the constituent communities in the country, one can arrive at “a more complete and integral framework for the physical, psychological, social, political and economic diagnosis of the nation’s condition and a surer basis for an effective therapeutic protocol than the current economistic approach that has been used by the country for the past over half a century and the historical results of which have been less than satisfactory.”
From the more global perspectives of Schumacher, Henderson, Swimme and Thomas Berry, from the American context of Fox and Wendell Berry, and finally from the Philippine perspective of Sixto Roxas, there are strong arguments for renewing conventional economic thinking toward one which takes on a cosmological and ecological perspective while at the same time moves toward a more human and local community scale to promote a sustainable future for humanity and for the Earth.
Matthew Fox, The Reinvention of Work: A New Vision of Livelihood for our Time (New York: Harper Collins, 1994), 220-229.
E.F. Schumacher and Peter N. Gillingham, Good Work (New York: Harper Collins, 1979), 3.
Brian Swimme and Thomas Berry, The Universe Story: From the Primordial Flaring Forth to the Ecozoic Era – a Celebration of the Unfolding of the Cosmos (New York: Harper Collins, 1992), 241.
Hazel Henderson, “False Economy” Creation Spirituality (September/October 1992): 26-27.
Thomas Berry, The Dream of the Earth (San Francisco: Sierra Club, 1988) 71, 73.
Berry, 33, 34.
Wendell Berry, Sex, Economy, Freedom and Community (New York: Random House, 1974), 12.
Wendell Berry, 15, 16.
Wendell Berry, 17.
Sixto Roxas, “Globalization, Integral Development and the National Interest” (reading for ACA course, 2003).