Can Character Survive Globalization? Schumacher's Vision

Positive vs. Normative Economics

Positive economics relies almost exclusively on quantitative analysis filtered through abstract ideas. It strives to be as scientific as possible by limiting its analysis to the description of economic facts within a system, as well as economic behavior, and by operating on hypotheses and data collection. The discipline believes it can exclude such things as value judgments or moral advice. It focuses on the way economic systems operate as they exist, rather than making any sort of recommendation as to how things ought to be. Positive economics does not stretch beyond the facts to speak about the moral character of a system as a whole. Following the model of the natural sciences, positive economics even attempts to describe economic laws such as profit maximization or fluctuations in Gross Domestic Product. Its goal is to eliminate assumptions in its studies and thereby allow greater predictability. By confining itself to facts — which may be proven or disproven quantitatively — it seeks to assert economics as a purely scientific field of study and application.

By contrast, normative economics inserts value judgments. It blends the positive facts and statistics derived from positive economic studies with policy recommendations. Notions of well-being and common good fuel these recommendations, often oriented away from what is taken to be an inherent individualism and selfishness within capitalism. Different kinds of moral philosophies underpin normative economics, whose practitioners would likely disagree that economics can ever fundamentally operate without some sort of preconceived value. In this view, nothing is neutral or objective. Economic systems are instituted and arranged on the basis of judgments, which may be more or less wise and are always subject to criticism. Normative economics is therefore more closely connected with issues of social justice and political philosophy. This distinction between positive and normative economics was clearly articulated in an important article by Milton Friedman (1953), although the idea was first expressed clearly by Keynes.

The question of character is a moral question. As such, positive economics tends to veer away from engagement with it. Normative economics, on the other hand, is willing to engage the issue head on. Whether or not character can survive in an age of globalization is such an immense topic that it can best be approached by examining a particular and significant effort to grapple with the question — an effort from the side of normative economics. One of its major proponents is E.F. Schumacher. His book Small Is Beautiful (1973) is part of his important critique of positive economics. In it, he offers a view of how character might be retained within global capitalism. This essay will explore some of his key points and use them to make the case that character can indeed survive in an age of globalization, provided that the right social structures and attitudes are in place to prevent purely economic aims from eroding all ethical values.

Schumacher's Critique of Globalization and Labor

Schumacher's view is that economics must be informed by wisdom. This stands in contrast to a positivist view that sees the end of economics as profit alone, with a clear separation of production from consumption. It also contrasts with the view that capitalism must be expansionist and therefore involved in forms of harmful globalism. For one thing, he sees much of the economic arrangement of global capitalism as dehumanizing. Driven by the desire to reduce costs, capitalism seeks to replace human labor with automation. Schumacher sees the consequence of this as fatal for the character of the worker. Machines are, in his view, essentially soul-destroying: they take work away from people, or at best leave them performing monotonous, mechanical tasks in whose meaning they have no investment. He writes, "The worker himself is turned into a perversion of a free being" (Schumacher 34). Work comes to be viewed merely as a necessary evil in exchange for a paycheck.

Positive economics organizes this system on the basis of cleverness rather than wisdom. It defines cost by excluding free goods such as nature; it focuses on the short-term; it expects everyone to operate under the predominant notion of maximizing return on capital employed; and it places real values — such as beauty, cleanliness, and morality — into the category of the "uneconomic." So not only in the modes of production, but also in its arrangement of expected consumption, global capitalism supports a system in which people are relieved of responsibility for their actions. "In a sense, the market," Schumacher writes, "is the institutionalization of individualism and non-responsibility" (Schumacher 42). Following positive economics, the market expects people to behave "economically," meaning that their highest value will be money and wealth. Economic analysis reinforces this by focusing on strictly quantitative measures of happiness or goodness. These measures are far easier to acquire, but they do not tell the real story.

Another harmful effect of globalization lies in its treatment of nature. From an economic viewpoint, nature has been seen as something to exploit because it is regarded as part of income rather than part of capital. Companies circle the globe seeking natural resources, and wealthy nations consume energy far in excess of what their populations would proportionally justify. The problem is that this economics views itself and its resources as essentially unlimited, relying on technological progress to sustain expansion indefinitely. It operates on the assumption that growth will eventually generate wealth for all. In fact, however, the ethics of greed and envy that drive this economic trend destroy happiness and serenity even as they stimulate production. Rather than leading to peace and permanence, a greedy expansionism premised on the endless multiplication of needs leads instead to war, dependency, and existential fear. Schumacher writes, "Only by a reduction of needs can one promote a genuine reduction in those tensions which are the ultimate causes of strife and war" (Schumacher 31).

If natural resources were viewed as capital — or as something sacred, qualitatively different from any man-made object — Schumacher believes there would be far greater efforts at conservation, particularly of non-renewable resources such as fossil fuels. Part of the prevailing ideology is that anything not man-made is valueless. As a result, globalism erodes character by depleting the sacred and irreplaceable things found in nature. This destructive trend, combined with the dehumanizing forms of labor it promotes, has detrimental effects on contemporary life and will continue to harm future generations.

The Exploitation of Nature Under Global Capitalism

Schumacher identifies several further negative effects of globalism. Its drive to accelerate communication and transportation — in service of the mobility of labor and products — leads paradoxically to less freedom, as it produces greater vulnerability and insecurity, more social dropouts, and mass migration to urban centers. Furthermore, the deconstruction of agriculture — treating it as an industry to be automated and trimmed — has led to the fragmentation of rural family life, unhealthy population accumulation in cities, and a resulting increase in poverty.

Schumacher proposes a number of meaningful alternatives to these devastating effects of globalization on moral character. All of his proposals rest on the idea that the essence of meaningful life is the effort to reconcile opposites with the whole personality. He calls this divergent reasoning, writing that divergent problems "demand, and thus provoke the supply of, forces from a higher level, thus bringing love, beauty, goodness, and truth into our lives" (Schumacher 90). Positive economics, by contrast, deals only with convergent problems, in which the solution is an either/or proposition. If things are seen divergently, other values besides profit can enter the economic picture. It allows for the inclusion of the metaphysical and meta-economic concept of the sacred and of the dignity of life. It ceases to view everything as a means to an end. As a result, the prevailing industrial ideal — "to eliminate the living factor . . . and to turn the productive process over to machines" for the increase of profit — is subject to genuine critique (Schumacher 103).

Conclusion: The Possibility of Character in a Global Age

Friedman, Milton. "The Methodology of Positive Economics." In Essays in Positive Economics. Chicago: University of Chicago Press, 1953.

Schumacher, E.F. Small Is Beautiful: Economics as if People Mattered. New York: Harper & Row, 1973.