Ernst F. Schumacher's Approach To Economic Development

Prior the emergence of growth with equity in the 1960s, the different schools of thought have focused on economic modernization as a measure of development. However, Ernst F. Schumacher argues that quantitative terms such as GNP, investments, and savings should not be an indicator of development; instead, he demands the return to the actual size of man and concentrate on his real needs because the adherence to the principles of economic modernization will result in self-destruction. In fact, modern technology, as Schumacher explains, has not alleviated poverty but exacerbated the problem on poverty and unemployment. With this, the different approaches within growth with equity that includes income-oriented approach, employment-oriented approach,
As stated in chapter 12, Schumacher states that work opportunities of the poor in a modern industrial society are constrained, hence the need for the development efforts to be redirected towards creating workplaces which allow individuals themselves to be productive and not dehumanized nor reduced to a small cog in the machine. Due to the idolatry of modern economics, the industrial society demands predictability and accuracy and thus eliminates the human factor that creates mistakes, resulting in the replacement of individuals with highly capital-intensive machines in the production process. In chapter 14, he underlines that the sophisticated technology forces the poor labourers to remain as “gap-fillers” in the requirements of the rich, so the unemployment in India can only be solved with the choice of technology. For this reason, Schumacher highlights the need for a new technology that is not reserved for the powerful and rich but is available to all. He calls it intermediate technology for it is superior to primitive technology but simpler and freer than the sophisticated technology of the modern industry. Lisk notes that the employment-oriented approach suggests that modern activities must be reduced, so labor can substitute capital in the production process to achieve development. Accordingly, Schumacher affirms that intermediate technology is suited in the environment of
The capabilities or life outcomes approach presupposes that life is not reduced to the mere act of survival for there are other factors that make life more meaningful such as the aforementioned non-market values including justice, health, beauty and happiness in which the quantified notion of economics deprives every individual who clings to their idolatries. Schumacher wants to highlight the significance of taking a step back from the modern notion of development that only results in destruction and dehumanization and assess whether these means (education, wealth, etc) will lead to the ends that humans really need and not just what the modern society has