Experts from "The Relevance of E. F. Schumacher in the 21st Century." by John Fullerton

May, 2008

Our global economic system is broken not because
of the credit crisis; it is broken because it is predicated on perpetual, resource driven growth with no
recognition of scale limitations.

What we are not hearing, at least in the mainstream media, is a critical
reframing of the questions that address root causes. . . . . We are
not hearing a debate about the sustainability of a perpetually growing
global economic system nested within our finite biosphere. We are not
hearing a debate about the wisdom of allowing financial power (and systemic
risk) to be increasingly concentrated in the hands of a few financial
institutions of increasing complexity and scale. We are not publicly
questioning the wisdom of the system we have allowed to evolve in response
to capital's quest for ever increasing financial returns. Nor are we
debating where to look for creative responses.

However, nothing could be more important at this critical time. What we
grasp is that the financial crisis we are reacting to is but a cyclical
side show to the bigger issues we face regarding the sustainability of our
economic system. We should see the present financial crisis as a wake up
call to this far greater challenge. We should search with an open mind for
the wisdom we need to transition our economic system onto a sustainable
path, grounded in ecological reality, with a respect for human justice and a
deep appreciation for all life.

What is needed is nothing less than a new economic myth, which incorporates
the central issue of scale in order to supplant and transcend the
hand" of the free market. We need a "post-modern (post-materialist)
economic theory".

At the beginning of the 20th century, scale did not matter. At start of the
21st century, scale redefines our economic challenge.

In my personal quest for this new economic myth, I was stopped
dead in my
tracks after discovering E.F. Schumacher several years ago. Most who know
of Schumacher know him from his seminal work, Small is Beautiful - Economics
as if People Mattered (1973). The fortunate ones have also read his final
published work, A Guide for the Perplexed, a title that grabbed me and did
not disappoint. Most disciples of Schumacher probably encountered his clear
thinking during the 70s. Many went on to become leaders in the
environmental movement. I was in junior high school when Small is Beautiful
was published, and then was busy building a career in global finance during
the 80s and 90s on the belief that finance rather than politics would
dominate international relations during my lifetime. I got that right, but
not in the way I expected. Seeing global finance, what I do, as a root
cause in fueling our unsustainable economic system, has shaken many of my
prior beliefs on

. . . it is now time that we transcend to an economics built upon
wisdom. Schumacher's instruction is clear and compelling. "From an
economic view point, the central concept of wisdom is permanence. We must
study the economics of permanence." This intention takes us in a
different direction than conventional, Cartesian thinking.
suggests valuing durability over efficiency, stability over speed. These
are different values from those typically celebrated in the marketplace.

We need to think about what adjustments are necessary to "insure" the
permanence of our collective home, which must include a stable civil
society. Such thinking must address the very nature of our economic system.
Without a sustainable and just economic system, there is no permanence. We
need to inject these ideas into the public debate by reframing the cyclical
economic concerns that
preoccupy the mainstream media. We see little true
recognition of this profound challenge among our business, financial and
governmental leadership, which remains absorbed with short-term tactical

Following Schumacher's lead, we should look to the great wisdom traditions
for direction in this truth. Where better to look than to the ideas and
teachings from all cultures that have stood the test of time, rather than
restrict ourselves to contemporary economic theories that we know are
limited and incomplete.

Schumacher is relevant to our critical 21st century challenges precisely for
this reason. His philosophy, his concern about the limits of materialistic
scientism, his distinctions between divergent and convergent problems, and
his ideas of decentralism, appropriate technology, and human scale to name
but a few, are all rooted in the great spiritual and philosophical
teachings. Not
surprisingly, his ideas, in addition to being humane and
just, are aligned with nature and nature's sustainable way, the only truly
sustainable system we know. They are, I believe, rooted in truth as best as
Schumacher could discern it, and therefore they represent wisdom, the wisdom
of permanence.

If you examine Schumacher's personal library, which is carefully stewarded
at the
E. F. Schumacher Society in the Berkshires, you will find that most of the
texts are not about economics. Instead, they include the great
philosophical and spiritual texts from all traditions. Schumacher's gift
and genius was to derive economic principles and ideas from these teachings,
to have the courage to speak the truth, despite knowing it often flew in the
face of conventional economic thinking, and to make the truth accessible
with his clear and witty prose. What emerges is certainly not the final
word on the economics
of permanence. Some of his thinking is outdated, or
simply missed the mark. But as a foundation to build upon, it is
invaluable. The reason his ideas about economics ring true is because they
are built upon these wisdom traditions. The contradictions of modern
economics are gone.

Our challenge now is to refine and update this thinking and to chart a
practical path of convergence between the reality that exists in our
economic system today and the principles we strive to uphold and upon which
our long run prosperity undoubtedly depends. . . . The opening decades
of 21st century may be our best chance to launch the critical transformation
of our economic system to an economics of permanence. We need to get it
right, as only our collective consciousness will allow.

Transitioning to a sustainable and just economic system is the ultimate
challenge of the 21st century. History no doubt will judge our
by how well we acknowledge, embrace and take up this challenge.

John Fullerton is a former Managing Director of JPMorgan where he worked for
18 years in New York, London, and Tokyo, and subsequently was CEO of an
energy focused hedge fund. He is now seeking to launch an investment fund
focused on investing in high impact sustainability initiatives, and is
working on The Purpose of Capital, a book about the role of investment
capital in sustainable economics. He is a friend and supporter of the E. F.
Schumacher Society in Great Barrington, Massachusetts. John can be reached

We have posted his full article at the E. F. Schumacher Society's website