http://odishapostepaper.com/edition/4628/orissapost/page/6
August 30 is celebrated as the National Small Industry Day. It is dedicated to promoting small businesses nationwide and offering job opportunities to the unemployed. On this important day it may not be a bad idea to revisit the ‘‘Small is Beautiful – A Study of Economics as if People Mattered’’ a highly influential book published fifty years ago. The book was written by E.F. Schumacher in the year 1973.
E F Schumacher was a German-British statistician and a renowned economist. Because of his leftist orientation, Schumacher left Germany before the Second World War and spent the rest of his life in England, where he was a pioneer in integrated thinking about economic, environmental, and cultural issues. I was introduced to the underlying principles of the book “Small is Beautiful’ by Professor Malcolm Harper in the early 1990s. He was the Professor of Enterprise Development at Cranfield University in the UK, and he worked extensively with the small enterprises of Odisha during the 1990s.
Though the book is 50 years old, the issues discussed by Schumacher seems to be more relevant for today’s world. Schumacher examined the economy which was thriving on big business, through which anonymous owners and leaders had accumulated great wealth through the labor of their “employees”. Schumacher called it a “parasitic” relationship.
Throughout the world, governments were privatizing everything from electrical utilities to prisons, from railroads to education. People of Odisha too are witnessing such shifts in every sphere. Large private universities have taken the place of the public universities; small movie halls were closed and multiplex movie theatres like Inox and PVRs are ruling the roost, people visit malls more frequently than their neighborhood markets, and even the power(electricity) distribution was transferred to a private sector company. Most of these organisations are large and driven by the objective of maximization of shareholders’ wealth.
The obsession with ‘big’, ‘mass production’, and ‘profit driven private ownership’ was challenged by Schumacher. He stressed that such organisations led to a dehumanization of people. People working in such an organisation remain like an anonymous cog in a huge machine where decisions are taken on the basis of profitability rather than human needs. The book did not stop at just identifying the problems with the prevailing system. Schumacher provided alternatives too. One of the powerful recommendations was developing people centered organisations. He stressed such organisations need to be small and community owned.
Small, as perceived by Schumacher, is not just as another manifestation of the physical size of an enterprise. It represents a school of thought which gives importance to human relationships, which shifts the focus from maximization of profit to creation of environmentally sustainable enterprises.
It is time to do away with the investment-based definition of small-scale business enterprises. It is time to create a different type of entrepreneurial ecosystem which will be evaluated not on the basis of financial performance alone. As envisaged by Schumacher, the new enterprises need to be organized as locally as possible, and on a smaller scale.
Schumacher used Buddhist economics to drive the importance of small businesses. According to Buddhist economics, the most rational form of production is production from local resources to meet local needs. The goal is self-sufficiency, not surplus production. ‘Economic progress’ is needed only to achieve self-sufficiency, and anything beyond will lead to destruction. According to Schumacher, industry needs to serve people, not the other way round. Disconnect between people and industry happens when the industry is driven only by growth and maximization of owners’ wealth.
The disconnect between people and industry can be bridged if businesses are set up using local resources for the benefit of the local people. Such community based small businesses create an environment where local residents directly shape the community and its well-being. Large business houses are forced to spend crores of rupees for socially relevant activities as per the CSR guidelines, but they fail to understand the local community.
According to the National Sample Survey Office (NSSO) nearly one in three young Indians between the ages of 15 and 29 is not engaged in either education, employment, or training (popularly known as NEET). Community based small local businesses may help in addressing the NEET problem by providing jobs to the local youth and help in reducing the problem of migration.
Is Schumacher’s proposal feasible today? The answer depends on the commitment of the government. It cannot happen Suo-motto without the enabling policy support of the government. Governments need to work on this issue meticulously keeping the larger interest of society.
Let us examine the potential of community based small businesses in addressing NEET in the capital city of Bhubaneswar. Bhubaneswar has 67 municipal-wards and 436 slums. More than 80,000 households stay in these slums. More than 30% of the population stay in the slums. On average, 18,500 people stay in a slum of which around 4000 individuals belong to the NEET category. Promoting community level small business enterprises may help in meeting the needs of the youth who are at present neither in education, employment, or training.
The state government needs to come up with a ward-level small business policy to make each ward economically vibrant. A vibrant municipal ward will contribute towards a strong municipality and in the process create an economically strong state.
It is worth revisiting the Spanish philosopher George Santayana’s year 1905’s quote, “those who cannot remember the past are condemned to repeat”. People ignored Schumacher fifty years back, now we have one more opportunity to use small businesses to create a larger impact on the society. Small is beautiful and relevant even today.