Thinking about Schumacher

International development creates funny and interesting policy spaces when you start to think about prevailing processes.

E.F. Schumacher is an author who has fallen out of fashion in development. In 1973, he wrote a book called Small is Beautiful which springboarded the appropriate technology movement. Largely I think people missed the big idea behind his thoughts and zoomed in on a particular (likely perceived to be easy) strand of his thinking. Appropriate technology became almost synonymous with non-governmental organisations trying to give away random agricultural implements. Yes, I am being deliberately uncharitable in my thoughts regarding the appropriate technology movement but I see Schumacher’s argument being picked up again by Yunus. Yunus argues for microcredit to spawn business enterprises, looking more at entrepreneurship as a route out of poverty.

But I have been watching the news to see what’s coming out of the United States as it relates to job creation, reading far too many books, and thinking big dissertation thoughts. One big idea contained in Small is Beautiful concerns the cost of job creation. It seems that capital level investment largely determines worker salaries… at least trying to read Schumacher’s analysis. I am not an economist nor do I play one on the internet… but this thought intrigues me.

Right now the main piece of “capital” at my disposal is my computer. Roughly, my computer costs $1200. The challenge for me is to leverage this capital to create some broader income earning strategy for myself. As a graduate student, I can roughly expect a salary around $12000, largely “earned” through putting my computer to work for me to make connections with knowledge spaces relevant to my field of study. But really, anyone with a computer could ostensibly put that computer “to work” in a way that generated a broader income.

The challenge then becomes creative positioning. If I try to save $1200 during one year, how could I reinvest that $1200 in a way that creates a broader stream of income? I could, for instance, broaden my life experiences by spending that $1200 on a perspective widening trip or an educational experience. Schumacher is rather big on honouring “the human substance” so spending that $1200 on personal wellbeing is in game. But this lump sum savings amount is 10% of my annual income.

Check it: when you look at Muhammed Yunus’s work, this regular small savings amount actually guides some of the principles behind microsavings. The idea behind microsavings seems to be that if the poor can save, then they can also invest in a business. Similarly, microcredit functions in a way to try to help people get towards microcapital.

My computer is a form of “microcapital” that actually seems to be doing rather well for me at the present moment. But I wonder if one of Schumacher’s critical observations was that this appropriately sized micro-capital (sized at 10% to 100% of a person’s income) really doesn’t exist very well among the world’s poor.

Paul Polak made a name for himself by mainly talking to farmers and identifying key capital gains that could improve their livelihoods at scale. His best known interventions are small-scale drip irrigation systems and treadle pumps. Many non-governmental organizations talk about the $25 treadle pump. WAIT. If someone is making less than a dollar a day, then that $25 treadle pump is right at that sweet spot of 10% of their annual income. The farmer who gets a pump (or a drip irrigation system) is in a prime place to actually utilise farming knowledge to make the technology work for her or him.

But there’s a question still about job creation. When I use my computer as a graduate student, I’m honestly not having a go related to my own entrepreneurial skill and talent. In a previous life, I had a gem of a boss who said, “Be careful with this machine. It is worth 5 graduate students.” Imagine Schumacher said that though. The capital investment from the machine gave 5 graduate students employment. When you put 5 of us in the mix at roughly $40,000 a year for related costs, then you have a machine investment of roughly $200,000. [I actually did try to cost a micro-CT scanner to see if that number has any bearing in reality, but I couldn’t easily find a website making the price of that particular technology visible. Whether that machine was fully utilised in employing 5 graduate students is an honest question.] The raw capital investment of an annual salary creates an opportunity to earn an annual salary.

What happens though when the technology cost needed to do a particular job far exceeds the available salaries in an area? Here I’m thinking of landless persons. What sorts of technology, scaled at roughly $300, have the potential to create an authentic fully realised job? Most of the landless generally rely on their body and skill set to create a job for themselves. But what if there were a way to transfer some sort of machine that would enable them to effectively stair-step to the next level?

As I have been working on my MA, it is hard for me not to think about asset transfers and social protection. I think the main “technology” at the annual income level is a cow. But what if there were more options? What if there were more options for the types of businesses that the poor tend to run that created opportunities for reinvestment at 10% of the annual income? Recognising that the body is the core asset of persons, what would it look like if the poor had options other than investing their 10% back into managing their medical expenses? What if non-governmental organisations (or a broader social movement or the private sector) thought about ways to improve access to durable material goods connected largely with a vision of a particular person?