He states: “Each time one encounters such opposites, each of them with persuasive arguments in its favour, it’s price looking into the depth of the issue for something greater than compromise, greater than a half-and-half solution. Possibly what we actually need shouldn’t be either-or but the-one-and-the-other-at-the-same-time.”
The principle of the unity of opposites is, here, abstract and universal. But Schumacer also offers specific and concrete examples of its practical deployment. Central to his organisational prescriptions is the antinomy between “order and freedom”. He states: “We will associate many further pairs of opposites with this basic pair of order and freedom.” In doing so, he practises the Hegelian impulse to see a dialectic in any respect phases of existence, including the modes of hierarchy and autonomy inside human acts of collaboration.
“All real human problems arise from the antinomy of order and freedom. Antinomy means a contradiction between two laws; a conflict of authority; opposition between laws or principles that seem like founded equally in reason. Excellent! That is real life, stuffed with antinomies and larger than logic.”
The discussion of contradiction between two extremes, and the attempt to search out a sublation of those opposites, or a minimum of an accommodation, is central to Schumacher’s mental practice, including his prescriptions of find out how to run an organisation. He claims this unity of opposites informed his practical leadership of the National Coal Board, which on the time had 800,000 employees.
Schumacher posits that each “extremes” of the order-freedom dialectic are mandatory in organisational practice. “In any organisation, large or small, there have to be a certain clarity and orderliness; if things fall into disorder, nothing may be completed. Yet orderliness, as such, is static and lifeless; so there must even be loads of elbow-room and scope for breaking through the established order, to do the thing never done before, never anticipated by the guardians of orderliness, the brand new, unpredicted and unpredictable consequence of a person’s creative idea.”
This determines the contradiction of “centralising and decentralising”. He adds: “Centralisation is principally an idea of order; decentralisation, considered one of freedom. The person of order is often the accountant and, generally, the administrator: while the person of creative freedom is the entrepreneur. Order requires intelligence and is conducive to efficiency; while freedom calls for, and opens the door to, intuition and results in innovation.”
Schumacher complains that the majority organisations fail to recognise such dialectical oppositions, and fail to administer them. This leads to infinite and unproductive “swings of a pendulum” or unmediated order taking on until “the organisation becomes moribund and a desert of frustration.”
The philosopher doesn’t simply observe contradiction, but offers a transparent programme to administer and even leverage such apparent paradoxes with the intention to bring about creative satisfaction for the workforce, without sacrificing results for the owner or manager. Schumacher, typically, doesn’t step outside of the capitalist paradigm and his solutions are designed to secure profitability, while dissolving the alienation of labour.
“The basic task is to attain smallness inside large organisations,” he argues, fittingly. He also advances 4 key principles: the Principle of Subsidiary Function; the Principle of Vindication; the Principle of Motivation and at last the Principle of the Middle Axiom. I think each of those principles are price retaining, and may be deployed in profit-making organisations and in addition impact-centred organisations reminiscent of we discover in the general public and charitable sectors.
The organisational structure advocated by Schumacher based on his small is gorgeous principle can best be described as a practice of allowing for the best autonomy possible, while allowing for hierarchy only where mandatory. This implies decisions have to be taken on the coal face, literally in his case, at any time when possible. Managers should set and monitor strategy, and supply clear goals and guidance. But they need to only then intervene in each day decisions under extreme circumstances, reminiscent of when mission critical goals haven’t been met.
This prescription of employee autonomy is directly set out in his Principle of Subsidiary Function. This principle states: “It’s an injustice and at the identical time a grave evil and disturbance of right order to assign to a greater and better association what lesser and subordinate organisations can do. For each social activity ought of its very nature to furnish help to the members of the body social and never destroy and absorb them.”
Andrew Simms, the climate campaigner and co-author of the Green Latest Deal within the UK, speaks to the centrality of this principle: “If EF Schumacher’s great work on rethinking economics had been called the Principle of Subsidiary Function its audience, I believe, won’t have reached the hundreds of thousands that were touched by Small is Beautiful. Yet the previous is a more accurate description of the concept at the guts of his work…”
The principle must be actively defended within the workplace, or organisation. Indeed, Schumacher is adamant that the manager who wishes to intervene within the activity of the frontline employee must justify such actions. That is the right defence against economic autocracy, and against micromanagement.
Schumacher couldn’t be clearer. “The Principle of Subsidiary Function implies that the burden of proof lies at all times on those that need to deprive a lower level of its function, and thereby of its freedom and responsibility in that respect; they should prove that the lower level is incapable of fulfilling this function satisfactorily and that the upper level can actually do significantly better.”
This helps resolve the contradiction between the “opposites of centralising and decentralising”, he claims. “The Principle of Subsidiary Function teaches us that the centre will gain in authority and effectiveness if the liberty and responsibility of the lower formations are fastidiously preserved, with the result that the organisation as a complete can be ‘happier and more prosperous’.”
The proven fact that the manager can not centralise and control all activity can be the reason for some discomfort. It may additionally end in some “waste” by way of replication, best practice not being immediately generalised, and staff performing the identical functions in other ways. Nonetheless, the gains by way of the engagement of the workforce, their feeling of freedom and their ability to work creatively greater than make up for such concerns.
In Schumacher’s terms: “From the administrator’s perspective, i.e. from the perspective of orderliness, it is going to look untidy, comparing most unfavourably with the clear cut logic of a monolith. The massive organisation will consist of many semi-autonomous units, which we may call quasi-firms. Each of them could have a considerable amount of freedom, to offer the best possible probability to creativity and entrepreneurship.”
There are further complications. Schumacher recognises that some teams inside a big organisation is not going to be involved with immediate profit making. For instance, the HR department of a supermarket is not going to make any sales but will provide a service to colleagues that can make sure the organisation can in actual fact function. He due to this fact sets out what may be understood as an internal market inside the organisation. In his terms, one department may pay “rent” to an, or receive a “subsidy” from a department that uses its services. This, again, allows for a high level of autonomy on the front line. It situates managers not as central control, but as an alternative as service providers to front line colleagues.
This approach could appear extremely radical. Furthermore, it’d appear idealistic relatively than pragmatic, and practical. But that is the facility of Schumacher’s work. It is predicated on the actual life practice of being directly involved within the running of the National Coal Board in Britain, which he described as “considered one of the most important industrial organisations in Europe.”
This case study demonstrates beyond reasonable doubt that it is feasible “to establish quasi-firms under various names for its opencast mining, its brickworks, and its coal products.” He further adds: “But the method didn’t end there. Special, relatively self-contained organisational forms have been evolved for its road transport activities, estates, and retail business, not to say various enterprises falling under the heading of diversification.”
The remaining principles of Schumacher’s organisational science protect and secure the primary principle of Subsidiary Function. The Principle of Vindication makes explicit that the management must limit its interference with the frontline workforce to developing and deploying high level strategy, in communicating targets, after which having clear measures – call them key performance indicators – to be certain that the strategy is being delivered by the organisation.
Indeed, the managers must actively defend the autonomy of those that report back to them. He states: “To vindicate means: to defend against reproach or accusation: to prove to be true and valid; to justify; to uphold; so this principle describes thoroughly one of the crucial vital duties of the central authority towards the lower formations.” He concludes: “Aside from exceptional cases, the subsidiary unit have to be defended against reproach and upheld.”
Schumacher is discussing find out how to run organisations in a capitalist society, where profitability is the one real measure of success. This won’t seem applicable for charitable and activist work that sits outside of the flow of commodity production and sales. Nonetheless, the important thing point that Schumacher desires to make here is valid. The management of any organisation should limit their interference to absolutely the minimum, and in a capitalist company that minimum needs to be the generation of profit.
The novel features of this that each one other matters – how the day after day activity needs to be conducted and managed – must remain with the front line staff. In a charity, a manager may focus entirely on developing strategy and monitoring impact. If the frontline staff need to implement a 4 day week, and the manager cannot reveal a decrease in impact, then that call needs to be taken by those frontline staff, and never the manager.
That is stated explicitly and clearly in Schumacher’s essay. “In its ideal application, the Principle of Vindication would permit just one criterion for accountability in a industrial organisation, namely profitability.” The argument continues: “The centre could have two opportunities for intervening exceptionally. The primary occurs when the centre and the subsidiary unit cannot come to a free agreement on the rent or subsidy, because the case could also be, which is to be applied.”
He adds: “The second opportunity arises when the unit fails to earn a profit, after allowing for rent or subsidy. The management of the unit is then in a precarious position: if the centre’s efficiency audit produces highly unfavourable evidence, the management could have to be modified.”
Schumacher then introduces the Principle of Identification. Again, this rule is designed to guard the primary principle of Subsidiary Function. The proposal is that every project, each programme, and every department inside a big organisation must have its own balance sheet. In modern parlance, this might be an operational budget. The purpose is that the team delivering on the project, or running the department, needs to be given full autonomy so long as the balance sheet demonstrates that they’re making a profit, in a industrial organisation, or delivering impact inside budget, as could be the case in a non-commercial setting.
He explains his adherence to the profit motive: “Business operates with a certain economic substance, and this substance diminishes consequently of losses, and grows consequently of profit.” Given this assumption, the principle of identification states that: “Each subsidiary unit or quasi-firm will need to have each a profit and loss account and a balance sheet.”
The aim, again, is bigger autonomy. “A unit’s success should result in greater freedom and financial scope for the unit, while failure – in the shape of losses – should result in restriction and disability. One wants to bolster success and discriminate against failure.”
The management does hold colleagues accountable. But unless managers can show a team is failing (making a loss, or using resources without delivering impact) they can not micromanage or interfere in base level decision making. This aspect of Schumacher’s prescription can sound overly technical. Nonetheless, by way of autonomy within the workforce he’s direct and certain. “This can be a matter of great psychological importance.”
Now Schumacher arrives at The Principle of Motivation. The Principle of Subsidiary Function ensures employee autonomy. The first advantage of this technique is that staff remain motivated. They’ll work creatively, they’ll learn, they’ll see the outcomes of the choices they’ve made. They’re rewarded by the success of their work. Nonetheless, motivation is so vital inside an organisation that Schumacher deems that it requires its own principle in his organisational system.
He states: “It’s a trite and obvious truism that folks act in accordance with their motives. All the identical, for a big organisation, with its bureaucracies, its distant and impersonal controls, its many abstract rules and regulations, and above all of the relative incomprehensibility that stems from its very size, motivation is the central problem.”
He adds: “Managements assume that folks work simply for money. for the pay-packet at the tip of the week.” This is solely wrong-headed. And, the philosopher states, “[i]ntellectual confusion exacts its price.”
Autocratic management comes at a substantial cost. The attitude that the managers make all the choices and the staff are there simply as a secretariat to mindlessly enact those decisions is pricey, prohibitively so for money strapped charities. When staff are given orders and directives they simply lose motivation, while others will resist and rebel. Managers then spend beneficial time attempting to reassert control.
The lack of autonomy for employees has immediate consequences. “Many haven’t any desire to be in it, because their work doesn’t interest them, providing them with neither challenge nor satisfaction, and has no other merit of their eyes than that it results in a pay-packet at the tip of the week.”
And the implications for the organisation as a complete may be terminal. “[T]he health of a big organisation depends to a rare extent on its ability to do justice to the Principle of Motivation. Any organisational structure that’s conceived without regard to this fundamental truth is unlikely to succeed.”
The fourth and final Schumacher principle for running an organisation is again concerned with protecting the primary rule of Subsidiary Function, of ensuring the very best possible degree of autonomy for frontline staff. Schumacher calls this The Principle of the Middle Axiom. This highly technical term simply restates the suggestion that managers be certain that colleagues understand the strategy, and are given clear intermediate goals and parameters for his or her work.
Schumacher recognises that “[t]op management in a big organisation inevitably occupies a really difficult position. It carries responsibility for all the things that happens, or fails to occur, throughout the organisation, even though it is much faraway from the actual scene of events.”
There are real pressures and a temptation towards central, hierarchical control over complex, unpredictable situations. “How, then, can top management on the centre work for progress and innovation?”
The Principle of the Middle Axiom is mandatory as a bulwark against managers using control. He states that “being distant from the actual scene of operations, the central management incur the valid criticism that ‘it attempts to run the industry from Headquarters’, sacrificing the necessity for freedom to the necessity for order and losing the creative participation of the people on the lower formations – the very people who find themselves most closely in contact with the actual job.”
In the best terms, the Principle of the Middle Axiom just implies that managers must set out the goals, objectives, methods and rules (the strategy) of the organisation clearly. An axiom is a press release of first principle that doesn’t should be, or indeed can’t be, proven through evidence or argument.
The aim of the organisation is such an axiom. If you would like to change the actual aim of your organization or team, then you definitely are probably within the improper workplace. Nonetheless, while managers may be seen because the guardians of the strategy of the organisation they absolutely must not become involved in day after day decisions. They have to not move beyond the center axiom of setting the aim and scope of a department, programme or project.
Small is Beautiful is best generally known as a manifesto for a recent generation of thinkers, especially economists, who rallied against the sheer scale of the commercial society, the event of world monopolistic firms, and the usage of massive machines to extract value from the natural environment, turning it right into a lifeless wasteland.
Schumacher is obvious that his interest was in appropriateness of scale. The society through which he found himself idolised the big, the economies of scale, and he desired to rejoice the small as an mental counter.
Interestingly, this philosophical approach found specific expression in Schumacher’s organisational science. The tactic was to make the large organisation an aggregation of small organisations. The aim was to make sure freedom for all employees. This had the sensible advantage of supporting high levels of creativity, innovation and motivation across even large organisations.
But there was also for Schumacher also a deep principle at stake. Human freedom is an instantaneous good. The economic advisor to the British National Coal Board knew instinctively that everybody of its 800,000 employees had a right to have probably the most control possible over their very own work, to be fully human relatively than mere tools. While his organisational philosophy was no utopia, it had the potential to be a bulwark against autocracy and micromanagement.
Brendan Montague is editor of The Ecologist. The SMALL IS THE FUTURE event is going down on Saturday, 17 June 2023 on the Paintworks, Bristol. Speakers include Dr Ann Pettifor, Charlie Hertzog Young, Satish Kumar, Professor Herbert Girardet and Gareth Dale. Buy tickets here. If you would like to attend the event but cannot afford a ticket email firstname.lastname@example.org.