The Problem
Greece’s economic recovery is concentrated in Athens and Thessaloniki. Regional economies depend on government transfers and seasonal tourism. Local businesses are systematically disadvantaged against chains and multinationals in public procurement. Revenue leaves communities as fast as it arrives.
The bank debt cycle traps municipalities and small businesses alike. Money flows upward and outward. Communities are drained rather than invested in.
The dominant economic thinking says this is inevitable. Scale wins. Bigger is more efficient. Globalisation creates wealth. E.F. Schumacher spent his career proving this thinking wrong.
The Evidence
E.F. Schumacher: Small Is Beautiful
E.F. Schumacher was a German born British economist who served as chief economic adviser to the UK National Coal Board for two decades before publishing “Small is Beautiful: A Study of Economics as if People Mattered” in 1973. The book became one of the most influential economic texts of the twentieth century. The Times Literary Supplement named it among the 100 most influential books published since the Second World War.
Schumacher’s central argument is that modern economics has a fundamental orientation problem. It treats growth as the purpose of economic activity rather than human wellbeing. It measures success by GDP rather than by whether people have meaningful work, strong communities and a sustainable relationship with the natural world. It assumes that bigger organisations, larger scale production and more centralised systems are always more efficient. And it is wrong.
The problem of scale. Schumacher argued that there is an appropriate scale for every economic activity. Some things genuinely benefit from large scale production. Many do not. The assumption that bigger is always better leads to the destruction of local economies, the concentration of wealth, the degradation of work into repetitive meaninglessness and the severing of the connection between production and community.
When a multinational opens a factory in a region, it creates jobs. When it closes the factory because margins improve elsewhere, those jobs vanish instantly. The community has no resilience because it has no ownership. It was a site of production, not an economic community. Schumacher argued for economic structures where the people who do the work own the enterprise, where production serves the community that hosts it, and where economic decisions are made at the level where their consequences are felt.
Appropriate technology. Schumacher coined the concept of intermediate or appropriate technology: tools and methods that are sophisticated enough to be genuinely productive but simple enough to be owned and maintained by the people who use them. The opposite of appropriate technology is the capital intensive, expert dependent system that requires constant external inputs and leaves communities dependent on distant suppliers.
This concept maps directly onto the software craftsmanship dojo model. A laptop, a terminal, Vim, TDD. These are appropriate technologies for software craftsmanship. They do not require expensive infrastructure or corporate licensing. They can be used anywhere. The skills to use them are transferable and owned by the practitioner, not by an employer or a platform.
Buddhist economics. In one of his most famous essays, Schumacher proposed what he called Buddhist economics: an economics that treats work as valuable not only for what it produces but for what it does to the worker. Good work develops the person. Bad work degrades them. An economy should be judged not by its output but by whether it provides opportunities for meaningful, dignified, skill building work.
This is the philosophical foundation of AURIO’s economic programme. We do not measure economic success by GDP growth in Evros. We measure it by whether people have work that develops them, communities that sustain them and an economy that serves them rather than extracting from them.
The Local Multiplier Evidence
The local multiplier effect is one of the most consistently documented phenomena in development economics. Research shows that every euro spent in a locally owned business circulates two to four times within the community before leaving. Every euro spent in a multinational chain leaves immediately. Local businesses generate two to four times more jobs and tax revenue per unit of spending than equivalent chain operations.
Schumacher predicted this. When ownership is local, decisions serve the community. When ownership is remote, decisions serve distant shareholders. The multiplier effect is not a mysterious economic force. It is the predictable consequence of local ownership.
Mondragon: Schumacher’s Vision at Scale
The Mondragon cooperative network in the Basque Country is the living proof of Schumacher’s argument. Founded in 1956 by a Catholic priest, Jose Maria Arizmendiarrieta, it has grown into the largest cooperative network in the world: over 80,000 worker owners across manufacturing, finance, retail and education.
Mondragon demonstrates that worker ownership is not a small scale curiosity. It is a viable structure for a diversified regional economy. Mondragon cooperatives survived the 2008 crisis better than comparable conventional businesses, maintained employment through profit sharing adjustments, and reinvested surpluses locally rather than distributing them to distant shareholders.
The Mondragon model embeds Schumacher’s principles. The people who do the work own the enterprise. Economic decisions are made at the level where consequences are felt. Surpluses serve the community. Scale exists (Mondragon is large) but is governed democratically, not hierarchically.
Local Currencies: Monetary Design as Economic Policy
The Totnes Pound and Bristol Pound local currency experiments in England demonstrated that complementary currencies increase local economic circulation by creating an incentive to spend within the community. A Totnes pound spent locally generates 2.5 pounds of activity in the local economy. At the supermarket, it generates only 1.4 pounds. The money escapes.
Local currencies celebrate place, culture and history. They make the invisible visible: every transaction is a choice about where value flows. Schumacher would have recognised them as appropriate technology applied to money.
Zero Waste: Waste as Resource
San Francisco’s zero waste programme achieved 80% waste diversion through composting incentives and local processing, creating hundreds of local jobs from what was previously an export cost. A garbage collector in San Francisco does not see garbage. He sees paper, glass, resources, food waste for composting. Waste became a local economic input rather than an external expense. Compost returns to farms. The loop closes. The money stays local.
The Deeper Argument
The worst way to support an economy, as the documentary evidence shows, is what most governments do in the name of economic development: spend huge sums to attract or retain multinationals. It is a failure, a proven failure. This is not where the jobs are. It is not where the future is.
Schumacher understood why. A multinational has no loyalty to a place. It has no need to maintain a healthy community or a well functioning society. It optimises for shareholder return. When that optimisation means closing a plant, moving production offshore or replacing workers with automation, the community bears the cost and the corporation captures the benefit.
The alternative is not economic isolation. It is economic democracy. Local ownership. Cooperative structures. Appropriate technology. Production that serves the community that hosts it. Schumacher called this economics as if people mattered. AURIO calls it building where people live.
Companies that grow and go global are very strong at creating dollars. But very few people see the colour. To create more jobs, more wealth for more people, we must increase the density and diversity of local businesses. Every dollar spent locally has two to four times more impact on employment, wealth, taxes and community donations than the same dollar spent at a multinational.
If what we have is people power, we need to use it. That is how to make economic power in our communities and thus strengthen democracy.
References
- Schumacher, E.F. “Small is Beautiful: A Study of Economics as if People Mattered” (1973)
- Schumacher, E.F. “Good Work” (1979)
- Arizmendiarrieta, J.M. writings on Mondragon cooperative philosophy
- Whyte, W.F. and Whyte, K.K. “Making Mondragon: The Growth and Dynamics of the Worker Cooperative Complex” (1991)
- New Economics Foundation, “The Money Trail” (local multiplier research)
- North, P. “Local Money” (2010)