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All work and no play makes Jack a dull boy.
All play and no work makes Jack a mere toy.
Maria Edgeworth, Harry and Lucy Concluded
What is “just right” when it comes to “how to live”? Sarah Bakewell’s book on Montaigne, How to Live, is one good place to look for an answer. There is no single answer that will suffice. We are all different.
My father had a partner named Louie Dufour. I admired Louie in many ways. He was French-Canadian. He appreciated all the good things in life or at least the things that seemed good to me. I once asked him the key to a long and healthy life. “Try a little bit of everything,” he answered, “but not too much. When something is the best it can be, stop. Not trying and overdoing are both fatal.”
Diversification and restraint. Not bad advice. Long after my father died, I decided to retrieve the old floor safe that was still in his house. Retrieving that safe is a story in itself that I’ll save for another time. I needed to open the safe, so I called Louie out of the blue. He must have been well into his 80s by this time (my father was nearly 50 when I was born). Louie answered the phone and did not hesitate to answer in a few seconds. A few turns that way, a few turns this way, hit the right numbers at the stops and voila, the safe opened. He laughed when I expressed amazement at his ability to recollect the combination. Both his mind and his spirit were sharp to the end.
Today the combination would probably be stored in a password protected file accessible to me with a few keystrokes. I wouldn’t have had to call my old friend, ask about his health, reminisce on old times, listen to his latest thoughts on life, and so on. Robots are replacing people and they are, no doubt, far more efficient, even possibly as sexual partners. Knowledge is stored in computers these days, not brains. Brains are fickle, fragile and prone to wander off into unknown territory.
What does this have to do with economics you ask? Stay tuned.
There is a new book taking the business world by storm, a book I was sure I’d dislike: Big is Beautiful: Debunking the Myth of Small Business by Michael Lind and Robert D. Atkinson. I’m one of those ungrateful spoiled Baby Boomers who grew up in the Berkeley Economics Department who was and still is impressed by E. F. Schumacher’s book Small is Beautiful. But, I knew from Charles Darwin that eventually I’d have to read Big is Beautiful for the same reason that children are instructed to eat broccoli.
Charles Darwin used to say that whenever he ran into something that contradicted a conclusion he cherished, he was obliged to write the new finding down within 30 minutes. Otherwise his mind would work to reject the discordant information, much as the body rejects transplants. Man’s natural inclination is to cling to his beliefs, particularly if they are reinforced by recent experience–a flaw in our makeup that bears on what happens during secular bull markets and extended periods of stagnation.
So, I read the book and I made some notes. This is not a book review. If you are looking for that, I recommend: Can Business Of Any Size Be Good. I do have some things I want to say about the book. In some ways what I have to say relates to the advice I got from Louie Dufour all those years ago.
Beauty is truth, truth beauty,—that is all
Ye know on earth, and all ye need to know.
Oliver Sacks writes in Musicophilia about how people with amusia hear a symphony as nothing more than the clattering of pots and pans. Amusia can be either congenital (inborn) or acquired (through injury or other means). It’s the acquired amusia I’m interested in, a diminishment in the capacity for wonderment brought on by something outside us. How is it acquired? Likely in many ways. One possible answer relates to the central thesis in the Big is Beautiful book.
Lind and Atkinson point out the flaws in the anti-big movements over the years using productivity and growth data. They show that the various forms of our megalophobia have been based on elitist self-interest, naïve nostalgia, and a couple of flimsy ‘-isms’, like producer republicanism (the notion that democracy is healthier if dominated by self-employed small producers) and market fundamentalism (the belief that monolopies and oligopolies distort the market and hurt consumers).
Their case is compelling—if productivity is your only God. Productivity monotheism might be fine for economists and the policy makers who love them, but a single-minded focus on how much companies produce per employee can have devastating effects on individuals, communities, societies, and our planet. Can Business Of Any Size Be Good, Christine Bader
To be fair to economists, they’ve known this all along or they should have. Take this famous statement by Adam Smith in The Wealth of Nations:
“The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. The torpor of his mind renders him not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgement concerning many even of the ordinary duties of private life… But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it.” Adam Smith
The same Charles Darwin whose advice encouraged me to read Big is Beautiful wrote about how something similar to acquired amusia happened to him:
“Up to the age of thirty, or beyond it, poetry of many kinds…gave me great pleasure, and even as a schoolboy I took intense delight in Shakespeare, especially in the historical plays. I have also said that formerly pictures gave me considerable, and music very great, delight. But now for many years I cannot endure to read a line of poetry: I have tried lately to read Shakespeare, and found it so intolerably dull that it nauseated me. I have also lost almost any taste for pictures or music…My mind seems to have become a kind of machine for grinding general laws out of large collections of fact, but why this should have caused the atrophy of that part of the brain alone, on which the higher tastes depend, I cannot conceive…The loss of these tastes is a loss of happiness, and may possibly be injurious to the intellect, and more probably to the moral character, by enfeebling the emotional part of our nature.” Charles Darwin
Big is not inherently bad, but is it beautiful? Small may be beautiful but is it enough? Should we strive to be “dull boys” or “mere toys?” I think Louie Dufour’s model of diversification with restraint applies here.
Karl Marx, no friend of capitalism which he thought (incorrectly) to be self-destructive and temporary, admitted the advantages of productivity and growth and praised the urban life they led to:
The bourgeoisie has subjected the country to the rule of the towns. It has created enormous cities, has greatly increased the urban population as compared with the rural, and has thus rescued a considerable part of the population from the idiocy of rural life. (Marx and Engels, Communist Manifesto)
In Oaxaca where I’m currently visiting and where the mezcal flows free and clear, they say “Para todo mal, mezcal; para todo bien, tambien.” They take their mezcal seriously here. There has been much talk and concern here about mergers and acquisitions in the mezcal industry. The wonderful and useful mezcal blog, Mezcalistas, discusses some typical concerns and benefits of concentration that relate to this discussion on bigness and smallness:
I, like much of the <small> mezcal community was concerned when I read the news of the acquisition [Del Maguey by Pernod Ricard], which was not so much of a surprise given how rumors fly through the category, but instead a somewhat scary validation that everything about mezcal was going to change. There is this almost rampant feeling of ownership that underlies the mezcal community here in the US that plays out in several ways – from the owners of brands, to those of us who “discovered” it and want to keep it as we remember it from our first trip to Oaxaca, to preserving our ideas of the small producer. It is hard letting go of those feelings in this changing landscape …
One worry is whether the special qualities of small producer mezcal can be sized up? [They can’t IMHO.] But wait. Why can’t we have both as we do in the wine industry, small boutique producers that cater to those who can appreciate and afford them and bulk producers for the rest of us?
Mezcalista points to the two sides of the coin:
At this point in time, Del Maguey was taking a lot of heat about its deal with Pernod Ricard, with concerns that they (Ron) were leaving their small producers behind and pocketing the millions from the deal themselves. But talk to any of the employees at the bodega, or even residents in Teotitlan del Valle, and you get a more rounded perspective. After all, the company was responsible for getting cell phone and internet service for the community, as well as helping initiate a community health center. It is easy to dismiss these as self serving, but it is important to remember how difficult it is for these communities to access the capital to do these projects on their own.
Big, if not beautiful, is convenient and useful in ways that sometimes outweigh the downside. But, there is a downside and usually your heart guides you in the right direction.
The heart has its reasons, which reason does not know. Pascal
Reason is and ought only to be the slave of the passions. David Hume
To be specific, the multinational beverage company Diageo recently purchased George Clooney’s tequila company for a cool $1 billion. They also bought Pierde Almas mezcal and, as discussed above, Pernod Ricard partnered with Del Maguey. Del Maguey was the first to promote single village mezcal and market it in the United States. Bacardi’s acquisition last year of a minority stake in Ilegal Mezcal was the first in a series of such changes that will continue. Growth and productivity have their place as Atkinson and Lind document so carefully in their book.
Atkinson and Lind refer often to the Austrian-American economist Joseph Schumpeter. Schumpeter is known today mostly for his famous phrase “creative destruction,” a concept he used to describe the give and take process of economic innovation and growth. However, his contributions to economics consist of far more than the idea of creative destruction. They include his monumental A History of Economic Analysis composed with the economic historian (and Schumpeter’s wife) Elizabeth Boody. Schumpeter had reservations about the Big is Beautiful theme that Atkinson and Lin don’t explore. He worried about the potential detrimental impacts of overweighting business matters on the mind and soul of man much like Darwin.
“The capitalist process rationalizes behavior and ideas and by doing so chases from our minds, along with metaphysical belief, mystic and romantic ideas of all sorts. Thus it reshapes not only our methods of attaining our ends but also these ultimate ends themselves…”
“One may care less for the efficiency of the capitalist process in producing economic and cultural values than for the kind of human beings that it turns out and then leaves to their own devices, free to make a mess of their lives.” Schumpeter, Capitalism, Socialism, and Democracy
[I am indebted to Oshan Jarow for many quotes and observations: Capitalism’s Metaphysical Erosion: The Contemplative Solution.]
So, where does this bring us?
For what shall it profit a man, if he shall gain the whole world, and lose his own soul? Mark 8:36
Where indeed? Big, small, beautiful—this whole discussion reminds me of something I read long ago. I don’t remember where or by whom but I do recall the story. A young American from Texas was traveling by train through the English countryside. A proud Englishman next to him was pointing out all the beautiful pastoral scenes as the train rushed by. Finally, in exasperation, the young Texan said: “You know, you could put all of this England into a small corner of Texas.” The Englishman thought for a moment and then responded: “That’s so I guess, but to what purpose young man, to what purpose?”
Kenny Chesney, John Mellencamp
Well I was born in a small town
And I live in a small town
Probably die in a small town
Oh, those small communities
All my friends are so small town
My parents live in the same small town
My job is so small town
Provides little opportunity
Educated in a small town
Taught the fear of Jesus in a small town
Used to daydream in that small town
Another boring romantic that’s me
But I’ve seen it all in a small town
Had myself a ball in a small town
Married an L.A. doll and brought her to this small town
Now she’s small town just like me
No I cannot forget where it is that I come from
I cannot forget the people who love me
Yeah, I can be myself here in this small town
And people let me be just what I want to be
Got nothing against a big town
Still hayseed enough to say
Look who’s in the big town
But my bed is in a small town
Oh, and that’s good enough for me
Well I was born in a small town
And I can breathe in a small town
Gonna die in this small town
And that’s probably where they’ll bury me