The issue of retrenchment as an organizational adaptation to changing conditions is discussed here in relation to four interrelated policy questions: What is the economic future of schooling? What economic assumptions underlie the institutional model of school organization? How could economics be interpreted in terms of a human investment model of school organization? What guidelines for organizational retrenchment are suggested by the two models? The speaker differentiates between the institutional perspective and the human investment perspective of economics as they affect the meaning of educational organization and future retrenchment. He contends that it probably is not possible to make universal judgments of appropriate action when two opposing perspectives must be considered. Rather, philosophies and methodologies for logically determining "appropriateness" in the formulation of social policy are, and will be, a striving based on faith. (Author/JM)