In Commonwealth, Michael Hardt and Antonio Negri observe that, because of network communications and radically cheapening production technology, capital accumulation is becoming “increasingly external to the production process.” But rather than working with this trend and exploiting the opportunities it offers, they argue, the Social Democratic approach is “to reintegrate the working class within capital.” That entails “on the one hand, re-creating the mechanisms by which capital can engage, manage, and organize productive forces and, on the other, resurrecting the welfare structures and social mechanisms necessary for capital to guarantee the social reproduction of the working class.”
This was recently confirmed, if further confirmation were needed, by a Michael Lind opinion piece in Salon (“How to beat the libertarians on the economy,” December 1).
Before I proceed to examining the main line of Lind’s argument, let me get one thing out of the way. He starts by claiming that the Right is united around a libertarian economic agenda. “On economics … there is no distinction between conservatism and libertarianism. The mainstream right’s economic vision is libertarian, pure and simple: smaller government, lower taxes, free trade and deregulation.”
Um, no. The GOP agenda favors close collusion between the state and big business. In the Republican, just as in the Democratic, vision, the government’s main functions are to subsidize the operating expenses of big business, to protect it from competition, to forcibly open up foreign markets for its goods and make the world safe for its depredations abroad, to utilize its idle production capacity, and absorb its surplus output. The Republicans package this agenda in the ideological trappings of “free markets,” “free enterprise,” “bootstraps” and “rugged individualism.” The Democrats hide behind Soccer Mom rhetoric about “working families sitting around the kitchen table.”
But the main focus of Lind’s piece is the proper Progressive response to this alleged monolithic libertarian unity of the Right. The center-Left, he says, has for the past century been made up of three competing strands: small producerism, unionism and economic rights. Lind’s sympathies are fully and unambiguously with the last of the three. His solution to the problem of unity on the Left is for the small producerists and unionists to close up shop and adopt the economic rights agenda.
Lind says one thing that’s entirely correct. The economic rights school, since its origins in the Progressive Era, has been promoted mainly by “reformers and intellectuals, based in the educated professional class.” Indeed. The original demographic base was the managerial-professional classes that developed to administer the giant monopoly corporations that came to dominate the economy in the late 19th century, the government agencies that arose to regulate and stabilize the corporate economy, and assorted tertiary civil society organizations (large chartitable foundations and universities) that served the needs of the corporate-state nexus.
The first professional managers of large, multi-unit corporations came from an industrial engineering background. They saw their job as doing for the entire organization what they’d previously done for production on the shop floor: standardizing and rationalizing tools, processes and systems, minimizing variation, etc. Progressivism, in turn, was the ideology of the managers and engineers who administered the large organizations; political action was a matter of applying the same principles they used to rationalize their organizations to society as a whole.
The managerial-professional demographic base of the Progressive movement saw large, centralized, hierarchical institutions with Weberian job descriptions and Taylorist best practices as natural, inevitable, and (if you’ll pardon the phrase) “progressive.” The fortunes of Progressive intellectuals were attached to extending the power of such organizations in the same way that those of the Roman legists and politiques were to the power of the rising absolute monarchs in early modern times.
Lind displays the mindset of this class, and its usually unspoken assumptions about economics and technology, in virtually every sentence of his analysis.
Even his choice of language gives away his assumptions (assumptions which don’t actually bear much scrutiny in light of technological fact); he dismissively qualifies small producerism as “nostalgic,” and refers in patronizing terms to an environmental movement that “romanticizes tiny ‘organic’ farms and urban gardens.”
Lind himself is far more open to the charge of romanticizing the kind of mid-20th century mass-production industrial gigantism celebrated by Schumpeter, Galbraith and Chandler, based more on their appeal to his managerial-professional values than to any genuine understanding of technological history.
His language, in describing small-scale, decentralized production, is consistently loaded. “Small producerism is even more obsolete in the early twenty-first century than it was in the early twentieth.” Self-employment, in that time, has fallen from 25 percent to 7 percent. But the decline in self-employment, he says, is “a sign of progress,” since the predominance of self-employment and small business is something associated with “[p]rimitive Third World economies” (“the backward economies of the global South, with their peasants and peddlers”).
He goes on to state his central assumption (one which he never actually bothers to defend): “Economic progress involves the substitution of machinery for labor — largely by big, capital-intensive firms that can afford expensive equipment and drive out smaller competitors.”
That’s arguably true of the mass-production economy of the mid-20th century — the one described by John Kenneth Galbraith and Alfred Chandler — but it’s not true of the one we live in today. It’s Lind who’s nostalgic for — who romanticizes — an obsolete economic model.
And there’s a strong case to be made that large-scale mass production, even in the mid-20th century, was actually the dominant model only because it had been promoted by the state at the expense of more efficient alternative models. Before the invention of the electric generator and the electric motor, large-scale factory production resulted mostly from the need to economize on power from a prime mover. A mill would be built around a single steam engine or water wheel, with all the machines powered by belts from the drive shaft.
With the invention of the electric motor, an independent prime mover could be built into each individual machine. This meant that it was no longer necessary to economize on power by putting a bunch of big machines in one place. The electric motor could be scaled to the size of the machine, the machine could be scaled to production flow, production could be scaled to demand, and the production site could be located as close as possible to the point of consumption. So the ideal production model, from the standpoint of taking maximum advantage of the unique efficiencies of electrical power, would have been to integrate general-purpose electrical machinery into craft production in local industrial districts. Had the Second Industrial Revolution followed this pattern in America, we’d have had an economy of a hundred Emilia-Romagnas, rather than General Electric and General Motors.
Instead, we got mass production. That meant a model of production based on using extremely expensive, specialized machinery for large-batch production, and running it as close as possible to 24/7 to fully utilize capacity, amortize the enormous capital outlays and minimize unit costs. Large-scale batch-and-queue production to minimize unit costs meant production had to be undertaken without regard to preexisting demand — which meant, in turn, that society had to be organize around finding ways to absorb the output whether people wanted it or not. The result was a society based on mass consumer credit, mass advertising and planned obsolescence. We also got, of necessity, a state actively engaged in finding ways to remedy the chronic crisis of overproduction by soaking up surplus investment capital and consuming whatever portion of industrial output was necessary to avoid idle capacity. The state did this by such expedients as developing a huge civil aviation system and interstate highway system as a sink for surplus capital, promoting the automobile-highway complex and sprawl, and developing a giant Military-Industrial Complex that encompassed most of the industrial economy.
So what went wrong? We didn’t get industrial gigantism because it was more efficient. We got it because of a set of background structural conditions, created by the state, that favored industrial gigantism. First of all, the railroad land grants resulted in a much higher-volume system of national trunk lines than would have otherwise developed. And as Alfred Chandler argued, such a high-volume, high-speed, reliable transportation system on a large scale was absolutely essential to the functioning of nationwide wholesale and retail networks. It was the existence of an organized national wholesale and retail market, in turn, which the first large national industrial corporations piggybacked on. Had it not been for the railroad land grants, the national railroad system would likely have been a patchwork of many smaller, regionally oriented systems linked by a smaller-capacity system of fewer national trunk lines.
And both the industrial tariff and the patent system actively facilitated the formation of large industrial cartels. In particular, many of the first large industrial corporations were created by pooling patents. And manufacturing corporations, in turn, formed oligopoly markets by pooling and exchanging markets. For example, GE and Westinghouse cartelized the consumer appliance industry by exchanging their patents. AT&T originally consolidated as a monopoly based on the Bell patents. And the American chemical industry got its start from the U.S. government’s seizure of German patents in WWI.
Finally, much of the Progressive Era regulatory agenda served the primary purpose of minimizing competition. The Meat Inspection Act and the Pure Food and Drug Act was basically an industry quality code adopted under the aegis of the U.S. government, with the advantage — unlike the adoption of such a code by a private cartel — of eliminating the Prisoner’s Dilemma incentive to defect. By enforcing a unified standard of quality and safety, removed them as issues of cost competition within an industry, and also gave firms within the industry what amounted to a government seal of approval for the export trade. The “unfair competition” clauses of the Clayton and SEC Acts prohibited dumping or selling under cost, effectively outlawing price wars and making stable oligopoly markets possible for the first time. The Progressive Era regulatory state, in short was a case of the capitalists acting through their state, in much the same way Marx described in the case of the Ten-Hour Day Act.
In any case, if the main engine of economic progress was ever the large-scale accumulation of capital by large, capital-intensive firms, that’s not true any longer. The main economic trend of the past generation has been an implosion in the capital outlays required for both material and immaterial production. The desktop computer and Internet made it possible for an individual, at the cost of a few hundred dollars worth of equipment, to produce informational goods that previously required a million-dollar publishing facility or music studio, and to distribute such information without the intermediation of the Associated Press or RCA. The invention, first of cheap CNC machine tools scaled to job shops in Emilia-Romagna and Shenzhen, and then, in the past decade, of open-source CNC tools scaled to a garage, mean a fall of two or three orders of magnitude in the capital outlays required for industrial production.
Lind must have been sleeping under a rock this last thirty years. The declining need for investment capital to produce a given level of output has been one of the central causes of the economic malaise of the past generation. Although 20th century corporate capitalism was always plagued with chronic crises of excess productive capacity and surplus capital without a profitable outlet for investment, it became far worse from the 1970s on. This crisis of surplus capital has been the main reason for the development of the bloated FIRE economy since the ’80s, and the succession of one bubble after another.
For Lind, declining levels of self-employment result from the fact that “many people in developed countries prefer steady wages and benefits at medium-to-large firms to the uncertainties of self-employment.”
The implication is clear: “The American center-left should ask itself how much energy it wants to devote to helping the 7 percent of Americans who are self-employed, rather than the overwhelming number who work for somebody else.”
He never considers the possibility that declining levels of self-employment reflect — much like the predominance of his beloved large, capital-intensive corporations — not so much necessary technological imperatives or spontaneous preferences, as artificial structural conditions. If he did, he might consider addressing the structural conditions that cause an “overwhelming number” to “work for somebody else.”
In fact the technological changes I described above have destroyed whatever material rationale once existed for the wage and factory systems. That rationale, originally, was a technological shift from individually affordable, general-purpose craft tools to extremely expensive, specialized machinery as the dominant means of production. Such machinery could only be afforded by rich people, who hired poor people to work it for them. The revolution in desktop information technology and cheap production machinery is reversing this trend: We’re going back to (a much higher-tech version of) cheap, general-purpose craft tools.
So whatever the reason for the declining level of self-employment, it’s not in the superior efficiency of large-scale, capital-intensive production as such. If anything, it results from the existing corporate power structure, using “intellectual property” and other state-enforced entry barriers, to enclose the new small-scale technologies as a source of rents within the institutional framework of the old system. We have a global economy where most actual production is outsourced to small job-shops, but companies like Nike use patents and trademarks to hold a monopoly on disposing of the product — much like the putting-out system of the 18th century. Absent such legal restrictions, the local makers of Nike shoes could market them directly to the local population at a tiny fraction of the price, rather than putting $2 pairs of shoes into container ships to be marked up to $200 on the shelves at Walmart. And similar garage shops could make consumer goods in the United States in the actual towns where they were consumed.
Lind has a little more sympathy for the labor movement than for the small producers, but not much. He takes the radical decline in union membership, like the decline in self-employment, as simply a given. The possibility that there might be structural causes, or that those causes could be profitably addressed, doesn’t bear looking into.
In fact organized labor’s decline results from employers’ exploiting the structural possibilities created by “Progressive” labor legislation in the first place: The Wagner Act’s business union model, pioneered by Gerard Swope at GE. The Wagner model outlawed all the most effective forms of direct action in the workplace, many of which are described in the old Wobbly pamphlet “How to Fire Your Boss.” Instead, union leadership was coopted into the role of enforcing contracts on the rank-and-file and preventing wildcat strikes, sick-ins and slowdowns. Worker resistance was limited to declared walkout strikes in the period between contracts (one of the most dangerous and least effective forms of direct action), and the formal grievance procedure.
In return, union workers were led to expect periodic pay raises based on productivity, job security against arbitrary firing, and seniority-based promotions. But this could be counted on only so long as management saw working with establishment unions as useful. When corporations turned to a model of systematically busting unions and offshoring production in the late ’60s, labor was powerless to fight back so long as it stuck to the old Wagner model that tied one hand behind its back.
But Lind not only fails to embrace the new possibilities small-scale production technology and network communications offer for labor struggle and economic justice. He puts himself in the position of King Canute, standing on the beach and commanding the tide to halt.
He falls back on the agenda Hardt and Negri describe: “[R]e-creating the mechanisms by which capital can engage, manage, and organize productive forces and … resurrecting the welfare structures and social mechanisms necessary for capital to guarantee the social reproduction of the working class.”
But the mid-20th century model Lind yearns for is doomed, whether he likes it or not. The “intellectual property” monopolies it depends on to enclose the new production technologies within its old institutional framework are becoming unenforceable, and competition from open-source production using those technologies is becoming impossible to suppress. The subsidized inputs the old corporate dinosaurs depend on for their profitability are bankrupting the state, and the resources themselves are reaching their limits in the form of crises like Peak Oil.
The only hope for workers is to work with, not against, the radical possibilities offered by new technology. This means networked, horizontal ways not only of organizing labor struggle against corporate power, but of organizing production itself, and organizing the solidaristic support infrastructure for an economy of networked self-employed producers and cooperatives. The wave of the future is radical unions like OURWalmart and the Coalition of Imolakee Workers, using public pressure, boycotts, embarrassment and humiliation campaigns, and whistleblowing (what the Wobblies call “open mouth sabotage”). It’s temp worker unions on the guild model, and other networked support platforms for pooling risks and costs, providing benefits, obtaining training and certification, and collective bargaining.
All these things capitalize on our advantages, and on the weaknesses of the old managerial hierarchies we’re fighting. They take advantage of the agility of networked organization, the low overhead and efficiency of small-scale production, and the comparative slowness, stupidity and waste of bureaucratic hierarchies. By building a more efficient counter-economy they’re too stupid and slow to suppress, and by those of us still working within the old employment system using a guerrilla-style asymmetric warfare approach to fighting them, we use our efficiency and agility as force multipliers and render their advantage in accumulated capital and size irrelevant.
Lind’s approach, on the contrary, amounts to fighting the enemy on their own terms: Contesting their control of the state through a head-on assault, in a system rigged to maximize the advantages of money and institutional power. In short, Lind’s approach is comparable to Guderian slogging head-on through the Maginot Line, instead of encircling it.
As I wrote some time ago:
Our goal is not to assume leadership of existing institutions, but rather to render them irrelevant. We don’t want to take over the state or change its policies. We want to render its laws unenforceable. We don’t want to take over corporations and make them more “socially responsible.” We want to build a counter-economy of open-source information, neighborhood garage manufacturing, Permaculture, encrypted currency and mutual banks, leaving the corporations to die on the vine along with the state. We do not hope to reform the existing order. We intend to serve as its grave-diggers.
