Economic Development Without the State
Posted by Kevin Carson on Aug 19, 2010 in Commentary • 16 commentsAmerican political debate has recently centered on manufacturers that relocate overseas and “abandon” American workers — and the alleged need for government to stop them from doing it. But maybe we need to figure out a way to abandon the corporate employers, instead.
Conventional community economic development policy — this is equally true of Chambers of Commerce, state industrial development commissions, and World Bank technocrats — starts from the assumption that the path to economic development is colonization: Get a giant corporation to set up an outpost in your community and provide a lot of jobs (preferably with government seed money to lure them in).
The rationale was simple: For a couple of centuries, the propertied classes’ privileged access to big piles of capital and millions of acres of stolen land made them a chokepoint on economic development.
But technological developments in recent years — the desktop/Internet revolution in the information sphere, and the revolution in cheap digitally controlled machine tools in manufacturing — are freeing us from this dependence.
The main material reason for the factory system and predominance of wage labor was the technological shift a couple hundred years ago from relatively inexpensive, general-purpose artisan tools to expensive machinery. Only the very rich could afford the machinery required for production, and they then hired wage laborers to operate it.
The computer revolution, and the revolution in cheap garage-scale machine tools, have reversed this shift. The computer is a cheap, general-purpose artisan tool that destroys the quality gap between what a person can produce at work and what he can produce at home, in a whole range of industries: Software, recording, and desktop publishing among them.
And now cheap digital machine tools mean the same thing for manufacturing. Open-source hardware hackers have cooked up homebrew versions of CNC routers, cutting tables, milling machines, lathes, 3-D printers, etc., that cost one or two thousand dollars (or less) to build — compared to tens of thousands for commercial, proprietary digital tools, and millions for a factory equipped with old-style mass production machinery.
A garage “factory” with $10k worth of homebrew machinery can do most of what used to require a million-dollar factory. And with a network of open-source hardware designers, it can design its own products, and produce “lean” style: Producing in small batches and switching back and forth between lots of different products as the orders come in, and gearing production to a local/neighborhood market. That means low overhead, no inventory, drastically reduced shipping costs, and no mass-marketing costs.
In a lot of manufactured products, a major portion of price is either brand-name markup or embedded rents on patent and copyright, rather than labor and material cost (Tom Peters crowed, in The Tom Peters Seminar, that 90% of his new Minolta’s price was “intellect”). Competition will strip out that part of price (along with the portion of your work hours that go toward earning money to pay tribute to the owners of artificial property rights).
It helps that relocalizing manufacturing to “a hundred thousand garages” essentially makes proprietary designs unenforceable. The costs of industrial patents are such that they only pay for themselves if you produce in large batches, and enforcement costs are minimized by the fact that a handful of oligopoly firms distribute their products through a handful of corporate retail chains. When thousands of garage factories are producing knockoffs or riffing off of proprietary designs, in small batches at the neighborhood level, the costs of enforcement will destroy the patent regime.
Patents are also the main legal support to planned obsolescence, as well as to the whole model of price-gouging on parts and accessories (e.g. cheap phones and expensive service plans, cheap printers and expensive toners, etc.). With no patent restrictions on competition, there would be no legal barrier to competitors producing generic modular accessories and spare parts for other companies’ platforms. So the competitive pressure would be toward developing products that were compatible with other companies’ stuff and easy to repair by simply replacing one modular component — instead of designing products that only work with your own marked-up accessories, and can’t be fixed without throwing the whole thing away.
And all this renders the conventional strategy for community economic development totally obsolete. A low-capital, low-overhead approach to development is an enormous force multiplier for the community’s own resources. When the capital outlay for building a factory to produce everything you need falls a hundredfold, the propertied classes’ longstanding advantage in access to land and capital is completely nullified — communities can bootstrap local economies, starting with almost nothing, without begging a Daddy Warbucks for help.
So maybe this is the beginning of a shift away from the idea of “jobs,” and back to work as something working people do for ourselves and for exchange with each other.
C4SS (c4ss.org) Research Associate Kevin Carson is a contemporary mutualist author and individualist anarchist whose written work includes Studies in Mutualist Political Economy, Organization Theory: A Libertarian Perspective, and The Homebrew Industrial Revolution: A Low-Overhead Manifesto, all of which are freely available online. Carson has also written for such print publications as The Freeman: Ideas on Liberty and a variety of internet-based journals and blogs, including Just Things, The Art of the Possible, the P2P Foundation and his own Mutualist Blog.
>The main material reason for the factory system and the predominance of wage labor was the technological shift a couple hundred years ago from relatively inexpensive, general-purpose artisan tools to expensive machinery. Only the very rich could afford the machinery required for production, and they then hired wage laborers to work it.
I'd love it if there was a brief aside on how the Enclosures and Tucker's categories of monopoly relate to the creation of this situation. Without this, it almost sounds like the specific way the Industrial Revolution happened was historically necessary to get to a technologically advanced society.
Aside from that I really like this article and the case you make for a decentralized way out of existing capitalism.
Thanks, Darian. I agree that it would be nice to add some nuance (material from Mumford, etc.) indicating that the actual form taken by industrialization wasn't the result of pure technological determinism. But 800 words is pretty much the upper limit to get this stuff syndicated by newspapers.
The term colonization as applied to local development is spot on.
it also seems to mimic outsourcing in that the local government usually paves the way for the colonizer through tax breaks, loans, special conditions and even direct subsidies or land donations.
i was talking to a friend about the whole industrial garage concept and hundred dollar [with $15 production costs] athletic shoes. it seems the oppurtunity is there and it is only a matter of time. it already seems to be occurring in specialty items.
I like to use the trader/merchant example of economic development without much State backing.
Trappers in the west usually mingled well with Indians. They traded technologies with them, intermarried, learned each others languages.
Then the State comes along and just wipes out the Natives.
Combining cultures, societies, technologies, and genes is always preferable to xenophobic and oppressive behaviors such as genocide or segregation.
Brazil WILL be a power player on in the modern global game and I believe part of this reason, asides from having ample natural resources, is that Brazil, while still segregated, has embraced their diversity relative to many other countries.
This works on a genetic level, through heterozygous organisms being more resistant to disease and more reproductively successful, and on a cultural and memetic level.
Had we intermingled with the Native Americans rather than wiping them out, perhaps we would have 'absorbed what is useful' as Bruce Lee espoused, and become a better, healthier society as a result.
This is all very well and good, but it assumes that the products created in a homebrew garage are just as good as what comes from a specially-tailored manufacturing plant. I really don't see any reason to think that generalists would be as good as specialists, whether you mean machines or people. The result is that you spend the time you spent in wage slavery in repair slavery, and you've gained nothing. I remember spending Saturdays at the TV repair shop as a boy in the early 80s, and it sure as hell didn't feel like a liberating blow against corporate capitalism. By contrast, my mother bought a large TV in 1994 and replaced it in 2009 without spending a dime on repairs.
You've also got the repair parts idea wrong. Repair instead of replace isn't a function of intellectual property, it's a function of labor costs. It's cheaper to have a Third World laborer assemble a new phone than to pay a First World worker to repair it. Drop the software chip protection – it functions like a patent but isn't called one as such – and it's still cheaper to have a Third Worlder assemble a new one and ship it here than to have someone at Big Box Electronix disassemble and reassemble it for $12.50/hr. plus bennies and 401(k).
While it's true that web publishing, music recording, small scale manufacturing and other industries may be done via small organizations or even individuals, it is hard to foresee certain industries and services, e.g., web searching, mobile phone services, social networking, not being provided by large institutions. The only current counterexample I can think of is plentyofish.com, but I attribute that to the founder being unusually adept both technically and marketing-wise. Yahoo, eBay, Google, were started by one or two individuals, but nowadays it seems nearly impossible for that to be repeated.
"Drop the software chip protection – it functions like a patent but isn’t called one as such – and it’s still cheaper to have a Third Worlder assemble a new one and ship it here than to have someone at Big Box Electronix disassemble and reassemble it for $12.50/hr. plus bennies and 401(k)."
Ah, people who use present conditions to indict revolutionary possibilities that would yield a completely different world, they just make my day.
Also, the early 1980s are not particularly know as an age of DIY open-source manufacture. Sure it was difficult to repair stuff then, it still is. That's the system we're trying to change.
Assembling a software chip by a Third Worlder? I think you are confusing chips (ICs, integrated circuits) with larger circuits such as PCs, laptops, mobile phones, etc. ICs are fabricated (see http://en.wikipedia.org/wiki/Semiconductor_device…. And this again is a process or industry that is hard to envision as being done in a small scale. Someone may be able to design ASICs (application-specific ICs) and have it produced in a foundry (semiconductor fabrication plant) in some quantity, but you still need the people, expertise and resources of an Intel or AMD to design a Core i5, a Phenom or a GPU.
What about the sewing machine?
I'm excited about this potential for open source manufacturing, but I wonder is access to machines is really a big factor in making it happen. Take the clothing industry for example — most Americans can buy a sewing machine, but very few Americans make their own clothes. In fact, I've seen plenty of unused/rarely-used sewing machines sitting around American homes, so even after people commit their capital to the purchase of this machine, they still don't make their own clothes.
I can only speculate about the factors that cause clothing to be produced in a mass-market structure. First, as mentioned above, it could be the wage disparity between America and the places where clothing is made: Americans find it easier to buy clothes than to make them, the logistical and marketing problems associated with intercontinental trade create organizational bottlenecks, and of course, the workers there cannot afford their own sewing machines. Second, it could be that large factories really do have intrinsic efficiencies relative to the small shop — my understanding is that even when a lot of clothing was made in the USA, it was made in factories (even today, with American Apparel, for example). Third, there could just be a cultural preference for brand-name/commercial clothing. This may be a specials situation for clothes since they are such overt status symbols. It also might be easier to change this preference if more products than just clothing can be home-made, thereby undermining the general dominance of branding in our culture.
Re: Joe. I think that social networking services can be provided in a federated framework similar to email. Google Wave showed that this was technically possible, though perhaps that system's failure was due in part to the lack of structure for the user interface, and it may be hard to create a system that provides the user with sufficient structure to make adoption easy, yet is flexible enough to run in a truly decentralized manner.
I know that Mr. Carson can speak for himself, but a lot of issues in the comments are covered in depth in Homebrew Industrial Revolution.
Just a handful of points:
- Open source design+social networking=unlimited product customization
- Small shops (textile, machine, wood, etc.) have superior flexibility for setup/changeover of production
- Absence of push marketing, corporate hierarchy, long-distance transportation, warehousing, etc. gives smaller shops an labor/overhead advantage
The economies of scale that corporate behemoths enjoy are brought about through state intervention in the form of subsidies, tax-supported infrastructure, public education, intellectual property laws, etc., etc.
Once a network of small-scale design/production/distribution facilities is established, most of our everyday physical and aesthetic needs can be met on a local or regional basis. The resultant synergy of creativity, flexibility and personal empowerment will allow larger-scale cooperative efforts to serve the most specialized goals ( e.g. high-tech medical care, space exploration).
Josh: But as Pat suggests, the efficiency advantages of rapid changeover with g-p machinery (demand-pull, low inventory, etc.) may outweigh the unit cost advantages of product-specific machinery. And those advantages are in fact the reason for the Emilia-Romagna model.
As for ease of repair, a good concrete example is the iPhone, as recounted in Julian Sanchez's "Dammit, Apple!" The folks at the "genius bar" wanted him to replace a $300 phone with a stuck key. Instead, despite a blobject casing deliberately designed to thwart opening up, he fiddled around for fifteen minutes with a multitool and unstuck the key. Something as simple as different screwheads would have made it easy to do in just a couple minutes.
Joe: As ricketson says, things that do require large organization can be done through federation/networking.
the beginning of the end of oil may be the beginning of the transformation away from centralized production.
other things will have a deciding effect, such as whether the grid gets revamped, dams maintained,hiways, etc.
if the numbers go too much the other way on the capital end and things get even more extreme than they are now, with even more trillions sitting around with nowhere to go, people will search and find alternatives.
if the planners can keep the current system together, then people will keep pushing their carts after the carrot.
basically, I am just restating what pat said above. if the status quo can be maintained, it will be an uphill battle. but any glitch in the system is an oppurtunity.
I think the automobile industry provides good examples of possibilities for decentralized manufacture.
The kit car industry, while small, might become more viable if major auto wasn't subsidized. Kit cars are composed of parts from various companies, and assembled at home, customized to consumer specifications.
Also, the after market part industry. Certain makes and models of vehicle have been so popular, even after manufacture has ceased, that a whole industry of small companies have sprouted up to provide for the demand. For instance, one can build a 67 Chevy Nova from the ground up with after market parts. The patents on these cars have run out, but demand has remained.
I think that in a way, when everything is homogenized to a certain extent, real innovation takes place. Without forced obsolescence, certain products will dominate the market. The 350 Chevy engine will always be popular (even after we transition to electric cars).
Take away forced obsolescence AND partents, and we will have a core to work from and customize to our whims and fancies. The 350 Chevy is just a great engine. If Chevy had opened the design early on, there would be many more of them on the road, with more add ons and customizable parts.
Instead, Chevy decided to make new engines that were less reliable and less well built. They did so not because the 350 was obsolete, but because their company couldn't profit from it any more.
With electric cars, there will probably be a core design that is great. Instead of totally re doing the design to make it better, it will be a step by step process that will retain that core. Everyone will be driving cars that are from the same family, like everyone carries genes from the same family. This will help innovation, and also create MORE individuality. Africans and Caucasians are more similar in genes than are two groups or tribes of Chimps in the Congo. Yet we LOOK more different. We are more customized.
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@Joe "but you still need the people, expertise and resources of an Intel or AMD to design a Core i5, a Phenom or a GPU." -no, this is not true. The 8-core, 64-way threaded Sparc T2 is arguably more powerful than an i5, Phenom, or your average GPU, but the design is opensourced: http://www.opensparc.net
Of course fabrication is another story…