New Wine in Old Bottles

Big is not beautiful when it comes to economics. This is the key message of Kevin Carson’s “Industrial Policy: New Wine in Old Bottles“. His essay makes compelling arguments in favour of an anarchist society based on small-scale community manufacturing, peer-to-peer production and decentralised production. Carson sets out the ways in which the state concentrates economic power in the hands of inefficient corporations, before providing real-world evidence that better alternatives to the current state-capitalist system exist.

These alternatives are – in part – enabled by recent innovations in disruptive technology. The most visible of these are online: open-source software, crowdsourced funding, cryptocurrencies, and torrenting to name a few examples. In the digital world, ‘intellectual property’ laws are becoming ever more unenforceable, meaning that economic power is slowly being siphoned away from those who would use state violence to charge extortionate rents in the virtual realm. Bitcoin’s potential for anonymity holds the promise of a user-friendly, stateless currency that will further galvanise the informal sectors of economies across the world. The growing popularity of crowdsourcing initiatives such as Kickstarter continues to hurt oligopolistic capital providers (e.g. commercial banks and venture capital funds). Eschewing traditional means of accruing capital, entrepreneurs can now enjoy lower costs and higher autonomy by aggregating dispersed capital. Quoting Eric Hunting, Carson highlights how conditions in the technology sector are creating pressures for “modularization around common architectural platforms in order to compartmentalize and distribute development cost risks”. We can already see this manifesting online with the rise of Ethereum, which provides the “common architectural platform” for developers to build and publish decentralised applications. There is a world of possibility in disruptive technology, with ideas for decentralisation waiting in the minds of an increasingly anti-state, tech-savvy generation.

This modularization is not confined to the digital realm. In fact, physical manufacturing is the main focus of Carson’s work. Citing the unsustainability of the Sloanist industrial model – which fetishizes “enormous market areas and costly, product-specific machinery” – he demonstrates the superiority of localised production. Emilia-Romanga (a prosperous region of Italy) is used as a case-study for community-based supply chains, small-scale general purpose machinery and a style of manufacturing that is far more responsive to local demand. The advantages of local production, especially in an anarchist society, are made clear. Less intermediary steps in the chain of production give regions more resilience to economic downturns, whilst workers’ bargaining power is improved as wage labour becomes an optional supplement to the income of self-sufficient households. Thanks to “the rapid growth of technologies for home production”, we stand in a far more powerful position when negotiating a fair wage for our labour:

The knowledge that you are debt-free and own your living space free and clear, and that you could keep a roof over your head and food on the table without wage labor indefinitely, if you had to, has an incalculable effect on your bargaining power here and now…

Carson addresses the objection that the downfall of big business would result in a less prosperous society. He berates the ineptitude of the corporate economy, which has only ballooned to such a degree with the assistance of government privileges. The state subsidises inefficiency on a grand scale, creating “a business model based on extensive additions of inputs” rather than more efficient use of existing resources. Community workshops are one example of moving from “ending” to “mending”, which reduce waste and disperse economic power through utilising the spare capacity of community capital. Letting the market determine distribution and marketing expenditure would also encourage a more localised industrial model; if transportation subsidises were scrapped, the resultant increase in distribution costs would shift production to cater for local markets, and consequently reduce the need for marketing. As unit costs fall, so do prices.

Of course, small-scale production is not always feasible. Though there are rare cases in which “economies of large-scale machine production exist”, Austrian competition theory tells us that such concentrations of economic power are dynamic. Without the state to entrench them, they are of benefit only so long as they benefit the consumer. In the end, “most of the economies of machine production are captured with the bare adoption of the machinery itself”. One hopes that in the future, this will take place with the 3D printer (a paradigmatic example of household production), and replication will take place at a small-scale or even household level.

The tone of Carson’s study is optimistic, and with justification. Disruptive technology and the rise of the informal sector is robbing the state of the funds needed to keep Big Energy, Big Transport and Big Business afloat. Intellectual property is dying a slow, painful death. But we cannot rest on our laurels. Making the mistake of the Marxists and confidently predicting the inevitable transition to anarchy would be a great folly. The market does not simply move towards the society that Carson envisions, and real decentralising technologies need to be invented by real people. Bitcoin, Airbnb and Uber did not just appear out of thin air! Subsidies, licencing laws and intellectual property require a concerted push into the dustbin of history. Reading Carson’s work, the most important insight I gained was that market anarchists must take concrete action to bring about a healthy stateless society.

Free Markets & Capitalism?
Markets Not Capitalism
Organization Theory
Conscience of an Anarchist