.comment-link {margin-left:.6em;}

Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

My Photo
Location: Northwest Arkansas, United States

Thursday, February 26, 2009

The Long Emergency, S.M. Stirling, and the Transition to a Relocalized Manufacturing Economy

Generally speaking, I believe most of the building blocks of an alternative, decentralized and less energy-guzzling economy are already out there and ready to adopt. As Amory Lovins et al argued in Natural Capitalism, the main thing holding it back is cultural inertia and path dependency. When energy prices get high enough, they'll overcome that inertia. And according to Lovins et al, just the low-hanging fruit (things like replacing trucks with trains, cogenerating power from industrial waste heat, etc.) could easily eliminate more than half our current fossil fuel consumption.

On a more radical level, the building blocks are already out there for local, small-scale manufacturing economies, as well as the prerequisites for shifting a considerable portion of production to the household or neighborhood barter economy. As little known as they are, I expect skyrocketing energy prices and a collapse of much of the wage economy to make it a lot easier for those currently involved with such technologies to promote them. For example, almost nobody in the conventional building industry displays any awareness of passive solar cooling (i. e., cooling air by running intake pipes several feet underground). But some people, scattered around the country, do have it even now. And when the cost of air conditioning a conventional tract house rises to $300 a month, I expect a guy whose house is cooled for $0 a month to generate some hellacious word of mouth in surrounding neighborhoods.

Along the same lines, multimachines (cheap, multiple-purpose machine tools suitable for desktop production--if you've got a fairly big desk), however poorly known to the public at large, are out there. And they can be used to replicate themselves using local supplies of scrap metal. So the knowledge is out there, and will almost certainly spread at least into immediately surrounding pockets of population as their usefulness is demonstrated. Ditto for the demo projects at Open Source Ecology's Factor E Farm.

Sheer necessity is apt to generate a great deal of selective pressure for the identification and rapid expansion of “best practices.” However gradually the new technology spreads, we can expect it to follow the example of the mustard seed in the long run.

As I've also argued elsewhere, I expect small machine shops and backyard hobby shops to become the basis of a localized industrial economy, under pressure of necessity, when the supply chains of the centralized corporate industrial economy collapse.

S. M. Stirling's treatment of manufacturing issues in Island in the Sea of Time is extremely interesting in this regard. It's the first volume of his Nantucket trilogy, which begins with an unexplained “Event”: the transportation of the entire island of Nantucket, with all its present-day buildings and inhabitants, to the world of 1250 BC. The series recounts Nantucket's attempts to survive in the late Bronze Age—among other things, rebuilding a local industrial economy given only the on-island resources that made the transition, and the resources that can be obtained by trade in a Bronze Age world.

The core of Nantucket's reconstituted industrial economy is a basement machine shop owned by Patrick Leaton, a sort of shop-geek hobbyist, under the glorified name of Seahaven Engineering. I quote from Leaton's remarks to the Town Meeting on the resources on-hand, immediately after the Event:

Oh, I can work up anything you want,” he said. “Give me power and bar stock or sheet steel. The problem is there's only one of me. I can do anything, but not everything.

That was a problem. Nantucket simply didn't have much industry. Seahaven was a one-man quasi-hobby; most of Leaton's living had come from his computer dealership, with the machine shop in his basement. At that, it was the sole and singular metalworking facility on the island, unless you counted the high school shop classes and the Eagle's [a Coast Guard vessel that made the transition] onboard machine shop.

Cofflin [chief selectman/town manager] pressed his fingers to his forehead. “Let's look at it this way. What have you got, what can it do, and what can you do to do more of it?”

Ah...” Leaton frowned. “Well, I've got a 1956-type Bridgeport milling machine, with digital controls added on, an old Atlas twelve-by-thirty-six engine lathe, an Atlas horizontal milling machine, a seven-inch Ammco shaper, and I just got in a Schaublin eight-by-eighteen precision tool making lathe, a real beauty—Swiss. All light-to-medium stuff. There may be more on-island. I'll start looking.”

The head of the Nantucket Electric Company cut in. “You made those flanges for us, and some other fairly heavy work. The turbocharger, for instance.”

Yup, but I sort of cheated—used the Bridgeport as a verticle lathe with a rotary table.” He looked around. “Forty-eight inches by twenty-nine, machined out of solid five-eighths plate—”

Cofflin cleared his throat. Leaton flushed and continued:

Bottom line, Chief, is that I could make just about anything, including more tools; a lathe is one of the few tools that can make a copy of itself. It'll be a little awkward without a foundry, but I could make a round bar bed lathe, the Unimat type; it'll work perfectly well, just not as durable as a cast or forged bed. I'm making a tool cutter of my own right now, or was before this all happened.”

Excuse me,” Arnstein cut in. “You're saying that eventually you could duplicate your operation, and then duplicate it again, and so forth? And that you can do pretty well any metal shape?”

Yup,” Leaton said, obviously puzzled. “Give me the metal, and yes. Wasn't that what I was saying?”

You could make, for example, a steam engine?”

Well, I do that all the time—little ones, and they're working scale models. I've got machinery that can work to ten-thousandths of an inch, and Watt did it with tolerances of an eighth of an inch. I've got a nice set of Weber measuring-gauge blocks, after all. I could turn out, say, a twenty-five horsepower model in a week, maybe convert an old VW flat-type engine. Need a welder to help me with the boiler.. maybe use a propane tank... but hell, we've got a half a dozen top-notch welders and some heaving bending rolls. Bit difficult to make really big cylinders without a foundry or casting plant, but I could if you gave me a month or two to tool up. Up to a couple of hundred horsepower. But we don't have the fuel for many of those. Hell, we can't even keep the town power plant running for more than six months, no matter how we ration....”

There are also, thanks to Nantucket's craft economy, some authentic blacksmiths with small-scale iron smelting facilities, as well as pottery-makers and a glassblower. The economic conversion is aided by some marginal wind and photovoltaic generating capacity, along with some emergency backup generators and assorted fuel reserve tanks around the island. Given the replicability of his machinery, and given the feasibility of creating alternative means of generating the power to run it, Leaton has the initial traction he needs to begin building a sustainable industrial economy.

To repeat, something similar (with resources pooled along the lines Karl Hess and Colin Ward suggested with their neighborhood shops and Kirk Sale with his local repair/recycling/remanufacture facilities) is likely to be the basis of a local manufacturing economy when the supply chains of replacement parts from Whirlpool and GE dry up. Given such a distributed local manufacturing economy built from a base of small machine shops and hobbyist workshops, coupled with microenterprises (bakeries, day care centers, cab services, market gardens, microbreweries, etc.) run out of people's homes using their ordinary household capital equipment, and with liquidity provided by LETS systems if and when the present currency system collapses, I believe thriving local economies will expand to fill the gap pretty quickly under pressure of necessity.

One thing that will help the transition will be if the U.S. government, state governments, and other "hollowed out states" lack the capability of enforcing bank ownership of paper on mortgages in default, and we can transition as the banks collapse to a default system of ownership based on current possession. That, and no last-ditch effort at large-scale police statism to enforce the Digital Millennium Copyright Act and suchlike at the national level, or zoning restrictions on home-based microenterprises, neighborhood bazaars and workshops, etc. at the local level.

Even when collapses have been catastrophic, as in Argentina early in the decade, people have been extremely resilient and creative in finding ways to make things work in the face of necessity. Stirling's fictional account of the emergency construction of Nantucket's manufacturing economy assumed a sudden and catastrophic disappearance of all non-local inputs. That's a worst-case scenario, extremely unlikely.

If there were such a catastrophic event, the lesson of Stirling's account seems to be that there are a lot of small machine shops, high school metal shops, etc., all over America and the rest of the industrialized world, along with enough alternative energy and emergency backup power to take up the slack of converting such shops to off-the-grid power. Even if national and global supply chains completely shut down, no particular community would be left in the radical isolation of Stirling's Nantucket. So given the existing, widely distributed facilities that could be expanded into local manufacturing bases, it's a safe bet that some sort of decentralized manufacturing economy would survive the transition even in the worst case.

For what it's worth, I expect the collapse to be a long one (a "long emergency") taking from one to two decades, so there will be no catastrophic collapse and sudden vacuum to fill. So Stirling's scenario can be taken as a sort of a fortiori argument for the feasibility of reconstituting some sort of localized manufacturing economy over the course of a longer and more controlled crash. In that event, we are likely at the very least to have time for a learning curve like that Cuba had building an economy of neighborhood market gardeners to fill the gap when Soviet-bloc petrochemicals were cut off (applied by way of analogy to the learning curve for expanding small machine shops and backyard hobby shops into a local manufacturing base).


Anonymous Anonymous said...

'For what it's worth, I expect the collapse to be a long one (a "long emergency") taking from one to two decades, so there will be no catastrophic collapse and sudden vacuum to fill'.

Some important caveats:-

- While there might be no single catastrophe for the whole collapse, there probably will be many localised sudden breaks. It's like the way a gradual accumulation of snow on a roof or the gradual decay of structural supports can suddenly break the rest, as you get a runaway cascade or domino effect from each small break throwing too much load on the next support. Think avalanche, or last straw breaking the camel's back.

- This can show up as one single major dividing event that you can see with hindsight, like the barbarians suddenly flooding into the Roman Empire in the early 5th century AD. Try reading Alfred Duggan's "The Little Caesars", particularly his introductory material, where he brings this out.

It all depends on the degree of interdependency that has been built up.

By the way, be careful using Stirling as an exemplar. He is one of a self-selected breed that can best be described as "self-hating Canadians", who embrace distinct US values in a way that makes them take on a lot of the flaws calling those good.

February 27, 2009 5:02 PM  
Anonymous Anonymous said...

The Government needs to be more hands-off in regards to the flow of money between individuals and corporations, plus if the bad credit in the banks would be bought off, plus more incentives given, the economy would be boosted.


March 02, 2009 2:52 PM  
Blogger Chloe Nothing said...

"Disasters bring people together, imparting a common context and project. In this suddenly opened and democratized atmosphere, individuals whose lives were formally seperated identify with each other. This sense of community offers intimations of a different kind of society, turning calamity into a harbinger of better things. Disasters are often the crucibles of millenarian and revolutionary movements: in such extremes, people experience the broad possibilities of life and subsequently set out to realize them."

-National Research Council Committee on Disaster Studies, Convergence Behavior in Disasters: A problem in Social Control

March 05, 2009 9:44 PM  
Blogger S.M. Stirling said...

Note that the economy of Nantucket in the "Island" books doesn't -stay- small and decentralized, or rather doesn't stay any smaller or more decentralized than is required by the small population, relatively low productivity and hence the limited opportunity for division of labor and application of comparative advantage.

As Adam Smith pointed out, the limiting factor in the division of labor/specialization is the size of the effective market.

By end of the trilogy they've got a mini-steel-mill built in Britain; in Ironbridge Gorge, in fact, the original cradle of the Industrial Revolution.

The reason nobody builds cars in small machine-shops isn't that it's technically impossible. It's perfectly feasible.

It's just not -economically- possible; the result would cost too much.

That's why most manufactured goods are made in great big honking plants; you get more for less that way.

If you got rid of all the big manufacturing entities, you could cobble together something from local resources.

And the process of reconcentration would begin immediately, driven by the same ineluctable economic logic that caused it the first time, and by the (instinctual) urge of most humans to follow the "least effort principle".

April 13, 2009 11:45 PM  
Blogger Kevin Carson said...

S.M. Stirling: Thanks for stopping by.

I originally intended to address some of the points you raised (not only Leaton's enthusiasm for the Thames valley as the "Silicon Valley of the first industrial revolution," but the seeming recreation of many forms of anti-market privilege by Nantucket like land grants in the colonies instead of allowing free Lockean homesteading). But I decided it was outside the immediate scope of my post.

My main area of disagreement with you concerns your assumption that the rise of mass-production industry resulted from the "ineluctable economic logic" of superior efficiency.

In fact, I believe that with a few exceptions, small-scale factory production on the Emilia-Romagna model (integrating general-purpose powered machinery into craft production, with small batches and frequent changes between production runs, geared to local demand on a just-in-time basis) is *more* efficient than mass-production when the latter's costs of long-distance shipping and push-distribution are taken into account.

I agree with Borsodi and Mumford that the invention of the electric motor eliminated the main imperative behind the large factory (economizing on horsepower from a single prime mover), and put the household and small shop on an even footing with the "Dark Satanic Mill." Most of the economies of machine production are captured with the bare adoption of machinery on a small scale; the modest additional reductions in unit production cost with large-scale machinery are more than offset by increased costs of distribution and marketing.

In a free market, American industrialization arguably would have taken the pattern of a hundred Emilia-Romagnas. Instead, the state tipped the balance with massive railroad subsidies, "intellectual property" law, tariffs, regulatory cartelization, etc. Electrical machinery, rather than living up to the full decentralizing potential of Mumford's "neotechnic" revolution, was fitted into the older organizational forms of the paleotechnic era. So what we wound up with was Sloanist mass-production: enormously expensive product-specific machinery, which mandated large-batch production 24/7 to minimize unit costs, which mandated in turn corporate control over external society to make sure the stuff would be bought up and the wheels could keep turning. When you figure the enormous amounts of crystalized labor wasted to keep the system running (the buffer stocks of unfinished goods and the inventories of finished goods awaiting orders, described by Waddell and Bodek in Rebirth of American industry; and the mountains of discarded products in landfills that could have been better designed around modular components for easy repair and long life), it's not really that economical.

In fact the costs of extending Adam Smith's market area exceed, in most cases, the savings from increased division of labor. The problem is that the state subsidized those costs and externalized them on taxpayers.

In some cases, like heavy engine blocks, the large mass-production factory really is most efficient in absolute terms. But in most such cases, I would argue that the product is itself an answer to an artificial problem created by the state. The present extent of demand for cars results from state subsidies to sprawl and monoculture. The civilian jumbo jet almost certainly would never have come into existence on its own nickel, abseent the heavy bomber program to fully utilize the expensive machine tools required to produce it.

The most prominent case I can think of of a genuinely valuable product that requires large-scale production, is the microprocessor foundry--but even there the scale of demand would be considerably reduced by easily reprogrammable chips (in which case chips would be harvested from landfills on the same pattern as local minimills harvesting scrap metal).

Without government subsidies to economic centralization and capital-intensive production methods, IMO our economy would look a lot more like Borsodi and Mumford, and a lot less like Chandler and Schumpeter.

I have an extended critique of Alfred Chandler's Whig theory of industrial progress in Ch. 2 of my org theory book:

It's distilled in a blog post here:

Anyway, thanks much for your comments.

April 14, 2009 12:17 AM  
Anonymous P.M.Lawrence said...

Although I did have some minor quibbles with the story, e.g. I'm pretty sure that flintlocks unlike percussion caps couldn't fire rifles with unperforated paper cartridges even if you nitrated the paper (the paper wouldn't work for cartridges and there would still be the grease barrier), by and large the technological developments would work out.

But that doesn't mean there was any "ineluctable economic logic that caused [the process of reconcentration] the first time". The thing is, many earlier civilisations had reached the same jumping off point without taking that step - the successor states of Alexander, Rome, China, India at times - and even within Europe it only started in Britain, a scientific and technological backwater compared to France (which followed Britain in this). It took extra factors, which appear to have been:-

- the availability of and demand for coal, which needed a wood shortage to start paying enough to grow;

- the fact that the only cheap thing you can do with coal is burn it, leading to industries having to concentrate near the mines and then gaining from positive network externalities, economies of scale external to the firm, etc. (none of which are benefits confined to large firms);

- the adaptation of canals, river locks, etc., from water management to transport that broadened the area industries could serve (and which needed the prior water management incentives to set them up before they too got positive network externalities);

- railways, which needed two stages to reach positive network externalities, servicing mines (at first linking them to water transport, particularly sea transport) and then the widespread availability of coal because of the canals.

Notwithstanding all that, in the logic of the story it still makes sense as people knew the potential was there to be realised and would have done it anyway. But without those coincidental advantages it would probably have been harder and taken longer with more setbacks than in the story. But for the same sort of reason, I can only see the specific Emilia-Romagna pattern emerging spontaneously when very similar starting conditions for that were in place, or non-spontaneously by being adopted deliberately when people had a model or pattern for it to suggest it and went for it despite having to overcome setbacks of that sort that they didn't know would await them. Something that seems much more likely to me is, an analogue of the way "islands" of higher culture survived through the Dark Ages in monasteries that effectively subsidised a smaller command economy for them with subsistence resources they owned - a "palace economy" (when things picked up generations later, this all flowed out into reviving market economy structures, network externalities got going again, etc.). For us the institutions would probably usually not be monasteries, but they would have to be just as smale scale, cross-subsidising, and community linked for resource access to keep going until things picked up and passed self sustaining levels of criticality. Again, those criticality issues aren't internal to the firm.

April 15, 2009 6:15 PM  
Anonymous Cummins Engine Parts said...

The economy as we know of it today has gone completely haywire. Well, at least for the most part. From the beginning days of our time, money has been introduced as a form of currency to rightfully trade and acquire anything that we desire. Looking at today's society, the money system has evolved into a complete totalitarianism state of authority. Well, like Al Pacino says in Scarface, "Tony Montana: In this country, you gotta make the money first. Then when you get the money, you get the power. Then when you get the power, then you get the women." That's just how the cookie crumbles, money comes first then everything else just tags along.

April 26, 2009 10:50 PM  

Post a Comment

<< Home