[p2p-research] Exchange with S.M. Stirling on Decentralized Production

[Kevin Carson]

I was surprised and pleased to find that S.M. Stirling had visited my
blog discussion of his book Island in the Sea of Time.
http://mutualist.blogspot.com/2009/02/long-emergency-sm-stirling-and.html

He left a comment which led to an interesting exchange:

STIRLING:  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".

ME:  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:
http://members.tripod.com/kevin_carson/sitebuildercontent/sitebuilderfiles/chapter1.pdf

It's distilled in a blog post here:
http://mutualist.blogspot.com/2008/06/alfred-chandler-critique.html

Anyway, thanks much for your comments.

-- 
Kevin Carson
Center for a Stateless Society http://c4ss.org
Mutualist Blog:  Free Market Anti-Capitalism
http://mutualist.blogspot.com
Studies in Mutualist Political Economy
http://www.mutualist.org/id47.html
Organization Theory:  A Libertarian Perspective
http://mutualist.blogspot.com/2005/12/studies-in-anarchist-theory-of.html