Adam Arvidsson.  “The Makers—again: or the need for keynesian management of abundance,” P2P Foundation Blog, February 25, 2010.

In the first installment of this review essay, I dealt with Economic Abundance by William Dugger and James Peach.    I found it only tangentially related, at best, to the post-scarcity tradition we’re familiar with.

Adam Arvidsson and Martin Ford both write from something much closer to that tradition.

Arvidsson, following up on his initial review of Makers by Cory Doctorow, set out to explain the difference between his views and mine.

In my review of Makers, I argued that the central cause of the economic crisis was (first) the excess capacity of mass-production industry, and (second) the superfluous investment capital which lacked any profitable outlet thanks to the imploding cost of micromanufacturing technology.  Arvidsson responded:

However an oversupply of capital is only that in relation to an insufficient demand. The reason why hundreds of thousands or even millions of ventures can not prosper is that there is insufficient demand for their products. This suggests that an economy of abundance (also a relative concept- the old industrial economy was surely an economy of abundance in relation to the old artisanal economy) needs a Keynesian regime of regulation. That is, the state or some other state-like actor must install a mechanism for the redistribution of value that  guarantees a sustained demand for new products. To accomplish this entails two things. First, to redistribute the new value that is generated away from the restricted flows of corporate and financial rent that circulate among Kettlewell and his investors and to larger swats of the population (thus activating the multiplier effect!). Since the Maker boom builds on highly socialized, or even ubiquitous productivity, it seems logical that such a redistribution takes the form of some kind of guaranteed minimum income. Second, the state (or state-like actor) must guarantee a direction of  market expansion that is sustainable in the future. In our present situation that would probably mean to offer incentives to channel the productivity of a new maker culture into providing solutions to the problem of transitioning to sustainability within energy, transport and food production systems. This would, no doubt open up new sources of demand that would be able to sustain the new economy of abundance for a long time, and after that we can go into space ! Without such a Keynesian governance, a future economy of abundance is doomed to collapse, just like the industrial economy of abundance collapsed in 1929.

This might have been true of the excess industrial capacity of the 1930s, when the primary problem was overinvestment and the maldistribution of purchasing power rather than a rapid decline in the money price of capital goods.  Under those circumstances, with the technical means themselves changing in a fairly gradual manner, the size of the gap between existing demand and demand on a scale necessary to run at full capacity might well be small enough to solve with a guaranteed income, or social credit, or some similar expedient.

But the problem in Makers is entirely different.   It’s not simply excess industrial capacity in an environment of gradual and stable technological advance.  It takes place in an environment in which the cost of capital goods required for industrial production has fallen a hundredfold.  In that environment, the only way to avoid superfluous investment capital with no profitable outlet would be if demand increased a hundredfold in material terms.  If a given consumption good produced in a million dollar factory can now be produced in a $10,000 garage shop, that would mean I’d have to buy a hundred of that good where I’d bought only one before, in order to cause a hundred times as many garage shops to be built and soak up the excess capital.  Either that, or I’d have to think of a hundred times as many material goods to create sufficient demand to expand industrial capacity a hundredfold.   I don’t think demand is anywhere near that upwardly elastic.  The oversupply of capital in Makers is mainly in relation to the cost of producer goods.

So the solution, in my opinion, is—again—to approach the problem from the supply side.  Allow the embedded scarcity rents in the prices of our goods to evaporate, and the bubble-inflated values of real estate and other assets along with them, so that it takes less money and fewer hours of work to obtain the things we need.