Cory Doctorow.  Makers (Tor, 2009).

The major themes I’ve written about here lately — the decline of traditional mass-production industry, the crisis of value and shift of production outside the cash nexus, the rise of micromanufacturing (see “The Homebrew Industrial Revolution“), the digital/network culture — are all central to Makers.  And given my research and writing interests, it’s a foregone conclusion that any work of cyberpunk or other near-future sci fi is going to wind up marked and dogeared beyond belief.  Just about anything I’ve read by Neal Stephenson or William Gibson has ended up that way, as did the machine shop material in the first volume of S. M. Stirling’s Nantucket series.  So after just one reading, Doctorow’s book looks like it’s had the living shit beaten out of it.  It’s that good.

You really should click on the link right now and pre-order it — immediately.  If you want to sample it before buying, check out the serialization at Tor.  But if you want a book you can read in comfort, without sitting hunched over a computer screen — and maybe one you can dogear and mark the shit out of — it’s sixteen bucks and change at Amazon.  That’s pretty cheap for a new hardback.  And friends of the P2P Foundation and of Doctorow’s work at EFF will enjoy helping to demonstrate his contention that free ebooks are good for business.

I.  Background

The first part of the book,  which takes its lead characters through the rise and fall of the New Work (a sort of micromanufacturing boom on the same pattern as the dotcom boom and bust), was my primary interest.

The story begins sometime in the second decade of this century.  It’s set against the background of the kind of economic clusterfuck I’ve written about a lot recently (for example, “The End of Economic Growth”  at this blog, and my paper “The Decline and Fall of Sloanism” at Center for a Stateless Society).

Doctorow’s near-future scenario is the culmination of a long trend that began in the 1970s, with Japan’s development of cheap CNC machine tools scaled to the needs of the garage factory and job-shop.   Since then we’ve seen progressively larger shares of total industrial production shifted from the old mass-production core to a periphery of flexible manufacturing networks like those of Emilia-Romagna and Shenzhen, and the growing shift of contract production to independent supplier networks.  By 2000, a majority of transnational corporations’  industrial production took place not in their own facilities, but in the job-shops of Asia.

The rise of the micromanufacturing and Fab Lab movements in recent years has taken things an order of magnitude further in the same direction.  According to Doug Rushkoff, the destructive effect of the desktop computer on the old information and culture industries resulted from the imploding cost of the means of production.    As Yochai Benkler described it, in a few decades we went from conventional radio stations, music studios and printing presses costing hundreds of thousands of dollars, to desktop publishing and podcasting operations that were two orders of magnitude cheaper.   When the initial capital outlays for information and cultural production fall by a factor of a hundred, all the capital previously absorbed by those industries becomes superfluous.

We’re seeing the same thing now in the realm of physical production.  We’re seeing the development of homebrew CNC cutting tables, routers and 3-D printers that can be built for a few hundred bucks.  A Fab Lab with homebrew machine tools and RepRap — essentially a factory — can be built for $5000.  The desktop manufacturing revolution is in the process of making the majority of investment capital superfluous, the same way the desktop computer revolution has destroyed the information and entertainment industries.   If there’s an analogue of Moore’s Law for industrial hardware, you can stand it on its head and get a general rule:  if capital outlays for micromanufacturing fall exponentially, then every so many years the amount of stuff that requires mass production industry to make will be reduced by half.

As Marcin Jakubowski of Factor e Farm put it:

Friends and family still harass me. They still keep telling me to ‘get a real job.’ I’ve got a good response now.  It is:

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1.  Take a look at the last post on the soil pulverizer

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2.  Consider ‘getting a real job at $100k,’ a well-paid gig in The System.  Tax and expense take it down to $50k, saved, if you’re frugal.

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Ok. I can ‘get a real job’, work for 6 months, and then buy a Soil Pulverizer for $25k. Or, I make my own in 2 weeks at $200 cost, and save the world while I’m at it.

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Which one makes more sense to you?  You can see which one makes more sense to me.  It’s just economics.

In other words, when the cost of your own factory is only two months’ wages, how ya gonna keep ’em down in the factory?  And when a few years’ toil in Babylon enables you to amass the funds to buy out at the bottom,  living in Zion with enough land you to grow most of the things you eat and a share in the machinery needed to produce most of the things you consume with a twenty-hour work week —  well, last one out turn off the lights.

For half a century the neo-Marxists of the Monthly Review group, people like Paul Baran, Paul Sweezy, and Harry Magdoff, have been writing on capitalism’s chronic tendencies toward overinvestment and excess capacity.  The exacerbation of those crisis tendencies that’s being brought about by current technological developments is like a mild case of the sniffles turning into double pneumonia.

The implosion of capital outlay requirements, overhead, and production costs, and the unenforceability of the “intellectual property” laws from which artificial scarcity rents are derived, mean that all the traditional sources of monetized value are collapsing.  Today, in 2009, we see an economy awash in surplus capacity and surplus investment capital, with no plausible scenario by which that capacity can be utilized or productive outlets for that capital can be found; the idea that some combination of debt-fueled consumption and planned obsolescence can get the factories back to churning out eighteen million cars a year is a joke.  What we’re left with is the near certainty of long-term unemployment gradually creeping into the teens, and idle plant and equipment turning to dust, as an underemployed workforce produces growing shares of the value it consumes in the informal economy, and a growing share of physical production takes place in small shops and garages

Take these trends a few years further, and you get something like the scenario at the outset of Makers.

The story begins with a press conference by Landon Kettlewell, frontman and CEO for the newly-formed Kodacell (a merger of Kodak and Duracell).  He first reflects in passing on the creative destruction wrought by network technology in recent years (“The very idea of a travel agent is inconceivably weird today!  And the record labels, oy, the poor, crazy, suicidal, stupid record labels.”).  The current changes in physical production, he sums up thusly:  “Capitalism is eating itself….  The days of companies with names like General Electric and General Mills and General Motors are over.”  There are no longer any surviving forms of capital-intensive, large-batch production that can gobble up enormous amounts of investment capital.

Later in the story, Kettlewell splurges with travel on the seven Kodacell corporate jets with something of an “apres moi, le deluge” air.  He mentions that the company can’t even unload them at fire sale prices, because there just aren’t any companies out there willing to spend money on jets any more.  Not even Saudi princes.  And an accountant says “In ten years, if we do our jobs, there won’t be five companies on earth that can afford this kind of thing — it’ll be like building a cathedral after the Protestant Reformation.”

A world with no surviving corporations still capable of affording private jets.  Nunc dimittis servum tuum, Domine, secundum verbum tuum in pace, quia viderunt oculi mei salutare tuum.

The America in which all this is taking place is a logical extrapolation from the one we’re living in.  In particular, that means lots and lots of that cyberpunk staple, the shantytown, in thousands of abandoned malls and similar habitats across the country.  It’s a country in which real estate values never came back from the collapse:  deteriorating condos and apartments are available for dirt-cheap rents to the marginally employed and the working poor; for those too poor to meet even those standards, millions of units of residential and commercial real estate sit abandoned because their value has collapsed beyond the point at which it was no longer worthwhile even to do basic maintenance or pay taxes.   At one point a character mentions that some thirty million Americans live in “marginal housing,” i.e. are technically homeless squatters, without formal title to their place of residence.  And by the time we get to Part Two, in the 2020s, the percentage is probably considerably higher.

The property arrangements are informal, but in most places cops don’t even bother with issues of legal title where there’s no obvious owner.  We’re probably close to that sort of thing happening now, in the real world:  at some point the smarter local sheriffs are going to figure out that, while both the house and its current occupant will probably still exist in another five years, the bank that owns the paper probably won’t.

I don’t know if Doctorow is a fan of Colin Ward, but the flavor of his shantytowns is very much like that of the British “informal housing” Ward describes in Talking Houses.  The squatter communities started out as tents and lean-tos surrounding nuclei of homeless retirees in RVs and trailers (“the military wing of the AARP,” one character calls them).  The residents over time picked up skills for carpentry and masonry, and made creative use of scavenged materials, and built a fairly comfortable and attractive life for themselves.  “They started with plastic sheeting and poles, and when they could afford it, they replaced the sheets, one at a time, with bricks, or poured concrete and rebar.”  “None of them had mortgages, but they had neat vegetable gardens and walkways spelled out in white stones with garden gnomes standing guard.”  The jury-rigged electrical power and communications infrastructure reminds me a bit of Neil Gershenfeld’s description, in Fab, of Indian village cable systems with reverse-engineered satellite receivers.  Shantytown businesses included tea rooms, barbecue houses, microbreweries, and the like, and eventually Fab Labs.  Crops were raised in vacant lots, and chickens and pigs in abandoned buildings.  At one point the residents of a shantytown respond to 7-Eleven’s offer to open a store with a hearty “fuck off”:  “We’ve got lots of community-owned businesses around here that do everything a 7-Eleven could do for us, without taking the wealth out of our community and sending it to some corporate jack-off.”

Taken all together, it sounds like an example of what Paul Goodman called “comfortable poverty”:  traditional monetary metrics of standard of living, in a time of imploding costs, have limited relevance.  The main drawbacks are the uncertainty of property titles (a familiar theme from Hernando de Soto), and the undeveloped social support networks.  The lack of adequate healthcare ranks high as an example of the latter concern.  But with garage microfactories capable of churning out syringes and IV pumps, and plenty of underemployed MDs at a time when employer-based health insurance (in Doctorow’s scenario) is likely collapsing like a house of cards, the idea of a revived system of “lodge practice,” with decent quality cooperative clinics and even operating theaters run out of storefronts for credit on the shantytown barter network, seems quite plausible.

In their early days the towns of medieval Europe, growing up outside the feudal structure, probably had a flavor something like this.  As old villages at strategically situated crossroads and fords began to swell with runaway serfs, and artisans setting up in business for themselves to service the revived commerce, they found themselves in an irregular legal status vis-a-vis the feudal lords in whose territories their town walls technically lay.  By building walls and raising militias, federating together, and appealing to the new central governments’ interest in promoting commerce, they were able to compel de jure recognition via royal charters.   But state recognition followed from their prior demonstration, on their own, that they were the building blocks of the new society.  In fact, until the introduction of artillery capable of battering down town walls, recognition of royal sovereignty by leagues of free towns became very nearly pro forma.  That’s the way I learned it from Kropotkin, anyway.

II.  The New Work Boom

Anyway,  that’s the general economic environment at the beginning of Makers.  Kodacell’s new business model, in that environment, is to ruthlessly liquidate most of its surplus manufacturing capability, and use its cash on hand as something like a Grameen bank for hardware hackers, to fund thousands of micromanufacturing startups.  “The money on the table is like krill:  a billion little entrepreneurial opportunities that can be discovered and exploited by smart, creative people.”

100kGarages, an ambitious networked micromanufacturing project, takes its name from a remark by Tom Brokaw in the presidential debates.  He asked whether the country’s manufacturing future would best be served by “funding a Manhattan-style project or by supporting 100,000 garages across America to encourage the kind of industry and innovation that developed Silicon Valley…”

That’s a perfect summary for Kodacell’s investment program, and those of other like-minded corporations.   The dying Fortune 500 companies were in the process of liquidating what was left of their old mass-production facilities, and using their remaining liquid assets to fund as many micromanufacturing startups as they could find.  Although the general idea was kicked off by Kettlewell’s press conference, it quickly became the dominant investment model for dozens and dozens of corporations that were finding 90% of their plant and equipment was superfluous and they had no idea what they could spend their capital on.  Before long Westinghouse had shut down its appliances division and started its own multi-billion dollar microcredit operation, looking for garage startups to fund.  By the end of Part One, the list of corporations specifically named as doing the same thing included Westinghouse, McDonald’s, the investment arm of the AFL-CIO, Ford, GM, and the UAW (with the strong implication that they were just a rough sampling of the much larger number of companies doing the same thing).

From the press conference, we follow tech reporter Suzanne Church to one of these startups, a Fab Lab run out of an unfinished mall cum salvage yard by a couple of hardware hackers named Perry Gibbons and Lester Banks.  In a direct parallel to the creation of Web 2.0 by unemployed or underemployed veterans of the dotcom bust, Gibbons and Banks are both former tech industry employees who started by (if I may borrow a phrase from neo-Marxist James O’Connor) hoarding their labor-power and working outside the cash nexus.

“He [Banks] was the sysadmin at a company that was making three-D printers, and I was a tech at a company that was buying them, and the products didn’t work, and I spent a lot of time on the phone with him troubleshooting them. We’d get together in our off-hours and hack around with neat little workbench projects, stuff we’d come up with at work.   When both companies went under, we got a bunch of their equipment at bankruptcy auctions.  Lester’s uncle owned the junkyard and he offered us space to set up our workshop and the rest is history.”

And elsewhere:

“We’re just here because someone dropped the barrier to entry, made it possible for a couple of tinkerers to get a lot of materials and to assemble them without knowing a whole lot about advanced materials science.  Wasn’t it like this when the Internet was starting out?”

And Lester’s and Perry’s garage micromanufacturing outfit is a perfect illustration of the principles of agility inherent in open-source peer production — principles most of us have seen discussed, on this blog and elsewhere, under many different names:  Eric Raymond on the Bazaar; John Robb on STEMI compression;  Assassin’s Mace;  Nathan Cravens on productive recursion; Vinay Gupta on distributed infrastructure;  Bucky Fuller’s “ephemeralization” and “dymaxion” principle; Taiichi Ohno’s eliminating muda.

She’d [Suzanne] loved the contrast of nimble software companies compared with gigantic, brutal auto companies, but what her boys were doing, it made the software companies look like lumbering lummoxes, crashing around with their fifty employees and their big purpose-built offices.

The nimbleness of small, bottom-up, ad hoc organizations, in comparison with conventional bureaucratic hierarchies (with their dedicated buildings, job descriptions, prestige salaries, and Weberian procedural rules), and the tendency of the latter to create an artificial 400% markup to do anything, has been a recurring theme in the work of decentralist thinkers like Paul Goodman and Ivan Illich.  Until recently, the state’s subsidies to the dinosaurs have been enough — barely — to tip the balance in favor of the dinosaurs and against the rats in their nests.  Today they no longer are, and the state’s bankrupting itself in the process of even trying to prop them up.

Jeff Vail raised the question of when micromanufacturers would switch from producing trinkets and doodads to producing the kinds of primary goods — necessities — that are currently produced by conventional manufacturers.  That concern is paralleled in Doctorow’s narrative.  The stuff Perry and Lester were churning out in the early part of the book was exactly the kind of trivia and ephemera that Vail dismisses.

But after Perry is injured in a tussle with cops over the legal status of the shantytown, and the shantytown itself is half burnt down, they become increasingly radicalized.  They shift to an emphasis very much like that of Vinay Gupta:  producing cheap necessities of daily life for shantytown residents and the homeless. At first, that means intensive R&D on unconventional building technologies, followed by various “technologies for living” like composting toilets.  At the close of Part One, Perry is talking — with the fervor of a Captain Ahab — of cheap Fabbing machinery that can produce more cheap Fabbing machinery at almost no cost, expanding garage manufacturing into every shantytown into the country and allowing the squatter communities to manufacture products of their own choice.  Quoting Perry:

“They need the tools to make any other tools,” is what Perry said when he returned from the hospital, the side of his head still swaddled in bandages that draped over his injured eye. They’d shaved his head at his insistence, saying that he wasn’t going to try to keep his hair clean with all the bandages. It made him look younger, and his fine skull-bones stood out through his thin scalp when he finally came home. Before he’d looked like a outdoorsman engineer: now he looked like a radical, a pirate.

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“They need the tools that will let them build anything else, for free, and use it or sell it.” He gestured at the rapid prototyping machines they had, the 3D printer and scanner setups. “I mean something like that, but I want it to be capable of printing out the parts necessary to assemble another one. Machines that can reproduce themselves.”

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Francis shifted in his seat. “What are they supposed to do with those?”

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“Everything,” Perry said, his eye glinting. “Make your kitchen fixtures. Make your shoes and hat. Make your kids’ toys—if it’s in the stores, it should be a downloadable too. Make toolchests and tools. Make it and build it and sell it. Make other printers and sell them. Make machines that make the goop we feed into the printers. Teach a man to fish, Francis, teach a man to fucking fish. No top-down ‘solutions’ driven by ‘market research’”—his finger-quotes oozed sarcasm—“the thing that we need to do is make these people the authors of their own destiny.”

That probably had something to do with why the New Work boom collapsed.

III.  The New Work Bust

As I said before, my primary interest was in the New Work boom of Part One.  The story in Parts Two and Three is an enjoyable read for its own sake.  Part Two begins about a decade after the collapse of the New Work boom, sometime in the 2020s.  It centers on Perry’s and Lester’s development of a network of open-source amusement park rides in abandoned Wal-Marts across the country.   The rides, using a feedback system something like Slashdot’s, evolve over time by as construction robots implement user-generated content.  Part Three centers on a struggle between Disney corp and the ride network, along with rogue Disney exec Sammy Page, with way too many plot twists to summarize here.  But it includes an interesting subplot about Page’s venture in home 3-D printers that print out dioramas of historic Disney attractions on a subscription basis, and Lester’s hack of the printers to produce open-source designs, that takes the whole micromanufacturing theme up another notch.  In any case, in reading Parts Two and Three I found myself putting most of my effort into sussing out just why the boom of Part One collapsed, and how the conditions of Part Two came about.  Doctorow leaves that mainly to the reader’s imagination, with a few hints here and there.  My analysis follows

The “New Work” boom went bust for the same reason as the dotcom boom.   In the 2000 bust network technologies, far from showing themselves to be overrated or a fad, became the fundamental building blocks of the new post-bust economy.  But it was precisely this fundamental status, and their associated ubiquity and abundance, that put them beyond the ability of a small class of capitalists and other rentiers to monetize.  It’s frequently argued that the dotcom bust gave rise to Web 2.0; this piece by Michel Bauwens is a good example.   Web 2.0 was created by unemployed or underemployed knowledge workers working outside the cash nexus.

Likewise, Doctorow’s New Work boom went bust, not because it was a failure, but because it was too successful.  We see in Part Two that the micromanufacturing technologies of the New Work, if anything, are even more ubiquitous than in Part One.   If the toys went in the trash, the technology itself remained as the basis of the physical production economy.  The U.S., one of the characters says in Part Two, is a “post-manufacturing” economy.  The economy of Makers may be “post-manufacturing” in the sense that there are no longer “jobs” in “factories,” but if so it seems to be the kind of post-manufacturing economy in which every shantytown in America has a collection of microfactories, operating out of abandoned storefronts and garages, that can make anything a conventional factory used to make in the 20th century.  The collapse of the New Work boom didn’t mean the micromanufacturing technology it was based on disappeared; rather, the technology became so cheap and common that it was impossible for venture capitalists to make money off it.   The New Work and the micromanufacturing technology associated with it had the same destructive effect, in the realm of physical production, that Rushkoff described in the information and culture industries.  The “post-manufacturing” economy of Part Two is an economy in which manufacturing is no longer an issue for the same reason that water’s not an issue for fish.

And the failure of Doctorow’s New Work boom is a brilliant fictional illustration of how conventional economies are wrecked by abundance:  micromanufacturing is so productive it destroys all the opportunities to make money off it.

The first part of the book left some suggestive leads as to just why the boom failed.   I think the key is the contradiction inherent in Kettlewell’s investment strategy, and that of the other big corporate venture capital funds.  The problem with his “straining a billion bits of krill” investment model is that those hundreds of thousands and even millions of ventures, cumulatively, weren’t enough to soak up even a large fraction of all the capital lying around waiting to be invested.

Here’s Tjan, an accountant sent in by Kettlewell to work with Lester and Perry, on how he expected it to work:

“Those two can build anything.  That’s the point:  any moderately skilled practitioner can build anything these days, for practically nothing.  Back in the old days, the blacksmith just made every bit of ironmongery everyone needed, one piece at a time, at his forge.  That’s where we’re at.  Every industry that required a factory yesterday only needs a garage today. It’s a real return to fundamentals.  What no one ever could do was join up all the smithies and all the smiths and make them into a single logical network with a single set of objectives.  That’s new and it’s what I plan on making hay out of.  This will be much bigger than dotcom.  It will be much harder, too — bigger crests, deeper troughs.  This is something to chronicle, all right:  it will make dotcom look like a warm up for the main show.”

But there was a fallacy of composition implicit in his reasoning.  What he described was an excellent model for a single small venture capitalist with several thousand dollars to invest.  And that’s just how it worked, at the level of the individual product:  he put fifty grand into bankrolling one of Perry’s and Lester’s product lines, and got seventy grand out three months later.  The problem is, a corporation with fifty billion can’t repeat the same process a million times — especially when the entire Fortune 100 is doing the same thing, looking for opportunities to unload all their idle cash on whatever terms are available.  As Kettlewell later complained,

“Our business units have an industry-high return on investment, but there’s not enough of them. We’ve only signed a thousand teams and we wanted ten thousand, so ninety percent of the money we had to spend is sitting in the bank at garbage interest rates. We need to soak up that money with big projects—the Hoover Dam, Hong Kong Disneyland, the Big Dig. All we’ve got are little projects.”

The individual startups, given sufficient agility to switch rapidly to new products as returns collapsed on the old ones, could produce enormous ROI compared to traditional industrial investment.  The problem is that, despite the astronomical rate of return, the absolute quantities of capital required for such startups was so small; even a million garage shops, if they require only a few grand to get started, will use only a fraction of the capital that used to be invested in conventional industry.  So the overwhelming majority of available capital still sat idle without any productive outlet.   What’s more, those enormous ROIs were as unstable as a uranium atom; the problem was that with the initial capital outlays required so small, and entry barriers so low, the period of entrepreneurial rents from being first to market kept getting shorter and shorter, until the investors were barely staying ahead of the shock wave of competitive price implosion.  My tentative post mortem on the boom is that that shock wave overtook the investors, the spectacular rates of return reached their saturation point; and by the time the wave of entrepreneurial profit exhausted itself, with store front Fab Labs equivalent to a Shenzhen in every favela, 90% of the corporate investment funds still sat gathering dust.