Homebrew Industrial Revolution, Chapter Four: Back to the Future

[Michel Bauwens has kindly invited me to serialize excerpts from my recently published book The Homebrew Industrial Revolution:  A Low-Overhead Manifesto.  Over the next several weeks, I will post two excerpts from each chapter.  In this case I’m posting  only one excerpt from Chapter Four, which is the shortest in the book.]

Even with the decentralizing potential of electrical power neglected and sidetracked into the paleotechnic framework, and even with the diversion of technical development into the needs of mass-production industry, small-scale production tools were still able to achieve superior productivity—even working with the crumbs and castoffs of Sloanist mass-production, and even at the height of Moloch’s glory.    Two models of production have arisen within the belly of the Sloanist beast, and between them offer the best hopes for replacing the mass-production model:  1) the informal and household economy; and 2) relocalized industry using general-purpose machinery to produce in small batches for the local market, frequently switching between production runs.

Home Manufacture. First, even at the height of mass-productionist triumphalism, the superior productivity of home manufacture was demonstrated in many fields.  In the 1920s and 1930s, the zenith of mass production’s  supposed triumph, Ralph Borsodi showed that with electricity most goods could be produced in small shops and even in the home with an efficiency at least competitive with that of the great factories, once the greatly reduced distribution costs of small-scale production were taken into account.  Borsodi’s law—the tendency of increased distribution costs to offset reduced unit costs of production at a relatively small scale—applies not only to the relative efficiencies of large versus small factories, but also to the comparative efficiencies of factory versus home production.  Borsodi argued that for most light goods like food, textiles, and furniture, the overall costs were actually lower to manufacture them in one’s own home.  The reason was that the electric motor put small-scale production machinery in the home on the same footing as large machinery in the factory.  Although economies of large-scale machine production exist, most economies of machine production are captured with the bare adoption of the machinery itself, even with household electrical machinery.  After that, the downward production cost curve is very shallow, while the upward distribution cost curve is steep….

I discovered that more than two-thirds of the things which the average family now buys could be produced more economically at home than they could be bought factory made;

—that the average man and woman could earn more by producing at home than by working for money in an office or factory and that, therefore, the less time they spent working away from home and the more time they spent working at home, the better off they would be;

—finally, that the home itself was still capable of being made into a productive and creative institution and that an investment in a homestead equipped with efficient domestic machinery would yield larger returns per dollar of investment than investments in insurance, in mortgages, in stocks and bonds….

…The situation which prevailed in the days when water power and steam-engines furnished the only forms of power is at an end.  As long as the only available form of power was centralized power, the transfer of machinery and production from the home and the individual, to the factory and the group, was inevitable.  But with the development of the gas-engine and the electric motor, power became available in decentralized forms.  The home, so far as power was concerned, had been put in position to compete with the factory….

The average factory, no doubt, does produce food and clothing cheaper than we produce them even with our power-driven machinery on the Borsodi homestead.  But factory costs, because of the problem of distribution, are only first costs.  They cannot, therefore, be compared with home costs, which are final costs. [Flight From the City]

One of Borsodi’s genuine shortcomings was his treatment of household production in largely autarkic terms.  He generally argued that the homestead should produce for itself when it was economical to do so, and buy from the conventional money economy with wages when it was not, with little in between.  The homesteader should not produce a surplus for the market, he said, because it could only be sold on disadvantageous terms in the larger capitalist economy and would waste labor that could be more efficiently employed either producing other goods for home consumption or earning wages on the market….

A relatively modest degree of division of labor in the informal and barter economy would be sufficient to overcome a great deal of the learning curve for craft production.  Most neighborhoods probably have a skilled home seamstress, a baker famous for his homemade bread, a good home brewer, someone with a well-equipped woodworking or metal shop, and so forth.  Present-day home hobbyists, producing for barter, could make use of their existing skills.  What’s more, in so doing they would optimize efficiency even over Borsodi’s model:  they would fully utilize the spare capacity of household equipment that would have been idle much of the time with entirely autarkic production, and spread the costs of such capital equipment over a number of households (rather than, as in Borsodi’s model, duplicating it in each household)….

Relocalized Manufacturing. Borsodi’s other shortcoming was his inadequate recognition of the possibility of scales of manufacturing below the mass production factory….   He confused factory production with mass-production….  In arguing that large-scale factory production was more economical only for a handful of products… he ignored the possibility that even many of those goods could be produced more economically in a small factory using general-purpose machinery in short production runs.

In making “serial production” the defining feature of the factory, as opposed to the custom shop, he made the gulf between factory production and custom production greater and more fixed than was necessary, and ignored the extent to which the line between them is blurred in reality….

In fact the possibility of an intermediate model of industrial production has been well demonstrated in industrial districts like Emilia-Romagna….

…Today, in both Toyota’s “single minute exchange of dies” and in the flexible production in the shops of north-central Italy,  factory production takes on many of the characteristics of custom production.  With standardized, modular components and the ability to switch quickly between various combinations of features, production approaches a state of affairs in which every individual item coming out of the factory is  unique.   A small factory or workshop, frequently switching between products, can still obtain most of the advantages of Borsodi’s “uniformity” through the simple expedient of modular design.  Lean production is a synthesis of the good points of mass production and custom or craft production.

Lean production, broadly speaking, has taken two forms, typified respectively by the Toyota Production System and Emilia-Romagna.  Robert Begg et al characterize them, respectively, as two ways of globally organizing flexible specialization:  producer-driven commodity chains and consumer-driven commodity chains….  [ Robert Begg, Poli Roukova, John Pickles, and Adrian Smith, “Industrial Districts and Commodity Chains:  The Garage Firms of Emilia-Romagna (Italy) and Haskovo (Bulgaria),” Problems of Geography (Sofia, Bulgarian Academy of Sciences), 1-2 (2005)]

The interesting thing about [lean production] is that it’s closer to custom production than to mass production.  In many ways, it’s Craft Production 2.0.

Craft production, as described by James Womack et al in The Machine That Changed the World, was characterized by [skilled workers, small shops, general-purpose machine tools and low production volume]….

The… low volume… resulted from the inability to standardize parts, which in turn resulted from the inability of machine tools to cut hardened steel.  Before this capability was achieved, it would have been a waste of time to try producing to gauge; steel parts had to be cut and then hardened, which distorted them so that they had to be custom-fitted.  The overwhelming majority of production time was taken up by filing and fitting each individual part to the other parts….

Most of the economies of speed achieved by Ford resulted, not from the assembly line… but from precision and interchangeability.  Ford was the first to take advantage of recent advances in machine tools which enabled them to work on pre-hardened metal.  As a result, he was able to produce parts to a standardized gauging system that remained constant throughout the manufacturing process.  In so doing, he eliminated the old job of fitter, which was the primary source of cost and delay in custom production.

But this most important innovation of Ford’s—interchangeable parts produced to gauge—could have been introduced just as well into craft production, radically increasing the output and reducing the cost of craft industry….

With this innovation, a craft producer might still have used general-purpose machinery and switched frequently between products, while using precision machining techniques to produce identical parts for a set of standardized modular designs.  By radically reducing setup times and removing the main cost of fitting from craft production…, craft producers would have achieved many of the efficiencies of mass production with none of the centralization costs we saw in Chapter Two….

The other cost of craft production was setup time:  the cost and time entailed in skilled machinists readjusting machine tools for different products.  Ford reduced setup time through the use of product-specific machinery, foolproofed with simple jigs and gauges to ensure they worked to standard.  The problem was that this required batch production, the source of all the inefficiencies we saw in Chapter Two….

In industrial districts like Emilia-Romagna, the problem of setup and changeover time was overcome by the development of flexible general purpose machine tools, particularly the small numerically controlled machine tools which the microprocessor revolution permitted in the 1970s.  Ford’s innovations in precision cutting of pre-hardened metal to gauge, and the elimination of setup time with small CNC tools in the 1970s, between them made it possible for craft production to capture all the efficiencies of mass production….

In other words, lean manufacturing—as Sabel and Piore put it—amounts to the discovery, after a century-long dead end, of how to integrate electrical power into manufacturing.

Emilia-Romagna is part of a larger phenomenon, the so-called “Third Italy” (as distinguished from the old industrial triangle of Milan-Turin-Genoa, and the cash crop plantation agriculture of the South):

a vast network of very small enterprises spread through the villages and small cities of central and Northeast Italy, in and around Bologna, Florence, Ancona, and Venice….  These little shops range across the entire sprectrum of the modern industrial structure, from shoes, ceramics, textiles, and garments on one side to motorcycles, agricultural equipment, automotive parts, and machine tools on the other. [Piore and Sabel, “Italian Small Business Development:  Lessons for U.S. Industrial Policy,” in John Zysman and Laura Tyson, eds., American Industry in International Competition:  Governnment Policies and Corporate Strategies (Ithaca and London:  Cornell University Press, 1983).]

Although these small shops (quite small on average, with ten workers or fewer not unusual) “perform an enormous variety of the operations associated with mass production,” they do so using “artisans’ methods rather than industrial techniques of production.”

A typical factory is housed on the ground floor of a building, with two or three floors of apartments above for the several extended families that own it….  At the smaller end of the scale, “production is still centered in the garage…”

Production on the Emilia-Romagna model is regulated on a demand-pull basis:  general-purpose machinery makes it possible to produce in small batches and switch frequently and quickly from one product line to another, as orders come in.  Further, with the separate stages of production broken down in a networked relationship between producers, constant shifts in contractual relationships between suppliers and outlets are feasible at relatively low cost….

New Possibilities for Flexible Manufacturing. …[W]ith the decay of the first stage of the paleotechnic pseudomorph, flexible manufacturing has become the wave of the future—albeit still imprisoned within a centralized corporate framework.  And better yet, networked, flexible manufacturing shows great promise for breaking through the walls of the old corporate system and becoming the basis of a fundamentally different kind of society.

By the 1970s, anarchist Murray Bookchin was proposing small general-purpose machinery as the foundation of a decentralized successor to the mass-production economy.

In a 1970s interview with Mother Earth News, Borsodi repeated his general theme:  that when distribution costs were taken into account, home and small shop manufacture were the most efficient way to produce some two-thirds of what we consume.  But he conceded that some goods, like “electric wire or light bulbs,” could not be produced “very satisfactorily on a limited scale.”

But as Bookchin and Kirkpatrick Sale pointed out, developments in production technology since Borsodi’s experiments had narrowed considerably the range of goods for which genuine economies of scale existed.   Bookchin proposed the adoption of multiple-purpose production machinery for frequent switching from one short production run to another….

The importance of machines with this kind of operational range can hardly be overestimated.  They make it possible to produce a large variety of products in a single plant.  A small or moderate-sized community using multi-purpose machines could satisfy many of its limited industrial needs without being burdened with underused industrial facilities.  There would be less loss in scrapping tools and less need for single-purpose plants.  The community’s economy would be more compact and versatile, more rounded and self-contained, than anything we find in the communities of industrially advanced countries.  The effort that goes into retooling machines for new products would be enormously reduced.  Retooling would generally consist of changes in dimensioning rather than in design. [Post-Scarcity Anarchism]

And Sale, commenting on this passage, observed that many of Borsodi’s stipulated exceptions could in fact now be produced most efficiently in a small community factory.  The same plant could (say) finish a production run of 30,000 light bulbs, and then switch to wiring or other electrical products—thus “in effect becoming a succession of electrical factories.”  A machine shop making electric vehicles could switch from tractors to reapers to bicycles…. [Human Scale]

Since Bookchin wrote Post-Scarcity Anarchism, incidentally, Japanese technical innovations blurred even further the line between the production model he proposed above and the Japanese model of lean manufacturing.  The numerically controlled machine tools of American mass-production industry, scaled down thanks to the microprocessor revolution, became suitable as a form of general-purpose machinery for the small shop….

According to Piore and Sabel, CNC machinery offers the same advantages over traditional craft production—i.e., flexibility with reduced setup cost—that craft production offered over mass production.

Efficiency in production results from adapting the equipment to the task at hand:  the specialization of the equipment to the operation.  With conventional technology, this adaptation is done by physical adjustments in the equipment; whenever the product is changed, the specialized machine must be rebuilt.  In craft production, this means changing tools and the fixtures that position the workpiece during machining.  In mass production, it means scrapping and replacing the machinery.  With computer technology, the equipment (the hardware) is adapted to the operation by the computer program (the software); therefore, the equipment can be put to new uses without physical adjustments—simply by reprogramming. [The Second Industrial Divide]

[The Toyota system, for all its virtues, is an attempt to put new wine in old bottles.  By retaining the large corporate form, it fails to capitalize on all the possibilities of lean production]

…The “warehouses on wheels” (or “container ships”) distribution model used by centralized manufacturing corporations, even “lean” ones like Toyota, is fundamentally at odds with the principles of lean production.  Lean production calls for eliminating inventory by gearing production to orders on a demand-pull basis.  But long distribution chains simply sweep the huge factory inventories of Sloanism under the rug, and shift them to trucks and ships.  There’s still an enormous inventory of finished goods at any given time—it’s just in motion….

As Womack et al point out, lean production—properly understood—requires not only the scaling of machinery to production flow within the factory.  It also requires scaling the factory to local demand, and siting it as close as possible to the point of consumption, in order to eliminate as much as possible of the “inventory” in trucks and ships.  It is necessary “to locate both design and physical production in the appropriate place to serve the customer.”

The authors of Natural Capitalism devote a separate chapter to lean production.  And perhaps not surprisingly, their description of the lean approach seems almost tailor-made for relocalized manufacturing on the Emilia-Romagna model….

1 Comment Homebrew Industrial Revolution, Chapter Four: Back to the Future

  1. Avatarjames william gibson

    I hope Mr. Carson will comment on any political changes in Italy arising from this highly decentralized mode of production. It would seem logical that as people become more empowered at work and grounded in a local/regional community then they would also become more politically active. Perhaps these changes are underway, perhaps not. Mr. Carson’s input, whether in the form of excerpts addressing politics connected to decentralized production, or a separate essay by him, would be appreciated.

    Like many, I hope that distributed generation of energy among households and small businesses, and local farming, will lead to political empowerment. Let’s learn what the Italian case teaches.

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