Homebrew Industrial Revolution: Chapter Six, First Excerpt

[Michel Bauwens has kindly invited me to serialize excerpts from my recently published book The Homebrew Industrial Revolution:  A Low-Overhead Manifesto (you can check it out for free online here).  Over the next several weeks, I will conclude with the last series of two excerpts each from Chapters Six and Seven.]

Chapter Six. Resilient Communities and Local Economies

We already saw, in Chapter Five, the economy of networked micromanufacturing that’s likely to emerge from the decline of the state capitalist system.  We further saw in Chapter Three that there is a cyclical tendency of industrial production to shift from the mass-production core to the craft periphery in economic downturns.  And we’ve witnessed just such a long-term structural shift during the stagnation of the past thirty years.

There is a similar historic connection between severe economic downturns, with significant periods of unemployment, and the formation of barter networks and resilient communities.  If the comparison to manufacturing holds, given the cumulative effect of all of state capitalism’s crises of sustainability which we examined in Chapter Three, we can expect to see a long-term structural shift toward resilient communities and relocalized exchange.  John Robb suggests that, given the severity of the present “Great Recession,” it may usher in a phase transition in which the new society crystallizes around resilient communities as a basic building block; resilient communities will play the same role in resolving the current “Time of Troubles” that the Keynesian state did in resolving the last one.

Historically, economic recessions that last longer than a year have durations/severities that can be plotted as power law distributions…. Given that we are already over a year into this recession, it implies that we are really into black swan territory (unknown and extreme outcomes) in regards to our global economy’s current downturn and that no estimates of recovery times or ultimate severity based on historical data of past recessions apply anymore. This also means that the system has exceeded its ability to adapt using standard methods (that shouldn’t be news to anyone).

It may be even more interesting than that. The apparent non-linearity and turbulence of the current situation suggests we may be at a phase transition (akin to the shift in the natural world from ice to water)….

As a result, a new control regime may emerge. To get a glimpse of what is in store for us, we need to look at the sources of emerging order (newly configured dissipative and self-organizing systems/networks/orgs that are better adapted to the new non-linear dynamics of the global system).

In [the Great Depression] the sources of emerging organizational order were reconfigured nation-states that took a more active role in economics (total war economies during peacetime). In this situation, we are seeing emerging order at the local level: small resilient networks/communities reconfigured to handle this level of systemic environmental non-linearity and survive/thrive…. Further, it appears that these emerging communities and networks are well suited to drawing on a great behavioral shift occurring at the individual level, already evident in all economic statistics, that emphasis thrift/investment rather than consumption/gambling (the middle class consumer is becoming extinct).

So what does this mean? These new communities will eventually start to link up, either physically or virtually…, into network clusters. IF the number of links in the largest cluster reaches some critical proportion of the entire system’s nodes…, there will be a phase transition as entire system shifts to the new mode of operation. In other words, resilient communities might become the new configuration of the global economic system.

[See also Robb’s discussions of “Economies as a Social Service” since I published this book]

Robb’s phase transition resembles Jeff Vail’s description of the gradually shifting correlation of forces between the old legacy system and his “Diagonal Economy”:

The diagonal economy might rise amidst the decline of our current system—the “Legacy System.”  Using America as an example (but certainly translatable to other regions and cultures), more and more people will gradually realize that there the “plausible promise” once offered by the American nation-state is no longer plausible.  A decent education and the willingness to work 40 hours a week will no longer provide the “Leave it to Beaver” quid pro quo of a comfortable suburban existence and a secure future for one’s children.  As a result, our collective willingness to agree to the conditions set by this Legacy System (willing participation in the system in exchange for this once “plausible promise”) will wane.  Pioneers—and this is certainly already happening—will reject these conditions in favor of a form of networked civilizational entrepreneurship.  While this is initially composed of professionals, independent sales people, internet-businesses, and a few market gardeners, it will gradually transition to take on a decidedly “third world” flavor of local self-sufficiency and import-replacement (leveraging developments in distributed, open-source, and peer-to-peer manufacturing) in the face of growing ecological and resource pressures.  People will, to varying degrees, recognize that they cannot rely on the cradle-to-cradle promise of lifetime employment by their nation state.  Instead, they will realize that they are all entrepreneurs in at least three—and possibly many more—separate enterprises:  one’s personal brand in interaction with the Legacy System (e.g. your conventional job), one’s localized self-sufficiency business (ranging from a back yard tomato plant to suburban homesteads and garage workshops), and one’s community entrepreneurship and network development.  As the constitutional basis of our already illusory Nation-State system… erode further, the focus on #2 (localized self-sufficiency) and #3 (community/networking) will gradually spread and increase in importance, though it may take much more than my lifetime to see them rise to general prominence in replacement of the Nation-State system.

In this chapter we will examine the general benefits of resilient local economies, consider some notable past examples of the phenomenon, and then survey some current experiments in resilient community which are especially promising as building blocks for a post-corporate society.

A.  Local Economies as Bases of Independence and Buffers Against Economic Turbulence

One virtue of the local economy is its insulation from the boom-bust cycle of the larger money economy….

The greater the share of consumption needs met through informal (barter, household and gift) economies, the less vulnerable individuals are to the vagaries of the business cycle, and the less dependent on wage labor as well.

The ability to meet one’s own consumption needs with one’s own labor, using one’s own land and tools, is something that can’t be taken away by a recession or a corporate decision to offshore production to China (or just to downsize the work force and speed up work for the survivors).  The ability to trade one’s surplus for other goods, with a neighbor also using his own land and tools, is also much more secure than a job in the capitalist economy.

Ralph Borsodi described the cumulative effect of the concatenation of uncertainties in an economy of large-scale factory production for anonymous markets:

Surely it is plain that no man can afford to be dependent upon some other man for the bare necessities of life without running the risk of losing all that is most precious to him.  Yet that is precisely and exactly what most of us are doing today.  Everybody seems to be dependent upon some one else for the opportunity to acquire the essentials of life.  The factory-worker is dependent upon the man who employs him; both of them are dependent upon the salesmen and retailers who sell the goods they make, and all of them are dependent upon the consuming public, which may not want, or may not be able, to buy what they may have made. [Flight From the City]

Imagine, on the other hand, an organic truck farmer who barters produce for clothing from a home seamstress living nearby.  Neither the farmer nor the seamstress can dispose of her full output in this manner, or meet all of her subsistence needs.  But both together have a secure and reliable source for all their sewing and vegetable needs, and a reliable outlet for the portion of the output of each that is consumed by the other.  The more trades and occupations brought into the exchange system, the greater the portion of total consumption needs of each that can be reliably met within a stable sub-economy.  At the same time, the less dependent each person is on outside wage income, and the more prepared to weather a prolonged period of unemployment in the outside wage economy.

Subsistence, barter, and other informal economies, by reducing the intermediate steps between production and consumption, also reduce the contingency involved in consumption.  If the realization of capital follows a circuit, as described by Marx in Capital, the same is also true of labor.  And the more steps in the circuit, the more likely the circuit is to be broken, and the realization of labor (the transformation of labor into use-value, through the indirect means of exchanging one’s own labor for wages, and exchanging those wages for use-value produced by someone else’s labor) is to fail….

Leopold Kohr, in the same vein, compared local economies to harbors in a storm in their insulation from the business cycle and its extreme fluctuations of demand…. [The Overdeveloped Nations]

Communities of locally owned small enterprises are much healthier economically than communities that are colonized by large, absentee-owned corporations.  For example, a 1947 study compared two communities in California:  one a community of small farms, and the other dominated by a few large agribusiness operations.  The small farming community had higher living standards, more parks, more stores, and more civic, social and recreational organizations.

Bill McKibben made the same point in Deep Economy.  Most money that’s spent buying stuff from a national corporation is quickly sucked out of the local economy, while money that’s spent at local businesses circulates repeatedly in the local economy and leaks much more slowly to the outside….

B.  Historical Models of Resilient Community

The prototypical resilient community, in the mother of all “Times of Troubles,” was the Roman villa as it emerged in the late Empire and early Dark Ages.  In Republican times, villas had been estates on which the country homes of the Senatorial class were located, often self-sufficient in many particulars and resembling villages in their own right.  During the stresses of the “long collapse” in the fifth century, and in the Dark Ages following the fall of the Western Empire, the villas became stockaded fortresses, often with villages of peasants attached.

Since the rise of industrial capitalism, economic depression and unemployment have been the central motive forces behind the creation of local exchange systems and the direct production for barter by producers.

A good example is the Owenites’ use of the social economy as a base of independence from wage labor.  According to E. P. Thompson, “[n]ot only did the benefit societies on occasion extend their activities to the building of social clubs or alms-houses; there are also a number of instances of pre-Owenite trade unions when on strike, employing their own members and marketing the product.”…  [E.P. Thompson, Making of the English Working Class]

Cooperative producers’ need for an outlet led to Labour Exchanges, where workmen and cooperatives could directly exchange their product so as “to dispense altogether with either capitalist employers or capitalist merchants.” Exchange was based on labor time. “Owen’s Labour Notes for a time not only passed current among members of the movement, but were widely accepted by private shopkeepers in payment for goods.”

The principle of labor-based exchange was employed on a large-scale. In 1830 the London Society opened an Exchange Bazaar for exchange of products between cooperative societies and individuals. The Co-operative Congress, held at Liverpool in 1832, included a long list of trades among its participants (the B’s alone had eleven). The National Equitable Labour Exchange, organized in 1832-33 in Birmingham and London, was a venue for the direct exchange of products between craftsmen, using Labour Notes as a medium of exchange.

The Knights of Labor, in the 1880s, undertook a large-scale effort at organizing worker cooperatives.  Their fate is an illustration of the central role of capital outlay requirements in determining the feasibility of self-employment and cooperative employment.

The first major wave of worker cooperatives, according to John Curl [For All the People], was under the auspices of the National Trades’ Union in the 1830s.  Like the Owenite trade union cooperatives in Britain, they were mostly undertaken in craft employments for which the basic tools of the trade were relatively inexpensive.  From the beginning, worker cooperatives were a frequent resort of striking workers…. This was a common pattern in early American labor history, and the organization of cooperatives moved from being purely a strike tactic to providing an alternative to wage labor.  It was feasible because most forms of production were done by groups of artisan laborers using hand tools.

By the 1840s, the rise of factory production with expensive machinery had largely put an end to this possibility.  As the prerequisites of production became increasingly unafforable, the majority of the population was relegated to wage labor with machinery owned by someone else.

Most attempts at worker-organized manufacturing, after the rise of the factory system, failed on account of the capital outlays required….

Ebenezer Howard’s Garden Cities were a way of “buying out at the bottom” (a phrase coined by Vinay Gupta—about whom more later):  building the cities on cheap rural land and using it with maximum efficiency. The idea was that workers would take advantage of the rent differential between city and country, make more efficient use of underused land than the great landlords and capitalists could, and use the surplus income from production in the new cities (collected as a single tax on the site value of land) for quickly paying off the original capital outlays. [To-Morrow]  Howard also anticipated something like counter-economics: working people living within his garden cities, working through building societies, friendly societies, mutuals, consumer and worker cooperatives, etc., would find ways to employ themselves and each other outside the wage system.

It is idle for working-men to complain of this self-imposed exploitation, and to talk of nationalizing the entire land and capital of this country under an executive of their own class, until they have first been through an apprenticeship at the humbler task of organising men and women with their own capital in constructive work of a less ambitious character….  The true remedy for capitalist oppression where it exists, is not the strike of no work, but the strike of true work, and against this last blow the oppressor has no weapon.  If labour leaders spent half the energy in co-operative organisation that they now waste in co-operative disorganisation, the end of our present unjust system would be at hand….

An interesting experiment in restoring the “circuit of labor” through barter exchange was Depression-era organizations like the Unemployed Cooperative Relief Organization and Unemployed Exchange Association….

Such ventures, like the Knights of Labor cooperatives, were limited by the capital intensiveness of so many forms of production.  The bulk of the labor performed within the barter networks was either in return for salvage goods in need of repair, for repairing such goods, or in return for unsold inventories of conventional businesses.  When the supply of damaged machinery was exhausted by house-to-house canvassing, and local businesses disposed of their accumulated inventory, barter associations reached their limit.  They could continue to function at a fairly low volume, directly undertaking for barter such low-capital forms of production as sewing, gardening on available land, etc., and trading labor for whatever percentage of output from otherwise idle capacity that conventional businesses were willing to barter for labor.  But that level was quite low compared to the initial gains from absorbing excess inventory and salvageable machinery in the early days of the system.  At most, once barter reached its sustainable limits, it was good as a partial mitigation of the need for wage labor.

But as production machinery becomes affordable to individuals independently of large employers, such direct production for barter will become increasingly feasible for larger and larger segments of the workforce.  [See also my review of Curl’s book at the P2P Blog.]

The Great Depression was a renaissance of local barter currencies or “emergency currencies,” adopted around the world, which enabled thousands of communities to weather the economic calamity with “the medium of exchange necessary for their activities, to give each other work.” [Bernard Lietaer, The Future of Money]

The revival of barter on the Internet coincides with a new economic downturn, as well.  A Craigslist spokesman reported in March 2009 that bartering had doubled on the site over the previous year….

Barter websites for exchanging goods and services without cash are proliferating around the world….

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