Homebrew Industrial Revolution: Chapter Six (Second 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 few weeks, I will conclude with the last series of two excerpts each from Chapters Six and Seven.]

Chapter Six:  Resilient Communities and Local Economies

C.  Resilience, Primary Social Units, and Libertarian Values

As the crisis progresses, and with it the gradually increasing underemployment and unemployment and the partial shift of value production from wage labor to the informal sector, we can probably expect to see several converging trends:  a long-term decoupling of health care and the social safety net from both state-based and employer-based provision of benefits; shifts toward shorter working hours and job-sharing; and the growth of all sorts of income-pooling and cost-spreading mechanisms in the informal economy….

More fundamentally, they are likely to entail people coalescing into primary social units at the residential level (extended family compounds or multi-family household income-pooling units, multi-household units at the neighborhood level, urban communes and other cohousing projects, squats, and stand-alone intentional communities), as a way of pooling income and reducing costs.  As the state’s social safety nets come apart, such primary social units and extended federations between them are likely to become important mechanisms for pooling cost and risk and organizing care for the aged and sick.   One early sign of a trend in that direction:  multi-generational or extended family households are at a fifty-year high, growing five percent in the first year of the Great Recession alone.  Here’s how John Robb describes it:

My solution is to form a tribal layer.  Resilient communities that are connected by a network platform (a darknet).  A decentralized and democratic system that can provide you a better interface with the dominant global economic system than anything else I can think of.  Not only would this tribe protect you from shocks and predation by this impersonal global system, it would provide you with the tools and community support necessary to radically improve how you and your family does [sic] across all measures of consequence.

Poul Anderson, in the fictional universe of his Maurai series, envisioned a post-apocalypse society in the Pacific Northwest coalescing around the old fraternal lodges, with the Northwestern Federation (a polity extending from Alaska through British Columbia down to northern California) centered on lodges rather than geographical subdivisions as the component units represented in its legislature.  The lodge emerged as the central social institution during the social disintegration following the nuclear war, much as the villa became the basic social unit of the new feudal society in the vacuum left by the fall of Rome.  It was the principal and normal means for organizing benefits to the sick and unemployed, as well as the primary base for providing public services like police and fire protection….

It’s to be hoped that, absent a thermonuclear war, the transition will be a bit less abrupt.  Upward-creeping unemployment, the exhaustion of the state’s social safety net, and the explosion of affordable technologies for small-scale production and network organization, taken together, will likely encounter an environment in which the incentives for widespread experimentation are intense….

An article by Reihan Salam in Time Magazine, of all places, put a comparatively upbeat spin on the possibilities:

Imagine a future in which millions of families live off the grid, powering their homes and vehicles with dirt-cheap portable fuel cells. As industrial agriculture sputters under the strain of the spiraling costs of water, gasoline and fertilizer, networks of farmers using sophisticated techniques that combine cutting-edge green technologies with ancient Mayan know-how build an alternative food-distribution system. Faced with the burden of financing the decades-long retirement of aging boomers, many of the young embrace a new underground economy, a largely untaxed archipelago of communes, co-ops, and kibbutzim that passively resist the power of the granny state while building their own little utopias.

Rather than warehouse their children in factory schools invented to instill obedience in the future mill workers of America, bourgeois rebels will educate their kids in virtual schools tailored to different learning styles. Whereas only 1.5 million children were homeschooled in 2007, we can expect the number to explode in future years as distance education blows past the traditional variety in cost and quality. The cultural battle lines of our time, with red America pitted against blue, will be scrambled as Buddhist vegan militia members and evangelical anarchist squatters trade tips on how to build self-sufficient vertical farms from scrap-heap materials. To avoid the tax man, dozens if not hundreds of strongly encrypted digital currencies and barter schemes will crop up, leaving an underresourced IRS to play whack-a-mole with savvy libertarian “hacktivists.”

Work and life will be remixed, as old-style jobs, with long commutes and long hours spent staring at blinking computer screens, vanish thanks to ever increasing productivity levels. New jobs that we can scarcely imagine will take their place, only they’ll tend to be home-based, thus restoring life to bedroom suburbs that today are ghost towns from 9 to 5. Private homes will increasingly give way to cohousing communities, in which singles and nuclear families will build makeshift kinship networks in shared kitchens and common areas and on neighborhood-watch duty. Gated communities will grow larger and more elaborate, effectively seceding from their municipalities and pursuing their own visions of the good life. Whether this future sounds like a nightmare or a dream come true, it’s coming.

This transformation will be not so much political as antipolitical. The decision to turn away from broken and brittle institutions, like conventional schools and conventional jobs, will represent a turn toward what military theorist John Robb calls “resilient communities,” which aspire to self-sufficiency and independence. The left will return to its roots as the champion of mutual aid, cooperative living and what you might call “broadband socialism,” in which local governments take on the task of building high-tech infrastructure owned by the entire community. Assuming today’s libertarian revival endures, it’s easy to imagine the right defending the prerogatives of state and local governments and also of private citizens — including the weird ones. This new individualism on the left and the right will begin in the spirit of cynicism and distrust that we see now, the sense that we as a society are incapable of solving pressing problems. It will evolve into a new confidence that citizens working in common can change their lives and in doing so can change the world around them.

I strongly suspect that, in whatever form of civil society stabilizes at the end of our long collapse, the typical person will be born into a world where he inherits a possessory right to some defined share in the communal land of an extended family or cohousing unit, and to some minimal level of support from the primary social unit in times of old age and sickness or unemployment in return for a customarily defined contribution to the common fund in his productive years.  It will be a world in which the Amish barn-raiser and the sick benefit societies of Kropotkin and E.P. Thompson play a much more prominent role than Prudential or the anarcho-capitalist “protection agency.”

Getting from here to there will involve a fundamental paradigm shift in how most people think, and the overcoming of centuries worth of ingrained habits of thought.  This involves a paradigm shift from what James Scott, in Seeing Like a State, calls social organizations that are primarily “legible” to the state, to social organizations that are primary legible or transparent to the people of local communities organized horizontally and opaque to the state.

The latter kind of architecture, as described by Kropotkin, was what prevailed in the networked free towns and villages of late medieval Europe.  The primary pattern of social organization was horizontal (guilds, etc.), with quality certification and reputational functions aimed mainly at making individuals’ reliability transparent to one another.  To the state, such local formations were opaque.

With the rise of the absolute state, the primary focus became making society transparent (in Scott’s terminology “legible”) from above, and horizontal transparency was at best tolerated….

To accomplish a shift back to horizontal transparency, it will be necessary to overcome a powerful residual cultural habit, among the general public, of thinking of such things through the mind’s eye of the state.  E.g., if “we” didn’t have some way of verifying compliance with this regulation or that, some business somewhere might be able to get away with something or other.  We must overcome six hundred years or so of almost inbred habits of thought, by which the state is the all-seeing guardian of society protecting us from the possibility that someone, somewhere might do something wrong if “the authorities” don’t prevent it.

In place of this habit of thought, we must think instead of ourselves creating mechanisms on a networked basis, to make us as transparent as possible to each other as providers of goods and services,  to prevent businesses from getting away with poor behavior by informing each other, to prevent each other from selling defective merchandise, to protect ourselves from fraud, etc.  In fact, the creation of such mechanisms—far from making us transparent to the regulatory state—may well require active measures to render us opaque to the state (e.g. encryption, darknets, etc.) for protection against attempts to suppress such local economic self-organization against the interests of corporate actors.

In other words, we need to lose the centuries-long habit of thinking of “society” as a hub-and-spoke mechanism and viewing the world from the perspective of the hub, and instead think of it as a horizontal network in which we visualize things from the perspective of individual nodes.  We need to lose the habit of thought by which transparency from above ever even became perceived as an issue in the first place.

This will require, more specifically, overcoming the hostility of conventional liberals who are in the habit of reacting viscerally and negatively, and on principle, to anything not being done by “qualified professionals” or “the proper authorities.”

Arguably conventional liberals, with their thought system originating as it did as the ideology of the managers and engineers who ran the corporations, government agencies, and other giant organizations of the late 19th and early 20th century, have played the same role for the corporate-state nexus that the politiques did for the absolute states of the early modern period.

This is reflected in a common thread running through writers like Andrew Keene, Jaron Lanier, and Chris Hedges, as well as documentary producers like Michael Moore.  They share a nostalgia for the “consensus capitalism” of the early postwar period, in which the gatekeepers of the Big Three networks controlled what we were allowed to see and it was just fine for GM to own the whole damned economy—just so long as everyone had a lifetime employment guarantee and a UAW contract….

Keith Olbermann routinely mocks exhortations to charity and self-help, reaching for shitkicking imagery of the nineteenth century barnraiser for want of any other comparision to sufficiently get across just how backward and ridiculous that kind of thing really is.  Helping your neighbor  out directly, or participating in a local self-organized friendly society or mutual, is all right in its own way, if nothing else is available.  But it carries the inescapable taint, not only of the quaint, but of the provincial and the picayune—very much like the perception of homemade bread and home-grown veggies promoted in corporate advertising in the early twentieth century, come to think of it.  People who help each other out, or organize voluntarily to pool risks and costs, are to be praised—grudgingly and with a hint of condescension—for doing the best they can in an era of relentlessly downscaled social services.  But that people are forced to resort to such expedients, rather than meeting all their social safety net needs through one-stop shopping at the Ministry of Central Services office in a giant monumental building with a statue of winged victory in the lobby, a la Brazil, is a damning indictment of any civilized society.  The progressive society is a society of comfortable and well-fed citizens, competently managed by properly credentialed authorities, happily milling about like ants in the shadows of miles-high buildings that look like they were designed by Albert Speer.  And that kind of H.G. Wells utopia simply has no room for the barn-raiser or the sick benefit society.

Aesthetic sensibilities aside, such critics are no doubt motivated to some extent by genuine concern that networked reputational and certifying mechanisms just won’t take up the slack left by the disappearance of the regulatory state.   Things like Consumer Reports, Angie’s List and the Better Business Bureau are all well and good, for educated people like themselves who have the sense and know-how to check around.  But Joe Sixpack, God love him, will surely just go out and buy magic beans from the first disreputable salesman he encounters—and then likely put them right up his nose.

Seriously, snark aside, such reputational systems really are underused, and most people really do take inadequate precautions in the marketplace on the assumption that the regulatory state guarantees some minimum acceptable level of quality.  But liberal criticism based on this state of affairs reflects a remarkably static view of society.  It ignores the whole idea of crowding out, as well as the possibility that even the Great Unwashed may be capable of changing their habits quite rapidly in the face of necessity.  Because people are not presently in the habit of automatically consulting such reputational networks to check up on people they’re considering doing business with, and are in the habit of unconsciously assuming the government will protect them, conventional liberals assume that people will not shift from one to the other in the face of changing incentives, and scoff at the idea of a society that relies primarily on networked rating systems.

But in a society where people are aware that most licensing and safety/quality codes are no longer enforceable, and “caveat emptor” is no longer just a cliche, it would be remarkable if things like Angie’s list, reputational certification by local guilds, customer word of mouth, etc., did not rapidly grow in importance for most people. They were, after all, at one time the main reputational mechanism that people did rely on before the rise of the absolute state, and as ingrained a part of ordinary economic behavior as reliance on the regulatory state is today.

People’s habits change rapidly.  Fifteen years ago, when even the most basic survey of a research topic began with an obligatory painful crawl through the card catalog, Reader’s Guide and Social Science Index—and when the average person’s investigations were limited to the contents of his $1000 set of Britannica—who could have foreseen how quickly Google and SSRN searches would become second nature?

In fact, if anything the assumption that “they couldn’t sell it if it wasn’t OK, because it’s illegal” leaves people especially vulnerable, because it creates an unjustified confidence and complacency regarding what they buy.  The standards of safety and quality, based on “current science,” are set primarily by the regulated industries themselves, and those industries are frequently able to criminalize voluntary safety inspections with more stringent standards—or advertising that one adheres to such a higher standard—on the grounds that it constitutes disparagement of the competitor’s product.  For example, Monsanto frequently goes after grocers who label their milk rBGH free, and some federal district courts have argued that it’s an “unfair competitive practice” to test one’s beef cattle for Mad Cow Disease more frequently than the mandated industry standard.  We have people slathering themselves with lotion saturated with estrogen-mimicing parabens, on the assumption that “they couldn’t sell it if it was dangerous.”  So in many cases, this all-seeing central authority we count on to protect us is like a shepherd that puts the wolves in charge of the flock.

D.  LETS Systems, Barter Networks, and Community Currencies

Local currencies, barter networks and mutual credit-clearing systems are a solution to a basic problem:  “a world in which there is a lot of work to be done, but there is simply no money around to bring the people and the work together.” [Lietaer]

Unconventional currencies are buffers against unemployment and economic downturn..

One barrier to local barter currencies and crowdsourced mutual credit is a misunderstanding of the nature of money.  For the alternative economy, money is not primarily a store of value, but an accounting system to facilitate  exchange.  Its function is not to store accumulated value from past production, but to provide liquidity to facilitate the exchange of present and future services between producers….

E. C. Riegel [Private Enterprise Money] argues that issuing money is a function of the individual within the market, a side-effect of his normal economic activities.  Currency is issued by the buyer by the very act of buying, and it’s backed by the goods and services of the seller.

Money can be issued only in the act of buying, and can be backed only in the act of selling. Any buyer who is also a seller is qualified to be a money issuer. Government, because it is not and should not be a seller, is not qualified to be a money issuer.

Money is simply an accounting system for tracking the balance between buyers and sellers over time.

And because money is issued by the buyer, it comes into existence as a debit.  The whole point of money is to create purchasing power where it did not exist before:  “…[N]eed of money is a condition precedent to the issue thereof. To issue money, one must be without it, since money springs only from a debit balance on the books of the authorizing bank or central bookkeeper.”

IF MONEY is but an accounting instrument between buyers and sellers, and has no intrinsic value, why has there ever been a scarcity of it? The answer is that the producer of wealth has not been also the producer of money. He has made the mistake of leaving that to government monopoly.

Money is “simply number accountancy among private traders.”  Or as Riegel’s disciple Thomas Greco argues, currencies are not “value units” (in the sense of being stores of value).  They are means of payment denominated in value units. [Money and Debt]

In fact, as Greco says, “barter” systems are more accurately conceived as “credit clearing” systems.  In a mutual credit clearing system, rather than cashing in official state currency for alternative currency notes (as is the case in too many local currency systems), participating businesses spend the money into existence by incurring debits for the purchase of goods within the system, and then earning credits to offset the debits by selling their own services within the system.  The currency functions as a sort of IOU by which a participant monetizes the value of his future production.  It’s simply an accounting system for keeping track of each member’s balance…  [The End of Money and the Future of Civilization]

There’s no reason businesses cannot maintain a mutual credit-clearing system between themselves, without the intermediary of a bank or any other third party currency or accounting institution.  The businesses agree to accept each other’s IOUs in return for their own goods and services, and periodically use the clearing process to settle their accounts….

The point of the mutual credit clearing system, as Greco describes it, is that two people who have goods and services to offer—but no money—are able to use their goods and services to buy other goods and services, even when there’s “no money.”…

There has been a new revival of local currency systems starting in the 1990s with the Ithaca Hours system and spreading to a growing network of LETS currencies.

But Ted Trainer, a specialist on relocalized economies who writes at “The Simpler Way” site, points out that LETS systems are, by themselves, largely worthless.  The problem with LETS systems, by themselves, is that

most people do not have much they can sell, i.e., they do not have many productive skills or the capital to set up a firm.  It is therefore not surprising that LETSystems typically do not grow to account for more than a very small proportion of a town’s economic activity….  What is needed and what LETSystems do not create is productive capacity, enterprises.  It will not set up a cooperative bakery in which many people with little or no skill can be organised to produce their own bread.

So the crucial element becomes clear.  Nothing significant can be achieved unless people acquire the capacity to produce and sell things that others want….

The core task in town economic renewal is to enable, indeed create a whole new sector of economic activity involving the people who were previously excluded from producing and earning and purchasing. This requires much more than just providing the necessary money; it requires the establishment of firms in which people a can produce and earn….

Trainer’s critique of stand-alone LETS systems makes a lot of sense.  When people earn official dollars in the wage economy, and then trade them in for local currency notes at the local bank that can only be spent in local businesses, they’re trading dollars they already have for something that’s less useful; local currency, in those circumstances, becomes just another greenwashed yuppie lifestyle choice financed by participation in the larger capitalist economy.  As Greco puts it,

a community currency that is issued on the basis of payment of a national currency (e.g., a local currency that is sold for dollars), amounts to a “gift certificate” or localized “traveler’s check.”  It amounts to prepayment for the goods or services offered by the merchants that agree to accept the currency.  That approach provides some limited utility in encouraging the holder of the currency to buy locally…  [But] that sort of issuance requires that someone have dollars in order for the community currency to come into existence….

Trainer’s main limitation is his focus on large-scale capital investment in conventional enterprises as the main source of employment.  In examining the need for capital for setting up viable firms, he ignores the enormous amounts of capital that already exist.

The capital exists in the form of the ordinary household capital goods that most people already own, sitting idle in their own homes:  the ordinary kitchen ovens that might form the basis of household microbakeries producing directly for credit in the barter network; the sewing machines that might be used to make clothes for credit in the network; the family car and cell phone that might be used to provide cab service for the network in exchange for credit toward other members’ goods and services; etc.  The unemployed or underemployed carpenter, plumber, electrician, auto mechanic, etc., might barter his services for credit to purchase tomatoes from a market gardener within the network, for the microbaker’s bread or the seamstress’s shirts, and so forth.  The “hobbyist” with a well-equipped workshop in his basement or back yard might custom machine replacement parts to keep the home appliances of the baker, market gardener, and seamstress working, in return for their goods and services.  Eventually “hobbyist” workshops and small local machine shops might begin networked manufacturing for the barter network, perhaps even designing their own open-source products with CAD software and producing them with CNC machine tools.

Hernando de Soto, in The Mystery of Capital, pointed to the homes and plots of land, to which so many ordinary people in the Third World hold informal title, as an enormous source of unrealized investment capital.  Likewise, the spare capacity of people’s ordinary household capital goods is a potentially enormous source of “plant and equipment” for local alternative economies centered on the informal and household sector.

There is probably enough idle oven capacity in the households of the average neighborhood or small town to create the equivalent of a hundred cooperative bakeries.  Why waste the additional outlay cost, and consequent overhead, for relocating this capital to a stand-alone building?…

E.  Community Bootstrapping

[This section is largely based on the material in two posts at the P2P Foundation Blog]

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