Homebrew Industrial Revolution Serialization: Chapter Seven, last installment

[Michel Bauwens has kindly invited me to serialize excerpts from my forthcoming book The Homebrew Industrial Revolution:  A Low-Overhead Manifesto.  This is the final installment.]

Chapter Seven.  The Alternative Economy as a Singularity

D.  Seeing Like a Boss

The contrast in agility and learning ability between stigmergic organizations and hierarchies… [is fundamental]

Eric Raymond sees the phase transition between forms of social organization as a response to insupportable complexity.  The professionalized meritocracies that managed the centralized state and large corporation through the middle of the 20th century were an attempt to manage complexity by applying Weberian and Taylorist rules.  And they did a passable job of managing the system competently for most of that time, he says.  But in recent years we’ve reached a level of complexity beyond their capacity to deal with….

The answer, under these conditions, is to “[a]dapt, decentralize, and harden”—i.e., to reconfigure the system along the stigmergic lines he described earlier in “The Cathedral and the Bazaar”:

Levels of environmental complexity that defeat planning are readily handled by complex adaptive systems. A CAS doesn’t try to plan against the future; instead, the agents in it try lots of adaptive strategies and the successful ones propagate. This is true whether the CAS we’re speaking of is a human immune system, a free market, or an ecology.


Since we can no longer count on being able to plan, we must adapt. When planning doesn’t work, centralization of authority is at best useless and usually harmful. And we must harden: that is, we need to build robustness and the capacity to self-heal and self-defend at every level of the system.

Compared to the stigmergic organization, a bureaucratic hierarchy is systematically stupid….

…[T]he point… is not that managers are inherently less intelligent or capable as individuals.  Rather, it’s that hierarchical organizations are—to borrow that wonderful phrase from Feldman and March—systematically stupid.  For all the same Hayekian reasons that make a planned economy unsustainable, no individual is “smart” enough to manage a large, hierarchical organization. Nobody–not Einstein, not John Galt–possesses the qualities to make a bureaucratic hierarchy function rationally. Nobody’s that smart, any more than anybody’s smart enough to run Gosplan efficiently–that’s the whole point. No matter how insightful and resourceful they are, no matter how prudent, as human beings in dealing with actual reality, nevertheless by their very nature hierarchies insulate those at the top from the reality of what’s going on below, and force them to operate in imaginary worlds where all their intelligence becomes useless.   No matter how intelligent managers are as individuals, a bureaucratic hierarchy makes their intelligence less usable.

In the case of network organization, just the opposite is the case:  networked, stigmergic organization promotes maximum usability of intelligence.

The fundamental reason for agility, in a self-managed peer network, is the lack of a bureaucratic hierarchy separating the worker from the end-user.  The main metric of quality is direct end-user feedback.  And in a self-managed peer network, “employee education” follows directly from what workers actually learn by doing their jobs.

In a corporate hierarchy, in contrast, most quality metrics are developed to inform bureaucratic intermediaries who are neither providers nor end-users of the company’s services….

Such nonsense results, of necessity, from a situation in which a bureaucratic hierarchy must develop some metric for assessing the skills or work quality of a labor force whose actual work they know nothing about.    When management doesn’t know (in Paul Goodman’s words) “what a good job of work is,” they are forced to rely on arbitrary metrics….

Most of the constantly rising burden of paperwork exists to give an illusion of transparency and control to a bureaucracy that is out of touch with the actual production process.  Most new paperwork is added to compensate for the fact that existing paperwork reflects poorly designed metrics that poorly convey the information they’re supposed to measure.  “If we can only design the perfect form, we’ll finally know what’s going on.”

Weberian work rules result of necessity when performance and quality metrics are not tied to direct feedback from the work process itself.  It is a metric of work for someone who is neither a creator/provider not an end user.

In a self-managed process, if we may recur to the terminology of James Scott cited in the previous chapter, work quality is horizontally legible to those directly engaged in it.  In a hierarchy, managers are forced to see “in a glass darkly” a process which is necessarily opaque to them because they are not directly engaged in it.  They are forced to carry out the impossible task of developing accurate metrics for evaluating the behavior of subordinates, based on the self-reporting of people with whom they have a fundamental conflict of interest.  All of the paperwork burden that management imposes on workers reflects an attempt to render legible a set of social relationships that by its nature must be opaque and closed to them, because they are outside of it.  Each new form is intended to remedy the heretofore imperfect self-reporting of subordinates.  The need for new paperwork is predicated on the assumption that compliance must be verified because those being monitored have a fundamental conflict of interest with those making the policy, and hence cannot be trusted; but at the same time, that paperwork relies on their self-reporting as the main source of information.  Every time new evidence is presented that this or that task isn’t being performed to management’s satisfaction, or this or that policy isn’t being followed, despite the existing reams of paperwork, management’s response is to design yet another form.  “If you don’t trust me to do the job right without filling out all these forms, why do you trust me to fill out the forms truthfully?”

The difficulties are inherent in the agency problem.  Human agency is inalienable….  There is no magical set of compliance paperwork or quality/performance metrics that will enable management to sit in the driver’s seat of the worker’s consciousness, to exercise direct control over his hands, or to look out through his eyes.

The only solution is to build incentives into the work itself, and into the direct relationships between the worker and customer, so that it is legible to them  It is necessary to create a situation in which creators/providers and end-users are the only parties directly involved in the provision of goods and services, so that metrics of quality are for them as well as of them.   Michel Bauwens writes:

The capacity to cooperate is verified in the process of cooperation itself. Thus, projects are open to all comers provided they have the necessary skills to contribute to a project. These skills are verified, and communally validated, in the process of production itself. This is apparent in open publishing projects such as citizen journalism: anyone can post and anyone can verify the veracity of the articles. Reputation systems are used for communal validation. The filtering is a posteriori, not a priori. Anti-credentialism is therefore to be contrasted to traditional peer review, where credentials are an essential prerequisite to participate.


P2P projects are characterized by holoptism. Holoptism is the implied capacity and design of peer to [peer] processes that allows participants free access to all the information about the other participants; not in terms of privacy, but in terms of their existence and contributions (i.e. horizontal information) and access to the aims, metrics and documentation of the project as a whole (i.e. the vertical dimension). This can be contrasted to the panoptism which is characteristic of hierarchical projects: processes are designed to reserve ‘total’ knowledge for an elite, while participants only have access on a ‘need to know’ basis. However, with P2P projects, communication is not top-down and based on strictly defined reporting rules, but feedback is systemic, integrated in the protocol of the cooperative system.

When you make a sandwich for yourself, or for a member of your family, you don’t need a third-party inspection regime to guarantee that the sandwich is up to snuff, because there is a fundamental unity of interest between you as sandwich maker and sandwich eater, or between you and the person you’re making food for.  And if the quality of the sandwich is substandard, you or your family know it because it tastes bad when they take a bite of it.  In other words, the process is run directly for the benefit of those engaged in it, and the quality feedback is built directly into the process itself.

It’s only when people are engaged in work with no intrinsic value or meaning to themselves, with which they don’t identify, which they don’t control, and which is for the benefit of people whose interests are fundamentally opposed to their own, that a complicated system of compliance and quality metrics are required to vouch for its quality to third parties removed from the immediate situation.  And in such circumstances, because the managerial hierarchy lacks the job-related tacit knowledge required to formulate meaningful metrics or evaluate incoming data, the function of the metrics and data is at best largely symbolic….  At worst, they reduce quality when people who don’t understand the work interfere with those who do.  So you wind up with a 300-page manual for making the sandwich, along with numerous other 300-page manuals for vendor specifications—and it still tastes like crap.

A classic example of the counterproductivity of using bureaucratic rules to obstruct the initiative of those directly involved in a situation is the story of a train fire which was widely circulated on the Internet (which, according to Snopes.Com, it turns out was legitimate).  A faulty bearing caused a wheel on one of the cars to overheat and melt down.  The crew, spotting the smoke, stopped the train in compliance with the rules.  Unfortunately, it came to rest on a wooden bridge with creosote ties.  Still more unfortunately, the management geniuses directing the crew from afar refused to budge on the rules, which prohibited moving the train.  As a result, the bridge burned and six burning coal cars dropped into the creek below….

Rigid hierarchies and rigid work rules only work in a predictable environment.  When the environment is unpredictable, the key to success lies with empowerment and autonomy for those in direct contact with the situation.  A good example is the Transportation Safety Administration’s response to the threat of Al Qaeda attacks.    As Matthew Yglesias has argued, “the key point about identifying al-Qaeda operatives is that there are extremely few al-Qaeda operatives so (by Bayes’ theorem) any method you employ of identifying al-Qaeda operatives is going to mostly reveal false positives.”  So (this is me talking) when your system for anticipating attacks upstream is virtually worthless, the “last mile” becomes monumentally important:  having people downstream capable of recognizing and thwarting the attempt, and with the freedom to use their own discretion in stopping it, when it is actually made.

An almost universal problem, when bureaucratic, stovepiped industrial design processes isolate designers from user feedback, is the “gold plated turd.”  Whenever a product is designed by one bureaucracy, for sale to procurement officers in another bureaucracy who are buying it for someone else’s use, a gold-plated turd is almost invariably the result….

Niall Cook, in Enterprise 2.0, describes the comparative efficiencies of social software outside the enterprise to the “enterprise software” in common use by employers.  Self-managed peer networks, and individuals meeting their own needs in the outside economy, organize their efforts through social software chosen by the users themselves based on its superior usability for their purposes.  And they are free to do so without corporate bureaucracies and their officially defined procedural rules acting as a ball and chain.  Enterprise software, in contrast, is chosen by non-users for use by other people of whose needs they know little (at best).  Hence enterprise software is frequently a gold-plated turd.  Blogs and wikis, and the free, browser-based platforms offered by Google and Mozilla, are a quantum improvement on the proprietary enterprise software that management typically forces on its employees.  The kinds of productivity software and social software freely available to individuals in their private lives is far better than the enterprise software that corporate bureaucrats buy for a captive clientele of users—consumer software capabilities amount to “a fully functioning, alternative IT department.”  Corporate IT departments, in contrast, “prefer to invest in a suite of tools ‘offered by a major incumbent vendor like Microsoft or IBM’.”  System specs are driven by management’s top-down requirements rather than by user needs….   Management is inclined “to conduct a detailed requirements analysis with the gestation period of an elephant simply in order to chose a $1,000 social software application.”  Employees often wind up using their company credit cards to purchase needed tools online rather than “wait for [the] IT department to build a business case and secure funding.”…

As a result of all this, people are more productive away from work than they are at work….

The parallels between Enterprise 2.0 and the military’s doctrines for Fourth Generation Warfare are striking.  …Fourth Generation Warfare doctrines are an attempt to take advantage of network communications technology and cybernetic information processing capabilities in order replicate, within a conventional military force, the agility and resilience of networked organizations like Al Qaeda….  The basic idea behind the new doctrines is, through the use of networked communications technology, to increase the autonomy and reduce the reaction time of the “boots on the ground” directly engaged in a situation.   But as John Robb suggested, military hierarchies wind up seeing the new communications technologies instead as a way of increasing mid-level commanders’ realtime control over operations, and increasing the number of sign-offs required to approve any proposed operation.   By the time those engaged in combat operations get the required eleven approvals of higher-ups, and the staff officers have had time to process the information into some kind of unrecognizable scrapple (PowerPoint presentations and all), the immediate situation has changed to the point that their original plan is meaningless anyway.

So the real thing—genuinely independent, self-managed networked resistance movements unimpeded by bureaucratic interference with the natural feedback and reaction mechanisms of a stigmergic organization—is incomparably better than the military hierarchy’s pallid imitations.

Similarly, Enterprise 2.0 is an attempt to replicate, within the boundaries of a corporation, the kinds of networked, stigmergic organization that Raymond wrote about in “The Cathedral and the Bazaar.”  But networked producers inside the corporation find themselves thwarted, at every hand, by bureaucratic impediments to their putting immediately into practice their own judgment of what’s necessary based on direct experience of the situation….

But in fairness to management, it’s not the stupidity of the individual; …it’s the stupidity of the organization.  Large, hierarchical organizations are systematically stupid, regardless of how intelligent and competent the people running them are.  By definition, nobody is smart enough to run a large, hierarchical organization, just as nobody’s smart enough to centrally plan an economy.

E.  The Implications of Reduced Physical Capital Costs

The informal and household economy reduces waste by its reliance on “spare cycles” of ordinary capital goods that most people already own.  It makes productive use of idle capital assets the average person owns anyway, provides a productive outlet for the surplus labor of the unemployed, and transforms the small surpluses of household production into a ready source of exchange value.

Let’s consider again our example of the home-based microenterprise—the microbrewery or restaurant—from Chapter Five….

The lower the initial capital outlays, and the lower the resulting overhead that must be serviced, the larger the percentage of its income stream belongs to the microenterprise without encumbrance—regardless of how much business it is able to do.  It is under no pressure to “go big or not go at all,” to “get big or get out,” or to engage in large batch production to minimize unit costs from overhead, because it has virtually no overhead costs.  So the microenterprise can ride out prolonged periods of slow business.  If the microenterprise is based in a household which owns its living space free and clear and has a garden and well-stocked pantry, the household may be able to afford to go without income during slow spells and live off its savings from busy periods.  Even if the household is dependent on some wage labor, the microenterprise in good times can be used as a supplemental source of income with no real cost or risk of the kind that would exist were there overhead to be serviced, and therefore enable a smaller wage income to go further in a household income-pooling unit….

Because the household economy and the microenterprise require few or no capital outlays, their burden of overhead is miniscule.  This removes the pressure to large-batch production.  It removes the pressure to get out of business altogether and liquidate one’s assets when business is slow, because there is no overhead to service.  Reduced overhead costs reduce the failure rate; they reduce the cost of staying in business indefinitely, enjoying revenue free and clear in good periods and riding out slow ones with virtually no loss….

F.  Strong Incentives and Reduced Agency Costs

…Wage labor and hierarchy are characterized by high degrees of “presenteeism.”  Because the management is so divorced from the actual production process, it has insufficient knowledge of the work to develop a reliable metric of actual work accomplished.  So it is required to rely on proxies for work accomplished, like the amount of time spent in the office and whether people “look busy.”  Workers, who have no intrinsic interest in the work and who get paid for just being there, have no incentive to use their time efficiently.

Under the “face time” paradigm of wage employment at a workplace away from home, there is no trade-off between work and leisure.  Anything done at work is “work,” for which one gets paid.  There is no opportunity cost to slacking off on the job.  In home employment, on the other hand, the trade-off between effort and consumption is clear.  The self-employed worker knows how much productive labor is required to support his desired level of consumption, and gets it done so he can enjoy the rest of his life.  If his work itself is a consumption good, he still balances it with the rest of his activities in a rational, utility-maximizing manner, because he is the conscious master of his time, and has no incentive to waste time because “I’m here anyway.”  Any “work” he does which is comparatively unproductive or unrewarding comes at the expense of more productive or enjoyable ways of spending his time.

At work, on the other hand, all time belongs to the boss.  A shift of work is an eight-hour chunk of one’s life, cut off and flushed down the toilet for the money it will bring.  And as a general rule, people do not make very efficient use of what belongs to someone else.

J.E. Meade contrasts the utility-maximizing behavior of a self-employed individual to that of a wage employee:

A worker hired at a given hourly wage in an Entrepreneurial firm will have to observe the minimum standard of work and effort in order to keep his job; but he will have no immediate personal financial motive… to behave in a way that will promote the profitability of the enterprise….  [A]ny extra profit due to his extra effort will in the first place accrue to the entrepreneur….


Let us go to the other extreme and consider a one-man Cooperative, i.e. a single self-employed worker who hires his equipment.  He can balance money income against leisure and other amenities by pleasing himself over hours of work, holidays, the pace and concentration of work, tea-breaks or the choice of equipment and methods of work which will make his work more pleasant at the cost of profitability.  Any innovative ideas which he has, he can apply at once and reap the whole benefit himself…. [“The Theory of Labour-Managed Firms and Profit Sharing,” in Jaroslav Vanek, ed., Self-Management:  Economic Liberation of Man]

Greenberg notes a “striking” fact:  “the vast difference in the number of supervisors and foremen found in conventional plants as compared with the plywood cooperatives.”

While the latter were quite easily able to manage production with no more than two per shift, and often with only one, the former often requires six or seven.  Such a disparity is not uncommon.  I discovered in one mill that had recently been converted from a worker-owned to a conventional, privately owned firm that the very first action taken by the new management team was to quadruple the number of line supervisors and foremen.  In the words of the general manager of this mill who had also been manager of the mill prior to its conversion,


We need more foremen because, in the old days, the shareholders supervised themselves….  They cared for the machinery, kept their areas picked up, helped break up production bottlenecks all by themselves.  That’s not true anymore.  We’ve got to pretty much keep on them all of the time…. [ Edward S. Greenberg.  “Producer Cooperatives and Democratic Theory” in Robert Jackall and Henry M. Levin, eds., Worker Cooperatives in America]

G.  Reduced Costs from Supporting Rentiers

The alternative economy reduces waste and increases efficiency by eliminating the burden of supporting a class of absentee investors.  By lowering the threshold of capital investment required to enter production, and easing the skids for self-employment at the expense of wage employment, the informal economy increases efficiency.  Because producer-owned property must support only the laborer and his family, the rate of return required to make the employment of land and capital worthwhile is reduced.  As a result, fewer productive resources are held out of use and there are more opportunities for productive labor.

The absentee ownership of capital skews investment in a different direction from what it would be in an economy of labor-owned capital, and reduces investment to lower levels. Investments that would be justified by the bare fact of making labor less onerous and increasing productivity, in an economy of worker-owned capital, must produce an additional return on the capital to be considered worth making in an economy of rentiers. It is directly analogous to the holding of vacant land out of use that might enable laborers to subsist comfortably, because it will not in addition produce a rent over and above the laborer’s subsistence.  As Thomas Hodgskin observed in Popular Political Economy,

It is maintained… that labour is not productive, and, in fact, the labourer is not allowed to work, unless, in addition to replacing whatever he uses or consumes, and comfortably subsisting himself, his labour also gives a profit to the capitalist…; or unless his labour produces a great deal more… than will suffice for his own comfortable subsistence.  Capitalists becoming the proprietors of all the wealth of the society… act on this principle, and never… will they suffer labourers to have the means of subsistence, unless they have a confident expectation that their labour will produce a profit over and above their own subsistence. This… is so completely the principle of slavery, to starve the labourer, unless his labour will feed his master as well as himself, that we must not be surprised if we should find it one of the chief causes… of the poverty and wretchedness of the labouring classes.

When capital equipment is owned by the same people who make and use it, or made and used by different groups of people who divide the entire product according to their respective labor and costs, it is productive. But when capital equipment is owned by a class of rentiers separate from those who make it or use it, the owners may be said more accurately to impede production rather than “contribute” to it….

The administrative and transaction costs of conventional commercial economy have a similar effect to that of rentier incomes:  they increase the number of people the laborer must support, in addition to himself, and thereby increase the minimum scale of output required for entering the market.  The social economy enables its participants to evade the overhead costs of conventional organization…, as described by Scott Burns in The Household Economy….

Marketplace labor must not only bear the institutional burden of taxation, it must also carry the overhead costs of organization and the cost of distribution.  Even the most direct service organizations charge two and one-half times the cost of labor.  The accountant who is paid ten dollars an hour is billed out to clients at twenty-five dollars an hour….  When both the general and the specific overhead burdens are considered, it becomes clear that any productivity that accrues to specialization is vitiated by the overhead burdens it must carry.


Consider, for example, what happens when an eight-dollar-an-hour accountant hires an eight-dollar-an-hour service repairman, and vice versa.  The repairman is billed out by his company at two and one-half times his hourly wage, or twenty dollars; to earn this money, the accountant must work three hours and twenty minutes, because 25 per cent of his wages are absorbed by taxes.  Thus, to be truly economically efficient, the service repairman must be at least three and one-third times as efficient as the accountant at repairing things.

The same principle applies to exchange, with household and informal arrangements requiring far less in the way of administrative overhead than conventional retailers.  Food buying clubs run out of people’s homes, barter bazaars and freecycling networks, the imploding transaction costs of aggregating information and putting buyer and seller together on Craigslist, etc., all involve little or no overhead cost.   Projects like FreeCycle, in fact, kill two birds with one stone:  they simultaneously provide a low-overhead alternative to conventional retail, and maximize the efficiency with which the alternative economy extracts the last drop of value from the waste byproducts of capitalism….

The shift to dispersed production in countless micro-enterprises also makes the alternative economy far less vulnerable to state taxation and imposition of artificial levels of overhead.  In an economy of large-scale, conventional production, the required scale of capital outlays and resulting visibility of enterprises provides a physical hostage for the state’s enforcement of overhead-raising regulations and “intellectual property” laws.

The conventional enterprise also provides a much larger target for taxation, with much lower costs for enforcement.  But as required physical capital outlays implode, and conventional manufacturing melts into a network of small machine shops and informal/household “hobby” shops, the targets become too small and dispersed to bother with.

This effect of rentier income, by the way, is just another example of a broader phenomenon we have been observing in various guises throughout this book:  the effect of any increase in the minimum capital outlay, overhead, etc., to carry out a function, is to increase the scale of production necessary to service fixed costs.  Overhead is a baffle that disrupts the flow from effort to output, and has an effect on the productive economy comparable to that of constipation or edema on the human body.

H.  The Stigmergic Non-Revolution

…A political movement is useful mainly for running interference, defending safe spaces in which we can build the real revolution—the revolution that matters….

Rather than focusing on ways to shift the correlation of forces between the state’s capabilities for violence and ours, it makes far more sense to focus on ways to increase our capabilities of living how we want below the state’s radar.  The networked forms of organization we’ve examined in Chapter Three and in this chapter are key to that process.

The focus on securing liberty primarily through political organization—organizing “one big movement” to make sure everybody is on the same page, before anyone can put one foot in front of the other—embodies all the worst faults of 20th century organizational culture.  What we need, instead, is to capitalize on the capabilities of network culture.

Network culture, in its essence, is stigmergic:  that is,  an “invisible hand” effect results from the several efforts of individuals and small groups working independently.  Such independent actors may have a view to coordinating their efforts with a larger movement, and take the actions of other actors into account, but they do so without any single coordinating apparatus set over and above their independent authority….

The best way to change “the laws,” in practical terms, is to make them irrelevant and unenforceable through counter-institution building and through counter-economic activity outside the state’s control….

Without the ability of governments to enforce their claimed powers, the claimed powers themselves are about as relevant as the edicts of the Emperor Norton.  That’s why Charles Johnson argues that it’s far more cost-effective to go directly after the state’s enforcement capabilities than to try to change the law.

In point of fact, if options other than electoral politics are allowed onto the table, then it might very well be the case that exactly the opposite course would be more effective: if you can establish effective means for individual people, or better yet large groups of people, to evade or bypass government enforcement and government taxation, then that might very well provide a much more effective route to getting rid of particular bad policies than getting rid of particular bad policies provides to getting rid of the government enforcement and government taxation….

It’s a principle anticipated over twenty years ago by Chuck Hammill, in an early celebration of the liberatory potential of network technology:

So, the next time you look at the political scene and despair, thinking, “Well, if 51% of the nation and 51% of this State, and 51% of this city have to turn Libertarian before I’ll be free, then somebody might as well cut my goddamn throat now, and put me out of my misery”—recognize that such is not the case. There exist ways to make yourself free.

This coincides to a large extent with what Dave Pollard calls “incapacitation”:  “rendering the old order unable to function by sapping what it needs to survive.”

But suppose if, instead of waiting for the collapse of the market economy and the crumbling of the power elite, we brought about that collapse, guerrilla-style,  by making information free, by making local communities energy self-sufficient, and by taking the lead in biotech away from government and corporatists (the power elite) by working collaboratively, using the Power of Many, Open Source, unconstrained by corporate allegiance, patents and ‘shareholder expectations’?…

One of the benefits of stigmergic organization, as we saw in earlier discussions of it, is that individual problems are tackled by the self-selected individuals and groups best suited to deal with them—and that their solutions are then passed on, via the network, to everyone who can benefit from them.  DRM may be so hard to crack that only a handful of geeks can do it; but that doesn’t mean, as the music and movie industries had hoped, that that would make “piracy” economically irrelevant.  When a handful of geeks figure out how to crack DRM today, thanks to stigmergic organization, grandmas will be downloading DRM-free “pirated” music and movies at torrent sites next week….

Statism will ultimately end, not as the result of any sudden and dramatic failure, but as the cumulative effect of a long series of little things.  The costs of enculturing individuals to the state’s view of the world, and of dissuading a large enough majority of people from disobeying when they’re pretty sure they’re not being watched, will result in a death of a thousand cuts.  More and more of the state’s activities, from the perspective of those running things, will just cost more (in terms not only of money but of just plain mental aggravation) than they’re worth.  The decay of ideological hegemony and the decreased feasibility of enforcement will do the same thing to the state that file-sharing is now doing to the RIAA.

One especially important variant of the stigmergic principle is educational and propaganda effort.  Even though organized, issue-oriented advocacy groups arguably can have a significant effect on the state, in pressuring the state to cease or reduce suppression of the alternative economy, the best way to maximize bang for the buck in such efforts is simply to capitalize on the potential of network culture:   that is, put maximum effort into just getting the information out there, giving the government lots and lots of negative publicity, and then “letting a thousand flowers bloom” when it comes to efforts to leverage it into political action.  That being done, the political pressure itself will be organized by many different individuals and groups operating independently, spurred by their own outrage, without even sharing any common antistatist ideology….

…When Woodward and Bernstein uncovered Watergate, they didn’t start trying to organize a political movement to capitalize on it.  They just published the info and a firestorm resulted….

In light of all this, the most cost-effective “political” effort is simply making people understand that they don’t need anyone’s permission to be free.  Start telling them right now that the law is unenforceable, and disseminating knowledge as widely as possible on the most effective ways of evading it.  Publicize examples of ways we can live our lives the way we want, with institutions of our own making, under the radar of the state’s enforcement apparatus:   local currency systems, free clinics, ways to protect squatter communities from harassment, and so on.  Educational efforts to undermine the state’s moral legitimacy, educational campaigns to demonstrate the unenforceability of the law, and efforts to develop and circulate means of circumventing state control, are all things best done on a stigmergic basis….

I.  The Singularity

The cumulative effect of all these superior efficiencies of peer production, and of the informal and household economy, is to create a singularity.

The problem, for capital, is that… the miniaturization and cheapness of physical capital, and the emergence of networked means of aggregating investment capital, are rendering capital increasingly superfluous.

The resulting crisis of realization is fundamentally threatening.  Not only is capital superfluous in the immaterial realm, but the distinction between the immaterial and material realms is becoming increasingly porous.  Material production, more and more, is taking on the same characteristics that caused the desktop computer to revolutionize production in the material realm.

The technological singularity means that labor is ceasing to depend on capital, and on wage employment by capital, for its material support.

For over two centuries, as Immanuel Wallerstein observed, the system of capitalist production based on wage labor has depended on the ability to externalize many of its reproduction functions on the non-monetized informal and household economies, and on organic social institutions like the family which were outside the cash nexus.

Historically, capital has relied upon its superior bargaining power to set the boundary between the money and social economies to its own advantage.  The household and informal economies have been allowed to function to the extent that they bear reproduction costs that would otherwise have to be internalized in wages; but they have been suppressed (as in the Enclosures) when they threaten to increase in size and importance to the point of offering a basis for independence from wage labor.

The employing classes’ fear of the subsistence economy made perfect sense.  For as Kropotkin asked:

If every peasant-farmer had a piece of land, free from rent and taxes, if he had in addition the tools and the stock necessary for farm labour—Who would  plough the lands of the baron?  Everyone would look after his own….


If all the men and women in the countryside had their daily bread assured, and their daily needs already satisfied, who would work for our capitalist at a wage of half a crown a day, while the commodities one produces in a day sell in the market for a crown or more?… [The Conquest of Bread]

“The household as an income-pooling unit,” Wallerstein writes, “can be seen as a fortress both of accommodation to and resistance to the patterns of labor-force allocation favored by accumulators.”  Capital has tended to favor severing the nuclear family household from the larger territorial community or extended kin network, and to promote an intermediate-sized income-pooling household.  The reason is that too small a household falls so far short as a basis for income pooling that the capitalist is forced to commodify too large a portion of the means of subsistence, i.e. to internalize the cost in wages. [“Household Structures and Labor-Force Formation in the Capitalist World Economy,” in Joan Smith, Immanuel Wallerstein, Hans-Dieter Evers, eds., Households and the World Economy]   It is in the interest of the employer not to render the worker totally dependent on wage income, because without the ability to carry out some reproduction functions through the production of use value within the household subsistence economy, the worker will be “compelled to demand higher real wages….” [Wallerstein and Joan Smith, “Households as an institution of the world-economy,” in Smith and Wallerstein, eds., Creating and Transforming Households:  The constraints of the world-economy]  On the other hand, too large a household meant that “the level of work output required to ensure survival was too low,” and “diminished pressure to enter the wage-labor market.”

It’s only common sense that when there are multiple wage-earners in a household, their dependence on any one job is reduced, and the ability of each member to walk away from especially onerous conditions is increased:  “While a family with two or more wage-earners is no less dependent on the sale of labor power in general, it is significantly shielded from the effects of particular unemployment…” [Samuel Bowles and Herbert Gintis. “The Crisis of Liberal Democratic Capitalism:  The Case of the United States,” Politics and Society 11:1 (1982)]  And in fact it is less dependent on the sale of labor power in general, to the extent that the per capita overhead of fixed expenses to be serviced falls as household size increases.  And the absolute level of fixed expenses can also be reduced by substituting the household economy for wage employment, in part, as the locus of value creation….

The new factor today is a revolutionary shift in competitive advantage from wage labor to the informal economy.  The rapid growth of technologies for home production, based on small-scale electrically powered machinery and new forms of intensive cultivation, has radically altered the comparative efficiencies of large- and small-scale production….

The practical choice presented to labor by this shift of comparative advantage was ably stated by Marcin Jakubowski, whose Factor E Farm is one of the most notable attempts to integrate open manufacturing and digital fabrication with an open design repository:

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:


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

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.


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.


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

In other words, how ya gonna keep ’em down in the factory, when the cost of getting your own garage factory has fallen to two months’ wages?

As James O’Connor described the phenomenon in the 1980s, “the accumulation of stocks of means and objects of reproduction within the household and community took the edge off the need for alienated labor.”

Labor-power was hoarded through absenteeism, sick leaves, early retirement, the struggle to reduce days worked per year, among other ways.  Conserved labor-power was then expended in subsistence production….  The living economy based on non- and anti-capitalist concepts of time and space went underground:  in the reconstituted household; the commune; cooperatives; the single-issue organization; the self-help clinic; the solidarity group.  Hurrying along the development of the alternative and underground economies was the growth of underemployment… and mass unemployment associated with the crisis of the 1980s.  “Regular” employment and union-scale work contracted, which became an incentive to develop alternative, localized modes of production….


…New social relationships of production and alternative employment, including the informal and underground economies, threatened not only labor discipline, but also capitalist markets….  Alternative technologies threatened capital’s monopoly on technological development…  Hoarding of labor-power threatened capital’s domination of production.  Withdrawal of labor-power undermined basic social disciplinary mechanisms…. [Accumulation Crisis]

To reiterate:  we’re experiencing a singularity in which it is becoming impossible for capital to prevent a shift in the supply of an increasing proportion of the necessities of life from mass produced goods purchased with wages, to small-scale production in the informal and household sector.  The upshot is likely to be something like Vinay Gupta’s “Unplugged” movement, in which the possibilities for low-cost, comfortable subsistence off the grid result in exactly the same situation, the fear of which motivated the propertied classes in carrying out the Enclosures:  a situation in which the majority of the public can take wage labor or leave it, if it takes it at all, the average person works only on his own terms when he needs supplemental income for luxury goods and the like, and (even if he considers supplemental income necessary in the long run for an optimal standard of living) can afford in the short run to quit work and live off his own resources for prolonged periods of time, while negotiating for employment on the most favorable terms.  It will be a society in which workers, not employers, have the greater ability to walk away from the table.  It will, in short, be the kind of society Wakefield lamented in the colonial world of cheap and abundant land:  a society in which labor is hard to get on any terms, and almost impossible to hire at a low enough wage to produce significant profit….

Gupta’s short story “The Unplugged” related his vision of how such a singularity would affect life in the West.

To “get off at the top” requires millions and millions of dollars of stored wealth. Exactly how much depends on your lifestyle and rate of return, but it’s a lot of money, and it’s volatile depending on economic conditions. A crash can wipe out your capital base and leave you helpless, because all you had was shares in a machine.


So we Unpluggers found a new way to unplug: an independent life-support infrastructure and financial architecture—a society within society—which allowed anybody who wanted to “buy out” to “buy out at the bottom” rather than “buying out at the top.”


If you are willing to live as an Unplugger does, your cost to buy out is only around three months of wages for a factory worker, the price of a used car. You never need to “work” again—that is, for money which you spend to meet your basic needs.

The more technical advances lower the capital outlays and overhead for production in the informal and household economy, the more the economic calculus is shifted in the way described by Jakubowski above.


We have seen throughout this chapter the superiority of  the alternative economy, in terms of a number of different conceptual models—Robb’s STEMI compression, Ceesay’s economies of agility, Gupta’s distributed infrastructure, and Cravens’ productive recursion—to the corporate capitalist economy.  All these superiorities can be summarized as the ability to make better use of material inputs than capitalism, and the ability to make use of the waste inputs of capitalism.

Localized, small-scale economies are the rats in the dinosaurs’ nests.  The informal and household economy operates more efficiently than the capitalist economy, and can function on the waste byproducts of capitalism.  It is resilient and replicates virally.  In an environment in which resources for technological development have been almost entirely diverted toward corporate capitalism, it takes technologies that were developed to serve corporate capitalism, adapts them to small-scale production, and uses them to destroy corporate capitalism.  In fact, it’s almost as though the dinosaurs themselves had funded a genetic research lab to breed mammals:  “Let’s reconfigure the teeth so they’re better for sucking eggs, and ramp up the metabolism to survive a major catastrophe—like, say, an asteroid collision.  Nah, I don’t really know what it would be good for—but what the fuck, the Pangean Ministry of Defense is paying for it!”

To repeat, there are two economies competing:  their old economy of bureaucracy, high overhead, enormous capital outlays, and cost-plus markup, and our new economy of agility and low overhead.  And in the end… we will bury them.

1 Comment Homebrew Industrial Revolution Serialization: Chapter Seven, last installment

  1. AvatarPoor Richard

    Even in natural systems like ant and bee colonies we see a combination of stigmergy and hierarchy. Limited hierarchy per se can have utility–I wouldn’t eliminate it from the toolbox. The limits of organization (see Kenneth Arrow’s book of that name) are more related to the lack or failure of appropriate feedback loops. That is why, for example, small systems are often easier to sustain than large ones.

    I agree that complexity is a key issue, but by its very nature complexity is not amenable to over-simplified approaches. Of course, the very nature of the brain and its limited cognitive resources inclines us to over-simplify.

    The discussion in this article is broad and thought-provoking, but certain conclusions or inferences may be not be as generalizable as we’d hope.

    One generalization that may be warranted is that, to paraphrase Speaker of the House Tip O’Neill’s observation that “all politics is local”– all socio-economic behavior is local. A closely related generalization is “Think global, act local” (“…attributed to Scots town planner and social activist Patrick Geddes.[1] Although the exact phrase does not appear in Geddes’ 1915 book “Cities in Evolution,” [2] the idea (as applied to city planning) is clearly evident: ” ‘Local character’ is thus no mere accidental old-world quaintness, as its mimics think and say. It is attained only in course of adequate grasp and treatment of the whole environment, and in active sympathy with the essential and characteristic life of the place concerned.” ~ http://en.wikipedia.org/wiki/Think_Globally,_Act_Locally)

    “[A]dequate grasp and treatment of the whole environment…in active sympathy with the essential and characteristic life of the place [and people] concerned” is a good rule of thumb.

    All the other social and economic ideas of the past, present, and future belong in the socio-economic hackers’ toolbox, for use when and where appropriate. There is no ideological, or one-hack-fits-all, solution.


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