Good summary of the main thesis of the excellent Organization Theory book by Kevin Carson, which I’m in the process of reading.
“The rise of mass-production industry did not result from the “ineluctable economic logic” of superior efficiency.
In fact, I believe that with a few exceptions, small-scale factory production on the Emilia-Romagna model (integrating general-purpose powered machinery into craft production, with small batches and frequent changes between production runs, geared to local demand on a just-in-time basis) is *more* efficient than mass-production when the latter’s costs of long-distance shipping and push-distribution are taken into account.
I agree with Borsodi and Mumford that the invention of the electric motor eliminated the main imperative behind the large factory (economizing on horsepower from a single prime mover), and put the household and small shop on an even footing with the “Dark Satanic Mill.” Most of the economies of machine production are captured with the bare adoption of machinery on a small scale; the modest additional reductions in unit production cost with large-scale machinery are more than offset by increased costs of distribution and marketing.
In a free market, American industrialization arguably would have taken the pattern of a hundred Emilia-Romagnas. Instead, the state tipped the balance with massive railroad subsidies, “intellectual property” law, tariffs, regulatory cartelization, etc. Electrical machinery, rather than living up to the full decentralizing potential of Mumford’s “neotechnic” revolution, was fitted into the older organizational forms of the paleotechnic era. So what we wound up with was Sloanist mass-production: enormously expensive product-specific machinery, which mandated large-batch production 24/7 to minimize unit costs, which mandated in turn corporate control over external society to make sure the stuff would be bought up and the wheels could keep turning. When you figure the enormous amounts of crystalized labor wasted to keep the system running (the buffer stocks of unfinished goods and the inventories of finished goods awaiting orders, described by Waddell and Bodek in Rebirth of American industry; and the mountains of discarded products in landfills that could have been better designed around modular components for easy repair and long life), it’s not really that economical.
In fact the costs of extending Adam Smith’s market area exceed, in most cases, the savings from increased division of labor. The problem is that the state subsidized those costs and externalized them on taxpayers.
In some cases, like heavy engine blocks, the large mass-production factory really is most efficient in absolute terms. But in most such cases, I would argue that the product is itself an answer to an artificial problem created by the state. The present extent of demand for cars results from state subsidies to sprawl and monoculture. The civilian jumbo jet almost certainly would never have come into existence on its own nickel, abseent the heavy bomber program to fully utilize the expensive machine tools required to produce it.
The most prominent case I can think of of a genuinely valuable product that requires large-scale production, is the microprocessor foundry–but even there the scale of demand would be considerably reduced by easily reprogrammable chips (in which case chips would be harvested from landfills on the same pattern as local minimills harvesting scrap metal).
Without government subsidies to economic centralization and capital-intensive production methods, IMO our economy would look a lot more like Borsodi and Mumford, and a lot less like Chandler and Schumpeter.”