A “New New Deal” for the Old Economy

A disconcerting part of the (small g) greenish, cooperative and alternative economy movements is fond of proposals for “New Deals” of one kind or another (Green New Deal, and so forth). I say “disconcerting” because, given the broad tendency of those movements to favor decentralism, economic relocalization and horizontal governance, the New Deal is — to put it mildly — a very odd paradigm to appeal to. It’s especially difficult for so-called “Progressives,” whose movement is a combination of elements — mid-20th century mass-production liberalism and a heavily diluted, greenwashed New Leftish sensibility from the ’60s — that mix about as well as oil and water.

Such resurrected “New Deal” proposals periodically surface in the form of proposals like Michael Moore’s to retool Detroit and put people to work by the millions building bullet trains, or Warren Buffet’s to do the same with wind farms and building out a “smart grid.” Most recently, we see it in economist Joseph Stiglitz’s proposals in the Roosevelt Institute’s “Rewriting the Rules of the American Economy: An Agenda for Growth and Shared Prosperity.”

In it, Stiglitz proposes what amounts to a “New New Deal” (that’s not his term, but Anna Bergren Miller’s — “A New New Deal from the Roosevelt Institute,” Shareable, Oct. 1). As Miller notes, the report “really does feel like a throwback to Great Depression-era America,” with policy proposals like “full employment” and “make-work infrastructure programs … that seem curiously out of touch with both contemporary technology and the growing sharing movement.”

Reading through the report myself, I see a few deviations from the conventional New Deal or Social Democratic models. The biggest one is scaling back the legal framework of so-called “intellectual property” which, Stiglitz correctly observes, functions mainly as a protectionist measure to “shield intellectual property owners from competition in the same way high tariffs protect domestic industries” — a point I have often made myself.

This is a refreshing change, given what passes for conventional wisdom on too much of the Center-Left these days. Even alleged “socialists” like Doug Henwood use rhetoric hardly distinguishable from Joe Biden’s “you wouldn’t download a car” or “no different from a smash-and-grab at Macy’s” (Henwood actually equated the open-source movement and commons-based peer production to 90s dotcom capitalism).

But despite some welcome exceptions, overall the report operates on assumptions based on the kind of mid-20th century industrial model celebrated by John Kenneth Galbraith and Alfred Chandler.

A good many of them, like the provisions for reining in CEO pay and promoting long-haul investment in place of the current model of strip-mining corporations to goose quarterly numbers and game management bonuses, are an attempt to return to the mid-20th century managerial corporation of “Organization Man” fame that prevailed before the rise of the Cowboy CEO. The report also calls for incentives to promote the kinds of large-scale capital investments “that create the potential for long-term economic growth,” and tosses around a lot of standard-issue rhetoric about “competitiveness in the global economy.” In this regard the report tacitly assumes an economy in which most production continues to be organized under the auspices of large, hierarchical, capital-intensive corporations, and productivity is directly correlated with massive capital investment.

In keeping with this mid-20th century vision of dinosaur economics, Stiglitz also proposes the traditional liberal panacea of large-scale infrastructure investment.

This is all nonsense. What the economists call “labor force participation” is declining for a reason. We probably reached Peak Employment in 2000. It simply takes less labor to make the things we need. Most goods are produced near the point of consumption on a demand-pull basis with durable and easily reparable modular designs. The consequent elimination of subsidized waste, guard labor, bureaucratic overhead, marketing and transportation costs, and planned obsolescence mean we could probably enjoy a comfortable lifestyle with fifteen hours labor a week on average.

As both states and corporations approach fiscal exhaustion and retreat from the social sphere, employer and government-based safety nets will be increasingly replaced by extended family, multi-family, or neighborhood cohousing projects, micro-villages, etc., for pooling incomes, costs and risks. Or by friendly societies and mutuals, or guilds providing unemployment and health insurance for the self-employed. In such a society, the typical person might be born into a multi-family compound or mini-village with a guaranteed right of subsistence and access to tools or productive land in return for contributing a modest amount of labor (if capable) to common needs; only a small minority of members, perhaps, would work in the outside money economy to earn “foreign exchange” to buy things produced outside the informal economy. The modern capitalist state declared war on working class and village safety net institutions and actively promoted social atomization and the nuclear family — not to mention enclosing open fields and common pasture and waste — precisely because they made it possible for individuals to subsist on the social economy independently of the wage system.

Stiglitz’s proposal of universal childcare for enabling “universal workforce participation” by women, stripped of its “Progressive”-sounding veneer, is just a warmed-over version of the capitalists’ age-old agenda of destroying the informal and social economy in order to force people into the cash nexus. The capitalist farmers of 18th century Britain enclosed the common pasture, wood and fen in order to force independently subsisting cottagers into “universal workforce participation.” So did the colonial authorities of British East Africa when they evicted the native peasantry from the best land and imposed a poll tax that could be paid only with money earned by wage labor.

In a world where the new possibilities of liberatory technology, and the terminal crises of the capitalist state, are together pointing towards the kind of future described above, an economic agenda based on such obsolete ideas as increased workforce participation and full employment is a joke.

Likewise, it takes less capital to produce the things we need to live comfortably. When the work of a million-dollar publishing house or music studio can be done with a thousand bucks or so worth of desktop hardware running on open-source software, and a garage shop with $20,000 worth of open-source tabletop CNC machine tools can produce goods that once required a million-dollar factory, the vast majority of investment capital is simply not needed. The democratic revolution in cheap, ephemeral technology has greatly intensified capitalism’s preexisting chronic crisis tendencies towards excess capacity.

And the revolution in cheap, high-tech production tools scaled to the level of the neighborhood or household, combined with the increasing need for self-provisioning outside the wage system for a growing number of people, means that a growing share of what we consume can be produced in self-managed cooperative shops operating on a craft model with $20 or $30 thousand worth of open-source tabletop CNC machine tools. And many more of our material needs not only for food and physical goods but for services like ride-sharing, babysitting and elder care, hair-styling and the like will likely disappear from the money economy altogether, and be met through cooperative arrangements in the social economy.

While assuming the persistence of corporate employment and the wage system as the governing paradigm for the economy, the report repeats the post-industrial cliche of a shift from a manufacturing to mainly a service economy. But if anything, we’ll probably be manufacturing more stuff here at home. It just won’t be produced under the auspices of manufacturing corporations. The job shops in Shenzhen currently producing on contract for Apple and Nike will simply disregard those companies’ “intellectual property” and market identical goods to the local population at prices stripped of the brand-name markup and embedded patent rents. And Americans will get their shoes and appliances from similar garage shops in their own neighborhoods.

As for the “competitive global economy,” it is in large part a creature of the state: Highly dependent not only on the (increasingly unenforceable) patents and trademarks that allow Western-owned corporations to offshore actual production to independent contractors while retaining a monopoly over disposal of the product, but also on a growth model based on the extensive addition of heavily subsidized raw material inputs of all kinds and subsidized long-distance transportation infrastructure and cheap fossil fuels. All this is unsustainable. “Intellectual property” law is rapidly becoming powerless to prevent the micro-manufacture of knockoff designs in garage shops around the world, just as media and software companies have failed to enforce their copyrights on information. The state is reaching what Marxist James O’Connor called “Fiscal Crisis,” bankrupted by corporate capitalism’s exponentially growing need for subsidized input costs to maintain the illusion of profitability. And the entire economy is hitting the wall of Peak Natural Resources of all kinds.

Most of the “infrastructure” that so-called “Progressives” lionize (think of Rachel Maddow standing in front of a giant hydro-electric dam talking about “doing great things”) were created to subsidize the distribution needs of giant industrial dinosaurs producing on a grossly inefficient scale. The relocalized economy of the future will involve mostly the retailing of goods produced in small shops in the same community, with a much smaller capacity network of railroads and two-lane highways to handle the long-distance shipping needs that remain.

In healthcare, Stiglitz presumes a continuing model of service delivery controlled by large, capital-intensive, bureaucratic corporations, only tinkering around the edges of the finance model by funding universal access to this bureaucratically-provided care and bringing the bureaucratic state to bargain with corporate bureaucracies in bringing prices down. In higher education, likewise, college is to retain its present character as a human resource pipeline to corporate employers, only universally available and free — no doubt driving massive inflation in the legal licensing and credentialing requirements to make or do anything, and rendering unemployable anyone who’s unwilling to devote several extra years of their life to additional processing by the higher education bureaucracy.

That’s an approach typical of what passes for the Left, let alone American liberals. It accepts as a given the delivery of healthcare, education and the like by licensed priesthoods who treat their human clientele as a sort of raw material. Only the finance side is reformed so as to ensure universal access. It’s a model Ivan Illich did such a brilliant job taking apart.

The British anarchist Colin Ward devoted most of his career to challenging the false dichotomy of service delivery in healthcare, education, housing, etc., either by the bureaucratic state or the large capitalist corporation. Ward instead championed the mutuals, cooperatives and friendly societies described by Kropotkin and E.P. Thompson. The delivery of most healthcare by low-overhead, cooperative neighborhood clinics, using MRI and other machinery produced by open-source hardware hackers at a tiny fraction of the cost of the proprietary versions, with IV tubing 3-D printed in neighborhood garage factories and drugs produced in DIY biotech labs, is either now within our reach or soon will be.

In banking and finance, despite some expansion of bankruptcy protections and modest reining in of “too big to fail” banks, Stiglitz assumes the continuation of a system in which capitalist banks lend the money supply into existence at interest. Nothing like creating the money by simply depositing it into people’s checking accounts interest-free, via Social Credit or a Basic Income — far less statist, from my libertarian standpoint, than the present arrangement. Let alone, God help us, anything like Tom Greco’s mutual credit clearing systems or other interest-free local currencies, or mutual banks issuing interest-free secured loans against their members’ collateral.

Taken together, the report is, as Miller says, “situated squarely within conventional economic theory and practice. It fails to address, never mind leverage, the potential healing power of the alternative markets and producer-consumer relations embodied by the ‘real’ sharing economy.”

Stiglitz’s proposals are a classic illustration of the nature of the Social Democratic agenda, as described by Antonio Negri and Michael Hardt in Commonwealth, which is basically “to reintegrate the working class within capital”:

It would mean, on the one hand, re-creating the mechanisms by which capital can engage, manage, and organize productive forces and, on the other, resurrecting the welfare structures and social mechanisms necessary for capital to guarantee the social reproduction of the working class.

This reintegration requires, in particular, a Hamiltonian approach to preventing deflation from radical abundance and instead enforcing artificial scarcity as a source of rents for funding full employment at forty hours a week. It’s basically an agenda of subsidizing inefficiency and waste — in the tradition of planned obsolescence — in order to create artificial need for labor and raw materials and prop up their market value.

What would an alternative agenda look like? Socializing the benefits ephemeral technologies and imploding production costs in the form of free or nearly-free goods, and ensuring that the remaining necessary labor time is evenly distributed and earns sufficient returns to purchase the ramaining scarce goods.

Stiglitz’s proposal is very much in the tradition of what Guy Standing calls the “labourism” of the early 20th century Old Left, which abandoned the 19th century anarchist and socialist movements’ vision of a utopian future where (in Marx’s words) one might “hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner, just as I have a mind, without ever becoming hunter, fisherman, shepherd or critic.” Or Kropotkin’s village economies of electrically-powered small-scale manufacturing and intensive horticulture, where the distinctions between city and country, intellectual and manual labor, work and leisure, all disappeared. In its place they substituted a world organized around the factory, substituting only the state for the capitalist in choosing the Board of Directors, where (in the words of Anthony Burgess’s young Alex) everyone “not a child or with child” had a full-time job with high wages.

Abundance, unfortunately, seems to be the stone that the builders refused for many in the Old Left tradition. But for many more of us, both including free market advocates of Free and Open Source Software and autonomist Marxists who see commons-based peer production as the kernel of the future communist society, abundance is the cornerstone.

Stiglitz’s agenda amounts to seizing scarcity from the jaws of abundance, and using the power of the state to preserve a dying system based on busywork and subordination.

Back in the ’70s National Lampoon did a parody of Mark Twain’s A Connecticut Yankee in King Arthur’s Court, in which Hank Morgan travelled a thousand years into the future and found a society based on post-scarcity, moneyless communism. Morgan immediately set about reshaping that society to suit his notions of 19th century modernity and progress. In a world where people could travel any distance instantly with matter-energy transporters and replicate any desired good for free, he set up a bicycle factory and paid the bewildered workers in company scrip.

In case you haven’t guessed, Stiglitz is the Hank Morgan in this scenario.