Rebalancing Capitalism

An Exercise in Definite Optimism (Part 3)

Johann Elert Bode, The Constellation Libra. Wikimedia Commons

What would success in grappling with humanity’s permanent problem look like? How do we get to a society where most people are able to “live wisely and agreeably and well”? In the past couple of essays, I’ve focused on the technological changes needed to resolve the deep conflicts opened up by industrialization. To address the conflict between humanity’s technological striving and its embeddedness in and dependence on the natural world, we need revolutions in energy and food production. And to ease the conflict between modernity’s liberating individualism and our hard-wired needs as social animals, we need breakthroughs in housing, transportation, healthcare, and education to batter down the cost of living and thus reduce the need for market work for pay.

Technological progress alone, though, is not enough. To move past capitalism’s crisis of inclusion and arrive at a social order that offers everyone — not just the elite —good chances to find purpose, status, and meaning in life, we are going to need new social arrangements as well as new tools. In my view, we need to create an alternative pathway for flourishing outside of the capitalist system, one in which families, neighborhoods, and communities are reinvigorated by reassuming responsibilities that previously had been offloaded to either the market or the state. We need to make it so that capitalism’s vast impersonal order rests on a secure, sustainable foundation of strong personal ties and face-to-face relationships.

I’m acutely aware that the new social synthesis I envision — a rebalancing of Gesellschaft and Gemeinschaft — is not at present the program of any popular movement. Many of the discrete elements of what I see as the next stage of social progress have attracted supporters and sparked growing movements, but nobody has put the elements together into a coherent, overarching vision. Back in my arrogant 20s, coming to conclusions that lay outside the mainstream just convinced me all the more that I was able to see things others missed. These days, however, being lonely in my opinions leads me to fear that I’m foolishly missing something that’s obvious to everybody else.

Why Change Is Needed

Putting trepidations aside, let me review the considerations that have pushed me toward the position I now hold.

Everything we know about human flourishing points to the importance of strong personal relationships. Human beings are hypersocial animals: we dominate the planet today not because of our individual smarts, but because of our unique capacity for cooperative activity. The flip side of this superpower is a deep neediness: our ability to function at all is dependent on developing and maintaining connections to other people. Babies that don’t receive regular human touch can fail to thrive and die. Solitary confinement leads to mental illness and can shorten lives even after the confinement ends. Sartre had it precisely backwards: for Homo sapiens, hell is the absence of other people. Yet contemporary society is characterized by the progressive weakening and unraveling of personal relationships. People are disconnecting from family, disconnecting from work, disconnecting from friends, disconnecting from community involvement — and this disintegration is especially pronounced outside the elite.

To build and maintain strong relationships, people need to do things together — even if the thing in question is just hanging out. People need to share responsibilities and engage in joint projects. They need to depend on each other. Yet the development of urbanized consumerist capitalism has drained our personal relationships of their functional significance. The home was once an economic production center; now it is a locus of increasingly solitary consumption. Churches and friendly societies once sustained us in the face of life’s downside risks; now we look to the distant and impersonal welfare state. Conversation with friends was once the main alternative to the boredom of idleness; now we have endless options for absorbing entertainment and stimulation that we can enjoy as parties of one.

We know that there is a strong connection between having an “internal locus of control” and overall life satisfaction. Life is better when we feel in control, when we can see the connection between effort and reward, when we believe we have the power to influence events. And while having an internal or external locus of control is influenced by our individual psychological makeup, the circumstances of our life are crucially important as well. Yet the conditions of contemporary society make it difficult for most people to feel in control. Members of the managerial, professional, and entrepreneurial elite enjoy significant autonomy on the job and pursue careers that assume a healthy measure of control over the course of one’s working life. Meanwhile, members of the elite have developed the human capital to navigate the abstract complexities of bureaucratized life with confidence and a sense of entitlement. For most people, though, jobs offer little scope for autonomy and self-expression, and working life is more of a random walk through disconnected jobs than a self-directed career journey. Less acculturated to facility with the abstraction of modern life, most people tend to experience the constraints imposed by bureaucracies and algorithms as mysterious and inscrutable, totally beyond their capacity to influence and push back against. Their encounters with the system too often leave them feeling anxious, confused, and powerless.

Everything I’ve mentioned thus far is well-buttressed by the findings of social science, but let me add one further consideration that is more speculative in nature. As I wrote about in an earlier essay, until recently human existence was dominated by solving problems in the physical world — most pressingly, the problems of obtaining food, shelter, and clothing. Nowadays, in our postindustrial service economy, the business of society is increasingly disconnected from physical problem-solving; instead, our preoccupations are ourselves and other people. I believe that this progress has had a profound and unfortunate side-effect: our mental lives are no longer disciplined by regularly bumping up against the hard, nonnegotiable demands of physical reality. Instead, our main reality is the murky, dreamy world of our and others’ thoughts and feelings, where everything is negotiable and what is popular or self-serving regularly trumps what is true. Losing our anchor in the physical world, I fear, has allowed us to drift off into all manner of morbid delusions and pointless status contests. Growing mental health problems among adolescents — the age cohort that is probably most thoroughly insulated from the hard surfaces and sharp edges of the physical world, and most thoroughly immersed in the preoccupations of identity and status — are one clear sign that we are adrift. Beyond that, there is the inconvenient fact that physical reality hasn’t gone anywhere: our dream world of identity and status rests on an immense foundation of rigorous and intricate problem-solving. I worry about the sustainability of a social order in which the vast majority of people have no understanding of how any of that foundation works and indeed lack the mental skills and habits that make such understanding possible.

All of the above leads me to the conclusion that capitalism has overshot. To achieve the goal of material plenty, mass mobilization into a vast, impersonal system of market-mediated specialization and exchange was essential. But to move from here to mass flourishing, we need to recognize that this system has been carried too far. We currently expect that most able-bodied adults will organize their lives around paid employment, with all the burdens on vital personal relationships which that imposes, despite the fact that for most people paid employment does not provide adequate economic security, development of capacities, sense of control, status, or satisfaction. Rising to the challenge of the permanent problem requires that we find a better way.

Supplementing Capitalism, Not Supplanting It

With the achievement of technological breakthroughs now on the horizon, and the great additional wealth that they will generate, a better way is possible. It doesn’t require the overthrow of capitalism, or the development of some radical new alternative to markets for incentivizing and coordinating the large-scale division of labor. What is needed instead is a rebalancing of capitalism, one in which we divert some of our collective time and effort from participation in that large-scale extended order and instead take care of some of our needs through small-scale, face-to-face divisions of labor at the household, neighborhood, and community levels.

In other words, my vision for social progress includes a significant expansion of home- and community-based production for internal use. With appropriate investments, we can help people achieve a measure of economic independence by providing for some of their own basic needs — including food, shelter, energy, childcare, schooling, and elder care. This project can be pursued at various levels of ambition, from helping families trim their grocery and electricity bills, to promoting the creation of teaching and care-giving co-ops, to developing new exurban communities designed for a more self-sufficient lifestyle, to establishing pioneer outposts dedicated to settling remote areas and exploring new ways of living.

Throughout the industrial and postindustrial eras, almost all the flow of people and resources has been in the opposite direction: from home production to selling your labor on the market, from independence to interdependence. These moves were staggered by sex: first it was mostly men, leaving the farm for work in factories, shops, and offices; women followed with a lag as traditional “women’s work” was automated, marketized, or assumed as a responsibility of government. Today in advanced countries, home-based production has been reduced to home maintenance, taking care of children, and preparing meals. But the time has come to stage a partial reversal of the long-term historical trend and begin relocating production closer to home — within the household, neighborhood, or community.

A movement to reduce dependence on both the market and government could start small and proceed incrementally, and even at a modest scale could make a positive difference in many lives. But for it to fulfill its promise, the shift to greater economic independence would need to scale up sufficiently to provide a large-scale alternative and counterweight to the capitalist cash nexus. The goal is not to supplant the capitalist system, but to supplement it and balance it: to provide a generally recognized and widely adopted alternative pathway for living well, to reduce or eliminate dependence on the labor market enough to substantially improve bargaining power for ordinary workers when they need or want to work for pay, and to produce sufficient demand for the technologies and techniques of self-sufficiency to spur sustained innovation along those lines both within and outside the system.

At first blush this may sound like an old prescription – and perhaps it is, but with a decidedly new twist. “Back to the land”/”small is beautiful” thinking has cropped up recurrently since the earliest days of industrialization — from utopian communes and the arts and crafts movement of the 19th century, to distributism in the late 19th and early 20th centuries, back to utopian communes in the 1960s and 70s, and on to the “degrowth” movement of today. But these movements have all been predominantly reactionary: grounded in ethical and aesthetic revulsion toward capitalism and industry, infused with romantic yearning for the simplicity and organic wholeness of rustic life, and deeply skeptical of technological and economic progress. The more contemporary iterations feature an ecological sensibility — again, with a romantic embrace of primitivism and hostility toward energy-intensive, technology-intensive, organization-intensive modernity.

The movement toward greater economic independence that I have in mind proceeds from a starkly different worldview. I am an unabashed partisan of modernity over our agrarian past, and of what Adam Smith called the “great society” and F.A. Hayek termed the “extended order” — the vast and intricate division of labor governed by impersonal rules and mediated by competitive markets. Looking at its record over the past two-and-a-half centuries, I regard capitalism as the greatest engine of human progress ever devised. And looking forward, I have no interest in a static, ascetic world of narrow, self-imposed limits. I believe that human knowledge and capabilities should be pushed as far as possible — to employ a favorite phrase of mine borrowed from Freeman Dyson, “infinite in all directions.”

In the past, the call to withdraw from the city and pursue self-sufficiency in the countryside was a call for retreat. Not only was it motivated by reactionary beliefs, but if heeded its effects would have been regressive as well. Progress from poverty to abundance depended upon a mass migration of the workforce out of low-productivity agriculture and into cities and high-productivity manufacturing. Had that migration been halted, all the possibilities of abundance we are now struggling to realize wouldn’t even exist.

But things are different now. Ordinary workers whose strong hands and backs were needed to build industrial prosperity are now superfluous and marginalized in a postindustrial economy. A partial demobilization from the market is therefore the path forward. The goal here is not to renounce our industrial heritage and retreat to simpler ways of doing things. On the contrary, the point is to advance to a higher level of social development — not by turning our backs on the extended order’s division of labor, but by embodying it in machines and software in a way that allows us to live more in tune with our inborn social natures.

The Path to Greater Economic Independence

Raw materials for an economic independence movement are scattered all across the contemporary social landscape. The surging interest in remote work. The emergence of the gig economy. 3-D printing and the maker movement. The free and open-source software movements. Baugruppen and other co-living arrangements. Circular economy initiatives. Rooftop solar power and other distributed renewable energy resources. Promising research advances in next-generation geothermal energy and small-scale nuclear reactors. The ongoing attempts to create intentional communities of one sort or another. Efforts to develop blockchain and token-based technologies as infrastructure for decentralization. The stirrings of interest in founding new, innovative cities. Vertical farming and farming robots. Artificial meat. Home schooling and the proliferation of online educational resources.

What is missing is any sense of a common purpose — any recognition of a larger design that could transform this social bric-a-brac into pieces of a puzzle. But once you grasp the fact of capitalism’s overextension, immediate and long-term goals come into view that could supply the needed common purpose, uniting disparate and disconnected elements into a coherent movement for change.

One immediate goal is to promote working from home — not just remote work, but home-based businesses as well. The first step toward greater economic independence is reestablishing the home as a locus of economic production. That step alone provides an important measure of existential independence from the system: your choice of where to live is now independent from your choice of how to earn money, and your working hours and conditions are more under your control. The covid-19 pandemic gave a huge boost to remote work and revealed a strong desire not to return to the old status quo. Meanwhile, the YIMBY (“yes in my backyard”) movement in opposition to restrictive zoning rules — which, among other things, prevent the operation of a wide variety of home-based enterprises — has grown rapidly in recent years. Leaning heavily into encouraging remote work and home-based businesses would connect a nascent economic independence movement to contemporary trends, thus giving it traction, while putting those trends in a larger context and energizing them with greater ambition.

As working from home expands, the creation of co-op arrangements for childcare, schooling, elder care, gardening, and other DIY activities will become easier to arrange with more people at home during the daytime. Such arrangements could certainly arise in existing neighborhoods, but they would be part of the raison d'être of new co-living arrangements where people in multiple households collectively finance and build housing that features at least some shared facilities. Promoting and facilitating neighborhood co-ops and new kinds of co-housing provide additional short-term goals for an economic independence movement. Co-ops and co-housing are both natural complements to an increase in the size of the home-based workforce, and expanding co-ops is the most promising way to start unwinding dependence on market provision.

Another step toward independence lies in further encouragement of rooftop solar panels and home batteries as distributed energy resources for the larger electrical grid. Already popular and growing more so, rooftop solar is sometimes criticized as inefficient since costs are more than double those for centralized solar production. In fact, however, rooftop solar actually lowers overall energy costs considerably because of its assistance in smoothing demand on the grid. Accordingly, what’s good for promoting independence from the system is also good for the system itself. Over time, energy self-reliance may evolve to encompass power generation at the community level and expand to include other renewable energy sources, but rooftop solar provides an excellent starting point because of its preexisting momentum.

One additional initiative is needed at the outset to ensure a favorable legal environment for greater economic independence. A successful movement will require, not just a whole series of technological breakthroughs, but an ongoing process of technological diffusion and adoption. It is vitally important for this process not to be obstructed by misguided intellectual property protections that keep valuable new ideas bottled up and artificially scarce. Hacker culture animates the maker and free and open-source software movements and will surely provide the guiding spirit of an economic independence movement as well, and it is antithetical to the recent trend toward expansive enforcement of patent and copyright claims. Moving beyond the cash nexus will require people to become tinkerers again — taking things apart, putting them back together, experimenting, modifying, putting components together in new combinations, all without any regard to having to ask outsiders for permission or pay them tolls. Accordingly, a strong campaign for the precedence of physical ownership over intellectual property will be needed to safeguard the movement from IP holders insisting upon rents. Especially important are the defense of robust rights of repair and a broad reading of fair use; even better would be a blanket exemption from patent and copyright claims for any allegedly infringing activity that is primarily noncommercial in nature.

All these initial steps toward economic independence help to set the stage for the main event, the ultimate long-term goal of the movement. And that is to chart and pursue a new direction for technological and organizational advance: achieving material abundance at human scale. The transition from poverty to plenty was made possible by elevating production and organization to superhuman scale: crowded cities, sprawling factories, multidivisional, multinational corporations, and far-flung transportation and communications networks, all situated in the global extended order of impersonal rules and institutions. But just as advances in productivity reduced the scale of profitable production, thereby enabling the transition from mass production of fungible goods to mass customization of made-to-order products, other advances can enable reductions in the scale of the division of labor needed to provide basic material needs at high levels of quality and variety. Those advances can open up a viable and progressive alternative to paid employment: households and communities that operate at a high degree of self-sufficiency.

Vertical farming, artificial meat, renewable energy, and 3D printing are among the new technologies that make the transition to human-scale abundance imaginable. But to make the imaginable possible and the possible real will require sustained research and development — not just in labs, but on the ground in actual residential settings with the kind of iterative tinkering that propels new ideas down the learning curve.

A growing network of pioneer communities could serve as the proving grounds for the new technologies of economic independence. These communities would range in size from a few dozen to a few thousand residents, perhaps with some kind of modular structure that allows smaller units to federate and scale up. They could be constituted out of existing residential areas, but over time more and more would be located in new developments designed and built for greater self-sufficiency at the household and community level. Philanthropy can play an important role in launching the first communities, but over the long term government support will be vital.

Think of a 21st century version of the Homestead Act, giving people the resources they need to build new and better lives on their own. An extensive list of technological missions relevant to achieving human-scale abundance could be developed, and people seeking to found new communities could apply for support with plans for advancing this or that mission. In exchange for benefits received — free or heavily discounted land, infrastructure, and equipment, along with access to technical assistance — pioneer community residents would be expected to collect and share information as part of the larger collaborative R&D effort. For a 21st century Homestead Act to realize its full potential, it will need to provide not only resources and financial support, but also the necessary legal and regulatory flexibility to try out new technologies, building and production methods, and social arrangements. In other words, it should follow the example of the charter cities movement and allow the experimentation conducted in pioneer communities to extend to governance.

Reaching the Next Level

So what might a successful economic independence movement be able to achieve after a few decades of steady progress? Imagine an extensive archipelago of pioneer communities, home to a double-digit percentage of total households — and, amplifying the communities’ effect on the larger society, a large penumbra of independence-friendly activity, including a major shift toward remote work, home-based businesses, and new co-housing arrangements.

The pioneer communities are all committed to a high degree of self-reliance, and residents are proud of the fact that they take care of their own needs: they grow much of their own food, generate their own electricity, mind and school their own kids, and take care of their aging parents. More and more of them build their own housing as well. How common work is organized will vary from community to community, with arrangements ranging from informal communalism to contractual commitments to coop and corporate forms. For goods and services provided at the community level, it may be possible to develop local currencies so that people can still use market mechanisms but in a way that keeps the money at home and encourages community self-sufficiency.

While some pioneer communities in remote locations take self-sufficiency as far as they can, typically residents have a fair degree of involvement with the larger market order. Communities regularly sell surplus crops and food as well as power. Some might attract tourists and short-term visitors. Many residents have remote work jobs, others run home businesses, others have on-site jobs that they schedule around their community obligations. They buy clothes and cars and TVs and smartphones and all the other normal personal possessions, and they travel and go out to restaurants and bars just like everybody else.

But in the pioneering culture, people draw a clear line between needs and wants. Needs they take care of on their own, as much as possible, while market work is for covering the extras. A genuine DIY ethos takes root: people take pride in knowing how things work, how to build and maintain things, how to operate and repair complex machinery, how to program. They consider themselves superior to those still living in full dependency on the market and government. People seeking financial independence talk about having “f*** you money” — a cushion to protect them no matter what happens. Pioneer community residents have “f*** you lives”: they can take care of themselves no matter what happens.

They know their quality of life is better than it was for most of their parents, and they think this makes them wealthy in the ways that count most. Most of them never have to commute. Enmeshed in deep and functional personal relationships, they spend a lot less time alone in front of screens. They eat better and exercise more. Substance abuse and mental illness are less common.

Family life and childhood are also noticeably different. Once you stop warehousing adults in shops and offices all day, the need to warehouse kids in institutional daycare or schools evaporates. Children help out with chores as soon as they are able, they play freely and spontaneously with each other as there are always adult eyes around, and their schooling is smaller-scale, less structured, and more integrated into the activities and challenges of daily life. And as the reintegration of work and family life dramatically lightens the burdens of child-rearing, kids aren’t just freer and more independent than those in contemporary suburbia – they are more numerous as well. Pioneer communities are the scene of a new baby boomlet.

And what about the rest of society? What about all the people still immersed in the capitalist system? Of course outcomes will vary from country to country, with their different political structures and different lines of political division, but in general we can expect the emergence of a sizeable class of highly self-reliant citizens to have beneficent consequences for the country at large. It is likely that the creation of a viable alternative beyond the cash nexus will appeal most to people less favored by the status quo. Accordingly, although a goodly number of people from the professional and managerial elite do choose to opt for the pioneer life, most residents of the new communities come from outside the capitalist elite. The wealth built up in pioneer communities thus represents a sizeable egalitarian shift relative to the preexisting order. And with the significant reduction in total hours spent in paid employment, labor markets are tighter and thus more worker-friendly.

A successful economic independence movement would thus, for the first time in many decades, confront the elites of the capitalist system with significant countervailing power. That power arises out of real leverage: residents of the new pioneer communities are in effect participants in a slow-motion general strike, withdrawing their labor and thereby augmenting the bargaining power of those still selling their services on the market. As this dynamic plays out over time, the message delivered to political elites is unmistakable: the best way to protect the capitalist system of paid employment from further erosion is to make it a better deal for workers.

A successful movement for economic independence would not deliver utopia — but it may keep dystopia at bay. For millions of people, it would mean the chance for a better, more fulfilling life — an alternative pathway for contributing to society and pursuing happiness. And for everyone else, it would mean living in a society that is now less skewed toward favoring the rich and powerful. Carving out a new way of life beyond the cash nexus would not wreck or replace capitalism; it would help to revive capitalism by creating more balanced, less top-heavy social orders in which it can operate.

For the foreseeable future — that is, until the coming of artificial general intelligence and replicator machines — a vast division of labor mediated by competitive markets will remain an indispensable social technology for providing a whole host of goods and services vital to prosperity and prospects for human flourishing. But as our present era of capitalist overextension has made clear, the social technology of the capitalist system isn’t good for everything, and it doesn’t work well for everybody. For capitalism to continue functioning as an engine of social progress, its scope needs to be narrowed so that it operates within its areas of comparative advantage. By creating a progressive alternative pathway for social life, a successful economic independence movement can make it possible for capitalism to refocus — and rebound.