Wednesday, February 24, 2010

Industry's Parting Gifts

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We are going to need some widgets made. They do not have to be as sophisticated or as complicated as the widgets we have today. For instance, once it is no longer possible to launch satellites, we will no longer have satellite navigation systems such as the Pentagon-run GPS or the joint Russian/Indian GLONASS. To compensate, we will have to go back to using radio beacons, so that boats can find harbor entrances in the fog. Another example: once laser printer and ink-jet technology no longer exists, we will need to bring back the humble old teletype. Add to that all of the other humble adaptations that will be needed once the electric grid and municipal services first become unaffordable, then cease to exist.

Countless items will have to be manufactured, one way or another, using local means, because imports are also going to first become unaffordable, then cease to exist. These items will have to be far more robust, longer-lasting and maintainable than the consumer products of today. A population reduced to a permanent state of camping out shares certain characteristics with astronauts and deep-sea divers and others who live and work on the edge: their reliance on their equipment is absolute. In such situations, an unreliable or unmaintainable product is worse than no product at all, because it gives a false sense of security. Making such high-quality items is by no means technically impossible; things can be made so well that they will last a lifetime and even become heirlooms. This, then, should be the new main thrust of industrial activity: to manufacture and distribute products with the understanding that this process will run out of resources and stop. These products must be designed to outlive the process by which they are made, by as long as possible.

How would one organize such a production scheme on an industrial scale? Is it even possible? If it is not, then the only recourse is to have this done by garage, basement and backyard tinkerers, using plans shared over the internet. In fact, this seems to be what is happening, and it very well may be all that ever happens. If that is the case, then production volumes will be much lower than what can be attained with mass production techniques, leaving a huge unmet demand, and a far more precipitous drop in living standards than is really necessary. But let us imagine for a moment that we can do better. How would we go about organizing such an effort? Here are some thought experiments—projections, if you will—based on what I've observed over the years. I present three scenarios—not a complete list, I hope, but these are all the scenarios I can think of without straining my imagination. I hope that you can do better.

Suppose you have a company that sets out to make a widget. Let's call it Company A. Its founders are all engineers, of an uncompromising sort, and the widget they design and manufacture is of tremendous longevity, durability and overall quality. Taking full advantage of economies of scale, they design a single, universal model that uses the maximum possible number of interchangeable, off-the-shelf commodity components, optimize it for mass production, and stockpile a gigantic inventory, including all the custom spare parts that they feel would ever be needed. To make sure that their product is sufficiently idiot-proof, they even test it on selected members of their own families. The engineers concentrate on what they feel is important, neglecting questions of marketability and competitive pricing, and the result is that Company A's widget cost double of functionally comparable widgets sold by the competition.

When consumers refuse to pay so much more than they feel they have to, Company A's widget fails in the marketplace, and the company is liquidated. Its remaining stock of widgets is eventually sold at a large discount, while Company A's investors get almost nothing. Those who are lucky and clever enough to buy one of these widgets go on to use them for the rest of their lives, never needing to buy another one, because, being grossly overdesigned and overbuilt, they simply never fail or wear out. In spite of Company A's failure as a business, the reputations of the engineers do not suffer at all, because, after all, their product is a tremendous technical success. Furthermore, since the installed base of their widgets never goes down, the engineers remain in demand as consultants, called in whenever issues do arise. Some of them form a small company that maintains an inventory of spare parts, and uses it to recondition and service their widgets far into the future. Eventually, long after the names of Company A's competitors are all forgotten, its name enters the language as the generic term for the widget it once made.

Now suppose you have another company, Company B, which makes a similar sort of widget. Its founders are all MBAs who are mainly interested in things like growth strategies, market penetration and continuous profitability. They are superficially interested in the widget itself, as consumers or from a sales and marketing perspective. The internal workings of the widget are, to them, best left up to the engineers. They do hire some smart engineers to start with, but don't give them much of a voice in making strategic decisions, and manage them by doling out bonuses and promotions for things like new features, shorter time to market, and lower production costs. They see to it that the widget they make is competitively priced, fashionably designed, and quickly obsolescent, so that consumers are ready to pay again and again just to get the latest features and designs. Durability and longevity are not a concern, since one or two years of semi-reliable service is all that's needed for Company B to come up with a new, improved version that consumers can be persuaded to buy given a sufficiently generous trade-in offer.

They work to boost revenue by offering an extended warranty or a service plan (made necessary by frequent breakdowns), charging for premium customer service (made necessary by their normal customer service, which consists of a robotic phone maze backed by a few trainees in India who just read aloud from Company B's public web site in a listless, stuttering monotone) and offering numerous enhancements and upgrades (made necessary by annoyances or missing functions within the base product). They also build a profit center out of selling spare parts. They see to it that their product does not contain any commodity parts, and that no parts are interchangeable between model years, so that every replacement part has to be purchased through a dealer. Company B does quite well, becoming profitable, doubling in size several times, and gains a commanding market share.

But then the troubles begin. First, given the short replacement cycle of its widget, it becomes harder and harder for Company B to contain costs while continuing to increase production. Costs of key inputs, such as certain metals, plastics, energy to run the plants, and shipping and distribution costs, all start going up, making their widgets more expensive to produce. At the same time, it becomes increasingly difficult to pass these higher costs on to the consumers. Concerted efforts at cost containment, championed by senior management, burn up more money than they find in savings. Second, turnover among the engineering staff starts to creep up, and after a while employee retention becomes a major problem. An effort is made to boost recruitment, but paradoxically this only increases the turnover rate, until the average tenure of an engineer is shorter than the time it takes to learn the product.

As development timelines slip and defect rates increase, management throws money at the problem by hiring high-priced consultants and engineering methodology snake oil salesmen, all to no avail. Lastly, although Company B manages to hold on to its market share, the overall size of the market starts to shrink as consumers run out of money and curtail their purchases, holding on to their outdated widgets until they fail, then learning to live without them. Eventually Company B is acquired by a foreign company, which crates up and ships off the few pieces of the operation it finds useful and auctions off the rest. As Company B's customers try to eke out a bit more life out of their half-broken widgets, the average resale price of Company A's widget soars well above its initial list price, and its proud owners go around looking insufferably smug.

Company C is not really a company but a consortium organized by a group of activists who correctly perceive the great need for this widget and decide to tackle the issue head-on through tireless community organizing. Their initial concept includes plans for the widget to carry a "100% Sustainable" label. A group of retired community college professors takes several months to define the technology selection criteria that would allow the project to meet the 100% sustainability requirement. In the end, they decide that the widget could be made out of hand-worked clay baked in a solar oven, but only if the oven itself is exempted from the 100% sustainability requirement. It could also be hand-woven out of wicker and bamboo, provided that these were subsequently composted and the compost returned to the soil where the wicker and bamboo were grown. However, the widget can't be made to work without the use of Nylon, Vinyl, Neoprene, epoxies and other fossil fuel-based synthetics, nor can it operate without components made with mined, increasingly scarce elements such as tantalum, gallium and lithium.

The organizers then move to drop the "100% sustainable" requirement and to shift their focus to "Serving community at every level." Production of the widget is to include hands-on job training programs at community colleges and vocational training centers, assembly tasks would be done by groups of mentally and/or physically challenged individuals, while testing, kitting-out and packing would be performed by religious groups (in conservative states) and groups of people with alternative sexual orientations (in liberal ones). From the outset, the consortium is plagued by scandal. The "Made with Pride in the USA" decals turn out to be made in China. The Visual Installation Guide is never printed in Braille. Worst of all, due to communication difficulties caused by static and noise on the line during conference calls, the lesbians (who were to lovingly pack completed widgets in wicker baskets hand-woven by Haitian orphans and filled with organically grown straw) turn out to be not lesbians at all, but eager out-of-work Thespians (of both genders, and barely half of them gay) and Fezbians (perfectly conventional males with convincing falsettos united by their predilection for wearing a fez). The consortium collapses in acrimony and mutual recriminations without shipping a single completed widget. Out of sheer frustration, one of the organizers, laboring alone, succeeds in assembling a single working widget, and donates it to the Smithsonian.

Based on the foregoing, it would appear that the choice is between failing at something and failing at everything. Company A makes excellent widgets but fails to pay back its investors. Company B makes money but its widgets quickly become useless trash. Company C entertains us with its feckless shenanigans but fails to produce any widgets. I really do hope that I am missing something. Is there a Company D out there? If so, please tell me, because I would really like to know.


Abilard said...

So would I. Company C has formed several times at a nearby college town (they never seem to lose faith) and company B is ubiquitous. Company A manifests only slightly more often than honest politicians and the Loch Ness monster.

The Q said...

Edison batteries can last for decades. (NiFe electrodes and KOH electrolyte. KOH can be produced anywhere). By the time these wear out we will either have no more need for electricity or be using dilithium crystals.

The following link refers to a 90 year old electric car using this technology:

An engineering company in Victoria, BC is now importing these into Canada. Local production of these would be a worthwhile venture.

Philip Brewer said...

If you think about it, Company A works out fine for everyone but the investors—the customers and the engineers are all happy.

In fact, I know of at least one company just like that. It was run by an engineer who had produced a huge success for his investors, only to see the company fall into the hands of Company B type management. So he created a new company. For years now he has sucked in more and more capital from investors who imagine he might reproduce his initial success. But it's clear (to me) that he has no intention of doing so, except perhaps by mistake. He wants to do interesting engineering and produce new, cool products at the expense of his investors.

I'm down with that.

Larkin said...

I suspect that my grasp is incomplete but I go for company A because we are talking about universal replacement and then transition from one necessary product after another relying on the innovations of the previous.

I was at the British Museum in South Kensington when I was a kid. I marveled at the huge steam powered devices such as walking beam engines, ect ect. Most of them over 100 years old and all of them could be made to run today even using solar collection. They might have run continually since their creation with a scheduled parts replacement plan proving that they were really made to last.

Plan B is General Motors. Read David Halberstan's "Reckoning"

zolaris said...

It's my understanding that Lincoln Electric Co. of Cleveland, Ohio, is sort of a "company D."

Lincoln makes highly reputable welding equipment, and has a fairly progressive, "guaranteed employment," merit-based structure.

Of course, in an age of peak oil and dwindling resources, the only guaranteed employment is likely to be locally sustainable subsistence, and the inputs to manufacture and operate arc welders will be scarce.

fritz said...

Alright a few requests:

First, how bout a caption for the picture (and all the pics for these posts!). A rye one is cool - as long as we get to see the source and splanation for what we're lookin at too. Wouldn't want a troll griping about non-seriousness.

Second, please help an old guy out. Everyone, please come up with some examples of company A. I was thinkin years ago Mercedes was headed that way. MaBell's mfg unit was headed that way too with their goldplated mfg of indestructible phones (before deregulation). I think there was a manufacturer of kitchen ware that went under that way. Like a pot or pan mfr. Can't remember the name. I'm betting pv panel mfrs will go the way of company A if they ever figure a method of using less rare elements. That and electric car mfrs - once they're onto the Q's batteries.

There has to be a few historical examples of manufacturers working themselves out of business. In a good way like company A.

Third and toughest, can we start figuring timelines for degradation of technology - both availability and development? No specific predictions with dates. Just some kind of cascade of events and/or steps in regression. Guess that's tougher and requires more diggin and pondering. This last post was a great step in that direction. Although I do take issue with radio beacons serving longer if at all than gps.

Thank you all and hopefully more like The Q will come up. I'm lookin at batteries for existing and future pv panels on this house. "NiFe electrodes and KOH electrolyte" sound redeeming. Everything else I've heard of outprices the solar panels and is expected to last a decade.

Thank you again.
ps anyone else notice, nobody's much interested in examples of companies B and C? Like we're all too famliar with and worked for these companies. Except of course for the Fezbians. These are guys seriously into Steely Dan right.

Mike "Pops" Black said...

Company D isn't a company, it's a lighthouse keeper and a postman.

Wullow said...

Company D?

It will be like company A, with one main exception: It will not mass-produce the widget while company B is still thriving. It will instead attract investors willing to gamble on a future payoff.

Of course, even from day one it will have a storefront -- virtual or physical -- for the niche market of customers who recognize the widget's superiority and are willing to pay extra for it. But its near-term mission will be continuing research, product improvements, PR, and acquisition of parts inventory.

I think there are a number of company Ds already out there.

Dmitry Orlov said...

More or less adequate explanation of the illustration

Sixbears said...

How about no company at all? Instructions for building the widget are made available free on the Internet. Home builders improve the widget and open source their improvements. Anyone who wants a widget can either build it or find some craftman to build it for them.

Government goes nuts trying to find a way to tax this process but fails.

Anonymous said...

This was excellent!

Dmitry Orlov said...

Sixbears -

Try building a smelter or a foundry in your backyard - not a pretty picture! Yes, it is possible to build lots of things out of stock using hand tools (I do it all the time) but some custom components are still needed. Design is necessary but not sufficient.

Unknown said...

From a systems perspective, it is probably easier to answer your question. There probably won't (can't) be an industrial scale company D (or an A). Unless the economic paradigms that drive our current economy are changed, there is little chance that any company that doesn't acknowledge those paradigms could survive.

Our mass denial will keep most from recognizing this as a final industrial spasm. Thus, few will see the need to alter our paradigms and turn to production of things that will be useful after the lights go out.

Some local, small scale production near urban centers might be possible just as the farmer's markets are growing there. Not entirely sure what they might produce beyond small hand tools, gardening tools, looms and treadle-powered sewing machines.

Maybe we need to begin to study the Amish.

Ari said...

"Everyone, please come up with some examples of company A. I was thinkin years ago Mercedes was headed that way."

Our boat has a head (toilet) made by a now-defunct company called Wilcox-Crittenden, which I would offer as an example of "Company A."

It's a solid bronze toilet.

The thing is so massively overbuilt that I can't imagine buying more than one of them in their lifetime.

It needs parts and service, but I can imagine my great-grandkids crapping on this thing.

No wonder they're out of business.

So... one model that comes to mind is a hybrid:

- open source consortiums produce specifications for extremely durable goods

- small scale capitalist enterprises supply the spare parts for as long as possible

Kevin said...

Company A all the way!

I see a crying need for durable hand-powered or treadle-operated tools of every kind: drills, saws, coffee grinders, mixers, juicers, sewing machines, you name it. I wish I knew how to make these things, but have no metal-working skills or tools.

Also, my crappy Chinese-made (of course) umbrella just tore apart after being blown inside-out only once. Sure could use a better one.

KrazyKat said...

Yo Sixbears,

Here's one way of squeezing revenue out of the un-company, declare them to be 'bad':

Nudge said...

At home I've got a Juki industrial sewing machine that fits the Company A product profile alright. It could be used 3 shifts daily, 24/7, to make jeans in some clothing factory and it wouldn't even notice the effort. It's a steel and cast-iron monstrosity that must be dissembled to be moved .. yet it will probably still be sewing just fine a century from now, with adaptations made for power sources. It can be adapted for pedal, shaft, or belt drive quite easily.

What's needed, if I may be so bold to say so, is some other meme besides “make big bucks fast for our infestors (sic) even if it means taking shortcuts”. Did I not read somewhere (probably here) that in the good old USSR many common manufactured products (vehicles, appliances, etc) were made to be serviced and maintained quite simply over long periods of time? The companies making that kind of stuff had other motives besides paying off their vulture-capital backers the most quickly. IMHO /any/ commercial venture that values speedy & fat shareholder returns over end-use product longevity & serviceability is going to end up pulling a Company B type stunt.

Of course, the infestors will be happy, and here in the United Parking Lot of America that's all that counts, really.

Henry Warmoth said...

Company A's product sounds a bit like the AK-47, which notoriously returned very little wealth to its inventors due to the lack of intellectual property protection in Soviet Russia.

In some markets, a more profitable way to make product A would be to aim for a premium or luxury market. It takes years to acquire a reputation for reliability and quality, but some companies turn a nice profit this way. Eg my London Fog jacket will probably outlast even my military surplus one, and I suspect BMWs may be among the last cars left running

Abilard said...

Example of Company A (before it was consumed):


Anonymous said...

What you described reminds me of the situation in the ex-communist Eastern Europe in the early 90's when the collapse was devastating. I can't believe how USA can be so shortsighted to the path they have taken.

But why am I wondering afer all Gorbachev is giving "good" advises to Obama about the Perestroika in USA.

History reapeats itself but this time we that suffered during the Soviet collapse will be on the correct side of the Atlantic ocean:-)

Unknown said...


Virtually all (mid sized) heavy Engineering Companies are models of a Company "D" - products which last for longer than society wants them.

Think - Tunnel Boring Machines, 10MW+ AC Generators, Hydro Turbines, Recip. Engines, Industrial Pumps, even commercial ships.

These machines outlast their original builders' lives. Usually the only reason they are replaced is to improve efficiency - not due to failure of the machine.

The companies that produce these machines are modestly profitable and usually run by Engineering types.

They need basic maintance

Nature Creek Farm said...

Two things:
First, What are people FOR? Unless you start with the premise of useful people, then what is the point of making the widget sustainable? If the overall picture is one of consumption, then of course, all three companies will fail (as they should).
If, however, you first ask, "What do people really need in order to be a sustainable, useful part of their universal environment?" and address that need, you might find that most of the materials are readily available to meet all of their needs without unsustainable things, and in fact, many wonderful things that are not 'needs' can be had with sustainable resources and produce music, art, etc.
The idea that people need widgets gives too much power to the widgets.
Second: Read "The Last Lone Inventor" about Philo Farnsworth and the invention of the television. Though mined materials are used, it is important to understand that most of the materials were handled and processed by one person (who gained skills as needed) to actually make a television. Everything since then has just been about profit and money. We first have to uninvent centralized money ("Life, Inc." by Douglas Rushkoff), and we would do a lot to improve our mental and cooperative abilities and manual skills so that we wouldn't be baffled by the concept of making our own elaborate stuff with our bare hands and a few simple tools.
Also, too...go here and watch the video about Mondragon..

RebelFarmer said...

My big question is the purpose of any of these companies. Why would you want to form a company in the first place? Profit? Ability to stay in business for at least the lifetime of the widgit for after market parts and service? Just to see if a product can be engineered to last?

There are a lot of folks now that already know that the existing paradigm of company formation is going to change. That everything is going to become more local and regional. With economic collapse and peak oil, the whole reason to doing anything and everything is going to change. The basic requirements for survival are going to rise to the top of the heap. That will translate into food, shelter, transportation of goods, and the manufacture of necessities. To my mind, the only way to address our needs are on a community basis.

One of the things that was obvious from "Reinventing Collapse" is that Russians and Americans "solve" critical problems in very different ways. From what Dmitry has shared, Russians tend to be insular, whereas Americans tend to band together to solve problems. I think that is going to be our saving grace.

Yes, there are going to be those that will look to profit from misfortune, and those that will steal from others. Yes, there will be violence. But I think that in the end the survivors will be those that form community to meet the needs of that community.

Given my belief and experience in my own community, "Company D" will be formed as a community effort to meet the needs of the community as a whole. Community resources and skills will be pulled together to produce whatever widgit we need to better our lives collectively.

We only have a five year window at best before everything falls apart. Worldwide. There are individuals and communities that will rise to the task at hand, and there will be those that fall by the wayside. To even think in terms of "companies" seems a little odd to me. Yep, we will need "widgets" in a multitude of ways. But how we meet those desires and needs is going to change radically. And "profit", "sustainability", and "company" structure are not even going to be recognizable in their current form.

dave said...

company "d" has always existed, and always will. it goes variously by the name religion, government, mafia, gang, army, police force, &ct. this is how they work: they see a company "a" product that they like, so they take it. 100% sustainable.

Dmitry Orlov said...

RebelFarmer -

I agree with what you say, but my particular narrow focus in this post is in repurposing existing industrial capacity to mass-produce items that will outlive it and that will make post-industrial life better. The way it stands, we'll have lots of very well-built weapons, not so much ammo, lots of well-built but useless industrial equipment, and lots and lots of post-consumer trash. I am trying to find ways to change that balance.

Matt hayden said...

I kind of think a "company D" has to have these characteristics:

1. It's not a company - it's a cooperative entity. Think of the Linux community. it produces outstanding functionality, and avoids company B-type marketing horseshit.

2. It's about the design, not the production. The design is the MOST IMPORTANT part of the puzzle - done properly, it will stand up to repeated modifications and retain sufficient interoperability between versions to allow parts replacement and break-fix.

3. Production needs to be possible on small-scale equipment. For consumer electronics, this is going to mean going to a cottage-industry model, as Zach Vex has done with his Z-VEX guitar pedals - they're made by hand. Components are going to get bulkier. We'll have to live with it.

Also, the machines used for manufacturing will get smarter - they have to. The baby CNCs currently pushed by techno-utopian magazine Make *work*, and don't require a huge amount of power - a 12v battery through an inverter will work very nicely to keep one of them plus a laptop computer (controller) running for a while. Larger versions, like the ubiquitous ShopBots, take more power but can still be run off the grid if necessary - and with great savings of material caused by precision.

4. The large tools we use to shape our environment - metal lathes, wood power tools, etc - are going to have to quit using electricity,. Up into the 1920s, leather-belt drives using clutches to start/stop equipment, powered by water or steam, were the motive power for a surprising number of factories. There's no reason we can't go back to that - they pollut less and are easier repair than direct-drive electric motor tools.

5. Marketing will be useless. The product - which presumably will be manufactured by smaller local entities rather than a large centralized entity, a la blogger Driftglass' notable essay "Peak Stoopid" - has to be good and it will spread by word of mouth, where compatibility with existing stuff will help it gain critical mass.
6. No investors. The tools to do this stuff are NOT EXPENSIVE, most of them - I have built a complete home shop from stuff from CL which I've rehabbed, and it's cost less than $3k with the parts I needed to buy or make. Yes, even baby CNCs have a cost, but the beauty of current-gen open-source CNC is that a lot of them can make the parts to replicate themselves. So the 'company' isn't a company; it's someone who's taken the time to assemble tools (often for other reasons - in my case, it's all tools which can be driven via multiple methods, as long as the power source is rotary, and it's about survivability) and has an interest in building things either for profit or for barter.

7. Intelligence is needed. This is key - in past ages, the boffins were often compelled by barbarians to create objects for fear of penalty, with the boffins (swordmakers, etc) being replaceable. NSM for a lot of modern goods - yeah, a street gang may attempt to threaten a technical person, but a technical person with tooling and skills is not easily replicable. And we can make our own weapons and shoot back with great accuracy (cf open-source crossbows). So this time around the boffins may actually come out ahead and be community leaders - we can keep things running and train the ignorant natives how to maintain some form of technological civilization, and possibly even provide incentive to remain civil while doing so.

In short, Company D is not a company, it's a worldview. It's got to be about merit, material availability, intelligent use of tools, and needs supported by adequate resources. It can't just be about money; design and manufacturing decisions made solely on the basis of cost aren't long-term adaptive, as Dmitri points out in the original blog entry.

Dmitry Orlov said...

Matt -

Lots of good points. What you don't answer is how existing industrial capacity can, in its twilight, be used to mass-produce stockpiles of components that will be difficult to reproduce moving forward. Cottage industry can do a lot, but not as much as a foundry. To order a production run, you need money, and to get money, you need investors. And investors will insist on some sort of viable business plan that requires marketing. Yes, you are right, in the future blah blah blah with OS crossbows. However, in the present...

Matt hayden said...

kollapsnik - no argument with any of your points at all. I think I'm talking about repurposing what we can, and doing it on a small scale so that investment capital is not necessary, or so it can be done by a small group. I think that's that only way around COmpany-B-ism.

Thank you!

Nature Creek Farm said...

OK, I missed the point that we were supposed to find useful ways to utilize the monster factories to make long-life products for the future. I thought the article was about coming up with a business model from the ground up.
Company D needs to be a subset of Company A, but it is a company that down-builds companies, so the successor to Company D may be many company d's (d1, d2, d3) which dismantle the large infrastructure to make smaller infrastructure which makes smaller infrastructure. The current paradigm (since 1900 especially) has been to concentrate logistics toward a central point. The future paradigm needs to be distributed manufacturing. The most important things to build now with current factories are those which will be used to dismantle centralization: such as rail service, smaller roadmaking equipment (eventually horse-drawn), smaller tractors for farms, then walk-behind tractors for both transport and field work. Finally, the materials from the larger companies would be scavenged to make smaller companies or sole proprietorships that make hand tools which can duplicate themselves and one layer up in sophistication, such as the walk-behind, veggie oil powered tractors mentioned above.
Eventually, new energy sources may be developed that would enable technology rebuilding back up the chain, but hopefully, will remain risk-distributed and diverse (flatten the bell curves) instead of risk-concentrated. The key is determining how profits are to be measured, how progress is perceived, and how to cooperate on goals which no longer are open-ended or based on infinite resources.

vertalio said...

How, indeed. Assuming populations don't plummet to the Dark Ages after a species bottleneck, and the planet is still inhabitable, what will we need? we use the lesson to reinvent the culture as cooperative and sustainable, or try to recover using the old methods? Humans may be problem-solvers at heart, but that's partly what got us to this precipice.
I'd vote we give up the stars, give up the centralized state, strangle the last banker with the entrails of the last priest, and start planting tree crops in earnest, but it wasn't on the ballot.

I guess my suggestion boils down to; hand tools and information on how to cobble useful things together out of the cultural detritus we should be swimming in before too long.
That, and a zombie cookbook.

RebelFarmer said...

Okay, Kollapsnik, I think I get what you are after. The problem is getting company D off the ground in the short time frame we are facing. So here is my take.

Number one is to interest investors dollars. Right now those dollars are going to other countries with lower wages and no environmental regulations. So, right now is probably bad timing to bring any kind of manufacturing into America unless you solve the wage arbitrage issues. Not to mention the fact that we are currently in a Recession/Depression and NOBODY has any money to buy widgets. Given the current environment you would need to find a very wealthy Investor Angel that is visionary and sees what is coming down the pike. A standard business plan is not going to attract investors in this environment.

Number two is to identify the owner of a collapsed or soon to collapse manufacturing plant that can be converted to the planned uses.

Number three is to find an idea that is already making progress, has already got limited investors, and wants to take the next step into mass production. This could be some solar device, electric car, etc. Company D could be set up in such a way that it contracts to manufacture for these start-ups that are ready to take off.

Number four is what the structure of Company D would look like. To me the only structure that makes any sense is a co-operative on the Spanish Mondragon model. When there is a shortage of money, the coin has to be labor and brains, not dollars.

By the way, Whirlpool just announced that it is closing down its factory in the US and moving to Mexico. What these idiots don't seem to understand is that the 1,100 employees they are laying off, along with the millions of America's unemployed, are not going to be able to buy washing machines. I suspect that factory is going to be auctioned off for a song. And you have a local labor force that knows how to run it.

And that's all I have to say about that......

Nudge said...

Kollapsnik, sorry for having missed your point about re-purposing what manufacturing capacity we've got before it stops running completely.

If I had to pick a “best use” it would be something like cranking out tools of various kinds that aren't purpose-built for electricity but can be adapted for such via the usual electric motor plus fan belt arrangement. The sewing machine I mentioned above is one such tool. Think of doing the same with lathes, grinders, milling machines, and all sorts of other tools.

The point is, these should be the sorts of tools that can be used to make useful things (in the case of the sewing machine, clothing) or, even better, tools that can be used to make other tools. A lathe is a tool that can be used to make a copy of itself ~ cute, eh? It just needs some hands and eyes and intelligence and some kind of power source. Pedal power will do.

This won't happen, of course. Infestors want speedy returns on their money, not a softer landing for society.

Mitch Trachtenberg said...

Brilliant stuff here, thank you.

Like many of the commenters, I've seen my share of companies A, B, and C.

Turning company A into company D does not involve changing company A -- it involves changing the ecosystem within which company A exists.

I think turning company A into company D requires that company A be owned in part by the consumers of its widgets. Company B thrives by falsely convincing the world that its products have more value than they cost. If company A has its own consumer/investor base that knows company B's claims are not true, company A can live a nice long life.

I don't think it's entirely bleak on the company D front. I live in an area with a very professional food coop. It is supported by its consumer/owners, who provide loans when expansion needs arise.

The task is probably harder when you have a company that requires significant up-front investment -- the problem is finding a way to get the investment without being able to offer the potential of outsized rewards down the road.

Again, you need a community that understands what matters, and invests in it.

Unknown said...

btw, is that the Kin-Dza-Dza flying contraption depicted? Or burn-out space capsule?

Dmitry Orlov said...

Kin-Dza-Dzaq contraption. Pepelats.

Anonymous said...

As a student of industrial design, patent holder, and recent deserter of a 15-year career developing, manufacturing, and selling tomorrow’s trash I find this post intensely interesting. Much of this chapter of my life was spent straddled between conference room meetings in Chicago, New York, and LA and the gritty factory floors that dot America’s crumbling industrial wasteland. During my studies and work experiences I have found no system of design, development and mass production palatable enough to ever want to return to the process. These days my design skills are mainly focused on improving a small sailboat to take me on an extended journey and perhaps find a new vocation and or a more sane place. Since departing from my old life I sometimes fantasize about exactly what I think you are proposing: A dignified, efficient, and sustainable, system for the development, production, and distribution of manufactured goods.

I find it immensely challenging to imagine a product life cycle that has yet to be realized. It is even more difficult for me to do so without being immersed in and intimate with a reality that I have yet to experience. The design and development happening at most of our Fortune 500 (75% of GDP) is painfully political, grossly inefficient, and on a good day extrudes nothing more that glorified dog excrement. Before the seed of an enhanced product lifecycle can have the chance to geminate it will need a greatly reformed and refocused society.

Collapse will undoubtedly usher in larger wave of introspection and demand for wholesale reform. So what sort of canvas will America’s version of Perestroika provide for this new product lifecycle? My dreamscape for this reformed society desperately wants project a vast gnome-like world organized in a sort of liberal branch of the Quaker Friend’s tradition. The realities illustrated in our world’s history are a blunt wake up call where my utopian dreamscape explodes into the ash of an inept authoritarian regime. We should probably accept that exceptionally bright, prescient, and reliably well-meaning people are no more likely to populate the ruling class of the future than they do today. It is probably appropriate to paint this fourth product lifecycle onto a society similar to that of today’s energy and resource lacking North Korea.

With this method of thinking I suppose there is little chance for improvement for our existing bankrupt ways of manifesting goods. But why be a pessimist? It would only serve to discourage the struggle for a better world and leaves us ill prepared in the unlikely event that humanity manages to collectively defy traditional ills.

Lets imagine that our diverse population has a symbolically speaking, an extended “come to Jesus” discussion about the reasons for its collapse. By some miracle we manage to honestly and accurately assess the core architectural failures buried in the rubble of the foundation. Enough of us emerge on the same page and we effectively rise from the ashes of our former selves. This reborn and much enlightened (yet much resource poorer) society manifests the perfect compost where the seed of this 4th option, a greatly enhanced way to design, build and distribute goods, can germinate. With this established we need a unique human need and a product that satisfies it to model the 4th company with.

Anonymous said...

Part 2:

In this new state of collapse and attempt to rise a greater number of people will be subject to suffering from cold and hunger. To satisfy this need lets make a company that specializes in the realm of a combination hearth/oven/stove. Many such devices exist in our current reality but we need a new version to address an inconsistent supply of fuel, available in more expensive and smaller quantities. One month a family may only have access to coal. The following month maybe only diesel, electric, propane, wood, alcohol, or kerosene can be obtained. We need a hearth that is not only efficient; it also needs to be exceptionally versatile. Should our traditional currency cease to have value the owner of this hearth could barter their wares or services for a broad range of fuels to fulfill a family’s core need. It will probably not be feasible to own, maintain and perhaps relocate frequently with seven or more unique hearths. I propose we use this hypothetical hearth to model this 4th company, or more broadly speaking: A dignified, efficient, and sustainable, system for the development, production, and distribution of manufactured goods.

armybrat01 said...

Perhaps a good example might be the companies that rose out of the ashes of post WWII Japan and Germany. A band of us, free of the encumbrances of company type 'B' could produce some scaled down version of the widget for personal use and for trade, by obtaining materials from the black market.

Thanks for all you have written over years. I very much appreciate your insight!

Unknown said...

Retirees are often bored but many still have the ability to work and for the present have their income needs taken care of. Organize retirees to take up crafts such as blacksmithing, weaving, making yarn, tinsmithing, carving. They can sell their goods now for art. When the crash comes they are set with tools and skills to pass on their trade to younger people now unemployed.

Anonymous said...

Life if not always as we expect it to be. Most probably no Company D will exist, just DIY or a local artisan. Thiw implies that many current technologies will not be viable in the near future, but so what? Better air and human relations will more than compensate.

Magnus Redin said...

High transportation and material costs would favor company A since their widgets and spare parts keeps their value during slow global train and ship freight and dont fall in value in the warehouses. Company A can probably continue series manufacturing their power drills and drill bits or whatever for a hundred years as long as they dont expand too fast and overextend themselves. They do of course need to be situated in a stable country with a stable grid etc.

Anonymous said...

The distinction between investor and consumer is no longer necessary. Democratize investment by giving that power directly to each consumer. Think of it as an industrial version of a CSA (community supported agriculture).

Company D doesn't need "investors," ie, banks, venture capitalists, people with lots of money making their decisions based on voodoo MBA projections of market share, etc. Instead, it uses an internet-based collective pre-purchasing system. That is, consumers make a "prepurchase pledge" for a widget.

How would this work? If enough consumers pledge to buy a widget and the income meets a pre- specified production budget, their accounts are debited and Company D is given a percentage of this debited revenue, enough to meet a specified production goal. Company D meets these production goals, gets another portion of the revenue, etc. until the widgets start to ship.

To coordinate this kind of industrial consumption economy, an organization is founded-- sort of like a Consumer's Union but with a financial and auditing arm-- that offers all sorts of different possible widgets to consumers online. It serves as the guarantor, the trusted third party, inspecting and reviewing producers at predefined stages to ensure goals are being met.

Consumers, knowing that the moral hazard risk is reduced, are more willing to "buy" a product they won't actually receive for a while. They know if anything ever goes wrong, they will be refunded whatever portion of the budget is left.

Producers, knowing they would lose their main market, play by the rules and don't cut corners. Through the intermediary organization, there is transparency between producers and consumers-- "perfect information" as the economists call it. It saves money, and those savings are shared by both parties. Still, consumers will still pay more, and so at first the market may be small. It won't matter, however, because this system can support small production runs and still be worthwhile to small producers.

The result is a competitive marketplace with many small producers making high quality, long lasting products. There are no disinterested "investors" to serve. Perhaps even the Capitalist (this investor who seeks only abstracted monetary gain) finally withers away from the private market.

Unknown said...

When I first read this article, I thought: dear god, Orlov has become utopian! Of all people! ;)

Thinking seriously about the question you pose, two mechanisms have occurred to me, both of which should have some effect (although minor) on the future.

One is the market effect of competition from all these basement workshops. There are, for example, more and more people building bicycles that are coming to resemble cars (three or four wheels, gasoline engines, disc brakes, even monocoque enclosures), though they weigh under a tenth as much, and thus get 100mpg. It's not possible for industry to compete directly with such constructions (since they are not legal), but they still manufacture the bicycle components. To the extent that "consumers" (which will include quite a number of people who are assembling complex machines from parts) make the forward-looking choices, big industry will participate (somewhat) in creating forward-looking products, without having to understand that they are.

Second, charity. (This is a "company D"). There are quite a few large organizations out there, some with billions of dollars of funding, constructing high quality water filters, portable shelters, rugged computers, and so on for non-profit export to the so-called "developing nations". Such products are traditionally forbidden to residents of the exporting nation, no matter how poor, but in any case, the products get made. Eventually, they could end up in use everywhere.

Of course this can't amount to a "new main thrust of industrial activity". As you clearly understand, the incentives of the system prevent that. But the ecosystem of product design will be influenced somewhat.

Anonymous said...

I wonder if there is room for company D to start relatively small and build itself over time? Compatibility with existing widgets at much higher durability/quality could provide a market.

I also suspect that there will be a large, very distributed market for skilled trades - metalworkers, for example - as the costs of large-scale production and shipping increase. People who can use a metal lathe to make things and then heat-treat them will be of great value...and providing services could be one piece of a business which also produces relatively standard parts.

The Q said...

Thanks for the pointer to the planet Pluk (and Alpha!)

Below are links to an English-subtitled version of Kin Dza Dza

I am not qualified to judge the quality of the subtitles, but they appear plausible. I am certain there must be Soviet-specific references that would be impossible to "get" without a running commentary by someone familiar with the era.

Back in my school days the physics department brought in a guest lecturer who promised that a feasible process to convert water to LUTZ was only 10 to 20 years away. That was well over 20 years ago. After seeing what happened to Pluk, I believe it's good thing they haven't succeeded.

Anonymous said...

We think of the Amish as Luddites, but they have done some amazing things in terms of off-grid manufacturing using pneumatics and other technology neglected by capitalist industry. I predict that they will be manufacturing long after Boeing and all its ilk are still and rusting. See