In 1970 we stopped making things. More precisely, we lost the will to make things. Across the OECD, manufacturing shrank and industries relocated overseas. Germany was a rare exception to the rule.
The contraction of manufacturing was partly driven by economics. Cheap labour abroad beckoned. Yet the industrial shrinkage was just as much a cultural phenomenon. Big-government liberalism re-engineered social expectations. Attention shifted from production to distribution. The bureaucratic welfare state burgeoned. Corporate welfare and crony capitalism multiplied. Grants and allocations captured the social imagination. Making, producing and building seemed old-fashioned.
The consequences were debilitating. The great wealth-creation phase of the 1950s and 1960s stopped. Real income and GDP growth flattened. Pundits promised that the workforce would become populated with glamorous highly-educated symbol-users. University enrolments exploded. The class of public sector professionals and administrators swelled. Most, though, failed to become a document fabricator or processor. The alternative usually was a service job. Graduates waited tables and drove taxis. Increasing numbers of people opted out of work altogether and into government disability payment schemes. The crux of modern life, the work ethic, came under mounting strain. Unsustainable long-term government debt and deficits increased. This debt was illusory money. It was easy to obtain but difficult to pay off. Governments distributed it to those who could no longer be gainfully employed in a de-industrialising society.
Now, for the first time in forty years, there are tentative signs of a reaction. Post-industrialism has run its course. Its glitz has turned into grime. Twentieth-century Keynesian economics supposed that employment was a function of economic demand and that such demand could be stimulated at will by government spending. Time and again that proved not to be the case. This is because economies are foremost a function of supply and production, not of demand and distribution. If economies don’t supply appealing goods, they falter. The music business boomed in the 1960s and 1970s when it produced interesting artefacts. It is bust now because it no longer does that. It blames the internet for its woes but the real cause of its decline is that it is an industry among many that has lost the capacity to produce appealing goods. The same thing happened to Hollywood and to manufacturing industries in the major economies.
Over the long term, the wealth-creating ability of modern capitalism has been remarkable. What has driven it has been the capacity to create ingenious new products of lasting value, interest and utility. Equally remarkable have been the canny ways devised for producing these products. The first industrial revolution gave us the putting-out system (cottage industry). The factory system followed. After that we had the production line, the firm, and the modern organisation. The least effective of all of these has been the organisation, which dominated the post-industrial information age, the era of electronic documents and office software. While its advocates periodically promised leanness, the principal legacy of this technology was the relentless expansion of private and public bureaucracies. These produced exactly nothing—unless you count innumerable unread reports, audits, assessments, reviews and regulatory frameworks. This was documentary hell. It was reflected both in declining real wealth creation and declining employment levels.
Chris Anderson predicts the coming of a new industrial revolution. This one is based on digital manufacturing methods. These methods are principally of two types. One is computer-aided manufacturing (CAM) using laser-cutting techniques and robotic devices such as CNC (computer numerical control) machines. This style of manufacturing is subtractive. It cuts things (furniture, for example) out of plastic, wood, metal and other materials. The second type is additive manufacturing or three-dimensional (3D) printing. The desktop factory is around the corner. Today you can go down to Officeworks and buy a 3D printer for $1000. In time, these printers will be $100. 3D printing allows almost anyone to print out almost any object they have designed or else scanned into their design software. I can scan my head and print it out. The same can be done to a screw, a tube, a doorknob, a building; really anything that can be additively manufactured, which is to say can be printed out by a machine, much like an old-time ink-jet printer, that ejects layer upon micro-thin layer of resin or other material and additively builds up the physical object. Soon dentists will routinely print out dental crowns on the spot. Such office-based desktop manufacturing will mean waiting only an hour for the crown instead of two weeks while your dental impression is sent away to a specialist lab to be fabricated.
Houses can be printed, and apartment buildings and cars. Ultimately most things can and probably will be printed: from human organs to flutes. Or if not printed, then laser-cut. The most interesting aspect of this is how much it will transform the nature of economics. Much that we already know about economies will remain unchanged. Yet some things, and perhaps many things, will change. Modern economies are a function of industrial technology. A powerful new industrial technology is on the horizon. It will not change the root economies of mass manufacturing. It will still be more economical to mass-produce hundreds of thousands of plastic containers using conventional manufacturing methods. Such products will still be sourced from China or Bangladesh—or whatever country this year has begun industrialisation. As Anderson says, if you want to produce a million rubber ducks, the best way to do that is to invest a lot of money in tooling classic injection-moulding machines. The first duck you produce will cost you $10,000; for every duck after that, the cost reduces. That does not apply to print manufacture. The last 3D-print duck you produce will cost you as much as the first one did.
However, print manufacturing shows signs of developing, potentially on a very large scale, the custom or boutique production of unique, rare, distinctive and exclusive objects. This is the point at which, conceptually, the prototyping and the production of objects merge into one. Such print-on-demand objects are design-intensive in the traditional nineteenth-century art sense of being original. They are high-technology artisan artefacts. Computer-aided manufacturing is well-suited to such boutique “protoduction”. Design-intensive small-run products are economic to manufacture additively. The print production process is highly adaptable to a state of constantly changing product design, or what is often called rapid prototyping. A digital machine simply prints or cuts out whatever x,y,z co-ordinates the computer tells it to. No re-tooling is required. As Anderson notes, variety, complexity and flexibility are virtually costless in digital manufacturing. This makes production geared to rapidly changing designs or unique patterns economical and easy.
While computer-aided manufacturing will not change the economics of producing millions of the same item, it will change the geography and geo-dynamics of mass manufacturing. Design capitalism and CAM capitalism will have a major long-term impact on the international division of labour. This is a complex scenario, which Anderson explains well. He is sensitive to the nuances of what is possible and what is not possible. He is a successful science writer who has become a successful small manufacturer, running an aerial robotics company. His enthusiasm for new manufacturing techniques is off-set by the analytic caution of a good science writer. For the most part, he gets the balance about right.
The first impact of computer-aided manufacturing will be to reverse the trend to globalisation. In the past forty years big manufacturing countries have exported their factories overseas, seeking cheaper labour. High-tech robotic factories are beginning to alter this trend. As CAM progressively removes labour from the factory process, labour costs become less important and transport costs become more important. Distant locations with cheap labour start to be less attractive compared with local sites with lower logistics costs. Already we are seeing a return of factories to the United States. There is no reason this won’t happen in Australia also.
The end of the age of globalisation is coming. This will affect the geography of wealth production. If in net terms 2 per cent of an iPhone’s price returns to China’s low-margin mass manufacturers, in the future that return will decline. Continuously operating people-less factories in Texas and Kansas will compete successfully for high-volume tiny-margin business because they are closer to the end-market. As the labour component declines, the costs of transport, land, taxes and energy become key to manufacturing economics.
Objects created at home, or in a local 3D print shop, or by a local small-run boutique producer, all reverse the globalisation process. Design files might be imported by a consumer or a retailer but the objects themselves will not be. They will be printed out locally. This will transform international value chains. All of the post-industrial ideological chatter about globalisation will come to an end. Capital and design knowledge will continue to move across international borders but (in relative terms) the conventional trade in goods will decline. Compared to the size of the world’s population and its wealth, fewer objects will sail halfway round the world from a distant factory through multiple hands to your home. Weightless designs, a few electronic bytes, will increase in circulation. Capital, as ever, will chase businesses—wherever they are. Since the time of Adam Smith and David Ricardo, the assumption has been that, even despite transport costs, a physical object will find a buyer thousands of miles away because it can be manufactured cheaper or better far away from home. That is all that globalisation is—or was. Some of that will remain and some of it will disappear.
There will be significant consequences for the worldwide production of wealth. Employment, though, is another story. Post-industrial promises of glamorous job creation failed miserably. Mass digital manufacturing relying on robots and laser-cutting technology will produce few jobs except for a small number of high-skill, high-wage technicians. Yet already big businesses are not the prime job creators. Job creation is concentrated among small and medium enterprises. That is where design capitalism comes into its own.
Anderson astutely observes that digital manufacturing combines bytes and atoms. It merges virtual computer-aided design with the production of objects. That merger is indicative of real creation. High-level creativity joins together opposites. In this case it combines virtual bytes and physical atoms. The merging of the virtual and the physical gives this technology real bite. Amongst other things, it fuses art and science. It will not replace mass manufacturing. Anderson is very clear about that. 3D printing, even organised along factory lines, does not offer classic economies of scale. Print technology, however, offers the prospect of large markets emerging for the first time in history for the sale of niche products.
Mass customisation was anticipated by Alvin Toffler in 1970. But the post-industrial era spurned it in practice. Print manufacturing technology has existed since the 1970s, but the hobbyist embrace of the technology in the last decade has opened up ingenious applications of these tools. Consumer, retail and small business “protoduction” markets seem plausible in a way that they were not forty years ago. The development of small-scale boutique production on a large scale appears much more palpable today than in the past.
Walmart and Target are great businesses. They sell mass-produced items. Anderson is talking about a new industrial epoch. This epoch is defined not by what you can buy in the mass market but rather in the mass-specialist “protoduction” market. This emergent industrial market is based not on production runs of millions but instead on millions of minute production runs. Design-intensive manufacturers produce one or a handful or hundreds or even thousands of units of an item. But they do not produce millions. The smaller of these businesses don’t even have to set up a factory to manufacture their products; they can create design files that a generic factory then prints out or cuts out. Entry costs to manufacturing thereby are significantly lowered. Barriers to making are reduced. The culture of making thus has a chance, once more, to expand. We are not condemned to the dismal post-industrial culture of workless redistribution, bureaucratic document production and vacuous advocacy lobbies. Human beings are innate makers. They are objectivating creatures. They are compelled to create things. Their myths and religions are about creation. They fill their world with the objects and artefacts that they make: clothing, jewellery, furniture, machines, and art objects.
There are two kinds of new maker businesses: replicant businesses and design-focused businesses. The first re-create old objects; the second create original or distinctive objects. Having a problem finding a replacement for a screw whose head has been severed? Your hardware store doesn’t stock it? So scan its twin and print it out. One day soon you will do this with your own desktop printer, or else you will go to a local print manufacturing shop with a USB stick to do it. Officeworks will become Printworks. Armies will print out broken parts on the battlefield. Need to fix a plane to get it back in the air? Replicant technology will manufacture the needed components on the spot. All sorts of businesses will develop around this technology. The spare-parts business in the auto industry is huge. It is almost as big as the source industry itself. Why order and ship a spare part when its file can be downloaded and printed or the object can be scanned and reverse-engineered?
Anderson cites the case of Nathan Seidle’s Colorado firm SparkFun, which manufactures small runs of hard-to-find electronic parts. This kind of low-volume, high-margin business represents the heart of replicant capitalism. Its consumers are not in the market for a cheap part but rather for a scarce high-margin part. Often they will pay almost anything for it. In the replica-part business, an old phased-out component can be expertly scanned to a design file and the file e-mailed to the consumer. Alternatively the replicant part can be printed out and posted to the customer. Whether traditional postal services, like Australia Post, can keep up with the emergence of mail-driven mass-boutique manufacturing is an interesting question. Will FedEx-style businesses replace them?
Design capitalism is a step beyond replicant capitalism. It focuses on original creations. Want a stylish, artisan-designed, knife-and-fork set? You will be able to license an interesting design for a small fee and then print out the artefact. That is what the design firm i.materialize calls the power of the unique. Of course the more fee-paying downloads, the less unique to you the object will be. So then a market for limited-edition designs will grow. Do you have a desire for a boutique car with your own design input? No problem: in the United States, you can already go to the Local Motors 3-D Printed Cars site. The manufacturer today can print a car in forty hours composed of forty components using two technicians. It aims to reduce that print time to 2.4 hours in 2015. The car designs are the co-creations of the producer, the buyer and the firm’s 150,000-strong online community.
Anderson stresses the role of web-based online open-source design communities in product development. He is very sceptical about relying on closed-source intellectual property. Anderson’s conception is closer to the classic science-university model of research or even the early days of Henry Ford’s enterprise than it is to the intellectual-property-obsessed organisation-era post-industrial model. Anderson emphasises the value created by design rather than by knowledge. Design capitalism is not a “knowledge economy”. It is not driven by the commercialisation of patents. It is notable that, as the big bureaucratised organisations, from pharmaceutical corporations to universities, went down the intellectual-property path, their real R&D output declined.
The future, however, is not just about the intellectual gift economy of maker communities. That has an all-too-romantic flavour about it. Designers will develop businesses. Maker sites like Thingiverse will begin to look less like hobbyist sites and more like the commercial image broker Shutterstock, where consumers download stock images on demand for a fee. Maker files will be downloaded in the same way. We are not at that point yet. The maker movement is in its hobbyist phase right now. It is like the Homebrew-style personal computer movement in the 1980s. As consumer and retail 3D printing grows, small and medium businesses will develop around the technology.
Business varies in its levels of energy. Design capitalism is closer to car manufacture in the pre-Ford era than to the mass production archetype of the Ford Motor Company. The pre-Fordist period was very energetic. There were hundreds of garage-style manufacturers in the auto business. These cottage industries may be coming back. If they are, then they will produce jobs in the way that the Big Three style of mega-business cannot.
Boutique production offers customers uniqueness, originality and design value. The new technology offers small and medium producers highly flexible computer-controlled manufacture. Multiply garage-begun businesses of twenty to 100 employees thousands of times over, and you have an effective job generator. This is important because good jobs (and lots of them) are the best way of distributing wealth in a society. Jobs tie wealth distribution directly to the production of wealth.
The post-industrial social model has been a poor creator of jobs. It supposed that the state would distribute wealth instead by transfer payments. But a society can distribute only what it produces. When it neglects its capacity to produce, it has less to distribute. Post-industrialism deluded itself that debts and deficits were actual wealth instead of fake wealth.
The contemporary makers’ movement puts creation back where it deserves to be: front and centre. The heart of modern capitalism is its capacity for creation. Modern societies work best by working. They do this by making, producing and manufacturing. We cannot know what the future will bring. So, fingers crossed then that mass boutique production realises its promise and provides a way to finally get beyond the lassitude of post-industrialism.
Peter Murphy is Professor of Arts and Society at James Cook University and author of The Collective Imagination: The Creative Spirit of Free Societies (2012). He is editor of Aesthetic Capitalism (2014) with Eduardo de la Fuente. His latest book, Universities and Innovation Economies, will be published early in 2015 by Ashgate.