More Than Employees: What Killed Our Local Economic Independence?

P1000702Over the past couple of weeks, I’ve been following with a kind of morbid fascination our American presidential race. Of particular interest to me is not so much where our two parties disagree, however, but where they in fact agree. Both parties openly acknowledge that the economy is not working as it should for everyone, and both parties have the same prescription: jobs – i.e. better employment options.  On the surface, this sounds great for those of us trying to climb our own respective career ladders or for those trying to get on a career ladder in the first place. And this of course must be a winning theme, because it seems to be the primary domestic issue in every presidential election I can remember. But honestly, this mindset just doesn’t sit right with me, and not just because of the influences of Wendell Berry and Planet Money, but because of our past. Looking back at American history, the concept of economic success as our ability to be employed by others is a fairly recent phenomenon. We were once a nation of small business owners, each of us creating a unique American Dream of our own with self-employment as the cornerstone. Today we’re a nation of employees looking for jobs that provide upward mobility. So what happened?This idea of owning the American Dream versus being employed by the American Dream has haunted me ever since I read the following paragraph from Melvin Urofsky’s biography of famed lawyer, Supreme Court justice, and one of my own personal heroes, Louis Brandeis.

brandeis biography“‘Half a century ago,’ Brandeis told a congressional hearing in 1912, ‘nearly every American boy could look forward to becoming independent as a farmer or mechanic, in business or in a professional life; and nearly every American girl could expect to become the wife of such a man. Today most American boys have reason to believe, that throughout life they will work in some capacity as employees of others, either in private or public business; and a large percentage of women occupy like positions.’ The rise of gigantic industries caused this shift, and the consequences would be devastating to the nation. The boy would work, he would produce, he might even do better as an employee than as an independent farmer or mechanic. But where would he be able to test himself? Where would he have an opportunity to wager his future on his own ability? How would he develop the strong and independent character that came from daring and succeeding, or even from daring and failing? Democracy reflected the character of its citizens, and a nation could never have a vibrant democracy without people, individuals with pride and strength to take chances.”

While I’ve been pondering this statement for quite awhile, it was only recently, upon reading Alfred D. Chandler, Jr.’s book The Visible Hand: The Managerial Revolution in American Business, that I started understanding what actually instigated such a shift. Per Chandler, the economy of our nation at its birth was very different than the economic reality we see today – namely we were a nation with a highly decentralized economy of worker-owners. How decentralized? Well quoting Chandler,

“…the traditional American business firm was a single-unit business enterprise. In such an enterprise an individual or a small number of owners operated a shop, factory, bank or transportation line out of a single office. Normally this type of firm handled only a single economic function, visible handdealt in a single product line, and operated in one geographic area.

… As late as 1840 there were no middle managers in the United States – that is, there were no managers who supervised the work of other managers and in turn reported to senior executives who themselves were salaried managers. At that time nearly all top managers were owners; they were either partners or major stockholders in the enterprise they managed.”

Think about that for a moment: up until 1840, we were a nation in which middle management did not exist. As an individual who has never really questioned a career path defined by rising from one level of middle management to the next, I found this fact absolutely mind-boggling and hard to imagine. What does the alternative decentralized economy on a country-wide scale actually look like? Here Chandler paints the picture:

“In 1790 nearly all the families who raised or processed crops or goods lived on the same premises on which they worked. The largest group of producers who lived and worked in the same place were, of course, the farmers, who accounted for close to 90 percent of the labor force in 1790. In the early nineteenth century the family farm which produced crops for the market also raised much of its own food and manufactured its own furniture, soap, lye, candles, leather, cloth, and clothing.” …

In the seaboard cities and the small towns of the interior, manufacturers were largely artisans who lived above or near their shops. … Some artisans, especially journeymen who had not yet set up their own establishment, became itinerants during the warmer months, traveling from village to village and farm to farm in the practice of their trade.

Those few producers who worked outside the home lived in the towns and were concentrated in the building trades, constructing homes, warehouses, commercial edifices, ships and wharves. They too were artisans – painters, carpenter, masons, shipfitters, riggers, caulkers, and the like. In the ports, ropewalks and copper-sheeting works supplemented ship construction. Like the small city breweries, rum and sugar refineries and tanneries, they were usually operated by a master artisan and a small number of assistants.”

So in a sense the work was simpler, hands-on, slow, deliberate and communally local in scale.  I think the thing that struck me is that for all the talk I hear within the local movement about these things, I guess I never understood that it isn’t some utopia they’re talking about. This is the economy we had not but two centuries ago. It was a world that came apart and was lost. Why? Because the glue holding this local economy together was our human and technological limits.  Limits in technology led to limits in communication, production, and distribution. Here, I think this paragraph by Chandler is really profound,

“As long as the process of production and distribution depended on the traditional sources of energy – on man, animal, and wind power – there was little pressure to innovate. Such sources of energy simply could not generate a volume of output in production and number of transactions in distribution large enough to require the creation of a large managerial enterprise or to call for the development of new business forms and practices. The low speed of production and the slow movement of goods through the economy meant that the maximum daily activity at each point of production and distribution could easily be handled by small personally owned and managed enterprises.”

The rest of the book goes on to describe the process of technological change that led to an economy based on mass production and mass distribution – an economy based on large organizations run by multiple layers of management. I’m still in the process of making my way through the book (who wants to join me?) and can’t wait to report back what I find (I feel like I’m on to something!).

But so far what this book has really done is to help me see the policy promises of our politicians of an economy of “better jobs” in a new light, and it has me asking a lot of new questions. Namely:

  • If the lack of communication, transportation, and distribution led to a highly decentralized economy of local worker-owners, what does it mean for government policy to continually fund the opposite?
  • Are these policies inadvertently causing or enabling consolidations and widening the income inequality gaps?
  • What policy decisions can better decentralize the economy to bring local self-sufficiency? Could such policies be made politically appealing in the current political climate?
  • Given that technology is not going anywhere, our communication and transportation networks are continuing to build a more inter-connected world, where does local go from here? How does local reverse the tide?
  • And finally, what does all this mean for the character of our nation and the American Dream if we are turning more into a nation of middle managers rather than business owners?

I hate to leave on a cliff hanger but these are the thoughts that are reeling around my head right now as I plow through Chandler’s book. In the meantime, I would love to get your thoughts and learn from your experiences! Please drop me a line below and feel free to share this conversation with your friends. Until next time… stay tuned, this is going to be fun!

2 thoughts on “More Than Employees: What Killed Our Local Economic Independence?

  1. Pingback: The Birth of the Modern Shark Tank Economy | The New Localization

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