The Limits of Localist Reforms

First published in Human Geography, Vol. 4, No. 2, 2011


Localism is an ideology suggesting that small changes in economic organisation can foster widespread social change. However, it lacks an understanding of how capital centralization sets limits on the viability of decentralized production, local technologies and ethical small business. Localism shares the same bias towards individual exchange as the market economies it wants to reform.


El localismo es una ideología que sostiene que pequeños cambios en la organización económica pueden generar amplios cambios sociales. Al mismo le falta, sin embargo, entender los límites que la centralización de capital pone a la viabilidad de la producción descentralizada, a las tecnologías locales y a los micro-emprendimientos éticos. El localismo tiene la misma tendencia hacia el intercambio individual que tiene la economía de mercado que quiere reformar.

Localism is an ideology that suggests capitalist economies grow too large, creating alienation and ecological damage. In response, it aims to establish smaller networks of production and distribution to revitalize communities and the environment. However, localism does not have a theory of value. Unable to articulate how wealth is produced, it views capitalism as a system of use-value production. Yet capitalist expansion is inherent: the drive to achieve socially necessary abstract labour time (SNALT) means capital must strive to lower the amount of value that commodities contain. This dynamic pushes capitalist firms to expand and subsume smaller competitors.

Localism tries to overcome the effects of capitalist growth in two different ways. Pro-market localists suggest market regulation can create ethical local capitalism. By virtue of their small size, firms will treat workers and the environment better. This is applied in two ways: suggesting local business keeps money in the community, and that capitalist economies can change through ethical consumption. Anti-market localism suggests that committed individuals can transcend capitalism through the use of simple technologies and free labour. Exchanges of concrete labours, alternative currency and credit schemes are proposed as ways to create direct, ethical trade that benefits local communities.

Both pro- and anti-market approaches cannot restrict the law of value, and thus localism remains an ethical, individualist strategy for social change. Ultimately, localism must formulate a political response that challenges capitalist social relations, rather than trying to set up alternatives that evade them.1

The Roots of Localism

Localism derives from the idea of a steady-state economy. Classical political economist Adam Smith suggested society exhausts its natural resources and becomes static. Malthus, Ricardo and John Stuart Mill all believed that social surplus would be used up by rent and subsistence, leaving no profit or growth (Daly, 1996: 3). Schumacher synthesized many of these themes in his 1973 book Small is Beautiful, reviving the notion of steady-state economics as a positive outcome, denouncing growth for growth’s sake and suggesting neoclassical economics failed to account for externalities. Bruntland’s 1987 United Nations report Our Common Future applied the conclusions of steady-state ecological economics more broadly, calling for wealth redistribution and a slower growth of population and resource (de Stigeur, 2006: 159). More recently, Daly has suggested the health of the eco-system should dominate production decisions, and economic decisions should create equilibrium with the ecosystem (Daly, 1996: 4). These ideas have been taken up by a number of American and European activists who share a criticism of large-scale industry, particularly agribusiness, and call for networks of consumers and entrepreneurs to create ethical social and economic organization within capitalism (cf. Estill, 2008: 33; Kingsolver, 2007: 76; McKibben, 2007: 231; Petrini, 2007: 137; Shuman, 2007: 213). This intersects an existing discourse on the radical left which calls for new forms of local community organization to transcend capitalist social relations (cf. Berry, 1996: 414; Carrlson, 2008: 180; Hahnel, 2005: 63).

Localism and Value

A theory of value explains how a society generates wealth. However, the lack of a critique of capitalism stems from localism’s inability to comprehend value. The social relation of the commodity labour power is absent in localist literature. Its inability to distinguish use from exchange-value means it must fall back on ahistorical, idealist concepts such as trust or wisdom to explain the continued existence of production and trade (Estill, 2008: 175). According to Schumacher, Marx made a “devastating error when he formulated the so-called ‘labour theory of value’” (Schumacher, 1999: 4). However, Marx articulated a value theory of labour, in which commodities contained abstract units of socially necessary labour. This was significant for two reasons: first, it meant a generalized market in commodities was necessary for goods to exchange in capitalism; and second, the very existence of that market implied a generalized dispossession of workers from the means of production, forcing them to become wage-labourers.

If commodities are simply use-values, or things, capital becomes a quantifiable collection of those things, accumulated knowledge and equipment (Schumacher, 1999: 4). If commodities express the alienated conditions of production, capital becomes a social relation of exploitation: a quantified expression of the power to exclude labourers from the means of production, creating a class of people with nothing to sell but their labour power.

Localism relies on the latter definition: capital is a collection of commodities that can be compared, discounted and valued according to other things. This leads it to support technical reforms of capitalism, rather than seeing how the drive for growth is embedded within capital itself. Schumacher tries to design an economics to “maximize human satisfactions” without an alternative explanation of value. His purpose is to make sure enterprises do not grow too big, proposing workplace investment equal to average annual earnings “of an able and ambitious industrial worker” in order to maintain a steady-state, no-growth economy at the level of individual firms (Schumacher, 1999: 21). This follows Ricardo in creating a labour theory of value, assuming wages comprise the entire value that a worker creates.

However, while annual worker earnings include the source of value, they also include the surplus value appropriated from a worker’s output and not paid for. The basis for capitalist growth is the capture of this surplus value. To lower prices and gain more market share, firms must reduce the amount of labour-power embodied in their commodities and increasing the surplus value appropriated from each worker. They do so in order to grow; otherwise competitors that can produce cheaper commodities will drive them to bankruptcy. In short, a steady-state capitalism is a contradictory concept.

Without understanding this dynamic, however, Schumacher and other localist economists maintain steady-state economics is viable because it is wiser, based on a shared morality (Schumacher, 1999: 24). Daly and Farley call for “imposed macro-level distribution and scale limits” according to social rather than individual justice, to which the market will adjust its prices (Daly and Farley, 2004: 365). Values will be imposed, while capitalist firms will accept the imposition. This idealism derives from viewing capitalism as a system of use value exchange, rather than a social relation of private ownership over the means of production, with the inherent drive to expand that entails.

Pro-Market Localism

Based on this use-value analysis, some localists suggest that market regulation can check unplanned growth. McKibben defends Adam Smith and markets, suggesting that we simply cease “to worship markets as infallible and consciously [set] limits on their scope” (McKibben, 2007: 3). Petrini assures his readers that “it is not my intention to denounce the capitalist system in itself” (Petrini, 2007: 165). While localists may see unchecked growth as inherent to markets, they still believe those markets can be regulated (Daly and Farley, 2004: 363). McKibben argues that “a program of redistribution, however wise or moral” will not address more fundamental problems of growth (McKibben, 2007: 14). The answer is simply to make to “make the economy less efficient”, a change which is not “ideological” and will gain support from both conservatives and environmentalists (McKibben, 2007: 120).

For Daly and Farley, limiting the scale of production and distribution allows goods to become scarce and thus “valuable assets” (Daly and Farley, 2004: 364). Here the market is a positive tool for equitable distribution: a small firm will simply provide better use values. McKibben calls for more capitalists, defining them as entrepreneurs held back by public land ownership and red tape (McKibben, 2007: 209). Shuman suggests that local entrepreneurs are closer to the community, which can “better shape its laws, regulations, and business incentives to protect the local quality of life” (Shuman, 2007: 47). Market compulsion for firms to grow and ruthlessly lower costs is either absent from the debate, or the market itself will mobilize “good old fashioned greed”, providing the high prices necessary to switch to green technology and promote community values. The market will work when it suits the local economy, and be abandoned when it does not, changing politics and values from individualist to community-oriented ((McKibben, 2007: 172, 196). It is significant that both Daly and Schumacher are economists who have attempted to criticize their field from the inside: they are not criticizing the foundations of economics, just the fact that its principles lead to growth. Therefore pro-market localists demand that capitalists solve the problems their very existence poses.

The Idealization of Small Business

Having established the market as a positive force, localists can claim that ethical businesses are “automatically small-scale, personal, and local” (Shuman, 2007: 41). Large means “separating the producer from the consumer, the banker from the depositor, the worker from the owner” whereas “small is the scale of efficient, dynamic, democratic and environmentally benign societies” (Morris, 1996: 438). Shuman suggests that it is the impersonal nature of big business that causes greed (Shuman, 2007: 41). An owner is only exploitative if “he appropriates profit in excess of a fair salary to himself” and obtains higher rates of profit and interest than normal on his capital. Anything extra should be shared with all other co-workers. In these circumstances, labour exploitation no longer matters: “even autocratic control is no serious problem in a small-scale enterprise which, led by a working proprietor, has almost a family character”. As long as the business is small, “private ownership is natural, fruitful, and just” (Schumacher, 1999: 223, 225). The problem is not the capital relation but the way it is implemented.

Like Fourier, who appealed to the wealthy to fund his utopian schemes, the localists cite examples of good capitalists who refuse to pursue excess wealth and make “have voluntarily abandoned the chance of becoming inordinately rich”, making “it possible to build a real community” (Schumacher, 1999: 237). McKibben lauds a Chinese rabbit-farmer who, inspired by an aid group that gave him start-up capital (i.e. rabbits), “then became a kind of philanthropist, spending most of his wealth and time training others” (McKibben, 2007: 207). Capitalism will change because new, equitable laws and customs will be created. Enlightened small businesspeople can divest themselves of their holdings and give ownership to their employees (McKibben, 2007: 234). Petrini advocates “friendship and the joining of forces over economic competition, the public over the private, the gift over trade” (Petrini, 2007: 183). For Kingsolver, in the face of corporate agricultural concentration, the answer “for both growers and the consumers who care, is a commitment to more local food economies (Petrini, 2007: 123). Profit is made optional by caring about the proper, local size.

The Viability of Small-Scale Production

Localism conflates the size of ownership with the size of production. The two are very different: while the centralization of production needs concentrations of machinery and labor power, the centralization of ownership does not. This is borne out by the U.S. trend towards the latter.

Localists echo Smith’s promotion of small, equal capitals and Proudhon’s ethical artisans. Opposed to monopoly capitalism, Smith believed small market actors, who were unable to dominate production and distribution, could be self-regulating (Kovel, 2007: 177). Smith was generalizing his observations of a particular historical period, the birth of competitive capitalism, whereas monopoly capitalist enterprises have been growing since at least 1870 (Baran and Sweezy, 1966: 225). Localism does not acknowledge how large firms have destroyed small-scale holdings, not from a lack of ethics but due to market compulsion to achieve the lowest possible price. Almost 40 years ago, monopoly corporations already employed a third of all American workers (O’Connor, 1973: 16). Using Shuman’s own statistics, that proportion has grown from a third to over half. The clear trajectory towards centralization suggests that the limited power of small firms, and the fallacy of equating small workplaces with small owners. In fact, new, smaller forms of workplace organization and out-sourcing are central to the neoliberal project, allowing owners to break up concentrations of workers and reduce their bargaining power. The introduction of smaller, high-tech workplaces has allowed capital to centralize further. Thus localism does not overcome the power of big corporations to get bigger; depending on the industry, small workplaces can even facilitate it.

There are two other problems. When commodities embody higher amounts of value than products made in bigger facilities, they depend on high-cost, niche markets to realize that value, reducing the number of potential consumers. Also, small production does not necessarily solve environmental problems. Miniaturization still requires vast amounts of resources, such as the carbon and water required for precise, water- and laser-cut components. Albo suggests that smaller firms have to use more energy and resources to create their own production chains (Albo, 2007: 14). They also may not have the funds to implement environmental protection measures. In the United Kingdom, of small businesses voluntarily reporting environmental practices, only 28% of those with less than 10 employees reported implementing any environmental protection measures at all, while 77% of businesses with 50 – 250 employees implemented measures. The chemicals sector had the highest compliance level, where 70% of businesses had regulations in place; however, other metal- and chemical-intensive industries were less compliant. Just under half of electronics firms had green measures; only 31% of metals and 30% of textile industries participated. Most small businesses do not have a comprehensive, organization-wide Environmental Management System or plans to introduce one (Environment Agency, 2002: 10). Thus “whether or not a business had an environmental policy depended critically on size. Smaller businesses were least likely to… safeguard the environment” (Environment Agency, 2002: 7).

These principles can be examined through two applications of pro-market localism: the benefits of locally owned businesses and ethical consumerism.

How Money Flows Through Local Spaces

Localists believe that locally owned businesses keep money in the community (Estill, 2008: 165; Kingsolver, 2007: 149; McKibben, 2007: 96). The claim was investigated by Civic Economics, a consulting firm in Andersonville, a neighbourhood of Chicago, to investigate the impact of local businesses versus chain stores. Interrogating its findings can help establish whether personal connections can resolve the contradiction between use and exchange value, “[w]hen we work for, buy from, or invest in people we know” (Shuman, 2007: 37).

The survey found that “ten local firms generate a combined $6.7 million in annual economic impact compared to $8.8 million for the ten chains” (Cunningham and Houston, 2004: 3). However, the disaggregated data shows a net benefit to the local economy: for every $100 consumers spend at chain stores, $43 stays in the local community, while spending at locally-owned stores retains $68. The “local economic impact” of chain stores equals $105 per square foot, versus $179 for locally owned stores: small stores pack more value into a smaller space. This comprises a “Local Premium”, how much more revenue remains local in locally owned firms versus foreign ones. Local service providers have a Local Premium of 144% per square foot, retailers 63% and restaurants 22% (Cunningham and Houston, 2004: 5).

However, the analysis contains theoretical errors. First, although Andersonville is a definable neighbourhood, it contains localities within it and is itself part of larger localities. When business owners live in another section of the city from their firms, or large corporations hire workers who live and shop locally, are these people local and does the money stay in the community? This geographic definition is never clarified.

Second, local merchants must still provide goods: unless those goods are made locally as well, they are imported and the non-local component simply gets displaced from the moment of exchange to the circuit of distribution. Service-based small businesses like massage or web design still need an infrastructure of foreign-made products to facilitate it. Money may circulate locally for a single stage, from consumer to merchant, but must spread afterwards (Albo, 2009).

Third, if goods cost more at a locally-owned firm than a retail giant, then total, net consumption is lower, because higher prices lower the level of goods and services consumed, leaving less money to be spent locally. Likewise, the money saved at the big retail firm is no longer available for local spending. As well, if the local spending remains in rich localities, it does not spread to poor ones.

Four, the figures rely on neoclassical assumptions about the source of value, and this makes determining whether income goes to capital or labour more difficult. “[L]ocal economic impacts for businesses that serve a local market are primarily made up of four components: labor, profit, procurement, and charity” (Cunningham and Houston, 2004: 4). Labor becomes a wage cost while profits simply “remain in the city”. According to neoclassical economics, these are all equal factors and outcomes of production, and the study assumes all members of a local community derive equal impacts from paying wages, purchasing supplies and earning profits: in other words, that they are all entrepreneurs. Yet according to Marx, labor is the sole source of profit, procurement and charity. This is suggested by the study’s own figures: the 70% Local Premium of local businesses “are largely accounted for by one factor: labor costs” (Cunningham and Houston, 2004: 6). The struggle to lower the portion of value in commodities appears locally too.

However, this does not necessarily mean that small, local firms pay higher wages. Small business plays a central role in American capitalism. In 2007, almost 22 million Americans were self-employed, while 5.4 million businesses employed 20 workers or less, generating 49% of all new jobs. This compared to just over 18,000 firms of 500 or more employers, meaning small firms collectively made up 99.7% of employers, not including unpaid volunteer and household work or the informal market. However, small businesses are largely exclusive: 83% of owners are white, married, older men, down from 87% in 2000. Shuman hints at their work conditions where many home-based businesses comprise second and third jobs, suggesting workers become entrepreneurs primarily due to stagnant wages. American companies with more than 500 employees pay a third higher wages than smaller ones. Small businesses are significantly less likely to provide healthcare coverage, a major cost for employees (Shuman, 2007: 43; Sargeant and Moutray, 2010: 36).2 In Canada, the same-sized businesses pay higher weekly wages than medium and small firms with fewer than 500 and 100 workers respectively (Industry Canada, 2010: 27). As of 2003 the wage-gap between large and small employers had shrunk by a third, caused by overseas production and the growth of low-wage employers (Shuman, 2007: 56). In other words, the wages big business pays are shrinking to the meagre, existing level of small ones.

These trends suggest that small firms are less ethical than large ones, at least when it comes to wages, limiting the appeal of small businesses to U.S. workers. However, the Andersonville study finds instead that locally owned stores pay 28% of their revenue on wages, versus 23% for chains. This must be interrogated, as the study appears to collapse owner-operators and employers of small firms together. As the study states, local businesses “are heavily dependent on the labors of the owner… resulting in the most substantial Local Premium.” These results appear elsewhere. In Austin, Texas, local businesses retained 45 cents of every dollar in the city, while the Borders book chain retained 13 cents. The gap was “mostly in the form of wages. Most of the difference came from profits but the local businesses also spent a higher percentage of revenue on wages, partly because of higher pay rates, and partly because of less efficient staffing.” (Weissman, 2004). A Local Premium does not necessarily mean better small employers; rather, owner-operators work longer hours and incur higher wage costs because they must replicate all the tasks of the division of labour that larger organisations have centralized since the nineteenth century.

Despite making the neoclassical mistake of formally assigning labour a value (i.e. a wage) like any other commodity, these admissions show that value is created through labour and the surplus is appropriated by capital. Since capitalists are compelled to lower the amount of value each commodity embodies, introducing more labour into the process simply drives costs above the lowest cost, the goal of capitalist production (Mandel, 1968: 141). Since local businesses do not have the capital to accomplish these tasks, The Local Premium comes from their substitution of their own bodies and time for capital. This is a strategy for individualized accumulation, but it does not avoid the global law of value, nor does it necessarily create a more humane community.

Ethical Consumption

To support small businesses, localism advocates ethical consumption (Petrini, 2007: 116; McKibben, 2007: 106). Underlying this argument is a belief in the power of consumers to change how capitalism functions. For example, Kingsolver suggests that the growth of organic and local garden sellers means consumers can change agribusiness (Kingsolver, 2007: 179). Shuman names 10 different areas consumers could change their spending habits to buy locally, imagining a consumer-led panacea of local business, finance and technology to bring communities together (Shuman, 2007: 106, 211). Localists acknowledge that the quality of production and distribution of local food is not consistent, and alternative production and distribution facilities raise the price of commodities (Estill, 2008: 102; Kingsolver, 2007: 117). However, consumers are supposed to compensate for these structural imbalances by paying more; ideally, consumers should not only shop locally but produce fruit, vegetables and livestock locally as well, “to exercise some control over which economy we would support” (Kingsolver, 2007: 75, 307). Petrini’s Slow Food movement takes this further, suggesting producers should inform consumers about production and distribution, while the latter create new food communities, which in turn create a market in the “exchange of abilities” i.e. the direct exchange of concrete labours with its own “nodes and communities” of distribution (Petrini, 2007: 232). Just like Proudhon advocated, capitalism can be gradually replaced through the building of a parallel network of petty-commodity producers.

Those contradictions become apparent in one of the most popular localist consumer choice schemes, the Hundred Mile Diet. In an experiment echoing bioregionalism, Smith and MacKinnon decided to consume only food originating within the local watershed, which existed within approximately 100 miles of them. Yet a single local meal cost too much money and time to source, so they switched to growing their own food. Even staples like rice, salt and wheat grain could not be purchased and they ate potatoes for most meals. Every addition to their diet, such as fish and poultry, took similar calculations that they conducted as individual consumers (Smith and MacKinnon, 2007: 35, 74). In another example, after a week spent figuring out the origin of Thanksgiving dinner, Estill could not determine a way to determine food miles for all 34 ingredients (Estill, 2008: 107). Activists ended up reproducing the division of labour in miniature.

Individual consumers cannot assimilate the information necessary to create ethical shopping choices.3 In response, Petrini argues that “one must not give in; one must reconsider and redefine the role of the consumer” (Petrini, 2007: 165). Consumers are supposed to cope individually with the crises of allocation endemic to the market. Yet a commodity’s life cycle is incredibly complex and hidden; even if its ecological impact is evident, there may not be other alternatives available (Albritton, 2009: 167, 180). Defining change through consumer choice makes shopping the outer limits of possible change (Patel, 2007: 312). This is a concession to neoclassical economics, which allows capital to shift responsibility for its actions to the individual consumer.

These problems show how technology and industry are both structured by capital’s drive to centralize ownership, lowering costs to meet SNALT. The circuit of consumption is also not autonomous, as Marx recognized: “the use of products is determined by the social conditions in which the consumers find themselves places, and these conditions themselves are based on class antagonisms.” Those antagonisms dictate that consumers buy what is produced for them on a mass scale: cheap things are widespread because they are profitable, not because they are useful, in terms of providing nutrition or health. “In a society founded on poverty the poorest products have the fatal prerogative of being used by the greatest number” (Marx, 1973: 54). Exchange, not use-value, governs production, even when the products made are unhealthy.

It is clear that capitalism promotes wasteful individual consumption, much of which only provides temporary benefit for a few while creating ecological misery for many. However, collective consumption is actually too low. Many of the world’s poor, who do not get their basic needs met, should consume more. This would only be possible a rationally-planned economy that can change the structures of consumption according to democratic need, providing communal goods such as health care, housing and transport.

These limitations suggest that the market is not a neutral tool to distribute goods, but a space where capital asserts its power to drive down the value of labour power and obtain more surplus value. Localism that attempts to use the market must confront this dynamic, and its own assessment of local businesses and small-scale production suggests there are strict, outer limits on the ability to build smaller, more ethical enterprise.

Anti-Market Localism

These limitations point to the need to overcome the market, in order to create socially useful production. There is no clear divide between pro- and anti-market localists: for example, Schumacher accepted the labour theory of value but was not opposed to socialism (Schumacher, 1999: 220). However, far left variants of localism have developed a more complex relationship between the political and economic, calling for economic decentralization and autonomous, community-controlled democracy (cf Carrlson, 2008: 77; Hahnel, 2005: 181). Naess, the originator of deep ecology, called for an alliance between socialists and environmentalists to create radical equality and restrict market excess. (de Steigeur, 2006: 192). This section will examine how anti-market localism develops a strong criticism of the effects of capitalist development in a number of areas, while ultimately failing to develop effective alternatives.

Local Autonomy and an End to Inter-local Trade

Radical forms of localism suggest that communities can de-link from international economies to respond better to local needs (Norberg-Hodge, 1996: 405; Berry, 1996: 414; Morris, 1996: 438). It is certainly true that some products can be made locally with fewer resources: for instance, in temperate climates, certain agricultural products can be grown closer to distribution and consumption networks. Large-scale production and transport can often require environmentally damaging infrastructure and intensive fuel use, the 2010 oil spill disaster in the Gulf of Mexico being only the latest example.

However, large-scale production coordinates technical problems created by the need to reduce inputs and make output units more transportable. The converse is that small-scale divisions of labour can create wasteful duplication. For instance, a local power generator without a steel industry would need its windmills built elsewhere, as well as parts to supply the windmills, requiring the production of exports to facilitate trade. Shuman admits that “[t]his process of substitution never ends” (Shuman, 2007: 54). If local jurisdictions did this for every industry, it would be impossible to meet the socially determined needs of a technologically advanced society. Kovel warns that localities specializing in particular products can temporarily export goods; however, enterprises will shift to where production is cheapest, ending local production (Kovel, 2007: 182, 194). Without infrastructure and a social planning mechanism to distribute production between communities, local production would create the same instabilities as large-scale production (Hahnel, 2005: 183).

Problems of Advanced Technology

Localist literature often conflates the size of industry with the technology it uses. Although large-scale production and advanced technology may have been linked in Marx’s time, that link has been severed: as shown, large-scale ownership is compatible with technologically advanced, small-scale production. However, there is still a relationship: particular industries have adopted machines to create economies of scale and become more efficient. For example, industrial farming generates seven times as much output with a third of the labour force compared to 100 years ago (Smith and MacKinnon, 2007: 57). However, localists recognize that unrestrained growth creates an unsustainable social and ecological impact (McKibben, 2007: 31). Schumacher blames “crudest materialism” for reducing nature to “a quarry for exploitation” (Schumacher, 1999: 89). Therefore Schumacher calls for large numbers of workplaces with cheap, simple production methods, using local materials for local consumption (Schumacher, 1999: 146). The permaculture movement promotes “appropriate” technologies that are simple enough for local people to use and maintain them (Carrlson, 2008: 60).

This criticism closely reflects Marx’s understanding of how capitalism creates externalities. Under capitalism the appropriation of natural wealth takes the form of private property, the unfettered right to a resource (Marx, 1981: 134). The use-value of the natural world cannot be considered apart from the need to generate exchange value. Yet for Schumacher, capitalist degradation does not stem from the social compulsion to seek the lowest cost, but from technology, the machines that create industrialism (Schumacher, 1999: 146). He differentiates between tools, which are direct extensions of a “craftsman’s fingers” enhancing “a man’s skill and power”, and machines, “turn[ing] the work of man over to a mechanical slave” (Schumacher, 1999: 39). Poverty is caused by expensive technology that eliminates the “traditional workplaces” of poor people without replacing them (Schumacher, 1999: 149).

Marx was acutely conscious of the degradations of large-scale industry, devoting over 100 pages of Capital Volume One to machine technology’s impact on workers (Marx, 1977: 517-639). However, he prefaced this discussion with the social context of technology. What defines a machine is not how it operates but its social purpose: to drive down the value embodied in commodities by replacing human workers. Machines can shorten “the part of the working day in which the worker works for himself, [and] lengthen the other part, the part he gives to the capitalist for nothing. The machine is a means for producing surplus value.” Marx goes on to show how machinery leads to large-scale industry producing the means of production (Marx, 1977: 492, 495, 505). Sophisticated productive technology displaces the poor from their workplaces because machines can replace human labour.

Marx did not have a fetish of technological rationality, holding that since capitalism formed by excluding people from the land through enclosure and dispossession, socialism had to accept the natural limits that land conservation places on production (Foster, 2000: 177). Marx saw “colossal wastage in capitalist production”; however, he also suggested that effective re-use of products required large-scale processes, using advanced machinery to process waste (Marx, 1981: 195-196). Later Marxists have suggested that smaller technologies, industries and firms develop in a complex, political interaction with larger ones. Nations with less developed capitalist social relations can obtain new technologies and industries directly from more advanced ones, without having to go through the same development processes (Davidson, 2006: 23). This leads to a piecemeal social development, with pockets of wealth amid large-scale misery. This means that capitalism does not advance inexorably forward, progressing through stages of history and building bigger and bigger machines, but rather develops different forms in different spaces. Determining how technology is used in local spaces is a matter of study, not a principle of localism.

This means that in some cases, local, ‘appropriate’ technology may be unethical, denying the benefits of growth to societies that need it. Growth has the potential to generate use-values necessary to address the contradictions of uneven development, creating jobs and aggregate demand, making more goods, services and jobs available (Saad Filho, 2004: 7). For example, McRobie claims that a focus on people, and not commodities, would lead to technologies to help poor women (McRobie, 1981: 186). Yet labour-saving devices like laundry machines have the potential to free women from some of that labour. Consumer devices, let alone mass public transit systems, are impossible without a highly developed capacity to source materials, process them into finished products and distribute them across large distances. There are good examples of technology that can be put to use immediately by poor people with no other resources than animals and their own physical strength (McRobie, 1981: 194). However, this is unnecessary where an advanced division of labour exists.

Work As Freedom

Localism contrasts free work to the drudgery of wage-labour. Carrlson suggests that workers unite around “the embrace of meaningful, freely-chosen, and ‘free’ work on the other” (Carrlson, 2008: 16). Schumacher follows Ricardo in stating, “there is universal agreement that a fundamental source of wealth is human labour.” All work can be liberating, “nourishing and enlivening” (Schumacher, 1999: 38-39).

For Marx, work was creative activity, while labour was alienated work, performed because the worker will starve otherwise (Marx, 1981: 1056). Yet if work and labour are equally sources of emancipation, then localists can find ways to evade the wage relation, through volunteer labour, particularly as part of small-scale agriculture, where “farm interns [enjoy] a high quality of life despite their low standard of living” and “excruciatingly labor intensive” work (Estill, 2008: 112). This is a call for employment on the basis of use-value: while Shumacher calls for liberation from the “attachment to wealth”, there is no way to reproduce one’s labour power in a capitalist system without a portion of the value the worker has produced, received as wages.

The autonomous wage-labour that localists desire remains a partial possibility within capitalism. Not all workers are coerced directly by the law of value: for example, in democratically-run cooperatives workers can decide how production is organized. However, there still needs to be a market and consumers to distribute those goods. The capacity for self-management does not change the broader imperative to achieve SNALT and thus limits the prospects for free labour schemes.

LETS, Alternative Currency Schemes and Credit

Anti-market localism suggests that exchanging concrete labours directly can overcome the degradation of social life encouraged by money (Estill, 2008: 62; Schumacher, 1999: 28). In a more radical attempt to bypass the wage-relation, Kingsolver suggests doing away with money altogether, working “directly for food” (Kingsolver, 2007: 176). This search for money alternatives is articulated in three ways: Local Exchange Trading Systems (LETS) systems, which match goods and service providers; local currencies, where an alternative store of value circulates in local spaces, rather than being tied to specific, pre-determined concrete labours; and new forms of credit to support local enterprise (Ingham, 2004: 185).

A direct exchange of concrete labour means a one-to-one exchange of labour hours. However, market values still dictate LETS values: when local scrips become exchangeable with regular money, those with higher-value, scarcer skills do better, while poor people have to do more labor-intensive tasks. In one example, a scrip representing labor-hours was equivalent to $10 U.S.: “lawyers charge five Hours per hour, and babysitters half an Hour per hour” (Ingham, 2004: 187). Meeker-Lowry asks those who “want to move away from the conventional value system… should one person’s labor be worth three or four times what someone else earns?” In practice, LETS also rely on the external, capitalist market to determine labour hours according to market demand. This reinforces SNALT and reproduces the abstraction of concrete labour.

Since LETS do not represent abstract value, prices are more likely to vary widely, depending on how much the person providing the service values her own labour. The subjective quality of LETS make them more likely to be restricted to small groups of committed activists, and in practice, participants abandon LETS once “the economy turns around”. When the model falters, it relies “the values and consciousness of its members” to save it (Meeker-Lowry, 1996: 458). Without understanding the capital relation, cultural explanations stand in for a structural determinant: the need for a global market to set price signals. These schemes end up limited to small, isolated cases (Shuman, 2007: 111; Hahnel, 2005: 343).

Alternative currencies differ in implementation, but in most cases they represent services-in-kind (Meeker-Lowry, 1996: 449, 455). They are often adopted successfully at first and then encounter problems once they must determine their worth against the existing global market. Regardless of the form of currency, a money relation is needed to represent social production. In the nineteenth century, Proudhon followed Ricardo by suggesting that money represented concrete labour time and proposed elaborate schemes for different currencies and labour-exchange banks. With finance suitably regulated, products could exchange for like products, and no one could monopolize the money supply through hoarding (Proudhon, 1972: 228, 142). However, Proudhon’s labour bank could not supply enough goods when members needed them (McNally, 1993: 137).

Money represents a ‘promise to pay’: all contracting parties must believe that their commitments to exchange will be realized. However, to claim as Estill does that, “trade is a function of trust, and it is trusting one another that lies at the heart of our local economy” misses the coercive, structural imperative that money represents (Estill, 2008: 175). Capital trusts states to enforce the right to accumulate and to provide stable property rights for credit-issuing institutions. When Afghan warlords issue their own currency, they can better enforce the ‘promise to pay’ than the national state (Ingham, 2004: 184). Money represents the social and political aspects of capitalist power.

These schemes’ weaknesses arise from confusion about the technical and social functions money fulfils in a capitalist economy. The circumstances under which goods are produced vary tremendously according to occupation and locale, and actual labour expended on actual things does not count towards the production or measurement of value. Rather, commodities exchange based on the abstract, socially necessary labour contained within them (McNally, 1993: 156). As long as acts of production are planned privately and separately, money is the abstract medium that can represent those acts.

This does not mean that money is exclusively capitalist: in pre-capitalist economies, money forms only one of many other links mediating exchange. For example, feudal peasants traded some goods or equivalent labours directly, while other goods were made for the market and exchanged using currency. However, one of the tasks capitalism accomplished was to dispossess the mass of labourers from the means of production. Reproduction became mediated by the market. In those circumstances, money became the dominant means of exchange. Non-market, or alternative market exchange continue to exist: some forms of it, such as unpaid domestic work, provide a source of free value for capital. However, generalized commodity production needs money to work: without it, this would imply capitalist social relations have not been generalized.

Credit is money issued by banks to finance future production, on the expectation that it will generate surplus value and pay interest. Localism suggests that credit is a neutral tool that local banks can issue to encourage ethical, small-scale production (Estill, 2008: 174). McKibben suggests local currencies could supplement national ones (McKibben, 2007: 163). Local debtors and capital-holders alike are supposed to be immune to the global lending rates that every other bank uses. Instead, non-usurious rates will be bolstered by the trust and shared values at the heart of the local community.

Like money’s role as a lubricant of exchange, credit also predates capitalist economies: for example, peasants remained indebted to their feudal masters, while sharecroppers were indebted to landowners. However, once money became a connecting link for all socio-economic activity in capitalism, capitalists gained access to new forms of credit to create new means of production and gain a competitive advantage. Credit did not create capitalism, but it has become a major tool that capital uses to expand. Thus changing the form of currency does not eliminate the need for a money relation to represent the fragmentary nature of social ownership. Personal relations between creditors and capitalists can work in an undeveloped market, but in a complex one, that relationship is institutionalized within the bank (Harvey, 2006: 247). As seekers of interest, banks have little incentive to set their own exchange policy independent of going rates. Even those banks that do accept local currencies do not pay interest on them, for fear of paying more than market-based rates. This restricts local currencies to assisting exchange, not generating new credit and expanding production (Ingham, 2004: 187).

A lesser proposition, for state- or cooperatively-regulated banks to provide access to credit in national moneys, has had historical success, providing lower interest rates and more readily available loans. However, the potential for socially-useful investment remains limited when faced with the totalizing logic of capital. Attracting capital through deregulating markets is a defining feature of neoliberalism, and the importance of global, deregulated credit is best shown by its absence. In the financial crisis that began in 2008, banks stopped lending to each other, afraid of being burdened with bad debt. To prevent the credit system from failing, states used vast reserves of public money to allow banks to write off toxic debt and renew credit relationships. This is, ultimately, a political question: whether democratic pressure can force states to set the terms for socially-useful lending. For example, the state could direct money towards interest-free housing loans.

This discussion suggests that anti-market localisms are correct in seeing the consequences of the law of value. However, by not recognizing how the drive to achieve SNALT drives capitalist growth, they propose individualized solutions to social dynamics. Small-scale technologies are not always appropriate to meet social need. Free labour remains limited by the compulsion to lower the value of commodities. LETS, alternative currency and credit schemes do not overcome the structural imperative to determine the value of abstract labour in the global market, and thus they are not powerful enough to restrict or end the capitalist marketplace.


Pro- and anti-market localisms assess the prospects for small enterprise differently, but both assume that reducing the scale of capitalist economy can make it more ethical. The inherent drive to expansion foils all attempts to expand micro-alternatives and is what keeps localism, in effect, local. This makes it ineffectual at promoting systemic change. The goals of localism for rational production and distribution must be reframed politically.

An understanding of how the law of value works can shift localist activist priorities. For example, many localists oppose large retail stores opening in their neighbourhoods that force small businesses into bankruptcy, pay low wages and violate environmental regulations. This laudable activism can strengthen by understanding capital’s goal to extract more surplus value from workers. Firms can do so in two ways. By raising Absolute Surplus Value (ASV), firms either lower workers’ wages or increase the time spent working, while raising Relative Surplus Value (RSV) means implementing new technologies that make individual workers more productive. Both strategies lower the value embedded in commodities. However, just stopping one outlet opening does not change this dynamic. It can even have unintended consequences: imposing limits to ASV can force capital to introduce new technologies and forms of organization to make savings at other points in the supply chain, either increasing ASV in countries with fewer labour rights, or increasing RSV and contributing to unemployment and job stress. Organizing workers who make and distribute commodities into unions restricts both RSV and ASV. Localist consumer activism does not confront these dynamics, but local producer activism does.

Socialism provides the best political model in which to achieve the goals of localism. Once the market compulsion to achieve SNALT is eliminated, production and distribution on the basis of use-value becomes possible. In a socialist society, money could represent workers’ portions of surplus labor. However, for labour-money to work, supply and demand must be guaranteed, so that individual and social average labour times are the same. The mechanism governing exchange would have to control all sales and purchases. Labour power could not be sold; rather, wage changes would change price ratios. Both production and consumption would have to be guaranteed from the outset, which means socialized production. Commodity exchange, and the separation of producers from means of production, would be eliminated (McNally, 1993: 158).

Likewise, production can only be ecologically and humanly viable when goods are made for social need, not individual use. A rationally-organized society, in which human need and not profit dictated social production, could determine democratically whether local or broader forms of production were more sustainable. Large-scale, high technology production has the potential under socialism to contribute to emancipation, freeing time by automating tasks, eliminating unpleasant work and creating a comfortable, secure, ecologically rational existence for all. Moreover, if the localists desire the direct democracy of local communities, high technology will be necessary to reduce workload and create time to participate (Biehl and Bookchin, 1998: 98).

Despite the recent Arab Awakening, mass movements to revolutionize society are still rare and many radicals in the Global North do not consider how to build them. This has opened a space for localist ideas that promote individualized solutions. However, the point is to connect defensive struggles against capital incursion with struggles to gain control over the means of production. This is the surest way to create new development strategies that transcend the local without promoting unrestricted, capitalist growth.


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1 I would like to thank Jamie Gough and David McNally for their substantive feedback on this paper.

2 For the U.S., there is no data on disaggregated wage rates for different-sized businesses. Firms with zero to four employees had a collective wage bill of just under $235 billion USD, while firms with over 500 employees paid over $2.8 trillion USD. However, this figure is larger than for all businesses with less than 500 employees, which paid wages of $2.2 trillion USD in the same period, suggesting, at the very least, the dominance of large firms in the U.S. economy (U.S. Small Business Administration, 2008: 2).

3 There is no automatic link between long distance transport and carbon use. For example, localists trace a major source of the carbon footprint through transport, and a 2001 study states that shipping food nationally uses 17 times more fuel than regional shipping. More recent research suggests food travels 2500 miles on average before purchase (Smith and MacKinnon, 2007: 30). However, certain foodstuffs are more carbon-intensive when grown in industrialized countries; the colder climate of many of the latter means more carbon is generated for refrigeration. Spanish tomato farmers produce less carbon dioxide than British farmers, while Kenyan rose producers emit less carbon dioxide than the Dutch (Bedard, 2009). Transportation is only one factor in overall energy use and efficient handling and storage can outweigh its impact. Even Smith and MacKinnon cite another study that showed it was more efficient, carbon-wise, to import sheep from New Zealand than to grow them in Britain. It would take a wholesale shift to organic production in the U.K. to reduce environmental costs by 75% (Smith and MacKinnon, 2007: 222). A recent three year study of salmon production found that there are dramatic differences in carbon emission from different countries, depending on the type of feed different producers rely on (Pelletier et al., 2009: 8733). Food production as a whole creates 83% of carbon emissions, transportation only 11% (Weber and Matthews, 2008: 3508). Those costs are external to the consumer. Food miles do not accurately reflect how the constantly changing technology of production and transportation affect prices and the environment (Woodhouse, 2010: 451).

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