An Open Letter to Lovers of Centralization

I detect a widespread lack of acknowledgement of the critical issue of scale in human orgnanization.

E.F. Schumacher’s seminal work on the subject points clearly that human organization simply breaks down after a certain size is reached, as is stated by L. Kohr in The Breakdown of Nations.

Therefore, it is useful to:

1. increase the size at which organization breaks down, by utilizing more advanced practices of human organization. This is difficult, and we haven’t succeeded to this point. There is arguably not one day in the 20th century when armed conflict was not being waged.

2. Operate at the smallest possible scale to assure highest organization: transparency, accountability, distributive economics, all the good P2P stuff. This seems to be the easy option.

Thus, we must start with a quest for decreasing the scale of human enterprise.

I think this can be done for ALL human enterprise – the question being, how much can we reduce the scale in practice – while increasing the quality of life for everyone.

A great case to explore, as the absolute limit of human technology today – is semiconductors or computer chips.

What is the smallest scale we could do this effectively?

My claim is that it can be done on the scale as small as a 40 acre farm, not necessarily millions of square miles that it takes today. If abundant energy is made available as one of the next frontiers of p2p , then silicon semiconductor may be produced anywhere that sand is available. Sand is purified, reduced to silicon, and silicon is refined – by utilizing loads of energy. This could be a case for abundant semiconductor PV cells, or computer chips.

That is not such a far cry as it may first appear. At least absolute abundance of semiconductor PV could be around the corner, if not the computer chips themselves.

What I am implying here is the case for replacing all societal monoliths with small huggable variants. Or at least ones you would want to pass down to your children.

I did do an undergrad thesis on PV production – otherwise I speak from learned ignorance. But I would like to ask anyone if you have any testable evidence that shows that centralization is desirable, or that it should not be thoroughly substituted by appropriate scale as in the p2p movement? There is evidence that large scale leads to corruption, increasing gap between rich and poor, armed conflict, etc. If you have any contrary evidence, please let me know. It seems that it’s a fact that anything large is scale should be broken down, decentralized. I think that’s an unquestionable ‘truth’ not only in the p2p movement, but outside. Centralization is good only to those who benefit. It is clear that it’s a small fraction of the global population.

I say this because I think that it’s possible to attain a new understanding on the issue of scale in human organization. I think it’s possible, and desirable, to create the cultural understanding of the shortcomings of centralization – as opposed to its praise – which is today’s consensus. I simply think this is one instance of half-baked thinking at the level of the entire society – one that stands in the way of much p2p progress.

I’d appreciate any comment on this. I’d just like to know how to communicate the issue of scale properly. I’m open to changing my understanding  if I see some new light here.

These are theoretical points, but they truly determine the progress of Prosperity on a Smaller Scale. The latter is a paradigm whose time has come.


  1. Vinay Gupta

    Small is Profitable is available on Amazon, and very much worth reading in terms of making an absolutely ironclad argument for decentralization of at least electricity resources. I think you’ll find many of the perspectives presented in the book apply equally well to water, and even to manufacturing.

  2. Vinay Gupta

    Has a list of the benefits. Here’s the top 10.

    1 Distributed resources’ generally shorter construction period leaves less time for reality to diverge from expectations, thus reducing the probability and hence the financial risk of under- or overbuilding.

    2 Distributed resources’ smaller unit size also reduces the consequences of such divergence and hence reduces its financial risk.

    3 The frequent correlation between distributed resources’ shorter lead time and smaller unit size can create a multiplicative, not merely an additive, risk reduction.

    4 Shorter lead time further reduces forecasting errors and associated financial risks by reducing errors’ amplification with the passage of time.

    5 Even if short-lead-time units have lower thermal efficiency, their lower capital and interest costs can often offset the excess carrying charges on idle centralized capacity whose better thermal efficiency is more than offset by high capital cost.

    6 Smaller, faster modules can be built on a “pay-as-you-go” basis with less financial strain, reducing the builder’s financial risk and hence cost of capital.

    7 Centralized capacity additions overshoot demand (absent gross underforecasting or exactly predictable step-function increments of demand) because their inherent “lumpiness” leaves substantial increments of capacity idle until demand can “grow into it.” In contrast, smaller units can more exactly match gradual changes in demand without building unnecessary slack capacity (“build-as-you-need”), so their capacity additions are employed incrementally and immediately.

    8 Smaller, more modular capacity not only ties up less idle capital (#7), but also does so for a shorter time (because the demand can “grow into” the added capacity sooner), thus reducing the cost of capital per unit of revenue.

    9 If distributed resources are becoming cheaper with time, as most are, their small units and short lead times permit those cost reductions to be almost fully captured. This is the inverse of #8: revenue increases there, and cost reductions here, are captured incrementally and immediately by following the demand or cost curves nearly exactly.

    10 Using short-lead-time plants reduces the risk of a “death spiral” of rising tariffs and stagnating demand.