Peter Frase

I feel like I've written a million almost-finished blog posts in the past month without coming up with anything I wanted to put up. But now I'm inspired, because something very interesting is going on in the progressive policy-wonk blogosphere right now. A whole bunch of different writers suddenly seem to be converging on an idea that I've also been playing with for a while: capitalism has gone through, or is going through, the transition to an economy in which rents rather than profits are the dominant form of value extraction.

This started when Robert Kuttner [touched off a conversation](http://www.creditslips.org/files/kuttner-on-past-future-bkcy.pdf) about the role of the rentier class in American politics. Kuttner frames our politics as a contest between the claims of the past and the claims of the future: the former are bonds, loans, and the like, while the latter are potentially productive investments. It's a framing that evokes an old tradition of differentiating productive and unproductive labor, but fingering the financial elite as rentiers is particularly suited to our moment. This idea then got picked up and elaborated in a whole bunch of different places ([Konczal](http://rortybomb.wordpress.com/2011/06/06/robert-kuttner-on-the-aftermath-of-debt-bubbles-and-restructuring-debts/) , [Krugman](http://krugman.blogs.nytimes.com/2011/06/06/the-rentier-regime/) , [Horning](http://www.popmatters.com/pm/post/142726-)).

Konczal, in particular, has been great on this. Prior to Kuttner's essay, he had already been writing about the increasing [dominance of the financial sector](http://rortybomb.wordpress.com/2011/03/07/towards-a-theory-of-corporate-and-financial-sector-solidarity/) in the economy. But what really blew my mind was the post he [put up today](http://rortybomb.wordpress.com/2011/07/07/rents-versus-profits-in-the-financial-reform-battle-and-post-industrial-economy/). He goes much farther than any of the other comments by noting that what we really need is to "get a generalizable theoretical framework for conflicts between profits and rents in the post-industrial world." And in search of such a framework, he digs up a [Michael Hardt essay](http://seminaire.samizdat.net/IMG/pdf/Microsoft_Word_-_Michael_Hardt.pdf) that poses the question in explicitly Marxist terms.

Hardt, following Marx, portrays the transition between different economic eras in terms of the dominant form of property in each. Under feudalism and early capitalism, the dominant form is "immobile" property, chiefly land. Under mature industrial capitalism, it is "mobile" property, chiefly the outputs of industrial production. But today, mobile property is becoming subordinate to "immaterial property": copyrights, patents, affect, care, financial claims, and so on. The interesting twist is that it is only under the regime of mobile property that profit becomes the dominant form of value extraction. In both the regime of immobile property and the regime of immaterial property, the dominant form of value extraction is through rent. The key difference between rents and profits is that, according to Hardt:

> In the collection of rent, the capitalist is deemed to be relatively external to the process of the production of value, merely extracting value produced by other means. The generation of profit, in contrast, requires the engagement of the capitalist in the production process, imposing forms of cooperation, disciplinary regimes, etc.

This, I think, gets at the heart of what is going on in contemporary political economy. And it's mildly shocking to me to see somebody like Mike Konczal endorsing it, because this dude is no academic Marxist. He's a former financial engineer who now works at the [Roosevelt Institute](http://www.rooseveltinstitute.org/), which is just the sort of mainstream New Deal liberal outfit that it sounds like.

I do think Konczal gets it a bit wrong in one spot, though. Commenting on the Hardt essay, he says:

> Much of the modernization that Marx triumphed was a victory of profit-makers over rent-holders. What Hardt argues is that, as the economy becomes more and more about information, the crucial ends of capital holders is to take things that could belong to the commons and instead appropriate them as property rights and sell them off. The implies a prioritization of rent-holders over profit-makers in terms of power over the economy (also implying a regression back from the future that Marx thought would come after profit-makers – take that Hegelian Marxism!).

Take that, indeed! I think this line of argument is actually a lot more Hegelian than than Konczal gives it credit for. It's true that the return of the rentier looks, superficially, like a regression back to pre-capitalist social relations. And it may bring with it some seemingly atavistic political movements: I'm thinking in particular of movements for debt forgiveness, a political demand that dates back to [ancient times](http://en.wikipedia.org/wiki/Jubilee_(Christianity)). But while the form of value extraction as rent looks the same, the *content of the value-creating activity*--and the form of social life that this activity produces--is completely different.

Above, I noted that you can describe economic systems in terms of their dominant property form. But another way to look at it is in terms of the identity of their exploited class. Under a primarily agrarian system based on control of land, it's peasants; under industrial capitalism, factory workers. One big difference between the exploited classes under these two systems is that under the former, peasants are fragmented and isolated from each other, while under the latter the proletariat is brought together in factories and cities and hence becomes a unified and self-aware *class*. Marx famously (or infamously) referred to the "idiocy of rural life", by which he meant that peasants were "idiots" in the etymological [Greek sense](http://en.wikipedia.org/wiki/Idiot_(Athenian_democracy)): people concerned exclusively with individual and private rather than public affairs. From the [*18th Brumaire*](http://www.marxists.org/archive/marx/works/1852/18th-brumaire/ch07.htm):

> The small-holding peasants form an enormous mass whose members live in similar conditions but without entering into manifold relations with each other. **Their mode of production isolates them from one another** instead of bringing them into mutual intercourse. The isolation is furthered by France’s poor means of communication and the poverty of the peasants. Their field of production, the small holding, permits no division of labor in its cultivation, no application of science, and therefore **no multifariousness of development, no diversity of talent, no wealth of social relationships**. Each individual peasant family is almost self-sufficient, directly produces most of its consumer needs, and thus acquires its means of life more through an exchange with nature than in intercourse with society. **A small holding, the peasant and his family; beside it another small holding, another peasant and another family. A few score of these constitute a village, and a few score villages constitute a department. Thus the great mass of the French nation is formed by the simple addition of homologous magnitudes, much as potatoes in a sack form a sack of potatoes**. Insofar as millions of families live under conditions of existence that separate their mode of life, their interests, and their culture from those of the other classes, and put them in hostile opposition to the latter, they form a class. Insofar as there is merely a local interconnection among these small-holding peasants, and the identity of their interests forms no community, no national bond, and no political organization among them, they do not constitute a class. They are therefore incapable of asserting their class interest in their own name, whether through a parliament or a convention. They cannot represent themselves, they must be represented.

Factory work has a completely different character than this, which is why Marx thought the proletariat was capable of becoming a "class for itself" that could lead the way in overturning capitalism, whereas the peasantry was politically inert.

Above, I noted that peasants and factory workers are the key exploited classes for agrarian and industrial capitalism respectively. What about rentier capitalism? Arguably--and definitely this is Hardt's argument--it's those who provide "immaterial labor". Some of these people are isolated from each other like peasants--women providing care in the home, for example. But a lot of them are engaged in producing what Hardt refers to as "the common": "the results of human labor and creativity, such as ideas, language, affects, and so forth". For instance, one of the big new facts about today's economy is that you have lots of people connecting, collaborating, creating and sharing things over the Internet, creating value that is then extracted by the big network-controlling rentiers like Google and Facebook. That's why Konczal is wrong, and rentier capitalism isn't a regression to an earlier mode of production but rather, as Hardt says in explicitly Hegelian jargon, the "negation of negation": first capitalism negates the individual property of the small proprieter, and then it negates its own form of property as it comes to depend increasingly on the common.

Now, it's certainly possible to argue that these kinds of mass sociality and creativity aren't promising for building political consciousness, and that they just encourage narcisissm, consumerism, and self-commodification. That's what I generally take [Rob Horning](http://www.popmatters.com/pm/blogs/marginal-utility/) to argue, for example, and he's a thoughtful guy whose arguments need to be reckoned with. But while the comment sections on major websites might suggest that the class of immaterial laborers are "idiots" in the contemporary sense, they are in a quite different situation from the rural idiocy Marx described. The "multifariousness of development, diversity of talent, wealth of social relationships" that Marx thought was missing from the peasantry is precisely what contemporary forms of immaterial labor tend to foster. Hence I tend to be cautiously optimistic about their political potential. That, I think is the rational kernel of the talk of "multitude" by Hardt, Negri, et al, even though I tend to find their arguments kind of blustery and overly speculative. (I have some more things to say about creating a new collective agent of anti-capitalist struggle, but those will appear in my essay in the forthcoming issue of [*Jacobin*](http://jacobinmag.com/).)

But it's certainly not inevitable that those who build the common will become a class for themselves. And if they don't, then we instead get a full-fledged rentier capitalism, in which the exploited class is held in new kinds of domination by the rentier class. That's what I was thinking about when I wrote about [Anti-Star Trek](http://www.peterfrase.com/2010/12/anti-star-trek-a-theory-of-posterity/) and [Idiocracy's theory of the future](http://www.peterfrase.com/2011/01/idiocracys-theory-of-the-future/). Which brings me back to why I was so excited about the whole rentier debate in the blogosphere. If so many people are coming around to these ideas from wildly different directions--Kuttner's old fashioned liberalism, Krugman's neoclassical economics, Hardt's post-modern Marxism, and my own weird mix of social democratic and communist impulses--then I start to think that we're hitting on something real and profound about how the current political economy is working.

In his influential treatise on the modern welfare state, [*The Three Worlds of Welfare Capitalism*](http://books.google.com/books/about/The_three_worlds_of_welfare_capitalism.html?id=Vl2FQgAACAAJ), Gøsta Esping-Andersen proposed that one of the major axes along which different national welfare regimes varied was the degree to which they de-commodified labor. The motivation for this idea is the recognition--going back to Marx--that under capitalism people's labor-power becomes a commodity, which they must sell on the market in order to earn the means of supporting themselves.

Following Karl Polanyi, Esping-Andersen describes the *de*-commodification of labor as the situation in which "a service is rendered as a matter of right, and when a person can maintain a livelihood without reliance on the market" (p. 22). So long as the society remains a capitalist one, it is never possible for labor to be *totally* de-commodified, for in that circumstance there would be nothing to compel workers to go take a job working for someone else, and capital accumulation would grind to a halt. However, insofar as there are programs like unemployment protection, socialized medicine, and guaranteed income security in retirement--and insofar as eligibility for these programs is close to universal--we can say that labor has been partially de-commodified. On the basis of this argument, Esping-Andersen differentiates those welfare regimes that are highly decommodifying (such as the Nordic countries) from those in which workers are still much more dependent on the market (such as the United States).

In the lineage of comparative welfare state research following Esping-Andersen, de-commodification is generally discussed in the way I've just presented it: in terms of the state's role in either forcing people into the labor market, or allowing them to survive outside of it. However, from the standpoint of the worker, we can think of the de-commodifying welfare state as giving people a *choice* about whether or not to commodify their labor, rather than forcing them to sell their labor as would be the case in the absence of any welfare-state institutions. The choice that is involved here is not merely about income. It ultimately comes down to how we want to organize our time, and how we want to structure our relations with other people.

What is ultimately at stake here is not merely the commodification of labor-power, but the commodification of all areas of social life. For based on the institutions that exist and the choices people make within them, we can imagine multiple social equilibria. Social life could be highly commodified: everyone performs labor for others in return for a wage, and also pays others to perform social functions which they don't have time for. But we could have a much lower level of commodification where people work less, because their cost of living is much lower: they are able to satisfy many of their personal needs without spending money.

To elucidate this point, consider a simplified thought experiment. Suppose you and I live in adjacent apartments. Now consider the following ways in which we might satisfy two of our needs: food and a clean habitat.

In scenario A, I cook my own meals and clean my own bathroom, and you do the same for yourself.

In scenario B, you pay me to cook your meals, and I pay you to clean my bathroom.

In scenario C, I pay you to cook for me and clean my bathroom, and you pay me to cook your meals and clean your bathroom.

This hypothetical is a bit silly, since with only two people involved we could just barter the trade in services rather than paying each other money. But in a more complex economy with many people paying each other for things, the medium of exchange becomes necessary, so I leave that element in place even in this simplified example.

What might make each of these three scenarios desirable?

The advantage of scenario A is that each of us has maximal control over our labor and our lives. I cook and clean when I choose, I eat just what I like, and I will do just enough cleaning to ensure that the bathroom meets my standards of cleanliness.

The advantage of scenario B is that it might be more efficient, if each of us has what economists call "comparative advantage" in one of the tasks. If I'm a better cook, but you're better at cleaning, then each of us ends up with overall better meals and cleaner bathrooms than we would have had otherwise. The downside, however, is that each of us has now partly alienated our labor to some degree. I have to monitor you to make sure that you're doing a complete job of cleaning, and you can boss me around if you dislike my food or I don't have dinner ready on time. What's more, the only way for this exchange to be fair to both of us is in the unlikely event that you enjoy cleaning the bathroom just as much as I like cooking. In the more likely case that both of us find cleaning much less pleasant than cooking, you get a raw deal.

Scenario C would seem to combine the worst elements of the other two scenarios. There is no efficiency gain, since we are both performing both tasks. And our labor is maximally alienated, since we are doing all our cooking and cleaning at someone else's command rather than for ourselves.

The point of these examples is that they represent different visions of how the economy might work. Scenario A is the one I sympathize with, and it's one that motivates many socialists, feminists, social democrats, and advocates of shorter working hours and less consumerist ways of living. Scenario B is more like the traditional vision of 20th century liberal capitalism: by commodifying more of social life, we increase our material abundance but at the expense of living alienated lives as commodified labor.

However, I would argue that a lot of political and economic discourse in the United States is actually dominated by the third scenario, which sees commodification as a good in itself, irrespective of its efficiency or its effect on our working lives. I said above that scenario C didn't have anything to recommend it, but this is not exactly true. For in a society where labor-power is still commodified and people are dependent on the labor market, it is essential that we constantly create new jobs for people to perform--otherwise, you end up with mass unemployment just like we're seeing right now. Scenario C is the one that maximizes job-creation and GDP growth, even though it is by no means obvious that it is the scenario that maximizes human happiness and satisfaction.

It's worth belaboring this point precisely because so many liberals and even leftists take the "high-commodification" equilibrium for granted. Take the example of [Matt Yglesias](http://thinkprogress.org/yglesias/issue/) of the Center for American Progress. I write about him often (and once got [Yglesiassed](http://thinkprogress.org/yglesias/2011/03/23/200322/endgame-419/) in return) because in many ways I find him a more congenial thinker than a lot of more traditional "leftists" who seem trapped in nostalgia for mid-20th century industrial capitalism. But the issue of commodification gets at a core area where we see the world differently.

Yglesias often writes about the fact that industrial employment is inevitably declining for technological reasons, and hence services are bound to make up an increasing share of the employment. This motivates some of his other hobby-horses, such as his crusade against occupational licensing, which he sees as an impediment to creating these needed service jobs. Now, I have no particular attachment to occupational licensing, and on the issue of manufacturing and industrial employment, Yglesias and I are basically in agreement. Where we disagree is in seeing the best future trajectory of the economy as one in which people perform more and more services for each other, for pay. [For example](http://thinkprogress.org/yglesias/2011/03/07/200135/the-yoga-instructor-economy/):

> [T]his is why I’ve been saying that yoga instructors have the job of the future. Nothing in these trends suggests that the actual quantity of janitors is going to increase in the future. If anything, falling demand for office workers implies that the future can have fewer. So is the future a smallish number of wealthy office workers served by an "aristocracy of labor" of unionized janitors awash in a pool of unemployed people enjoying free health care? Presumably not. The people of the future will be richer than the people of today, and therefore will more closely resemble annoying yuppies. Nicer restaurants are more labor-intensive than cheap ones, and the further up the scale you go the more specialized skills (think sommelier) come into play. Annoying yuppies take yoga classes, or even hire personal trainers. Artisanal cheese is more labor-intensive to produce than industrial cheese. More people will hire interior designers and people will get their kitchens redone more often. There will be more personal shoppers and more policemen. People will get fancier haircuts.

It's easy to mock the idea that the future economy will be based entirely on giving each other haircuts and yoga instruction. But my objection is not that this is *implausible*--I think it's entirely plausible, and such a world could even feature a relatively egalitarian income distribution, depending on the bargaining power of labor and the intervention of the state. The real question, I think, is whether this is the only way for things to turn out--that is, is it really true that [the yuppie that is richer only shows, to the less rich, the image of their own future](http://www.marxists.org/archive/marx/works/1867-c1/p1.htm)? And if not, is it the most desirable outcome?

I don't want to pre-judge this choice so much as just argue that it *is* a choice. Whether we end up in a low-commodification, low cost of living scenario A or a high-commodification, high cost of living scenario C will be the result of an interaction between the state and other institutions and individual choices within those institutions. It is thus both a political and a cultural question. Even now, not every country resolves these questions in the same way. In the Netherlands, for example, both incomes and working hours are lower than in the United States, and a good argument can be made that the well-being of the Dutch is [at least as high as our own](http://academiccommons.columbia.edu/catalog/ac:129022).

This is why I think that the politics of de-commodification in the 21st century will be closely linked to the politics of time.

The other day I re-watched John Carpenter's [*They Live*](http://www.imdb.com/title/tt0096256/)--which, for the record, is a pretty good satire of Reagan-era America, and deserves to be remembered for more than just that stupid Shepard Fairey [sticker campaign](http://obeygiant.com/). While watching, I noticed something pretty great that I missed the first time through. It shows up after the main character puts on magic sunglasses, which allow him to see that the billboards around him actually contain secret brainwashing messages. Most of these just say things like "consume" and "obey". But check out the sign in the upper left corner of this picture:

That command, of course, is a riff on an old slogan of the 19th century labor movement, which demanded the eight-hour day using signs like this one:

As David Roediger and Philip Foner remark in their [great history of American labor and the working day](http://books.google.com/books?id=h8P-uuyYe_YC&lpg=PA324&ots=xG4cd8F4rn&dq=roediger%20foner&pg=PA98#v=onepage&q&f=false):

> [T]he cry "Eight hours for work, eight hours for rest, eight hours for recreation," acted as more than a common denominator. It embodied . . . the highest aspirations of the working population. It expressed cherised values. . . . In making the eight-hour system the key to equal education for children, to the continued mental development of adults, to the defense of republican virtue and class interest by an enlightened and politically active citizenry, to health, to vigor, and to social life, supporters viewed their demand as an initial step to major changes, not as a niggling reform. (pp. 98-99)

As is well known, the demand for shorter hours mostly disappeared from organized labor's agenda after World War II, for [complex](http://books.google.com/books?id=lv9cfP1QMAcC&printsec=frontcover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false) and [disputed](http://books.google.com/books?id=yV2xgJBNfo4C&printsec=frontcover&dq=cutler+uaw+hours&hl=en&ei=edPjTZqZAoPq0gH07Z2yBw&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCoQ6AEwAA#v=onepage&q&f=false) reasons. The sign I saw in *They Live* is one consequence of abdicating the postive class argument for shorter hours. By the time the movie was made in 1988, the eight-hour movement's greatest slogan could come to seem not like a cherished victory of the working class, but rather as a piece of dystopian propaganda. "Eight hours recreation" becomes the command to "play eight hours", and this "play" is refigured as obligatory participation in consumerist culture rather than the opportunity for political, intellectual and moral development that it signified for the eight-hour campaigners. Perhaps it's not surprising, then, that these days long hours are often portrayed as an issue of individual preferences or "workaholic" psychology, rather than the outcome of organized labor's long political defeat.

I have a feeling this little vignette will end up in my dissertation somehow, although I don't think I mentioned doing any cultural studies in my fellowship proposal.

On the occasion of Osama bin Laden's death, I'm dusting off something I wrote a long time ago but never bothered to publish anywhere. The brief essay below is about six and a half years old, and it was written shortly before the 2004 U.S. elections. Bin Laden had just [put out a tape](http://english.aljazeera.net/archive/2004/11/200849163336457223.html), now mostly forgotten, in which he seemed to be inserting himself into the election in an especially bizarre way. At the time, there was lots of chatter about how this tape would help Bush's re-election, particularly because of the way bin Laden's comments seemed to echo things that the left was saying about Bush at the time.

The whole affair caused me to reflect on the bizarre way that Americans allowed bin Laden to affect the national discourse after 9/11. He disrupted our society just as much through his rhetoric as through his violent plots--and that rhetoric sometimes appeared to be a self-conscious parody of the rhetoric of American power. How, I thought, could bin Laden not be aware of the power he held to discredit ideas in the eyes of mainstream American opinion, simply by associating himself with them? Thankfully, he can no longer perform this role, but the underlying problem--the way we allow official "enemies of America" to exercise a veto over our political discourse--persists.

This is what I wrote in 2004:

Finally, the suspense is over. We've gotten the answer to the question on everyone's mind: what does Osama Bin Laden think about the US Presidential election?

The release of a new Bin Laden tape in late October would have become the center of the electoral contest in any event, but now Bin Laden has intervened directly in American politics. Previous tapes have directed themselves primarily at Bin Laden's presumptive *umma*, the disaffected Muslims who provide his recruits. For Americans, Bin Laden had only threats and invective. Now, however, he appears to appeal directly to Americans, over the heads of their leaders. "Security is an important pillar of human life", says Bin Laden, and "we only engaged battle with you because we are free persons".

What are we to make of this new pose, with Bin Laden cloaking himself in the language of American democracy, in tones of empathy and conciliation (admixed with violence and threats)? With Osama Bin Laden, nothing can be taken at face value. Every sector of American culture has spent the past three years constructing Bin Laden as the personification of all that is bad, to the point that he has become both the author and the embodiment of evil and untruth, to an almost metaphysical degree.

Osama is radical negativity. Any position becomes nearly impossible to affirm in public as soon as it has been upheld by Osama Bin Laden. As a consequence, Bin Laden has gained a seemingly magical power to pollute and corrupt any discourse in which he intervenes. His latest intervention seems conscious of this, in the way it deploys tropes of the domestic anti-Bush left: the commentary neatly wraps together the allegations of Bush's slowness to react on the day of the attacks (including even the "My Pet Goat" incident shown in *Farenheit 911*) with the effort to connect American foreign policy with the roots of terrorism.

Does Osama understand what he represents to Americans? Does he understand that anything he touches becomes anathema in our political discourse? If he does, then surely he knows that his comments are a gift to George W. Bush: now that Osama has raised questions about the prudence and competence of Bush's policy, no-one else can legitimately do so.

David Brooks understands this. In [his *New York Times* column](http://www.nytimes.com/2004/10/30/opinion/30brooks.html), he dutifully acts as a reflexive puppet of the Bin Ladenist rhetorical virus. "What we saw last night was revolting", he says of the video. "Here is this monster . . . trying to insert himself into our election, trying to lecture us on who is lying . . . with copycat Michael Moore rhetoric about George Bush in the schoolroom, and Jeb Bush and the 2000 Florida election." Brooks drips with an ominous discursive authoritarianism, carried on the winds of innuendo and suspicion. Bin Laden talked about Bush lying. What does that tell you about those who call Bush a liar? Bin Laden criticized Bush's behavior on 9/11. What does that tell you about people who criticize the administration's response to the attacks? And so on. The power of Bin Laden is already there, and Brooks has only to invoke it. Simply remind the audience that *Osama said this*, and watch the life drain out of a once-cutting piece of political invective.

Parody, wrote Jonathan Swift, is the act of impersonating the style and manner of those whom one wishes to expose. The latest incarnation of Osama Bin Laden is as a parody of the American empire. Here is a man whom westerners utterly identify with murder and evil, declaiming that his acts of carnage were all in the service of "liberty" and "security"; the parodic echo of Bush is obvious. Here, too, is Bin Laden, addressing the American people directly—as if any American cares to listen to his disingenuous sympathy. Bin Laden's feigned concern with the American right to security mocks Bush's lectures to Iraqis and Afghans about the gifts of freedom and democracy their new occupiers have brought them. If, at one level, Bin Laden has propped up Bush by undermining all rational criticisms of his administration, he has also introduced an element of radical absurdity into the logic of the American empire: in Bin Laden, we see the ludicrous reflection of perpetual war for perpetual piece.

Bin Laden the radical negation of criticism, and Bin Laden the parody of empire, both serve to undermine reason as a basis for policy or political discussion. Most viscerally, Bin Laden provokes the furious outrage which Brooks wants us to feel. That rage fuels the continuation of the "war" in its present form, which suits Bin Laden's needs as well as it suits Bush's.

One does not have to be a conspiracy theorist to suppose that if Bin Laden did not exist, American conservatives would have had to invent him.

So it turns out that Matt Yglesias [advocates](http://twitter.com/#!/mattyglesias/status/56096800112783360) replacing Medicare with cash grants to senior citizens. Tyler Cowen [agrees](http://marginalrevolution.com/marginalrevolution/2011/04/cash-grants-instead-of-medicare.html) from a libertarian perspective, but suggests this be presented as an alternative to traditional medicare rather than forced on everyone.

Cowen cites Paul Krugman's comment about government-provided healthcare, that "what would terrify the right . . . is the likelihood that genuine socialized medicine would actually win that competition" with private insurance. Cowen responds that "What would terrify the left . . . is the likelihood that genuine privatized cash would actually win that competition." This strikes me as a case of the common political fallacy where the motivations of one's political opponents are assumed to be the inverse of one's own: if conservatives are in favor of less government, the left must be in favor of more government. But this isn't very plausible; most liberals and leftists that I'm aware (including me) see government as a means of achieving social justice and equality, not as an end in itself.

In general, I'm very much in favor of doing redistribution by just handing people unconditional cash rather than subjecting them to [bureaucratic tests and restrictions](http://www.peterfrase.com/2010/03/against-means-testing/). In the specific case of health care, however, I'm not persuaded. This is not because I think government health care is inherently desirable, but because I think just giving people money to purchase their own health care violates the communist principle that underpins social rights in the welfare state.

What does it mean to say that social rights are communist, with a small "c"? Only that they are based on the principle of *from each according to ability, to each according to need*. In a capitalist society with an unequal distribution of income, "ability" becomes "ability to pay". This principle, that contributions to the welfare state should be proportional to income, is well established-- although in practice it is of course deeply contested. What is more difficult is determining what qualifies as "need".

The simplest way to deal with this is to say that the state should be neutral about what specific things individuals "need" to live a decent life, and should instead just give everyone the means to procure whatever *they* view as their basic needs--in other words, we should just give everyone money. This is the principle behind the [Basic Income](http://www.basicincome.org/bien/), which is based on ensuring that everyone in society receives some baseline income irrespective of work and which is something that I strongly support as a long-term goal.

However, simply giving everyone an equal amount of money is a solution that breaks down in cases where, for reasons that are basically outside the control of individuals, needs are very unequally distributed. And health care is the pre-eminent case of this. Some people simply require more health care than others, whether because they happen to be genetically predisposed to illness, or because they get hurt in an accident, or because they get cancer, or because they happen to be [a woman](http://www.amcp.org/data/jmcp/JMCPSupp_April08_S2-S6.pdf).

This is why it makes sense for Medicare to be organized the way it is: from each according to their ability to pay (though this principle is compromised because not all income is subject to Medicare taxes), and to each according to their need for health care services. Setting things up this way creates political and policy problems, of course, because someone has to decide what counts as a health care "need". Hence all the debates we've been having about Cadillac health plans, comparative effectiveness research, death panels, etc. Moreover, there will inevitably be a struggle to define just which health conditions are truly involuntary, and which reflect individual decisions regarding, e.g., diet and exercise.

But handing people checks is no substitute at all. If you just hand people money and tell them "go buy some health care", you're doing an injustice to those who have higher health care costs through no fault of their own. If you tell them to "go buy some health insurance" instead, then you either create a market where insurers will only take healthy applicants, or you go in the direction of mandates on insurers to accept people and mandates on individuals to buy insurance. At that point, you're basically back to guaranteeing people access to the health care they need, rather than telling them to buy as much health care as they want.

Things like health care are a challenge for the way I like to think about the welfare state. My preference is for a kind of [communist-libertarian synthesis](http://www.bepress.com/bis/vol1/iss1/art6/) in which we are all guaranteed substantive equality without requiring the state to micro-manage our decisions. The best way to do that is through simple, unconditioned transfers like Basic Income. However, such schemes will always be complicated by the ways in which needs are substantively and quantitatively unequal, and thus formal equality of income results in substantive inequality of condition. To deal with health and illness is to deal with the biological level of human existence in a way that leftists are often somewhat reluctant to do. From a Marxist perspective, you can look at this the way [Sebastiano Timpanaro does](http://www.newleftreview.org/?view=1472):

> Marxists put themselves in a scientifically and polemically weak position if, after rejecting the idealist arguments which claim to show that the only reality is that of the Spirit and that cultural facts are in no way dependent on economic structures, they then borrow the same arguments to deny the dependence of man on nature.

> The position of the contemporary Marxist seems at times like that of a person living on the first floor of a house, who turns to the tenant of the second floor and says: 'You think you're independent, that you support yourself by yourself ? You're wrong! Your apartment stands only because it is supported on mine, and if mine collapses, yours will too’; and on the other hand to the ground floor tenant: 'What are you pretending? That you support and condition me? What a wretched illusion!' . . .

> To maintain that, since the 'biological' is always presented to us as mediated by the 'social', the 'biological' is nothing and the 'social' is everything, would once again be idealist sophistry. . . .

> . . . it must be added that although the biological level has virtually no importance in determining traits distinguishing large human groups (there is, for example, no correlation between membership of a certain race and the possession of certain intellectual or moral gifts), it does again have a conspicuous weight in the determination of individual characteristics. Humanity is not made up of individuals who are all equal in psycho-physical constitution, differentiated only by the social environment in which they happen to find themselves.

Recognition of these brute physical facts of existence forces us to confront the complex texture of human needs. Thus while the formal economic equality signified by the basic income is an important general principle, it must be supplemented by direct provision of services in areas like health care, where needs are seriously unequal. This is, among other things, something that differentiates the left-wing and Marxist-influenced conception of basic income from the right-wing version propounded by someone [like Charles Murray](http://www.fljs.org/sites/www.fljs.org/files/publications/Murray.pdf).

I went into excruciating detail about manufacturing output statistics in my last post, mainly so that I could post some more analysis using various international sources. One question that often comes up about American manufacturing, after all, is whether our pattern of deindustrialization is unusual compared to other countries. To get some idea, we can use the statistics on employment and output compiled by the OECD. These numbers are, as best I can tell, roughly comparable to the Federal Reserve "output" numbers I used in my initial post on U.S. manufacturing.

For most countries, the OECD data only goes back a few years. So for some of the most interesting cases--namely, recently industrializing poor countries--we don't have good historical data. However, we can at least compare the U.S. to other rich countries. Here's manufacturing employment and output for the U.S., Sweden, and Japan, going back to 1970:

Here, we see that "deindustrialization" in the sense of declining manufacturing employment is not just a U.S. phenomenon. Likewise, manufacturing output has grown dramatically in all three countries. Indeed, output growth has been faster in the U.S.

This is particularly amusing with respect to Japan. Back in the 1980's, of course, Japan played the role of bête noir in American popular discourse that China plays today: the scary Asian menace that was going to out-compete the U.S. economy and ensure our economic doom. And indeed, output and employment in manufacturing both grew faster in Japan than in the U.S. in the 1980's. But since then, Japan has followed the same pattern of employment decline as the United States, while its output has remained stagnant. This is worth keeping in mind when considering the likely future of manufacturing in today's low-wage countries.

But what if we expand our view to include some more recently industrialized countries? Given the available data, we are unfortunately limited to just the most recent business cycle. Still, there are some interesting patterns:

Now some different patterns emerge. The U.S., Germany and especially Korea show the pattern of divergence between employment and output. In South Africa and Turkey, on the other hand, the two are more closely linked. Turkey, in fact, shows an actual increase in the number of manufacturing employees, unlike any of these other countries. This is likely due to a combination of low Turkish wages and proximity to EU markets--along with the anticipation of possible future Turkish membership in the EU. There are those who would like to "bring back" manufacturing jobs from offshore locations like Turkey. But it's not clear how many jobs this would actually create--Turkish manufacturing is a big employer precisely because it isn't all that productive. Protectionist policies--or increases in wages in the low-wage producers--would probably create some jobs in the rich countries, but they would also probably lead to increased use of labor-saving technology.

Of course, we still haven't dealt with the panda bear in the middle of the room: China. But I'm going to wait and put that one in its own post.

I'm going to do a little series on manufacturing, because after doing my last post I got a little sucked into the various data sources that are available. Today's installment comes with a special attention conservation notice, however: this post will be extremely boring. I'll get back to my substantive arguments about manufacturing in future posts, and put up some details about trends in productivity in specific sectors, some data that contextualizes the U.S. internationally, and a specific comparison with China. But first, I need to make a detour into definitions and methods, just so that I have it for my own reference. What follows is an attempt to answer a question I've often wanted answered but never seen written up in one place: what, exactly, do published measures of real economic growth actually mean?

The two key concepts in my previous post are manufacturing employment and manufacturing output. The first concept is pretty simple--the main difficulty is to define what counts as a manufacturing job, but there are fairly well-accepted definitions that researchers use. In the International Standard Industrial Classification (ISIC), which is used in many cross-national datasets, manufacturing is definied as:

the physical or chemical transformation of materials of components into new products, whether the work is performed by power- driven machines or by hand, whether it is done in a factory or in the worker's home, and whether the products are sold at wholesale or retail. Included are assembly of component parts of manufactured products and recycling of waste materials.

There is some uncertainty about how to classify workers who are only indirectly involved in manufacturing, but in general it's fairly clear which workers are involved in manufacturing according to this criterion.

The concept of "output", however, is much fuzzier. It's not so hard to figure out what the physical outputs of manufacturing are--what's difficult is to compare them, particularly over time. My last post was gesturing at some concept of physical product: the idea was that we produce more things than we did a few decades ago, but that we do so with far fewer people. However, there is no simple way to compare present and past products of the manufacturing process, because the things themselves are qualitatively different. If it took a certain number of person-hours to make a black and white TV in the 1950's, and it takes a certain number of person-hours to make an iPhone in 2011, what does that tell us about manufacturing productivity?

There are multiple sources of data on manufacturing output available. My last post used the Federal Reserve's Industrial Production data. The Fed says that this series "measures the real output of the manufacturing, mining, and electric and gas utilities industries". They further explain that this measure is based on "two main types of source data: (1) output measured in physical units and (2) data on inputs to the production process, from which output is inferred.". Another U.S. government source is the Bureau of Economic Analysis data on value added by industry, which "is equal to an industry’s gross output (sales or receipts and other operating income, commodity taxes, and inventory change) minus its intermediate inputs (consumption of goods and services purchased from other industries or imported)." For international comparisons, the OECD provides a set of numbers based on what they call "indices of industrial production"--which, for the United States, are the same as the Federal Reserve output numbers. And the United Nations presents data for value-added by industry, which covers more countries than the OECD and is supposed to be cross-nationally comparable, but does not quite match up with the BEA numbers.

The first question to ask is: how comparable are all these different measures? Only the Fed/OECD numbers refer to actual physical output; the BEA/UN data appears to be based only on the money value of final output. Here is a comparison of the different measures, for the years in which they are all available (1970-2009). The numbers have all been put on the same scale: percent of the value in the year 2007.

The red line shows the relationship between the BEA value added numbers and the Fed output numbers, while the blue line shows the comparison between the UN value-added data and the Fed output data. The diagonal black line shows where the lines would fall if these two measures were perfectly comparable. While the overall correlation is fairly strong, there are clear discrepancies. In the pre-1990 data, the BEA data shows manufacturing output being much lower than the Fed's data, while the UN series shows somewhat higher levels of output. The other puzzling result is in the very recent data: according to value-added, manufacturing output has remained steady in the last few years, but according to the Fed output measure it has declined dramatically. It's hard to know what to make of this, but it does suggest that the Great Recession has created some issues for the models used to create these data series.

What I would generally say about these findings is that these different data sources are sufficiently comparable to be used interchangeably in making the points I want to make about long-term trends in manufacturing, but they are nevertheless different enough that one shouldn't ascribe unwarranted precision to them. However, the fact that all the data are similar doesn't address the larger question: how can we trust any of these numbers? Specifically, how do government statistical agencies deal with the problem of comparing qualitatively different outputs over time?

Contemporary National Accounts data tracks changes in GDP using something called a "chained Fisher price index". Statistics Canada has a good explanation of the method. There are two different problems that this method attempts to solve. The first is the problem of combining all the different outputs of an economy at a single point in time, and the second is to track changes from one time period to another. In both instances, it is necessary to distinguish between the quantity of goods produced, and the prices of those goods. Over time, the nominal GDP--that is, the total money value of everything the economy produces--will grow for two reasons. There is a "price effect" due to inflation, where the same goods just cost more, and a "volume effect" due to what StatCan summarizes as "the change in quantities, quality and composition of the aggregate" of goods produced.

StatCan describes the goal of GDP growth measures as follows: "the total change in quantities can only be calculated by adding the changes in quantities in the economy." Thus the goal is something approaching a measure of how much physical stuff is being produced. But they go on to say that:

creating such a summation is problematic in that it is not possible to add quantities with physically different units, such as cars and telephones, even two different models of cars. This means that the quantities have to be re evaluated using a common unit. In a currency-based economy, the simplest solution is to express quantities in monetary terms: once evaluated, that is, multiplied by their prices, quantities can be easily aggregated.

This is an important thing to keep in mind about output growth statistics, such as the manufacturing output numbers I just discussed. Ultimately, they are all measuring things in terms of their price. That is, they are not doing what one might intuitively want, which is to compare the actual amount of physical stuff produced at one point with the amount produced at a later point, without reference to money. This latter type of comparison is simply not possible, or at least it is not done by statistical agencies. (As an aside, this is a recognition of one of Marx's basic insights about the capitalist economy: it is only when commodities are exchanged on the market, through the medium of money, that it becomes possible to render qualitatively different objects commensurable with one another.)

In practice, growth in output is measured using two pieces of information. The first is the total amount of a given product that is sold in a given period. Total amount, in this context, does not refer to a physical quantity (it would be preferable to use physical quanitites, but this data is not usually available), but to the total money value of goods sold. The second piece of information is the price of a product at a given time point, which can be compared to the price in a previous period. The "volume effect"--that is, the actual increase in output--is then defined as the change in total amount sold, "deflated" to account for changes in price. So, for example, say there are $1 billion worth of shoes sold in period 1, and $1.5 billion worth of shoes sold in period 2. Meanwhile, the price of a pair of shoes rises from $50 to $60 between periods 1 and two. The "nominal" change in shoe production is 50%--that is, sales have increased from 1 billion to 1.5 billion. But the real change in the volume of shoes sold is defined as:

So after correcting for the price increase, the actual increase in the amount of shoes produced is 25 percent. Although the example is a tremendous simplification, it is in essence how growth in output is measured by national statistical agencies.

In order for this method to work, you obviously need good data on changes in price. Governments traditionally get this information with what's called a "matched model" method. Basically, they try to match up two identical goods at two different points in time, and see how their prices change. In principle, this makes sense. In practice, however, there is an obvious problem: what if you can't find a perfect match from one time period to another? After all, old products are constantly disappearing and being replaced by new ones--think of the transition from videotapes to DVDs to Blu-Ray discs, for example. This has always been a concern, but the problem has gotten more attention recently because of the increasing economic importance of computers and information technology, which are subject to rapid qualitative change. For example, it's not really possible to come up with a perfect match between what a desktop computer cost ten years ago and what it costs today, because the quality of computers has improved so much. A $1000 desktop from a decade ago would be blown away by the computing power I currently have in my phone. It's not possible to buy a desktop in 2011 that's as weak as the 2000 model, any more than it was possible to buy a 2011-equivalent PC ten years ago.

Experts in national accounts have spent a long time thinking about this problem. The OECD has a very useful handbook by price-index specialist Jack Triplett, which discusses the issues in detail. He discusses both the traditional matched-model methods and the newer "hedonic pricing" methods for dealing with the situation where an old product is replaced by a qualitatively different new one.

Traditional methods of quality adjustment are based on either measuring or estimating the price of the new product and the old one at a single point in time, and using this as the "quality adjustment". So, for example, if a new computer comes out that costs $1000, and it temporarily exists in the market alongside another model that costs $800, then the new computer is assumed to be 20 percent "better" than the old one, and this adjustment is incorporated into the price adjustment. The intuition here is that the higher price of the new model is not due to inflation, as would be assumed in the basic matched-model framework, but reflects an increase in quality and therefore an increase in real output.

Adapting the previous example, suppose revenues from selling computers rise from $1 billion to $1.5 billion dollars between periods 1 and 2, and assume for simplicity that there is just one computer model, which is replaced by a better model between the two periods. Suppose that, as in the example just given, the new model is priced at $1000 when introduced at time 1, compared to 800 for the old model. Then at time 2, the old model has disappeared, while the new model has risen in price to $1200. As before, nominal growth is 50 percent. With no quality adjustment, the real growth in output is:

Or 25 percent growth. If we add a quality adjustment reflecting the fact that the new model is 20 percent "better", however, we get:

Meaning that real output has increased by 56 percent, or more than the nominal amount of revenue growth, even adjusting for inflation.

In practice, it's often impossible to measure the prices of old and new models at the same time. There are a number of methods for dealing with this, all of which amount to some kind of imputation of what the relative prices of the two models would have been, had they been observed at the same time. In addition, there are a number of other complexities that can enter into quality adjustments, having to do with changes in package size, options being made standard, etc. For the most part, the details of these aren't important. One special kind of adjustment that is worth noting is the "production cost" adjustment, which is quite old and has been used to measure, for example, model changes in cars. In this method, you survey manufacturers and ask them: what would it have cost you to build your new, higher-quality model in an early period? So for a computer, you would ask: how much would it have cost you to produce a computer as powerful as this year's model, if you had done it last year? However, Triplett notes that in reality, this method tends not to be practical for fast-changing technologies like computers.

Although they are intuitively appealing, it turns out that the traditional methods of quality adjustment have many potential biases. Some of them are related to the difficulty of estimating the "overlapping" price of two different models that never actually overlapped in the market. But even when such overlapping prices are available, there are potential problems: older models may disappear because they did not provide good quality for the price (meaning that the overlapping model strategy overestimates the value of the older model), or the older model may have been temporarily put on sale when the new model was introduced, among other issues.

The problems with traditional quality adjustments gave rise to an alternative method of "hedonic" price indexes. Where the traditional method simply compares a product with an older version of the same product, hedonic indices use a model called a "hedonic function" to predict a product's price based on its characteristics. Triplett gives the example of a study of mainframe computers from the late 1980's, in which a computer's price was modeled as a function of its processor speed, RAM, and other technical characteristics.

The obvious advantage of the hedonic model is that it allows you to say precisely what it is about a new product that makes it superior to an old one. The hedonic model can either be used as a supplement to traditional method, as a way of dealing with changes in products, or it can entirely replace the old methods based on doing one-to-one price comparisons from one time period two another.

The important thing to understand about all of these quality-adjustment methodologies is what they imply about output numbers: growth in the output of the economy can be due to making more widgets, or to making the same number of widgets but making them better. In practice, of course, both types of growth are occuring at the same time. As this discussion shows, quality adjustments are both unavoidable and highly controversial, and they introduce an unavoidable subjective element into the definition of economic output. This has to be kept in mind when using any time series of output over time, since these numbers will reflect the methdological choices of the agencies that collected the data.

Despite these caveats, however, wading into this swamp of technical debates has convinced me that the existing output and value-added numbers are at least a decent approximation of the actual productivity of the economy, and are therefore suitable for making my larger point about manufacturing: the decline of manufacturing employment is less a consequence of globalization than it is a result of technological improvements and increasing labor productivity.

The other day I got involved in an exchange with some political comrades about the state of manufacturing in the United States. We were discussing this Wall Street Journal editorial, which laments that "more Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined". Leaving aside the typical right-wing denigration of government work, what should we think about the declining share of of Americans working in industries that "make things"?

I've written about this before. But I'm revisiting the argument in order to post an updated graph and also to present an alternative way of visualizing the data.

Every time I hear a leftist or a liberal declare that we need to create manufacturing jobs or start "making things" again in America, I want to take them by the collar and yell at them. Although there is a widespread belief that most American manufacturing has been off-shored to China and other low-wage producers, this is simply not the case. As I noted in my earlier post, we still make lots of things in this country--more than ever, in fact. We just do it with fewer people. The problem we have is not that we don't employ enough people in manufacturing. The problem is that the immense productivity gains in manufacturing haven't accrued to ordinary people--whose wages have stagnated--but have instead gone to the elite in the form of inflated profits and stock values.

Anyway, I'm revisiting this because I think everyone on the left needs to get the facts about manufacturing employment and output burned into their memory. The numbers on employment in manufacturing are available from the St. Louis Federal Reserve, and the data on output is available from the national Federal Reserve site. Here's an updated version of a graph I've previously posted:

I like this graph a lot, but today I had another idea for how to visualize these two series. Over at Andrew Gelman's blog, co-blogger Phil posted an interesting graph of bicycing distance and fatalities. That gave me the idea of using the same format for the manufacturing data:

This graph is interesting because it seems to show three pretty different eras in manufacturing. From the 1940's until around 1970, there was a growth in both employment and output. This, of course, corresponds to the "golden age" of post-war Keynesianism, where the labor movement submitted to capitalist work discipline in return for receiving a share of productivity gains in the form of higher wages. From 1970 until around 2000, output continues to rise rapidly, but employment stays basically the same. Then in the last ten years, employment falls dramatically while output remains about the same.

This big take-home point from all this is that manufacturing is not "in decline", at least in terms of output. Going back to an economy with tons of manufacturing jobs doesn't make any more sense than going back to an economy dominated by agricultural labor--due to increasing productivity, we simply don't need that many jobs in these sectors. Which means that if we are going to somehow find jobs for 20 million unemployed and underemployed Americans, we're not going to do it by building up the manufacturing sector.

One thing that has long bothered me about many socialist and Marxist critiques of capitalism is that they presume that a system based on the accumulation of *capital* presupposes the existence of *capitalists*--that is, a specific group of people who earn their income from investment, rather than by working for wages. It is totally possible to imagine a system in which profit-making private enterprise still exists, the economy is based on profit-seeking and constant growth, and in which the entire population works as wage-laborers for most of their lives. I always figured the most likely candidate for such an arrangement was some kind of [pension fund socialism](http://www.leftbusinessobserver.com/NSPensions.html). But today, Matt Yglesias gives [another similar path](http://yglesias.thinkprogress.org/2011/03/obtaining-the-returns-to-capital/). He's discussing something from Felix Salmon about how the rich increasingly have access to lots of investment opportunities that are closed off to ordinary investors, and he says:

> [T]he right thing to do is to just directly think about the issue of how best to ensure that everyone obtains the financial benefits of equity investments. And the answer, I think, is sovereign wealth funds. That’s how they do it in Singapore and conceptually it’s the right way to do it. An American version of Singapore’s Central Provident Fund would be much too large for any market to absorb, but the US share of world GDP should shrink over time and it’s conceivable that there would be some way to work this out on the state level to create smaller units. A fund like that would render the public listing issue irrelevant, since it would clearly have the scale to get in on the private equity game. This would, needless to say, entail injecting a hefty element of socialism into American public policy but I’m always hearing from smart conservatives how much they admire Singapore.

This points in the direction of an ideal type of society in which all businesses are owned by sovereign wealth funds of this type, which are used to pay for public services. So everyone works at a job for a wage or salary, and contributes some of their paycheck to one of these funds, just as they now contribute to pension funds. The returns from the funds are then used to pay for things like retirement, health care, education, and so on. Yglesias jokingly refers to this as "socialism". And by certain classic definitions, it is: the capitalist class has been abolished, and the workers now own the means of production (through their sovereign wealth funds).

But in many other ways, of course, this is not how socialism was traditionally conceived. In particular, you would still have profit-seeking companies competing with each other, and they would still be subject to the same kind of discipline they are now--the shareholders, which is to say the sovereign wealth funds, would demand the highest possible return on their investment. So at best, this is a kind of [market socialism](http://books.google.com/books?id=KWy9JbWvjywC). But while there are people who take on the task of the capitalist--the employees of the sovereign wealth funds--they don't make up a *capitalist class*, because they aren't investing for their own personal profit. Indeed, we've already moved a long way in this direction, which is why Peter Drucker was [talking about pension fund socialism](http://tpmcafe.talkingpointsmemo.com/2010/07/23/socialism--american_style/) in 1972.

Of course, we do still have actual capitalists, and getting rid of them would be a long and difficult process. But the important point about capitalism without capitalists is that in many ways it isn't any better than capitalism *with* capitalists. You still have to sell your labor power and submit to a boss in order to survive, so alienation persists. Since firms are still competing to deliver the highest returns to their shareholders, there will still be pressure to exploit employees more intensely and to prevent them from organizing for their rights. Exploitation goes on as before, and it will be all the more robust insofar as it is now a kind of collective self-exploitation. And on top of all of this, the system will still be prone to the booms and busts and problems of overaccumulation that occur in today's capitalism. It was, after all, public and union pension funds that [bought many of the toxic mortgage-backed securities](http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aW5vEJn3LpVw) during the housing bubble.

All of this is why it is analytically important to separate the conceptual framework of *capital and wage labor* from the concept of *capitalists and workers*. In the system I've just described, capital and wage labor still exist, and still define how the economy works. But now each person is simultaneously a capitalist and a worker, in some degree or for some part of their life. Thinking through the inadequacy of such an arrangement is, for me, a more accessible way of thinking through the arguments of people like [André Gorz](http://books.google.com/books?id=7wxpl7sYYCYC) and [Moishe Postone](http://books.google.com/books?id=GwDxsHOxd84C). They argued that the point isn't to get rid of the capitalist class and have the workers take over: the point is to get rid of capital and wage labor.

Easily the most tiresome conversation that has resulted from the Arab revolutions of 2011 is the argument about whether these uprisings are "Twitter revolutions" or "Facebook revoutions" or whatever. On the one hand, you have lots of mainstream media organizations playing up the importance of social networks as some sort of spontaneous revolution-fuel, while ignoring the long years of organization that went into, say, the Egypt uprising. And then you have people arguing that actually, Internet communication isn't really [a good basis for political organizing](http://www.newyorker.com/reporting/2010/10/04/101004fa_fact_gladwell), or that it will [become a tool of authoritarian governments](http://www.slate.com/id/2281743/), or that Twitter is [trapping us all](http://jdeanicite.typepad.com/i_cite/2011/03/from-swords-unto-mindshares.html) in a neo-liberal feedback loop of circulating affects.

Today I saw this [silly op-ed](http://www.csmonitor.com/Commentary/Opinion/2011/0321/Why-the-tweet-will-never-replace-the-street), about how "the tweet will never replace the street". This is an absurd straw target, of course; as NPR media strategist Andy Carvin remarks (on Twitter!), ["Why is so hard to get that many revolutionaries in the mideast simply don't separate their online lives from their offline ones?"](http://twitter.com/#!/acarvin/status/50227708025769984)

This really gets at what I find to be the fundamental irrelevance of these debates: they ultimately depend on a questionable metaphor. They all proceed as though "the Internet" and "the Real World" were clearly separate spaces. That underlying metaphor of the Internet as a separate social space goes back at least to William Gibson's coining of ["cyberspace"](http://books.google.com/books?id=IDFfMPW32hQC). And it does a pretty good job of portraying the way the Internet felt when I first encountered it in the 1990's. But I think the most noteworthy thing about the period we're in right now is that this boundary is being erased. In another ten or twenty years, the metaphor of "the Internet" as a separate space may not even make sense to us anymore.

This is a theme that Charlie Stross has written a lot about, and he lays out some of the important themes in [this 2009 speech](http://www.antipope.org/charlie/blog-static/2009/05/login-2009-keynote-gaming-in-t.html). He notes that the spread of high-spead Internet connections, along with devices like the iPhone, is effacing the line between the Internet and the Real World. Looking forward to 2030, he says:

> Welcome to a world where the internet has turned inside-out; instead of being something you visit inside a box with a coloured screen, it's draped all over the landscape around you, invisible until you put on a pair of glasses or pick up your always-on mobile phone. A phone which is to today's iPhone as a modern laptop is to an original Apple II; a device which always knows where you are, where your possessions are, and without which you are — literally — lost and forgetful.

Now, one can be excited or terrified about this vision, or some combination of both. But what's significant about it is that it makes absolutely no sense to ask whether the Internet is important for real world politics in this context. The Internet is the world is the Internet.

To step back into the present: obviously we don't yet live in a world of always-on augmented reality. But things like Twitter are a step in that direction. There is something fundamentally different about Twitter--where you can post updates and communicate with people from anywhere, as something integrated into everyday life--compared to the way the Internet was when I was a kid, when "going online" meant going down into the basement and getting lost in the screen. Newsgroups and listservs and BBS systems and the like really did feel like separate "spaces", and so the metaphor of the internet as a place made sense. That's why that Chappelle's show sketch ["If the Internet was a Real Place"](http://www.youtube.com/watch?v=8U7HztvetQk) is funny.

The whole misbegotten debate about Internet-versus-real activism strikes me as a consequence of the inevitable generational lag in our intellectual life. The people who are now in a position to dominate the conversation are the ones who were the first to grow up with the Internet--but it was the old Internet-as-a-place. I suspect that as the generations following mine assert their own approach to these questions, they will look at these distinctions very differently.