Peter Frase

I'm quite upset that Matt Yglesias came out with [an ebook called *The Rent Is Too Damn High*](http://www.amazon.com/Rent-Too-Damn-High-ebook/dp/B0078XGJXO) before I had a chance to use that title for one of the iterations of my [rentier-capitalism arguments](http://www.peterfrase.com/category/anti-star-trek/). That aside, the book condenses a number of themes that will be familiar to regular readers of Yglesias' blog---in particular, his advocacy of the virtues of urban density, and his condemnation of the thicket of local regulations that bias the United States away from dense development. Mike Konczal has [a bunch of interesting things to say about it](http://rortybomb.wordpress.com/2012/03/07/some-critical-thoughts-on-the-rent-is-too-damn-high/), which I'll try not to repeat. (Though on his last point, regarding the state's role in gentrification, I'd add that [Neil Smith's work](http://books.google.com/books?id=IpxT3CDOapsC) is worth a look.) In lieu of a full review, here are two things that struck me as I read the book.

####All that is solid melts into air

Mike criticizes the limitations of Yglesias's analysis of rent control, and points us to JW Mason's [great post](http://slackwire.blogspot.com/2012/02/economicsts-actively-evil-neoliberal.html) on the subject. The basic point is that rent control isn't just about prices, it's just as much about stabilizing neighborhoods and reducing turnover. But it doesn't surprise me that Yglesias misses this, because the omission is symptomatic of a larger weakness in his style of analysis.

Toward the end of the book, after recounting the virtues of allowing new, high-density development, Yglesias remarks that:

> In the real world, of course, people tend to resist change and want to use whatever levers are at their disposal to resist it, oftentimes disregarding the greater costs to society at large. Fortunately, state and federal officials have tools at their disposal to counteract this tendency.

The problem, here as elsewhere, is that in the tradeoff between social stability and aggregate material prosperity, Yglesias appears to assign stability a value of zero. If people "tend to resist change", then this is simply an obstacle to be overcome by "state and federal officials". The ideal type of society that's evoked here is a perfectly frictionless world of market transactions, one that fully realizes Marx's comment that under capitalism, "all that is solid melts into air".

This is the utopia I find to be implicit in Yglesias's writing in general---not just on urban development, but also on unions, or on occupational licensing, for example. It's the basis for a particular version of left-neoliberalism, in which a perfectly efficient and deregulated market exists alongside a very redistributive social democratic state, but a state which only moves money around *ex post* rather than penetrating into the concrete workings of either production or exchange.

That vision assumes that it's desirable to subject all of life to the whims of the market, in return for a higher standard of living. But whether or not such a tradeoff is politically or economically feasible, there's no *a priori* reason to say that the desire to have a stable, predictable life or job or neighborhood is less valid than the desire to maximize economic growth. It's not that Yglesias's line of critique is totally wrong---I agree that NIMBYism and fear of change is often an impediment to desirable policies, and I agree that people with generally Left politics often betray a confusion about these issues. But while it's not desirable to just freeze our current cities and neighborhoods as they are, it's unreasonable to simply dismiss the desire for stability out of hand. To take this to its *reductio ad absurdam*, I don't think most people---or probably even Matt Yglesias---would want to live in a world where we all had to change jobs and move to new apartments every few weeks, even if such an arrangement would make us materially richer.

####Mutations of the property form

The other thing that caught my eye was a brief remark Yglesias makes about our evolving understanding of property rights. I've written on this topic repeatedly in the context of intellectual property law, noting how the concept of property that forms the basis for IP is very different from the one that applies to physical property. Following the economists [Michele Boldrin and David K. Levine](http://www.dklevine.com/general/intellectual/coffee.htm), I emphasize the way that physical property rights are supposed to be about what you can do with property in your physical possession, while intellectual property rights entail the ability to tell *other* people what they can or can't do with their copy of some general pattern or idea that you own the rights to. But as Yglesias notes, the politics of urban development suggest a related evolution in or attitude to property rights in real estate:

> . . . over the past several decades, there's been a revolution in our understanding of what property rights entail. We've switched from a system in which owning a piece of real estate means you're entitled to do what you want with it, to one in which owning a piece of real estate means you get wide-ranging powers to veto activities on your neighbors' land.

There's evidently a formal resemblance here, but I'm not yet sure whether it reflects some deeper connection. The parallel is suggestive, however, since it was the classical economists' treatment of property in land that gave rise to the theory of rent, which would later be [applied to intellectual property](http://p2pfoundation.net/Intellectual_Property_as_Artificial_Property_Rent). This relates to something else Mike Konczal brought up, harking back to [his](http://rortybomb.wordpress.com/2011/07/07/rents-versus-profits-in-the-financial-reform-battle-and-post-industrial-economy/) and [my](http://www.peterfrase.com/2011/07/slouching-towards-rentier-capitalism/) earlier speculations about the increasing importance of rentiers in a post-industrial economy.

I don't have anything very thought out to say about this yet, but it's interesting that both in both its landed and immaterial guises, the rentier form of property seems to give rise to this post-individualist conception of property rights. The connection, perhaps, could come from the notion of [oligarchical wealth defense](http://rortybomb.wordpress.com/2011/07/15/a-response-to-corey-robin-on-the-political-idea-of-monetary-policy/). Both land use regulations and intellectual property protections tend toward conserving not just one's ability to use a plot of land or a piece of information, but to maintain its economic *value*.

Rick Perlstein's recent *Rolling Stone* [column](http://www.rollingstone.com/politics/blogs/national-affairs/why-obama-needs-to-change-to-win-20120222) performs what is now a routine left-liberal critique of Obama: by failing to articulate an ideology and differentiate himself from Republicans, the President has allowed Republicans to redefine mainstream political debate ever farther to the right. This argument has certain charms, but I couldn't help but notice the way Perlstein himself inadvertently enacts the same error he ascribes to Obama, and "ratifies his opponent's reality, by folding it into his original negotiating position." In the course of refuting various Reagan-era calumnies against Jimmy Carter, Perlstein informs us that:

> What's more, to arrest the economy's slide, Jimmy Carter did something rather heroic and self-sacrificing, well summarized [here](http://www.huppi.com/kangaroo/L-carterreagan.htm): He appointed Paul Volcker as Federal Reserve chairman with a mandate to squeeze the money supply, which induced the recession that helped defeat Carter – as Carter knew it might – but which also slayed the inflation dragon and, by 1983-84, long after Carter had lost to Reagan, saved the economy.

This has settled in as the preferred narrative of the "Volcker shock" across the mainstream political spectrum, with Carter and Volcker as the self-sacrificing heroes who forced unpleasant but life-saving medicine down the throat of an unruly nation. We are to imagine them wistfully reading Brecht's ["To Posterity"](http://www.poemhunter.com/poem/to-posterity/) as they sacrifice their political reputations on the altar of contractionary monetary policy; do not judge them too harshly.

Not to worry, for judgment has been remarkably generous, even among liberals. It falls to radical malcontents like [Doug Henwood](http://lbo-news.com/2011/12/13/the-fed-and-the-class-struggle/) and David Harvey to tell a different story. If the heroic mythology of Volcker's recession is reminiscent of the self-congratulatory rhetoric of the contemporary pro-austerity faction, this is no coincidence. In the radical account, the Volcker shock is the beginning of the long era of [opportunistic disinflation](http://thinkprogress.org/yglesias/2010/07/22/197970/opportunistic-disinflation/), in which wage and employment gains may never be tolerated if they come at the expense of a little inflation. Here is how Harvey describes the opening salvo:

> In October 1979 Paul Volcker, chairman of the US Federal Reserve Bank under President Carter, engineered a draconian shift in US monetary policy.¹⁸ The long-standing commitment in the US liberal democratic state to the principles of the New Deal, which meant broadly Keynesian fiscal and monetary policies with full employment as the key objective, was abandoned in favour of a policy designed to quell inflation no matter what the consequences might be for employment. The real rate of interest, which had often been negative during the double-digit inflationary surge of the 1970s, was rendered positive by fiat of the Federal Reserve (Figure 1.5). The nominal rate of interest was raised overnight and, after a few ups and downs, by July 1981 stood close to 20 per cent. Thus began ‘a long deep recession that would empty factories and break unions in the US and drive debtor countries to the brink of insolvency, beginning the long era of structural adjustment’.¹⁹ This, Volcker argued, was the only way out of the grumbling crisis of stagflation that had characterized the US and much of the global economy throughout the 1970s.

This was all understood at the time. Here is the *New York Times* on December 31, 1981:

> The outlook for inflation, said Richard G. Lipsey, of Queens University in Ontario, "turns on the determination of wage increases," not supply-side tax cuts or quick changes in inflationary expectations. For Mr. Lipsey, this means that the fight against inflation requires accepting the pain of high unemployment and a sluggish economy.

> Mr. Volcker said he was optimistic. "The picture looks a little better to me," he said this week after leading a panel discussion at the social science convention. But, he added with his usual caution, "the evidence is not clear yet."

> "The problem," Mr. Volcker said, "is not only making gains at a high cost during a recession, but also keeping them when the recovery begins."

> "I'm agnostic," said Charles L. Schultze, chairman of the Council of Economic Advisers in the Carter Administration. "I don't know. We will get the special ones, like autos, but I don't know the extent to which they will slop over into the rest of the economy."

Volcker was trying to accomplish the same thing that Ronald Reagan was trying to do when he smashed the air traffic controllers' union: weaken labor. [Here](http://books.google.com/books?id=c7b-lYM_-TcC&lpg=PA82&ots=N-wyRBuypt&dq=feldstein%20american%20economic%20policy%20in%20the%201980s&pg=PA162#v=onepage&q&f=false), Volcker offers that:

> the single most important action of the [Reagan] administration in helping the anti-inflation fight was defeating the air traffic controllers' strike. He thought that this action had had a rather profound, and, from his standpoint, constructive effect on the climate of labor-management relations, even though it had not been a wage issue at the time.

And yet it's hard to imagine a writer like Rick Perlstein calling Reagan's attack on PATCO "courageous".

But perhaps the neglect of the Volcker regime's class nature reflects a deeper shortcoming in liberal politics. The stagflation that Carter faced was a more intractable problem than the demand shortfall that confronts the American economy today, and it was far less susceptible to the traditional Keynesian remedies. When capital refuses to invest, and labor refuses to take no for an answer, then something has to give. The alternative to neoliberalism's assault on the working class was not simply a continuation of the Fordist golden age, but a more radical attack on the capitalist mode of production. Reflecting on the stagflation era in 1988, the socialist economist Diane Elson [remarks](http://newleftreview.org/?view=424):

> Conventional Keynesian fiscal and monetary remedies are unable to deal with a situation in which prices and wages are rising while output and employment are falling. This has opened the way for ‘monetarist’ policies to confront the problem by a combination of deflation and attempts to make markets more ‘competitive’, in the sense of more like the markets of Walrasian and Austrian theory, with prices falling as demand falls. Such policies impose enormous costs in terms of unemployment and wasted resources, and are ultimately self-defeating. Most markets fail to behave like those in Walrasian and Austrian theory not for lack of competition, but precisely because of the existence of competition. An accessible exposition of this point is provided by Okun, who concludes: ‘ . . . the appropriate functioning of customer markets and career labour markets requires a marked departure from the price flexibility of the competitive model. Customers and suppliers, employees and firms develop methods of reducing price variation that help to perpetuate relations and minimize transaction costs over the long run.’ [39] At the micro-level, there are good reasons for firms to raise wages and pass on increased costs in price increases while reducing output and employment. By doing so, they may be better able to maintain the co-operation and loyalty of their customers and workforce than by cutting wages and prices.

> The policy conclusion commonly drawn from this type of reasoning is the need for Keynesian monetary and fiscal policy to be supplemented by some kind of incomes policy which will restrain firms from raising wages, and thus make it possible for conventional Keynesian policies to maintain a higher level of demand without running into the problem of inflation. However, this penalizes households in relation to enterprises if there is no complementary mechanism restraining prices. Recognizing this, some advocates of incomes policies also advocate price controls. But if the process of setting prices is left in the hands of enterprises, there still remains a fundamental imbalance: households cannot monitor price formation in a way that enables them to enforce restraint on enterprises in the same way that enterprises can monitor wage formation and enforce a wage restraint programme upon workers. [40] Moreover, the vital knowledge of unit costs and profit margins remains in the hands of enterprises, and without this Price Commissions have no teeth, and the implementation of price guidelines cannot be effectively monitored. This imbalance could only be removed by socializing the price formation process, making it transparent to households by making information on unit costs and profit margins public. Capitalist enterprises will always resist this, because secrecy gives them a competitive advantage and private ownership implies the right to withhold information. State-owned enterprises will also resist such disclosure if they are enjoined to focus their efforts on maximizing their own surpluses, and to relate to other enterprises, and to households, primarily through the market. It is not surprising that price formation is such an explosive issue in the marketization of socialism.

Elson goes on to detail her radical solution, which includes free public services, an unconditional basic income, worker-managed public enterprises, and public accounting of prices and wages. Around the same time, others were experimenting with less ambitious---yet still extremely radical---solutions such as the [Rehn-Meidner plan](http://findarticles.com/p/articles/mi_m1093/is_n1_v41/ai_20485334/). Such far-reaching proposals may perhaps seem quaint now, and this kind of grand theorizing may indeed be ill-suited to the present moment. But that only underscores the difference between the crisis we face today and the one the capitalism faced around the 1970's. Today's crisis stems, ultimately, from labor's weakness, and its historically low share in total output; this is a problem that the ruling class could in principle solve, even if they choose not do so (whether for political reasons or merely out of ineptitude). The previous crisis was something else, the consequence of labor's *strength* and of capital's increasing inability to contain it.

Such crises represent social democracy's revolutionary limit, and hence conventional reformist liberalism has no good answers to them. At best, it finds itself in the position of William Greider, [mounting a defense of inflation](http://www.thefreelibrary.com/Secrets+of+the+Temple.-a06306539http://www.thefreelibrary.com/Secrets+of+the+Temple.-a06306539) as the friend of the debtor---a reasonable claim at moderate inflation rates, but more tenuous for the situation of the early '80s. Today, liberals and socialists can find themselves aligned in calling for aggressive fiscal policy to restore effective demand. But if they don't grapple with the historic impasse that the stagflation era represented, then liberals may well find themselves in the uncomfortable position of endorsing the Volcker shocks of the future.

A recent article in the *New York Times* reports an [encouraging victory](http://www.nytimes.com/2012/02/19/technology/foxconn-to-raise-salaries-for-workers-by-up-to-25.html) for the workers at Foxconn, the gigantic Chinese manufacturer that makes products for Apple and many other companies:

> The announcement by Foxconn, which said that it would raise salaries as much as 25 percent, to about $400 a month, came after an outcry over working conditions at its factories. In recent weeks, labor rights groups have staged coordinated protests in various countries after reports that some of Apple’s Chinese suppliers operate harsh, abusive and dangerous facilities. To stem criticism, Apple hired a nonprofit labor group to inspect the plants it uses.

It seems that this move came in response to the efforts of the workers themselves---including the martyrs who [committed suicide](http://www.telegraph.co.uk/news/worldnews/asia/china/9006988/Mass-suicide-protest-at-Apple-manufacturer-Foxconn-factory.html) in protest against Foxconn's labor practices---and increased awareness among consumers. Mike Daisey's [report](http://www.thisamericanlife.org/radio-archives/episode/454/mr-daisey-and-the-apple-factory) for *This American Life*, in particular, deserves credit for raising consciousness. This victory, if it holds up, is an encouraging example of how trans-national labor solidarity can work.

In a follow-up, however, the *Times* [carefully avoids](http://www.nytimes.com/2012/02/20/technology/pressures-drive-change-at-chinas-electronics-giant-foxconn.html) the class struggle at the heart of this story: as Ned Resnikoff [observes](http://resnikoff.wordpress.com/2012/02/19/workers-never-act-but-are-merely-acted-upon/), the story goes through remarkable linguistic contortions to avoid ascribing agency to the Foxconn workers themselves. We are told that for higher wages to be sustained, companies "must convince consumers in America and elsewhere that improving factories to benefit workers is worth the higher prices of goods." The fate of Chinese workers is thus placed in the hands of corporate marketers and beneficent consumers rather than, say, the workers themselves.

Mobilizing consumers has its place in a labor organizing campaign, but I'm dubious that the altruism of atomized consumers on its own is a durable basis for increasing wages. The market is simply too good at obscuring the true relations of production, except when rare instances like this one break into the open; ethical consumerism can easily be subverted by companies that sell a false sense of moral purity by [marketing themselves](http://clamormagazine.org/issues/38/aa/straub.php) as virtuous capitalists. A better model for the role of consumers in labor struggles are things like the [California Grape Boycott](http://l3d.cs.colorado.edu/systems/agentsheets/New-Vista/grape-boycott/History.html), which was initiated and led by the United Farm Workers.

There are a couple of other interesting things about the Foxconn story, which actually ties together a lot of my preoccupations. One thing to note is that in this case, the struggle over *time* was at least as important as the fight over money. In addition to higher wages, Foxconn is pledging to reduce overtime---the punishing 14-hour days and 7-day weeks have been reported as a major factor behind the wave of suicides. Given how much of 19th Century labor history in the West was devoted to the fight over the working day, it's not surprising that the same struggle is being recapitulated in China.

The other thing that jumped out at me is the last paragraph of the [*Times* story](http://www.nytimes.com/2012/02/20/technology/pressures-drive-change-at-chinas-electronics-giant-foxconn.html), which is tacked on almost like an afterthought:

> And worried that the old model is dying, Foxconn has announced plans to invest in millions of robots and automate aspects of production.

Just last week, I [wrote a post](http://www.peterfrase.com/2012/02/the-dialectic-of-technology/) where I described the relationship between worker bargaining power and technical change as follows:

> Suppose, for example, that employers had to pay much higher wages for work outside of standard hours, for irregular schedules, and for last-minute re-schedulings. In the short run, this would increase the income of some workers, which is good. It would also make employers more reluctant to use employees in this manner, unless it made them enough money to pay the higher wages. But in the long run, it would create stronger incentives for employers to simply use fewer workers, perhaps by replacing their labor with machines. This might sound like a dystopian scenario in itself---we win higher wages, and the end result is that we just get replaced with robots! But the alternatives are, in my view, even worse.

If Foxconn follows through on its wage and hour concessions, and on pledge to automate, it will fulfill this dynamic perfectly.

Moreover, this case demonstrates that the disappearance of human labor in manufacturing is not just a rich-country phenomenon, and the data suggests that Foxconn is not anomalous. Recently, Felix Salmon [came up with](http://blogs.reuters.com/felix-salmon/2012/02/02/why-jobs-require-cities/) data showing that the absolute number of manufacturing jobs is declining, not just in the United States and other rich countries, but even in China. Some of this may be a result of production shifting to even lower-wage countries, but it also lends support to my [longstanding contention](http://www.peterfrase.com/2011/04/the-united-states-makes-things/) that the most important story behind deindustrialization is technological change rather than outsourcing. If even China isn't growing manufacturing employment, this suggests that the global economy is going through a gradual transition from an industrial to a post-industrial economy, much as rich countries made the transition from being predominantly agricultural to a stage where farming only makes up a tiny percentage of jobs and GDP. Going back to a manufacturing dominated workforce doesn't seem much more plausible---or, when you think about it, much more desirable---than reverting
to a
situation in which most people worked on farms.

That's not to say manufacturing doesn't matter. Jared Bernstein had a [good post](http://jaredbernsteinblog.com/manufacturing-why-we-should-help-the-sector-but-not-too-much/) the other day that describes the ways that a strong manufacturing sector benefits a national economy. But direct job creation is only a minor component of the case for manufacturing, and the declining employment in the sector means that a revival of manufacturing is unlikely to play a large role in reducing the unemployment rate. Matt Yglesias [gets to the central issue](http://www.slate.com/blogs/moneybox/2012/02/02/china_s_service_juggernaut_and_the_scourge_of_agriculture.html) here:

> But *even in China*, job growth is coming primarily from the service sector. It's not a nation of factory workers and it likely never will be. But China has been de-ruralizing very rapidly. And it turns out that one way to characterize the "good old days" of rapid income growth in the United States is as not a move to factories but *off* of farms.

To Yglesias, this implies that growth in the service sector is the key issue for global economies in the future. But to take this a step further, one way to characterize what is happening in the United States today is not a move to the service sector but *out* of manufacturing. And it's true that, if you want the aggregate amount of employment to grow in step with the growth of the population, you are committed to creating a whole lot of service jobs. But as I have [argued before](http://www.peterfrase.com/2011/06/de-commodification-in-everyday-life/), this implies a strong normative judgment about the socially-optimal level of commodification.

As Ursula Huws has [pointed out](http://socialistregister.com/index.php/srv/article/view/5712), the creation of service sector jobs often entails "a socialisation of the kinds of work which are also carried out unpaid in the home or neighbourhood", things like "health care, child care, social work, cleaning, catering and a range of personal services like hairdressing." Insofar as people experience these tasks as unpleasant drudgery, it is desirable to reduce the need for them to performed unpaid---particularly since unpaid work is done disproportionately by women. But just as in manufacturing, there are more and less labor intensive ways of replacing domestic labor. As Cat Valente observes in her [fascinating post](http://www.antipope.org/charlie/blog-static/2012/02/life-with-and-without-animated.html) on gender-biased technological change in Japan, innovations that reduce the need for household labor can be at least as significant as iPhones or assembly-line robots. This is the alternative to the system in which one privileged group of workers hires another group of workers for the domestic tasks they no longer have time or inclination to perform.

To what extent do we deal with de-industrialization by turning more and more of human activity into paid work, and to what extent do we try to decrease the total amount of wage labor by reducing the work week and allowing people to spend more time out of the labor force? That is one of the key questions facing us in the 21st century, as the jobs that currently
form the basis of our economy [begin to disappear](http://www.futuristspeaker.com/2012/02/2-billion-jobs-to-disappear-by-2030/).

I was surprised and pleased to see that Bhaskar had decided to put Shulamith Firestone's *The Dialectic of Sex* up [on the Jacobin blog](http://jacobinmag.com/blog/2012/02/the-dialectic-of-sex/), as it's one of my favorite pieces of Marxist-feminist writing. In spite of its occasional outlandishness, it does two things exceptionally well. The first is to extend Marxist analysis into the realm of sex and gender by simply taking Marx and Engels' own framework to its logical conclusion, which they themselves were too blinded by the patriarchal assumptions of their time to recognize. The second is to see modern technology as an indispensable element of women's liberation, going so far as to argue that "Until a certain level of evolution had been reached and technology had achieved its present sophistication, to question fundamental biological conditions was insanity."

My recent writing has, I think, created an impression in some people's minds that I'm reflexively pro-technology. I even jokingly refer to myself that way sometimes. It's true that I will sometimes treat a certain kind of technical change as an [unexamined premise](http://jacobinmag.com/winter-2012/four-futures/), and that I tend to be [skeptical of arguments](http://www.peterfrase.com/2011/09/conservative-leftists-and-radical-dockworkers/) that are centered on the criticism of technology and its effect on labor. But it isn't so much that I think more technology is always good; I just think that arguments for or against certain technologies often begin by asking the wrong question.

Via Aaron Bady's indispensable [Sunday Reading](http://zunguzungu.wordpress.com/2012/02/11/sunday-reading-35/), I found [this post](http://yolacrary.blogspot.com/2012/02/on-technology-and-classless-society.html) from Richard at the blog "The Existence Machine", which I hadn't previously known about. Richard quotes, and objects to, a passage from the journalist Paul Mason asserting---and attributing to Marx---the notion that a classless society "must be based on the most advanced technologies and organisational forms created by capitalism itself." His objection is that this naturalizes technology and prevents us from being critical of its effects and its sustainability. But that's not the only way to interpret that formulation, and I think it somewhat misconstrues what the argument is about. The question is not whether technology, or capitalist production methods, are good or bad. Technology mediates social relations, and it is those social relations that should be the object of critique.

It is possible, however, to interpret Mason as saying that "advanced technologies and organizational forms" have an existence independent of class relations. To get into the technical weeds for a moment, this way of thinking reflects a dualism between what Marxists call the "forces of production" and the "relations of production". The forces of production are the machines, factories, and techniques that make large scale industrial society possible, while the relations of production are the human inequalities between the mass of workers who have nothing to sell but their labor power, and the handful of bosses who control the means of production. Taken to its extreme, the forces-relations dualism implies that we can keep the economy pretty much the way it is now, but just change who's in charge of it through some combination of worker ownership and government planning. I find this to be inadequate---even if it's possible, it doesn't really address some of the worst aspects of life in a capitalist society. And in the past, I've critiqued both [market socialism](http://theactivist.org/blog/do-they-owe-us-a-living) and [pension fund socialism](http://www.peterfrase.com/2011/03/capitalism-without-capitalists/) on this basis.

The forces-relations dualism can also lead to a crude kind of technological determinism, in which technological changes somehow automatically lead to social transformation when they become incompatible with capitalist social relations. That's how this passage from Marx's [1859 *Preface*](http://www.marxists.org/archive/marx/works/1859/critique-pol-economy/preface.htm) is sometimes read:

> In the social production of their existence, men inevitably enter into definite relations, which are independent of their will, namely relations of production appropriate to a given stage in the development of their material forces of production. The totality of these relations of production constitutes the economic structure of society, the real foundation, on which arises a legal and political superstructure and to which correspond definite forms of social consciousness. The mode of production of material life conditions the general process of social, political and intellectual life. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness. __At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolution.__ The changes in the economic foundation lead sooner or later to the transformation of the whole immense superstructure.

The most famous modern version of technological-determinist Marxism is probably G.A. Cohen's [*Karl Marx's Theory of History: A Defence*](http://press.princeton.edu/titles/320.html). But while I think there's a grain of truth to this reading, pure technological determinism is untenable as social theory, and politically it leads either to quiescence or to something like [accelerationism](http://leniency.blogspot.com/2008/10/accelerationism.html). Indeed, part of my purpose in writing ["Four Futures"]((http://jacobinmag.com/winter-2012/four-futures/)) was to demonstrate how the same technical conditions could be made compatible with very different social relations.

Yet for all that, I find myself sympathetic to Mason's formulation: socialism "must be based on the most advanced technologies and organisational forms created by capitalism itself". That's not because I think it's possible to build a classless future while keeping the capitalist forces of production exactly as the are. It's because, on the contrary, I think that altering relations of production inevitably leads to transformations in the technologies of production. So my amended claim would be that the successor to capitalism must *begin from* the capitalist forces of production, but it will not leave them unchanged. There is a critique to be made of technology, but it's the one that comes from workers themselves, and it is enacted in the workplace and in the labor market. The answer to the dehumanizing qualities of technology under capitalism is to attack the inequalities of class power that make them possible.

A concrete example of what this means can be found in a recent [report](http://retailactionproject.org/wp-content/uploads/2012/01/FINAL_RAP.pdf) on retail work in New York City, which I heard about from [Nick Serpe](http://dissentmagazine.org/atw/author.php?id=75). Nick alerted me to the following passage:

> Surveyed workers reported __erratic scheduling that could change hourly, especially with the use of computerized or online scheduling systems that can track projected sales and adjust labor costs daily.__ A JC Penney worker stated, 'They switch the schedule around a lot and they expect that you look on the computer every half hour to know your schedule. They change my time and if you didn’t print your schedule that week as evidence of the change, they will disregard your complaint.' The practice of hour-to-hour scheduling adjustments means that workers expect to be nearly always on call.

This is a clear example of technology being used to intensify worker exploitation, in a way that makes it appear to be both a force and a relation of production. And here is where I would distinguish my perspective from technological utopianism, which Mr. Teacup [glosses](http://www.mrteacup.org/post/malfunction-in-the-cyborgologist-utopia.html) as "good things are technologically determined and bad things are socially determined." I reject this position because I reject the idea that technology can be separated from society in this way, which is just another version of the forces-relations dualism. I begin from the premise that technologies reflect, embody, and arise in the context of social relations, and can never be socially or politically neutral; the forces and relations of production dialectically determine one another.

So I accept that technology can have negative effects on labor, and the passage quoted above is a good example. But labor also affects technology---that is, the form that technological change takes is shaped by the strength and organization of workers. I usually avoid writing in a way that directly criticizes technology, not because I'm a techno-utopian, but because I'm more interested in approaching the dialectic of worker and machine from the other side. The trouble with writing critiques of technology is that it tends to lead into either outright Luddism, or else Frankfurt School-style cultural pessimism that's not clearly connected to any collective agent or political project. The most plausible answer to the negative consequences of technology for workers, I believe, is not to denounce the machines but to *strengthen labor* so that it is able to contest the path of technical development on more favorable terms.

Being subject of the whims of a scheduling computer that can shift your hours around at any moment is, to be sure, not a pleasant situation. And if approached from the standpoint of critiquing technology, it's tempting to view this as a testament to the hollow nature of "progress", proof that the development of better machines only allows workers to become more immiserated, precarious, and exploited. But I read this not so much as a story about technology, but a story about the noxious interaction between technology and a weak, underpaid labor force.

Consider that [most research](http://books.google.com/books/about/Working_in_a_24_7_economy.html?id=56gXBZzzY7AC) shows that workers prefer to work regular, standard hours rather than having rotating or off-hour schedules. Yet most do not make any more money than they would doing the same job in a standard 9 to 5, at least in the United States. This strongly suggests that workers are unable to resist the desire of employers to impose non-standard work schedules, or to demand higher wages in return for taking them. The technology described in the passage above intensifies this dynamic, but is not the primary cause of it. The technology wouldn't have such baleful effects if not for the weak bargaining position of the workers. What is at issue, to use [mainstream economics terms](http://www.nber.org/papers/w14809.pdf), is whether technological change tends to be labor-saving or labor-complementary.

What would happen if workers were in a better position to resist these kinds of crappy scheduling policies? Suppose, for example, that employers had to pay much higher wages for work outside of standard hours, for irregular schedules, and for last-minute re-schedulings. In the short run, this would increase the income of some workers, which is good. It would also make employers more reluctant to use employees in this manner, unless it made them enough money to pay the higher wages. But in the long run, it would create stronger incentives for employers to simply use fewer workers, perhaps by replacing their labor with machines. This might sound like a dystopian scenario in itself---we win higher wages, and the end result is that we just get replaced with robots! But the alternatives are, in my view, even worse.

There are two primary mechanisms by which capitalist enterprises make themselves more profitable. The first is to exploit their workers harder, by extending their hours or by paying them lower wages. The second is to produce the same amount of stuff with fewer workers, by adopting new production techniques and new technologies. (If you want the long technical explanation, these are what Marx calls the absolute and relative forms of surplus value, and the [relevant chapters](http://www.marxists.org/archive/marx/works/1867-c1/) of *Capital* are roughly chapters 7 through 12.) Since the two ways of increasing profits are to some degree substitutes, closing off one avenue tends to push the capitalist in the direction of the other.

If the absolute exploitation of labor is not an option---because the workers, for whatever reasons, are capable of demanding high wages---then the incentive to innovate in labor-saving ways will increase. Indeed, some technologies that aren't economical in an environment of low wages will become so when wages are high. This is the main argument of [my post](http://www.peterfrase.com/2011/07/cheap-labor-and-the-great-stagnation/) about the connection between low wages and technological stagnation. On the other hand, if labor-saving technological innovation isn't an option---whether because it's directly barred or because there's a [great stagnation](http://www.amazon.com/Great-Stagnation-Low-Hanging-Eventually-ebook/dp/B004H0M8QS) on---then employers will focus on exploiting their workforce ever more intensely.

The final possibility is that *both* strategies are closed off: workers are powerful enough to maintain high wages, and labor-saving innovation is either prohibited or impossible. The result will just be a stagnant, low-growth economy. Some might view this as the best case scenario, since it would heighten the contradictions and make calls for an alternative to capitalism more convincing. But the evidence suggests that economic stagnation is not conducive to building a powerful and successful Left---often it's quite the opposite, as [Doug Henwood](http://lbo-news.com/2010/05/17/recessions-better-for-right-than-left/) and [Duncan Foley](http://homepage.newschool.edu/~foleyd/NotesCrisisSocChange.pdf) have argued. So until it's possible to make a radical break with capitalism, even socialists need to make their peace with economic growth---the question is whether that growth happens primarily on the basis of hyper-exploiting labor, or is instead predicated on using it more efficiently.

It's this way of thinking, perhaps, that leads me to be occasionally sympathetic to the cluster of ideas some of us refer to as [left neoliberalism](http://crookedtimber.org/2011/07/18/the-limits-of-left-neo-liberalism/). To me, the core of left-neoliberalism (or [globalize-grow-give progressivism](http://www.peterfrase.com/2011/08/redistribution-under-neoliberalism/)) is growth-maximizing deregulation plus redistribution, as an alternative to directly intervening in the labor market to assure broad-based high wages. Where I part company with this school of thought, however, is in my emphasis on the need to strengthen the overall bargaining power of labor. This doesn't need to be brought about entirely through labor *unions* of the traditional sort; as Chris Maisano [notes](http://jacobinmag.com/blog/2012/01/the-state-of-our-unions/), their prognosis remains rather grim, and they have major drawbacks as presently constituted. But it does imply the need for some combination of unions, state regulations, [
full employment](http://www.peterfrase.com/2011/07/against-jobs-for-full-employment/), and [basic income](http://theactivist.org/blog/do-they-owe-us-a-living). Ultimately, of course, a powerful and confident working class will tend to provoke a crisis for [Kaleckian](http://mrzine.monthlyreview.org/2010/kalecki220510.html) reasons, but that is a development I would very much welcome.

I stress the importance of strengthening labor precisely because I'm not a techno-utopian. Technological change may be almost inevitable---and in any case, I think it's very desirable---but the form that change takes is very much a question of social relations. As the early Mario Tronti [had it](http://libcom.org/library/lenin-in-england-mario-tronti), "it is the specific, present, political situation of the working class that both necessitates and directs the given forms of capital's development."

I've spoken only about the relation between technology and labor. Equally important are the ways that technology intersects with the environment, and with everyday life outside of the workplace. But a fuller consideration of those issues will have to wait for a future post.

Today is a day of protest against SOPA and PROTECT IP, two proposed pieces of legislation which are being promoted as necessary responses to copyright infringement, and which threaten to impose serious restrictions on Internet communication. Big sites like Wikipedia and Reddit---and small but dear to my heart sites like the [Marxists Internet Archive](http://marxists.org/index.htm)---have gone dark to register their opposition to the legislation. Stopping legislation like this is very important to me, because the continual escalation of intellectual property enforcement is the foundation of the incipient rentier dystopia I've explored in much of my [previous](http://www.peterfrase.com/2010/12/anti-star-trek-a-theory-of-posterity/) [writing](http://jacobinmag.com/winter-2012/four-futures/). But since I'm not important enough to make much of an impression by shutting down, I'll instead provide something topical to read until those sites return.

While SOPA and PROTECT IP aren't dead, they look significantly less threatening now than they did a couple of months ago. Some of the worst provisions of the bills have been removed or softened in response to organized opposition, and SOPA (the House version of the bill) [seems to be dead](http://www.examiner.com/computers-in-denver/house-kills-sopa) for the time being. The fight is not over, however, and the current version of the bill still has a lot of disturbing implications. See [here](http://www.washingtonpost.com/blogs/ezra-klein/post/five-reasons-the-internets-still-protesting-sopa-and-pipa/2012/01/18/gIQAbDG67P_blog.html) for a detailed explanation. One of the worst provisions, for people who care about censorship on the Internet, is one that would allow Internet service providers to block users as long as they can claim to be acting "in good faith" to combat piracy. This is likely to give rise to a situation where risk-averse companies pre-emptively block users in response to the claims of the big copyright owners, even where the claims are baseless. Worse, this provision creates an opening for governments or private actors to censor political expression under the guise of enforcing copyright. It's not hard to imagine the governments of New York or Oakland issuing bogus takedown notices for images of police brutality against Occupiers; indeed, this isn't entirely a hypothetical scenario, as Google has already [reported receiving precisely this kind of questionable takedown order](http://www.techdirt.com/articles/20111026/01374816513/google-reveals-70-increase-requests-content-removal-including-law-enforcement-wanting-to-hide-police-brutality.shtml) from a law enforcement agency.

The resistance to SOPA and PROTECT IP has been stronger and more effective than I expected, which is encouraging. And the coalitions that have lined up on each side of the issue cut across the normal partisan divisions in American politics, as explained in [this article](http://www.huffingtonpost.com/2011/12/14/sopa-protect-ip_n_1140180.html) by Zach Carter and Ryan Grim. But while it's tempting to read the backlash as an example of grassroots mass movements fighting back the corporate power of the copyright cartels, it's at least equally important that these bills have exposed a deep division between two factions of big Capital---and forced Leftists and liberals to decide which faction they side with.

In the House, SOPA was introduced by right-wing Republican Lamar Smith, a member of the Tea Party caucus. But among the [bill's cosponsors](http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR03261:@@@P) are a number of liberal Democrats---including John Conyers, Jr., lately a fan of liberals due to his [full employment jobs bill](http://www.ourfuture.org/blog-entry/2011031007/jobs-bill-wrongly-ignored-budget-cut-mania). On the other side, an equally motley crew of representatives quickly [came out against](http://www.techdirt.com/articles/20111115/09233216778/ron-paul-comes-out-against-sopa-joins-other-elected-officials-saying-no-to-great-firewall-america.shtml) SOPA and PROTECT-IP, with Democrats like Zoe Lofgren and Anna Eshoo standing alongside Ron Paul and even Michelle Bachman.

It's tempting to see this as reflecting some kind of [libertarian-statist divide](http://www.forbes.com/sites/erikkain/2011/12/10/sopa-the-ndaa-and-patent-trolling-why-americans-need-a-civil-liberties-caucus/) that cuts across typical partisan cleavages. But it's more likely that the surprising coalitions in congress reflect an equally unusual division among the corporate interests that move policy in Washington. A number of big corporations and industry groups have [come out strongly against](https://www.eff.org/deeplinks/2011/11/explosion-opposition-internet-blacklist-bill) SOPA and PROTECT-IP, including Facebook, Google, and the Consumer Electronics Association. That helps explain why Lofgren---whose district covers an area around San Jose, California---has taken the lead in opposing the bills in congress. And it's easier to see how Conyers found himself on the same side as the Motion Picture Association of America, Pfizer, and Mastercard, once you know that the legislation has also received [support from the AFL-CIO](http://www.scribd.com/doc/72920942/Almeida-Statement-on-H-R-3261-the-Stop-Online-Piracy-Act-2011-11-16).

The presence of labor union support may tempt some liberals into supporting this legislation (and not for [accelerationist](https://twitter.com/#!/destructuremal/status/159671376888864769) reasons). They could nod along to journalist Robert Levine, who [calls technology companies](http://www.salon.com/2011/11/01/does_culture_really_want_to_be_free/) "digital parasites" bent on demolishing the economic foundations of media creation. Conyers has promoted the laws, [implausibly](http://www.cepr.net/index.php/blogs/beat-the-press/sopa-will-cost-jobs-the-nyt-should-talk-to-an-economist-not-the-chamber-of-commerce), by claiming that they will "protect jobs" in creative industries. This is a canny move, since working writers and artists are a sympathetic group when contrasted with big media companies parasitically making money by copying their work. But that's not really what this fight is about---rather, it's a struggle between two different fractions of Capital.

The basic divide at work here is between those capitalists that make money by selling *access to content*, and those that make money by controlling the content *distribution networks*. For content sellers like the music business, extremely harsh intellectual property laws are desirable because they create the artificial scarcity upon which their whole business model depends. Companies like Facebook and Google, in contrast, still mostly make their money by controlling the platforms on which people distribute various kinds of media, and selling access to their user base to advertisers. For them, looser copyright laws don't pose a threat to profits, and in fact they facilitate the business model: by increasing the amount of copying and sharing, they increase the popularity of the distribution networks, which in turn makes them more valuable to advertisers.

One of the hallmarks of Marxism (at least [my version of it](http://www.peterfrase.com/2011/07/reanimated-marxism/)) is that it regards capitalist development not as an unambiguous evil but as a simultaneously progressive and exploitative phenomenon. In the [traditional view](http://plato.stanford.edu/entries/marx/#4.3), capitalism develops the forces of production which are the precondition for socialism, but eventually becomes an impediment to both economic rationality and human well-being. This implies that while the capitalist mode of production is a historically limited form that must ultimately be superseded, there are situations in which capitalism---or some aspect of capitalism---has a progressive aspect that is preferable to those reactionary forces that would prefer to maintain the status quo. Hence it's worth asking whether things like SOPA/PROTECT-IP amount to ["bailouts of dying industries"](https://twitter.com/#!/umairh/status/159682914651619329)
["at the expense of the future"](https://twitter.com/#!/umairh/status/159683020545212416).

To be sure, trying to pick and choose between progressive and reactionary factions of capital can get you into some squirrelly situations. In the Communist movement---particularly among [Maoists](http://www.marxists.org/reference/archive/mao/selected-works/volume-5/mswv5_54.htm)---it was once common to distinguish between a reactionary "comprador" bourgeoisie and a progressive "national" bourgeoisie in peripheral countries. While the compradors were dependent on and politically allied with international capital, it was argued, the national bourgeoisie and the working class shared an interest in resisting imperialist control and developing an independent national economy. This analysis was sometimes used to justify Communist support for bourgeois governments on the grounds that they were based on the national bourgeoisie rather than the comprador elite. In practice, this led to some unfortunate political errors, with Communists issuing apologetics for various unappealing regimes in the post-colonial world.

But despite these pitfalls, picking sides between capitalists is sometimes unavoidable if you want to avoid the self-serving and moralistic cop-out of dogmatic [third campism](http://en.wikipedia.org/wiki/Third_camp). Some might argue that the network capitalists are *worse* than the more old-fashioned content capitalists. The old media model at least pays some wages to creators, after all. This the vibe I get, for example from [Mr. Teacup](http://www.mrteacup.org), whose posts often critique the radical potential of peer-to-peer and open source production from an apparently anti-capitalist direction. [This post](http://www.mrteacup.org/post/peer-production-illusion-part-2.html), for example (which I discussed [here](http://www.peterfrase.com/2011/12/the-peer-to-peer-future/)), argues that the whole idea of voluntary, non-waged production networks is actually a key part of the ideology of neo-liberalism.

But in the context of the current debate over intellectual property, I would argue it is the capitalists who control the networks and distribution channels---like Google and Facebook---who represent the more progressive segment of the bourgeoisie. Which is not to say that they're either admirable companies or, in the long run, friends of the Left. It's certainly true that they are, in one sense, parasites: they profit from the labor and creativity of users who make, remix, upload and share content for free. But their great virtue, in contrast to the pro-intellectual property side, is that they at least *accept the existence* of a cultural milieu based on sharing and access to knowledge, rather than trying to restrict it by tightly controlling access to information. As the French economist Yann Moulier-Boutang says in a [recent interview](http://mitpress.mit.edu/catalog/item/default.asp?ttype=2&tid=12358), Google poses a threat to "the united front maintained by the intellectual property advocates" because "they have built an economic model that meshes with this free-use era." He goes on to say:

> Google represents a huge step forward. It forced the gaps wide open and caused a crisis, or at least an awkward predicament, for those supporting the proprietary system. This is why __I believe it is strategically sound to create an alliance with Google__ to dismantle old, archaic models, even though I feel we simultaneously need to be ready to fight it, because Google's goal is to make money, and the company could, in any case, be bought out by Chinese pension funds or anyone else at any point, which could easily lead to problems, especially around the issue of privacy, since Google uses personal data.

The idea of an "alliance with Google" might sound fanciful or silly. But in practice, things like the SOPA fight force everyone to be in an alliance with Google or an alliance with [the MPAA](http://feedproxy.google.com/~r/blogspot/Hzoh/~3/9mmpIrNdPFI/what-rude-pundit-said.html). This is the sort of thing I think about when I see people making critiques---often sensible ones---of the exploitative social network capitalists, and then going on to [suggest](http://www.mrteacup.org/post/peer-production-illusion-part-3.html) that we should actively dismantle emerging commons and systems of peer production---that "rather than advancing the bounds of the beachhead, we should turn back and destroy it---not just the new forms of peer production and social enterprises that are emerging, but the traditional system of charitable giving and volunteering and the ideal subjectivity of sharing, altruism and cooperation that supports both".

People making this critique may believe that they are staking out a left-wing alternative to a nefarious new form of postmodern capitalism. But this critique strikes me as an un-dialectical, [abstract negation](www.kent.ac.uk/secl/philosophy/articles/sayers/marxistdialectic2.pdf) of capitalism, which fails to recognize the way a post-capitalist future can, and must, develop out of capitalism. And given the current balance of class forces, I worry that rejections of peer production and the commons mostly serve to shore up the ideological legitimacy of the most reactionary and ossified parts of capitalism---the same elements that make up the vanguard of [rentism](http://jacobinmag.com/winter-2012/four-futures/).

[Tom Slee](http://whimsley.typepad.com/whimsley/2012/01/2012-predictions-turning-points-for-the-web.html) linked this [danah boyd](http://www.zephoria.org/thoughts/archives/2010/05/15/facebook-is-a-utility-utilities-get-regulated.html) post which posits that Facebook is a "social utility", and hence is likely to end up being regulated like a power company or a cable provider. Slee hopefully predicts that in 2012, "boyd's view that 'Facebook is a utility; utilities get regulated' will become mainstream".

This would definitely be a step in the right direction, and until recently I would have completely endorsed the sentiment, since I've thought this way about big Internet companies for a long time. Even before Facebook, it always seemed to me that Google's search engine, for example, was an immensely important and valuable social utility, and one that's too important to be left in the hands of a single private sector company. So my suggestion, only a bit joking, would be that we ought to nationalize Google and Facebook.

But I've started to wonder if this is the best way of characterizing what Facebook is, and what it does. Is it a company that delivers a necessary good to its customers, or is it an intermediary that facilitates transactions *between* its customers? Or to put it another way: is Facebook more like a utility, or is it more like a bank?

The most important distinguishing characteristic of utilities is that they tend to be natural monopolies. Because of the huge capital investment involved in laying down things like power or sewer lines, there are huge barriers to entry for competitors and one company tends to dominate. In order to prevent such utilities from extracting huge rents from their monopoly position, the government either has to heavily regulate them, or else take them over and run them directly.

Facebook doesn't have the kind of massive physical infrastructure of traditional utilities, but it has another kind of barrier to entry: since a social network is valuable in proportion to how many people you know who are already on it, Facebook's very size tends to draw in new members and dissuade people from jumping to alternative, smaller networks. As boyd points out in her post, a lot of people feel like they *need* to be on Facebook for social or professional reasons, even if they dislike the company's approach to to its users' data.

But it should already be clear from the above that while Facebook's position resembles that of the traditional utility monopolist in some ways, it isn't quite the same. Facebook's power comes not from controlling a lot of expensive infrastructure, but from the fact that people want to communicate and share with as many of their friends as they can, and they need to be on Facebook to do that. But what if it were possible to connect and share with someone on Facebook *without joining Facebook*?

To explain what I mean by that, I need a different analogy. Instead of a utility, compare Facebook to a bank. Banks operate as part of a larger national monetary system, in which the government regulates commerce, and the Federal Reserve creates money. The banks are repositories for that money, which they are allowed to take in as deposits and send out as loans. In order for the overall financial system to function, there have to be regulations that ensure that customers at different banks can easily deal with each other. For example, the [Uniform Commercial Code](http://www.enotes.com/banking-reference/banking-lending-law) specifies that if I write a check to a someone and they deposit it at a different bank, my bank is obligated to transfer the funds. So Citigroup isn't allowed to say that I can only write checks to other Citigroup customers.

This is where the analogy with Facebook comes in. The "stuff" that flows through Facebook's network---the shares, connections, messages, etc.---is a sort of currency, less like the electricity that you get from the power company and more like the money that's exchanged between bank customers. An electric company actually *creates* electricity, but Facebook doesn't create its content any more than banks create money. (Yes, I know, banks kind of do [create money](http://en.wikipedia.org/wiki/Money_supply#Fractional-reserve_banking), just bear with my simplification for a moment.) So the paradigm we need is not necessarily a single regulated or nationalized social network, but a tightly regulated social networking *system* that allows people to communicate across multiple social network institutions.

Imagine that there was a standard social networking protocol, which specified the general things you want to do on a social network: connect your account to the accounts of other people, post status updates, send private messages, post photos, send event invitations, and so on. Now suppose that you're on Facebook and I'm on [Diaspora*](http://blog.diasporafoundation.org/), and you want to friend me. In a regulated social networking system, Facebook would be obligated to accept the connection between my Diaspora account and your Facebook account, and to deliver whatever messages or media I chose to share with you. Since the account wouldn't be on Facebook's servers, they wouldn't necessarily know anything about me, I wouldn't be subject to their ever-changing privacy settings, and the only information they would have about me would be whatever I chose to share with my Facebook-using friends.

Of course, being able to monitor the flow of sharing between Facebook and non-Facebook users still gives Facebook a lot of marketable data, and still raises privacy concerns. But this isn't an insurmountable regulatory problem, nor is it that different from what happens in the financial system. Credit card companies collect a lot of personal information about us too, after all, even though people seem less inclined to make a fuss about that than they are to fret about Facebook.

This is all a sort of half-formed thought, and it probably doesn't work for some reason I haven't thought of yet. And to turn this back around again, the way retail banking is currently structured may not even work very well for banking, much less as a model for social networking. As [Ashwin Parameswaran](http://www.macroresilience.com/2012/01/05/the-public-deposit-option-an-alternative-to-regulate-and-insure-banking/) has argued, there's a good case for replacing federally-insured private banks with a public bank to take retail deposits, something like the [postal banking system](http://en.wikipedia.org/wiki/United_States_Postal_Savings_System). So maybe we're back to nationalizing Facebook after all. I certainly wouldn't be sorry to see Mark Zuckerberg expropriated.

There's a good article in [LA Magazine](http://www.lamag.com/features/Story.aspx?ID=1568281) about UCLA parking theorist Donald Shoup. Shoup has made a name for himself (among urban planning nerds) by showing how urban land use practices systematically over-produce free and cheap parking, leading to all sorts of undesirable consequences for everyday life.

As Matt Yglesias [says](http://www.slate.com/blogs/moneybox/2011/12/29/la_magazine_profiles_donald_shoup.html), Shoup's views on parking can be reduced to two themes. First, "that governments should not force real estate developers, store owners, and other businessmen to build more parking than their own calculation of what the market balance of supply and demand is." This is just the straightforward point that the state shouldn't force the creation of things that have negative externalities and disproportionately benefit the already well-off. More interesting is the second theme, "that governments shouldn't underprice street parking in a way that leads to Soviet-style shortages of available spaces and elaborate rationing rules about how long you're allowed to stay in a given spot." Yglesias, and Shoup, portray their position as a free-market alternative to the evils of central planning, surely a canny move for liberal audiences. But there's something else going on here; consider this experiment in LA, as described in the LA Magazine article:

> This spring the DOT plans to introduce an $18.5 million smart wireless meter system based on Shoup’s theories. Called ExpressPark, the 6,000-meter array will be installed on downtown streets and lots, along with sensors buried in the pavement of every parking spot to detect the presence of cars and price accordingly, from as little as 50 cents an hour to $6. __Street parking, like pork bellies, will be open to market forces__. As blocks fill, prices will rise; when occupancy drops, so will rates. In an area like downtown, ideal for Shoup’s progressive pricing, __people will park based on how much they’re willing to pay versus how far they are willing to walk to a destination.__

There are two points I want to make about the two bolded phrases, one directed to my left and one to my right. (See? I'm an even-handed centrist.) To Leftists, this talk of subjecting parking to "market forces" sounds like the usual neo-liberal claptrap, in which public services are thrown open to private avarice. And it's understandable that we're all wary of talk of the market, which has become a kind of universal solvent for putative reformers looking to batter down the welfare state; as Tom Frank [remarks](http://politics.salon.com/2011/12/28/the_rise_of_utopian_market_populism/), faith in the market has a utopian fervor on the right, as the free play of capitalism is presented as the magical solution to all problems.

But rather than accept the ideological representation of The Market as all that is competitive and efficient and bounteous and true about capitalism, it's worth reflecting on just what the Leftist objections to the market traditionally were, and whether they fit the case described here. There are two that I think are most important. The first is a narrowly economic argument, to the effect that under the "anarchy" of capitalist competition, the pursuit of private profit leads to unjust and irrational results: luxury goods are produced while the poor starve, inventories pile up that no-one can afford to buy, factories lie idle while thousands are looking for work, the environment is despoiled, and so on. In Trotsky's [Transitional Program](http://www.marxists.org/archive/trotsky/1938/tp/tp-text.htm ), there are repeated references to this kind of market anarchy, which will inevitably be superseded by a superior form of rational, conscious, worker-controlled planning. Indeed, says Trotsky, "The necessity of 'controlling' economy, of placing state 'guidance' over industry and of 'planning' is today recognized – at least in words – by almost all current bourgeois and petty bourgeois tendencies, from fascist to Social Democratic."

But is someone like Donald Shoup trying to introduce the anarchy of the market, or suppress it? Consider:

> Parking had never crossed Shoup’s mind when he left Yale for L.A. in 1968—his focus was public finance and land-value theory. In 1975, he stumbled onto a master’s thesis by two USC students who had worked their way through school parking cars for a man named Rex Link. “Link,” says Shoup, “was annoyed that county workers were offered free parking downtown when federal workers had to pay. ” Link’s student employees proposed a study. “They found that 72 percent of county workers drove to work alone,” says Shoup, “but 60 percent of federal employees carpooled, took public transportation, or even walked. These were workers in the same professions, driving to the same location.” When forced to pay a practical value for their parking, drivers were twice as likely to carpool—traffic congestion was halved, carbon emissions were halved. “The more I thought of that,” says Shoup, “the more I thought there was a perfect storm here. __No one can tell you why parking prices are set as they are. But when people pay comparatively little for something that’s expensive to produce, the result is collective irrational behavior.”__

The Market has been so mystified by its apologists that we no longer recognize a planned economy when we see it. It's true that that last sentence is, in some ways, redolent of old pro-market critiques of Soviet planning: when prices are arbitrarily decreed by the state rather than equilibrated in competitive markets, irrational and suboptimal outcomes are the result. But Shoup's alternative is not merely to unleash the anarchy of the market, in which private firms somehow compete to offer parking at the lowest price. The ExpressPark experiment, as described in the first quote, is an exemplary case of central planning. The city begins by decreeing a production target, which in this case is maintaining one empty parking space on each street. The complex system of sensors and pricing algorithms is then used to create price signals that will meet the target. The key point here is that the capitalist market's causal arrow has been reversed: rather than market price fluctuations leading to an unpredictable level of production, it is the production target that comes first, and the prices are dictated by the quota. What this reminds me of, more than anything, is some of the abortive experiments in economic planning that happened in the USSR under Kruschev, as fictionalized in Francis Spufford's *Red Plenty*. Mathematicians and economists, including the Nobel prize winner Leonid Kantorovich, attempted to use the mechanism of prices, not to restore capitalism, but to make central planning work better. Consider this exchange, which Spufford invents between Kantorovich and his academic critics:

> ‘But what about the evident similarity between your “valuations” and the market prices of a capitalist economy?’ asked Boyarskii, who was sounding rather strained.

> ‘It’s true that there is a formal resemblance,’ said Leonid Vitalevich. ‘But they have a completely different origin, and therefore a completely different meaning. __Whereas market prices are formed spontaneously, objective valuations – shadow prices – must be computed on the basis of an optimal plan. As the plan targets change, the valuations change.__ They are subordinate to the very different production relationships of a socialist society. Yet, yet, __the scope for their use is actually bigger under socialism.__ The capitalists actually agree with you, Dr Boyarskii, that the mathematical methods we’re talking about should only be applied on the small scale, on the level of the individual firm. They have no choice: there is no larger structure, in the economy of West Germany or the United States, in which they can be set to work. They have had some success, I believe. I’m sorry to say that, since George Danzig and Tjalling Koopmans made their discoveries of “linear programming” in America during the war, the techniques have been adopted there far more eagerly, far more quickly, than in the Soviet Union. Linear programmers in the USA calculate routes for airlines, and devise the investment policies of Wall Street corporations. But we still have an opportunity before us which is closed to the capitalists. Capitalism cannot calculate an optimum for a whole economy at once. We can. There is a fundamental harmony between optimal planning and the nature of socialist society.

This seems much closer to what Donald Shoup is doing than the traditional liberal conception of the free market. The same might be said of various "market based" solutions to climate change, which begin by setting price on carbon or a limit on total carbon emissions and then allow the rights to emit to be traded. Once again, the plan targets come first and the prices come second.

There is a second line of argument against markets, however; that they are not merely anarchic and inefficient, but also induce ideological mystifications that perpetuate capitalism and exploitation. Bertell Ollman puts the point as follows in his [criticism of market socialism](http://www.nyu.edu/projects/ollman/docs/market_mystification.php):

> One major virtue of centrally planned societies, then, even undemocratic ones, even ones that don't work very well, is that __it is easy to see who is responsible for what goes wrong. It is those who made the plan. The same cannot be said of market economies which have as one of their main functions to befuddle the understanding of those who live in them.__ This is essential if people are to misdirect whatever frustration and anger they feel about the social and economic inequality, unemployment, idle machines and factories, ecological destruction, widespread corruption and exaggerated forms of greed that are the inevitable byproducts of market economies. But to the extent this is so, only a critique of market mystification will enable us to put the blame where it belongs, which is to say—on the capitalist market as such and the class that rules over it, in order to open people up to the need for creating a new way of organizing the production and distribution of social wealth.

This attack, too, fails to land a blow against the LA parking experiment. Despite the presence of price signals, and a market, it is no mystery who is responsible for the new regime of fluctuating meter prices: the city of Los Angeles, urged on by its academic homunculus Donald Shoup. Indeed, it is the very visibility of the planners that makes projects like this so controversial among those who take their right to free parking for granted, and who oppose policies like congestion pricing that would mitigate traffic by charging drivers for entering busy areas. This is also part of what makes cap-and-trade climate policy vulnerable to right-wing attack; whatever its "market based" costume, everyone knows that the policy begins with government lawmakers and bureaucrats.

Which is not to say that all opposition to these schemes is unfounded. There's a blind spot that characterizes many proponents of things like the re-pricing of parking, particularly those who we learned to call "left neo-liberals" this summer. It's captured in the second phrase I bolded in that first passage: "people will park based on how much they’re willing to pay versus how far they are willing to walk to a destination." In just three words, "willing to pay", we have swept away the inequality of wealth and power that any attempt to turn market mechanisms toward planned ends must confront. Willingness to pay, of course, is also a function of *ability* to pay, and a market mechanism implicitly attributes worth to a person's desires in proportion to the money they have to spend.

Thoughtful neoclassical economists [know this](http://delong.typepad.com/sdj/2009/04/hoisted-from-the-archives-a-non-socratic-dialogue-on-social-welfare-functions.html), but they usually choose to ignore it, presumably because the consequences of confronting it would be too politically uncomfortable. Their own theories tell them that, due to the [decreasing marginal utility of money](http://www.getrichslowly.org/blog/2010/06/16/the-marginal-utility-of-money/), an extra dollar is worth more to the poor than to the rich. It follows that asking an extra dollar for parking hurts the well-being of the poor far more than the rich, and systematically privileges those who don't need to think twice about paying six dollars for a parking space. To which a good left neo-liberal would no doubt reply that the issues of rational pricing and wealth redistribution are logically distinct and should be thought separately. But politically, this means that redistribution is the lonely last instance that never comes.

All of which is enough to make a good progressive recoil from such a thing as "the market price for street parking". But this position is not nearly audacious enough. Rather than a rejection of market relations, this is merely a rejection of a novel form of planning, in favor of the older, more obscure, more unfair and more inefficient methods of planning the use of public space. We could say instead that what's needed is a direct assault on the inequalities of wealth and income that subvert the functioning of prices, and thereby impede the realization of the plan.

Now that the new *Jacobin* is live, I can point out the essay I've been teasing for a while in my posts. It builds on the thought experiment I carried out in my ["Anti-Star Trek"](http://www.peterfrase.com/2010/12/anti-star-trek-a-theory-of-posterity/) post, in which I imagined a fully automated economy where class and profit was based entirely on intellectual property. In the new piece, that hypothetical is just one of four possible futures---two egalitarian utopias and two class-divided dystopias. It's an attempt to think more systematically about the interaction between automation, ecological and resource limits, and class, and it's available to [read](http://jacobinmag.com/winter-2012/four-futures/) online.

A side issue in the essay, as well as a number of my blog posts, is that I often gesture at things like open source software and other kinds of peer-to-peer (P2P) production, as prefigurations of what labor might look like when freed from its oppressive form as capitalist wage labor. But there are others on the left who see P2P as a negative development, or at least one without much liberatory potential. Take the anonymous [Mr. Teacup](http://www.mrteacup.org), whose archives I've recently been reading through with great interest. He (I'll use that pronoun since the alias is male whether or not the blogger is) recently put up a two-part post on "The Peer-Production Illusion".

[The first post](http://www.mrteacup.org/post/peer-production-illusion-part-1.html) argues that "in practice, the open source software movement is compatible with and influenced by capitalism", which "casts doubt on overly optimistic claims that peer production is intrinsically anti-capitalist." Teacup shows that much of what looks like voluntary non-waged peer production really isn't, because most of the work is done by employees of private firms which pay them to work on open source projects. He compares things like the Apache web server software to physical infrastructure: just as capitalists pay taxes that go to build things like roads and sewer systems through the medium of the state, so too firms will collectively fund the development of software that they all use, but from which none of them derives a comparative advantage.

I find little here to disagree with---clearly, P2P isn't *inherently* anti-capitalist, and the analogy with physical infrastructure is an astute one. But the [second post in the series](http://www.mrteacup.org/post/peer-production-illusion-part-2.html) goes on to to criticize a slightly different view:

> The establishment of gift economies, even if they grow profits right now, might contain the seeds of eliminating capitalist production altogether. I'm going to call this __the Beachhead Hypothesis: in the vast territory controlled by capitalism, P2P creates autonomous spaces free from exploitative wage labor that can be expanded__ to encroach further on enemy territory.

> I disagree with this hypothesis because I don't think we took this territory, I think it was created by capitalism.

I believe something quite close to the "Beachhead Hypothesis", even though I *also* agree that the P2P space was in many ways created by capitalism. I don't think this is a contradiction: capitalist relations first arose within a feudal context, but that doesn't mean they couldn't ultimately point beyond feudalism. The crucial point is that the same set of relations can have a very different meaning depending on the larger social context in which it's embedded.

While the first "Peer Production Illusion" post argued that much apparently P2P labor was really just capitalist wage labor organized at a supra-firm level, the second post employs a very different line of argument against the Beachhead Hypothesis. Teacup claims that even where "real" peer-production is done by people who aren't paid for it, it still isn't promising or liberating. Rather, peer production is actually an integral part of the ideology and practice of neoliberalism, which is built on a "civil society" in which unpaid acts become a source of private profits. Just as the ethic of charity can obscure the need to change structural inequalities, "the altruism of individuals participating in P2P gift economies obscures their role as free labor for capitalism."

The implication here is that anyone who embraces the P2P ethic is kind of a sap, tricked into doing free labor for the man when they should be demanding a wage for it. Which in a way is true, because the problem with P2P as it exists now is that it is embedded in a society that's still organized around wage labor. Everyone is still expected to support themselves by working for pay, but capitalists who profit from the work of the P2P economy are evading the fundamental bargain between capital and labor: I, the worker, will do work from which I am alienated and from which someone else profits, and in return you, the capitalist, must pay me a wage.

One response to this is to denounce P2P and other forms of free labor, in an attempt to shore up the wage. This is the direction in which Mr. Teacup seems to tilt. But another answer to this untenable situation is that the problem is not with P2P but with the institution of wage labor itself. If we are all, more and more, producing economic value even when we aren't at work, this strengthens the case for a "social wage" paid to everyone---i.e., something like my perpetual hobbyhorse, the Unconditional Basic Income. This, indeed, is the direction that post-Autonomists like Hardt and Negri [ultimately went](http://www.leftbusinessobserver.com/Empire.html). Another way to put this is that the rich need to pay a tax in order to support a piece of social infrastructure that they depend upon: the P2P economy.

But you obviously can't take that position if you think P2P production is an inseparable part of a neoliberal capitalism that's even worse than the order that preceded it. The alternative that remains is basically to go back to mid-20th Century social democracy, and to try to restore a real, pure capitalism in which all value-creating labor is rewarded with a wage (although as David Graeber [points out](http://www.peterfrase.com/2011/08/the-return-of-the-politics-of-debt/#comment-354626525), actually-existing capitalism has always depended on lots of labor that doesn't fit the archetype of contractual wage labor).

A better strategy, I think, would be to learn from those moments when the working class responded to new forms of exploitation not by shoring up the old status quo, but by making a counter-move that advanced the economy forward to yet another new stage. When industrialization threatened traditional craft skills, one response of the labor movement was a craft unionism that tried to preserve the privileges of a small subset of skilled workers. But it was the more radical industrial unions that ultimately helped make possible the social democratic compromise that neoliberalism later undermined---a compromise based on accepting certain kinds of productivity-enhancing, deskilling technological changes in return for a share of the resulting rise in output. Just as craft unions were inadequate to an industrial age, the logic of class struggle in the factory is unlikely to be adequate to a post-industrial context. The question then, isn't whether P2P is or isn't capitalist, but whether we can get its capitalist integument to [burst asunder](http://www.marxists.org/archive/marx/works/1867-c1/ch32.htm).

It's been pretty dead around here, I know---I've been pulled away by other obligations, including the new issue of [*Jacobin*](http://jacobinmag.com/), which will feature not one but *two* of my contributions. Look for that, coming soon!

Just a quick (or, well, now I guess it's not so quick) note in the meantime on today's topic of discussion in the part of the lefty Internet where I hang out: Matt Yglesias's [post](http://www.slate.com/blogs/moneybox/2011/12/01/ceo_pay_drives_inequality.html) arguing that it doesn't make sense to talk about a conflict between corporate fat-cats and workers, since CEOs are in some sense "workers" too. [Seth](http://jacobinmag.com/blog/2011/12/everything-old-is-new-again/) and [Doug](http://lbo-news.com/2011/12/02/the-ceo-as-humble-worker/) obviously think that this is a kind of obtuse way of putting things, politically and morally. And I agree---but I don't think they quite get at the real problem with the argument.

Doug says that "the point isn't how hard you work, it's what you take home", and he goes on to note that the average big company CEO makes about $3,800 dollars an hour. But he implicitly concedes Yglesias's point that this is all about inequalities among workers, one group of whom happen to be obscenely well-compensated. That gives Yglesias the opening to [zing back](https://twitter.com/#!/mattyglesias/status/142681917068812290): "I'm the one insisting on an orthodox Marxist account of exploitation." That, in turn, touched off some Twitter banter about what share of top-1% income comes from wages versus investments, and so on.

This seems a bit irrelevant to me. I'd counter that the point isn't just "what you take home", nor is it even how your income is classified for accounting purposes; rather, it's *where you're positioned in the system of capital accumulation*. In the circuit of M-C-M', most workers are just another commodity: the labor-power that is bought as part of the "C" step, the production and sale of commodities. CEOs, on the other hand, are actually in a position to control the entire process of production, and their income is best thought of as a share of the resulting profit, whether or not that share is officially coded as salary or as stock options.

It would be possible to set things up so that the CEO was paid more like a normal worker, and all the profit went to the shareholders, but that's pretty clearly not what's going on now. (Though you're welcome to go see [Tyler Cowen](http://marginalrevolution.com/marginalrevolution/2011/11/are-ceos-paid-their-value-added.html) if you'd like some silly arguments to that effect.) In practice, managers at American corporations are able to behave as though they are the owners of the enterprise rather than the shareholders, and thus are entitled to appropriate profits themselves---there is a large [literature](http://www.amazon.com/Pay-without-Performance-Unfulfilled-Compensation) on this, showing how executives manipulate boards and compensation committees. This may not make them identical to the traditional conception of a capitalist who is the juridical owner of the firm, and it may put their interests in conflict with those of shareholders, but it certainly makes them quite different from ordinary wage laborers. (See [here](http://mattbruenig.com/2011/12/01/corporate-executives-are-not-just-highly-paid-workers/) for a similar rendition of this argument.)

So that's one criticism of what Yglesias wrote: it's not just that he underplays the significance of income inequality, he also fails to really reckon with the role top management plays in actually existing capitalism. The fact that European and Japanese CEOs make so much less than their American counterparts, which Yglesias mentioned in a tweet, actually gives the game away---this is an indication that these non-American executives have been less successful at grabbing a share of profits for themselves.

However, there's an important kernel of truth to what he's saying. It *is* possible, at least in principle, to have a society that is just as capitalist as ours, but where everyone is really a "worker" in a meaningful sense. I [wrote about that](http://www.peterfrase.com/2011/03/capitalism-without-capitalists/) in the spring, in a post that I know Yglesias has read, because he linked to it. Probably he views the argument differently than I do---I meant to show that it's not enough to just get rid of the capitalist class if you want to challenge the deep structure of capital, whereas Yglesias might think that "capitalism without capitalists" is a state of affairs we should aspire to. And when he says that "the concept of a class struggle between workers and capitalists was at the time it was created grounded in a specific contrast between workers and owners", he seems to imply that we've *already* reached a fully depersonalized capitalism, which I think is wrong. But even if it were right, that wouldn't mean the current state of affairs was somehow OK.

So to reiterate what I said in my earlier post: the opposition between *capital and labor* is not the same as the opposition between *capitalists and workers*, and you can't always cleanly align the two relations on top of each other.

So [Kevin Drum](http://motherjones.com/kevin-drum/2011/11/back-chessboard-and-future-human-race) and [Matt Yglesias](http://thinkprogress.org/yglesias/2011/11/17/371098/the-back-half-of-the-chessboard/) have read Erik Brynjolfsson and Andrew McAffee's *Race Against the Machine* e-book, and *both* of them managed to come away impressed by the exact argument that [I identified](http://www.peterfrase.com/2011/10/the-machines-and-us/) as the weakest part of the book's case. Namely, the belief the Moore's law---which stipulates that computer processing power increases at an exponential rate---can be extrapolated into the indefinite future. It's true that Moore's law seems to have held fairly well up to this point; and as Drum and Yglesias observe, if you keep extending it into the future, then pretty soon computing power will shoot up at an astronomically fast rate---that's just the nature of exponential functions. On this basis, Drum predicts that artificial intelligence is "going to go from 10% of a human brain to 100% of a human brain, and it's going to seem like it came from nowhere", while Yglesias more generally remarks that "we’re used to the idea of rapid improvements in information technology, but we’re actually standing on the precipice of changes that are much larger in scale than what we’ve seen thus far."

Let's revisit the problem with this argument, which I laid out in my review. The gist of it is that just because you think you're witnessing exponential progress, that doesn't mean you should expect that same rate of exponential growth to continue indefinitely. I'll turn the mic over to Charles Stross, from whom I [picked up this line of critique](http://www.antipope.org/charlie/blog-static/2007/05/shaping_the_future.html):

> __Around 1950, everyone tended to look at what the future held in terms of improvements in transportation speed.__

> But as we know now, __that wasn't where the big improvements were going to come from. The automation of information systems just weren't on the map__, other than in the crudest sense — punched card sorting and collating machines and desktop calculators.

> We can plot __a graph of computing power against time that, prior to 1900, looks remarkably similar to the graph of maximum speed against time.__ Basically it's a flat line from prehistory up to the invention, in the seventeenth or eighteenth century, of the first mechanical calculating machines. It gradually rises as mechanical calculators become more sophisticated, then in the late 1930s and 1940s it starts to rise steeply. __From 1960 onwards, with the transition to solid state digital electronics, it's been necessary to switch to a logarithmic scale to even keep sight of this graph.__

> It's worth noting that the complexity of the problems we can solve with computers has not risen as rapidly as their performance would suggest to a naive bystander. This is largely because interesting problems tend to be complex, and computational complexity rarely scales linearly with the number of inputs; we haven't seen the same breakthroughs in the theory of algorithmics that we've seen in the engineering practicalities of building incrementally faster machines.

> Speaking of engineering practicalities, I'm sure everyone here has heard of Moore's Law. __Gordon Moore of Intel coined this one back in 1965 when he observed that the number of transistor count on an integrated circuit for minimum component cost doubles every 24 months.__ This isn't just about the number of transistors on a chip, but the density of transistors. A similar law seems to govern storage density in bits per unit area for rotating media.

> As a given circuit becomes physically smaller, the time taken for a signal to propagate across it decreases — and if it's printed on a material of a given resistivity, the amount of power dissipated in the process decreases. (I hope I've got that right: my basic physics is a little rusty.) So we get faster operation, or we get lower power operation, by going smaller.

> We know that Moore's Law has some way to run before we run up against the irreducible limit to downsizing. However, it looks unlikely that we'll ever be able to build circuits where the component count exceeds the number of component atoms, so __I'm going to draw a line in the sand and suggest that this exponential increase in component count isn't going to go on forever; it's going to stop around the time we wake up and discover we've hit the nanoscale limits.__

So to summarize: transportation technology *looked* like it was improving exponentially, which caused people to extrapolate that forward into the future. Hence the futurists and science fiction writers of the 1950s envisioned a future with flying cars and voyages to other planets. But what actually happened was that transportation innovation plateaued, and a completely different area, communications, became the source of major breakthroughs. And that's because, as Stross says later in the essay, "new technological fields show a curve of accelerating progress — until it hits a plateau and slows down rapidly. It's the familiar sigmoid curve."

And as Stross says [elsewhere](http://www.antipope.org/charlie/blog-static/2010/05/unpleasant-medicine.html), "the first half of a sigmoid demand curve looks like an exponential function." This is what he means:

The red line in that image is an exponential function, and the black line is a sigmoid curve. Think of these as two possible paths of technological development over time. If you're somewhere around that black X mark, you won't really be able to tell which curve you're on.

But I'm inclined to agree with Stross that we're more likely to be on the sigmoid path than the exponential one, when it comes to microprocessors. That doesn't mean that we'll hit a plateau with no big technological changes at all. It's just that, as Stross says in yet [*another* place](http://www.infinityplus.co.uk/nonfiction/intcs.htm):

> New technologies slow down radically after a period of rapid change during their assimilation. However, I can see a series of overlapping sigmoid curves that might resemble an ongoing hyperbolic curve if you superimpose them on one another, each segment representing the period of maximum change as a new technology appears.

Hence economic growth *as a whole* can still look like it's [following an exponential path](http://inpp.ohiou.edu/~brune/gdp/gdp.html).

None of which is to say that I wholly reject the thesis of Brynjolfsson and McAffee's book---see the review for my thoughts on that. In a way, I think Drum and Yglesias are underselling just how weird and disruptive the future of technology will be---it's not just that it will be rapid, but that it will come in areas we can't even imagine yet. But we should be really wary of simply extending present trends into the future---our recent history of speculative economic manias should have taught us that if something [can't go on forever](http://survivalandprosperity.com/wp-content/uploads/2010/12/Shiller-Housing-Bubble-Graph.jpg), it will stop.