economy

Lately, I've been consumed by analyzing the biggest story of the decade:  financialization and the ensuing economic crisis which now seems likely to be with us for a decade. In thinking about the #domusweb project, I've been struck by how the critical tools that have been en vogue during the last decade have proved bankrupt in the face of the economic crisis.

What strikes me most about this is how clear the crisis was to anyone who reads materialist historians. Take Giovanni Arrighi's brilliant The Long Twentieth Century. The description he gives of financialization and systemic cycles of capital accumulation in the Introduction should be enough for anyone to make reasonable sense of what happened in the last decade. What's more remarkable is that it was written not this year but in 1994.  

Or take Fernand Braudel, the other great inspiration for Arrighi beyond Marx. Arrighi points out that in observing the development of the capitalist cycle in eighteenth century Holland in the third volume of Civilization and Capitalism, Braudel writes "At all events, every capitalist development of this order seems, by reading the stage of financial expansion, to have in some sense announced its maturity: it was a sign of autumn." (Braudel, Civilization & Capitalism, volume 3, 246). 

In contrast to Alan Greenspan's boldfaced lie that nobody could have seen the crash coming, materialists understood full well what was on the way. What puzzled us was the dimension and duration of the boom.

But in certain ways, the academy did miss the obvious. Cogent analyses of capitalism were never part of the discourse in most fields. Instead, capital became too abstract a force, divorced from reality. Everything could be read as a manifestation of capital and rote critiques made for an easy conclusion to "critical" essays. Such deep reading wasn't deep at all, really, and thus its understandable that such "lite" criticism was rejected wholesale under network culture.

Instead, other explanatory models rose to the fore, models like actor-network-theory. Famously, Bruno Latour asked the rhetorical question "Why has Critique Run Out of Steam?" For Latour and most other advocates of Actor-Network-Theory, capitalism was as much a construct produced by Marxists as an actual entity. Instead, they argued, agency had to be traced across a network of actors, both human and non-human. 

The sad thing about all this is that Actor-Network Theory wound up about as useful as lite criticism, which is not very much. To be mean: how is it that Actor-Network Theory proves so irrelevant to the contemporary crisis? Why, in other words, did it run out of steam? 

Let's turn all the talk about Marxist analysis being irrelevant in the 2000s on its head, where it belongs: Marxist analysis was way ahead of the game. It proved far more relevant than monetarism in the end. Our contemporary crisis is a crisis of overaccumulation. If that's not clear to you, then go and read Marx or Arrighi or Mandel or Braudel or any one of a number of thinkers who explain it well. For here perhaps Latour might have something if we read him against the grain: see, it wasn't Marxism that was irrelevant—it was the construction of Marxism's irrelevance. A world beholden to the bubble—including in academia—simply never understood that nothing had really changed, except for the level of delusion.  

Iceland's Eyjafjallajoekull volcano hasn't given up disrupting north Atlantic air travel this summer, but what if it's the harbinger of something bigger?

The global city is predicated on face to face communication being essential to major business deals. But the global city model, originally outlined by my colleague Saskia Sassen, is almost twenty years old. Trying booting up your Powerbook 100 to read this blog post. In this post I'd like to speculate on the impact of the volcano, technology, and global warming on the global city.  

First, let's talk global warming and green hype. During the last decade, friendly but misguided green advocates have advocated pedestrian-oriented cities as environmentally-sound alternatives to the suburbs. But looking at America (and many countries in Europe aren't all that different from this), most cities have seen sustained and uninterrupted declines in the last half century. The starring exceptions are the global city of various scales: New York, Chicago, Boston, LA, San Francisco and so on. For the most part, these cities have seen a remarkable renaissance as centers of business and creative activity. The urbanites who live here live in the global city, thinking nothing of jetting from London to Shanghai and alighting in San Francisco. Often, these individuals literally inhabit the global city and owning pied-à-tierres on multiple continents is increasingly as common among the super-wealthy as owning an estate is. At home, the "creative class" practices localism religiously, probably out enjoying home-smoked bacon cupcakes and carbon-neutral triple-pulled ristrettos right now.  

But the idea that this kind of life—which is as predicated on consumption as existence in deepest suburbia—is environmentally sound is laughable. Apart from the manic rate of conspicuous consumption in the global city, flying one mile on an airplane produces almost  as much CO2 as driving that same mile by oneself in an automobile (other side effects, including polluting in the very thin atmosphere high-up may be much worse). Moreover, if an average driver in the United States drives some 12,000 miles a year, that's half of what you need to get into a frequent flyer club.

I think by now you get the picture: the high-flyer of the global city is much worse for the environment than the suburbanite. So much for sustainable living. 

Now back to the volcano. The impact it's had on transatlantic travel has been massive as planes continue to be grounded in one European country or another multiple times a week. Pollution-wise, the amount of CO2 it released is significantly less than the amount of CO2 that would have been produced by the Airbuses and Boeings that happened not to fly on those days (obviously, the volcano also released other pollutants, many of which are quite toxic to life). Business travel had already dropped as a result of the recession. The volcano is a wake-up call. If my business relied on frequent international travel for face-to-face meetings, I'd begin asking myself how sustainable this is from an economic standpoint and how vulnerable my business was to such disruptions.   

There's more to the story. As I stated earlier, we're far from the day of the Powerbook 100, which couldn't even browse the Web. 70% of stock market trades now take place between computers at millisecond-level speeds. I have a hunch that the face-to-face financial deals that used to drive the global financial markets are becoming less important economically. 

Let's put this all together then. A perfect storm is emerging. Far from the idea that the suburbs will collapse in Richard Florida's great reset, it is likely the global city that collapses, replaced by ubiquitous high-speed telecommunications and undone by changing climatological conditions, not to mention peak oil.

Make no mistake, I'm not offering up a new utopia of any sort here. What I'm predicting is an end to network culture as we know it and it won't be pretty. The coming collapse of the global city will be slow and brutal, accompanied by the stationary state that Gopal Balakrishnan described last year.

I don't see many easy solutions out there. Ironically, the best bet is probably the very scare-word the American right loves to deploy: socialism. Now it's unlikely to take hold in the US, at least not for a generation or two but some countries will probably get the drift and head in that direction. What gets us out of this morass and what form of global spatial organization replaces the global city is unclear. Still, the late, great global city was far from equitable or sustainable. We can hardly lament its passing.  

Nothing irks me more than the idiots* who say that nobody saw the crash coming. I blogged about it years before it happened. It was plain as day. The real estate market was a bubble. Nothing fundamental had changed.

So for the record, the bump in the stock market today suggests just how fragile the markets are. I've brought this up many times in the networked publics panels, but it's worth mentioning again: high velocity trading is a major threat to the markets and the markets are far from stable.

In literally the blink of an eye the NYSE had dropped over 995 points. It bounced back, but was still down over 350 at the end of the day. 

This isn't the kind of glitch we should ignore. It's a warning underscoring how unsound our financial markets are. Anyone interested in the survival of the current economy system should hope that the Obama administration doesn't ignore it.  

*Of course some of the people saying that nobody saw the crash coming aren't idiots; they're liars.

War has changed in network society. Of course, we are familiar with the asymmetrical networked warfare taking place in Iraq and Afghanistan. Then there's the emerging cyberwar, which recently ratcheted up as Google complained it was the victim of cyber attacks originating in China. The new issue of the Atlantic has more. 

But there's also economic warfare. What we see now is hardly a typical recession from which we will recover in the next year. On the contrary, part of a prolonged condition that will define this decade. Obviously, much of it is the product of astonishing foolishness on the part of governments, corporations, and individuals, all of whom seem to have been so hopped up on prozac that they thought that the good times would never end and that they could continue with their profligate policies for all eternity. As symbols of the old new economy are dying (goodbye and good riddance Hummer, sorry Athens—home of the 2004 Summer Olympics—and Dubai), and the crisis is crippling US cities and states (look at what's happening in Los Angeles, for example), we should ask if there isn't a touch of new war in all this.

Now I don't mean to turn to conspiracy theory, but I want to use this as an opportunity to suggest that our current economic crisis has its roots not just in rank stupidity and blind greed but also in other, murkier, conditions. Two seemingly opposed but complimentary plots come to mind. The first is China's. Back in 1999, two high-ranking officials of the Chinese military wrote a book called "Unrestricted Warfare." You can find excerpts at Cryptome. In this book, which is commonly understood to have been written to be read by the military, the first Gulf War was given as an example of how war had changed to become less directly violent, but also more pervasive (remember Peter Gabriel's song?). China's response against an adversary with technological superiority would be to pursue unrestricted warfare. In particular, economic war becomes part of the scenario. Here's a quote:

…in this era of economic integration, if some economically powerful company wants to attack another country's economy while simultaneously attacking its defenses, it cannot rely completely on the use of ready-made means such as economic blockades and trade sanctions, or military threats and arms embargoes. Instead, it must adjust its own financial strategy, use currency revaluation or devaluation as primary, and combine means such as getting the upper hand in public opinion and changing the rules sufficiently to make financial turbulence and economic crisis appear in the targeted country or area, weakening its overall power, including its military strength. In the Southeast Asian financial crisis we see a case in which the crisis led to a lowering of the temperature of the arms race in that region. Thus we can see the possibility that this will happen, although in this case it was not caused by some big country intentionally changing the value of its own currency. Even a quasi-world power like China already has the power to jolt the world economy just by changing its own economic policies. If China were a selfish country, and had gone back on its word in 1998 and let the Renminbi lose value, no doubt this would have added to the misfortunes of the economies of Asia. It would also have induced a cataclysm in the world's capital markets, with the result that even the world's number one debtor nation, a country which relies on the inflow of foreign capital to support its economic prosperity, the United States, would definitely have suffered heavy economic losses. Such an outcome would certainly be better than a military strike.
   

Is it conspiracy theory to suggest this is something the Chinese are thinking about? The Pentagon doesn't think so: they recently held a war game to investigate the consequences of economic warfare against the United States. More recently, US arms sales to Taiwan prompted Chinese military leaders to call for economic countermeasures.

Now, the effects of such a war in a globally-linked economy aren't clear and China could well wind up hurt in the blowback. It might be interesting for the Chinese military leaders to talk to the ghost of France's President Charles de Gaulle, who tried a similar move back in the 1960s by converting dollar reserves to gold only to find himself ousted during the events of May 1968. (N.B. I never knew that the origins of the Peter Gabriel song are in a European television game show that was also inspired by de Gaulle).   

In the US we also have an economic civil war of sorts that has been waged by members of the Republican party. "Starving the beast" is a policy that conservatives developed in the 1980s in which they hoped to realize their desires for a smaller federal government by forcing cuts. This could only be accomplished, they argued, by cutting taxes significantly so as to "starve the beast" and provoke governmental downsizing. See this article in the Independent Review, for more. Unfortunately for the conservatives, the beast didn't starve, it was stoked, it simply borrowed more money and our current economic crisis is very much the result. Massive cuts loom, but so do continued expenses that likely will only be fundable by increased taxes.

Playing with economies for ulterior motives is a dangerous measure, but one that I think we've hardly seen the last of in network society. All we can hope for is that we start talking about such madness in public and that, just as Herman Kahn's provocation that we think the unthinkable and contemplate life after nuclear war ultimately brought us to the process of détente, this too will lead us to stop playing silly games.  

Over the course of the last year, I've read and reread Jeffrey Nealon's Foucault Beyond Foucault . Works centering on a particular philosopher are almost always formulaic and rarely interesting. This is a notable exception. Anyone with an interest in theorizing contemporary culture should get Foucault Beyond Foucault. Nealon re-reads Foucault for the present day in a highly intelligent way. To reduce his argument to a sound bite, Nealon looks at Foucault through the lens of Deleuze's essay on the societies of control.The central point of Nealon's book is Foucault (and Deleuze's) concept of "intensification," which explains the way that power operates in contemporary society.

Nealon:

For Foucault, this charting of emergent modes of power is hardly a story of progress or Enlightenment, but a story of what he calls the increasing 'intensity' (intensité) of power: which is to say its increasing 'lightness' and concomitant 'economic' viability, in the broadest sense of the word 'economic.' Power's intensity most specifically names its increasing efficiency within a system, coupled with increasing saturation. As power becomes more intense, it becomes 'more economic and more effective' ("plus economique et plus efficace"; D&P, 207). In this sense, the genealogical shift from torturing the body to training it is hardly the eradication of the punitive gesture; rather it works to extend and refine the efficacy of that gesture by taking the drama of putative power and resistance out of the relatively scarce and costly criminal realms and into new situations or 'markets'—to everyday life in the factory, the home, the school, the army, the hospital." (32)

Nealon reads our society of control (and with it what I call network culture) as an intensification of both postmodernism and modernism, a far more effective system than the disciplinary society that Foucault analyzed. Nealon's discussion of contemporary economics is also insightful: he explains that Marx's old model of M-C-M' (where M is money, C is a commodity, and M' is more money generated by the production and sale of the commodity) is now dethroned by M-M', speculative finance. This is crucial for understanding our contemporary economic condition.   

Get the book and find out more.

Never mind that the decade really ends in a little over a year, it's time to take stock of it. Today's post looks back at the decade just past while tomorrow's will look at the decade to come.

As I observed before, this decade is marked by atemporality. The greatest symptom of this is our inability to name the decade and, although commentators have tried to dub it the naughties, the aughts, and the 00s (is that pronounced the ooze?), the decade remains, as Paul Krugman suggests, a Big Zero, and we are unable to periodize it. This is not just a matter of linguistic discomfort, its a reflection of the atemporality of network culture. Jean Baudrillard is proved right. History, it seems, came to an end with the millennium, which was a countdown not only to the end of a millennium but also to the end of meaning itself. Perhaps, the Daily Miltonian suggested, we didn't have a name for the decade because it was so bad.

Still, I suspect that we historians are to blame. After Karl Popper and Jean-François Lyotard's condemnation of master narratives, periodizing—or even making broad generalizations about culture—has become deeply suspect for us. Instead, we stick with microhistories on obscure topics while continuing our debates about past periods, damning ourselves into irrelevance. But as I argue in the book that I am currently writing, this has led critical history to a sort of theoretical impasse, reducing it to antiquarianism and removing it from a vital role in understanding contemporary culture. Or rather, history flatlined (as Lewis Lapham predicted), leaving even postmodern pastiche behind for a continuous field in which anything could co-exist with anything else.

Instead of seeing theory consolidate itself, we saw the rise of network theory (a loose amalgam of ideas from the theories of mathematicians like Duncan Watts to journalists like Adam Gopnik) and post-criticism. At times, I felt like I was a lone (or nearly lone) voice against the madding crowd in all this, but times are changing rapidly. Architects and others are finally realizing that the post-critical delirium was an empty delusion. The decade's economic boom, however, had something of the effect of a war on thought. The trend in the humanities is no longer to produce critical theory, it's to get a grant to produce marketable educational software. More than ever, universities are capitalized. The wars on culture are long gone as the Right turned away from this straw man and the university began serving the culture of networked-enduced cool that Alan Liu has written about. The alienated self gave way to what Brian Holmes called the flexible personality. If blogs sometimes questioned this, Geert Lovink pointed out that the questioning was more nihilism than anything else.

But back to the turn of the millennium. This wasn't so much marked by possibility as by delirium. The dot.com boom, the success of the partnership between Thomas Krens and Frank Gehry at the Guggenheim Bilbao, and the emergence of the creative cities movement established the themes for this decade. On March 12, 2000, the tech-heavy NASDAQ index peaked at 4069, twice its value the year before. In the six days following March 16, the index fell by nine percent and it was not through falling until it reached 1114 in August, 2003. If the delirium was revealed, the Bush administration and the Federal Reserve found a tactic to forestall the much-needed correction. Under pretext of striving to avoid full-scale collapse after 9/11, they set out to create artificially low interest rates, deliberately inflating a new bubble. Whether they deliberately understood the consequences of their actions or found themselves unable to stop it, the results were predictable: the second new economy in a decade turned out to be the second bubble in a decade. If, for the most part, tech was calmer, architecture had become infected, virtualized and sucked into the network not to build the corporate data arcologies predicted by William Gibson but as the justification for a highly complex set of financial instruments that seemed to be crafted so as to be impossible to understand by those crafting them. The Dow ended the decade lower than it started, even as national debt doubled. I highly recommend Kevin Phillips book Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism to anyone interested in trying to understand this situation. It's invaluable.

This situation is unlikely to change soon. The crisis was one created by over-accumulation of capital and a long-term slowdown in the economies of developed nations. Here, Robert Brenner's the Economics of Global Turbulence can help my readers map the situation. To say that I'm pessimistic about the next decade is putting it lightly. The powers that be had a critical opportunity to rethink the economy, the environment, and architecture. We have not only failed on all these counts, we have failed egregiously.

It was hardly plausible that the Bush administration would set out to right any of these wrongs, but after the bad years of the Clinton administration, when welfare was dismantled and the Democrats veered to the Right, it seemed unlikely that a Republican presidency could be that much worse. If the Bush administration accomplished anything, they accomplished that, turning into the worst presidency in history. In his review of the decade, Wendell Barry writes "This was a decade during which a man with the equivalent of a sixth grade education appeared to run the Western World." If 9/11 was horrific, the administration's response—most notably the disastrous invasions of Afghanistan and Iraq, alliances with shifty regimes such as Pakistan, and the turn to torture and extraordinary rendition—ensured that the US would be an enemy for many for years to come. By 2004, it was embarrassing for many of us to be American. While I actively thought of leaving, my concerns about the Irish real estate market—later revealed as well-founded—kept me from doing so. Sadly, the first year of the Obama administration, in which he kept in place some of the worst policies and personnel of the Bush administration's policy, received a Nobel peace prize for little more than inspiring hope, and surrounded himself with the very same sorts of financiers that caused the economic collapse in the first place proved the Democrats were hopeless. No Republican could have done as much damage to the Democratic party as their own bumbling leader and deluded strategists did. A historical opportunity has been lost to history. 

Time ended by calling it "the worst decade ever."

For its part, architecture blew it handily. Our field has been in crisis since modernism. More than ever before, architects abandoned ideology for the lottery world of starchitecture. The blame for this has to be laid with the collusive system between architects, critics, developers, museum directors and academics, many of whom were happy as long as they could sit at a table with Frank Gehry or Miuccia Prada. This system failed and failed spectacularly. Little of value was produced in architecture, writing, or history.

Architecture theory also fell victim to post-criticism, its advocates too busy being cool and smooth to offer anything of substance in return. Perhaps the most influential texts for me in this decade were three from the last one: Deleuze's Postscript on the Society of Control, Koolhaas's Junkspace, together with Hardt and Negri's Empire. If I once hoped that some kind of critical history would return, instead I participated in the rise of blog culture. If some of these blogs simply endorsed the world of starchitecture, by the end of the decade young, intelligent voices such as Owen Hatherley, David Gissen, Sam Jacob, Charles Holland, Mimi Zeiger, and Enrique Ramirez, to name only a few, defined a new terrain. My own blog, founded at the start of the decade has a wide readership, allowing me to engage in the role of public intellectual that I've always felt it crucial for academics to pursue.   

Indeed, it's reasonable to say that my blog led me into a new career. Already, a decade ago, I saw the handwriting on the wall for traditional forms of history-theory. Those jobs were and are disappearing, the course hours usurped by the demands of new software, as Stanley Tigerman predicted back in 1992. Instead, as I set out to understand the impact of telecommunications on urbanism, I found that thinkers in architecture were not so much marginal to the discussion as central, if absent. Spending a year at the University of Southern California's Annenberg Center for Communication led me deeper into technology and not only was Networked Publics the result, I was able to lay the groundwork for the sort of research that I am doing at Columbia with my Network Architecture Lab.

The changes in technology were huge. The relatively slow pace of technological developments from the 1950s to the 1980s was left long behind. If television acquired color in the 1960s and cable and the ability to play videotapes in the late 1980s, it was still fundamentally the same thing: a big box with a CRT mounted in it. That's gone forever now, with analog television a mere memory. Computers ceased being big objects, connected via slow telephone links (just sixteen years ago, in 1993, 28k baud modems were the standard) and became light and portable, capable of wireless communications fast enough to make downloading high definition video an everyday occurrence for many. Film photography all but went extinct during the decade as digital imaging technology changed the way we imaged the world. Images proliferated. There are 4 billion digital images on Flickr alone. The culture industry, which had triumphed so thoroughly in the postmodern era, experienced the tribulations that Detroit felt decades before as the music, film, and periodicals all were thrown into crisis by the new culture of free media trade. Through the iPod, the first consumer electronics device released after 9/11, it became possible for us to take with us more music than we would be able to listen to in a year. Media proliferated wildly and illicitly.

For the first time, most people in the world had some form of telecommunication available to them. The cell phone went from a tool of the rich in 1990 to the tool of the middle class in 2000. By 2010, more than 50% of the world's population owned a cell phone, arguably a more important statistic than the fact that at the start of this decade for the first time more people lived in cities than in the country. The cell phone was the first global technological tool. Its impact is only beginning to be felt. In the developed world, not only did most people own cell phones, cell phones themselves became miniature computers, delivering locative media applications such as turn-by-turn navigation, geotagged photos (taken with the built in cameras) together with e-mail, web browsing, and so on. Non-places became a thing of the past as it was impossible to conceive of being isolated anymore. Architects largely didn't have much of a response to this, and parametric design ruled the studios, a game of process that, I suppose, took minds off of what was really happening.

Connections proliferated as well, with social media making it possible for many of us to number our "friends" in the hundreds. Alienation was left behind, at least in its classical terms, as was subjectivity. Hardly individuals anymore, we are, as Deleuze suggested, today, dividuals. Consumer culture left behind the old world of mass media for networked publics (and with it, politics, left behind the mass, the people, and any lingering notion of the public) and the long tail reshaped consumer culture into a world of niches populated by dividuals. If there was some talk about the idea of the multitude or the commons among followers of Hardt and Negri (but also more broadly in terms of the bottom up and the open source movement), there was also a great danger in misunderstanding the role that networks play in consolidating power at the top, a role that those of us in architecture saw first-hand with starchitecture's effects on the discipline. If open source software and competition from the likes of Apple hobbled Microsoft, the rise of Google, iTunes, and Amazon marked a new era of giants, an era that Nicholas Carr covered in the Big Switch (required reading).   

The proliferation of our ability to observe everything and note it also made this the era an era in which the utterly unimportant was relentlessly noted (I said relentlessly constantly during this decade, simply because it was a decade of relentlessness). Nothing, it seemed, was the most important thing of all.

In Discipline and Punish, Foucault wrote, "visibility is a trap." In the old regime of discipline, panopticism made it possible to catch and hold the subject. Visibility was a trap in this decade too, as architects and designers focussed on appearances even as the real story was in the financialization of the field that undid it so thoroughly in 2008 (this was always the lesson of Bilbao… it wasn't finance, not form, that mattered). Realizing this at the start of the decade, Robert Sumrell and I set out to create a consulting firm along the lines of AMO. Within a month or two, we realized that this was a ludicrous idea and AUDC became the animal that it is today, an inheritor to the conceptual traditions of Archizoom, Robert Smithson, and the Center for Land Use Interpretation. Eight years later, we published Blue Monday, a critique of network culture. I don't see any reason why it won't be as valuable—if not more so—in a decade than it is now.   

I've only skimmed the surface of this decade in what is already one of the lengthiest blog posts ever, but over the course of the next year or two hope to do so to come to an understanding of the era we were just in (and continue to be part of) through the network culture book. Stay tuned.

British author Charles Leadbetter critiques the "Digital Britain plan" for making broadband ubiquitous, much like the Obama Administration's own plan. Leadbetter points out that both are flawed because they focus on infrastructure in a narrow way, failing to address the deep transformations that the Internet is making on network culture and economy. Read his response here.

This section is particularly important:

Accelerating the spread of broadband will not save these industries but make their predicaments more difficult. Here’s the truth: plans to invest more in digital technologies will only pay off if they bring further disruption to economies that are already in turmoil. We will know when politicians are really serious about the coming digital revolution when they start to admit that it will have to cause significant disruption to established business models if it is to pay off.

This is particularly tricky in the UK. The implosion of financial services, long the flagship of the services economy, means the cultural and media industries, in which Britain has a strong position, will take on an even more important role.

Leadbetter has this right and what he says can also be applied to the two countries that I work in, the United States and Ireland, but the problem for capital will come in monetizing what he calls "mutual media," the rising ecology of bottom-up media production.

The problem with this model, also proposed by other authors such as Yochai Benkler and Clay Shirky is that it does not give an adequate explanation of how to monetize such media or how to distribute wealth in a remotely equitable manner (let's forget socialism for the moment, I'm talking about market monopolies, in particular the inherent power-law nature of networks and how we can have anything beyond Google). Let's be clear about this: mutual media are incredibly successful not just because we can produce anything we want and upload it, they are successful because it has us producing content for free for corporations.

Make no mistake about it, the day that it dawns on the administration at the New York Times that there are bloggers out there who would work for free, for the fashionable cachet of a byline on a Times column, and that these bloggers are better than many of the Times's own writers is about two weeks before the entire staff of the Arts & Leisure section finds itself looking for work at Starbucks.

The economy undergoing an unprecedented transition. The owl of Minerva spreads her wings at dusk. Theory once again dreamed its successor era: if in the years between 1988 and 1994 theory seemed to be everything only to vanish, in the years since culture has seemed to be everthing, but on a much vaster scale, forming what appeared to be a new backbone in the economy (even if, as I've pointed out, it was finance all along). That's vanishing now and with it, economic crisis is at our doorstep. There is no way out of this on the horizon. The wealth of networks is not in their ability to promote sharing or interaction, but in their ability to strip away jobs and destroy industries without proposing sustainable new ones. 

For anyone who thinks I'm being pessimistic, I do hope you're right and I'm wrong. Really, I do.

Alternate scenarios wanted. My only caveat is that I we don't cook the books or take on more Ponzi schemes like the real estate bubble.

Fellow resident of my adopted hometown of Montclair, NJ and New York Times journalist David Carr has a new piece out yesterday entitled "The Fall and Rise of Media" in which he explores the rapid decline of the (traditional) media industry and makes a case for optimism about new media. It's a good read, take a look.

Carr puts on a brave face as he remind us that all reigns are temporary. The media jobs being swept away are positions that were obsolete years ago, he suggests, all but invoking Joseph Schumpeter’s “creative destruction” as an up side to the devastation that media outlets face today. As historian Jackson Lears reminds us in his latest book, Rebirth of a Nation, Americans have a longstanding fascination with the idea of rebirth and our own era is hardly immune to.

This struck a chord for me this morning as I had just finished watching the third season of Mad Men last night* and wondered about the show's future. (spoiler alert!) With the end of the old firm that the Mad Men worked for, would the new firm they would build be nimble and intelligent, able to embrace the changing terrain of the 1960s, a diabolical player in an alternate universe version of Thomas Frank's The Conquest of Cool? Or is it destined to be wiped out by the juggernaut of sociocultural change that comprises the mid and late 1960s the way Philip Johnson was, at least for a decade? In the atemporal world of network culture, we often forget how commonly we still look backward to find reference points for transformations in the contemporary world. Here I’d identify the popularity of Mad Men today. It offers us a glimpse at a moment of massive, societal transformation, as a relatively comfortable came unglued. Perhaps four decades from now we'll see a remake of Mad Men set at the New York Times, or at a dot.com corporation. Certainly, it would lack well-designed furniture and well-cut suits, but so it goes.

In his article, Carr points to a new generation of under-30 journalists armed with netbooks, wireless connections, and visions of reshaping their world. Let's hope so. The dinosaurs were dinosaurs not only because of their attitude and their budgets, but also because of the poverty, our worse yet, the outright fiction, of their reportage (no disrespect to David, but the Times itself often led the way with this: Judith Miller anyone?). No question, it’s high time to renew media. Already the architectural blogosphere is smarter, sharper, and more critical than newspaper critics have been in decades.

But there's also much to dread and not just for the dinosaurs. Rarely do things go back to normal after a serious downturn. Economic regimes undergo radical changes during recessions, often even more dramatic than during boom times when excess liquidity keeps the status quo well lubricated. 

What we're seeing now, then, isn’t just the disappearance of some crufty old salts from journalism, but rather the restructuring of the creative class. Media is very much at the forefront of this. Faced by the perfect storm of a collapsing subscription base and the decline of the advertising dollar, media corporations have figured out that the losses of income are permanent and made cuts accordingly.

In contrast, architects are flailing about. This doesn’t mean that job losses in the profession haven’t been massive, but the profession has done little to rethink how it operates. There’s little question that we won’t see another building boom the size of the one we just witnessed again in our lifetime (nor do I wish it: there's only so much economic destabilization we can take!). The downsizing is going to be permanent. The result will be heady competition between young unemployed veterans with serious job experience after a few years in the job force and a corps of new graduates trained in new skills that even those who graduated five years ago don't have. If my readers want to see me as a pessimist, that's fine, chalk up my position to a refusal to buy Prozac, but I’ve lived through enough recessions to know that the last few years were a huge anomaly and there’s a price to be paid for the excesses.

Beyond the collapse of the media sector, the very core of the contemporary upper middle class—jobs in media, advertising, real estate, finance, law and other services—faces evisceration, and may well follow the lower middle class into extinction over the course of the next decade. Those jobs are gone now and with them a host of possible commissions for architects. More than that, since the Obama administration’s greatest accomplishment seems to be to have unloaded the word “hope” of any meaning, at this point it seems likely that the shift rightward during the next elections will ensure that cities are deprived of the funding necessary to keep them afloat. Fade back to Mad Men and the early 1960s. It’s at this moment that New York takes a turning point and Mayor Robert F. Wagner sees his city entering into a multi-decade fiscal crisis from which it barely recovered.

Decades from now, will the monuments of the last decade—sadly much inferior to the monuments of the 1950s (where, after all, is our Seagram or Lever? The Standard? Magnolia Bakery maybe?)—remind us of the last days of the Creative Class and the hipster city? In 2029 will Sex in the City be as anachronistic in its depiction of the city as a thriving place for young people, just as Breakfast at Tiffany’s was in 1979?

Or is it possible that somehow the Obama administration will wise up? That he’ll take a cue from Harvard and fire Larry Summers together with the investment bankers that have infected the Cabinet, and insist that America not only has a public option for health insurance but that we’re going to rebuild manufacturing, in some smart, as yet unforeseen way? Heck, maybe the multitude will throw off its shackles and we’ll all live in a Shangri-La of post-Marxist immaterial culture. 

One thing’s for sure, though. We’re not going back to 2002. Time will tell who succeeds in navigating through it as individuals, nations, and worlds.  

   
*In general, I don't have the time to ever watch shows when they first come out so I watch them time-shifted, either on my pitifully small Verizon DVR or on my AppleTV,  Roku box, or sometimes even via Blu-Ray disc from Netflix. I point this out since I want to hammer home how media consumption habits are changing. It's particularly interesting watching my children, who have never known a world without on-demand or, for that matter, full-time PBS Kids Sprout.
 

Capitalism, especially under globalization, produces homogeneity. We're quite familiar with the spread of McDonald's and Frank Gehry around the world, but the most important aspect of this spread is an economic levelling. To be sure, capitalists exploit differences between local economies—for example, cheap labor in China—but as history progresses, these differences lessen.

Take, for example, Ireland, where I teach from time to time. Even though it has an English-speaking population and is conveniently located, Ireland lagged behind the UK and Anglophone North America due to a long history of British colonial oppression and, subsequently, government policies that stressed agrarian self-sufficiency. Thus, labor and land were underexploited and, when investment money poured in during the 1990s, the Celtic Tiger exploded. By the mid 2000s, the price of labor and land in Ireland had caught up and the Celtic Tiger entered into an artificial afterlife, extended by banks, businesses, and governments that didn't want to face its end. By 2008, Ireland was considered the fourth most expensive economy in the world. The result is predictable: industry is moving out of Ireland rather and workers from Eastern Europe are returning home. The idea that Ireland will add one million new residents in a few decades seems preposterous again.    

But unquestionably, China is the real economic powerhouse of the last decade. For the most part, China's been able to grow tremendously now due to centuries of underdevelopment. 21st century Chinese wonders like the CCTV building or the 300mph maglev trains are possible only because the vast majority of Chinese make around $2,000 per capita annually (see here) and a vast migrant labor force exists to keep labor prices down. As Chinese labor prices rise, it too will become less competitive. If the one-child policy has created a ready supply of male workers without children to support, when this generation ages a few decades from now, China's workforce will collapse.

Back in the United States, I don't see how we can pay for the massive borrowing that the Bush and Obama administrations have undertaken without a currency devaluation. This is unlikely to happen overnight, but rather I see it as being a period of double digit inflation (our current inflation rate is already much higher than official figures, thanks Alan Greenspan) and double digit interest rates.

Not only will this help with debt repayment, it will be a convenient way of devaluing homes. Let's say  you have an interest rate of 5.9% locked in and a house worth 400,000. House prices are stable even as inflation is 10%. Your house is losing 10% value a year. You might complain, but at least you have a house so you won't complain too much. A new homeowner is facing interest rates of 16% to get into the market. Your interest rate sounds like a pretty good deal in comparison. Five years of 10% inflation and no increase in house prices will pretty much take care of the overpriced housing market.

I'm old enough to remember the 1980s, which made me much more cautious than many Generation Y types when it came to the last boom. I remember when cyclical unemployment in big industry turned into structural unemployment and, like inflation, was written out of the system under the Reagan administration. If you're unemployed for too long, the system says you're not really looking for a job—even though you may be—and if you're a freelancer or working part-time, you're also not unemployed. So if we're seeing 9.4% unemployment this month, you should probably double that to get a real picture of how many people aren't being employed in traditional fashion. What if this continues for a few years? And what if we get the high interest rates that I predicted, eviscerating home values? 

I think the result is a country that approaches "Third World" status with a cheap labor force that will take on contract work without any guarantee of continuing employment for low wages. Take a look at this article from the Times on the troubles that freelancers face. I'm afraid that for higher-paid members of the service industries (media, education, architecture, art, finance, personal services) the 2000s are going to seem very much like the 1980s did for blue-collar workers.

Make no mistake, the EU is no better off. The Euro is not a stable currency and I'm not willing to put money down that it isn't going to tank first or harder than the dollar.

The Third World didn't vanish in the worldwide economic "boom," it spread everywhere. That's what the last two decades have brought us. I knew that the Bush administration was alternately too stupid and too evil to point this out, but Obama had the opportunity to force Americans to face up to the crisis, as FDR did when he took over in 1933, but he took an easy way out. Now we'll all pay the price. Welcome to the new, improved, much larger Third World.

As I've fruitlessly tried to get Technorati to update its listings for this blog, it's become more apparent that the service is in zombie mode. Like many companies today, Technorati has done away with support personnel in favor of having users try to answer each others' questions in a discussion forum. But that's hardly of any use anymore as the forums fill with notes that Technorati doesn't respond to support tickets. Still, how could they? As the economy tanks, there's no money for firms with questionable business models like Technorati and the server bills have to be paid before little things like functionality are addressed. 

This is hardly meant as a rant against Technorati. In contrast, it strikes me that the "social Web" is imploding. Over at Newser, MIchael Wollf observes that Facebook's CFO has left and concludes that "The wheels are coming off the bus at Facebook." Things are no better at Twitter although it seems that Google and Microsoft are competing to buy that service so it may have a reprieve. 

In other words, I'm suggesting that what we are seeing is not so much the replacement of old media by new, but the annihilation of both. Marxists have long predicted that capital's contradictions would undo it and, although I'm hardly optimistic about the prospects of a Red future, it seems like we're getting a taste of this now.