In response to another conversation:
I thought the original premise was about how the tech/labor debate related to the financial crisis. Not how tech undermined capital. (Though Krugman seems to have picked up on that in a way I probably don't understand). Capital has prospered because tech requires capital. Globalization and horizontal integration, necessary to the global enterprise, reduces the cost of capital. Why borrow and buy expensive machinery when cheap foreign labor can accomplish the same result? And if you were horizontally integrated, production being only one more enterprise component, you don't even have to capitalize a factory (production facility). Some foreign enterprise (perhaps with subsidized capital) will do that for you. It's the difference between scale (GM) and scaleable (Google/Facebook) - (I saw that somewhere else).
But horizontal integration has its limitations. It's easy enough to make accounting, advertising, production, etc., profit centers (out-sourcing). But what about R&D? "Innovation"? If you out-source it you don't own it. Those would always be cost centers. It would require some egg-head to build a "garage project" on his own. No help. No capital. That was my rant of long ago. And I suggested that the challenge was for the financial system to identify those worthy projects and fund them and make them available to the horizontal enterprise for production.
Boy was that dumb! Capital's job is to make credit available to credit worthy borrowers. Homeowners, Italians, Greeks, Spaniards, derivatives - make up your own lies. Whatever someone else will buy. Forget about actually trying to ascertain the enterprise value of an idea. Myopia.
And that, in a nutshell, is how tech/labor relates to subprime.
