economic activity isn’t about satisfying the demand for objects; it’s about satisfying demand, period, and people demand many things that have little to do with assembly lines and smokestacks — haircuts, mixed drinks, financial advice, dentistry, and so on.
Yglesias, likewise, suggests that all work could conceivably be seen as manufacturing:
The important thing is to not get too caught up in the words “making” and “things.” A farmer makes plants. A cook makes meals. A chef makes recipes. A restaurant investor makes business plans. A marketing specialist makes brand loyalty. A salesman makes sales. A personal trainer makes muscle mass.
Incidentally, this is why critics of capitalism sometimes complain about reification -- because capitalism encourages us not to be too hung up about the concept of the "thing" and "thing-ification." At the level of ideology we are expected to regard our social practices as a constant process of production of alienated things that can be separated from the context of their origin and exchanged, and to see this is simply natural, inevitable. What gets called a "good" and what gets called a "service" is always in flux, varying according to the amount of reification required by economic conditions.
But the point Avent and Yglesias seem to want to make is that it's more or less nonsense to argue, as Andy Grove does here, that the U.S. needs to recommit to manufacturing. We're always already "manufacturing," in some broad sense of the word, as long as people are getting paid to do something. The critical necessity, they suggest, is to be able to make goods and services cheaper, so more consumers will demand them. "As we get better at making things, more people can shift into the making of expensive luxury items and then those items become non-luxuries," Yglesias writes, and hence more people can desire and buy them. (He assumes a never-ending demand for "luxuries"; that supply creates its own demand -- Say's Law, which wishes away the problem of effective demand.)
It's important to think about what "getting better at making things" means exactly. Avent asserts that "economic growth ... is about figuring out how to do more with less," that is, improving productivity. Sometimes, technical innovation accomplishes that task. However, the quickest way to improve productivity is to fire people and make fewer workers do the work -- that's what the discipline of "management" and its type of innovation are all about. Hence Avent concedes that "economic growth is often about labor-saving innovation" -- an insight Marx emphasizes in one of the more cryptic portions of Capital, when he starts in on the "composition of capital."
The gist is that the amount of labor that capital needs to absorb in the process of "valorizing" itself -- turning a profit -- varies depending on the economic sector and on conditions, including levels of innovation and productivity. Marx regards productivity improvements at the expense of wage-paying jobs as a fundamental contradiction in capitalism. Value, in his view, stems from human labor, not productivity improvements like machines or management strategies, so when capital seeks to get more work done with less labor, they reduce the human input that makes the output have value. Such productivity enhancements may increase output but over the long term they also devalue that output, making it sell cheaper. As George Caffentzis explains Marx's logic (pdf):
Machines’ weakness – the fact that they cannot create value – has enormous consequences for the whole capitalist system. Industries that employ a large amount of machinery and a relatively small amount of labor cannot create within their production process the surplus value necessary to constitute an average rate of profit for the inconstant capital (machinery, for the most part) and variable capital (wages).Profits then shift to the sectors with more human input. As labor intensive industry moves to places where labor is cheap, the U.S. faces the dilemma of how to keep people employed when much of its industry has become reliant on constant capital (machines) rather than variable capital (humans). It has moved away from traditional manufacturing, meaning more of America's workforce must shift into making other things -- including ideas and services. This would seem to require retraining. Avent argues that "what is really important is the level, supply, and transferability of skills. And it is here that we seem to have run into problems. We’re not producing enough skilled workers to keep up with the demand for skills, and we’re producing too many unskilled workers. Many of today’s jobs require a great deal of specialized knowledge, which takes a long time to acquire." That line of thinking often leads to a concern with improving education so we produce more engineers and computer programmers and the like.
But Avent also makes the more compelling claim that developing human capital is a primarily a matter of guaranteeing a certain level of "human input to economic activity, which, like it or not, we need to maintain." In that sense, the skills themselves are arbitrary as long as there are socially necessary (or socially demanded) production processes that make use of them, whatever they are. Maybe retraining isn't as necessary as a collective reconceiving of what can be considered a skill. Could it be possible that we've reached a point at which the requisite skills don't follow from specific needs, but instead skills easily acquired in a leisure-oriented society drive the creation of leisure-oriented labor processes that then invent social demand? Work and leisure would thereby become harder to differentiate, along with production and consumption. (This fits Baudrillard's assessment of the consumer society, as well as the "immaterial labor" thesis popularized by Hardt and Negri.) The nature of compensation also changes as wages start to take the form of fame, attention, recognition, credibility, autonomy, free time (since necessities in these societies come cheaply or are included -- in theory, anyway -- in the standard social safety net).
Increases in the standard of living may thereby have the paradoxical effect of turning "living" itself into a ceaseless work process. The more leisure eliminates work in the traditional sense, the more it becomes work itself in the immaterial sense. By making traditional types of skills irrelevant, productivity innovations are making us reconceive our leisure time activities as a skill set.
Another way of looking at structural shifts in the economy -- at the changes in the things we manufacture -- is that capitalists, in order to find profitable ways to employ the workforce in the U.S. (that is, to preserve the "human input"; to alter the "organic composition of capital"), have had to increasingly turn taken-for-granted practices and customs and beliefs of everyday life into "services" -- that is, into products. Reification has had to be intensified. With basic needs sated by goods made cheaply abroad or with minimal labor input, new needs have to be systematically invented. That means things people were comfortable with have to be turned into problems for them -- they need new desires and new anxieties. Thus life becomes a lifestyle that is sold to us and which grants us our identity, now an ongoing construction project.
The nature of the "skills" being reproduced in U.S., the ones that we can still incorporate into production, are oriented more and more toward lifestyle making. The sector of "productive jobs" in the U.S. seems to be in those areas sometimes decried as inessential if not corrosive to the human spirit -- cultural meanings, identity tokens, marketing, etc. Given the proclivities of our workforce, the U.S.'s comparative advantage is in manufacturing desires and refining them in the realm of language and feeling, as opposed to making things. These jobs can seem frail and frivolous, the work not socially necessary and therefore not psychically rewarding in the same way. It commercializes the process of making one's social world, emptying it of trust and the feeling of authenticity. The approval we seek to stabilize our sense of self is suddenly explicitly bound up in public, commercial enterprise.
Correspondingly, production is more and more a matter of cultural reproduction -- making selves in lifestyles, enhancing identity-oriented pursuits. As a result, we come to see more of our identity-shaping activities as work -- they are subsumed under capital. We can't help but regard our self-fashioning in capitalistic terms, as building our personal brand. So, on our current path, more and more U.S. workers are likely to be turned into knowledge workers, meme generators, hype merchants, identity mongers -- making "cool" while transforming their social life into a stream of branded idea-products. Soon, if that trend continues, worker = hipster.