What do virtual worlds mean for governance, production and identity? What is the relationship between these new spaces and contemporary capitalism? In this paper, I explore some of the political-economic implications of technological transformation and reflect on the social effects of producing, communicating and existing in virtual space. Although the use of online social networking is nothing new, the emergence of virtual worlds such as Second Life provide for unique opportunities to examine changing trends in the governing of societies and the self, as well as in the production of goods, services, identities and norms. I argue that a new period of virtualization is emerging, following the era of post-Fordism, and that this shift is bringing about a new regime of accumulation and new modes of social regulation. The transformation is driven by processes of rescaling. Virtual governance is becoming simultaneously centralized and despatialized, while economies of scale and economies of scope are merging into economies of convergence. The rescaling of the social largely marks a new mode of becoming human through the extension of the virtual panopticon, and shifts towards auto-regulation and intensified self-customization. Through the study of discourses surrounding the Internet and the exploration of new spaces such as Second Life, this paper seeks understand and mobilize the new spatial and scalar geographies of economic and socio-political interaction in a virtual age.