Manuel Castells

One of the books on my reading list is Manuel Castells' The Rise of the Network Society. I had the fortune of studying with Castells, who is a professor at Annenberg, in Autumn 2003. Rather than making new notes for the book, I will cut and paste choice selections from my class notes.

What is Network Society?

MC’s recent book looked at Finland as a network society, and at its differences/similarities with other network societies.

social labor policies (and disparate organizational principles in general) affect workers’ relationship to knowledge/skill-sets, directly impacting sector-wide productivity

MC seems to be an organizational determinist – e.g. soviet system precluded shift from industrial to info economy because politically, information was centralized and controlled

1970s – post-industrial theorists

- Alain Duren (?) 1969 (left)

- Daniel Bell 1973 “The Coming of the Post-Industrial Society” (right)

- 2 axes: technical and social relationships of production

o social axis: capitalism vs. collectivism

o technical axis: industrialist vs. post-industrialist

- transformation from ind >> post-ind

o transformation to knowledge and info econ

o transformation in employment from production to services

o social transformation favoring elements who hold managerial and information-heavy social roles

- critiques:

o assumption that importance of knowledge and information are new

o bell’s calculations indicating increasing importance of info sector were from 1919-49, not post-industrial era

o manufacturing employment declined, BUT this can be attributed in part to growth of global production networks. in fact, manufacturing increased globally thru 1990. also, much of the disappearing employment was from the agricultural sector. also, services is a broad term encompassing disparate roles (i.e. prostitutes, professors)

o the notion that post-ind means increasing managerial class ignores growing class of immobile, unskilled, low-paid workers

o 1970s theories could not possibly encompass developments of that era (i.e. microprocessors, genetic sequencing, growing comm. networks)

o 1970s theories limited in scope – focus on US, Russia, etc.

o no references to economy/ecological sustainability tension

o no mention of women’s changing roles in society, incl explosive job growth. renders comparative statistics (i.e. unemployment level) thorny.

o “post-industrial” doesn’t say much about what this era is. just says what it’s not.

Structural trends driving transformation:

1. Technology. Transformation may have been catalyzed or enabled by technology, but it’s not technological determinism, because technology isn’t the root cause of change. New technological paradigm – form a superior system with greater performance capacity. “informationalism” – equivalent term to industrialism.
   1. microelectronics
   2. genetic engineering (longer term process)
2. Globalization.
3. Knowledge and info processing – feeds back into and accelerates the process of knowledge creation. (i.e. open source software)
   1. Zara is a classic example. consumers now lead, rather than follow fashion. they have deeply integrated feedback system to analyze consumer data worldwide in real-time. 2-week feedback system. 12k new models into the mkt each year.
4. Cultural transformation based on increasing flexibility and capacity of media world. virtuality is a dimension of reality.
5. Crisis of patriarchalism. Transformation of women’s consciousness. Mass insurgency.
6. Global networking of social struggle and protest. Global opposition to global domination.
7. Transformation of modern nation-state into something else… “The Network State”
       
        (in castell’s terms of agency vs. structure, agency = intention, while structure = unconscious. agency can refer to the behavior of an organization, as long as it can be seen as a single actor. thus, bush & co. are exerting agency in contradistinction to the structural trends of international politics. kofi annan, in contrast, is exerting agency to support the structure).

1990s – internet provokes reinvestigation. theory of network society emerges.

networks are an old aspect of human society. networks aided by microelectronic communication technologies are new. in the past, marshalling large volume of resources required command/control structures. no longer true. decision making and collective behavior can now be decentralized not sure I agree with this

Informationalism

1. self-expanding processing capacity – technological development fuels itself.
2. recombinatory capacity of new comm. technologies is unique. modularity.
3. distributing power of new technologies is unrivalled.

The New Economy and the Network Enterprise

NEW ECONOMY

1. substantial productivity growth on the basis of tech/mgmt/knowledge
2. global economy – (tech, org and inst) transnationalization of core production of goods and services. requires deregulation.
3. networking

A. Productivity

economic theory: increasing returns (Brian Arthur) – as each node is added to the network, aggregate value of network increases exponentially. the more you invest, the higher the return. contrast with traditional economic theory of decreasing returns

productivity growth equation:

pi delta = f(K, L, R + e)

k = capital

l = labor

r = resources

e = unknown variable (a/k/a productivity residual)

e accounts for highest proportion of productivity growth. most interpretations of e focus on science, tech, mgmt, knowledge – recombines the other variables in more efficient way

production process creates:

1. product itself
2. embodied knowledge (how to create product)

•  this process, in combination with the increasing value of growing networks, creates the increasing returns situation.

new economy =/= dot com

- however, internet is essential to growth and transformation of traditional businesses (IDC, FORR: 85% of online business is B2B)

3 interrelated trends:

1. growth of productivity based on knowledge, info and tech

- in basic terms, productivity = unit of output divided by unit of input

- sustained surge in productivity growth is indicator of new economic factor or structure

- in US: 1.4% per year from ’75-‘95

- ’96 >> US productivity climbed, reaching 5% in ’99 and 6.4% in first half of 2000. but even in 2001-2, in midst of downturn, productivity grew at a rate above 5%.

- last week, international labor org released new data showing 2.2% growth in US from ’96-’03, includes downturn.

2. formation of a global economy

3. formation of a network economy

Greenspan and Siechel @ FRB: only one way to explain high growth + low inflation + high employment – increasing efficiency of production systems due to info and comm. techs.

Jorgernson and Brynholfsson disagreed. didn’t believe tech was the driver.

major debate as to why productivity growth has been high, and independent of cycles. it’s not simple. ‘90s study showed that computers added to productivity of horizontal orgs but detracted from productivity of vertical (hierarchical) orgs. therefore, key is transfer of knowledge, more than just control.

productivity growth in Ireland has been roughly 6% per year over the same time period. in finland, 3.5%. this is in part because companies that produce productivity-enhancing tech tend to be among the first adopters of that tech.

B. Global Economy

Global Economy:

- financial globalization (all savings are traded in world markets). $2.1 trillion in currency traded each day.

- production globalization

value of stock market in US (minus derivatives) = 5x US GDP

value of global derivative markets = 12x global GDP

- therefore, tremendous (paper) productivity in markets. this matters, because value by definition is created by the market.

Paul Volcker – chapter in On The Edge (Hutton & Giddens, Eds.) explains how financial markets currently work

markets around the world are integrated by:

1. computer networks and info systems
2. transmarket synthetic securities (?)

each market interacts and effects each other market. this leads to some interesting effects:

1. anticipated values based on world events
2. investors constantly absorb and react to information

the flow of capital must adjust to speed of information

1987 stock market crash was induced by computers, all of which tried to sell simultaneously when the market dipped. thus, new regulation saying that humans must make final decisions on buy/sell.

in addition to wealth of data, traders on exchanges make decisions based on their expectations and interpretations of the world. this helps account for differences between markets that are electronically linked and exposed to same data.

Paul Volcker: therefore, markets respond to representation, not reality. REPRESENTATION IS REALITY.

this creates unpredictable market turbulences. the market has, essentially, become an automaton, running under its own steam.

C. Networks and Network Enterprise

last 15 years – drastic change in the way business is done.

network economy started in US, just like industrialism started in England. spreads/changes in other countries.

1. decentralization of companies

- IBM – in 1985, reinvented itself – confederation of 5 different business units, acting independently and sometimes competing.

2. small and mid-sized companies are becoming networked. makes production much more      flexible.

- example: ad-hoc network of HK manufacturers to meet cabbage patch demand in advance of christmas

3. each small-mid company works for/with several larger corporations, rather than one.
4. corporations and ancillary networks engage in strategic alliances and partnerships – always changing. also, large use of subcontracted labor.

ergo, the new model is the “business project,” an ad hoc multi-firm alliance created for a single goal. after project ends, different pieces go their own ways

- all (with rare exception) successful business enterprises in this era are networked. the ones that aren’t are dying.

The network enterprise = org model. business activity based on networks of networks. ONLINE. that’s critical.

- Cisco is a great example. Its own network infrastructure products allowed it to establish a network organization that caused it to thrive. still represents 75% of internet infrastructure.

- 50% of sales didn’t require a human

- 80% of sales were majority online

- only owned 2 factories, the rest of production was subcontracted

Two fundamental aims:

1. Increase productivity
2. Increase competitiveness

productivity >> high growth + high employment + low inflation >> income >> consumption (as well as investment) >> demand >> back to beginning

innovation:

- technological

- process (i.e. networking)

- product (includes marketing and packaging – relationship of product to consumer)

university system and immigration >> R&D, know-how, talent <<>> entrepreneurship >>  innovation >> productivity and competitiveness

entrepreneurship also relies on institutional openness

investment >> financial markets >> financial valuation and VC (risk) >> entrepreneurship

- requires trust   - requires expectation

interdependence and volatility >> globalization >> financial markets

 

evaporation of TRUST has contributed to destruction of whole cycle – investment in US dropped 10% from last year

 

Entrepreneurship – essentially Schumpeterian notion.

(standard managerial theory – entrepreneur is risk-taker motivated by profit.)

Schumpeter: entrepreneurialism driven by individual “creative destruction” – eliminate all forms of production because they are not compatible and because they no longer deserve to exist. Darwinian. not survival of fittest, necessarily, but overall improvement. Culture of innovation embodied in person or collective.

- Nokia reorg was essentially creative destruction.

- Himanen: hacker “ethic” has driven information age, much as Weber’s “protestant ethic” drove industrialization. It’s not about good, it’s about the mandate to innovate. Innovation for the sake of creativity.

- economy based on info and innovation means that hackers – creatives – drive production and efficiency for society at large.

- however, both knowledge and social networks are still both essential for entrepreneurship

- this model applies to historical epochs, as well as info age.

- power to harness superior technology (which is socially determined) drives ability to innovate.

Q: how does innovation like the development of LA freeways at the expense of public transit fit into Schumpeterian notion of creative destruction?

A: Peter Hall, Cities and Civilization uses this as an example of creative destruction, actually.

Q: Yes, but this begs the question of from who’s perspective destruction can be considered “creative” – there were many for whom this was destructive destruction

A: yes, well, sometimes creative destruction has a very destructive potential. holocaust doesn’t rate, because it wasn’t creative, but creation of nuclear bomb does.

Q: How about Nestle replacing chocolate with crap?

A: Doesn’t count as creative, by my definition. Or innovation, for that matter, because it’s not driven by creativity this is a totally circular definition of innovation, creativity, etc.

Transformation of Work and Employment

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work/employment is a great indicator of transformation in social structure. labor = anchor of social organization. how people work determines who they are and how they think.

A. Transformation of Work Process

1. NETWORKING

new paradigm in production of goods and services = networking.

2. IMPORTANCE OF KNOWLEDGE AND INFORMATION

value generated is based on efficient processing of information >> competitiveness and productivity.

- process info, add knowledge

- proportion of value of agriculture based on actually planting stuff in soil = 15% (value measured via resources out/resources in ratio)

almost all non-management labor can be done by machines these days (re: both goods and services)

3. ACCESS TO GLOBAL AND LOCAL MARKETS

function of deregulation and liberalization of markets

IT and transportation systems

container traffic system – totally computerized

4. NETWORK OF AUTONOMOUS INDIVIDUAL WORKERS

workers that add value must be autonomous, be able to make decisions based on analysis of machines and understanding of automated environment.

industrial model today is flexible mass production (i.e. clothing or auto market) – still assembly lines, but supply is moderated to match demand. process aided by reprogrammable machines and existence of networked information infrastructure.

5. ABILITY TO MANIPULATE SYMBOLS AND INTERPRET INFO

6. MULTILOCATIONAL SKILLED LABOR

not telecommuting per se, because people aren’t staying home. they are working from several locations – offices, remote locations, home, meetings, etc. thus, increases transit problems, rather than decreases them.

- increases number of total work hours, because it makes workers persistently available.

Andrew Gillespie (2000) Myth of Telecommuting, in Cities in the Telecommunications Age (James Wheeler, Ed.)

 

reduction of moderately skilled labor, increase in top and bottom rung labor. middle of pyramid is eroding.

 

diminishing center is comprised of a) skilled, under-compensated women in the service sector (i.e. teachers, nurses) and b) remnants of old skilled working class (auto workers, etc) – autonomy, but not decision-making. only interpretation of instructions. still protected by labor unions.

these stratifications have little to do with the task itself – has to do with social processing of task (many “unskilled” labor is actually skilled – i.e. security guards, janitors, etc).

self-programmable labor vs. generic labor:

- SPL has capacity to take the ball and run with it. fundamental skill is finding and using information about how to do something. ergo, the top 35% of labor market will change professions 5 times during course of career.

- generic: lack of specific skills makes the worker completely replaceable by other workers, machines, or both.

- thus, source of cleavage is education but education is more important for credentials and social capital than for knowledge and skills MC: social capital is an additional layer, that applies to both generic and SP labor

- skills = static, knowledge = flexible

rate of expansion of prof labor force is 2x expansion of low-level. however, low-level has greater numbers than top scale.

B. Transformation of Employment

MYTH: TECHNOLOGY KILLS JOBS

- Quantitatively untrue.

1. 1980-2000: net increase in jobs in USA. static unemployment as women flooded the labor market. Unprecedented growth of jobs.
2. most job creation in most technologically advanced countries. high level of correlation there.
3. also true at the sector and firm level. adoption of new technologies increases number of jobs.
4. even true in manufacturing.
5. number of hours worked by workers has increased over these years as well (contributes to some measures of productivity)

- Qualitatively half-true

1. growth in high- and low-level jobs, with dwindling moderate-skill jobs
2. strength of labor unions correlates with continuing size of moderate-skill job market (such protection is bad for country’s competitiveness, long term)

in Europe in mid-90s, proportion of men over 55 who were employed dropped to 42%. Many retired, didn’t become unemployed.

interestingly, euro efforts to bring work week to 35 hours reduced the number of jobs, rather than increased them, because companies invested savings in tech infrastructure. however, produces more time for people to spend living (and consuming) so may lead to more jobs in the long term.

- law has more or less been eliminated. now companies have more discretion over how long their employees work.

Japanese study from 1980s

- GM intro’d tech, lost workers through attrition

- Totyota intro’d tech, retrained workers, reengineered factories, and increased productivity, increased quality, and took GM’s market share

- Fiat had no change. tech improved actual productivity, but labor unions prevented company from reaping savings by firing people.

- ergo, intro of technology can have a broad range of effects.

so WHY doesn’t technology destroy employment?

- assumption that technology reduces labor is predicated on the assumption that demand and manufacturing volume remains constant. BUT IT DOESN’T.

- but there are, of course, winners and losers. maybe some auto laborers lose jobs, but champagne importers gain jobs. gains exist only in holistic sense.

- as long as demand growth outstrips productivity gains, everything is hunky dory (???)

- politically and institutionally determined process (not tech determined)

low road vs high road of competitiveness – emphasizing low cost of labor vs. emphasizing high productivity

TRANSFORMATION OF EMPLOYMENT

- not loss of jobs, but

- individualization of labor process

- flexibility of work, relationship bet’n company and worker.

- companies benefit from absence of unions and other strictures against employment decisions

types of flexible employment

- part time

- temp

- self-employed/consultants

- mixture of above

- requires negotiation on the part of the laborers and mgmt

only 22% of people employed in CA are employed under traditional conditions (3+ years at a f/t, year-round job). other countries, 35-60 percent. finland: flexible labor grew from 10-32 percent from 1990-2000.

DEFINING FEATURE OF INDUSTRIALIZED SOCIETY – socialization of labor. creation of working class.

NEW PROCESS – individualization of labor force.

 

Aram: increasing need to hustle reduces individual productivity of laborers. transaction cost economics. 

MC: time spent negotiating by individuals doesn’t count as hours working, ergo no loss of productivity

Aram: that’s totally industry-centric view of labor. now, more than ever (what with flexible labor and multi-spacial work), labor should be considered total human resources of a laborer. not framed by given job or office

MC: um, well, that’s not really a viewpoint from which we can make an analysis

 

Netherlands used to have 20% unemployment

- moved to flexible labor

- now, 2% unemployment, and many more women in workforce

- how they did this: total protection of people through gov’t budget (health, welfare, etc)

silicon valley model: you’re on your own

- works only on one condition: your burn out people and import more from abroad. immigration based model. unlimited supply of new labor. 215k H1 visas per year in 1990s.

flexibility is now the model of employment throughout the world a/k/a “informal economy” – especially in developing nations. no protection in informal economy leads to people being “underemployed” rather than unemployed

•  low-level model of flexibility

C. Relationship of Flexible Employment and Productivity

just as socialization of production was essential to industrialization, flexibility is now becoming essential to present era.

the model of flexible organizations preceded the enabling technologies

- central/northern Italian small and medium size co’s

- hong kong manufacturing model

- silicon valley (flexible, high production) – started from scratch with network model. for instance, Fairchild started semi-skilled and cheap production in HK in 1963. extreme distantiation from the jump.

tension between flexibility and productivity:

Nonaka: theory of relation between tacit and explicit knowledge for companies.

- explicit knowledge = procedures, experience, etc. – transmittable. tacit = untransmittable. showed empirically that tacit knowledge was essential to productivity of Japanese firms. in most companies, tacit knowledge is lost. if workers care about the company, they reinvest knowledge, making tacit knowledge explicit. job tenure encourages this, while flexible labor discourages it.

- workers develop “personal portfolios” – using tacit knowledge as a bargaining chip in negotiations with their companies and others.

- companies try to overcome this contradiction by differentiating between two kinds of labor force. double standard personnel policy – try to stabilize self-programmable labor, and maintain flexibility for unskilled labor.

- ironically, it is the unskilled workers who want stability, and the skilled ones who want the freedom that flexibility confers.

- HP model: “nice” company – good relationship with labor (i.e. dry cleaning, catering, childcare on site). this worked for everyone but the most valuable workers

- hence, most valuable workers were enticed to care about company via STOCK OPTIONS

- Castells: finnish gov’t brokered relationships between unions and companies to insure both flexibility and security – government paid for reskilling of fired workers. often, disguised form of unemployment. sometimes, however, reskilled labor returns to old company in new capacity. downside of finnish model is that finland is quite xenophobic, and allows very little immigration.

two models of flexibility:

1. silicon valley: get what you can while you can

2. northern euro model: job security doesn’t matter because the gov’s got your back.

 

Relation of rise of network society to transformation of gender in labor and society:

Crisis of patriarchy

beginning in 1960s, massive influx of women into paid labor force to near parity with men.

IV1: structural transformation of society, labor, etc. (structure)

IV2: social movements of 1960s (agency)

IV3: (interaction effect between IV 1 and 2)

DV: massive transformation of women’s consciousness

causes:

1. transformation to service economy (demand)
2. education of women (supply)
3. increasing need for second income in family (although partially caused by devaluation of male labor subsequent to introduction of women into the labor force)
4. social movements of the 1960s enabled social acceptance. women’s movement was a      reaction to patriarchalism within other social movements (i.e. civil rights)
5. women’s ability to control reproduction through birth control, abortion, etc.

benefits of female labor force:

1. skilled but flexible. (80% of American households still are predominantly cared for by women, not equally by men)
2. lower cost of labor (society regards females as less essential to family survival)
3. no unions (changing very recently – historically due to male domination of unions)
4. companies perceive women as being better suited to service jobs because of their putative social sensitivity (Daniel Bell: service economy relies on “game playing” rather than strict production)

effects:

1. entrance of women into paid labor force changed power dynamics in families by adding to their financial clout and bargaining power.
2. introduction of women into larger social networks and increasing freedom from the family (see Hochschild)

90% of labor force in modern 3^rd world electronics manufacturing plants are women. so, it’s not just the shift to a service economy that opened the doors, but also the shift in the type of manufacturing entailed in production economy. (see Janet Salaff’s book on HK women labor). part of this is that women’s health (i.e. eyesight, in microscopic labor) is less valued than men’s, so they are more highly prized for deleterious labor.

WOMEN AND THE INTERNET

initial gender divide evaporated rapidly after commercialization of the medium

- key issue here is age.

o older women < older men

o younger women > younger men

participation of women in producing internet tech

- systematic under-representation of women in high-tech skilled labor

- due, in part, to women’s lack of welcome in engineering schools

- also, some self-selection (maybe based on innate abilities, maybe on perceived self-efficacy, maybe family-based bias) on the part of women

- women are scarce among open-source community, hackers

internet and sex-discrimination

- women are more able to fight bias online than in person

- on the other hand, working online isolates women from each other (less important for men only from a gender politics standpoint…lack of organization hurts everyone from a general political standpoint)

internet has been essential to development of new women’s movement

- not traditional organizations (a la NOW)

- more fluid groups keyed to specific issues – ad hoc organization

internet has aided in deconstruction and disguising of gender identity

- very little supporting research for this theory so far

The Spatial Transformation Engendered by Emergence of the Networked Society

global village theory (world gets smaller thanks to cmc)

- undermined because internet has self-reflexive system whereby enfranchised groups don’t have to deal w/ disenfranchised. no longer a public sphere. [my point, elaborated by MC]

- (see Barry Wellman)

- also see Carolyn Hawthorne-White The Internet in Everyday Life

- also Steve Volberg edited book, Virtual Society?

- also Rice & Katz, The Social Consequences of Internet Use

- However, this research looks only at individual behavior, not at uses of Internet for social movements

- (not yet published dissertation at Berkley) Jeff Juris, The Political Culture of Networks in the Movement for Social Justice

- (not yet published book) Manuel Castells (ed) The Network Society: A Global Perspective

MYTH: death of cities (per futurologists a la Negroponte)

- in last 10 years, we have seen increasing urbanization – over ½ of all world’s population now in cities

- most rural residents currently in india and china (this is changing quickly)

- urban growth is currently 7% per year

- MC expects urbanization to continue but couldn’t defensive decentralization in the wake of 9/11, etc, change this trend? much as navy was decentralized after pearl harbor

- MC: yes, that’s true, if we are really facing a new set of rules manifested by 9/11. but right now, there are no clear indications that’s happening.

- maybe the definition of a city changes once the world is largely “urbanized” – that is, population density alone doesn’t define it

MYTH: disappearance of workplaces b/c of telecommuting

- hasn’t happened. more of a move toward multi-local labor among white collar skilled workers

MYTH: CMC would disintegrate city centers, aid sprawl of suburbs

- centralized cores of cities (downtowns) have become stronger, more intense, revitalized

- suburbanization seems limited to older areas and those in deep economic depression

- corporate businesses have re-concentrated and built up downtown areas

- immigration has added vitality to urban cores

- at the same time, suburban sprawl has increased

-  MC: yes, both things are happening. not only in US, but everywhere

WHAT IS ACTUALLY HAPPENING SPATIALLY?

formation of very large metro areas

(city = residential, region = economic)

- we are observing the merger of several metro areas into a bigger (but more diversified) unit

- thus, economically, it is a continuously metropolitan area (again, this begs the question of how you define a city…)

- LA, for instance, embraces LA, Ventura, SD, TJ… (this encompasses ~18M people) – however, the separate cities are still culturally distinct

- largest is being built around HK (~55M people)

- Tokyo is second largest (~40M)

- NYC is third largest

- these amalgamated depend heavily on transportation (i.e. high-speed train). under 500km, planes are not competitive.

- however, cities still retain distinctive local resource networks and cultures.

thus, the changes are more complex than “disappearance of cities”

- concentration of metro areas

- internally highly decentralized

- multi-nodal structure

- thus, you have simultaneous growth and sprawl.

- kind of like a pomegranate

idea: maps of interlocking metropoles are work- or capital-centric. what would the map look like if it was life- or domestic-centric? all of a sudden, sprawl would be focus, cities would look more like holes

mass transit doesn’t work for these new structures

- requires predictable migratory behavior

- doesn’t allow for flexible flows in new sprawl

- ideal solution = electric cars, or H-power vehicles + peds and bikes

- transportation systems now require multi-modality

megalopolises are not independent

- the rely on global network of resource exchange

- for every region, connectivity and HR are the two critical ingredients for livelihood

- transportation and telecom are both essentially computer networks now

thus, COMPUTER NETWORKS are the nervous system for this entire system of organization

there are important consequences of F2F interaction and the services that support it. this is why physical centralization is still important. impromptu meetings and relationships

- milieu of innovation

- milieu of decision making

- see Peter Hall, Cities and Civilization (1998)

- doesn’t internet open source movement belie this claim?

- MC: local milieus of innovation are necessary to get a movement going, but now, it seems, they can be expanded and maintained online. in other words, the pump must be primed with physical collocation.

- in business, resources are identical between rivals – real business edge comes from relationships

 

GEOGRAPHY OF THE INTERNET

see Matthew Zook, The Geography of the Internet Industry 2003

1. Technical Geography

- backbone of global internet is in US

- however, this is changing fast as new backbones are built (London, Tokyo, Seoul, Frankfurt, Paris)

- backbone is always located where most moneyed interests are located.

- thus, this reinforces the metropolitan dominance structure

2. Geography of Users

- also changing fast.

- 1999: 60% in North America

- 2003: 33% in North America

- China estimates 59M users (counting HK and Taiwan) < 10%

- Africa <1% (~4.5M, 1.5 in South Af)

- Latin Am: 30M <5%

- Middle East: 4M <1%

- Total Internet users: 650M

within countries, larges portion per capita is always in largest metro areas

(rural:urban = 1:2)

- exception: germany (many mid-sized cities)
munich = berlin = hamburg

- exceptions in US:
Austin and Seattle way ahead of Chicago or Dallas

3. Geography of  Producers

Hardware

- concentrated in a few, high-tech hubs

- Washington, D.C. = central in US

Software

- maps major metro (except Chicago, which sucks)

- same in Japan and Korea

- Europe: Paris greatest. Then London+, then Munich/Bavaria. Then Stockholm and Helsinki

Consolidation of Domain Ownership (thanks to Zook)

- US dominance is absolute

- top 5 cities (1% of world pop) account for 20% of internet domains

- top 50 cities (4% of world pop) = 48% of internet domains

- top 500 cities (12% of world pop) = 70% of internet domains

- concentration increased 1998-2001

- in France, Paris = 27%

- in England, London = 30%

- in Spain, Barcelona = 50%

- in US: NYC, then LA, then SF (also 3 largest in world)

- per capita, numbers are different (NYC = #14)

- per firm, SF has twice Chicago, Philly, Dallas, or Houston

- apparent factors: size, sophistication, and importance of technology industry in a given local.

- within-city consolidation – i.e. SF’s SOMA district, and NY’s Silicon Alley

Lesson: the milieus of innovation from electronics have emerged as milieus for internet hardware and software. capital consolidation is self-perpetuating.

“The Space of Flows” of information is not the only dominant space in society. Localities and neighborhoods are very powerful constructs. People’s meanings are also built on “Space of Places” confined to localities. Meaning of direct experience is local. Meaning in society at large is global. Flows shapes structure of society, Spaces shapes experience of people. Relationship of the two is the tension that forms society.

How does Internet change relationship between media and culture?

 

Transformation of mass media into multimedia – new technologies, plus liberalization and deregulation have created a system in which people have access to many different channels of information

- 3 tv networks went from 90+ share in 1960s to <50 share today

mass media: oligopoly broadcasting to same audience

- financed by commercial or political advertising

multimedia: diversity of channels, nichification of audience, consolidation of ownership

reasons that consolidation of ownership sucks

- limited decision making process leads to limited aesthetic and political range

- economies of scale reduce actual service to markets (i.e. clear channel fire story)

- pandering to identity politics notions of diversity limit our ability to achieve real diversity and cement the ad hoc cultural identities that should operate fluidly

 

internet has been discussed for over a decade based on notion of convergence. specifically, interactive tv and video on demand.

- this vision led to the mega-mergers of the media world.

starting in 1992, massive experiments with video on demand (i.e. FSN). people were not willing to pay for it. sports is the only thing that people are consistently willing to pay extra for access to. apparently demand for entertainment is already sated – however, people apparently have more appetite for personalized politics, education, news, etc. than they are currently being served.

convergence has failed so far (FSN, XBOX/WebTV, AOL/TW, etc).

“the convergence was in the pockets of Steve Case but not in the industry, not in the market” -MC

studies show internet is NOT primarily an entertainment tool (as I know from Jupiter…)

- personal communication

- professional communication

- public services

 

WHEN CONVERGENCE WORKS AND DOESN’T WORK

porn online

1. illegal porn (i.e. kiddie) – falls into same internet ghetto as nazi stuff or what have you. private space for expression of inner urges
2. legit porn – about 9 percent reported using it in the last week (concentration for men 20-30)
3. sex products
4. sex communication/meetings

tendency is people using porn while at work. this raises some interesting questions.

radio online

- both local and online only

newspapers

- work for free, but not for pay.

ebooks

- don’t work.

- however, publishing a chapter or two online has proved to be successful marketing

scholarly journals

- you can bet these will be online only pretty soon.

new forms of visual art

- including collaborative

- success defined aesthetically here, not necessarily commercially

- i.e. Bill Viola

keys to this pattern of internet failure/success:

- self directed

- reconfigurable

MC: Internet + multimedia = “Network Communication Space”

- a/k/a “hypertext”

- owes origins to vannevar bush, etc. – the medium of all media

- ted nelson (1985) – Xanadu. an interactive, electronic system that would unite all info for all time in one medium. MC: this could never work because the act of coding and digitizing is too much to encompass everything

- today 93% of communicable recorded linguistic information is digitized (Peter Lyman)

however, media are still diversified. multiplicity of language and media, each with their own peculiar rules and qualities.

internet allows to you to select what you will of all digitized media, and build your own text.

 

MC’s BIG HYPOTHESIS: there is no “THE hypertext,” there is only “MY hypertext and YOUR hypertext”

at the industry level, we are talking about mass customization.

at the social level, we are talking about the building of individual frames of interpretation

• this leads to the issue of protocols of communication for a fragmented text. we have common materials but not common language. this is the biggest issue in communication today, according to MC

this is exactly what I have been writing and thinking about. the community of remixes constitutes, in castellsian terms, a meta-hypertext in which people are sharing their individual reconfigurations with one another

 

fastest growing family structure: single fathers (3% of HH)

married family with biological kids = 7%

schools are the only spatial socialization left in society

koolhaas – postmodern architect. hypertextual approach.

Informational Politics

working definition of politics: representation and domination within the state

commonality of political trends can be directly related to transformation of society and to the enabling technologies that contributed to it

- worldwide crisis of political legitimacy

o lack of confidence on the part of citizens in their gov’ts, parties, representatives

o 2/3 of citizens in the world think that they are not governed by the will of the people (based on 65k interviews – UN millennial assembly poll, 2000 and 2002 – Annan emphasized it’s true for US and other major nations as well)

o 63.2% of Americans feel like the country is dominated by a handful of big interests

o 83.6% japan

o 64.1% germany

o 60-90% of almost every country

o low reputation of politicians worldwide – seen as corrupt and bureaucratic

o most trusted institution: armed forces (69%)

o least trusted: multinational corporations, parliament/congress

o since the surveys first fielded in late 80s, the trend has continued unabated

- impact of this fact in political behavior

o low voter turnout (declining in all democracies)

o people tend to vote against, not for.

o increasing protest votes for candidates w/ extreme political convictions, with the acknowledgment that they can’t win. this is defined by candidates with outrageous views [yes, yes, this is problematic].

o increasing power of third-party candidates

o the younger the vote, the greater the dissatisfaction with traditional parties (this can lead to reduced voting among the young – i.e. last French pres election, in which there was a 20% gap between young and old voting levels in first round)

o 1980-2005:

§ increasing 3^rd party candidate voting

§ when 3^rd parties have won, they actually change political system (Berlusconi in Italy, Conservative coalition in Japan, Greens in Germany)

§ once they come to prominence, they become absorbed, and their support declines

- parallel decline in civic participation

o e.g. Putnam (Bowling Alone)

o this doesn’t mean that grassroots mobilizations are declining. to the contrary, they’re on the rise. but this is different from civic participation.

o move towards autonomous creation of social/action networks

o this echoes split in formal politics between mainstream and fringe

three elements that have been proposed as complementary causes

1. crisis of efficiency of state in the age of globalization
        - the state doesn’t disappear, but it becomes constrained
        - states play role of globalizers themselves
        - by doing so, they become increasingly distanced from their own constituencies
2. technology of politics
3. practice of politics as personal attacks and scandal

Monroe Price, Media and Sovereignty

Joseph Nye, Governance in a Globalizing World

modern politics: media, personality and scandal:

- development of media politics as the key form of organizing political behavior and discourse

- politics becomes shaped through media

- in US and Western Euro, people receive over 80% of political information from mass media

- people trust television most as source of information. (compelling nature of the visual)

- if it’s not in the A/V media, it doesn’t exist in the public mind (less serious in EU than US, because they require equal access to TV for candidates).

- ultimately, decisions are made in the center of the political spectrum (swing vote)

o I don’t see much mechanical difference between the centrist swing vote and, say, someone choosing between Nader and Gore, or between McClintock and Schwarzenegger.

- major parties try to create an image at the center that the maximum number of voters can trust and believe in. character, personality become essential.

o I wonder whether the swing voter is a myth. yes, there are always people wavering between candidates in any given election, but I am not convinced they are always the same people. that is, I wonder whether you could point to an individual, and say “this person is a swing voter”

- the most efficient tactic, therefore is to destroy the opponent’s credibility, rather than to shore up your own.

- therefore, direct connection between media politics, personalization of politics, and politics of scandal.

- in the last 15 years, almost every major western nation has been rocked by major governmental scandals.

- every candidate prepares leak ammunition just in case.

- this has a cumulative effect of undermining everyone’s trust in everyone.

Finnish Model

common conception that advanced technological innovation is predicated on “silicon valley model”

- however, there are indications that countries and societies can reach high levels of tech development through other means

- this conception has biased the understanding of industrial societies throughout history

MC’s Q: what are the commonalities and idiosyncrasies of various advanced technological societies?

- in every society, there is one nucleus that is part of a global network society. truly technological elements tend to be identical across nations.

- some societies have achieved different levels of tech development and different roles in the global production economy

- some societies have reached the same destination through different routes

FINLAND

- in the last 5 years, consistently at the top of the UN technological index

o creation of tech

§ patents per capita

§ royalties per cap

o diffusion of recent innovations

§ internet, cell phone, etc

o diffusion of all innovations

§ telephones, electricity, etc

o human skills

§ mean schooling

§ ration of university students enrolled in sci/math/engineering

- also consistently topped economic competitiveness index (WEF)

- Finland also has had the most labor productivity in manufacturing (measured per hour)

- 3.5% annual productivity growth 1996-2001

- 25% productivity growth in telecom manufacturing
360% ratio of richest to poorest (compared to 900% in US)
Genie index measuring social inequality (0-1 range)

o US: 0.36 in 1950 >> 0.38 in 1999

o Finland: 0/27 in 1979 >> 0.20 in 1999

- 3.8% below poverty line

- 19% unemployment in 1991 >> 9% in 2001 (mostly 50+ workers)

- long-term coverage for unemployment (never going below basic living income)

- full coverage for university students (regardless of length of time)

- universal high-quality child care

Finland vs. US

- similar degree of technological achievement

- striking difference in social model, approach to social services

- c.f. The Information Society and the Welfare State (Castells and Himmanen)

- no unions in silicon valley, 90%+ in finland

SILICON VALLEY MODEL

- raw material: advanced IT knowledge concentration. both university and private industry.

- labor: talented scientists and engineers. universities had deliberate policies of producing more computer scientists (1960-70 – huge scale-up). also immigration both foreign and domestic was essential.

- capital: funding from military/defense sector. also, VC generated from inside the industry. (1/3 of all US VC is in Bay Area)

- these three elements came together as a result of institutional entrepreneurship. Stanford/Berkeley helped graduates get started in the biz. DARPA was also essential.

- thus, this was anything but pure grassroots entrepreneurship

- ethic that “it’s ok to fail”

- entrepreneurial culture of California. the state attracts that type of person.

- SOCIAL NETWORKS in industry are also essential

- c.f. Regional Advantage, Anna Lee Saxenian

- 40% of companies led by recent immigrants (mostly Chinese and Indian)

- however, education in California sucks, and 20% of SF Bay residents are functionally illiterate

individuals trying to start a new business:

- US: 8%

- Finland: 6%

- Europe: 3%

FINNISH MODEL

- welfare state provides high-quality, secure, stable labor force

- secure environment in which people can take risk

- increased productivity à revenue for the welfare state

o given high taxation ~50% (2/3 of citizens are happy with this)

o people are willing to pay high taxes if they continue to receive high quality public services

o strong national identity leads to desire to support the nation (under Swedish colonization, Finns were forbidden to read or write)

- flat society – homogeneous, horizontal, strong national identity

- Finland was historically poor – mostly living off of forestry, agri, fishing, etc.

o slowly, integrated hi-tech into these industries, then spread to other tangential sectors

- 1990s – starting developing telco/comm. industry. this is linked to history of Russian occupation. from the start, Finnish parliament decided they didn’t want Russia to have easy access to control telecom. So by 1910, there were 50 different telco operators and by 1930, there were 800. This competition led to innovation. And to a competitive market of technology suppliers, selling tech into Russia. Eventually concentrated to 25, with 3 leading. The state bailed out businesses that weren’t reaching profitability, insuring continued variety of providers.

- 1991: 10% flexible labor force. 1998: 30% flexible labor.

The Nokia Story

- Nokia is the name of a town and river in the middle of the Finnish forest. In 1865, 3 companies were created in this town, one of which created paper, the other created cable, the last forestry products. Eventually, they merged.

- These companies became part of a bank-led group, with traditional “A” shares and “B” shares – which provides diversified capital and centralized decision making.

- Nokia moved into creating color televisions at a time when Japan was flooding the market. This didn’t succeed all that well.

- The company was on the edge of implosion.

- THEN, 1991, Soviet Union collapses. Finnish GDP falls 20% from 1991-93.

- Nokia tried to sell off, but no one wanted it.

- Only one of the company’s 11 divisions was doing well (mobile comm. and networks), even though it was v. small (3% of company revenues). Head of this div was anointed CEO.

- Nokia sold off 9 divisions, eliminated class-divided shares, and went on the NYSE.

- In 1960s, Scandinavian countries started working on a Nordic mobile telephony standard. This was adopted by all of Europe in mid-1980s. (US still doesn’t have common standards)

- Today, Nokia has 35% of mobile phone market. Motorola 12%, Ericsson 10%.

- This was due to a combo of gov’t financing and entrepreneurial motivation. The requisite knowledge came from an extraordinarily developed university system. Tenfold increase in number of universities since 1960s. All the universities’ research centers are linked with private companies. Nokia has centers in all the major universities. As do the 3000 other high-tech companies in Finland.

- Nokia in 1993 transformed its company to a network organization. But unlike Cisco, which acquires its innovation, all R&D came from inside. (joint with universities all around the world).

- Nokia prioritized product innovation over process innovation. They decided that mobile phones should be a mass consumer product.

- Two public co’s were created:

o Tekkes to fund innovation. DEVELOPMENT

o Sitra – public VC firm. CAPITALIZATION