Network economy, flexible employment & social networks of affinity

Social implications of information & communication technologies, Manuel Castells, 1999

Since I still haven't read Manuel Castells' trilogy "The Information Age: Economy, Society, and Culture," I thought this report, which he prepared for the OECD might be a good introduction to his work.

His analysis is interesting and maintains a balance between internet utopia and dystopia. My main complaint is that Castells points out the changing nature of work and the effects of ICTs on social networks, yet fails to link the two.

Social networks are part of the foundation of successful industrial clusters, especially of innovation-intensive clusters. All the way back to Granovetter's "The strength of weak ties" sociologists have been pointing out the importance of social networks for job hunting. They must be all the more important for "flexible work." The connection between changes in work and in social networks runs even deeper - as Richard Sennett describes in his particularly bleak "Corrosion of Character". At the heart of Sennett's argument is the blurring of boundaries between work and social life - a trend often ascribed to the globalizing economy. Castells lays out the groundwork for this topic, but unfortunately skips the analysis.

Castell's focus is on ICTs' effects in changing social networks and on their impact on work and employment. He rightly points out that

technology per se does not determine social processes, and institutions. Technology is a mediating factor in a complex matrix of interaction between social structures, social actors, and their socially constructed tools, including technology. But because information and communication are at the core of human action, the transformation of the technological instruments of knowledge generation, information processing, and communication, has far reaching implications.

This makes any direct analysis of ICTs' effects almost impossible. While they have little direct impact, ICTs enable far-reaching changes in the flow of information, ideas, people, money, and goods and services. Each of these flows is subject to many other influences and has its own dynamic. And these dynamics, in turn, influence the direction of technological development. In such an environment, simple cause-effect statements are not only impossible to make, they are also pointless.

Economy and work
"Flexibility" is the key word in Castells' analysis of the economy in the information age. This flexibility is achieved through decentralization within firms and the creation of flexible and shifting networks between them.

To be sure, large business conglomerates, particularly multinational corporations, dominate the global economy, but they are internally decentralized as networks, and they connect to a complex set of equally networked, small and medium businesses. Furthermore, large corporations and their ancillary networks build ad hoc strategic alliances, thus forming networks of networks, in an economy characterized by variable geometry.

A global economy as a planetary unit can only exist because of the worldwide infrastructure in telecommunications, information systems, air transportation, and fast transportation/delivery systems.

(Of course, the internet is not the only thing linking thes intra-nets and extra-nets. As Castells well knows.)

The need for flexibility has important implications for the world of work. As Castells points out, technology does not destroy jobs. In fact, it helps economies create employment. However, there are significant differences to traditional long-term, stable, contracted, single-firm employment.

The network economy induces a great diversity of employment status: part-time, temporary work, self-employment, subocontracting. These flexible forms of work and employment represent already the majority of the labor force in the UK, the Netherlands, and Italy, and are progressing rapidly in the rest of the industrialized world.

In Silicon Valley, at least 50% of all new jobs created in the last 10 years, are in this category of flexible employment (Benner, 1999). These trends are taking place across the whole spectrum of occupational structure, among business consultants, and engineers, as well as among low-skill service workers. This flexibility is also the characteristic of most jobs of the urban informal economy in developing countries, the main source of job creation in the largest metropolitan areas in the world (Borja and Castells, 1997).

Much innovation research points out the importance of entrepreneurship and of knowledge spill-overs created through labor flows. New technology enables and encourages more flexible forms of employment. At the same time, these new forms seem to be accelerating technological innovation.

Social networks
Castells explains that even as social networks expand through the internet, they remain rooted in existing social practices and affinities.

The pervasiveness of Internet does not imply the emergence of a virtual society that would substitute for the "real society".

Computer-mediated social networks are largely connected to people's social practices, and existing networks. This finding largely echoes the classic study by Claude Fischer (1992) on the role of the telephone in the early 20th century, expanding socially rooted social networks, rather than displacing them. [...] Networks develop for specific purposes, and even chat groups are constructed around affinities, and shared values and interests.

In his analysis of urbanization, Castells notes a paradox that globalization researchers face time and again: Human activity is becoming more globalized and more localized at the same time. I am particularly interested in this paradox as it concerns production and innovation. Castells describes it on a broader scale:

Thus, there is at the same time, spatial concentration and decentralization of activities and human settlements. Yet,. the functional connections do not follow the pattern of spatial proximity, but the logic of the dominant interests circulating in these networks. Thus "the global city" is not one, or several, major cities in the world, but a composite space made of bits and pieces of New York, London, Tokyo, Paris, Frankfurt, but also of Buenos Aires, Mexico, Sao Paulo, Hong Kong, Singapore, and of locales harboring dominant economic/information activities in any major urban center anywhere in the world.

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