Message-ID: <19991214205427.AAA8695@jubilee.ns.sympatico.ca@LOCALNAME> Date: Tue, 14 Dec 1999 16:50:02 -04 From: Kerry Miller <mailto:kerryo@ns.sympatico.ca> Subject: Newman: Govt, Tech and the Politcal Economics of Community To: mailto:DEVEL-L@LISTSERV.AMERICAN.EDU
http://socrates.berkeley.edu/~newman/
NET LOSS: GOVERNMENT, TECHNOLOGY AND THE POLITICAL
ECONOMY OF COMMUNITY IN THE AGE OF THE INTERNET
By Nathan Newman, Ph.D.UC-Berkeley
<mailto:nathan.newman@yale.edu>
Where does technology like the Internet come from? Why is it so
identified with specific regions like Silicon Valley? Why does new
technology seem so associated in the public mind with both personal
empowerment for some people and economic insecurity and growing
powerlessness for others? And what is the best government policy for
promoting technology and equal access in the new economy?
What confuses all these questions is the dynamic interaction
between government, technology and the regions that are shaped
and in turn reshape both technology and economic policy alliances.
And nowhere has this dynamic been more confusing than in the case
of the Internet, a technology directly planned and funded for decades
by national government in Washington, DC, yet associated most in
the public mind with garage startups in Silicon Valley. Even as
technology companies have digested billions of dollars in technology
subsidies from the government, we hear new words like
"cyberlibertarianism" coined by Internet enthusiasts.
This book, NET LOSS: GOVERNMENT, TECHNOLOGY AND THE POLITICAL
ECONOMY OF COMMUNITY IN THE AGE OF INTERNET helps make sense of this
historical and ideological jumble. It highlights the process by which
government guided the creation of the Internet and the regions most
associated with the technology, even as the forces unleashed by the
Internet have in turn reshaped and constricted government technology
policy to the detriment of the broader public.
===============
OVERVIEW
The Internet has emerged as the focus for much of the strongest
hype and substance in debates on the new economy. It has become
the defining economic event of the end of the 20th century - a fact
reflected by the obsessive media attention and to the raw economic
explosion of companies associated with it.
The Internet is seen as the metaphor, even the embodiment, of
the new information age, of a post-industrial economy, and of a new
paradigm in workplace and company organization. Information in this
view, rather than raw materials, have become the substance of commerce
and the Internet is the highway of the new era.
Most strikingly, the Internet is seen as the herald of the
globalization of the economy and the triumph of a deregulated
marketplace. In this vision, the economics of place have given way
to telecommuting, global production and just-in-time delivery of
goods and information from all points on the globe. In such a world,
economic regions become an oxymoron as the economy becomes a matter
of bits and e-mail in cyberspace, not transit and meetings in local
space. The "Third Wave" in this scenario leaves economic regions
as the archaic leftovers of the industrial age. Governments, those
stalwart institutions tied to such geography, become impotent and
unimportant in this new global information society. Yet on the face
of it, it's nonsensical to argue that new information technologies
like the Internet show the irrelevancy of national governments and
economies.
The Internet is one of the crowning achievements of central
government in the last few decades--planned over decades, funded
by a series of federal agencies, and overseen by a national network
of experts. And its success is not merely an exemplar of technical
achievement but is also an exemplar of the efficiency of government
planning over purely private economic development. In the absence
of the open standards of the Internet developed and promoted by the
federal government, almost all analysts admit that the private vision
of toll road information services promoted by industry would not have
created the surge of explosive economic innovation we are currently
seeing around the Internet. It is only with the success of the
Internet (and the profits to be made) that industry is now decrying
the interference of government in information access.
The most striking counter to the vision of global placelessness
is the very existence of Silicon Valley, the region most associated
with the rise of the Internet. If any region were to collapse on
the wave of cyber-communication, it would be Northern California's
"hotwired" Silicon Valley. Contrary to what some might expect,
Silicon Valley not only survives but is thriving, expanding and
even consolidating its role as the geographic focus of a supposedly
geography-free revolution. From network router companies like 3Com
to Web tool makers like Netscape to the multimedia upstarts of San
Francisco's "multimedia gulch", new companies in Northern California
seem to be refusing to let geography die its proper death.
The simplest connection between government policy and regional
strength in places like Silicon Valley is that the government itself
designed its technology policy to favor small regional companies,
which in turn favored the emergence of regions like Silicon Valley
where small firms without bottomless corporate resources could
complement each other with services and products.
The subtlety is in the range of policy tools used by the
government in promoting such small-firm innovation, including funding
university research that could easily spin-off new firms, requiring
second sources for defense contracts, promoting public technology
standards with which small firms could cheaply integrate new products,
and supporting aggressive public purchasing regimes to favor desired
technology. Silicon Valley firms that would be at the heart of its
commercialization, such as Sun, Cisco and Oracle had all gotten their
start based largely on selling to government agencies. Or, as in the
case of Netscape, such firms would raid the talent of the government
centers that built the Internet to commercialize government-created
software like the Mosaic web browser and servers.
In evaluating the role of regional economies, then, it is
critical to see them not as initiators but respondents to national
and global economic policies. All of these policies both encouraged
innovation and a technology regime favoring smaller firms in specific
geographic spaces. But at a deeper level, the vibrancy of the Silicon
Valley regional economy is not in defiance of globalizing trends
due to the Internet but that regional strength was in many ways the
precondition for the triumph of the Internet.
Fundamental technological change like the Internet requires
more than the introduction of new products; it requires fundamental
transformations in a whole array of mutually supporting institutions,
goods, services and standards that must all advance together. While
this can happen between people and companies in different places,
the organic trust and interaction of those living in the same region
has always been a key factor in such broad-based technological
advancement, whether in the car industry in Detroit or in the
financial districts of Wall Street.
But the end product of this kind of technology policy is not
just new technology but a reshaping of politics governing the economy,
first in shaping the local economic spaces directly targeted by
government policy, then, as technologies like the Internet take on
national significance, in reshaping national policies themselves.
Even as outside federal investment was the basis for regional
expansion, there have subsequently appeared internal economic dynamics
that are critical to how the economy functions in the context of the
new information-based technology, especially in its relationship to
regional politics and the more general global politics of control of
an industry.
The very "lock-in" of regional dominance raises the issue of
what regions do to either hold onto that dominance or what they fail
to do that may let such an advantage fade away. As critically, the
new dynamics of regional economics highlight who has power within
such regions and who loses out as regional economies change under
the impact of technology. As Internet commerce took off, its business
leaders increasingly fought any government policy seeking expanded
access for the broader public for fear that would undercut business
opportunities.
Even when sharing physical geography, companies have found
increasing need for new political and social relationships in the form
of business-to-business consortia in order to regularize technology
exchange and get political agreement on standards. This in turn has
reshaped local politics in places like Northern California in ways
that link elite professionals together in a new kind of suburban
"gated community" of innovation. Especially as the federal government
withdrew from coordination of Internet standards, innovation in places
like Silicon Valley was increasingly tied to global technological
needs. However, this elite version of cooperation leaves little need
for serious concessions to the needs of non-elite workers in a region.
Despite the ode to "small business" as the engine of jobs, such
globally-oriented startup companies are tied to global corporate
policies that end up promoting overall policies that increase
inequality within regions. As wages rose in the Silicon Valley areas,
housing and other costs rose even faster for the average workers, just
as poverty rose rather than fell with the overall prosperity of the
region. For most workers, the Silicon Valley boom has given little
sense of security but rather, with the rise of temporary agencies and
the rise of contingent employment for as much as 40% of workers, a
sense of the ephemerality of growth. Even as elite engineers invest
the dividends of IPOs for their long-term security, other workers
watch continual outsourcing of lower-end jobs erode any sense of
stability.
The Internet itself is much like the utility networks of the
past where great fortunes were made and political battles were fought
to assure the widest possible access. Integrated public utility
networks and cross-class growth coalitions had defined the social
space in which Progressive reformers in the early part of this century
had built modern local government in line with regional economic
management goals. However, as the Internet industry has built its
"gated community" and elite economic networks selectively connect rich
suburbs and professional urban enclaves across the globe with the most
advanced technology, poorer communities and urban sections have been
left with little more than virtual dirt roads.
We are seeing new ideologies of privatization and corporate
servicing by local governments that end up doing little or nothing
for the general population. Instead, cities and towns are pitted
against each other in an endless competition to spend what little
resources they have serving those with the most capital, while eroding
democracy to make government services one more set of amenities that
corporations choose from in conducting branch site selections.
At the most basic level, the invisible regional geography of
communication serves to polarize already existing economic and racial
divides as cities rush to support business with public networking
goods. Technology investments in schools end up overwhelmingly in the
hands of more privileged communities as business finds concentrated
support for schools in their suburban enclaves a more cost-efficient
approach than general revenues for all schools.
And just as networking has eroding firm barriers separating
firm from firm, the Internet is helping to blur the lines between
government and business. Global firms scoop government contract
bids off the Net as local services become merely part of the business
plan of multinational corporations. Conversely, government services
respond ever more precisely to the demands of those businesses
operating in the region, whether in expediting construction permits
electronically or the wholesale marketing of government data for the
benefit of firms doing business in the area. At best we see local
governments seeking to extract small economic concessions for the
wholesale benefits they deliver in their desperate recruitment of
business.
In outlining the emergence of the Internet, my book illustrates
the way government shapes new technologies and regions while in
turn being itself reshaped by the new economic forces unleashed.
This has meant the rise of cyberbusinesses pushing for government
to cede control its management in favor of private profits, often
at the expense of both the needs of the technology and of equity
in local and national economies. If there is a saving grace to this
grim trajectory, it is the hint of new organizing by community groups
in creating their own global alliances to begin to even up the global
power balance. It is this new system of local community organizing
combined with global networking that is defining the ongoing politics
of the new global economy.
[...]