Hi folks,
I recently finished my Ph.D. and am starting to work on getting it published. I've put the dissertation version on the Web and I was hoping some of those brilliant minds out there could look it over and give me feedback and editing ideas. The URL is:
http://socrates.berkeley.edu/~newman/
The dissertation is aimed at putting all the hype over the Internet is a more solid economic and historical context, especially concentrating on what it means for thinking about government intervention, regional political economy and community power. Here is the abstract for the dissertation:
This dissertation is a case study in the interactions of government, technology and the changing role of regions in our economy using the emergence of the Internet in Silicon Valley as the focus. It examines how technology shapes new industries, how federal investments fuel the growth of new population sectors and new innovations, how new business relationships grow around regional industrial sectors, and how global markets themselves depend on core regions that produce the innovation fueling those global economies.
The dissertation highlights how government action was crucial for the creation of both the Internet and the collaborative business practices and open computer standards that are at the heart of the Silicon Valley model. It shows how the nature of regional economies are changing as local elite business collaboration around industries like the Internet are replacing the broader public investments that fueled regional growth in the past.
Accompanying this change is a radical restructuring of previously regionally-focused industries, such as banking, electric utilities and telephone companies, where changes in federal regulation are undermining regional planning and the power of local community actors. The rise of global Internet commerce itself is undermining the tax base of local governments, even as governments increasingly use networked technology to market themselves and their citizens to global business – usually at the expense of all but their most elite residents.
The dissertation focuses on the key interaction between political choice and the direction of technology and its social outcomes. At the core of any changes in technology are changes in power relations and the Internet itself embodies changing social forces that are themselves reshaping which political and economic actors will hold power in the new era. In this way, the Internet is less the cables and wires tying homes and offices together than a system of contested rules for information exchange that are constraining the shape of power in the new information age. At the heart of this dissertation is how the battle over those contested rules are reshaping regional economies and politics in the modern era. -----
And for a taste of the argument, here is the opening pages of the introduction:
Chapter 1: Introduction
"The post-information age will remove the limitations of geography. Digital living will include less and less dependence upon being in a specific place at a specific time, and the transmission of place itself will start to become possible." --Nicholas Negroponte, director of MIT's Media Lab in his book Being Digital[1]
"National economies are swiftly breaking down into regional and sectoral parts--subnational economies with distinctive and differing problems of their own." --Futurist Alvin Toffler on regional economies in The Third Wave[2]
The new "information economy" seems to evoke a contradictory debate on regions and decentralization. On one hand, we have technologists like Nicholas Negropante seeing local regions disappearing as important entities in the face of the "spaceless" technology of information exchange.
On the other hand, futurists like Alvin Toffler and his political disciples like Newt Gingrich have argued that the microchip is the midwife of regional rebirth and the deathnell for central political decision-making.
How do we explain this contradiction?
The Internet has emerged as the focus for much of the strongest hype and substance in debates on this 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.
Now, there are truths in each of these ideas, but the truths obscure the underlying reality of transformation rather than decline in both the vibrancy of local economic activity and the importance of government action. 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 Webtool makers like Netscape to the multimedia upstarts of San Francisco's "multimedia gulch", companies in Northern California seem to be refusing to let geography die its proper death.
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.
As economic theorists dating back to Alfred Marshall have noted, regional "industrial districts" have always been a breeding ground for specialized innovation where day-to-day interaction support the trust and human interaction needed for such co-dependent innovation. If anything, the intense technological specifications needed in high technology and the rapid technological change we live under just accentuate the need for ongoing local interaction and Silicon Valley has just emerged as the premier space for innovation in networking technology.
In its origins, Silicon Valley itself is largely the creature of federal spending and effort; its pioneering firms like Hewlett-Packard and Varian grew based on defense contracts during World War II and its aftermath which pumped billions of dollars into the Bay Area economy, just as federal research dollars poured into the region via universities like the University of California at Berkeley and Stanford along with government laboratories like NASA's Ames Research Center. The Internet itself was a project directed for a quarter of a century by federal government agencies in association largely with regionally-based university computer departments.
Yet despite what might be seen as the continuity from the past in the roleof both regions and government in advancing technology and its associated economic benefits, there is a justified sense that something has radically changed in the economy. While Silicon Valley designers may cluster together at Palo Alto bars, the computer components powering their tools have scattered to factories throughout the country and the third world. Industry itself is using the new technology to extend itself globally as production becomes a global process. Business to business interactions are in turn reshaped as the cost of communication at large distances drops to virtually zero. The Internet promises a global marketing venue reaching consumers around the world. For industries like software companies or banks where the transfer of ideas and commitments (rather than physical goods) are the key, the Internet promises an even more radical reshaping of where and how they distribute core services.
Community in regions increasingly takes the form of regional business associations emerging like kudzu across the economic landscape. It is through these business-based associations, tied to local, state and federal government, that the innovations of specific regions are harvested to leverage corporate profits and global economic changes such as the Internet. This horizontal approach of business-to-business community alliances has largely supplanted the vestiges of the vertical cross-class collaborations that had once somewhat tied the economic fates of rich and poor together within regions. It is these local horizontal business linkages, supported by the federal government, that were key to the emergence of the mutually reinforcing technologies and institutional changes that sped the dominance of the Internet in economic life.
Inequality within economic regions has increased, just as inequality has increased across the country and the globe. What is disappearing is not the importance of geography but the singularity of a "region", of the shared economic fate of those sharing the same physical space. Instead, information technology is being used to link the professional elites of regions within a space of shared innovation in order to market that space to a global marketplace, even as the less skilled workers of regions find themselves locked in geography that whipsaws wages downwards through that same global competition.
The institutions that once linked investments and broad-based economic development within regions - local banks, power utilities and the local telephone company - are being rapidly supplanted by global competitors competing and fracturing local markets in favor of global niches serving different economic strata within regions. This in turn has undermined the shared regional economic development strategies tied to such institutions that had once linked labor unions, community groups and elite businesses in some degree of cross-class collaboration around regional goals.
In this transformation, government is not merely the victim of a deterministic technological trend but has been the trend's enabler through specific political decisions made. Beyond the creation of the Internet, the federal government promoted a program largely mislabeled "deregulation" that deliberately fractured regional banking, utility and telephone institutions in favor of national and global competitors. But government did not disappear in this change of policy: in fact, federal regulation of telecommunications activity crucial to the new information age has accelerated as a whole range of subsidies, interconnection rules, and anti-trust interventions has radically reshaped the economic map at the behest of government regulators and judges.
What has changed within regions is the relative power of global corporations in dictating local government policy and wage levels of lower-skilled workers within specific regions. The economic action of technology innovation may happen overwhelmingly within local venues, but corporations have the ability due to the new technology to quickly pick and choose new venues outside the control of local government and grassroots actors who desperately try to negotiate with these global partners. The lack of the traditional regional economic anchors like community banks and local utilities who once mediated some degree of regional growth alliance has left local actors with few allies for broader economic development.
With this, we see the present reality of local governments teetering on the edge of insolvency and austerity while abandoning any serious thrust for equality. Instead, we end up with a form of local government that increasingly markets services to global corporations over the needs of local lower-income citizens while using tax breaks to lure and keep business in their regions. The Internet and related information technologies promote an increasingly national and global retail market, thereby further undercutting local government revenues dependent on sales taxes on locally purchased goods.
For local government, the promise of the new technology to enhance democracy gives way increasingly to a blurring of the lines between government functions and business interests as "public-private partnerships" and privatization undermine local political control. Desperate for revenue, local governments have increasingly begun marketing information about their own citizens to corporations, even as those same global corporations use the Internet to rapidly survey and play off local governments against each other in bidding for corporate location decisions. The fragmentation of utilities leads to increasing inequality in telecommunications between richer and poorer towns and between schools serving richer and poorer students.
There is a sad irony (and a political agenda) in calls for returning budgetary decision-making powers to local governments prostrate before the power of global corporations to dictate local policy. That this "decentralization" agenda is occurring even as federal regulators increasingly displace local government control over banks, utilities and telecommunications just emphasizes that the ambiguity over the globalizing and decentralizing effects of the new information economy are not merely technological contradictions but political and ideological contradictions that are shaping the economic landscape.
The Focus of this Dissertation
This dissertation is intended to be a case study in the interactions of government, technology and the changing role of regions in our economy using the emergence of the Internet in Silicon Valley as the focus. At one level, the modest goal is to tell that history in the context of the issues raised in the previous section and throw new light on the dynamics of a region and technology too often discussed in purely economistic or technological terms.
The more ambitious goal is to use that case study to build the broader case for how technology, government and regions are interacting with each other in this new economic era. Obviously, Silicon Valley as an early consumer as well as producer of networking technology is a key region in understanding these dynamics, even as its uniqueness make it a problematic region for complete generalization to other areas. The Internet as well is a radically unique innovation whose lessons will only be partly applicable to lesser breakthroughs. Still, Silicon Valley's very precociousness as a high-tech region makes its evolution a credible model for insights into the fate of other regions where technological innovation is increasingly supplanting raw commodity production. As well, the dynamics of economic inequality and the corporate undercutting of integrated regional economic development that this dissertation will explore is inevitably even more pronounced in regions that are at the periphery, and therefore at the mercy, of global production.
The study of the interaction of information technology like the Internet and the particular area of Silicon Valley highlights the highly mediated nature of regions, by the technology that shapes new industries, by the federal investments that fuel the growth of new population sectors and new innovations, by the shaping of new business relationships that grow around such new industries and by how global markets themselves interact heavily with core regions that produce the innovation fueling those global markets. The particularity of the story of the evolution of the Internet and its interaction with the Silicon Valley region, like the unique story of all technologies and regions, helps to undermine the simplistic models of universal economic development, models that favor abstract "market rules" while ignoring the specific history of government and social interaction that lie at the creation of each new market.
As well, the emphasis on the federal government's role in the evolution of both Silicon Valley and the Internet inevitably raises more universal issues of how and why the federal government acts in technology and economic development areas. In detailing specific issues of controversy, the experience of other regions will be used to highlight similarities and contrasts to throw greater light on these universal dynamics. While no region will be treated with the same integrated and comprehensive view with which Northern California will be treated, these comparisons will help to enrich the overall case study of the region.
Since this dissertation will highlight some of the bleaker implications of technology, it is worth emphasizing that my view is not anti-technology in any sense. In fact, one of the main purposes of this story is to refute the technological determinism of both the optimists of the Right and the technological pessimists of the Left in favor of an analysis that sees the key interaction between political choices and the direction of technology with its specific social outcomes. It is through the application of technology and the social structure created to absorb that technology that the positives and negatives of technology manifest themselves.
In his The Visible Hand, Alfred Chandler wrote of the wholesale transformation of capitalism as a system between the 19th and 20th centuries due to the combined effects of communication and transportation technology along with radical changes in managerial systems. With the Internet and related information technologies, relations of production are being reshaped as deeply in the transition from the 20th to the 21th century.
At the heart of any changes in production are changes in power relations and the Internet itself embodies changing social forces that are themselves reshaping which political and economic actors will hold power in the new era. Karl Polanyi emphasized the way historically that the underlying government-created infrastructure of rules of exchange under capitalism shaped all actors in the economy; those rules set the environment for how economic conflict and technology played out in the rise of industrialization. In the same way, the Internet is less the cables and wires tying homes and offices together than a system of contested rules for information exchange that are constraining the shape of power in the new information age. At the heart of this dissertation is how the battle over those contested rules are reshaping regional economies and politics in the modern era.