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Assigned Readings

Castells, M. (1989, first paperback edition 1991)). The informational city: information technology, economic restructuring, and the urban-regional process. Oxford, UK; Cambridge, Mass., USA, B. Blackwell: Chap. 1. (jump to notes below)

Friedmann, J. (2001). Intercity networks in a globalizing era. Global city-regions: trends, theory, policy. A. J. Scott. Cambridge, UK New York, Oxford University Press: 119-134. (jump to notes below)

Porter, M. E. (2001). Regions and the new economics of competition. Global city-regions: trends, theory, policy. A. J. Scott. Cambridge, UK New York, Oxford University Press: 139-156. (jump to notes below)

Topic introduction

Theories and concepts of development, modernization and progress are rooted in culture and history. Their meanings change over time. In this respect, theory is important. Joined with practice, theory can be a critical and progressive force. Theory can also be used to justify the status quo or a deepening of exploitation. World system theory aims at explaining today's global economic order including the "global assembly line" and the contemporary division of labor among cities. Economic geographers try to explain such processes as industrial location, technological change and innovation. Insight into such processes is crucial. The best work in economic geography excels at integrating economics with socio-cultural and organizational theory. Regional Ecology integrates the views of political economy with an analysis of ecological systems. The capital-mobility model has dominated thinking about urban and regional economic development. Development decisions are largely based on the functional logic of market rationality. In opposition to this, some argue that more emphasis needs to be placed on territorial or ecologically-based social rationality. So, while there may be widening concern about promoting so-called “sustainable” development, there is wide disagreement on how to get there. There are contradictory views about such fundamentals as capital mobility, trade, state intervention, and metrics for measuring wealth and quality of life.

Castells, M. (1989). The informational city: information technology, economic restructuring, and the urban-regional process. Oxford, UK; Cambridge, Mass., USA, B. Blackwell: Chap. 1. (the reference to this article shows 1989 and 1991, but they are from the same book. It was first published in 1989 followed by a paperback edition in 1991).

Castells notes that The MAIN PROCESS in the transition to a "post-industrial society" is NOT the shift from goods to services. Rather it is the emergence of information processing as the core, fundamental activity conditioning the effectiveness and productivity of all processes of production, distribution, consumption, and management (Castells, 1991:10).

FORDISM: the period 1945 to the early 1970s is labeled Fordism: a system of intensive accumulation based upon the kinds of mass production of standardized products epitomized by the Ford automobile company and the mode of social regulation based upon Keynesian principles of macroeconomic management by the state.

Keynesianism The body of economic thought and policy analysis developed by John Maynard Keynes and his followers. The principles of Keynesianism were laid forth in Keynes's The General Theory of Employment, Interest and Money (1936), a seminal work of economic theory that emphasized the interventionist role of the state in stimulating aggregate demand in order to reach a full-employment equilibrium. More generally, Keynes charged the state with responsibility for active management of economic growth—principally through attempts to moderate the swings of business cycles. These priorities reflected a critique of the market/price mechanism as an efficient means of allocating resources. In particular, Keynes argued, there was no automatic tendency toward full employment in a market economy. Unemployment could occur in equilibrium, and the government's job was to correct it.
Source: "Keynesianism" Dictionary of the Social Sciences. Craig Calhoun, ed. Oxford University Press 2002. Oxford Reference Online. Oxford University Press. CDL UC San Diego. 20 January 2004 <http://www.oxfordreference.com/views/ENTRY.html?subview=Main&entry=t104.e896>

One explanation for why such a global shift is taking place has to do with LONG WAVES:

Long Waves refers to notion that global economic growth occurs in series of long waves of more or less fifty-years’ duration. This notion is generally associated with the work of Russian economist N.S. Kondratiev. K-waves (We are now said to be in the fifth K-wave) lasts for about fifty years and appears to be divided into the four phases of prosperity, recession, depression, and recovery.

Source: The above graph is from Gary Shilling's 1998 work, Deflation
For a discussion of long waves, click here for an article by Donella Meadows

	For an historical view of longwaves, 1905-1980, click here
	For an historical view of longwaves, 1770-1990s, click here

The main thing to capture with respect to this kind of history concerns the tension between free-market verses central planning. Along these lines, two dramatic intellectuals that stand out above all others are Karl Marx and the English economist J.M. Keynes.

"The Social Sciences: History of the social sciences: THE 20TH CENTURY: Marxist influences." <http://www.eb.com:180/cgi-bin/g?DocF=macro/5005/82/16.html> [Accessed 24 January 1999]. Britanica Online

What Marx's ideas have suggested above all else in a positive way is the possibility of a society directed not by blind forces of competition and struggle among economic elements but instead by directed planning. This hope, this image, has proved a dominant one in the 20th century even where the influence of Marx and of Socialism has been at best small and indirect. It is this profound interest in central planning and governance that has given almost historic significance to the ideas of the English economist J.M. Keynes. What is called Keynesianism has as its intellectual base a very complex modification of the classical doctrines of economics--one set forth in Keynes's famous The General Theory of Employment, Interest and Money, published in 1935-36. Of greater influence today, however, than the strictly theoretical content of this general theory is the political impact that Keynesian ideas have had on Western democracies. For out of these ideas came the clear policy of governments dealing directly with the business cycle, of pumping money and credit into an economic system when the cycle threatens to turn downward, and of then lessening this infusion when the cycle moves upward. Above all other names in the West, that of Keynes has become identified with such policy in the democracies and with the general movement of central governments toward ever more active and constant regulation of processes once thought best left to what the classical economists thought of as natural laws. True, the root ideas of the classical economists are found in modified form even today in the works of such economists as the American Milton Friedman. But it would not be unfair to say that Keynes's name has become associated with democratic economic planning and direction in much the way that Marx's name is associated with Communist economic policies.

Castells' article is a difficult, densely packed, but important article that deserves careful study and digestion. Castells introduces a set of definitions and conceptual tools that will serve us well. The following notes are quoted and paraphrased from pp. 7-32. Key terms: production, reproduction, surplus, technology, MOD, MOP

a. Production:

The action of humankind on matter (low entropy matter-energy) to appropriate and transform for its benefit by obtaining a product, consuming part of it (in an unevenly distributed manner), and accumulating the surplus for investment in accordance with socially determined goals.

Humankind: labor and the organizers of production

Labor: internally differentiated and stratified according the role of the producers in the production process.

Matter: nature, human-modified nature, and human-produced matter.

Technology: The type of relationship established between labor and matter in the production process through the intermediation of a given set of means of production enacted by energy and knowledge.

Surplus: The share of the product that exceeds the historically determined needs for the reproduction of the elements of the production process

.

Social structures interact with production processes by determining the rules for the appropriation and distribution of surplus. These rules constitute modes of production.

Mode of Production: A mode of production is characterized by the structural principle by which surplus is appropriated, thus designating the structural beneficiary of such appropriation, namely the dominant class.

b. The capitalist and statist modes of production

The capitalist mode of production is characterized by:

1. separation between producers and their MOP (means of production)

2. the commodification of labor

3. private ownership of the MOP on the basis of control of commodified surplus (capital--e.g., machinery, buildings, tools, computers)

These three features determine the basic principle of appropriation and distribution of surplus by the capitalist class.

Capitalism is oriented toward profit-maximizing, that is, toward increasing the amount and proportion of surplus appropriated on the basis of control over the MOP.

Under the statist mode of production (in the centrally planned economies of communist countries) the control of surplus is external to the economic sphere: it lies in the hands of the power-holders in the state, that is, in the apparatus benefiting from the institutional monopoly of violence. The allocation and distribution of goods and services is determined by central planning (as opposed to the market as in capitalism).

NOTE: In a more recent article, Castells (1992:73) argues that we have recently witnessed the end of communism. He says that some communist governments and some communist parties may remain in existence for a short time, but communism as a system has ended. The end of communism has brought with it "the historical failure of statism and of centrally planned economies, along with the recognition of the market as the least irrational mechanism to allocate scarce resources.

The end of communism, the demise of central planning, and the so-called triumph of the market economy on the world stage has implications for planning in capitalist societies. "These developments undermine the ideological foundation of planning as superseding market and individual dynamics. They also, indirectly, challenge the legitimacy of government intervention through public sector/public service social reform policies, and ultimately call into question, at the ideological level, all forms of regulation, including environmental regulation" (Castells, 1992:76).

c. Capitalism and commodity production

A COMMODITY is the form products (e.g., washing machines, clothes, fast food) take when production is organized through exchange in a market system. The commodity has two powers: first, it can satisfy some human want, that is, it has USE VALUE; second it has the power to command other commodities in exchange, a power of exchangeability referred to as EXCHANGE VALUE.

Survival in a capitalist economy demands a constant renewal of investment aimed at reaching larger and larger markets. This involves market rationality.

d. Market rationality vs social rationality.

Logic tied to the economic pursuit of the highest possible profit. Emphasis is placed on the realization of exchange value.

Logic that takes into account community and solidarity relations (and biophysical reality) in a way that prioritizes use value (and sustainability) as opposed to the realization of exchange value.

As an outcome of competition among commodity producers for markets, the profits earned in commodity production are persistently ploughed back (i.e. accumulated) into expanding the bases of production. In other words, if you snooze you loose. Competition involves winning and losing. As Daly and Cobb (1989) tell us: "Last years winners find it easier to become this years winners. Winners tend to grow and losers disappear. Over time many firms become few firms, competition is eroded, and monopoly power increases" (p. 49). Daly and Cobb go on to explain that to the extent that competition is self-eliminating we must constantly reestablish it by trustbusting--"practically a forgotten word in the current age of mergers, takeovers, and misguided efforts to reestablish international competitiveness by allowing gargantuan expansion in the vain hope that economies of scale have not yet given way to diseconomies of scale" (ibid.).

The Capitalist Mode of Production, like any other, comes into existence "as the result of historical processes in which a rising social class becomes dominant by politically, and often militarily, defeating its historical adversaries, building social alliances and obtaining support to construct its hegemony" (Castells, 1989:9). Hegemony is the "historical ability of a given class to legitimate its claim to establish political institutions and cultural values able to mobilize the majority of the society, while fulfilling its specific interests as the new dominant class" (ibid.).

The social relations of production (the dominant beliefs, attitudes, and expectations that legitimate and reproduce the "rules of the game") and the mode of production determine the appropriation and distribution of the surplus.

e. Determination of the level of surplus

THE LEVEL OF SURPLUS is determined by the productivity of a particular process of production at a given time. That is, it is determined by "the ratio of the value of each unit of output to the value of each unit of input. Productivity levels are themselves dependent on the relationship between labor and matter as a function of the use of means of production by the application of energy and knowledge. This process is defined by technical relationships of production, defining a MODE OF DEVELOPMENT" (Castells, 1989:10).

f. Modes of development:

The technological arrangements through which labor acts upon matter to generate the product, ultimately determining the level of surplus. (Agrarian, Industrial, and informational). Each MOD is defined by the element that is fundamental in determining the productivity of the production process.

Each MOD has a structurally determined goal, or performance principle, around which technological processes are organized:

Industrialism: oriented toward economic growth, that is, toward maximizing output

Informationalism: oriented toward technological development, that is toward the accumulation of knowledge. While higher levels of knowledge will result in higher levels of output, it is the pursuit and accumulation of knowledge itself that determines the technological function under informationalism.

Modes of Production (including capitalism) evolve with the process of historical change. In some instances, this leads to their abrupt supersession; more often, they transform themselves by responding to social conflicts, economic crises, and political challenges, through a reorganization that includes, as a fundamental element, the utilization of new technical relationships that may encompass the introduction of a new MOD.

i. Pre-Industrial (Agrarian MOD)

Extractive: economy based on agriculture, mining, fishing, timber. Increases in surplus result from quantitative increases in labor and means of production, including land.

ii. Industrial- (Industrial MOD)

Fabricating: using energy and machine technology for the manufacture of goods. Source of increasing surplus lies in the introduction of new energy sources and in the quality of the use of such energy.

iii. Post-Industrial- (Informational MOD)

One of processing in which telecommunications and computers are strategic for the exchange of information and technology. Source of increasing productivity lies in the quality of knowledge.

The MAIN PROCESS in the transition to a "post-industrial society" is NOT the shift from goods to services. Rather it is the emergence of information processing as the core, fundamental activity conditioning the effectiveness and productivity of all processes of production, distribution, consumption, and management (Castells, 1991:10).

The new centrality of information processing results from a series of developments in the spheres of: (1) production, (2) consumption, and (3) of state intervention.

1. production: emergence of large corporations, the shift from capital-labor as key to knowledge (science, technology, management) as key to increase surplus

2. consumption: constitution of mass markets, info gathering/info distribution. The rise of the welfare state the and millions of jobs in information handling

3. State intervention: depends on steering by manipulating info networks, increasingly complex administration

g. History and long waves of capitalism i-iv

I. The Great Depression of the 1930s and the decline of the laissez-faire model of the pre-Depression era

II. Post-WWII Restructuring, emergence of a new model (Keynesianism), based 3 structural modifications:

1. social pact between big capital and big labor (limited capital-labor accord)
2. regulation and intervention by the state (limited capital-citizen accord)
3. emergence of new global institutions to control the international economic order (IMF).

These changes ushered in the golden age of western capitalism, a quarter century of unprecedented economic growth

III. Crisis of the system in the 1970s. Mechanisms established in the 1930s and 1940s created contradictions that thwarted growth in the capitalist economy:

*labor steadily increased its share of the product
*social movements imposed constraints
*fiscal crisis strapped the state
*international competition intensified
*oil shock

IV. Current period: Capitalist Restructuring in the 1990s and the creation of a new model of socio-economic organization based on three fundamental processes:

New information technologies have been decisive in the implementation of these three fundamental processes of capitalist restructuring.

click image for larger version of the diagram

h. Definitions of the NIDOL

NIDOL: The global division of labor under capitalism wherein the production of certain goods and services are concentrated in some places and not others. The New in the NewIDOL involves an historic shift of manufacturing (destined for consumption in the First World) from First to Third World cities.

Marx on the old IDOL

Marx first described the (old) IDOL as follows:

"a division of labor suited to the requirements of the chief centers of industry, converting one part of the globe into a chief agricultural field of production for supplying the other part which remains chiefly an industrial field."

The new in the NewIDOL

Capital concentration in the form of 500-1000 MNC has created an integrated, worldwide network of production, exchange, finance, and corporate services arranged in a complex hierarchical system of cities (at the top of which are the World Cities--source: Logan and Swanstrom 1990: 8-9)

Also: In the last two decades, the world capitalist system has switched substantially, and for the first time in its history, to overseas volume of production of manufactured products in Third World cities for re-export to the home markets in home cities.

An approach to development in which economic growth is promoted by expanding a nations export industries (strategies include support for export processing zones) .

Logan and Swanstrom(1990:11) point out the current period of RESTRUCTURING (which began in the 1970s) is fundamentally one of profitability (level of surplus) due to heightened international competition placing new pressures on the organization of production. This has led to the shift from Fordism to Global Fordism.

RESTRUCTURING: Castells definition: "The process by which Modes of Production transform their organizational means to achieve their unchanged structural principles of performance. Restructuring processes can be social and technological, as well as cultural and political, but they are all geared toward the fulfillment of the principles embodied in the basic structure of the mode of production. In the case of capitalism, private capital's drive to maximize profit is the engine of growth, investment and consumption" (1991: 11).

Friedmann, J. (2001). Intercity networks in a globalizing era. Global city-regions: trends, theory, policy. A. J. Scott. Cambridge, UK New York, Oxford University Press: 119-134.

In this chapter (delivered at a major "Global City-Regions" conference in Los Angeles, CA), Friedmann highlights a set of "new relationships that are beginning to emerge, and that are centered on large city-regions." (p. 120). He outlines them in the form of six interrelated propositions, noting that "some of them are already fairly well understood while others are still the object of ongoing debates." (p. 120).  The six are these:

1. a limited number of city-regions are the major nodes and focal points of a globalizing economy;
2. finding an appropriate form of governance continues to be a critical concern for these regions;
3. in today's world, city-regions are increasingly responsible for managing their own development;
4. the sustainable development of city-regions requires giving greater attention to the creation and conservation of regional wealth in its multiple forms;
5. city-regions have much to gain (and nothing to lose) by associating with other regions in networks, especially, if not exclusively, across national borders, in the continuing quest for sustainable development;
6. city-regions situated in geographical proximity to each other, but embedded in national economies of different levels of economic achievement and sharing cultural affinities, can collectively strengthen their competitive position by collaborating with each other in the creation of a sustainable common wealth.

Be able to provide a synopsis in a paragraph or two that captures Friedmann's main point in each of his six propositions.

Porter, M. E. (2001). Regions and the new economics of competition. Global city-regions: trends, theory, policy. A. J. Scott. Cambridge, UK New York, Oxford University Press: 139-156.

Porter argues that there is a "new economics of competition." He explains this newness as resulting from "six transitions that are increasingly driving prosperity." The six transitions are labeled:

1. from marcroeconomics to microeconomics
2. from current productivity to innovation
3. from economywide to clusters
4. from internal to external sources of company success
5. from separating to integrating economic and social policy
6. from nationa/cross-national to regional and local

Be able to provide a synopsis in a paragraph or two that captures Porter's main point in each of his six so-called transitions .