Chapter+11

=The Information City, the New Economy, and the Network Society= By Manuel Castells


 * Purpose: to examine the interactions between the transformation of the economy and of the environment we live in.
 * The new economy: not just the internet economy, but and economy that works through and with the internet. Features of the new economy:
 * Based on productivity, knowledge, information, and innovation
 * Competitiveness is global
 * Performance is dependant on networking, which is made possible by technology
 * Technology is necessary for the change into the new economy, but is not the cause of this change

Capital in the New Economy

 * Firms are valued at what the global financial market states they are
 * Technologies can reduce transaction costs considerably by letting anyone invest by themselves (without an investor). This makes the markets a lot more complex.
 * The technology behind electronic stock exchanges can move money/capital from anywhere in the world to any other place instantly. Thus, stock information changes very quickly.
 * The value of stocks is determined by information on the product/company, not by the company’s profits

Labour in the New Economy

 * Flexibility is key
 * Talent, highly skilled labour is a key resource
 * Multiculturalism is important. Immigrants bring certain skills which have a big impact on productivity
 * Labour is highly divided/segmented
 * Self-programmable labour vs. Generic labour

Innovation – the Fuel of the New Economy

 * Innovation: “the ability to create new products and processes and to think about new relationships between the economy and society.”
 * The culture of innovation is a culture of sharing information, not of hiding innovation. You must share your innovation(s) and information in order to be successful; otherwise your innovation/information will quickly become obsolete.
 * Organizational learning (mainly through networking) is another important aspect. Organizations must be open to and learn from innovation and change.
 * Innovation is increasingly produced by territorial concentrations. For example, Silicon Valley is based on the networking between other companies and people operating there. To know what’s going on in Silicon Valley, you must be in Silicon Valley. This cannot be done over the internet.

Challenges for Cities

 * Individualization and fragmentation of society. Society is being transformed into networks of individuals, which excludes those who cannot afford to be part of the network.
 * There is an increasing divide between people with vastly different cultural and educational resources. Now that everyone has internet access, what to do with your cultural and educational resources becomes an issue. This creates a digital divide between people who know what to do with their resources and people who don’t.
 * Multiculturalism
 * Territorial divide between places in the world that are connected to global networks and places that are not

Conference summary: The examination of interactions between the transformation of the economy and of the spatial environments – increasingly cities – in which we live. Def. of the New Economy
 * 1) An economy where companies, firms, entrepreneurs, etc. around the world are working o the basis of Internet and in which their organizational and innovation logic is embedded in the Internet or related information technologies.
 * 2) An economy that worlds through, by and with the Internet and with those things that the Internet represents.
 * 3) This economy is **not** based on **technology**, but on **productivity**. It is based on productivity growth, but the productivity growth is built upon our ability to do things a new way with the new information technologies.

Three major features: 1 (Productivity) - Based upon the growth of productivity through knowledge and innovation as well as the ability to increase our capacity of knowledge-creation, which is directly supported by new information technologies (a better def of number 3). - The information tech, especially the Internet, allows knowledge to become portable and applicable. Knowledge becomes specific to the task and the orientation of the problem that you have to solve at every level. - Essential feature of the NE: the capacity of distributing knowledge, learning from what you did with this knowledge and fitting it back into the system in a self-expanding process. (Eg. Wiki’s)
 * The basis of the New Economy**

2 (competitiveness operates in a global environment) - Global Economy – competitive globalization. - competitiveness = increasing market share [competition between economic actors (firms, regions or countries) takes place in a globally interdependent system] - global interdependent systems happen because of the new technological basis. (telecommunications, info system, air transportation, sea trans, etc lets the system work as a unit in real time on a planetary scale) - Governments created globalization, but they cannot control it, thus the global eco is competitive.

3 (networking) - networking is the same meaning in the info age as the industrial age (assembly-line production, distribution process, mass-standardized production process, etc) àLeninism (Lenin adored Henry Ford and tried to implement Fordism in the Soviet Union) – system based on large-scale standardization and vertical organizations that require a strict division of labor and an extreme rationalization of each process. - networking is the capacity to assemble resources in a flexible adaptable way around projects and then to do these projects. The project becomes a unit, a corporation. Corporations exist and are sustainable only when there are internal networks connected to other networks (large and small corporations) and firms organized in networks. - Corporations are easily eliminated through competition, and can only survive is they join the network.

Society and the economy are changed by all kinds of other things like new sources of competitiveness, new values, new strategy, new objectives. But without this kind of technology, networking will not happen. Technology is necessary but not sufficient condition for the change into the New Economy and into the new society.

- key role is flexibility in labor markets and employment. - No relationship between information technology and unemployment - Flexibility: the end of stable employment (the prevailing mode of employment during the industrial age)
 * Labor in the New Economy**

Innovation – the fuel of the New Economy - Innovation: the ability to create new products and processes and to think about new relationships between the economy and society - The innovation process: - First: The culture of innovation is a culture of sharing information, not of hiding innovation. An open source of sharing information and about win-win situations. This changes everything in terms of property rights, intellectual property, etc. (he doesn’t get into this issue) - Second: modern cultures of innovation is organizational learning, which happens mainly through networking and internal synergy in organizations. (Synergy is based on getting ideas from other people and from other companies.) - Third: innovation is increasingly produced by territorial concentrations of production and innovation, which create innovation through synergy.

The internet industry relies on synergy.