Thursday, August 13, 2009

Reading :: The Internet Galaxy

The Internet Galaxy: Reflections on the Internet, Business, and Society
By Manuel Castells

So I'm continuing my tour through Manuel Castells' books, of which there seem to be too many to count. Castells writes books like I write articles. This particular book was based on the author's Clarenden Lectures in 1999 – pre-crash, pre-9/11, pre-Afghanistan, pre-Iraq - and originally published in 2001; I read the 2003 reprint. With all that has happened since it was published, though, the book is surprisingly fresh and relevant. That's particularly true as I work through some case studies I've been conducting into net work here in Austin.
Castells' central argument here is that "the Internet is the basis for the organizational form of the Internet Age: the network" (p.1). Networks have been around for a long time, he allows, but information technologies have allowed them to "take on new life" (p.1). He adds:
Networks have extraordinary advantages as organizing tools because of their inherent flexibility and adaptability, critical features in order to survive and prosper in a fast-changing environment. This is why networks are proliferating in all domains of the economy and society, outcompeting and outperforming vertically organized corporations and centralized bureaucracies. (p.1)
However, "They have had considerable difficulty in coordinating functions, in focusing resoruces on specific goals, and in accomplishing a given task, beyond a certain size and complexity of the network" (p.2; this is familiar territory for those who have read about networks in business and warfare). Castells refers here to the problem of scaling that has traditionally limited networks to "primarily the preserve of private life" (p.2). But
Now, however, the introduction of computer-based information and communication technologies, and particularly the Internet, enables networks to deploy their flexibility and adaptability, thus asserting their evolutionary nature. At the same time, these technologies allow the coordination of tasks, and management of complexity. This results in an unprecedented combination of flexibility and task performance, of coordinated decision-making and decentralized execution, of individualized expression and global, horizontal communication, which provide a superior organizational form for human action. (p.2)
IT-powered networks, particularly the Internet, are now structuring "Core economic, social, political, and cultural activities throughout the planet," and "exclusion from these networks is one of the most damaging forms of exclusion in our economy and in our culture" (p.3; cf. Castells' discussion of "black holes" in End of Millennium).
Castells goes on to discuss the culture of the Internet in Chapter 2, particularly "the producers/users at the source of the Internet's creation and configuration" (p.36). He argues that the Internet culture has four layers: "the techno-meritocratic culture, the hacker culture, the virtual communitarian culture, and the entrepreneurial culture" (p.37). He describes the four in more detail than I intend to do here; let's skip forward a bit.
In the next chapter, Castells moves on to e-Business and the new economy, where he drops this interesting statistic:
as of 2001, about 80 percent of the transactions over the web are B2B [business-to-business], and this implies a profound reorganization of the way in which business operates. Internal networks, by which employees communicate among themselves and with their management, are critical for the performance of the firm. The entire business organization needs to conform to the Internet-based technology through which it relates to customers and suppliers. Furthermore, as individual entrepreneurs blossom in this kind of economy, linkages between consultants, subcontractors, and firms over the web become as significant as the firm's own operations. What is emerging is not a economy, but a networked economy with an electronic nervous system. (p.65)
He describes "e-business": "By using the Internet as a fundamental medium of communication and information-processing, business adopts the network as its organizational form" (p.66). This transformation "permeates throughout the entire economic system" (p.66). He refers to his earlier work on the "networked enterprise," I.e., "the organizational form built around business projects resulting from the cooperation between different components of different firms, networking among themselves for the duration of a given business project, and reconfiguring their networks for the implementation of each project" (p.67). So "the network is the enterprise":
While the firm continues to be the unit of accumulation of capital, property rights (usually), and strategic management, business practice is performed by ad hoc networks. These networks have the flexibility and adaptability required by a global economy subjected to relentless technological innovation and stimulated by rapidly changing demand. (p.67)
Using case studies of companies such as Nokia and Cisco, Castells argues that although "the network enterprise preceded the diffusion of the Internet," the Internet "enables scalability, interactivity, management of flexibility, branding, and customization in a networked business world" (p.76, his emphasis). He discusses each of these, but I'll zero in on customization, which Yrjo Engestrom has also examined in terms of the new economy in terms of co-configuration.
Customization, Castells says, is
the key to the new form of conducting business. Cultural change, and the diversity of global demand, make it increasingly difficult to resort to standardized, mass production to satisfy the market. On the other hand, economies of scale still count, prompting the need for high-volume production as a way to lower marginal costs per unit. The right mix between volume and customized production can be achieved by operating a large-scale network of production, yet customizing the final product (be it good or service) to the individual consumer. This is accomplished by personalized, iterative, on-line interaction. But it is also helped by automated profiling incorporated into the model of on-line transactions, which allows business to target specific customer preferences. ... If customization is the key to competitiveness in the new global economy, the Internet is the essential tool to ensure customization in a context of high-volume production and distribution. (p.77)
So "Thus, what the Internet adds to the network enterprise model of business is its capacity to evolve organically with innovation, production systems, and market demand, while keeping its focus on the ultimate goal of any business: money-making" (p.77). And the Internet has changed money-making as well, by transforming financial markets (p.79); "the stock market valuation of firms has increasingly diverged from their measured book value" (p.85) because this transformation has made intangibles more valuable "in an economy where well over half of the workers process information" (p.88). In this economy, where 1.5 billion GB of information are generated each year, "The e-conomy cannot function without workers able to navigate, both technically and in terms of content, this deep sea of information, organizing it, focusing it, and transforming it into specific knowledge, appropriate for the task and purpose of the work process" (p.90).
Such labor "must be able to reprogram itself, in skills, knowledge, and thinking to change tasks in an evolving business environment" (pp.90-91. And that self-programmable labor takes education that is oriented toward continual expansion or (as others have termed it) lifelong learning. But it also takes a certain environment, because "self-programmable labor cannot deploy its capacity in a traditional, rigid, business environment. ... The e-firm, on-line or off-line, is based on a flat hierarchy, a teamwork system, and open, easy interaction between workers and managers, across departments and between levels of the firm. The network enterprise is enacted by net-workers, using Internet capability, and equipped with their own intellectual capital" (p.91).
Such labor also tends to be operationally autonomous, particularly in small businesses and consultant-subcontractor networks (p.92). "These business entrepreneurs own their means of production (a computer, a telephone line, a mobile phone, a place somewhere, often at home, their education, their experience, and, the main asset, their minds)" (p.92; cf. Drucker, who states in Post-Capitalist Society that knowledge workers' minds are their means of production). Castells recalls a division he described in earlier writings: "the distinction between self-programmable labor and generic labor," i.e., between labor that can't and can be generalized, automated, or codified (p.94). He argues that "the entire labor force should become self-programmable" (p.95). And he stresses that both types of labor must become more flexible. (Again, Drucker addresses this issue as well in Post-Capitalist Society, drawing the distinction between knowledge work and other types of labor, such as manufacturing and agriculture.) Indeed, in the knowledge economy, "innovation is the primordial function" (p.100).
On to the next chapter, in which Castells tries to untangle the differences between virtual communities and networks. The term "community," he complains, confuses different forms of social relations (p.125). He sees the residential community fading away as "a meaningful form of sociability" (p.126) and argues that understanding current social interaction requires redefining community: "de-emphasizing its cultural component, emphasizing its supportive role to individuals and families, and de-linking its social existence from a single kind of material support" (p.127). He quotes Barry Wellman's definition of communities as networks, then adds that
Naturally, the key matter here is the displacement from community to network as the central form of organizing interaction. Communities, at least in the tradition of sociological research, were based on the sharing of values and social organization. Networks are built by the choices and strategies of social actors, be it individuals, families, or social groups. Thus, the major transformation of sociability in complex societies took place with the substitution of networks for spatial communities as major forms of sociability. (p.127)
Right, and although the Internet has accellerated that substitution, other networks – telephone and roadway systems, for instance – had already begun that work.
In the next chapter, Castells discusses networked social movements, including the Zapatistas (who he had discussed in previous work) and Falun Gong (p.138). In movements such as these, the Internet becomes "the indispensible component of the kind of social movements emerging in the network society" (p.139). That's because "social movements in the Information Age are essentially mobilized around cultural values" (p.140); because social movements "have to fill the gap left by the crisis of vertically integrated organizations inherited from the industrial era" (p.140); and because of the globalization of movements (p.142). For the second point, Castells draws on the example of the WTO protests in Seattle, as I discussed in a recent post.
The second feature characterizing social movements in the network society is that they have to fill the gap left by the crisis of vertically integrated organizations inherited from the industrial era. Mass political parties, when and where they still exist, are empty shells, barely activated as electoral machines at regular intervals. Trade unions survive only by abandoning their traditional forms of organization, historically built as replicas of the rational bureaucracies characteristic of large corporations and state agencies. Formal civic associations, and their organizational conglomerates, are in full decline as forms of social engagement ... This is not to say that people do not organize and mobilize in defense of their interests or in the affirmation of their values. But loose coalitions, semi-spontaneous organizations, and ad hoc movements of the neo-anarchist brand substitute for permanent, structured, formal organizations. Emotional movements, often triggered by a media event, or by a major crisis, seem often to be more important sources of social change than the day-to-day routine of dutiful NGOs [nongovernmental organizations]. The Internet becomes an essential medium of expression and organization for these kinds of manifestation, which coincide in a given time and space, make their impact through the media world, and act upon institutions and organizations (business, for instance) by the repercussions of their impact on public opinion. These are movements to seize the power of the mind, not state power. (pp.140-141, my emphasis)
The Seattle WTO protests were characterized by
a vast coalition of extremely different, and even contradictory, interests and values, from the battalions of the American labor movement to the swarms of eco-pacifists, environmentalists, women's groups, and a myriad of alternative groups, including the pagan community. The activists of Direct Action Network provided the training and organizational skills for many protestors. But the movement was based on the exchange of information, on previous months of heated political debate on the Internet, that preceded the individual and collective decisions to go to Seattle and to try to block the meeting of what was perceived as an institution enforcing "globalization without representation." (p.141, my emphasis)
The WTO case has been discussed extensively in the netwar literature, and Castells in particular acknowledges the work of Arquilla and Ronfeldt, "in my view the leading analysts of security affairs in the informationalist paradigm" (p.158; I agree, of course). Castells is taken with the idea of noopolitik, which I have discussed elsewhere on this blog.
Let's skip a bit again, since some of this work is redundant with Castells' other work. In the chapter "The Geography of the Internet," Castells points out that the Age of the Internet hasn't obviated geography; the Internet Age is not the end of cities (p.224), because "the networked economy ... is an economy made of up very large, interconnected metropolitan regions" (p.225), because such "territorial complexes" facilitate innovation and synergy (p.226). Similarly, he throws cold water on the idea that a substantial number of people will work from home (pp.231-232). (My current studies suggest that working from home limits the sort of networking one must do in order to establish and exploit contacts, particularly potential subcontractors.) Rather than the home worker, we get the nomadic worker: wireless and mobile Internet access mean that people can work from various locations, desk assignments are reduced, and workers spend more time in the field (p.234). The result is
a multiple configuration of work spaces. The overwhelming majority of people do have workplaces to which they go regularly. But many also work from home (not instead of, but in addition to, their usual workplace), they work from their cars, trains, and planes, from their airports and their hotels, on their vacations and in the night – they are always on call, as their beepers and mobile phones never stop ringing. The individualization of working arrangements, the multi-location of the activity, and the ability to network all these activities around the individual worker, usher in a new urban space, the space of endless mobility, a space made of flows of information and communication, ultimately managed with the Internet. (p.234)
I'll just add here that we can include buses, coffee shops, and waiting rooms (where I do much of my work) as well as coworking spaces and libraries. Since Castells wrote this passage, laptops have become far more powerful and inexpensive, mobile phone lines have become more numerous than landlines, smartphones have become more powerful, free wifi has become common in urban areas, and social networking/status broadcasting technologies such as Facebook and Twitter allow us to tell our personal networks what we are doing right now.
Hand in hand with this trend, Castells notes that the trend in knowledge work is not toward complete control and monitoring of individual workers, as has been feared:
What management of information requires is, in fact, the opposite: to give workers as much initiative as they can handle, under conditions defined and organized by management. The informal transmission of information, tacit knowledge of the company, group dynamics, and economies of scale for advanced telecommunications equipment seem to be among the key elements underlying the growth of these "electronic communication factories" that become a new form of workplace in the Internet economy. (p.233)
Reading this book, several things strike me.
One is the convergence among Castells' work, the netwar literature (of which Castells reviews only a small part), and some of Drucker's work. In fact, I don't think that Castells ever cites Drucker in the books I've read, and Drucker certainly doesn't cite Castells, but they seem to note many of the same phenomena. Their orientations are quite different, but beneath the surface they have much in common (beyond the fact that they are both prolific writers). Both have influenced the discussion of netwar, which encourages me since I am seeing many parallels between netwar and networked business practices.
Another thing that strikes me is that this book seems prescient in some of its implications for work, particularly, as I said earlier, in the cases of distributed work organization I'm studying in Austin. Inside, outside, and between organizations, people are increasingly mobile, increasingly autonomous in operational terms, increasingly able to enact separations between self-programmable and generic labor, and increasingly able to turn what was once self-programmable into generic labor by leveraging protocols, APIs, and automation. So, although Castells seems prescient in examining implications, I think that networked organizations have still moved beyond what he describes in 2001 in terms of decentralization, mobility, flexibility, and change. I'll be developing these thoughts further as I continue to develop these cases.
I'm not sure I would recommend every Castells book, but if you're interested in how the Internet is changing work and society, this is a good place to start. It's more accessible and up-to-date than his Information Age trilogy, but it still bundles the most relevant of those ideas, and it does so in a readable fashion. I recommend it highly.

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