But these alliances are rarely permanent cooperative

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But these alliances are rarely permanent cooperative structures. This is not aprocess of oligopolistic cartelization. These complex networks link up onspecific business projects, and reconfigure their cooperation in differentnetworks with each new project.The usual business practice in this networked economy is one of alliances,partnerships, and collaborations that are specific to a given product, process,time, and space. These collaborations are based on sharing capital and labor,but most fundamentally information and knowledge, in order to win marketshare. So these are primarily information networks, which link suppliers andcustomers through the networked firm. The unit of the production process isnot the firm but the business project, enacted by a network, the network enter-prise. The firm continues to be the legal unit of capital accumulation. Butsince the value of the firm ultimately depends on its financial valuation in thestock market, the unit of capital accumulation, the firm, becomes itself a nodein a global network of financial flows. Thus, in the network economy, thedominant layer is the global financial market, the mother of all valuations.This global financial market works only partly according to market rules. Itis also shaped and moved by information turbulences of various origins,processed and communicated by the computer networks that constitute the28Manuel Castells
nerve system of the global, informational, capitalist economy (Hutton andGiddens, 2000).Financial valuation determines the dynamics of the economy in the shortterm. But in the long run, everything depends on productivity growth. This iswhy the source of productivity constitutes the cornerstone of economicgrowth, and therefore of profits, wages, accumulation, and investment. Andthe key factor for productivity growth in this knowledge-intensive, networkedeconomy is innovation (Lucas, 1999). Innovation is the capacity to recombinefactors of production in a more efficient way, and/or produce higher valueadded in process or in product. Chapter 6 in this volume reminds us of thisbasic fact. Innovation depends on innovators. And innovators, as analyzed inchapter 2, depend on cultural creativity, on institutional openness to entrepre-neurialism, on labor autonomy in the labor process, and on the adequatefinancing of this innovation-driven economy.The new economy of our time is certainly capitalist, but it is a new brandof capitalism. It depends on innovation as the source of productivity growth,on computer-networked global financial markets, whose criteria for valuationare influenced by information turbulences, on the networking of productionand management, internally and externally, locally and globally, and on laborthat is flexible and adaptable in all cases. The creators of value have to be self-programmable, and able to autonomously process information into specificknowledge. Generic workers, reduced to their role as underlings, must be

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Term
Spring
Professor
Whitaker
Tags
Sociology, NETWORK SOCIETY

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