Armin Medosch on Thu, 2 Oct 1997 01:16:24 +0200 (MET DST)

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<nettime> Uneven Development

Telepolis Special Issue Global Economy
Concept Armin Medosch and Niko Waesche

Call for Comments on:


Much of the debate about the economics of globalisation has focused on the
expansive behaviour of multinational enterprises (MNEs) and the plight of
national governments confronted with the question of how to uphold their
sovereignty. The situation becomes more complex when one considers on one
hand the growth of corporate networks on the basis of Internet technology,
which are transforming global financial and business transactions, and on
the other hand the evolution of alternative spaces on the Internet in which
goods are traded rather than sold.

In addressing this complexity, however, the debate has largely ignored the
patterns that are clearly forming. One such pattern is that the development
is consistently uneven.

*Spatial Unevenness

The nation state is in trouble. Everywhere, new political and economic
spatial entities are appearing, challenging the sovereignty of the nation
state. Regions such as Catalonia and supranational blocs such as NAFTA are
on the rise. Nongovernmental organisations (NGOs) such as Amnesty
International or Greenpeace are assuming powers that were previously only
reserved for official bodies formed by nation states. Supercities such as
Los Angeles or Seoul are evolving into centres of global cultural
production. They are international environments with eroding national
specificity. New spaces are also appearing on the Internet, where goods and
contents are exchanged far from the auspices of national governments. A
gift economy is forming on the net. But money transactions are also on the
rise; digital payment systems are making the pending introduction of the
Euro seem a farce.

But there are also geographic voids which cannot seem to keep up with the
pace of development. A whole continent, Africa, seems to have slipped off
the map. Rural cities everywhere which once carried important local roles
are falling into oblivion. The industrialised nation state that once
insured that every citizen was entitled to a phone line regardless of where
she lived is now forsaking universal ideals in favour of neoliberal
policies of national competitiveness such as privatisation and

Among nation states, too, unevenness can be detected. One nation state
seems to rule supreme capturing the imagination of most other national
policy makers world-wide. The US economy has been growing for seven years,
unemployment is low, inflation minimal, tech stocks are rising again. The
argument that economic prosperity has entered a phase of unlimited growth
and that business cycles have ended is gaining media coverage. IT in
general and the Internet specifically have supposedly helped generate this
unusually continuous growth development by actually making firms more
productive. Counter-arguments such as those by the MIT economist Paul
Krugman are being presented as the pessimistic ramblings of a East Coast
party pooper.

*Uneven Labour Market

Uneven spatial economic development is mirrored by unevenness detectable in
the quality of work. 

A far- reaching general restructuring of work can be observed in many
countries. MNEs are shifting their organisations away from hierarchies
based on "command and control" towards combinations of separate units
composed of smaller, temporary project group entities. For the employee a
completely new situation has come about which contains many benefits as
well as drawbacks. New responsibility also means that the employee is
directly exposed to market forces.

A new type of wage earner is on the rise, the "self-employed employee." She
is free to decide how to organise her work, but also has to deal with the
uncertainties of the market and the success of her "project group" is
coupled with the sustainance of her job. In essence she is a freelancer,
nevertheless she is still less than an entrepreneur, dependant on selling
her work power mainly to one source of income. Astonishingly this new type
of the "self-employed employee" can be encountered in areas as different as
creative computer related jobs, unskilled "hamburger-flipping" jobs or
trained worker jobs. It is to be found in MNEs as well as in SMEs, in
freelance office partnerships and in the form of the new urban digital home

The unevenness here is not to be detected in the basic conditions but in
the way people can cope with them. It seems to be a perfect arrangement for
all kinds of creative and culture workers, who are globally mobile,
high-profile and high-wage. People in these jobs have always tended towards
freelance work and have valued independency over lifelong career security.
They are also in a position to negotiate earnings and conditions of work
with their corporate employers. But on the other side we have, from the
underpaid temp worker in the domestic service industry towards people in
lower middle class service industry jobs, a wide array of workers who are
not in the priviledged position to be able to cope adequately with this new
type of job relation. Their traditional representatitives, the unions, are
weakened or not ready yet for dealing with this new form of employment.

*Uneven Competition

It is generally assumed that globalisation and digitisation will lead to
greater competition and specialisation among firms which will benefit the
consumer via lower prices. Especially West coast commentators such as Tom
Peters and Kevin Kelly have proclaimed the age of the small and medium
sized enterprise (SME). Not only is the small firm supposedly a better,
less anonymous employer and thus more attractive to the global creative
worker, it is also seen as the prime carrier technological innovation.
Through digital networks such as the Internet, the SME can achieve global
reach while remaining firmly lodged in its home base.

This is the myth. Many policy makers want to believe it, especially in
Europe where the globally competitive SME is seen as a favourable
alternative to the MNE. Whereas the MNE can use its international structure
to avoid paying high taxes and reduce its employment in areas of high
labour cost, the SME is viewed as firmly lodged in its home country. It can
be technologically innovative and thus provide for quality, high-paying
creative jobs. In fact, the German economy in particular has historically
relied to a large degree on the SME.

But is the new digital-era SME similar to its older brethren? Some evidence
exists showing that SMEs are less domestically lodged than before. Some are
also much shorter lived than before, focusing their energies on acquisition
by a major player from the media, computer or telecommunications
industries. Venture capital firms are seeing acquisitions as a major
alternative to stock placement, meaning less energies will be spent in
making the firm a self-sustaining entity. The dependency of small firms
upon MNEs must also be highlighted. Many are realising that they cannot
participate in the global economy without partnerships with large players.
In these partnerships, the division of power is asymmetric, however.

These factors are pointing to an SME role which is much different to what
its enthusiastic supporters believe it to be. The SME may be much more
highly dependent upon MNEs than believed and a very unstable employer in
the home economy. The few SMEs that are truly global in scope may choose to
leave their home country in order to escape from domestic institutional
constraints. Overall, competition may be decreasing instead of increasing
as a few MNEs gain strength relative to SMEs.

*Net Fissures

What is the changing nature of the globalising and digitising economy? What
is obvious today is that the different actors involved, be they nation
states, MNEs, SMEs or the work force are not globalising equally fast.
Uneven development is detectable, creating fissures that must be taken
seriously. These breakage points, however, are also points of insight. And
it is these points of insight that we are after in our special issue.

Telepolis - Magazine of NetCulture
Office London: 52B Andrews RD, London E8 4RL
Phone: +44 171 923 88 30 Fax: +44 171 923 88 31

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