Postindustrial Society by S. Sassen
Source: Sassen S. (2001), The global City Second editions, Princeton University Press, Princeton, Oxford, p.433
« We can identify at least three major bobies of theoretical work that address the question of the articulation of leading economic sectors with the rest of the economy and, more generally, the socioeconomic conditions in cities under the current regime of advanced services. One is general economic development theory; another, the model of the economic base pr export sector in urban economies and its multiplier effects; and the third, the sociological model of the postindustrial economy.
According ti general economic development theory, as economic development progresses it will bring about a generalization of the market and market relations to an increasing number of institutional spheres in a society. In the case of the labor market, this entails a growing incorporation of workers, and people of working age generally, into formal work relations. This process is part of the broader expansion of the regulatory capability and intend of the state. The period of rapid growth after World War II was, indeed, characterized by the attainment of high levels of economic development in major industrialized countries and the growing incorporation of workers into the formal labor market. A series of regulatory aspects ensured that a majority of workers had full-time, year-round jobs, often with unemployment and retirement benefits. Unions were central in this expansion of formal work relation. Fordism is the most institutionalized version of this model of the labor market. This process was according to this thesis, expect that the leading cities in the most advanced countries would certainly be characterized by a strong expansion in the share of workers incorporated in highly developed and encompassing formal labor markets. The growth of causal work would be interpreted as a development lag or as exogenous to the advanced sectors of the economy; for example, informal labor markets could be viewed as imported through Third World immigration.
The model of basic versus nonbasic industries addresses the issue of city-building economic activities (Mayer 1969; Alexander 1954). City-building industries are those that generate more than is consumed internally and hence produce for “export” as well. It is this export activity (including domestic and international) that becomes a vehicle for multiplier effects in that it contributes to the expansion of the other sectors in the economy that service the basic industries. Exports provide an exogenous source of additional income for the city and induce a demand for additional support services beyond those required by the resident population. Expansion in the nonbasic sectors of the economy is basically reproductive; it cannot generate new growth. Much debate has centered on whether manufacturing, always held to be a basic sector, in indeed so in the current era. Classic arguments on services as the basic sector were developed by Blumenfeld (1955) and Tiebout (1957); a notion of service as the basic sector seems particularly appropriate for the case of major cities that are leading centers in the production and export of producer services. This thesis would suggest that the high level of exports and the extremely high value of these exports in the three cities under consideration (New York, London, Tokoyo), should have a rather high multiplier effect and the benefits should be evident over a wide range of industries in these cities.
In its original and richest formulation, the postindustrial model posits a major transformation, one where the expansion of the highly educated workforce and the centrality of knowledge industries will lead to an overall increase in the quality of life and a greater concern with social rather than narrowly economic objectives. It is impossible to recapitulate the full thesis, and unnecessary given the widespread familiarity with Bell’s (1973) text. For the purposes of this discussion what matters is Bell’s notion of a hierarchy in the growth of services, the first type of services developed being those linked to industry, notably transportation and distribution, and the later ones being those linked to a higher quality of life. For Bell, this latter stage in the development of services will be characterized by a more collective or communal nature, given the type of needs they respond to and the public character of provision for many of these services. Furthermore, the preeminence of theoretical and technical knowledge with a scientific base makes postindustrial society on resting on knowledge. The central problem of society is no longer that of capital or the organisation of industrial work but that of the organization of scientific knowledge. This means that the class of professionals and technicians not only expends greatly but becomes the vital center of postindutrial society. This is a heterogeneous and stratified class, ranging from teachers and health workers to engineers and scientists. But at its core are the latter, engineers and scientists. It is an enlightened elite, whose politics cans play a significant role in changing in the social order. The transformation of work is also evident in the organization of firm and power. The preeminence of services is expected to entail a growth of smaller-sized firms, where professional knowledge is more important, contributing to making firms and the organization of work more humane and social. This represents the transition from an economic to a more sociological mode of thought in the management of firms and pf society.
Several element in this model have certainly taken place. If we consider the producer services and finance as knowledge industries, then it os evident that there has been rapid growth of such industries and that they have become the dominant sectors in advanced economies. Furthermore, as the preceding chapter indicated, there has been an expansion of highly paid professional-level jobs and a growth in the high-income stratum of workers. Finally, high-income gentrification as we see it in these three cities does in many ways represent a higher quality of life for those that benefit from it. Important question that rise are first, whether the increase in low-wage jobs and the increase in informal and causal work are or are not articulated with these advanced, higher forms of growth. Second, does the rapid increase in the number of small firms on the advanced services alter the nature of concentration in these economies? The evidence presented on preceding chapters suggests that high levels of economic concentration continue, though often in different forms from that represented by the large manufacturing-oriented multinational corporations and the large transnational banks that dominated economic activity in the 196s and well into the 1970s. Alongside these type of corporations, there is now a vast number of comparatively small firms, which together exercise immense control over investment and economic activity, especially in these cities. And finally, how is the vast proliferation of small firm with marginal returns and mostly low-wage jobs we see in these cities articulated with the advanced sectors of the economy? »
Reference:
Alexender J. (1954), « The Basic-Nonbasic Concept of Urban Economic Functions », Economic Geography, Vol.30(3)
Bell D. (1973), The Coming of Post-industrial Society : A venurein Social Forecasting, Baic Books, New York
Blumenfeld H. (1955), « The Economic Base of the Metropolis », Journal of the American Institute of Planners, Vol.21
Mayers H. (1969), « Making a Living in Cities : The Urban Economic Base », Journal of Geography, Vol.18 (2), pp.70-87
Tiebout C. (1957), « Location Theory, Empirical Evidence, and Economic Evolution », Papers and Proceeding of the Regional Science Associations, Vol.3, pp.74-86
« We can identify at least three major bobies of theoretical work that address the question of the articulation of leading economic sectors with the rest of the economy and, more generally, the socioeconomic conditions in cities under the current regime of advanced services. One is general economic development theory; another, the model of the economic base pr export sector in urban economies and its multiplier effects; and the third, the sociological model of the postindustrial economy.
According ti general economic development theory, as economic development progresses it will bring about a generalization of the market and market relations to an increasing number of institutional spheres in a society. In the case of the labor market, this entails a growing incorporation of workers, and people of working age generally, into formal work relations. This process is part of the broader expansion of the regulatory capability and intend of the state. The period of rapid growth after World War II was, indeed, characterized by the attainment of high levels of economic development in major industrialized countries and the growing incorporation of workers into the formal labor market. A series of regulatory aspects ensured that a majority of workers had full-time, year-round jobs, often with unemployment and retirement benefits. Unions were central in this expansion of formal work relation. Fordism is the most institutionalized version of this model of the labor market. This process was according to this thesis, expect that the leading cities in the most advanced countries would certainly be characterized by a strong expansion in the share of workers incorporated in highly developed and encompassing formal labor markets. The growth of causal work would be interpreted as a development lag or as exogenous to the advanced sectors of the economy; for example, informal labor markets could be viewed as imported through Third World immigration.
The model of basic versus nonbasic industries addresses the issue of city-building economic activities (Mayer 1969; Alexander 1954). City-building industries are those that generate more than is consumed internally and hence produce for “export” as well. It is this export activity (including domestic and international) that becomes a vehicle for multiplier effects in that it contributes to the expansion of the other sectors in the economy that service the basic industries. Exports provide an exogenous source of additional income for the city and induce a demand for additional support services beyond those required by the resident population. Expansion in the nonbasic sectors of the economy is basically reproductive; it cannot generate new growth. Much debate has centered on whether manufacturing, always held to be a basic sector, in indeed so in the current era. Classic arguments on services as the basic sector were developed by Blumenfeld (1955) and Tiebout (1957); a notion of service as the basic sector seems particularly appropriate for the case of major cities that are leading centers in the production and export of producer services. This thesis would suggest that the high level of exports and the extremely high value of these exports in the three cities under consideration (New York, London, Tokoyo), should have a rather high multiplier effect and the benefits should be evident over a wide range of industries in these cities.
In its original and richest formulation, the postindustrial model posits a major transformation, one where the expansion of the highly educated workforce and the centrality of knowledge industries will lead to an overall increase in the quality of life and a greater concern with social rather than narrowly economic objectives. It is impossible to recapitulate the full thesis, and unnecessary given the widespread familiarity with Bell’s (1973) text. For the purposes of this discussion what matters is Bell’s notion of a hierarchy in the growth of services, the first type of services developed being those linked to industry, notably transportation and distribution, and the later ones being those linked to a higher quality of life. For Bell, this latter stage in the development of services will be characterized by a more collective or communal nature, given the type of needs they respond to and the public character of provision for many of these services. Furthermore, the preeminence of theoretical and technical knowledge with a scientific base makes postindustrial society on resting on knowledge. The central problem of society is no longer that of capital or the organisation of industrial work but that of the organization of scientific knowledge. This means that the class of professionals and technicians not only expends greatly but becomes the vital center of postindutrial society. This is a heterogeneous and stratified class, ranging from teachers and health workers to engineers and scientists. But at its core are the latter, engineers and scientists. It is an enlightened elite, whose politics cans play a significant role in changing in the social order. The transformation of work is also evident in the organization of firm and power. The preeminence of services is expected to entail a growth of smaller-sized firms, where professional knowledge is more important, contributing to making firms and the organization of work more humane and social. This represents the transition from an economic to a more sociological mode of thought in the management of firms and pf society.
Several element in this model have certainly taken place. If we consider the producer services and finance as knowledge industries, then it os evident that there has been rapid growth of such industries and that they have become the dominant sectors in advanced economies. Furthermore, as the preceding chapter indicated, there has been an expansion of highly paid professional-level jobs and a growth in the high-income stratum of workers. Finally, high-income gentrification as we see it in these three cities does in many ways represent a higher quality of life for those that benefit from it. Important question that rise are first, whether the increase in low-wage jobs and the increase in informal and causal work are or are not articulated with these advanced, higher forms of growth. Second, does the rapid increase in the number of small firms on the advanced services alter the nature of concentration in these economies? The evidence presented on preceding chapters suggests that high levels of economic concentration continue, though often in different forms from that represented by the large manufacturing-oriented multinational corporations and the large transnational banks that dominated economic activity in the 196s and well into the 1970s. Alongside these type of corporations, there is now a vast number of comparatively small firms, which together exercise immense control over investment and economic activity, especially in these cities. And finally, how is the vast proliferation of small firm with marginal returns and mostly low-wage jobs we see in these cities articulated with the advanced sectors of the economy? »
Reference:
Alexender J. (1954), « The Basic-Nonbasic Concept of Urban Economic Functions », Economic Geography, Vol.30(3)
Bell D. (1973), The Coming of Post-industrial Society : A venurein Social Forecasting, Baic Books, New York
Blumenfeld H. (1955), « The Economic Base of the Metropolis », Journal of the American Institute of Planners, Vol.21
Mayers H. (1969), « Making a Living in Cities : The Urban Economic Base », Journal of Geography, Vol.18 (2), pp.70-87
Tiebout C. (1957), « Location Theory, Empirical Evidence, and Economic Evolution », Papers and Proceeding of the Regional Science Associations, Vol.3, pp.74-86
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