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Dimensions of The Networked Society
Manuel Castells (Transcript Edited by Eric D. Carlson)
Four major transformations are occurring as a result of the interactions between society and the current technological revolution in electronic networks. These transformations are in the economy, in the nature of work and employment, in mass communications, and in the political system. Each of these transformations correlates with the increased inter-connectivity and interactivity which electronic networks enable. These transformations thus define dimensions of what can be called the “Networked Society.” However, to be sustainable, these transformations must become anchored in values and in institutions, and they must continue to foster the culture of cooperation and social responsibility that has produced the technological revolution.
This article is an edited transcript of Professor Castells’ colloquium presented at the Santa Clara University Center for Science, Technology, and Society on May 4, 2000.
Technological Change and Social Change
The study of the interactions between technology and society is more important than ever because we are in the midst of a technological revolution, which is linked to a cultural, organizational, social, and political revolution in the deepest sense of the word “revolution.” This is not a revolution in the sense of power and control of the state, but a revolution in the way we think, live, and act.
This interaction between technological change and societal change has existed throughout history. For example, the Industrial Revolution was the beginning of the industrial society in many ways. Note that there were many different forms of the industrial society, and there were many different processes of industrialization around the world. Different cultures and different institutions made different attempts to control the social impacts of industrialization.
The social history of the telephone provides another example. In 1992, a colleague at the University of California at Berkeley completed a study of the use of the telephone that was focused on four communities in northern California. When the telephone was introduced it was supposed to be an instrument mainly of business. But the study shows that the telephone is used for many purposes, particularly for personal interaction with family and friends.
A third example relates to the history of the development of computing devices. In 1967 the President of IBM predicted that by the year 2000 ten very powerful computers in the world would connect us all. On the contrary, in 1984 when Apple introduced the PC, we all thought we would have PCs at home and be free from large computers. But it looks like computing is very different than either of these predictions. It is much more complicated; networks are the key. PCs will not disappear, but there will be many other devices connected to the networks.
These three examples illustrate that we cannot understand the technological changes, such as the Industrial Revolution, the telephone, the PC, and the Internet, without understanding the related social transformations. And we cannot understand the social transformations without understanding the technological changes. In that sense there is no technological determinism, and there is no social determinism.
The examples of the telephone, the PC, and the Internet also indicate that the more flexible the technology, the more successful the technology will be. Conversely, the more rigid the technology, the more rapidly it will be made obsolete.
This is the starting point of my reflections: the notion that there is this interaction between technology and society. And the moment you accelerate the information technology revolution you also accelerate the process of social change. Technological change and social change interact, and we must understand these interactions to forecast and to design technology and also to understand and to control what is happening in society.
The Paradox of the Progress of the Past Twenty Years
Analysis of the results of the technological revolution of the last 20 years indicates objective progress in a number of social dimensions. We have made substantial progress in the material well being of most people around the world. We have improved democracy overall at the world level. Health indicators, such as life expectancy, have increased considerably. Eighty-four percent of the children in the world attend school at the primary level.
However, the growth in material well being is distributed unevenly. We have growing inequality around the world between countries and within countries, particularly within the United States. Overall in the world we have about one billion people who live with less than one dollar per day and about another one and a half billion people who live with less than two dollars per day. Take seriously the recent reactions in Seattle and in Prague against globalization of the economy, which may be the beginning of similar reactions throughout the world. And, by the way, they are using the Internet to react and to organize.
Recently, the United Nations completed the largest global survey ever undertaken based on a representative sample of 65,000 people. This survey indicated that two-thirds of the people think their governments do not represent them, do not trust their governments, and feel that their countries are not governed by the will of the people. This includes a majority of the people in all advanced democracies.
So, while there is an extraordinary technological and cultural revolution with objective indications of material progress, although unevenly distributed, there is also widespread distrust of governments, some crises of political institutions and feelings among people that they are losing control of what is happening. Part of the issue is the speed of change. Part of it is that we do not understand what is happening. But part of it is a breakdown of social solidarity, a breakdown in social ties, and the development of extreme individualism.
The Networked Society
I would like to introduce an analysis of what I consider to be the heart of these extraordinary changes that are occurring in connection with the current technological revolution. We are being transformed into a “Networked Society;” a society in which every major activity is built on electronically powered information networks.
Networks have always been a very interesting form of social organization. They are flexible, they are adaptable, they can react to a changing environment, and they can move around people and resources to re-adapt to a task. Networked social organizations have a great advantage of being adaptable; they can reconfigure by themselves without losing coherence. The major problem that networked organizations have had is difficulty in focusing on the fulfillment of a given task beyond a certain size and a certain level of complexity. Often in a large networked organization it has been too cumbersome to coordinate and to execute decisions to concentrate resources. Networked organizations were very good for social solidarity, for survival, for interpersonal relationships, and for professional connections. But large-scale, vertical organizations were perfect for large armies and large governments, which had to move resources and people in order to secure power, develop economies, and win wars.
So why in this particular age do networked organizations appear to be so effective? The answer is technologies that facilitate interaction. Through information technologies, networked organizations can reconfigure constantly and be flexible, but still keep the coordinating functions and the task performance functions using real-time processing to reintegrate command and to decentralize execution. So we do have a technological basis that allows networks to suddenly emerge as powerful, efficient forms of social organization.
Let me now elaborate on four different dimensions of the Networked Society where there are significant, perhaps even dramatic, changes. These dimensions are the New Economy, work and employment, mass communications, and politics.
The Networked Society and the New Economy
The New Economy is one of the key transformations that has occurred in the last two decades, and is defined around three features that are interrelated. You cannot explain one of these features without the others.
The Information Economy
The first feature is the information economy, in which knowledge and information are the sources of productivity and competitiveness. Knowledge and information always have been important to any economy, but now, because of information technology, we have a constant feedback process in which knowledge and information that are generated act on themselves in real-time. Information technology has the ability to provide real-time knowledge and information feedback to the models of production and distribution. Production and distribution are transformed in the process of using knowledge and information.
For the past 10 years there has been a debate on whether or not there has been increasing productivity in the information economy. A number of economists have argued that productivity has not increased because of three reasons. First, there is a time lag that is required for the productivity increase in the first sectors that use the information technology to diffuse to other sectors to create measurable productivity improvements. In the Industrial Revolution it took 50 years for productivity to spread from the first sectors that used technology to the entire economy. A second factor affecting productivity increases due to technological changes is that organizations have to re-tool themselves to use new technology before they can achieve productivity gains. And third, we do not know how to measure productivity in services. Because we have over 70 percent of employment in services we therefore do not know how to measure aggregate productivity.
But the picture changes as the Bureau of Labor Statistics and the Commerce Department re-define the measures of productivity. For example, until November 1999 software was not considered investment, but as soon as software is included as investment, you can recalculate productivity to show constant productivity growth for the past five years. Increased productivity is fundamental to economic growth, and is the only way to explain rapid GDP growth with low inflation, low unemployment, and moderate wage increases, such as we have seen in the past five years.
The second major feature of the New Economy is globalization. The core activities of the New Economy have the capacity to work as a unit in real-time on a planetary scale. Capital works globally in real-time, and the core of the production system is organized in international production networks that are managed daily in real-time. Multi-national corporations only employ about 120 million workers, but they represent about one-third of global GDP and two-thirds of international trade. However, the most important aspect of international trade is the internationalization of production. A key issue is that globalization does not include most jobs. Ninety percent of all jobs have nothing to do with the global network of production, which is really determined by global capital and currency markets, global trade, and global science and technology. What is new is that network technologies make this global system work in real-time. It is only through telecommunication, information, and transportation systems that we have these global systems of production and management.
The Networked Enterprise
The third feature of this New Economy is that it is an economy based on the networked enterprise. The networked enterprise is not simply a network of enterprises; it is an organizational form. Most large corporations have decentralized into networks, with departments and production units that are largely autonomous and not hierarchically related to each other. Thus we have the “horizontal corporation.” In addition, small and medium businesses have organized themselves into networks. Small and medium businesses cannot make a difference by themselves because they do not have the resources or the vision. It is by forming these networks with each other that they become competitive. These small and medium business networks relate as subcontractors to the decentralized networks of the large corporations, thereby forming a structure of internally decentralized networks connecting to external networks throughout the globe.
And, more importantly, in the past ten years we have seen a dramatic increase in strategic alliances among these decentralized corporations. These alliances merge parts of corporate networks for specific projects, for specific product lines, for specific markets, and for specific time periods. At the same time, many of these corporations are competing with each other in other markets.
When you take a cross sectional view of the business activity at a particular point in time, you do not see a firm. Instead, there is a network of different elements organized around a business project. The project is the unit that hires people, brings together resources, makes money, etc., and when it is finished it is dissolved. There is an extraordinary mobility of resources, linked with the ability to reconfigure the network of production and management around a specific task. This phenomenon has profound consequences in terms of work process, in terms of labor force, and in terms of strategies.
The Internet Economy
Information technology and information systems are responsible for all three of these features of the New Economy (knowledge-based productivity, globalization, and networked enterprises). The most critical of these technologies and systems is the Internet. Without the Internet you cannot explain the New Economy. The New Economy is the Internet Economy, but it is not made up solely of the Internet companies (which are only a tiny part of the New Economy). The New Economy is made up of the companies that use the Internet for everything. You have to equate this use of the Internet with the use of electricity. An industrial company cannot exist in today’s economy without electricity, or without the Internet. Either you use the Internet or you are out.
The confusion of the Internet companies with the New (Internet) Economy is related to one of the most controversial and complicated aspects of the New Economy, which is use of stock valuation for fueling growth. Valuation of stock depends on how much money a company can attract. If investors believe that their investments will grow and therefore keep investing, then stock valuation can be used as capital to fuel company growth. In particular, when a company has a high stock valuation, it can use stock as currency to pay people and buy companies. Beyond the matter of speculation, there is thus a critical link between investment capital and the stock of a company. So we move to a world with stock as currency. And this world has different rules.
This gets us to the heart of the matter, which is why and how stocks are valued in the global financial markets. The global financial markets work not on the basis of rational calculations but on the basis of information turbulence. And in markets that are globally interdependent and that are electronically traded, with instant decisions from an uncontrollable number of individuals and firms, this information turbulence amplifies the effects. To paraphrase a statement from Paul Voelker: “Today we have global financial markets which operate not on the basis of reality but on the basis of the perception of reality, and in fact perception is reality.” No longer does an objective evaluation of the performance of a company always establish its valuation. In the New Economy, valuation is assigned through information networks that are processed randomly in the global financial markets. The unsettling consequences of these effects are unpredictability and ultra-high volatility (for example, in April 2000). These are not inflated values; they are unstable values.
The Networked Society and the New World of Work
All these transformations of the New Economy have an extraordinary impact on the nature of work and therefore on our lives. Today in this “leisure society” we work more than we have in the last 30 years, particularly in the United States. For many people most of the meaning of their lives comes from work, from what they do. Three years ago, my colleague at Berkeley published a wonderful book based on observations of major corporations. The title of the book, There is No Place Like Work, is indicative of the findings that many people are trying to escape their homes, and that many people are concerned first about their work.
If you want one word that characterizes the new world of work, it is “individualization” -- individualization of the relationship between each person and his/her company and his/her relationship to the work process. We have an increasing diversity of work situations: self-employment, part-time, temporary jobs, consulting, and contracting. For example, in September 1999, the UCSF Policy Institute conducted a survey based on a representative sample of workers in California. If you define a traditional job as people working full time for a company year-around, the study found that the proportion of workers in California with such a job is only 33 percent. If you add the criterion of having worked for the company for over three years, then the proportion is only 22 percent. If you include the restriction of one breadwinner in the family, then the cumulative percentage drops to 8 (and to 7 percent if you include male breadwinners only). As a result, in professional work, we have moved to “personal portfolios;” professional people have their skills and they trade these skills with corporations.
The incorporation of women into the labor market has progressed mainly through these flexible working-arrangements. In the past ten years, we have shifted from the “organization man” to the “flexible woman.”
The fact that networks of individuals are the basic structure of the new labor market has multiple consequences on the individualization of society. It has consequences for the pension system, consequences for management and labor negotiations, and consequences for productivity.
The Networked Society and Mass Communications
The third of the important transformations of the Networked Society is that most of cultural expression is interconnected in what I call “electronic hypertext.” Multi-channel, multi-media communications spells the end of the concentrated, mass media world. For example, television has been segmented into a diversity of expression and targeted to a number of specific audiences. In the 1960s in the United States, the three large television networks had 90-95 percent of the audience in prime time. Now they have 50 percent and this percentage is constantly declining. What we have now is a highly diversified media system in which the different media interact with each other. The coming of the Internet into this system provides the connecting point among the other media systems. The critical point is that we have a horizontal network of communication that is generated by multiple sources through the Internet, which then connects to the mass media. Once everything is on the Internet there will be online, televised, and printed versions, but the format will not be what matters. When everything is online the important question will be: whom do you believe? Credibility and authoritative sources will become critical.
What we are observing is the integration and diversification of the media system. What papers such as the Los Angeles Times and the Chicago Tribune are doing is very important. The new systems that they are introducing for journalism create an “Internet newsroom” in which journalists work in real-time to receive and produce information that is constantly updated. This is not the wire service; it is processed information. They are constantly writing and rewriting articles, and then distributing information throughout all kinds of media that then feeds back into the newsroom. Similar changes are occurring for entertainment and for other kinds of communication. There is a flexible interconnection of all media systems into an electronic hypertext with multiple links and extreme interactivity.
We have started a new culture, which I call the culture of “real virtuality” (not virtual reality). Most cultural expressions, such as entertainment and politics, have to go through the electronic hypertext to have a social impact beyond interpersonal communications. This electronic hypertext does not exhaust all the possibilities of interaction but it anchors the most important. It encompasses, or “codes,” most of what we discuss in our lives. What is new is not that reality is coded but that most of this coding happens in a virtual network. Therefore, television and the Internet and the rest of the electronic hypertext become a fundamental part of our reality.
The Networked Society and Politics
This electronic hypertext is especially important for politics because politics has become image politics. If you do not effectively use the media, you are not in politics. Politics will be determined by the means you need to be in power. There are two such means, image (to reach the audience) and money (to create the image). And these two go together. Without money you don’t get image, and without image you don’t get money. And because the whole democratic political system was built on the basis that you should not need money, this paradox leads to dependence on financing, some of which is “illegal.” Everybody does it, at least in Europe, in the United States, and in the other major democratic countries. Because of this, politics is systemically corrupt regardless of the personal honesty of the politicians, most of whom are honest people who just take the money they need to run their campaigns. Because the political system is corrupt, we have a market for denouncing corruption. The politics of scandal has become the main form of politics because negative messages are five times as effective as positive messages. Because every politician has done something bad, you just have to find the smoking gun of your opponent in order to get elected. The politics of scandal creates a huge system of intermediaries, who are in the business of producing information ¾ true, half-true, or completely false. Anyone in politics needs the same arsenal and this expands the business.
The net result of the politics of scandal is that there is less and less discussion of issues of real substance of politics, and more and more discussion of the personal mistakes of the politicians. This ultimately brings most people to the notion that all politicians are corrupt and do not care about the people. This creates a layer of individualization and networking disconnected from government.
I will conclude with two reflections on the Networked Society ¾ one on society in general and the other on the relationship between technology and society.
Network organizations in society are extremely dynamic, productive, and creative. However, historically we have seen that a purely networked society that does not coalesce in some kind of institutional setting and that does not have values, other than the value of being in the network, will disintegrate. In other words, if the Networked Society is not anchored in institutions and in values it is ultimately not a sustainable society, and is only a collection of individuals. In fact, many of the reactions against the current process of the expansion of the Networked Society take the form of religious, ethnic or territorial fundamentalism, or communalism. The resistance is in the form of some transcendent values that cannot be dissolved by the network. Transcendental values are based on nationalization, regionalism, religion, and ethnicity, and result in a form of isolationism. On one hand, this is resistance against the disintegrating logic of network organizations. On the other hand, the resistance itself is disintegrating for society because society is built upon the notion of communication among different individuals.
My second concluding reflection concerns the social aspects in the development of technology. The history of the information technology revolution shows that the culture of cooperation and collaborative efforts has been absolutely critical in nurturing innovation. The Internet as we know it would not exist without cooperation, from publicly posting information, to Internet societies that are run out of personal responsibility, to the strange combination of researchers and a libertarian counter-culture based on developing technology and opening it up to the world. A fascinating example is that of the Open Source consortium for the Linux operating system, which has developed on the basis of collaborative efforts by thousands of software developers who responded to the call from Linus Torvald for a free exchange of software. The largely unknown result of this effort is that most (over 60 percent) of web servers today use Linux.
Most of the technology that is the basis for the Networked Society has been produced based on cooperation and social responsibility. Individual competition is only part of the story of the development of new technology. It is precisely the strange combination of competition, cooperation, and social responsibility that has triggered the most extraordinary technological revolution in history. The more that we move toward the culture of competitive advantage and forget about cooperation and social responsibility, the more we may jeopardize the next stage of this revolution.
Manual Castells. “Materials for an exploratory theory of the network society,” British Journal of Sociology, 51:1 (January/March 2000), 5-24.
Manual Castells. The Information Age: Economy, Society and Culture, 3 volumes, (Oxford: Blackwell, 2000).