Chapter 8: Conclusion- The Death of Community Economics, or Think Locally, Act Globally

Chapter 8:
Conclusion- The Death of Community Economics, or Think Locally, Act Globally

With conservatives like Newt Gingrich promoting political decentralization and "New Democrats" framing much the same politics in terms of reinventing government, it is hardly surprising that this bipartisan consensus has driven market competition in telecommunications and the transfer of government responsibilities to local government in a host of other programs. All this has added to the crisis facing most local governments. What is remarkable, though, is how much the drive and desire for decentralized economics and politics is shared even by the strongest grassroots progressive and left-wing opponents of the governing establishment. While critical of corporate power and skeptical of achieving the form of decentralization they desire under present economic power relations, most progressive activist organizations, especially those tied to a more environmental vision, promote the goal of decentralization as ardently as the rhetoric of the establishment.

One typical manifesto comes from a coalition called the General Agreement on a New Economy (an explicit response to the General Agreement on Tariffs and Trade-GATT) which is led by a range of scholars associated with left institutions like the Institute for Policy Studies, the Worldwatch Institute, the National Jobs for All coalition and other key research organizations. In their manifesto, they have argued for the goal of "A new form of federalism rooted in communities where local goals and programs for a sustainable future can be chosen through a fully participatory process, with regional and federal functions that can help integrate local efforts into a cohesive whole capable of ensuring overall sustainability, equity and full employment" and "use of private and public initiatives and resources to achieve these local goals, with supplemental federal funding provided to communities and regions in a manner that accounts for differences in local resources and severity of problems."1 They add the conditions of restraint of corporate power and, in practice, most progressive activists defend the federally-based programs that they ideally would see decentralized. But the convergence with the stated goals of the establishment is remarkable and shows the reserves of vision in the United States that decentralizes draw on in promoting the ideal of community-based decision-making on the economy.

Even some left activists see that similarity and explicitly align themselves as the "left wing" of a Third Wave politics that includes Gingrich. Carl Davidson, a Chicago activist and leader of various socialist organizations over the years, is managing editor of Chicago-based cy.Rev: A Journal of Cybernetic Revolution, Sustainable Socialism & Radical Democracy where he co-wrote an article entitled "The Third Wave and the Republicans: Is Newt Gingrich a Closet New Leftist?" Davidson traces the emergence of Gingrich's politics and rhetoric not out of just the corporate right but from the 60s left:

Is Gingrich a hidden 1960s new leftist in 1990s conservative clothing? Not only is he using some of our old slogans, he also appears to be invading our political space. After all, it was only after the antiwar and civil rights movements of 30 years ago that it became possible to badmouth the White House and the federal government the way it's being done today.

As a national officer of Students for a Democratic Society in the late 60s, Davidson speaks with more authority than most when he, with some irony, hails the fact that "Newt Gingrich is leading the most successful attack on the capitalist state since the 1960s. Tearing apart bureaucracies, desanctifying authority, de- legitimizing the corporate liberal political system, decentralizing power closer down to the grass roots..." Even as Davidson attacks the hypocrisy of Republican defense spending and pro-corporate power in Gingrich's agenda, he argues that the core of the rhetoric of decentralization is a natural result of the telecommunications 'Third Wave': "There is nothing wrong with returning many government programs to the state or municipal level. Local politics is more accessible to grass roots' movements. A good amount of decentralization, moreover, is an inevitable consequence of telecommunications and its impact on the economic base of society. Gridlock in Washington is partly a result of federal bureaucracies being too distant and too clumsy to handle regional and urban realities."2

Given this dissertation's descriptions of the disempowerment of local government and the splintering of regional economies as useful units for economic planning, what are we to make of this decentralization consensus spanning the ideological spectrum from the far right to the far left poles?

At one level, we can see it less as a response to the new technology than, as Davidson notes, a continuation of New Left and other traditional American politics that has always sought utopia in local and small town values. The technology becomes an excuse to dress the politics of nostalgia in new cybernetic clothes. Any political position can target spending and social structures they dislike as "too centralized" and obsolete in the "new" economy. The right can target the social welfare state while the left can target corporate subsidies and rail against corporate power. Conservatives get the best of this cynical politics since corporate power, as we have detailed, remains centralized, but all political actors find sustenance in this cyberpolitics of nostalgia. Progressive activists end up hyping a program of "community economics" that resembles nothing so much as a longing for the old "growth coalition" regional politics, a politics that are increasingly defunct as cybertechnology allows the selective interpenetration of regions that erodes the growth linkages of regions.

But beyond nostalgia, there are real contradictions in the new technology and economics of the networked world that makes the promise of decentralization alluring, even if dead wrong politically (especially for those promoting egalitarian values). We have federal government technology spending driving economic revolutions, even as local private entrepreneurs appear seemingly out of their garages to commercialize the new technology. We have a globalization of production even as singular regions like Silicon Valley loom ever more important on the economic landscape. We have the dramatic globalization of business alliances even as regional business consortia become more critical in assuring production standards in our information-rich economy. We have the market-driven dissolution of regional economic linkages tied to banking, power and telecommunications infrastructure, even as the appearance of new technologies and companies expand local choices in participating in the global economy. Across the spectrum, we have the rise of market competition and "deregulation" of industries even as expanded regulations permeate both the domestic and international economy.

Out of this confusion of where the dynamic engine of growth originates in the economy, it is hardly surprising that people find resonance in directing political focus on the aspects of the economy that are situated within the comfortable scale of the local. There was a compelling logic to the Depression-to-post-War period where national-scale industries dominated the land and were counterbalanced by national-scale legislation that shaped and restrained their actions within regions of the country. As networking technology has allowed business to globalize, the federal government has seemed incapable of fully coping with the changes and global institutions seemed too murky and disordered a focus for economic management, so the local region has emerged as the only handhold, however slippery, for activist energy in using the government to steer citizens' economic fate.

In turn, we have had the peculiar regionalization of global business organization, its breaking up of concentrated national factories into carefully constructed regional niches that expertly harvests what author Saxenian has labeled "regional advantage" in the service of the global corporation. All of this has contributed to the myopia of decentralization and the idea that the community is now the natural scale for government action. Progressives may not want to compete against other regions and would prefer cooperation, but they are stilled lulled by the illusion that integrated regions exist that share common fates. The ready participation of business in ever-increasing "public-private" partnerships and consortia at the regional level just further validates those who reify regions as economic units.

This conclusion chapter will recap the relationships explored in this dissertation of the role of federal action in its support of economic growth in regions like Silicon Valley, with the Internet and networked technology as a prime example, even as these policies were combined with the dissolution of the economic ties between richer and poorer members of such geographic regions. As described, it is a relatively bleak story as inequality grows and local political institutions find themselves overburdened by responsibilities they cannot cope with. But there is also a positive side of the story for even as local egalitarian economic development becomes a nearly impossible concept in the new economy, new opportunities for managing the national and global economy are opening up. And even as the grassroots rhetoric of many community organizations emphasizes local economics, increasingly the new technology is being used in practical ways to strengthen global organizing for economic justice. While the latter is sporadic and mostly unsystematic at this point, it is worth emphasizing that the use of information technology has been expanding within the corporate world for well over thirty years, while most unions and community organizations have begun to turn to electronic networking only in the last half-decade. To extrapolate the current trajectory towards greater economic inequality is to ignore the fact that one side of the economic class divide is only now beginning to practice use of these tools and mastery is years down the road. It will only be when the community and labor side of the economic conflict is as pervasively networked globally as business that the true political and economic balance of power will be able to be measured.

The Contradictions of Place in the Age of the Internet:
Reassessing the Evidence of this Dissertation

To fully engage with the question of what we are to make of regional economies and their relation to local government, we have to return to the underlying, inconvenient truth that economic and especially technological innovation has sprung not from the garages of local companies but from the long-term investments of centralized government. Not that individual creativity was unimportant but if Isaac Newton could acknowledge he stood on the shoulders of "giants" in his breakthroughs, the creators of the latest Internet gee-gaw can fess up to the economic and historical investments by national governments that made their innovations possible.

The Internet is just the most recent (albeit dramatic) permeating technology that was the child of centralized government planning and economic support. From aerospace to biotechnology, the government has played a key and usually leading role in technological advance and with corporate research labs cutting back on basic research, that role is unlikely to diminish in the future.

The Internet may be highly identified with the Silicon Valley region but it was, much to the annoyance of cyberlibertarians, born in the bureaucratic halls of Washington, D.C. It came out of a whole set of institutions and a milieu of innovation directly and purposefully funded by federal agencies, primarily in the Advanced Research Projects Agency (ARPA) but also out of a host of other technology-oriented bureaucracies. The federal government created a national network of experts who could guide the Internet to economic viability, laid the wires and funded the computers where it was tested and developed its initial critical mass, and funded many of Internet companies in today's headlines as contractors for federal government projects or agencies.

The reality is that no corporate research laboratory and no local government could operate on the decades-long time frame needed for the development of the Internet. Innovation requires generations of innovation with little commercial payback and where the need for public discussion and collaboration on the basic science makes it impossible for any one company to enjoy the fruits of proprietary discoveries. As analysts like Kenneth Flamm have argued3, the federal government funded the breakthrough research that created the basic form of the computer in the 1960s. Federal funding created the advances of time-sharing minicomputers and most of the networking technology that is the heart of high technology to this day. Commercialization increased the speed and lowered the price of each of these innovations but the driving engine for its creation was the federal government.

In the case of the social infrastructure and technical standards necessary for the Internet, the government's role was even more indispensable. As the stew of proprietary networking technologies developed in the 1980s showed, no private corporation was going to support the long-term creation of open standards by themselves in the absence of the government. Over decades, ARPA and other federal agencies like the National Science Foundation would concentrate their funding and support on standards that facilitated the most open network connections possible and, through strategic support for those protocols in UNIX (via Bill Joy who later helped found Sun), would help spread them throughout the computing world. The federal government would organize and fund an emerging professional network of computer experts to oversee and guide the emerging connections between government, universities and the slowly building commercial sector involved in the Internet. And through the creation of public space and the harnessing of volunteer energies in its early stages, the federal government encouraged a stream of free, quickly shared software that promoted continual innovation on the network. Far beyond traditional conceptions of industrial policy investing a few dollars in promising industries, the federal government fundamentally created the whole framework of a new electronic marketplace of common standards, thereby breaching the monopolistic divides of what had been rather stunted proprietary systems.

The initial commercialization of the Internet would be done largely by direct government spin-offs or companies relying on government contracts for their origin. The companies that took over the management of the backbone wires carrying most of the traffic would include UUNET, a direct spin-off from the Department of Defense, BBN with its long-time contract ties with the government, and MCI which was involved in contracts throughout the 1980s in building the original NSF backbone. And Silicon Valley firms that would be at the heart of its commercialization, such as Sun, Cisco and Oracle had all gotten their start based largely on selling to government agencies. Or, as in the case of Netscape, such firms would raid the talent of the government centers that built the Internet to commercialize government-created software like the Mosaic web browser and servers.

In all these ways, the federal context for the development of the industry surrounding the Internet is inescapably both national and based in initiatives flowing from the federal government. In evaluating the role of regional economies, then, it is critical to see them not as initiators but respondents to a national and global economic context.

When looking at why a region like Silicon Valley became such a concentrated center for the industry, the most simple (but not simplistic) answer is to ask Why Not? and chalk it up to dynamics that could as easily have favored some other region. Economist Brian Arthur, who has been a pioneer in applying the insights of mathematical complexity theory to economics, has argued that in looking at the success of firms in the information economy, too much post-facto analysis obscures the unpredictability and multiple likely outcomes of these new markets. In what he calls an "Increasing Returns World", the new economy is one where early innovation is rewarded with ever increasing dominance of a market due to the up-front development costs of entry and customer "lock-in" to standards established by the market leader. In the "casino of technology", inferior products can dominate the market purely because of unpredictable events that give them a leg-up at the beginning of the process of technological lock-in. Once a lead is established by a technology, all sorts of other factors come into play to reinforce its economic dominance.4

From this viewpoint, many of the factors used to explain the rise of technological dominance by a region - supportive services, available capital, business culture - can as easily be seen not as a cause but as the result of that dominance. In a global context of trade, Paul Krugman has noted that along with lock-in, complexity theory encourages a viewpoint of spontaneous self-organization within geographic spaces that will tend to concentrate centers of production in specific locations, not based on present factors that can be easily duplicated but based on initial conditions that predate present dominance. Krugman argues that "in a more realistic model of the world economy...there would be many possible outcomes, depending on initial conditions; given a slightly different sequence of events, Silicon Valley might have been in Los Angeles, Massachusetts, or even Oxfordshire."5

Overwhelmingly, the "initial conditions" that attracted high technology to regions across the country were earlier rounds of government investment in technology, largely through defense spending. Across the spectrum of high technologies industries, Ann Markusen and Peter Hall have shown that while the availability of public and private amenities play a role in attracting high technology, the overwhelming factor correlating with the rise of technology firms in any region is the level of defense spending. Considering the emphasis on the role of research universities like MIT and Stanford (their research strength itself the product of massive government investment), the striking result of Markusen and Hall's analysis is that in the absence of defense spending, a research university has no effect on whether a region attracts high technology firms - a rather sharp message that purely endogenous factors are unlikely to generate economic development.6 It was successive waves of military and other federal spending from World War II onwards that fully launched Silicon Valley as the center of semiconductor production and then as the center for the Internet industry.

However, even as outside federal investment was the basis for regional expansion, there have subsequently appeared internal economic dynamics that are critical to how the economy functions in the context of the new information-based technology, especially in its relationship to regional politics and the more general global politics of control of an industry. The very "lock-in" of regional dominance raises the issue of what regions do to either hold onto that dominance or what they fail to do that may let such an advantage fade away. As critically, the new dynamics of regional economics highlight who has power within such regions, who is disempowered within such debates, and how the national and global context of government and multinational interests shape the options of such regional actors.

Anna Lee Saxenian7, Michael Piore and Charles Sable8, and Michael Best9 among others have argued that new flexible technology has made regional concentrations of artisan talent the new paradigm for economic competitiveness. However such a critical mass of talent and firms appear in a region (and the stories of different districts have a menage of idiosyncratic stories), it is argued that such industrial districts gain the ability to respond to rapidly changing global demand by rearranging firm alliances and employment patterns that is unmatchable by traditional isolated mass production corporations. Commentators like Bennett Harrison10 and Robert Reich11 have seen such regional concentrations as less an indigenous relationship of local firms than a new form of multinational organization that uses regions as a venue for strategic alliances in a global production system. The prevalence of global production relationships by firms in Silicon Valley, noted by Richard Gordon12, has reinforced this later view.

However, even within this debate on the relative role of internal production relationships versus global production relationships, there is still a consensus that there is something inherent in the economics of the new technology driving the success of these new flexible production relationships. While there is no doubt some truth in the arguments made in this regard, this dissertation has also firmly shown the context of government action that has made such industrial district approaches more or less successful - with the Internet a prime example of that process. It has been government support and commitments to the diffusion of technology and broad open standards that has allowed regions like Silicon Valley to thrive over regions tied to more hierarchical firms that based their strength on proprietary approaches.

Analysts like Saxenian have painted the success of Silicon Valley firms like Sun Microsystems and their commitment to regional networked relations and non-proprietary standards as following from an inherent economic advantage of non-proprietary approaches in the new economics of technology. In her story the firms in Route 128 were inherently doomed to failure given their proprietary approaches. There is little question that Silicon Valley firms hitched their fates to non-proprietary standards at a rate far beyond any other region (although not without many firms attempting otherwise and a culture of lawsuits hardly in keeping with a pure image of cooperation), but the success of that strategy over the long-term was as dependent on a supportive national government context as the region's high-tech origins had been dependent on government investments.

In fact, the origins of the region as a center for semiconductor production would have been impossible without the federal government forcing AT&T to license its transistor technology widely and barring the company from the industry for the next three decades. Without that act (and a continued commitment by the government to pushing open technology diffusion over the years), peripheral regions like Silicon Valley would have had little chance of overcoming the strength of AT&T and other larger corporations. They would have used patents and their existing economic position to keep technology within traditional industrial enclaves - exactly the pattern in most of Europe where old-line industrial companies were more favored by their national governments' policies.

When Sun Microsystems sought to enter the workstation market, the very existence of a non-proprietary operating system that Sun could adopt was dependent again on government policies that in the late 60s pushed AT&T to widely release its innovative UNIX operating system. The federal government had funded improvements in the operating system throughout the 1970s, particularly in its support of the UC-Berkeley version that Sun adopted, and it was ARPA that had funded Bill Joy to add TCP/IP protocols. In a laissez-faire vacuum, no underfunded upstart like Sun would have had a chance to enter the marketplace since readily available public systems would not have been available. It was only in the context of government-backed standards and readily available government contracts (which Sun, Oracle and a range of Silicon Valley companies needed in their initial phases) that entrepreneurial startups were able to blossom so explosively in the region.

But the success of Sun and Silicon Graphics and the whole array of firms who clustered around these public standards did not depend just on picking up a government-provided public good and running with it. Sun would go farther and, by teaming up with AT&T, newly allowed into the computer market in the 1980s, would push for a standardization of workstation-class computers around its version of UNIX. When the federal government in 1986 required all computer companies to provide UNIX as an option for all government purchases, the proprietary workstation systems promoted by Route 128 companies were doomed as they all rushed to provide UNIX-compatible systems.

Silicon Valley had a "regional advantage" in its network of cooperating firms, but it was an advantage that would have been useless without the creation and support by the federal government to the standardized computer systems around which that cooperation was organized. One need only look at the proprietary "lock-in" of the Windows-Intel duopoly that developed in the microcomputer market in the late 1980s and early 1990s - notably a technology market where the federal government had the least involvement in setting standards in the period.

The Internet would just extend Silicon Valley's leveraging of public goods through its cooperative network, where it would face off against proprietary information networks that were set up in the 1980s and 1990s by IBM (Prodigy), H&R Block (Compuserve), General Electric (Genie), the independent American Online, the abortive proprietary Microsoft Network, and a slew of proprietary corporate networks. These later companies located their headquarters and employees in a range of locations, mostly outside the Silicon Valley, yet most commentators saw them and the traditional cable and phone companies as the key to building the "Information Superhighway."

The key to the success of Silicon Valley in the networking marketplace was the leveraging of the federal government's investments through a system of regional cooperation to commercialize the Internet. Cisco, the creator of the routers that would enhance the "plumbing" of the Internet, would become the first multi-billion-dollar company launched by advertising and selling its goods over the Internet. Netscape, created by Silicon Graphics founder Jim Clarke, would latch onto the emerging World Wide Web (the product of the European CERN laboratories and the NCSA centers in Illinois) and launch its commercial browser. Sun, whose workstations were running substantial numbers of early Internet Web sites at universities, government facilities and corporate offices by the time Netscape was launched, would build on its collaboration networks to promote new Internet tools, including its Java language to enhance open standards in computing.

However, despite their leveraging of twenty years of government investment in the Internet, Netscape and other Silicon Valley companies faced the worry that the privatization of the Internet and the threat of cable-telephone company alliances might create strong proprietary alternatives that the federal government would not block. In a sense, the very success of Netscape in creating its own set of standards for the World Wide Web without serious government opposition was a warning sign that Microsoft or others might do the same in even more proprietary ways

In general, the early 1990s found many Silicon Valley companies reeling from government funding cutbacks and fears for their survival. When over a 1000 business and local government officials came together in 1992 to found Joint Venture: Silicon Valley, the name of the report accompanying the conference - An Economy at Risk - summarized the sense of fear for the future of the region. Silicon Valley leaders, who had increasingly seen themselves as national corporate leaders, "returned home" to argue that businesses in the region had to work together with universities and local government to revive the regional economy. Influenced directly by scholars like Saxenian, they put special emphasis on tightening the alliances and supply networks within the region. Information networking would be one tool in that goal.

But a funny thing happened on the way to reviving the Valley industrial district. Instead of the Internet becoming a tool by semiconductor manufacturers for improving supply networks in the region, it became an explosive industry all by itself. And counter the predictions of Saxenian, hierarchical mergers, global alliances and corporate acquisitions rather than flexible small firm alliances became even more the norm in the region. While the more limited view of regional advantage promoted by Robert Reich - shared workforces and business amenities - continued to play a strong role, the region on the surface seemed to be following Bennett Harrison's view of multinationals and leading firms imposing increasing economic concentration. In fact, through new tools like electronic catalogs and other global connections facilitated by the Internet, the need for close local supply relationships have been diminished in serious ways because of the new technology.

Yet this later process was also accompanied by an intense and accelerating process of regional organizing by businesses, from Joint Venture to CommerceNet to BAMTA to reinforcing an alphabet soup of manufacturing and software alliances based in the Valley. The key to this new explosion of regional business organizing is the need to substitute regionally-agreed to public goods like standards for clear federal intervention. Especially in a networked economy where software and networking hardware need to be compatible, such business consortia become increasingly common despite the globalization of production.

The key to these conflicting trends of globalizing multinationals and regional consortia is in the nature of the standards needed to support networked innovation. Even as production can be increasingly globalized, the day-to-day innovation needed in developing new technology and making sure it is developed as compatible with other new technology happens most easily when workers are in the same physical space. When technology is proprietary, those controlling its standards can assure that far-flung companies meet its specifications, but the ongoing development of open standards requires a more organic process which requires either strong government involvement keeping innovation on track or people in constant contact within a region to push standards forward.

Even when sharing physical geography, companies have found increasing need for consortia relationships from MCC to Sematech to CommerceNet in order to regularize technology exchange and get political agreement on standards. Additionally, as the increasing global participation in CommerceNet and BAMTA showed, such regional consortia facilitate the participation of more actors in that process, even as it continues to be driven by companies within the consortia's region. And in radically new markets like the Internet, the participation of the national government helps to facilitate both the trust involved and the legitimacy of the standards approved. While Saxenian talked about such standards-generating organizations in the context of flexible production relationships, what became clear in the 90s is that the organizational need for managing innovation standards is far outpacing actual production relationships as the reason for regional cooperation. As the federal government withdrew from direct governance of standards, its implicit endorsement of CommerceNet through its funding helped facilitate Netscape, EIT and others to develop open standards for Internet commerce, avoiding fears of a splintering over proprietary standards that would have undercut the dominance of Valley software firms.

Privatization of standards makes economic regions the most efficient way for a combination of private corporations to establish the trust needed to commercialize open standards. This is ultimately an economically beneficial result for all the cooperating companies as a whole, since open standards tend to create a far larger market than proprietary standards which dampen innovation and new entries to the marketplace. In the early stages of CommerceNet, the highest priority was promoting the Internet itself as an alternative to private information networks. In this, they were aided by a federal government still involved enough to support a range of industry networking efforts using the IP protocol. The consortia efforts and other regional alliances were critical in promoting the standards around new applications that would sell Silicon Valley products tied to the Internet. By basing a network of allied companies within the same region, the spillover of growth in the Internet industry was most likely to rebound to the economic benefit of those supporting the "public good" of open standards.

There is an ironic counterpoint to the success of Silicon Valley cooperation in seeking to commercialize the Net which is that, despite much of the retreat of the federal government from coordinating Internet software production, one of the most serious challenges to the Internet industry has been the global production of non-commercial software. Despite the media focus on the Internet showdown between Silicon Valley firms versus Microsoft's proprietary approach, what has been ignored is the continuing production of non-commercial software on a global basis developed out of the earlier traditions of ARPAnet.

The fact remains that the most popular Web server is not Microsoft's or Netscape's but the free Apache Web server (used by an estimated 45% of web sites)13 developed by volunteers around the country and the globe using the original NCSA server as a base. Similarly, after the fiasco of divisions around commercial UNIX standards in the early 90s within the region and across the country, one of the most popular operating systems is the free version of UNIX called Linux-a version that Wired magazine notes could well "emerge as the second operating system after Windows" with its growth on top of an already installed base of three to nine million users.14 The Internet itself has facilitated wide global collaboration on enhancements of these and other free tools, such as free compilers and Web script languages like Perl which run many dynamic programs on Web sites and are more popular than most commercial alternatives. The most extreme case is Linux whose "kernel" was written in 1991 by Linus Torvalds, a student at the University of Helsinki in Finland. He would combine his innovation with a range of free UNIX tools overseen by the Free Software Foundation (also known as GNU tools) which was directed by Richard Stallman, one of the original MIT hackers who setup FSF as a protest against the commercialization of university research. A worldwide network of collaborators then worked with Torvalds to endlessly innovate the original Linux system to the point where it is considered in many ways a more robust operating system than Windows NT.

The global nature of collaboration on free tools like Apache, Linux and Perl - compared to the largely regional collaboration around commercial standards and the largely company-specific development of proprietary standards like Windows - is not accidental and highlights the geography of trust and economics involved in much of standards creation. Freeware collaborators on free software systems are acting based on altruism and the hacker ethic of achievement, so trust is easy to generate as everyone is involved in pure enhancement of a public good without serious expectation of capturing the social benefits of its creation as private economic gain. Collaborators on commercial standards need to assure that the "expanded pie" of innovation rebounds to their individual economic benefit and the simplest way to assure that are the organized links of companies and venture capitalists in a region like Silicon Valley.

What is radically new in this arrangement and outside the traditional industrial district view of the world is the way Bay Area companies have used standards-setting cooperation to leverage a host of local companies, including in the entertainment and banking industries, into a more globally dominant position. Richard Gordon has emphasized the way multinationals have increasingly made Silicon Valley a global center of technology production, but the nature of cooperation around standards reveals how such a dominance of technology can be leveraged into a much broader and diverse global corporate position in the global economy. With an overall market capitalization of $452 billion of its industries, Business Week has noted that compared to Silicon Valley, "the only locale with near-comparable economic heft is Wall Street."15

As corporate coordination of innovation rather than production links becomes the key to understanding the business politics of regions, this elite version of cooperation leaves little need for serious concessions to the needs of non-elite workers in a region. Implicit (and often explicit) in the views of industrial district advocates like Piore and Sabel along with Saxenian is the idea that shared production links require active involvement of all members of the production stream in decision-making, creating a vital role for workers and communities as a counter-balance to the power of companies. To the extent that companies are small and tied to indigenous growth factors, they are dependent on and will support broad community economic development.

However, if those small startup companies are tied to global corporate needs as is apparent in the dynamics of innovation detailed in this dissertation, then the much darker vision detailed by analysts like Bennett Harrison of economic polarization is likely to be the norm. Even as wages rise in the Silicon Valley areas, housing and other costs rise faster for the average workers as poverty rises rather than falls with the overall prosperity of the region. For most workers, the Silicon Valley boom gives little sense of security but rather, with the rise of temporary agencies and the rise of contingent employment for as much as 40% of workers, a sense of the ephemerality of growth. Even as elite engineers invest the dividends of IPOs for their long-term security, other workers watch continual outsourcing of lower-end jobs erode any sense of stability.

Harvey Molotch and John Logan16 argued for a model of urbanization tied to the idea of the city as a "growth machine" where labor and capital allied to promote growth as a community interest where all could share in the proceeds. However, tilted towards elite economic interests, the idea of a rising tide lifting all boats was a firmly entrenched part of the economy of regions. David Harvey17 elaborated on this viewpoint in seeing urbanization as a way to reinvest the surpluses of capitalist production in the public goods that would further economic expansion. Because capitalists invariably underinvest in the public goods needed for economic growth, governments were able to establish an autonomy of urban politics in creating the "Keynesian city" that balanced the needs of production with the broad-based consumption needs of the population.

However, the public goods needed by new technology firms are not primarily the road construction and public works that once tied capital and unskilled labor together in alliance. Instead, the public goods of the new era are basic research and information standards supplied by combinations of universities and government support for business consortia. Left out of this equation is any real need for agreement by non-elite members of the community or the creation of goods that serve their day-to-day economic needs. Smart Valley and CommerceNet may tie local businesses to local governments, but representatives of labor unions or any other force representing general workers have decidedly not been a factor in the structuring of high-tech regional politics.

If any traditional public good should have survived as a fixture in "growth coalitions," it would be transportation in the congested roadways of Northern California. But even here, the focus on business politics has been on finding ways to create private deals focused on the particular needs of the technology companies over the general population. The focus on telecommuting by Smart Valley is just one example of this secession. The political support by technology firms for mass transit serving the high technology corridor, even while the firms spend millions to defeat proposals that would support bus service or other needs in poorer communities reflects the evolution of Silicon Valley into what the Economist labeled a grander version of a gated community - the ultimate expression of private public goods created at the expense of the broader public.

Of course, industry has always tried to tilt public spending towards their needs and the evolution of the technology in some ways just accentuates that tradition. But what has decisively fractured regional economic development and made it practically an oxymoron is the disappearance of what Harvey calls "fixed capital" - public utilities serving regional markets and the holders of public debt tied to specific regions. It was always fixed capital that acted as an anchor across the divide between globally-oriented industry and the working class public. Such companies found a cross-class interest with labor unions and other community organizations in building a growth coalition that expanded wealth across the region - an interest tied to the fact that companies whose markets were circumscribed by geography could grow most easily with the widest possible expansion of consumption.

What networking technology in general and the Internet in particular has allowed is the elimination of regional networks in favor of global competition that fractures local markets. And as global companies have assumed greater economic and political power, they have forced through regulatory changes that have assisted in the destruction of those regulations that had safeguarded the needs of lower-income residents within regions. As global market competition envelopes retail banking, power utilities and phone service, it is the power of global actors that is defining local politics rather than any indigenous cross-class collaborations. Where funds from business and wealthier customers had once supported universal services, the newer political regimes promote the exact opposite: low banking and service rates for the wealthy while lower-income consumers see fees escalate. And as once local "fixed capital" becomes footloose global players, it becomes unclear where the political will and economic resources for public goods will come from for local economic development that is not purely aimed at the needs of the business elite.

Local banking was once the fixture of community economics as city-based banks or more regionally-oriented bankers like A.P. Giannini saw the circulation of money between local depositors and local business as the lifeblood of their own enterprise. Expansion of consumer credit would expand local buying which in turn would expand the markets of local businesses - a virtuous cycle supported by New Deal regulatory rules like Regulation Q which mandated that rich and poor customers be offered the same basic interest rates. It was the first computerized banking networks tied to credit cards that would begin the undermining of these local bank markets, while upstart financial firms like Charles Schwab would use computerized networks to start moving the savings of upper-income professionals out of local banks and into the global financial markets.

The federal government not only repealed banking laws that stood in the way of this globalization of local money, it actively supported them through tax laws that encouraged savings and loans to resell their loans on the global bond market and supported new global banking expansion. Increasingly banks and other financial firms could pick-and-choose their customers not by region but by income and occupation across the nation and the globe, thereby dissolving any fixed pots of capital tied to geography. Venture capital which, instead of cycling money throughout the region as older banks did, would cycle capital between elite engineers benefiting from stock options and the wealthy investors searching for super-profits. On the other hand, poorer banks customers have been driven out of the system altogether through steeply increasing bank fees. Interstate bank mergers just further fueled the abandonment of regions.

At the same time, banks in the Silicon Valley region increasingly forged ties with the computer industry to increase their power within that global banking market. Much as regional collaboration on standards strengthened the role of Bay Area computer companies within the general Internet industry, banking collaboration within the region became a vehicle for the economic elite to strengthen their power in the global on-line banking system. So even as the ties between the poor and the wealthy within the region have unraveled, the economic and political ties of the regional elite have only strengthened.

In the case of the electric power industry, the Internet is becoming the vehicle for a breathtakingly rapid collapse of regional power market that once served as a crucial engine of regional industrial planning and growth. Spurred by Federal Energy Regulatory Commission regulations mandating a real-time Internet wholesale market for power sales, the power industry is beginning to forge national and global links that interpenetrate regional markets. With meticulous federal regulations facilitating these new electricity markets, $50 billion in wholesale transactions are being managed through the Internet and, as retail electricity competition takes off, up to $200 billion annually of electricity will soon be ricocheting across the national electricity grids.

Beyond the federal regulations that have facilitated this new market, it was federal support that developed the underlying technology that made non-regional electricity markets possible. Early on, power utilities had been seen as natural monopolies since the local flow of power made it simplest to let one company have a franchise for any neighborhood, city or even region. It was federally funded technology and research from the Electric Power Research Institute (its existence the result of pressure on the industry from the government) that pioneered the new class of solid state controllers called thyristors that allowed flexible control of the transmission of electricity. Derived from the same technology stream as the microprocessor (and largely from the same federal source of funding), these thyristors expanded the capacity of transmission lines and made it more economical for energy to be shipped between and within regional energy markets. Supplemented by new renewable energy sources and turbine technology dramatically improving the efficiency of natural gas as a source of electricity, the federal government developed the framework for the destruction of traditional regional energy markets.

As with the rise of global banking, the results of creating national markets for energy sales is an expansion of regional polarization as large business users grab the fruits of technology innovation in the form of hundreds of billions of dollars in energy price discounts, even as small users face the costs of bailing out local utilities who invested too heavily in obsolete nuclear facilities and other white elephants. Ironically, the economic non-viability of these "stranded assets" is the result of the very government planning in the 1970s that improved energy conservation and developed the new technology that is allowing the new networked markets in energy. And those new networked markets are themselves undermining the ability of local regulators to promote that same kind of energy conservation and economic planning in the future. As cooperation between utilities gives way to competition and as power companies invade each other's markets, companies are slashing investments in basic energy research.

Local regulators are increasingly stripped of the ability to govern local energy markets as, against the rhetoric of "decentralization", the federal government increasingly invests national regulators with micromanagement powers over all aspects of energy production, distribution and marketing. Where local electric utilities once ran their businesses with a rather light but public-spirited hand by local regulators, we are witnessing a blizzard of national legislation and regulation motivated by special interest players trying to buy political influence that favors their approach to market dominance. The greatest worry is that these new national microregulations will favor short-term production and profits at the expense of long-term investments in the electricity grid. Grid blackouts in the core of the network are easily prophesied as short-term market competition replaces the cooperation between utilities that has maintained the public energy grid over the years.

Nothing highlights the internal polarization of regional economics more than the trajectory of telephone "deregulation" which itself is tied up in the birth of the Internet itself. Despite the rhetoric of the Internet as a new free market, its emergence and the profits of Internet Service Providers has been dependent on regulations that allowed the Internet to cannibalize local telephone infrastructure at the expense of general phone users. Worse, the fragmentation due to the breakup of AT&T of different telecom services, including the Internet, has ended up preventing a general digital upgrade of that local infrastructure. High-end business and professionals have profited from an array of new companies and technologies given free access to the shared network, even as underinvestment in that infrastructure has led to higher costs for average users of the phone service.

In that sense, we are seeing the direct reversal of regional investment in public goods. Where once cross-class alliances supported investments in general public goods like the phone infrastructure on the condition that they help subsidize those unable to afford such services, we increasingly see the public, including low-income users, subsidizing new telecom services used almost exclusively by professionals and the wealthy. Behind the rhetoric of "deregulation" is the reality of an army of lobbyists pushing through regulations that force the local phone companies to give these elite services access to the public network without investing in the long-term health of that public good.

It is this mandate for interconnection to public networks by those looking for marginal profit that lies at the heart of economic polarization and the abandonment of the need by the elite for any serious involvement in regional agreements that include the needs of working families. Each step in the breakup of AT&T, from the rise of MCI and Sprint to private PBX services, saw the erosion of investments focused on the general network serving all customers. In their place arose ad-hoc private solutions for the elite that still depended on the existing public network with little responsibility to fund its maintenance. Where AT&T in the 1970s devoted 40 percent of long distance charges in continual investments in upgrading local infrastructure, other long distance services were allowed to invest just half that amount in exchange for interconnection and local proprietary networks gained access for the price of a local phone call.

Worse, as new electronic networks attached themselves to the public network, they each developed their own internal proprietary standards, thereby creating the fragmentation of electronic networks in the 1980s. And this interconnection to the public network by proprietary services was mandated by federal regulators over the objections of not only AT&T but also most state regulators who bemoaned the erosion of their ability to promote the upgrading of integrated regional networks. And when AT&T was broken up in the courts (over the objections of both regulators and public opinion), any semblance of long-term investment in local infrastructure gave way to short-term investments in new telecom services focused on the economic elite.

In a sense, the Internet became the government-backed solution to a fragmented mess created by the federal government-backed interconnection mandates of the 1970s. But while a technically innovative solution, it was an economically regressive solution that further eroded regional coherency around public goods and the economic planning that would assure equality of access. To leverage the success of the Internet, the federal government turned over the national backbones it had created to competing private companies while subsidizing local Internet providers through nearly free access to local phone infrastructure. Hemorrhaging costs in its core business, local phone companies turned to their own high-end services for profit and in the 1990s went on a merger and acquisition spree that essentially obliterated any real role as regional economic anchors. The 1996 Telecommunications Act would just ratify the competitive pressures that were driving costs up for lower-end users of phone and cable services while delivering discounts for global services to business and upper-income customers.

While the diversity of services delivered to business users was impressive, what was lost for average users in this liquidation of regionally-based telecom services is highlighted by the experience of the Minitel system in France. While admittedly less technologically sophisticated than the Internet, the Minitel electronic networking system was in place a full decade before most people in the US had ever heard of the Internet. By 1994, it was regularly used by over 50 percent of the population - a level of penetration still not reached within the US by the Internet. Where managing one's bank account electronically is a fact of life in France, it is still a bit exotic within the US due to continuing hassles over standards needed to create fully secure connections between home and bank over the Internet. As the New York Times noted in comparing the Minitel to the Internet:

For all its technological restrictions, the Minitel is everything the Internet needs to become. The hardware costs almost nothing, the system is safe and reliable for transactions, it guarantees a high degree of privacy, is amazingly simple to use, and generates revenues for both its operators and the merchants that venture into it.18

The difference is that integrated government planning in France assured both broader compatibility and more comprehensive participation by citizens. The kinds of security and financial transaction standards being promoted belatedly out of regional consortia like CommerceNet were able to be built into the Minitel system from day one. And because Minitel is administered by a telecom monopoly, it could invest in infrastructure for the long-term, including distributing Minitel terminals for free on the assumption that expanded use of the system would pay for the upfront investment over time. Given the fractured telecom system here, this is an impossible economic strategy in the US where no company could be assured of recouping such high levels of long-term investment, especially with the government mandating interconnection to one's potential customers. Another difference was that in France the profits from electronic networking, used more by upper-income citizens, were used to subsidize a massive expansion in general phone service for everyone in the country, assuring that all citizens, whether they used the Minitel or not, would benefit from its promotion by the government.

In the US, the fraud of "deregulation" is that despite the rhetoric, government mandates in industries ranging from banking to telecommunication have not disappeared - in fact they have grown as lobbyists swarm Washington. Instead, they have been used by industry to appropriate the "commons" of public networks for private profit at the expense of services to regional populations. Instead of regional banks or utilities being encouraged through local regulation to see their economic self-interest tied to general regional growth, the federal government has preempted local regulation in favor of mandating access to those regional networks by global companies. Those global companies can then make large profits off of the most valuable customers in regions everywhere, while having no responsibility for either less profitable customers or maintaining the public network as a whole.

The irony is that even as federal regulatory mandates have helped liquidate regions as functioning economic units, we still see the same conservatives who have pushed those mandates arguing disingenuously for "decentralization" of government economic decision-making to local government. The problem is that the same global economic forces that have accelerated economic commerce over the Internet and through other venues have undermined tax revenue for governments dependent on local commerce.

Local economic development once created a virtuous cycle of local planning and investment leading to local jobs where residents would shop at local stores and generate revenue for further economic development, both privately and publicly. The technologies of cyberspace are making it increasingly easy for consumers to shop for goods far from their home, thereby depriving local governments of tax revenue they could once count on. As out-of-state Internet-based commerce continues to expand, local and state governments lose billions of dollars in revenue. The federal government has done nothing to either assist local governments in collecting lost sales tax revenue or help replace the revenue with other forms of taxation. If anything, they have made the problem worse through heaping new spending responsibilities on local government and, through measures like the Wyden-Cox bill, further restricting their revenue options.

As commerce has been globalized by the new technology, the economic and political ties within regions between rich and poor communities have been frayed even further. In a sense, this process started with the globalization of financial networks which, as we have noted, helped dissolve regional pools of capital. With global speculation on the rise, housing prices and thereby property taxes accelerated out of control in the 1970s; richer property owners responded by pushing through Proposition 13 in California and similar measures throughout the country. Combined with escalating divisions between rich suburbs and urban centers, the ability of regions to coordinate economic development has been tightly constricted. In this context, regional corporate strategies allied purely to suburban and upper-income customers make sense in the context of local governments without the revenue to mount broad-based economic development initiatives.

Dependence on sales tax revenue has biased many local governments against promoting industry in favor of retail outlets while encouraging governments to offer tax breaks to companies to relocate - a further drain on local revenues in a destructive zero-sum competition for revenue. Internet commerce undermines that sales tax-dependent strategy, leaving local communities scrambling for revenue against one another in ways that often further undermines intelligent regional planning.

However, in the context of the elite regional business politics more broadly detailed in Chapter 2 and 3 of this dissertation, the scramble for tax dollars may only be a sideshow in the transformation of local politics in the age of the Internet. Integrated public utility networks and cross-class growth coalitions had defined the social space in which Progressive reformers in the early part of this century had built modern civil services in line with regional economic management goals. However, as industry has built its "gated community" and elite economic strategies and networks selectively connect rich suburbs and professional urban enclaves across the globe with the most advanced technology, poorer communities and urban sections have been left with little more than virtual dirt roads. We are seeing new ideologies of privatization and corporate servicing by local governments that end up doing little or nothing for the general population. Instead, cities and towns are pitted against each other in an endless competition to spend what little resources they have serving those with the most capital, while eroding democracy to make government services one more set of amenities that corporations choose from in conducting branch site selections.

At the most basic level, the invisible regional geography of communication serves to polarize already existing economic and racial divides as cities rush to support business with public networking goods. Technology investments in schools end up overwhelmingly in the hands of more privileged communities as business finds concentrated support for schools in their suburban enclaves a more cost-efficient approach than general revenues for all schools.

And just as networking has eroding firm barriers separating firm from firm, the Internet is helping to blur the lines between government and business. Global firms scoop government contract bids off the Net as local services become merely part of the business plan of multinational corporations. Conversely, government services respond ever more precisely to the demands of those businesses operating in the region, whether in expediting construction permits electronically or the wholesale marketing of government data for the benefit of firms doing business in the area. And in those areas such as job searches where electronic information could serve the public, the lack of access to information on the private sector (partly due to cutbacks in government funding) means that the Net fails for lack of political will. At best we see local governments seeking to extract small economic concessions for the wholesale benefits they deliver in their desperate recruitment of business.

Community Power in the Age of the Internet

So this is the rather grim situation of power and inequality as the age of the Internet begins. It is precisely at the local level, where politicians of left and right say people should be solving their economic problems, that they are most disempowered. Within such local politics, it is the global business class that exercises most power, since their easy threats to move away production and other jobs benefiting non-elite workers chills political debate on economic development. At the national level, both the ideology of decentralization and the raw economic power accumulated due to these trends has pushed for political policies that have accelerated the trends of economic polarization.

What is important to recognize, as this dissertation has emphasized, is that there is nothing in the technology that makes activist government irrelevant. If anything, the opposite has been the case as "market deregulation" has required escalating caseloads for national regulatory commissions and legal dockets. Intellectual property laws and trade deals have put government action at the center of determining the dispensation of economic fortunes between different interest groups. There is no technological reason why the underlying laws and regulations governing use of the new technology could not favor economic equity in a way that supported all communities rather than leaving them at the mercy of global gamesmanship by multinationals.

What has changed with the new technology is therefore not the degree of government intervention but of who it benefits and how power operates. And where the technology has played its most critical role is in strengthening the political hand of businesses to use rapid communication to coordinate far-flung geographic empires and increase its bargaining leverage in local and even national political fights.

But while the strengthening of the power of multinational companies has been the first result of the new technological developments, to merely extrapolate an ever-increasing gap in power and expanding inequality would be to ignore the long-term dynamics of technological change and social struggle over geographic space. As economic historians like Emanuel Wallerstein have documented, an early response to industrial technology was for capitalists to flee the old cities of the Middle Ages controlled by craft and guild rules. They built factories in traditional rural areas where a new geography of company-driven urbanization would define the economic landscape.19 While that change would empower a new economic class and introduce new power inequalities, it also would inspire in the following centuries new organizational responses. In particular, national trade unions would emerge and push for the centralization of government policies over working and living conditions, which in turn would create the modern social democratic conditions where "growth coalitions" had originally thrived.

A key part of the rise of such national associations as a check on the power of industrial economic power was the new communication technology of that day, namely the printing press and the newspaper. Alexis de Toqueville in his Democracy in America saw the newspaper as more than merely an avenue for speech but the conduit for the existence of civil associations by average citizens. As he wrote in 1839:

In a democracy an association cannot be powerful unless it is numerous. Those composing it must therefore be spread over a wide area, and each of them is anchored to the place in which he lives by the modesty of his fortune and a crowd of small necessary cares. They need some means of talking every day without seeing one another and of acting together without meeting. So hardly any democratic association can carry on without a newspaper...Newspapers make associations and associations make newspapers.20

In a times when the economics of newsprint and the rise of a mass, non-associational press has undermined the traditional newspaper, the rise of Internet communication as a tool of association may very well promise a counterbalance to the rising power of the economic elite. While recent in its application and still reaching only a fraction of those rooted in community due to the "modesty of their fortune," political and economic organizing over the Internet is slowly emerging as a critical tool for amalgamating the power of community members and workers across the country and the globe. It is in many ways dramatically more powerful means of "talking every day" and "acting together" than the newspaper every was.

The effects of the new technology on community organizations and unions is only tentative so far, so the stories concluding this study are anecdotal, but they do show the emerging possibilities that counterbalance the grim economic and political trends that existed as long as networking technology was the exclusive preserve of business. What is remarkable is how quickly the Internet has been moving from a high-tech toy to a day-to-day tool for organizing - often at a pace that leaves many activists bewildered. Its use promises not only new ways to exercise power within regions and on a global basis but also promises to reshape what democracy itself will mean for large mass organizations. Like the economic spin-offs centered in the technology regions of Boston and Silicon Valley, many of these initial political uses of the Net have had their basis in those regions as well.

The first public consciousness of the Internet as a political tool for progressive political change really came in 1995. Not surprisingly, the first stories emerged off of college campuses where the density of Internet connections was already relatively high. The event that caught the national media's attention was a March 29th national rally on 100 college campuses across the country protesting against the Republican Contract on America. Remarkably, the Boston-based Center for Campus Organizing - the lead organization of the national rallies - had only a dozen or so campus contacts as they announced the day of action in only a month-and-a-half before the proposed date. But using the Internet, they quickly spread the word, gained agreement on a set of principles endorsed by the network and created a national event covered by media ranging from USA Today to The Nation. The March 29th action followed closely on the heels of protests against California's anti-immigrant Proposition 187 which had spread nationwide over electronic mail lists dedicated to the issue sponsored by the Center for Community Economic Research at UC-Berkeley.21

Rich Cowan, a former MIT student who heads the Center for Campus Organizing, emphasizes that the Internet is no complete substitute for face-to-face meetings, but he does believe the Internet is a "vehicle for groups to exchange strategies and introduce new people to successful organizing strategies and the lessons they've learned."22 This is the power of the Internet: to allow activists to almost instantly share what is happening in their region, redefine national goals proposed by others and come to a consensus on dates and forms of joint action. From the fight against Proposition 187 to the March 29th rallies to national marches that would follow on May 6th against the Contract on America, furious on-line organizing became a fixture on the Internet in the Spring of 1995 in a way that had never been seen before.

Non-profits and the Net

Off campus, national non-profits had been slowly connecting on-line for a number of years and many local community organizations had begun to see the Net as a key to connecting communities divided by distance and media disinterest. Many began getting on-line for prosaic economic reasons. James Johnson, an organizer for Sacramento Communities Taking Action for Neighborhood Dignity (STAND), got on-line in 1995 to begin extensively sharing his work around police brutality and accountability with other organizations from Portland to Denver to Rhode Island to South Carolina. The move to electronic mail was a deliberate one by the Center for Third World Organizing (CTWO), STAND's Oakland-based national network headquarters, who supplied computers to its affiliates and helped to do basic computer training for organizers. Johnson notes that before e-mail, "CTWO organizations used to spend $15,000 per year just on UPS and postage and those costs dropped significantly. Where before you were looking at $10 per pop, now we just e-mail it." With the rapid fire exchange of information, community groups can more rapidly make the political case that local issues, whether lead poisoning in paint or police brutality, are actually national trends.

While Johnson got online initially for these cost-saving reasons, he hopes that access to on-line information will expand what his organization is able to do. STAND traditionally has concentrated on local organizing in poor and minority Sacramento neighborhoods, but Johnson hopes to use the Internet and the organization's Sacramento location to "shift some work to lobbying on statewide issues. There's a lot of information on the statehouse on the Internet that would allow STAND to get involved without hiring permanent lobbyists."23

Empty the Shelters (ETS), another national low-income organization, has made an even deeper commitment to conducting internal communications on the Internet. With offices in Chicago, Philadelphia, San Francisco, Oakland and Atlanta, staff and activists decided that using the Internet on homelessness and poverty issues would be the best way to coordinate their work in a practical way with a limited national budget. ETS invested to buy each activist center a modem, an online account and setup an on-line discussion conference for communication. ETS went a step further and began holding meetings online and posting all communications on their online conference. It even stopped faxing out information in order to force everyone to use the equipment that had been purchased.

The decision to move much of the organizational communication on-line was based on raw economics: "We had $7000 in the budget," notes Emilee Whitehurst who runs the Oakland office, "and we made the decision to invest in accounts and modems instead of putting the money into a national meeting. We had a debate and the choice was to bypass a meeting last December (in 1994)." Whitehurst admits that her own technophobia slowed her down from using the technology as quickly as other offices, but she points out that lack of training was a problem as well. Without money in the budget for training, Whitehurst emphasizes, merely investing in technology will not work. And Whitehurst emphasizes that face-to-face meetings will still remain vital: "There are certain things you can do on-line and some things you should reserve until you meet in person. We waited too long to get on-line but we have to be wise in how we use it and for what decisions."24

Pat Bourne, who helped run an early computer training and networking program at San Francisco State called SFUNET, emphasizes that despite the benefits of networking, the transition to the new technology is still a battle for many groups in low-income communities. SFUNET focused on working with groups focused on the problems of homelessness and Bourne worries about those being left behind: "People in the computer area have no idea the budget constraints these non-profits are under," complains Bourne. "Just getting $60 for a modem is hard. The lack of resources is unbelievable - the lousy office equipment, the pressure they are under. This is why I wince when people talk about Windows or the Web and talk about, hey it's only $800 for a 486." Each advance in technology raises the bar a bit higher and threatens to leave those struggling on-line behind: "There was a point where any piece of junk could use the computing power of the host computer. But with graphics and the Web, it demands more power from the person's computer."25 Beyond the costs of equipment are the costs of keeping staff trained in the technology. For non-profits dependent on the sweat and expertise of a key volunteer or staff person, turnover can also be a devastating blow.

Still, non-profits across the spectrum from environmental to peace organizations have taken strongly to electronic communication. As dramatically, many organizations, particularly unions, have begun using the Internet not merely to communicate with allies but as an integral part of their organizing weaponry against opponents.

Unions and the Electronic Targeting of Business

A key feature of the new economy, especially in places like Silicon Valley, has been the outsourcing and subcontracting of many jobs, especially those held by less skilled and often minority employees. This has allowed many high-tech firms to create the illusion of being "good employers" even as large chunks of their effective workforce, whether in subcontracted assembly plants or in support services, work for substandard wages in awful conditions. One use of the Internet has been to cross the social distance between the segmented workplaces of elite core workers and peripheral workers being organized.

Justice for Janitors, one of the most militant union campaigns across the country by the Service Employees International Union, took on and won a broad campaign to organize the janitorial workforce of Silicon Valley - one of the only segments of the industry that has been unionized in recent years. Combined with militant street action, the union used the Internet to publicize its campaigns against Apple Computer, Oracle and Hewlett Packard on a global basis to tarnish the companies' images as "model" employers. Additionally, they used electronic bulletin boards to directly inform engineers and programmers of the work conditions of those workers who the elite workers never saw who cleaned their offices every night, putting pressure on those companies to recognize the union.

Oakland-based Local 2850 of the Hotel Employees & Restaurant Employees (HERE) International union, which covers much of the emerging highway 580 extension of Silicon Valley, has begun using the Internet even more directly in their organizing campaigns, particularly in targeting a small chain of luxury hotels known as the Western Lodging Group. The union's initial foray onto the Internet publicized retaliatory firings at the Lafayette Park Hotel and generated hundreds of letters, phone calls and e-mailed support letters from activists and organizations around the country. As the campaign evolved, a key tactic of the union became targeting corporate customers of the hotel who regularly used it to house visiting clients.

One of the hotel's largest corporate customers had been PeopleSoft, a computer software company that used the hotel for employees and corporate partners coming into town. After refusing to relocate to another hotel, Local 2850 took the simple step of highlighting negative economic facts from the company's own legal filings, then posted the fact sheet to computer-oriented newsgroups on the Internet. The result was almost instantaneous; the company received a barrage of letters from worried customers and investors, while PeopleSoft claimed that its stock declined by over $63 million in value due to reactions over 2850's electronic postings. Soon after, PeopleSoft announced it was moving its customers and other visitors to another hotel.

Other companies have been similarly targeted; in this way, Local 2850 has managed to use the Internet to link the struggle of some of the most peripheral workers in the Silicon Valley production system - those who clean the rooms of clients - to the global capital investors in Bay Area firms. The next step was for 2850 along with a broader network of affiliated hotel union locals to build on-line connections to target the global hotel reservation system of travel agents and event planners to discourage them from booking customers in targeted hotels. With a well-publicized Web page and electronic messages to key people, images of picket signs and chanting protesters have been used to steer potential customers thousands of miles away from booking rooms in hotels being targeted for organizing.26

One of the most ambitious attempts to use the new information technology to take on the global firms of the Bay Area has been launched by the South Bay Central Labor Council, encompassing 110 affiliated unions representing 100,000 workers in much of Silicon Valley. Amy Dean, head of the Labor Council based in San Jose, sees the future of the labor movement in organizing the vast array of contingent workers created in the region. Having strongly backed the Justice for Janitors campaign, Dean sees it only as the beginning: "The janitors were just the first among the contingent workforce. This is going to involve everybody from janitors to technical writers to software gypsies and testers to quality assurance engineers. When we talk about doing windows in the valley, we're not just talking about the janitors who clean them, but the software engineers who write them."27 Along with launching a community-based policy center called Working Partnerships as a direct counterpoint to the business-led Joint Venture: Silicon Valley, the Labor Council's Web site is seen as a tool over time to creating a community of contingent workers who rarely meet and can then be organized into economic power.

One effect of the Internet that is strengthening unions but is less welcomed by many national union and organizational leaders is its use in increasing democracy within national organizations. The Internet promises a large upheaval in democratic debate as local areas gain greater voice and connections laterally outside hierarchical structures of the organization.

One case in point is the American Federation of State, County and Municipal Employees (AFSCME) where an electronic mail list called PUBLABOR has been heating up the Internet for the last few years with debates about democracy in the organization. Local union leaders and activists who had never had a chance to talk face-to-face have shared sharp criticisms of the national union leadership for its failure to support their locals and for instances of undemocratic leadership. Complaints over use of union dues in one local lead to other participants chiming in with similar or different experiences in their region of the country. Others in AFSCME have staunchly defended the national leadership amidst the raucous debate and in-depth analysis of the organization's successes and failures.

Katie Buller, a library support staff person at the University of Madison-Wisconsin and an AFSCME member, created and moderates the PUBLABOR list and views the debates over democracy in the union as a reflection of members' frustrations in a large organization. "PUBLABOR has provided an opportunity for activists to talk to each other; before we didn't even know each other, nor did we know that we could share common problems and success stories, learning from each other in the process."

Buller has received some pressure from her local AFSCME leadership to use her position as moderator to tone down criticism of the top leadership, but Buller shrugs off the pressure as "livable." "What is AFSCME gonna do? Throw me out for creating a forum for free speech?" She adds that International union staff have generally been supportive of her work on the list, even though most of the leadership have avoided participating in the debates, either out of fear of being attacked on the list or out of lack of time for the long debates. Buller also thinks the problems of internal democracy and other faults are no worse in AFSCME than other unions; "AFSCME is often a target because it is the biggest of the public employee unions," argues Buller and she praises the organization for working to become "Net literate." 28

What AFSCME is facing will no doubt become chronic across larger organizations, ranging from unions to the NAACP to environmental organizations: chunks of the "mass" membership and local leaders will get on-line and gain the ability to initiate dialogue on the direction of their organizations outside the often tightly controlled annual or biannual conventions. But that expansion of democracy will only strengthen these organizations over the long run as local concerns more easily become national issues.

Think Locally, Act Globally: The Internet and the Globalization of Economic Justice Organizing

Beyond national organizing, the Internet is hastening the process of global alliances challenging privatization and economic trade deals that ignore the concerns of environmentalists and labor. On News Year Day of 1994, the day that NAFTA was implemented, the Zapatista guerrilla army announced its existence to the world and launched a series of raids that focused attention on their demands for land reform and a rollback of neoliberal economic policies in Mexico. From the beginning the Internet would be used to convey the ideas and messages of the Zapatistas and their mysterious leader Subcommandante Marcos to the world. The Mexican government clashed with the rebels, then spent the year in uneasy negotiations seeking a peaceful settlement of the conflict.

As the peso's value plunged in 1994, many nervous investors blamed the Zapatistas for undermining the country's economy. While serious analysts noted that the operations of a small army in a marginal state like Chiapas was not itself significant, perception could create reality in the volatile financial markets. Finally, an analyst for Chase Bank of New York on January 13th, 1995 published a memorandum declaring, "While Chiapas, in our opinion, does not pose a fundamental threat to Mexican political stability, it is perceived to be so by many in the investment community. The government will need to eliminate the Zapatistas to demonstrate effective control of the national territory and security policy."29 Within a month, Mexican President Salinas launched a military assault on the Zapatistas under pressure from both Chase and other international financial forces.

The Chase memo got no coverage in the US media except for a small newsletter run by Nation columnist Alexander Cockburn and his collaborator Ken Silverstein. But then the political networks that had been distributing information on the Internet for the Zapatistas picked up on the newsletter and redistributed it with the comments from the Chase analyst. A firestorm of angry email and phone calls swept over the Chase headquarters threatening boycotts and other sanctions against the bank. The first mention of the story in the major media became Chase publicly disassociating themselves from the analyst and his recommendations. As Mexican papers expressed outrage at this capitulation to US financial interests, Salinas was once again forced to back away from the war against the Zapatistas. A few months later in May, the Mexican foreign minister, Jose Angel Gurria Trevino, paid a back-handed tribute to the success of the Zapatistas' and their allies' technological sophistication when he tried to dismiss the rebellion as just "war of inks, of writings, and a war on the Internet."30

The conflict in Chiapas became for many progressive activists a paradigm of a new global politics - a conflict rooted in a specific region, yet appealing for global economic changes to make reform possible. It was a war waged by some of the poorest and least technologically-sophisticated people on the planet using cutting edge technology to bypass the biases of the global mass media. Even as the electronic flows of money crash through regional economies and increase economic inequality, progressives took heart that the new electronic flows of information were giving the world community of activists a new tool for coordinated response.

If the electronic financial tools had come out of those square miles of Silicon Valley, many of the electronic tools carrying the Zapatistas messages were also flowing from the same acreage, largely in the form of an organization called the Association for Progressive Communications (APC), a global consortium of dozens of national electronic networks, with its headquarters at its US-affiliate, the Institute for Global Communications (IGC). IGC is the center for progressive networking in the US with over 7000 progressive environmental, peace and labor organizations having accounts with the organization by 1997 and through the APC connects directly with over 50,000 activists and non-profits in over 133 countries. 31

Starting off as bulletin boards run off of Apple II's in the early 1980s, two electronic networks, EcoNet and PeaceNet, arose to link peace groups and environmental organizations. These networks based in Menlo Park grew out of the rich left-wing organizing tradition of the 1970s that had briefly fused with the emerging personal computer revolution in places like the Homebrew Computer Club. Lee Feldenstein, the red-diaper baby who had helped launch Homebrew, would use profits from his shares of Osborne Computer to build an early networking project called Community Memory until Osborne itself collapsed. Other projects like the Peoples Computer Company (a magazine not a manufacturer) and for-profits like DYMAX, all located in Menlo Park, would spread the gospel of technology to politicos in the area.32 Out of this milieu arose EcoNet and PeaceNet which in 1986 merged to form IGC (and added components involving labor, conflict resolution and women's organizations). In 1988, IGC launched a major effort to spread electronic networking internationally, especially in third world countries and among indigenous peoples. At the same time, IGC had donated its software to GreenNet, a progressive electronic network in the United Kingdom, and it began assisting the creation of electronic network affiliates around the world. Seven founding national networks would create the Association of Progressive Communications in 1990, which would grow, to fifty affiliates by 1997.APC would be chosen by United Nations agencies and conferences to host discussions and resources, a recognition of their critical international role.33

While the rise of the Internet lessened IGC's role as often the exclusive electronic connection activists might have with other activists around the world, it has continued its role in building networks where the Internet still has yet to deeply penetrated and, more importantly, in building the political and social infrastructure that made links possible. In many ways, IGC and APC thrived earliest as the center for international linking of community organizations that had never been able to have regular contact in the past. One example cited by IGC staff is the Environmental Law Community, which used electronic networking to strengthen an existing organization and extend its reach internationally. Using the system for conferencing and email, IGC staffer Michael Stein paints this picture:

Their staff is running around the world with Powerbooks and they're driving the technology. E-law's John Bonine flew to Mongolia at the request of a small law cooperative and won the struggle against a mining concern about three years ago. Now, there's a computer network in Mongolia called MAGIC that just joined APC and it was through his efforts. There's someone who used the electronic medium to drive community building. They're sold on IGC and APC, so wherever John goes Powerbook in hand, they promote it.34

Stein also cites the example of the Pesticide Action Network, based in San Francisco, which has helped build a stronger worldwide movement around pesticide reform. They have worked hard to get all thirty-five of their steering committee members on-line from around the world, creating affiliates in Africa, Asia, and Central America. Going to endless trouble to get modems and computers to their affiliates around the world, "they really made use of the computer to enhance capacity building in their movement."

As the Internet and the World Wide Web has grown, other groups have pioneered using it to spread information and target global corporate targets. The Rainforest Action Network (RAN), in its effort to curtail logging by Mitsubishi Corporation, began inundating its headquarters with faxes automatically sent from the RAN Web site upon request by those visiting their Internet site.

However, if any organization shows the political promise of the Internet as a counterbalance to corporate power, it is the Minneapolis-based Institute for Agriculture and Trade Policy (IATP). As NAFTA, the World Trade Organization and other international trade institutions assume ever larger roles in governing not only trade but also the limits of environmental and labor rights around the world, the IATP has been pioneering the use of the Internet to keep activists around the globe updated with the information needed to track and fight for a more just trade system in the world. The IATP was established in the 1980s by organizations throughout the Americas to create a multi-national progressive counterbalance to those advocating neoliberal rules on trade. "In 1988 and 1989," explains IATP Executive Director Mark Ritchie, "we saw how to use the computer information technology to summarize the information we were collecting and distribute it cheaply to establish a common information base in a wide area of organizations. We spawned a whole new genre of publications and genre sharing."35 A co-founder of the Fair Trade Campaign against NAFTA and GATT, IATP would play a critical role in educating environmentalists, unionists and community organizations not only to the need for an alternative trade policy but of the need for international organization across borders to achieve those goals over the long-term.

IATP updates would become a weekly and sometimes daily information source with news from around the world, summarized and then redistributed to activists around the world. Bulletins would be sent over the Internet to cities around the world, then faxed by those organizations to allies without Internet connections - cutting the communication costs drastically and expanding the information distributed to hundreds of organizations who had never heard of IATP or the Fair Trade Campaign before. These information bulletins would be supplemented by on-line archives and strategy discussion conferences located at IGC where trade policy and organizing strategies could be broadly debated. While neither NAFTA or GATT were defeated in the US Congress, the organizing campaign against them forged new links domestically between environmentalists and labor unions that had never existed before, while a whole new vista of international organizing has grown linked to common struggles around trade issues.

Beyond its organizational savvy with electronic communication, IATP has been pushing itself (within its low-budget means) to the technological edge. "We've experimented with having people electronically scan articles in other countries," notes Ritchie, "then send them up to us on the Internet. Then we run them through language translation software. It doesn't give perfect translations, but it allows us to monitor information that would be otherwise inaccessible to us." Not only does IATP use the Internet for electronic discussions, it began experimenting having conference calls directly over the Internet - bypassing the phone companies - as early as 1995. IATP has produced a weekly television and radio show for a number of years and began using satellite time to beam it around the world and hope to soon begin distributing it over the Internet as that becomes possible. What is remarkable is that IATP has achieved its quite penetrating level of worldwide communication with a relatively small staff - a feat made possible only due to the leveraging of the Internet to expand both its sources of community information that it then publishes and its reach to those who need its day-to-day information.

The Internet may not have single-handedly defeated "fast track" authority in the fall of 1997 but it played a key role in bypassing a major media devoted almost unanimously to free trade in traditional corporate terms. No less a supporter of free trade than The New Republic has noted the gulf in viewpoint between " an insular and patronizing pro-globalization establishment" versus what the magazine labeled "resentful and suspicious anti-globalization populists." The magazine noted that the next battle on globalization, the Multilateral Agreement on Investments, may have already been lost without a single major article about the agreement in major newspapers due to "MAI paranoia [which] has ricocheted through the Internet." The magazine worried that the elite was ignoring this growing grassroots organization on the Internet at its peril.36 By March 1998, The Economist noted in an article titled "The sinking of the MAI" that "Labour and environmental groups want high standards written in for how foreign investors should treat workers and protect the environment. Their fervent attacks, spread via a network of Internet websites, have left negotiators unsure how to proceed."37

The reality is that activists committed to their local community have begun to flip the old 60s mantra of "Think globally, Act locally" on its head. With power at the local level at the mercy of global corporate competition, activists on the Internet increasingly see global alliances as, ironically, the only way to preserve local sovereignty in any meaningful way. In that paradox of the electronic age, it is the technological and global elite that increasingly pays rhetorical homage to "community" (gated in most cases) and local government, while it is local community and union activists who increasingly see the global village as their political home.

Conclusion: Global Links to the Politics of Place

What this all promises is a growing struggle in each region as the positive and negative trends of the information age clash. As global companies create new strategic alliances using the elite human resources of each region in turn, labor and environmental organizations are marshaling the tools of the information age to organize communities and the contingent workers pushed to the fringes of economic and political power.

De Toqueville as he surveyed early 19th century America cast a critical but pleased eye on the democratic possibilities of his age. But the rise of industrialization did trouble him as to the effects it was likely to have on the quality of "association" that he saw as so critical to his view of democracy. He despaired that "An industrial theory stronger than morality or law ties [the industrial worker] to a trade, and often to a place, which he cannot quit. He has been assigned a certain position in society which he cannot quit." He worried that as the lives of the worker narrowed and his cultural vision narrowed, a new manufacturing "aristocracy" was arising that had abandoned all loyalty to territory or place and "there is no true link between rich and poor." With no loyalty to the individuals they employed or the territory in which they live, de Toqueville saw this new industrial class of employers as the greatest threat to democracy in his survey. While he hoped they would not flourish, De Toqueville argued:

I think, that, generally speaking, the manufacturing aristocracy which we see rising before our eyes is one of the hardest that have appeared on earth...For if ever again permanent inequality of conditions and aristocracy make their way into the world, it will have been by that door that they entered.38

While De Toqueville's fears were realized in the later part of the 19th century, there had been hope after decades of struggle by unions and political organizations that a new form of liberal social democratic state had been established in the mid-20th century. A key part of that vision was the sense, as John Logan and Molotch described it, of a business class that had tied itself economically to the regions in which they did business through cross-class alliances and "growth coalitions" to build the economic infrastructure that benefited all in our economy. Instead, we have seen the globalization of economic commerce and the emergence of regions not as shared democratic spaces but merely useful venues for economic management of global technologies. In the Internet we see the contrasting visions of the rootless corporations promoting global commerce as local tax revenues disappear into cyberspace versus the new grassroots organizing of unionists and environmentalists building a new paradigm of promoting global economic rules aimed at the needs of local communities.

The growth of the Information Superhighway embodies in this way a radical change in urban space where global links in communication and organization become the key to exercising any local power. Internal alliances within a region will always matter but local power is inevitably flowing to those who can use the new information technology to deploy global power in support of those local needs. That is the challenge of communities in the new information age.

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Endnotes for Chapter 8

1 General Agreement on a New Economy (GANE). For Full Employment, Equity and Environmental Sustainability: Summary of Working Draft #1. Washington, DC. http://www.igc.org/econwg/gane/g11sum.html.

2 Davidson, Carl and Jerry Harris. "The Third Wave and the Republicans: Is Newt Gingrich a Closet New Leftist?" cy.Rev: A Journal of Cybernetic Revolution, Sustainable Socialism & Radical Democracy. Issue #2, March 1995.

3 Flamm, Kenneth. 1988.

4 Arthur, W. Brian. "Increasing Returns and the Two Worlds of Business." Harvard Business Review. July-Aug 1996.

5 Krugman, Paul. "Complex Landscapes in Economic Geography." The American Economic Review. Vol 84, no. 2. May 1994.

6 Markusen, Ann; Peter Hall, and Amy Glasmeier. High Tech America: The What, How, Where, and Why of the Sunrise Industries. Boston. Allen & Unwin.

7 Saxenian, Annalee . Regional Advantage: Culture and Competition in Silicon Valley and Route 128. Cambridge: Harvard University Press, 1994.

8 Piore, Michael and Charles Sabel, The Second Industrial Divide: Possibilities for Prosperity. Basic Books, New York, 1984.

9 Best, Michael. The New Competition: Institutions of Industrial Restructuring. Harvard University Press, Cambridge, MA: 1990.

10 Harrison, Bennett. Lean And Mean: The Changing Landscape of Corporate Power in the Age of Flexibility. Basic Books: US: 1994.

11 Reich, Robert. The Work of Nations: Preparing Ourselves for 21st Century Capitalism. Alfred Knopf, New York: 1991.

12 Gordon, R. and L. Kimball. "The Impact of Industrial Structure on Global High Technology Location." in The Spatial Impact of Technological Change, ed. by John Brotchie, Peter Hall & Peter Newton. Croom Helm. London. 1987.

13 Moeller, Michael. "Fort Apache: freeware's spirit outshines commercial products." PC Week v14, n23 June 9, 1997.

14 Glyn Moody. "The Greatest OS That (N)ever Was." Wired. August 1997.

15 Mandel, Michael. "Taking Its Place in the Pantheon." Business Week. August 25, 1997.

16 Logan, John R. and Harvey Molotch. Urban Fortunes: The Political Economy of Place. University of California Press. Berkeley. 1987.

17 Harvey, David. The Urban Experience. John Hopkins University Press, Baltimore: 1989.

18 Giussani, Bruno. "France Gets Along With Pre-Web Technology." The New York Times. September 23, 1997.

19 Wallerstein, Immanuel Maurice. The Modern World-System. Academic Press. New York. 1974.

20 DeToqueville, Alexis. Democracy in America. Ed. By J.P. Mayer. Translated by George Lawrence. Anchor Books. Garden City, New York. 1969, p. 517-1518.

21 Miller, Leslie. "Activism goes on-line: Plugging in to electronic organizing." USA Today. April 25, 1995 and George, Rose. "Drop the Prop." The Nation. January 9/16, 1995. As a co-director of the Center for Community Economic Research, I have to acknowledge that my involvement in this and a few other of the cyber-organizing actions described here was more than as a disinterested researcher.

22 Rich Cowan, Center for Campus Organizing, interview, June 13, 1995.

23 Interview with James Johnson, Organizer with STAND (Sacramento communities Taking Action for Neighborhood Dignity), March 29, 1995.

24 Interview with Emilee Whitehurst, Coordinator of Empty the Shelters Oakland, May 26, 1995.

25Interview with Pat Bourne, director SFUnet, April 8, 1995.

26 Interviews with Jim Dupont, President Local 2850 HERE and Stephanie Ruby, Organizer Local 2850.

27 "Labor Plans Big Sweep in Valley: Janitors just first wave of organizing 'renaissance.'" San Francisco Chronicle. May 31, 1996.

28 Interview with Katie Buller, PUBLABOR moderator, August 1995.

29 Cockburn, Alexander; Silverstein, Ken. "War and peso. (Mexico)", New Statesman & Society, 24 Feb 1995.

30 Chapman, Gary. "Mexico: Window on Technology and the Poor." Los Angeles Times. October 28, 1996.

31 Richtel, Matt. "The Left Side of the Web Seeds Global Grass Roots." The New York Times. June 14, 1997.

32 Levy, Steven. Hackers: Heroes of the Computer Revolution. Anchor Press. Garden City, New York. 1984.

33 Sallin, Susanne. The Association for Progressive Communications: A Cooperative Effort to Meet the Information Needs of Non-Governmental Organization. A Case Study Prepared for the Harvard-CIESIN Project on Global Environmental Change Information Policy. February 14, 1994.

34 Interview with Michael Stein, IGC Program Manager, March 8, 1995.

35 Interview with Mark Ritchie, Institute for Agriculture and Trade Policy Executive Director, June 8, 1995.

36 Beinart, Peter. "TRB from Washington: The Next NAFTA." The New Republic. December 15, 1997.

37 "The Sinking of the MAI." The Economist. Mar 14, 1998.

38 De Toqueville, p. 555-558. 581