The Network Economy
The Role of information in
Providing Coordination & Control
Cognition & Coordination
(Courtesy of
Joisyshowaa)
Beniger’s Conceptual Metaphor &
Social Mechanisms
(Courtesy of
Retinol
Entropy & the Second Law of
Thermodynamics.
Systems must be open if they are
to prevent entrophy
Information allows systems to
survive & maintain control.
Information technologies
increasingly provide the means.
What Does Beniger Mean by
Control?
A system that provides communication and a feedback
mechanism.
Where does Beniger Stand on the
Social Constructivist Scale?
• Somewhere in the middle!
• Technology was created to fill a
need.
• Technology solved the problem but
in so doing increased the crisis of
control.
• Hence, a dialectical relationship
exists between the two.
Courtesy of J.
Leighberry
How is Beniger’s Work Similar to that of
Shumpeter, Veblen, & Freeman’s?
• An emphasis on historical
evolution.
• Incorporation of cumulative
factors.
• A reasoned history, comparing
variables across time &
circumstances.
(Courtesy of Webjoy)
• Technology clusters & uneven
development.
How Does Beniger Differ?
• Emphasis on shared characteristics.
• Although economies are diverse, they share a
need to coordinate activities and maintain
control
• Coordination requires information & an effective
way of communicating it.
• Networks—both social as well as
technological—serve as a means for such
communication and control.
• Social ties are a function of a lack of
communication. Ie. the traditional vs. the
associational community.
How Does His Perspective Compare
to Marx?
• Social behavior is purposive.
• Change takes place in a structural, dialectical
fashion.
• Technology plays a key role.
(Courtesy of Alvero
Harrais)
How Does His Perspective Compare
to That of Adam Smith?
• Although economic growth
depends in part on the size of
the market, it also depends on
what Durkheim described as
moral density. Lacking moral
density, uncertainty in the
market gave rise to the first
information industry—in the
form of all type of information
‘middlemen.’ It was these
middlemen that allowed the
‘market’ to rule throughout
the period of commercial
capitalism.
Title: Middle Man;
Artist: Adam... from
Bear and Bird
In What Tradition Can We
Locate Beniger?
• Classical Sociology
• Emile Durkheim (social facts)
• Talcott Parsons (structural
functionalism)
• Both were concerned with the
problems of increasing
complexity, and the need for
greater integration.
Courtesy Hamid Bohloll
(Courtesy Juan Pardo)
Harking Back To Durkheim—Beniger
Explains the Industrial Revolution
“Resolution of the crisis demanded new means of
communication, as Durkheim perceived, to control
an economy shifting from local segmented markets
to higher levels of organization—what might be
seen as the growing ‘systemness’ of society. This
capacity to communicate & process information is
one component of what structural-functionalists
following Durkheim have called the problem of
integration, the growing need for cooperation of
functions that accompanies differentiation and
specialization in any system (Beniger: 11)
Beniger Follows a
Functionalist Approach
• Society has a direction—it
is increasingly complex.
• To coordinate requires a
means of control.
• The problem is ongoing &
dialectical in nature.
• Technology is viewed as
the solution as well as the
cause.
Courtesy of B Tal)
What is a Functional
Argument?
• A specific type of ‘social mechanism.’
• Entails the notion of an agent functioning
to achieve an implicit goal.
• The consequences of some kind of
behavior or social arrangements are
considered essential elements of the causes
of that behavior.
A Structural/Functional
Model
(h)omeostatic
variable
(s)tructure
(t)ension
When Are Functional
Arguments Appropriate?
• Difficulty in achieving a
goal leads to increased
effort, as well as a variety
of means.
• If the desired end is
achieved, despite
considerable resistance.
• When selection/rewards
take place according to
consequences
(courtesy of Survival of the Chillist)
Applying Functional Imagery
to Beniger
• The goal sought (H) is control over information to
coordinate the economy.
• The tension (T) in the equation is the growth in the
size and complexity of the economy.
• The structure (S) refers to the various structures or
behaviors that are adopted to provide the requisite
control.
Source: A. Sinchcomb
By What Means Do Societies
Increase Control?
• Differentiation & specialization.
• Programming.
• Standardization and preprocessing.
• Enhanced information processing.
• Communications & feedback.
Some Examples Include:
• Structural differentiation: specialization of city merchant into retail
shoppers and their wholesale suppliers; general merchants into ship
owners, managers, and traders; interior jobbers into more specialized
middlemen.
• Innovations in programming: establishment of bankruptcy, commercial
and corporation laws, & regulation of interstate commerce.
• Standardization & preprocessing: fixed prices, commercial credit ratings,
standard means of sorting, grading, etc.
• Information processing: the auction and the commodity exchange,
commercial bills of lading and warehouse receipts.
• Communications: commercial newspapers, trade journals, mercantile
libraries.
What Thesis is Beniger
Contesting? How?
• The sector approach to economic development is
inappropriate.
• The information revolution is not a new phenomenon—
and information infrastructure was essential to every
phase of social and economic history.
• The information revolution is part of the larger and ongoing Control Revolution.
• The state of IT determine the level of economic growth.
What Constitutes Collin ClarkDaniel Bell’s 5-Stage Growth Model
• The primary sector—extraction and cultivation of primary
resources.
• The secondary sector—processing primary goods as in
construction and manufacture.
• The tertiary sector—providing the economic infrastructure as
in utilities, transportation & communication.
• The quaternary sector—trade, finance, and parallel processes
for collection, processing, and distributing information.
• The quinary sector—social program in the form of
socialization, law, and education.
How Were Bottlenecks Overcome in
the Commercial Economy?
• Decentralization of Activities—to provide
information function.
•
•
•
•
•
Factors
Commissioned merchants
Auctions
Jobbers
Storekeepers.
• Importance of social networks & traditional
relationships.
.
What Was the Role of the
Tertiary Sector?
• Common carriers and companies to build overland rights
of way.
• Allowed for specialization by reducing information and
transaction costs.
• Complex network of specialized middlemen.
• But the system lacked regularity and predictability, so the
market governed.
• Preceded the exploitation of the primary and secondary
sectors.
What Was the Role of the
Quaternary Sector?
• Pooled capital—joint stock companies.
• National banking system with distributed branches,
allowing for circular exchanges.
• Insurance companies, which not only reduced risks
but also provided investment capital.
• Were required for the exploitation of the primary
and secondary sectors.
The Industrial Revolution—Random
Events or Clustered Technologies?
• Coal
• Iron
• Railroads
• Machine tools
• Telegraphs
• Standards
(Courtesy of Let Me Be Mobile
What Caused the Crisis of
Control?
= The need for communication, information processing and
decision-making to move the entire system at the increased
speed.
How Did These Crisis Manifest
& Resolve Themselves?
• Transportation--the railroads
(safety/efficiency).
• Distributed processing.
• Standardization.
• Bureaucratization.
• Communication feedback and
control.
Crisis Resolution (cont)
• Production (controlling inputs, economies of speed).
• Preprocessing with standardized, interchangeable parts.
• Standardized processes with mass production—
scientific management, continuous processing,
assembly line.
• The vertically integrated firm—control for inputs,
quality control, statistical control via market feedback
from dealers. Control flow from production to
consumer.
• Wholesale jobbers, department stores & retail catalogs.
• Postal service. Rural Free Delivery.
Crisis Resolution (cont.)
• Consumption (matching supply and demand)
• Product differentiation through packaging, trademarks,
and branding.
• Emergence and specialization of advertising.
• Use of mass media to foster mass consumption.
• Retail credit.
• Supermarkets—process people past merchandise.
• Chambers of Commerce. Consumer protection.
Blogging Question
How are Toyota’s problems
related to Beniger’s control
revolution. How might
they be resolved. What role
will networks (social and
otherwise) play? What
solutions would you
suggest?