IT in Education: Sociological Perspective
Lecture 3
The Economic Consequences IT Development:
The Coming of Informational-Global Capitalism
The Rise of Network Society
The Rise of Network Society

Informational and the Information
Technology Paradigm (Castells, 1996)

Central position of information in production:


It replaces land and natural resources in pre-industrial
society and capital in industrial society to become the
primary factor of production in the value production
process.
In industrial society, it is information and knowledge
acting on technology, which triggered the industrial
revolution; but in informational society, it is technology
acting on information that revokes technological
breakthrough.
The Rise of Network Society

Informational and the information
Technology Paradigm (Castells, 1996)

Central position of information in production:


…
As a result, technology to act on information has
replaced the technology on natural materials and energy
to become the major driving force for advancement and
competitions.
The Rise of Network Society

IT Paradigm …

Pervasiveness of IT: As the mobility and
penetrating capacities of IT grows, it has
pervaded into every aspects of human
activities and every domains of modern society.
As Castell underlines “we now have a wireless
shin overlaid on the practices of our lives, so
that we are in ourselves and in our networks at
the same time. We never quit the network, and
the networks never quit us.” (Castell, 2008, P.
448)
The Rise of Network Society

The constitution of the network logics
“The Atom is the past. The symbol of science for the next
century is the dynamical Net … Whereas the Atom
represents clean simplicity, the Net channels the messy
power of complexity. …The only organization capable of
nonprejudiced growth, or unguided learning is a network.
All other typologies limited what can happen. A network
swarm is all edges and therefore open ended any way you
come at it. Indeed, the network is the least structured
organization that can be said to have any structure at
all. …In fact a plurality of truly divergent components can
only remain coherent in a network. No other arrangement –
chain, pyramid, tree, circle, hub – can contain true diversity
work as a whole.” (Kelly, 1995, p.25-27 quoted in Castells,
19976, note71, p. 61-62)
The Rise of Network Society

The constitution of the network logics
“Network can now be materially implemented, in all kinds
of processes, and organizations, by newly available
information technologies. Without them, the networking
logic would be too cumbersome to implement. Yet this
networking logic is needed to structure the unstructured
while preserving flexibaility, since the unstructured is the
driving force of innovation in human activity” (Castells,
1996, p. 62)
The Rise of Network Society

IT Paradigm …
Flexibility: The fluid structure of the network and its IT
basis provide the network with high degree of modifiabity,
reversibility, and reconfigurability. In one word, flexibility
has become one of the definitive features of IT network.
By flexibility, it refers to the state of affairs in which “not
only processes are reversible, but organizations and
institutions can be modified, and even fundamentally
altered, by rearrangeing their components. What is
distinctive to the configuration of the new technological
paradigm is its ability to reconfigure, a decisive feature in a
society characterized by constant change and
organizational fluidity. ….

The Rise of Network Society

IT Paradigm …
Flexibility:
. ….Flexibility could be a liberating force, but also a
repressive tendency if the rewriters of rules are always the
powers that be. As Mulgan wrote: ‘Networks are created
not just to communicate, but also to gain position, to
outcommunicate.’” (Castells, 1996, p. 62)

The Rise of Network Society

IT Paradigm …

Convergence: Built on the above-mentioned
features of IT network, the network also equips
with high degree of compatibility and
convergeability, with other systems.
The Rise of Network Society

IT Paradigm …

Mobility and autonomy: As informational
technology and mass communication turn from
“wired” to “wireless”, they have become much
more mobile. IT and communication
apparatuses are no longer confined or pinned
down to a definite location. As a result, they
have allowed their users to liberate from
particular physical localities and even social
institutions, such as families, workplaces,
offices, and schools, etc. (Castell, 2008, Pp448449)
The Rise of Network Society

The two essential consequence of the
advent of the IT paradigm. They are

Space of flow: Manuel Castells (1996) underlines that one
of the profound features brought about by the globalinformational infrastructure is the separation of
simultaneous social practices from physical contiguity,
that is time-sharing social practices are no long
embedded in locality of close proximity and/or within
finite boundary. As a result, the traditional notion of
space of places has been transformed into space of
flows. In informational network, such as the internet, "no
place exists by itself, since the positions are defined by
flows." There is practically no boundary, no concepts of
center or periphery, no beginning or end. It is all but
flows
The Rise of Network Society

The two essential consequence of the
advent of the IT paradigm. They are

Timeless time: Castells also underlines that the globalInformational infrastructure has also transform the
conception of time in human society. Time is no longer
comprehended in terms of localities around the globe
according to the international time-zones. Human
activities around the global can be coordinated
"simultaneously" in disregard of conception of local time,
such as morning, evening, late at night, etc. Furthermore,
with the aid of IT, the conventional linear, sequential,
diachronic concepts of time has been disturbed. "Timing
becoming synchronic inflate horizon, with no beginning,
no end, no sequence." (Castells, 1996, p. 74)
The Rise of Network Society

These two features have caused
foundational changes in of social
institutions in human society

Institutional embeddedness in local and/or national
space: Most of the social institutions, i.e. enduring
social-activity patterns, in modern society, are grown out
of the competitive nation-state context originated in
Europe since the eighteenth century, such as sovereign
state, national-citizenship, national economy, national
culture, etc. The constitution of the space of flow made
possible by the global-informational infrastructure has
disrupted if not destroyed the definite boundary of
modern state and its entailed powers and authorities on
social activities.
The Rise of Network Society

…foundational changes in of social
institutions in human society…

Institutional legitimation accumulated through time: The
legitimation underlying the enduring social-activity
patterns found in institutions are accumulated through
generations of national citizens. The cognitive validity
and normative dignity of these institutions have been
verified and justified in long lines of critical and historic
events, such as revolutions, wars, natural disasters, etc.
The advent of the conception of timelessness underling
global-informational paradigm has disturbed national
cultural heritage and disrupted the grand narrative of the
national history.
The Rise of Network Society

The concept of network society: As a result, the
modern society that we are so familiar with and
used to, i.e. a configuration of social institutions,
such as economy, polity, culture, and even social
identity, built on definite physical locality and
duration in time, has dissolved if not evaporated.
In its replacement is a set of social institutions
that are organized around the logic of network,
namely operated in the flow of space and timeless
time.
The Advent of Informational-Global
Economy and the End of Capitalism?
A Debate

The proponents:

Bill Gate’s thesis of Friction-Free Capitalism
The Advent of Informational-Global
Economy and the End of Capitalism?
A Debate

The proponents:


Bill Gate’s thesis of Friction-Free Capitalism
Peter Drucker’s thesis of Post-Capitalist
Society

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Industrial revolution: Knowledge applied tools,
process, and products
Productivity revolution: Knowledge applied to
work
Management revolution: Knowledge applied to
knowledge
The Advent of Informational-Global
Economy and the End of Capitalism?

The opponents:


Another stage, if not the highest stage, of
capitalism
Historical outline of the development of
capitalism

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Mercantile capitalism: 1500-1800
Industrial capitalism: 1800-1940
Organized capitalism: 1950-1970
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Fordism
Welfare-state corporatism
Informational-global capitalism
The Advent of Informational-Global
Economy and the End of Capitalism?
Basic concept of capitalism : As a mode of
production
“Capitalism is a system based on competition
between free producers using free labor with free
commodities, ‘free’ meaning its availability for
sale and purchase on a market” (Wallerstein, 1987)

The Advent of Informational-Global
Economy and the End of Capitalism?

Basic concept of capitalism : Accordingly, it can
be characterized by the following features:
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Domination of capital over other means of production,
including labor
Labor power is bought and sold by money wages
Production for sale rather than for own use; production
for exchange value rather use value
Commoditfication as the primary cyclical dynamics of
the mode of production: MCPC’M’, i.e. Money
capital  Commodity (i.e. labor and the means of
production)  Production  Commodity (products) 
Money
Competition among capitalist
Transnational Corporation and
Transnational Practice

By Transnational Corporation (TNC), it
refers to “a firm which has the power to
coordinate and control operations in more
than one country, even if it does not own
them.” (Ducken, 2007, P. 292) It is a firm
“with the capacity to work as a unit in real
time on a planetary scale.” (Castells, 1996,
P. 92)
Transnational Corporation and
Transnational Practice

Historical development of TNC


TNC in the form of trading companies across
the globe since the 16th century, e.g. the East
India Company and the Hudson’s Bay
Company.
TNC in the form of manufacturing companies
across the world since the 20th century.
Transnational Corporation and
Transnational Practice

Historical development of TNC…

TNC in the informational and network
enterprise since 1980s.


Offshoring: It refers to instances where a multinational company moves or expands some of its
operations and jobs to overseas locations, In other
words, it is the movement of jobs and/or operations
to ‘foreign’ locations, however, all of this movement
takes place internally within a single company’s
structure.”
Outsourcing: It “refers to instances where a company
decides to buy goods and services, once performed
in-house, from a supplier outside of the firm.
Transnational Corporation and
Transnational Practice

By Transnational Practice (TNP), it refers to the
phenomenon grown out of the expansion of TNCs and
with it “the rise of new communities and the formation
of new social identity and the relations that cannot be
defined through the traditional reference point of
nation-states.” (Robinson, 2007, P. 136) Accordingly,
“transnational practices refer to the effects of what
people do when they are acting within special
institutional contexts that across state borders.
Transnational practices create globalizing process. …
Transnational Corporation and
Transnational Practice
By Transnational Practice (TNP), …
. …Globalizing process are abstract concepts, but the
transnational practices that create them refer directly
to agents and agencies do and derive meaning from
the institutional settings in which they occur, and
because of which they have determinate effects.”
(Sklair, 2002, P. 84)

Transnational Corporation and
Transnational Practice

Accordingly, Sklair specifies that there are three
spheres of TNPs, namely



Economic TNPs,
Political TNPs, and
Cultural TNPs.
From Fordist-Keynesian Capitalism to
Informational Global Capitalism: The
crisis of Fordistic production process

Crisis in factor inputs



High raw material costs (especially oil)
High inventory costs
Inflexibility of set-ups of machinery and assembly line
From Fordist-Keynesian Capitalism to
Informational Global Capitalism:

Crisis in circulation time and cost


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Lengthy delivery times between suppliers and
assemblers
Extended interruptions in production due to the need to
retool
The length of time required to make decisions with an
extensive corporate bureaucracy
The time required to correct quality problems
The time demanded to work off previous inventories
The length of time required to institute innovation, due to
separation of design engineers and production
personnel
From Fordist-Keynesian Capitalism to
Informational Global Capitalism:

Crisis in capital / labor relation


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Mounting unproductive expenses connected with
supervison of the workforce
Worker resistance at the point of production in overt and
indirect form (strike and absenteerism, respectively)
Wage increases not match by productivity advances due
to collective bargaining through unionism
Quality control stemming from the separation of quality
control to a separate department
From Fordist-Keynesian Capitalism to
Informational Global Capitalism:

Crisis in capital / consumer relation


Inability to respond promptly to shifts in consumer
demands
The mass production of standardized products
prevented from producing customized or customerdesigned products
The constitution of the informationalglobal economy

Constitution of global division of labor

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
Producers of high value, based on
informational labor
Producers of high volume, based on low-cost
labor
Producers of raw materials, based on natural
endowment
Redundant producers
The constitution of the informationalglobal economy

Constitution of global production network:
Microelectronic and computer as examples




R&D, innovation, and prototype fabrication in
“Technopolis”
Skilled fabrication in branch plants in newly
industrializing areas in core countries
Semi-skilled, large-scale assembly and testing work in
offshore newly industrialized countries
Customization of device and aftersales maintenance and
support in regional centers throughout the globe
The constitution of the informationalglobal economy

Constitution of global production network:
Microelectronic and computer as examples




R&D, innovation, and prototype fabrication in
“Technopolis”
Skilled fabrication in branch plants in newly
industrializing areas in core countries
Semi-skilled, large-scale assembly and testing work in
offshore newly industrialized countries
Customization of device and aftersales maintenance and
support in regional centers throughout the globe
The constitution of the informationalglobal economy


Constitution of global finance network: Capital
and information flows around the globe via hubs
and nodes, i.e. international financial centers
Constitution of global distribution of consumer
goods and services
The constitution of the informationalglobal economy

The constitution of the Informational-global capitalism:
“It is informational because the productivity and
competitiveness of units or agents in this economy (be it
firms, regions, or nations) fundamentally depend upon
their capacity to generate, process, and apply efficiently
knowledge-based information. It is global because the
core activities of production, consumption, and
circulation, as well as their components (capital, labor,
raw materials, management, information, technology,
markets) are organized on a global scale either directly or
through network of linkages between economic agents.”
(Castells, 1996, p. 66)
The constitution of the informationalglobal economy

The constitution of the Informational-global capitalism:
…
It is an economic system “based on the capacity of IT to
be able to work as a unit in real time on a planetary scale.”
(Castells, 1996, p.92)
The Constitution of the Network
Enterprise

Internal organization form of network enterprise:
Horizontal corporation

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Flexible specification replacing rigid division of labor in
bureaucratic Fordism
Flat and networked hierarchy
Team management
Autonomous but accountable teamwork and/or quality
circle
Measuring performance by customer satisfaction
Reward based on team performance
Maximization of contact with suppliers and customers,
and swift responses to feedbacks in retool or even
reengineer
Information, training and retaining of workers
The Constitution of the Network
Enterprise

External organization of network
enterprise



Multidirectional networking with small and
medium business
Licensing-subcontracting
Corporate strategic alliance
The Constitution of the Network
Enterprise

Manuel Castells characterizes network enterprise
as “specific form of enterprise whose system of
means is constituted by the intersection of
segments of autonomous system of goals. Thus,
the components of the network are both
autonomous and dependent vis-a-vis the
network. …The performance of given network will
then depend on two fundamental attributes to the
network: its connectedness, that is its structural
ability to facilitate noise-free communication
between its components; its consistency, that is the
extent to which there is sharing of interests
between the network’s goals and the goals of its
components.” (1996, p.171)
The Transformation of Work and
Employment

Decentralization of Work
“The restructuring of firms and organizations, allowed by information
technology and stimulated by global competition, is ushering in a
fundamental transformation of work: the individualization of labor in the
labor process. … The new social and economic organization based on
information technologies aims at decentralization management,
individualizing work, and customizing markets, thereby segmenting
work and fragmenting societies. New information technologies allow at
the same time for the decentralization of work tasks and for their
coordination in an interactive network of communication in real time, be
it between continents or between floors of the same building. The
emergence of lean business practices of methods goes hand in hand
with widespread business practices of subcontracting, outsourcing,
offshoring, consulting, downsizing, and customizing.” (Castells, 1996, p.
265)
The Transformation of Work and
Employment

Debate on Jobless society


Automation and computerization will cause rise of
unemployment and even a “jobless future (Aronwitz &
DiFazio, 1994)
Carnoy (2000) and Castells (1996) argue that the jobless
thesis is to simplified and misleading.
The Transformation of Work and
Employment

Debate on Jobless society

Castells (1996, p. 228-9) characterize the transformation
of employment and occupational structure as follows





The phasing out of agricultural employment
The steady decline of traditional manufacturing
employment
The rise of both producer services and social services, with
the emphasis on business service in the first category, and
health services in the second group
The increasing diversification of service activities as
sources of jobs
The rapid rise of managerial, professional, and technical
jobs
The Transformation of Work and
Employment

The transformation of work and employment:
Debate on Jobless society

Castells (1996, p. 228-9) characterize the transformation
of employment and occupational structure as follows …



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The formation of a “white-collar” proletariat, made up of
clerical and sales workers
The relative stability of a substantial share of employment
in retail trade
The simultaneous increase of the upper and lower levels of
the occupational structure
The relative upgrading of the occupational structure over
time, with an increasing share of those occupations that
require higher skills and advanced education proportionally
higher than the increase of the lower-level categories
The Transformation of Work and
Employment

The hypothesis of two different
informational models


The “Service Economy Model” of the US, UK
and Canada
The “Industrial Production Model” of Japan and
Germany
The Transformation of Work and
Employment

The rise of Netwrokers and Flextimers

The New division of labor in network enterprise
has transformed “work” in the following ways

Value-making: It refers to the actual task
performed in a given work process






The commanders
The researchers
The designers
The integrators
The operators
The operated
The Transformation of Work and
Employment

The rise of Netwrokers and Flextimers

The New division of labor in network enterprise
has transformed “work” in the following ways

Relation-making: It refers to the relationship
between a given organization and its
environment, including other organizations



The networkers
The networked
The switched-off
The Transformation of Work and
Employment

The rise of Netwrokers and Flextimers

The New division of labor in network enterprise
has transformed “work” in the following ways

Decision-making: It refers to the relationship
between managers and employees in a given
organization



The deciders
The participant
The executants
The Transformation of Work and
Employment

Flexibility of work changes important elements of
work in the following four ways (Carnoy, 2000, p. 74)

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The notion of time: Flexible work means less employed time
than a thrty-five- or forty-hour per week full-year job
The notion of permanency: Flexible work is based explicitly
on a fixed-term contract with no commitment for future
employment
The notion of location: Although the vast majority of
workers still work at business sites, increasing numbers of
independent contractors work not on-site but in their homes
The notion of social contract between employer and
employee: the traditional contract based on reciprocal
rights, protections, and obligation is rapidly relinquishing.
The Political TNPs and Class
Relations in Transnational Capitalism

The Rise of the Transnational Capitalist Class: As
the result of the growing numbers of TNCs and the
increase in TNPs, capitalist class in the traditional
Marxist sense has been replaced by what Sklair
called Transnational capitalist class, which Sklair
specifies into four fractions: (Sklair, 2002, P. 99)


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TNC executives and their local affiliates (corporate
fraction);
globalizing state and interstate bureaucrats and
politicians (state fraction);
globalizing professionals and technical fraction; and
Merchants and media (consumerist fraction)
The Political TNPs and Class
Relations in Transnational Capitalism

Changes in class relation in Transnational
capitalism

Asymmetries of class power between globally mobile
capitalists and locally pin-downed proletariat:



As TNCs and their owners and managerial class can also plan and
operate their business across national borders, they could easily
and rapidly relocate their manufacturing planets and operational
offices to any localities that can provide lowest production costs
and highest returns of revenues, i.e. profit maximization.
The bargaining powers of local wager laborers and their unions
have deteriorated substantially and rapidly. It has made class
confrontations and conflicts in TNP situations practically
impossible because the TNCs can always move to some other
countries, which are more capitalist-friendly.
As a result, the bargaining powers between globally mobile
capitalists and locally pin-down has grown asymmetrically in favor
of the capitalist interests.
The Political TNPs and Class
Relations in Transnational Capitalism

Changes in class relation in Transnational
capitalism

Polarization within the hierarchy of wage-laborers:


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Within the TNPs, there arises a class of wage-laborers whose
knowledge and skills are in great demands world-wise. This group
of transnational wage-laborers can seek employments globally and
ask for wage-levels in globally auctioned scales.
On the bottom of global hierarchy of wage-laborers, there are the
unskilled “disposable laborer”, whose labor can easily be “offshored”, “outsourced” if not automated.
As a result, income inequality among wage-laborers have
increased drastically and it confirms Robert Reich thesis that “why
the rich are getting richer and the poor, poorer.” (Reich, 1996)
The Economic Consequences IT Development:
The Coming of Informational-Global Capitalism
END