ICSE2000: Window on the World - Issue 2 - Manual Castell's Keynote

Today ICSE 2000 attendees were treated to a keynote address by Professor Manuel Castells, professor of sociology at the University of California at Berkeley in the U.S. While it could be argued that his talk sounded more like the work of an economist than a sociologist, it was nevertheless interesting and thought-provoking.

The good news is that we are not the nerds most people think us to be! Professor Castells even compares us to the people of the Renaissance, mastering multiple disciplines and talents. The bad news is that the pressures of the New Economy are not going to let up, as systemic volatility is here to stay.

Professor Castells asserted that the New Economy is not based just on knowledge. It actually has three key features, all of which are based ultimately in the great enabler, microtechnology:

1 information productivity; which is in turn based on information technology

2 real-time; global connectivity of capital flows, productivity, and management (not just world-wide shipping of goods), which is only possible due to the technology infrastructure

3 networking; the Internet is at its heart, but it is more than just a technology. The New Economy is not just the economy of those who provide the Internet, but rather of those who use it

It shouldn’t be too surprising that this New Economy has new rules for capital, labor, and management:

Profit-making is now only one element of the economic calculation. Today investors base their decisions not on profitability but on expectations for growth in the value of the stock. In the words of a recent paper by former U.S. Federal Reserve Chairman Paul Volker, things today are not working according to objective economic reality but by perception; that is, perception is the reality. The currency of the New Economy is stock, not cash.
Education is critical for the New Economy labor force, but there is an increasing gap between those who can master “the knowledge skills” and those comprising the generic or unskilled labor force.
Management must now be able to navigate unpredictability in both technology and the business world.
This New Economy is linked to new phenomena that are more sociological in nature. There is a new labor flexibility as labor adapts to the demands of the new companies. There is an increase in the individuality of work and a new self-defined sense of career. We are seeing a move away from the traditional worker who works full-time year-round under a predictable long-term contract with a single company. Instead, people are more likely to be self-employed, working for a number of companies, possibly simultaneously. The Industrial Revolution took artisans and made them into a homogeneous workforce; the revolution of the New Economy is reversing this. Related to this is a new geographic mobility. Professor Castells cited the example of an entrepreneur from India who starts his own company in California then returns to India, continuing to work his established network from there. Finally, there is a new need for an informed and educated consumer that is able to use and understand the Internet. The New Economy is based on networks, not on institutions as in the past.

Professor Castells pointed out a number of new challenges imposed by the New Economy, including:

increasing volatility—the market is amplified by the speed of the technology
the ability of the markets to continue to expand at the same rate—the ratio of the needed growth in productivity to the apparent growth in the talent pool is increasing and will compel us to include the underdeveloped countries in the New Economy
the truism that winners imply losers—the move away from traditional employment patterns brings with it a disassociation from work of social protections provided by insurance, pensions, and welfare.
the decrease in homogeneous societies—there are more multi-cultural societies and many different kinds of households
education—the New Economy drives a need for more innovative education, but educational institutions are among the most conservative institutions in the world. They must become more nimble and responsive to meet the need
inclusion of the world, not just the developed countries.

Professor Castells concluded with a call to us to connect our technological capabilities and societal ethics in meeting the demands of the New Economy. His final remark was that, to sustain the future, we just start thinking differently.

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