© Copyright, Fondazione Cariplo - I.S.MU. Milano.
Stampato a Milano nel mese di Agosto 1997
Tipomonza - Via Merano, 18 - Milano

Place and Work in the Global Information Economy

Saskia Sassen
Columbia University, New York, USA
On leave, Center for Advanced Study, Stanford, USA

Globalization can be deconstructed in terms of the strategic sites where global processes materialize and the linkages that bind them. Among these sites are export processing zones, off-shore banking centers, and, on a far more complex level, global cities. This produces a specific geography of globalization and underlines the extent to which it is not a planetary event encompassing all of the world. It is, furthermore, a changing geography, one that has changed over the last few centuries and over the last few decades. (And, most recently, has come to include electronic space).

This geography of globalization contains both a dynamic of dispersal and of centralization, a condition that is only now beginning to receive recognition (See Sassen 1991: chapter One).

The massive trends towards the spatial dispersal of economic activities at the metropolitan, national and global level which we associate with globalization have contributed to a demand for new forms of territorial centralization of top-level management and control operations. The spatial dispersal of economic activity made possible by telematics contributes to an expansion of central functions if this dispersal is to take place under the continuing concentration in control, ownership and profit appropriation that characterizes the current economic system. National and global markets as well as globally integrated organizations require central places where the work of globalization gets done. Further, information industries require a vast physical infrastructure containing strategic nodes with hyperconcentration of facilities; we need to distinguish between the capacity for global transmission/communication and the material conditions that make this possible. Finally, even the most advanced information industries have a production process that is at least partly place-bound because of the combination of resources it requires even when the outputs are hypermobile.

One of the central concerns in my work has been to look at cities as production sites for the leading information industries of our time and to recover the infrastructure of activities, firms and jobs, that is necessary to run the advanced corporate economy. These industries are typically conceptualized in terms of the hypermobility of their outputs and the high levels of expertise of their professionals rather than in terms of the production process involved and the requisite infrastructure of facilities and non-expert jobs that are also part of these industries. A detailed analysis of service-based urban economies shows that there is considerable articulation of firms, sectors, and workers who may appear as though they have little connection to an urban economy dominated by finance and specialized services, but in fact fulfill a series of functions that are an integral part of that economy. They do so, however, under conditions of sharp social, earnings, and often racial/ethnic segmentation.

In the day-to-day work of the leading services complex dominated by finance, a large share of the jobs involved are lowly paid and manual, many held by women and immigrants. Although these types of workers and jobs are never represented as part of the global economy they are in fact part of the infrastructure of jobs involved in running and implementing the global economic system, including such an advanced form of it as is international finance. The top end of the corporate economy --the corporate towers that project engineering expertise, precision, "techne"-- is far easier to mark as necessary for an advanced economic system than are truckers and other industrial service workers, even though these are a necessary ingredient.

We see here at work a dynamic of valorization that has sharply increased the distance between the devalorized and the valorized, indeed overvalorized, sectors of the economy.

A new geography of centers and margins

The ascendance of information industries and the growth of a global economy, both inextricably linked, have contributed to a new geography of centrality and marginality This new geography partly reproduces existing inequalities but also is the outcome of a dynamic specific to the current forms of economic growth. It assumes many forms and operates in many arenas, from the distribution of telecommunications facilities to the structure of the economy and of employment. Global cities accumulate immense concentrations of economic power while cities that were once major manufacturing centers suffer inordinate declines; the downtowns of cities and business centers in metropolitan areas receive massive investments in real estate and telecommunications while low-income urban and metropolitan areas are starved for resources; highly educated workers in the corporate sector see their incomes rise to unusually high levels while low- or medium-skilled workers see theirs sink. Financial services produce superprofits while industrial services barely survive.

The most powerful of these new geographies of centrality at the global level binds the major international financial and business centers: New York, London, Tokyo, Paris, Frankfurt, Zurich, Amsterdam, Los Angeles, Sydney, Hong Kong, among others. But this geography now also includes cities such as Bangkok, Taipei, Sao Paulo and Mexico City. The intensity of transactions among these cities, particularly through the financial markets, trade in services, and investment has increased sharply, and so have the orders of magnitude involved (e.g. Noyelle and Dutka, 1988; Knox 1995). At the same time, there has been a sharpening inequality in the concentration of strategic resources and activities between each of these cities and others in the same country.

Alongside these new global and regional hierarchies of cities, is a vast territory that has become increasingly peripheral, increasingly excluded from the major economic processes that are seen as fueling economic growth in the new global economy. Formerly important manufacturing centers and port cities have lost functions and are in decline, not only in the less developed countries but also in the most advanced economies. Similarly in the valuation of labor inputs: the overvalorization of specialized services and professional workers has marked many of the "other" types of economic activities and workers as unnecessary or irrelevant to an advanced economy. There are other forms of this segmented marking of what is and what is not an instance of the new global economy. For instance, the mainstream account about globalization recognizes that there is an international professional class of workers and highly internationalized business environments due to the presence of foreign firms and personnel. What has not been recognized is the possibility that we are seeing an internationalized labor market for low-wage manual and service workers and internationalized business environments in immigrant communities. These processes continue to be couched in terms of immigration, a narrative rooted in an earlier historical period.

This signals that there are representations of the global or the transnational which have not been recognized as such or are contested representations. Among these is the question of immigration, as well as the multiplicity of work environments it contributes in large cities, often subsumed under the notion of the ethnic economy and the informal economy. Much of what we still narrate in the language of immigration and ethnicity I would argue is actually a series of processes having to do with a) the globalization of economic activity, of cultural activity, of identity formation, and b) the increasingly marked racialization of labor market segmentation so that the components of the production process in the advanced global information economy taking place in immigrant work environments are components not recognized as part of that global information economy. Immigration and ethnicity are constituted as otherness. Understanding them as a set of processes whereby global elements are localized, international labor markets are constituted, and cultures from all over the world are de- and re-territorialized, puts them right there at the center along with the internationalization of capital as a fundamental aspect of globalization.

How have these new processes of valorization and devalorization and the inequalities they produce come about? This is the subject addressed in the next section.

The global city: a nexus for new politico-economic alignments

The implantation of global processes and markets in major cities has meant that the internationalized sector of the economy has expanded sharply and has imposed a new set of criteria for valuing or pricing various economic activites and outcomes. This has had devastating effects on large sectors of the urban economy. It is not simply a quantitative transformation; we see here the elements for a new economic regime.

These tendencies towards polarization assume distinct forms in (a) the spatial organization of the urban economy, (b) the structures for social reproduction, and (c) the organization of the labor process. In these trends towards multiple forms of polarization lie conditions for the creation of employment-centered urban poverty and marginality, and for new class formations.

The ascendance of the specialized services-led economy, particularly the new finance and services complex, engenders what may be regarded as a new economic regime because although this sector may account for only a fraction of the economy of a city, it imposes itself on that larger economy. One of these pressures is towards polarization, as is the case with the possibility for superprofits in finance which contributes to devalorize manufacturing and low-value added services insofar as these sectors cannot generate the superprofits typical in much financial activity.

The super-profit making capacity of many of the leading industries is embedded in a complex combination of new trends: technologies that make possible the hypermobility of capital at a global scale and the deregulation of multiple markets that allows for implementing that hypermobility; financial inventions such as securitization which liquify hitherto unliquid capital and allow it to circulate and hence make additional profits, the growing demand for services in all industries along with the increasing complexity and specialization of many of these inputs which has contributed to their valorization and often over-valorization, as illustrated in the unusually high salary increases beginning in the 1980s for top level professionals and CEOs. Globalization further adds to the complexity of these services, their strategic character, their glamour and therewith to their overvalorization.

The presence of a critical mass of firms with extremely high profit-making capabilities contributes to bid up the prices of commercial space, industrial services, and other business needs, and thereby make survival for firms with moderate profit-making capabilities increasingly precarious. And while the latter are essential to the operation of the urban economy and the daily needs of residents, their economic viability is threatened in a situation where finance and specialized services can earn super-profits. High prices and profit levels in the internationalized sector and its ancillary activities, such as top-of-the-line restaurants and hotels, make it increasingly difficult for other sectors to compete for space and investments. Many of these other sectors have experienced considerable downgrading and/or displacement, for example, the replacement of neighborhood shops tailored to local needs by upscale boutiques and restaurants catering to new high income urban elites.

Inequality in the profit-making capabilities of different sectors of the economy has always existed. But what we see happening today takes place on another order of magnitude and is engendering massive distortions in the operations of various markets, from housing to labor. For instance, the polarization among firms and households and in the spatial organization of the economy contribute, in my reading, towards the informalization of a growing array of economic activities in advanced urban economies. When firms with low or modest profit-making capacities experience an ongoing if not increasing demand for their goods and services from households and other firms in a context where a significant sector of the economy makes super-profits, they often cannot compete even though there is an effective demand for what they produce. Operating informally is often one of the few ways in which such firms can survive: for example, using spaces not zoned for commercial or manufacturing uses, such as basements in residential areas, or space that is not up to code in terms of health, fire and other such standards. Similarly, new firms in low-profit industries entering a strong market for their goods and services may only be able to do so informally. Another option for firms with limited profit-making capabilities is to subcontract part of their work to informal operations.

The recomposition of the sources of growth and of profit- making entailed by these transformations also contribute to a reorganization of some components of social reproduction or consumption. While the middle strata still constitute the majority, the conditions that contributed to their expansion and politico-economic power in the post-war decades --the centrality of mass production and mass consumption in economic growth and profit realization -- have been displaced by new sources of growth.

The rapid growth of industries with strong concentration of high and low income jobs has assumed distinct forms in the consumption structure which in turn has a feedback effect on the organization of work and the types of jobs being created. The expansion of the high-income work force in conjunction with the emergence of new cultural forms have led to a process of high-income gentrification that rests, in the last analysis, on the availability of a vast supply of low-wage workers.

In variable degrees, depending on the city, the consumption needs of the low-income population in large cities today are increasingly met by manufacturing and retail establishments which are small, rely on family labor, and often fall below minimum safety and health standards. Cheap, locally produced sweatshop garments, for example, can compete with low-cost Asian imports. A growing range of products and services, from low-cost furniture made in basements to "gypsy cabs" and family daycare is available to meet the demand for the growing low-income population.

There are numerous instances of how the increased inequality in earnings reshapes the consumption structure and how this in turn has feedback effects on the organization of work, both in the formal and in the informal economy: the creation of a special taxi line that only services the financial district and the increase of gypsy cabs in low-income neighborhoods not serviced by regular cabs; the increase in highly customized wood work in gentrified areas and low-cost rehabilitation in poor neighborhoods; the increase of homeworkers and sweatshops making either very expensive designer items for boutiques or very cheap products.

One way of conceptualizing informalization in advanced urban economies today is to posit it as the systemic equivalent of what we call deregulation at the top of the economy. Both the deregulation of a growing number of leading information industries and the informalization of a growing number of sectors with low-profit making capacities can be conceptualized as adjustments under conditions where new economic developments and old regulations enter in growing tension.

In sum, we can think of these development as constituting new geographies of centrality and marginality that cut across the old divide poor/rich countries, and new geographies of marginality that have become increasingly evident not only in the less developed world but inside highly developed countries. Inside major cities in both the developed and developing world we see a new geography of centers and margins that not only contributes to strengthen existing inequalities but sets in motion a whole series of new dynamics of inequality.

Large cities around the world are the terrain where a multiplicity of globalization processes assume concrete, localized forms. These localized forms are, in good part, what globalization is about. If we consider, further, that large cities also concentrate a growing share of disadvantaged populations --immigrants in Europe and the United States, African-Americans and Latinos in the United States, masses of shanty dwellers in the megacities of the developing world-- then we can see that cities have become a strategic terrain for a whole series of conflicts and contradictions. We can then think of cities also as one of the sites for the contradictions of the globalization of capital. On one hand they concentrate a disporportionate share of corporate power and are one of the key sites for the overvalorization of the corporate economy; on the other, they concentrate a disproportionate share of the disadvantaged and are one of the key sites for their devalorization. This joint presence happens in a context where (1) the transnationalization of economies has grown sharply and cities have become increasingly strategic for global capital; and (2) marginalized people have found their voice and are making claims on the city as well. This joint presence is further brought into focus by the sharpening of the distance between the two.