URBAN AGE by liwenting

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									BULLETIN 1
SUMMER 2005


THE DEEP ECONOMIC HISTORY OF PLACE: IT MATTERS
Saskia Sassen, Centennial Visiting Professor, LSE and Ralph Lewis Professor of Sociology, University of Chicago
Enough economic history has taken place over the last            enormous globalising, digitising and homogenising
fifteen years, since globalization and digitisation became       dynamics and capabilities. The work of running
major forces, for us to know that a network of about 40          globalised and digitised sectors, takes material
global cities around the world today constitutes an              infrastructure, state of the art built environments, and
infrastructure for managing and servicing the global             multiple types of talent. It also takes ‘‘specificity,’’
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operations of firms and markets -- and, increasingly, for        something we might call the specialised difference of a
global actors in many different domains, from art to             place/region. Thus Chicago is different from New York
global tourism. This network of global cities is also an         in terms of its cutting-edge contemporary sectors. To get
infrastructure for today’s two major global labour               at these types of issues we compared leading financial,
markets: the new transnational class of high-level               advertising, accounting and law firms headquartered
professionals and executives and the low wage                    in Chicago and New York and studied their global
immigrant service workers that have come to constitute           networks of affiliates to understand whether they were
a global care-chain. It is common for observers to see in        servicing different types of operations. Thus I would
this development a homogenising of these cities: they            have expected Chicago-based law and accounting
increasingly have expanding glamour zones developed              firms to be more likely to service a firm’s operations
to world-class standards, with key buildings by world-           in Sao Paulo or in Mongolia, than would New York
class architects, and plenty of world-class shops and            based firms. Leading Chicago firms in these specialised
restaurants. All of this is true, but it is only half of         service sectors have different geographies of global
the story. If the value of these cities were confined            operations from firms in the same sectors headquartered
to providing this homogenised world class setting for            in New York City and in London. New York City never
firms and markets, this network of global cities would           had a large agro-industrial economy; it was always
not be fulfilling the critical and strategic role it plays in    dominated by finance, trade and services. There was
the high level management and servicing for the                  only light manufacturing. The specialised service firms
global operations of firms and markets, and increasingly         headquartered in Chicago developed advanced state of-
other major global actors.                                       the-art specialised services and instruments in finance,
                                                                 in law and in accounting that were based precisely on
 It is the deep economic history of these cities, or their       the experiences and needs of what was once one of the
regions, which is the critical second half of the story          most important agro-industrial centres in the world.
about why this network of global cities is strategic. This       These firms know how to handle the specialised
fact has not been recognised, perhaps because the most           financial needs, legal-accounting needs, of major
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visible aspect has been that first half of the story -- the      industrial manufacturing firms and of agribusiness.
making of world class urban glamour zones in each of             Thus Chicago’s history as a vast agro-industrial complex
these cities. The role that the distinct deep economic           allowed it to develop specialised services that kept that
histories of place play in this strategic network is a           history going through its development and innovation
submerged history that functions in the shadow of the            as a specialised service economy even after vast
blinding visibility of the urban glamour zone. It is also a      components of the older agroindustrial complex had
fact that goes against the most common images about              been more or less destroyed by the 1980s. A global
economic globalisation, the notion that everything               manufacturing or mining firm needs a specific kind of
becomes the same, with McDonald’s and Nike available             accounting, legal and financial service when it comes to
for sale anywhere in the world. Understanding these              highly specialised forms of expertise. In key aspects such
deep economic histories of cities that are part of the           firms will need legal and accounting and financial advice
strategic global network is one of the key efforts in the        that will diverge from that of service sector firms. In fact
Urban Age project as it moves from New York to                   this question of specificity goes much farther than
Shanghai to Johannesburg, and onwards. That the deep             sectors: within finance, Chicago still is a leader in
economic history of a place should matter may perhaps            commodity futures. New York cannot compete on this.
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be seen as an irony -- though not for me -- in an era with       It was in Chicago that financial futures were developed



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URBAN AGE / BULLETIN 1 / SUMMER 2005 / SASSEN – THE DEEP ECONOMIC HISTORY OF PLACE: IT MATTERS

in the 20th century driven by its large agro-industrial                   one of that of the Chicago region in the sense of
economy.                                                                  traditions and knowledge to develop specialized
                                                                          capabilities for servicing the global operations of large
Much has been said about how the move to an                               industrial firms. Clearly the notion that the Ruhr could
information economy renders many older types of                           be joined with Koln and Dusseldorf into a functioning
economies obsolete and renders place less significant. It                 economic region is highly controversial and not many
is indeed the case that many kinds of manufacturing are                   think it feasible. Yet re-scaling at the larger Rhine-Ruhr
simply finished, no longer needed. And it is also the case                level, might be very interesting - a brilliant move in that
that if you are a financial trader or are involved in work                it raises the diversity of talents, of information, of
that you can do online digitally, you can get your                        experience, and incorporates the deep economic
information from anywhere in the world. That is truly a                   histories of each of these places, each with its specialised
major difference today compared with the past. But                        difference. The challenge is to understand how diversity
what is typically left out of these common accounts is                    can be value-adding. It raises the level of difficulty of the
that it only works if the work or the information you                     project of constructing a Rhine-Ruhr metro area, but if
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need is standardized -- it can be very complex, but still                 it succeeds it will do so as a complex, highly diverse
be standardised. The often overlooked fact is that                        region, a development evident in other large highly
firms operating in leading sectors need to ‘‘make’’                       internally diverse regions such as Chicago and Shanghai.
information. This making of information that I am                         Internal diversity/ complexity becomes value-adding in
talking about involves ‘‘marrying’’ standardised                          our types of economies. The specialised difference of a
information, which can be very complex, with                              city or region matters in a global digitised era. It signals
something else which is about guessing, evaluating,                       the presence of a deep economic history that has
forecasting or just taking a leap of faith and saying ‘‘yes’’,            endowed a place with specific strengths for developing
intuitively. This takes knowledge and talent, because if                  specialised capacities. It also signals complexity and
you don’t have talent, what comes out is not particularly                 diversity of components that allow a place to keep
good; it’s not enough to have competence. But talent in                   reinventing and repositioning those capacities. Many
these types of specialised services needs a certain type of               places do not have deep economic histories -- for-
environment - mixed, diverse, a kind of strategic                         example Miami. But a city and region with such a
laboratory for picking up pieces of the puzzle that are                   history should not ask ‘‘How can I overcome the past of
functioning in a global economy where uncertainty and                     my city and region?’’ but rather ‘‘How do I make its past
speed are the new tyrannies. This is part of the work                     work for my city and region?’’ As our nomadic Urban
process of firms in leading sectors, and it is also part of               Age project moves across the world, it is this question I
the larger setting outside the firm. It is at this point that             will be asking.
the specialised difference of an area matters in the sense
that the kind of information that gets made in a place
such as New York or Chicago or Shanghai is connected
to their economic history.

Not unconnected to the value-added of having a deep
economic history is one of the findings in our research
about the new information technologies. Our question
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was how users of these technologies -- whether a firm, a
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government institution, a market -- can maximize the
utility they can derive from the capabilities of these new
                                                                          __________________________________________
digital technologies. Computer-centred network
technologies are the critical form of this technology for                 URBAN AGE
firms and markets. What we found was that a user can
maximise its utility through organizational complexity.                   a worldwide series of conferences
                                                                          investigating the future of cities
A complex environment is one of the contributions of a
deep economic history. All of these issues discussed                      organised by the Cities Programme
here through the case of Chicago have meant that I have                   at the London School of Economics and
                                                                          Political Science and the Alfred Herrhausen Society,
become very interested in the effort in Nord Rhein                        the International Forum of Deutsche Bank
Westfallen to construct a metro-area in the Rhine-Ruhr
region. The deep economic history of the Ruhr reminds                     more information on www.urban-age.net


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