by Manuel Castells Today, global flows of wealth, information, technology, crime, and drugs are bypassing national governments. At the same time, people don't believe in these national governments any longer. At the last election in this country, only 49% of the people voted. The central tool of reform and liberalism -- the national government -- doesn't work. Even within that government, political leaders have to deal with so many issues, particularly the political office scandals and the attention to the media every minute, that they don't have time to do anything. Ultimately, there is such a gap between the rhetoric of liberalism and the instruments of liberalism that people realize that the king is not only naked, but doesn't know it.
I come to that position as someone who was sympathetic and close to the socialist government in Spain. Members of that government were my classmates when I was younger. I am a Catalan, born in Barcelona, and have also spent many years at the University of Paris. What you call "liberalism" in America is called "social democracy" in Europe. Although the terms are a little bit different ideologically, basically they represent the same thing -- the social contract between capital and labor under the auspices of government, an attempt to create social protection for the citizens while at the same time not interfering in the basic management of capitalism. That's what social democracy was and is. And in Europe it is also in very bad shape, empty of ideas and empty of instruments.
Social democrats in Europe are trying to organize the globalization of capital while at the same time defending the interests of citizens and workers. They are organizing the conditions of capitalist development in the age of globalization because they know the high price to pay for not doing so is to wreck the economy. If one country goes in a different path than the others, capital bypasses this country and the economy tumbles in a few days. But doing both things at the same time has become impossible. Here in Oakland you have only to look through the window to see what it means to be bypassed by the global economy.
We are in a society in which everything that is valuable is connected through information networks, through telecommunications, through transportation, through business services. It is the formation of a new type of space, the space of flows, which is made up of London, Frankfort, Singapore, San Francisco, Wall Street, etc., all in high technology from Silicon Valley, or Yokohama and Austin, Texas. Everything that can be taken into consideration to make a profit is connected. Everything that is not valuable is disconnected. Who is in and out of this network may change constantly, including the same Silicon Valley engineer. The day he/she turns 50 and is making over $50,000, he or she is in trouble.
So we are in a planet made up of many disconnected places, and many connected flows, and who is in and out is sometimes very random, not dependent on what people do or what people have, but what is the newest strategy, the newest idea. Strategists who can guide these flows do pretty well, but they don't organize, and they don't know very much about these flows. They get high salaries, but the logic of this network is more important than who controls the network. The networks control themselves. Financial markets control the fate of companies, the fate of places, the fate of people, including managers.
Many people are doing very well, but the fact remains that your pension fund and my pension fund are flying around the world and being transformed into some new currency that is going to change in about half an hour. Nobody knows what may happen. This is not only a market logic. It includes turbulences in the market created by all kinds of events. If Greenspan has a problem in his family tomorrow, and he is kind of gloomy during the day, something starts happening that the Tokyo Stock Exchange interprets in a different way, and suddenly we have a real problem. That may last for only half a day, but at the end of that half a day winners equilibrate with losers, so the markets, from the economy's point of view, remain stable. However, who loses that day is transformed into billions of dollars and hundreds of thousands of jobs destroyed. That day will not be recreated in the same form the following day.
While the market does not collapse as a whole, there are hundreds of thousands of collapses for many firms and many individuals, and the ones being born are not the same ones who collapsed. That's what's new -- the technology allowing instant trading on a global scale. That creates a stability for the system, but it destabilizes the individuals. The system corrects itself while destroying many firms and many jobs. A collapse can be more devastating now than in the past, but it is not the collapse that is at stake here. It is the constant crises that create constant instability in the economy and in the life of the individual.
Let's take a couple of examples. When the Zapatistas attacked, the Mexican peso plummeted because Salinas was sustaining the peso artificially with huge flows of foreign investment. When foreign investment could not sustain the rate of investment, the peso went down. The American dollar tried to save the peso, but then the markets in the world feared that the American dollar would go down. Then the German mark went up, so all the other European currencies in order to be integrated had to go up too. To do that, they had to create tremendous budgetary constraints that in turn created unemployment in Europe. That delayed the European reunification process for three years and blew up considerable numbers of jobs in all the European countries. So you see, one political event triggered a series of events in the entire world that were all connected and had very practical consequences.
Keep in mind that the mass of goods and services traded in the world -- the entire mass -- represents only 3% of the total value of business transactions in the world. The other 97% is financial, capital transactions, currency transactions, etc. So the actual economy -- the real economy -- is increasingly unreal. The 97% are stocks, are currencies, are options, are future options, are what is called financial derivatives, all kinds of imaginary money. The Gross Domestic Product of America is $6.5 trillion, but the total financial flows in America, including all kinds of financial transactions, are 130% of the American GDP. So there is a lot more money floating than everything that has been produced in America. The financial flows are huge in comparison to goods and services. That's where you make your money; therefore, no company ultimately has real control because everything depends on what happens to the investments in these financial markets. Even if you make a good judgment, if conditions should change the following week, you're in trouble.
The classic terms of class analysis don't apply any more: the traditional class analysis was that workers were the producers of value, a value that was then expropriated by capital. To some extent that's still true because if you don't produce value, you won't be employed. However, the real producers of value for capital are the high-level engineers in Silicon Valley, high financial analysts in Manhattan, etc.
The majority of people are not producing much value, so they're not paid much. Among other things, they can be replaced either by machines or by Mexican workers on the border of Mexico or by Indian engineers working online in Bombay, or investment will take place somewhere else. That's what the Third World has been experiencing for a long time with the International Monetary Fund. Now it's our turn.
People who are using computers are producing information, which is the most valuable thing today. Machines do most of the work picking fruit, making things in factories, etc., but labor is more important than ever because it's information processing, which depends on mental ability. That's labor. The proportion of people involved in direct, high-level information is growing every day. In America we have one-third of the population working with high intensive information activity, and one-third with very low skills, and this is increasing. The one-third in the middle is shrinking. This in turn creates a tremendous social divide, a lot of surplus people in the way the world is being organized that can only be reestablished through moral and political solidarity, not through class interests. The surplus people are needed as long as they don't create trouble and as long as they are cheap. This is what I call generic labor. It doesn't matter who does it. I call them human robots.
But the people who are still making a lot of money -- the 20% at the top -- they can spend. So on the one hand, you deepen markets in terms of the affluent segments of society; you sell more to these affluent people. On the other hand, you connect all the possible affluent peoples in the world and sell all over the world to huge segments of the population. China is still a very poor country, but if you just take 10% of 120 million people, you have something. We are talking about 20 to 30% of the population -- the upper third.
The bottom third is becoming marginalized, irrelevant. They're not irrelevant as humanity, but irrelevant in terms of the system. From the point of view of the system, they have very little to contribute to this world. Drugs take care of keeping them happy because, on the one hand, they keep people in their hallucinations and, on the other hand, they provide jobs, and they provide income. Also, these people are sent regularly to prison, which creates another industry.
Is there any way out of this?
The labor movement isn't dead or useless, but it is only one element, one component, of a broader network of control that includes, should include, communities, new kinds of social movements like environmentalists, feminists, etc. It's this kind of networking of different instruments of defending people's interests that can bargain -- not overrun, but bargain -- with capital.
I observe two kinds of resistance movements to globalization. One is the resistance on the basis of identity: that usually is nationalism or religion or ethnicity -- some fundamental identity, which, by being so fundamental, excludes the others. If everybody who is not part of my religion is excluded from my identity, then we go into building tribes. The other kind is localism, where everybody who lives in a locality gets together and invents a new kind of identity to control the global from the local.
The Patriot movement in the U.S. is said to link up about 5 million people, probably the largest mass political movement in this country, and I think it is totally underestimated. We see the extreme manifestations of this movement but we don't see the millions and millions of people who are organized by the Christian Csoalition and grassroot groups all over the country. They aim at controlling globalization and controlling capitalism on the basis of values that are cherished by people in terms of their identity. So unless communities organize themselves, bridging the traditional progressive values with the new conditions under which these values should control corporate capitalism -- not destroy it, but control it, tame it, make it human -- unless this happens, we are going to see all kinds of wild manifestations of extreme radicalism that will be very far away from traditional corporate capitalism, but also far from traditional liberalism as well.
There is a big difference between the Christian televangelists who are manipulators and the hundreds of thousands of people who try to find a refuge and a way to control their lives. That's the important phenomenon -- Basque nationalism, Islamic fundamentalism, regionalism all over the world -- not the telep;vangelists. In Europe, nation states are fading away and being integrated into a supranationalist state. Local and regional movements are the ones that have more legitimacy with the people, and they're linking up. I would say in America we have a revival of localism and a revival of community-based organizations that are trying to control their lives because these flows have to land somewhere. That's the trick. You cannot control the global flow, but you can negotiate the landing sites of these global flows.
Some communities have experience with local currencies. There's a very extravagant attempt in Italy to create a new republic in the richest part of northern Italy, creating even some monetary instruments for that republic. But all this is not real. It's symbolic politics because the currency, in fact, will be a global currency. The national currency will disappear. The point is what you do locally with this global currency.
If communities and local governments start cooperating, and creating networks of free communes, things may change. An experience already going on in Europe is the old libertarian idea that, instead of building nation-states, people organize communes in which they can be together but at the same time not be isolated. They can be linked to each other, providing information, providing joint strategies to negotiate with different corporations, for instance, through Databank links to municipal governments. Databanks track movements of corporations and conditions under which corporations settle here or there. An association of local governments, in fact, is a consultative agency to the European union, comparing and coordinating the strategies of planning, of local economic development, of what the corporation says to one city or to another. The Internet is a fantastic instrument for this kind of association.
--This edited article is taken, with permission, from Jerry Brown's interview of Manuel Castells on the "We the People" radio program.
The Information Age
Manuel Castells, Professor of Sociology and City and Regional Planning at U.C. Berkeley, has written over 20 books.
All the topics covered in this article are fully developed in the trilogy Manuel Castells just published on the Information Age: The Information Age: Economy, Society, and Culture: Vol. 1, The Rise of the Network Society (1996); Vol. 2, The Power of Identity (1997); Vol. 3, End of Millennium (1998), published by Blackwell (Oxford, England, and Cambridge, Massachusetts).
Readers can order the trilogy with a special offer at http://www.blackwellpublishers.co.uk. This book is already in its 4th printing and has been translated into 10 languages.