The Uses of Diversity. David Ellerman

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СКАЧАТЬ an associated group do not seem to fit the bill. After Hatsopoulos died, these empire-building proclivities set in and many of the Thermo companies were combined in the Fisher Scientific Company that brags about having 70,000 employees worldwide.

      Yet another possibility arises when most of the technology is embodied in highly mobile “human capital,” where independent venture capital is available, and where the economic environment has reached a certain critical mass of diversity. Then as in California’s Silicon Valley, Boston’s Route 128, or Taiwan’s Silicon Gulch¹⁷ (not to mention the fervent period of the Industrial Revolution in England), many of the technological possibilities can be fulfilled by breakaways and spin-offs that cannot be prevented by empire-building management in the original company—management that sees “Big things turning into smaller things” as “decay and disintegration” rather than “birth and renewal of vigor” (Jacobs 1980, 68).

      And finally, there are many service sector enterprises with small capital requirements where management cannot stop spin-offs and breakaways. In these last two cases, spin-offs are possible not because they are compatible with the legal form of the enterprise but because much of the business is embodied in the human knowledge and skills of the staff who walk out the door at the end of each working day and have the choice of not coming back.

      The Difference Democracy Makes

      The enemies of diversification are not just one-sided economic theories that emphasize the deepening of old work rather than the creation of new work (to put it in Jacobs’s terms). Empire-building proclivities also thwart diversity, and those tendencies are evident both politically and economically. But the political grip of those proclivities will depend on the form of government. In an autocracy where power comes from above, the sovereign will seek to maintain and perhaps even expand the realm.¹⁸ But if power comes from below as in a political democracy (leaving aside the half-free and half-slave antebellum America), there are few grounds to deny the expressed wish of the bulk of the population in a part of a country to become autonomous or to secede. Jacobs cites the early twentieth-century peaceful secession of Norway from Sweden as an example (the separation of Singapore from Malaysia might also be mentioned), and she viewed the possible secession of Quebec with equanimity, if not support (see Jacobs 1980).¹⁹

      The same dynamics of power and legitimacy are at work in an economic polity. In a conventional company, where power comes from above, management has little reason to sponsor spin-offs and would have little cause to accede to any expressed desires coming from below to use the firm’s technological and business capabilities for new enterprise creation through spin-offs and breakaways. When the preconditions of a Silicon Valley are present or in labor-intensive service sectors, then it may happen anyway—not because of the form of business but in spite of it.

      In a democratic company (e.g., an industrial cooperative) where power comes from below, then management has less of a leg to stand on to oppose new enterprise creation through spin-offs and breakaways.²⁰ Pigou specifically mentioned that “associations of workers combined together in small co-partnership workshops” would constitute the “first school in which this capacity can be developed,” and thus such companies would contribute to the community not just “boots and shoes” but the second product of “well-trained competent” people (Pigou 1960, 205–06).

      That has certainly been the experience of today’s best example of cooperative development, the Mondragon group of cooperatives in the Basque region of Spain.²¹ The companies known collectively as “Mondragon Cooperative Corporation” produce a rather full variety of high-valued added consumer products, intermediate goods, and capital goods including the first robots and computer numerically controlled (CNC) machinery designed and built in Spain. Since the firms are all cooperatives, it was all done with no foreign ownership. The group started with a single company in the mid-1950s producing a kerosene heater. Then it systematically implemented the economic principle of plenitude by filling out the backward linkages, producing the machines to make the heaters and then the machines to make those machines. Through multiproduct diversification, it started producing other consumer durables (stoves, refrigerators, and washing machines) and all the things to produce those things. Each bottleneck called forth new energies to solve problems, for example a bank to help finance new enterprises, an applied technological research institute to systematically learn new technologies and turn them into new products, a consulting company to help new firms start (a “factory factory”), an insurance company for members, and a polytechnic university.

      Since the firms were cooperatives and, as a group, had the express goal of developing good jobs in the Basque country, the positive externality of fostering spin-offs and breakaways was “socialized” or internalized within the group (see Ellerman 1984). The original company did not have the option of “owning” a spin-off or preventing the spin-off if the mother company could not capture all the benefits. The new company would also be a cooperative that would have to “rest on its own bottom” or “walk on its own two feet”—within the group.²² Thus the headquarters of the whole group encouraged groups within existing firms to coalesce around ideas to produce adjacent products in a spin-off. The potential managers and workers might be from a village or small region without much industrial development so by doing the spin-off near their homes they satisfied both economic and social goals. In a similar context, Jacobs noted that such “division would be a normal, untraumatic accompaniment of economic development itself, and of the increasing complexity of economic and social life” (Jacobs 1984, 215). Since the spin-off process was carried out in an organized and socially approved way, precautions could be taken so that it did not disrupt the original mother firm. It became part of how the group evolved.

      Concluding Remarks

      Our overall goal here is to call attention to Jane Jacobs’s work not only as a writer about cities but as a writer about economies and development where cities have the central role as the main sites of development. Her emphasis on diversification is particularly relevant to today’s debates about globalization. She is almost a one-person antithesis to orthodox economics which is professionally enamored with the logic of specialization, increased division of labor, and the theory that each country (or city region) should specialize in its comparative advantage.

      According to comparative advantage theory, the North (industrialized countries) clearly has the comparative advantage in modern science, technology, and industrial production. The South (developing countries) should not indulge in the wasteful duplication of producing on its own (initially) crummy imitations of the industrial products produced so well in the North. The South should specialize in their comparative advantage, which is natural resources, agricultural products (which the North should buy more from the South to lock in that sterile pattern), and unskilled labor. Indeed, the South can in part function as a “bedroom community” for unskilled labor that becomes “transnational”—migrating back and forth to the North to take the jobs that northerners don’t want.²³ Insofar as industrial products need to be produced in the South, this should be done by factories owned and operated by the multinational companies from the North which already have the comparative advantage in that sort of thing (which will tend to crowd out the development of that local capacity in a familiar colonial fashion). But it is “win-win” since the factories will use the cheaper local labor, one of the South’s specialties. By thus urging the North and the South to each exploit their own comparative advantage, the development institutions that operate according to the “science” of economics—such as the World Bank (see Ellerman 2005) and the IMF—promote the goal of worldwide efficiency.²⁴

      But Jane Jacobs, being without the blessing of an intellectual formation in economics, spent a lifetime studying economies rather than economics, and she has arrived at a rather different viewpoint. Her perspective is productivist (or capabilities based) rather than consumptionist. Rather than starting with an artificial static conception of the economy and then perhaps later discovering that some cherished notions (e.g., static efficiency) might even cut against evolutionary dynamics,²⁵ she begins СКАЧАТЬ