III - E-Business and the New Economy

In a society where private firms are the main source of wealth creation, it should come as no surprise that in the 1990s, when Internet technology became available to the public, the fastest and most widespread use of its applications was in business. The Internet is changing business practices in terms of supplier and customer relationships, management issues, production process, cooperation with other firms, financing, as well as determining the value of shares in financial markets. The skillful use of the Internet has become a major source of efficiency and competitiveness for all types of business activities. For all the hype around dot-coms, they represent only a small, entrepreneurial vanguard of the new economic world. And, as is typical of any risky venture, the business landscape here is filled with the wreckage of unfounded fantasies. However, there are business projects like the Phoenix bird, many of which rise from their own ashes over and over again, learning from their mistakes in order to make another attempt at a productive round of creative destruction. In the United States in 2000, trade through the World the web amounted to about 400 billion dollars. Forecasts released in March 2001 by the Gartner Group, a market research company, put the figure in the order of $3.7 trillion for 2003. In addition, the rapid pace of development of electronic commerce in the world may lead to the fact that by 2004, according to International Data Corporation, the share of the United States in the total volume of commercial transactions made through the Network may be less than 50%, compared with 74% in 1999, which is an indicator of the projected faster development of electronic commerce in Europe compared to the United States in the early years of the 21st century. Even with the slowdown in the Internet economy, the total value of global B2B transactions in 2003 could reach $6 trillion, according to Gartner Group forecasts. Forrester Research estimates that global e-commerce in 2004 will be $6.8 trillion, 90% of which will be B2B (Business Week, 2001: 128).

However, the value e-business goes far beyond its quantitative characteristics, since in 2001 about 80% of all transactions via the World Wide Web were B2B transactions, and this implies a significant change in the ways of implementation commercial activities. The internal networks through which employees communicate with each other and with their management are highly importance for effective work firms. The entire organization of the business as a whole must conform to the Internet technology that provides communication with customers and suppliers. In addition, as this type of economy enables individual entrepreneurship to thrive, communications between consultants, subcontractors, and firms via the World Wide Web become as important as the activities of the firm itself. In this case, not a dot-com economy arises, but a network economy with an electronic nervous system.

Thus, there is no reason to argue that online firms are just a fleeting episode of the initial period of the information age. AOL, Yahoo!, Amazon, e-Wow, e-Trade, e-Toy, and many other bold pioneering firms have truly created a new business model by leveraging the power of the Internet and learning as they go. Indeed, the financial markets believed in the reality of their claims to build the future, rewarding their courage with a staggering valuation of market capitalization (for the time being). And venture capital investors have been captivated by their prospects and have been able to secure enough investment to fuel an entirely new sector of the economy and, moreover, a new economy, without waiting for the heat to subside.

The dot-com avalanche has shaped a new economic landscape centered on e-business. By the phrase “e-business” I mean any business activity, the main manifestations of which in the field of management, financing, innovation, production, distribution, sales, relations with employees and consumers are carried out mainly through the Internet or on the Internet or other computer networks. regardless of the nature of the relationship between the virtual and physical parameters of a given firm. Using the Internet as the main means of communication and information processing, business chooses the Web as its organizational form. Socio-technical transformations permeate the entire economic system, influencing all processes of creation, exchange and distribution of values. As a result, capital and labor are the key components of any business process- undergo corresponding changes in terms of their characteristics, as well as the way they are used. Of course, the laws of the market economy continue to operate in this network economy, but in a special way, the understanding of which becomes extremely important in order for us to live normally, develop and prosper in this brave new economic world.

With this in mind, my analysis will be structured in the following order: the transformation of the practice of the firm; the relationship between the Internet and capital markets; the role of labor and flexible employment practices in the network business model; the specificity of innovation in the electronic economy in the context of increasing labor productivity. These analytic threads will be summarized in a synthetic characterization of the real meaning of what has come to be known as the "new economy". The new economy is not a fantasy country of unlimited economic growth, capable of canceling business cycles and immune to crises. If there is a new economy, then there are and will be new forms of the business cycle and, eventually, economic crises, modified under the influence of certain processes characteristic of the new economy. Accordingly, I will conclude this chapter with several hypotheses regarding the characteristics of the new economic cycle and possible crises resulting from the fall in the value of "tech" stocks in financial markets, based on observational data for the period from March 2000 to March 2001.

Electronic Capital and Market Valuation in the Internet Age

The transformation of capital markets is at the heart of the development of Internet firms and, in fact, of the entire new economy. Without venture capital funding for new ventures, there would be no internet-driven economic growth. And venture capitalists have been able to continue actively financing ventures despite their high mortality rate (about a third of all projects in the US) only because of the high returns due to the unprecedented market capitalization value given by the financial markets to many of these innovative business projects. The sharp drop in the value of "tech" stocks that began on March 10, 2000, failed to erase from memory the amazing rise in the value of technology firms (including the surviving dot-coms) over the past decade. Despite the liquidation of numerous new Internet companies around the world that proved too short-sighted in their business plans to survive changes in market sentiment, capital raised by high profits in the technology sector in the 1990s and later became the fuel of the new economy. For five years, from 1996 to the first months of 2001, in a volatile financial market and even after entering bear territory in 2000-2001, all major technology firms, as well as a considerable number of Internet companies managed to significantly increase its market value. Indeed, after its sharp fall in 2000-2001, the NASDAQ index in February 2001 reached a mark that was three times higher than in 1996. It is likely that it will start to decline in the future for reasons that I will discuss in a moment, but it is important to note here that a long period of strong growth throughout the 1990s was already able to transform the United States economy and the core of the global economy.

I will show that most of this growth was neither speculative nor excessive, and that the high value of "tech" stocks was not a financial bubble, despite the apparent overvaluation of many firms. However, I completely disagree that we live in an economy that ignores the laws of gravity. Historical data and economic theory show that if values ​​rise, then they will inevitably fall, as was the case in 2000-2001, after which they may begin to rise again. And the main questions here are the following: when, to what extent and why. To answer these questions, we need to analyze the transformation of financial markets over the past decade, driven by deregulation, liberalization, new technologies, and business restructuring.

At present, we are witnessing the gradual development of a global interdependent financial market governed by computer networks, with a new set of rules for investing capital and determining the value of shares and other securities. As information technology becomes more powerful and flexible, and as national laws become more subject to the movement of capital and electronic commerce, there is an integration of financial markets, which eventually turn into a single structure that functions in real time and covers the entire globe. Thus, the ability of commercial systems to form computer networks is transforming financial markets, and the new rules of financial markets provide the necessary capital to finance the Internet economy. Let's go through this very important but difficult to understand question step by step.

First, I want to describe the mechanism by which capital markets provide funding for e-business innovation. A typical work cycle in this sense in the late 1990s in Silicon Valley began with a bold business plan and some set of visions of what Internet technology could do, more in terms of business innovation than technical innovation. After all, most technologies these days are either open-source or immediately usable, so the big question is what to do with them, and it takes talented people to solve that. Talent can be obtained for money, for big money, or, as is most often the case, with the promise of such money. After that, the business plan is sold to a venture fund. Venture capital in Silicon Valley does not take long to find: they are always there. In fact, a third of all venture capital in the United States is invested in the San Francisco Bay Area. In most cases, investors are not purely financial firms. Often they are firms that owe their origin to the industry. high technology. Sometimes wealthy high-tech entrepreneurs privately invest in promising business projects. In most cases, investors familiar with the industry set up a venture capital fund and connect it with third party investment companies eager to enter a promising market. Such funds work closely with start-up companies, directing their business projects and looking after them for as long as they are considered worthy of investment.

However, many projects fail, either before reaching the implementation stage or failing in the marketplace. However, the return on successful ventures is so great that, on average, venture capital funds far exceed those of alternative financial investments (Gupta, 2000; Zook, 2001). That's why they keep doing it, tightening their leverage when the market is falling: ultimately the success of the project will depend on the valuation of the financial market. With the help of initial investments received from venture capitalists, entrepreneurs start a company, hire talented people and pay them with options, that is, future income (or expected income). In doing so, they carry out appropriate work in order to make possible the initial public offering (IPO). The performance of the IPO, that is, the assessment of the project by investors in the financial market, will determine the life or death of this project. If it is successful enough, the firm uses the market capitalization estimate to raise additional capital, and then goes into serious business: not hoping for a quick profit, but expecting to supply enough great expectations, it eventually either develops into a competitive company or is acquired by a richer company, usually paying with its share capital. So, instead of becoming real billionaires, the sell-off entrepreneurs get richer only on paper, turning into "dream partners" with a good chance of impressing the financial market in the long run. In principle, the reaction of the market will be in accordance with the pragmatic rules of the economy, that is, the ability of the company to generate income and make a profit. However, the timing of the formation of such an assessment varies over a very wide range. Expectations of high returns can prolong investor patience, thereby giving innovation a chance to shine.

The rapid development model combines technical innovation, entrepreneurial creativity and expectations-based financing from the market. Its scope is not limited to start-up Internet companies or purely online companies such as AOL, Yahoo!, e-Wow and Amazon. The use of this model underlies the success of new large technology companies (Intel, Cisco, Sun Microsystems, Dell, Oracle, EMC, and even Hewlett Packard and Microsoft in their early days). The fate of traditional companies reinvesting in the new economy (such as Nokia or IBM) also depends on their ability to attract investors in the financial market through their valuation. And such an assessment is a derivative of technical innovation, entrepreneurial creativity and the ability to create your image in the financial world. So, for example, Nokia's success in global distribution of its products was based on the introduction of innovations (several generations of cell phones, expansion of the set of applications, including mobile Internet access and new technologies in the field of network infrastructure), an effective management model (integration in the center, networking at periphery, flat corporate structure) and high performance on the stock exchanges (until the process of growth in the value of its shares began to falter in accordance with the trend common to all “technological” stocks) (Ali-Yrkko et al., 2000). The new financial market is the key to the new economy. Below I will outline its main distinguishing features.

First of all, there is currently a process of increasing globalization and interdependence between financial markets. While national laws still matter (in fact, it is the differences in legal and regulatory environments that provide the basis for speculation), the ability of capital to flow into and out of securities and currencies regardless of the market, and the hybrid nature of financial derivatives, often consisting of securities of different origin, contribute to the accelerated merging of markets. This financial interdependence is technically supported by a network of computer networks enabling global trade and real-time decision making. Strictly speaking, these networks are not the Internet because they do not use Internet protocols. But still, these are computer networks, and they are connected to the Internet. The global integration of financial markets makes the task of regulating their activities national and even international organizations more and more difficult. Given the fact that in 2000 the foreign exchange markets averaged over $2 trillion a day, it is understandable why the joint intervention of the central banks of the European Union, the United States and Japan to support the euro in September 2000 could not stop it. falling until the opposite trend prevails in the markets. It follows that financial fluctuations in any market anywhere in the world can, in principle, spill over to other markets, regardless of the differences between the nature national economies and market value levels. It was this “infectious” effect that characterized the emerging financial markets crisis of 1997-1999, when crises in Asian countries, Russia and Brazil fed each other, despite the dissimilarities of the economies in these three regions. Contrary to what was then feared, these crises failed to spread to the US and Western European markets for the simple reason that, despite all the talk of emerging markets, at that time they accounted for only 7% of the total value of all world finance, and their integration with major capital markets has been limited. As emerging markets become more important and electronic networks connect them more closely with global financial markets, the scope and speed of financial flows will have to increase, further increasing market interdependence and multiplying sources of instability.

Secondly, financial markets are changing under the influence of e-commerce. Electronic Communications Networks (ECNs) originated from transactions in the NASDAQ. Created in 1971 and merged with the American Stock Exchange in 1998, the NASDAQ, like the New York Stock Exchange, is a non-profit organization that sells stocks. However, it does not have any specific place for trading: it is an electronic market based on the use of computer networks. The NASDAQ played a very important role in the development of the new economy, as leading companies used the NASDAQ as a medium for public offering of their shares, paying tribute to its high flexibility. ECNs created by brokerage firms, such as the American Instinet ( subsidiary Reuters Group pic), provide private investors with the opportunity to search for information and make investments online. Brokerage companies Charles Schwabb, e-Trade and others have been able to significantly increase their market share by establishing a web-based network of individual accounts. Traditional brokerage and financial firms like Merrill Lynch, who swore they would not succumb to this trend, eventually opened their own networks e-investment, as business and money clearly pointed to the Internet's ability to provide access to information and organize trade. Single day traders, using their own information and communication tools, flooded American financial markets in the late 1990s, then made several forays into Europe, after which they began to lose ground and eventually disappeared completely as a result of ever-increasing market volatility, which they themselves contributed a lot. The spread of ECN in Europe has been slower due to national fragmentation and stricter legislation. However, with the advent of the euro, scientific and technological progress and deregulation, electronic commerce in the second half of the 1990s managed to expand its sphere of influence. Easdaq, Tradepoint and Jiway have become the main trading systems in European markets. In March 2000, e-Crossnet, a rate equalization system backed by global fund management firms, was launched in London.

The currency markets themselves are becoming electronic. In the futures market, the German-Swiss electronic exchange Eurex in 1999 overtook the Chicago Mercantile Exchange, becoming the largest futures market in the world. In the end, in 2001, the Chicago Stock Exchange joined the winner and entered into an alliance with Eurex. MATIF and LIFFE, the French and British futures exchanges, also switched to using electronic systems. Cantor Fitzgerald Broker, the world's largest bond broker, created an electronic exchange in New York in 1998 to trade long-term Treasury futures contracts. The threat from e-commerce has led to projects to merge European stock exchanges. In 2000, the London Stock Exchange and the Frankfurt Stock Exchange tentatively agreed to merge with the organization of one market in London for solid stock values ​​and another in Frankfurt, in a joint venture with NASDAQ, to provide increased trading volume. This agreement was never implemented, mainly due to the attempt of the Swedish exchange Swedish OM to take control of London, which was an ominous omen for all financial markets. The French, Dutch and Belgian stock exchanges have decided to merge to form Euronext, while the Spanish and Italian stock markets were expected to gravitate towards one of the two to three mega markets currently emerging in Europe. An important step in the joint venture project between NASDAQ and the London and Frankfurt stock exchanges was the inclusion of the Tokyo Stock Exchange in this project, which creates the basis for building a global association NASDAQ. The New York Stock Exchange also plans to introduce mixed system e-commerce and trading on the stock floor. In addition, New York, NASDAQ, London, Stockholm and other stock exchanges, under pressure from competitors, are targeting equity participation, trying to be more flexible, increasing their competitiveness and deregulating. In general, there is a trend towards a significant increase in the role of e-commerce as the heart of the financial market and towards the consolidation of stock exchanges around the world into several nodes that can attract investors due to their critical mass and commercial flexibility. This will result in increased interdependence of global financial markets, as well as an increase in the volume of transactions and the speed of their implementation.

Why does transaction technology matter? It is able to provide a reduction in transaction costs of at least 50%, which allows you to attract more investors and increase the number of transactions. It opens up investment opportunities online, which leads to the following results. First, there is an unprecedented increase in the size of the market, as the latter is able to mobilize savings in one place for investment in another, which is accompanied by an acceleration in the turnover of capital investments. For example, the US Depository of Trust and Clearance Corporation (DTCC), the main clearing bank for US common stocks and bonds, processed $70 trillion worth of securities in 1999, and in the first half of 2000, the volume of transactions increased by 66% compared to the same period in 1999 (which, on an annualized basis, gave a figure more than ten times the gross domestic product of the United States at that time). Secondly, online information is becoming a determining factor for investors to make certain decisions. Third, there are more options for de-intermediation as private investors and online brokers dispense with traditional brokers and investment firms. Finally, investors are able to instantly respond to changing market trends, as they must be aware of all the movements that occur at high speed in a complex market and be equipped with the appropriate technical means, allowing real-time financial decisions.

Thus, e-commerce increases the number of investors with diversified strategies, which, using a decentralized network of investment sources, operate in a global interdependent market that is characterized by high speed. The result of all this is an exponential increase in market volatility, as complexity, scale, and speed develop a fast-response behavioral pattern for internet-wielding investors, causing chaotic dynamics and an attempt to outsmart the market in real time. Thus, both the transformation of finance and the transformation of trading technology lead to the fact that market instability becomes a systemic trend.

It is in this new fintech context that markets value firms and, in fact, any other subject of value, since new financial accounting, supported by powerful computer models, has led to the process of securitization of almost everything in the world: from entire countries (the concept of "net value implementation of the country" with financial assessment) to church-issued bonds, environmental programs, cultural institutions, local governments, state governments, and financial derivatives (synthetic securities that combine the current and future value of stocks, bonds, commodities, and currencies).

Determining the value in the financial market is the key mechanism of our economy. From a structural point of view, of course, the factor that matters for economic growth is productivity. From the point of view of the company, the main thing is to earn income and profit. However, the process of economic growth begins with investment. And for investors, the main interest here is the return on the money they invested, which is determined by the valuation of the shares representing their investments in the financial market. In other words, investment is driven by growth in share prices, not earnings and profits. It is possible that there is a direct relationship between profits and appreciation, and then the criteria for valuation in the financial market should be simple and entirely dependent on the measurable performance of the firm in that as far as income and profits are concerned.

However, in reality, at the beginning of the 21st century, we see a different picture: over a period of almost a decade, the gap between the value of shares and earnings per share has steadily increased. Empirical evidence shows that the stock market's valuation of firms has increasingly diverged from their book value. Valuation in financial markets is, of course, based on earnings and profits to determine the value of shares. However, these criteria are by no means the only ones. Intangible assets also play a role here: according to a number of studies, every dollar of a firm's capital invested in installing computers is associated with at least five dollars of market value after checking for other assets. Firm valuations are even more favorable when investment in information technology is combined with organizational change (Brynjolfsson, Hitt, and Yang, 2000). Other important intangible assets for market valuation include branding, company image, management effectiveness, and business scope. So when the markets came to the conclusion that the Internet was the technology of the future, any stock that was connected to the Web immediately began to receive a premium, even despite the risk associated with it and - which happened quite often - the unrealistic business prospects of the firm. When the markets began to react negatively to what they considered the overvaluation of "tech" stocks from March 2000, the devaluation of many of these stocks was largely unrelated to the actual performance of the respective firms.

However, markets also react to macroeconomic indicators and political decisions or their anticipation. Or the discrepancy between expectations and actually occurring events. The reaction of the markets is also based on non-economic criteria. They are exposed to what I call information turbulences of various origins, such as political instability, legal/court events (such as an antitrust lawsuit against Microsoft), technical expectations (surrender personal computers for rent or development mobile Internet) or even the personal whims and statements of decision makers (Greenspan, Duisenberg). As Paul Volker (2000:78), who analyzed the transformation of global financial markets, wrote, “Capital flows and their valuation in free financial markets are influenced by both perceptions and objective reality, or perhaps more precisely, perceptions are reality".

All this is by no means new. However, here, as in the case of other information processes, in the era of the Internet, qualitative changes are taking place. First of all, there is the spread of rumors and news that become easily accessible to everyone. All sorts of financial gurus publish online letters with confidential information addressed to them. to corporative clients. Specialized firms like Whisper.com post rumors and leaks on the Internet that in the past would not have gone beyond a narrow circle of insiders. Messages about financial speculations and announcements aimed at raising prestige, some are serious, others are not, most are something in between (who knows!), create an atmosphere of informational uncertainty. In such an environment, investors are required to react in real time, so that later the speed of the market does not make them pay for their indecision. Private investors, by their large numbers, only increase the instability of the market. However, major institutional investors, also operating at the speed of the Internet and with colossal funds, are able to turn and change market trends, creating unpredictable patterns of interaction between individual decisions and systematic trends.

Financial markets are by and large out of anyone's control. They have become a kind of automatic device, making sudden movements that do not follow a strict economic logic, but follow the logic of chaotic complexity that results from the interaction of millions of decisions, real-time and global reactions to information turbulences of various origins, including economic news related to income and profits. Or their expectations. Or something opposite of what was expected.

The reality check of the actual functioning of financial markets in the age of the Internet helps to adequately perceive the well-known controversy about the overvaluation of Internet firms and, in fact, the entire new economy as a whole. Indeed, there has been a significant reassessment of the prospects of many firms to become profitable enterprises in the past, and even now, in the face of an economic downturn. However, the expectation of profits from outstanding technical achievements or business innovations is by no means evidence of a "rampant irrationality" as formulated by Shiller (1999) in his popular critical work on the financial evaluation of the new economy. Indeed, if we look back, some of the most famous financial “bubbles” in history (which are so often referred to by conservative economic minds in our time) were not at all as speculative as is commonly believed (Garber, 2000). ). Believing that the Internet or genetic engineering are the driving belts of the 21st century, and investing in firms that are producers or early adopters of such technological innovations without taking into account their short-term returns, does not seem entirely irrational. On the contrary, it seems to make more sense than betting on the continuation of traditional business in the midst of a technological revolution, the main object of which is information processing in an economy where more than half of all workers are involved in data processing to some extent.

Yes, it is possible that some stocks have been or are overpriced. But how exactly? The obvious answer (“the market decides”) is purely tautological, for it is the market that sets the price high in the first place, above the level that traditional standards could guarantee. Thus, the implication is that the market will eventually determine the "correct value". But when, at what moment? How long to wait for this moment? Long terms are not a gift of fate: they are an inextricable series of short terms. They are not assigned, they are fixed by ad hoc trajectories following ad hoc events. Moreover, if we look at the behavior of the financial markets in early 2001, we see that they seem to have done well in terms of new economic indicators . Yes, overvaluation went hand in hand with undervaluation, using traditional business performance measures. Yes, many start-up Internet companies were not viable and may have needed a test of the financial markets in order for some kind of Darwinian correction to pump up the muscles of the Internet economy. At the same time, however, the big tech companies - the most advanced, well-managed, profitable and profitable - have been penalized by the financial markets disproportionately to the apparent reasons for their downturn. For example, Nokia shares fell sharply in August 2000, despite good business results, due to the announced delay in the receipt of a new model of mobile phones, as well as due to its warning that revenues will grow more slowly next quarter. than in the previous one. Dell, a leading notebook manufacturer, and Intel, a recognized leader in microelectronics, lost 50% of their value due to the fact that their revenues were not as high as expected. Yahoo! consolidated its position as the world's leading portal, continuing to increase revenues and show profits, and yet the company's shares lost 80% of their value, forcing its chief executive to resign in March 2001. Threatened by fragmentation and holding onto a monopoly in a vanishing market (personal computers), Microsoft also suffered losses, but on a smaller scale than other companies facing a similar crisis, and its share price rose in the first quarter of 2001. Amazon's stock fell 60% in the summer of 2000, despite a strong 84% increase in sales in the second quarter of 2000, with total sales reaching almost $3 billion by the end of the year. And Ajnazon still has not shown any profit. Despite this, however, the company has attracted investors since its inception with its conviction that the first winner in the online books and CDs business can lay a solid foundation for future profits as part of the learning curve. And this seems to be quite reasonable. However, that sentiment was undermined by a virus of disillusionment with riskier Internet ventures, forcing Amazon to lay off thousands of workers and close two of its businesses in early 2001. In short, the shake-up in 2000-2001 did not affect only (or mostly) start-up Internet companies.

In fact, it hit all technology companies and even more so the stock market as a whole. Reliable companies with all the credibility that traditional valuation methods provided have suffered losses along with many undisciplined start-ups. Very few companies have managed to avoid devaluation in the stock market, in particular the utility companies, well known to Californians for their excellent business practices. On the other hand, better promotional abilities and the ability to form a business image were very useful in slowing down the decline in share prices. Nokia is a prime example here. Having learned more the hard way the lesson of early announcement [of its economic health] when its share price fell in the summer of 2000, on October 19, 2000, the company announced promising earnings for the end of the quarter, as a result of which its share price increased by 27% in one day, helping to lift the index NASDAQ (and this despite the fact that Nokia does not trade through the NASDAQ!).

Thus, the severe decline in the technology market in 2000-2001 demonstrated not a return to traditional valuation criteria, but the degree of volatility in financial markets, and in particular emerging markets, where investors move at the speed of the Internet. This is not a lesson in a rampage of irrationality followed by a sharp transition to moderation, but, on the contrary, a lesson in nervous behavior, structurally determined by globalization, deregulation and electronic commerce. The presented data do not indicate the return of the traditional business cycle, but the emergence of a new type of economic cycle, in fact, a new scheme of entrepreneurial activity, characterized by instability and alternating sharp increases and decreases in market valuation as a result of information turbulence, combining economic criteria with other sources of valuation (Mandel, 2000). In the age of the Internet, with its systematically unstable information-dependent financial markets, the ability to live in danger becomes part of the business lifestyle.

Labor in the e-economy

While the financial market evaluates a company's performance, the workforce remains a source of productivity, innovation and competitiveness. In addition, the factor work force becomes more important than ever in an economy that depends on the ability to find, process and use information in an increasingly online fashion. Indeed, we are now experiencing an information explosion. According to a study by the University of California at Berkeley (Lyman and Varian, 2000), there are about 550 billion documents on the World Wide Web (95% of which are public domain), and the rate of increase in the volume of online information is 7.3 million web pages per day. . Number of messages sent annually e-mail, five hundred times the number of web pages. 1.5 billion gigabytes of information is produced annually in the world different kind, 93% of which in 1993 were produced in digital form. Thus, on the one hand, business firms have access to a huge amount of data that, through magnetic memory, digital processing and the Internet, can be recombined and used for any purpose and in any context. On the other hand, it puts enormous pressure on the workforce. The electronic economy cannot function without workers who are able to cope - both technically and in terms of content - with this sea of ​​​​information, organizing it, concentrating it and transforming it into specialized knowledge in accordance with the goals and objectives of the work process.

Workers of this type must be highly educated and enterprising people. Companies, both large and small, depend on the quality and autonomy of their workforce to operate. Quality is not measured by the years spent on education, it is determined by the nature of education. Those working in the e-economy must be able to reprogram themselves in terms of skills, knowledge and thinking, in line with the ever-changing challenges of an evolving business environment. A self-programming workforce needs a certain type of education, on the basis of which the worker's accumulated store of knowledge and information can be expanded and modified throughout his (or her) working life. This has important implications for the requirements placed on the education system, both at the formative stage and during the retraining and retraining processes that continue throughout adult life. These implications include the demand for e-economy to develop e-learning as a long-term “companion” of professional life. The most important features of such a learning process are, firstly, learning how to learn, since most of the specialized information, as a rule, becomes outdated within a few years, because we live in an economy that changes at the speed of the Internet; secondly, the ability to transform the information received during the training into special knowledge.

However, the self-programmed workforce is unable to demonstrate its abilities in the traditional tough business environment. Brenahan, Brynjolfson and Hitt (2000) have empirically identified positive feedback loops between information technology, organizational agility and a highly skilled workforce at the firm level. The activities of an electronic company (on the Web or off it) are based on a flat hierarchy, a system collective labor and free, unconstrained interaction between employees and management in all structural divisions, as well as between individual levels of a given firm. The network enterprise is made possible by network workers who use the potential of the Internet and have their own intellectual capital.

Talented people are main factor production in the field of electronic business. Literally everything now is based on the ability to attract, retain and effectively use talented employees. In such a competitive labor market with high demand for a self-programming workforce, firms resort to a range of tricks to retain their best employees. In addition to the usual tricks in such cases (financial benefits, gifts, bonuses), the main strategy for retaining employees in the firm is to partially pay through stock options, allowing them to take advantage of the results of the activities of this firm. This links the fate of the worker to the success of the firm (at least until the worker earns enough money to become independent). Examples of high market capitalization valuations act like a magnet, attracting the very best and most talented to participate in the following promising venture: in 1999, about sixty-five “paper millionaires” appeared daily in Silicon Valley. And even the sobering downturn in the market in 2000 could not lessen that motivation, only making us more cautious about mixing life choice with stock options.

Stock option payments are, in fact, highly beneficial to firms, not only as a means of securing labor, but also because they partially relieve them of the burden of paying salaries. In addition, in the US, companies can reduce their taxes by the amount of stock option payouts. In some cases, large companies pay no corporate taxes at all thanks to this tax loophole, a relic of the past, dating back to the days when stock options were an exclusive activity "reserved" for a narrow circle of top officials. As for employees, stock option pay, ironically, revives the old anarchist ideology of company self-management, as employees become co-owners, co-producers, and co-managers.

Self-reliance, involvement, plus a relaxed form of joint ownership are expensive, requiring complete subordination to the business project, far beyond the scope of contractual obligations. For professionals working in Silicon Valley companies, workweeks exceeding 65 hours are the norm. And at the stage of delivery of any important project, there are not even nights left for rest. Similar work schedules seem to be typical of the Internet industry in Barcelona, ​​Paris and Helsinki.

The historic resurgence of the autonomy of labor after the bureaucracy of the industrial age can be illustrated even more clearly by the development small business, quite often represented by individuals working as consultants or subcontractors. Such business entrepreneurs own own funds production (computer, telephone line, mobile phone, workplace- most often at home - their education, their experience and the most important asset - their mental abilities). They accumulate equity, which is often invested in the shares of the companies they work for. This bidirectional process of concentration of capital and disaggregation of labor appears to be one of the historical surprises of the e-economy.

The recognition of the importance of the role of the self-programming workforce for e-business and the corresponding demand for it has led to a shortage of such workers in the fastest growing industries and regions of the world. From Silicon Valley to Stockholm and from England to Finland, the challenge for leading companies has been to find engineers, computer programmers, e-business professionals, financial analysts, and simply anyone with the ability to develop new skills to meet the demands of an ever-changing marketplace. However, the growing number of women graduating from higher educational establishments, and the massive recruitment of women into the paid workforce provide a key supply of skilled, flexible and self-reliant workforce to meet the needs of the e-economy. Despite existing gender discrimination in the corporate world, all levels of the professional structure were massively invaded by women, and under pressure from them, the wage gap between women and their male colleagues narrowed during the 1990s. The structural integration of women into the labor market has proven to be a necessary condition for the development of the new economy, with long-term implications for family life and for the entire social structure as a whole.

Another important source of talent supply, particularly in the United States, has been immigration. In 2000-2001, the US absorbed over 200,000 highly skilled workers a year on special visas and, in addition, used tens of thousands more online, working in their own countries or in "development centers" in offshore zones, in particular in the Caribbean Sea. Many of these emigrants have established their own companies after obtaining permanent residence. According to a study by Saxenian (1999), in the 1990s, about 30% of the total number of new companies in Silicon Valley were headed by immigrant CEOs from China or India. And this is not counting the numerous immigrant entrepreneurs of other nationalities, in particular citizens of Russia, Israel and Mexico. Europe, despite rising xenophobia, has recognized the reality of attracting immigrant professional workers as forecasts for 2004 indicated that European labor markets would be unable to meet over 25% of the need for information technology workers. In 2000, the UK passed legislation granting 100,000 special immigrant visas annually. Germany did the same, despite public protests, by allocating a quota of 20,000 visas. In Finland, Nokia has been pressuring the government to reduce the very high income tax of up to 30% for employees working in Finland for a limited period of time. This was necessary for Nokia to attract the professional workforce that the company needed in order for it to fit into the new round of technical innovation.

Curious enough here is the fact that, according to research by Saxenian et al., immigrants arriving in Silicon Valley are not at all lost to their countries (Saxenian, 1999; Balaji, 2000). Many of them, after settling in some leading technology or business center, create companies in their own countries, bridging the gap between California and India, Taiwan, Israel, Mexico, and so on. Newly formed companies develop their own networks in their own country, as a result of which new entrepreneurs migrate to Silicon Valley, replicating this process. Thus, by and large, we are not dealing here with a “brain drain”, but we are witnessing the emergence of a “brain circulation” system.

Of course, not all workforce in the e-economy or e-business is self-programming. In their more early works I made a distinction between the self-programming and the general labor force. The epitome of the general workforce are workers who do not have special skills or are not able to acquire them during the production process, and use only those skills that are required to carry out the instructions of the management. Such workers can be replaced by machines or a general labor force from anywhere in the world, while right choice the proportions between machines, local labor and workers from other regions will be determined by current economic calculations. Of course, this general labor force does not depend in the least on the qualities of the individual. It is the result of the lack of public and private investment of intellectual capital in a given person. In addition, the tasks performed by the general labor force are determined by the needs of the economy as a whole and therefore are not necessarily primitive in nature: the assessment makes them so. social structure. For example, one of the fastest growing and low-skill services in all countries of the world is private security. Obtaining a license to carry and use weapons requires not only special training in the art of shooting and hand-to-hand combat, but also appropriate legal knowledge, psychological stability and the ability to behave in critical situations. All of these qualities require college-level preparation, as well as a general ability to self-program the right skills for the circumstances and the level of technical development. However, public institutions treat such professions as marginal in terms of wages, training and recruitment procedures, leaving the respective areas of activity at the mercy of the general labor force, which is often very inefficient. As knowledge and information spread both within society and across the globe, the entire workforce can and should become self-programming. However, as long as societal institutions, business priorities, and patterns of inequality operate in tandem, the total labor force will remain a necessary quantity, rather than a specific quality, in the decisive contribution that the labor force makes to productivity and innovation in an e-economy.

One of the main manifestations of transformation labor relations turns out to be common to both the self-programming and the general workforce is flexibility. The network form of business organization, the high rates of development of the global economy and the availability of technical capabilities for working online, both for individuals and firms, lead to the emergence of a flexible employment scheme. The notion of a predictable career path—with a full-time job in a firm or in the public sector, for an extended period of time, with clear definitions of contractual rights and obligations common to most employees—is slowly disappearing from business practices, even though it continues to persist in regulated labor markets and in the shrinking State Lecturer. Martin Karnoy (2000), in his seminal book on the transformation of the workforce in the new economy, has documented that self-employment, part-time work, temporary job, subcontracting and consulting are gaining ground in all economies. In the less developed economies, informal activities, completely uncontrolled and based on casual employment schemes, are characteristic of a very large part of the urban labor force in most countries. And the general trend here is as follows: the place of the “organized man” is occupied by the “flexible woman”. For example, a study by Chris Benner (2001) has shown that flexible employment practices, embodied in labor intermediaries and flexible recruitment policies, are a hallmark of the Silicon Valley economy. A survey by the University of California at San Francisco and the Field Institute (1999) based on a representative sample of the California labor force in 1999 provided empirical evidence of a decline in the share of traditional employment patterns. If, according to this study, a traditional job is defined as one that is performed by one full-time employee on day shifts throughout the year and is paid by the firm for which this work is done, and this person does not work from home or as an independent contractor, then it turns out that only 33% of workers in California fit into such a scheme. If we add to this "traditional" status the requirement of at least a three-year contract in one company, then the proportion of working-age Californians who meet the specified criteria will decrease to 22%.

Although European labor markets are less flexible, the overall trend is the same, as Karnoy (2000) has documented. How this flexibility is exercised varies from country to country, depending on the provisions of labor and tax laws. Thus, Italy and the UK have the highest proportion of self-employed entrepreneurs in relation to other countries - members of the Organization for Economic Cooperation and Development, while the Netherlands went from severe unemployment problems in the 1980s to the lowest unemployment rate in Europe in 2000 year, creating numerous part-time jobs (mainly for women) with the coverage of all social payments by the state.

The flexibility of the labor process, the diversity of employment patterns and working conditions, and the individualization of labor relations are the systemic features of e-business. Flexible labor practices tend to spread from this core of the new economy throughout the labor market, thereby contributing to the emergence of a new variety social structure, which I described in the concept of the network society.

Productivity, innovation and the new economy

If there is a new economy, it is only thanks to a sharp jump in labor productivity. Without such a leap, we could still argue that there is a technological revolution, but not necessarily a new economy. As a consequence, for many years there has been a fierce debate among economists about the actual evolution in increasing productivity, as well as about the reasons for this phenomenon. Measuring productivity has always been a tricky business, made more difficult in our economy by the following three factors: most people work in the service sector, where measuring productivity is the most difficult; the statistical categories designed for the industrial age are woefully inadequate for assessing the information economy (an example here is the US Department of Labor's pre-1998 definition of software costs as an expense rather than an investment); business operates in global networks of production and distribution, and therefore performance accounting must in fact take into account any factors that contribute to the change in productivity along the entire value chain, and this is beyond the reach of modern methods accounting. Add to this the gap in time observed by economic historians between technological revolutions and when they begin to impact at the firm level, and we can better understand the "productivity paradox" that has baffled economists for years.

However last changes in statistical categories in the United States and the use of improved accounting procedures seem to suggest significant productivity gains as a result of the massive information technology investment associated with network-based organizational change. After all, in terms of economic theory, productivity gains alone can explain the emergence of an economy capable of growing at a consistently high rate at near-full employment, with rising incomes and low inflation over a long period of time, as has been the case in the United States since 1993. by the end of 2000. If in the period 1985-1995 labor productivity in the United States increased at an average annual rate of 1.4%, then from 1996 to 2000 this rate doubled, amounting to 2.8%. During the twelve months between the second quarter of 1999 and the second quarter of 2000, labor productivity grew at a staggering 5.2%. During the 2000-2010 ten-year period, productivity growth is projected to be between 2.3% and 4% per annum, according to various estimates, although a fall in share prices in 2000-2001 and beyond could significantly change this forecast as a result of lower investment and the most and the introduction of innovation, productivity growth and economic growth. Nevertheless, in the last quarter of 2000, in the midst of a significant recession in the US economy, labor productivity increased at an average annual rate of 2.4%, slower than the previous quarter, but still strong enough to bring annual productivity growth for all of 2000 as a whole to 4.3%. Thus, even using a lower threshold for estimates of future productivity growth—about 2.3% annually—would have greatly improved US labor productivity figures for the previous two decades, providing the basis for the rise of a new economy whose form and logic are all are still in the development stage.

Research by Steven Oliner and Daniel Sichel of the Federal Reserve Bank in Washington, and Dale Yongerson of Harvard and Kevin Styro of the New York Fed conclude that investment in information technology and high productivity in the computer industry have been found to be major drivers of acceleration. productivity growth (Oliner and Sichel, 1994; Sichel, 1997; Jorgenson and Stiroh, 2000; Jorgenson and Yip, 2000). Indeed, throughout the 1990s, productivity in the information technology sector increased by 24% annually. As history shows, innovators and creators of new technologies are the first to use them, as well as the first to prepare a workforce for them and modify them accordingly. organizational structure. In this way, the earliest users become the first to benefit from increased productivity. However, as their business model, along with new technologies, begins to penetrate other sectors of the economy, the rate of productivity growth also increases. This was brought to the attention of Brynjolfson and Hitt (2000), who studied six hundred American firms between 1987 and 1994. They showed that the internal decentralization of the firm and the use of networked forms of organization were necessary conditions for increasing productivity through information technology. Based on a number of case studies, Lucas (1999) also showed that the benefits to firms from investment in information technology, while generally positive, are quite variable in nature. Not all of them are measured by return on investment, but technology is usually a very important factor in positioning a firm in terms of product, production, and market.

In short, the US saw a significant increase in investment in information technology equipment and software in the second half of the 1990s, reaching 50% of all business capital investment in 2000. These investments, combined with organizational restructuring and especially the proliferation of Internet-based networks as a comprehensive business practices, seem to be the main factors explaining the growth in labor productivity, which is both the main source of value creation and the foundation of the new economy.

Elsewhere in the world, investment in information technology and the spread of networks is also occurring at a high rate, especially in Scandinavia, Western Europe and the industrialized countries of Asia. However, the impact of these changes on labor productivity, measured at the level of national economies, still does not manifest itself, except in Finland and Sweden. This can be explained by the combined effect of the following factors: the inadequacy of statistical categories even more outdated than in the United States; a smaller share of firms related to information technology in the total share capital: about 3% in Germany and Japan against 7% in the USA; a significant lag of European firms in terms of organizational change and workforce flexibility. However, e-business case studies and statistics on labor productivity and earnings per IT worker seem to show the same trend as in the United States. Indeed, since the new economy is a global economy, if e-business had to develop only within the borders of the United States, the process of its spread would eventually simply stop, since the productivity growth caused by this business would outpace the development of global markets, causing overproduction crises. Establishment of Do-Co-Mo in Japan, new entrepreneurial networks in high-tech industries in Taiwan and South Korea, the rapid growth of the mobile telecommunications and related service industries in Scandinavia, the restructuring of the French and German automotive industries based on a network business model, the retooling of the Dutch and German microelectronics industries, and the development of competitive online financial services in London and Frankfurt are all examples of the profound transformation of the global economy towards technology-driven productivity growth, first seen in the United States. If such trends really owe their origin, as I believe, to the changing business model and the spread of information technology, then they can overcome the effects of the recent recession of 2000-2001. However, this will require organizing a new type of business cycle management, the analysis of which is devoted to the last section of this chapter.

The new e-business-led economy is not an online economy, but an information technology-supported economy dependent on a self-programming workforce and organized around computer networks. The above components act as sources of productivity growth and thus the creation of wealth in the information age. However, if the workforce is the source of increased productivity, then the creativity of the workforce and the efficiency of business organization are ultimately driven by innovation. Innovation is a function of a highly skilled workforce and the existence of knowledge-generating organizations. And the process of innovation is also changing in the e-economy, as the use of the Internet plays a major role in innovation.

Manuel Castells

Galaxy Internet

Preface to the Russian edition

Several transitional processes are taking place simultaneously in Russia. One of the most significant is the technological and organizational transition to the information society. Wealth, power, social well-being and cultural creativity in 21st century Russia will largely depend on its ability to develop an information society model tailored to its specific values ​​and goals. Internet is information technology and social form which embodies the Information Age in the same way that the electric motor was the driving force behind the social and technological change of the Industrial Age. The book before you undertakes an analysis of the Internet as a cultural phenomenon along with the broad impact that the Internet has had on business, politics, personal relationships and the field of communications. The Internet was originally created as a means of free global communication.

While technology does not guarantee freedom, the Internet is in fact a powerful tool for both individual freedom and the freedom of community groups. However, freedom does not imply its necessarily positive social realization because it all depends on how people and social institutions relate to freedom. Thus, the rapid spread of the Internet around the world is accompanied by a variety of rumors and myths in the media about the possible negative impact of the Internet. More recently, a senior official Russian government expressed his negative attitude towards the Internet on the grounds that it can have a devastating effect on children. As this book demonstrates, empirical research debunks most of these myths. Moreover, to judge the Internet in terms of "good" or "bad" is generally wrong. Technology is good or bad depending on how we use it. They are extensions of ourselves.

In any case, regardless of our attitude towards the Internet, we must reckon with the fact that the Internet and computer networks in general have already become the backbone of all modern societies around the world. If in 1995 there were less than 10 million Internet users in the world, by the end of 2003 there were about 700 million, and by 2005 their number will reach a billion, even if we take into account the huge difference between developed and developing countries. In addition, all activities, from the financial sector and the media to politics and social movements, are organized around the Internet. So the real question for people, for businesses, for institutions, is how to live with the Internet. In order to answer this question to each with his own own point From a scientific point of view, we need to collect everything we know about the social, economic and political significance of the Internet on the basis of scientific research. This is exactly what this book aims to do: to summarize and analyze the Internet research findings over the past few years. While most of this data comes from studies done in the West, especially in the United States, it seems to be consistent with studies done in other countries, such as the 2002 survey study of Internet use I did in Catalonia and recent studies. held in China and Latin America.

What can we learn from these studies? Without getting ahead of the conclusions of the analysis undertaken in this book, the following deserves attention.

1) The Internet was built by its creators, mostly scientists and students, as a means of free communication. In addition, the functioning of the Internet was provided by programs freely distributed over the network. Even today, Apache and Linux, open source programs, run two-thirds of the world's web servers. Due to its structure, controlling the Internet is possible, but very difficult, although governments try to suppress free communication by identifying the senders and recipients of illegal messages, imposing penalties on them and Internet service providers. However, due to the global routing of the Internet, it is almost always possible to find alternative ways of transmitting a message to avoid control, as Internet users in China do. Thus, the Internet is, first of all, a universal social space for free communication.

2) Empirical evidence suggests that the Internet does not promote social exclusion and personal alienation. In fact, it promotes intrasocial interaction and the construction of interpersonal networks. It helps to increase f2f communication (face-to-face, face-to-face), but does not get rid of it. Self-managed based on personal choice, networked (online and offline) communication is an evolving form of social interaction in the information age. Use of the Internet exclusively for online chats and role playing very limited, primarily to the circle of teenagers and young users. The Internet is related to the real life of people. In our society, reality is shaped by both the physical and virtual worlds.

3) The Internet is extremely important for business. But not for a purely online, virtual business. The online dot-coms failed to find an adequate business model, and their failure triggered the New Economy Crisis in 2000-2002. However, econometric studies and case studies show that the Internet is a very significant factor in increasing productivity and competitiveness, making possible the spread of networked forms of business organization. For example, in the United States during the economic recession of 2000-2003, productivity continued to grow at a very high rate (4% per year on average and 6.8% in 2003), and this is directly related to building organizational networks and using computers and the Internet. .

Thus, the new economy exists, but it is not associated with the virtualization of business, but with a change in the forms and processes of activity in all areas of business through the use of knowledge, communication technologies and networks as the basic organizational form.

So, the Internet is not just another technical novelty or technology. It is the key technology of the information age. It embodies a culture of freedom and individual creativity, being both the source of a new economy and a social movement based more on changing human consciousness than on increasing the power of the state. The use of the Internet, however, depends on the nature of the people and society that use it. The Internet does not determine what people should do or how they should live. On the contrary, it is people who create the Internet, adapting it to their needs, interests and values. That is why the development of the Internet in Russia will be determined by what kind of Russian society at this moment in history.

We did not have time to look back, how the Internet became

a normal part of our lives and habitual

working tool. We didn't even have time

realize what he is. How did he appear?

Who created it? How did

spread of the Internet in the sphere

communications? How the economy has changed

under his influence? What changes

in culture leads to the spread

Internet? How do they change under its influence?

relationships between people? What

"digital divide"? How has it changed

structure of our Everyday life? Book,

which you hold in your hands, answers these

(and many other) questions based on

fundamental and comprehensive analysis.

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M. Castells is an American sociologist of Spanish origin, one of the largest sociologists of our time, specializing in the theory of the information society. Network society and the information age, forms of identity and development problems.

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The institutional approach in the concept of M. Castells and its influence on the development of the ideas of the information society

Manuel Castells (Spanish: Manuel Castells; born 1942) is a Spanish-born American sociologist.

He is considered one of the largest sociologists of our time, specializing in the field of information society theory. He studied in Paris with Alain Touraine. At the beginning of his scientific career, he studied the problems of urban studies. taught sociology at high school social sciences (Paris, France). Since 1979 he has been a professor at the University of California at Berkeley.

As a visiting professor, he lectured at major universities in the world. Since 1984, he repeatedly visited the USSR, and then - Russia.

The study of Manuel Castells "The Information Age: Economy, Society and Culture" (1996-1998. "The Information Age" consists of three volumes "The Making of a Networked Society", "The Power of Identity" and "The End of the Millennium"). This study had a huge impact on modern social sciences. The work of M. Castells includes more than 1200 pages and is an encyclopedic analysis of the role of information in modern society. After the release of this three-volume book, some observers put M. Castells on a par with Karl Marx, Max Weber, Emile Durkheim.

Marxist Approach", written under the influence of structuralist Marxism. In 1979 he was invited to the University of Berkeley (California), where he holds the position of professor of urban and regional planning and sociology. Lives in California (San Francisco), but constantly visits different countries- has been a visiting professor at more than 20 universities around the world. Already after the first job, Castells established a solid reputation as a researcher of urban studies. In 1989 he publishes the book "The Informational City", where for the first time

the concept of "informationalism" appeared, which was developed in his main work "The Information Age".

M. Castells is a post-Marxist and an active social democrat. He criticizes communism as an ideological movement, in his opinion "all utopias lead to terror if a serious attempt is made to bring them to life."

The Network Society and the Information Age

M. Castells does not use the concept of "information society" in his works. In his opinion, all societies used information and therefore were informational. The term "Information Age", in his opinion, has great analytical value, because allows us to describe a certain period of change that has gradually increased since the 1970s.

Castells introduces a new term - "informationalism", which means "the impact of knowledge on knowledge as the main source of productivity." The development of informationalism, according to Castells, leads to the emergence of a network society and a "new economy".

When describing modernity, Castells prefers the term "informational capitalism," which is a particularly ruthless form of capitalism because it combines incredible flexibility with a global presence.

In his three-volume work "The Information Age: Economy, Society and Culture", Castells shows the features of the transition to the "information age", the main feature of which is the networks that connect people, institutions and states. This has many implications, the most significant of which is the possible widening of the gap between increased global activity and sharpened social divisions. Castells explores two sides of this issue:

• the ways in which globalization enhances the integration of people, economic and social processes;

· processes of fragmentation and disintegration, which are also associated with globalization.

According to Castells, the beginning of the information age dates back to the 1970s, to the capitalist crisis (the end of the so-called post-war order). The crisis accelerated the restructuring of the economy, and it so happened that this process coincided with the emergence of a phenomenon that Castells called the "information mode of development."

The development of the network society does not mean the death of nation states. There is a trend of weakening and growing dependence on international processes, but the role of states will still be significant.

Castells in his work provides an overview of national strategies and describes various countries, both winners and losers in a globally integrated world. The newest international division of labor may be different, but its general direction has four options:

high value producers (based on information labor);

Producers of large volumes (based on low labor costs);

Producers of raw materials (based on natural resources);

Excess producers (using devalued labor).

The Network Society and New Forms of Identity

The main contradiction (and, accordingly, the driving force of development) of the emerging new society based on network structures is the contradiction between the globalization of the world and the identity (originality) of a particular community. Castells, based on the concept of the French sociologist Alain Touraine, introduces the concepts of "resistance identity" and "future-oriented identity". In a society of network structures, along with the state, global networks and individuals, there are communities

who coalesce around a resistance identity. This resistance is directed against the main trend in the development of modern society - globalization.

An important feature of these communities is the minimal involvement in the structures of traditional civil society and their, for the most part, protest character. However, in the future, some of these communities will be able to move from resistance to an identity that looks to the future and thus will be able to create something similar to a “new civil society” and a new state. “A new identity looking to the future, Castells emphasizes, does not arise from the past identity of civil society that characterized the industrial age, but from the development of today's resistance identity.”

Castells cites the main groups of communities that, in his opinion, can, through the identity of resistance, move to an identity looking to the future and thereby contribute to the transformation of society as a whole while maintaining the values ​​of resistance to the interests of global flows of capital and information. These are, first of all, religious, national and territorial communities. Castells emphasizes the need to take into account the ethnic factor, which acts as an important component of both oppression and liberation and is involved in supporting other forms of community identity (originality) (religious, national, territorial).

Territorial identity and the growth of its global activity leads to the return of the "city-state" to the historical stage, as characteristic feature century of globalization. Women's communities and environmentalist movements also, according to Castells, have the potential to form a future-oriented identity. A sign of the correspondence of these communities to the new architecture of the network society is their network, decentralized form of organization and self-organizing systems of information circulation within the community. It is this decentralized, elusive nature of network structures social change, concludes Castells, makes it so difficult to perceive and identify the new identity, directed towards the future, which is being formed today.

E-Business and the New Economy

In his work “Internet Galaxy” (2001), M. Castells focused on the transformation of social relations in various fields under the influence of the development of the Internet. It is important that he analyzed the development of e-business and the new economy taking into account the crisis of the new economy after a sharp drop in the shares of high-tech companies (NASDAQ2 index) in 2000-2001. M. Castells warns about the illusory nature of the idea that the so-called "new economy" is a fantastic country of unlimited economic growth, capable of canceling business cycles and immune to crises. These illusions were quite widespread before 2000 and partly served to revalue the shares of Internet companies - the so-called dot-coms (from the English dot-com, i.e. ".com"). If there is a new economy, Castells notes, then there are and will be new forms of the business cycle and economic crises, modified under the influence of the specifics of the new economy.

Castells begins his analysis of the specifics of the new economy with a study of the "network enterprise" model as the organizational basis of electronic business. Network business means organizational form, which is the result of cooperation between various components of different firms, which are combined into one network structure for the period of work on a specific business project and reconfigure their networks for the implementation of each of the projects. The network enterprise develops using various network strategies. Castells gives four main types of strategies, emphasizing that in each specific case its own combination is possible.

1. Solving the strategic task of developing a large corporation through the internal decentralization of the company, the involvement of integrated horizontal structures that ensure cooperation in the implementation of a specific task;

2. Cooperation between small and medium-sized businesses that pool their resources to achieve a critical mass sufficient for the success of the project;

3. Connecting networks of small and medium-sized businesses with components of large corporations in order to implement a specific project or long-term program;

4. Strategic alliances and partnerships between large corporations and their support networks.

Thus, a network enterprise is not a network of enterprises and not an intra-company network structure, it is an additional factor for managing economic activity, focusing on specific business projects that are implemented through networks of various composition and origin. Those. the network is an enterprise. At the same time, the company continues to be an organizational unit that provides capital accumulation, property rights and strategic management, and business practices are implemented through networks formed under specific project or program (ad hoc1 networks).

At the same time, Castells recalls that the network enterprise, as a method of doing business, long preceded the development of the Internet and formulates a set of factors that helped to significantly increase the efficiency of network structures based on Internet technologies.

Network scalability. The use of the Internet makes it possible to include as many components in the network as required for the implementation of each operation, each transaction or the entire project. Thus, the network can develop, quickly expand or contract in accordance with the changing business strategy, without significant costs.

Interactivity. A network implemented using Internet technologies makes it possible to do without vertical communication channels and provide multidirectional information exchange and joint decision-making. The result is an improvement in the quality of information exchange and the achievement of mutual understanding between partners in the process of their business cooperation.

Flexibility of management. Possibility of combining methods strategic management with the technologies of decentralized interaction of many partners is crucial for the network to achieve the formulated goals and objectives.

Branding. Investment requires a symbol of a generally recognized ability to add value to goods and services. In a world of complex production and distribution networks, branding can be done primarily through innovation management and tight control. end results. The effective use of Internet technologies makes it possible to provide feedback between all network components and production / distribution processes, as well as error detection and correction.

Orientation to the consumer. At present, it is increasingly difficult to meet the diverse needs of the market through standardized mass production. The optimal balance between mass production and consumer-oriented production can be achieved through the use of a large-scale production network, but with the tailoring of the final product, product or service for a specific customer. This task is solved in many systems through personalized interactive interaction with the customer online.

M. Castells demonstrated the application of these factors on the examples of the development of several successful companies that effectively applied network principles and created a network of partners and customers around themselves (Cisco, Nokia, etc.).

When analyzing the formation and functioning of the new economy, Castells pays great attention to the transformation of capital markets and the specifics of the market valuation of Internet companies. An important component of this process is venture financing. Without the funding of new businesses (dot-coms) by venture capital funds, there would be no growth of the new economy. As a result, a certain vicious circle: Venture capital funds have been able to continue to actively fund more and more ventures, despite the high mortality rate of supported enterprises (about a third of all projects in the US), only thanks to the high returns of surviving companies due to the unprecedented assessment of their market capitalization.

A typical e-business innovation funding cycle in the late 1990s in Silicon Valley began with a bold business plan and a set of ideas about the effectiveness of the proposed venture, expressed more in terms of business innovation than technological innovation. After that, the business plan is offered to a venture capital fund, which is located nearby (a third of all venture capital in the US is invested in Silicon Valley). In most cases, investors are not purely financial companies, but are firms that owe their origin to the technology industry. In most cases, the founders of a venture fund are familiar with the area in which they are going to invest, and attract others to the activities of their fund. investment companies seeking to enter new markets. After making a decision to finance an innovative project, the venture fund closely cooperates with the newly formed company and actually manages the business project, and this guardianship continues for as long as this company and field of activity is considered promising for attracting investments. At some point, the ward company can be sold, and the proceeds go to a venture fund and are used for further investments.

At the same time, many projects fail before reaching the implementation stage, or fail in the market. However, the financial return from successful enterprises is so great that the returns of venture capital funds, on average, are much higher than the profitability of traditional financial investments.

Using the initial investment received from a venture fund, the initiators of an innovative idea found a company, hire the main performers and pay them with options, i.e. expected income in future years. At the same time, work is underway on the public offering of shares of the new company on the stock market (IPO).

The effectiveness of the IPO process, i.e. the evaluation of the project by investors in the financial market, to a large extent determines the life or death of this project. If successful in the stock market, the company uses market capitalization to raise additional capital, after which it can enter into a serious business, not hoping for a quick profit and either gradually turns into a competitive company or acquires more big company. At the same time, in the case of an acquisition, the settlements are carried out by equity capital and thus, the entrepreneurs after the sale become richer on paper, turning into "dream partners" with a good chance to impress in the financial market in the long term. The reaction of the market, Castells notes, always corresponds to the pragmatic rules of the economy - the company's ability to generate income and make a profit, but the timing of the formation of such an assessment varies widely. Expectations of high returns can quite often prolong investor patience, thereby giving innovation a chance to shine. Rapid development model innovative company includes three main factors:

availability of an innovative idea and relevant technological developments;

Entrepreneurial creativity

· financial support of the market, based on the expectations of venture capital.

According to Castells, this scheme is used not only among newly formed Internet companies (the most famous are Yahoo!, e-Bay, Amazon), but also among large technology companies (Intel, Cisco, Sun Microsystems, Dell, Oracle, EMC, and even Hewlett Packard and Microsoft at the beginning of their existence).

Problems of development of the network society

A new social form - the network society - is spreading across the planet in all its variety of manifestations and demonstrating significant differences in terms of the consequences of this process for people's lives. The specificity of transformations depends on historical, cultural and institutional factors, and these processes bring both favorable opportunities and negative consequences.

In conclusion to his work "Galaxy of the Internet", M. Castells formulated the main problems currently hindering the development of a network society. In his opinion, resistance to the development of the network society and dissatisfaction with this world are largely associated with a number of unmet demands.

1. Internet Governance, i.e. freedom as such. The Internet, as a network of networks, is gradually becoming the communication basis of the network society, but there is a danger that this infrastructure may be owned by someone, and access to the network may become an object of control;

2. The presence of a large number of excluded from the network. This segregation occurs in various ways and for various reasons: due to lack of technical infrastructure; due to economic or institutional barriers to network access; lack of educational and cultural opportunities to harness the potential of the Internet; shortcomings in the production of online content;

3. Problems with the development of abilities to process information and generate relevant knowledge. By this, Castells does not mean skills in using the Internet, but education in a broader and more fundamental sense - i.e. the acquisition of the intellectual ability to learn to learn throughout life, to find and process information, to use it to produce knowledge;

4. Problems associated with the transformation of labor relations. The emergence of the network enterprise and the individualization of employment schemes lead to a change in the mechanisms of social protection on which the relations of production of the industrial world were based;

5. The new economy is late with the introduction of new flexible procedures for institutional regulation. Shift towards computerized global networks as the institutional basis of capital has largely undermined the regulatory capacity of both national governments and international institutions. The systemic volatility of global financial markets and huge disparities in the use of human resources, according to Castells, require new forms of regulation adapted to new technologies and new market economy;

6. Danger of increased intensity of exploitation of natural resources and increased degradation of the environment. Castells notes that network technologies can stimulate the economic growth to the detriment environment, but there are also alternative trends: effective management environmental information prevents the predatory exploitation of nature and allows environmental organizations to monitor this process;

7. The most frightening, writes Castells, are the fears of the technological devices created by man getting out of control. This extends to the emerging fields of genetic engineering, nanotechnology and microelectronics, the convergence of which can lead to unexpected discoveries, the use of which is associated with a high social and ethical responsibility.

Castells ends the description of the problems with the question - who should deal with these problems and resolve the emerging systemic conflicts and contradictions? Who are represented characters leading our transition to the information age? In traditional democracies, these were usually governments that acted in the interests of the whole society. However, the crisis of legitimacy that extends to today's state power does not allow for the full transfer of responsibility to the current authorities. Castells asks: “How can we entrust the lives of our children to party-controlled authorities who usually operate in a systemic environment of corruption, completely dependent on ‘image politics’, running segregated bureaucracies with no idea of ​​the real lives of their citizens? But on the other hand, is there an alternative to them?

Castells sees the way out of the institutional crisis of the modern transforming society in the development of two already existing trends (increasing social responsibility business and the empowerment of non-governmental organizations) and, most importantly, in the restructuring of existing institutions of governance and democracy to the conditions of the impending network society.