Co-produced Economies: Capital, Collaboration, Competition 9781138819627, 9781315744315

Table of contents :
Cover
Half Title
Title Page
Copyright Page
Table of Contents
Preface
Acknowledgement
List of abbreviations
1. Setting the scene: conceptualising capitalist economies as co-produced
1.1 Introduction
1.2 Theory and method
1.3 Characterising capitalist economies and economic geographies
2. Making co-production possible: from state regulation to informal institutions, conventions and habits
2.1 Introduction
2.2 Strategic selectivity in state policies and actions
2.3 Why do capitalist states take the organisational and spatial forms that they do?
2.4 National states and national monies
2.5 National states and institutional systems of regulation
2.6 Beyond the national: the triple process of reorganising the state
2.7 Beyond the mainstream: regulating economic forms in the interstices and on the margins of the capitalist mainstream
3. Enabling co-production: managing relations between capital and labour
3.1 Introduction
3.2 Representing the collective interests of capital and labour
3.3 Spaces of work: recruiting, managing and organising labour3
3.4 “Soft capitalism”: new ways of co-producing, new forms of
labour regulatio
3.5 Beyond flexibility: cyberspace, the internet and new forms of
co-production and labour contro
3.6 Projects, virtual firms: new ways of working, new spaces of
production
3.7 Looking forward to a glimpse of the future?
4. Competition among co-producing firms: varying forms of competitive strategy
4.1 Introduction
4.2 Strategies and forms of competition
4.3 Innovation, knowledge creation and flows of knowledge
within companies
4.4 The Internet, markets and competitive relationships among
4.5 Competition via market creation and marketing innovation
4.6 Competing via switching sector: from co-producing surplus value to seeking rents
4.7 The complexity of choosing competitive strategy and its systemic implications
5. Collaboration among firms: collaborating and co-producing with some in order to compete with others
5.1 Introduction
5.2 Co-producing through networks and relational contracts
5.3 Networks, collaborative knowledge creation and innovation: relationships among forms of proximity
5.4 Changing relationships between manufacturers, wholesalers and retailers
5.5 Longer term collaboration: co-production, strategic alliances and joint ventures
5.6 Merger and acquisition: competition or collaboration and a new route to co-production?
6. People collaborating and competing for waged work in the co-producing economy
6.1 Introduction
6.2 Divisions of labour, changing forms of employment and the tensions of collaborating through trades unions
6.3 Challenges to labour organisation: changes in the labour process and socio-spatial divisions of labour
6.4 Workers competing with one another: multiple identities and competition for jobs
6.5 Multiple disadvantages, divisions among workers and competition in the labour market
6.6 People collaborating via forming co-operatives
6.7 Spontaneous informal collaboration by ‘unorganised’
workers
7. Engaging consumers in the co-production of commodities
7.1 Introduction
7.2 Advertising, brands and meanings: consumers as passive recipients of information?
7.3 Consumers as active participants: advertising strategies and the co-production of meanings
7.4 Spectacle, the experience economy and ‘imaginative
hedonism’: co-producing ephemeral commodities
7.5 New forms of relationship between consumers, retailers and manufacturers in product design and sale
7.6 Further feedback: consumer pressures on manufacturers and retailers
7.7 Creating new meanings and re-valorising commodities: new
forms of exchange beyond the mainstream, or defining a new
mainstream?
8. Capital and nature: from relations of domination to active co-production
8.1 Introduction
8.2 Nurturing nature via agricultural practices
8.3 Re-engineering nature – from husbandry to genetic
engineering
8.4 Collaborating and co-producing with non-human life forms
8.5 Coda: capitalism and the transition from first to second
nature
9. Co-producing sustainable economies or the end of capitalism as we knew it?
Bibliography
Index

Citation preview

Co-produced Economies

“This book makes a new and important contribution to our theoretical understanding of social economy. Researchers, educators and policy makers committed to building co-operative, mutual and social enterprises will find this a valuable addition to their library.” Dr Rory Ridley-Duff, Reader in Co-operative and Social Enterprise, Sheffield Hallam University In common with most other advanced capitalist economies of the Global North, the UK has experienced a decline in the manufacturing industry and an increase in the service sector in recent decades. At the same time, there has been a substantial manufacturing growth in a number of countries in the Global South, especially China and India. Why have these changes occurred? What have been their economic and ecological consequences? How can we best understand the way the contemporary economy functions? This book explores the answers to these questions, proposing that the contemporary capitalist economy is best understood as a complex socio-spatial system of co-production involving relations between people, things and non-human entities. It is argued that these people typically have conflicting and competitive interests yet can come together to resolve their differences or find ways of regulating their conflicting interests. National states continue to have a critical role in establishing these systems of regulation. At the same time, many companies draw on the knowledge of their customers while others enrol animals, insects and plants as co-producers. As a result, the improbable processes of commodity production and capital accumulation continue more or less routinely; with problems and occasional crises overcome in a variety of ways. Co-produced Economies will be of interest to students of economic geography, political economy and economic development, and more generally to social scientists interested in issues of the causes and consequences of economic change. It will also be of relevance to policy makers seeking to develop economic policies in the increasingly volatile global economy and in the context of growing environmental concerns. Ray Hudson is a political-economic geographer at Durham University, UK, where he has been a Professor since 1990. He is a Fellow of the British Academy, of the Academy of the Social Sciences, the Royal Geographical Society and the Regional Studies Association as well as a member of Academia Europaea.

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Co-produced Economies Capital, Collaboration, Competition

Ray Hudson

First published 2019 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2019 Ray Hudson The right of Ray Hudson to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record has been requested for this book ISBN: 978-1-138-81962-7 (hbk) ISBN: 978-1-315-74431-5 (ebk) Typeset in Bembo by Taylor & Francis Books

Contents

Preface Acknowledgement List of abbreviations 1

Setting the scene: conceptualising capitalist economies as co-produced

viii x xi

1

1.1 Introduction 1 1.2 Theory and method 2 1.3 Characterising capitalist economies and economic geographies 5 2

Making co-production possible: from state regulation to informal institutions, conventions and habits

16

2.1 Introduction 16 2.2 Strategic selectivity in state policies and actions 18 2.3 Why do capitalist states take the organisational and spatial forms that they do? 21 2.4 National states and national monies 25 2.5 National states and institutional systems of regulation 26 2.6 Beyond the national: the triple process of reorganising the state 29 2.7 Beyond the mainstream: regulating economic forms in the interstices and on the margins of the capitalist mainstream 38 3

Enabling co-production: managing relations between capital and labour 3.1 Introduction 42 3.2 Representing the collective interests of capital and labour 45 3.3 Spaces of work: recruiting, managing and organising labour 48

42

vi

Contents 3.4 “Soft capitalism”: new ways of co-producing, new forms of labour regulation 66 3.5 Beyond flexibility: cyberspace, the internet and new forms of co-production and labour control 68 3.6 Projects, virtual firms: new ways of working, new spaces of production 70 3.7 Looking forward to a glimpse of the future? 71

4

Competition among co-producing firms: varying forms of competitive strategy

74

4.1 Introduction 74 4.2 Strategies and forms of competition 75 4.3 Innovation, knowledge creation and flows of knowledge within companies 87 4.4 The Internet, markets and competitive relationships among firms 94 4.5 Competition via market creation and marketing innovation 96 4.6 Competing via switching sector: from co-producing surplus value to seeking rents 97 4.7 The complexity of choosing competitive strategy and its systemic implications 100 5

Collaboration among firms: collaborating and co-producing with some in order to compete with others

102

5.1 Introduction 102 5.2 Co-producing through networks and relational contracts 104 5.3 Networks, collaborative knowledge creation and innovation: relationships among forms of proximity 113 5.4 Changing relationships between manufacturers, wholesalers and retailers 116 5.5 Longer term collaboration: co-production, strategic alliances and joint ventures 120 5.6 Merger and acquisition: competition or collaboration and a new route to co-production? 122 6

People collaborating and competing for waged work in the co-producing economy 6.1 Introduction 130 6.2 Divisions of labour, changing forms of employment and the tensions of collaborating through trades unions 131

130

Contents vii 6.3 Challenges to labour organisation: changes in the labour process and socio-spatial divisions of labour 136 6.4 Workers competing with one another: multiple identities and competition for jobs 138 6.5 Multiple disadvantages, divisions among workers and competition in the labour market 150 6.6 People collaborating via forming co-operatives 151 6.7 Spontaneous informal collaboration by ‘unorganised’ workers 153 7

Engaging consumers in the co-production of commodities

156

7.1 Introduction 156 7.2 Advertising, brands and meanings: consumers as passive recipients of information? 158 7.3 Consumers as active participants: advertising strategies and the co-production of meanings 166 7.4 Spectacle, the experience economy and ‘imaginative hedonism’: co-producing ephemeral commodities 170 7.5 New forms of relationship between consumers, retailers and manufacturers in product design and sale 173 7.6 Further feedback: consumer pressures on manufacturers and retailers 177 7.7 Creating new meanings and re-valorising commodities: new forms of exchange beyond the mainstream, or defining a new mainstream? 178 8

Capital and nature: from relations of domination to active co-production 8.1 8.2 8.3 8.4 8.5

9

181

Introduction 181 Nurturing nature via agricultural practices 183 Re-engineering nature – from husbandry to genetic engineering 186 Collaborating and co-producing with non-human life forms 192 Coda: capitalism and the transition from first to second nature 199

Co-producing sustainable economies or the end of capitalism as we knew it?

203

Bibliography Index

209 238

Preface

Some dozen or so years ago, in my role as Pro-Vice Chancellor for Partnerships and Engagement at Durham University, I became involved in a project supported by the UK Economic and Social Research Council and N8 (a collaboration among the eight research–intensive universities in the north of England) focussed upon coproduction, principally understood in terms of a relationship between private sector firms and universities in translating research results from universities, particularly in the natural sciences and engineering, into innovative new processes and products in the market. It was one expression of the growing pressures for universities in the UK to demonstrate their value to the wider society (there were of course others that focused more on work in the social sciences and humanities and their role in community development, economic regeneration and tackling social disadvantage and inequality for example). Or to put it slightly differently, the emergent emphasis on this particular form of co-production was an expression of how pressures from capital and the state were structuring the production and flow of knowledge. Although at the time I had no time to develop the idea, it struck me that the notion of co-production was one that could very fruitfully be applied to the capitalist economy and commodity production more generally, since this depended above all on a range of people and institutions, typically with conflicting and competitive interests (between capital and labour, between competing companies, between workers in search of work, between national states in search of investment…), nonetheless coming together to resolve their differences or finding ways of regulating their conflicting interests in such a way that the improbable processes of commodity production and capital accumulation continued more or less routinely; that is not to say without problems and the occasional crisis, but nonetheless such problems were overcome in a variety of ways. Given that commodity production necessarily involves people working with elements of the natural world governed by natural laws, by biophysical and biochemical processes, outcomes are not necessarily those intended by commodity producers. One response to this, in some circumstances, has been to enrol non-human life forms as active co-producers in attempts to avoid these unintended consequences and create more effective forms of commodity production. Furthermore, recognising that the activities of commodity production and capital accumulation are distributed over time and space – and to pretend otherwise is fundamentally misleading – further emphasises

Preface

ix

the complexity of these processes and of the improbability of the economy being successfully reproduced. Therefore, it struck me then that approaching the capitalist economy in terms of a complex socio-natural and socio-technical system of coproduction, distributed spatially and temporally, could be a way of further developing earlier work (for example, Hudson, 2000, 2001, 2005) but at the time I simply sketched out the structure of a book and parked the idea into the category of “potentially interesting future projects”. In later years I’d jot down ideas and draft material on particular issues in files on my PC and in various notebooks and when I had a chance to read new material I’d add notes for future use. In this way I accumulated an expanding collection of files and a growing pile of notebooks. A decade later in 2016 I stepped down from the University Executive and again found myself with time to return to some writing. As a way of getting back into this, I pulled together some papers mainly written in the 2000s (Hudson, 2016a) and in doing so revived the idea of going to back to considering the economy in terms of co-production. However, it soon became clear that pulling together the diverse fragments assembled and written over more than a decade, expanding and adding to them and converting them into a unified book was challenging; not least as I discovered that there was a considerable literature that I had only managed to keep up with in quite a sketchy way. It came as a salutary reminder that reading and writing are habits that need to be constantly renewed. But after the better part of three years, I succeeded after a fashion. All academic work is by its nature collaborative, drawing on and responding to the work of others. This book is no exception. It draws on work that I’ve carried out collaboratively with others (notably Huw Beynon and Costis Hadjimichalis, but also Ash Amin, Harriet Bulkeley, Mike Crang, Mick Dunford, Nicky Gregson, David Sadler, Adrian Smith and Allan Williams), others I know and whose work has influenced me but who I haven’t worked with directly (including Gavin Bridge, Peter Dicken, Gernot Grabher, David Harvey, Bob Jessop, Alain Lipietz, Linda McDowell, Doreen Massey, Diane Perrons, Andrew Sayer, Nigel Thrift, Dina Vaiou and Sarah Whatmore) and a much greater number from a variety of disciplinary backgrounds who I only know through their written work (as will be clear from the bibliography). It goes without saying that they have no responsibility for the way I’ve interpreted and used their work in this book. It’s also in the nature of academic work that your ideas evolve and as a result this book draws on my earlier work and seeks to further develop it, but in seeking to take it further it is also and necessarily to a degree an auto-critique of it. I was also in some doubt as to whether the book should be titled Co-Produced Economies or Co-Produced Economic Geographies, for as Roger Lee always emphasised to me there are never just economies, only economic geographies; it makes no sense to think of aspatial economies. I trust that this sense of the significance of the spatial as well as the temporal running through all economic activities comes across clearly in the book. Nonetheless after wrestling with the issue for some time I opted for the shorter and simpler title. Ray Hudson Durham and Nerja, 2018

Acknowledgement

I would like to thank Sage for permission to use material from Economic Geographies: Circuits, Flows and Spaces in modified form in parts of this book. In particular, I have drawn on material from parts of Chapters 3 and 4 and also some material from parts of Chapters 6 and 7.

Abbreviations

ABB AMS ANT B2B BPR BSE CDO CMP CRO DDR EPOS EPZs ECB EU FDI FGR GCC GDP GMO GNP GPN HRM HVFP ICT IED IMF IP IPPR IPR IT JIT M&A

Asea Brown Boveri automated milking systems Actor Network Theory Business-2-Business Business Process Re-engineering bovine spongiform encephalopathy Collateralised Debt Obligation capitalist mode of production Clinical Research Organisations Deutsche Demokratische Republik electronic point of sale export processing zones European Central Bank European Union foreign direct investment Bundesrepublik Deutschland global commodity chain gross domestic product genetically modified organism gross national product global production network Human Resource Management High Volume Flexible Production information and communication technology electronic data exchange International Monetary Fund intellectual property Institute for Public Policy and Research intellectual property rights information technology Just-in-Time merger and acquisition

xii Abbreviations MNC NAFTA NGO PBR RNA SME SOE TSMC TQM UK USA WTO

multinational corporation North American Free Trade Area non governmental organization Plant Breeders’ Rights ribonucleic acid small and medium-sized enterprise state-owned enterprises Taiwan Semiconductor Manufacturing Total Quality Management United Kingdom United States of America World Trade Organization

1

Setting the scene Conceptualising capitalist economies as co-produced

1.1 Introduction Conventional mainstream economics is predicated on a set of assumptions as to how individuals and organisations such as capitalist enterprises ‘ought to behave’, in various ways seeking to maximise their individual or collective interests in the formal market and monetary economy (summarised in indices such as wage and profit rates and GDP), implicitly at least behaving according to the rules and regulations that define economic activities as legal and those undertaking them as legally entitled to do so. Central to this approach is the concept of Homo Economicus. This mythical individual exists in an imaginary and gender-blind economy of perfectly informed, economically rational and utility maximising individuals pursuing their self-interest via making choices in perfectly competitive markets in which all economic actors are equally powerless price-takers. Given a set of very restrictive assumptions about people and the environment, the hidden hand of the market is all that is then needed to ensure the smooth functioning of the economy and its attainment of a stable equilibrium state. Insofar as there is recognition of the necessary role of the state in securing the conditions for economic activity, it is limited to enabling exchange in markets which will result in economies attaining the desired state of equilibrium. Put another way, “an economy, if sufficiently conceptually disembedded, may be modelled as tending towards equilibrium” (Streeck, 2017, 77). Such an approach depends upon a thin and “undersocialized” conception of economic action (Granovetter, 1985) that ignores the necessary and unavoidable grounding of capitalist economies in systems of broader social relations (Polanyi, 1944). The mythical individuals of these theories also exist in a world in which neither time nor space matter. In mainstream economics the economy exists on the head of a pin, in neo-classically inspired location theories on a boundless isotropic plain. While Krugman (for example, 1991) extended such market-clearing, micro-foundational and zero surplus-profit scenarios to the case of monopolistic competition in space, enabling him to explain the emergence of spatial order from geographical uniformity, Sheppard (2015, 1124) pointedly remarks that “this imaginary fails when the spatiality of capitalism is taken seriously”.

2

Setting the scene

Such approaches deny the fundamental reality of life in the economies of the real world and ignore the influence of the flow of time and of place, space and spatial differentiation in shaping processes of competition and collaboration and so the ways in which actually existing economies work. These are serious weaknesses. Given these various assumptions there is also an implicit normative concern with how lives ‘ought to be lived’, a moral imperative as to how people and organisations ‘ought to behave’ in the economy, as a concept which began life as a thought experiment in the late nineteenth century subsequently became transformed into an ideal, a normative description of how people should behave in the economy (Stedman Jones, 2014). Significantly, these assumptions typically owe more to their convenience in producing mathematically tractable solutions to models of behaviour than they do to their realism in relation to actual economic behaviour. In contrast, Smith et al. (2006, 81) draw attention to the growing emphasis on understanding the significance of “the social and power-filled character of markets, their diversity and complexity, their sensitivity to context, their passions as well as their ‘rationality’ and their part in the social construction and performance of the economy”. None of which, of course, is amenable to mathematical modelling. Or as Miller (2002a, 232) puts it, “it is becoming more and more apparent that in practice business does not operate on disentangled market lines”, that economies always involve issues of culture and meaning, and that it is equally clear that place, space and the differences that these make are quite fundamental to the ways in which business operates and the economy functions. So, in light of these limitations, how should actually existing capitalist economies be conceptualised in ways that better capture their essential and defining characteristics?

1.2 Theory and method The epistemological starting point for this book is a rejection of methodological individualism and its associated conception of the economy, metaphorically drawing on the laws of nineteenth-century physics, as simply the additive sum of the actions of individuals maximising their own utility and thereby defining the mechanistic ‘laws of the economy’ (such as those of supply and demand) that allegedly operate invariantly across space and time and lead economies to converge on a stable equilibrium state. Instead, I will follow an approach that recognises the need for differing levels of abstraction in analyses of capitalist economies and economic geographies and that recognises that capitalist economic development is an improbable and contradictory social process that necessarily involves collaboration between people with contradictory and opposing interests. Moreover, it involves processes of uneven and combined development, existing in a state of ongoing disequilibrium rather than exhibiting any tendency towards a state of equilibrium. Reflecting this, I will draw on Marxian political economy to clarify why capitalist economies function as they do – the imperatives of surplus-value production, profits, accumulation and the structural limits and parameters that these define.

Setting the scene

3

The Marxian concept of mode of production, highly abstract and based around the conflictual class structural relation between capital and labour, provides a starting point and key insights into why capitalist economies work as they do within limits set by the law of value. However, in actually existing capitalist economies the petty bourgeoisie – comprising small capitalist enterprises and selfemployed workers – occupies a contradictory location between the major structural classes of capital and labour (Wright, 1978, 1985). Furthermore, as Wright (1989) later recognised, within these broad classes we need a more finely grained and nuanced view of class to allow for a more delicately etched map of class structures and intra-class differentiation. As Beynon (1999, 38) reminds us, Marx himself had “observed that the social and technical divisions of labour had produced an ‘infinite fragmentation of interest and rank’” within the major classes. That conclusion has been reinforced by subsequent changes in the organisation of capitalist economies, the deepening and widening of technical and social divisions of labour and the increasing spatial reach of capitalist relations of production. Added to which, dimensions of identity such as ethnicity, gender, place and territory have led to further differentiation within these classes. As a result, actually existing capitalist social formations have much more complex and varied class structures than those of the highly abstract mode of production. Recognising and responding to this, and to the processes through which the conflictual social relations of capitalism are nonetheless reproduced in ways that allow commodity production and accumulation to continue, insights can be drawn from a range of other theoretical perspectives. These include strands of micro- and middle-level theories drawn from heterodox economics, including evolutionary and institutional perspectives, state theories and the critical social sciences more generally to understand how capitalist economies operate in a variety of capitalist social formations in which a range of behaviours is possible within these structural limits, to throw light on the how and what of the economy as well as the why. Drawing on these various themes and bringing aspects of them together leads to the point of departure from which the rest of the book follows: that is, a recognition that economic behaviour is meaningful, structurally situated, instituted and socially regulated, that economic activity is the outcome of culturally situated acts of meaningful social co-production (see Hudson, 2004; Jessop, 2004; Sum and Jessop, 2013). As Jessop (2004, 159) puts it, combining “concepts and tools from critical semiotic analysis and from critical political economy [produces] a distinctive post-disciplinary approach to capitalist social formations”. While it is debatable as to whether this is post- rather than pre-disciplinary (Jessop and Sum, 2001), there is no denying that economic actions must always be understood as meaningful to those enacting them. Given the “overall improbability of capitalist reproduction” (Jessop, 2004, 159), understanding how capitalist economies are (re)produced is not necessarily straightforward, precisely because they are based around conflictual class relations between capital and labour, as well as competition among fractions of these structural classes. Added to which, in addition to these class structural cleavage planes there is a variety of other dimensions of division within ‘actual existing capitalisms’, often based on prejudice and discrimination because of

4

Setting the scene

characteristics such as ethnicity, gender and race that are often related to, but never simply reducible to, those of class. For example, ethnic or racial segmentation of labour and housing markets is endemic and a pervasive characteristic of many capitalist social formations. Economic activity requires bringing together a variety of people and organisations with conflicting interests to nonetheless work together, sometimes collaborating more or less willingly, sometimes coerced in particular ways in specific times and places. For the economy to be reproduced these conflicts and tensions must be maintained within ‘acceptable’ limits as a result of state activities and a variety of other governance and regulatory mechanisms and processes. As a result, the economy can be thought of as “essentially an historically and socially variable configuration of instituted processes” while capitalism is most appropriately understood as a “fundamentally multiple and diverse” mode of socio-economic organisation (Harvey et al., 1999, 11), with varied spatialities and economic geographies. This has been recognised with varying degrees of sophistication in a range of literatures that seek to develop meso-level theoretical concepts to deepen understanding of how capitalist economies work in practice, such as those of varieties of capitalism (Hall and Soskice, 2001), variegated capitalism (Jessop, 2011; Peck and Theodor, 2007; Peck and Zhang, 2013) and various regulationist approaches (Aglietta, 1979; Boyer, 1990; Boyer and Saillard, 2002; Dunford, 1990). There are also radically different ways of conceptually situating the economy, however, that focus more on micro-scale practices and the behaviours of individual human subjects, recognising that these are always socially situated and embedded in institutions, conventions, personal relationships or groups sharing identical values (for example see Callon, 2005; Miller, 2002a; Strauss, 2011). While Callon and Miller have disagreed as to the merits of their respective micro-approaches, Smith et al. (2006, 95) emphasise that the styles of thinking associated with virtualism (Miller) and performativity (Callon) fit well together, they are two sides of the same coin. They offer two routes into the formatting of markets which open up their essentialism, expressing their politics, affects and sociality in some surprising, intriguing and disturbing ways. Rather than focus on one level of analysis and approach to the exclusion of the others, a more constructive approach – and the one to be followed here – involves drawing on aspects of both macro- and micro-level approaches, and also, crucially, paying attention to meso-level concepts related to institutional arrangements (for example, as well as various regulationist accounts, see Hodgson, 1988, 1993; Hollingsworth, 2000). The social interactions through which economies are constituted and reproduced necessarily involve material objects and technical devices, texts and so on (for example, see Callon et al., 2002; Latour, 1987, 2005) and in this sense economies can be thought of as socio-material constructions. Metrological regimes, forms of calculability that are constitutive or performative of

Setting the scene

5

economic relations and that enable qualitatively different commodities to be exchanged for a given quantity of money, are particularly important in capitalist as well as other market-based exchange economies. Arguably these have become even more important in the current phase of capitalism, with the growing importance of processes of financialisation (for example, see Durand, 2017). As such, economic behaviour is most appropriately conceptualised as both the product of and framed by a socio-technical system, one of social coproduction but necessarily involving non-human subjects and non-human objects so that the economy can also be thought of as co-produced through relationships between people and things. This entails recognition, for example, that markets of various sorts (both for commodities and ‘fictitious’ commodities such as labour and land) are not natural entities, but are socially constructed; or as Callon (2005, 3) puts it, “concrete markets constitute calculative devices with variable, adjustable configurations”, with boundaries and limits that depend upon how markets are framed, upon what is included and what is excluded – for example, the exclusion of environmental effects and other externalities in the market for automobiles so that their costs are borne collectively rather than only by those purchasing and using the automobile. Thus, in order to exist and function, concrete markets require a set of investments and operations to shape calculative agencies, to qualify and singularise commodities in ways that define their distinctive characteristics. In this way the use value of commodities is confirmed via innovations and, typically via advertising, by fine-tuning the profiling that attaches them to the consumer to endow them with meaning and so exchange value, thereby organising and stabilising the encounters between goods, people and agencies. Concrete capitalist markets function precisely because of the multiplication of intermediaries and mediators of all kinds: in short, because of the proliferation of agencies (Callon, 2005, 8–15). Seen in this way, markets are complex systems of co-production involving relationships between people and things of various sorts, characterised by a multiplication of differences, gaps, displacements and translations, that is by the asymmetries and the relations of domination that they sustain – between capital and labour, between competing companies, between producers and consumers and so on.

1.3 Characterising capitalist economies and economic geographies 1.3.1 Conflictual social relationships and the co-production of commodities The fundamental characteristic of capitalist economies is that they are predicated upon conflictual class relations, in particular the class structural relation between capital and labour. This is a dialectical and necessary relationship – capital needs the availability of labour-power to produce surplus-value and accumulate in ever greater quantities, people need to be able sell their labour-power for a wage in order to live. Each requires the other in the abstract space defined by the

6

Setting the scene

capitalist mode of production (CMP). Commodities are co-produced as capital and labour come together and conjoin in the process of production; commodities are either co-produced through capital and labour coming together at the point of production, or they are not produced at all. But in the material and social worlds in which people live and economies actually exist, as well as the conflictual relations between capital and labour, there are also chronic conflicts in terms of competition between companies for market share and profits and among groups of workers for access to waged employment. Companies compete in widely varied ways – on the basis of price, or product quality, or on the design and aesthetic of their products, or the innovativeness and novelty of their products and so on – and these competitive relationships are both expressions of deeper relationships and the means by which these are reproduced and shape the broader development trajectories of capitalist economies and economic geographies. Expressed slightly differently, the organisational arrangements of capitalism are neither more nor less than expressions of the workings of the law of value and, as such, they are more developed carriers of those same contradictions (Harvey, 1982, 153). Class allegiances and relations typically become entangled with other dimensions of identities in ways that affect processes of competition and influence which people become involved in the co-production of commodities. Often competition for employment among wage labourers becomes entangled with non-class issues of identity such as ethnicity, gender, and religion. In addition, and very importantly, class relations for both capital and labour can become entangled with location and territory. Put another way, as a result of this ‘geography matters’ (Massey and Allen, 1984) and economies are always constituted as economic geographies, co-produced and as such both grounded in and co-producing inequalities across a range of sociospatial dimensions. In similar fashion, Brenner (2011, 143) refers to the changing spatial patternings of the economy as “deep structures within capitalism’s restlessly changing geographical landscape”. However, despite these embedded conflictual relations and chronic competition and the resultant tensions to which these lead, capitalist economies nonetheless succeed in co-producing commodities and profits. Despite the underlying conflictual and competitive relations, the economy comes to be organised in such a way that these competitive pressures and the resultant tensions are (for most of the time) held within tolerable limits and there is a sufficient degree of co-operation and collaboration between and within competing classes and social groups to enable commodities to be successfully co-produced and capitalist economies to be reproduced and expand. Such economies and their socio-spatial relations can thus be thought of as co-produced, although that is not to say that those involved in these processes are necessarily willing participants, for many do so in circumstances that are not of their own choosing. Reflecting this, and the uneven and combined character of capitalist economic development (inter alia, between social classes and places) and in contrast to economic orthodoxy, the focus in this book is with understanding how and why individuals and organisations actually behave as they do in the co-production of commodities, performing economic activities in real time and particular

Setting the scene

7

places, both constrained by the socio-spatial structures of the economy and simultaneously helping (re)produce those structures and the fluctuating economic landscape. Or, seen from a different but related perspective, understanding how the economy is constituted in and as a result of practices under conditions of radical uncertainty; that is, not simply in conditions of imperfect and partial knowledge of the present but in circumstances in which future unknowns – not least in relation to the effects of economic activities on biochemical and biophysical processes – cannot be represented as calculable risks. This has an important implication: as a result of economic actors necessarily acting in conditions of at best imperfect and partial knowledge within the contradictory social relations of capitalist production, crises are unavoidable, but precisely what they will entail, where and when they will erupt, and how they will be resolved, cannot be predicted with any degree of precision. Contemporary capitalism is an economic system clearly predicated on competition, but this is a much more nuanced and subtle version of competition than that of the conventional mainstream of academic economists, involving forms of co-production, collaboration as well as competition, and an explicit concern with the ways which competitive behaviour is culturally constituted and politically and socially regulated and governed. The tension between competition and collaboration is unavoidable in capitalist economies. It constitutes a fundamental contradiction. It is unavoidable precisely because such economies are predicated upon class structural conflict between capital and labour and at the same time on a resolution of this conflict to enable capital and labour to agree on the terms and conditions on which labour-power will be purchased and utilised by capital to produce profits and on which labour will be reproduced to sustain a supply of labour-power on the labour market. In short, resolved in a way that guarantees the successful co-production of commodities. There is therefore also a crucial relationship between social reproduction beyond the workplace, typically in placebased communities at various spatial scales, and production of surplus-value within the workplace. Equally, regulatory processes must ensure that competition among capitals is contained in such a way as to avoid it becoming systemically destructive and ruinous, so that the surplus-value created through co-production can be realised and transformed into capital to enable expanded accumulation while enabling collaboration between some co-producing companies as part of their strategies of competing with others. This approach is therefore one that conceptualises the economy as constituted through processes of co-production resulting from individual and collective decisions within politically constructed formal regulatory frameworks and institutions as well as within a range of informal – in the sense of non-state –institutions and governance arrangements in civil society that keep social conflict within tolerable and manageable limits. Such institutions are constructed at and operate through a mixture of particular spatial scales and non-scalar geometries. The national state remains a critical scale and state employees perform critical roles in securing the conditions in which accumulation is possible; while they do not

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produce surplus-value, they yield surplus labour that is necessary in securing the conditions for surplus-value production by others (Poulantzas, 1975). However, the national is by no means the only scale that matters in processes of regulation and governance. Place and space, at varying scales, profoundly structure and are structured by these political and social institutions and social actors – capital and labour, as well as the myriad divisions within these major social classes – that constitute capitalist economies. Within these frameworks, people make a variety of decisions as economic actors (such as consumers, employees or employers, or suppliers or sub-contractors). These decisions are, from their perspective, rational – recognising that different people will have different rationalities, motivations and amounts and types of knowledge available to them to inform their decisions and differing amounts of money and other material resources to provide the power to implement them. They pursue their own interests via a mixture of collaborative and competitive behaviours, depending upon their perception of their class relationships to other economic actors and on the various other identities that they adopt and construct, including those of ethnicity, gender and place and territory that may or may not be related to class. While their decisions may be rational, this is not, however, the simple one-dimensional rationality of homo economicus but recognises that there are diverse definitions of rationality held by different actors, part of which crucially hinges on their perception of their relationships to other economic actors, and which may involve a variety of class and non-class allegiances and characteristics. However, the effects of their decisions may not be those intended and the issue of who controls their outcomes, assuming for the moment that they are controllable, is critical. Bracketing this latter issue for the moment, the crucial point is that understanding ‘the economy’ necessitates taking account of ‘non-economic’ processes and influences within the worlds of culture, politics, society and the state. As Polanyi (1944) forcefully emphasised, the ‘economy’ is always embedded and constituted through relationships within this wider social world. The issue therefore is not whether this complex system of co-production occurs, but how it is made possible and sustained over time – for without it activities of production, exchange and consumption and more generally the constitution of capitalist economies would be impossible. Capitalist economies of necessity are co-produced in complex ways as people with competing class (and other) interests nonetheless agree to engage together in commodity production. As indicated above, there is a critical role for money in general and national monies in particular in ensuring that exchanges can take place routinely in spite of radical uncertainty. Since money is a fictitious commodity, there is a resultant requirement for institutions that will guarantee the reliability of monetary systems so that they can be trusted. The actors may change but the framework of relationships remains more or less constant, at least over the short term, because it is critical to ensure a degree of predictability to enable economic transactions to occur, though this may (and probably will) change over the long term. Moreover, it is also

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important to recognise that markets involve a whole range of people beyond consumers and producers and that ‘the economy’ extends beyond those monetarised activities that the conventional mainstream regards as defining its extent to include a range of activities that lie beyond monetary valuation and that are guided or informed by broader cultural and social values. For example, buying a car, clothing or food are economic transactions but which car, clothes or foods to buy are decisions clearly informed by cultural and social values as well as disposable income. It is important to recognise this in conceptualising the economy and its varied constitution in time and space – something that will be emphasised and run as a theme through the book, drawing on and developing material from a range of disciplinary literatures to produce a cross-disciplinary (and potentially inter-disciplinary) perspective on the co-produced economy and its economic geographies. This disciplinary range is also one indication of the ways in which the lines separating the processes of production, exchange and consumption in practice are becoming, or perhaps better, are becoming seen to be, increasingly blurred. The reproduction of the capitalist economy requires ongoing co-production and co-operation between and within classes and other culturally and socially defined groups and places (recognising for some that this co-operation may be given unwillingly but nonetheless given out of necessity). This necessary degree of cooperation is usually ensured via a range of co-ordinating processes – a mix of formally and informally instituted behaviours, underwritten and made possible by regulatory mechanisms ranging from informal conventions to formal legal process and the activities of the state in defining acceptable behaviours in the economy. These regulatory mechanisms define the parameters of acceptability. Conventionally, forms of co-ordination are categorised as the institutional forms of markets, hierarchies and networks, although the boundaries between these are often fuzzy and permeable so that they can be to a degree co-constituting rather than discrete alternatives. All three of these coordinating institutions involve unequal power relations and varying forms of trust. Hierarchies are conventionally seen as existing within organisations while markets and networks refer to interorganisational relations and/or relations with a range of non-market organisations as well as other economic actors, such as firms or consumers. In fact, these boundaries are now often blurred, and deliberately so. For example, pseudo-markets are created within public sector and state organisations, networks are created within firms and other organisations while networks can be created ‘in the shadow of hierarchy’ as these three forms of governing interpenetrate and merge with one another in hybrid forms. Given the emphasis that has been placed upon the superiority of network forms of organisation in much recent literature, it is important to keep in mind the critique of much network literature in ignoring power (Hadjimichalis and Hudson, 2006) and to recall “the silence on power relations within the network” (Christopherson, 2011, 170). Acknowledging the problems with network approaches, nonetheless the myth, based upon a thin and undersocialised conception of social process, of the hidden hand of the market as the only – and only necessary – coordination mechanism is patently inadequate as an explanation of the reproduction of markets.

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1.3.2 Regulation and the problem of fictitious commodities As Streeck (2017, 1) emphasises, “[c]apitalism has always been an improbable social formation, full of conflicts and contradictions, therefore permanently unstable and in flux, and highly conditional on historically contingent and precarious supportive as well as constraining events and institutions”. An important reason for the improbable nature of capitalist social formations is that successful commodity production depends upon what Polanyi (1944) characterises as “fictitious commodities”: labour; nature, including land; and money. They are fictitious commodities precisely because they are not produced as commodities but through a variety of other social and natural processes. For example, the reproduction of labour involves domestic labour processes within capitalism that are not organised as wage labour. Capitalist enterprises seek to dominate nature, to transform materials from nature to produce commodities that have both exchange and use values. Elements of nature that are, or have been, produced with human intervention by biochemical and biophysical processes are then appropriated by capital. While necessary for successful commodity production elsewhere in the capitalist economy, this depends upon the continuing existence of elements of the natural world that are fragile and potentially destroyed by commodification. Fictitious commodities are thus those to which the laws of supply and demand apply only partially, and awkwardly, and as a result they can only be commodified within narrow bounds in a carefully circumscribed and regulated way if they are to retain their use value. Commoditisation risks destroying their use value to capital in surplus-value production. Consequently, limits need to be placed upon the extent to which they are commodified and market relations penetrate their (re)production as a result of regulation by national states or other social forces based in civil societies. Because of its chronic dependence upon the fragile existence of fictitious commodities, capital has sought ways of displacing the problems of their management in space and time (Harvey, 1982). An appropriate supply of labour-power is a pre-requisite for the co-production of commodities. Consequently, capital invested in commodity production in one place may seek to recruit and acquire labour-power from other places by systems of internal and international labour migration, displacing the costs of reproduction to other societies and locations. Alternatively, it may re-locate to those places in which there are substantial numbers of people searching for waged work and in which the costs of reproducing labour and the price that capital has to pay to acquire labour-power are lower. In the same ways, capital may scour the globe for sources of raw materials as inputs to manufacturing processes involving materials transformations, or to find distant or peripheral locations in which to dispose of waste products. Again, it may choose to re-locate polluting production to these locations if this is a more profitable strategy. These are instances of ‘spatial fixes’, shifting the location of activities and

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displacing the problem elsewhere rather than solving the underlying problem of reproducing fragile fictitious commodities, and which run the risk of provoking political opposition from those adversely affected by these various strategies. There is a substantial literature from Marx onwards that deals with these issues of spatial fixes (for example, see Luxemburg, 2003/1913; Mandel, 1975; and especially Harvey, 1982). The other main strategy for managing fictitious commodities involves displacement in time rather than space, especially in relation to money via the creation of credit and other forms of financial and monetary innovations (Durand, 2017; Harvey, 1982). These involve making claims in the present on surplus-value yet to be produced in the future, with the risk that this production may not take place as expected and as a result provoke crises for individual firms or even systemically. More generally, managing the successful maintenance and reproduction of fictitious commodities is a risky business – what seem to be solutions at one time may subsequently become seen as problems that require new forms of solution. Perhaps the most fundamental of these revolves around seeking to square capitalism’s structural requirement for compound rates of economic growth with the limited ecological capacity of natural systems. 1.3.3 Nature and the economy: the biggest threat to commodity production? As well as being a social process, and one that conjoins people with things in networks through which economic transactions occur, capitalist production, as with all modes of production, is embedded in nature and as a result the coproduction of commodities and economic processes necessarily involve material transformations of elements of nature. Because nature is a Polanyian fictitious commodity, its reproduction – not to say survival – depends upon regulatory limits being set to commodification and the penetration of market relations. This is quite fundamental: relations between people and these elements of the natural world are central to economic processes. Historically, the focus in capitalist economies was on conquering and mastering nature, and later genetically re-engineering natural processes, but more recently there has been a limited shift to collaborative working with non-human beings, actively involving them as subjects in new forms of co-production. The involvement of natural materials and non-human life forms in the coproduction of commodities also introduces complications, however, as both other species and inanimate objects can exercise causal powers – not necessarily intentionally but simply because biochemical and biophysical processes have their own causal structures and logic and cannot necessarily be contained to give only socially desired outcomes (Lemke, 2015). One way to approach these issues is via Actor Network Theory (ANT) which seeks to argue that we should collapse the artificial binary distinctions between culture/nature and human/non-human and instead focus on the sprawling networks of both animate and inanimate actors through which social and economic life is constituted and played out. Inanimate materials and objects – as diverse as coffee beans, iron ore, or IT systems – are

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not sentient beings capable of thought and strategic action but they are an inherent and potentially critical element in the networks of which they are part (for example, on coffee beans, see Whatmore and Thorne, 1997). In similar fashion, Lemke (2015) refers to a ‘government of things’, a conceptual approach that includes the material environments and the specific constellations and technical networks between humans and non-humans as well as social relations among people in exercising agency. Furthermore, the unintended and/or unwanted effects of these transformational processes can impact back on the natural world in a way that may threaten the sustainability of the capitalist economy itself (as through the effects of global warming as well as more localised pollutants). I will return to the questions of whether an ecologically sustainable capitalist economy is possible in later chapters. 1.3.4 Beyond the capitalist mainstream Capitalist economies are more complex and messier than just co-existing capitalist social formations and even more so than an unfettered and untainted CMP and as such it is important to consider the economy beyond the capitalist mainstream, which Gibson-Graham et al. (2013) suggestively refer to as the ‘iceberg economy’, hidden beneath the surface of the mainstream. There is abundant evidence of the continuing significance of unpaid community and household labour within the heartlands of commodified capitalist economies (for example, see Gershuny, 2000; Wilson, 2013). Not only are these significant in themselves, indicative of possible localised alternatives to capitalist social relations in the organisation of economic activities, but they can also be central to the reproduction of labour and the social relations of capital. As a result, echoing Polanyi (1944), the economic landscapes of capitalism can be more properly understood as made up of capitalist social relations often embedded in and entangled with non-commodified practices such as mutual aid, reciprocity, co-operation and inclusion (Williams and Windebank, 1998; White and Williams, 2010). Furthermore, taking account of economic and social processes beyond the capitalist mainstream necessitates, inter alia, consideration of two further issues – the informal economy and the illegal economy – which problematise processes of governance and regulation and their relationship to capitalist co-production, the competitive strategies of capital and processes of accumulation. Not least this is because while “rules and regulations are vital for the functioning of markets … it is in the nature of capitalist competition that profit-seekers will try to evade or circumvent them. Illegal or sublegal … tend to be more profitable, due to being riskier, than trading in the usual paths” (Streeck, 2017, 207). There are important relations between informal and illegal economies, economies that in various ways are interdependent and co-constituted with one another and mainstream capitalist economies via a range of mechanisms and values that to seek to ensure their reproduction (such as various forms of trust; reciprocity; non-monetary value; non-mainstream monies and exchange; different concepts of value and processes of valuation (Leyshon et al., 2003)). It is,

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however, important to emphasise that definitions of the (il)legal vary over time and space – what is legal in one political jurisdiction may be illegal in another, for example, while what is illegal but considered socially acceptable and licit in one jurisdiction may be regarded as illicit in another (see Chiodelli et al., 2017). Furthermore, there may be important activities that lie beyond – as opposed to within the parameters of – the capitalist economy, non-capitalist economies that relate to those of capitalism. Again, these involve different concepts of value and processes of valuation and relations between these and those of capitalism. While capitalist economies are dominated by the CMP and the social relations of capital, they exist as the dominant force in social formations that involve the articulation of the CMP with other modes of production (for example, see Luxemburg, 2003/1913). As a result, they shape the transfer of value among economic actors, economies and places as a result of the competitive strategies of capitals and states (for example, see Hadjimichalis, 1987). Historically, these relationships were critical in influencing the emergent trajectories of capitalist economies and the evolving landscapes of uneven and combined development, as recognised in accounts of primitive accumulation, but they remain important in the contemporary economy as forms of accumulation by dispossession. This reflects a shift in emphasis from the primary to secondary circuit of capital in the competitive strategies of capitalist firms, from the co-production of surplus-value to the appropriation of rents. More particularly, it involves a variety of mechanisms and processes through which value is transferred from non-capitalist economies to circuits of capital via rents of various sorts, especially in particular locations in which capitalist values and systems of valuation are forcibly imposed on non-capitalist societies (for example, see Harvey, 2004; Hall, 2012; Mollett, 2016; Sneddon, 2007; Springer, 2013; Webber, 2008) or are imposed on those in marginalised positions within capitalist societies (Smith, 2015). As a result, the transfer of value among classes within capitalist economies and from non-capitalist to capitalist economies remains an important strand of corporate competitive strategies and a determinant of accumulation trajectories in many parts of the global economy, especially in the so-called ‘emergent economies’, given greater salience by the shift to neo-liberalisation. In short, accumulation by dispossession is not an historical relict left from the early phases of (pre)-capitalism – ‘primitive accumulation’ – but an active accumulation strategy that varies in its significance temporally and spatially. At the same time as there are transfers of value from non-capitalist to capitalist economies, there are also moral economies situated beyond the monetarised capitalist economy. These may both challenge and offer alternatives to the rationale of capitalist production. Rather than being the mainstream, in some localised times and places the dis-embedded economy and the market may therefore be marginalised, suggesting alternative ways of organising economies. That said, there is also evidence within gift exchange of “considerable use of calculation – and often quite fine calculation – of strategy and interests with respect to inalienable goods and the nature of relationships”

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(Miller, 2002a, 228). He continues (ibid., 231) “[w]hat anthropologists from Mauss through Bourdieu have argued … is that gift-like transactions are highly calculative of the advantages that could accrue to those that give gifts”. Thus, it is important not to elide calculability with monetisation and also to recognise that in some circumstances practices of gift giving can become appropriated by capital and incorporated into the mainstream. Seen from the perspective of capital, such corporate gifts provide ideological justification for the pursuit of profit by re-embedding morality in the market and/or create binding relationships and obligations that compel the actions of recipients (though others may challenge such views: for example, see Cross, 2014). 1.3.5 Emergent effects: trajectories of change towards an unknown endpoint Capitalism cannot be understood, or practised, simply as an economic process; its economic aspects are co-implicated with biophysical, cultural, political and social processes, in ways that repeatedly exceed and undermine any “laws of economics” (Sheppard, 2015, 1113). Thus these various forms of co-production – between people, between companies and other organisations, between institutions, and between people and elements of the natural world – in an economy driven by a structural imperative to compete and the compulsion to create surplus-value and profits, mean that the capitalist economy is characterised by innovation, change and uneven development, by emergent effects, developing and evolving on an open trajectory (albeit one within strict structural limits) towards an undecided and unknown future, an unknown end-point. This emergent character is in part a result of “interactions between different causal domains. In respect of a given causal domain, the effects of these interactions are contingent, outside its own internal patterns of coherence and logic, and therefore also over-determined, subject to multiple causalities” (Harvey et al., 1999, 263). Evolutionary perspectives are important here. As Arthur (2009, 191) has put it, the economy “exists always in a perpetual openness of change – in perpetual novelty. It exists perpetually in a process of self-creation. It is always unsatisfied … The economy is perpetually constructing itself”, but without ever knowing where it will end up. This has important implications in thinking about what a sustainable economy, involving different social relations to those of capital, and its geography might look like, a point to which I briefly return in the final chapter. Prior to that, however, the organisation of the rest of the book is as follows. In Chapter 2 I consider how improbable capitalist economies are made possible as a result of state policies and other forms of social regulation that establish the conditions in which the co-production of commodities can be successfully carried out. Chapter 3 then goes on to examine forms and processes of competition and collaboration between the classes of capital and labour, the buyers and sellers of labour power as they seek to come to strike a deal over the character, terms and conditions of co-production in the workplace while Chapters 4 and 5 go on the consider forms of competition and collaboration among companies as they seek to

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develop viable forms of co-production within and between them. Chapter 6 then examines the ways in which workers collaborate to compete for waged work and the divisions between workers that this both reflects and creates as they seek to find a role in processes of co-production. In Chapter 7 I examine the links between producers and consumers in the co-production of commodities, focusing upon the changing ways in which companies have increasingly sought to draw upon the knowledge of consumers in the co-design and co-production of commodities and strategies for their sale. In Chapter 8 the focus switches to changing forms of co-productive relationships between capital and nature, the changing ways in which capital has appropriated nature, moving from domination via genetic modification to co-production with non-human organisms. It also begins to consider the question of ecological sustainability. Finally, in Chapter 9 I return to the question of whether a sustainable co-produced capitalist economy is a realistic option, what sort of co-production would be necessary – and what would be possible – in the transition towards future sustainable economies, what alternatives there might be to the social relations of capital – and what sort of future awaits us …

2

Making co-production possible From state regulation to informal institutions, conventions and habits

2.1 Introduction As Streeck (2017, 1) emphasises, “[c]apitalism has always been an improbable social formation, full of conflicts and contradictions, therefore permanently unstable and in flux, and highly conditional on historically contingent and precarious supportive as well as constraining events and institutions”. What he fails to say is that such events and institutions are also spatially as well as temporally contingent and this spatial contingency is crucial, not least as national states have been and remain critical in providing this support. The starting point for this chapter therefore is a question: why is the state, and a separation between the economic and political spheres, necessary in capitalist economies The practical involvement of the national as a pivotal regulatory space and of the national state in regulating national economies has been recognised for many years by social scientists. In the 1970s, the state derivation debate sought theoretically to specify the characteristics of the capitalist state within the abstract space of capitalist social relations (Holloway and Piciotto, 1978). As Gerstenberger (2011, 65) was later to reflect, The problem of the derivation debate was [that] … [i]nstead of explaining the state form as being the result of historical struggles and ensuing practices, it was explained as being a necessity for the functioning of capitalism. In other words, the theoretical structure of the capitalist state was logically derived from the theoretical structure of capitalism. In contrast, as Hirsch and Kannankulam (2011, 13) subsequently put it, The concrete institutional shape taken by the state apparatus is form determined, that is … subject to structural constraints which result from existing relations of production and exploitation. These, in turn, impose limits on the range of possible modes of institutionalization. However, the political form can manifest itself in a range of different institutional configurations. This depends on specific historical paths, concrete economic relations and class constellations, relations of social power, and the way social conflicts develop.

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However, following the derivation debate analyses of the state quickly evolved to recognise that the common historical path was the national and that the prime regulatory spaces of capitalism were constituted as the contiguous and bounded territories of national states, acknowledging the geopolitics of capitalist development and the key regulatory role of the national state in this. In due course, there was later recognition that the state is not the only national scale regulatory institution and mechanism and that the national is not the only territorial space and scale of regulation. Nevertheless, the national state has been discursively constructed as having absolute authority and mastery over its national territory, recognised as sovereign by other national states and, as such, able to define and manage a national economy (although this modernist conception of the national space has been regularly violated by neo-imperialist adventures, such as those in south east Asia and the Middle East by, among others, the USA and UK). However, the key point is that national states, economies and societies are seen to have co-evolved and to be mutually constitutive, with shifting and permeable boundaries between them. Capitalism has a crucial distinguishing feature which defines it as a distinctive form of social organisation, one that has clear implications for the form of the capitalist state and its institutional configurations. Unlike other social systems of exploitation, in which appropriating classes or states extract surplus labour from producers by direct coercion, capitalist exploitation is distinctive as it is characterised by a division between the “economic” moment of appropriation and the “extra-economic” or “political” moment of coercion. Underlying this separation is the market dependence of all economic actors, appropriators and producers, which generates economic imperatives distinct and apart from direct political coercion. This separation – which creates two distinct “spheres”, each with its own dynamics, its own temporalities and its own spatialities, its constitutive economic and political geographies – “is both a source of strength and a source of contradiction” (Meiksins Wood, 2017, 177). Most fundamentally, “[t]he separation of ‘economy’ from ‘politics’ and of ‘state’ from ‘society’ is … a crucial condition for the possibility of the existence and reproduction of the capitalist mode of production” (Hirsch and Kannankulam, 2011, 15). As a result, as Meiksins Wood points out, capitalism, in some ways more than any other social form, needs politically organised and legally defined stability, regularity, and predictability in its social arrangements to ensure its sustained reproduction. This is because the social relations of capital are fundamentally contradictory and based on class conflict so that the economic imperatives of capitalism are always in need of support by extra-economic powers of regulation and coercion, which state activity provides. This support is needed to contain and manage the inherent contradictions, create and sustain the conditions necessary for successful accumulation and reproduce the system of capitalist property relations. The problem is that these contradictions and limits are conditions of capital’s existence and self-reproduction that it cannot provide for itself and that its own inherently anarchic laws of motion constantly subvert. Capital has an inherent tendency to erode the conditions that enable successful accumulation. As a result,

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to stabilise its constitutive social relations – between capital and labour and between competing capitals – in complex systems of co-production, capitalist economies are especially reliant on legally defined and politically authorised systems of governance and regulation (although, as discussed below, in particular times and places there can be pressures to circumvent the limits defined by legality in search of competitive advantage). Capitalist transactions require an elaborate infrastructure of material and social conditions that their own profit-maximising imperatives are ill-equipped to provide. Business transactions at every level require consistency, predictability and reliable enforcement, in contractual relations, monetary standards, and exchanges of property. While trust alone may be important in some circumstances, in the last analysis it is the power of the law guaranteed by the state that ensures that contracts are honoured. However, the coercive powers that sustain these regularities and guarantee predictability must exist apart from capital’s own powers of appropriation if it is to preserve its capacity for selfexpansion. Furthermore, in a system of markets in which the economy has been “disembedded” from other social relations, there is a distinctive need for politically organised social provision to provide legitimation for the dominant social relationships, at a minimum to keep people alive through times when they cannot sell their labour-power, and to ensure the reproduction of a reserve army of labour.

2.2 Strategic selectivity in state policies and actions As Poulantzas (1978, 128) put it, “[t]he (capitalist) state should … be regarded as … a relationship of forces, or more precisely, the material condensation of such a relationship among classes and class fractions, such as is expressed within the state in a necessarily specific form”. As well as these antagonistic class relations, it is the material condensation of relations of rule connected with issues such as ethnicity, race and gender (Hirsch and Kannankulam, 2011, 16). One implication of this is that the actions and practices of capitalist states, while typically claiming to be for the common good, are far from class neutral. As such, state policies are strategically selective, shaped though not simply determined by the asymmetric power structure of class relations (Jessop, 1990). There are important connections between structural parameters, institutional forms and agents in shaping selection mechanisms and strategies which impose filters on the content of policy and upon who is included in and excluded from debates about policy and the policy agenda, who, to varying degrees, can influence policy choices. In this, in particular spatial and temporal contexts, not all options that are individually possible will be compatible with other policy options and this issue of “(in)compossibility” (Jones and Jessop, 2010) will be critical in shaping the content and boundaries of strategic selectivity. The forms of selectivity that emerge are linked to modes of governmentality, to ways of conceptualising both the objects and processes of governance and regulation. The fact that state actions are spatially selective, with “a tendency to privilege certain places within accumulation strategies” (Jones, 1997, 832), is of particular significance in relation to processes of spatially uneven and combined

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development. Furthermore, favouring certain places also favours particular capitalist and other social interests. This selectivity is partly a response to political pressures, to be seen to be concerned with territorial equity and the integrity of the national territory but there are also structural limits, inherent to the accumulation process and in the relationship of the state to capital, as to the scope of the state to exercise selectivity in this way. While the capitalist state’s relative autonomy is a precondition which enables the contradictory and antagonistic relations between classes and other social groups to be regulated in such a way that societal reproduction can take place (Hirsch and Kannankulam, 2011, 21), there are always limits to its room for manoeuvre in policy formation and implementation. Offe (1975, 144) emphasises the continuing dependency of the state upon the accumulation process, not least as the funding of state activities depends upon taxes levied on profits, rents and wages. This establishes structural limits to the state’s capacity to act and seek to manage crises; autonomy is always circumscribed and relative. Failure to sufficiently acknowledge the existence of such contradictions and limits is one proximate cause for recurrent crises in state activities. In order to try to minimise the impact of these limits, the state deploys a socially specific “sorting process”, influenced by the interests of dominant classes and the presence of historically contingent specific state functions, including some social groups in processes of policy formation whilst excluding others. However, while state policy is strategically selective, it is important that is it represented and popularly accepted as an expression of a hegemonic project, one that is in the general interests of all citizens and serves the common good rather than the interests of any particular class or grouping within a given territorially defined community. Achieving hegemonic status thus helps disguise the socio-spatial selectivity of state policy agendas and actions and defuses challenge and opposition from those whose interests are marginalised within or excluded from policy concerns. As Jessop et al. (1991, 241) put it, drawing on Foucauldian concepts of power, strategic selectivity includes the ways in which the specific organisation of the state differentially privileges the access of some forces [of representation] to formulate specific policies and secure their support within the state apparatus (internal articulation) and then to effectively implement these policies (intervention) in relation to a specific micro-physics of power (social and material bases of the state). This suggests that it is helpful to draw on both Marxian and Foucauldian perspectives in seeking to understand why national states act as they do – Marx focussed on the why of capital accumulation and state power, Foucault on the how of economic exploitation and political domination. Drawing on the earlier analyses of John Locke and Adam Smith, Foucault emphasised the emergence of a self-regulatory structure of governance that placed limits on the arbitrariness of state power while enabling individuals to regulate their own conduct

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according to the rules of a market society, internalising processes of domination and disciplining of self within the individual. Consequently, the dominant conceptions of freedom and liberty were and still are deeply embedded in the social relations and codes characteristic of market exchange based on private property and individual rights. As Harvey (2014, 204) puts it: “These exclusively defined the realm of freedom and any challenge to them had to be ruthlessly put down”. However, for those of a liberal political economy persuasion, freedom becomes a means of Foucauldian ‘governmentality’ through which the self-discipline of whole populations can be managed by state power and it is that self-discipline that assures conformity and compliance with bourgeois institutions and ways of life, including capitalist class domination and the cumulative wealth and power of capital. In other words, the end is not in question and does not have to be challenged in the name of freedom because freedom is incorporated in the process. Thus, freedom defines the relationship between the structural classes of capital and labour and ensures that workers will behave within its parameters, complying and cooperating with capital, however unwillingly, as it pursues its goals of the co-production of profits and accumulation of capital. In Gramsci’s (1971) terms this signifies that capital has become hegemonic. What is involved here over a long period of time is a transition of historical significance between three forms of government: sovereignty, disciplinarity and governmentality. Crucially in terms of the economy, this entails a change in “the definition of the corporation from a state-chartered entity to that of an individual” (Christopherson, 2011, 167; see also Barkan, 2013). Foucault helps show how over time economy and state co-evolved and were increasingly organised in conformity with – but without ever being reduced to – key features of capitalist political economy and without these features in turn being fully pre-given. Foucault conceptualises the state as a relational ensemble and governmentality as a set of practices and strategies, governmental projects and modes of calculation that operate on something called the state. However, this something is the terrain of a nonessentialised set of variable political relations, rather than a universal, fixed and unchanging phenomenon (Jessop, 2006). Such a perspective has implications for understanding the state and its relationship to the economy as it grapples with seeking to satisfy competing class (and other) interests. Rather than the state being understood as a solid “thing” exercising distinctive powers, it is seen to comprise a bundle of practices and processes assembled together in unbounded ways so that the exercise of state powers is far from monolithic or even coherent as the state itself becomes an arena of struggle. As a result, the distinction between state and civil society (for example, in fields such as education, health care or housing) can be blurred and the boundaries between them become permeable and highly porous. While this porosity indicates potentially shifting relations between state and civil society, the lack of coherence lies at the heart of the crisis-prone character of state activity.

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However, there is also a deeper and more fundamental reason as to why capitalist state activity is unavoidably crisis-prone, with a tendency to produce effects other than those intended. This is because state activity is incapable of abolishing the economic crisis tendencies inherent to capitalist economies. Instead, it has two counter-productive unintended and related effects. First, state involvement can amplify rather than resolve economic and financial crises (Durand, 2017). What seemed to be solutions at one point in time later become seen as problems: this is illustrated by the way in which inflation (in the 1970s), public debt (in the 1980s) and then private debt (in the 1990s and 2000s until 2007) became transformed from solutions to problems requiring new solutions in the core countries of capitalism. In the wake of the major economic and financial crisis of 2008 the response of virtually all capitalist states, with varying degrees of willingness, was to become “fiscal consolidation states” (Streeck, 2017), seeking to contain and rein in public indebtedness in the face of growing social need in order to reassure banks and financial institutions that national states could be trusted to repay their debts to them. Whether such policies will succeed, and what new problems they will throw up for national states, as of now (2018) remains to be seen. Secondly, therefore, rather than resolve economic crises, state activity instead absorbs them into the operations of the state itself, where they emerge as fiscal, rationality or legitimation crises (Habermas, 1975; O’Connor, 1973; Offe, 1975). Rather than solve problems, state activity merely moves the underlying crisis tendencies to new arenas, where they reappear in new forms. Capitalist states thus tread a precarious path between seeking to keep their expenditures and policies within limits that secure both social and political legitimacy and continuing capital accumulation in the space of the national territory, while always in danger of generating unintended effects that threaten to lead them to slip from that knife-edged path.

2.3 Why do capitalist states take the organisational and spatial forms that they do? While there has been much discussion of moves towards both supra-national and sub-national forms of state organisation (which I will discuss below), the national nevertheless remains the dominant organisational and regulatory space and scale, the state form co-evolving with capitalist economic practices. As a result, capitalist economies remain dependent on extra-economic conditions and political and legal supports. Until now, no-one has found a more effective means of supplying those supports than the political form with which capitalism has been historically, if not causally, connected: the national state. This is because “[a]s much as ‘global’ capital might like a corresponding ‘global’ state, the kind of day-to-day stability, regularity and predictability required for capital accumulation is inconceivable on anything like a global scale” (Meiksins Wood, 2017, 179).

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As a result, the national state of necessity remains the key site of governance and regulation, but at the same time national states vary greatly in their powers, influence and form while the boundaries and territories of national states have altered significantly over time (and indeed continue to do so). National states and their territories – which are bounded but with boundaries that are permeable and provisional and can be seen as reproduced as an effect of networks of sociotechnical practices (see Painter, 2010) – are central to the economic geographies of capitalism. There are ‘normal’ forms of national state (such as liberal, neo-liberal, ordoliberal or social democratic interventionist) all of which involve some form of electoral systems of representative democracies, though with varying political priorities depending on the politics of the elected government and the form of the state. In contrast there are ‘exceptional’ state forms that involve the suspension of the electoral principle, and one – or no – party systems (such as Fascist states and military dictatorships: Poulantzas, 1974). There is also considerable variability in the degree to which national states selectively ignore their own regulatory standards and in which illegality is seen as licit and tolerated or in which certain “spaces of exception” are created that are “‘islands’ within the generality of national law” within which normal regulatory conventions are suspended (Gerstenberger, 2011, 78). There are three particularly important types of the “spaces of exception” in which states selectively choose not to exert their full authority, all of which have grown spectacularly in number and influence in recent decades: places that offer registration in the national ship register, allowing ships to sail under “flags of convenience”, which have been central to the growth of global commodity movements; export processing zones (EPZs); and “offshore” tax havens, a form of privatisation of sovereignty (Piciotto, 2011), as well as “no go” dangerous spaces in some cities or border regions in which states are simply unable to exercise their authority. For example, by 1975 there were about 80 EPZs in 25 countries; by 2002 this had increased to 3,000 in 116 countries, with 70–80 per cent of the total global EPZ workforce in China (Sunley, 2011, 107). Re-location to, or sub-contracting to suppliers in, EPZs became widespread among major multinational producers of a wide range of consumer goods as they re-organised their global production networks (for example, see Donaghu and Barff, 1990; Sunley, 2011; and Chapter 4). As a result of locating in these spaces firms are able organise processes of co-production to their advantage, to structure relations between capital and labour and labour processes and control of labour in particular ways, constructing the workplace as an “exclusionary space” (Kelly, 2011, 155). Tax havens have also become an important focus of financial operations in the financialised global economy, present both in small offshore islands (for example, in George Town in the Cayman Islands Upland House, a small five storey building employing just over 260 people is officially home to 18,000 companies: Day, 2009) and in the centres of the capitalist economy in cities such as London and New York, facilitating legal transactions by both major multinationals and sovereign wealth funds (Buckley et al., 2015). At the same time, because of their opaque and complex systems designed to facilitate legal tax avoidance, they have become major centres of illegal financial transactions, including those involving CDOs, other derivative structures and money laundering enabling

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profits from the illegal economy to be sanitised and flow from the illegal to legal economies (Hudson, 2018a, 2018b). While no-one would deny the increasing global reach of capital, at the same time there is little evidence that today’s ‘global’ capital is any less in need of national states than were earlier capitalist interests. Capital may operate across the globe but it still relies on national states to maintain local conditions favourable to accumulation as well as to help it navigate the global economy via bi-lateral and international agreements on flows of money capital, commodities and labour. As a result, globalisation is characterised less by the decline of the national state than by a growing contradiction between the global scope of capital and its persistent need for more local and national forms of ‘extra-economic’ support, “a growing disparity between its economic reach and its political grasp” (Meiksins Wood, 2017, 179). At the same time, there are significant differences in the form, power and capacities of national states, with the USA (for now at least) the global hegemon, while a few other national states such as Germany and Japan are major economic powers, a few others including France, Italy and the UK retain pretensions to global influence, and China and India are growing in importance; but the vast majority of national states remain, to varying degrees, weak and powerless, subject to the effects of decisions made elsewhere. There are also different articulations and configurations of the national with supra-national and sub-national scales in seeking to balance the demands of accumulation with the need for political legitimation and to maintain the perceived separation of the economic and political spheres (although there are well-known instances of exceptions to this: see below). Bearing in mind these variations among national states, what do they do to make co-production and capitalist economies possible? Or put differently, what are the dimensions on which national states compete with one another to attract or retain mobile capital? Choice of competitive strategy will, inter alia, reflect the political strategy of the national government, the position of a national state within the global geo-political order and the composition and structure of the economy in its national territory. Prosaically, state involvement can extend, inter alia, to some or all of the following:       

Providing material infrastructure to enable production, transport, exchange, and consumption of commodities. Providing information technology and communications infrastructure to link buyers and suppliers. Regulating product markets, product quality and prices. Regulating competition between companies. Regulating competition between capital and labour. Encouraging the creation of new products and production processes by R&D and innovation policies. Encouraging mergers and acquisitions (M&A) to produce ‘national champions’ in strategically important sectors; or conversely preventing M&A activity to protect ‘national interests’.

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Influencing international trade patterns via trade policies, international trade treaties and policies relating to foreign direct investment (FDI) and portfolio investment. Managing links with other national states in international regulatory bodies (such as the International Monetary Fund (IMF) and World Trade Organization (WTO)), with embryonic supra-national states (such as the EU) and with extra-state organisations (such as multinational corporations (MNCs)). Influencing labour markets via policies on trades unions, education and training, and via migration policies. Regulating the labour process via legislation on issues such as the length of the working day and health and safety at work. Shaping income distribution and consumption patterns via prices and/or incomes and taxation policies. Influencing the location of activities within the national territory via financial incentives to locate in some places and legislation to prevent location in others. Seeking to reduce pollution, setting environmental standards, and encouraging recycling of materials via environmental legislation. Creating selective inter-penetration of the economic and political spheres via nationalisation and other forms of public ownership in order to guarantee specific capitalist interests and/or those of ‘capital in general’ and/or the broader legitimacy of the political-economic arrangements then in place. Selectively replacing markets as resource allocation mechanisms and partially de-commodifying the production of some goods and services. This is especially important in relation to the fictitious commodities of labour and nature to ensure that they retain their use value. Selectively pulling back the boundaries of state activities to (re)commodify particular activities and create new opportunities for capital. Creating and guaranteeing national monies.



     



 

The list, though long, covers well-known ground but is nonetheless indicative rather than definitive. In broad terms, national states enable both ‘traded’ and ‘untraded dependencies’ via creating an architecture of legal arrangements within which the social relations of both economy and civil society can be guaranteed. The scope and content of state policies is open to multiple sources of influence, with many proximate causes, mutually determining the trajectories of state activity. National states can both “roll back” the scope of their actions and “roll out” their activities into new spaces (for example, see Peck, 2010). However, location in the international state system influences the scope of state activities, often decisively, with important effects on the room for manoeuvre available to national states in policy formation and implementation. Bearing these limits in mind, states have to balance two sorts of demands in formulating and implementing their economic policies. Firstly, they must seek to ensure the smooth accumulation of capital in their national territory. Secondly, they must be seen to be acting legitimately, to preserve both the authority of the state and the

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hegemony of capitalist social relations. Seeking to satisfy these contradictory demands creates problems for the state in carrying out its own activities. While the state is exercising power with the objective ‘in the last instance’ of reproducing capitalist social relations, the question of how it seeks to do so, how it walks the tightrope between the competing demands of accumulation and legitimation, remains open.

2.4 National states and national monies While the money form pre-dated the rise of capitalism by several centuries, money came to fulfil three related functions that are central to capitalist economies (Dodd, 1994): it is simultaneously a medium of exchange, a store of value and a measure of account. Moreover, with the growth of financialisation in recent decades (Durand, 2017), money and monetary flows have become even more significant in capitalist economies. Money is crucial in enabling exchange relations, representing social value in a form that enables qualitatively different commodities to be exchanged as equivalents. Thus ‘value’ is a social relation established between the labouring activities of countless people working for a wage in locations around the world and value theory describes a specific set of social relationships in which exploitation as a process of extracting surplus labour can only be understood in the context of the wider social forms constitutive of capitalism as a system of commodity production. As a social relation value is immaterial and invisible. Being immaterial and invisible, it requires some material representation. This material representation takes the form of money. Without money and the commodity transactions it facilitates, value could not exist as an immaterial social relation. Value could not form without the aid of money as its material representation and the social practices of exchange that it facilitates. Harvey, importantly, emphasises that “[t]he relation between money and value is dialectical and co-evolutionary – they both emerge together – rather than causal”.1 The role of national states has been pivotal in this co-evolution, so that monies have emerged and become formalised as more or less stable national currencies that are themselves exchangeable in markets, guaranteed by national states.2 Despite the emphasis on globalised relations in economic transactions, national monies therefore have remained of central importance (although increasingly in electronic rather than paper form). As Dodd (ibid.) emphasised, the role of money in capitalist economies extends beyond facilitating commodity exchange, however. More particularly, money, which supposedly measures value, itself becomes a kind of commodity – money capital. Its use value is that it can be used to produce more value (surplus-value realised as profit). Its exchange value is the interest payment, the price of borrowing, which in effect puts a value on that which measures value “(a highly tautological proposition). This is what makes money so special and so odd” (Harvey, 2014, 28).

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In light of the events and financial crises of 2008, it is worth elaborating on the significance of national states and the EU and their key role in relation to the creation and guarantee of their national currencies and the euro and maintaining confidence in the qualities and meaning of the paper money they issue. A similar point can be made about their electronic monies and those of supra-national authorities such as the European Central Bank (ECB) and the IMF. This had become all the more important after 1972 with the abandonment of the metallic base of the world’s money supply. That said, with burgeoning financialisation the sovereign powers of the national state over capital and money flows have definitively, although unevenly, been eroded over the past few decades. This does not mean that the state is powerless, but rather that, to varying degrees, the powers of virtually all national states have become more contingent on the power of finance capital and of bond holders. As a result, the powers and practices of national states have typically been more and more directed to satisfying the demands of major corporations and bond holders, often at the expense of their citizens (as the citizens of Greece, for example, found to their cost: Varoufakis, 2017). Furthermore, not all states are equally powerless in matters of monetary policy, and there are important asymmetries of power among national states. In particular, in the current phase of capitalist development, considerable benefits accrue to the USA as the dominant world power from its control over the dollar as the global reserve currency. The USA state has exercised imperial power either directly via military intervention or indirectly by dollar diplomacy. The hegemony of the USA state in the world system is largely sustained by its control over the world currency and its ability to print money to pay, for example, for its excessive military expenditures and the structural imbalance in its trade with China in particular. Conversely, weak and/or dependent states have lost influence over their domestic economies and become beholden to policy advice and financial assistance from international organisations, such as the ECB, the IMF, and the World Bank, themselves under the influence of the USA and the Washington Consensus (Varoufakis, 2017).

2.5 National states and institutional systems of regulation The constitution of capitalist states as national states formed the starting point for regulationist approaches that seek to navigate a course between the Scylla and Charybdis of “agentless structures and structureless agents” (Jenson, 1990) and envisage a definite relationship between a national economic growth model (a régime of accumulation) and the ways in which this is regulated (a mode of social regulation). They share some similarities with other approaches which emphasise the territorially distinctive constitution of capitalism and its spaces of governance such as the social structures of accumulation and varieties of capitalism approaches (Hall and Soskice, 2001). Moreover, such approaches can also be used in analysing other forms of socio-economic organisation. For example, Elster et al. (1998, 204)

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argue that the “unity of economic and social policy”, the “tight coupling of production and social policy”, set the state socialist welfare régime apart from all “worlds of welfare capitalism”, although this was a difference that was to be dramatically eroded after 1989. As capitalist economies and political systems co-evolved, the national scale emerged as pivotal in the organisation of economies and regulationist approaches focus upon these relationships (Dunford, 1990). While there are variations among regulationist perspectives, they all conceive of régimes of accumulation as relatively stable aggregate relationships between production and consumption while modes of regulation are seen as providing the regulatory mechanisms within state and civil society, the body of beliefs, habits, laws, and norms consistent with and supportive of a régime of accumulation. Furthermore, they all emphasise the correspondence within a given mode of development between régimes of accumulation and modes of regulation necessary for social systemic stability. As such, a mode of regulation is a set of mediations that contains the accumulation process within limits compatible with social cohesion in a given territorial formation (Aglietta, 1999, 44). For example, during the ‘Fordist’ era major national states sought to balance increases in productivity and consumption within the national territory via public expenditure, taxation and income re-distribution policies. However, the establishment of a mode of regulation is a political process, involving a “representational struggle” as to the most appropriate way of coupling consumption and production (MacLeod and Jones, 1998). Consequently, modes of social regulation are formed within determinate limits through indeterminate political and social struggles. The establishment of a stable coupling between an accumulation system and a mode of regulation is an overdetermined contingent outcome, a chance discovery resulting from a process of trial-and-error learning in a specific time/space context. Some combinations of régime of accumulation and mode of regulation are feasible, or compossible (Jones and Jessop, 2010), while others are not. Feasible couplings provide a spatially specific temporary resolution to the inherent structural contradictions of the value form within capitalist social relations, encompassing both the commodity and non-commodity elements needed to underpin growth and accumulation. While the state generally plays a key role in securing a given mode of social regulation, this also necessarily involves the participation of capital and a variety of groups within civil society. Political practices, social norms and cultural forms contingently combine in complex ways to enable the dynamic and unstable capitalist system of commodity co-production to function, at least for a period, in a relatively coherent and stable fashion. Consequently, modes of regulation do not simply exist, pre-formed and awaiting discovery by national states: national states are not “the prisoners of a fixed genetic code” (Weiss, 1997, 18). They can search for and adopt varied economic growth models and forms and modes of regulation. Indeed, such

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experimentation with regulatory projects is likely to be an on-going process, particularly intense during periods of crisis as the state grapples with the task of ‘discovering’ or inventing an appropriate mode of regulation within a range of possible varieties of capitalism that enables competing demands to be made temporarily compatible (as events following the crises of 2008 testify). Compatibility needs to be achieved on two levels. First, in terms of the different ‘political shells’ within which state structures are situated, broadly divisible into democratic and non-democratic forms, though with significant differences among forms of democratic state, depending upon the extent to which state authority and power is secured by consensus and persuasion rather than coercion and the exercise of the state’s legitimate monopoly of physical force and violence within the national territory. Secondly, within any particular ‘political shell’, the challenge is to discover compatible combinations of growth models, forms of economic organisation and modes of regulation. There were, for example, national variations around the canonical generic Fordist régime of accumulation (Lash and Urry, 1987) and claims as to the emergence of three “ideal types” of post-Fordist reflexive accumulation, linked to different national regulatory modes based on Japan, German speaking Europe, and the USA and UK (Lash and Urry, 1994, 63ff.; though for a critique, see Hudson, 1989; Sayer, 1989). Others claim to identify distinctive ideal-typical “varieties of capitalism”, involving particular forms of national state formation and policies and their relationship to national economies (Hall and Soskice, 2001), though this in turn has been criticised as underplaying the variety of forms that these relationships can take in more “variegated capitalisms” (Peck and Theodor, 2007; Jessop, 2011). Irrespective of these conceptual differences and vocabulary, these approaches share a common theme of each national state seeking to support a particular economic growth model and sustain a particular set of social and political bargains and compromises within its sovereign space of regulation to allow this. Consequently, in regulationist terms, national spaces can exhibit quite distinctive couplings of an accumulation model and mode of regulation in the same global political-economic environment. Discovering and securing a feasible combination is far from straightforward, however. Reflecting the complex and multi-dimensional character of capitalist societies, and the variety of interests represented within them, the state is confronted with a demanding policy agenda. Internally, it seeks to balance competing claims over accumulation strategies and economic growth trajectories, and deal with issues of equity and social justice in the distribution of the benefits and costs of growth. Externally, it seeks to manage relationships with other national states, international organisations and multinational capital. As capitalist societies have become more complex, the balance of issues on the agenda that the state sets for itself, or has set for it by other social forces, has altered. For example, ecological issues and planetary futures are now much more prominent as policy issues. Likewise, the growing globalisation of the economy, the stretching of social relations over greater distances and the increasing porosity of national economies in the face of international flows of capital, commodities and people intensify the problems of

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regulating a national economy. As a result, there have also been significant changes in the ways in which national states approach their roles of crisis avoidance and management in order to try to guarantee relatively long periods of economic prosperity and social stability. Expressed in more analytic terms, national states are therefore involved in seeking to manage the contradictions inherent to capitalist economies and establish institutional frameworks in which the social relationships required for cooperation between capital and labour, sustainable competition among capitals, successful co-production of commodities and continuing capital accumulation are possible. However, it is important to understand how the ‘modern’ state emerged historically. As Harvey (2014, 155–156) notes, “[the] state is a bounded territorial entity formed under conditions that had little to do with capital but which is a fundamental feature of the geographical landscape”. That is, the links between them are associational, historical and temporal rather than causal. As a result, “[t]he two spatialities of state and capital sit awkwardly with and frequently contradict each other. … The logic that attaches to the territoriality of state power is very different from the logic of capital”. As Harvey emphasises, then, (national) capitalist states both preceded but have since co-evolved with capitalist economies but in an often-uneasy relationship. Moreover, capital has – and more precisely, particular capitalist interests have – acquired a privileged relationship with the state, procuring privileged access to processes of policy formation and protection by national states that claim a monopoly over the legitimate use of violence (and often the right to deploy it outside their national territory) and a monopoly over the means of money creation. They use these privileges to protect their own interests and perpetuate the power of capital in general. Tellingly, “[c]entral banks always bailout banks but they never bail out people” (ibid., 173). The events following the financial crisis of 2008 graphically exemplified the point as major national states – notably the USA and UK (Jenkins, 2010)3 – de facto nationalised banks and financial institutions, socialising the risks of financial collapse while leaving the ownership and control of financial institutions in the hands of private capital.4 However, it is important to remember that the relationship between national states and capital is reciprocal, albeit asymmetric in terms of power: even the most powerful national states depend upon revenues raised directly and indirectly (not least via taxes on workers’ incomes) on capital – a symbiotic, if unequal, relationship.

2.6 Beyond the national: the triple process of reorganising the state Although approaches such as regulationist, social systems of production and varieties of capitalism tend to give methodological and ontological primacy to the historically dominant national scale, there is no necessary reason for regulation to be primarily or predominantly a national scale process. Privileging the national as the only scale and site of state regulation has increasingly been

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seen to be problematic, theoretically and empirically. Governance and regulation can be carried out at a range of spatial scales that are constituted through political and social struggles and particular representational practices (MacLeod and Jones, 1998). Recognising this spatio-temporal specificity, variability and contingency, Hay and Jessop (1995, 305) emphasise the “constantly evolving spatial forms of accumulation and regulation”, the dynamic of spaces of governance and regulation since these can never be more than a temporary fixing of the contradictory social relations of the economy in a particular spatial form. As national growth models and the economic and financial policies of national states slipped into crisis, undermined by new and growing forms of globalisation and financialisation, the silences of approaches that focused simply on the national and ignored the growing re-allocation of state powers upwards, downwards and outwards became increasingly problematic. Acknowledging this, Jessop (1997) refers to the “reorganisation” of the state, a triple process of de-nationalisation (hollowing out to sub-national scales), de-statisation of the political system and the internationalisation of policy régimes. Nonetheless, the national state remains significant but in the context of a visibly shifting architecture of state power and mechanisms of regulation and governance. Moreover, some national states have been actively involved in authoring and implementing these processes of restructuring rather than being helpless victims of them. Recognising this, Peck (1994, 155 – emphasis added) argues that relatively autonomous social structures of accumulation and regulation are bound together in a necessary relation. However, their causal powers will be realised in different ways in different places, dependent upon contingent circumstances so that “the nature of the regulation-accumulation relationship is qualitatively different at each geographical level”. This suggests a distinctive multi-scalar linking of processes of accumulation and regulation, involving qualitatively different and, to a degree, scale-dependent types of relationships. 2.6.1 Scalar shifts The extent to which regulation is carried out at sub-national and supra-national scales is related to pressures on the national state form ‘from above’ and ‘from below’. As Harvey (2014, 159) notes, “the changing space relations on the part of capital circulation and accumulation … have transformative implications for the new political configurations”. Pressures ‘from above’ result from growing economic globalisation, from tendencies towards the trans-nationalisation of political organisation, the formation of macro-scale regions such as the European Union (EU), North American Free Trade Area (NAFTA) and Mercosur, the expansion of the G7 to the G20 as a decision-making body, the enhanced significance on issues of trade and intellectual property (IP) of regulatory bodies such as the IMF and WTO and the growing influence of international institutions such as the WTO (Piciotto, 2011), the ECB, the World Bank and the IMF, the latter two heavily influenced by the USA (Robinson and Gibson, 2011). There is a subtle and complex interplay between national states remaking themselves,

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relations among national states and processes of globalisation – which both affect and are affected by national states, though unequally. In some cases these were developments that were certainly instigated and actively carried out by the states themselves in the period since … the end of the 1970s. … [so that] this is by no means a straightforward weakening of the states by an external process but a strategic self-transformation carried out by the states themselves. (Hirsch and Kannankulam, 2011, 26–27) In contrast, however, in many other cases these were changes imposed upon other national states that were already in a structurally weak position which was further eroded by these changes which they had little choice but to accept and comply with them. The erosion of the efficacy of national monies and the national as a space of monetary regulation was particularly significant from the early 1970s with the collapse of the Bretton Woods arrangements and an increasing tendency to create new ‘global’ financial spaces, ‘global monies’ and regulatory systems. These developments have been enabled by technological and organisational changes, changes that have been of especial importance in markets for capital, credit and money and the more general financialisation of the economy. A combination of “securitization, deregulation and electronification” (Lash and Urry, 1994, 18–22) facilitated radical transformation of these markets, with some product markets operating globally and on the basis of 24-hour-a-day trading. This further exposed national economies to the combined regulatory pressures of markets as steering mechanisms and global monies as disciplining technologies. The undermining of the national economy as an object of state management, notably through the internationalisation of trade, investment and finance, and also growing competition among states to lower corporate tax rates in an attempt to attract capital flows, was a major factor contributing to the ‘crisis of Fordism’ as Keynesian management of national economies became increasingly problematic. In particular, the emergence of floating exchange rates, digital money and electronic transfer systems seriously compromised the capacities of central banks and national governments to control their own currencies (Warf and Purcell, 2001), particularly given the loosening of national control on capital flows. Furthermore, the creation of the euro by eleven of the member states of the EU involved a voluntary de-nationalisation and Europeanisation of their currencies, partly with the intention of this providing a stronger currency globally via re-scaling the space of monetary governance. Whether it will succeed in this remains an open question, as the effects of the euro have been to exacerbate sectorally and spatially uneven development within euroland (Hadjimichalis and Hudson, 2014) linked to “the emergence, during the crisis, of an integrated European consolidation state as a unique configuration of national states, international relations and supranational agencies …” (Streeck, 2017, 113 – emphasis in original). This emphasises that the EU is

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far from being a supra-national state with the full panoply of powers of a national state; for example, the creation of the euro has simply served to emphasise the significance of the lack of a common fiscal policy while the legitimacy of the EU more generally is undermined by the undemocratic character of its policy formation and decision-making processes. This has been registered in the rise of generally regressive right-wing anti-EU nationalist parties in many of the constituent national states of the EU and most dramatically to date in the BREXIT vote in the UK in 2016, a reflection of opposition to any further re-scaling upwards of governance and regulation.5 Finally, there are other new forms of ‘de-nationalising’ monies and credit systems, constructed in particular ways and controlled from specific local spaces, such as global cities but also ‘spaces of exception’ such as tax havens, the creation of which is again a result of decisions by national states (as noted above). While the national therefore remains critical in relation to money as a pivotal source of social power, there certainly has been a diminution in the capacity of many national states to control monetary and fiscal policy. Equally, however, claims that the national no longer matters (Ohmae, 1995), that it is a “nostalgic fiction” in a borderless global world and that we are witnessing “the end of sovereignty” (Camilleri and Falk, 1992), are patently wrong – indeed in the last two decades borders have become much more, rather than less, important in the wake of events such as 9/11 in New York, 7/7 in London, the terrorist atrocities and bombings in Paris and other cities and fears as to an influx of migrants and refugees from Africa and the Middle East into the EU and USA. As a result, in many parts of the world there are political pressures to retain the national as a scale of governance and protect national cultures and economies in the face of pressures for supra-national re-scaling. Furthermore, the national remains critical in relation to money as a source of social power, a privileged means to control access to wealth. While money as a representation of value can and must circulate freely, as social power it depends upon a territorial configuration and socio-political system (in short, a national state) that renders that particular form of social power hegemonic rather than occasional and dispersed (Harvey, 1996, 235). The relative de-nationalisation of the world economy is thus a contradictory process, with the creation of international regulatory agencies and global markets actively authored by national states (Panitch, 1996; Sassen, 2003), some of which continue to form key sites of global market regulation. While the growth of international regulatory agencies can be seen as evidence of the emergence of elements of a transnational network state, a state form consisting of specific transnational state apparatuses, it relies upon the actions of national (and regional) state apparatuses transmitting transnational priorities and decision-making processes (Demirovic´, 2011, 39). Thus “it is not a question of whether capital’s internationalisation results in the decline of the state, but rather how the state continues to participate in capital’s internationalisation in order to reproduce itself” (Yeung, 1998, 293, emphasis in original). Consequently, the emergence of supranational regulatory and governance institutions may in

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turn further reinforce the importance of the national state (Cerny, 1990). These varying institutional sites thus co-constitute the regulatory apparatuses of national and global economies, with discourses and tactics mutating across sites and scales of negotiation. The tendency to the internationalisation of economic relations has one additional and very important further implication: for it meant that “states were located in markets, rather than markets in states” (Streeck, 2017, 22 – emphasis in original). While acknowledging the significance of Streeck’s point, it is also important to recall that only a fraction of financial product markets is organised and operates on a truly global basis, and even then in and through a very small number of nodes in the global economy – notably the “global cities” of London, New York and Tokyo (Sassen, 1991) but increasingly cities in south east Asia such as Beijing, Hong Kong and Singapore (for example, see Karreman and van der Knaap, 2012). Moreover, circuits of industrial as well as financial capital have been internationalised but as relatively uncoordinated circuits, further complicating the task of national states in managing and reproducing national economies. For in these circumstances, money as a means of payment at best imperfectly represents value created through material processes. This emphasises the inherently speculative character of transactions within such an economy since credit represents a claim on surplus-value yet to be produced and there is no necessary relationship between the national territories in which it is produced and those in which claims to it are made. Pressures ‘from below’ are generated because of regionalist and nationalist movements, informed by complex mixtures of cultural, economic and political motives that combine to form pressures for more powerful sub-national spaces of governance and regulation within the boundaries of national states. On the one hand, economically advanced regions seek increased autonomy to reduce fiscal transfers to less successful regions (as in the movement to establish ‘Padania’ in northern Italy and the continuing influence of the Lega Nord in Italian politics and the long-established and continuing campaign for greater autonomy if not outright independence for Catalunya in Spain: Giordano, 1998; Schech, 1988). On the other hand, economically disadvantaged regions seek greater autonomy precisely because central state regional policies have failed to improve their economic well-being (for example, as in Corsica and Scotland: Kofman, 1985; Smith and Brown, 1983), although as the failure of the Scottish National party to convince the Scottish electorate of the merits of independence in 2014 and the decisive rejection of a devolved regional assembly in north east England in 2003 demonstrated, greater autonomy is not always seen as the solution to developmental problems (Hudson, 2006). Deciding on the preferred scale of governance can be a complicated process, however; having failed to vote for independence from the rest of the UK in 2014, in 2016, in contrast to most of England and Wales, Scotland then voted to remain in the EU, seeing EU membership rather than remaining as part of the UK as important in securing Scotland’s future economic well-being. Separatist pressures become most powerful when economic motives combine with a sense of political oppression of culturally ‘suppressed nations’ (as in Belgium, Quebec or in the Basque country and

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Catalunya in northern Spain: Anderson, 1995; Mandel, 1963). As with the shift upwards of regulatory powers, national states are not innocent and passive by-standers in these processes of territorial decentralisation of power and/or responsibilities. For example, states may seek to preserve the integrity of their national territory via granting increased autonomy to cities and regions within their boundaries or seek to contain fiscal crises by devolving responsibility (but not commensurate resources) for economic development to cities and regions. These varied pressures have reinforced tendencies to shift regulatory practices from the national level and so bring about qualitative changes in relationships between national, supra- and sub-national levels. It is, however, important not to overstate the extent of such changes. There is a long history of international regulation of global economic relationships by world organisations (Murphy, 1994), although there has been a significant expansion in the number of such organisations since the end of the Second World War (Zacher, 1992) and in some parts of the world growing pressures to transfer state power upwards to the supra-national level (for example, to the institutions of the EU). There has also been a long-established sub-national territorial structure to state power in response to requirements for administrative efficiency and political legitimacy. Increasingly, however, in places there have also been pressures further to shift the power to shape policies for regions to the regional level (a decentralisation of power to decide and resources to implement decisions rather than local and regional levels simply administering central government policies for these areas) and so produce a greater correspondence between administrative spaces and the meaningful spaces of the life world (for some people at least). However, such decentralisation may in turn raise the key issue of who in these places acquires the power to speak for them and to decide. As a result, more complex architectures of political power and spaces of governance and regulation have emerged. In summary … The reorganisation of the national state involves moving regulatory capacities both upwards and downwards within state structures and outwards from the state into the institutions of civil societies and back into the economic institutions of markets. The concept of reorganisation denotes the emergence of new, more complicated structures of regulation, involving re-defined relations between economy, society and state and complex links between the national, supra-national and sub-national. National states retain a key role as “scale managers”, shaping decisions about scalar shifts in regulatory capacity, serving as centres of persuasion and authors of narratives about change and reform and centres of interpretation and dissemination of knowledge about experiences elsewhere (Peck, 2002, 357). While there has been a diminution in national state capacity to control monetary and fiscal policy in many states,

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these have not been uncontested tendencies (Jessop, 2000, 8–9). More generally there were and are counter-tendencies to the weakening of the national as a space of governance and the erosion of the powers of national states. Indeed, national states retain considerable power and authority in many policy domains and remain as an important locus of accumulation, continuing to structure economic space much as before (Aglietta, 1999; Wade, 1990). While the national remains a pivotal “geographical scaffolding” of regulation within the emergent multi-scalar structures, “the significance of the national is now ever more tightly linked to other supra- and sub-national scales of political economic organisation than was previously the case” (Brenner, 2011, 144) – though of course this does not mean this is an inevitable trend. Or as Sunley (2011, 103–104) puts it, [d]espite the growth of non-state and network forms of governance, nation-states, both individually and collectively, continue to be a core component of this governance context, even as their forms and functions have been changed by globalization and its powerful constituent discourses. Relationships between accumulation and regulation are therefore differently constituted between and within scales. The variety of scalar territorial capitalisms finds a parallel in the variety of state capacities, strategies and spaces of governance and regulation, which are likely to become more rather than less pronounced (Weiss, 1997, 16). The growing emphasis on governance is recognition of the increasing importance – or perhaps more accurately is increasing recognition of the importance – of the institutions of civil society in securing the conditions under which the economy is possible. It acknowledges the social constitution and co-production of the economy, the embedding of the economy in cultural and political traditions and arrangements. However, this does not resolve the problems stemming from crisis tendencies in state activity but transposes them to different spatial scales and into civil society. One consequence of the changing role of the national state is a growing emphasis upon exploring forms of regulation beyond liberal market-facilitating and interventionist market-replacing which in varying ways draw upon network conceptions of state activity and capacities. The national state has a pivotal facilitating role by encouraging and steering such policy networks. For Weiss (1997) the alternative is the catalytic state, an emergent state form seen as reconstituting its power at the centre of alliances formed both within and outside the boundaries of the state. Catalytic states seek to achieve their goals by dominating coalitions formed of national states, transnational institutions and private sector groups. The most important partnerships are those between government and business. These processes of coalition formation are “gambits for building rather than shedding state capacity” (ibid., 24–27). For others, the

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emphasis is upon the enabling state, creating partnerships between state agencies and social partners, with a broader policy agenda encompassing social inclusion (Amin, 1998). Rather than directly (or indirectly) providing goods and services on a de-commodified basis for people, the state seeks to provide an enabling and facilitating environment, allowing social partners to provide goods and services for themselves with state assistance and support. The emphasis on such forms of self-help is partly a response to mounting fiscal pressures and the void left by the retreat of the interventionist state, and partly a response to new and previously unmet (and unarticulated) social needs. This shift in the character of state policy is also informed by a view that more sophisticated non-price forms of economic competitiveness necessarily depend upon co-operative social relationships and a different approach to co-production within cohesive and inclusive societies. However, the transition from an interventionist to a catalytic or an enabling mode of state activity does not mean that national states cease to have an interventionist role, any more than the transition from liberal to interventionist state ended national state involvement in the construction and regulation of markets, though the transition to a fiscal consolidation state tightens the limits within which intervention is possible. While recognising the changes that have taken place in the spatiality of state power, there are those who point to the limits of conceptions of state power being devolved horizontally outwards and vertically up and down from a central point. For example, Allen and Cochrane (2010, 1087) suggest that both scalar and networked topographies have found their limit and now push up against a topological world in which the ability of institutions to be far-reaching in their powers opens up for interrogation precisely what forms of reach are in operation today. Thus, they suggest that topological conceptions should replace topographical ones in understanding the ways in which state power is distributed and exercised in complex and transverse ways in a variety of fluid spatio-temporal assemblages. As a result, if topological geographies call into question the notion that state power may be redistributed through a hierarchization of spaces or that it can be scaled upwards and downwards or extended horizontally, then such a geography also has consequences for how political interests are mobilized and demands raised. This is particularly the case as new forms of governance increasingly have involved organisations in the private sector and civil societies in emergent assemblages.

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2.6.2 From state to private sector and civil society As well as scalar shifts within state structures, regulatory capacities have also been shifted ‘outwards’ to markets and non-state organisations with enhanced significance placed upon social practices beyond the state. Much greater reliance has been placed upon markets, often global markets, as governance and regulatory mechanisms. A range of organisations and institutions within civil society has also been incorporated into processes of governance, often with direct effects on the character of co-production and the structuring of the economy. Furthermore, some of the institutions of civil society have become organised on a trans-national basis, especially in relation to environmental issues which are widely acknowledged as global (for example, Friends of the Earth and Greenpeace have both evolved to become trans-national NGOs). At the same time, the significance of private sector transnational economic organisations as legitimate regulatory mechanisms has been greatly enhanced, encompassing “international standards agencies, arbitration tribunals, sectoral and functional associations and of course markets” (Radice, 2000, 34). The involvement of private sector organisations in economic and financial regulation is far from new but, enabled by technological innovations, it has both grown in magnitude and been qualitatively transformed in recent decades. As a result, governance has increasingly come to involve the activities of a range of epistemic communities and forms of expertise from within both civil society and the economy. The weakening position of the national state in fiscal and monetary policy therefore also reflects the growing capacity and power of private sector companies to create credit and a global credit system that is largely private and subject predominantly to market regulation (Altvater, 1990, 23; Strange, 1988, 30). As with scalar shifts in regulatory capacity, however, national states have been implicated in bringing about this selective and uneven process of de-statisation – while it has been most extensive in the neo-liberal heartlands of the UK and USA, it has been much less in evidence in China and India and other ‘emerging economies’ (Hudson, 2016b). There has nonetheless been a significant expansion of the involvement of private sector organisations, many of them international, in economic and financial regulation as the importance of private coordinating and evaluative agencies such as credit rating agencies (for example, Moody’s and Standard and Poors), institutional investors (for example, Goldman Sachs and J P Morgan), pension funds (for instance, the UK Universities Superannuation System and the California Public Employees Retirement System), and accountancy firms (such as PriceWaterhouseCoopers) has grown rapidly in an era of global finance (Radice, 2000, 34). Indeed, as Piciotto (2011, 88) remarks of the neo-liberal era, “the biggest paradox has been the growth of industry and corporate codes of conduct, the private sector adopting public standards for itself”, although “this has generally been in response to pressures from their customers, workers and suppliers, and sometimes in order to forestall the imposition of legal obligations”. Furthermore, the role of private entities and institutions may even extend to controlling public as

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well as private activities, assessing public as well as other private entities; for example, bond rating agencies (which classify state as well as corporate debt), and institutions that certify and guarantee compliance with technical standards, for example in relation to complex financial transactions and the internet (ibid., 90). Consequently, in these changed arrangements the role of the national state in ensuring order and transparency in its national financial markets and in compliance and quality standards has been partially taken over by these private institutions as, along with central banks, they have increasingly taken responsibility for some of the regulatory and coordination functions previously held by national states. The new global forms of credit in a debt, paper and increasingly electronic economy that exists in cyberspace are beyond the control of national states and exert great structural power over them (Leyshon and Thrift, 1992), further reducing the capabilities of both national states and international bodies to steer national economies (Lash and Urry, 1994, 292). This shift in the balance of regulatory power and influence can be linked to Miller’s (2002b) more general arguments about “virtualism” and its limits – that is, the increasing ability of economists and other agents of abstract models such as those of audit agencies and consultancies to transform the world into closer approximations of their theories and models and the limits to such processes. Miller (2002a, 229) notes “the astonishing rise of management consultancies in the private sector and auditing in the public sector, which were … trying to quantify and disentangle the world in order to make everything accord with their abstract principles according to how cost efficiency might be obtained”. While such private sector firms may therefore exert great influence, there are, however, limits to such transformations and this is not an inexorable advance. Given the complexity of the socio-technical systems that constitutes economies, the outcomes are not necessarily those intended, as the financial crash of 2008 dramatically revealed. Mathematical modellers erroneously believed that their models were correct, and that the financial world should behave according to the same principles of Brownian motion as the physical world, ignoring the structural limits that are integral to the accumulation process. As a result, there was of necessity a selective re-advance of the state regulatory boundary as banks, insurance companies and other financial organisations were de facto nationalised in order to underpin the edifice of the global capitalist economy.

2.7 Beyond the mainstream: regulating economic forms in the interstices and on the margins of the capitalist mainstream While considerable attention has been given to formal and legal regulatory processes and mechanisms, capitalism continues to be characterised by activities, organisations and spaces in which legal regulatory limits are chronically and routinely breached. Economic activities continue to be regulated but not necessarily by the provisions of formal legal systems of regulation. In part, illegal activity occurs within the mainstream ‘legal’ economy as companies seek to gain competitive advantage and/or individuals seek personal gain.

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For example, there is a wealth of evidence of a variety of illegal practices such as paying wages below minimum legal rates, requiring people to work in workplaces that breach legal limits, employing illegal labour, breaches of copyright and IPRs, insider trading, market rigging, false trade invoicing, transfer mispricing, and tax evasion – all activities that in some times and places are regarded as licit and, while contested by some, are tolerated by others within the mainstream economy. This tolerance extends to the ‘blind eyes’ of state regulatory authorities. As such, while certainly concentrated more in some places than others, such practices are widely diffused, spatially and sectorally across diverse activities. In addition, however, there are particular places in which economies, based around commodities and activities that are defined as illegal, are dominant. These illegal economies involve, inter alia, the production and sale of narcotics, money laundering and the trafficking of people and/or the labour-power of people who, for varying reasons, (in)voluntarily choose to live beyond the scope of state labour market regulation and as a result are not legally sanctioned to provide labour-power – children, or illegal migrants, or children who are illegal migrants. For example, O’Connor (2007) reports that large numbers of Bangladeshi and Nepalese children are illegally brought into India and sold to work in brothels, carpet factories, farms and quarries, part of the 15 million children, mainly from lower caste families, illegally employed in India. In the spaces in which such activities are a dominant presence, regulation is via the varied regulatory mechanisms of the informal and illegal economies. These range from ties of friendship, ethnic, family and kinship relations and relations of trust to the threat or actuality of physical violence and in extremis death (Hudson, 2018a). Such forms of enforced co-production, economy and regulation are prevalent in spaces in jurisdictions in which local circumstances and institutions enable particular illegal activities to become generally seen as licit. Such spaces are disproportionately concentrated in the (so-called) transitional and developing economies but are by no means limited to them as neo-liberal economic policies and practices have sharpened socio-spatial inequalities and created fertile breeding grounds for illegality in the core areas of capitalism as well as in its peripheries. This often involves the entanglement of elements of the legal state and its officials in illegal activities, either directly or indirectly, sanctioning them by turning a ‘blind eye’ to their existence (often in return for a financial consideration): for example, see Pöyhönen and Simola, 2007. Well-known examples include the spaces controlled by Cosa Nostra in Sicily, the ‘Ngrangdeta in Calabria, the Camorra in Naples, Mexican drug cartels, the Chinese Triads, the Japanese Yakuza and the Russian Mafia (Chiodelli et al., 2017; Hudson, 2018b; Slack and Campbell, 2016). All these organisations are involved in illegal flows of labour, the illegal trade of people and things, the illegal production of goods and the laundering of the resultant money by various mechanisms into the mainstream economy for private gain. State officials

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may also turn a ‘blind eye’ to such illegal practices not for personal gain but because of a desire to encourage economic growth in their area – or simply to enable people to subsist – in a situation in which there seems no alternative to engagement with the illegal (for example, see CIVIDEP, 2009; Kynge, 2009; Raineri, 2017). The result is a complex mix of spaces beyond the reach of ‘normal’ state regulation, resulting in a form of ‘graduated sovereignty’ in different overlapping and co-existing zones of economic control, in some of which the state voluntarily cedes some of its regulatory authority, in others of which people simply choose to live beyond it. One consequence of systematically turning a blind eye to illegal activities, however, is a loss – often considerable – of revenue to the state that potentially could be used for progressive developmental purposes. These illegal activities and spaces are not only significant in themselves but have other important relationships to and effects upon the formal legal economy and its regulation. Money laundering and the cleansing of money from illegal activities so that it becomes money capital in the circuits of the formal legal economy is one important aspect of this (Castells, 2000). More generally, there are places in the Global South (and indeed North) where [i]formal economies spring up (including those that entail criminal activities) to sustain life on marginal terms in low-cost accommodation in shacks, shanty towns and favelas. The unemployed eke out a living however they can in the urban slums. What this does, of course, is to define a way and standard of life and, even more importantly for capital, a cost of living that defines a lower bound for wages in the formal sector. (Harvey, 2014, 175)

Notes 1 There is a long debate under the rubric of the ‘transformation problem’ concerning the translation of values into prices. I agree with Massey (1995, 307) that this is ultimately fruitless as prices and values are concepts of qualitatively different status. 2 The most significant partial exception to this is the creation of the euro in 1999, as a result of 11 countries of the EU, subsequently expanded to 19, agreeing to share a common currency. However, the EU falls far short of being a comprehensive supranational state: see pp. 31–32. 3 The total government rescue packages in the USA and UK stood at $2,684bn and $1,476bn respectively. Ranked in terms of the size of the rescue package as a percentage of GDP, Ireland headed the list (243.9%), followed by the UK (68.7%) with the USA (18.1%) ranked twelfth after Sweden, the Netherlands, Slovenia, Austria, Finland, Spain, Canada, Germany and Norway as a result of the much greater magnitude of its GDP (Jenkins, 2010). 4 This is clearly understood by key officials within state institutions. As a former Governor of the Bank of England put it: “In terms of its balance sheet, the banking

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system had been virtually nationalised without collective control over its operations. That government rescue cannot be conveniently forgotten. When push came to shove, the very sector that had espoused the merits of market discipline was allowed to carry on only by dint of taxpayer support” (King, 2016, 4). To which I’d only add, a very significant “dint”. 5 That said, it is important to note that much of the vote to leave the EU was based on a general disaffection for varying reasons with all the major political parties and the political system more generally in the UK rather than a specific rejection of the EU; the referendum simply provided an opportunity for the disaffected to register their protest, with of course unanticipated consequences.

3

Enabling co-production Managing relations between capital and labour

3.1 Introduction Capitalist economies are structured around the class relationship between capital and labour and as this is an asymmetrical power relationship its reproduction is by no means automatic or guaranteed. However, the ‘moment of production’, central to the economies of capitalism, depends upon the contradictions being contained and this dialectical relationship being reproduced and managed in ways that enable labour to be reproduced and capital to prosper. Put another way, it depends upon capital and labour, the buyers and sellers of the commodity labour-power, agreeing to co-produce commodities in a way that is in part dependent upon and structured by their various strengths and the balance of class forces in a given labour market which influence the content and form of the deal struck over the ways in which work and the labour process will be organised within a particular model of co-production. Relations between the buyers and sellers of labourpower are then configured in particular ways within the co-production process. Furthermore, the choice of that co-production model – for example Taylorist mass production, some version of HVFP or flexible specialisation – will in part be determined by the characteristics of the labour market. Capital requires labour-power in order to produce profits while labour has to sell its capacity to work, its labour-power, to capital in order to reproduce itself. This asymmetry marks the nature of co-production. The resultant effect within the social relations of capital is to transform social labour … into alienated social labour. Work and labour are exclusively organised around the production of commodity exchange values that yield the monetary return upon which capital builds its social powers of class domination. Workers, in short, are put in a position where they can do nothing other than reproduce through their work the conditions of their own domination. (Harvey, 2014, 64, emphasis added) Harvey thus cogently expresses the class structural position of labour. Whether this is how workers perceive their class position is another issue – and there

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may also be complications to this binary division, fracturing the structural class of capital along sectoral and territorial cleavage planes and the structural working class along lines of ethnicity, gender or location as well as industry and occupation. Class formation in practice has always involved an interplay between structural class position and other non-class dimensions of identities as experienced in day-to-day life. But even if workers recognise the structural realities and can, to some degree at least, combat the effects of other divisive social forces and identities, they still have little choice but to accept their role as providers of labour-power in some form of co-production dominated by capital, though whether they do so willingly or not is another matter. Nonetheless, the key issue is how, not whether, labour cooperates with capital, willingly or otherwise, in the processes of co-producing commodities; otherwise there is no capitalist economy. Since capital needs workers to provide labour-power, employers need to ensure both a supply of labour and a degree of compliance, if not willing consent, by labour. Reciprocally, because labour needs to be able to sell its labour-power, an unavoidable imperative in a capitalist economy, it has to agree a bargain with capitalist firms (and capitalist states) for the use of that labour-power. As such, the key issue is the terms and conditions of sale in the market, revolving around a “tension” between capital and labour that requires “managing” (Burawoy, 1979). This is particularly so (leaving aside for the moment production via piecework) as companies buy a worker’s capacity to work for a contractually agreed period of time, not a fixed amount of labour and so, from their perspective, must manage work to extract as much surplus-value as they can from the labour-power they purchase. Depending on the specificities of activity, time and place, there is a varying emphasis between producing absolute and relative surplus-value – reflected in the length and porosity of the working day and the intensity and productivity of work – in seeking the overall maximisation of surplus-value production. Capitalist firms therefore routinely face two related issues in their search for a viable form of co-production: firstly, how to recruit the ‘right’ sort of labour to maximise the chances of profitable production; secondly, how to organise it in the workplace so that it then produces as much profit as possible. Given the class structural antagonism between capital and labour, the issue for capital is how to secure the compliance of workers so as to maximise the production of profits, while the issue for labour is to secure the best deal possible in relation to wages and terms and conditions of work. For capital there is a variety ways in which it can organise production and the labour process to achieve its objective and co-produce commodities profitably. These involve different forms of relationship between capital and labour, with varying mixes of coercion – above all arising from the imperative for workers to earn a monetary wage – and consent more or less willingly given, depending upon the terms and conditions on which work is offered and carried out. Burawoy (1985) suggests that there are two generic types of capitalist factory regimes, depending upon whether coercion or consent is the dominant organisational principle in the workplace: the despotic (based on coercion), and the hegemonic (based on

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consent). Rather than only deploying one approach in a factory or workplace, however, the same firm may within the same workplace employ coercion with respect to some workers, consent with respect to others, depending upon the character of its activities and its internal division of labour. More generally within capitalist production, “social relations are themselves outcomes of a mix of coercion, consent and compromise between exploiting and exploited classes” (Selwyn, 2012, 214). Furthermore, with the development of globalised production strategies, firms have developed new approaches and interventions which are constructing more complex forms of work organisation and labour control than Burawoy envisaged (Xue, 2008). For capital, the issue is, as it always has been, to ensure that the competencies and skills required to produce profits are reproduced but without these become monopolisable and so the basis for strengthening workers’ bargaining capacity vis à vis capital (while recognising that capital where it is both possible and profitable to do so seeks to capture workers’ knowledge and skills in machines and deskill labour so that it approximates more closely to the commodity form of abstract labour). For capital the point is always to secure the conditions of co-production that will yield the production of profits, not of goods and services per se: that is, capital is driven by the structural imperative to produce exchange values rather than use values. However, labour market conditions vary as between economic activities, industries and occupations, and time and place and as a consequence the extent to which workers willingly consent to sell their labour-power varies, as do the wage levels and terms and conditions on which companies offer to buy it1 – for example in relation to issues including working hours, degree of worker autonomy, training and skills development, promotion opportunities, job security, job status, nonwage benefits and workplace facilities. Willing consent is particularly important in activities that involve direct interpersonal interaction between producers and consumers of services, since these are forms of co-production in which those providing the service necessarily to a degree engage emotionally with those purchasing and consuming the service, and in forms of material production that necessarily involve high levels of worker autonomy and flexibility in production. In contrast, consent may have to be extracted much more reluctantly from backoffice workers, workers undertaking low-level service sector activities and production line workers involved in the deskilled tasks of mass production of material commodities, with intense competition for waged work in the labour market serving as the disciplinary force that coerces workers to accept whatever is on offer (though of course there is always the possibility that disgruntled and militant workers may sabotage commodity production). From the point of view of capital, exploitation – the extraction of surplus-value – can and indeed must be managed in diverse ways, irrespective of whether consent is given willingly or unwillingly, to ensure that commodity production is sufficiently profitable. Clearly the availability of labour is crucial for capital and this, coupled with the generally greater mobility of capital relative to labour, highlights the importance of labour reserves and the places in which they are available. Capital

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can seek to draw upon these labour reserves in one or both of two ways, via spatio-temporal fixes that involve either bringing labour to existing sites of work or by re-locating economic activities to places of surplus labour. Because of the spatio-temporal variations in labour market conditions, geography clearly matters in influencing the sorts of relationships into which capital and labour enter and the forms of co-production that are possible. While spatially uneven development is a consequence of past capitalist development, it has important consequences for the contemporary organisation and further development of capitalist economies – or more precisely economic geographies. Faced with tightening labour markets and labour shortages in some places, companies seek out locations as capital expands into new spaces in which labour is available, at varying spatial scales. Conversely, the imperative to find waged work generates flows of migrant labour from places of surplus labour to centres of capitalist activity, intranationally and internationally. Variations in labour market conditions are critically important to the ways in which relations between capital and labour are and can be structured in different forms of co-production – with varying degrees of coercion or consent and co-determination between capital’s choice of production methods and labour market conditions which delineate the scope that capital has to recruit labour that will provide labour-power that meet its needs.

3.2 Representing the collective interests of capital and labour While at one level of abstraction capital and labour can be conceptualised as structural classes, in practice the strategies and tactics that companies and workers use to represent their varying interests involve allying with some while competing with others. Employers and employees deploy a variety of strategies and tactics in organising and representing their collective interests in a dialectical relationship of competition and co-operation between capital and labour as well as within these structurally defined classes. While there are often rhetorical claims as to capital and labour organising globally, the reality is a much more differentiated and fractured process. Capital routinely seeks to organise to articulate its interests in relation to those of particular sectoral, corporate or territorial organisations. There is a long history of organisations that represent particular fractions of capital on different territorial bases, from the local to the trans-national, although the territory of the national state remains a critical scale. For example, in the EU there are powerful industrial lobby groups (such as EUROFER, representing iron and steel producers in the EU) that seek to shape EU policies in their interests. In the UK the Institute of Directors, the Confederation of British Industry, the Engineering Employers Federation, the Chambers of Commerce and the Federation of Small Businesses are long-established institutions representing different groupings of capitalist interests, while there are other organisations representing particular sectoral and territorial interests. There are similar institutions in other national states. These organisations can themselves often

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be in competition – for example, in seeking to influence national state policy agendas to favour the particular interests of their members. This (as well as pressures from organised labour for example) can create difficulties for state agencies in formulating and implementing coherent economic policies. Precisely because “the state is an institutionalization of competing and antagonistic class relations, it … takes the shape of a heterogeneous network of agencies which are partly in conflict with one another” (Hirsch and Kannankulam, 2011, 16). Such employers’ organisations often seek to negotiate over wages and working conditions with workers or their representative organisations such as trades unions in particular sectors or industries, to reach sectoral and national agreements on wages and working conditions linked to nationallydefined regulatory frameworks and limits which then set the parameters within which employers and employees negotiate as to the terms and conditions of co-production within the firm. However, both trades unions and employers may seek to negotiate at differing spatial scales, depending upon variations in labour market and other regulatory conditions. While national agreements may set minimum levels below which labour market standards cannot (or more accurately, should not) fall, they may also constrain the bargaining position of militant and powerful local or regional level organisations. Conversely, employers with high labour costs may prefer national agreements. Moreover, there may be important relationships between scales. In the USA for example, the process through which local unions may form is established by federal (national) labour legislation (Clark, 1988). Equally, the right of individual states to pass anti-Union right-to-work laws is enshrined in federal labour legislation, the 1947 Labour-Management Relations (Taft Hartley) Act. The position was further altered in 1984 when the National Labor Relations Board created a precedent by allowing firms to relocate production from unionised to non-unionised workplaces, thereby enabling companies to out-source work to non-union plants, lowering levels of trades union membership and dividing unionised from nonunionised workers on a workplace basis (these issues are discussed further in Chapter 6). Clearly, capital is not necessarily opposed to the collective organisation of labour per se; indeed, in many ways it requires it. For example, trades unions provide an important source of knowledge and information for companies (Rutherford and Holmes, 2007). Unions can also play a significant role in the adoption of new work systems, wage bargaining and skill formation while at the same time attempting to harmonise wages and conditions across firms (Herrigel, 2004). Such instances suggest that trades unions can be seen as co-constituting the socio-spatial relations within which work takes place and in some circumstances may possess a substantial degree of autonomy from capital in so doing (Cumbers et al., 2008, 2010). The key issue is the form of organisation and the balance of power between the employing company and organised labour.

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However, the ways in which workers unite and divide is important to companies in another sense. There has certainly been considerable stress in recent years upon the fragmentation of work and the individualisation of labour contracts and the relationship between the employee and employer. This perhaps has taken its most extreme form with the development of zero-hours contracts in the so-called ‘gig economy’, especially in service activities as varied as work in warehouses, taxi driving and the provision of home care, covering some 3–4 per cent of the employed workforce in the United Kingdom, for example (Bloodworth, 2018; House of Commons Business, Innovation and Skills Committee Report, 2016). Nevertheless, many companies continue to need to be able to deal with workers on a collective basis. So while there have been pressures in certain sections of labour markets in some places to individualise contracts, more generally companies still need to be able to deal with workers collectively and from this perspective the issue for them becomes the forms of collective organisation and the types of trades unions or other collective bodies (company or workplace councils, for example) through which workers come together to articulate their demands. From the point of view of capital, compliant, docile and obedient trades unions are ideal but the variation in skill requirements within a labour force may require companies to adopt differentiated strategies for labour, dealing with different groups of workers in different ways, depending upon their position and role in the process of commodity co-production. Where they are able to do so,2 workers characteristically seek to represent their interests, secure access to waged employment and improve the terms and conditions on which labour-power is bought and sold on the market, by forming trades unions. These unions are the key organisational institutions for workers seeking to pursue their interests, defining membership in relation to a variety of criteria – including industry, occupation, ethnicity, gender and territory at varying spatial scales. Wright (2000) draws an important distinction between workers’ structural and associational power. The former derives from workers’ capacity to disrupt capital accumulation, and accrues to workers on the basis of their position in the production process and their resultant ability to disrupt it and so is therefore partially determined by the type of commodity produced. Associational power is a product of workers’ collective organisation comprising “the various forms of power that result from the formation of collective organization of workers” (ibid., 962). The formation and subsequent growth of trades unions is the product of an historical struggle, an ongoing contested process with a definite and uneven geography, in terms both of the industries and places in which it occurred and continues to occur and the geographical scales at which unions have sought to represent workers’ interests. This historical geography of trade unionism has had a critical formative effect upon unions’ tactics and strategies. As a result, there are various forms of trades’ union organisation, related to the types of work and working conditions experienced by workers in different industries,

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companies, times and places and to their identities as workers (Hyman, 1998). While trades unions are perhaps the key formal institution through which the collective interests of labour are promoted and defended in the labour market, at the same time they often become involved in controlling and disciplining workers within the workplace. This contradictory position reflects the inherent ambiguity of their relationships to capital. On the one hand, trades unions accept the legitimacy of unequal power relations between capital and labour while, on the other, simultaneously seeking to maximise the benefits to workers within this constraint via challenging the rights of capital to purchase and deploy labour-power on its own terms in coming to an agreement on a particular form of co-production within the workplace. Organising via trades unions is also a contradictory process in another respect, for labour organising in these ways simultaneously involves groups of workers uniting but at the same time distancing themselves from, and often directly competing with, other groups of workers over access to various forms of waged employment. While capital can be thought of as trying to ‘disorganise’ labour via segmenting the labour market, dividing workers from one another on a variety of dimensions to create optimal conditions for profitable production, workers are active subjects in this process as, in uniting with some, workers are actively involved in differentiating and dividing themselves from other groups of workers (issues that are discussed further in Chapter 6). Rather than seeking simply to ‘disorganise’, however, capital may instead seek to secure the cooperation of some groups of workers and collaborate with them to organise work in particular ways that facilitate profitable co-production. There is a long history of territorially based collaboration between fractions of capital and labour, as shared territorial identity triumphs over class differences and workers see such cooperative arrangements as the best way for them to secure waged employment. Companies may encourage ‘sweetheart’ unions, sanitised and compliant company unions or non-union company councils which typically involve the selective co-option and co-operation of sections of labour. Following the unification of Germany, for example, employee works councils and trades unions became “willing – albeit publicity shy – partners” in pioneering “modernising agreements” (Milne and Williamson, 2006). The specific ways in which companies seek to (dis)organise labour and deploy different methods of control of work and the labour process depend on their choice of production strategy (issues that are discussed more fully below). Competition and collaboration between capital and labour, and labour’s stance within this process, is shaped by expectations and norms typically formed in and reflecting the experiences of particular times and places and their prevailing forms of work organisation.

3.3 Spaces of work: recruiting, managing and organising labour3 While there are very many instances of owner-managers of small companies, in the major capitalist firms that dominate the global economy there is typically a separation between ownership and management (although the boundary between ownership and management has typically become more blurred in the upper

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echelons of management as remuneration packages have come to include share options).4 Major companies need to devise appropriate recruitment strategies and organisational forms of relationships among managers as a precondition for dealing with the issue of relationships between managers and the rest of the workforce. Such major companies first emerged in the nineteenth century but have subsequently increased greatly in extent and influence. Over time, throughout the history of capitalism, a number of characteristic organisational forms of managerial labour have been developed as organisational innovations have coevolved with innovations in products, processes and methods of production. This has given rise to differing structures of managerial strata and requirements for new managerial skills and competencies. Relationships among these various managerial strata vary in terms of both horizontal and vertical hierarchical linkages, depending upon the chosen form of corporate organisation. The recruitment and organisation of their cadres of managers are crucial tasks for firms. Suitably qualified managerial labour must be recruited and organised in such a way that it can in turn devise a viable form of co-production within the firm, organising the mass of the workforce, via a mixture of coercion and reward, to work in such a way as to produce sufficient profit to ensure corporate viability. Viability in turn depends upon the type of commodities being produced and the methods of production being deployed. 3.3.1 Organising managerial labour As capitalism has evolved, so too have methods of management (Ghosal and Bartlett, 1997; Pasternack and Viscio, 1998; Thrift, 1999). The emergence of the American System of Manufacture in the nineteenth century required creating methods of impersonal bureaucratic management control, encompassing the creation of new occupations, new managerial strata and structures and new middle management tasks. This in turn led to the emergence of vertically integrated major industrial corporations in the USA by the early twentieth century, in which the dominant managerial form became a single hierarchy within a single corporation, linked to the emergence of mass production, with production relying upon intracompany capabilities and product competencies, co-ordinated by a firm’s internal hierarchical management organisation (Pine, 1993, 229). This replaced market coordination as the means of managing geographically scattered and diverse business and production activities (Best, 1990, 35–46). Many companies continue to coproduce in-house for a variety reasons, with varying implications for recruitment and labour control strategies. It may be cheaper and/or more certain, minimising risks. Particular tasks may be too exacting and specialised to be sub-contracted or involve firm-specific knowledge that must be protected from competitors. Vertically integrated production may entail producing components at differing locations within an intra-corporate geography of production, depending on the relative weights attached to economies of scale and scope. Irrespective of their dispersed geographies, however, decisions about production organisation remain within the internal corporate control hierarchy.

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Despite evidence of and emphasis upon growth in external sourcing, there are persistent tendencies towards vertical integration, not least in ‘leading edge’ sectors as well as in well-established activities such as the mass production of chemicals and metals, because of the relative weights of variable and fixed capital costs in production. For example, in semi-conductor production, fixed capital costs have increased significantly as a proportion of total production costs. Such sunk costs make “entry to and exit from the industry more expensive and difficult” (Flamm, 1993, 66–70). Furthermore, the tendency to blur boundaries between material products and services is leading companies vertically to integrate, extending activities along the supply chain (for example, in automobiles: Hudson and Schamp, 1995). In industries ranging from computers to steel production (Hudson, 1994c) wholesalers have extended their influence both up-stream and down-stream. They are responding to the impacts of just-in-time production and market fragmentation, leading to demands for greater flexibility in production, by customising products to customers’ demands (Hudson, 1994a). In many industries, however, it became clear that monolithic vertically integrated systems were unwieldy. The paradigmatic response to this problem was the multi-divisional managerial structures first developed at General Motors, based around two central guiding principles (Ghosal and Bartlett, 1997). Firstly, decentralisation within the firm to increase the number of employees empowered to exercise entrepreneurial judgement. Secondly, new cost accounting systems to co-ordinate entrepreneurial initiatives and maintain control and overall corporate coherence. Other major companies (including du Pont, IBM, and Philips) subsequently adapted this model. From the early 1970s, however, the ‘command and control’ model – whether in hierarchical or decentralised multi-divisional form – became increasingly problematic (Pasternak and Viscio, 1998). Companies sought new, more decentralised management spaces and structures appropriate to ‘flexible co-production’, increasingly volatile market conditions and enhanced emphasis upon product differentiation and market segmentation as elements of competitive strategies. Consequently, enabled by advances in production, transport and communication technologies, the “newly emerging organisational form” became “the complex global firm” which has as its “key diagnostic feature” an integrated network configuration and capacity to develop flexible co-ordinating processes both inside and outside the firm (Dicken et al., 1994, 30). Consequently, the intra-firm structure of large corporations increasingly came to resemble a network rather than a hierarchy (Castells, 2000). This created scope for greater flexibility and variety in internal organisational structures, governance mechanisms and geographies: as a result, internal organisational forms become increasingly heterarchical (Grabher, 2001). As such, this tendency both created and required new forms of organisational structure and managerial skills and competencies. The canonical example of ABB (Asea Brown Boveri) led to a widely held view that corporate success depended upon the collective and combined knowledge of people within a company, and the coherence with which

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different parts of the company were combined within looser, more decentralised and fluid horizontal network structures of management, with financial performance closely monitored. ABB’s Abacus Management Information System collected data for 4,500 profit centres, comparing performance and budget forecasts on a monthly basis (Taylor, 1991). Imitating ABB, other companies typically split into separate profit centres, with careful central monitoring of their performance. However, ABB subsequently radically modified its approach in the late 1990s focusing on customer and product segments. This was seen as “a natural progression of the journey we have been on”, a response to a “silent revolution” in the market that is “completely changing the business landscape”. ABB sought to transform itself into an “agile knowledge-based company, with ‘brain power’ ” as its corporate motto, the Internet as its favourite tool, allowing it to interact one-to-one with customers and deliver mass customised information, products and services.5 However, such highly flexible mass customisation required common business and management processes worldwide to facilitate ABB’s interaction with its customers (Chief Executive Jorgan Centeram cited in Hall, 2001). This aspirational approach has subsequently also been modified in various ways by other companies, but with an emphasis on decentralisation and loose horizontal relationships rather than rigid vertically hierarchical ones within intra-company management structures. For example, GSK claimed to create an organisational structure for R&D “completely different to anything that exists today”, dis-aggregating research into individual profit centres involved in intra-corporate competition for funds (Pilling, 2000a, 2000b). Taken to their (il)logical conclusion, “deep integration” organisational models would ultimately involve completely cloned organisational structures in affiliated and subsidiary companies, with the entire functional range of corporate activities present in each company, subsidiary and territory (United Nations, 1993). In practice, corporate capital has gone down different and varied organisational pathways. As processes of globalisation evolved, large companies devised “hybrid” dual organisational structures and “strategic architectures” to cope with the complex challenges posed by increasingly fluid and dynamic markets (Howells, 1993, 222). These have two components that require differentiated but co-ordinated managerial structures and practices and different strategies for the recruitment and management of labour. First, they require an integrated network structure to manage core competencies, encompassing intense knowledge exchanges between the component elements of the firm. Decisions about core competence activities are detached from regular, on-going “make or buy” decisions based on transaction costs, as they require long-term commitments based on sunk costs and specific governance mechanisms to ensure the effective circulation of knowledge (Amin and Cohendet, 1997, 13).6 Secondly, alongside this there is a classical hierarchical managerial structure to deal with non-core competence activities. This provides a cheaper way of managing routine activities dependent upon flows of codified information. Whether such activities are retained within the firm or out-sourced depends upon ‘traditional’ transaction

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cost criteria. There is thus a major fault line between core and non-core activities but this line – and so the boundary of the firm – is fluid and shifting, as these activities are relationally defined. In some circumstances, however, firms are developing even more differentiated internal management spaces and structures and more decentralised and flexible managerial strategies as they seek to respond to emergent local opportunities. Such heterarchic firms – often producing commodities with a high knowledge and/or symbolic content, such as advertisements – require skilled and flexible workers and are characterised by heterogeneous forms of internal organisation. In such firms there is a necessary degree of “under-determination” or “under-specification” in production via “soft assembly”. This gives rise to a specific form of co-production. As the form of the final product is not initially obvious but emerges via processes of trial and error learning, search and experiment, workers necessarily have a considerable degree of autonomy over the labour process. Co-producing in this way requires a “redundancy of resources, skills, models and philosophies … embedded in different organisational contexts and in different organisational layers” in such a way that the higher layers only exercise a limited degree of control over the activity of the lower organisational layers. “Such ‘soft assembly’ allows a lower level organisational unit to respond to local contexts and exploit intrinsic dynamics: ‘soft assembly’ out of multiple, largely independent components yields a characteristic mix of industries and variability” (Grabher, 2001, 358). Expertise and expert knowledge, and its diffusion between and within firms, are therefore central to the emergence of these new managerial models and styles. However, “there is nothing new about the ‘soft’ dimension with regard to economic activity”. What is relatively new is “the degree to which culture is called on; the degree to which experts exercise their judgement; the degree to which creativity is called into play” (Heelas, 2002, 81, emphases in original). The net result of these various tendential developments has been a growing emphasis on the need for flatter, more flexible, differentiated and decentralised managerial structures and corporate cultures, for a new mode of corporate governmentality within an increasingly risky, unstable and rapidly changing economic environment. Allegedly, in the “autopietic system” that characterises a “more reflexive” and “soft” capitalism (Thrift, 1999, 67), “firms now live in a permanent state of emergency, always bordering on the edge of chaos” (Thrift, 2002, 201). Consequently, to survive and prosper they must become faster, more agile, generating just enough organisational stability to change in an orderly fashion alongside sufficient hair-trigger responsiveness to adapt rapidly (one might say at the drop of a hat …) to the “expectedly unexpected”. Such an approach requires new managerial skills and “fast subjects”, a qualitatively different type of manager able provide leadership and creativity while living life in a blur of change, a life in which change is the only constant (Thrift, 2001, 2002). Consequently, there is an attempt “to engineer new kinds of fast managerial subject positions which can cope with the disciplines of permanent emergency”. This project “involves much more direct engineering of the management subject” than has previously been attempted. Further, and

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crucially, it involves “the production of new spaces of intensity in which the new kind of managerial subject can be both created and affirmed”. Creating such “fast” management subjects “requires finding a whole variety of different methods of acting upon others in order to produce subject effects” (Thrift, 2002, 202–205). This entails specifying procedures which both reveal and value the “new things” that are needed to create “fast subjects”, which Thrift (2002, 206–207) “rather glibly” names as sight, cite and site, thereby seeking to emphasise “how bound up these new procedures are with the production of new spaces which, by being more active, more performative than those of old, can help foster creativity. Thus sight – new spaces of visualisation; cite – new spaces of embodiment; and site – new spaces of circulation”. The latter are of particular relevance since new means of producing creativity and innovation (issues explored further in the following chapter) are bound up with new geographies of circulation, which are intended to produce situations in which creativity and innovation (process and product) can, “quite literally”, take place. Nonetheless, recognising that different forms of corporate organisation may co-exist in one place, “it would clearly be ludicrous” to suggest that the project of governmentality centred on the spaces of production of fast subjects “has a total grip” (Thrift, 2002, 207). On this at least, Thrift is correct. Indeed, it remains an open question as to whether such a project is feasible as a stable long-term approach and, if so, in which domains of commodity production. Thus, even in those activities and locations in which it emerges, this “fast world” may not last, running up against its limits and the contradictions of underlying capitalist social relations. For one thing, there is no consideration of labour other than managers so quite how work is actually carried out to coproduce commodities remains a mystery. More fundamentally, it is grounded in a particular conception of capitalism and a business model centred on shorttermism and dependent upon the lax system of financial regulation that came to dominate in the USA in the 1980s and 1990s but that now, post-Enron, WorldCom and other accounting and financial scandals, and particularly after the major systemic crisis of 2008 and its aftermath, looks increasingly fragile. 3.3.2 Labour recruitment, the organisation of work and regulation of the labour process Capitalist companies and their managers must routinely deal with two issues that are crucial to successful profitable activity: first, they must recruit appropriate labour, able to provide the required labour-power, recognising that this can vary greatly depending on the activity to be undertaken; secondly, they must discover and implement a viable mode of co-production and organise those recruited workers to work in such a way as to create and realise sufficient surplus-value to ensure the viability of the company. Companies can deploy a range of strategies in recruiting labour. Broadly speaking, these fall into one of two types. Firstly, there are strategies that depend on ‘who you know’, with workers recruited through ‘informal’ channels as a result of reputation and past

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employment histories, shared ethnic or cultural identities, or personal contacts and relationships with family members or friends. Such contact networks are, however, both inclusive and exclusive and as such can be advantageous to some workers but disadvantageous to others (Lash and Urry, 1994, 189). Secondly, strategies that rely on recruiting workers via a variety of formal and impersonal mechanisms through the institutions of markets and private and public sector recruiting agencies and institutions. Companies can also choose to deploy a range of methods of organising production, various forms of co-production, and it is important to emphasise that in this there is no simple historical sequence or convergence onto ‘one best way’. On the contrary, at any one point in time there is a complex economic geography, with differing approaches to co-production and the organisation of economic activities co-existing in different places, or even in the same place. More generally, companies routinely adjust existing recruitment practices, methods of co-production, working practices and shift systems, altering these in the light of local labour market conditions, both those that are favourable and those that are unfavourable in terms of their concerns and interests. In labour markets characterised by supply exceeding demand, companies may take the opportunity to force down wages and/or selectively to shed labour and alter working patterns to increase productivity and profitability, confident that the fear of job loss will coerce those retaining their job to accept such changes. In labour markets characterised by high unemployment employers may cut labour costs by substituting part-time for full-time jobs, temporary for permanent contracts, by increasingly casualising work and ‘Taylorising’ contracts or offering jobs but on inferior terms and at lower wages: for example, in 2001 VW created “a factory within a factory” at Wolfsburg, creating 5,000 jobs for previously unemployed workers but on lower wages than those paid to the main labour force. In such labour markets companies may also use initial temporary employment to ‘screen’ workers prior to offering more permanent contracts (Beynon et al., 1994). In contrast, in tight labour markets in which there are shortages of labour, companies may modify the form of co-production and alter working patterns to facilitate recruitment and ensure continuing production or service delivery. For example, in such labour market conditions companies may alter shift systems, introducing ‘twilight shifts’ or shift systems synchronised with school hours to enable women with child-care responsibilities to work part-time (Hudson, 1980); or introducing flexible shift systems to enable women to combine seasonal work in agriculture with factory work (Smith et al., 2018). During the 1990s banks in the UK began to adjust their recruitment and retention strategies in the face of growing skill shortages in key ‘high tech’ areas, introducing new systems of homeworking to allow women with children to combine child care with paid work (Summers, 1998). There is also evidence of the growth of home working linked to new forms of contract working in IT more generally and of extensive homeworking in more mature, low technology and labour-intensive industries, such as clothing, as companies respond to tight labour market conditions and/or exploit the existence of reserves of

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female labour available for work in but not outside the home residence (Peck, 1996; Hadjimichalis and Vaiou, 1996; Tokatli, 2008). While easing recruitment problems and lowering fixed capital investment costs, in some circumstances homeworking can also exacerbate problems of labour control precisely because of the spatial separation of workers and managers (an issue discussed further below). Alternatively, faced with labour markets in which the desired type of labour is scarce, rather than seek to make changes in situ, companies may choose to change location to secure the desired labour market conditions and continue with their existing system of co-production, practices and methods. The asymmetrical power relationship between capital and labour means that while people of necessity have to sell their labour-power and companies need to acquire it, capital has a greater variety of tactics at its disposal involving changes of location and/or production strategy and technology. Not least, it can seek to resolve problems of securing the quantity and quality of labourpower that it needs by substituting dead for living labour via the mechanisation or automation of all or parts of production processes. As Greenfield (2018, 187, emphasis in original) puts it: one clear motivating factor behind research into automation is the creation of a cheaper and far less fractious labor force – one that never demands overtime, never agitates for higher wages or better benefits, never sues on grounds of discrimination, never files for workers’ compensation, and never complains about the conditions to which it is exposed. There is a long history of capital pursuing such an approach to increased automation as part of its competitive strategies, thereby restructuring the form of co-production by reducing both the quantity and quality of labour-power required at the point of production. During the 1980s, automobile and integrated circuit producers in Japan experimented with heavily automated methods of production in response to labour shortages in ‘full employment’ labour markets (Hudson, 1994a; de Lamarlière, 1991). Fiat followed a similar strategy in the Mezzogiorno, not so much because of absolute labour shortages but rather because of the problems of recruiting workers who could be socialised into the disciplines of flexible high volume automobile production. It subsequently reverted to less automated strategies as labour market conditions became more favourable, problems of recruitment eased and levels of demand for automobiles declined (Conti and Enrietti, 1995). The collective and social character of co-production necessitates assembling workers in specific spaces of work at defined times to allow discipline to be maintained. Whatever the selected form of co-production and form of organisation of the firm, “[e]xerting discipline and control over labour is a perennial problem for employers. Within spaces of production the problem of labour control remains” (Kelly, 2011, 154–155). While home working persists in some activities and places, most wage work occurs in specifically designated workplaces – factories, offices, shops, hospitals and care homes for example – and this allows work to be organised, controlled and disciplined in particular ways,

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depending on the commodity being produced, on how it is being produced and on where it is being produced. Such workplaces provide a system of labour control, surveillance and resistance, allowing the location and movement of employees to be carefully defined and monitored. A ‘frontier of control’ therefore runs through the workplace, around and over which managers and workers negotiate and struggle. Workers strive to maximise their remuneration and control over the labour process and optimise working conditions. Owners and managers endeavour to guarantee the production of sufficient surplus-value via organising the labour process and the working day to their advantage – for example by lengthening the working day, decreasing the porosity of the working day, via intensifying the pace of work within it, or increasing labour productivity via technological innovation.7 More importantly, in a system of co-production, managers must also manage the social relations of production so that workers are imbued with desired attitudes, beliefs and values. In this way they seek to ensure that “authority relations appear at best just, or at least inevitable” (Bowles and Gintis, 1976, 82). However, workers may contest these particular “enabling myths” (Dugger, 2000) and managers may then have to adopt other, non-discursive tactics to secure the frontier of control. There is a range of different models of co-production of material commodities and immaterial services, each requiring labour to work and be disciplined in different ways and posing different challenges to managers seeking to manage the labour process and secure the frontier of control to ensure that it results in the required outputs. Conversely, workers may be organising to re-define that frontier to enhance their position, their wages and terms and conditions of work. While capital has a structural advantage over labour, groups of workers may nonetheless achieve local victories. The outcome of the contest determines whether – and where – profitable coproduction structured through the relationships between the buyers and sellers of labour-power will be successfully carried out. Craftwork, flexible specialisation and skilled labour Craftwork remains important in many parts of the contemporary capitalist economy and requires that workers necessarily have considerable control over the process and pace of work, with extended work time cycles. Crucially, in this form of co-production the knowledge and skills of workers, much of which will have been acquired via the transfer of tacit knowledge in the course of an apprenticeship and on the job in dealing with specific problems, cannot be dis-embodied and transferred to machines. For example, Storper (1993, 443) notes that the labour processes of highly skilled craft workers in the Parisian clothing industry “are not to be rationalised or codified by any outside force, including their employers”. Consequently, the labour process must be controlled via (neo)paternalistic strategies of co-operation and “responsible autonomy” (Friedman, 1977), encouraging workers to identify and ally their interests with those of their company and connect spaces of

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work with life in the community and home. As a result, the trades unions of craft workers typically operate differently to those of unskilled workers.8 While there has been a long-term tendency for capital to replace craft workers and skilled labour by less skilled labour, capturing the knowledge of workers and deskilling work via mechanisation and automation, craftwork and skilled labour nevertheless remain of critical importance (Pollert, 1988), especially in some types of firm (notably, small and medium-sized enterprises (SMEs)), activities, and sectors, not least as ongoing processes of innovation create the need for new skills and forms of craftwork. Furthermore, rather than de-skilling labour, in some circumstances reproducing and utilising skilled labour can be critical to corporate choice as to the form of co-production strategy and the location of production. For example, Kenwood re-located high volume production of mini-disks from Malaysia to Japan and reorganised the production process around its skilled labour force at Yamagata, where the factory had been facing closure because of the ending of production of mobile phones (Nakamoto, 2005). Following a rigorous Just-in-Time (JIT) approach, the labour process was re-organised to minimise unnecessary movement, halving the number of people handling parts before they reached the production line. Everything that a production line worker needed was placed within 75 cm of where they stood, cutting the amount of space needed for production by 70 per cent and so freeing up space for increased production. Crucially, whereas in Malaysia 22 people were needed to produce each mini-disk, in Japan this was cut to 7 – and at a push to 4, with the intention of reducing it even further: “the more people there are, the greater the overall loss of time – so the ideal is for one person to make the entire product” (Kazihoro Sata, Managing Director at Yamagata, cited in Nakamoto, 2005). Quality control takes place while products are being assembled rather than afterwards, the defect rate declined by 72 per cent compared to Malaysia, and inventory – the largest element in overall costs – was reduced from 18 to 3 days. Production costs fell by 10 per cent compared to Malaysia although labour costs were four times higher. Clearly, more productive multi-skilled labour capable of performing a variety of tasks became the key resource around which this new more competitive model of co-production was structured. While the Parisian haute couture industry is one example, more generally the knowledge and skills of craft workers have been emphasised as critical to the success of “flexible specialisation” in mature industries in industrial districts (Storper, 1993, 1995) and also in newer ‘high tech’ industries as technological change creates ‘new’ skills, sometimes specific to particular workers. For example, workers in SMEs performing knowledge-intensive activities in ‘hightech’ industries such as electronics and IT work at self-determined speeds within relatively non-hierarchical managerial structures. Furthermore, ‘creative’ occupations in SMEs producing and transmitting various forms of knowledge have expanded greatly. Professional, managerial and technical staff accounted for some 75 per cent of workers employed in software companies and in new

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semi-conductor firms in the 1980s in the USA (although this partly reflected out-sourcing of fabrication: Sklair, 1990). Consequently, “reflexive” jobs characterised by long job-cycles, ranging from days to weeks (engineers and technicians) to months or years (advertising executives) have grown in number (Lash and Urry, 1994, 57, 99). Such ‘soft capitalism’ (Heelas, 2002) can, however, be a form of co-production that leads to super-exploitation, to people working very long hours (far beyond those to which they are formally contracted), driven by commitment to the company and personal satisfaction from performing their job (Massey et al., 1992). Manufacturing SMEs reliant upon craftwork or deploying flexible specialisation approaches to co-production pursue selective, often spatially specific, recruitment and retention policies. Recruitment is often via personal ties and networks of family and friends: essentially on the basis of ‘who you know’ and ‘where you’re from’ as well as ‘what you know’ or what you can do. Recruiting on this basis can be a very effective approach for employers to link external and internal labour markets in a way that ensures a committed and compliant workforce. Employment of family members and friends depends upon all of them behaving appropriately.9 In emergent ‘high tech’ manufacturing sectors, characterised by burgeoning labour demand and considerable inter-firm contacts because of networked production strategies, ‘know who’ can also be critical in recruitment. In the 1980s in Silicon Valley, for example, almost 80 per cent of engineers leaving companies there moved to a new job with another Silicon Valley company (Angel, 1989). In many occupations requiring highly qualified and skilled labour in the services sector ‘know who’ and reputation are often crucial influences in recruitment and retention strategies. Reputation is critical in the recruitment strategies of companies producing commodities with a high symbolic content (Grabher, 2001, 369). Similarly, in cultural industries ‘know who’ and the resultant inter-personal network relationships are critical to the way in which project teams are assembled (Lash and Urry, 1994, 115).10 These project teams are recruited from an environment that combines a transaction rich network of firms (Storper and Christopherson, 1987) with a transaction rich network of individuals, since many firms are self-employed people. Competitive strategies based upon flexibility or product quality require long-term retention of skilled workers, a particular form of co-production that socialises them into the company’s culture, as their acquired practical knowledge and capabilities become key corporate competitive assets. This can be problematic if key employees choose to leave for a new job with a competitor company (as many did in the 1980s in Silicon Valley), potentially weakening the competitive position of the firm they left.11 While in general company specific skills and knowledge cannot be purchased in the labour market (Penrose, 1957), instances such as this emphasise the significance of retention as well as recruitment strategies in producing an appropriately skilled and compliant workforce.

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From the American System of Manufacture to Taylorism, Fordism and mass production The American System of Manufacture, created in the mid-nineteenth century, was a major organisational and technological innovation enabling parts to be machine processed and assembled “by workers who had not been apprenticed in the craft tradition” (Best, 1990, 32). Subsequently, it evolved into “[m]ass production”, defined as “the American system plus the principle of flow” (ibid., 52) – first introduced in food processing and energy industries where commodities were in, or could be rendered into, liquid form. However, the full implications of this development for organising the labour process remained latent until Taylor’s work on scientific management and the development of Ford’s mass production automobile plant with its mechanised assembly lines. Crucially, Taylorist mass production was subsequently introduced into a much wider range of consumer goods industries. Mass production is a form of co-production based on deeply asymmetrical power relations between managers and workers, with a profound separation of mental from manual work, extreme task specialisation and a deep technical division of labour (Braverman, 1974). Alienated workers typically perform simple, repetitive de-skilled tasks with very short job-task cycles (often defined in seconds). The moving production line delivers materials to them at speeds determined by managerial dictat. Increasing line speeds lead to labour productivity increases while shift systems allow maximum utilisation of machines and accelerate the turnover time of fixed capital. Taylorist mass production therefore requires workers to work in particular ways, with recruitment strategies varying with labour and product market conditions. It is also an approach to co-production that has seen the character of relations between employer and employees alter significantly over time. With the initial introduction of mass production methods in the early part of the twentieth century, paternalistic employers (for example, at Heinz, Campbell’s and Ford) deployed selective recruitment strategies and increased wages, seeing improving the quality of the workforce as the route to enhancing productivity and product quality. Subsequently, and more generally, companies using mass production strategies typically came to seek out spaces characterised by an abundance of labour prepared to accept unskilled or semi-skilled work, enabling them to adopt less selective approaches to recruitment. Since workers required little training for routine deskilled production retention was not an issue and so companies could adopt a more confrontational approach to managing the labour process and pursue aggressive ‘hire-and-fire’ tactics, often with rapid labour turnover. In such circumstances, the overriding concern for workers was often simply to secure waged employment rather than the terms and conditions on which work was offered. While mass production organised in this way initially conferred great competitive advantages, however, in many places it subsequently became more problematic as labour market conditions changed in an era of ‘full employment’. The initial challenges arose from

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increasing resistance by workers to its Taylorist command-and-control culture in ‘full employment’ conditions in industrial centres in the advanced capitalist countries. There was increasing resistance to speed-up and intensification of work, which erupted in numerous disruptive official and unofficial ‘wild-cat’ strikes in the 1960s. Later, further fundamental challenges were posed by the emergence of volatile product market conditions. Despite claims about the demise of mass production, however, it is clear that in many places and branches of manufacturing Taylorism is far dead. Sassen (1991), for example, refers to the growth of “downgraded manufacturing”. Enabled by a combination of political and technological changes, new spaces of production opened up, initially in places on the fringes of the capitalist core territories but increasingly in the Global South, especially in parts of south America and south east Asia, and in central and eastern Europe following the demise of communism there (Hudson, 2016b). The growing size of corporations enabled them to split up production processes, functionally and spatially, while technological changes allowed further de-skilling of jobs. Consequently, companies could locate specific parts of the overall production process in spaces with ‘appropriate’ labour market conditions, and in particular shift de-skilled work to areas characterised by large masses of people with little or no previous experience of working in a factory and prepared to undertake such work and at much lower wage levels than those in established centres of capitalist production. Indeed, re-location often provided labour market conditions that enabled companies to continue to use despotic employment practices akin to “bloody Taylorisation” (Lipietz, 1986). Geographies of Taylorist mass production were thus re-cast at various scales, stretching the social relations of production over successively greater distances (Dicken, 2015; Fröbel et al., 1980; Hudson, 2016b; Massey, 1984; Lipietz, 1987; Yeung and Coe, 2015). Such “spatial fixes” (Harvey, 1982) enable Taylorist manufacturing to be preserved by (temporarily) containing its inherent contradictions within new intra-national and international divisions of labour.12 Major manufacturing multinational corporations (MNCs) in a range of labour-intensive activities thus shifted production to places in which a multitude of people in search of waged work were prepared to work long hours for low (often very low) wages in poor conditions and working environments, frequently endangering their health and well-being or even their lives (for example, see Anning and Chambers, 2016; Brown et al., 2013; Kazmin, 2013; Kazmin et al., 2013: Leroux, 201313). In Bangladesh “many garment manufacturers routinely, and covertly, subcontract work to other factories, which may not fulfil the standards Western buyers insist they require of their own suppliers” (Kazmin et al., 2013), practices that are not limited to Bangladesh. Often production was also sub-contracted to local suppliers employing young women migrants moving from rural to urban areas, ‘green labour’ with no previous experience of factory work, who were paid below the legal minimum wage. In summary, the typically low legal labour market standards were frequently ignored, as illegal working practices and conditions became condoned as a licit part of custom and practice in the workplace as companies and

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factories competed for orders from first-tier suppliers and brand owners. Furthermore, national states were complicit in these breaches; not least via the creation of export processing zones (EPZs) on which even the minimal legal national standards were abolished. Mass production also remains very important in other places and industries such as bulk chemicals and metals in which production involves a continuous flow of products and in other technologically dynamic ‘high tech’ sectors such as computing and electronics in which scale economies are crucial (Delapierre and Zimmerman, 1993, 77–78; Dunford, 1991, 78). In addition, another, sometimes linked, neo-Fordist (Palloix, 1976) response to the problems of labour discipline has been to modify the form of co-production by further increasing automation within mass production factories, substituting dead for living labour at the point of production, for example by increasingly using robots to cut production costs and to alleviate problems of control over the labour process (Aglietta, 1979, 123; Greenfield, 2018). Automation involves further de-skilling people as wage labourers as they become adjuncts and extensions to machines that replace tasks once carried out by people. As such, neo-Fordism can be seen as a further attempt to perfect flow-line principles within mass production (and to extend this into high volume flexible production (HVFP) approaches: see pp. 62–64). In addition to the expanded reproduction of Taylorist practices in manufacturing, Taylorism has been extended into agriculture and mining, activities historically characterised by labour processes of ‘appropriation’ and ‘nurturing nature’,14 forms of co-production which often necessarily cede considerable autonomy to workers. This was perhaps a fortiori the case in underground coal mining in the UK. The separation of workers underground from managers on the surface led the latter to seek – unsuccessfully as it turned out – to re-structure the labour process in deep mines to resemble that of the factory production line (Winterton and Winterton, 1985) and also shift production from deep to surface strip mining and labour processes more amenable to surveillance and control (Beynon et al., 2000, 16–35 and 64–89). Taylorist principles have also been introduced into many routine sales and service sector activities, creating ‘downgraded services’ as work is re-organised to cut costs and tighten managerial control of the labour process. Often this involves re-locating back-office functions to offshore or otherwise peripheral locations to serve a typically widely dispersed customer base. Such work in call and contact centres can be closely monitored by software systems such as Blue Pumpkin: It’s the heart of the call centre. From this we can organise agent shifts, which are usually 7.5 hours long and include 2 paid 15 minute and one unpaid half-hour lunch. If the screen is purple, it’s good but if it’s red it means agents aren’t doing what they’re supposed to be doing … We have a thing called schedule adherence, which is set at 93%. We expect agents to be doing what they should be doing 93% of the time. … With this we can tell if people are mucking about or not. (Paul Titheradge, ClientLogic, quoted in Santhanam, 2005)

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There are limits to this approach, however. While capital can successfully introduce such methods of working for routine data processing, they are much more problematic in co-produced activities such as ‘frontline’ services in which interaction with consumers is required (and this is discussed further on pp. 65–66). High volume flexible production strategies Capitalist firms deploy HVFP strategies in an attempt to devise forms of co-production that combine the positive aspects of both mass and craft production while avoiding the problems of both. They require workers to work in very different ways to Taylorist mass production, though often in factories in which there is heavy fixed capital investment and substantial though selective deployment of automation. While developed in the automobile industry, HVFP has subsequently diffused, often in hybrid form, to other consumer goods industries (for example, personal computers) and to parts of continuous flow industries (such as chemicals and steel). In general, these HFVP strategies involve (relatively) small batch production but at its limit HVFP produces mass customised commodities, unique products manufactured from mass produced components and parts (Pine, 1993). As early as the 1980s, “no two cars built on the same day at the Volkswagen plant in Wolfsburg were completely identical” (Streeck, 2017, 99). By the mid-1990s, Dell had introduced its system of producing personal computers individually customised to order. Utilising the internet and its website – www.dell.com – and telephone sales for the direct purchase of PCs, customers could configure their computer online, and then send the order to a manufacturing plant, where the machine would be assembled and shipped within hours of receipt of the order. Within half an hour of customers confirming their order, the required parts were identified and sent to the factory floor. Manufacturing and logistics costs were halved between 2002 and 2005, a result of scale economies and by shaving crucial minutes off the production process, so that by 2005 the assembly time for a PC was four minutes, with a further 45 minutes to download software and the operating system (Morrison and Roberts, 2005). Mass customisation of such commodities requires modular production of goods and services, together with a modular architecture that defines how to link modules together and an environmental architecture that enables a company to match what it can produce with what a customer wants, thereby reducing ‘customer sacrifice’, the gap between what the customer really wants and what they’ll settle for. However, potential customers can be overwhelmed by the possible number of combinations of modules and while design tools such as ARAMARK’s Resource Center Software and GNC’s Custom Vita-Pak can help them manage this, they do so at the risk that this “gets in the way of customers determining exactly what they want” (Pine and Gilmore, 1999, 74). Levi Strauss developed an alternative approach to mass customisation in 1994, installing computerised measuring systems in retail stores, electronically transferring customer orders to clothing factories, laser-cutting and bar-coding the pieces, stitching them on a regular assembly line and finally mailing the finished products directly to customers’ addresses (Yeung et al., 2010).

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A pre-condition for such flexibility in customised co-production is a particular pattern of work organisation and labour relations: annualised contracts, with people required to agree to work as needed, 24/7/365. However, while mass customisation is often represented as a radical departure in terms of production organisation, many specialised and sophisticated complex products have always been customised and produced to order (Vaughan, 1996; see also endnote 14). For example, major items of capital equipment (power stations, generators) and complex means of transport (large jet airliners and ships) have been built to order rather than mass produced. Often this has involved workforces recruited as required for each contract and organised in particular ways depending on the characteristics of the required commodity. Similarly, in the specialised machinery market, customisation has long been regarded as a practical necessity for commercial success as, “by definition, each application of a given technology will be to some extent uniquely adapted to the user’s specific needs” (Gertler and DiGiovanna, 1997, 1588). It is clear that small batch production and production to order pre-date the emergence of both systems of HVFP and “post-Fordism” (Lash and Urry, 1994, 94). Similarly, while much of the literature on forms of HVFP focuses on manufacturing it is also the case that at least some services such as tourism are characterised by moves to forms of HVFP. Shaw and Williams (2003, 133) refer to the “McDonaldization of tourism consumption characterized by a form of mass customization, presenting to tourists flexible products, based on efficient and calculable holidays”. Because HVFP in manufacturing typically incorporates principles of JIT and ‘lean’ production, predicated on minimal stock levels, for this approach to co-production to be successful companies require labour market conditions that allow them carefully to select individual workers and organisations to represent them. They require specific forms of non-adversarial, compliant, company-oriented trades’ unionism or company consultative councils rather than adversarial unions. Workers are rigorously selected, often using extensive psychological and physical dexterity tests, to ensure trouble-free and error-free production. Companies seek young, physically fit, workers who eschew disruptive industrial action. In services activities that involve face-to-face interaction with customers as integral to co-produced service delivery considerable attention may also be given to the appearance and/or communication and social skills of potential employees. The precise form of recruitment, retention and labour control strategies depends upon labour market conditions. For example, in tight labour markets, such as those of Japan from the 1950s to 1990s, promises of ‘jobs for life’ for core workers, perhaps conditional on the possibility of re-deployment within the firm, were pivotal. Such an approach later became increasingly problematic, however, as competitive pressures intensified. This was highlighted in 1999 when Nissan announced a major redundancy programme from its Japanese factories. In labour markets characterised by high unemployment, companies (often the same companies) can be much more selective in their recruitment criteria and strategies, actively seeking out ‘green labour’, and in their retention

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strategies (Fucini and Fucini, 1990; Hudson, 1994a, 1995a). For example, Mazda had over 96,000 applications for 3,500 jobs when it opened its first plant in the USA. Nissan received over 10,000 applications in the mid-1980s when it advertised for an initial 240 production workers for its new factory on the fringes of Sunderland and Washington New Town in north east England. A few years later it advertised for a further 600 workers there and within six weeks had 33,000 applications. HVFP requires management of the labour process in the workplace through employee commitment to the company and involvement in the job via Human Resource Management (HRM), Total Quality Management (TQM) and Business Process Re-engineering (BPR) practices (Wills, 1988, 15–16). TQM seeks to produce a series of small-scale continuous improvements in productivity and work practices while BPR seeks to achieve larger-scale and discontinuous re-design of processes (Pine and Gilmore, 1999, 148). In some ways the management of the labour process in HVFP has similarities with earlier responsible autonomy strategies of labour control (Friedman, 1977). There is a discursive emphasis on quality enhancement, problem solving rather than machine minding, and longer job-task cycle times, built around (sometimes conflicting) themes such as flexibility, responsibility, self-development, job enrichment, training, security of employment, performance-related pay schemes, teamwork and improving the commitment and trust of a more valued workforce. Represented in this way, HVFP can be seen as an approach to coproduction offering more varied work, rather than the serial repetition of Taylorist mass production. However, companies deploying HVFP strategies require great flexibility in allocating workers’ time on the line, considerable use of multi-tasking, increased flexibility in the scheduling of overtime, and reorganisation of shifts to ensure that factories and machines produce goods for the maximum time possible within regulatory limits.15 In automobile assembly plants, for example, HVFP typically involves substantial fixed capital investment in robots for welding and assembling vehicle bodies and automation of the paint shop, with pressures to minimise the turnover time of this substantial fixed capital investment. Consequently, the intensive pace of work leads to stress and physical injuries, such as repetitive strains (Leslie and Butz, 1998). Moreover, relative autonomy for workers at the point of production is contingent upon accepting stringent productivity and quality targets and systems of managerial control. Requiring production line workers to perform their own maintenance work creates a different form of co-production that erodes the distinction between craft and assembly line work. Enhanced managerial control over the labour process requires detailed information about individual workers’ performance. As such, it is “important to counterpose the contemporary business rhetoric and practice of targets, ranking and assessment” with the “new management ideals” of HRM (McDowell, 2001, 237). Furthermore, defining internal workplace social relations around customer-supplier relations (Yates, 1998, 127–137) creates a system of labour control that individualises work norms and remuneration systems

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within a culture of teamwork and competitiveness. Replacing direct supervision with peer pressure as a regulatory mechanism helps re-define workers’ identities and fracture their sense of solidarity (Hudson, 1994a). Companies intensify the pace of work by new, subtle methods of control, exploitation and surveillance, increasing psychological stress on workers (Okamura and Kawahito, 1990), leading to increases in mental ill-health and in some circumstances leading to increased numbers of suicides (Betts, 2007a; Hille, 2010), while cutting workforces and the turnover time of fixed capital. As such, HVFP represents a form of co-production that is a logical and historical extension of the principles of mass production. Performativity and work in services A range of consumer services including retailing, health and the caring services and professions, and tourism and travel require a variety of different types of embodiment and embodied performance which necessitate particular recruitment and labour management strategies. Such co-produced service work has a performative component in which workers are required to assume a particular role or personality and “have to perform and respond to the emotional needs and expectations of clients, as well as to the requirements of managers …” (Shaw and Williams, 2003, 65). This performance can occur in both face-toface encounters (for example, involving fast food workers reading from the scripts given to them) and technologically mediated situations (for example, Indian call and contact centres workers taking on English names as part of the scripted encounter with distant customers). Even in situations in which contact is remote, as with call and contact centre activities, a co-produced performance that simply involves operatives reading from a pre-given script without a necessary degree of cultural awareness, emotional intelligence and linguistic competence has proved inadequate. Furthermore, call centre operatives pretending to be ‘other’ people from different cultures can lead to stress and problems of identity and mental health for them (Overell, 2005). Working in remote call centres brings together two competing logics – cost saving through standardised, routine highvolume work combined with a personalised customer performance. As a result, this can create tensions. As Coyle (2010, 291) puts it, discussing the reasons why a major UK MNC repatriated its call centre operations from India back to Newcastle upon Tyne in north east England, “[d]eeply embedded in the call centre labour process are taken for granted knowledge and skills that only become apparent when lifted out of the ‘local’ social relations that produced them”. In other cases the service provided is more visibly co-produced, to varying degrees based on face-to-face interactions between customer and employee in which the service providers sell part of themselves as part of the service through their embodied and emotional attributes. These embodied attributes of the provider affect both the propensity to consume and the nature of the interaction: for example, discussion as to the choice of a burger in a fast food outlet with a sales assistant reading from a script, the serving of a meal in a restaurant by a knowledgeable

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waiter, discussion as to the choice of wine with an experienced sommelier, discussion with a sales assistant tuned in to the latest fashions when buying clothing, or the provision of personal care by an empathic carer in situations in which care has become commodified. These encounters vary in both their intensity and sophistication, in large part because of the differing levels of experience and expertise of those providing the co-produced service. Because the service is used up in the exchange, it has to be constantly reproduced and resold and customers have to be seduced into desiring the products on a repeat basis (McDowell, 2014, 8). This has implications for both product advertising16 and labour recruitment strategies and for who is chosen to perform such work, depending upon attributes such as age, ethnicity, gender, and bodily appearance: in short, the embodiment of certain characteristics of the person. Such bodily requirements become one basis for labour market segmentation in terms of who get what sort of jobs in these co-produced activities.17 As McDowell (2008, 22) emphasises, “the characteristics of docility, deference and a neat embodied performance that are valued by employers of labour at the bottom end of the service sector are most closely mapped onto the socially constructed attributes of femininity”. The significance of embodied performance can be seen in tourism in the work of airline stewards, beach attendants, and receptionists in hotels, among others (Shaw and Williams, 2003, 89). Employers have expectations as to the appearance of these employees in terms of gender, age, and clothing for example and also as to how they should act and sound in terms of their bodily movements and voices. This performance adds to the tourist encounter because it forms part of the expectation of many customers; indeed, many tourists may be prepared to contribute enthusiastically to the overall performance.18 Similar processes can also be seen in the context of themed restaurants (Crang, 1994). Customers expect certain performances from waiters and waitresses, and in turn contribute to these performances. Crang (1997) furthermore argues that tourism products are experiential, interactional (involving employees and tourists) and involve the “temporal co-presence of producers and consumers in tourist production processes” Moreover, “tourism employees are not just actors on a stage, they have to act out that stage” (Crang, 1997, 139 and 147).19 However, there are also institutional and material limits that circumscribe the scope for performance as tourist and leisure experiences “are controlled by a range of management systems and in a range of settings” (Shaw and Williams, 2003, 154).

3.4 “Soft capitalism”: new ways of co-producing, new forms of labour regulation The more celebratory accounts of working within systems of HVFP emphasise the sense of satisfaction that comes from doing a job well, contrasting this with the alienating effects of Taylorist mass production, and allegedly re-engaging workers creatively with the production process. This sense of satisfaction is also

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an important attribute of craftwork, helping confer and create personal identity for those performing it. This emphasis upon personal satisfaction from and development through new forms of co-production and work organisation has been further elaborated within discourses of “soft capitalism”, with a particular focus on securing emotional buy-in from workers to the strategies of the firm (Stern, 2007). Work continues to have a strongly utilitarian aspect (unavoidably, as goods and services that result from it must be sold) but it is claimed that there is more to work than just this. Soft capitalism is “about culture, knowledge and creativity; about identity, about values, beliefs and assumptions” (Heelas, 2002, 82), exploring “cultural expertise concerning the psychological realm of life” and developing it for commercial and competitive advantage. This leads to a specific work ethic and self-regulation at work. Echoing Foucauldian emphases on the production of subjectivities, work is seen as providing “the opportunity to ‘work’ on oneself; to grow; to learn; to become more effective as a person”. By working on oneself through work (in particular via training and supervision) one becomes a more efficient producer. But motivation to work is also – crucially – enhanced by virtue of the fact that personal development is involved. Work is meaningful because (among other things) it provides opportunities for “inner” or psychological identity exploration and cultivation. Thus “work really matters, or matters most, when it caters for what it is to be alive. Without the training, without the opportunity to be, explore and develop oneself, work is deemed to be unsatisfactory” (Heelas, 2002, 93, emphases in original). Indeed, in such celebratory accounts, at the limits of soft capitalism work apparently acquires a spiritual dimension: one is working on oneself to experience that spirituality which is integral to one’s very nature or essence. The workplace is valued … as a vehicle to the end of self-sacralisation. And inner spirituality can then be put to work to enhance work productivity. (ibid., 89) Clearly, however, despite the references to self-improvement, spirituality and the sacred, in the context of capitalist relations of co-production issues of productivity and surplus-value production are never far from the surface in such discourses. Even so, the extent to which such a work ethic, centred on “life values” and a “life ethic”, is generalisable within the constraints of capitalist relations of co-production is, at best, debatable. For work “is increasingly insecure and stressful, for managers as much as any other group and … the encouragement of personal commitment is little more than rhetoric for a small proportion of managers” (Warde, 2002, 189). As Sayer (2007) has noted in a

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review of Thrift’s Knowing Capitalism, accounts of ‘soft capitalism’ are devoid of people other than a small cadre of senior managers and consultants. This selectivity is revealing, indicative of the limits to such an approach. While work for some consultants and a small cadre of managers may become “meaningful”, it is difficult to see how much routine work could be so transformed. Indeed, the expansion of Taylorisation into new spheres, often in novel and intensified forms, suggests that much work has become less, rather than more, meaningful for those performing it. There are, however, also questions as to the regulation of work within the parameters of “soft capitalism” as a form of co-production of commodities, as this lays great weight upon personal self-discipline (issues of responsible autonomy, team working and so on) as well as personal development. The practices of self-discipline and regulation of the self may enhance (self) exploitation and surplus-value production rather than spirituality, benefiting capital rather than labour since the most positive and effective disciplining of individuals is achieved through the practices of freedom (Rose, 1999). For capital to be able to hand over the management of labour to people for whom such self-management is increasingly understood as constituting “pleasure in work”, and the development of the self, is to achieve unprecedented and sophisticated levels of regulation of labour and the labour process (Donzelot, 1991), a radical change in the character of co-production. As such, the practices of soft capitalism take processes of self-regulation of work to new heights, suggesting that for labour at least these would be better characterised as “hard” not “soft” capitalism.

3.5 Beyond flexibility: cyberspace, the internet and new forms of co-production and labour control The possibilities offered by the internet are allowing companies to devise new forms of commodity co-production and radical new forms of labour control in circumstances in which people are prepared to accept working in ways that echo the early phases of industrial capitalism but on the basis of the latest innovations in ICTs. This has been particularly the case in the software industry, in which “body shopping” – obtaining software production contracts from distant clients, then hiring local contract workforces to fulfil them – became commonplace. As Ettlinger (2014, 89) has put it, however, flexibility is now being superseded by the ‘open business model’. Seen from the perspective of capital, [t]he “openness” paradigm promises to combine new production systems, made possible by the technologies of web 2.0 and a shrunken space of globalization, with novel forms of business organization and value extraction; it offers a powerful weapon to inter-firm competition and a new regime of labour control.

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Moreover, this is a new regime of labour control which is integral to a new form of co-production, one that combines the possibilities of new technologies and new spaces of work in innovative ways and that disempowers workers as work becomes precarious in the extreme. Crowdsourcing provides a powerful illustrative example of how the deployment of new ICTs enables new forms of control of the labour process via the creation of what Huws (2003, 2014) refers to as the “cybertariat” engaged in “digital Taylorism”, mainly female workers scattered around the globe whose ways of working have been radically altered as a result of changes in IT and word processing technologies. New digital platforms have allowed powerful MNCs to extend their outsourcing strategies into the homes of individual workers located around the world in what “amounts to a reincarnation of the putting-out system” (Beynon, 2015, 319), a world of very precarious work in which people are therefore willing to work for very little. Well-known examples of this so-called “crowdwork”, which from the point of view of capital offers an inexpensive, increasingly global, zero-hours contract system, include CrowdFlower, Clickworker and CloudCrowd. For example: “Labor-on-Demand”. Get work done by over 500,000 workers in more than 70 countries. CrowdFlower’s Labor-on-Demand solution offers a cost-conscious and elastic workforce that gives companies immediate high-quality work. CrowdFlower customers complete massive volumes of simple jobs quickly, with none of the lead time and overheads associated with traditional hiring and outsourcing. (Cited in Beynon, 2015, 319) But it is perhaps Amazon, through its Mechanical Turk operation, that has pushed the boundaries furthest. Mechanical Turk has its own mystificatory language in which the employers are called ’Requesters’; the jobs ‘Human Intelligence Tasks’ or ‘HITs’; and the workers ‘Providers’ or ‘Turkers’. In reality, the way in which work is organised through Mechanical Turk involves workers performing parcels of work delineated by employers (or by computer programmes triggered to put out work on behalf of employers) for which they are paid by the piece and for which they bid on Amazon’s platform, Amazon charging the employer a 10 per cent commission. Amazon’s Mechanical Turk website promises an “on-demand and flexible workforce in the Cloud” and the ability “to access thousands of high-quality, low-cost, global on-demand workers … . The work takes the form of micro-tasks … which computers cannot do or cannot do as well as humans” (Beynon, 2015, 319). This makes clear that there are limits to what can be profitably delegated to machines while machines play a key role in the allocation of tasks and the organisation of the labour process in this new form of co-production. As such, this requires workers to accept a labour control regime that visibly subordinates people to machines in the pursuit of profit.

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But this is not just routine data entry and routine office work within the production of services. Such approaches are also extending into R&D. For example, in software development and engineering, innovative jobs [are] at the very centre of the creative revolution in work brought about by IT … In the area of mobile applications, Apple and Google, the market leaders, have through crowd sourcing been able to outsource this development activity, harnessing the creativity of individual developers (occupying a position between casual employees and entrepreneur [with] a home-based working life) around the world. (Beynon, 2015, 32020) As a result the boundaries between home and workplace are blurred while work remains uncertain and precarious.

3.6 Projects, virtual firms: new ways of working, new spaces of production There has been growing emphasis on projects and temporary project teams as a new organisational model, a new form of co-production especially prevalent within flexibly networked firms and in particular sectors of the economy. Major corporations are “internally decentralised as networks [which] connect themselves as specific business projects, and switch to other networks as soon as the project is finished” (Castells, 2000, 10). Projects constitute “temporary social systems” of co-production in which people with diverse professional and organisational backgrounds and skills work together to accomplish a complex task, insulated from the day-to-day routine activities and organisational routines of the firm: “[t]he arch-typical action unit becomes the multi-skilled, multi-knowledgeable and temporary project team” (Hagstrom and Hedlund, 1998, 180). Such temporary project structures can also extend across firm boundaries, with time-limited “virtual firms” created to undertake discrete tasks: “major corporations work in a series of changing alliances and partnerships, specific to a given product, process, time and space …” (Castells, 2000, 10).21 Such fluid organisational forms exclude the vast majority of wage workers who lack the requisite technical and social skills needed for working in this way. As collaborations between diversely skilled people, projects provide “trading zones” between different business models, identities and philosophies (Grabher, 2001, 361). As such, projects and “virtual firms” may constitute an approach to co-production that simultaneously contains and combines different extant approaches to production, creating (temporary) hybrid forms and social relationships among those engaged in them. Moreover, their emergence may signal a significant change in corporate organisation. Assembling members of existing companies into teams to execute specific tasks is effectively a process of mass customisation of the enterprise, based on the ability routinely to form

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virtual companies, and requiring those employed to accept this way of working. This new, project-based organisational form renders the boundaries of the firm, in the conventional sense, virtually irrelevant. The key element in the organisation of production becomes the networks of linkages within and across these boundaries. Moreover, as well as crossing corporate boundaries, they are increasingly stretched over space. For example, as Grabher (2002, 258) demonstrates, “projects in the advertising industry increasingly are embedded in the context of international networks and global communication groups which, in a more general sense, also exemplify the role of permanent organizations in temporary project settings”. On the other hand, then, the emergence of project-based teams also presumes that firms are identifiable legal and social entities, possessing defined boundaries and a degree of permanence and coherence, able to form contracts and co-operate on the basis of mutual interest and trust. As such, people can identify with them. However, the formation of “virtual firms” or “project-based teams”, like any other form of capitalist co-production, cannot escape underlying contradictions in the social relations of capital. The socialisation of knowledge production makes it hard to distinguish legally between the IP of different firms. This reinforces a tendency for network economies to be captured by the network and, in turn, for new forms of enterprise to emerge, “virtual firms” that are able to capture such economies without destroying the broader network that generates them. Some companies already approximate such virtual enterprises (Pine, 1993, 258–263). However, unless the virtual firm becomes co-extensive with all those involved in production, the contradiction [between the increasing socialisation of the productive forces and the private control of the social relations of production] is still reproduced on the side of the social relations of production. For whereas every capital wants free access to information, knowledge and expertise, it also wants to charge for the information, knowledge and expertise that it itself can supply. (Jessop, 2000, 5) This is a salutary reminder that while variation in organisational form is important, so too are the structural parameters of a capitalist economy.

3.7 Looking forward to a glimpse of the future? As capitalist economies have developed increasingly complex and differentiated socio-spatial divisions of labour, companies have come to adopt varying strategies for labour recruitment and management of the labour process in a variety of approaches to co-production. Rather than one approach replacing another, however, these approaches have come to co-exist and relate to one another. This has resulted in a complex landscape of forms of co-production involving a variety of relations between capital and labour necessarily coming together as the former pursues the production of profits while the latter seeks waged employment as a pre-condition for day-to-day living and in many cases survival.

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There are, however, claims that the landscapes of capitalism and relations between capital and labour could be radically re-defined as a result of what is referred to as the emerging Fourth Industrial Revolution, based on ‘smart’ products and machines communicating directly or remotely through the cloud, leading to significant productivity increases (Cooper, 2014) and a qualitative increase in the extent to which many jobs now performed by people could be replaced by automated processes. Automation is of course not new but the scale and extent of automation in the economy could expand dramatically. This fourth revolution, it is claimed, is being driven by a series of technologies that are rapidly increasing both the physical and cognitive capacity of machines: in short, first brawn and the replacement of manual labour and now brain and the replacement of knowledge-based mental labour. These technologies include digitalisation, robotics and artificial intelligence (Greenfield, 2018). As in the past, the creation of new technologies will involve the creation of new skills and jobs but also the destruction of others on a much larger scale, although this will be an uneven process, sectorally and spatially (for example, see Leigh and Kraft, 2018). The emergent automating technologies are capable of performing an increasingly wide range of tasks that were once the sole preserve of people working for a wage. For example, it has been estimated by the Institute for Public Policy and Research (IPPR) that up to a third of the total number of waged jobs in the UK are potentially fully automatable in the next two decades while the Bank of England suggests that half of the total jobs face a medium to high risk of being automated (Lawrence et al., 2017) and allegedly workers in the USA earning $20 per hour or less have an 83 per cent chance of losing their job as a result of automation (Greenfield, 2018, 184).The potential technical feasibility of automating technologies to replace and redesign jobs in various sectors and occupations is clearly considerable but the pace, extent, and distributional effects of automation will be shaped not just by technical possibilities but by economic, political and social processes that, inter alia, will re-shape relations between capital and labour. Moreover, the extent to which automation develops will vary sectorally and spatially, with production potentially becoming both more mobile and more localised, as companies evaluate the competitive advantages of automation as compared to searching for cheaper sources of wage labour in commodity co-production. As a result, relations between capital and labour will be re-structured, potentially dramatically, in labour markets defined at multiple spatial scales, as will the landscapes of uneven and combined development.

Notes 1 As discussed in the previous chapter, national states are also typically significant employers of waged labour. While such labour is indirectly supportive of the production of surplus-value, it does not produce surplus-value directly. 2 As noted in Chapter 2, some forms of capitalist state either ban trades unions or only permit unions that are de facto state controlled and from the point of view of workers, ineffective. Examples of the latter include contemporary China and Italy and Spain in their Fascist periods in the last century.

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3 While for reasons of presentation I distinguish between the organisation of management and the organisation of work by managers at the point of production or service delivery, this dichotomy fails to capture the complexity of work organisation and labour process control. Not least, within the categories of ‘manager’ and ‘worker’ there are important variations in power, autonomy and control. 4 Relationships are further complicated at the margin in companies in which employees are also share-holders. In the UK, for example, there are about 300 such companies, the best-known of which is the John Lewis Partnership, a major retailing department store. 5 The changing role of knowledge in the production process, its relationship to innovations in ICTs, and relationships with customers as a source of knowledge are discussed more fully in subsequent chapters. 6 There is a fuller discussion of knowledge production in Chapter 4 and of the significance of strategic alliances in Chapter 5. 7 In value theoretic terms, surplus-value production can be enhanced by either increasing absolute or relative surplus-value. 8 Trades unions and their approaches are further discussed in Chapter 6. 9 In north east England, craft workers in industries such as engineering and shipbuilding producing complex commodities moved routinely between jobs and firms on a more-or-less uninterrupted series of contracts, with jobs allocated via informal contact networks based in working men’s clubs, pubs and trades union offices (Hudson, 1989). More recently such practices became transposed into newer industries such as offshore construction (Cumbers, 1990). Being seen as a ‘good’ worker was a critical pre-condition for recruitment. 10 Project working and its socio-spatial organisation is discussed further later in this chapter. 11 Although the risks posed by such transfers of embodied knowledge can to a degree be mediated by developments in technology, as noted in Chapter 4. 12 There is a much fuller discussion of these globalised production chains and networks and collaborative forms of co-production in Chapters 4 and 5. 13 According to Leroux, for example, 57 per cent of clothing factories in Bangladesh were breach of fire regulations, as were 54 per cent of those in Pakistan 42 per cent of those in India and 40 per cent of those in China. 14 These issues and the different approaches to co-production that they entail are discussed further in Chapter 8. 15 The introduction of HVFP also has implications for the organisation of work beyond the immediate point of production, in retailing establishments and distribution points. Some of these are discussed in Chapter 7. 16 Advertising and the strategies that companies use to sell commodities are discussed in Chapter 7. 17 An issue discussed further in Chapter 6. 18 Although such co-production may involve mundane activities; witness for example airline passengers helping clear up their own rubbish on low-cost airline flights between the UK and various holiday destinations in southern Europe. 19 The emergence of the experience economy and its requirements and implications are discussed further in Chapter 7. 20 These issues of changing processes of knowledge production and innovation are discussed more fully in Chapter 4. 21 Collaboration among firms via strategic alliances and other forms of partnership for a range of reasons is discussed further in Chapter 5.

4

Competition among co-producing firms Varying forms of competitive strategy

4.1 Introduction While there is considerable evidence that many owners of SMEs do not want their firms to expand, more generally there is a tendency for individual companies to expand the scale of their operations, restructure forms of co-production within the firm, and drive the dynamic of capital accumulation and systemic expansion. The ways in which the firms that constitute capitalist economies organise relations of co-production cannot avoid the need to compete and produce profits. This is because such firms are driven by a structural market imperative that forces them to compete with one another to prosper and survive (Meiksins Wood, 2017). This is not a matter of choice: they must compete to enhance the mass and/or rate of surplus-value and increase profits. Failure to do so runs the risk of bankruptcy, the demise of the firm and the loss of whatever capital it represents. There are many dimensions on and ways in which capitalists and capitalist enterprises compete with one another. At one level, these can be thought of in Schumpeterian terms as qualitatively different strategies of either adaptive ‘weak’ or creative ‘strong’ competition: in the former, firms accept the conditions and parameters of extant forms of co-production and markets as they find them and compete within their boundaries by reducing costs below those of their competitors; in the latter, via a process of creative destruction, they seek to disturb existing market conditions and parameters, to change them via radical product and/or process innovations that revolutionise the form of co-production and redefine markets to their competitive advantage, increasing their market share as their competitors fail and become bankrupt (Schumpeter, 1961). These distinctions are, however, analytic, with abundant evidence that in practice companies simultaneously deploy both types of strategy (Sabel and Zeitlin, 1997). More recently it has been suggested that in the neo-liberal era new forms of “disruptive innovation” have developed: “more ruthless, out-of-the blue and less willing to take prisoners or accept delay in order to become ‘socially compatible’” (Streeck, 2017, 39). This is exemplified by the emergence of (so-called) platform firms such as Alibaba, Airbnb, Amazon and Uber, with the radical changes in relations between capital and labour in new forms of co-production predicated on degraded terms and conditions of employment at the heart of their competitive strategies.

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The way in which firms compete in specific product markets is influenced by the particular model of production that they choose to use and the forms of co-production, collaboration and competition between capital and labour within the firm that this involves. However, while firms are driven by a structural imperative to compete, in certain circumstances and seemingly paradoxically, it becomes rational – in the sense of furthering their own economic self-interest – for capitals to collaborate and co-produce with some so as to enhance their competitiveness with others. Just as there are many ways in which capitalist firms can compete, so too are there many ways in which they can co-operate, collaborate and co-produce as part of competitive strategies. Furthermore, the same behaviours – such as acquisition and mergers – can take on different meanings, in some circumstances becoming elements in competitive strategies, in others elements of collaborative approaches (and these various aspects of collaboration are the subject of the next chapter).

4.2 Strategies and forms of competition 4.2.1 Competition within existing socio-technical paradigms These forms of competition are seen as ‘weak’ because they revolve around companies seeking reductions in production costs within the parameters of an existing socio-technological paradigm, within which all firms producing a particular product operate. As such, the success of these strategies continues to depend – as it always has done – upon the effectiveness of a firm’s capacity to search for and acquire relevant information as to the costs of various inputs, the existence of possible new markets or the regulatory conditions and restrictions that apply in different jurisdictions. Firms vary in the effectiveness of their search strategies. Information can be obtained from a variety of sources and media, including research commissioned on specific issues and places, advertisements from other firms, trade journals and from various private sector and state agencies. Companies can search for information on cheaper sources of labour, which may lead to recruitment in situ or to relocation; on cheaper sources of inputs of raw materials or of manufactured components and materials, possibly leading to changing sourcing strategies; on potential new markets that might allow them to increase their scale of production and lower unit costs via economies of scale; or on locations in which the regulatory costs of production are lower. Typically, the search for lower cost sites has involved switching production to more peripheral locations within the capitalist economy, extending the scope and space of capitalist relations of production and of that economy as capital scours the globe in search of locations in which it can co-produce profitably. Cost and price are clearly central to this mode of competing and the success of the underpinning form of co-production within the firm. The determination of prices depends, in part, on the character of commodities, the structure of

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markets and the links between customers and suppliers (Leborgne and Lipietz, 1988, 1991). Price competition coordinates connections between buyers and sellers via arms-length market transactions, market-regulated supply relationships that are relatively distant and non-interventionist: customers search for products that meet their requirements at the lowest price or they specify the required technical and performance criteria and suppliers then bid for orders. If prices are fixed by competition in the market, then the emphasis falls upon suppliers reducing their costs in order to gain a competitive advantage and ensure profitability. Price competition is typically the strategy chosen in markets for mature mass-produced products in which there is little other than price to distinguish the products of a given quality of one company from those of another. It is typically the strategy adopted for supplying relatively simple components and parts that embody little specific knowledge but which will become part of more complex commodities such as automobiles or computers and for relatively simple commodities produced via labour intensive processes for final consumption (for example, items of everyday clothing and footwear for mass markets: Crewe and Davenport, 1992). Few commodities are totally insensitive to price differences, however, and companies are engaged in an on-going search to cut costs and reduce prices. For example, major automobile producers have sought to lower costs and prices by sharing components between different models and brands (Mackintosh, 2005). The success of Dell in the market for PCs reflected the fact that “Dell has established a way of doing business that has given it a price edge no rival can easily match” (Morrison and Roberts, 2005). Competition via price typically has a distinct spatial and/or temporal dimension. In financial services, competition through time can be decisive. For example, high-frequency algorithmic trading companies have gone to great lengths, and are prepared to incur great costs, to gain first mover advantage by reducing the spatio-temporal distance by a few milliseconds between their servers and an exchange’s matching engine (for example, on the New York Stock Exchange) where orders to buy and sell are put together. The technology allows thousands of orders to be sent and a match found, “all in less than 300 micro-seconds – 1,000 times faster than the blink of a human eye” as traders seek to profit from fleeting opportunities presented by minute price changes in markets (Grant and Mackenzie, 2010). Speed matters in the market: “Two hundred fifty milliseconds are hardly noticeable while talking, but it’s long enough for a crowd to get ahead of you in the market” (Leinweber, 2009, 72, cited in Lenglet, 2011). Algorithms are software codes that code practices in an IT significant ‘textual’ device, designed to replicate trading patterns. While produced as commodities, to be accepted, they need to comply with regulatory texts, the codes of conduct that code accepted practices in the markets. The trading strategies of algorithmic trading companies rely on computerised quantitative models that identify which type of financial instrument to buy or sell (for example, stocks, options or futures) as well as the quantity, price, location and timing of the trades. Not only are they used in order to ‘find’ prices and match buy-and-sell

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orders, thereby materialising exchanges, but now they are also able to ‘decide’ when and how to send orders without direct human intervention; thus algorithms help shape and co-produce markets. As a text, the algorithm is a definitional device that makes the financial world different each time it ‘decides’ to fire an order into the market (Lenglet, 2011, 47). The intention of companies and traders in deploying algorithms in trading is to gain a competitive advantage by reducing the latency – the delay in placing, confirming or cancelling an order – in the hope that this will ensure that their trade is the first to be executed (Clark, 2010; although see Arnoldi, 2016). This compression of time both changes the market and – if the trade is successful – creates substantial competitive advantage for the successful trader, in the process dramatically reshaping the socio-spatial structure of global finance (Lewis, 2014). Algorithmic trading, a novel form of co-production combining people and machines, grew in the USA from about 30 per cent of the total volume of equity market trades in 2005 to about 70 per cent in 2009, with these transactions initiated by just 2 per cent of the 20,000 trading firms in the USA, firms that made profits of $21 billion in 2008 (Clark, 2010). However, the growth of algorithmic trading and the search to replicate the spaceless world of instantaneous adjustment of orthodox economic theory raises regulatory issues since “[w]hen time and space are reduced to dimensions in which it is materially impossible to (inter)act, then the regulation of actions may be problematic” (Lenglet, 2011, 62). In other sectors of the economy, in manufacturing and other services, firms use their knowledge – always imperfect and partial as the costs of acquiring information must always be set against the perceived competitive advantage of so doing – of the location of cheaper inputs, notably cheaper and more malleable labour, to seek ‘spatial fixes’ via re-locating to preserve existing forms of co-production within the firm and enhance or preserve competitiveness, both intra-nationally (Lipietz, 1980; Massey, 1984) and internationally (Fröbel et al., 1980; Lipietz, 1987). As Padmanabhan (2012, 972) has put it, when competition becomes the driving force, one response to price competition among producers is to reduce wages in a “race to the bottom”. This is an on-going race: for example, while not so long ago China was the destination for companies seeking cheap labour for low-cost manufacturing, as labour costs there have risen they have re-located to countries such as Bangladesh, Mexico, Thailand and Vietnam (Pilling, 2013). However, the relevant issue is not the absolute cost of labour but rather the cost of labour per unit output so that issues of productivity and the flexibility, malleability and quality of labour as well as wage rates enter into the cost equation as the most cost-effective location may not be that in which wage rates are the lowest (for example, see Nakamoto, 2005 and Chapter 5). Companies may openly seek to play off factories or other facilities such as back offices in different locations within the firm against one another as they seek to enhance competitiveness by cutting unit labour costs, playing upon and exploiting the immobility of labour and peoples’ ties to place and need for waged employment as they seek to revise the terms and conditions of co-production. The threat of re-location can, in these circumstances, sometimes be as effective in

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meeting corporate goals of cost cutting as actually re-locating (for example, see Beynon 1973, 52–53). In 1997 workers at Osram’s Augsburg factory in Germany agreed to move to more flexible shift systems. They did so knowing that the company was considering moving to Bari, which would cut labour costs by 40 per cent (Marsh, 1997). In 2004 Siemens threatened to move a factory producing mobile phones from North Rhine Westphalia to Hungary unless the German workers agreed to increase their working week from 35 to 40 hours; as Siemens had already moved most of its electronics assembly plants to locations outside Germany, it was able successfully to “blackmail” the 4,000 workers in North Rhine Westphalia into accepting this increase (Wolfgang Mὕller, I G Metall, quoted in Atkins and Williamsons, 2004). Shortly afterwards, 6,000 workers at Daimler-Chrysler plants in Baden-Württemberg agreed to new working practices and an increase in the working week from 35 to 39 hours, the company having previously threatened to move production of the new Mercedes S-class from Bremen to South Africa (Jenkins and Wassener, 2004). Such cases exemplify the ways in which specific forms of competition, coercion and co-operation between capital and labour in particular forms of co-production within firms are central to this form of inter-corporate competition. They illustrate how companies use their knowledge of cost differentials to enhance the production of both absolute and relative surplus-value in situ by increasing the length of the working week and introducing new working practices. In these ways companies seek to use their knowledge of production cost differences to preserve or enhance competitiveness in relation to competitors working within the same socio-technical paradigm and to others deploying more advanced technologies and/or bringing new products to the market. Companies and factories also compete on the basis of price to become or remain part of the supply chains of other companies, with smaller and weaker firms confined to market niches that are unattractive to larger and more powerful firms and on terms that favour the interests of the latter. Multinational corporations (MNCs) routinely exercise their monopoly power to exploit differences in wage rates and other labour market conditions, modifying forms of co-production both in relation to the spatial organisation of production within the company and in their sub-contracting strategies for the supply of components and parts and for the assembly of final products. While productivity may be lower, wage rates may be so much lower that unit production costs are reduced as a result of re-locating and/or sub-contracting. This has been central to the process of ‘global shift’ and the re-location of much industrial production to the Global South, increasingly the location of surplus-value production (for example, see Dicken, 2015; Hudson, 2016b). Major companies have also increasingly sub-contracted a range of back-office functions and service activities as well as customer call and contact centres to offshore locations in China, India and south east Asia with abundant supplies of much cheaper suitably qualified labour, willing to work long hours in order to keep their job (Overall, 2005), as service providers there compete for business (Lakka, 1994; James and Vira, 2012). In 1985 there were only three MNC R&D

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centres in India; by 2007 there were over 200, of which about 40 per cent were in Bangalore, 20 per cent in Delhi and 15 per cent in or near Mumbai. In the twenty-first century China and India were increasingly the new centres of innovation in a changing international division of labour (Leahy, 2010; Merchant and Johnson, 2005) as off-shoring increasingly encompassed project-based ‘knowledge processing’ (Merchant, 2005). This extension of the scope of co-production includes activities such as legal services, formulating patents, product development by major engineering companies (Marsh, 2007) and drug testing and pre-clinical trials by major pharmaceutical companies in locations in India in which both the cost and time needed for development can be greatly reduced, with the emergence of Clinical Research Organisations (CROs) facilitated by legislative changes by the national state (Prasad, 2009). In addition, stem cell research and research on human embryos is seen as more ‘culturally acceptable’ in China, India, Singapore and South Korea than in Europe and North America (Cookson, 2005). The supply chains and production networks that result from these diverse offshoring activities can take a variety of organisational and spatial forms (which are discussed on pp. 107–113). MNCs are constantly looking for ways of producing and organising space to stay ahead of their competitors. Rather than out-source activities, for key core strategic information technology (IT) and business process functions companies have developed their own in-house offshore facilities, allowing them to protect their IP while significantly reducing labour costs (Bolten, 2005) while others such as J.P. Morgan, Merrill Lynch and McKinsey have developed ‘captive’ research facilities in offshore locations (Merchant, 2005; Wighton, 2005). In addition, some Indian companies, such as the computer services company Wipro Technologies, have begun both to out-source work to other Indian companies and to ‘reverse offshore’ work from their Indian clients to lower cost locations, such as Egypt, as socio-spatial divisions of labour become more complex (Leahy, 2009). Selwyn (2015, 267) refers to a process of “‘hyperbabbagisation’, where the spatial disaggregation of production constitutes a strategy by capital to increase labour exploitation”. The emergence of open innovation systems as a business strategy for the co-creation of innovations enabled by advances in information and communication technology (ICT) has led to further changes in the spatial form of supply chains and led to forms of intensified price competition among individuals and companies working in virtual sweatshops as they seek to compete for work, a new tier in the division of labour in re-configured supply chains, facilitated by new communications networks1 4.2.2 Competition via creating new forms of co-production: new processes, products and socio-technical paradigms of production In contrast to ‘weak’ competition, ‘strong’ competitive strategies involve deliberately seeking to change the basis of competition via transforming the socio-technological paradigm of co-production. Consequently, strategies of strong competition centre on the chronic disturbance of capitalist markets, constantly seeking to revolutionise the what and how of production via

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innovation in products, processes and forms of production organisation. In this way companies strive to create new forms of co-producing commodities as the basis for sustainable long-term competitive advantage. Successive major qualitative changes in the economy as a result of fundamental changes characterised as five Kondratieff long waves (defined respectively by the invention of the steam engine; railways and steel; electrification and chemicals; automobiles and petroleum; and ICTs: see Freeman and Louca, 2001; Mandel, 1980) have framed the context in which more specific innovations in the organisation of firms and their approaches to process and product innovation have taken place. This constant pressure for innovation is often seen as a progressive aspect of capitalist production, generating a constant flow of new processes of production and of new products to markets. Moreover, relationships between different types of innovation may themselves vary within different models of co-production. The simultaneous development of product and processes is a well-established feature of the system of mass production, although as products move through their life cycle appropriate processes of production may alter. Within mass customisation, however, the importance of any individual product decreases “because there are so many of them. … It is process life cycle that has become more important” (Pine, 1993, 215, emphasis in original). Variation in regulatory régimes can also shape trajectories of innovation. For example, different national regulatory régimes for energy supply, health care systems or IPRs can encourage some innovations while discouraging others. Conversely, the viability of such régimes may depend upon their compatibility with particular forms of innovation (Foray, 1993). Organisational innovation Companies can seek to compete via innovations that lead to major changes in forms of management organisation and structure, as discussed in the previous chapter. In addition, managers in those companies can seek to enhance competitiveness by increasing productivity via other forms of organisational innovation, discovering new ways of producing more efficiently via ‘better’ use of labour and other resources within their existing forms of co-production and technological paradigms. On the other hand, innovations in both process and product may require changes in the organisation of a company. An attraction to companies (and indeed national governments attempting to formulate strategic industrial policy) of seeking to ground competitive advantage and success in organisational innovation and structure is that organisation is a non-marketable input. Companies seek competitive advantage via organisational innovation precisely because, once established, it can be embedded in company specific knowledge, skills and routines as the basis for a particular form of co-production that rivals cannot easily imitate or buy in the market. It is not amenable to diffusion in the same way as, say, technical knowledge about a new production process. This sort of competitive advantage, embedded in the institutions and routines of the

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firm and the tacit knowledge of those who work in and for it, may allow a company to maintain a long-term competitive edge over its rivals. There may, however, be limits to the extent to which organisational innovation can be sufficient to guarantee competitiveness. For example, significant differences in labour or other input costs may offset superior organisation in sectors producing mature products while key employees may leave for another company, taking their embodied knowledge with them. Process innovation and new technological paradigms of production Process innovation denotes technologically new ways of making existing products, revised forms of co-production that will enhance their competitiveness once in the market or that will get them to the market ahead of their competitors. This may be a result of work in formal R&D laboratories but may also result from the day-to-day activities of workers in their workplaces. This emphasises that knowledge and innovation are in part outcomes of an often adversarial and always contradictory relationship between capital and labour that lies at the heart of commodity co-production. For example, in many lower tier automotive components plants there is an almost exclusive focus on incremental process innovation, carried out by workers on the shop floor and production line, as supplier companies seek to cut costs and maintain their position in production networks (Rutherford and Holmes, 2007, 207). More major innovations have also been critical in enabling companies to remain competitive. For example, Volkswagen developed a novel assembly system based around common production platforms and extensive sharing of components between different models of vehicles, seeking to cut production costs by up to 20 per cent as a result (Marsh, 2013). Major process innovations have also been crucial in enabling companies in allegedly ‘old smokestack’ industries such as bulk chemicals and steel to remain competitive. For example, the introduction of basic oxygen steel-making technology reduced the amount of socially necessary labour time required to convert iron to steel from 8 hours to 45 minutes while the invention by ICI of the steam reforming process for ammonia production reduced the required number of workers per shift from 63 to 7 (see Beynon et al., 1994). The automation of production processes in these industries subsequently further reduced the required amounts of socially necessary labour time and enhanced the competitive position of those firms that had first mover advantage. Applying such major innovations in production methods typically requires new plant and machinery. Consequently, there is a critical link between process innovation, fixed capital investment and technological change and the location of such investments. The “hunt for technological rents” (Mandel, 1975, 192–194) via process innovations that allow the labour time needed in production to be reduced below the existing socially necessary amount enables “surplus” profits to be made. Reducing labour inputs to below the socially necessary average is significant because producers who use the ‘new’ technology in restructured

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systems of co-production can then sell at below average prices, increasing their market share, while collecting above average profits on each unit of the commodity sold. There is of course no guarantee that such a strategy will work; there is always a risk that it may not and the company could fail. On the other hand, if it succeeds, its rivals may fail. If it does succeed, it retains this competitive edge until such time as the ‘new’ technology diffuses to other producers and becomes generalised as the accepted form of organising co-production, establishing new productivity norms for that commodity (or sector). Knowledge of such innovations can flow via a variety of channels: as texts; via people; via artefacts (Gertler, 2001, 8–12). The new productivity norm reduces the required amount of socially necessary labour time. This in turn triggers a fresh round of R&D, of process innovation, in search of another technological advance and competitive advantage. In this way the process of constantly revolutionising production technologies proceeds and competition becomes the motor of accumulation. Thus industries often represented as ‘old’ and ‘smokestack’ may continue to experience radical changes in process technologies via the deployment of ‘high technology’ production processes in new forms of coproduction as they seek to remain competitive (for example, see Economic Policy Institute, 2000; Winterton and Winterton, 1985). This conception of the dynamics of process innovation is specific to the mass production of standardised commodities sold in mass markets. In other models of co-production, process innovation has a differing significance. De-coupling product and process technologies in forms of HVFP further enhances the importance of process innovation to competitive strategy. Companies deploying HVFP approaches to co-production invest in general-purpose process technologies that are more flexible, responsive and easily re-used across products and product families. They have longer process life cycles relative to the products they create, and can therefore underpin competitiveness by providing a stable base for the dynamic supply of differentiated products and services. Within mass customisation the importance of any individual product decreases “because there are so many of them. Processes become decoupled from products and now outlast individual products – some of which are developed and sold only once – and can outlast the entire product life cycles. It is process life cycle that has become more important” (Pine, 1993, 215, emphasis in original). Companies seek to move from mass customising products and services on the basis of flexible process technologies to the “mass customisation of process uniquely suited to their new market opportunities” (Pine, 1993, 256). There are, however, also limits to the de-coupling of product and process innovation within these new approaches to “agile (co-)production”. Pine (1993, 241–253) identifies several sources of such limitation: radical new product and process innovations that homogenise markets via creating new dominant designs; homogenising consumer demand, for example via a reaction to accelerating product obsolescence; information overload, as consumers are overwhelmed by information about a burgeoning range of products; minimum times for development cycles; and minimum life cycles for

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products and services. Such limits would tend to re-establish different relationships between product and process innovation strongly reminiscent of the era of mass production. Process innovations can also have direct implications for where co-production takes place as a key strand of competitive strategy. Conversely, spatial variations in labour market conditions can shape which forms of co-production and what sort of process technologies and competitive strategies are deployed in particular locations. These locational implications arise for two reasons. Firstly, rather than companies using ‘old’ technologies and/or organisational forms of co-production failing and becoming bankrupt, they may survive by selectively relocating to places in which labour market (or other) conditions permit the ‘old’ technology and its associated form of co-production to be competitive with the ‘new’ one. Secondly, companies using the ‘new’ technology may need to find fresh locations in which it can be profitably deployed. For instance, this could be in areas in which workers lack the knowledge and experience of existing norms of coproduction for these commodities and thus will accept the conditions associated with the ‘new’ technology. Conversely, in other circumstances the importance of knowledgeable and skilled labour can lead capital to invest in places in which it is available or tie capital to particular places as these develop the endogenous capacity to generate new processes (and products) which ensure a competitive edge in the market. Such “technology districts” are places in which economic growth occurs on the basis of in-situ “product-based technological learning”, creating new forms of co-production that underpin the competitiveness of firms located there (Storper, 1993). Once two or more ways of co-producing the same commodity exist, companies face difficult decisions about how and where to produce as they seek to remain competitive, decisions which may also be linked to choice of what to produce within a given product sector. The rationale for choosing a particular approach to co-production may not be straightforward, however. Approaches may be adopted simply because “they become fashionable in management cultures, because they protect the interests of powerful groups within an organisation, or because managers find it hard to see beyond established social norms and practices” (Halford and Savage, 1997, 109). Furthermore, “like all social interactions, economic decisions are as much affected by tradition, historical precedent, class and gender interests and other social factors as by considerations of efficiency and profit” (McDowell 1997, 119). While one might query the “as much”, the broader point about the complex over-determination of such “economic decisions” is a very valid one. Product innovation Whereas many process innovations involve firms in competition for shares of existing markets, product innovation aims to create new products and markets in which companies can be, if only for a time, sole and monopolistic producers. Given the pace of technological change, however, “performance superiority will be brief”, so that there is continuous pressure for further product

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innovation as a route to competitive advantage (Mitchell, 1998). It is increasingly important in allowing product differentiation and market segmentation in response to consumer demand in markets for both goods and services (Noteboom, 1999; Poon, 1989). Product innovation can result in the enhancement of ‘existing’ products, often seemingly mundane ones, creating qualitatively different products within the same market segment as companies strive for a competitive edge via further segmenting mature markets (Griffith, 1998). Such incremental changes may be a result of feedback from customers or users of the product (Tödtling et al., 2013).2 Such changes may also be related to process innovations. The introduction of new micro-electronic technologies enabled firms radically to alter forms of co-production, dramatically shortening production cycles and producing more varied and customised versions of the same basic commodity, sub-dividing the large and uniform product runs of industrial mass production into ever smaller series of sub-products in an effort to conform more closely with the specific preferences of ever-smaller groups of consumers – something like large-scale boutique production and, at the limit, groups of one in mass customised production. From the point of view of capital, this offered possibilities of greater profits, both because of the ability to increase the price of more differentiated commodities and to increase the aggregate level of demand as a result of increasing the number of customers due to reducing the gap between what was on offer and their preferences and desires. More important than increasingly fine differentiation and qualification of existing products, however, is the creation of totally new products, products which previously did not exist, and this is of the greatest significance as it involves the construction of new markets rather than a zero sum game as to the allocation of shares of a given market. For example, when the automobile first appeared it provided a completely new form of personal transportation; so too did commercial airliners. When TVs were first made available, they offered a completely new form of home-based entertainment. When lap-tops became available, they changed the ways in which many people worked (I’m writing this on an old Dell laptop …). Once IKEA popularised flat-pack furniture DIY was irrevocably changed. When mobile phones first became available, they transformed the ways in which people communicate and interact (as of course did the Internet). Such product innovations, therefore, have a potentially much greater transformational impact on ways of living and working, the socio-spatial structures of production and markets, and trajectories of economic growth. New products need to open up new markets if they are to succeed within the parameters of capitalist economies and allow individual companies to increase their mass of realised surplus-value. Capital displays great ingenuity in creating new products. There are, however, no guarantees of success as product innovation is a risky business, with a long history of failure (Mitchell, 1998). Perhaps the most significant forms of product innovation in recent decades have been those in banking and financial services, with widespread effects both at the level of the competitiveness of individual companies and systemically in the financialisation of the economy as the emphasis has switched more from the

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primary to secondary circuit of capital as the arena of competition. Enabled by a combination of technological innovations in ICTs and state deregulation of financial activities, new forms of shadow banking developed via which major firms created and sold new products such as interest rate swaps and futures, options on interest rates and currency values, household loans and mortgage debts that were then bundled up and salami-sliced into new products, complex financial derivatives intended to provide clear and defined income streams. These asset-backed securities, packaged into Collateralised Debt Obligations (CDOs) were then sold globally, as private debt reached unprecedented levels in the USA and other major capitalist economies (Norfield, 2017). As Leyshon and Thrift (2007, 98) observe, in order to survive the financial system must be able to constantly reproduce itself and that means that it must continuously prospect for new asset seams that can be turned into collateral; consequently, almost anything that might provide a stable source of income on which more speculation might be built is brought into play. As a result, banks and finance firms made massive profits from trading (assumed) future earnings by creating diverse “securitised” products (Hadjimichalis, 2017, 43). There were three sources of demand that lay behind the growth of these securitised products (Leyshon and Thrift, 2007, 100). First, large, blue-chip borrowers could often raise capital directly from the capital markets through the securitisation of their assets more cheaply than by borrowing from banks. Moreover, by securitising their future income streams, borrowers were able effectively to realise these streams ‘early’ while also externalising at least some of the risk that this future income might never be realised. Second, the demand for investments from large institutional investors such as pension funds created a ready market for bonds based on securitised assets as these enabled investors to diversify their portfolios. Third, by facilitating securitisation banks were able to serve the borrowing needs of their clients while at the same time by-passing and circumnavigating international banking regulations, such as capital adequacy requirements, that would otherwise limit the amount of money banks could advance through their own balance sheets in the form of loans. The scale of expansion associated with these financial product innovations was staggering: negligible at the start of the 1970s, they were worth $865bn by 1987 and a notional $685bn by the end of the first decade of the 2000s (Durand, 2017, 20). Initially focused on the Chicago Board Options Exchange, derivatives markets subsequently grew quickly in London, Frankfurt and Paris. As Durand (2017, 73) notes, in a way that points to the links between the product innovation strategies of individual financial companies and the systemic impacts of their actions, “[t]he explosion of fictitious capital reveals a dizzying growth in the quantity of value validated in anticipation of the accumulation process linked to commodity production”. When this financial bubble burst and unleashed the global financial crisis in 2008, a crisis which quickly spread to the productive economy, it resulted in the bankruptcy of major firms such as Lehman Brothers but more significantly the de facto nationalisation of the debts

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(though not the assets) of major banks and financial institutions as the necessary price of preventing further bankruptcies and the collapse of the capitalist financial system. This was especially the case in the USA and UK where the neo-liberal de-regulatory process had extended most deeply and widely. This demonstrated in the most graphic fashion that the national state is a capitalist state, prepared to go to whatever lengths are needed to ensure the reproduction of capitalist social relations and the protection of capitalist interests.3 What also became clear was the way in which the explosion of financial product innovations was linked to a parallel expansion of illegal and illicit activity in the co-production of these new commodities. As Streeck (2017, 31) has put it, [f]inance is an industry where innovation is hard to distinguish from rulebending and rule-breaking, where the pay-offs from semi-legal and illegal activities are particularly high; where the gradient in expertise and pay between firms and regulatory authorities is extreme; where revolving doors between the two offer unending possibilities for subtle and not-so-subtle corruption. As a result, while fraud and corruption have been endemic in capitalism from its origins, with the recent emergence of financialisation, and with the rise to dominance of the finance sector over the last four decades, they have become pervasive. This growth has been a result of the “deep empathy on the part of the legal system with the competitive pressure on financial institutions to break the law in order to make a profit”. Streeck’s analysis thus raises important questions about state regulation – or perhaps more accurately, lack of regulation – of product innovation in financial services and more generally in different regulatory jurisdictions in variegated capitalisms.4 More generally in the economy, processes of product innovation and the relationships between research and development have varied with different models of commodity co-production. In Taylorist mass production there is a strong division between mental and manual labour and a linear sequential model of R&D creating ‘breakthrough’ product innovations, then producing them in long runs of standardised product. In systems of high volume flexible production (HVFP) the processes of product innovation and development are structured differently. In particular, there are three distinctive organisational features: ‘self-organising’ development teams; overlapping development phases, replacing a segmented division of labour with a shared one; and a commitment to continuous learning. Changing the form of product innovation from the mass production linear R&D model to one appropriate to the new flexible forms of production severely circumscribes the utility of the concept of product life cycle. Competitive success depends upon being the first to identify an emerging market, a segmenting market, or a change in consumer requirements in a previously unchanging market. Success depends

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upon the minimisation of product development and product changeover times, not upon being the lowest cost (or highest throughput) producer. Pressures for accelerating and continual product innovation are linked to an increasing volatility and ephemerality in fashions and tastes as product life cycles for many commodities become increasingly brief, even transitory as when the commodity is a performance or spectacle.5

4.3 Innovation, knowledge creation and flows of knowledge within companies In many industries a firm’s competitiveness and growth potential depend upon its capacity for product innovation, which in turn depend upon a continuous process of knowledge creation (Davids and Frenken, 2018). The scale of investment in research by major companies can therefore be considerable; for example, Renault employs 12,000 engineers and technicians at its technical centre near to Paris, designing and developing new models (Betts, 2007a). The significance of knowledge for process and product innovation and competitive commodity co-production has also led to considerable emphasis upon protecting knowledge and the products of innovation via licensing agreements, patents and IPR legislation. The various actors involved in the development of IPR systems have progressively evolved discourses about the utility of legal protection for R&D, innovation, creativity and technology transfer – which are in turn bound up in “truths” about the IPRs or moral rights of inventors, authors and corporate bodies (Robinson and Gibson, 2011). In these ways innovative companies across all sectors of economic activity seek to maintain their competitive edge. The process of innovation depends upon the creation of new knowledge and/or the application of existing knowledge in new and novel ways. While knowledge is collaboratively created by firms in-house it is also co-produced and created in collaboration with others, including other firms, consumers, suppliers and government departments and universities.6 The processes of knowledge creation, learning and innovation within firms have also varied over time and space. Single loop learning underpins incremental changes in both process and products while double loop learning involves radical changes in one or both of process and product (Levinthal, 1996). While a distinction is typically drawn between codified and tacit knowledge, Tödtling et al. (2013, 162) suggest that as a result of the growing complexity of processes of knowledge creation “there is a need to go beyond this simple dichotomy” and that [o]ne way of doing this is to distinguish between “analytical”, “synthetic” and “symbolic” types of knowledge bases, which partly transcends the tacit-codified dichotomy. The knowledge base concept argues that tacit and codified forms of knowledge always co-exist but in different combinations.

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Furthermore, since this threefold distinction “refers to ontologically generic categories, most activities are in practice composed of more than one knowledge base”. While much knowledge originates in a tacit form, embodied in particular workers’ experience and skills, capital historically has set out to capture this and convert it from a tacit to a codified form, breaking it up into discrete and more manageable tasks, knowledge of which can be deployed and used as the basis of enhanced competitiveness (including by using it to enable mechanisation and automation). It continues to do so. While successful as a strategy for knowledge creation and R&D in many industries, times and places, this approach of codifying tacit knowledge also runs up against limits, not least those of cognitive lock-in. At the same time, codified knowledge is readily transmittable more widely beyond the firm that creates it so that any competitive advantage gained from innovations deriving from its creation and use may only be temporary and transitory. Even so, creating new knowledge to underpin the creation of new processes of commodity co-production and of new commodities has been and remains central to the dynamic of capital accumulation. The creation of new knowledge almost always builds upon prior knowledge, typically in collaboration with others either within or outside the boundaries of the firm. Consequently, companies seek to control the process of knowledge co-production and the resultant product and process innovations to their competitive advantage. They seek to control the ways in which knowledge is co-produced, focusing on its use value to them in increasing their competitiveness in commodity co-production. Radical product innovations are particularly important in creating competitive advantage for those with first mover advantage in developing and deploying them. Furthermore, in addition, knowledge production itself has increasingly become commodified, with knowledge produced as an exchange value to be sold to others rather than as a use value to its co-producers. Knowledge creation thus underlies various forms of innovative activity in which firms necessarily engage in their search to create competitive advantage that they can, temporarily at least, monopolise. The ways in which knowledge is co-produced and translated into innovations vary, depending upon choice of production strategy and the organisational structure of the firm. The original development of Taylorist mass production was based upon capturing the tacit knowledge of skilled craft workers, rendering this in codified form to enable the resultant disaggregation of production into a series of discrete tasks that could be performed by semi-skilled or unskilled labour. These processes of knowledge capture and conversion involved the creation of new divisions of labour within firms in which scientific knowledge workers were employed with a monopoly over the processes of analytic knowledge creation and its diffusion within the firm. In this way capital could break the power of skilled craft workers to control the production process and the pace of commodity production and radically increase both the scale and pace of production. In the mass producing firm, with production organised on Taylorist principles, there is therefore a distinct form of co-production, with a sharp differentiation

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between those engaged in manual and mental labour, with the production of knowledge and innovations confined to the key privileged sites of the design studio or a formal R&D department or laboratory, inhabited mainly by men in white coats - the officially designated spaces of creativity. Typically, creative work there involves the application of scientific and other forms of codified analytic knowledge – although always requiring some input of synthetic or symbolic and tacit knowledge to the process. Some companies have given considerable thought to the workspaces which R&D workers occupy so as to maximise the probabilities of creative interaction, learning and innovation. For example, at P&G’s fabric and homecare innovation centre near Cincinnati [l]aboratories are open plan to allow scientists to swap ideas and see what others are doing. The four floors are connected by escalators so that staff do not have to climb stairs or wait for lifts to go and speak to someone in another department. Moreover, each floor has a ‘connection space’ – Italian villa, English pub, ski lodge – where staff can relax and swap ideas. Miniature production facilities allow scientists to test quantities of new products - they do not have to wait for time on factory production lines. But as well as physical connections P&G’s 7,000 research and development staff are connected by virtual networks with each other – and increasingly to the 1.5 million scientists with similar expertise who work outside the company. (Buckley, 2005) While such developments facilitate the co-production of knowledge and innovation by increasing interaction among the scientific knowledge workers employed in the dedicated R&D departments and design studios, they still retain a monopoly over the processes of knowledge creation and its diffusion within the firm. There are strict limits to the character of knowledge co-production as a result. New knowledge produced in these settings, within a rigidly demarcated hierarchical structure, then flows in only one direction, from the mental workers in the R&D laboratory or studio to the manual workers on the production line and serves as the basis for innovative new processes or products. While mass production based on the Taylorist model of R&D offered many benefits in terms of enhancing price competitiveness by lowering the unit cost of production for standardised commodities via economies of scale, it also suffered from a major disadvantage because of the absence of feedback loops from customers and users of the products of innovations to those responsible for producing them. As a result, new innovative products could often fail in dynamic markets, with the surplus-value embodied in them remaining unrealised, while opportunities for other new products may have been missed. As the limitations of organising knowledge creation, innovation and commodity production in this way became apparent, companies explored other ways of co-producing and creating knowledge and producing innovations that dissolved the rigid division between manual and mental labour within the firm.

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In this, they sought to capture the knowledge of, potentially, all members of the workforce. In contrast to the one-directional flows of knowledge within the hierarchies of Taylorist firms, there was increasing emphasis upon flows up as well as down hierarchies, and horizontally and laterally as well as vertically within the organisational structures of the firm. This generalised circulation of knowledges necessarily depends upon the sharing of codes and languages to allow various communities of interaction and practice to operate. In this way the tacit knowledges of workers throughout the firm could be captured and valorised in the process of co-producing innovative commodities and, where relevant, the knowledges of all workers within the company drawn upon, and drawn into, these processes of co-production. Google, for example, does not have a dedicated R&D facility but distributes research activity across its product divisions, where the vast majority of its fundamental research takes place alongside the running of everyday business: “There doesn’t need to be a protective shell around our researchers where they think great thoughts. It’s a collaborative activity across the organisation, talent is distributed everywhere” (Alfred Spector, head of research at Google, cited in Simonite, 2014). By embedding people working on fundamental research into the core business, Google and companies like it encourage creative contributions from workers who in other companies would be far removed from any involvement in research and development activities. Furthermore, companies have increasingly sought to engage with customers, both those who purchased their existing products and potential consumers of the new ones, drawing on their knowledge to help shape innovations so as to increase the probabilities of innovative new products being competitive and economically successful. For example, in Taiwan “foreign buyers demanded improvements in quality and … became a crucial source of knowledge for new product design and development” for electronics producers there (Sunley, 2011, 108 – citing Saxenian, 2006). Alternatively, producers shared knowledge to help their customers re-design their products. Taiwan Semiconductor Manufacturing (TSMC) developed ‘design for manufacture’, an approach designed to cut costs by helping customers “redesign their chips so they can be more simply manufactured” (Hille and Cane, 2005). TSMC followed this approach of necessity as the vast majority of its customers were too small to keep up with the pace of innovation in process technology, leading to decreasing profits and “forcing TSMC to take a larger role in design, spend more and share intellectual property with its customers” (Hille, 2006) in an attempt to increase sales of products resulting from each successive generation of technology. Companies more generally seek to draw upon the knowledge of their customers and secure their participation in the knowledge-creation process by their using a new product and communicating the results back to its producer. For example, in developing new computer games this engagement between producer and user in product innovation both diminishes the costs of in-house testing and decreases the distance between software creators and users via creating an information feedback loop as a result of the beta-testing of computer software

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and the involvement of potential users. Furthermore, integrating a sub-set of potential customers directly into the product development process helps create demand for the final product (Kenney and Curry, 2001, 51–52). In similar fashion, companies producing commodities for other final consumer markets have increasingly sought ways of tapping into the knowledge that actual and potential customers have about their products to try to ensure that they are consistent with the culturally specific codes, values and expectations held by customers. More generally, the most effective form of user-centred innovation involves design collaboration among many widely distributed contributors as the Internet has dissolved once meaningful distinctions between “innovators” and “customers” in sectors as diverse as software, bio-technology, medical instrumentation, tele-communications and sports equipment (von Hippel and Schrage, 2007).7 These changes towards more systemised approaches to co-production of knowledge reflect the growing recognition that the production and application of abstract formal knowledge in the co-production of commodities depends in part upon other sorts of knowledges, tacit skills and capabilities, and on trialand-error behaviour (Arora and Gambordella, 1994, 528). This requires acknowledging the legitimacy and ‘voice’ of different types of knowledge, not least as radical innovations often challenge the dominant logic within a company or industry. As a result, knowledge for more radical innovations may, of necessity, originate from technologically distant sectors and technology fields (Tödtling et al., 2013). Radical and revolutionary innovations may therefore be produced in emergent and unexpected ways via interactive knowledge creation processes within and across the boundaries of the firm, by synthesising different types of knowledge rather than always privileging the scientific knowledge of the R&D laboratory or design studio. This approach to knowledge co-creation necessitates closer integration of R&D with other sections within companies, with far-reaching implications for their internal organisation and operation. Such tendencies are observable in flexibly specialised knowledge-intensive and innovation-intensive small and medium-sized enterprises (SMEs), in firms adopting new forms of HVFP and mass customisation that sought to preserve the advantages of scale economics from mass production while tailoring the product to meet the specific requirements of the customer and, most radically, in companies such as Google that have dispensed entirely with a discrete R&D department. These new approaches to organising co-production more flexibly to ensure that it results in products that are competitive and sell therefore necessarily involve a different approach to knowledge production and innovation. In its most pronounced and knowledge-intensive form, production becomes a “design process” and an “R&D process” and the production system operates as an expert system (Lash and Urry, 1994, 96). This has implications for ways of working within the firm since competitive success based on design innovation requires the combination of a wide range of different types of embodied, tacit and codified knowledges (Hatch, 2013). Design emerges from interactions between different sites that synthesise and recombine knowledge so as to produce emergent effects and new designs (Sunley et al., 2008). More generally, from the perspective of

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capital and its managers, the aim is to diffuse the creative processes of innovation and learning throughout the entire workforce, capturing the knowledge of all workers to enhance productivity and the quality of both product and work in a knowledge-based economy (Florida, 1995). The co-production and circulation of flows of knowledge within such knowledge-creating firms is therefore a complex and evolving process, involving both codified and tacit knowledge in differing knowledge bases, interactions between them, and the transformation of the latter into the former. Nonaka et al. (2000) and Nonaka and Takeuchi (1995) for example, conceptualise the process of knowledge creation in terms of four modes of knowledge conversion (Socialisation; Externalisation; Combination; and Internalisation – hence SECI). Furthermore, (ibid., 16–19) they insist that “the movement through the four forms a spiral, not a circle”. In the process of knowledge creation, the interaction between codified and tacit knowledges “is amplified by each of the four modes of knowledge conversion”. Knowledge production is seen as “a dynamic process starting at the level of the individual and expanding as it moves through communities of interaction that transcend sectional, departmental, divisional or even organizational boundaries. Organizational knowledge is a neverending process that up-grades itself continually”. These communities of interaction through which knowledge is co-produced can be defined within the formal organisational structures of the firm – for example as concept teams, limited life project development teams and task forces. Mittal, the world’s biggest steel company, has a knowledge management programme … [that] brings together specialists in different steel making disciplines from all Mittal plants … typically 20 to 30 managers will meet for three-day sessions at which problems are discussed and solutions debated. If a plant has a problem, technical experts from another plant who have similar experiences are sent to help. (O’Connell, 2005) The groups are organised around 25 areas of activity and each meets for one or two three-day sessions a year, with more frequent conference calls and specialist meetings focused on particular issues (Marsh, 2005b). Alternatively, communities of interaction can be constituted through informal communities of practice, formed by employees (who at times may enrol others from beyond the firm) with shared interests in solving a particular problem and brought together by this as a result (Amin and Roberts, 2008; Wenger, 1998; Lave and Wenger, 1991). This is an approach to co-production that emphasises ‘learning by doing’ through fluid communities bound together by patterns of mutual engagement, notions of joint enterprise and shared repertoires. A community of practice therefore connects people together in a system of shared meanings and understanding distinguishable from other socio-spatial networks by the intensity of interaction and focus that it exhibits. However, as Coe (2010, 159) points out,

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the issue of who benefits from communities of practice often seems to be underplayed. At times, the collaborative world of knowledge communities seems to be free floating from another economic world of power, inequality, competition and the dynamics of value creation, enhancement and capture. The same point can be made about knowledge-creating approaches more generally in the context of capitalist production. Increasingly such communities of interactive knowledge co-production are organised as globally distributed teams which mostly meet remotely via videoconferencing and other forms of electronic technology. It is increasingly common for such multi-disciplinary and cross-departmental product development concept teams “to produce new ideas and products via a communication network that links team members from Singapore and France with those in California and Kentucky” (Leinbach, 2001, 25). This tendency has been further reinforced by developments in cloud-based computing since it “allows teams to collaborate from almost anywhere in the world”. This enables companies with mobile and distributed workforces to “collaborate on documents, attend meetings and brainstorm new ideas simultaneously and instantly. The effect on output and productivity is immense as transport and travel issues, both time and cost, are practically eliminated” (INGRAM Micro, 2016). While these globally distributed teams do represent a significant change in organising intra-company processes of knowledge creation, transmission and innovation and can (but do not necessarily) smooth knowledge flows, reduce the socially necessary labour time taken to bring new products to market and so strengthen the firm’s competitive position, their management is not necessarily unproblematic. Reliance on distanciated social relationships of intellectual co-production can increase pressures on managerial time and resources and can create problems in transmitting tacit forms of knowledge, especially while working to very tight deadlines (Miller et al., 1996). More generally, attempting ‘management by design’ of the collaborative processes of knowledge creation, learning and innovation within and beyond the boundaries of the firm is inherently challenging within the contradictory social relations of capital. If successful, the resultant new knowledge then in turn becomes folded into the knowledge assets of the firm and, as such, becomes the basis for a new spiral of knowledge creation and for enhancing the core capabilities and competitiveness of the firm. Such an approach to the co-production of knowledge involves the interaction and transmission of codified – and often commodified – and tacit knowledges, the former via a variety of media and artefactual forms, the latter involving the movement of knowledge embodied in people. This emphasises the centrality of capturing and utilising embodied knowledge from employees at all levels throughout the knowledge-creating firm in underpinning innovation and competitiveness. Reliance upon embodied knowledge also carries risks, however, as key employees may be recruited by competitor companies, although these risks can

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to a degree be mitigated. Developments in computing and ICTs have allowed some companies to codify tacit knowledge in ways that both radically reduce the socially necessary labour time required for the translation of knowledge into innovation and help insulate a company from the effects of key staff moving to other companies. Some 80 per cent of engineering activity is simply minor variation on pre-existing practices and codified knowledge – indicative of a significant degree of path dependency in many innovation trajectories. By building these routines into computer programmes for generative modelling, major companies in sectors such as aerospace and automotive production can capture tacit knowledge and use it further to streamline design and engineering processes and as a result produce new designs very quickly, in a fraction of the time it took previously, often in minutes. Such a development also prevents knowledge in which a company has significantly invested and which differentiates it from its rivals being lost whenever people leave or die. Furthermore, by building structured knowledge into computer programmes companies can innovate and create in hitherto impossible ways (Cole, 1999), and as a result considerably strengthen their competitive advantage.

4.4 The Internet, markets and competitive relationships among firms Bold claims have been made about the alleged transformational effects of the Internet on the structure and spatial organisation of the economy as, allegedly, “materiality becomes subordinated to information and knowledge creation” (Kenney and Curry, 2001, 48). The presence of the Internet has undoubtedly influenced the ways in which producers and users of innovations collaborate (as noted above). The Internet certainly represents an important advance in technology for transmitting codified information, reduced to its most abstract form of 1s and 0s, a giant machine for reducing transaction costs, or in Bill Gates’ terms, a tool for friction-free capitalism – although the fact that the 1s and 0s that make up the Internet’s codes have to be written and entered into a machine by someone somewhere emphasises the stubborn materiality of this apparently immaterial economy. As the real cost of processing power, bandwidth and connections continues to fall, “it is reasonable to assume that anything that can be digitised will be”. In particular, business-to-business (B2B) market transactions have been at “the leading edge of the e-commerce revolution” (Leinbach, 2001, 17) as firms realised that it provided a means of competing more effectively. By 1999, B2B already accounted for 80 per cent of all e-commerce transactions in the USA (Button and Taylor, 2001). However, B2B largely involves using a new technology within existing business models, allowing more sophisticated supply chain management, with greater cost and quality control in market exchanges of material commodities between companies. Routine, standardised activities and transactions with a separable information content are especially amenable to digitisation and transmission via the Internet, allowing cost savings by replacing people occupying “the

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mechanical segments of the information exchange pipeline” with on-line transactions and allowing “every step in the procurement process [to] be monitored and optimised”. This has led to significant estimated B2B transaction cost savings: 39 per cent for electronic components and 20 per cent for computers (Button and Taylor, 2001, 33). However, as with all markets, B2B markets are social constructions that involve asymmetrical power relations between those that create and participate in them. This is especially so in the B2B arena “as the owner of the transaction platform has the potential to control the transactions conducted, both in terms of the rules but also in terms of rents” and so the distribution of surplus-value among competing firms. For example, the control of the automobile website by the ‘big three’ assemblers and their resultant access to information about suppliers’ behaviour and the costs of their inputs further reinforced their competitive power within the supply chain (Kenney and Curry, 2001, 62–63). B2B businesses can be established very quickly, placing a premium on first mover advantage, on being the first in a particular market category (although the history of e-commerce emphatically demonstrates that being first is no guarantee of commercial success). The creation of the ‘big three’ automobile suppliers’ web-site dramatically reduced the scope for competing sites to be established and “rather than permit interlopers to capture the benefits from becoming electronic intermediaries, the market leaders can capture the benefits of their sponsored start-up”. As such, the governance of a B2B market is very important and “there are pitfalls that discourage entry”. Development becomes path-dependent “because once an exchange becomes dominant, all the users incur large switching costs that block participants from exiting” (Kenney and Curry, 2001, 62–63). Some see the Internet as enabling new e-commerce business models to be ‘invented’ or ‘discovered’ and implemented in code, giving rise to new forms of co-production, new practices and forms of competition, especially with the global diffusion of internet use; as long as the Internet remains an essentially open platform, it will continue to enable the development of novel approaches. There is some limited evidence to support such claims, notably in the development of new forms of globally distributed knowledge production in systems such as Amazon’s Mechanical Turk and the emergence of the gig economy and firms such as Airbnb, Uber and Netflix.8 The most successful enterprises of the future will allegedly be based on the Internet’s own paradigms rather than paradigms based on the past “which [will be] rendered meaningless by the collective imagination and creativity of cyber explorers who are only beginning to learn the true contours of the new world they have created” (Kenney and Curry, 2001, 64). However, bold assertions as to knowledge creation and the emergent socio-technical properties of the Internet, and its capacity to effect radical economic transformations and become the basis of new forms and models of capitalism, as with those about a technology driven fourth industrial revolution more generally, are contentious and conjectural. Whether such bold claims are justified remains, at least as yet, an open question and Kenney and

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Curry recognise that “the final configuration caused by the Internet is difficult to predict because the features of the Internet interact in problematic and contradictory ways”. For example, as Aoyama and Ratick (2007, 177) have pointed out, while technological innovations have facilitated distanciated interactions, internet market places sit awkwardly with the sale of service functions for which quality remains the primary concern. What is certain is that as long as cyberspace is produced within the contradictory social relations of capital, it will have to respect the structural constraints, value relations and material realities of that paradigm and this will shape its further development.

4.5 Competition via market creation and marketing innovation Highlighting the significance of minimising product development times and being the first to supply consumers with a newly designed product, Best (1990, 14, emphasis added) argues that firms can succeed by identifying and “responding to” changes in markets or consumer preferences. As such, he underplays the extent to which firms actively seek to create demand for their existing portfolio of products and/or seek to change consumer tastes and cultivate preferences for new products via advertising and developing links with consumers as part of their Schumpeterian market disturbing competitive strategies. The competitive pressures of contemporary capitalism have heightened the importance attached to the culturally endowed and symbolic meanings of commodities and the identities that people (in part) form through consuming them, changes that were linked to further product and process innovations in the form of advertisements.9 The power to shape demand, to create and disturb markets, has become increasingly important as a part of competitive strategy in the context of some or all of the following: shortening product life cycles; increasingly fragmented and segmented markets; and increasingly blurred boundaries between goods and services. The fusion of goods and services, re-defining what constitutes the product, and the consequent mutation of markets are “without doubt” the most significant aspect of the “new economics of production”. Rather than, say, a car being thought of as simply a material product, “a car is conceived from the outset as a set of services provided to the user; in addition, it is sold with various services that make it a service good” (Veltz, 1991, 199). This, inter alia, strongly challenges conventional accounts that seek to differentiate between services and manufacturing or to identify a ‘post-industrial’ economy. The volatility of markets has been enhanced by further innovations in ICTs, and particularly the introduction of cloud-based approaches to computing: “the cloud is providing a platform for organisations to develop new products and services. … 44% of enterprises already buy IT on demand to launch new business models … the cloud complements the rapid change inherent in modern markets” (Samuels, 2016). Digitally competent and engaged customers now have access to an unprecedented amount of information which they can use to get better deals and services. Digitally aware executives and managers recognise the implications of this new era of flexibility. Rather than being

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constrained by the slow-moving nature of traditional IT, entrepreneurial companies and individuals are using the cloud to develop and launch new business models far more quickly than was possible previously, using the scope offered by cloud technologies to scale up these models to meet a surge in demand in a matter of hours or days. As a result, the brand, scale and resources of an established company do not necessarily provide the protection they were once used to when a disruptive new competitor or business model appears on the scene. Such flexibility creates an advantage for organisations that are able to identify new openings and exploit such gaps quickly. (Samuels, 2016) Examples of this Schumpeterian market disruption include Airbnb, Uber and Netflix. They exemplify the ways in which formerly successful forms of coproduction within long standing organisations in established industries are being disrupted by businesses that have adopted cloud technologies as “their weapon of mass disruption” (Joachim Mason, Head of Data Centre at CISCO UK and Ireland, quoted in Matthews, 2016), although it is worth noting that – so far at least – they are confined to narrow market niches in the service economy. Corporate (lack of) capacity to create and shape demand and generate markets is thus a crucial determinant of a company’s choice of competitive strategy. Some firms can only react to exogenously given market changes. Their focus is essentially short-term, responsive and adaptive. Other firms generate these changes and deliberately introduce market instability as part of their longer-term strategies for competitive success, often allied to the creation of new forms of co-production via product, process or organisational innovation and the shaping of demand within a ‘strong’ competitive strategy. The way in which leading companies in a sector (re) structure product markets thus becomes critical. Lagging companies can only temporarily delay and not permanently forestall the processes that cause markets to change while “companies that recognise this will not so much manipulate the market to regain stability as much as revel in its uncertainly to gain significant advantage over competitors” (Pine, 1993, 61). Recognition of the significance of different types of corporate response is important, although Pine (like Best: see p. 96) under-states the extent to which companies actively create market turbulence as a central component of their competitive strategy rather than simply revel in exogenously produced uncertainty resulting from rapidly and unpredictably changing consumer preferences in markets shaped by ‘consumer sovereignty’.10

4.6 Competing via switching sector: from co-producing surplus value to seeking rents The initial establishment of capitalist relations of production involved a process of ‘primitive accumulation’, involving the forcible conversion of commons into privately owned assets, sanctioned by the state, and the concomitant creation of

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a class of landless labourers who would provide labour-power for capital. The issue for capital from the outset was how to acquire those ‘fictitious commodities’ – land, labour and elements of nature – that were necessary to enable profitable commodity co-production As Polanyi (1944) emphasised, these ‘fictitious commodities’ are not produced as commodities but are produced through different social relationships and/or natural processes so that they must be appropriated and transformed into the commodity form and as such become a source of profits and rents.11 As has been emphasised by numerous analysts after Marx, given that capitalist economies necessarily rely upon a continuous source of labour-power as well as the conversion of elements of the natural world into profitable commodities, this process of primitive accumulation was not a one-off historical event but remained a process of ongoing significance throughout the subsequent development of capitalism, although its extent and precise forms varied with technological and legal innovations. Luxemburg (2003/1913) suggested that there were good theoretical reasons for this because capitalist economies can only exist as part of a broader capitalist social formation (“capitalism”) as they need non-capitalist modes of production from which they can extract a variety of resources, human, non-human and mineral (“necessary impurities”) for their successful reproduction. Or as Hodgson (2001, 71) later put it: Every socio-economic system must rely on at least one structurally dissimilar subsystem to function. There must always be a co-existent plurality of modes of production so that the social formation as a whole has the necessary structural variety to cope with change. The crucial theoretical implication of this is that there can therefore never be a homogeneous and totalising single capitalist mode of production (CMP) but rather a variety of capitalisms in different times and places. From the outset of capitalist relations of production, individuals and companies have switched capital between those activities that are productive of surplus-value and those that are rent-seeking, depending upon which are seen as providing a greater and/or more secure rate of return for that individual or organisation. These rent-seeking activities include investments in land, property and, more recently, financial assets of varying sorts, as well as in various forms of natural materials and life forms. Investment in such activities expanded considerably as the profitability of investment in productive activity fell from the 1970s “when capital began to experience the impact of an inflexion point in the trajectory of exponential growth” (Harvey, 2014, 245) and neo-liberal forms of governance and regulation became dominant, with much greater emphasis upon creating space for de-regulated markets, including the markets for money, to operate as resource allocation mechanisms. One central aspect of this was the shrinking scope of state activities and waves of privatisation that created opportunities for capital to find new sources of profitable investment as goods and services previously provided within the public sector became, sometimes once again, commodified and potential sources of both rents and

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profits. More generally, however, the rise of neo-liberalism was linked to a search for rent-seeking activities and this switch became expressed systemically as a shift of surplus capital from the primary to the secondary circuit of capital. There was an expectation of greater scope for profits there, not from co-producing commodities but through diverse forms of acquiring and trading assets of various sorts (land, property, raw materials, notably oil, in fact anything that seemed to offer the prospect of a future stream of rental income). This was paralleled by the creation of wholly new assets within the financial system itself – currency futures, credit default swaps, CDOs, and a whole range of other financial instruments. In this context an asset is simply a capitalised property title and its value is set in anticipation of either some future stream of revenue or some future state of scarcity. The stated intended purpose of creating these assets was that they were supposed to spread risk but in fact they had precisely the opposite effect, heightening risks in ways that made the volatility of short-term trading a field for smart speculative gains (issues discussed more fully earlier in this chapter). The returns from such speculative investments could be considerable. For example, investment in the booming real estate sector in Spain at the start of the twenty-first century was generating rates of profit of between 30 per cent and 46 per cent (Hadjimichalis, 2017, 56). The issue for companies therefore became how to acquire such ‘fictitious commodities’; how to create new forms of fictitious commodities; and how to convert to the fictitious commodity form people and things that were not produced as commodities. In part there was nothing new here – capital has always needed to acquire fictitious commodities as necessary conditions for the production of surplus-value and profits and had always speculated in rentseeking activities. But there was a qualitative change in emphasis, with the acquisition of such fictitious commodities solely with the purpose of speculative trading to maximise the difference between the costs of acquisition and resultant rental income or profits from sale. This change to rent-seeking behaviours became central to the neo-liberal phase and marked the transition to a new regime of accumulation of capital with financial and debt dominance (Boyer, 2000) in which the primacy of surplus-value production in goods and services was replaced by the primacy of surplus-value appropriation via all manner of rents. In short, “[t]he parasitic forms of capital are now in the ascendant” (Harvey, 2014, 245). While such a switch of capital from the primary to secondary circuit may – for a time – prove a profitable strategy for individual companies, it raises a risk at the systemic level of increasing capital investment in search of rents, interest and royalties rather than in productive activity leading to an imbalance between the amount of surplus-value produced in the primary circuit and claims on yet-to-be produced surplus-value as a result of rent-seeking investments in the secondary circuit of capital. This in turn may undermine the profitability of the investments of individual companies in the primary circuit and risk wider systemic crisis – as the events of 2008 and subsequent years graphically demonstrated. As Braudel (1984) presciently pointed out, reflecting on the longue durée of capitalist development, the switch to finance in this way historically has been “a sign of autumn”, indicative of maturing deeper systemic contradictions in the capitalist economy.

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4.7 The complexity of choosing competitive strategy and its systemic implications Deciding on a competitive strategy is clearly not straightforward and can often be risky, with risks at the level of individuals, companies and systemically. The shifting choices of companies between different areas of commodity production are reflected in the changing sectoral composition of economies, expressed for example in changes in the balance between the three major Departments of Production (those producing the means of production, consumption and destruction) and in the sectoral distribution of activities within each of these. Similarly, the choice between investments in activities that are productive of surplus-value as opposed to those in rent-seeking activities can be tricky. The investment strategies of many major companies, which are seemingly manufacturing firms, have included and continue to include elements of both. At the same time as firms in the financial services sector have expanded, so too has the involvement of non-financial firms and entities in financial activities increased, as their engagement in “profiting without producing” expanded markedly from the 1970s (Hadjimichalis, 2017, 45–47). The issue for them became to decide the balance between their activities in the primary and secondary circuits of capital as markets changed over time. For example, major producers of material commodities, such as Ford, General Motors, and Apple, have increasingly come to rely on profits from their activities as speculators in currency markets and as financial services providers, while at the same time typically relocating material commodity production to peripheral locations where production costs are significantly lower. What remains clear is that capitalist economies are structurally dependent upon the production of surplus-value. While individual companies may for a time successfully seek greater profits from switching capital to rentseeking activities, there are limits as to the extent to which the systemic balance between the primary and secondary circuits of accumulation can vary, which in turn will have implications for the success of individual corporate strategies. Within the sphere of commodity co-production, competition is often much more complex than simply in terms of price, embracing issues such as innovativeness, fashion, novelty, product quality, reliability and after-sales service, but it is important not to under-estimate the continuing salience of price competition. The benefits of low prices arising from economies of scale and other cost advantages of mass production are enduring features of production (Pine, 1993, 50). Companies that can co-produce at lower costs and prices still have a competitive advantage. They will however be more successful if they can retain low prices while providing the quality and variety that their customers demand. Put slightly differently, other things being equal, price competition remains very significant – and in some circumstances lower prices may well take precedence over higher quality or novelty (for example because of income constraints on consumers). On the other hand, as the feedback loops from customers to suppliers become reinforced, niche markets become smaller and the logical limit to this process is the customisation of individual

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commodities, analogous to craft production, and as a result price has a diminished significance as a dimension of competition. While this may be the logical conclusion, it is certainly not a practically feasible conclusion. There are two main reasons as to why this is so. First, because of technological constraints, mass customisation seems most feasible in consumer markets and product segments in which new information or telecommunications technologies are central to the provision of goods and services (Pine, 1993, 155). Secondly, because of income constraints on consumers that both limit the extent to which markets can be fragmented into myriad niches and generate pressures towards consolidation and homogenisation of consumer demand (ibid., 241–253). Consequently, many products will necessarily continue to be co-produced on a mass or batch, as opposed to an individually customised basis, and price will remain a critical dimension of competition in many commodity markets.

Notes 1 These issues are discussed more fully in Chapter 3 in the context of the ‘cybertariat’ and in Chapter 5 in the context of the emergence of open innovation systems. 2 The influence of feedback and flows of information from consumers to producers on the design and production of commodities is discussed further in Chapter 7. 3 See Chapter 2 for further information on the scale of the bail-out by national states. 4 Issues also discussed further in Chapter 2. 5 These issues are discussed further in Chapter 7. 6 For example, Google spends millions of dollars per annum on more than 100 research grants to universities as well as funding numerous doctoral fellowships (Simonite, 2014). Collaboration and the co-production of knowledge with external partners are discussed further in Chapters 5 and 7. 7 There is a fuller discussion of flows of knowledge and relations between the users and producers of commodities in Chapter 7. 8 The Mechanical Turk and similar developments are discussed in Chapter 3. 9 These issues are discussed further in Chapter 7. 10 The significance of advertising, the poverty of conceptions of markets as driven by ‘consumer sovereignty’ and various forms of links between consumers and producers are discussed more fully in Chapter 7. 11 Since these are ‘fictitious commodities’ there is an ever-present risk that in their eagerness to incorporate them into processes of commodity production capitalists will destroy them and as such provoke both economic and ecological crises; see also Chapters 1 and 9.

5

Collaboration among firms Collaborating and co-producing with some in order to compete with others

5.1 Introduction Capitalist enterprises face a strategic choice as to how and where to acquire the inputs in addition to labour-power that they need as they seek to co-produce profits. They have three broad choices; firstly, to co-produce in-house, bringing capital and labour together within the boundaries of the company; secondly, to purchase inputs that they need via arm’s-length relationships and market transactions with other firms; or thirdly, they can acquire those inputs via co-producing with other firms, forming various collaborative relationships, typically referred to as relational contracts and strategic alliances. These are relationships based on varying longer-term collaboration and commitments to other companies. While relationships between the firms still require market transactions – and as such are always competitive as well as collaborative – these are transactions that are mutually beneficial and mediated in various ways through agreements grounded in trust between the participating companies. Companies will often be pursuing all three strategies simultaneously, depending upon the nature of the mix of inputs that they require, and the boundaries between the three approaches are fuzzy rather than sharp, variable rather than fixed. No company of any significance has been wholly vertically integrated and the line between producing in-house and acquiring externally has altered over time, while forms of external linkages have also varied over time and space, as dominant companies have re-structured value chains and production networks, deciding to stop doing some things and moving into doing others. Ensuring that they have the optimal mix of supply strategies is critical to the continuing economic success of capitalist firms, and they vary in their capacity and power to negotiate these relationships. With the growth in significance of collaboration, firms increasingly have focused their resources on co-ordinating interfirm systems of co-production in networks of varying degrees of socio-spatial complexity, often encompassing many legal entities. As a result it has been suggested that “the borders of firms are fuzzy and they should be conceptualised as centres of strategic decision making, rather than discrete economic units” (Dicken and Thrift, 1992, 285). Nevertheless, while this may be correct from some points of view and for some purposes, from other perspectives firms still need to be seen as discrete economic units, not least in terms of their legal status as corporate bodies.

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What is undoubtedly the case is that specifying the boundaries of the firm has become increasingly difficult as companies make choices between supplying inputs from within the firm and procuring them via a variety of relationships with others. This poses a dilemma which is resolved in varying and contingent ways, depending upon the position of a firm within markets and networks, the centrality of tasks to the firm’s core competencies and on the balance between the advantages given by the stabilisation of inter-firm relations and the degree of predictability that these provide as a result of involvement in networks set against the asymmetries in power relations between collaborating partners which determine the room for manoeuvre that a firm actually has in practice. Not least, these asymmetries in corporate power shape the distribution of surplus-value created by collaborative co-production, so that some companies gain more than others by virtue of participating in the network. The availability of these varying options means that the boundaries of firms and the networks into which they enter are variable and have varying degrees of permeability, depending upon the nature of the relationships and the differing power of firms to determine their position within the network. The complexity of the issues facing companies seeking to compete via collaborative co-production strategies can be illustrated with an example from the clothing industry in Istanbul, a mature industry producing relatively simple commodities (Tokatli et al., 2011, 1203). In recent years there has been a switch in fashion culture from ‘ready to wear’ (and its two-season calendar) to ‘fast fashion’, premised on consumers buying, discarding and buying again all year long. Zara, for example, the prime exponent of ‘fast fashion’, employs 300 designers who create 20,000 new designs each year and its business model is based on stocking stores with new fashion collections twice a week; while unit production costs may be higher, small batch production saves on inventory and avoids heavy discounting at end-of-year sales, although collections that do not sell are routinely scrapped (Crawford, 2005). As a result of the development of ‘fast fashion’, major clothing retailers (such as Marks & Spencer and H&M as well as Zara) now expect that their manufacturing suppliers, who previously only procured the required fabrics and then turned the retailers’ designs into finished products, will also become involved in the newly collaborative process of making aesthetic and creative design decisions. This has led to supplier firms in countries such as India, Morocco and Turkey, by deploying technological innovations which made it possible to produce a variety of styles in shorter runs, developing the competence to manufacture intricately worked high quality garments with the required flexibility and speed, and companies such as Zara have turned to sourcing from them (Tokatli, 2008, 25). Clothing suppliers talk about their relations with buyers as “big teamwork”, or as collaboration, which refers to the dialogue in which the buyer not only tells the manufacturing firm what it wants, but also provides feedback on the manufacturer’s different samples. This means that buyers will take ideas from manufactures’ showrooms … [and] make changes according to their collection, depending on what can sell. (Aspers, 2010, 200)

104 Collaboration among firms As a result of these various changes, design is no longer exclusively in the domain of the retailer but is now also partially the responsibility of the manufacturing suppliers. Consequently, as clothing suppliers have had to acquire new design skills, the nature of their collaborative relationship with the major retailers has been altered, posing challenges for both parties. This change has “basically happened because the pace of fast fashion rarely allows time for designs to go back and forth between countries as manufacturers turn them into finished products” (Tokatli et al., 2011, 1203). With the replacement of the minimalist aesthetic of the 1990s by the embellished look of the 2000s, fast-fashion retailers came to expect that their garments should also be skilfully and intricately embroidered, appliquéd, beaded, sequined and even adorned with palettes, crystals and rhinestones – sometimes by hand and sometimes by equipment especially designed for the purpose of embellishment. This equipment consists of machines that can handle one or more embellishment techniques and their development is a significant process innovation. However, a single machine cannot deal with the enormous range of techniques involved in these processes, so that even the largest manufacturers are unlikely to invest in the full variety of machines, and thus are very much in need of the collaboration of smaller, specialised and labour-intensive firms. As a result, the co-production network becomes more complex, involving shifting relationships between the clothing suppliers and their sub-contractors. With the co-production of more complex commodities, within more extensive networks, the relational issues are much more complicated.

5.2 Co-producing through networks and relational contracts In locating relational contracting in the range of options available to companies in organising co-production, it has been suggested that it occupies a “middle ground”, a “vast space” between the “tight dualism” of firms and markets, involving ongoing relations of exchange, interaction and mutual development between two or more firms (Sayer and Walker, 1992, 128–129). Given that they occupy a “vast space”, it is not surprising that these contracts can involve a great variety of organisational forms. Such contracting typically develops in situations in which one company relies on another for parts, components or services embodying considerable skill and requiring trust in sharing knowledge and key competencies (Schamp, 1991) so that ensuring product quality depends upon the successful reproduction of these relationships (Hauge and Power, 2013, 388). Systemic subcontracting has a long history in industries such as shipbuilding but more recently it has increasingly become central to co-production strategies in a wide range of other industries – such as aircraft production, computers, telecommunications and other ‘high tech’ electronic equipment (Hudson, 1989). As such, this growth offers potential for firms of all sizes to engage in collaborative co-production activities within integrated network structures. Such collaborative activities involve a deepening social division of labour as the supplier population becomes increasingly differentiated. Many major firms now rely on an upper tier of suppliers, system integrators closely involved at all stages of the production process, from design to

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final production (Dicken et al., 1994, 39). These new, closer and longer-term customer–supplier relationships exhibit a greater degree of embeddedness, predicated upon non-market forms of collaboration and interaction and mutual trust. However, while framed in these ways they also remain market relationships and they are also profoundly unequal relationships. As Nolan (2003, 317–318, cited in Selwyn, 2015) argues, [l]arge capitalist firms now stand at the centre of a vast network of outsourced businesses which are highly dependent on the core system integrators for their survival. The system integrators possess the technology and/or brand name which indirectly provide sales to the supplier firms. They are therefore able to ensure that [they] obtain the lion’s share of the profits from the transactions between the two sets of firms. While trust may be an important aspect of such relationships, both produced through and helping further reinforce close inter-firm relations, especially in situations of repeated interaction in one place (Storper, 1995; Crewe, 1996; Gertler, 1997, 47–48), building trust is not straightforward. It requires using mutually understandable language and often prolonged socialisation or two-way face-to-face dialogue to provide reassurance in situations of uncertainty and to lead to a willingness to respect the other party’s sincerity in relations of co-production (Nonaka and Takeuchi, 1995). The production of trust can also be facilitated by shared cultural and ethnic identities, through relationships in forms of co-production that combine face-to-face interaction in economic activities that are spatially clustered with interaction in dispersed networks, such as those of the Chinese diaspora, and a gift economy “in which a gift (for example, of information) can never be repaid exactly, thus establishing an ongoing relationship” (Coe et al., 2007, 400). Creating trust as the basis of co-production via relational contracts and the (re) production of collaborative networked relationships has three main economic benefits. Firstly, being able to rely on others that you trust saves time and effort. Secondly, being able to trust others reduces risk and uncertainty, and can also reveal previously concealed possibilities for action. Thirdly, it expedites learning because people and organisations that trust one another are prepared to permit richer and thicker information flows while people are prepared to divulge more to those they trust. To ensure that trust has desirable effects and to allow people to have confidence in the probity of others, it must be (re)produced and protected when endangered by opportunism. However, even if transactions are grounded in relationships of trust, these are not necessarily transactions among equal partners as networks are typically characterised by asymmetries in power among the participating firms (Hadjimichalis and Hudson, 2006). For example, in open book negotiations, with collaborating companies exchanging information about costs, orders, investment plans and competitors, the brand owners and system integrators often require suppliers continuously to reduce prices. As a result, they “are able to ensure that [they] obtain the lion’s share of the profits from the transactions between the … firms” (Nolan, 2003, 318, cited in Selwyn, 2015).

106 Collaboration among firms Clearly, different types of trust are at work in different types of relationships (Aoyama and Ratick, 2007, 101): contractual (an expectation that promises will be kept); competence (expectations that the trading partner will do the work competently); and goodwill (expectations that both parties will have a moral commitment to maintaining the relationship). Partly as a result of these varying meanings, the concept of trust can be problematic (Lane and Reinhard, 1988), open to competing interpretations. For example, trust has very different meanings in the context of the dangers of mining coal underground (Douglass and Krieger, 1983) and in that of producing complex financial products, such as derivatives, in the City of London (Budd and Whimster, 1992; McDowell, 1997). However, although the substantive meaning of trust varies significantly between these two situations, in both cases it results from day-to-day working practices, strongly conditioned by surrounding social institutions and regulatory régimes. Relational contracts and collaborations often involve complex configurations of several co-producing firms, linked into networks of varying breadth, depth and organisational form. They can vary in degree of closure or openness, spatial extent and form and the extent of hierarchy within the network. Networks vary from relatively closed (for example, Japanese keiretsu) to much more open-system networks. They also vary from relatively egalitarian horizontal associational networks of co-producers, such as those formerly found in many parts of the Third Italy and other regions of southern Europe (Asheim, 2000; Hadjimichalis and Papamichos, 1990), to vertically differentiated sub-contracting networks, incorporating varying degrees of power and influence and hierarchical and exploitative relations among firms (Dicken and Thrift, 1992, 285–256; Leborgne and Lipietz, 1991, 38–39; Martinelli and Schoenberger, 1991, 120; Tokatli et al., 2011). As the subsequent experience of the canonical industrial districts of the Third Italy (and other parts of southern Europe) graphically demonstrated, however, such districts could be ‘hollowed out’, the place-specific network relationships ripped apart as trust evaporated, with routine production relocated to cheaper labour locations, as the districts became the controlling location of vertically disintegrated and spatially dispersed sub-contracting networks (Hadjimichalis and Hudson, 2014; Hudson, 2003). In a different context, the transition to capitalism in China, the complex industrial production system that initially developed in Shanghai based on relationships between the big state-owned enterprises (SOEs) and the vast numbers of Town and Village Enterprises, a system based around “lingering socialist relations of production”, was subsequently savagely restructured and hollowed out as relationships between the SOEs and their suppliers were subjected to the pressures of competitive capitalist market relations (Buck, 2007, 765). As with the Third Italy, this exemplifies the way in which relationships among co-producing companies – and places – can be radically re-structured as place-based networked relationships are destroyed in pursuit of profit and economic survival.

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While network relationships can be constituted in diverse ways, with varying degrees of closure and legal (in)formality and differing structures of intra-network power relationships among the co-producing firms, as the above examples illustrate they may also be fragile and subject to rapid restructuring and change. The location of decisive power in relations among firms co-producing within networks depends in part upon the character of the commodities produced, their cultures of production and the governance arrangements that link firms together. Global commodity chain analysis initially distinguished between “producer driven” and “consumer driven” chains, a difference depending on the activities of the dominant firm at the head of the chain (Clancy, 1998; Gereffi, 1994) but this dichotomy failed to capture the variety and subtlety of network relations and governance structures and their diverse spatialities. In response, it was subsequently elaborated into a five-fold typology, in which the characterisation of types of global commodity chain (GCC) governance structures extended from “un-embedded ‘arms-length’ market relations … through modular, relational and captive value chains, and … [culminating] … in ‘hierarchy’, which relates to the complete vertical integration of production within a unitary transnational enterprise” (Taylor, 2007, 534).1 Applebaum (2008) suggests that the emergence of giant transnational contractors in East Asia initially in electronics but subsequently also clothing and footwear is evidence of the emergence of a sixth type of chain. These giant contract suppliers operate large modern factories (in contrast to the sweatshops of small contractors emblematic of the early phases of the clothing GCC) and have also taken over many of the pre- and post-production functions previously centralised by “big buyers”, including design, warehousing and control over logistics (Applebaum, 2008, 73). These dynamics seem to signal that there has been a power shift among the co-producers in the clothing and electronics chains, with the asymmetry between “big buyers” and contractors at least partly redressed as these giant contractors increasingly are in a better position to negotiate prices with giant retailers (ibid., 71, 81). Even so, while offering valuable insights into the processes of collaboration and competition between companies within a chain, these typologies still offer a rather limited and stylised view of the variety of governance arrangements in these one-dimensional commodity chains. The later development of the literature on global production networks (GPNs) provided a rather more nuanced view of the governance and spatial organisation of production at global scale, moving away from one-dimensional linear chains to more complex geometries of relations among co-producing companies, albeit one that initially was very much firm-centric and paid relatively little attention to the role of labour and national state policies in shaping such networks (see Smith et al., 2002). More recently, however, there has been increased attention given to the varied roles of labour in some of these chains and networks (Barrientos, 2013; McGrath, 2013; Mezzadri and Fan, 2018; Selwyn, 2012) and also to the range of activities that such networks encompass (for example, see Murphy, 2012). However, an explanation of how these arrangements relate to the imperatives of the law of value and the transfer of value among firms in the network or chain remains generally absent in these various forms of GCC and many (though not all) GPN approaches (Starosta, 2010). Equally absent is an explanation of the how governance

108 Collaboration among firms structures and relationships among participating firms change over time (PatelCamillo, 2010, 79). In part, these changes have come about as production has become increasingly disintegrated and dispersed to diverse locations around the globe, so that international trade has increasingly become intra-corporate trade and dispersed economic activities have been re-integrated into more complex arrangements via the growth of international trade and flows of commodities, money capital and people (Feenstra, 1998). The character and form of chain or network relations is fundamentally contingent upon the asymmetric power relations among collaborating co-producing firms, as lead firms strategically exert their power in order to configure chains or networks to enhance their own profitability at the expense of others, to influence the ways in which these relations are mediated by state policies, and to determine the nature of the economic activities in which these constituent firms engage. There are numerous examples which illustrate this. Patel-Camillo (2010) shows how grower strategies and government policy facilitated the formation of grower cooperatives2 and transformed the power relations between growers and buyers in the Dutch cut flower industry in a shift from a buyer to a producer-driven chain. Asymmetric power relations between food processing companies and the farmers that supply them are long-established. For example, by the 1860s in the USA Campbell’s and Heinz exercised tight control over their supplying farmers, providing them with seed and laying down cultivation practices. [Heinz] guaranteed to buy the entire harvest at a price agreed at the time of planting. Thus, he secured his source of supply, the quality of the yield, and reduced the risk both to himself and the farmer … (Harvey et al., 1999, 161–162) This was a clear pre-cursor to supply chain practices which had become generally dominant by the late twentieth century in food production, with a concentration of power in a few companies that dominate food retailing (Lawrence, 2004), so that major food retailers such as Asda and Tesco in the UK were able to obtain significant amounts of free credit – around £2 bn – from their suppliers by simply delaying payments to them (Plender and Tricks, 2005). As Plender et al. (2005) remarked, “[i]n effect, suppliers have acted as surrogate bankers to the two groups on a remarkable scale, contributing growing amounts of finance in a period when cash flow from depreciation covered only one third of the combined investment outlay”, an approach also deployed by other major food retailing chains in Europe. Furthermore, in a context of a dominant oligopoly and markets in which the supermarkets had become increasingly sensitive to consumers’ concerns about food quality (Marsden et al., 2000), the supermarket chains were able to dictate the parameters of production of a range of crops as these concerns were transmitted down the supply chain. If food producers fail to conform to these requirements, then retailers can simply refuse to buy. In like manner, McDonald’s stringently specifies how its franchisees should cook and

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prepare hamburgers. In manufacturing, assembly companies specify precisely the quality standards and delivery schedules to which their component suppliers must conform (Hudson, 1994a). Such inequalities in power and influence are characteristic of many forms of co-production and are endemic throughout capitalist economies. In other mass consumption industries the retailer–manufacturer link may crucially shape the form of the co-production system and its spatial structure. Hourly variations in demand can be directly transmitted to the production line from electronic points of sale (EPOS) in shops via electronic data interchange (EDI) (Marsden and Wrigley, 1996).3 Because off-shoring of production to China, India and other parts of south east Asia failed to deliver expected increases in profitability, companies have re-structured network relations, shortened supply chains and re-located production nearer to home and sometimes back in-house. For example, Kenwood moved the production of minidisks from Malaysia to its Japanese factory at Yamagata; although labour costs were four times higher, production costs were 10% lower and moving to Japan enabled a faster response to changing market conditions (Nakamoto, 2005). In the clothing industry “the need for close monitoring of suppliers who can make the quality grade and respond extremely quickly to fragmenting and shifting consumption signals is resulting in more localised sourcing chains” (Crewe and Lowe, 1996, 279; see also Tokatli et al., 2011). As a result, many clothing companies have also switched to ‘near-shoring’ and located production in suppliers closer to the European market (Marsh, 2005a). More radically, as well as near-shoring suppliers, Zara keeps a remarkable proportion of its supply chain in-house. It buys cloth … from south east Asia, and dyes, cuts and sews most of its own garments with a network of factories in Spain and Portugal. Because this supply chain delivers quickly and with little waste because of rapid feedback from shops about what is selling well, it compensates for what it costs in higher wages. (Beattie, 2005) Echoing structures of relationships developed in automobile production (Hudson and Schamp, 1995), major clothing retailers also pass the costs of stockholding on to suppliers by securing pseudo just-in-time supply from increased stocks held by producers. The precise nature and configuration of links and relationships among coproducing firms depends upon the form of production system chosen by the dominant firm or firms. For example, high volume flexible production (HVFP) systems of co-production require and reflect a particular conception and practice of inter-firm co-operation to ensure that rigorous demands for quality and delivery schedules are met and suppliers accept a greater share of R&D and product development costs in exchange for long-term but never unconditional contracts. Issues of price and quality remain central. Within HVFP systems,

110 Collaboration among firms major assembly companies select a few large and capable first-tier ‘turn-key’ suppliers with generic manufacturing capabilities which function as ‘system integrators’ in modular co-production networks, managing the production and the assembly of components produced by other sub-contractors into subassemblies and final products (Nolan, 2003; Sturgeon, 2002; Sunley, 2011), in this way echoing a long-established model of organisation in one-off or smallbatch production of capital goods. In addition, in automobile production for example, system integrators have become increasingly specialised in the production of particular modules or technologies. While a few upper tier suppliers (often major multinational corporations (MNCs)) may enjoy relationships based upon trust (and conversely, the assembly companies and brand owners at the top of the hierarchy become more dependent upon them), further down the supply chain, with companies providing more basic components, regulation via typically fierce price competition remains endemic. Suppliers are also subject to rigorous screening and selection procedures by their corporate customers to ensure the required quality of products while renewal of contracts has typically depended upon price reductions, passing productivity gains resulting from cooperative R&D and continuous quality improvement on to the final product manufacturers (Hudson, 1994a; Nolan, 2003). In automobile production, for example, many assembly companies require their suppliers to open their books and submit to audits of their operations in the course of ongoing supplier quality assessments while the suppliers have no comparable right of scrutiny of their customers’ costs and internal practices (Rutherford and Holmes, 2007). Furthermore, major original equipment manufacturers, the brand owners that have the ultimate control of intellectual property (IP) and operate globally distributed co-production systems, may give proprietorial information to other firms which can produce components more cheaply. Some of the ways in which network relations have been altered – and the limits to such changed approaches – can be illustrated by the changes in the production of commercial airliners (Betts, 2007b). The production of and market for large commercial airlines is dominated by Airbus and Boeing, although with rather different spatial strategies of production as Boeing has concentrated its activities in Seattle while Airbus has split production between different sites within the EU. However, both have developed their most recent airliners, the Boeing 787 Dreamliner and the Airbus A350, in a radically new way, transforming themselves into systems integrators within networked co-production structures. While formerly they designed, engineered and manufactured as much as possible in-house, with strictly limited (although not insignificant) and controlled sub-contracting of component and parts production, increasingly they have devolved much more of the production of components and also design and engineering to international risk-sharing partners. Boeing initially out-sourced production of over 90 per cent of the parts for the 787, distributing manufacturing and design processes across an international network of partners, including “more than 50 of the world’s most capable top-tier supplier partners … at 135 sites around

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the world” (West, 2013). As a result, the 787 had about 30 per cent of parts made outside the USA, compared to about 5 per cent for the 747. However, the intended short-term cost reductions were only partly realised as “the complex engineering jigsaw failed – the parts arriving at Boeing’s main Seattle operation in the wrong sequence, or would not fit with parts from other manufacturers”. As a result, Boeing “was forced to bring some work back in-house” (ibid.), especially for parts that needed to be produced to very fine tolerances. As well as greater out-sourcing within this new model of aircraft co-production carrying these risks of failure of quality control, it also brings longer-term risks as it involves substantial transfers of technology and proprietary knowledge to potential competitors in China, Japan, Russia and other south east Asian countries. In networks dominated by major retailing companies, such as clothing, the coproduction system is structured to lock preferred suppliers into relations of dependence upon oligopolistically organised retailers, with fierce price competition between ‘preferred’ and lower tier suppliers (Crewe and Davenport, 1992, 196) and, on occasion, between retailers and preferred suppliers (Merchant and Voyle, 2000; Minton, 2000). In addition, however, such as in the ready-to-wear clothing industry in Istanbul “there was a huge need for a complementary component of sub-contractors, basically because of capacity-related and speciality-related issues, as well as those of keeping prices low …”. Furthermore, in some circumstances, “the pressures of keeping prices competitively low [have] encouraged manufacturers to enter into sub-contracting relationships with smaller workshops on the edge of illegality” (Tokatli et al., 2011, 1206). Thus, despite claims as to their relatively flat nature and collaborative character, the significant asymmetric and differential power relations within co-production networks can, in some circumstances, lead to firms crossing the boundaries from legal to illegal activities. This emphasises the point that in terms of relations between firms in such networks, “[n]ot all parts of a network are equal” (Dicken et al., 1994, 32) – and I would add not just in terms of relations between firms but also in other respects, not least in relations between capital and labour. In other networked co-production systems, such as those producing advertisements, lead companies co-ordinate the production process in different ways, depending upon the character of the inputs that they are out-sourcing (Grabher, 2001, 367). In coordinating the provision of routine services, such as printing, for which there is little creative input and a familiar pattern of ‘made-to-order’ supply, advertising agencies act more as “orchestrators”. For the provision of other commodities, which cannot be pre-specified and have a high creative input (such as film direction and production), jazz provides a more appropriate musical metaphor. For “orchestration connotes prescribed musical scores and a single conductor or leader to create the static (hierarchical) synchronisation of the orchestra. The co-operation with suppliers of these idiosyncratic inputs, however, involves turbulence, ambiguity, and a ‘redistribution of improvisation rights’” that is more in tune with the fluid improvisations of jazz. Consequently, such networked co-production structures have distinctive organisational characteristics.

112 Collaboration among firms The first is provocative competence, improvising and interrupting habits and routines. Secondly, they celebrate error as a source of learning. Thirdly, they are distributed systems, with tasks spread around between people. Fourthly, people alternate between roles of leader and follower, between performing as problem solvers and supporting problem solvers. Finally, they are characterised by “hanging out”, or learning-by-watching while apparently idle and not working. However, as Grabher (2002, 258) later recognised, such [n]etworks and groups above all link the projects with rapidly internationalizing and globalizing markets and also largely in response to changing client demands, broaden the disciplinary breadth of projects. Increasingly, groups also seem to become aware of the systemic limitations of project-based organizing by providing organizational arenas for cross-project learning. This conclusion also has important implications more generally for projectbased knowledge production strategies (as discussed in the following section and in Chapter 4). There are, however, three important further qualifications that must be made about networked organisational forms of co-production. Firstly, there is uncertainty about their extent (Gertler and DiGiovanna, 1997). The available evidence mainly relates to links between big firms, or between big firms and small and medium-sized enterprises (SMEs), drawn from a restricted set of industries and places. Despite the heterogeneity and prevalence of SMEs there is less evidence available on inter-SME links (and much of this relates to relationships within industrial districts in southern Europe, in many of which production structures have been hollowed out: Hudson, 2003; Hadjimichalis and Hudson, 2014). Secondly, there is no guarantee as to the stability of network forms or that they will persist over time; they represent a temporary fixing of the contradictory socio-spatial relations of capitalist co-production. Thirdly, relationships between network structure and spatial form are indeterminate. Some forms of Just-in-Time (JIT) production require co-location. In industries such as automobile production, the drive for shorter product development and delivery cycles has led to network restructuring and the greater spatial clustering of component supplier firms around vehicle assembly facilities (Rutherford and Holmes, 2007). Often, this clustering takes the form of specific industrial parks on which supplier companies locate adjacent to, or even within, the assembly plant; for example, Reed and Wright (2012) describe how at GM’s plant at Lake Orion, north of Detroit, [c]ar workers installing air conditioning and other components pick up kits of parts prepared by contractors working just a few yards away. The workers then step onto a conveyor belt carrying the cars and install the parts under the bonnet or inside the footwells. They then walk back, ready to start on the next vehicle.

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In some factories final assembly is also sub-contracted (Abreu et al., 2000; Ramalho and Santana, 2002). More generally, co-location or spatial propinquity may (but does not necessarily) facilitate organisational proximity by increasing the probabilities of encounter and interaction. Companies may simply be unaware of the capabilities of co-located firms and continue to source from distant suppliers for a variety of other reasons; given lack of knowledge, they prefer to continue to supply at a distance. However, they may know about local suppliers but continue to buy from more distant but cheaper or more reliable sources. Conversely, particularly given the advances of ICTs, organisational proximity does not necessarily require spatial propinquity (Bellet et al., 1993). Moreover, while different network relations can take different spatial forms – territorially integrated or disintegrated – the same network relationships can also take different spatial forms in different time/spaces (Leborgne and Lipietz, 1991, 38–39). While spatial proximity alone may facilitate incremental changes to process technologies, radical process innovations and the creation of new production practices require close interaction between the producers and users of technologies (von Hippel, 1998), which is most effective in circumstances in which users and producers share triple proximity – cultural, organisational and spatial (Lundvall and Johnson, 1994).4 In other cases, spatial proximity results because production depends upon material exchanges between co-located processes and firms. Outputs from one become inputs to others, notably in continuous flow industries such as bulk chemicals and steel (Hudson, 1983, 1994c) or between industries co-located on eco-industrial parks (Scharb, 2001; Spohn, 2002). There are, however, no rigid deterministic relationships between a particular form of inter-company relations and a particular geography of the production system. In networked HVFP systems component supplier companies can be co-located or can be – literally – located on the other side of the world. Sometimes companies have established one or two factories to serve the entire global market (Howells, 1993, 227), although such single or limited sourcing strategies run the risk of disruption to the production process because of this dependence. Clearly ‘Just-in-Time’ does not necessarily equate with ‘in one place’ (Hudson, 1994a, Lung, 1992).

5.3 Networks, collaborative knowledge creation and innovation: relationships among forms of proximity As suggested above, there are several forms of proximity that can facilitate collaboration between firms in the co-creation of knowledge and innovations: as well as geographical or territorial proximity, cognitive, institutional, organisational and social proximity can all be significant (Boschma, 2005; Lundvall and Johnson, 1994). Cognitive proximity refers to the extent to which people share the same knowledge; institutional proximity to the extent to which they share norms, practices and/or incentives; while organisational proximity refers to membership of the same organisations and social proximity refers to personal relationships between people (Davids and Frenken, 2018). The significance of differing forms of proximity varies with the motives for collaboration: for

114 Collaboration among firms example, high social proximity, based on prior ties and trust, is particularly important when the aim of a collaborative joint venture is cost and risk reduction (Hansen, 2014, 380). Empirical evidence suggests that all forms of proximity tend to be associated with increased collaboration and that distance on one dimension can be compensated for by closeness on others (Davids and Frenken, 2018). The resurgence of neo-Marshallian industrial districts in the Third Italy and other parts of southern Europe and the emergence of ‘new industrial spaces’ in the USA and elsewhere in the latter decades of the twentieth century (Scott, 1988) demonstrated that in some circumstances territorial proximity can be crucial. Twenty years later similar processes were in evidence in China in relation to Apple’s production strategy there, emphasising the importance of the huge cluster of component makers that are able to keep up with the constant upgrades required by the electronics industry. Chinese factories are also legendarily flexible … just weeks before iPhones were due to go on sale in 2007, Apple revamped the production line in Shenzen in order to fit the phones with glass screens instead of plastic ones. That turnaround would not have been possible anywhere else. (Pilling, 2013, emphasis added) In a similar vein, the discovery of ‘learning regions’ and regional innovation systems also pointed to the significance of territorial proximity and the unique spatial assemblage of assets in the co-creation of knowledge and innovations in some times and places (Braczisch et al., 1998; Cooke and Morgan, 1998). While much of the literature made claims as to the novelty of these processes and of the significance of knowledge and innovation to economic processes, as if this were something new rather than always integral to those processes (Hudson, 1999), there were significant path dependencies and strong continuities with past developmental trajectories. For example, the industrial districts of southern Europe in the late twentieth century bore a marked resemblance to their Marshallian predecessors in the UK in the late nineteenth century. Historically, as Harvey (2014, 96) notes, the [s]pontaneous development of innovation centres … occurs because … the fortuitous co-presence of different skills and knowledges of the sort … necessary for innovation to occur is more likely to be found in a seemingly chaotic economy characterised by innumerable small businesses and divisions of labour. More recently, however, the deliberate organisation of research universities, institutes, think tanks, and military R&D units in a given area with the intention that they collaborate has become a basic business model through which the capitalist state and capitalist corporations pursue innovation for competitive advantage, in part linked to new regional development strategies seeking to

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create new knowledge-based economies in peripheral and deindustrialised places (Hudson, 1994b, 2011). Such policy-led attempts to create successful place-based economies centred on collaborating firms co-producing innovations have met with variable success, since seeking to transplant forms of organisation that developed organically in some places to other places with very different economic histories and cultural and social characteristics is a process fraught with difficulty. Other forms of network also extend beyond the participating firms, enrolling other organisations in civil society and/or the state in the co-production and transmission of economically significant and often sensitive knowledge. As a result, over time certain distinctive ways of doing business incorporating shared norms and values have developed in places such as the City of London and New York’s financial district. Furthermore, while these are locally specific networks, they have developed crucial links among themselves and with other locations that stretch across the globe, both within and beyond the organisational structures of the participating firms. Such “untraded dependencies” (Storper, 1995) and the trust that they engender offer a different kind of ‘glue’ to that of the “traded dependencies” of market transactions and their purely economic logic that binds firms and other institutions together in a particular place. This reflects the existence of local social worlds of bars, cafes, restaurants and clubs, locations for gossip and rumour in which vital economic and financial knowledges can be exchanged in informal networks embracing bankers, corporate chief executives, stockbrokers, business analysts, journalists and so on (often people who went to the same schools and Universities). Crucially these intense class-based networks, through which a particular form of trust is built, are primarily organised at the local scale (Thrift, 1994). Despite the tendency for innovative activities to cluster in particular places, the number of international R&D collaborations, with links between companies spreading across the global, has also increased markedly.5 Building local knowledge and accessing global (non-local) knowledge are intrinsically interwoven activities and generate fundamental feedback loops, which are channelled through and lead to ongoing knowledge circulation (Bathelt and Cohendet, 2014). There are many examples of knowledge-creation and innovation projects that link different companies and span the globe, made possible by developments in ICTs and transport technologies that enable other forms of proximity (cognitive, institutional, organisational and social) to combine in varying ways to compensate for geographical separation and enable distanciated co-production of knowledge. While much interaction can therefore occur ‘at a distance’, those involved in these knowledge co-production projects can still meet face-to-face on a temporary basis at appropriate moments in the innovation process. In other respects, developments in ICTs have allowed the emergence of radically new forms of collaboration in the co-production of knowledge and innovation associated with the creation of new systems of “open innovation”. With the advent of open innovation as a business strategy for the co-creation of innovations, elements of the R&D process are out-sourced “to improve the

116 Collaboration among firms bottom line by exploiting new sources of labour-power in novel ways” (Ettlinger, 2014, 94), enrolling suppliers who compete on the basis of offering to do the work at the lowest cost and in this way cutting the costs of innovation. P&G (Procter and Gamble) is at the leading edge of this development in the organisation of innovation. In 2000, its newly appointed CEO, A. G. Lafley, set a goal of acquiring 50 per cent of the company’s innovations from external sources in a project that, significantly, was not called R&D but C&D: ‘connect and develop’. By 2006, 10,000 ideas for products and technologies had been submitted; from those, firms were chosen to form the global supply chain and they were offered the use of a secure IT platform to share technology briefs to ‘co-create’ with P&G. This represented a significant change in the organisation of R&D that depended upon price competitiveness among potential suppliers. As Ettlinger (2014, 96) notes, [w]here big companies invest in tangible R&D, this is now more likely to be through advancing increasingly internalized corporate venture capital to external firms, on a short-term basis – the Silicon Valley model – rather than expanding their own research departments. The fact that large goods and service producing firms have developed their own venture capital programmes itself speaks to their degree of financialization – in conditions of global overcapacity, higher returns are most often to be found outside their core competencies.6 Such companies have “increasingly found it possible to glean innovative technologies from their suppliers, now furnished with low-cost personal computers and software that facilitated independent innovation” (ibid., 95). As a result, with ‘open production’ of innovations via the Internet and other IT systems such as cell phones, companies can recruit workers for a wide range of tasks of varying complexity and skill content, from problem solving to menial work, from a global labour market. This enables them to establish novel ways of co-producing and collaborating in a new era of virtual sweatshops, creating a new tier in the division of labour facilitated by new communications networks. Companies such as Zappos and Threadless have “effectively eliminated design labour costs, through the development of skilled yet unwaged work” (ibid., 99) as individuals become Foucauldian neo-liberal subjects – Foucauldian ‘entrepreneurs of themselves’ in the business of knowledge creation and innovation.7

5.4 Changing relationships between manufacturers, wholesalers and retailers Capitalist production requires the sale of commodities and the realisation of the surplus-value embodied in them. Successful sale depends upon establishing collaborative relations among and between manufacturers, wholesalers and retailers, and their relationships with providers of credit, finance and financial services. Such relationships are variable over time and space but, however

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configured, they encompass power asymmetries and mutual dependencies. They also involve a redistribution of the surplus-value from the companies producing it to those involved in the circulation and sale of the commodities in which it is embodied. While these latter activities are not directly involved in the production of surplus-value, their involvement is necessary for its realisation and return to the form of money. As a result, as well as interest payments to providers of credit to all the companies involved, the profits of retailers and wholesalers (as well as the wages of their employees for the next round of production) also have to come from that realised surplus-value. Consequently, the asymmetries in power between the companies in these relationships are of some significance, as are their locations. Seen in terms of circuits of capital, the circuits of productive capital (C-M-C’) and of money capital (M-M’) become intertwined in complex ways as realised surplus-value flows between companies and places. The emergence of wholesalers as a distinct form of capitalist enterprise and of wholesale markets was important in the history of capitalist development as these markets combined “the functions of a price forming market and of logistical distribution … [this] was the fundamental structural feature of wholesale markets” (Harvey et al., 1999, 205). Subsequently, the emergence of large multiple retail chain stores in the USA in the latter part of the nineteenth century undermined this rationale and for some firms “broke the traditional divide between retailing and wholesaling by purchasing direct from manufacturers or primary produce suppliers” (ibid., 159). This change in relations between companies entailed new forms of distribution, which depended upon innovations in improved transport, communications and, in some activities, production processes. For example, modern fresh food distribution logistics “involve a complex matrix of producers [of the technologies on which the new systems rely, such as temperature controls and sensing, satellite tracking, moveable bulkheads, laser scanners and bar coding, stock-control software] and a distributed process of innovation” (ibid., 228). In due course, power relationships changed so that major retail chains such as Walmart sat at the apex of co-production networks with manufacturers such as Procter and Gamble (P&G) occupying a subordinate tier; “few consumer group companies are big enough to ignore … [the] downward pressure on prices caused by Walmart and those who wish to emulate it” (Roberts and Foster, 2005). In fact Walmart and similar companies are positioning themselves not as retailers but as merchant capitalists, distributors with their core competencies in logistics, shaping patterns of co-production and deploying “[n]ew technologies to move goods from networks of distribution centres, giving them monopoly control over key nodes in the global distribution network” (Lichenstein, 2009, 52, cited in Ettlinger, 2014, 91). Their warehouses in these nodes are heavily automated, with robots replacing people and the electronically tagged workers who remain increasingly seen as adjuncts of the IT systems that instruct them which goods to take from the warehouse shelves to re-stock the shelves in the retail stores in response to purchases there (Taylor, 2005).

118 Collaboration among firms Walmart has sought to increase the proportion of goods it buys directly from manufacturers rather than third-party procurement companies or suppliers as central to its strategy to cut costs and boost profits; in the words of Eduardo Castro-Wright, Head of Walmart’s USA stores, this is seen as “the opportunity to consolidate global sourcing”, providing “a major source of leverage for the company in years to come” (quoted in Birchall, 2010). Some 80 per cent of Walmart’s 6,000 suppliers are in China (Sunley, 2011). The asymmetric power relations that Walmart and similar capitalist enterprises seek with their suppliers are significant because “[b]y exerting immense pressure on the capitalist producers, the merchant capitalists and financiers … can reduce the return to the direct producers to the smallest of margins while racking up major profits for themselves” (Harvey, 2014, 84). As well as retailing and distribution companies such as Walmart operating in this way, so too do brand owners such as Apple, sub-contracting the manufacture of its I-products to China, especially to Foxconn and its supply chain, for example (Grimes and Sun, 2016; Hille, 2010). In cases such as these, not only does the realisation occur in a different sector, it also occurs in another country on the other side of the world, creating a geographical transfer of wealth of considerable significance. This echoes Hadjimichalis’ (1987) earlier analysis of the significance of geographic transfers of value in relation to the production of uneven and combined development in capitalist space economies. Such complex socio-spatial distribution systems are not without risk, however. In response, companies have developed sophisticated systems of inter-company relationships to try to minimise the risks to disruption (for example because of labour unrest and strikes, or natural disasters such as earthquakes, hurricanes and floods: Felstead, 2005), especially in ‘lean’ JIT systems of co-production and distribution. This involves “creating sufficient network capacity, distributed between different operators, and both combining in-house expertise and knowledge with a suite of out-sourced third-party operators, [so that] the overall logistical strategy minimises risks of… disruption in … supplies” (Harvey et al., 1999, 224). However, such strategies are not guaranteed to succeed. This became particularly evident in China, where Applebaum (2008) shows how the emergence of huge factories has encouraged labour militancy because workers came to understand the disruptive effects of their collective action on the global supply chains. In some circumstances, lead companies have financially supported key suppliers to prevent disruption to the flow of components and production (for example, see Michaels, 2007). The growing complexity and proliferating spatial reach of socio-spatial divisions of labour and relations among producers, distributors and retailers entail a qualitative leap in the nature of problems of co-ordination. It has been partly possible to solve these via various advances in ICTs and transport technologies – developments that were necessary pre-conditions for these socio-spatial divisions of labour to emerge in the first place. However, dealing with these coordination problems also requires more and different forms of “expertise” and this has resulted in the emergence and heightened significance of logistics

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and specialised logistics companies (Coe, 2014). It has therefore also involved the increasing importance of and dependence upon the “rule of experts” (Mitchell, 2002), those with the capability and knowledge to manage complex co-ordinating systems and fix them when they go wrong or fail to function as intended. Such failures threaten both the viability of individual capitalist enterprises as well as the sustainability of the capitalist system more generally. For as Harvey (2014, 138) suggests “the spatial and geographical organisation of production, distribution and consumption is in itself a way of orchestrating the contradictory relation between monopoly and competition”, emphasising the crucial role of spatial differentiation and uneven development in the organisation and expanded reproduction of capitalist economies. Moreover, as the spatial reach of capital has expanded, and the forms of spatial organisation deployed by capital have become both more complex and more sophisticated, the capacity to organise economic activities over space and coordinate flows of capital in its commodity and money forms has assumed greater significance. This in turn emphasises the importance of fixed capital in various forms of investment in ‘hard infrastructure’ and ICTs (video conferencing, email, list servers, satellite technologies and so on) and their significance in relation to facilitating these flows and the circulation of capital, an unavoidably contradictory relationship. Innovations in communications and transport technologies, notably the growth from the 1960s onwards of global systems of telecommunications (Malecki and Hu, 2009) and containerisation (Antonopoulos, 2016; Guerrero and Rodrigue, 2014) played a vital role in changing forms of collaboration and the geographical range of competition, especially with the development of methods of sorting goods in supervised bonded warehouses in the origin countries into sealed containers with the correct mixes for individual stores or distribution centres in the destination countries. In addition, there were important regulatory changes such as allowing customs declarations to be made at the factory rather than the export port (Wright, 2007) and more general reductions in political barriers to trade. Therefore, investment in fixed capital in these new transport and communication systems – very often provided by national states – has been critical in enabling the enhanced circulation of commodity capital, an expression of the dialectic relationship between fixity and the circulation and flow of capital. Furthermore, the growing use of ICTs in distanciated networks of co-production and trade has involved embedding organisational functions and responsibility into ‘hard’ infrastructure, the ‘delegation’ of tasks involved in the maintenance of social relations among and within firms from people to machines of various sorts, hardwiring and encoding coordination decisions into algorithms. This in turn requires more and different forms of ‘expertise’ and dependence upon the ‘rule of experts’, new forms of work, new skills and new groups of technical workers, a reconfiguration of the kinds of work and time frames of their action. It requires new forms of relationships among people to enact, produce, maintain, repair and sustain the material and technological infrastructure. Ribes et al. (2013, 4) refer to “the emerging trend for technologies themselves to actively sustain a geographically and

120 Collaboration among firms institutionally distributed organization”. Furthermore, “missing or weak affective ties may be made up in code to automate the workflows, models of trust, and norms of cross-organizational collaboration”. While they are in principle reversible, “acts of delegation are in practice prone to all sorts of path dependencies that make going back to prior states costly or impossible” (ibid., 12).

5.5 Longer term collaboration: co-production, strategic alliances and joint ventures As companies have increased in size, there has been a growing tendency for major companies to develop longer-term strategic relationships with key partners that go beyond the scope of relational contracts and their networked forms in their breadth, depth and forms of co-productive relationships. Strategic collaborative relationships can be developed in response to varying motives and take a variety of forms. Some – for example, trade associations and cartels, through which firms seek to control markets and avoid ‘ruinous competition’ – have a long history (for example, see Sweezy, 1938) and continue to be important. Others are more recent, emerging around other issues of shared strategic interest, underpinned to varying degrees by trust (Lorange and Roos, 1993). One indicator of this is the growth in the USA in the percentage of turnover of the largest 1,000 companies generated through strategic alliances, doubling between the early 1990s and 1998 to reach 25 per cent of turnover (Larsen G, cited in Hudson, 2001, 216). Such alliances are forged for a variety of specific purposes, shaping forms of co-production in varying ways (Vyas et al., 1995). They include: 



Market domination – strengthening market position and moving towards a position of monopoly via collaborating with others, establishing strategic alliances that dominate markets (as, for instance, in airlines, automobiles and pharmaceuticals). For example, from 1999 Nissan and Renault have been involved in a long-term bi-lateral strategic alliance, each owning large equity stakes in the other. Market access and penetration – for example, forming such alliances to gain access to mature national markets in sectors such as ICTs (Cooke and Wells, 1991; Hansen, 2014) or as a low risk method of penetrating highrisk markets, such as those of the transition economies of China and central and eastern Europe (Smith, 1998), sometimes via specific joint ventures (Griffiths, 2005; Marsh, 2013). Given the significance of the Chinese market, developing such relationships has become particularly important there. Franchising has become a specific form of strategic alliance that is particularly popular in service sector industries – for example, with companies such as McDonald’s in catering and fast food – as a way of penetrating unfamiliar markets while avoiding exposure to risk in culturally unfamiliar environments in which the cultures of local consumers are little understood.

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Sharing the increasing costs, uncertainties and risks of new knowledge creation, R&D and new joint product development, especially in technologically sophisticated sectors of production, and sharing technologies (Chesnais, 1993, 19; Walsh and Galimberti, 1993, 187–188). Often this involves joint ventures created specifically for this purpose. As Gertler and DiGiovanna (1997, 1586) note, “collaborative relationships in the form of strategic alliances between two or more firms have become a popular organizational form by which to spread the considerable costs of new product development” in industries such as pharmaceuticals, automobiles and micro-electronics, computing and telecommunications. For example, in 2010 Daimler-Benz, Nissan and Renault revealed a strategic partnership that involved swapping equity stakes and agreeing to develop and build small cars, vans and engines, with the intention of cutting both development and production costs. While falling short of the depth and breadth of the 1999 Nissan-Renault relationship, it went well beyond the limited short-term co-operation on individual cars and engines favoured by competitors such as PSA Peugeot Citroen, BMW and Ford (Reed and Schafer, 2010). Accessing specialist knowledge that cannot be cost-effectively created within the firm, especially in areas of complex manufacturing: A car assembler, which ultimately co-ordinates 20,000 parts, or a Boeing, whose planes contain some 250,000 parts, cannot possibly develop in-house the best qualified supplier, which means guessing right on technological developments in every productive activity that contributed to the final product. Instead, long-term consultative relations with suppliers in which design concepts are developed together offers the car assembler and Boeing the opportunity to specialise in design, assembly, distribution, and marketing. (Best, 1990, 264)





Joint production to realise economies of scale and scope (Lie and Santucci, 1993, 116; Delapierre and Zimmerman, 1993) or, alternatively, to cope with problems of over-capacity. Faced with problems of over-capacity, automobile producers increasingly considered strategic co-operation with rival companies as a way of cutting costs and realising scale economies by agreeing common standards, purchasing common components and sharing costs (Milne, 2007). Taking advantage of coalescing product categories, especially in sectors characterised by rapid technological change and heavy reliance upon expensive technologies, embracing collaboration over both product and process innovations (Hagedoorn, 1993; Mulgan, 1991).

Whilst not new, strategic collaborative ventures across national boundaries increased greatly in number from the 1980s (Lester, 1998) and changed

122 Collaboration among firms qualitatively in significance. Three features of that expansion are particularly striking. First, while regulatory policies and practices of national (and emergent supra-national) states may deter rather than encourage such forms of co-operation (Mulgan, 1991), they have become central to the competitive strategies of many national states and “virtually all large (and many smaller) corporations” (Dicken et al., 1994, 32). However, such alliances are most common between large MNCs, especially in sectors associated with new, technologically intensive products, “typified by high entry costs, globalization, scale economies, rapidly changing technologies and/or substantial operating risks” (Morris and Hergert, 1987 cited in Dicken 1998, 228). Consequently, they have a distinctive geography, concentrated within and between the global triad of macro-regions in North American, Europe and Japan. However, they are not universal; for example, Angel (1994, 199) concluded that “strong collaboration … is as yet relatively uncommon among US high technology firms”. Secondly, the vast majority of strategic alliances are between competitors, in both manufacturing and service activities. In a sense, this form of co-production is no more than a reflection of the dominance of a small number of MNCs in key sectors of the global economy. For example, such relationships are rife in the airline and automobile industries (Shaw and Williams, 2003, 106–108; Hudson, 1994a). Thirdly, many companies are forming networks of alliances rather than just involving themselves in a single alliance: “relationships are increasingly polygamous rather than monogamous” (Dicken, 1998, 228). Consequently, an important result of the expansion of these various forms of strategic alliances is that the boundaries between firms have become more blurred as the socio-spatial anatomy of co-production systems and the economy has become more complex.

5.6 Merger and acquisition: competition or collaboration and a new route to co-production? Mergers and acquisitions (M&A) can be either a form of competitive strategy, with the hostile acquisition of one company by another, or a form of amicable collaboration when two (or more) firms agree to merge for mutual advantage or when merger seems the least worst option available to one of the firms involved. Seen in this light, broadly speaking, M&A can form an element of either or both of ‘strong’ or ‘weak’ Schumpeterian competitive strategies. The latter involve attempts to cut costs via combining companies in similar product markets, concentrating market share, cutting unit costs and raising profitability. Other types of merger approximate more to forms of ‘strong’ competition as companies seek to add qualitatively new dimensions to their activities, such as new products, more effective processes or organisational and management skills (Waters and Corrigan, 1998). The anatomy of ownership and control of economic activities is therefore restructured as a result of (amicable) merger and (sometimes hostile) acquisition activity which serves to relocate firms in terms

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of structures of co-production, collaboration and competition. In particular, firms seek to strengthen their market position – that is, move towards a position of monopoly – via acquiring or merging with others. While M&A activity has become a more pronounced feature of capitalist development in recent decades, it is by no means a recent feature but rather is endemic to such development and varies spatially and temporally as well as by industry. There was, for example, a major peak in M&A activity in the USA around 1900, with less pronounced peaks in the late 1960s and mid-1980s, before another major surge in the late 1990s, and less pronounced though still significant peaks immediately before the crisis in 2008 and again in 2013; in the UK there were major peaks around 1910, in the mid-1920s, the late 1990s and in 2013, but with many smaller peaks in the intervening periods, including the 1980s (Francis, 2018). Between 1850 and 1993 in the Netherlands the number of exits due to M&A was around 5 per cent but in some sectors, notably banking, it was much higher, with about half of all exits of banks a result of mergers with or acquisitions by other banks (Boschma and Hartog, 2014, 248). This exemplifies the way in which the extent and timing of waves of M&A also varies with industry and sector, as these develop at different rates and new products, firms and sectors emerge whilst existing ones decline. For example, the number of companies producing hard disk drives globally fell from 60 in 1985 to 7 in 2006, mainly as a result of consolidation and M&A activity (De Haan and Schipper, 2009) while in a period of less than two years from early 1998, no less than half of the world’s leading 25 pharmaceutical companies were engaged in M&A activity, a period of “unprecedented consolidation” in the industry (Pilling, 2000a, 2000b). This included major cross-national mergers between Astra and Zeneca, Hoechst and Rhône Poulenc, and Glaxo Wellcome and Smith Kline Beecham. In the first few years of the twenty-first century, between 2005 and 2007, there was a surge in M&A activity in the logistics sector, as supply chains stretched globally, and manufacturing and retailing companies increasingly sought partners with global capabilities; for example, Deutche Post acquired Excel, the UK-based logistics group, bringing together 160,000 employees in dozens of countries within DHL (the logistics division of Deutche Post: Ward, 2007). Corporate amalgamation, especially on this scale, involves major economic and social restructuring and so “is bound to run into roadblocks”. As the data for the UK and USA demonstrate, “[t]he result is a wave-like pattern, with long periods of acceleration followed by shorter down-turns” (Nitzer, 2001, 234). This periodicity is also related to the pattern of long waves and the emergence of innovations that have implications for systemic changes in the economy and to changing state regulatory regimes and spaces. Such regulatory frameworks may prevent or discourage M&A because they would pose a threat to competition or encourage them to produce national or supra-national ‘champions’. Some national cultures and varieties of variegated capitalism encourage M&A (notably the Anglo-America model) while others are or until recently have been less receptive to such corporate behaviour, especially if this

124 Collaboration among firms involves unwelcome hostile acquisitions (the German and Japanese models, for example). The considerable increase in M&A activity in the second half of the 1980s and first half of the 1990s was linked to global deregulation of financial markets, the creation of macro-regions such as NAFTA and the EU’s Single European Market, and growing competitive pressures on companies in increasingly internationalised markets (Martin, 1994). The creation of the Single European Market led to increased cross-border M&A activity (Betts, 2007c) and created the space in which waves of acquisitions and mergers transformed industrial districts that had previously been characterised by collaborative local networks of co-producers into economies dominated by large integrated companies with spatially extensive networks of subcontractors linked by market relationships shaped through asymmetric power relations – for example in the clothing and leather industries of the Marche and Veneto in Italy while in Greece major local foods producers were acquired by competitors from Germany, Italy, the Netherlands and Switzerland (Hadjimichalis, 2017, 30–31).There was also an acceleration in acquisitions as a result of the privatisation of former state-owned industrial concerns, especially in Russia and the countries of central and eastern Europe after 1989. This created opportunities both for acquisitions by established companies, which thereby strengthened their position in the market, and also by individuals (the new oligarchs) in privileged positions to acquire substantial assets at knock-down prices as one expression of the process of “accumulation by dispossession” (Harvey, 2004). While M&A is endemic to capitalist development, however, it was not until the 1970s that these processes became global rather than national, linked to the de-regulation of capital flows by major national states and to changes in the dominant form of FDI. By the 1980s the majority of FDI was in the form of M&A, with a majority of investment in services (Weiss, 1997), including financial services (Martin, 1994), producer services (Coe, 1997) and advertising (Leslie, 1994), while brownfield M&A became the dominant form of FDI in manufacturing (Nitzan, 2001, 251). The development of transnational M&A was linked to financial globalisation, the formation of “totally internationalised” financial and monetary markets, enabled by the growth of ICTs and international trade agreements (Chesnais, 1993, 13). This combination of factors laid the foundations for the further development of industrial concentration so that “world oligopoly” became the dominant form of supply structure in R&D intensive and “high tech” industries characterised by rapid technological change as well as in “scale intensive” manufacturing industries (Nolan and Zhang, 2010). This in turn became linked to the emergence of global supply chains and global production networks (Yeung and Coe, 2015). Increasingly open international markets created the space for intra-industry expansion, initially across national borders, while legitimating further national concentration in pursuit of global competitiveness. Nitzan (2001, 246) suggests that “such refocusing is bound to become exhausted, pushing dominant capital towards renewed conglomeration … on a global scale”. However, as Chesnais (1993) hints, the extent to which M&A has led to further centralisation of capital and

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the emergence of truly international – let alone global – firms is uneven, sectorally and spatially. While evident in sectors such as computing, communications, chemicals and pharmaceuticals (Pilling, 2000a, 2000b; Piachaud, 2002), in many others the supply structure remains national, or sub-national. As with strategic alliances, companies can engage in M&A activity for a variety of reasons (Waters and Corrigan, 1998). Indeed, these often mirror the reasons for forming strategic alliances and firms may choose between M&A and strategic alliances, depending on which approach best meets their objectives (Naylor and Lewis, 1997; Thompson, 1999). The same company may, however, be simultaneously involved in both strategic alliances and M&A activity, pursuing acquisitions and mergers for a variety of reasons. For example: 





Big companies may acquire innovative small companies to access growth products or innovative process technologies; or to control the pace of their development or diffusion; or to broaden their product range; or to acquire new sources of technological rents, while avoiding the R&D costs of developing these (Jack and Bowe, 2005; Nitzan, 2001, 253). Companies such as Cisco, Facebook, Google, IBM and Microsoft are constantly searching for innovative new start-ups that could be strategic to their futures. Google alone has made no less than 214 new acquisitions since 1991, while in the same time period Cisco, Microsoft and IBM acquired 193, 189 and 181 firms respectively, mostly though by no means all technologically innovative small firms (Desjardins, 2018). Conversely, market structures may pressurise small companies to sell out, as in the “high tech” electronics sector industrial districts of late twentieth century California (Storper, 1993, 447–448). Even in the canonical horizontally networked industrial districts of the Third Italy and other parts of southern Europe, there have been growing tendencies to sell-out, buy-up and vertically integrate production (Hudson, 2003; Hadjimichalis, 2017). Companies merge in defensive moves to protect their market position against rival companies and pressure from their corporate customers. For example, Concast and Sky merged response to the growth of Amazon and Netflix and their penetration of the home entertainment market (Collingridge and Shah, 2018). P&G and Gillette, with complementarity product ranges, amicably merged in 2005 in response to pressure on prices from Walmart: “a combined P&G/Gillette will have both the brands and scale to be taken seriously even by retailers as large as Walmart” and the merged company was in a stronger position to negotiate with advertising groups, potentially triggering further M&A activity amongst advertisers (Silverman, 2005a). However, “P&G and Gillette also have to co-operate closely with the big retailer and have been pioneers in exchanging consumer information with Walmart” (Roberts and Foster, 2005). M&A between major companies in R&D intensive activities, such as automobiles, biotechnologies, electronics, pharmaceuticals and steel,

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allows the spreading of costs (Jack and Bowe, 2005; O’Connell, 2005; Pilling, 2000a, 2000b; Piachaud, 2002). For example, beginning in the 1980s, the short- and potentially longer-term commercial opportunities offered by emerging biotechnologies triggered waves of M&A activity, re-defining spaces of production, ownership and control, as companies sought to position themselves in this potentially very lucrative market and shape the production of life in the interests of the production of profits. As a result, by the beginning of the twenty-first century, four companies – Aventis, Du Pont, Monsanto and Syngenta – dominated the global market for transgenic seeds. Moreover, as over 75 per cent of transgenic crops produced from these seeds were modified to tolerate the herbicide products of the companies that produced the seeds, this created scope for future expansion as some 80 per cent of seeds planted globally were saved seeds. This wave of M&A and then joint ventures and strategic alliances between these and other leading firms lead to the emergence of “clusters of multinationals co-operating in achieving complete command of the food chain”, from the patent protection of transgenic germplasm, through chemically assisted growing, to the collection and distribution of harvests and their processing into food (Bowring, 2003, 109).8 M&A allows penetration of new markets via acquiring ready-made distribution networks. Market conditions of stagnant or slowly growing demand encourage the growth of M&A (Chesnais, 1993, 17). So too do opportunities to create markets for new commodities, as the major agencies which first emerged in advertising in the USA in the 1920s expanded abroad via processes of M&A and FDI to create networks of international offices and groups (Lash and Urry, 1994, 139). Acquisition of competitors, followed by rationalisation and plant closure, allows companies to eliminate surplus capacity and restore profitability (Clark, 1989). M&A in steel production, with the acquisitive activities of companies such as Mittal (O’Connell, 2005) and the merger between British Steel and Hooghoven, were the prelude to capacity cuts. However, the potential impacts of employment loss can deter M&A, even in sectors characterised by considerable excess capacity (such as the automobiles in the European Union: Hudson, 2002). SMEs may merge in response to growing competition, as they are squeezed between big companies and smaller more specialised niche producers: for example, in advertising and marketing (Nixon, 2002, 136). Companies acquire others to diversify and broaden their product range, and/ or change it via moving into some growing and out of other declining product areas. This allows companies to spread risks, by diversifying into products with varying business cycles, and/or into different spatial markets for the same products. During the 1990s, for example, ICI engaged in a series of selective acquisitions, asset swaps and disposals of peripheral and/or weaker activities to transform it from a bulk commodity to a speciality chemicals producer. This

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involved hiving-off its specialist chemical activities into a separate company, Zeneca, in 1993, but this proved to be simply one moment in an on-going process of acquisition and disposal by both companies (Edgecliffe-Johnson, 1998). Companies in the new knowledge economy have been actively involved in major acquisitions – for example, in 2011 Google acquired Motorola for $12.5 bn, in 2014 Facebook bought WhatsApp for $19 bn and in 2016 Microsoft bought LinkedIn for $26.2 bn as they strengthened their positions in key emerging market sectors (Desjardins, 2018). Acquisition simply can be a way of getting bigger, increasing market share and volume of output, classic processes of concentration of production and centralisation of capital. For example, this occurred in the UK in the 1980s in activities as diverse as clothing production (Crewe and Davenport, 1992) and the cleaning, catering and security industries (Allen and Henry, 1997), and in the 1990s in advertising, exemplified by the expansion of WPP via acquisition and take-overs (Grabher, 2001), pharmaceuticals (Pilling, 2000a, 2000b; Piachaud, 2002) and in a range of global mining companies (O’Connor, 2000). Mittal became the world’s largest steel producer as a result of a series of acquisitions between 1989 and 2005 (O’Connell, 2005). Companies may acquire other companies simply because of a “fashion effect”, a perceived need to increase in size and not to be left behind in the face of M&A activity by their rivals. Companies merge to control markets, although seeking to oligopolise a sector may be problematic because of national state regulation, as in the USA in the late nineteenth and early twentieth centuries, and because of embryonic supra-national state regulation, as with the formation of the European Coal and Steel Community in 1951, which in due course became integrated into the EU.

Despite the rhetoric about the revival of SMEs, ‘big’ is still ‘beautiful’ in capitalist economies that have become increasingly dominated by a small number of major corporations. This is perhaps most dramatically exemplified by the growth of Apple, Amazon, Facebook and Google and their strategies of M&A and vertical integration through which each of them seeks to control their network, as well as the platforms, applications, physical devices and content that run on them (Greenfield, 2018, 275). Through their dominant digital ‘universal platforms’ (online applications that intermediate between the provider of a service and its users) these major platform companies have come to control the underlying digital infrastructure and the majority of data generated through their networks, focusing on the extraction and analysis of data for profit (Lawrence and Laybourn Langton, 2018). The dominant platforms also tend to monopolise particular market segments. For example, in the UK Facebook has 74 per cent share of the social network market; Amazon is responsible for 90 per cent of all e-book sales and an estimated 80 per cent of online physical book sales; and Google has an estimated 88 per cent share of

128 Collaboration among firms desktop search engines and 95 per cent of searches on mobile phones. The £30 bn acquisition of Sky by Concast, “a seminal moment in the established players’ fightback against Amazon and Netflix” (Collingridge and Shah, 2018), is indicative of the increasing importance of size in this key sector of the economy. Furthermore, there is a continuing tendency for production in many other sectors and products to become more concentrated in a few giant firms via processes of M&A and centralisation of capital as they pursue the goal of “world oligopoly”. The acquisition of a firm can be considered a form of “post-entry learning” in which acquiring firms get access to the knowledge of acquired firms, which may increase their own capabilities and improve their routines (Boschma and Hartog, 2014, 250). Consequently, the growth of cross-national M&A can lead to a degree of convergence in business practices. The resultant big companies become the owners and managers of a diverse portfolio of brands, devolving commodity production through global supply chains and the co-production networks that they dominate. Size therefore confers many competitive advantages. These are not, however, unconditional or automatically conferred advantages. Not all M&A projects are successful: for example, having been launched amid a welter of publicity in 1998, the merger between Daimler-Benz and Chrysler fell apart after only nine years, a result of the companies overestimating the scope for synergies because of their failure to appreciate the impacts of the differences between the luxury and volume car markets and the reluctance of consumers in the USA to pay a premium price for the Mercedes brand, added to which there were problems because of cultural differences between the companies and their workforces (Reed and Milne, 2007). Problems of diseconomies of scale can result from M&A creating unwieldy conglomerates, companies that bring together diverse and unrelated activities and as a result are “considered as notoriously ineffective forms of organisation” (Ramsay, 1992, 31). The break-up of conglomerates such as the Hanson Group in the 1990s is indicative of the problems for capital and its managers that result from assembling such unwieldy conglomerates of diverse and unrelated businesses. Consequently, newly merged companies must define their core competencies and decide how best to integrate “local islands of knowledge” from all over the world to develop them (Amin and Cohendet, 1997, 8). They must also decide which activities are tangential and which product lines have surplus capacity and either close them down or divest them to others, and decide which activities to co-produce in-house and which to devolve to networks of co-producers. Consequently, selective disposal, divestment and exit from non-core activities is often a key element in post-merger and acquisition rationalisations and can have marked effects on both the competitive success of companies and on economic geographies as companies seek to maximise the benefits without carrying the costs of increasing size.

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Notes 1 It is debatable, however, whether Taylor’s fifth category constitutes a relational chain rather than a classically vertically integrated hierarchical corporate structure. 2 The issue of cooperatives as a potential alternative to the social relations of capital and conventional employer-employee relations is discussed in Chapter 6. 3 For further discussion of these issues, see Chapter 7. 4 See pp. 113–114 and also the discussion on knowledge production in Chapter 4. 5 See also Chapter 4. 6 As noted in Chapter 4, financialisation has had significant impacts on many manufacturing firms. 7 These and related issues are also discussed more fully in Chapter 3. 8 There is further discussion of the development of genetically modified crops and life forms in Chapter 8.

6

People collaborating and competing for waged work in the co-producing economy

6.1 Introduction Just as capitals compete to make profits, so people of necessity, in order that they, their families and dependants can live, compete to become wage labourers and as a result enable the co-production of surplus-value; just as some companies collaborate with others to make profits, so some people collaborate with others in order to compete for waged employment. Just as there are tensions arising from the necessity for competition and co-operation between co-producing companies, so too are there parallel tensions in relationships between groups of workers. They must simultaneously organise to negotiate with employers and compete with other groups of workers over access to jobs, the terms and conditions on which they are offered and so on. This raises important questions as to the axes around which people decide to collaborate and create “associational power” (Wright, 2000), typically but not exclusively by forming trades unions, and the ways in which this relates to their multiple identities – not simply in terms of their positions in technical and social divisions of labour, important though they are, but as men or women, as people of different ethnic groups or religions, as people of different sexualities, and as people who live in different places. Workers have created divisions on the basis of gender as men and women compete for employment and as certain types of jobs are socially coded as ‘male’ and ‘female’; or, on the basis of ethnicity, other jobs are coded as jobs for the indigenous ‘white’ population rather than for migrants of colour; or as jobs that are coded as being for Catholics rather than Protestants, or vice versa as the history of Ireland demonstrates; or again coded as jobs for illegal migrants as they are regarded as unsuitable for a variety of reasons by those who have legal status in the labour market. More generally, irrespective of their (il)legal status and the qualities that workers bring with them to the labour market and the workplace, migration regulates labour by dividing the working class along national, ethnic, racial, religious, linguistic and cultural lines, producing a divided class with less capacity for collective resistance (Scott, 2013). These varied identities can therefore structure the ways in which people both collaborate and compete with one another for waged employment in the labour market as they strive to find a role in the co-production of commodities that will enable them to at least survive.

Collaborating and competing for waged work 131 Furthermore, these divisions between workers can become institutionalised as a result of the ways in which trades unions behave and the contradictory position that unions occupy with respect to capital. While unions may collaborate over some issues (for example, health and safety at work standards) through international or national organisations (for example, the International Trades Union Confederation or the Trades Union Congress in the UK), on other issues they may be in competition, seeking to recruit members and increase their bargaining power and influence. Just as companies engage in mergers and acquisition (M&A) activity and form strategic alliances, so too do trades unions as they seek to strengthen their position vis-à-vis other unions and in negotiating with their members’ employers (both private sector companies and state organisations).1 In joining a trades union and uniting with some people, workers divide themselves from others in other unions and this may result in them being involved in direct competition for the same waged employment as companies make decisions about where to locate their activities and who to employ. For example, in the mid-1980s in the depressed labour market of north east England, the GMB and AEU2 were in competition for the right to represent workers in the new Nissan automobile factory at Sunderland (Hudson, 1995a). But even in situations in which there is not such direct competition, workers through their unions may be seeking to influence both corporate and state policies to favour their interests as opposed to those of other groups of workers – for example, over the location of investment, over trade policy, or over pensions policies. It is also important to note that in some circumstances in which trades unions are absent – or are proscribed by national states – workers may develop autonomous and informal forms of labour organisation. Unsurprisingly, capital also has a keen interest in the outcomes of this process of division and fragmentation within the structurally defined class of labour. The ways in which workers both unite and divide are important to capital in relation to its ability to recruit the types of labour-power that it wants on terms and conditions that reflect its interests and dominant position. As such, the issue for capital is the form of collective labour organisation and its stance regarding capital rather than an opposition to organised labour per se (as noted in Chapter 3).

6.2 Divisions of labour, changing forms of employment and the tensions of collaborating through trades unions With the growth of large-scale industrial capitalism, the prime institutional form of workers’ organisation gradually became the trades union as workers sought in various ways to become a class – or at least a fraction of it – ‘for themselves’. However, this was a complex and contradictory process and raised the issue of the bases on which workers would come together to form such unions. Given the historical geography of the development of industrial capitalism, there was an emphasis on industry and occupation, often on a local basis, bringing together predominantly (although not always) male workers organised

132 Collaborating and competing for waged work by industry and/or occupation, differentiating workers in terms of the skill levels of their occupations (recognising that ‘skill’ could be defined on the basis of social attitudes rather than necessarily on the technical requirements of a job). Subsequently, especially with the emergence of large-scale mass production, trades unions evolved on the national scale in most of the core countries of industrial capitalism in the twentieth century. In these ways, the formation of trades unions both united and divided groups of workers on the basis of industry, occupation and location, and in addition men from women in places in which there was female employment in workplaces outside the home (for example in the textile districts of Lancashire in northern England).3 Furthermore, trades unions for skilled and unskilled workers typically developed different strategies for relating to capital. Craft and skilled workers generally have more control over their pace of work and the ways in which work is controlled and organised. Consequently, their trades unions developed more room for manoeuvre in negotiations and so the ability to deploy a range of often quite subtle negotiating arguments and tactics. Trades unions representing unskilled workers – for example assembly workers in mass production car or consumer electronics factories – have much less room for manoeuvre in negotiation, since their members have minimal control over the pace and organisation of their work. They either accept the job as offered, or refuse to do so. Consequently, such unions are more likely to resort to industrial action and strikes in pursuit of their aims – although their willingness to pursue such a militant approach may be tempered by wider labour market conditions. While important as a way of furthering the interests of workers, the formation of trades unions is a complex and contradictory process in another sense. Companies generally need workers to organise collectively to facilitate processes of recruitment, negotiation of terms and conditions of employment, and organisation of the labour process but they also need unions to recognise the authority of capital in the workplace. They need to be able to organise the moment of co-production when labour power comes together with the material inputs and machinery of production on their terms. However, because organising in trades unions both unites groups of workers and divides them from other groups of workers, it creates both opportunities and challenges for labour and capital. As the capitalist economy developed with more complex forms of co-production and technical, social and spatial divisions of labour, as capital extended its domain over greater areas of the world – both by drawing in migrant workers to established centres of capitalist activity and decentralising some activities to peripheral locations – the difficulties facing trades unions and workers seeking to unionise became much more complex and challenging. As more and more women were drawn into wage labour, issues of representing the relations of men and women and avoiding these becoming competitive and so tilting the balance in the labour market further in the interests of capital intensified. Similarly, as migrant workers of different colour, culture and religion were drawn into established centres of capitalist activity, representing the rights of migrant workers who were seen as different and competing with the local population for waged work became a major challenge. This was especially so when migrant workers were seen to be accepting terms and conditions of

Collaborating and competing for waged work 133 employment that undercut those agreed by workers from the indigenous population. This was even more the case when illegal migrants were seen as taking the jobs of both legal migrants and local residents (Hudson, 2018a). In labour markets in which securing paid employment is by definition competitive, and in which employers are seeking to develop strategies that both play upon and amplify differences between workers so as to cut the cost at which they acquire labour-power and enhance their control over labour in the workplace, the task of representing workers and seeking to secure better terms and conditions of employment through trades union activity is particularly challenging. One consequence of this, along with changes in spatial divisions of labour leading to place-specific job loss, has been declining union membership in many of the established centres of capitalist activity in the Global North. One trades union response to falling membership, as the examples of the AEEU and GMB illustrate, has been for unions from different industries to merge as they sought to maintain their bargaining power and influence, although this has often led to workers with competing interests coming within the same union structure. Conversely, in those areas in the Global South and emerging economies more generally where capital is expanding for the first time, and new recruits have no experience of working in capitalist workplaces, there are serious challenges facing those seeking to establish trades unions there, especially in places in which they are proscribed by the state or there is hostility to their activities. Nevertheless, trades unions continue to be formed and union membership does expand in these places. For example, in 2013 in China Foxconn, which had previously resisted attempts by its 1.2 million workers to unionise, agreed that they could form “a genuinely representative union” (Pilling, 2013). Padmanabhan (2012) shows how female clothing workers in export-oriented factories in Kerala in southern India organised around a very local set of concerns and formed their own union to confront significantly the “global forces” of the contemporary global economy. Selwyn (2011) examines how significant gains have been achieved in north east Brazil by the rural trade union pursuing a militant strategy of aggressive strikes against employers during the formation of an export-oriented horticultural sector, while recognising that it then entered into a class compromise with the leading employers, changing from its strategy of militant action to win concessions to pursuing its objectives in terms of concessions sought via collaboration. Furthermore, even in situations in which labour remains non-unionised, some workers find individualised ways to advance their interests. For example, James and Vira (2012) show how some Indian call centre agents have developed ways of circumventing a lack of internal job ladders and achieving a degree of career progression through lateral ‘career staircases’, as they migrate between firms in pursuit of better pay, improved working conditions and more complex job roles. The processes and practices of trades union organisation thus seek to unify some workers in a collective organisation but simultaneously divide them from others, both those in other unions and those that remain non-unionised – for example occupationally, industrially, spatially, by gender and by ethnic group

134 Collaborating and competing for waged work (Yates, 1998). Trades unions become the institutional form of such divisions of labour and their practices and modes of representation of shared interests often help reproduce such divisions, sometimes intentionally, at others unintentionally, while in some respects seeking to challenge them. In these ways the structurally defined working class helps fragment itself, in competition over jobs, wages and working conditions and in ways which intersect with dividing the workforce according to a variety of criteria defining identities. Managing, if not overcoming, the tensions inherent in this process of simultaneous unity and division therefore constitute a – one might say the – major task for trades unions. In uniting on one dimension, workers inevitably define ‘other’ groups of workers, with whom they lack shared interests or with whom they are actively in competition. Furthermore, uniting and organising at one spatial scale may undermine attempts to organise at other scales (for example see Sweeney and Holmes, 2013). The dimensions and spatial scales around which workers choose to organise and unite, the formation of collective identities, the defining of ‘us’ and ‘them’, the construction of the underlying processes of “othering” (Said, 1978), and the implications of this for action, are all of central importance. It is, however, also important to emphasise that trades unions’ officials and workers are active subjects, not passive objects, in the creation of such divisions; they are capable and knowledgeable actors, with an understanding of the world constituted through their experiences and the cultures of the places in which they live and work. Even so, they act in circumstances of asymmetric power relations and imperfect and partial knowledge, unable to anticipate all the consequences of their actions. As a result, divisions between workers are actively produced, in part by workers themselves, both intentionally and unintentionally (for example, see Tu, 2014). At the same time, however, these cleavage planes of division are also dimensions of socially constructed individual and collective identities. While workers attempt to organise themselves to further their own interests, notably through forming trades unions, there are inherent limits to these attempts, a result of creating distinctions and divisions between groups of workers that then offer opportunities for companies to exploit. While historically the national became the prime spatial scale of trades union organisation in most of the core territories of capitalism, and remains so in many parts of the Global South, there has been a tendency in the last three or four decades for decentralisation and re-scaling of labour relations and associated issues over much of Europe and north America, shifting the focus from central or national trades unions, employers’ organisations and government institutions back to regional or local institutions and individual workplaces, or from trades unions to company councils, even to individual workers. This has been expressed in a variety of ways: the break-up of national agreements; making secondary picketing illegal to hinder national solidarity by workers; the transfer to local and regional state levels of responsibility for labour market regulation; and the development of collective bargaining arrangements tailored

Collaborating and competing for waged work 135 to individual plants, sometimes without union recognition, or of contracts customised to individual workers. Workers and their collective trades union representatives, to varying degrees, willingly and unwillingly, have been (and remain) active subjects involved in implementing these changes, albeit for many in circumstances and on terrain that they find unpalatable and certainly would not choose willingly (for example, against a labour market background of persistently high unemployment). In contrast, as noted above, in other parts of the world that have more recently come under the sway of capitalist social relationships, the emphasis is still much more upon building national trades union structures and the national as the spatial scale at which the interests of workers are represented and pursued. The competition among and divisions between workers were given a fresh twist by the increasing prevalence of uncertainty or precariousness of employment in much of the capitalist economy as companies restructured the form of commodity co-production. Initially in the mid-1980s, drawing on earlier distinctions between core primary and peripheral secondary sector companies, this process of labour market segmentation was conceptualised as a simple “core-periphery” dualism within large companies (Atkinson, 1984; Mayer, 1992). The position of workers with permanent, privileged, usually full-time “core” jobs “for life” was contrasted with those in marginalised precarious, usually casual or part-time, “peripheral” jobs or “training” positions. Increasingly, however, it was recognised that patterns and processes of labour market segmentation, divisions of labour within companies and the processes whereby particular types of people get particular types of jobs were much more complex than the core-periphery dichotomy suggests and that work across the skill spectrum was increasingly precarious (Ross, 2008). This partly reflected the ways in which capital deploys “divide and rule” strategies and uses segmentation to contain the contradictions of deskilling and homogenisation of workforces (Peck, 1994, 149). Thus “considerable labour flexibility segments and deeply divides the labour market”, with the costs of flexibility to employees experienced as burdens and risks that fall disproportionately on particular groups. Over much of the globalising economy, they were to fall heavily upon younger workers (for example, Garonna, 1998, 231–233). To a degree, however, definitions such as ‘core’ and ‘peripheral’ also depend upon subjective identifications by workers themselves, a way of creating differentiation, distinction and hierarchy within workforces, while trades unions seek to secure the ‘best’ jobs for their members. Workers cannot necessarily be malleably moulded by capital, since they consciously reflect upon their own activities and positions. Echoing the ways in which ‘skilled’ workers were – and are – often insistent on maintaining wage differentials between themselves and ‘unskilled’ workers, ‘core’ or ‘central’ workers may – and often do – consciously differentiate themselves from ‘peripheral’, part-time and casual or ‘marginal’ workers in precarious positions. This process can be particularly acute for those employed in sub-contracting companies. In their analysis of the growth of sub-contracting in segments of the service sector in the UK, Allen and Henry (1997, 189, emphasis in original) argue that a social distance often

136 Collaborating and competing for waged work opens up between the client’s workforce and the subcontract workforce. The contract relationship gives the client’s workforce “the power to define itself as central and others as marginal or subordinate to its activities”. For many contract workers, this relationship defines a clear separation from those who work around them and a “real distance” from those who employ them. The nature of routine service work signifies a subordinate status “but it becomes reified when it becomes contract cleaning, contract catering and contract security”. If the same functions were performed ‘in-house’, the cleaners, kitchen porters, waiters and security guards would share the same corporate identity as the rest of the firm’s workforce and thus very likely the same employment rights and benefits (although in such work these would typically be minimal). Beginning in the 1980s with the ascendance of neo-liberalism in the UK and USA, labour market and workforce ‘flexibility’ was increasingly emphasised as the route to corporate competitive success across the entire spectrum of the formal capitalist economy. Against a background of labour markets characterised by high levels of unemployment, companies were in a strong position to introduce new flexible working practices. While such flexibility was seen as new, however, in many ways it represented a return to practices that had first helped define the introduction of new ways of working as industrial capitalism initially took root in parts of the UK in the eighteenth century (Thompson, 1969). An integral part of the process then of the new systems of co-production was the growth of ‘flexibility’, dividing workers via homeworking and out-working sub-contracting systems (and such forms of work organisation remain prevalent in some industries and places: see pp. 69–70; 148–149). Associated with the recent increase in ‘flexibility’, there has been growing individualisation of contracts and working conditions in much of the advanced capitalist world of the Global North, with a growing number of people employed to carry out the same tasks engaged on different contractual conditions in relation to hours, benefits and entitlements (Standing, 1989). From the perspective of labour, in significant respects this represents a regression to a venerable form of co-production and conditions prior to the rise of trade unionism, with important implications for the collective organisation of labour and union practices as well as for the terms and conditions of work of individual workers. For individual workers, flexibility is likely to mean casualisation and continuous entries into and exits from precarious jobs in peripheral segments of labour markets and lack of bargaining power over the terms and conditions of such employment. Moreover, while “flexibility” is the language of the employer, “risk” is the language of the employee (Allen and Henry, 1997, 183) as this becomes one specific labour market manifestation of the wider transition to a “risk society” (Beck, 1992).

6.3 Challenges to labour organisation: changes in the labour process and socio-spatial divisions of labour The growth of the technical and social divisions of labour, and innovations in the organisation of work, have created distinctions and divisions between waged workers, an “infinite fragmentation of interest and rank” (Beynon,

Collaborating and competing for waged work 137 1999, 38, citing Marx), based upon levels of skill, knowledge and the social status associated with different forms of work. As a result labour markets have often become deeply and multiply segmented, in terms of industry and occupation. Each of these dimensions of segmentation is associated with spatial differentiation and discontinuities that divide workers from one another in a complex pattern of relationships as they compete on the labour market to find waged work. Depending on issues such as different levels of formal educational attainment and qualifications, experience and level of skill that they possess, and who they know as well as what they know, people compete with one another for those jobs available on the market (a competition that is also inflected by issues such as gender and ethnicity, as discussed on pp. 138–145). The differentiation within the working class by place in divisions of labour has become more pronounced in the course of capitalist development. Workers work in different industries, in different occupations within the same industry and in the same occupation in different industries and are engaged in competition for these positions in diverse workplaces. The growing complexity of systems of co-production, the growth of technical and social divisions of labour, between and within firms and sectors, and innovations in the organisation of work, have changed the parameters of labour market competition and helped further divide groups of workers from one another and re-defined the anatomy of these divisions. One aspect of deepening technical and social divisions of labour is that specialisation divides people experientially, organisationally and ideologically. Workers work in different workplaces, on very different terms and conditions, for variable levels of remuneration, and with varying security of employment. The growing fragmentation of work, within and between workplaces, produces increasingly finely differentiated divisions of labour and more or less inevitably leads to the creation of new class positions and intra-class divisions by industry and occupation (for example, see Wright, 1978). The division of labour in complex processes of co-production has vastly augmented the number of workers engaged in indirectly productive activities, reflected in the growth of service sector activities and occupations that are not directly productive of surplus-value but are necessary for its production by others. Consequently, proportionately fewer workers are employed directly in the tasks of transforming materials into useful products and the location of those performing this work of material transformation has often shifted dramatically as part of the process of “global shift” (Dicken, 2015) and the new industrial workers, ‘green labour’ drawn from agricultural rural regions, lack experience of waged work, factory working and trades union membership. This widening and deepening of the social and spatial divisions of labour is the latest phase of the more general and long-established process of industrial evolution and capitalist development. New sectors have emerged with new forms of outputs, leading to a deeper and wider social division of labour as layers of intermediate goods have multiplied. The technical division of labour has likewise deepened, as production processes within workplaces have become more complex and differentiated. Consequently, “the locus of social labour has shifted over the last century … from production to circulation, and from direct to indirect labour, including

138 Collaborating and competing for waged work technical and managerial work” (Sayer and Walker, 1992, 104–106). This differentiation within and between workforces is thus linked to changing forms of corporate organisation, in both private and public sectors.4 At its most basic, different groups of workers – and in some cases, individual workers – compete to sell their labour-power and subsequently perform work on very different terms and conditions, between and within firms and sectors. This is particularly the case when labour-power is provided by illegal workers, often migrants but also indentured workers and children, who have very little if any bargaining power precisely because of their illegal status (Hudson, 2018a). The consequence of these changes is that workers are further divided from one another in more finely differentiated ways and the challenges to the collective organisation of labour are further intensified. The growth of out-sourcing and off-shoring has created new sites of competition for work and as a result also divided workers territorially from one another in new ways. For example, within systems of mass production in the automobile industry male and female workers tended to be occupationally and spatially segregated within the same plant. The growth of out-sourcing as one part of new HVFP strategies has tended to reinforce and re-define such segregation. It is precisely the off-line jobs that women occupied within mass production plants that are the most susceptible to sub-contracting to independent parts suppliers. Many of these suppliers operate in peripheral and marginalised segments of the labour market in which wages are lower and working conditions and health and safety provision are poorer, often associated with the use of more rudimentary production technologies. This reinforces both women’s position in peripheral segments of the labour market and their physical and occupational segregation from men whose work remains within the assembly plants (Yates, 1998, 142), adding to the problems of uniting workers via membership of trades unions.

6.4 Workers competing with one another: multiple identities and competition for jobs As well as differentiation in terms of industry, occupation and skill levels, the structural working class is divided in other ways, notably ethnicity, gender and place but also on dimensions such as age, religion and (il)legal status. This reflects the multiple and conflicting identities that people experience and must deal with in their everyday lives, not least in their search for paid employment and in seeking to find common cause around which to identify and organise. For as Sayer and Walker (1992, 53) put it, we cannot expect societies to break neatly along the fault lines of class, gender and the division of labour. While the structural cleavages, like continental plates, run deep and grind mercilessly, they nevertheless turn against one another, against the willful intransigence of human beings, and against their own internal contradictions.

Collaborating and competing for waged work 139 Class, gender, ethnicity and divisions of labour (social, technical and spatial) must therefore be seen as “distinct, if wholly intertwined, structures of social oppression, exploitation, and difference”. They are, however, at the same time also important dimensions of identity and organisation. Clearly, as a result there are deep tensions because of these ambiguities in the organisation and representation of workers’ collective interests and in the ways in which such differences in identity are involved in structuring the competition for jobs in the labour market. While patriarchal social structures pre-dated capitalism, capital subsequently both exploited and re-shaped these structures, helping underpin the marginalised and subordinate role of women in labour markets (Hartmann, 1978). Consequently, the legacy of this is that men and women generally supply their labour on different terms, with implications for gender divisions between industries and occupations. Many industries and occupations are socially coded and stereotypically seen as male, others as female. Consequently, occupational, industrial and gender divisions can become co-constituted and powerfully intertwined. Sometimes such differentiation results from regulatory limitations (for example, the legal prohibition on the employment of women as underground coal miners in the UK). There are certainly some industries and occupations in which the physical nature of work makes it more suitable for men than women, and vice versa, although it is important not to overstate this. Growing emphasis on mental rather than manual work and increasing mechanisation and automation of much formerly strenuous manual work have reduced the areas in which differences in physical strength and stamina are a legitimate cause of differentiation between men and women in the allocation of work. That said, it is important not to over-emphasise the extent to which physically strenuous work has disappeared as a corollary of new methods of high-volume production.5 Some occupations were and are preserved by men for men by more subtle means, and in ways in which social class background interacts with gender differences. In the “old” ascriptive culture of banking in the UK senior managers were invariably male and “succession within the banking hierarchy was heavily managed by senior management. Jobs were not advertised and promotions were not applied for” (Halford and Savage, 1997, 112). In similar fashion, in high level financial services in the “old” City of London, a place characterised as “a set of class-based masculinist institutions … an elitist and masculinist environment [in which] an extreme gendered division of labour separated men from women”, professionals were recruited “through personal networks, school and family ties” (McDowell, 1997, 122–123). Even so, there were more complex processes involved than simply those of constructing class-based male and female divisions, for the changing culture of work in the City also involved a struggle between different forms of masculinity. As a result, in the “new City” of the 1990s, gendered recruitment processes remained highly selective and dependent upon particular network relations – for example, recruiting from a small number of Universities (McDowell, 1997, 123–128). As the “new” working practices of the

140 Collaborating and competing for waged work City challenged the “old”, and a faster, more overtly aggressive and open style of working emerged which was clearly different to the older, slower and rather more staid and collusive ways of work of ‘gentlemanly capitalism’, two rather different groups emerged which drew much of their cultural identity from contrasting versions of “entrepreneurial masculinity”. The first of these was anchored in a set of meanings around paternalism and ‘gentlemanly’ conduct, while the second was locked into a more macho, aggressive masculinity (McDowell and Court, 1994a, 1994b). There have long been claims – without any solid foundation – that some jobs are naturally ‘women’s work’. For example in the Global North there have been numerous claims that women are disproportionately concentrated in certain industries and occupations because some types of job (in health and social care, or child care for example) require the emotional skills of women, or that the performance of others (such as sewing, assembly of electronic components, or secretarial work) needs ‘nimble fingers’. In the clothing industry, for example, men often did the cutting while women did the sewing, although men could equally as well have sewed and women cut. Moreover, when men and women are employed within the mass production plants of industries such as automobiles, women tend to work in specific occupations and areas of the plant ‘off the line’, usually on the basis of gender stereotypes about female capabilities and skills (Yates, 1998, 142). In other cases there is disproportionate concentration of women because they are supposedly inherently suited to certain sorts of service sector jobs such as selling in shops or other retail establishments (Walsh, 1990) or as domestic servants or nannies (Gregson and Lowe, 1994). One of the goals of restructuring retail banking in the UK in the 1980s was to increase the ‘openness’ of bank branches. This cultural shift had clearly ageist and gendered concomitants, highlighting the ‘feminine’ qualities of accessibility in place of the distant authoritarian image associated with the middle-aged male bank manager. Consequently, “Sellbank” tried to put young women in visible positions in the bank to encourage people into the banking hall and increase sales of new services (Halford and Savage, 1997, 114). This tendency to place young women employees, particularly those judged to be physically attractive, in these positions (while recognising that ‘attractive’ is a cultural construction) further discriminates between employees judged as suitable to occupy them. Such gendered divisions of wage labour reflect continuing patriarchal views as to male and female roles, and the power and authority structures prevalent in particular times and places. They are socially specific and socially produced rather than ‘natural’ divisions of labour. Trades unions, however, often dominated by male leaderships, have on occasion helped legitimate propositions that there is a natural division between male and female jobs and as a result many female workers remained non-unionised. As both a cause and a consequence of being classified as ‘women’s work’, such jobs are typically defined as ‘unskilled’, as requiring little skill: “jobs are regarded as unskilled because they are feminised, not feminised because they are unskilled” (Craig et al., 1982, 77). In turn,

Collaborating and competing for waged work 141 the predominance in particular occupations of women workers who have been ascribed a low social status devalues the skill and social status of the jobs they do. They are poorly paid as a consequence. Much of the selective industrialisation of parts of the Global South from the 1970s has focused upon sectors and activities in search of cheap, malleable female labour (Fröbel et al., 1980; Elson and Pearson, 1981; Pearson and Mitter, 1994; Ong, 1987; Dicken, 2015). In extreme, but by no means rare cases, girls and young women provide such labour as age and gender combine to their disadvantage. For example, 12-year-old rural-born girls working as sewing machinists in Bangkok, sewing seven days a week from 08.00 to 23.00 and sleeping eight to a room (Phizacklea, 1990, 44–46). The illegal employment of young girls in clothing factories remains widespread in other parts of south east Asia (for example, see Peepercamp et al., 2018). Within the labour markets of the Global North, gender often combines with ethnicity doubly to disadvantage women in the labour market. For example, electronics companies in Silicon Valley made growing use of immigrant female labour within increasingly segmented labour markets (Saxenian, 1984). Within the UK, women of West Indian origin became (and remain) disproportionately concentrated in occupations such as cleaning and catering within the public health services (Hudson and Williams, 1995). Such gender divisions of labour are not immutably fixed, however. They can be – and have been – contested and challenged, though not necessarily to the advantage of women. As men entered contract cleaning – a “traditionally” female occupation – within the UK, a sexual division of labour was “invented”, replete with skills that accrued largely to men rather than women (Allen et al., 1998, 101). For example, certain tasks associated with the use of cleaning and other large machines were increasingly allocated to men. Conversely, as social skills have increasingly been emphasised in occupations such as security guards, with an aggressive and physical masculinity replaced by the construction of a more interactive, responsive, and alert masculinity, there is, “less that defines women out of security work” (ibid., 104). Indeed, increasingly it is only the “long hours” which may create problems for women seeking to juggle the responsibilities of waged and unwaged domestic labour that exclude them from such work. Male workers formerly employed in mass production industries are not constrained in this way and so tend to fill such jobs in the absence of better paid work. Ethnicity is a further dimension that shapes competition for jobs in the labour market and along which intra-class divisions are structured (for example, see Ince et al., 2015). Ethnicity, especially when it involves different skin colour, has often been a powerful dimension of division within the working class, with ethnic difference transformed into racist discriminatory practices in the labour market and workplaces. In its extreme forms this was institutionalised, most powerfully in the South African apartheid system.6 While now typically formally illegal in the countries of the Global North, ethnic and racial discrimination in the labour market (and elsewhere) continues to be a powerful

142 Collaborating and competing for waged work dimension of division in determining who gets what sort of jobs within coproducing economies. While ethnic divisions within workforces and in the allocation of people to jobs remain widespread, the precise dimensions of ethnic segregation vary between places and spatially demarcated labour markets. There are often strong ethnic divisions in labour markets linked to migration histories, both of permanent migrants and temporary migrant workers, perhaps most markedly when they involve temporary migrant workers who lack citizenship rights (a fortiori when they are illegal migrants: Pugliese, 1991; Brunettta and Ceci, 1998; Tu, 2014). Indeed, in some circumstances a combination of state regulation and the practices of trades unions, at best insensitive to the needs of migrant workers, especially when these are people of colour, help reproduce ethnic divisions of labour. As a result, rather than restrict illegal working by migrants such policies and practices help maintain a marginalised fraction of the labour force compelled to work for low wages beyond the employment protection and social insurance and welfare provisions of the state (Merrill, 2011). Consequently, those involved are in a very insecure position in the labour market (Hudson, 2014, 2018a). There have been strong links between migration and ethnic divisions in labour markets linked to the legacies of colonial and imperial histories (Yates, 1998). For example, in former colonial countries such as Australia, Canada and the USA, a history of immigration from the late nineteenth century led to ethnically diverse workforces and the institutionalisation of ethnic differences via labour market practices of skill recognition, types of employment and pay. The legacies of Empire also had significant effects on the post-imperial labour markets of the former imperial powers. There are strong ethnic divisions in former centres of Empire, one legacy of their imperial heritage. During the 1950s, for example, there was an influx of West Indian immigrants to work in public services within the UK, filling jobs such as hospital porters and cleaners, and working on public transport as cleaners, ticket collectors and drivers. They subsequently continued to be disproportionately concentrated in such occupations but were almost entirely absent from senior managerial positions (Hudson and Williams, 1995) while new waves of international migrants from the Global South and, later, parts of central and eastern Europe filled jobs in hotels and restaurants, the National Health Service and in private sector health and personal care for adults and children.7 Ethnic divisions continued to be evident within labour forces across a range of other sectors. In automobile manufacturing, for example, there were very few black workers in well-paid manual jobs in the Ford Motor Company despite the fact that they comprised some 40 per cent of its workforce in the UK. Such people of colour were also virtually absent from managerial positions. In private sector services, Halford and Savage (1997, 115) argue that “Sellbank” employed very few Asian workers, and even fewer Afro-Caribbean staff, especially in “front office” positions. Ethnic divisions in the labour market are particularly sharp in the City of London. The vast majority of middle and upper tier managerial posts are held by white (male) Anglo-Saxons. Members of ethnic minorities occupy only a small

Collaborating and competing for waged work 143 fraction of such jobs. In contrast, at the other end of the City’s labour markets, there is a bewildering array of ethnic groups – British residents of colour, New Commonwealth migrants of colour, migrants from Mediterranean origins such as Portugal and Spain, as well as more distant locations such as Colombia and the Philippines. The presence of these groups at the bottom end of such labour markets primarily reflects their ethnic grouping, rather than their inherent potential or skills. As well as this major cleavage plane based on colour of skin, marginalised ethnic groups also occupy distinctive and more specific labour market niches. Differences in the characteristics of ethnic groups, such as qualifications, occupational pre-dispositions, the extent and form of their involvement in informal ethnic networks, and other endowments, as well as the extent of discrimination, combine to channel groups through labour market competition into particular occupations (Cross and Waldinger, 1992). Furthermore, within particular occupations, a combination of these processes and managerial selection practices has led to different ethnic groups dominating particular workplaces. For example, in contract cleaning, “particular sites tend to have a disproportionate number of one ethnic grouping”. In a real sense, “an ethnic division of labour within cleaning work has sprung up in central London” (Allen et al., 1998, 106). Similar processes are observable in other global cities and major metropolitan areas (Sassen, 1991). Again, in many places trades unions have until recently often been implicated in reproducing such ethnic divisions within labour markets (and in some places still are). Within the UK, for instance, workers from ethnic minorities of colour tended to support trades unions and to be more heavily unionised than their white counterparts but unions characteristically failed to address their needs or support the causes they espoused. It was not until the 1980s, after a number of hard-fought and highly publicised disputes that the situation began to be redressed, in part because people of colour rose to prominence in some unions (Hudson and Williams, 1995, 190–191).8 Following the end of the Second World War in other parts of the world, ethnic labour market segmentation deepened and ethnic divisions often intertwined with gender divisions as women and people of colour in the workforce grew in number (Edwards, 1979; Gordon et al., 1982). In many instances, as in the UK, ethnic and racial groups were concentrated in particular jobs and physical areas of workplaces – typically the least desirable jobs and working places. For example, in the late twentieth century Californian labour market Mexican and other Latino immigrants were heavily concentrated in seasonal agricultural jobs such as fruit picking and in the clothing sweatshops of Los Angeles. Chinese immigrants, many of them children working illegally, worked in the totally unregulated clothing sweatshops of New York, 12 hours a day for less than $2 per hour in very poor working environments (Harvey, 1996, 287).9 These divides were often perpetuated by kinship and managerial strategies of recruitment which encouraged the development of ethnic and racial cleavages within workforces. Moreover, there was a history of such divisions to

144 Collaborating and competing for waged work a degree also being reproduced via workers’ actions and trades union practices. For example, during the nineteenth century in the USA there were numerous cases of white coal miners striking against the hiring of black miners (Corbin, 1981). For many years automobile unions in Australia, Canada and the USA used a paternalistic strategy that looked after ethnic minority workers but failed to include them in the union. In the USA automobile industry, co-option became the dominant union strategy for addressing questions of organisation and representation (Yates, 1998, 122–123). Deep ethnic divides also emerged in the labour markets of the EU, a product of the demands of capital faced with labour shortages which were reflected in the international labour migration policies of national states. For example, deep ethnic divisions were created within the West German labour market, as a result of the massive influx of gastarbeiter, temporary migrant workers without citizenship status and employed on specific fixed-term contracts. The numbers of gastarbeiter initially grew particularly sharply in the 1960s, to over 10 per cent of the West German labour force, becoming structurally embedded in occupations that ethnic Germans were reluctant to fill. Southern European and North African gastarbeiter became heavily concentrated in ‘dirty’ jobs in the coke works, in the ‘dirty and dangerous’ jobs in the hot metal areas of iron and steel works, in spot-welding, in foundries and in the paint shops in auto plants, and in low level service jobs. Following re-unification of East and West Germany (the Deutsche Demokratische Republik (DDR) and the Bundesrepublik Deutschland (FGR)), the pressures generated by the resultant growth of unemployment disproportionately fell upon migrant workers of different ethnic origins. There were calls for their repatriation; presumably to create employment opportunities for residents of the former East Germany, since the rationale for the presence of gastarbeiter was to fill jobs that West Germans would not take. The process of occupational segregation in Germany strongly resembles the way in which people of colour in the USA and new immigrants in Australia were also assigned to work in the least desirable and most hazardous jobs (Yates, 1998, 122). In addition, however, immigrant workers in Germany were pushed into unskilled and undesirable jobs because they were largely excluded from the apprenticeships that provide the entry route to skilled jobs in manufacturing. In Italy, a source of many migrant workers for Germany and other north west European countries, foreign workers, especially workers of colour, are heavily concentrated in agriculture, construction and household services (Brunetta and Ceci, 1998) and in the least desirable jobs in industry – for example, the ‘dirty jobs’ in the steel mills in Brescia (Merrill, 2011). Furthermore, in the emerging ‘green economy’ of the EU, it is migrant workers, often from the EU accession states, who do the ‘dirty work’ of resource recovery (Gregson et al., 2016). Not all ethnic divisions in labour markets are of such recent origin, however. Others have a longer history, although again often linked into migration histories and the colour of migrants’ skins. For example, Storper (1993, 443)

Collaborating and competing for waged work 145 describes the division of labour in the haute couture clothing industry of Paris. This is a long-established and “classic” system of subcontract cutting and sewing, in which ethnic differentiation and solidarity characterises each level of the system: design houses and better boutiques (French); cutters (Middle Eastern or Jewish); sewers (Turkish and North African); and knock-off (degriffe) outlets (Middle Eastern or Jewish). The structure of the labour market revolves around ethnic selection. Allocation of places in the technical division of labour is based on ethnic identities. Furthermore, in some circumstances ethnic divisions can generate deeply exploitative relationships within ethnic minority groups. In the USA, for example, several isolated ethnic communities (lacking language access to mainstream society, legal status, civil rights and social integration) provide “docile bodies for the innumerable sweatshops [for example in New York and Los Angeles] run by the same ethnically distinct capitalist class”. Community solidarities promoted by that class, strongly supported by ideologies of religious and ethnic solidarity, are an “assured vehicle for capital accumulation founded on the worst forms of exploitation” (Harvey, 1996, 312). In summary, there is a strong dimension of ethnic division in labour market competition and within the working class, with ethnic minorities in general occupying the lowest echelons of the labour market, filling the least desirable jobs, especially if they are visibly different to majority social groups in terms of appearance and colour of skin. The particular character of the competitive process of allocating positions within social and technical divisions of labour depends, however, upon interactions between general processes of ethnic segregation with the specificities of local labour markets, their particular cultures and institutional forms, and the ways in which ethnic difference is translated into racial discrimination and exclusion in different places. While these are the least desirable jobs in the co-producing economy, the functioning of that economy requires that they be filled and they are filled by people who have no other choice if they are to find some form of waged work through processes that are specific to particular places and times. Consequently, the character and consequences of ethnic segregation in the labour markets of Birmingham, England, Birmingham, Alabama and Birmingham, Michigan display significant variations (Peck, 1996, 266–267). People compete in labour markets and come to be particular types of waged worker precisely because they bear these attributes and differences of gender and ethnicity that are constitutive of their class identities (for example, see Merrill, 2011). As trades unions seek to organise and unify around people’s shared attributes as wage workers they always do so in circumstances in which people become wage workers differentiated from one another via a variety of pre-existing and durable characteristics and identities based on them. In many circumstances in parts of the Global North, however, trades unions have been – and in some cases still are – insensitive and unresponsive to the specific circumstances of ethnic minorities and people of colour. Differences between places have also been important in the ways in which workers have competed for waged employment, pitting the interest of ‘their place’ against those of similar workers in ‘another place’. Often this has

146 Collaborating and competing for waged work involved workers entering into cross-class alliances with capital on the basis of shared territorial interests as capital seeks to use the attachment of people to their place to its own advantage. Simply by threatening to re-locate companies can secure terms and conditions of employment that from their perspective are more attractive (for example, see Atkins and Williamson, 2004; Beynon, 1973, 52–53; Jenkins and Wassener, 2004). This influence of place in part reflects the ways in which spatial difference and territorial identity have been integral to the formation of trades unions and the ways in which workers are both united and divided through territory has become and remains significant. Indeed, some argue, convincingly, that territorial divisions are unavoidable (Herod, 1997, 2001). There is a strong element of path dependency as the historical geography of trades’ unionism has often had a critical formative effect upon the subsequent tactics and strategies of trades unions, the legacies of which in many ways are still present. Many trades unions developed from a plant or local to a national level. Forms of labour organisation, industrial relations and trades union power are often strongly territorially based at various spatial scales, shaped more by political culture and tradition and social and institutional factors than by the imperatives of production (Martin et al., 1994; Sunley, 1990). The resultant legacies of building the national from alliances of originally autonomous local and regional organisations were not easily eradicated (for example, see Beynon, 1985; Beynon and Hudson, 2019; Hudson and Sadler, 1983, 1986; Warde, 1989). While the Fordist era privileged the national regulatory scale, marked sub-national divisions continued to characterise labour market regulation and trades union organisation (for example, see Davis, 1986; Yates, 1998). This local variability continued and was often amplified in new forms of high volume flexible production (HVFP), with spatial variations in forms of lean production and industrial relations, for example (Kumar and Holmes, 1997; Rutherford and Gertler, 2002). The net result of these processes is that workers are chronically divided on a territorial basis, at varying spatial scales, as a product of the interaction of their collective strategies with those of capital and states. The activities of workers in forming trades unions and the attachments that people form to places in which they live and learn as well as work are important constitutive moments of both territorial identity and division. Processes of class formation have as a result become inextricably bound up with processes of territorial identity, as attachments to place and class are worked out at a variety of spatial scales. However, the significance of attachment to place also varies at different scales and this influences the ways in which workers are involved in competing for jobs for ‘their place’. For example, supra-nationally workers in the core territories of capitalism in the Global North see their interests as threatened by those in the new centres of accumulation and industrialising peripheries of the Global South, with this conflict often expressed through trade disputes and calls for import controls to protect ‘our’ jobs or conflicts over (dis)investment decisions and associated job creation or destruction. Similarly the interests of workers in the USA are pitted against those of workers in China and Europe (witness

Collaborating and competing for waged work 147 Donald Trump’s rhetoric about “America First”), while those in the EU are seen to be in conflict with workers in the USA or Japan. Workers within the Euro-currency zone of the EU and those in the countries of the EU that are not Euro-zone members are engaged in similar processes of competition. Workers in European countries that lie outside the EU (soon to include the UK) compete for jobs with those within the EU. National states often encourage nationalistic and typically only thinly disguised racist politics as they seek to gain the support of workers in struggles over the location of investment and production via appeals to ‘the national interest’. Companies too have a vested interest in playing off national states and groups of workers on a national basis, as they compete for investment and employment. There are, undoubtedly, often deep divides between workers in different parts of the world as a result of the competition for investment and jobs and their involvement in these processes means that appeals for ‘workers of the world to unite’ and for the working class to become a class ‘for itself’ more often than not fall on deaf ears. While there are developments towards the international expansion and integration of capitalist social relations, however, these do not necessarily precipitate competition among workers or undermine working-class political organisation at lower spatial scales. It may well be that in an international economy, “looking for comradeship abroad may be the only possible strategy for fighting successfully at home” (Wills, 1997, 12). Indeed, there are some suggestions of a tendency towards the “super-concentration” and/or “translocalisation” of some elements of labour relations (Herod, 1997, 186). There is, for example, growing evidence of cross-national border workers’ organisations and attempts, albeit contested, to create transnational solidarity (Fairbrother et al., 2013). There are also pressures to implement internationally defined labour and workplace standards as agreed by entities such as the EU, via the Social Chapter of the Maastricht Treaty and European Works Council directives, although some of the initial optimism associated with such initiatives has subsequently waned (Wills, 1999). There is also evidence of efforts by NGOs to develop co-ordinated transnational bargaining strategies and practices in response to globalisation and of growth in the international activities of trades unions in helping reconstruct the union movements of central and eastern Europe as the dominance of capitalism was restored there. Despite these efforts to transcend national boundaries, however, workers tend to remain deeply divided from one another at the national scale, in part because of differences in national regulatory and “factory régimes” and terms and conditions of work (Burawoy, 1985; see also Chapter 3). Workers in more affluent parts of the world seek to protect their employment positions, while those on the peripheries of the global economy seek to improve theirs. Below the national scale, there are often strong regional and local divisions within unions, typically grounded in the historical-geographical processes of trades union formation. These have on occasion become the basis for place-based campaigns to preserve employment, often in collaboration with capitalist interests as defence of place has taken precedence over class solidarity, especially in monoindustrial places. Such campaigns have often failed but in circumstances in which

148 Collaborating and competing for waged work they have been successful, an unintended consequence has been to undermine union solidarity and strategies at other spatial scales (for example, see Hudson and Sadler, 1983, 1986; Sweeney and Holmes, 2013). Over much of the capitalist world these place-based divisions between workers are becoming increasingly linked to campaigns for investment and jobs and the competitive activities of ‘pro-active’ localities and regions engaging in boosterism and place marketing. This amplifies and reinforces the ways in which organised labour engages in place-specific cross-class alliances in defence of, or pursuit of, jobs. Cox (1997, 178) emphasises that the rhetoric of co-operation with employers in confronting competition “elsewhere” underlines the “significance of the meaning systems that workers subscribe to and the importance of an independent organisational base for the construction of those meanings”. All too often workers have been persuaded by a discourse of globalisation whereas “a deeper understanding of capital, and the pressures and temptations to which firms are subject, might have led to a better bargain for labour”. Cox thus points to critical relationships between the material processes of the political economy of capitalism and the cultural and discursive contexts in which these are formed and understood. Finally, in considering the forms of competition between workers for waged work, there is a very important difference between those who work in specifically designated workplaces (be they factories, offices or someone else’s house) and those who work for a wage in their own home. For homeworkers, their home becomes part of the forces of production and not simply a place in which to escape from waged work and, for capital, a focal point for the reproduction of labour-power. Homeworking for a wage blurs the boundary between spaces of production and reproduction. As a result, homeworkers are spatially divided from other workers in distinctive and significant ways. There has been a resurgence in homeworking, which has become a global phenomenon. It is widespread over much of the Global South (Allen and Wolkowitz, 1987; Boris and Prügl, 1996; Chant, 2014), involving a great diversity of activities – for example, assembling electrical components, rolling cigarettes, making cane furniture, cutting and sewing clothing and more recently writing computer code. Often the growth of homeworking is directly linked to sub-contracting and the out-sourcing strategies of MNCs. The use of homeworkers (and sweatshops) has become a routine element in their repertoire of tactics to ensure low cost production. Much of this work is performed by women, young and old, often outside the boundaries of the formal economy (Portes et al., 1988) and beyond the boundaries of legality. In Mediterranean Europe, many farms are very small and incapable of providing an adequate income for those who farm them. As a result, homeworking has expanded rapidly in many such areas, often linked to the growth of sub-contracting and out-working in mature consumer goods industries, such as clothing and textiles. Furthermore, homeworking in manufacturing is often prominent in urban areas in Mediterranean Europe, involving male as well as female workers (Leontidou, 1993, 64). In countries such as the UK or USA, women work for a wage in their

Collaborating and competing for waged work 149 homes producing a wide range of commodities, such as clothing, shoes, windscreen wipers, and transmission belts or carrying out tasks such as writing computer code or copy-editing books and other publications. In the UK homeworkers in the clothing industry in the West Midlands had cloth delivered at 08.00 and the product collected at 18.00 on the same day by drivers who would pay the women in cash (at an hourly rate of £1.08 in 1984: Phizacklea, 1990, 96–99). Usually the women did not know the name of the contractor for whom they were working. Often homeworkers in the cities of the Global North are migrant women (with illegal migrants in particularly vulnerable labour market positions, especially if they have dependent children) as conditions typical of the labour markets of the Global South have been transposed into the Global North (Mitter, 1986). Since homeworkers produce diverse commodities, homework can involve the deployment of a wide range of production technologies, from the very simple using traditional craft skills to those incorporating sophisticated computer technologies, such as those involved in the new forms of work associated with the growth of crowd-sourcing and the ‘cybertariat’.10 While a global phenomenon, there are, however, marked local differences in the cultural contexts and consequences of homeworking. As a result, homeworking can take on varied connotations, depending upon variations in local labour market conditions and the cultures in which homeworkers are embedded. For example, there are significant differences between the experiences of migrant homeworkers in Los Angeles and Miami (Fernandez Kelly and Garcia, 1989). In the former, female (often illegal) immigrants from Mexico resorted to homeworking as a strategy of last resort, given their particularly vulnerable labour market position. In contrast, in Miami Cuban refugees were able to become homeworkers as a way of reconciling cultural and economic pressures. The presence there of a Cuban entrepreneurial class allowed women to work within their own homes and ethnic community, albeit one marked by strong patriarchal organisation. One consequence of this is that often middle-class immigrant women who have moved to Miami from Cuba would accept menial home-working jobs in order to preserve the family unit (Portes and Jensen, 1989). From the point of view of employers, homeworking can be advantageous within systems of co-production as it lowers fixed capital costs, reduces wage costs and allows intensification of the labour process (especially when homeworkers are illegal migrants: Fernandez Kelly and Garcia, 1989), although it can also lead to problems of lack of surveillance and control. A corollary of working from home is that unpaid family labour absorbs a range of functions that might otherwise fall upon the state. While there has been much discussion of extravagant claims as to the emergence of new electronic cottages and enriching forms of homework (Toffler, 1981), very little of the recent expansion of homeworking can be described in these terms, although there are undeniably a few professionals for whom homeworking is advantageous and desirable. In general, homeworkers are confined to their homes for a variety of reasons that work to their disadvantage – by domestic responsibilities, to evade taxation, to avoid employment or health and

150 Collaborating and competing for waged work safety at work legislation, because of their status as illegal migrants or because they are illegal child workers. In short, homeworking tends to inhabit the shadowy margins of the formal economy and as a result homeworkers are isolated and divided both from one another and from other workers.

6.5 Multiple disadvantages, divisions among workers and competition in the labour market At the risk of some over-simplification, within the deeply segmented labour markets of the Global North women and people of colour from ethnic minorities are disproportionately concentrated in poorly paid, part-time and marginal and precarious jobs. Most of these are concentrated within the lower echelons of the service sector (the main, or only, recent source of net employment growth there). For example, in retail banks in the UK in the 1980s, the pattern of demand for labour changed as workforces became increasingly segmented, with the use of casual and part-time female clerical staff both in regional service centres and high street branches (Halford and Savage, 1997, 112). Women are also disproportionately concentrated in part-time and precarious employment in catering, contract cleaning and hotels (Walsh, 1990; Rees and Fielder, 1992). In the economies of the Global South and emerging economies in which the employment of women in manufacturing is much more significant, they face similar, often greater, disadvantages in the labour market and competition for jobs. The introduction of new forms of commodity co-production and work organisation has undeniably led to more complex patterns and processes of competition for waged work and divisions between workers. For example, it has led to divisions on the basis of age, appearance, health and physical fitness, degree of commitment to the employer and shifts worked. For example, “in the tanned, toned world of the new service economy and in commodified forms of consumption and entertainment”, new markers of class identification, such as weight, skin colour, accents, intonations and gestures, are used to distinguish acceptable from unacceptable class-specific performances and “to mark working class bodies as increasingly unacceptable” (McDowell, 2006, 836). Few of these divisions have the enduring structural roots of the primary dimensions of cleavage around class, skill, gender or race. Nonetheless, they have the capacity to create new divisions and fracture existing solidarities built around workplace and union experience precisely because “these secondary cleavages overlay the primary ones, often re-articulating and augmenting expressions of conflict around the dimensions of skill, gender and race\ethnicity”. As a result, “this multiplication of fissures among workers poses particular challenges to unions …” (Yates, 1998, 120). The complexity of these fissures, the over-determination of the bases of unity and division and the resultant challenges to trades unions increase still further once due recognition is given to the importance of competition between workers on the basis of place.

Collaborating and competing for waged work 151

6.6 People collaborating via forming co-operatives Rather than sell their labour-power to capital and seek to organise in unions, people can seek to collaborate in a different way by forming a variety of social enterprises, community business corporations and cooperative ventures of various sorts. People employed in social enterprises and community business still sell their labour-power but to non-profit organisations that reinvest any surplus in the business and in a variety of community development projects (for example see Amin et al., 2002). People forming co-operatives follow a different path. As even a cursory search on Google will reveal, co-operatives are to be found in a wide variety of locations across the global economy. Rather than compete in the labour market and become sellers of labour-power to competing capitalist enterprises, the formation of co-operatives as a specific form of co-production reflects the fact that people agree to come together to work collaboratively, co-producing a variety of goods and services on a not-for-profit basis. In so doing, they are aware of the tensions that inevitably arise as co-operatives still have to operate in societies in which the logic of the market is dominant and in which the pressures of remaining competitive in the market and needing to adapt to changing market conditions are the same for the co-operative as they are for a capitalist firm. But nonetheless, recognising this, people can still decide to go ahead. This reflects a strategic political decision to demonstrate that there are alternatives to people competing as sellers of labour-power in the labour market. In such co-operatives democratic decision-making, especially around the utilisation of surplus and growth of the co-operative, helps cocreate co-operative subjects and political space. The ability to govern cooperatively, and to direct surplus towards growth of the organisation or the development of the wider co-operative movement, constitutes an emergent co-operative subjectivity at the same time as it enables and constitutes cooperative growth. Worker-owned co-operatives can adopt a variety of governing models – from majority rule to consensus. Larger co-operatives often elect representatives to make decisions for the co-operative while smaller cooperatives make decisions based on consensus among all those involved (Cornwell, 2011, 732). Neither governance structure is necessarily unproblematic but both differ markedly from the governance structures of capitalist enterprises while their conception of co-production is equally different. In 1980 in north east England, Consett steelworks produced its last cast of steel, having been established as an ironworks some 140 years earlier. This was a traumatic event in a town built around “the works”. In response to the closure, a conventional ‘re-industrialisation programme’ was set in motion by the national state, based around a familiar script of competing with other places and other groups of redundant workers in seeking to attract internationally mobile capitals and establishing new small enterprises that would grow and provide jobs for which local people could compete. However, a group of ex-steel workers, with the support of the local Derwentside District and Durham

152 Collaborating and competing for waged work County councils, decided to follow a different path. Reflecting a shared interest in music, they formed a co-operative, Northern Recording, and established the “Making Music Work” project in the town. The point of the co-operative and this project was not large-scale job creation but rather to demonstrate that local people could act collaboratively together to define a different post-steel trajectory for the local area and its people; to demonstrate that they too could find areas of common interest around which to develop co-operative ventures (Hudson, 1995b). A few years later, as part of the wider politically motivated destruction of the deep-mined coal industry in Britain, Tower Colliery in south Wales was closed, and its workforce made redundant. In many other collieries in which men were made redundant at this time, they left the industry, often recognising the futility of looking for alternative employment in deeply depressed local economies and using their redundancy payments to buy their house in the former mining village. At Tower, however, in strong contrast the newly unemployed miners decided to invest their redundancy payments in a co-operative formed to continue the mining of coal, in a demonstration that there was an alternative to closure and unemployment as a result of people choosing to work collaboratively together (Beynon and Hudson, 2019). As with Northern Recording and the “Making Music Work” project the Tower co-operative came to an end after a few years of successful operation – but the point that had been made in both cases was that there were alternatives if people chose to work together and collaborate to realise them. These are simply two of many examples from different parts of the world in which people demonstrate that there is an alternative to competing with one another in the labour-market to become sellers of labour-power (for example, see Cornwell, 2011; Gibson-Graham et al., 2013). There are well-known examples such as Marinaleda in southern Spain that demonstrate that even in unpropitious circumstances forms of collaborative co-operative production and social reproduction can be created and successfully held in place.11 There is a long history of successful agricultural co-operatives in Denmark, a more recent one of flower-growing co-operatives in the Netherlands (Patel-Camillo, 2011) while in Cape Breton on the eastern seaboard of Canada co-operatives have developed across a wide range of activities, in part in response to the decline of coal mining, steel making and fishing there (MacLeod, 1997). Some years ago, Williams (1989) wrote of the difficulties of local “militant particularisms” translating into more broadly based radical political movements. The challenge for co-operatives that develop in response to particular local circumstances and needs is to find ways in which these local initiatives do not simply survive but can develop into systemic alternatives, different models of co-producing economies on a major scale. This is, self-evidently, far from straightforward. Not least, this is the case as the examples of locally based co-operatives that have expanded beyond their origins, such as Mondragon in northern Spain, suggest that as they grow bigger and expand their horizons, sectorally and spatially, and compete with mainstream capitalist enterprises, then they increasingly behave – of

Collaborating and competing for waged work 153 necessity – in the same ways as the structural imperatives of capitalist market relations become dominant and they become yet another employer of labourpower and of people who compete to provide it (Kasmir, 1996). Rather than challenge the social relations of capital, they become incorporated into and supportive of them.

6.7 Spontaneous informal collaboration by ‘unorganised’ workers In many parts of the world, labour markets have become flooded with migrant workers, often from other parts of the world as the scale and scope of international labour migration has expanded. In places in which there are established trades unions structures, there is often indifference or hostility to the presence of such workers. As a result, they are excluded from established trades unions and as such lack institutional channels through which to articulate their interests (for example, see Merrill, 2011). In labour markets in other parts of the world in which migrant workers are a major source of labour-power, trades unions are either under state influence or banned completely. In these unpropitious circumstances, however, workers may develop spontaneous informal forms of collaboration. The labour markets of the Gulf States – Bahrain, Kuwait, Qatar and the seven members of the United Arab Emirates (of which Abu Dhabi and Dubai are the most significant) – are a major destination for international migrant workers, mainly of Muslim faith and drawn from Bangladesh, India, Pakistan and Nepal, notably in activities such as the burgeoning construction sector and domestic services as well as into some energy and industrial production activities. Of these, Dubai in particular has become a focus for speculative urban development on an unprecedented scale. In recent years Dubai has experienced a massive construction boom; one indication of this is that 15–20 per cent of the world’s tower cranes were to be found there (Negus, 2006) while attracting in tens of thousands of migrant workers to its non-unionised construction sites as labour unions are prohibited. An autocratic city-state, Dubai is under the control of a family dynasty that holds largely unelected control over the city, a city in which no minimum wage has been instituted for foreign workers, with salaries as low as £2.10 per day (ibid.), with these workers living in desert dormitories, and in a state in which forms of civic political action, public protest or autonomous political organisation and advocacy are generally not tolerated. However, as Buckley (2013, 270–271) argues, despite this hostile environment and the lack of unions and formal organisations for collective bargaining, “it would be a mistake to conclude that there have been no meaningful counter-politics at work in Dubai”. As evidence of this, she documents the spontaneous wave of worker actions that spread across the city between 2004 and 2008 – and which were still ongoing – and which had a “real and tangible effect on the conditions for many lower-waged builders in specific companies and on particular projects”. In a number of cases, labour

154 Collaborating and competing for waged work actions enabled workers successfully to negotiate an increase in wages, receive unpaid back pay, and in some cases win other concessions such as bi-annual plane tickets back home to visit their family. Institutionally, these actions also had a significant, if limited impact; as a direct result of labour demonstrations and unrest leading up to 2005, for example, the Dubai Government established a governmental committee on labour affairs (what one of Buckley’s respondents referred to as the “labour court”) and a human rights department to assist in the arbitration of disputes between individual workers and their employers. These agencies have since handled thousands of cases and have played an important role in collecting unpaid wages. Moreover, strikes, demonstrations and other forms of informal organising initiated by construction workers during this period led workers to examine their own fragmented and often temporary efforts to contest and restructure the relations governing their working and living conditions. Buckley (2013, 270) concludes that “[t]he emergence of collective expatriate welfare initiatives and the strikes mark both the emergence of a contradictory and informal collective politics of labour in the city, as well as a shift from heavy-handed state policies of discipline to multiple acts of ‘supportive neglect’ (Weinstein 2008) aimed at migrant builders” – indicative both of the possibilities of unorganised workers organising and of the limits to their efforts in the context of the unpropitious circumstances of the labour market in Dubai.

Notes 1 The Triple Alliance formed in 1914 in the UK between the Miners Federation of Great Britain, the National Union of Railwaymen and the National Transport Workers Federation is a famous – or infamous – example of such a strategic alliance (see Carter, 1916; Phillips, 1971). 2 As with companies, trades unions have a history of acquisition and merger. The initials GMB are derived from a highly contested merger in 1982 between the General and Municipal Workers Union and the Amalgamated Society of Boilermakers, Shipwrights, Blacksmiths and Structural Workers, with the merged organisation renamed the General, Municipal, Boilermakers and Allied Trade Union. In 1992 the Amalgamated Engineering Union (AEU) merged with the Electrical, Electronic, Telecommunications and Plumbing Union and the merged organisation took the new name Amalgamated Engineering and Electrical Union (AEEU). 3 Female workers in the cotton textile industry of Lancashire “played a significant part in the industrial history of the locality” and “Lancashire women joined trade unions on a scale unknown elsewhere in the country” as “union membership was accepted as part of normal female behaviour in the cotton towns” (McDowell and Massey, 1984, 132–133). 4 See the discussion of these issues in Chapter 3. 5 As noted in Chapter 3. 6 The use of slave labour, defined on the basis of ethnicity, in the Fascist regimes of interwar Europe was a further extreme example. 7 The UK government agreed to open the national labour market to migrants from the ten countries in central and eastern Europe that joined the EU in May 2004. This led to a significant inflow of migrant workers.

Collaborating and competing for waged work 155 8 For example, Bill Morris became General Secretary of the Transport and General Workers Union. 9 For further copious and detailed information on such issues in the clothing industry, see Clean Clothes Campaign at www.cleanclothes.org and for similar information across a wide range of activities in the Global South and emerging economies see SOMO www.somo.nl. 10 These forms of work are discussed more fully in Chapter 4. 11 The town in inland Andalusia has its own quite substantial entry in Wikipedia.

7

Engaging consumers in the co-production of commodities

7.1 Introduction Within the CMP the circuit of productive capital is fundamental, as this is where surplus-value is created and the sale of the commodity is a critical moment on this circuit, the moment at which the surplus-value embodied in the commodity is realised. The continuing viability of the capitalist enterprise depends upon this. The sale of a commodity is always a culturally inflected economic transaction; while recognising that people have varying purchasing powers, customers only buy commodities that have a use value and meaning for them. Rather than a reflection of the recent ‘cultural turn’ in the social sciences, recognising this is more an acknowledgment that established political-economy approaches from Marx onwards emphasise that economic activities are always infused with culturally specific semiotic processes, meanings and values (see Sum and Jessop, 2013). Given the significance of culture and meanings, companies necessarily pay considerable attention to persuading people that they want the commodified goods and services that they provide so that they become purchasers of their products. The purchasers of commodities comprise both other companies (buying commodities as inputs to the production of other commodities) and purchasers of commodities for ‘final’ consumption (although in practice many consumer goods are then re-sold on to others by their initial purchasers or recipients while others are given as gifts to others who consume them). In both cases, however, flows of information from advertisers and producers to purchasers play a critical role in seeking to shape the meanings intended for commodities in the eyes of potential purchasers and consumers as a necessary pre-condition for sale. Corporate advertising strategies, disseminated via the varied channels of the mass media, thus have a crucial role in influencing the ways in which people construct meanings. Via their advertising strategies companies seek to create the meanings and motives that drive consumer purchasing behaviour, create effective demand for their products and accelerate the turnover time of consumption and of capital. As such, the meanings which commodities acquire in specific cultural and social settings become critical. Producers

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emphasise differing attributes of their commodities depending upon the characteristics of the product and the segment of the market that they are seeking to penetrate: they can, for example, emphasise price, innovativeness, novelty, quality or authenticity. However, reactions to advertisements are not just shaped by the intentions of their authors but also by the attributes and positionality of potential consumers. The ways in which messages embodied in advertisements are ‘read’ are therefore culturally constructed and vary with attributes of the reader such as class, gender, ethnicity, age and location. This allows companies to use advertising strategies as a way of socio-spatially segmenting markets by seeking to create meanings that are specific to particular segments and groups of people. In this sense, advertising is an inherently spatial practice, creating and differentiating circuits and spaces of meaning and ‘placing’ a particular product in (what is seen as) its appropriate socio-spatial context. However, these attempts at manipulating meanings may be challenged and the meanings which potential consumers construct may diverge from those intended by the producers of the advertisements and commodities. Rather than being accepted as intended, the meanings of messages may be contested, an unintended outcome leading to consumer resistance and subversion Furthermore, the ways in which companies seek to influence potential consumers have altered significantly over time, partly in recognition of the fact that would-be consumers may challenge the intended meanings that their advertisements seek to convey. Recognising this, companies have sought actively to draw upon the knowledge of consumers as the flows of information have to a degree become two-way, selectively enrolling them as co-producers in the design of both the image of the product projected through advertisements and in the commodities that they seek to sell, materially altering these in the light of feedback from actual and potential consumers. In part, just as the emergence of modern advertising drew on then-contemporary research in psychology in the 1920s and 1930s, this has involved drawing on the more recent work of anthropologists, sociologists and cognitive psychologists to gather insights into the expressed desires and needs of people. As well as questionnaires and focus groups, companies have used in-depth interviews, ethnography and participant observation as well as the very different approaches of neuromarketing to gain insight into people’s behaviour (Tomkins, 2005). Advertisements, psychological and social research and the mass media are not the only sources of information on which potential consumers can draw and through which companies can seek to persuade them to purchase their products, however. As well as these sources of information drawn from social scientific research, potential consumers can draw on tacit knowledge conveyed in face-to-face encounters and transactions with sales employees who have expert or specialist knowledge and this can also be crucial in forming the meanings that commodities come to have for people. With the growth of Department stores in the nineteenth century, at least for those

158 Engaging consumers in co-production with sufficient purchasing power to patronise these establishments, shopping became a skilled, knowledge-based activity, with consumers’ knowledge shaped by retailers and their sales staff (Glennie and Thrift, 1996, 224–225). While the consumer may buy only what s/he wants to buy “this will [to buy] is not already there, it is co-constructed along with the good and with the salesperson and all the professionals of embedding. … values and meanings are at the heart of the transaction …” (Callon et al., 2002, 7). As Miller (2002a, 227) emphasises “the better a business reflects the totalizing moment of purchase by acknowledging the rich mixture of factors that consumers are looking for, the more they are likely to succeed”. While there has been a marked growth in on-line purchases, the encounters that potential customers have with commodities and sales staff in diverse physical spaces of sale at varying scales (individual shops, shopping malls and retail parks, for example) remain crucial in many decisions to buy. Companies, designers and planners therefore seek to manipulate the layout and design of these spaces to create meaningful settings as they search for ways to stimulate purchase and consumption. What might at first sight seem to be a rather bland shopping mall may in reality be a carefully designed and strategic space, reflective of the power of its owners, designers and tenants, structured so as to maximise sales. In part, this can involve representing spaces of sale as places of leisure and pleasure rather than simply locations in which purchases and sales of commodities occur. Recognising the significance of this, companies seek to use the power of affect and drama to create a sense of excitement within the act of consumption (Crewe, 2011).

7.2 Advertising, brands and meanings: consumers as passive recipients of information? 7.2.1 The growth and evolution of advertising It is only quite recently that advertising has had more than a marginal influence on patterns of sales and production (Williams, 1960, 1980, 177–186). The modern advertising system began to develop around the beginning of the twentieth century, its emergence closely tied to that of new forms of monopoly capitalist organisation and mass production and the necessity to mass produce customers who would buy mass produced commodities. The development of modern advertising – via product and process innovation – was pivotal to corporate strategies to create, organise and where possible control product markets, to make mass produced consumer goods both affordable and imbue them with meanings that made them socially desirable, that made people desire them. More than this, though, the emergence of mass consumption required a degree of homogenisation of consumer tastes, initially focused upon particular segments of national markets in the core industrial capitalist territories.

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Advertising, like the products of the industries which it promoted from the late nineteenth century, became organised around the principles of Taylorisation and Fordism. It was dominated by a few major agencies in the USA, which then expanded abroad via processes of M&A and foreign direct investment (FDI) as “networks” (the term used by advertisers) of international offices of these agencies formed rapidly (Lash and Urry, 1994, 139; see also Chapter 5). This entailed radical changes in the organisation of advertising. As in manufacturing, advertising companies drew upon the latest advances in scientific and social scientific knowledge, especially on psychological theories about how to create subjects (Miller, 2002b, 174). The result was the comprehensive development of an organised system of commercial information dissemination and persuasion that was central to the modern distributive system in conditions of large-scale capitalism (Williams, 1980). Initially advertisements provided relatively straightforward ‘factual’ information about commodities and their use-values, seeking to persuade consumers to buy them because of their modern, sometimes scientific, attributes. Increasingly, however, the focus shifted to the symbolic connotations of commodities, especially in the inter-war USA and beyond by reference to the glamour of Hollywood. As markets for consumer goods became saturated – at least in more affluent parts of the capitalist world – it became “[e]ssential for capitalist profitability to get individuals whose needs are covered to develop desires that give rise to new desires the moment they are fulfilled” (Streeck, 2017, 44 – emphasis in original). This process of commercial diversification and expansion, the movement of markets and commercial relations from the satisfaction of needs to the creation and servicing of desires and wants became critical for successful capitalist production and the expansion of capital. Subsequently, as a result, given the imperative better to understand desires and wants, in the 1940s and 1950s consumer psychology began to develop further, enabling advertising and marketing to take on a “more clearly psychological tinge” (Miller and Rose, 1997, cited in Thrift, 1999, 67) with the result that by manipulating the context in which advertisements appear, they “can be made to mean ‘just about anything’” (McFall, 2002, 162). Consequently, the ‘same’ things can be endowed with different intended meanings for different individuals and social groups, thereby allowing both the segmentation of markets and continuing growth in effective demand. As such, representations of the consumer are a necessary component of the existence of markets (Nixon, 2002, 133). By the latter decades of the twentieth century, Fordist mass production had by no means disappeared but new forms of high volume flexible production (HVFP) and mass customisation had been developed.1 These allowed commodities to be produced in smaller batches or even customised for individual consumers – or at least to be represented in this way as advertising evolved to offer mass produced visions of individualism (Ewen, 1976) – while preserving the cost advantages of mass production. This development was associated with significant changes in the form and content of advertisements and the information they conveyed to potential purchasers. These new forms of advertisement were predicated on the proposition that the use value and the functional and material

160 Engaging consumers in co-production qualities of the object being sold are “never enough” in themselves (Williams, 1980, 185): even commodities providing for the mundane necessities of daily life (toothpaste, razor blades, washing powder …) must be imbued with symbolic qualities and culturally endowed meanings, represented as meeting both the functional and the symbolic requirements of the consumer. As Williams (1980, 185, emphasis in original) puts it: we have a cultural pattern in which the objects are not enough but must be validated, if only in fantasy, by association with personal and social meanings … The short description of the pattern we have is magic: a highly organised and professional system of magical inducements and satisfactions, functionally very similar to magical systems in simpler societies, but rather strangely co-existent with a highly developed scientific technology. People are susceptible to influence via advertising and ‘the magic system’ precisely because they have – and, because of the effects of time and space, as well as their own limited cognitive capacity, can only have – imperfect and partial knowledge of commodities and markets (Mort, 1997). This creates opportunities for companies to use advertisements selectively to channel targeted information flows towards particular groups of potential consumers. Rather than simply respond to existing consumer preferences and demands as expressed through markets, however, they can pro-actively attempt to modify existing tastes or to create new desires for new products. Markets and products are continuously and dynamically changing and advertising seeks both to create and to exploit these environmental conditions, “creating variations between product concepts as a means to reconfigure both consumer demand and competitive market structures” (Slater, 2002, 68–73). This powerfully emphasises the way in which advertising practices and products, the latter themselves produced as commodities intended to sell other commodities, can be central to the disruptive ‘market disturbing’ strategies of strong Schumpeterian competition and the re-definition of markets.2 The broader implications of this are succinctly summarised by Barthes (1985, xi–xii): [c]alculating industrial society is obliged to form consumers who don’t calculate; if clothing producers and consumers had the same consciousness, clothing would be bought (and produced) at only the very slow rate of its dilapidation … In order to blunt the buyer’s calculating consciousness, a veil must be drawn around the object – a veil of images, of reasons, of meanings … in short a simulacrum of the real object must be created, substituting for the slow time of wear a sovereign time free to destroy itself by its own annual act of potlatch. However, the “act of potlatch” has increasingly become one that is enacted several times over the course of a 12-monthly cycle as product life cycles have been shortened and the fashion cycle speeded up in an era of ‘fast fashion’.3

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And while he writes specifically about clothing, the point has a more general validity in relation to other consumer goods, establishing a ‘language of fashion’ as consumer goods serve as identity codes for disparate cultural and social groups while changing fashions create built-in obsolescence and so continuously renewed demand for diverse consumer goods (for example, see Domosh, 1996). Or as Friedman (2007, emphasis added) rather more colourfully put it: a strategy once seen as specific to the fashion world has filtered out into the world of product development writ large, changing the behaviour of companies and their customers … Call it the handbag effect: the realisation that if you take a basic item, inject some real design, and then regularly change the design, you transform it … to an object of desire … It moves from being a pragmatic investment to an impulse driven by irrational desire, whether it is a necklace, a suitcase, a china setting, a phone, a car or a washing machine. The symbolic delineation of differences between fashion items opens up “a wider realm of signs … that is open to manipulation through advertising, styling, branding and marketing” (Allen, 2002, 56). As such, advertisers are actively creating and implementing definitions and meanings of products and markets rather than passively “choosing” from an existing pre-given array of possibilities. Consequently, a marketing strategy “is not – in the first instance – a matter of competition within market structures; rather it is a matter of competition over the structures of markets” (Slater, 2002, 68, emphasis in original). Furthermore, developments in information and communication technology (ICT) have enabled advertisers to direct targeted messages to potential consumers in increasing volumes and through diverse channels via TV programmes, blogs and websites focused on moving house, home decoration, preparing food, and choosing automobiles or holidays and tourist destinations for example. So too has a burgeoning range of sponsorship and promotional events. For commodities of all sorts, choice of medium has assumed greater importance in constructing advertising and marketing campaigns. Indeed, this choice has, allegedly, increasingly determined advertising and marketing strategies (Nixon, 2002, 137). However, the meanings that advertisers and their clients intend may not necessarily be accepted by potential customers and consumers of commodities. Consequently, markets may develop in unanticipated and unwanted ways, with consequent effects on the viability of those companies adversely affected by these developments. As Barthes suggests, “the economic practices of advertising are intrinsically caught up with the cultural understanding of the role, functions and nature of advertisements” (McFall, 2002, 161) and there is evidence that these have significantly changed over time. The intensified competitive pressures of contemporary capitalism have led to modifications of and refinements to “the magic system”, enhancing the significance of the culturally endowed and symbolic meanings of commodities and the identities created via their consumption. As Coe et al. (2007, 311) emphasise, “consumers are active agents making informed

162 Engaging consumers in co-production decisions about which commodities to buy in order to construct particular identities, or senses of self”. The content and tone of advertisements has gradually shifted from simple informational announcements to messages loaded with emotional and symbolic dimensions and undertones that involve more subtle forms of persuasion. In part, this has come about because technological advances have greatly enhanced consumers’ access to information about products; information flows have been both accelerated and expanded by electronic transmission and digitalisation, the development of the Internet and cloud-based technologies. As a result, few consumer products can expect to have any real, tangible point of difference for very long: “the USP, or unique selling point, is increasingly a thing of the past” (Stockdale, 2001, 17). Consequently, the symbolic attributes that can be attached to commodities have become increasingly important in differentiating between them. Because stable social relations and practices have seemingly disintegrated (Baudrillard, 1988), the pre-existing meanings of things can be appropriated by advertisers and deployed in their strategies to sell commodities. The ability to strip objects of their previous meaning has far reaching consequences as exchange relations and consumer culture become dominated by sign values. Echoing this, Lash and Urry (1994, 4) assert that “the mobility and velocity of objects in contemporary society have emptied them of their content, so that objects are better understood as sign values rather than as material objects”. They stress the symbolically saturated character of commodities, their “re-enchantment” as a product of the extraordinary proliferation and circulation of predominantly visual images and signs that become attached to commodities, irrespective of whether the signs themselves actually represent anything in particular. Nevertheless, while recognising the importance of symbolism and signs it is also important not to lose sight of the fact that in the final analysis what matters to capitalist enterprises is not the meanings that consumers might attach to commodities but the realisation of the surplus-value embodied in them at the point of sale. 7.2.2 The ascendance of the brand The process of de-coupling of signs and symbols from any specific referent product expanded and took on further significance with the growing emphasis on the promotion of brands (Arvidsson, 2006; Pike, 2013). While the branding of goods has quite a long history and is now a taken-for-granted feature of capitalist economies, initially “developing a market for products identified by brand was quite revolutionary …” (Harvey et al., 1999, 169). Creating brands subsequently became an important way to protect IPR and create a monopoly position in markets that allowed monopoly rents to be charged, thereby influencing the form of competition and the trajectory of accumulation. The manufacture of symbols of distinction embodied in a brand can be a source of long-term, if not quite permanent, monopoly rents and monetary gain, not just for “fine wines and perfect tourist destinations” (Harvey, 2014, 187) but even for such mundane products as boxes of breakfast cereals, tubes of toothpaste and boxes of soap flakes.

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Product differentiation via branding to emphasise that a product is unique, desirable and special has become a powerful way of avoiding the levelling effects of market exchange. The last two decades of the twentieth century saw a significant growth in branding as the most successful corporations shifted from manufacturing products to producing brands, with greatly enhanced expenditures on advertising, marketing, design, sponsorship and public relations (Urry, 2001, 2). The increasing prevalence of “enormously powerful and ubiquitous global brands or logos” with a “fluid-like power” signalled a major change in the character of competition across a wide spectrum of commodities –goods for final consumer markets, intermediate products, even bulk commodities such as metals and chemicals (Harvey, 2003). Brands typically are connected to specific proprietary markers, logos such as the curly script and curvaceous bottle that entice people to drink Coca-Cola or the apple with a bite out of it that signifies an Apple iPhone or computer, or to a particular person – people as diverse as David Beckham, Richard Branson, Madonna, Bruce Springsteen or Walt Disney – which identify the brand, distinguish it from potential competitors, and define particular brand families (Klein, 2000). Such logos are deliberately targeted, as companies seek to force people to look at them, “to underscore the capacity of the brand to condense its message to its mark” (Franklin et al., 2000, 69). The ability of brands to have this effect is a result of extensive processes of market research and promotion and of the ways in which the phatic inscriptions of the brand create links among apparently unrelated commodities. Put another way, global brands are abstractions that are only actualised in a range of products (Lury, 2004). The effectiveness of brands crucially depends on their proprietary markers operating as phatic images (Virilio, 1991, 1994), images that target attention and synthesise perception. As a result, “the time of the brand is that of the instantaneity of recognition and thus discrimination: brands work through the immediacy of their recognisability” (Lury, 2000, 169). As a phatic image, the brand de-contextualises biographical memory and re-contextualises it within expectations, understandings and associations developed through advertising, market research, the use of themed retail spaces – such as parks, restaurants, pubs and shops – and the sponsoring of activities and events that contribute to the elaboration of themed lifestyles. The result is that “these brands are free to soar, less as the dissemination of goods and services than as collective hallucinations” (Klein, 2000, 22). The effective brand thus links the person to the commodity in novel ways, “making available for appropriation aspects of the experience of product use as if they were the properties of the brand” (Franklin et al., 2000, 68–69, emphasis in original). More precisely, this is the way in which it is intended that the potential purchaser should read the brand and as a result be prepared to pay a premium for acquiring the cultural capital that the brand name confers. The cultural capital encapsulated in brands and sub-brands then enables markets to be segmented by ability – or not – to make the premium payments required to possess the desired qualities that the brand is perceived to embody and guarantee. Successful global brands, as varied as Apple, Benetton,

164 Engaging consumers in co-production Bodyshop, Gap, Nike, McDonald’s, Starbucks, and Virgin, have successfully created “family resemblances”. Through this form of commodity kinship, diverse commodities come to be seen to share essential characteristics so that “the shared substance of their brand identities” (Franklin et al., 2000, 69) becomes available to those able pay for the cachet of the brand. However, as Aspers (2010, 194) emphasises, while there are of course thousands of brands … only a fraction of them gain an identity in the sense that they become part of the consumers’ cognitive map so that they recognize them, associate something with them, value them and finally are willing to pay a premium to be “associated” with the identity. While de-coupling brand logos and their meaning from specific commodities underpins the concept of the brand as a generic representation of a company’s diverse products, it may conflict with the requirement for particular objects to maintain a degree of stability of meaning in order that they can perform as commodities and markets can be (re)produced (Hudson, 2004). This tension needs to be managed and contained. The “over-riding assumption” in contemporary marketing is that commodities acquire their “essential character” based on customers’ needs and products are classified according to the way that they are perceived, bought and consumed, resulting in product categories such as “convenience”, “speciality” and “unsought”. These in turn may become the basis of brand portfolios. In this way, the properties of objects “are linked to their positioning relative to customers’ perceptions and needs, but only as documented, interpreted and re-presented by the advertising or marketing industries” (Lury, 2000, 168, emphasis in original). Consequently, such a process of signification has definite limits, which vary with the type of objects and their use values. In contrast to Baudrillard and Lash and Urry, Appadurai (1986) insists that the meaning of objects derives from their uses, their forms and their patterns of circulation. “Meaning, then, might be more accurately conceptualised as at once a semantic and pragmatic category … use cannot be easily separated from meaning precisely because use is itself a major factor in the determination of meaning” (McFall, 2002, 152). Nevertheless, while recognising these important qualifications as to the relevance of the use value of a commodity and the limits to the number of brands that become part of consumers’ cognitive maps, it remains the case that the symbolic aspects of many brands and commodities have assumed a greater significance than they had in the past. As a result, “the lion’s share of consumption expenditure today – and a rapidly growing one – is spent not on the use value of goods but on their symbolic value, their aura or halo” (Streeck, 2017, 65). Consequently, at least in the more affluent parts of the capitalist global economy, people’s identities have been “welded to the consumption of goods” (Ewen, 1988, 60), and indeed to particular brands, linked to further product and process innovations in the form of advertisements (Lash and Urry, 1994, 140–141) as well as in the production of the commodities that are being

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advertised. One corollary of the enhanced significance of cultural capital and the meanings of things has been a deepening social division of labour that incorporates a complex and sophisticated advertising sector in addition to advertising divisions within companies. Advertising knowledge and skills have become critical resources and marketable commodities.4 The expansion of advertising and marketing has generated ‘white-collar’ jobs, many highly remunerated, heavily concentrated in major urban areas, in – or sub-contracted from – manufacturing firms. In summary, advertising and branding have become central to the creation of consumer demand via appeals to consumer individuality and identity (Lury, 1996). There are claims that the logic of the commodity has reached its apotheosis (Jameson, 1988, 84), based upon a heterogeneous market characterised by difference and incommensurability, driven by the cut and thrust of symbolic rivalry, as people seek to create identities through the acquisition (mostly in commodity form) of distinction and difference, searching for approval through the acquisition of appropriate brands, lifestyle choices and symbolic membership. These changes have been enabled by the development of the mass media, especially television, the Internet and social media. Advertising and design companies, in conjunction with the mass media, have greatly enhanced the “magic system”, generating enhanced desire for commodities via more powerful, sophisticated and persuasive processes of sign production. Such production has become a necessary condition for exchange relations and the circulation of capital, the dominant driving process. Consequently, in strong opposition to those who argue the case for ‘consumer sovereignty’, Williams (1980, 193) emphasises that “in economic terms, the fantasy operates to project the production decisions of the major corporations as ‘your’ choice, the consumer’s selection of priorities, methods and style”. There are those who argue that such a perspective over-emphasises the power that advertisers, allied to brand owners, producers and retailers, can exert over consumers (Jackson, 1993). Advertising, it is claimed, is rarely the sole or even most important source of pre-purchase knowledge about the existence or qualities of particular commodities, “seldom the single stimulator of wants and desires” (Pred, 1996, 13). It is certainly true that “consumers do not straightforwardly draw upon meanings prescribed by retailers and advertisers, but rather that commodity meanings are often contested and re-worked by consumers” (Leslie and Reimer, 1999, 433, emphasis added). While producers “create a series of texts”, these are “read by different audiences according to their own social conditions and lived cultures” (Jackson and Taylor, 1996, 365). Even so, advertising undoubtedly can significantly mediate and shape the changing relationships between the sign values of commodities, their symbolic meanings, and their material content and form (Fine and Leopold, 1993, 28). While some potential consumers may contest the meanings intended by advertisers, there are limits to consumer autonomy, reflexivity and resistance. Advertising strategies are clearly effective as companies continue to realise surplus-value via the successful sale of commodities. While Jameson may underestimate the capacity

166 Engaging consumers in co-production of consumers to challenge or even subvert the commodification strategies of capital, it is more difficult to challenge claims as to the success of advertising and marketing strategies in creating effective demand. It is, however, necessary to challenge binary accounts of a sharp shift from an era in which advertising was informational to one in which it is persuasive (McFall, 2002, 148–149). The form that advertising takes and the meanings and messages that it is intended to convey are always context dependent, a product of a spatially and temporally specific conjuncture of forces and processes. Whether the message is received as intended remains an open question, however.

7.3 Consumers as active participants: advertising strategies and the co-production of meanings It is clear that people are not simply passive and unquestioning recipients and consumers of the messages contained in advertisements and conveyed by brands. The concept of ‘circuits of culture’ (Johnson, 1986) suggests a more nuanced view of the creation, transmission and receipt of meanings, allowing for recursive loops, feedback from consumers to producers, and learning by producers from consumers. While the starting point in such a circuit may be the creation, within given social conditions, of a series of texts by advertisers and their clients, as noted above these are then read and differentially interpreted by people with differing amounts and types of knowledge, differing amounts of income and material resources, and differing endowments of cultural capital. The culturally constructed knowledges that people possess play a key role in their decoding and understanding of advertising messages. However, decoding is not simply a semiotic process but also involves the uses that people make of things in the determination of meaning. In addition, some of the most effective advertisements require potential consumers to ‘work with them’, to engage with and interpret them, actively co-producing part of the meaning themselves (Jackson and Taylor, 1996, 360). There are suggestions that over time consumers have become less susceptible to the illusions of mass consumption (for example, see Lash and Urry, 1994, 277); and it is undoubtedly true that some consumers in specific places and social groups do chronically challenge and re-work the meanings of commodities projected through advertisements. This selective contestation undermines those conceptions of globalisation that postulate the creation of a homogeneous global market place. Advertising practice has come to recognise this, as changes to the advertising strategies for Coca-Cola exemplify. After decades of a strategy based on the message of ‘one sight, one sound, one sell’, Coca-Cola sought to devise an advertising strategy that responded to local specificities so as “to make Coca-Cola appeal to every type of consumer, of every culture and nation, on every occasion” (Mitchell, 1995, 612). Similarly, in clothing “each global ‘fashion trend’ gets a local interpretation, and branded garment retailers operating in a market anchored in space have to relate to what their competitors are doing with these trends, rather than what firms in other markets are doing”. Thus, “though the production market

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for fashion garments is global, the consumer market for fashion garments is still essentially local” (Aspers, 2010, 197). These examples illustrate the ways in which major multinational corporations (MNCs) have increasingly devolved responsibility to local branches or agencies for creating advertisements and products customised to local conditions – variations on a global theme, but tailor-made to fit local circumstances, increasingly multi-local rather than variations on a multinational theme. From a starting point grounded in the intentions of advertisers, typically targeted at a specific market segment or niche, messages then travel around circuits of meaning, passing through successive phases of semiotic consumption, production and modification as consumers ‘second guess’ advertisers’ intentions while producers vary the nature of the product in response to or in an attempt to anticipate consumers’ reactions. Advertisers seek to remain in constant contact with consumers, monitoring and anticipating reactions via a range of social research methods – questionnaires, in-depth interviews, focus groups, psychometric tests, projective techniques, participant-observation and ethnographic approaches, drawing on a range of social science disciplines and skills. Increasingly innovations in information technology (IT) such as electronic point of sale (EPOS) and point-of-sale monitoring have enabled companies to track the purchasing patterns of consumers in real time and build up profiles of their characteristics and revealed preferences. Such behavioural information as to what customers actually choose to buy is used to evaluate existing advertising and sales campaigns and in turn deployed to structure the form and content of future advertising campaigns and possibly lead to product innovations as the commodity and not just the ways in which it is represented is altered in response to actual consumer behaviour (issues discussed further on pp. 173–177). This emphasises the ways in which the interplay between the producers and consumers of advertisements results in innovative co-produced forms of advertisements as well as consumer involvement in the co-production of the commodities that are advertised. Increasingly, the design, production and commercialisation of a new product or process mobilises growing numbers of actors, including, among others, end users in this collective endeavour. That is why there is often “co-design and co-production of the supply, the demand, and the goods around which they are shaped…. the collective dimension [of innovation] is increasing and … consumers’ commitment is becoming systematic” (Callon, 2005, 6). The involvement of potential consumers in these processes can shape consumer demand in more subtle ways. As Streeck (2017, 99–100) argues, marketing both discovers and typically also develops consumer preferences, both asking consumers what they would like but also suggesting to them things that they might be prepared to like, “including things they never imagined could have existed. Good marketing, in this sense co-opts consumers as co-designers, in an effort to haul more of their as yet commercially idle wants, or potential wants, into market relations”. These represent significant qualitative changes in the ways in which both advertisements and commodities are produced, including the commodification of the process of producing the advertisements.

168 Engaging consumers in co-production While the production of ‘first wave’ advertising by US-based multinational agencies assertively focused on the functional and utilitarian attributes of commodities, the ‘second wave’ sought to confront growing consumer opposition, scepticism and resistance to such an approach. In response, the ‘second wave’ created a new form of advertisement inspired by irony, self-deprecation and self-reflexivity. This represented a sea-change in the dominant form of advertising. Pioneering London agencies systematised this departure in product innovation through a new direction in process innovation – an advert ‘planned’ for an account by testing it on small samples of consumers. Using focus groups in the process of design enabled the views of potential purchasers and consumers to influence, often decisively, the final shape and form of the advertisement (Grabher, 2001, 352). Subsequently this emphasis on creativity was taken further in a ‘third wave’ of advertising (Lash and Urry, 1994, 141) which led to Soho in London replacing Madison Avenue in New York as the epicentre of a new geography of production (Grabher, 2001; Silverman, 2006). The active engagement of small focus groups of potential consumers in effect sought to anticipate how others in the wider population would decode the meaning of the message, based on the critical assumption that their views were representative of those of the sub-group of the wider population that was the target of the advertising campaign. Subsequently, however, there was a growing appreciation of the limits to an approach based upon focus groups and in-depth interviews conducted in the “sterile environments” of research facilities. Because such approaches were failing to yield information relevant to product development, companies began to explore the possibilities of anthropological and sociological approaches such as ethnography and participant-observation in the day-to-day environments of people’s homes. For example, teams of P&G researchers were “spending more time talking one-to-one in people’s homes” (Buckley, 2005), spending “days, sometimes weeks, in people’s homes studying everyday habits. Gathering such insights has helped P&G design products more effectively” (Grant, 2005). Other companies took a very different route and began to explore the knowledge to be gained from more recent advances in neuroscience and psychological research. The development of neuromarketing seeks to identify the neural responses that correlate with physiological changes and behavioural preferences for different brands and products (McClure et al., 2004). As a result, in these and other ways consumers have become more active (although not necessarily knowing) co-producers both of advertisements and of the commodities that companies are trying to sell. These changes have therefore led to new, increased and more varied forms of interaction between consumers and producers in the co-production of advertisements. Reflecting such changes, Lash and Urry (1994, 139) suggested that advertising has become more like a culture industry with advertising firms typically having a ‘creative’ side to create advertisements and an account planning and commercial side to sell them. Echoing this, Grabher (2001) claims that account planning is emblematic of the implosion of the economic, of the

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increasingly cultural inflection of advertising as a business service, and of the transformation of advertising into a “communications” or “culture” industry. While there may have been such an implosion, it remains one governed by strict commercial criteria and marked by precise economic limits within the parameters that define the capitalist mode of production (CMP) since advertising agencies need to make profits; to be commercially successful and realise their embodied surplus-value, the adverts they produce need to sell other commodities. However, these changes in its character and form have seen public discourse about advertising expand beyond the narrow boundaries of the business community, leading to comments on and reviews of advertising campaigns in daily newspapers and popular magazines and TV programmes that seek to create popular entertainment from advertisements, with an increasing fusion of advertising and entertainment (Silverman, 2005b). Although the direct impacts that this expansion and popularisation of discourses have had on particular advertising styles or philosophies may be limited, “it reinforces a feedback loop that supports a continuous up-grading of the industry. Broadening the debate leads to a deepening of the ‘advertising literacy’ of the consumers who, in turn, make increasing demands on the sophistication and subtlety of advertising” (Grabher, 2001, 370, emphasis added). This is indicative of the ways in which the forms and content of advertisements themselves, as well as their meanings, are re-worked within a circuit that encompasses diverse co-producers. While such circuits can include a variety of consumers as co-producers, they can also exclude other potential consumers, creating difficulties for advertisers and brand managers as a result. Recognising this, Stockdale (2001) argues that all points of contact with consumers should be seen as presenting opportunities for learning and R&D, for better understanding the implications for the role of advertising and communication, especially given a more interactive media world in which people can choose to ignore advertising or sponsorship messages. Companies need to engage with the full spectrum of consumers, understand their views on products, broaden the network of co-producers and use their knowledge to enhance product perceptions and market shares, and possibly lead to product innovation and refinement. Furthermore, recruiting “disaffected consumers” could help solve problems and develop new products. Whether Stockdale’s proposals would indeed ensure that consumers only read advertisements in the ‘intended’ way and behave accordingly is debatable (and unlikely). However, the suggestion as to the need to widen the network of potential co-producers – in a sense to democratise co-production – does indicate the complexities in understanding flows of meanings and the ways that these can be transformed as they pass around various socio-technical circuits. Advertising often offers a range of “uneasy pleasures”, from the simple desire for a product and its associated “lifestyle” to more complex pleasures such as the enjoyment of an “in-joke” and other forms of audience participation (Jackson and Taylor, 1996, 60–61). Advertisements seek to enhance and exploit

170 Engaging consumers in co-production these pleasures through narrative structures such as mini soap operas and intertextual references to previous well-known adverts. However, people interpret these flows of messages in varying ways, and not always those intended by their producers. As Allen (2002, 41) puts it, “the symbolic interplay that constitutes consumer codes is … not something that is handed down through a marketing tradition but is itself open to manipulation by active consumers”. As such, Lash and Urry (1994, 277) claim that people are increasingly reflexive about their society, its product and its images, “albeit images which are themselves part of what one might term a semiotic society”. This raises critical questions as to who has become increasingly reflexive, which people have the capacity to become ‘active consumers’ and co-producers. While the claim that Lash and Urry make may have validity in some socio-spatial circumstances – perhaps valid for that fraction of the new middle class endowed with ample cultural capital and writing about itself – there are evident dangers in over-generalisation here. There is, for example, little evidence of people becoming ‘active consumers’ – or co-producers – over the multitude of marginalised places of Europe and North America, let alone south east Asia and sub-Saharan Africa. The pleasures to which Jackson and Taylor allude are “uneasy” because many consumers know that advertising is primarily designed to sell commodities profitably rather than to educate or entertain, effectively drawing a veil over the social relations of co-production, and that their independence as consumers may be subtly undermined by the incorporation of consumer resistance. One expression of this is the growing resistance to brands, famously expressed in the slogan “No Logo” (Klein, 2000). Increasingly, advertisers seek to disarm sceptical consumers by employing a cultural politics of irony, saying one thing while meaning another, encouraging consumers to engage with the sense of ‘double meaning’ that “second” and “third” wave advertisements frequently evoke (Jackson and Taylor, 1995). For irony is always double edged, capable of expressing resistance to dominant readings but always liable to appropriation and incorporation. It is this range of meanings that the notion of “uneasy pleasures” seeks to convey. It suggests that the circuits of meaning associated with advertising and the recursive interplay between producers and consumers of meaning have become complex and, by design, loaded with ambiguity and scope for alternative and contested readings. In this context, co-production is at best an uneven and ambivalent process.

7.4 Spectacle, the experience economy and ‘imaginative hedonism’: co-producing ephemeral commodities The growth of the production and consumption of spectacle (Debord, 2000), a commodity form that is ephemeral and immediately consumed (but which nonetheless may require significant investment of fixed capital, typically debtfinanced – consider the various stadia built for the Olympic Games in Athens, Barcelona, London …), emphasises the increasing significance of consumers as designers and co-producers of the commodities that they consume in the

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experience economy. Commenting in relation to Debord’s book, Harvey (2014, 236) suggests that “it almost seems as if the representatives of capital read it very carefully and adopted its theses as foundational for their consumerist strategies”. A wide range of activities, including many TV shows and other media products, films, concerts, exhibitions, sports events, mega-cultural events, theme parks and, of course, tourism can be seen as falling within the realm of spectacle, sharing the defining characteristic that entertainment is active rather than passive, requiring the active participation of audiences and those consuming it. Even more interesting is the ways in which capital mobilises consumers to produce its own spectacle via YouTube, Facebook, Twitter and other forms of social media – people become simultaneously producers and consumers of these forms of distanciated interaction which can be instantaneously consumed, even as they absorb vast amounts of what might otherwise be free time that could be devoted to other activities. Crucially, however, this is not simply a one-way flow of information because the consumers produce information (which they agree to, although typically with little or no knowledge of what is entailed), which is then appropriated by the owners of the media for their own purposes. Thus “[t]he public is simultaneously constituted as both producers and consumers, or what Alvin Toffler once called ‘prosumers’” (Harvey, 2014, 236). Harvey goes on to note an important corollary: that is, that “capital profits not through investing in production in these spheres but by appropriating rents and royalties on the use of the information, software and networks it constructs”. This is symptomatic of broader tendencies in the contemporary phase of the development of capitalism: the growing influence of rentiers and their class relative to industrial capital.5 The increasing prevalence of spectacle as a commodity form, of prosumers as co-producers of the commodities that they consume as they produce them, relates to the emergence of the experience economy. More specifically, Pine and Gilmore (1999) argue that this reflects the transition towards an experience economy based on a conception of economic activities as theatrical production, in part in response to a tendency to growing automation and the de-personalisation of service delivery in many forms of service provision. This emphasises “symbolic, entertaining and hedonistic consumption in economic value creation” (Jeannerat, 2013, 370) in an economy of ephemeral experiences, co-produced by those who ‘stage’ them and those who ‘consume’ them and in which “employees are not just actors on a stage, they have to act out that stage” (Crang, 1997, 139 and 147).6 The offering of experiences occurs whenever a company intentionally uses services as the stage and goods as props to make a meaningful connection with an individual. Companies stage an experience whenever they engage customers, connecting with them in a personal, memorable way. By wrapping experiences around their existing goods and services, companies differentiate their offerings from those of their competitors. Thus, the development of the experience economy is intimately linked to product differentiation and market segmentation. Moreover, the transition to co-production of services in this way in the experience economy results in work and value taking quite specific forms,

172 Engaging consumers in co-production contingent upon the co-produced character of performance: “while the work of the experience stager perishes upon its performance … the value of the experience lingers in the memory of any individual who was engaged by the event” (Pine and Gilmore, 1999, 12–13, emphasis in original). Because consumers are co-producers of their own experiences, these are “rich with sensations created within the consumer”. A consumer buys an experience when “he (sic) pays to spend time enjoying a series of memorable events that a company stages – as in a theatrical play – to engage him in a personal way” and “[i]n the emerging Experience Economy any work observed directly by the customer must be recognised as an act of theatre” (Ibid., 2 and 106). However, the staging of those experiences has quite specific connotations and requirements within the social relations of capitalism: [u]ltimately a business is defined by that for which it collects revenue and it collects revenue only for that which it decides to charge. You’re not truly selling a particular economic offering unless you explicitly ask your customers to pay for that exact offering. For experiences, that means charging an admission fee. (Pine and Gilmore, 1999, 62, emphasis added) Moreover, that fee – whether explicit or implicit, hidden and incorporated in the overall cost of the commodified experience – must be sufficient to ensure that, from the perspective of its value to capital as the stager of the experience, co-producing services in this way is validated by producing a sufficient amount of profit. So while within the experience economy the economy can be thought of as theatre, producing experiences, these experiences must be sold sufficiently profitably. There is a further and radical implication that it is claimed results from the emergence of the experience economy because in customising an experience to make it “just right” for an individual “you cannot help changing that individual. When you customise an experience, you automatically turn it into a transformation … with transformation, the customer is the product” (Ibid., 172, emphasis in original). The transition to this form of experience economy therefore entails the commodification of the individual and their experiential life world. Tourism has become perhaps the quintessential form of the experience economy, essentially ‘experiential’, involving the active engagement of both tourists and tourist workers in the co-production of tourism experiences (Shaw and Williams, 2003, 16). Thus, tourists contribute to actively creating tourism experiences for themselves and for other tourists: the atmosphere of a tourism site, and the experience of tourists, is often dependent on the co-presence of other tourists. As well as interactions among the tourists, the quality of their experiences also critically depends upon the interactions between frontline service workers and tourists as clients. As Urry (1990) puts it, in every transaction there is a “moment of Truth” when satisfaction or dissatisfaction is realised. Thus,

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for example, “[t]he emotional content” of transactions between tourists and tourism employees may be as important as their manifest function, so that “the sensory feelings engendered by the encounter with the hotel receptionist may be at least as important as the fact that he or she served you efficiently” (Shaw and Williams, 2003, 80). However, tourism also has a necessarily material basis, requiring particular forms of fixed capital investment, such that some forms of tourism experiences cannot exist unless particular combinations of services and goods are provided in particular settings: staging these experiences requires specific combinations of material and institutional supports. Furthermore, companies use the power of affect and drama to create a sense of excitement within the act of consumption in tourism and other activities, such as leisure and retailing (Crewe, 2011). While actual tourist experiences are co-produced through the co-presence of tourists and providers of tourism, Urry (1990, 13) also argues that “it is hard to envisage the nature of contemporary tourism without seeing how such activities are literally constructed in our imagination through advertising and the media”. As Shaw and Williams (2003, 145) emphasise, the images created through TV and other media such as the Internet both act as powerful tools in selling destinations or types of holidays and also mediate the motives for travel. For many people these have become the foremost means of promoting travel and tourism. This emphasises the importance of the way in which cognitive representations of tourism and tourist destinations are co-produced between ‘remote’ image makers and individual consumers sitting in their homes, watching the screen of their TV or laptop. Such images of tourist places are an important influence on purchasing decisions, influencing what sort of activity tourists undertake, and where they do so. More generally, Campbell (1987) suggests that “imaginative hedonism”, the pursuit of pleasure as part of the act of consumption is strongly shaped by mass media. Furthermore, the experience economy with its attention to image, branding and lifestyle experiences, has, through the media (especially TV), been an increasingly dominant force in shaping imaginative hedonism.

7.5 New forms of relationship between consumers, retailers and manufacturers in product design and sale As well as the growing active involvement of some consumers in the production of advertisements and certain forms of service provision and delivery, in some sectors and product areas of manufacturing there has also been increasing involvement of consumers as a source of knowledge in the (re)design of material commodities, ranging from clothing and coffee machines to personal computers and automobiles. This constitutes “an emerging class of innovative user-producer relationships which are provisionally dubbed ‘co-development’” (Grabher et al., 2008, 253), with different modes of co-development organised along two dimensions: the degree of user involvement and the prevailing locus of knowledge production. As a paradigmatic example, with the advance of the

174 Engaging consumers in co-production micro-electronic revolution, the range of available automobile models multiplied to such an extent that consumers could be invited to design their new car themselves, by specifying their individual preferences. As a result, as early as the 1980s, “no two cars built on the same day at the Volkswagen plant in Wolfsburg were completely identical” (Streeck, 2017, 99).7 Such processes of codesign in commodity production have become generalised across a range of consumer goods. In clothing, fast fashion retailers “are now inspired by the most attractive and promising trends spotted at the big fashion shows and by cues taken from mainstream consumers which they can transform into products that can be put on the market almost immediately” (Tokatli et al., 2011, 1203). Spotting trends and copying ‘the whim of the day’ are also now easier thanks to digital photography and websites such as Firstview.com that post photos of new couture minutes after new designs are shown on the catwalk which can then be downloaded by subscribed members (Tokatli, 2008, 29). However, connecting rapidly changing customers’ demand with the upstream operations of design, procurement, production and distribution required the development of an information infrastructure with highly responsive communication channels to ensure faster and more reliable transfer of hard data and anecdotal information from trend setters, trend spotters and customers to designers and production staff (ibid., 23). Companies such as Dell have engaged with retailers, distributors and agents to connect directly with their end-buyers, offering mass customised PCs and laptops to consumers, and engaging internet customers directly in the design and specification of the particular product that they purchase and, in the process, acquiring valuable knowledge about consumer demands and the socioeconomic characteristics of their customers. There is, however, a further important economic advantage to this approach since, as a result, Dell has a cash-conversion cycle of negative eight days, strengthening its competitive position in the market (Pine and Gilmore, 1999, 149).8 Some companies take this process of consumer engagement further, recasting production as a miniature plant tour, and in this way turning the everyday acquisition and consumption of commodities ranging from day-to-day convenience goods such as a chocolate bar, a box of cereal, a pint of Guinness, or a carton of milk, to major infrequent purchases, such as a new automobile, into a memorable event. In this way they seek to draw the customer into the process of designing, producing, packaging and/or delivering the item – that is, into co-producing the commodity they will purchase. There are, however, limits to this process as “the economic incentive for manufacturing firms to add narrative, experiential elements to their tangible products does not eliminate the importance of synthetic and analytic knowledge about functional product features and manufacturing technologies” (Manniche and Larsen, 2013, 414). The growing involvement of consumers as co-producers in designing and making the commodities they purchase and consume can be seen as related to an increased concern with “authenticity” in an era in which “fakes saturate contemporary markets and product counterfeiting [has become] more

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sophisticated and more global” (Gilmore and Pine, 2007, 7; Hudson, 2018a). In part this saturation has come about because of the diffusion of sophisticated technological innovations in production methods enabling the proliferation of counterfeit versions of luxury goods, manufactured by firms in China and other emerging economies: in the ‘world factory’ of China, “[a]lmost any commodity can be knocked off and reproduced” (Pang, 2008, 120). The growth in production of sophisticated fakes and knock-offs is leading to the proliferation of items “that are, at least to an untrained eye, indistinguishable from the originals” (Tokatli, 2008, 26). There is a complex dynamic between the market for the genuine article and the market for the counterfeit for while the counterfeit has its own market it also exploits both the marketing strategy and the residual market of the genuine brand (Pang, 2008, 126). Faced with this blurring of the boundaries between the genuine and the fake, Fan (2014) suggests that the consumer turned ‘produser’ subject acts as a self-enlisted regulatory agent who works to perpetuate the value of the brand and the brand’s design-intensive value régime. In some cases, counterfeiting can extend to the retailing establishments that sell commodities, the design of the stores and their mode of retail operation, and not simply the commodities themselves that may in fact be genuine originals (Fan, 2010). Gilmore and Pine (2007, 165) suggest that when people create their own offerings to meet their individual needs – designing them, shaping them, touching them (even if only virtually) and causing them to come into being on their own behalf – “the results automatically come off as authentic, whatever the offering”. This appeal to authenticity in this way extended the scope of the experience economy and the engagement of consumers as co-producers to material commodities as well as services. The focus on authenticity emphasises the qualities of commodities as a key dimension of competition between companies, understanding quality “to be a co-constructive and iterative process based on relations between users, producers and other actors”. As such, quality and value are not given characteristics of commodities but are co-produced, socially constructed through practices and typically involve a promise and trust in a tangible outcome: the construction of quality is an expression of relations of understanding and trust that help producer, consumer and other agents navigate through increasingly crowded markets and choices. These relations can be triggered and advanced by coupling them to memorable experiences, and thus are strongly connected to the experience economy discourse … (Hauge and Power, 2013, 387–388, emphasis added) In contrast to innovations that have drawn upon the active engagement of consumers in shaping products and production strategies, technological innovations, especially in ICTs, have also enabled companies remotely to broaden and deepen their knowledge of customers’ behaviour and purchasing patterns, and alter production and supply chains accordingly. Innovations such as store cards and EPOS monitoring of purchases have meant that “the relationship between consumer and retailer has changed … and there is much to suggest

176 Engaging consumers in co-production that the retailer now enjoys enhanced asymmetry of power, both in information and exclusivity of trading” (Harvey et al., 1999, 241). Furthermore, alongside digital innovations such as the Internet (and internet searches via Google and so on), digital TV, digital music players and stores, this has led to the construction of detailed reports on the consumption practices of everyday life, as the environments in which people live have become increasingly automated and subject to remote surveillance, as a result providing the feedback channels for the scientific management of customer behaviour (Graham, 2001). The explosion of ‘Big Data’ has further blurred the permeable boundaries between advertising, consumer targeting and the practices of everyday life (see Longley et al., 2018). This has allowed major retailing firms to learn from consumers, who may not necessarily be knowing subjects, via the acquisition of knowledge as a result of these technologies. This has enabled retailers to combine the local knowledge of the village shop with a multinational’s economies of scale in buying and logistics (The Economist, 2005, 23). There has been further transformation of the producer/consumer relationship as a result of the growth of cloud computing and the ‘Internet of Things’ – “an unruly assemblage of protocols, sensing regimes, capabilities and desires”, dedicated to “the colonization of everyday life by information processing” (Greenfield, 2018, 32) in pursuit of profits. By 2015, for example, 84 per cent of UK companies used hosted or cloud-based services (Matthews, 2016a). This is because the power of the Internet of Things results not from simply connecting products but instead “from leveraging the data these connected ‘things’ create”. As a result, companies are “enabled to harvest data that might be used to refine targeted advertising, or for other commercial purposes” (Greenfield, 2018, 41). Previously, companies producing commodities, notably discrete manufacturers of material objects, have been confronted by two problems: ignorance as to the identity and attributes of their customers and, potentially more problematic, no depth of understanding of how their products were ultimately used. Their products were sold through a bricks-and-mortar store or a third-party internet site and once the product had left the warehouse they had little visibility as to who purchased it and how they used it. Having a “connected product” dramatically changes this model and, in some respects may significantly change the customer experience. A connected product provides companies with the ability directly to connect to their customers and better understand how their product is, or is not, being used. While this information may be valuable to consumers, especially to digitally engaged consumers who now have access to more information which they can use to their advantage, it is even more valuable to the company. This is because the Internet of Things allows companies to “walk hand in hand with their customer and hear their voice through the product”. Each step of their journey provides more insight into customer engagement with the product and the brand that it carries. From first impressions of the product, to everyday use and service issues, the company is able to monitor the experience and reactions of the customer. This creates the opportunity for enhancing satisfaction with the

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specific product and with the brand that it carries. As a result, “when something goes awry the company can be the first to know and the first to act, so it can turn a potentially upset customer into a brand ambassador” (Srinivasan, 2016, emphasis added). Drawing on the data available via the cloud and the Internet of Things means that “[c]ompanies are now automating their processes based on important business information”. For example, pricing strategies can be changed depending on how well a product is selling and items can be automatically reordered when stock is running low. More significantly, it is possible “to trigger a personalised e-mail to a customer to entice them to purchase, based on their shopping habits. … Working in the cloud means customer expectations can be met in an agile way …” (Davis, 2016, emphasis added). As an indication of the scale of the change this has enabled, 68.5 billion personalised emails were sent out in 2015, a 94 per cent growth over 2014.

7.6 Further feedback: consumer pressures on manufacturers and retailers The increasing capacity for communication between manufacturers and retailers – more generally, brand owners – and actual and potential consumers has also had other effects in creating the possibilities for consumers, non-consumers and pressure groups in civil societies to seek to influence companies to alter the ways in which they do business and conduct their affairs in more ethical, socially just and environmentally responsible ways. Corporate responses to these pressures typically take the form of codes of conduct (Piciotto, 2011, 99), social audits and Corporate Social and Environmental Responsibility policies (for example, see Raj-Reichert, 2013), seen as a way to improve working conditions and wages of those co-producing commodities and reducing the deleterious effects of economic activities on the ‘natural’ environment. However, there are tensions between the requirements of such audits and policies and their associated codes of conduct and competitive pressures to cut costs in order to maintain market share, or to secure a place in the supply chain or production network of a bigger company. As a result, in practice such codes are frequently disregarded or circumvented (Hornsey, 2005); while Carroll (2012) and the numerous reports of NGOs such as SOMO (see www.somo.nl) suggest that the aim of such policies is to bring legitimation to capital and mitigate the risks to capitalist interests and their institutional supporters. There are, therefore, strict limits to the efficacy of these policies in a capitalist economy: failure to create sufficient profit leads to failure in the market and as a result there are also systemic pressures to circumvent the requirements set out in Corporate Social and Environmental Responsibility policies (Sum and Ngai, 2006). Companies can, however, seek to use claims about their environmentally and socially responsible approaches as a marketing device, as part of their competitive strategy. ‘Fair trade’, for example, has become a marketing device and it is significant that the products first associated with the Fair Trade movement are tea, coffee and bananas. These are “banal enough”, perishable

178 Engaging consumers in co-production and/or consumed on a daily basis, requiring regular and consistent purchases and so enabling consumers regularly to express their support for more equitable exchange relations with producers in countries promoted by Fair Trade (Goodman, 2004). Related to this, there are concerns that such initiatives effectively act as technical barriers to trade, impeding access for producers in developing countries of the Global South to markets in the developed world of the Global North as they are unable to meet the stringent monitoring criteria built into schemes to guarantee that environmental and social criteria and standards are met. As such, certification can perhaps best be viewed “as a marketing and market access tool which allows the company to gain higher prices and a competitive edge in the market place rather than a mechanism to encourage trade” (Stringer, 2006, 716). But the point about unintended and emergent effects is generalisable to other such schemes (see Barkan, 2013).

7.7 Creating new meanings and re-valorising commodities: new forms of exchange beyond the mainstream, or defining a new mainstream? As some commodities reach the end of their socially useful lives for their original purchasers or owners – for example, automobiles, ships and many electronic goods – they may be disassembled and their constituent parts extracted for processing and re-use in further rounds of commodity production, both transferring value to new commodities and acquiring new meanings in the process. Disassembly in these Global Destruction Networks is heavily concentrated in specific places in both Global North and South (Herod et al., 2014; see also Gregson et al., 2016). Alternatively, the original purchasers or owners of a diverse range of consumer commodities (clothing, TVs, refrigerators, items of furniture, crockery and cutlery …) may donate them to gift or charity shops from where they may be sold on or given to others, acquiring new meanings and possibly new use values in the process. A further option is that their original owners may choose to sell them in a range of informal spaces of sale through which these ‘second hand’ or re-cycled commodities may again acquire fresh meanings and possibly new use values. This process can involve face-to-face interactions between buyers and sellers, as in car boot sales (Crewe and Gregson, 1998) or other second-hand market places (for example, see Gregson et al., 2001), or remote distanciated relationships in new electronic marketplaces such as eBay, in both cases producing exchange relations different to those of the formal mainstream retailing system; these may also extend to exchanges between the legal and illegal economies (Hudson, 2014).9 As in other respects, the development of new forms of information transmission and exchange via innovations in ICTs has been a crucial pre-condition for such distanciated developments. The paradigmatic online auction site, eBay, was established in October 1995 in the USA: without the emergence of the World Wide Web it

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simply would not have been possible. What began as a niche market for trading specialists and highly collectable items has become a massive on-line socio-technical exchange system, trading a very diverse range of products, including automobiles, catering equipment and medical scanners for use in hospitals – a development that has been an unintended and emergent effect. For some it has become a part of their economic strategy, part of their quotidian way of life. For example, it was estimated that by 2005 around 150,000 Americans were full-time eBay traders and a further 350,000 Americans were deriving part of their income from trading on it (The Economist, 2005). By that time, however, it had become a global system, albeit a globally uneven system because of the technical and economic preconditions that it requires, with 150 million users worldwide, buying and selling goods with a total price of US$40bn, yielding profits of over $1bn. Anyone can acquire information about products by browsing the website but buyers and sellers have to register. After searching through as many of the 40,000 different categories of goods as they wish, potential buyers submit the price that they are prepared to pay for those that they want. EBay then bids on their behalf in pre-determined increments; in some cases, however, the potential buyer can purchase instantly. The company generates its revenue from a ‘registration fee’ paid by the seller and a finalvalue fee on the goods that are sold, facilitating the processing of credit card payments through its PayPal system. The institutional framework for the basic honesty trading system is further underpinned by the company via feedback profiling that records the online reputation of buyers and sellers, and also by policing by eBay’s own category managers and security staff. While knowledge acquisition and the purchase of goods are activities performed in cyber-space, however, the commodities purchased must be moved in the physical space of the economy and this requires appropriate material and institutional infrastructures – transportation systems and postal, freight and logistics services. Buyers may also incur other costs associated with shipping, taxes and import duties, depending on the regulatory systems that govern the spaces within which or between which the exchanged commodities then move. From a socio-technical trading system developed to serve niche markets, it may be that eBay is helping define a new coproduced mainstream for at least some sorts of commodity exchanges within the parameters of capitalist social relations.

Notes 1 2 3 4

These are extensively discussed in Chapters 3 and 4. Schumpeterian ‘strong’ competition is discussed in Chapter 4. The emergence of ‘Fast Fashion’ and its effects are discussed in Chapter 5. One part of the more general significance of new forms of knowledge in economies, as discussed in Chapter 4. 5 As noted in Chapter 4.

180 Engaging consumers in co-production 6 See also Chapter 3. 7 VW continued to invest in innovative methods of flexible customised production, for example adding 1,000 Japanese-produced robots to the Wolfsburg factory in 2012 as part of a new strategy for modular production (Marsh, 2013). 8 Dell’s production methods are also discussed in Chapter 3. 9 Re-using materials in these varied ways can be seen as a way of limiting the ecological impacts of commodity production by reducing the demand for raw materials from the natural environment. These issues are discussed further in Chapters 8 and 9.

8

Capital and nature From relations of domination to active co-production

8.1 Introduction Building on an earlier observation that “all ecological and environmental projects are socio-economic projects (and vice-versa)” (Harvey, 1996, 249), so that within capitalist societies nature and society are indissolubly linked in specific ways as capital circulation and ecological processes intertwine to create complex environmental transformations, Harvey (2014, 247, emphasis in original) has more recently suggested that “the right way to think of it” is that “capital is a working and evolving ecological system within which both nature and capital are constantly produced and reproduced”. Abstract determinations at the level of value are continually translated into concrete social activity involving interactions between people and nature (Burkett, 1997). However, because of the nature of nature as a Polanyian fictive commodity, the social production of nature is always a complex and problematic process as the nature that is produced is something that is both evolving unpredictably of its own accord (because of the autonomous random mutations and dynamic interactions built into the evolutionary process in general) and is actively and constantly being reshaped and reengineered by the actions of capital. Consequently, this produces a very complex determination of relationships between people and nature. Fundamentally, however, the drive for profits and, moreover, for increasing profits in successive accounting periods, shapes those relationships and the appropriation of nature. As a result of this imperative, there is a strong tendency to transform or remove entities from their natural eco-systemic contexts in pursuit of profit. No part of the earth’s natural environment is immune from such dislocation and transformation; furthermore, these processes of transformation increasingly have been extended into plants and human and animal bodies, a qualitative change all the way down into the level of molecular biology and DNA sequencing. There are certainly technological limits as to the extent to which the effects of capitalist social relations can in practice effect such eco-systemic changes from the microto the macro-scale at any given point in time but they are constantly being pushed back as a result of scientific research and innovations.

182 Capital and nature While nature is socially produced and Smith (1984, 63) suggests that in the context of capitalism the key issues in the social production of nature are “how we produce nature and who controls this production of nature” (ibid., 63), this can never be a totally social process. For as Bridge (2011, 218, emphasis added) points out, since the social production of nature must unavoidably engage with diverse biochemical and biophysical processes that follow their own logics and trajectories independent of human wishes or intentions, “nature’s production is and can never be completely social”. This is an important qualification. Acknowledging its significance, the production of nature can be more helpfully understood as a form of co-production, a “conjoined materiality” in which humans and non-humans participate in the co-production of socionature (ibid., 227), although the materiality of nature in these processes of co-production may be a source of unpredictability, unruliness and resistance to human intention (Bakker and Bridge, 2006). As a result of nature’s “vital materialisms” (Bennett, 2010), the material properties and generative capacities of biophysical and biochemical processes, the production of nature is often an incomplete and partial process that may not necessarily follow the trajectory intended by people, leading to unintended and unwanted rather than desired outcomes. While typically dominant, it is also important to recognise that capital’s conception of nature as a mere objectified commodity does not necessarily go unchallenged by other social groups in civil society or by the institutions of the state. On the contrary; in some times and places it may well be and often is vigorously challenged, not least because of a recognition of the unintended and unwanted effects on the world of nature. As a result, there is a perpetual battle between the way in which capital conceptualises and seeks to use the metabolic relation to nature to construct its own ecosystem and the different concepts of and attitudes towards nature held in civil society and even within parts of the state apparatus. However, as Harvey (2014, 252) acerbically notes, [c]apital cannot, unfortunately, change the way it slices and dices nature up into commodity forms and private property rights. To challenge this would be to challenge the functioning of the economic engine of capitalism itself and to deny the applicability of capital’s economic rationality to social life. As with the production of nature, the production of the economy is not and can never be completely social precisely because, reciprocally, it necessarily involves interaction between people and elements of nature, both animate and inanimate. The economy is always co-produced via a socio-material process that involves material transformations of nature and other species and inanimate objects can exercise causal powers – not necessarily intentionally but simply because biophysical and biochemical processes have their own logics and cannot necessarily be contained to give only the outcomes intended and desired by people. For example, they may lead to unwanted effects on corporate profitability or on the health and well-being of people, places and nature

Capital and nature 183 (Hudson, 2010). While relations between people and elements of the natural world are unavoidably central to economic processes, the materials and processes that comprise the biochemical and biophysical worlds are not infinitely malleable: nature possesses lively generative capacities, sometimes fails to exhibit properties that are attributed to it and behaves in ways that confound efforts to produce it in a particular way in pursuit of profits. The intended outcomes of economic processes may be the production of profits but these may be accompanied by a range of unintended and unwanted outcomes which can impact back on the natural world in a way that may threaten the sustainability of the economy itself (as through the effects of global warming as well as more localised pollutants). Indeed, “and this is perhaps the most uncomfortable thought of all, it may be perfectly possible for capital to circulate and accumulate in the midst of environmental catastrophes” (Harvey, 2014, 249) so that environmental catastrophe does not so much threaten the economy of capital but rather defines its parameters and trajectory of change, regardless of the broader environmental and social havoc that this would bring in its wake … an issue I return to briefly in the final chapter. Before that, however, I examine the ways in which relationships with nature have altered from working within the constraints imposed by nature while seeking to weaken them, to seeking to control and dominate nature, to working collaboratively with nonhuman life forms in the co-production of capitalist economies.

8.2 Nurturing nature via agricultural practices Agriculture has a very long history, with many pre- and non-capitalist forms of agricultural production, involving the domestication and cultivation of plants and the taming of animals and animal husbandry. As Lopez–Portillo (speaking at a meeting of the Food and Agricultural Organisation in 1985, cited in Whatmore, 2002, 99) puts it: Historically, all manner of civilizations have depended on, or created, hundreds of thousands of plant species and varieties for their daily sustenance, for health and hygiene, for clothing, shelter, for obtaining dyes and chemicals, for symbols and progress. In sum, for the harmony and stability of their geography, their society, their culture. Agriculture and agricultural economies remained tied to the rhythms and times of natural biological and biochemical processes and subject to the vagaries of climate and nature. Nature and its inherent “vital materialisms” (Bennett, 2010) had a strongly constraining effect on the character of the agricultural economies that were possible. These traditional agricultural practices were strongly conditioned by the constraints that natural growth processes imposed on human activity and that limited what was possible in terms of co-production in the agricultural economy. Nevertheless, within these constraints and limits there is copious evidence of innovative agricultural practices in many parts of the world.

184 Capital and nature With the emergence of capitalism and its imperative to produce profits, capital has sought to weaken or abolish these constraints, changing the character of the processes of co-production in agriculture via more radical innovations, modifying growing environments and the qualities of products in particular ways and at least mitigating the unwanted effects of “vital materialisms”. Typically, such innovations increasingly drew on scientific knowledge produced in the laboratories of companies and universities (a specific example of the more general issue of formalised knowledge production discussed in Chapter 4). Such projects were informed by a common aim: to produce profits and facilitate the accumulation of capital. As a result, capitalist social relations have penetrated into many areas of animal and plant production, from the mundane (for example, cabbage and potatoes) to the more – to some Western tastes – exotic, both in terms of the cultivation of crops (such as avocados, mangoes and pineapples) and the rearing of animals (for example, crocodiles and ostriches as sources of meat and also of inputs to the production of consumer goods). Often these developments have been linked to changes in international trade agreements and new spatial divisions of labour. Despite such developments, however, production remained dependent upon natural biological processes, vulnerable to fluctuations in output and unpredictability in the processes of creating new strains and species. As a result, they also remain vulnerable to fluctuations in and unpredictability of profits. However, this also presented an opportunity for capital to seek to “out-flank” nature via two inter-related innovative processes: appropriationism, replacing previously ‘natural’ production processes by industrial activities, and substitutionism, substituting synthetic products for natural ones (Goodman et al., 1987). Successive transformations of agriculture seeking to “outflank nature” have provided a major market for many of the significant product innovations from the chemical and engineering industries – for example, new forms of seed, fertilisers and agricultural machinery. As a result, these capitalist interests have a vested interest in transforming agricultural practices in particular ways. However, the distinctive character of the labour process in capitalist agriculture (as compared to manufacturing: see Chapter 3) limits the effectiveness of such attempts systemically to transform the character of agricultural co-production, with implications for the ways in which class relations and forms of co-operation between capital and labour are structured. In agricultural labour processes, the primary role of labourers is to regulate and optimise the environmental conditions under which plants grow and animals develop as a result of naturally given mechanisms and organic processes that are relatively impervious to intentional human modification and in some cases, such as the capture of energy from the sun by photosynthesising plants, absolutely non-manipulable.1 Given this, despite continuing efforts to “outflank nature” and “industrialise agriculture”, a great deal of agricultural production of necessity continues to depend upon seeking to optimise natural conditions in relation to the growing requirements of particular species of plants and animals (Benton, 1989, 67–69).2

Capital and nature 185 Capitalist enterprises therefore have developed a variety of ‘localised’ adaptive solutions in their search for predictable and profitable approaches to co-production. Some forms of animal production – milk from dairy cows, meat from pigs and eggs and meat from chickens for example – have proved amenable to forms of industrial production based in the artificial environments of barns in which the animals live and are fed, typically dosed with antibiotics to combat the effects of living in dense concentrations in closed environments, but others such as sheep stubbornly resisted such forms of production, of necessity living in open fields and feeding on grass. These forms of localised environmental modification for animal production have increasingly relied upon innovations in computing and automated IT control systems and these are discussed further below in the context of the emergence of modified forms of industrial animal production. Capitalist enterprises also seek to “outflank” nature in the production of fruit and vegetables via innovative modifications to production processes and storage and transportation systems. Premature ripening and rotting of fruit and vegetables is inhibited via refrigeration and air transport and then produce picked prematurely is subsequently ripened by adding ethylene to warehouse atmospheres before being transported to shops and supermarket shelves as and when it becomes required for sale. For example, tomatoes mechanically harvested green in the USA and bananas picked green in central America are then shipped across the Atlantic Ocean to Europe in temperature-controlled containers from which they can then be moved to refrigerated warehouses to be ripened as required and then sent ‘fresh’ to supermarkets. Other innovations are located more directly in the production process and include optimising environmental growing conditions via techniques such as sophisticated drip irrigation that make agriculture possible in deserts, and hydroponics, replacing natural soils with a variety of growing media in areas devoid of suitable natural soils. The creation of the artificial closed environments of glass and plastic ‘greenhouses’3 has been particularly significant. Innovations in computing and automated control systems have become increasingly deployed in these closed environments, allowing more precise manipulation of growing conditions for plants and of the times at which crops are harvested within them. Plants grow hydroponically, not in soil, usually using rockwool as the medium. This allows precise control of the flow of water and the addition of required trace elements and nutrients in scientifically determined proportions to individual plants, with feedback from plants. Irrigation and nutrient systems are computer-controlled to ensure maximisation of yield. The growing environment in the glasshouse is artificially heated, raising the temperature and regulating the humidity, enriching the atmosphere by using heating systems to re-circulate CO2, often via sophisticated combined heat and power systems to both reduce energy and production costs and give increased yields (up to 15 per cent more). Such intensification of agriculture in these ‘closed’ environments substitutes energy for cultivatable area, fossil fuels for solar energy.

186 Capital and nature In ‘open field’ environments the drive for greater productivity and output per unit area leads to the intensive use of a range of biological and/or chemical fertilisers (Grübler, 1992). Such open-field systems, as well as semi-open plastic-covered production régimes, also typically involve the extensive use of chemical pesticides to ensure that crops are not eaten by unauthorised and non-paying non-human consumers before they can be sold in the market place. The production of fertilisers and pesticides formed major markets for major chemical companies, and also had important impacts back into the growth of the chemical industry (Dixon, 2018).4 In these varied ways, a combination of innovations in communications, transport and production technologies and the ready availability in many peripheral spaces of the capitalist economy of large masses of cheap labour-power that can be flexibly deployed in response to the varying natural rhythms of agricultural production, enable links between natural ecologies and economic activities to be loosened and, often along with the social relations of co-production, obscured. Clearly, there are strong systemic pressures to align the diverse times required by natural entities to survive, grow and reproduce more closely with the time/ space imperatives of capitalist production. As a result of a range of innovations, production of animals and plants becomes possible ‘out of time’ and often ‘out of place’ and agricultural production becomes increasingly globalised (Goodman and Watts, 1997; Whatmore, 1995). Consequently, seasonality is increasingly rendered irrelevant as supermarket shelves are continuously re-stocked with the same fresh products; ‘exotic’ tropical fruits and vegetables appear on supermarket shelves in affluent areas of temperate Europe and North America throughout the year. Rather than attempt to dominate nature in some general and over-arching sense, localised solutions are devised that allow particular sorts of co-production to be possible in a range of times and spaces and then move produce to markets around the world. Other technological changes seek more radical changes than just local adaptation, however.

8.3 Re-engineering nature – from husbandry to genetic engineering There is a structural imperative for capital to seek to privatise, commodify, monetise and commercialise all those aspects of nature that it possibly can. For [o]nly in this way can it increasingly absorb nature into itself to become a form of capital – an accumulation strategy – all the way down to our DNA. This metabolic relation necessarily expands and deepens in response to capital’s exponential growth. It is forced on to terrains that are more and more problematic. (Harvey, 2014, 262) As a result, diverse life forms, genetic materials, biological processes, knowledge of nature and intelligence in how to use their qualities and capacities and powers (whether of the artificial or distinctively human variety makes no

Capital and nature 187 difference) are all subsumed within the logic of commercialisation. In this way, “[t]he colonization of our lifeworld by capital accelerates” (ibid.). Reflecting this imperative to deepen and expand the scope of accumulation, people have explored new ways to change the qualities of the plants grown and animals raised for human consumption as part of the ongoing project to seek greater domination over nature and enhanced control over the processes of plant growth and animal development within agricultural co-production. Historically, the route to such desired changes was to produce hybrid plants through selective cross-breeding in the long-term flow of inter-generational and genealogical time. Seeking to steer the trajectory of natural selection in this way involves a process of trial-and-error learning, however, while mixing plant genomes through sexual reproduction results in the disappearance of desired agronomic traits from the next generation of plants (Bowring, 2003, 117–118). As such, there is both uncertainty and an unavoidable delay in assessing the success of outcomes and strict limits to the longevity of success. However, hybrid plants must be renewed annually, especially by farmers involved in large-scale mass production food systems seeking to juggle and satisfy the competing and varied demands of mechanical harvesting, food processing, major food retailers and fickle consumers. This opens up a potentially regularly renewable market for capital. Consequently, capitalist companies moved into seed production, seeking to “sterilise nature’s own prodigious and normally renewable productive and reproductive power so as to prevent it from creating for those who work it their own means of production: seeds”. As such, Kloppenburg (1988, 93) notes that “hybridisation thus uncouples seed as ‘seed’ from seed as ‘grain’ and thereby facilitates the transformation of seed from a use-value to an exchangevalue”. As scientific and technological advances opened up further possibilities, companies sought to extend their control over the production of nature via innovative processes of bio-engineering to create GMOs and transgenic species via genetic modification. Rather than seek to optimise ‘local’ growing conditions for existing species, genetic engineering alters the nature of those species or creates new ones. This represents an attempt to engineer a much more profound and global domination of nature. Such modifications relate both to the biological, material and discursive construction of the commodity and to new forms of product differentiation, a key dimension of competition and marketing strategies.5 Genetic modification has been used to alter the character of food products and enhance desired characteristics (such as colour, size, shape, taste and longevity: Harvey et al., 1999), in response to both regulatory and market pressures. In particular, the process of developing new plants by hybridisation “has progressed from operating at the level of visible or manifest aspects of the plant (phenotypes) to the molecular biological level of the gene, and DNA sequences” (ibid., 111), allowing completely controlled cross-breeding, precisely tailoring the production of biological variety to the requirements of markets and market segmentation. There are, however, limits to genetic re-engineering and commercial risks in seeking to modify biological processes and entities in these ways in pursuit of profit. For example, while recombinant DNA led to ‘classically’ hybridised

188 Capital and nature tomatoes that were commercially viable in Europe, a second differently genetically modified generation failed commercially as “the new biological entity failed to become economically instituted, to become stabilised in a new market” (ibid., 130). More generally, since they were first commercially licensed for open field agricultural production in 1996 in the USA, the diffusion of GM technologies has so far been uneven and limited to a few crops (corn, cotton, rape and soya) and countries (Argentina, Canada, China and the USA) while there has been strong resistance to GM foods in the EU. Genetic engineering replaces change over the longue durée of genealogical time by instantaneous production of new life forms in the space and time of the laboratory under the sway of capital. It also opens up possibilities that would not exist in genealogical time. These are radical changes. Thus, transgenic breeding “technologically [assists] nature’s own recombinant pathways by introducing new channels of genetic exchange, the human into the mouse,6 the fish into the strawberry, the protozoan into maize” (Franklin et al., 2000, 88). As well as opening up the prospect of bio-engineering organisms with previously unthinkable combinations of genetic material, this also promises an unprecedented degree of control over the fertility, reproduction and development of living things (Bowring, 2003, 121). Furthermore, GM techniques also carry the promise – or threat – of further dramatic dislocations in the times, spaces and forms of plant and animal co-production. High value crops that previously could only be produced in the tropics could potentially be mass produced by cloning and in vitro micropropagation techniques in carefully controlled growing environments in the temperate climates of North America and Europe. Via this particular process innovation and ‘spatial fix’ capital could avoid the constraints and uncertainties generated by unpredictable weather and seasonal variation, as well as problems of labour disputes, long-distance transportation and long-term storage of perishable goods (Bowring, 2003, 127). Such radical innovations in developmental processes and the growth of plants and animals – and the scientific and technical knowledges on which they depend – have provided the basis for processes of corporate transformation and new forms of co-production of new life forms in pursuit of profit, exemplified by Monsanto.7 Once a chemicals company, it transformed itself into a life sciences company. In the 1980s Monsanto acquired several agricultural biotechnology and seed companies and so became the second largest global seed producer and the largest global producer of GM seeds (although Monsanto itself was acquired by Pharmacia in 2000, it was then spun off in 2002 as a stand-alone venture). However, its success as a biotechnology company depended upon monopoly patents “whose grip is reinscribed by the signature that seals every purchase agreement each time a farmer buys Roundup ReadyTM seed” (Whatmore, 2002, 132). In the 1990s Monsanto developed several transgenic crops under the trademark Roundup ReadyTM, genetically modified to tolerate Roundup®, its flagship broad spectrum (that is, indiscriminate) glyphosate herbicide.8 Monsanto also inserted a marker gene into its New Leaf Superior potatoes, reprogramming them to produce their own

Capital and nature 189 insecticides. The marker, “a kind of universal product code” (Pollan, 1999, 11) allows Monsanto to identify its plants and so “enforce its patent license to those who purchase its product to grow potatoes to eat or sell, but not to reproduce” (Franklin et al., 2000, 73, emphasis in original). Inserting DNA and marker genes mean that as breeds have been partially de-naturalised “brands have become re-naturalisable in return” (Franklin et al., 2000, 91, emphasis in original).9 This process may yet be taken further as a result of the development of “terminator technology” (RAFI, 1999),10 a biotechnology designed to ensure genetic seed sterilisation and thereby introduce planned obsolescence into the plant. It does so by creating transgenic plants that yield infertile pollen or seeds because a toxin, for example that is expressed by a gene from the soil bacterium Bacillus amyloliquefaciens, is released when the plant reaches a particular developmental stage – for example, the mature seed drying out. The toxin then breaks down ribonucleic acid (RNA). This makes it impossible for the proteins required for the maturation of viable gametes or embryos to synthesise. It thereby provides “a technology … a biological means of policing (or functioning in lieu of) patents on life forms”, and serves to prevent seed saving from crops – especially soybean, rice and wheat – “in which hybridisation has not been commercially viable” (Bowring, 2003, 136). Following the initial award of a patent jointly to Delta and Pine and the US Department of Agriculture in 1998 (and subsequently two more), by 2000 all the major biotechnology companies had acquired patents for terminator-type systems – although AstraZeneca and Monsanto responded to pressure by publicly stating that they would not (yet) commercialise such technology. However, in 2000 an international moratorium on the use of terminator technology was put in place within the UN Convention on Biological Diversity, and strengthened in 2006, although contested by the major biotechnology companies which continue to develop the technology (in 2006 Monsanto acquired Delta and Pine) and the national governments of Australia, Canada, New Zealand and the USA. Corporate ability to brand and patent genetic material has been facilitated by regulatory innovations. Historically, a legal distinction drawn between “physical” and “intangible” property construed living things as belonging “by their very nature” to the domain of the physical. Since they failed to meet the criterion of being a non-obvious and useful human invention, they were beyond the reach of intellectual property rights (IPRs) legislation (Hamilton, 1993). This began to change in 1961, however, with the creation of the International Union for the Protection of New Varieties of Plants, the first step towards an international framework for Plant Breeders’ Rights (PBR), giving some limited quasi-patent protection for new plant varieties, provided that they were distinct and novel, stable in that they reproduce true to type, and uniform in that they are stable within a generation. This change was reinforced in 1994 when the US Supreme Court amended the 1970 Plant Varieties Protection Act and ruled it illegal to sell saved seeds for planting purposes (Bowring, 2003, 120).

190 Capital and nature In the 1980s, led by the US Supreme Court, legislation and case law began further to shift the ontological co-ordinates, drawing new distinctions between biological and micro-biological knowledge, practices and objects so that biochemical in(ter)ventions and genetic entities could be protected by patent (Correa, 1995). In 1987 the US Patent and Trademark Office ruled that all multi-cellular organisms – including animals – were eligible for patent protection within the framework of IPR. This removed a significant barrier to profitable production and enabled capital to seek out new sites of accumulation “in the interior spaces of the bodies of women, plants and animals” (Shiva, 1997, 5) while collapsing biological “becomings into the here and now of invention such that a germplasm without a history is folded into a future of monopoly entitlement” (Whatmore, 2002, 109–110). Furthermore, that the reproduction of commodities, markets and capital now have their own explicit “facts of life” is made particularly evident “in the context of bio-commodities, such as genetically modified foods, where the brand is not only written into the product’s DNA but is consumed in the double sense of being both purchased and eaten” (Franklin et al., 2000, 68). The transition from selective breeding via shaping processes of natural selection over the long-term to more-or-less instantaneous bio-engineering of new transgenic genetically modified varieties undoubtedly marks a decisive qualitative shift in the ways in which capitalist interests seek to transform living things for their own particular ends and in the distribution of power to make such choices. Yet in their public relations material companies such as Monsanto seek to deny this, deny that this denotes a radical change in process and product innovation, and present this DNA process as a straightforward extension of traditional breeding methods that simply allows genetic information to be transferred in a more precise, controlled manner. In short, the change is presented as quantitative rather than qualitative in its significance. However, countervailing voices in the life sciences community challenge this view which ignores the ‘trial-and-error’ character of experimentation. One manifestation of this is the ‘unintended effects’ of genetically modified soybeans. As Whatmore (2002, 134), not without irony, puts it: For all its precision engineering … the GM incarnation of the soybean [does not] stay put in the germinal fabric of the seed or the field boundaries of the crop … but is metabolised and redistributed through all manner of inter-corporeal relations in growing and eating practices. In like manner, but more frighteningly, BSE (bovine spongiform encephalopathy) emerged as an ‘unintended consequence’ of the intensive feeding regime of industrial cattle production. Thus the “troubling spectres of fleshy mutability” that haunt the shadowy regimes between field and plate emerge with particular intensity in the event of “food scares”. Such events have become a recurrent feature of the relentless industrialisation of food production under the imperatives of capitalist relations of co-production – within which the

Capital and nature 191 boundaries of legality can be crossed (for example, see Gregson and Crang, 2017) – and are emblematic of the threadbare fabric of trust (dis)connecting contemporary industrial food production and consumption (Griffith and Wallace, 1998). There are growing public concerns about possible health risks and the deleterious environmental impacts of conventional industrial food production methods. Recent food crises, notably BSE and outbreaks of foot‐and‐ mouth disease, have weakened consumer confidence in foods in general and especially in foods that are the products of industrial systems that depend upon the generalised use of pesticides, antibiotics, and other chemicals (Dreezens et al., 2005; Siderer et al., 2005). This in turn has led to feed-back effects and pressures to modify the forms of co-production and the processes of transformation in agriculture, both in terms of re-creating markets for non-GM seed varieties and of establishing “product traceability”. Reflecting increasing concern with the provenance of products, sophisticated IT systems have been deployed that allow close monitoring of the origin of items of fruit or vegetables, to a level of fine detail that includes the employee harvesting a particular item and the precise time and location – the individual plant – at which (s)he did so and, in relation to fresh meat products, allow total traceability of individual animals from which they came in terms of the date on which they were born and the farm on which they were reared. Pressures for non-GM production have created market opportunities for companies such as Seeds of Change Inc, based in Santa Fe, to sell native seeds, “heirloom variety” seeds that are ancient, organic and safe (Franklin et al., 2000, 85). As Franklin et al. (ibid., 85–86) note, the heirloom variety seed “indexes the most traditional uses of genealogy, mobilised to invite novel forms of personal consumption, self-health and political activism and environmental stewardship”. In sharp contrast, the patented clone and transgenic breeds manufactured by corporate agribusinesses and pharmaceutical companies “signify the precise opposite to a wary public, both captivated and disturbed by their coming into being. In their making and their marketing, the new breeds depart significantly from conventional models of genealogy”. The backlash against GM food has been particularly visible in Europe. In May 1999 major European food retailers formed a consortium to secure supplies of non-GM ingredients and derivatives. These countervailing commercial currents boosted the market for non-GM soya, primarily produced in Brazil (although one of the impacts – unintended by some – of increased growth of non-GM soya has been further destruction of the Amazon rainforest) and Canada, raising the price and volume of sales of soya guaranteed not to be Roundup ReadyTM. In the process, “this realignment of beans, contracts and devices” that could discriminate between and then keep apart GM and non-GM soya in separate markets “undermined the rubric of ‘equivalence’ and dispelled the ‘impracticability’ of their distinction” (Whatmore, 2002, 140). The ‘traceability’ and provenance of products has become increasingly important in relation to consumer perceptions of risk in the food chain and growing resistance to genetic modification among certain social strata and

192 Capital and nature food retailers in some parts of the world, as concerns over BSE and more generally genetically modified foods graphically illustrate. This has led to product innovation aimed at particular niche markets and those able to afford the premium prices attached to such products, especially in terms of organically produced organisms (Morgan and Murdoch, 2000; Murdoch et al., 2000; Winter and Davis, 2006). As well as the increased use of sophisticated IT monitoring systems, the concern with ‘product traceability’ has led to moves to fix products to specific spaces of production, to brand product via place (and vice versa) as one way of securing traceability (though not necessarily quality), trust and regard. Major food retailers sought to appropriate local food production systems and spaces as a way of meeting consumers’ concerns, minimising risk and avoiding legal liability, allied to marketing strategies that emphasise that their products contain no genetically modified material. In summary, life science companies have invested in the process and product innovations of genetic engineering and the development of GMOs in part as a way of creating continuing monopoly markets for other commodities that they produce. These companies sought to claim full and internationally recognised patent protection for humanly ‘invented’ life forms and, as a final guarantee, the creation of organisms with built-in planned obsolescence – that is, unable to reproduce. These biotechnology companies have then sought to represent this as a simple extension of established processes of biological evolution rather than as a sharp qualitative break with them as the production of life is engineered under the sway of capital rather than evolved within the genealogical time of natural processes. These processes of genetic modification may, however, be problematic, with unintended and unwanted emergent side effects, some evidently dangerous to human life and well-being, thereby raising doubts and fears about transforming living matter in this way. Thus “the newer biological technologies have been ‘sold’ within a voluntaristic-Promethean discourse which has inevitably occluded or rendered marginal the limits, constraints and unintended consequences of their deployment in agricultural systems” (Benton, 1989, 68). As a result, they have contributed to a corrosion of public trust in scientific opinion and expertise. In turn, however, this has created commercial (and other) pressures to return to more established and ‘natural’ forms of agricultural production and evolutionary procedures for the development of life forms.

8.4 Collaborating and co-producing with non-human life forms The most recent developments in agriculture involve a transition from the passive nurturing and active genetic modification of plants and animals to collaborative co-production in rearing animals and growing plants; from seeking to conquer, dominate, modify or suppress nature, to working collaboratively with it as it is found but in new ways. This new form of “fabrication of nature” centres on a switch from ‘traditional’ forms of animal and plant husbandry to modified industrial systems of both plant production and animal production.

Capital and nature 193 These are based upon scientific management and restructured labour processes involving a combination of the Taylorisation of work and, importantly, a requirement to acquire new cognitive skills in order to work collaboratively with new technologies and with non-human life forms. In the case of animal production, it is claimed that this new approach involves “[a]utomation, robotization and the growing trend of biotechnologization of work … [that] aim to increase production, reduce costs, and even do away with human labour wherever technically possible” (Porcher and Schmitt, 2012, 40–42). Rather than its abolition, however, this often involves changing forms of human labour, requiring differing competencies and new skills. Initially this new approach to co-production focused upon the objectification of animals within the ‘animal-industrial complex’ (Noske, 1989; Twine, 2012). Subsequently, and radically, as an integral part of a modified version of this new approach, it re-defined the role of animals as active knowledgeable subjects, learning and performing work. This newer approach thus conceives of people, animals and non-human life forms more generally as active subjects involved in processes of co-production of animal and plant products and so of profits. Consider the example of the automation of dairy farming. ‘Traditionally’ commercial capitalist dairy farming involved people managing and looking after animals, typically on the basis of tacit knowledge passed on from person to person and acquired as a result of experience and on-the-job learning. Central to this approach were the skills and knowledge of stockspeople, ensuring that the animals were healthy and that cows were milked at regular intervals, with cows feeding on grass and living in fields from where they were brought in batches to be milked. However, following their introduction in the Netherlands in 1992, there has been increasing, though as yet still limited, use of automated milking systems (AMSs) in northern Europe, with cows living in barns rather than fields (Holloway, 2007; Holloway et al., 2014a). Subsequently, use of such systems diffused to North America (Rotz et al., 2003)11 and even China (Engardio, 2007, 116–117).12 In part, these developments have been in response to labour shortages and concerns as to the profitability of production, in part because these innovations can be represented as beneficial to animal welfare, empowering cows as knowing subjects and addressing ethical issues and rising consumer concerns about the welfare of farmed animals. Claims about the freedom afforded to cows via AMSs feature prominently in the advertising material and competitive strategies of the manufacturers of these systems. The limited and uneven diffusion of AMSs in part reflects their cost. Such systems can represent a substantial fixed capital investment by farmers, each machine costing c.£80,000, with one machine required for every 60 cows (Holloway et al., 2014b, 133–135). While the manufacturers of these systems seek to differentiate their products from one another in search of market share, these AMSs share six main components in common: the milking stall; teat detection system; robotic arm to attach the cups to the teats; teat cleansing system; electronic and recording system; and the robotic milking machine. These can be configured in different ways but typically require changing the micro-geographies of different spaces and flows around the farm and the spatial layout of the milking parlour.

194 Capital and nature AMSs involve considerable use of computers and IT with cows identified to the system by individual radio tags or collars. Robotic milking involves the replacement of ‘conventional’ twice-a day milking managed by people with a system that allows cows the freedom to be milked automatically whenever they choose (Holloway et al., 2014a, 185). As a result, milk can be produced 24/7/ 365. Rather than cows feeding by grazing naturally in fields, the robot distributes individualised feed rations during milking and collects a complex array of data about each cow’s milk yield (its productivity), milk composition and various indicators related to health. Relations between cows as milk producers and people as dairy farmers are re-defined, with each assigned new roles in the milk production process, with cows becoming more active co-producers of milk. What is therefore distinctive about these AMSs, so it is claimed, is that within limits set by the technology of milking and the spatial layout of the barn in which the cows live, they empower the cows to have more freedom to behave as they wish and decide when and how often they will be milked automatically, managing this aspect of their lives themselves. As well as increasing autonomy for the cows, AMSs also involve a redefinition of the role of dairy farmers, with a greater emphasis upon formal knowledge and acquiring new skills as their role becomes to respond to the data collected as part of the AMS and use this in combination with their acquired tacit knowledge to inform the management of the cows and ensure their welfare. However, there are limits to the freedom conferred to cows by these systems and these limits are important and can be given a different interpretation to that of greater freedom. Rather than greater freedom, and in contrast to discourses of autonomy, choice and freedom that are promoted as advantageous to both cows and farmers in the advertisements for AMSs, the introduction of these systems can be seen to involve rather more complex relations of subjugation and control, as cows’ lives are ‘re-captured’ by robotic milking systems (Holloway et al., 2014b, 135–137). Rather than greater freedom, the re-defined role for dairy farmers not only requires them to acquire new cognitive skills in data interpretation and management – re-defining the relationship between manual and mental labour in their work – but also to structure their time as well as the spatial arrangement of their farms around the requirements of the milking robot, on call 24/7/365 to respond when required to deal with problems identified by the robot. In this respect AMSs have a more than passing resemblance to the subjugation of people to machines that characterises Taylorism.13 Furthermore, there are variations in the degrees of freedom for individual cows as the parameters for their behaviour are partly established as a result of the hierarchy of positions within the herd, which influence the order in which cows present themselves for milking, with some having to queue for long periods and/or be milked at ‘unsociable’ times of the day or night. This is also partly a function of the micro-geography and spatial layout of the barn, with cows required to move in particular ways and according to particular rhythms around the barn – for example, they typically need to be robotically milked

Capital and nature 195 before they can get access to food. Holloway (2007, 1051, emphasis added) expresses the point as follows, drawing on Foucauldian notions of discipline and power: the barn is an important part of the technology, imposing particular forms of discipline on bovine subjects and representing an expression of biopower in the alignment of technology and spatial organisation with cows’ bodies (and the human need to achieve particular effects from these bodies) and subjectivities. This arrangement is thus a co-production of technology, spatial organisation, body and subjectivity. … With each involved in the co-production of the other. Coppin (2003) makes a similar point in relation to large-scale pig farming in North America, with pigs disciplined by the spatial layout and technology of the farm. Thus, in both cases animals and people become co-constitutive users of the technology, disciplining both animals and humans through the creation of particular behavioural and bodily expectations and particular practices of confinement and control (Holloway et al., 2014b, 134). Seen in this light, the success of AMSs depends upon cows co-operating via engaging themselves subjectively in the work of co-production and learning to enact appropriate behaviours – but not all do so, and not all of the time. Those that consistently fail to behave as expected are typically removed from the herd. As Porcher and Schmitt (2012, 43, emphasis in original) put it, “cows do things: they take decisions and initiatives, they facilitate or complicate the farmer’s work”. While cows’ work is “ordinarily invisible, animal collaboration at work is visible when it is not obtained”. The work of the farmer, on which the success of the system depends, requires that the farmers are able correctly to interpret and appropriately respond to the considerable array of data recorded by the milking robot. As a result, they have been required to acquire new cognitive skills in data interpretation and management to enable the new metrological regimes centred on calculability and measurement to be put in place. These data then can be used to make decisions about interventions in the lives of individual cows in pursuit of greater milk production and enhanced milk quality. The establishment of a particular metrological régime becomes the key to the systemic effectiveness of an AMS (a particular instance of the more general significance of metrological régimes, discussed in Chapter 1). The emphasis on information and its interpretation also changes understandings of what constitutes “good stockspersonship” (Holloway, 2007, 1048). In this sense, AMSs can be thought of as involving the co-constitution of the new identities of both cows and people in differently technologically mediated relationships of milk co-production (Holloway, 2007, 1056). A second example of new forms of co-production relates to crops rather than animals, to contemporary commercial glasshouse production of crops such as tomatoes, cress and fresh herbs, again involving a combination of the appliance of science, new forms of human work and the enrolment of

196 Capital and nature different non-human life forms doing ‘what comes naturally’ to them. Glasshouse production of plants, often genetically modified, involves highly automated computer-controlled closed production systems (as noted on p. 185). In addition to and alongside these increasingly sophisticated technological innovations in the growth environment provided by the ‘artificial’ socio-technical ecologies of modern glasshouses, there has been a tendency for the enrolment of insects to control the presence of other, unwanted, life forms in fruit and vegetable production. Much of the animate labour in the glasshouses is thus provided by non-human life forms. This is because “[c]losed ecologies enabled biological controls to replace the agrochemicals … relied upon for open-field production” (Harvey et al., 1999, 40). The enrolment of insects only becomes possible in the context of the creation of specific spaces in which they are both mass produced and then contained and deployed as co-producers in fruit and vegetable production. One example of this is the use of biological control to combat aphids. There are a great many species of aphids and very few plants are immune to attack by them. Aphids feed by sucking plant juices and also carry diseases that seriously damage or kill the plants they attack. Aphids also multiply very rapidly because they are born pregnant, with tiny secondary embryos inside the first embryo and they reach adulthood in a week. They can therefore pose a major threat to greenhouse production but can be controlled by introducing specific insect predators into the greenhouses. These predators can be shipped in as cocoons, waiting to hatch, and packaged in bottles. Aphid parasites (A. matricariae) lay their eggs inside living aphids, which then turn into leathery looking ‘mummies’, and have proved successful in state-of-the-art European greenhouses in controlling the effects of aphids. A new adult parasite then flies out from a circular hole cut in the deceased aphid (for example, see www.naturescon trol.com/aphid.html). More generally, in state-of the-art greenhouses in northern Europe an important part of the labour process had been taken over by insects. Bees do the pollinating. Wasps do the policing. Tiny wasps (encarsia formosa), 0.6mm long and scarcely visible, zip around the greenhouses, vigilantly looking for whitefly. These wasps are mass produced and are provided with special ecologies to encourage them to work more effectively. Harvey et al. (1999, 4) comment further on life in the greenhouse: Similarly bemusing were bumble bees, a solitary insect, naturally evolved to reproduce once yearly. Yet … there were yellow cardboard boxes, with pictures of bumble bees and labels in seven major world languages. These delivered bumble bees for as long as need be, pollinating tomato flowers more efficiently than any human or mechanical means and on unpaid overtime. Bumble bees in vast numbers have thus been recruited to replace human labour, or other mechanical and chemical aids to pollination.

Capital and nature 197 Bees have now completely monopolised pollination in glass houses for all kinds of crop. They just happen to be better than other methods. As well as commanding lower wage rates. After all, they are doing something that ‘comes naturally’ to them. The fruit-set is improved, leading to more fruiting on the truss and higher quality fruit. (Ibid., 117) Since the late 1980s there have been important innovations that allow the mass production of bumble bees, breaking their natural annual generational cycle to produce them throughout the year as needed. Similar processes enable other insects to participate in horticultural labour forces. The development of biological pest controls has been a major innovation in horticultural production over the past two decades, replacing and/or complementing agrochemical pesticides and reflecting a philosophical change in approaches to pest control. For example, there has been an increasing use of wasps rather than pesticides to control pests but the deployment of wasps requires carefully constructed and controlled ecologies. As a result, mass producing these ‘beneficial’ insects, which became desired economic actors in the greenhouses, also requires mass-producing the unwanted ‘pests’, whitefly, on which they feed. This involved a change in philosophy from seeking to eliminate bugs via pesticides to accepting and indeed facilitating their presence. A third example extends the scope to the micro-scale and relates to the genetic modification of plants so that they perform specific tasks in industrial production processes: for example, genetically altered ragweed plants have been developed that clean soil contaminated by lead and other metals while micro-organisms have been developed to “eat” toxic wastes generated in semi-conductor production (J O’Connor, 1994, 157–158). Furthermore, rather than simply “eat” toxic wastes, other developments seek to involve micro-organisms as co-workers in the coproduced recovery of valuable metals such as copper, thereby bridging the boundary between the worlds of biological and biochemical and geological time and space as a necessary step in the creation of value (Labban, 2014). This involves the migration of production methods and techniques from manufacturing to extractive industry. The innovative employment of micro-organisms in the extraction of metals from mineral ores led to metals mining becoming, to a degree, a biologically based industry and to increased industrial interest and research activity in the application of bio-technologies to the extraction of metals from waste, particularly electronic waste. While the latter has yet to progress beyond the space and scale of the laboratory, the potential further intersection of those physical and biological processes of mining, and the associated re-definition of mining, further destabilises the analytical distinctions between extraction and manufacturing, biologically based and non-biologically based production, waste and resources. While bio-mining companies, such as GeoBiotics, have been built on ownership and licensing of proprietary mineral biotechnologies and processes without themselves investing in productive activities, major mining corporations have also developed their own proprietary mineral bio-technologies, either in-house,

198 Capital and nature through their subsidiaries, or by acquiring patents or the companies that have developed them.14 These have involved various forms of bio-leaching, in either heaps or tanks. Bio-leaching is a biochemical process that involves the solubilisation of solid metal values; that is, their conversion into their water-soluble form, by the oxidation of sulfides (such as covellite, CuS) or iron-containing minerals (such as pyrite, FeS2), or other minerals occurring with sulfides or iron-containing minerals. Yet, although those companies have captured value by licensing and on occasion selling their proprietary bio-technologies or the subsidiaries that owned them, over the past 30 years they have invested large amounts of capital in the application of those biotechnologies to the extraction of various metals from mineral ores across the Global South. The significance of bio-mining lies in the ability of microbial metabolism to mobilise metal values from recalcitrant low grade and waste ores, thus expanding the material basis of extraction to new reserves by extending the process of extraction itself at the cellular–elemental scale. Bio-mining destabilises the distinction between biologically based and nonbiologically based extraction, thus bringing to the fore the productive role that microbial forms of life can play in the extraction of metals. Of crucial importance is the moment at which the extraction of fresh value from human labour articulates with, and depends on, the metabolic and generative capacities of microbial communities – on machinic arrangements of microbial processes and human labour that produce what neither can on its own. In those arrangements the metabolic and reproductive functions of micro-organisms are subsumed in the production of value without themselves being value creating. (Labban, 2014, 562, emphasis added) In short, people and microbial communities come together in a new form of co-production. Labban elaborates on the transformative processes involved, arguing that biomining extends the “planetary mine” at the molecular scale, in the process eroding the boundary between biologically based and non-biologically based extraction. Indeed, the biochemistry of bio-mining microbes shows that the presumed boundary is in fact a dynamic space alive with a multiplicity of electrochemical and biophysical processes in which organic life and inorganic matter enter into fluid and productive arrangements. They represent vivid examples of “vital materialisms” (Bennett, 2010). They are spaces that extend from the bio-films produced by micro-organisms on contact with metal sulfides to the series of continuous tank reactors and heaps in which metal-bearing ores are leached and are instrumental in extending extraction to reserves of recalcitrant ores scattered across the earth. They also, however, present new technical problems because of the slow and uneven rate of the microbial metabolism. In response, mining and bio-technology companies have developed innovative processes to speed up and regularise the microbial metabolic process.

Capital and nature 199 As Labban (2014, 561) puts it, the particular productive capacities of materials (the solubility and ‘infinite’ recyclability of metals) and non-human organisms (the ability of microbes to break the moieties of complex molecules and solubilize metals) are subsumed into the production of value in the very process of breaking the resistance of recalcitrant forms of nature – a process that, however, produces new forms of recalcitrance and sets in motion the quest for new methods to overcome them. He continues: The subsumption of non-human nature in one form (the microbial metabolism) to break the resistance of non-human nature in another form (recalcitrant ore) creates in the process new obstacles arising from the microbial metabolism itself, which are overcome by engineering new environments and new microbial consortia that [are conducive to] a faster and more effective metabolism, and so on. This raises issues as to the productive role of micro-organisms in mining, the limits to bio-mining, and the bio-technologies that have developed to transcend those limits (and which in their turn give rise to new limits).15 Consequently, the combined de-territorialisation of metal extraction requires a theoretical de-territorialisation: rethinking extraction beyond extractive industry narrowly defined in terms of the physical removal of materials from a variety of mines and re-thinking the role that non-human forms of life play in the co-production of value in non-biologically based (extractive) industries.

8.5 Coda: capitalism and the transition from first to second nature The history of capitalism can be seen as a long-term process of transforming first nature to second nature, increasingly producing nature “from within”. Capital claimed property rights over natural domains through processes of ‘accumulation by dispossession’ and by “capitalising nature”, facilitating their “highest and best” use (M O’Connor, 1994, 144). For example, patenting GMOs or plants and seeds that previously were part of the commons of indigenous societies transforms them to private property with economic rights accruing to their new owners. More generally with the transition from first to second nature we enter a world in which capital does not merely appropriate nature then turn it into commodities … but rather a world in which capital remakes nature and its products biologically and physically (and politically and

200 Capital and nature ideologically) in its own image. A pre-capitalist nature is transformed into a specifically capitalist nature. (J O’Connor, 1994, 158) Moreover, the residual first nature is increasingly humanised, even if its components remain “wild”, as their use and management may be subject to detailed human control – for example, in rivers, forests, grouse moors or “big game” parks. Once people produce first nature, the distinction between first and second natures is eroded. The same piece of matter now exists simultaneously in a first nature that is concrete and material and a second nature that is abstract and derivative of the abstraction from use value that is inherent in exchange value. As a biological or physical entity, it exists in first nature and is subject to the laws of biology, physics and chemistry. As a commodity, it exists in second nature, subject to the law of value and market movements. Material nature is thus co-produced via socially organised human labour, subject to the determination of the imperatives of second nature, the incessant drive for profits that define capitalist relations of production. Or as Smith (1984, 55) puts it: “human labour produces first nature, human relations produce the second”. More specifically, the social relations of capital produce both second nature and social space as barriers and impediments to the co-production and the circulation of capital are removed (Altvater, 1994, 77). This social production of nature determines its treatment in the co-producing economy and in the process of capital accumulation. Specifically, through the capitalization of nature, the modus operandi of capital as an abstract system undergoes a logical mutation. What formerly was treated as an external and exploitable domain is now re-defined as a stock of capital. Correspondingly, the primary dynamic of capitalism changes from accumulation and growth feeding on an external domain, to ostensible self-management and conservation of the system of capitalised nature closed back on itself. (M O’Connor, 1994, 126) Indeed, O’Connor (ibid., 144, emphasis in original) goes on to claim, somewhat contentiously, that the modus operandi of modern capital in its “ecological phase” is not profit as such but “semiotic domination. What matters is to institute socially the commodity form”, thus representing all nature (including human nature) as capital, ipso facto in the service of capitalism as a legitimate social form. Looked at systemically, the pricing of a good or the successful capitalisation of an element of nature signals a “semiotic conquest”, namely “the insertion of the elements and effects in question within the dominant representation of the overall capitalist system activity”. This has “an undoubted ‘use value’ for the project of the reproduction of capital as a form of social relations”. Consequently, the distinction between first and second natures is increasingly rendered obsolete both by the development of capitalist forces

Capital and nature 201 and relations of production and by the discursive strategies of capital. As such, second nature increasingly encompasses both the material world, the social world of institutional formations that make co-production possible, and the discourses propagated about both. The search for the “mastery of nature” has been a centuries-long process predating the emergence of capitalism, one that has been modified in light of experience. It was – and to a considerable degree still is – a trial-and-error process of learning-by-doing. As capitalist economies have evolved, however, there has also been a qualitative shift in seeking to change the understanding of relationships between economies and nature to one grounded in the formalised pursuit and more systematic application of scientific knowledge. Nevertheless, relationships between economic activities and practices and nature remain chronically prone to generate unintended consequences, reflecting the limits to knowledge of these relationships and the emergent character and complexity of inter-relationships between natural and social systems. Thus, the development of capitalist forces of production can be seen as a contradictory process, emancipating people, to a degree, from the domination of nature but at the same time enmeshing them in exploitative social relationships of co-production and leading to new forms of risk because of environmental pollution and degradation. Global environmental catastrophes and localised pollution are not the intended outcomes of capitalist production but are nonetheless an integral part of it, expressions of “the second contradiction of capitalism” (O’Connor, 1997). The focus of co-production is quite precise – the production of profits, not the production of nature. Consequently, much of the production of nature is an unintended and uncontrolled by-product of the pursuit of profits. To reiterate Harvey’s (2014, 247, emphasis in original) precise summary of the relationships between capital, the capitalist economy and nature: “Capital is a working and evolving ecological system within which both nature and capital are constantly produced and reproduced. This is the right way to think of it”.

Notes 1 Although technological innovations have enabled the use of artificial energy sources in closed production environments, innovations discussed below, and have allowed the development in some parts of the world of ‘solar farms’ replacing crops in fields with masses of solar panels to capture solar power and convert it to electricity that can then be used in various economic activities. 2 Although through the creation of GMOs capital seeks to circumvent these constraints via producing transgenic organisms and as such change the labour process from an agricultural to industrial one, a development that is discussed below. 3 The possibility of glasshouse production can be traced back to a key innovation in the nineteenth century: the invention of a process for large-scale production of plate glass in 1833, in Birmingham, England. This was a critical pre-condition for creating glass houses, for “a revolution in glasshouse construction” (Harvey et al., 1999, 38). Subsequently, glass has been replaced by plastics in regions such as Almeria in the south east corner of Spain.

202 Capital and nature 4 In contrast, in the closed environments of glasshouses other non-human life forms have increasingly been enrolled as co-producers to control pests, a development which is discussed on pp. 195–197. 5 See also the discussion of marketing and competitive strategy in Chapter 4. 6 The reference here is to the transgenic OncoMouseTM, specifically created in 1988 by staff at DuPont and Harvard University, engineered for medical research to carry and breed with human genes pre-disposing it to cancer, further pushing back the constraints on the economy and human life and as such an ethically and morally controversial innovation. 7 Processes of M&A in biotechnologies and Monsanto’s involvement in these were described in Chapter 5. 8 Monsanto’s patent on Roundup®, which accounted for over 15 per cent of its sales and over 50 per cent of its profits in the 1990s, expired in 2000. As rival firms capitalised on the ending of patent protection, in 2002 sales of Roundup® fell by 24 per cent and Monsanto’s total sales declined by 14 per cent, resulting in a net loss for the year of $1.7 billion. This provided a powerful imperative to consolidate its lead in the production of genetically-engineered herbicide resistant seeds (Tokar, 1998, 257). 9 The cross-species transfer of DNA from human to mouse to create OncoMouseTM not only made the animal a transgenic life form but also a new form of private property. The significance of branding is further discussed in Chapter 7. 10 “Terminator technology” is the colloquial name for genetic use restriction technologies (GURTs). 11 About 50 dairy farms in Iowa have switched to AMSs and in total in the USA some 2,000 robotic milking machines have been installed (Rotz et al., 2003). One wellpublicised example is Fair Oaks Farm in Illinois, established in 1999. As well as dairy cows, there is a large-scale pig production, within a similarly automated régime. Beginning in 2004, the farm has also developed as a major tourist attraction, with adventure tours – the Crop Adventure, the Dairy Adventure and the Pig Adventure – a gift shop and a restaurant, charging an entrance fee to the 500,000 visitors per annum to gain access to the experience (see also the discussion of the experience economy in Chapter 7). 12 In Inner Mongolia, there is an experimental agricultural facility with China’s only robotic milking machine, enabling cows to choose when to be milked. “The thinking is that a contented cow will produce richer milk. And richer milk adds up to richer shareholders …” (Engardio, 2007, 117). Co-producing with cows was clearly seen as the route to increased shareholder value in the transition to the Chinese variety of variegated capitalism. 13 The characteristics of Taylorist labour processes are discussed in Chapter 3. 14 This is a specific example of processes on M&A considered more generally in Chapter 5. 15 A corollary of this recognition of the centrality of micro-biological and biochemical processes is that social scientists interested in the economy must necessarily engage with forms of knowledge in the natural and physical sciences that in some ways sit uneasily with the aims of a critical social science. As Labban (2014, 566) puts it, “We must therefore delve into the bio-chemistry of the mechanism by which microbes mobilize metals from mineral matrices to comprehend their active participation in the combined deterritorialization of extraction” (for a similar argument in the context of metallurgy and steel production, see also Hudson, 2012).

9

Co-producing sustainable economies or the end of capitalism as we knew it?

The binding theme running through the previous chapters is that capitalist economies are improbable co-produced entities. They are formed around and through structurally antagonistic social class relations, yet for most of the time they manage to be more or less successfully reproduced, co-produced via a mix of various forms of collaboration and competition regulated in various ways by national states, aspirant international pseudo-states and a range of organisations in civil societies at various socio-spatial scales. The simultaneously constraining and enabling effects of these various regulatory mechanisms contain the tensions that are inherent to capitalist relations of production (in their fullest sense) and so establish the conditions in which capitalist economies can be reproduced. This reproduction is certainly not an automatic or smooth process, however. It is punctuated by ebbs and flows of capital in various forms – money, commodities and labour – across the restless landscapes of capitalist uneven development and by recurrent crises at the levels of companies and territorial economies at various spatial scales – and less frequently systemically, as following the crashes of 1929 and 2008. The latter developments led Žižek (2011, x) to suggest that “the global capitalist system is approaching an apocalyptic zero-point”. Maybe it is, or maybe not. For at times seemingly against all the odds, the capitalist system has not collapsed and, however improbable, these economies are reproduced. This is not to suggest that the crisis tendencies have been abolished since they are inherent in the DNA of the social relations of capital but simply to recognise that the effects of crises can be mitigated, in part as a result of the interacting effects of a variety of technological, organisational and policy innovations that enable crisis tendencies, for a time, to be spatially and temporally displaced and help restore profitability. As well as being grounded in antagonistic social class relations capitalist economies also necessarily involve contradictory relationships between the economy and nature. All economic activities necessarily involve material transformations of elements of nature, but those under the sway of capitalism also have to obey specific imperatives since the use values of these ‘fictitious commodities’ are crucial to commodity production and the production of exchange value and the relationships between exchange and use values are far from straightforward. Whether these socio-natural relationships can be sustainably co-produced is even more problematic. There are various claims by

204 Sustainable economies or the end of capitalism? technological optimists that technological innovation can keep displacing these problems in time – expressed in the literatures on the circular economy, ‘cradle-to-cradle’ industrial ecology, eco-modernisation and eco-industrial production, for example, closing material loops so that wastes from one activity become inputs into another, with regulatory frameworks that encourage such collaborative input-output links. However, examples of eco-industrial development are typically confined to particular combinations of industries and small-scale eco-industrial parks on which collaborating firms co-locate (although there are some tentative moves towards developments on more extensive spatial scales: Ferri and Cefola, 2002). In general, however, such developments are very specific in terms of industries, scale and place rather than systemic in their transformative effects. Moreover, and more importantly in terms of their systemic implications, natural processes, raw materials from nature and non-human life forms have their own logics and developmental trajectories, following biochemical, biophysical, chemical and physical process laws, irrespective of human intentions and without regard to human wishes or needs. As a result, economic processes, which unavoidably depend upon their relationships with nature, often have unintended and unwanted consequences on nature in terms of environmental degradation and wastes. As well as fears of the exhaustion of key natural materials and widespread but more or less localised crises of pollution and environmental destruction, there are also dangers of environmental crises that threaten to have globally catastrophic systemic impacts – from seas of plastics in the oceans to global climate change. Such crisis tendencies are not amenable to management by continuous displacement in space or time for they threaten the boundary parameters within which such systems must be contained and so the capitalist economies and the societies in which they are more or less thinly embedded risk catastrophic collapse within foreseeable time horizons. Put slightly differently, “perhaps the most uncomfortable thought of all [is that] it may be perfectly possible for capital to circulate and accumulate in the midst of environmental catastrophes” (Harvey, 2014, 249). This leaves capitalist economies trapped between a very hard rock and an equally hard place. For at the same time as their activities create these systemic risks of environmental catastrophe, capitalist economies necessarily and unavoidably engage with natural processes and materials that follow their own biochemical and biophysical process laws irrespective of human intentions and their economic and social consequences. This combination of risks of related environmental and economic catastrophes poses without doubt the major challenge facing humanity. This challenge is above all a political one. Echoing Marx, Harvey (2014, 219), emphasises that political innovation is a matter of putting existing but hitherto isolated and separated political possibilities together in a different way. He later (ibid., 265) goes on to argue that the need “to replace the economic engine [of capital] and its irrationalities should now be obvious”. It is difficult to disagree with his analysis. But as he goes on to say, there is a major problem for “how this should be done is by no means clear and what kind of economic

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engine can replace that of capital is an even murkier proposition”. It is indeed difficult to see in any normative sense what such a systemic-level engine – and its constituent social relationships and relationships to nature – might look like and perhaps all that is possible is to recognise, following Streeck (2017) that capitalism is inexorably grinding to a halt and will incrementally collapse as a result of its own internal contradictions with no alternative in sight. Just how and when it will finally collapse remains unknown however – an as yet unknown trajectory to an unknown future at an unknown moment in time. This is undoubtedly a bleak conclusion but perhaps all that can be realistically assumed as of now. In the interim and foreseeable future, maybe the best we can hope for is the emergence of more humane, socially just and environmentally sensitive ‘varieties of variegated capitalisms’, though it is doubtful whether any of these would be adequate in the face of the magnitude of the challenges. There is certainly some evidence in the academic literature as well as in the activities of various social movements of at least a willingness to try to redesign forms of capitalism based in more ecologically sensitive relations and far higher levels of social justice and democratic governance (for examples, see Amin, 2009; Kallis and March, 2015). Certainly there is quite an extensive literature on ‘diverse economies’ (Gibson-Graham et al., 2013), on the growth of co-operatives, local currencies and social enterprises, allegedly evidence of the ‘end of capitalism as we knew it’ (Gibson-Graham, 1996). Many alternative forms of co-production, of social cooperation in organising economic activities and ways of being, not only persist in the contemporary world but also occupy a central place in many household and community livelihood practices. Moreover, many of these practices are empowering and desirable in that they are harnessed voluntarily through choice, and not economic necessity and the need to sell labour-power (White and Williams, 2010, 1637). There are also possibilities for radical changes in the social relations and geographies of production as a result of developments in digital fabrication, although as of now these remain very distant possibilities (Greenfield, 2018, 85–114). Moving beyond ‘capitalocentric views’ to recognise a diversity of possible economic relations and subject positions, not just analysing the economy differently but imagining a different economy, is a move in a progressive direction insofar as it goes. This qualification is important as there is a world of difference between imagining radical alternatives and translating these to systemic change in the social relations of the economy. It is, therefore, also important to be aware of their limits. For example, however imaginative the alternatives, many of these initiatives are localised, experimental and short-lived and it is also clear, for example, that many – perhaps the vast majority – of social enterprises that do survive in much of the Global North depend for their precarious survival on grants and subsidies from the state or contracts from mainstream capitalist enterprises (Amin et al., 2002). On a more positive note, other examples of thriving alternatives to the mainstream can be identified. There is abundant evidence of a wide variety of forms of economic life that resist, exceed, or simply are tangential to commodity production and market exchange, not only in supposedly traditional or less developed societies but also close to the heartbeat of globalising capitalism,

206 Sustainable economies or the end of capitalism? in such ‘global’ cities as London or New York. They form a valuable and diverse experimental ecosystem of norms, practices, and trajectories – “the seed banks, if you will, of alternatives to globalizing capitalism. … We must attend to the multiple, variegated assemblages of more than-capitalist practices already being experimented with, in and across all kinds of places” (Sheppard, 2015, 1129). The emergence of worker-run factories in South America in Argentina, Brazil and Uruguay, with workers taking over bankrupt firms and converting them to workers’ co-operatives, is another promising development. While admittedly few in number (about 200, 100 and 20 respectively in 2004), such worker-owned and managed factories hint at alternative ways of organising the social relations of co-production in ways other than the standard employer– employee relationship inherent to capitalism (Vieta and Ruggeri, 2009). More generally, there is evidence of a wide range of non-capitalist or alternative economies in which the nature of work and the organisation of economic activities might be different to the dominant capitalist system (for example, see Leyshon et al., 2003). However, examples such as the co-operatives formed by former coal miners to take over and operate formerly nationalised coal mines in Scotland and Wales and which only managed for a short time to operate as cooperatives before going out of business (Beynon and Hudson, 2019) are symptomatic of the difficulties faced by those seeking to develop alternative forms of economic organisation. Furthermore, even those that are economically successful are not necessarily without problems of a different sort. The transformation of the Mondragon co-operative in northern Spain into a multinational enterprise that operates largely according to the logic of the mainstream economy exemplifies the difficulties of developing such alternatives beyond the local scale in a global system dominated by the social relations of capital. Rather than challenge and pose alternatives to capitalist social relations, they are captured and enmeshed within them, legitimating rather than challenging the capitalist mainstream. However, the possibilities of alternatives also extend beyond the realm of coproduction to the sphere of social reproduction and civil society in which economic relations are embedded. In many parts of the world households and extended families conjoin in a whole range of practices of mutual support to create some semblance of a common life. Such practices become formalised in the establishment of community associations, ethnic assemblies, religious organisations, and the like, which pay considerable attention to defining and maintaining (sometimes repressively) the appropriate local neighbourhood conditions for social reproduction. Such associations can form the basis for larger social movements and it is from them that much inspiration is drawn for the idea that another way of life is possible to replace that given by the purely market and monetary transactions of mainstream capitalism (Harvey, 2014, 191). The challenge is to make sure these diverse organisations are cooperative rather than divisive and competitive – for example, as between religious or ethnic groups. Furthermore, these organisations may not necessarily be transformative but may be accommodative (in Fraser’s terms: Fraser, 1995) and as

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such may help legitimate and sustain mainstream capitalism rather than challenge it. Indeed, a focus upon identity politics may be socially and politically regressive. For the effects of neoliberalism’s emphasis on individualism and enhanced spatial mobility have, if anything, diminished mutual aid as a feature of a common social life except in communities that define their ties in religious or ethnic bonding. Put another way, this form of identity politics may serve to deflect attention from the class relations inherent to capitalism and undermine any sense of class solidarity, again helping reinforce the legitimacy of the capitalist mainstream. Nonetheless, the creation of such diverse heterotopic spaces, where radically different forms of production, social organisation and political power might – but it’s important to stress, do not necessarily – flourish for a while, mounting a challenge to the mainstream, does suggest a terrain of anti-capitalist possibility that is perpetually opening and shutting down. Such initiatives are important, even if they come and go, precisely because they help keep the possibilities of alternative ways of co-producing on the political agenda. The challenge is for them to become established and develop as systemic alternatives – a non-trivial challenge. How is this to be done? As Braun (2015) points out, although a robust critical literature has done much to help us understand how we have arrived at the present juncture in terms of the ecological impacts of the practices of (some) people upon the environment and has highlighted the deeply uneven geographies of socioecological change, it has been far less successful at imagining and engendering just and sustainable alternatives to existing political, economic, and ecological practices. Harvey (2014, 163, emphasis added) suggests that while different and diverse anticapitalist social movements and resistances are emerging from within the framework of capital’s uneven geographical development, they have to liberate and coordinate their own dynamics of uneven geographical development and the production of emancipatory spaces of difference, in order to reinvent and explore creative regional alternatives to capital. They constitute “a mosaic of different but loosely connected seedbeds for transformations of capitalism towards an anticapitalist future. How they might be put together is the question”. This last point echoes Williams’ (1989) prescient caution as to the difficulties of generalising “militant particularisms” and the problem of how highly fragmented though numerous oppositional movements might converge and coalesce into a more unified and broader political movement effectively to challenge capital’s systemic dominance, especially beyond the regional scale. Furthermore, in the absence of such a larger scale political alternative, there is a real danger that the creation for a time of such localised alternatives to capitalism may simply serve to legitimate the broader dominance of capitalist social relations, representing evidence that alternative choices are possible and tolerated within capitalist societies but that they lack the wider support required to mount a serious challenge to the capitalist mainstream. While Harvey suggests that one consequence of uneven geographical developments will be to generate ‘spaces of hope’ and heterotopic situations where new modes of cooperation – new forms of co-production and social reproduction – might flourish, at least for a while, before they get reabsorbed

208 Sustainable economies or the end of capitalism? into the dominant practices of capital, questions remain: will such radical alternatives emerge? If they do what will they look like? And, if they do emerge, is such re-absorption inevitable? If so, will it alter the existing ‘varieties of variegated capitalisms’ in any sense of developmentally progressive directions? Harvey (2014, 220) goes on to suggest Marx’s position, and I broadly follow him in this, … is that capital can probably continue to function indefinitely but in a manner that will provoke progressive degradation on the land and mass impoverishment, dramatically increasing social class inequality, along with the dehumanisation of most of humanity, which will be held down by an increasingly repressive and autocratic denial of the potential for individual human flourishing (in other words, an intensification of the totalitarian policestate surveillance and militarised control systems and the totalitarian democracy we are now largely experiencing). As Hadjimichalis (2017) puts it, drawing on Gramsci and his reflections on the crises of the interwar years, “Are there any politics of hope, or do we face the time of monsters?” This is a chilling dystopian vision of a future under the authoritarian sway of capital, with environmental catastrophe an unavoidable result of the necessarily materially transformative character of capitalist economic activity as this sets loose processes of chemical and physical change that cannot be contained or displaced and which will fatally undermine the natural basis on which capitalist economies and societies depend. Whether capital can therefore continue indefinitely remains in doubt – with all that, that implies for the future of humanity in the absence of any conception of a practical systemic alternative to it.

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Index

Page numbers followed by n and a number refer to a note. ABB (Asea Brown Boveri) 50–1 accumulation of capital 7, 12, 88; conditions for 17–18; disruption by workers 47; exploitation of nature 184, 186, 190, 199–201; legitimation 24–5; primitive 13, 97–8; régime of 26–7; state involvement 19, 21, 24–5, 35; see also capital Actor Network Theory (ANT) 11 advertising 156–61; brands 97, 162–6, 170; co-production 167–70; as entertainment 169–70, 173; industry 71, 159, 168; market creation 96, 158–61; resistance to 161–2, 165–7 AEEU (Amalgamated Engineering and Electrical Union) 133, 154n2 AEU (Amalgamated Engineering Union) 131, 154n2 agile methods 82, 177 agriculture: animal husbandry 191–5; automated milking systems (AMSs) 193–5, 202n11, 202n12; changing job roles 195; genetic engineering 126, 186–92; innovation 183–6; plant production 185, 187, 188–9 Airbnb 74, 95, 97 Airbus 110 airline industry 110–11, 121 algorithmic trading 76–7 Alibaba 74 Allen, J 36, 135–6 Amazon 74, 127; Mechanical Turk 69, 95 American System of Manufacture 49, 59 Amin, A 36, 205 AMSs see automated milking systems (AMSs) animal husbandry 191–5

Apple 100, 114, 118, 127 Applebaum, R P 107 ARAMARK, Resource Center Software 62 Asda 108 AstraZeneca 189 audit agencies 38 Australia, migrant labour 142, 144 authenticity 174–5 automated milking systems (AMSs) 193–5, 202n11, 202n12 automation 55–6, 61, 72, 139, 171; automated milking systems (AMSs) 193–5, 202n11, 202n12; automobile industry 64, 180n7 automobile industry 84, 100; competitive strategies 76, 78; customers 174; innovation 87; labour 54, 63–4, 140, 142, 144; operations 50, 62, 64, 81, 180n7; strategic alliances 121; suppliers 95, 110 autopietic system 52 Aventis 126 Bangladesh 60, 73n13, 77 banking 26, 84–5, 123, 139–40; see also financial services Barthes, P 160, 161 behaviour: economic 2, 3, 5, 9, 75, 99; of individuals 8, 156–7, 167–8, 175–6 Beynon, H 3, 69–70, 81 big data 176 biotechnologies 79, 126, 187; bio-mining 197–9; genetic engineering 126, 186–92; pest control 196–7 Blue Pumpkin 61 Boeing 110–11, 121

Index 239 Bowring, F 187, 188, 189 brands 162–6; brand ownership 76, 97, 105, 110; resistance to 170 Brazil 133, 191, 206 BREXIT 32, 41n5 BSE (bovine spongiform encephalopathy) 190–1 Buckley, M 153–4 Buckley, N 168 Burawoy, M 43 Business Process Re-engineering (BPR) 64 business-to-business (B2B) 94–5, 156 call centres 61, 65–6, 78 Callon, M 4–5, 167 Campbell's 108 Canada 142, 144, 152, 191 capital 10, 119; and nature 181–3, 199–201, 203–4; primary and secondary circuits 99–100; see also accumulation of capital capital labour relationship 5–9, 20, 42–5, 56, 71–2, 81; collective interests 45–8; innovation 74; see also trades unions capitalism 3–5; capitalist economies 2–3, 5–9, 12–15; commodities 10–12, 25; competition 7; future of 203–8; national state 16–21, 29; role of money 25–6; soft capitalism 52, 58, 66–8; variegated capitalism 4, 28, 123, 205, 208 capitalist mode of production (CMP) 6, 13, 156, 169 Castells, M 70 Castro-Wright, E 118 Catalunya, Spain 33–4 catalytic states 35–6 chemical industries 61, 62, 81, 113 Chesnais, F 124 China 23, 77, 120; automated milking systems (AMSs) 193, 202n12; call centres 78; clothing industry 73n13; counterfeit goods 175; diaspora 105; labour 133; transition to capitalism 106; Walmart 118 Chrysler 128 Cisco 125 Clickworker 69 clothing industry 60, 73n13, 155n9; fast fashion 103–4, 160–1, 174; labour 56, 57, 133, 140, 145, 149; localisation 166–7; network relationships 107, 109, 111, 124

cloud computing 72, 96–7, 176–7 CloudCrowd 69 co-operatives 151–3, 206 co-production 3–5, 14–15, 54, 71–2; capitalist economies 5–9; commodities 6–7, 27; with customers 157–8, 167, 173–7; innovation 74, 79–87; with nature 192–9; see also collaboration Coca-Cola 163, 166 codified knowledge 87–90, 91–2, 93–4 coercion 43–4, 59–60 collaboration 2, 74; innovation 87–93, 114–16, 121; labour 131–6, 151–4; long term 120–2; networks 102–4, 113–14; with non-human beings 11–12; supply chains 116–20 commodities 10–12, 25; co-production 6–7, 27; fictitious 5, 8, 10–11, 42, 181, 203; illegal 39; meanings 96, 156–7, 159, 160, 161–2, 165; and nature 11–12; re-valorisation 178–9 communities of practice 92–3 competitive relationships 7; between firms 6, 74–5, 94–6; labour 6, 130–1, 138–9 competitive strategies 100–1; breaching regulations 38–9; cost based 75–9; mergers and acquisitions 122–8; strong 74, 79–87; weak 74, 75–9 computers 84, 90–1, 174; see also ICT (information and communication technologies) Concast 125, 128 Consett, England 151–2 consumers see customers consumption, and production 27 contract workers 135–6, 141, 143 contracts: labour 47; relational contracts 102, 104–7 core competencies 93, 128 cost based competition 75–9 counterfeit goods 174–5 craftwork 56–8, 67, 73n9, 88, 132 Crang, P 66 crisis tendencies 20–1, 30, 35, 99, 203–4; avoidance 28–9; see also financial crisis (2008) Crowdflower 69 crowdsourcing 69 culture: circuits of culture 166–7; corporate 52, 58, 65, 67, 128, 139–40; cultural capital 163 currencies 26, 31 customers 156, 158–9; co-production 157–8, 173–7; interaction with 96,

240 Index 166, 168–9, 177–8; needs 159, 164, 167; participation in performance 66, 170–3 Daimler-Benz 121, 128 Daimler-Chrysler 78 de-skilling 59, 60, 61 Debord, G 170–1 decentralisation 52 Dell 62, 76, 174 Delta and Pine 189 Denmark 152 DHL 123 digital economy 31, 72, 127, 162, 174; consumers 96, 176; see also internet distribution see logistics Dodd, N 25 Du Pont 126 Dubai 153–4 Durand, C 25, 85 Eastern Europe 60, 120, 124, 142, 147 eBay 178–9 economic equilibrium 1–2 economic growth models 26–9 economies of scale 75, 121; mass customisation 91 electronics industry 57–8, 62 embodied knowledge 91, 93–4 employment 131–6; conditions of 74, 132–3, 138, 148–50, 177; see also labour environment (natural): commodities 11–12; localised modification 185–6, 195–7 environmental impact 177, 183, 201, 204; food production methods 191; soil de-contamination 197 ethnic differences, labour 141–6, 150 Ettlinger, N 68–9, 116 euro 31–2, 40n2 European Central Bank (ECB) 26, 30 European Union (EU) 24, 30, 45, 124, 127; euro 31–2; labour 144–5, 147 exchange 8; exchange values 187, 200, 203; money 25; re-valorisation 178–9 experience economy 170–3, 175 export processing zones (EPZ) 22, 61 Facebook 125, 127 factory regimes 43–4 fair trade 177–8 fashion industry see clothing industry fast subjects 52–3

female labour see women fictitious commodities 5, 10, 101n11, 181; state involvement 24; trading 98, 99; value 203; see also labour; money; nature financial crisis (2008) 28, 38, 40n3, 40n4, 53, 85–6; impact 21, 203; see also crisis tendencies financial services 115; competitive strategies 76–7; globalisation 37; labour 139–40, 142–3; products 33, 84–5, 99; regulation 53, 124; see also banking Firstview.com 174 flexible production 50–1, 54–5 flexible specialisation 57–8 flexible working practices 135–6 food industry 65–6, 108, 117–18; logistics 185; mergers and acquisitions 124; traceability 191–2 Ford Motor Company 100, 121, 142 Fordism 27, 28, 31, 59–61 Foucault, M 19–20, 67, 116 fourth industrial revolution 72, 95 Foxconn 133 France 23; clothing industry 56, 57, 145 franchising 120 Franklin, S 191 Friedman, A 56 Friedman, V 161 Friends of the Earth 37 gender differences, labour 130, 139–41, 150 General Motors (GM) 50, 100, 112 genetic engineering 126, 186–92; terminator technology (GURTs) 189, 202n10 GeoBiotics 197 Germany 28, 78, 144–5; mergers and acquisitions 124; unification 48 gifts 13–14, 105 gig economy 47 Gillette 125 Gilmore, J H 175 glasshouses 185, 195–7, 201n3, 202n4 global commodity chains (GCC) 107 Global Destruction Networks 178 Global North: informal economies 40; labour 133, 136, 140–2, 145, 146, 150; markets 178 global production networks (GPNs) 107 global shift 78, 137 Global South: informal economies 40; labour 133, 134, 150; migration from

Index 241 142; natural resources 198; as producers 60, 78, 141, 146, 155n9, 178 globalisation 22–3, 28, 30–3; agriculture 186; finance 33, 37, 124; labour organisations 147, 148; organisational structures 51–2 GM (General Motors) 50, 100, 112 GMB union 131, 133, 154n2 GNC, Custom Vita-Pak 62 Google 125, 127–8; R&D 90, 91, 101n6 governance 18, 19–20, 30, 33–5; business-to-business (B2B) 95; global networks 31–2, 37, 107–8; national scale 21–9, 32, 35; worker ownership 151–3; see also regulations Grabher, G 58, 70–1, 111, 112, 168, 169, 173 Greece 124 Greenfield, A 55, 72, 127, 176, 205 Greenpeace 37 Gulf States 153–4 Hadjimichalis, C 31, 85, 99, 106, 124, 208 Hall, S 26, 28 Harvey, D: capital and nature 181–3, 186–7; consumers 162, 171; fictitious commodities 10–11; future of capitalism 204, 206–8; innovation 114; labour 42, 98–9; national state 29–30, 32, 40; social context 25 Harvey, F 163 Harvey, M 14, 108, 117–18, 162, 176, 187–8, 196–7 Heelas, P 67 Heinz 108 high volume flexible production (HVFP) 61, 62–5, 91; impact of 159; innovation 82, 86; local variability 146; networks of firms 109, 113; services 63 Hille, K 90 Hirsch, J 16, 17, 18, 19, 31, 46 Holloway, L 193–5 homeworking 54–5, 148–50 Human Resource Management (HRM) 64 HVFP see high volume flexible production (HVFP) IBM 125 ICI 81, 126–7 ICT (information and communication technologies): production 76; retailing

109, 161, 167, 175; supply chains 79, 119–20; see also computers identities: identity politics 207; multiple 8, 130 IKEA 84 illegal economy 12–13, 38–40, 111, 191; counterfeit goods 174–5; financial transactions 22–3, 86; workers 130, 138, 142, 149 India 23; call centres 65, 78, 133; clothing industry 103, 133; illegal economy 39; R&D 78–9 individualism 159–60 industrial relations 46–8; see also trades unions informal economy 12 infrastructure 18, 23, 179; digital 119, 127, 174 innovation: agriculture 183–4; collaborative 113–16, 125; disruptive 74; knowledge creation 87–94; organisational 80–1; processes 79–80, 81–3; products 83–7, 88, 96–7, 173–7; user-centred innovation 90–1; see also biotechnologies; R&D (research & development) insects 196–7 intellectual property 71, 79, 87, 110; biotechnologies 189–90, 198, 199 International Monetary Fund (IMF) 24, 26, 30 international scale see supra-national scale international trade 24, 108, 124, 184 internet 68–70, 84, 94–6; Internet of Things 176–7; user-centred innovation 90–1; see also digital economy interventionist states 35–6 Istanbul 11, 103 IT see ICT (information and communication technologies) Italy 23, 33, 124, 144 Jackson, P 165, 169–70 Japan 28, 33, 57, 124 Jessop, B 3, 18, 19, 20, 30, 71 John Lewis Partnership 73n4 Johnson, R 166 joint ventures 120–2 Jones, M 18, 27 Just-in-Time (JIT) approach 57, 63, 109, 113, 118 Kazmin, A 60 Kenney, M 95–6

242 Index Kenwood 57, 109 Klein, N 163 knowledge 52; creation 87–94, 113–16; tacit/codified knowledge 56, 87–90, 91–2, 93–4 Labban, M 197–9 labour 98; in agriculture 184–5, 186, 195; collaboration 131–6, 147, 151–3; competition 130–1, 138–9, 148–50; contracts 47; control 43–4, 64–5, 68–70; costs 77–9; distributed workforce 93; ethnic differences 141–6, 150; as fictitious commodity 5, 10; gender differences 139–41, 150; and global networks 107–8; individual characteristics 66, 67; market 44–5, 54–6, 59–60, 83; recruitment 43, 51, 53–4, 58, 59, 63–4, 66, 132, 139; regulation 67–8; socio-spatial divisions 118, 131–2, 135–8, 145–8, 150; state involvement 24; unpaid 12; see also employment; management; trades unions; working class labour capital relationship see capital labour relationship Labour-Management Relations (Taft-Hartley) Act (1947) 46 Lafley, A G 116 land, as fictitious commodity 5, 10 Lash, D 28, 31, 58, 91, 159, 162, 166, 168 laws 18 lean production 63 Lenglet, M 76–7 Levi Strauss 62 Leyshon, A 85 location: basis of networks 106, 109, 110–11, 114–15; co-production 83; competition between 145, 147–8; see also space Locke J 19 logistics 62, 109–10, 119, 126; agriculture 185; food industry 117–19; mergers and acquisitions 123 London: advertising agencies 168; the City 33, 106, 115, 139–40, 142–3 M&A see mergers and acquisitions management: managing labour 49–51, 53–6; organisational structures 50–2; ownership 48–9; styles of 51, 52–3; see also labour Marinaleda 152

markets 100, 120, 125; business-to-business (B2B) 94–6; creation 96–7; disruption 97; niche 78, 97, 100–1; segmentation 84, 157–8, 159 Marx, K 2–3, 19 mass customisation 51, 84, 100–1, 174; of the enterprise 70–1; HVFP 62, 91, 159; processes 82 mass production 49–51, 59–61, 76, 88; customers 158; labour 132, 138 Mazda 64 McDonalds 108–9, 120 McDowell, L 139–40, 150 meanings 156, 159, 161–2, 166–7, 169; symbolism 96, 159, 162–3, 164, 165 Mechanical Turk 69, 95 Meiksins Wood, E 17, 21, 23, 74 Mercedes 128 Merchant, K 79 Mercosur 30 mergers and acquisitions 23, 122–8; see also ownership metal extraction 197–9 Mexico 77 Microsoft 125, 127 Middle East 17, 32, 145 migration 32; illegal labour 39, 130, 149; labour 132, 142, 144–5, 149, 153 Miller, D 38, 158, 159 mining 61, 197–9 Mittal 92, 127 Mondragon 152, 206 money 8, 25–6, 32–3; creation 29; currencies 26, 31; as fictitious commodity 8, 10; globalisation 30–3; laundering 39–40 Monsanto 126, 188–9, 190, 202n8 motivation 67–8 multinational corporations (MNCs) 22, 60, 110, 122, 128; competitive strategies 78; local adaptation 167 National Health Service 142 national state: capitalism 16–21, 29; currencies 26; de-statisation 37; as employer 72n1; globalisation pressures 30–3; labour organisations 134–5; policies 18–21; regional pressures 33–4; regulations 20, 21–9, 34–6, 38, 98–9; spaces of exception 22, 32; territorial identity 19, 26, 29, 147 nature: agriculture 183–6; and capital 11–12, 181–3, 203–4; co-production 192–9; as fictitious commodity 10,

Index 243 11–12; genetic engineering 126, 186–92; transition to second nature 199–201 Netflix 95, 97 Netherlands 123, 152, 193 networks: inter-firm 70–1, 102–3, 106–13; labour 107–8 neuromarketing 168 New York 33, 76, 115, 143; advertising agencies 159, 168 NGOs (non governmental organisations) 37, 147, 177 niche markets 78, 97, 100–1 Nissan 63–4, 121; trades unions 131 non-capitalist economies 13–14 Nonaka, I 92, 105 North American Free Trade Area (NAFTA) 30, 124 Northern Recording 152 O’Connor, J 200, 201 O’Connor, M 199, 200 offshoring 77–9, 138; back offices 61; production 109; tax havens 22, 32 OncoMouse 202n6, 202n9 open business model 68–70, 116 organisations: boundaries 102–3, 122; innovation 80–1, 86; organisational proximity 113; organisational structures 50–2; see also knowledge; management; multinational corporations (MNCs) Osram 78 out-sourcing 69, 111, 138, 148 ownership: management 48–9; see also mergers and acquisitions P&G (Procter & Gamble) 116, 117–18, 125; innovation 89; market research 168 Pakistan 73n13 Pang, L 175 Peck, J 30 performativity 65–6, 171–3 pests, biological control 196–7 pharmaceutical industry 79, 123 phatic images 163 Piciotto, S 22, 177 Pine, B J 62, 64, 80, 82, 97, 100–1, 171–2 Plant Breeders Rights (PBR) 189 plant production 185, 187, 188–9 Plant Varieties Protection Act (1970) 189 platform firms 74, 127 Polanyi, K 8, 10, 11, 12, 98, 181

political environment 17–18, 21, 204–5, 207; barriers to trade 119; de-statisation 30; regulation 26–9 Portugal 109 post-Fordism 61, 63 power: asymmetries 18, 103, 105, 107, 108, 117; capital labour relationship 134; retailers 176 price based competition 75–9, 84, 100 primitive accumulation 13, 97–8 private agencies 37–8 processes: innovation 81–3; process life cycle 82 production 55–8, 63; capital labour relationship 42–5; and consumption 27; costs 75, 77–8; innovation 79–80; mass production 49–51, 59–61, 76, 88; production lines 57, 59, 64–5 productivity 72, 82 products: innovation 83–7, 88; product life cycle 82, 86–7 profit: from nature 184; pursuit of 14, 69; and rents 98–100; use of labour 7, 43–4 projects 70–1 proximity 113–16 quality control 57, 64, 111 R&D (research & development) 70, 86; collaboration 87–93, 114–16, 121; management 51, 89–94; mergers and acquisitions 125–6; offshoring 78–9; state involvement 23; see also innovation Radice, H 37 re-valorisation, commodities 178–9 real estate sector 99 recruitment 43; labour market 63–4; open business model 116; for services 66; strategies 51, 53–4, 58, 59, 139; trade unions 132 recycling 178–9, 197 regional level see sub-national scale regulations 7, 12–13, 30; affecting innovation 80; breaching 12, 38–40; de-statisation 37–8; fictitious commodities 10–11; financial 53, 76–7, 85–6, 124; international 30–3; labour 53–6; mergers and acquisitions 123; national state involvement 21–9, 34–6, 98–9; see also governance relational contracts 102, 104–7 Renault 87, 121

244 Index rent-seeking activities 13, 97–100 retailers 103–4, 116–20; department stores 157–8; relationship with consumers 173–7 risk 84, 99, 100; reduction 105, 118, 120, 126 Roundup 188–9, 202n8 Russia 124 Rutherford, T D 46, 81, 110, 112 Samuels, M 96–7 Scotland 33 Seeds of Change Inc 191 separatist movements 33–4 services 63, 65–6, 150; performativity 171–3 Shaw, G 63, 65, 66, 172–3 Siemens 78 Silicon Valley 58, 116, 141 Silverman, G 168, 169 skilled labour 56–8, 67, 73n9, 88, 132; de-skilling 59, 60, 61 smart products 72 SMEs (small and medium-sized enterprises) 57, 74, 112, 126 Smith, A 19 Smith, S 4 social classes 3–5, 43, 203, 207; basis of networks 115; territorial identity 146–7 social enterprises 151–3, 205–6 social environment 2–3, 4–5; social proximity 113–14 social research 157, 167, 168, 175–6 socio-spatial divisions 6–7, 53–6, 145–8; labour 118, 136–8; market segmentation 157–8; see also space soft capitalism 52, 58, 66–8 software industry 57–8, 70 soil de-contamination 197 solar power 201n1 SOMO 155n9, 177 South America 133, 206 south east Asia 17, 33, 77, 78, 109, 141 space 2, 8; of exception 22, 32; heterotopic 207; labour markets 83, 146; problem displacement 10–11; retail 158; strategic selection 18–21; see also location; socio-spatial divisions; spatial scales Spain 33–4, 109, 152; real estate sector 99 spatial fixes 10–11, 45, 55, 60, 188 spatial scales 8, 134–5, 203; labour 46, 146; sub-national 23, 33–5, 36–7, 114, 134, 166–7; supra-national 23, 24, 26,

28, 30–3, 38; see also national state; space spectacle 170–3 state owned enterprises (SOEs) 106, 124 steel industry 127; innovation 62, 81; knowledge management 92; mergers and acquisitions 126; networks 45, 113 Stockdale, M 169 strategic alliances 120–2, 126; trades unions 131 strategic selectivity 18–21 Streeck, W 16, 31, 33, 86, 159, 167, 205 strong competitive strategies 74, 79–87 sub-contracting 135–6 sub-national scale 23, 33–5, 114, 134, 166–7, 207; labour organisations 146, 148 suppliers 103–4, 105 supply chains 108–9, 116–20 supra-national scale 23–4, 26, 28, 30–3, 38; environmental groups 37 surplus value: creation 5, 7–8, 56, 72n1, 73n7, 78, 95, 156; distribution 103; fictitious commodities 11, 14; retailers 117; switching capital 98–100; see also value sustainability 14, 183, 203–8 switching sectors 98–9 Syngenta 126 system integrators 110 tacit knowledge 56, 87–90, 91–2, 93–4 Taiwan Semiconductor Manufacturing (TSMC) 90 Taylorism 59–61, 86, 88; animal husbandry 193, 194; digital 69; R&D 89 terminator technology 189, 202n10 territorial interests 17, 35, 45; labour 48, 138, 146; national state 19, 22, 26, 29, 147; proximity 113–14; sub-national scale 34 Tesco 108 Third Italy 106, 114, 125 Threadless 116 Thrift, N 52–3, 68, 115 time 2; compression of 76–7, 94, 188, 197; problem displacement 10–11, 18, 204 Toffler, A 171 Tokatli, N 103–4, 111, 174 Total Quality Management (TQM) 64 tourism industry 63, 172–3 Tower co-operative 152 trades unions 46–8, 63, 72n2, 131–6; collaboration 131; representation of minorities 140, 142, 143, 145, 150,

Index 245 153; territorial identity 146, 147–8; see also capital labour relationship; labour transactions 8–9; e-commerce 94–5; gifts 13–14; illegal 22–3, 86; infrastructure 18 transnational network state 32–3 Triple Alliance 154n1 trust 18, 102, 104–6, 115, 120 Turkey 103, 111 Uber 74, 95, 97 UK 23, 32, 151–2; advertising agencies 168; employers organisations 45–6; financial services 33, 86, 106, 115, 139–40, 142–3; gig economy 47; mergers and acquisitions 123 unions see trades unions Urry, J 172–3 USA 33; advertising agencies 159, 168; agriculture 185, 188, 193, 202n11; financial services 76, 77, 85, 86, 115; homeworking 149; influence 23, 26, 30; labour 46, 143, 146–7; mergers and acquisitions 123; migrant labour 142, 143–4; retailers 117–18; Silicon Valley 58, 116, 141 value 6, 14; exchange values 44; and money 25–6; transfer of 13–14; see also surplus value variegated capitalism 4, 28, 123, 205, 208 Varoufakis, Y 26 vertical integration 49–50, 107

virtual firms 70–1 VW (Volkswagen) 54, 62, 81, 174, 180n7 Wales 152 Walmart 117–18, 125 weak competitive strategies 74, 75–9 Weiss, L 27, 35 West Indian 141, 142 West, K 111 Whatmore, S 188, 190, 191 wholesalers 116–20 Williams, R 159, 160 Wills, J 147 Wipro Technologies 79 women: homeworking 148–9; in labour market 55, 130, 139–41, 150 working class 134–5, 138–9; see also labour working practices 54–6, 139–40; distributed workforce 93; flexible 135–6; homeworking 54–5, 148–50; see also Fordism; mass production; Taylorism workplaces 148–50 World Bank 26, 30 World Trade Organization (WTO) 24, 30 Wright, E O 3, 47 Yates, C 133–4, 138, 140, 142, 144, 150 Zappos 116 Zara 103, 109 Zeneca 127