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Thoughts on how the economic downturn will reshape the world

Posted by: on Feb 15, 2009 | No Comments

We’re all talking about the impact of this economic precipice, right? Instead of venturing my own analysis, let me point to two analyses that are very different but have similarities.

One is Richard Florida’s analysis in the Atlantic, entitled “How the Crash will Reshape America.” Many in my Twitter stream have pointed it out. Florida sets up his argument this way:

In his 2005 book, The World Is Flat, Thomas Friedman argues, essentially, that the global economic playing field has been leveled, and that anyone, anywhere, can now innovate, produce, and compete on a par with, say, workers in Seattle or entrepreneurs in Silicon Valley. But this argument isn’t quite right, and doesn’t accurately describe the evolution of the global economy in recent years.

In fact, as I described in an earlier article for this magazine (“The World Is Spiky,” October 2005 [link opens PDF]), place still matters in the modern economy—and the competitive advantage of the world’s most successful city-regions seems to be growing, not shrinking. To understand how the current crisis is likely to affect different places in the United States, it’s important to understand the forces that have been slowly remaking our economic landscape for a generation or more.

Florida goes on to argue that we’ll see some real impact shear at the level of region and city, not nation, and that the disadvantaged will be those regions and cities that lack dense social connections. That doesn’t do justice to Florida’s argument, but I want to note that this analysis is at least somewhat consistent with Castells’ argument.

The other analysis comes from a paper that David Ronfeldt posted, along with its responses. Ronfeldt dusted off and reframed a paper from a few years ago, suggesting that we start thinking in terms of the “network-state.” In the comments, one person suggests that we’re on the cusp of radical decentralization in favor of rhizomatic constructions – and that the result will be less effective asymmetric warfare (e.g., terrorism) since the disappearance of state centers will mean lessened asymmetry. Another points to the response of the P2P Foundation, which pushes farther along the lines of “peer-governed civil-society networks,” which are described as “the great innovation of the last decade.”

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