Old realities run riot in the new economy

A review (Convergence 12, 1) of Chris Benner's Work in the New Economy - Flexible Labor Markets in Silicon Valley (Blackwell 2002; Blackwell Information Age series, general editor Manuel Castells) 293 pages. ISBN 0-631-23250-8

Silicon Valley emerges from this fascinating book as a rampantly-thriving phenomenon, in which no human thrives for long. A place where there are some unbelievably great jobs - but the careers are crap; the scene of "the greatest-ever legal creation of wealth in the history of the world", where wages, for the majority, are actually collapsing, unemployment is structural, and poverty is endemic and growing.

"Work in the New Economy" is a good antidote to the myth that's sold so heavily to new-media workers, that they are some brand-new kind of workforce, in a totally new world which, through a winning combination of New Technology and Positive Attitude, has finally escaped from history and the tedious old laws of exploitation. Examining the whole of Silicon Valley over time, instead of just its headline-grabbing success-stories du jour, we find that the old laws do apply here, in spades, and are being refined and extended to a quite hair-raising degree.

Benner's theme is "flexibility", and the phenomenal growth of the "intermediaries" who make it possible: a burgeoning ecology of commercial, public and voluntary organisations that mediate as matchmakers, trainers, gangmasters, consolers, bagmen and advisers between anxious workers and paranoid entrepreneurs. He differentiates (as the gurus of flexibility do not) between flexible work (which we all like) and flexible employment (which is what we actually get).

The Great White Shark of the intermediary ecosystem is the Temporary Staff Agency - typified by outfits like Manpower (the world's largest employer!), Adecco, Randstad, Kelly, and a dozen other innocuous-seeming high-street names. (Benner doesn't mention this, but these erstwhile office temp agencies are now global players, supplying cheap labour to food packing companies and sports-goods manufacturers with the same techniques it appears they originally developed and refined in Silicon Valley. Their latest growth area is "Managed Migration").

The tendency in Silicon Valley, as everywhere now, is for a company to employ (i.e. be responsible for) the barest minimum of permanent staff and to hire bodies as and when they are needed. Curiously, companies routinely pay well over the odds for staff by hiring them in this way, so as to be free to sack them at a moment's notice without any comeback.There is even a whole sector of intermediaries (Professional Employer Organisations - PEOs) that exist simply to be the "employers of record", for tax and benefits purposes, for the most expensive-to-sack contractors and consultants - who are then hired from the PEOs at extortionate rates. It is almost as if Silicon Valley is mainly a buck-passing industry. Firms cannot risk training their staff, either: they might leave, taking their skills with them. So again, training falls to the intermediaries, and the firms pay through the nose for it.

The class of intermediaries is a rich one. Benner includes all organisations that operate in the yawning voids between workers and their work: self-help groups and on-line communities like Webgrrls, professional associations like the ACM, community colleges and training companies, and even some old-style trade unions - which stack up impressively against the more obviously New Economy entities.

For instance, his section on "membership-based intermediaries" concludes with an account of The United Association of Plumbers, Steam and Refrigeration Fitters ("the UA" for short) This is the union whose members build the incredibly expensive, complex and dangerous chip-fabrication plants or "fabs" on which the whole New Economy depends. UA members enjoy what sound like amazingly secure, almost old-fashioned, careers. Significantly, the UA has taken charge of its members' training needs (like those of software workers, they change constantly). Today's media orthodoxy is that organisations like the UA are "dinosaurs" which are not only doomed to extinction, but should be hunted to extinction for all our sakes. Yet Silicon Valley makes good money from the UA:

"Intel complained ... that it cost three times as much to hire a plumber here as in Ireland. They built similar plants in each location and the one here was more costly since we had to do all the initial engineering and installation. Even with that, and with our 3-times labor cost factor, the plant that makes more money, dollar for dollar invested, is Santa Clara. It went in right first time. The guys knew what they were doing. When they turned it on everything worked. No leaks. Purity was up where it was supposed to be, and it comes out that these pain in the neck union people actually are worth it." (Tom Fisher, UA official interviewed by Benner, p168)

The picture I get from this fascinating and richly-researched book is of an industry that must be forcibly restrained for its own good; it is quite capable of sawing off its own legs off to avoid giving its rivals a free ride.

Benner's sources fill 18 pages, and a wealth of enticing further reading is in there. He has interviewed dozens of Silicon Valley workers, educators and union staff. There is a blind-spot however: qualitative assessments and histories of what Silicon Valley actually produces. He seems to accept that it's all good stuff and that the vicious competition he observes is somehow necessary to ensure quality, as "less innovative and less efficient companies downsize or go out of business and more innovative and efficient companies grow and take their place" (p47). The instability is also, he seems to suggest, an intrinsic feature of IT itself.

But hardbitten IT veterans like David Gelernter, Fred Brooks, Doug Engelbart, Ted Nelson and Jef Raskin constantly point out that this continuous change is not producing better products - indeed, it makes it impossible for radically useful technology even to get off the drawing board while at the same time it concretes half-baked yet "successful" (in market terms) technologies into the landscape. A radical reading is that capitalism is all about the creation and maintenance of scarcity, and from this perspective, the incredible wastefulness of human talent and its products is entirely logical, as is its resistance to initiatives that would make it more efficiently productive. It is useless to offer such a system carefully-made plans. Waste is what it wants! And Silicon Valley is a surplus-disposal system to beat anything the radical economists of the 60s had in mind when they described capitalism's systemic wastefulness.

Chris Benner's final chapter offers a range of initiatives and precepts that would simultaneously humanise Silicon Valley and make it more efficient. These include initiatives to encourage the creation of careers for people, rather than merely jobs; and new modes of reward - for example he hints at some kind of social wage (perhaps as advocated by the Green Party in the UK and elsewhere in Europe), and an extension of the "residual rights" which, as "repeat fees", are so important for actors, to all workers. Naturally union membership and collective bargaining would be greatly extended - and firms, as such, should cease to be the units of organisation and planning; instead, networks and clusters. And perhaps a welfare state. Unfortunately, these initiatives sound as if they'd need either a revolution or a miracle to stand a chance in the neoconservative USA - yet he has found some lovely, albeit isolated, examples where they have actually taken root, and work.

The main message I get from this book, however, is that there is absolutely no shortage of ways to bring civilisation to Silicon Valley. But as the Plumbers and Steamfitters well know, sweet reason alone will not get them adopted.