Pathways to Industrialization and Regional Development

Allen J. Scott, Michael Storper, Allen J. Scott, Michael Storper

• Publisher: Routledge
• Year: 2005
• eBook ISBN: 9781134882731
• Edition: 1
• Topic: Physical Sciences
• Subtopic: Geography
• Index: Geography

The world has seen a shift in socio-economic relations, in the patterns and processes of industrialization and regional development. The social regulation of the economic order, flexible production organization and industrial district formation have brought periods, places and pathways to the heart of economic debate.
Pathways to Industrialization and Regional Development provides a platform from which to address a new economic order. All the major schools of thought are represented. Focussing upon the interactions between economic logic and political institutions at both the local and global levels, the authors set the agenda for the 1990s.

Part I
INTRODUCTION

1
INDUSTRIALIZATION AND REGIONAL DEVELOPMENT¹

Allen J.Scott and Michael Storper

THEORIES OF INDUSTRIALIZATION AND REGIONAL
DEVELOPMENT: REGULATION, INSTITUTIONS, AND EVOLUTION

From the 1920s down to the 1960s, across the advanced capitalist world, many leading industrial sectors were converted to mass production methods. Over this same period, various institutions and practices were constructed to regulate the social and economic effects of mass production. These regulatory apparatuses consisted of rather similar basic elements throughout the advanced capitalist world. One such element was the strongly oligopolistic structure of industry, with its large-scale markets and rising barriers to entry. Labor relations and labor markets were everywhere ordered by institutions of collective bargaining, with a strong functional split between white-collar workers (responsible for industrial planning) and blue-collar workers (responsible for routine manual labor). Keynesian welfare-statist legislation helped to smooth out aggregate demand and to secure high levels of social stability. In regional terms, this form of industrialization was seen by theorists of the day as a system of core-periphery relationships, within which core regions tended to grow at the expense of underdeveloped peripheral regions which in turn provided raw materials or agricultural products for the core at unfavorable terms of trade.

By the late 1970s, the processes of industrialization and regional development based on this “Fordist” mass production system in the United States and Europe were in crisis, most importantly because of cheap foreign imports and the increasing difficulty of achieving high levels of productivity gain and the limits this imposed on the ability of the system to keep wages—hence consumption—moving upwards (see chapters by Altvater and Itoh). The mass production system began to undergo major restructuring as producers searched for new models of industrial technology, organization, labor relations, and location (Coriat, Standing). In the core regions of mass production, the effects of the concomitant plant closures and layoffs were aggravated by the intensified efforts of producers to respond to the crisis by decentralizing branch plants to low-cost peripheral regions. At the same time, after the 1960s, a series of new industrial regions based on flexible production arose outside of the heartlands of mass production.

Much of the theoretical reasoning of postwar social science portrayed the mass production system as the destiny of industrial society (Jessop). Its technologies, markets, institutions, politics, and geographical forms were seen as expressions of irreversible and univeral tendencies of modernization. Very few social scientists in the postwar period foresaw the processes of deindustrialization and decline which were dramatically evident by the 1970s in virtually all the major manufacturing regions of the United States and Western Europe, along with accompanying changes in politics, technologies, and markets. Even Marxian social theory, with its stress on the crisis tendencies of capitalist economies, proved largely inadequate to the task of understanding the historical changes that did take place (Jessop, Hirst and Zeitlin).

Social scientists in a variety of disciplines have now spent nearly two decades coming to grips with the effects of the breakdown of the mass production system, including the new processes of competition and global trade, profound redefinitions of occupational structures, the reshaping of labor markets and labor politics, and the rise of a series of new core regions. This book is evidence of the coalescence of an interdisciplinary project in the social sciences which is now generating powerful accounts of the decline of the Fordist mass production system, and the rise of a new flexible production order. More importantly, this book is in large degree focused on a new set of theoretical tools involving three interdependent dimensions of industrialization and regional development, i.e.:

1. their necessary institutional contexts,
2. their evolutionary dynamics, and
3. their geographical foundations and territorial specificity.

In particular, the book brings together work which draws on regulationist theory, institutionalist and evolutionary economics, and the new economic geography.

Regulationist theory provides us with a view of economic history as a chain of distinctive periods, together with a concept of the multilayered and political character of capitalist accumulation. These periods are defined by specific economic practices consisting of dominant sets of production relations (embodied in ensembles of leading industries), complemented by different political and quasi-political arrangements which coordinate the economy. Such practices are institutionalized when an effective coalition, or historical bloc is constructed which is capable of putting together and maintaining a specific set of social compromises. Regulationist theory identifies the specificity of the mass production system stretching from about the 1920s to the late 1960s as the marriage of a technological paradigm of production with Keynesian and Beveridgean institutions. Likewise, regulationist theory permits us now to pose the question of whether a new period of capitalist development based on the ascendance of the paradigm of flexible production and new forms of innovation-based competition is coming into existence; it also permits us to ask how production systems, institutions and markets are now different from those of the mass production period (Jessop, Altvater, Coriat, Leborgne and Lipietz, Dosi and Salvatore).

Institutionalist economics yields insights about the organizational logic of production. It has reopened the question of the nature of the firm and shed light on the many different possible articulations of markets and hierarchies that can efficiently coordinate production systems and labor markets in industrial capitalism. In so doing, institutionalist economics has replaced the view that there is always one single “best practice” for a given production activity, and shown that markets, technologies, and production organization are mutually interdependent systems embedded in relatively durable institutional contexts (Dosi and Salvatore). As a consequence, this body of theory indicates that sociopolitical organizations, far from constituting barriers to the operation of the market, are essential underpinnings of any efficient capitalist production system. The question is now what kinds of institutions will be built in the 1990s and how they will influence the organization of production, labor markets, and product markets in the early decades of the coming century (Hirst and Zeitlin, Saglio, Salais). In any case, empirical analyses of the advent of flexible production are proceeding with a sensitivity to the roles that institutions play in industrialization and regional development, and to the wide variety of institutional forms that may exist (Ganne, Saglio, Saxenian, Standing, Leborgne and Lipietz, Courault and Romani).

Evolutionary economics conceives of the development of technologies, markets, and institutions as pathways whose historical trajectory is governed by the complex interplay between prevailing rules of social order, and the probing and experimental character of much economic behavior in the context of prior states of the system (see particularly Dosi and Salvatore). The constitution of economic order is not a static equilibrium, but a constantly unfolding structure with many possible branching points; different pathways may be selected by the interactions among small events or by the regulatory effects of institutional order (Piore).

Economic geography deals with the territorial structures that flow from and sustain processes of industrialization and their regulation. It is through economic geography that the concrete synthesis of these other processes is realized as the question of regional development. Thus, each period of capitalist history tends to be marked by its own peculiar economic geography; just as the Fordist mass production era was rooted in a distinctive set of core regions, so with the rise of modern flexible production in the 1960s and 1970s, some sectors broke away from the old core regions and established themselves in new locational domains. In these domains, processes of institution-building—and thus of the eventual construction of a regulatory mode for the flexible production economy—are now occurring. In the same places, new kinds of technologies and labor relations which are critical to the new strategic competition and the evolutionary trajectory of production are being generated. It is thus here that the pathway of development of the contemporary period is, at least in part, being defined (Ganne, Saglio, Courault and Romani, Lorenz).

PERIODS OF CAPITALIST DEVELOPMENT AND THEIR GEOGRAPHICAL ANATOMY

Capitalism can be seen, in its most general form, as an arrangement in which commodity producers combine the physical means of production and labor in order to bring forth sellable outputs which generate profits. This general form, however, varies in its specific social configuration from time to time and from place to place; it emerges in practice as a

series of historically and geographically specific technological-institutional systems. The latter involve:

1. an evolving technological and organizational structure of production;
2. labor markets and industrial relations, including industrial politics and mechanisms of the socialization of labor;
3. managerial cultures and norms;
4. market structures and forms of competition;
5. regulatory institutions at sectoral, regional, national, and international levels.

It is possible to identify relatively distinct periods of capitalist development in terms of dominant technological-institutional systems as they are embodied in ensembles of leading industries and complemented by different political and quasi-political arrangements which steer and coordinate the economy. In this sense, technological-institutional systems are much like what regulationist theory refers to as regimes of accumulation and modes of social regulation (Jessop, Hirst and Zeitlin, Itoh). Such episodes as the putting-out period of early capitalism, the classical mill-and-workshop economy of the mid-nineteenth century, the Fordist mass production era, and the currently emerging system of flexible production, all express distinctive historical and geographical tendencies of particular technological-institutional systems.

Even so, the detailed internal configurations of any given system—in matters of technology, industrial organization, labor markets, products, regulatory institutions, and so on—will often vary over space and time. Thus, the Fordist mass production system showed considerable variation between the different leading capitalist economies, as did corresponding forms of Keynesian welfare-statist regulation. Above all, the employment relation and its legal underpinnings were marked by the peculiarities of each national case, and this has had important repercussions for the ways in which the crisis of Fordism has been played out across North America and Western Europe.

If technological-institutional systems retain a sort of structural integrity over more or less long periods of time, they are nonetheless always susceptible to crisis and dissolution. Such a turn of events may occur for a variety of reasons, whether internal (saturation of markets, declining profitability, institutional failures, and so on), or external (intensified foreign competition, resource depletion, and so on), or a combination of both. At such times, the preexisting system of production relations and regulatory institutions can no longer absorb the tensions creating the crisis without significant restructuring. In the case of the recent crisis of Fordism, this was manifest in a prolonged drop of profitability in core mass production sectors, rising unemployment, the weakening of organized labor, and neoconservative onslaughts against the institutions of the Keynesian welfare state.

The transition from one system to another—which may be abrupt or prolonged over time—will often be associated with and brought about by a reconstitution of the geography of production, especially in cases where the ascending leading sectors of the new system are free of any dependence on the immobile resources basic to the old. Every shift of technological-institutional system hence opens up a period of restructuring and the possibility of a radical switch in the spatial bases of production from one set of core regions to another. In the new regions thus established, patterns of production and accumulation will proceed in markedly different ways from those that typified the old system.

The typical organizational and locational model of mass production industry was the growth center focused on vertically integrated lead plants with many backward linkages. On this basis, a small number of core mass production regions emerged in the mid-twentieth century, such as the upper Midwest in the United States (and nearby areas of Ontario in Canada), and the area stretching from the English Midlands through northern France, Belgium and Holland to the Rhine-Ruhr area of Europe, with outliers in northwest Italy and southern Sweden. The system of mass production was also associated with large-scale urbanization, due to the massing of the work force of the lead plants and their dependent satellites.

By contrast with mass production, flexible production systems are characterized by progressive vertical disintegration of production with numerous producers (of different sizes) caught up in tightly knit network structures (Piore). In these networks, groups of industrial establishments with especially dense interrelations tend to locate close to one another to facilitate exchanges of goods and information, and to take advantage of external economies in labor markets and infrastructure. The emerging economy of flexible production has brought into existence a series of new core production regions, and these are typically quite different from those of the mass production system. Three groups of contemporary regions of flexible production can be recognized.

First, craft-based, design-intensive industries such as clothing, textiles, furniture, jewelry, ceramics, sporting goods, as well as foci of precision metalworking and machine-building, may be found in two main types of location. One coincides with inner city areas in large metropolitan regions such as New York, Paris, Los Angeles, and London, with their large immigrant populations. The other coincides with old centers of craft production, as in Emilia-Romagna and Tuscany in Italy, parts of the Rhone-Alps and Mediterranean regions of France, and certain parts of southern Germany and Scandinavia (Ganne, Saglio, Courault and Romani, Bianchi).

Second, high technology industry has tended to locate above all at selected suburban locations close to major cities and in formerly non-industrialized areas such as Cambridge in the UK, or the French Midi, or especially the US Sunbelt with its major new high-technology growth centers in such places as Orange County, Silicon Valley, Chatsworth-Canoga Park, Dallas-Forth Worth, and so on (Saxenian).

Third, advanced producer and financial service agglomerations are found in or close to the central cores of large cities, such as Tokyo, New York, London, or La Défense in Paris.

In all of these new flexible production areas it has been possible to reconstitute production processes so that they are insulated from labor forces marked by the historical experience of Fordism, with its traditions of unionization, collective bargaining, and finely-delineated task structures.

FROM CORE AND PERIPHERY TO A GLOBAL MOSAIC OF REGIONS

From the 1930s onwards, the rapid growth of the core zones of the mass production system provoked considerable political concern about the question of regional development. In both Western Europe and the United States, various interventions were made to assist those regions which seemed unable to recover from the Great Depression; and then in the postwar years, an expanding series of programs was implemented in an effort to redistribute growth from leading to lagging regions. After the 1950s, many Third World countries also devised ambitious regional development programs aimed at promoting and diffusing growth.

These efforts at regional policymaking were all informed by a common intellectual perspective, namely, a conception of capitalist economic growth as a process which tends to create highly developed core regions on the one hand, and underdeveloped dependent peripheral regions on the other. To be sure, in regional development theory there are many different accounts of core-periphery relations. The traditional approach to this issue is built up around the investigation of comparative advantage (based on pregiven endowments), market exchange, and concomitant spatial flows of capital and labor. In this approach, the full liberation of factor markets is seen as the key to a developmental process in which regional income inequalities will become nothing more than temporary and self-correcting aberrations. For other theorists, the core regions and nations of the capitalist mass production system grew at the expense of underdeveloped peripheries, by locking the latter into a system of unequal exchange. Yet a third set of theorists identified polarization and trickle-down effects of the production system as the main factors underlying core-periphery inequalities, intensified by the low-wage labor surplus trap, and accordingly they called for policies to accelerate transfers from core areas to peripheries.

A more recent line of analysis revolves around the new spatial and international division of labor—mediated by the multiestablishment, multinational enterprise—in which the various phases of the production process are differentially allocated across space in relation to their varying technological and skill characteristics. In this view, advanced technical and managerial tasks are typically allocated to core regions, and routinized, low-skill, labor-intensive activities are allocated to the periphery. Trade then occurs between different regions but within the large firm.

Each of these theoretical advocacies has some validity, and indeed each (with suitable further qualification) captures something of current realities. That said, none of thes...

Table of contents

• COVER PAGE
• TITLE PAGE
• COPYRIGHT PAGE
• FIGURES
• TABLES
• CONTRIBUTORS
• PREFACE
• ACKNOWLEDGMENTS
• PART I: INTRODUCTION
• PART II: A NEW PERIOD IN CAPITALIST DEVELOPMENT?
• PART III: NEW TECHNOLOGIES AND THE ORGANIZATION OF INDUSTRIAL PRODUCTION
• PART IV: THE TERRITORIAL FOUNDATIONS OF PRODUCTION SYSTEMS
• PART V: THE INCORPORATION OF LABOR
• PART VI: COLLECTIVE ORDER AND INDUSTRIAL POLICY IN POST-FORDISM