Suzanne Berger, MIT Task Force on Production in the Innovation Economy; Making in America: From Innovation to Market; The MIT Press; 2013-08-23; 264 pages; kindle: $14, paper: $20; publisher.
Suzanne Berger, Raphael Dorman-Helen Starbuck Professor of Political Science at MIT, is author of Making in America: From Innovation to Market.
(the first book is the opinion & summary, this book is the travel log ethnography).
Richard M. Locke, Rachel L. Wellhausen (editors); Production in the Innovation Economy; The MIT Press; 2014-01-03; 288 pages; kindle: $29, paper: $30 ($17+SHT).
(a decade ago, by Berger)
How We Compete: What Companies Around the World Are Doing to Make it in Today’s Global Economy; Crown Business; 2004-12-27; 252 pages.
(of Making in America)
How Finance Gutted Manufacturing; Suzanne Berger; In Boston Review; 2014-03-10.
- Positioned as a #ThoughtPiece for structured response by appropriate peers.
Co-Director of the Center for Economic and Policy Research.
Professor of Political Science at MIT
Munk Chair of Innovation Studies at the University of Toronto.
Senior Economist at the W.E. Upjohn Institute
Associate Professor of City and Regional Planning at UNC, Chapel Hill.
Joel Rogers, Dan Luria
Rogers is Professor of Law, Political Science, Public Affairs, and Sociology at the University of Wisconsin, Madison.
Luria is Economist at the Michigan Manufacturing Technology Center
Associate Professor of Urban Studies and Planning at MIT.
- Production in the Innovation Economy Project at MIT
- Last 30 years
- 1980 – 2010; i.e. Regan through Bush (skipping Clinton)
- Focus on Core Competencies is destructive/bad/unhealthy, etc.
- Vertical integration is good.
- continued below the Responses
- Dean Baker
- “good” but not really
- <quote><snip/>but it asks more questions than it answers. On its face<snip/>At a deeper level it lacks a clear sense of the tradeoffs involved in moving toward more high-road manufacturing.</quote>
- <quote>Berger’s reference to Houseman on mis-measured productivity matters little in the context of this debate. </quote>
- <quote>But we need more evidence and some sense of the tradeoffs. If German firms provide lower returns to investors, how much lower is it?</quote>
- Devalue the dollar.
- Something vague about better labor relations.
- Suzanne Berger
- Final response to the original opinement
- Oh my, we don’t agree.
- Authorities Cited
- Dan Breznitz
- Finance is destructive; more so than Berger pitched.
- I&P innovation is good, is done well
- The Silicon Valley Model is the problem.
- High skill labor
- High labor control of means of production
- Public/Private arrangements
- Financial architecture for small/midsize [manufacturing] firms
- Regulation [enlightened, paternal]
- Gary Herrigel
- Good Issues
- market failures
- industrial ecosystem governance
- <quote>[Berger] seems to believe in a kind of technological Say’s Law: that radical innovation will create new markets, new industries, and new jobs.</quote>
- Finance, is not [as much of] a problem [as Berger states]
- Manufacturing declined worldwide anyway
- Disintegration frees up resources [for good things; e.g. experimentation]
- The outcome [of Timken] is not inevitable
- It works for others
- The problem is: inequality
- Job growth occurs in China which is not unequal
- Inequality distorts <quote>he effectiveness of public experimentation around the market failures.</quote>
- Susan N. Houseman
- Official statistics actually point to a relatively healthy manufacturing sector.
- Productivity growth in manufacturing has greatly exceeded that in the rest of the economy.
- The numbers are incorrect; all positive numbers are due to electronics.
- Flat since 2000
- Authorities Cited
- Daron Acemoglu, David Autor
- William Lazonick
- The True Truth
- Low wage countries
- Chinese imports
- Commodity manufacturing
- Not enough product obsolescence
- Financialization & short-termism
- Therefore: Market Failure
- Repair the market failure
- Public policy is far-sighted.
- Small Policy
- Subsidization & paternalism; c.f. the Obama initiatives
Ensure the results are “manufactured here”
- Regulations on financial manipulation (e.g. stock buybacks)
- Big Policy
- Devalue the dollar
- Reduce corporate taxes
- Nichola Lowe
- <quote>But there is another solution: empowering smaller manufacturers to become active participants in the development of industrial skills.</quote>
- <quote>These experiments in skill development, led by small firms, may point the way to strengthening the U.S. manufacturing ecosystem.</quote>
- Authorities Cited
- Career Training
- Unskilled to semi-skilled
- Community College
- Training Cooperatives
- Joel Rogers, Dan Luria
- Financialization caused it
- Financialization will prevent repair
- Onshoring is a PR hoax in plastics and lousy jobs.
- Innovation cannot be an accent
- An innovation commons does not solve.
- Justification & Emphasis
- People without graduate degrees
- Fuzzy effects around the labor market
- The Problem Is
- Firms offshore to exit noncompetitive positions.
- This causes imports.
- There is no replacement export.
- [They] advocate policies that significantly raise demand for the output of good firms.
- The only plausible source of such demand is government.
- Large defense contractors
- National Champion System
- The managed Industries of the ’60s-’80s
- Very large public works. [Why not a tech-heavy war?]
- Electrical Grid
- Mike Rose
- From the publisher review of his book
<quote>Rose quotes a policy analyst: “How do you honor a student’s construction worker father while creating the conditions for his child to not be a construction worker?”</quote>
- Cultural assumptions about manual labor => <quote><snip/> attribute lower intelligence to those who work with their hands. </quote>
- Parables & Euphemisms
- Old Economy vs New Economy
- Neck Up vs Neck Down
- <quote>a senior executive at a major U.S. corporation wondered if “smart people” were needed in manufacturing</quote>
- Skills Gap as stigma and self loathing
- negative & reductive attitude
- disinvestment & disinvolvement
- Authorities Cited
- J. Phillip Thompson
- He helps [presidents of]
- United Federation of Teachers
- National Health Care Workers’ Union
- Unions aren’t the solution, but could be, maybe
- <quote>federal laws that mandate a “prudent man” standard for pension management.</quote>
- <quote>[court & SEC require] prudent men should care only about short-term profit maximization.</quote>
- <quote>there is nothing stopping unions and the public from demanding that prudent investment aim at something other than short-term profits.</quote>
- Finance is like Defense
- A planned economy
- Done in partnership the government
- Democratize the finance firms [meaning...?]
- Something about a multilateral stakeholder theory
- Something about shareholder activism
- Catherine Tumber
- Berger’s article
- asks the right questions
- is “original”
- Asked: <quote>What critical functions and services were lost with the demise of the great vertically integrated corporations, and how can we reconfigure them—if at all—in a finance-dominated neoliberal economy?</quote>
- Production in the Innovation Economy Projectat MIT
- demonstrates something somehow
- does not occur in a vacuum
- Free markets
- are bad
- won’t be changing
- (exactly) thirty years of badness, termed “freebooting”
- are caused by Libertarians (left and right), who need to change
- Authorities Cited (in order of appearance)
- Vaclav Smil; Made in the U.S.A. 2013.
- Andrew McAfee, Erik Bryjolfsson The Second Machine Age; 2014.
- Brad Feld; Startup Communities; 2012.
- a “breathless guide”
- The Charismatic Entrepreneur
- Leaders & Feeders Model
- Raymond Williams
- Language approach to analysis
- <quote>one can penetrate the heart of a culture by identifying its keywords and subjecting them to critical examination.</quote>
- Examples: “talent,” “smart,” “horizontal network,” “knowledge work,” “brain hub,” “The Creative Class.”
- Richard Florida
- Edward Glaeser and Enrico Morett
- Alan Ehrenhalt
- “The Great Inversion” from suburban to city living.
- Zelda Bronstein
- The Smart Growth movement
- Jane Jacobs
- Something about a revalorization project: <quote>What we need, in part, is to call things by their proper names. Writ large, the United States is in the grip of a financial economy. To right the balance politically, productive work and culture must be valued again—in schools, in urban planning, and in a world shared with innovative talent.</quote>
- David Weil
- Organizational innovation is the problem.
- Core (vs non-Core-is-Context) is the problem.
- lawlessness (noncompliance)
- relationship (is unwound)
- A story: activity cessation
- starts reasonably; at the edge in peripheral activities.
- creeps into core; maintenance, security, due care, etc.
- Multi-tier subsidiaries
- market mediation in lieu of command&control relationship (market==bad)
- responsibility via tort means workplace safety falls
- something about inequality [by parable: it follows that if a janitor and a master craftsman work together in the same shop, then the janitor will naturally have higher wages than if he was an independent contractor].
Theme Thread Claims
- Financialization did it.
- Financialization is bad.
- Capitalism is bad.
- Government has a role to play.
- There is contradition latent, so prescribe gently
- Retirement is care and people once worn out.
- Retirement uses Capitalism.
- This pits Retirement Class contra Working Class.
- Yet value Working Class, which produces, more than Retirement Class, which consumes.
- See, look! there are: market failures.
- Need public/private coordination.
- Germany is the paradigm, the exemplar and the model.
(from the article)
<quote>In the 1980s about two-dozen large, vertically integrated companies such as Motorola, DuPont, and IBM dominated the American scene. With some notable exceptions (for example, GE), large vertically integrated companies today have pared off activities and become not only smaller but also more narrowly focused on core competencies. Under pressure from financial markets, they have shed activities that investors deemed peripheral—such as Timken’s steel.</quote>
c.f. Geoffrey Moore’s Core vs Context
<quote>The breakup of vertically integrated corporations and their recomposition into globally linked value chains of designers, researchers, manufacturers, and distributors has had some enormous benefits both for the United States and for developing economies. It has meant lower costs for consumers, new pathways for building businesses, and a chance for poor countries to create new industries and raise incomes.
But the changes in corporate structures that brought about these new opportunities also left big holes in the American industrial ecosystem. These holes are market failures. Functions once performed by big companies are now carried out by no one.</quote>
<quote>A senior executive of Cisco told MIT researchers:
The separation of R&D and manufacturing has today become possible at a level not even conceivable five years ago. Progress in technology allows us to have people working anywhere collaborating. We no longer need to have them located in clusters or centers of excellence. We now have the ability to sense and monitor what’s going on in our suppliers at any place and any time. Most of this is based on sensors deployed locally, distributed control systems, and new middleware and encryption schemes that allow this to be done securely over the open Internet. . . . In other words, not only do we monitor and control what’s happening inside a factory, but we’re also deeply into the supply chain feeding in and feeding out of the factory.
Digitization and the Internet continue in multiple ways to enable the fragmentation of corporate structures that financial markets demand.</quote>
<quote>Now that investors have curbed their appetite for startups going public, acquisition by big companies and recourse to foreign capital seem to be the main avenues for bringing to market the innovations that begin life in university and public laboratories. Both of these routes have troubling implications for American innovation and jobs. When big companies acquire startups, the MIT researchers found, much of the dynamism and promise of the new technology can be lost in the process of integration. When commercialization takes place outside the United States, opportunities to learn about scaling new technologies are foregone. Over time, it becomes more likely that innovation will shift to places where companies have more experience with scale-up and commercialization.</quote>
Economist at the Michigan Manufacturing Technology Cente