The innovation complex: cities, tech, and the new economy

312 Pages·2020·12.272 MB·English

by  Sharon Zukin

The Innovation Complex

The Innovation Complex
Cities, Tech, and the New Economy
SHARON ZUKIN
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Innovation: A Trigger
Warning
Everyone talks about the “innovation economy,” but no one knows
exactly where it begins. If “innovation” means new businesses and
new ways of working that depend on digital technology, we can
trace its origins to mid- twentieth- century centers of research and
electronics production like California’s Silicon Valley and Route
128 in Boston. But if we want to know about the current era of
“platform capitalism,” we look for innovation in new centers of
software development in every big city of the world, beginning
with San Francisco, New York, London, and Shanghai. Moral judg-
ments also shape our search. Although critics of the new economy
are outraged by precarious labor and digital surveillance, people
who work within the self- styled “tech community” prefer an aspi-
rational discourse of “innovation and entrepreneurship.” Yet one
thing is sure despite contrasting views. Cities today are crucial sites
for both the creation of—a nd resistance to—a powerful interplay
of land, labor, culture, and capital that forms the base of the new
economy: the “innovation complex.”
As this phrase implies, the new economy has material as
well as symbolic dimensions. On the material side, city leaders
build multiple sites or “complexes” of buildings for technological
viii The InnovaTIon Complex
innovation to occur; symbolically, they manifest a psychological “complex”
or cultural anxiety about controlling innovation without losing power. They
are following the modern narrative of economic growth: with government
support, new ideas thrive, businesses invest, and jobs are created. These
“fictitious” expectations allow them to imagine a landscape of innovation
where everyone prospers.1
The reality is riskier and more complex. Under the radar, the city gov-
ernment plays a major role. It subsidizes business investment and special-
ized education so that tech companies will create jobs. It sets up tech hubs
and innovation districts for real estate developers to thrive. And it deals
with tech- related “disruptions” in local markets and communities: ride-
hailing services and short- term housing rentals, self-d riving cars and elec-
tric scooters, and collection of private data by companies that offer “smart
city” gear. Even if they try to ride the tiger of digital innovation, mayors are
held in thrall by a larger context: the reshaping of global capitalism.
To see how this works, look at The Grid, one of many initiatives the
New York City Economic Development Corporation (NYCEDC) has taken
in recent years.2 Like other “partnership networks,” The Grid sets up a
working relationship between private- sector tech companies, tech teams
in city government, and nonprofit organizations, including local univer-
sities, economic development corporations, and business improvement
districts. This diverse array of organizations aims to share knowledge and
forge innovation; along the way, it will save the city and the world from
both economic and environmental disaster. Yet clearly each partner hopes
to gain something from the arrangement: investment capital, procurement
or training contracts, or jobs.
Now, look at Jeff Merritt, a member of The Grid’s steering committee.
The photo on his website shows a youngish guy with a fashionable amount
of light brown stubble. Merritt’s background is in the field called “civic tech”;
he has worked on projects for citizens’ participation and democratic gov-
ernance with governmental agencies and nongovernmental organizations
in the United States and overseas. In 2010 he took a job with the current
mayor of New York City, Bill de Blasio, when he held the office of public
advocate. After de Blasio was elected mayor in 2012, he appointed Merritt
the city’s director of innovation. In that position, Merritt helped to establish
the Mayor’s Office of Technology and Innovation. He then moved to his
current job as head of IoT + Smart Cities at the World Economic Forum.
This is the organization that hosts the highly publicized, annual conferences
Innovation: a Trigger Warning ix
at Davos for A- list heads of corporations, governments, and research insti-
tutions from around the globe.
These seemingly trivial facts indicate a stunning reality: local lives and
fortunes are inextricably linked to global capital. You see this best in big
cities like New York that have emerged as “superstar cities,” centers of the
new economy. In these cities, startups bloom, jobs of the future multiply,
and a meritocracy trained in digital technology, backed by investors who
control deep pools of capital, forms a new, tech- financial elite. But you must
know where to look for it. Significant individuals whose names you don’t
know and events you’ve never heard of are claiming influence, forging the
rules, and shaping the mindset of a young generation. Jeff Merritt’s pres-
ence on the steering committee of The Grid helps to connect New York’s
innovation complex to the CEOs and organizational leaders of the World
Economic Forum.
This connection may remind you of the power elite, the term coined
by the mid- twentieth- century sociologist C. Wright Mills to describe a
new, unified structure of individuals at the top of business corporations,
government, and the military—a structure broader in scope, more deeply
embedded in national institutions, and more powerful than any local rulers
and influencers in history.3 For Mills, the power elite that developed in the
1950s, after World War II, responded to the risks of all-o ut nuclear war and
the riches of national markets. Today, a similar elite, based in the ranks of
the tech industry and among financial investors, responds to the risks of
all- out economic competition and the riches of global markets. Operating
through public- private- nonprofit partnerships like The Grid, a tech-
financial- governmental elite and its related meritocracy are remaking cities
for a new age of global capital.
I admit this is a more polemical vision of the new economy than most
accounts offer. On the one hand, economists and geographers map a “new
geography of jobs” that concentrates a small number of highly paid jobs for
highly qualified professionals in a few superstar cities. On the other hand,
sociologists and business experts who study innovation focus on processes
of informal social networking between organizations that eventually results
in marketable products and ideas. Both approaches emphasize the appar-
ently determining role of “tech talent”— young, mobile, educated labor—
who now want to live and work in cities, a cultural choice that has brought
us food halls, bike lanes, and coworking spaces, universal signifiers of the in-
novation complex, as well as New York City branches of Google, Facebook,
x The InnovaTIon Complex
IBM Watson, and a planned HQ2 for Amazon that was only prevented from
locating in Long Island City, New York, by widespread protest.4
I would not deny that cultural choices— aspirations, tastes, aesthetic
dispositions— have magnified the growing appeal of the new economy and
shaped the narratives that it promotes.5 At least as important, however, as
the sociologist Manuel Castells saw years ago, is capital, specifically, the un-
equal concentration of wealth and markets that gives some cities resources
to jump- start new businesses. This is primarily financial capital, of course,
but it is also the social capital that connects different actors and organiza-
tions in the “startup ecosystem” and the cultural capital that is transmitted
from investors to entrepreneurs and tech workers through mentorship and
networking in various “pipelines” of the innovation complex, notably uni-
versities, accelerators, and coding schools.6
Although most of these processes unfold within the private sector, the
city government plays a crucial role. In New York, since the 2008 economic
crisis, the city government has led an industrial policy oriented toward the
tech industry. Sometimes NYCEDC subsidizes new locations for individual
tech companies— excessively so, in working with New York State to bid for
Amazon’s HQ2— but it also subsidizes private-s ector and nonprofit part-
ners to outfit workspace, set up training programs, and build infrastruc-
ture, from tech hubs to ferry lines, that will fill vacant buildings, raise land
values, and create future jobs. I suspect this program is shared to a great de-
gree by all city governments regardless of who the mayor is or the dominant
political party or ideology.
Here, though, is the contradiction. The more successful the innovation
complex, the less livable the city becomes. One reason is that private inves-
tors reap most of the rewards. They justify their gains because of their will-
ingness to take risks. Yet, as the economist Mariana Mazzucato says, while
governments deserve both moral credit and financial rewards for backing
innovation, private equity managers and venture capitalists get too much of
both. The great wealth amassed by these investors, and by startup founders
and early employees who cash out their equity in an initial public offering
(IPO) or sale, floods the city’s housing market. Land values rise too high
and too fast for most of the “native” workforce to afford to live there.7
Time after time, we see city governments that are unable or unwilling
to capture enough of the financial rewards of innovation to pay for an ad-
equate supply of affordable housing, a smoothly functioning mass transit
system, and equitable public schools. At worst, the investment boom in a
Innovation: a Trigger Warning xi
city’s startup ecosystem depends on an unsustainable bubble of real estate
speculation, financing by sovereign wealth funds, and visa programs for
overseas investors.
Yet, in the past few years, the public has awakened to the yawning gap
between the wealth of tech titans and workers’ economic insecurity, and
between the power of social media platforms and users’ exposure to risk.
Awareness of the dark side of the innovation complex has stoked resistance.
In Berlin, residents and social activists protested Google’s plan to open of-
fices in a gentrifying neighborhood—a nd the company withdrew. In San
Jose, the city government asked for more influence in Google’s plans to build
affordable housing near its headquarters so that lower- income residents
outside the tech workforce would benefit. In New York, members of the
city council and state legislature, social activists, and residents showed so
much anger toward their exclusion from the bidding process for Amazon’s
HQ2, and the state’s and city’s failure to negotiate significant benefits for the
immediate community despite granting huge subsidies to Amazon, that the
company canceled the deal.
Although the governor and mayor claimed this resistance cost
New Yorkers the economic development opportunity of their lifetimes, tech
companies continued to open offices, the city council proposed broader
participation in economic development plans, and planning processes that
were already in effect—e xpert reviews, public hearings, step-b y- step nego-
tiations and approvals— began to come under greater scrutiny. These are
good first steps toward less charismatic but more democratic forms of inno-
vation than those represented by tech titans and billion- dollar IPOs.
I do not think I am naïve to believe that a city like New York can show
us both the promises and perils of the innovation complex. With its expan-
sive resources and equally outsize liabilities, New York offers a key testing
ground to use innovation for the common good. To begin, we must look at
how the innovation complex has been built in that city, brick by byte, since
the economic crisis of 2008. For this I offer both a layered history and a crit-
ical interpretation, showing how a new economy is put in place, reshaping
the city in our time.