~ Metropolis FROM < the DIVISION of LABOR toURBAN FORM. Allen J. Scott wan a (ssns20 University of California PressTHREE ‘The Logic of Industrial Production and Organization Tow sck 1 docip te basic theo femework on ‘which much of he et of chs book hangs. My point of deparur coms fs bre skech ofthe fandamental mcrocconemis of po duction in capitals. I then develop an overview ofthe problem othe vision of labor and industrial organization. On this bas T tas ove the lncamens ofa theory of the fm as both a Runcional and a pai phenomenon, From here I move forward into an elnate account of Jocatonl sty and the sructre ofthe moto spoceccmeny ComMoprTy PRODUCTION The ae ee of cape iy conto of ec and ‘xi on top wo teed neon cee tion, Conny proscon ie concise ee | nw wore Gn eager wag mane ‘pmo ie, capa soba ise ed ‘Srduly of he ic tinge on toh ‘tel epee one pene bor bee he ni oe ‘oe som (hs of oe 0 a Sey coven a pil nlc am wad stole {trot onal hepa ty ae, Ree oa fos ae pial stand nny oe pea Ite wo pans of potcim pour sain ae ‘ht dion of atmos potato apne ee satin ot dancer gb elon ee 2% Industial Production and Organization 7 ‘cil rations that gover ther prodketon. By this deniton, therefore, such intangible at information, news, and advice are comedies, us 2s raw materi and manuficured outputs a. Ata basic technical lve, commodity prevhction canbe conceived as an semble of simple input outpat activites, In de to dary hin poi, Jet us consider the ase of an economy comprising » sector of prochecon, wher each sector, of course, i made up by an sagrepaion chin thal ‘produces, Lee the toa poo! inp fom any Seto, ito aay ochee secon j be dine an, The total bor inp to set given sy ‘and the total owtpar from the same sectors write, imply, sty, We can forthwith iy eu the generalized structure ofan intersecorl inom system a follows ke te wm soe DR 8 Se vo Tere en et tert trae tata ‘This system identifies all he sgeregate physical ransctions and labor demands inthe economy ata mpi fncion of te undering phyieal ‘echnical proce tha regulte the tansrtaon of inputs ine apa, As aleady indicated, comely production also const of et of ‘sex eltons superimposed on and intersecting with these physical ‘output auctres, Two such tetions ae of primary intrest and ip ‘ance here. The fist i the pice system, andthe second has eo do wih the sovial arrangements that govern the dstrbutce of the economic sar sito pris and wages. Le us deine some tems: pis the production bre of the * corsmodiys wis the wage rate in sector jan ris the normal rate of proft on all capital advancod. Noee that wil tend to be constant overall eco a x consequence ofthe dais ofthe equ zation of the rate of prot in capmizm. We can combine these new ‘aables with our bsicinpu-outpr system 40a to define an cleneneary ‘eroeconomic model fa Staffs (1960) a elon, Gab) $b ton RBS + Om = Ga acne saad + On a Bib Re HRA + em ree28 Ixpustaia Pronuerion asp Oncanizarion ‘The j*equston ofthis syste signifies ha 3) teal capital advanced in Her jy cs sy, + maps +--+ apa (=8)s Ps (0) normal profs, fie hs ph 6) wages, id, must abe equated a equa eo (6) tori tector revenn, icy fa thi simple versio ofthe move, allaptl ingots are sumed to belly used up in one production penod We may append to this stem oF equations sey aPisrary nner Se, Metab tae 63 were Tis gross income forthe whole sysem ‘Wenow ake all wage rates, wa being defined exogenously bby aseris of historia and social crewmtancee—nuch a levels of worker otginizstion, politcal conditions, andthe lke—uhat Ke ouside the sie ‘economic logic of the equasons thence. The, given thew + 1 equa ‘ions a represented by 2.2 and 3.3, we can compte ie numesial ales of he » + 1 unkrowns consisting of the price vector pf, -- . and the rte of prof Tes evident that values ofr ae inversely correlated wth wage fates so cht any tse or fl inthe later il be followed by 2 decreas or increase, respectively, inte former. This omeltion suggests ha the takers of yages (workers) and the tke f profits (is) ase | cn shese grounds slve, be endemicaly sucepible ro cllions wth onc | another over thi espective shares ofthe soil sup. Indeed, workers fequenty organize in order to pres thei we lms move eed, jst a fs periodically take strong measure to evade the high cos of labor and thus ro increase rates of prof. The whole system of equations in ikea shlealrepresenaion of a apitalit scial formation: ic ents 8 given configuration of the fores oF production Ge, input-output tech. nologies) incervined with and stuctared by & dominant st of soi relations goveming prices and income disciouton. Its now posible to ‘ress out his skeletal famewerk and fo ambit with ianurabe a. sional deal For present purposes, an especialy urgent st of deals concen the ‘nstinatonal context of preduction. Thetis running ll the way ereigh this absracted mode! of capitalist production sytem, seri of impor (ane elionsips having © do with the Sm, the division of hot acl the organization of proton. These relationships, indeed, have major cet onthe way the whole system functions; they ae embed in logic, but they slo in cum have s gest impact on the way hat logis operates. Thus, we cannot move unproblematic from che agetegte ‘uatons 3.2 and 3.3 ro the individual ene of prodxtion an back gain St i fining ino ere de hos Wit Indu Podation and Orgaizaton » the ion of labor and dh | Sea ee tates te ‘tino the epaceeconony and the aba ioemeré can be mos |) sft sc. Befie we cn deal wt such genetic tates however, we have mich co do by way Of piney vestigate {be ilairal sracate of redaction. We begin witha cone of the dvi of ube ral 8 te f,ad we tes bul per is scout tothe problem finds eranzn st ge more, itis prsely atthe level ofthe. ‘THE DIVISION OF LABOR WITHIN THE FIRM “There ate innumerable esos of tbo in neem soi. We may speak of disor flor acorn ol, cripton genes indy, futon, and 0 on. For che meme, I prope fo tet a eather pec {2s ofthe divson of bor ineorng te tcc fngmentao of as "ilin the invidul em. A he arent proce T shal ake tr cresing reference 2 second eve, mane, the socal dvson oboe 38 ‘cprsntd bythe (vet dilentstion of aks rer independent fms Ata later sage U shal ako da with third cate, Leyte orl ‘nor iatonal vision of abr a esrb, fo xan, by Probl ea (198) and May (1984) “Te inal rm canbe viewed aa dying of tected labor proces separated fom on pote ate cvison of bor and coordinated by managerial sthoryy As both Lejonhuful (1984) sea Wiianson (1985) have suggested, his way of viewing th on peo ‘ides us with @ number of sigan anal pobies that en Sve 20 5 eng 8 we abere tote eosin vevon of te i 5 Be cobotiest ofthe sos emtacin fin, y = MO wich mpl iene orp as ech Rinna ina, i, and ber np € The Rn yells gene! defen oft ‘janie eons beeen apts an opus, but kt snoring ‘whatever about che dete inner sacral sangeet of he frm as Slvng socal instnsion. Above all weal sere fo the fn tena rol of the technic dvion of labor inthe fnconng of che fm. eisofprioay inperanc tht we copreend his oe fo i iso aml the fnconal sn spatial ongatetion of prdection, We fan ini the aa by means Of Be sev of the secant of Se30 Ispusrmsaz, PRODUCTION aND OxgaNIZATION dition heii mane hhh Ada Sih 17761970 yop pes ook Te Wasi Ter mg gi wih ht fn mance in 2 pie sng of depth Ste sn wed woo pe Sion co ou yw Ss el une wera” og sal ied mses Wik ears nhc mee Eo cea ning etsy eure cach at aig tes eds lo pcan in aks ‘etsy cc werk. dso sels of ith te ech or com ofa te fed he ane “hej gn inc Ths emt ea ag ‘=i ow cer shat ar pce agi Sassen Sig ot pong pining he ning ‘gato here ar am wkelicung fe fl om ip of pope rs ene Whining ss caper do cern incognito is ome oe ‘cee with orc alpine oft ep oe} ining soeaninc nwih Se smating a oe ns, nip Lay dns tds nated Casts et ini pin 97) ane dition of er gece pnee cea ei eereareemeie re een pee rece ‘ire sa wy of ening eee of er cn be dros gu Ase dt sao ee inp 21 po we Sie es of eto or gen Som One gris fe enn amy oft Syme ofan ntl psa vow seco aes ti Oy te fon). The string eel St pes ft tines pe equi onde meng ee ak the of pon nT er tgs nn ya ea eta enone mvhhy © aden ge setae ag shay so hing mae (Cf iat) omen apne ond sng noch ‘Span ot dnl cops pote Und i) Meee SE ig com hs eed rs ony wns cotee OF drag) ad ee a eal see Sipps star Septet one Te seco hor ar pul om oper aye Industral Production and Organization a aca+ney? 5, The ingle dui of he ciel don ker eet Taide Slits 2 bonis fab gs cca err of several differnt organiza rations. shall describe ro polar ‘ac ofthis penser. Th the fst place, tus ase chat and y are produced in perfect, balance with one another inthe repens = 9° The total veage es oF precio wl be, simply, gf) +h). Figure 3.1 hasbeen eonsruced for ila pupores 2 that ge) + Bi) = @* over the incre 7%, 27. Hence, ifthe market can abso the increase in, tea, the fem wl ‘en to switch to this eonguration ofthe vied labor recbnigue (sand ‘when its blbeprint is developed) cater than contining wo produce 2c fering eo the undvied Ranson fy). The minimam vale of ge) “+ 1g) i given by Tn the second plc, may well be feasible for che firm ro provace = and yin an balanced rel ad to dal with exes cr dfs of = ‘she to nero nods by mane of mai anecsions. Ini en 1s Likely to be produced ator closet is minimum merge cost, which isshonmin igre 3.2.5. The fn scompost average cot of producing wil now be 9" + hg), The condition "+ NO) = a* holds over the Sel 77 nt thie den Ge labor technique to the technigae whose average cost function i 9). the same time, we also have the condition 4" + MO) = BM over theFle 42. The spl mania fe ei isn of ee cna he ine BEES pb emer em ea incerval fj. Allee being equal, en the fem will opt for the dvd labor technique in which and yste produced in sn unbalanced sation and where produced ati abot minimum average cost, Ths option assumes thatthe frm can dispose of ts spl production x wie le ‘no damage to its overall profitably eel assumes, or example, that sucplus production can be masketed without a disproportionate incase inthe rms adainiserative cows, Ic need sary be ares thatthe relationships sketched out in fg 8.1 and 3.2 ate ilustracve ony Ths gies do nc define ay ievoeable ‘eoretcal neces nthe temporal sequencing of vite in peoduction technique. Their main purpose is to provide us wth a sinpe analyte ‘vocabulry that canbe pu fuse in caeying the argumene forward. They lo, nonebels,capare some ofthe operative mechanisms that under ‘the deepening and widening ofthe internal dvsion of labor in any given fem 4 the prodaction sytem evolves fm ©. eri wok, or fomhats manwlatitng process co usr lne mech ‘ods, or fom grocery stores to. tkets, and 60 on. That said, it is importa a te rovio tha the atl egcaton f Sodons 10 any manne f means ke ivarably doen the sep cme Se fens agmentng work al. Tena adeno ae, sion methods ar sonctines socked wih a nanowing of te era Indasral Production and Organization 33 nf a hs ve Mah 900 hn ed ike Aa ana ators ene Se Se a cr reccotdsencspeb ne ee eee Messe got oes anune scaey serie asta ee eee ee aw erate feet eee eee clr res ee Se ee ee eatin eee Coe ce INDUSTRIAL ORGANIZATION AND THE DIVISION OF LABOR BETWEEN FIRMS Consces, nce again, the division oflabor in pin mansfature, We bare eat wich cis phenomenon 9 fra something that contained within the wall of onc Inge workshop. Various other posites ae apparent, however. On is thar the workshop beaks up into a series of specialized and geographically eparace branch eablshmerts under common ov ‘eships this ste problem of she maitesablshmene fem, which we will addres at alter stage. Anothe is thatthe seal division of labor is ‘eansemed imo a wei division of labor in which the difeeatrades Involved in pin manufacture sepzate into independent end incvidly ‘owned workshops. If this later ce should cour, the workshops will bezome linked in system of inputourpar transactions andl thas ‘constitute an elementary indus! zampley. Where the soil division of Labor is accompanied by filing over prodiction costs, st wll ed ‘depen and iden, leading to the cretion of expanding pool of exer ‘cake economies. Ina now dass paper, Young (1928) has alluded 0 thie in tems of inreasing eta via the inensiing “vou ‘abounes” of production, Ths ass a once the qusGion of the strate ‘of vertically oxganized systems, ie, the problem of the verti ingration and diinsegracon of prtacion, We sat ok with a description of pro- lusion poceses 36 St of tansctonl atvies and comesponding scope eft ‘Transutional acts and sage ef. When we speck ofthe dsion lof labe, we a by the sme token making implicit reference prodution sce a a sens of labor procerser tht ae linked by mea of trans tional interconnections. Indeed ahs pionering ingaiyinto indiEa Inpusrnta: PRooucrion AND OncaNtzaston: ‘expinization, Coase (1987) suggested quite expicly that we ean think of production in one sense asa network of complex of tansacton, On ‘he one and, the finn with is echnical division of labors comserannd asa se of inemazedwasicons ruled over by & managerial hearty ‘Within tn frm, transactional behavior i guided by admnaatve woes, ‘us and decisions and led imately by int. On che other hen och fen is stunted within a social division of labor and thas ako eanasce busines with other rs cross euemal markets In ther marbets ns, anal behavior i guided above al by price signals. The pres igh o> (Coss wat to pose the problem ofthe strictie of prodten in ee oF the changing incertae berween the ineral and ti extemal domare of ‘ranaetonal activ: He caressed his insight in the allowing celebrated Boge, which amount, inestence, to an organization eheory of the firm. A Gam wit ea expand ui the cots of ngniing an eur rustion iti te fim Bese eq to he ets of cere ie ne Sa by means of an echnge a the open mater (Cane LIND fey Atay hen in then, the tha vide she nl ich of he Sim fom te ete rat fan tin ai he nde fae Sse athe pont whee the rave enc of nase fe tis) and kes ee ‘ This sie maybe highlighted by meas of to snl Maseaon scoesentng vei inegrtion an veal tegen eee Oh the ne han maths in mole el ar by te ae oe xrottinaaly iio organize tices Howe lng ie oe Sinica ede ter production consi they conn mare 28 inp eter an stl ings (wich by denon he ne ee ‘omy vaabe igh empertue). Mutt alin olersaclaee actions means ta ong malt hae a wey rong kane aes ‘clad imo se! smeking and this to acne heed ee roduction. On the ether hind fms epicaly mate fest eek Brinig sens, whch they unl purchase fom oe hea dn ‘Tanacona ex of managing rou el and psig ons allel tte high Vial dng fel and genie irllehe more pcsicabeinvew ofthechoensy arora oe pen mache in pring serves ‘Ar akeruive way of expresing the same ida so sy tat neal nie of ope a pss the ce oft Sed wang ee lng ‘Sample, bu that onal denon ote as pit ee oe Indus! Production and Organization 35 the kg prog sv ple Pazar nd Wil. 198; Sve, {Del Toe 198) ne a fee by Dn ny SO, scones of ope oe deca ge) + MG) = cet) = Andy ar ee) guns of exp) gs) ani) se eal naive season facto, nd (6) ele) he joe eae cot of pray «andy nan ntegrted Eom Where gi) = hoy Ste 7s dbcnaia of ape pera Need coor tnd dace omic of cope iets nhs way refer general ot oy 9 vee fn fini egaiaion bt a engomeece el. Tes ope ell ae msty dened by tate as naa hae both nan ad ec ao i Vor ingrained detain, Lt ws now cami a claimants ant en fe nen he veri oranaion of prodncon, Uno ty, tiscanemly isk coment cnaaly al heer Scum it afl te fm sc dicton of thee fone Her forth poor singles, inl eee so cumple of ah eran de, the nest un son of a chaps Tl anepe to cena s oe nice oer of te peli, Veneer icin a ee ‘age of ene another, and ifs gven enon engenn ce one, ttsencoctveal of hatte cman lic toe i he eee Far onsen of exon, Hower 1 etter igen ad AEneraon sw dine cago henanent! del cach alr separate saben ‘Vertical integration: Ver ingen edo come shout when he nein of the each mc! wi een a ene Siu cont sings. iano (1975, 1979, 1988) has propre in ‘tif powerflan intel soa at isos de a ere Saale in xenon the He da hs ch fle se mont pee 9 mate apenas wh) scl iti ay ung pe ely ire cmtingste se Hey ante ceo) a pa ont wpe Rawr, Ga heise co ope ot ‘tings pbcing sic Sonne ans comes unr se {Dalits one of otro tems wl nan cement ‘eth probly mess of vertcal mepate, For campo36 INDUSTRIAL Propucrion asin OncaxrzaTion ‘hat purchases R&D services fom an independent constancy may Bnd that ris subsidizing research breakthroughs in relied ares that the R&D ‘hm can then profitably marke for ie I ese pocenial beatae ‘cannot be adequately dal with ina contingene-lins contac. the fest fiom may wel begin to provide is ow REED sere internally Ales atively, fm that ast deal wich monopolize input or ont puc racers _my fn ito Feture proiabilty compromised by ring prices on the one ‘hand or resisted sles cuties nthe other (Keseman, 1978). This precisely the kind of problem alded wo above, where maken sel panes from asmeitng work tooling al Inthe absence of marke feiiley im molten sec, the to mst ene into soane sor oF long-eh tat pendence that makes each (ander conditions of separate onmership) valnerabe to the opportnism of te other. This problem, again, ean often bes be reso by vertical integration, ic, by enlarging the scope of ‘managerial povemance of the frm (Willison, 1981}. (One of the very srong findings in much of the recent teste on iui organization stat versal negation tends especially to come aboot i situations where transactions involve fir spec knowhow ad ‘echnologial complements (see Armour and exe, 1980; Levy, 1985; Masten, 1984; Stuckey, 1983; Warren-Boultan, 1978). In the er ‘conductor busines, fer example, RED work, wate ifsion nd tng sxe characterntialy vertically negrated because thete ate significa iio. syncs, and extremely complex information fedback and feedorward fis from one stage to the next (Henderson and Seot, 1987) Semi 0, dixconomis, ‘With these definitions in mind, ler ue eum to igure 3.3. ‘Theft panel (A) of figure 3.3 tepresens the case of fll vertical and pan integration of «and y. For exe of exposition, itis assumed here that: andy are produced in perfectly balanced proportions at every evel Ee] S'CDeNCyD¥8 Cy? a6x)m(yPraGo gest.) veel naga pad dade (@) Wied ot a (Semen, The queny vr tte lowhe pe tm (ey) repr ‘Sota an done scope an epee Mesne ntns o40 Ipurrmiat Propucrion ax Onasxtzarion of ourpue. Total average production cost inthis cse ste rpeesented by ‘he curve labeled g(s) + b(y) +56 9b, whose minimum values given bya. Observe thatthe curve (9) in panel A is dren (fr iusaive Paposc) in sich a way thar i cuts rough a region where iter economies of scope are postive Inde cetral pal (B) of figure 3.3 i i aseamed that and y ate ell verily integrated with each ther ba thats ie now produced a2 illest ction fom 5 In brie, panel B represents the case of the ‘verocallyinegrted meloesblshmont i. Taecarves labeled (0,3) ands 9) are defined as inthe previous eave, but ne wo iaiportan, {ualfcations to thi statement. irs, the fonction g() has now been ‘tansfoxmed ino the fanction g (2). This sited eo refer dhe change ‘nloaton ofthe esabishment ia wish xis manufacared, Such change ‘vl often in practice be associated with switch of prodacion techie, adit wil uly als be attocated with changes inthe price schedales ofthe matrals an labor ised as inputs to «Second, the curve repre: senting internal economies and discamoatee of scope as lo changed in shape: The new curves) hasbeen dawn (forthe sake oF argument) Jn uch a way that ie now pases ently rough a region representing insmal diseconomies of scope Ia this new station the curve #65 9) inclads an additonal inteal cost that is incuered in rans » fom its point of production co the location where y is manufietred. Ths, Gs) Includes simple plysical wanspoet eras on ¥ a8 well any ae ‘Sal communicatian and coordination cost involved in spatially pa rating production of x and y fom each othe. Total average cows inthe Case ofthe sition repeated by panel Bare now therefore en by the curve labeled gs) + hy) + (5 whose minimum vale i 2" The shaded area in panel B denes «ics of points for which 2) + 1g) + ¥(s,9) =a. ler, ten, verti integration and spatial separation ‘of factions willbe prefered till werd and pil integration, In panel C of fgute 3:3 the evo lor procesies ae taken to be both ‘etcaly and spatially separated. Prvtces of y wil now be obliged to buy inpat« through exeemal marker raneactione. The inp wil hence be vale at its mater peice, Given the dissolution of the internal Insiatonal boods linking sandy, neal economies and dieconomies ‘of scope will no longer ply sole in fixing their joint average cove, “However, eremal wansacion cons (inching transpore cont) will a= sored be inured in mediating input «though dhe open mates, and ‘these ae simply represented by the constant une quant’ Total average ‘ons of production in tis fly isineprated case can be express! as Tndastial Production an Organization 4a p.-+ £+ hip) Theconditon, + # + by) =f preva over the shaded ‘ea of panel C, and this signifies that fll disintegration is the most ‘como! frm of production inthis gen example. ‘Observe at once that fre 3.3 (ie gues 3.1 and 3.2) does indeed only represent an asbitrary example, and here ie no intention hereof tendentoulysserting that (a) intersted single esablishment forms of production ar always ini (Fie the viewpoint of com) to me {ablshmentsractres, or hat (b) malisabishment traces are alvays {nferiet fl fictional an spatal disintegration. Oa the consary, ay ther posible orderings ofthese organizational forms are conceivable in ‘cory and observable in practice What gare 83 seks to accomplish i ‘imply t posta the sot of intel that comes into elect Between the _nsjr variables tha conto the functional nd spatial lations verily ‘djcea labor process ‘On the bass of she anal cared oat with the aid of figure 3.3, we axe now ina postion to aim thatthe interpanetaing levels of the functional and spatial oeanization of production are deremined by i+ ‘eral and exteal wansactinal relations (as expressed in economies and economics of scape inthe copter of vartabe sale effets and thei ‘expression in proton cst and makes prices. Any coherent theory of Incas organi and location mt dal with al of these relton ‘Sipe in ther al saan ‘TOWARD AN ANALYSIS OF LOCATIONAL AGGLOMERATION AND DISPERSAL “The dscasion above revel the there nesesay pase itraon of exeraaet “Gras don ite speciale drial the dee te web of incinkages between dose eatablibmensbocomes, In is mane, the culin of on interconnected cole of nda ake ap, anit ‘eral dnegnion alo accompa by bremen degra increing mutes of eeablshment per quarry of coc ours) ten ‘be abr fimekkaps key to become pari cooohed Each unt of proton perfor a srs of pci tla wi the comple, on each intr conn asia operation the ‘eine came fer through tine No cng cn uel ete the condi of wm einen since each dependent fri anal2 Ixpusriuat PRODUCTION AND Onaanizarton pone efi erosion fe ene one a ronan cul oe, Hence ean ealy peed ‘ew of need otto cpa a ey aot Satunp eg ofahel ti fpedre sese ng tele buts, andre signeanty eye nea aes hot catgnon pone bac! of ce nee On cape npr ud sme fe epaen sf prion a pope fr ne ean Uta gh | Sdeemacal eaten pint | alvtovandercomaon cnr of gravity We wil dea wih teins Sirens ras ape TG we ry sy da i ap cones prte (r fre) om protic nie {part cpl eae sw mari rdw a ea Sind cout! winiy won pou Tas eras ass itp coven cm: pron ens tar ung epee iis of compo prensa by de ee x 0), Thelase cos wil tnd asymptote toner with ncn, smapitadss of. If we now hold crt an allow dance wo vane » SSE apt gS nee = gai = se will usualy find that sinlar economies of clear ako present a6 a funtion ofthe dseance over which» Bows, ‘Tables 4.1 and 4.2 display data chat exanpliythese remarks. They show {er the empirical ese of trucking rates in southern Ontario that sal ‘eanspoe costs ae srongly perc per unit of ow as both quanti an istane increase, These discounting effets ae the resul ofthe ached lunpness oF rasspor services in general, and the high feed cos shoe fr: fsquendy inured even before the fie uni of ight has bee oad) and the fat unit of distance as ben covered. Linkage ates and eat src, Jase a nage costs ae highiy {THSck TaNFow Sea ue TeastoRTen Bettany Totes ano Hagen ee wi a a ae BeAootonanaTioN Paocrssss ‘ames "Tec Thaxton Rares no Toxo ro Sette Cont tv ONtARIO (Gas rasan Bins Ba 500% sient 0b ps = om Panam eG ee ‘Ketece Bs oon ane oam Cc at) Eine urns ane Rats Ho ete GE BM te . do ies Gig Ie ne aca z ‘rious contingent atc of any gien flow Foe ain pins ae ( essay here Neda, 1 Cae ig on uty ei te gone Inforrtion) being ‘ranponed ae ih repost shape, suutance, ging desi and Soon. The gear the dpe ofmacdborcn A $i orks and rong ope ce chen Sone i alas we boi ret and sable erp a te, “aious sen coms can be spices ed. This means that ree. is i reducible toa simple routine, By cons, if busines comer, SE: Segue (3 re, ny, of maser uncraicer oepeiee sifreniation), then new contacts must be const rebut suk Agglomeration Processes 5 bight ionycracic instructions about werk ta need to be come leon nage partners. On aceason, no dott, thee uk of ier ‘maon can be accomplish by mal or tephone o other Cecenic seas; ae, howe the can be effec ut enly a te He sod take of ic persona ceo Beco I isthe ese then te Sinead tve ous ofthe employers who partcpat inthe contact mut alo be ade to al de oes costo nage 4 Fourth, and by exesion fom th iter pen, ages sometimes do "octal ay phys ow of goods waters bat on the pononasel ‘echangeofingngibe. Thsistommenahe cat of eansacten bene ‘offs ard sevice fictions inthe modems metropolitan conn Such transactions may involve mpl ecings of werd seine, sodas Thomgren (1970) and Westanay (1974) ave shown, he employees ho are moti tobe inoled ae ieee high evel managers ‘The mocecompex and cul the take of tisacing ae, the toe persed and ig pid the loan tana tent be Hens, fects contacts ore inet and tes snes deny wil 8s 290 ave fey time and spc cone ached to them = Lig and ation. cere aspects of ikage css have mule ‘le implications forthe unflding of locson syns Let coder by oy fatto to contain ena ‘On the ore hand, where lnkages ae smal in sale, unstandarcioed, stabs and in ned of persona inteanadton, they wl aly be sso wi high tae depeder cont pestle ow. Ar rec ‘ws my expect ind hat sal pln wth vate production seis (hence ham sale and problema npn eto) wiltend tolocate nes theirman ing: parsers. The prec degre of emergent locational behavior wil depend in parton thera ofthe ue of utp {0 the com of linkage (a igh value sigifing slave mens roximiy, slow vale the convese), bu ths ough formulae ofthe problem wil see for the pee, 0; Ontheotkeriand, where inkagerae lagen sa, anda, abe, ‘oe easy manageable, they wil tn oer seately low ean cone per uit of to. This implies hat age pats ih rata ae ‘eal tegulated input ouput elation wll be conesponingly nore fee to dec themes fom she nage pate and eaten eer rane fom them. [eshould beaded tha ranspore ad comemicaton costs he fen sexily cre ne in cojuncion wit the gnc detent ofthe forces of prodaton in italsm, Tasha suey sled gence26 AcatonmEATion PRocessrs Agglomeration Processes 3 ‘boning ofthe bonds tacking sdifien indus to one aor acs ‘olin he proces of agglomeration, bt we wl proceed er the pees copaphia gus. Eons may scone a by holding tas apea Se poh oe Pres have ls opdon bu to shter tightly pee ee ‘arc disimegraon andthe steralton of tacos ae the ener meet les manacion activity. Burthermors, with dual faces of a single phenomenon definable as a switch in the overall ‘ereing importance of jin tine devry noon ee tccinology of pricton sway fom hierarchies wa meas hcg, this endeny fo til omer stag ey itor prec sn vid mh (Wilisnas 19S SG (Steal 19830). Jneinne sets iahe connec an tem rial adviser ici to dent ot ashe ecg ‘en fis sch hap ae ev thy a eed pe hw of production but te who: enunatnal dnpeaton ct oe procs rte tan being shied a he fo an the indo eppras. Vert dsinepraton of that appecne ox urge: eps agra cet rinse once josey pecily probable where ii composed ot enly dieieces kee ‘scion been the dees produces ho eae Se Proce ina mukask ilies and whee ternal como fe ‘ei wllbe ven more probable fac ar eden a and highy compete and whee prodicer oper eth oes fang of diftenrated output In thee ccmsancen produce ches esse eck rid inves npc uni of ed ep, a 2 sho lily to temp ro renal hue prs ote fstes THE ELEMENTARY GEOGRAPHICAL pocatin wearer epee DYNAMICS OF PRODUCTION COMPLEXES | Sitel (984) have egevl, henew Ree misono | diction elope now bing inst n muy sets acy ey low mance tacit high eis prcaditecntaon le ‘Sinsmaling enensofthepracson pron Phatesuon sey re 28 open gocsn, bower, a inary casey by desaos fates preter atthe kee ofthe compl chan wth elo eva q nit of prosuction, wich sugges that in wordof exo unernnty sod daage some titers savas ct peal Prodan who opens in degra muta and ancerain cco ‘omic cvionment ae Yer kt tev oe arches igre linkage newors in which tinectons te names soa an ee scandad, and ual ove space anne They eee sep E t s i 2 F i 5 a E a i : z i 3 i : 5 g r i i é 5 i 5 Protaeatte Actually, ven where these costs are not xpcialvonctouy, Liter uct of excl tansacions may sil moog lily to be found in mural beni! locational symbions with one EER 2 [sl ofthe opporeunisy cvs tha can often ocon une | another, Insts producing consumer outputs sah ms dehing, fires Siyaner etl fer np whee maces we geogape |) att nats po ery and serving compeetve markets ae ery pomcemea em complemen input sipplers, mae poems | Prone fo this ort of organizations ocationalontome So too se ay oduct proeses may be neue pra pare ov sens es basic indusris whose ourpurs consis of variable small batch ens sac Suu needed bar cannot be readily obtained or epaprene i 2 segnents ofthe machinery, eects, or nacunert ieee te sure oe and servis faxtons he the sane popes Ee some lgesae mas pron nde ae lf Speen wan nrwors of sl deat plats proving alma epee Span Re ENT an gem dom ine nm ake | ‘sual ips an srces. Fo espe tan aceapaa ens ‘Poitou ioe Ubor nae pay an inpacensuppemenny | areca deeply involved with age mbsf eased apples aMetizontel Disintearation ewe 42, Ames cena mason wi apna oon ape subcontract ic wil they ae ae sae tine egaped a maine Santo reson wth sch needa alge eee ‘This rele: tothe ca and scrape induc piers eho eth ctr hry hh imine on the peed Seg epson of podcon thecal es of ee So Howes it sold by sow be dea tthe ops inky and ei evsion of ior epeent sae ae of vats pring aa phn a poh anes ea einer age pute ba ayo Oy merge: of mj cats of apt sa hb, i specie cman of wenn ec te cocoa ond Convergence frst posse nacho iy from Fusco polsiy cain fons sphere et omic expan bit nether ray nS eode oy feet coxunence Th whee he truce of poi i cha no dee ne JeHs of (realy and horizontal) dnepat proton eee ‘hee wll sly fi the pntcyconions Sen ea ek elope in modem eps in ths ee ee pede at Agglomecition Process s Testi oof nian. Seong is cl so igi 12nd we cn grey exend the argemas by means of an ingiy it me of Fanta ne local charac iis, In paren, suberrcing plays @ mejor (er hte logy Secognd nthe man of lua nel cons Subcontracting invole the fing out of packs of wk inde peaden prodaces who undeate to pefonn~acordng to given in Suction specif aks. The works then tual Seamed in semis oem ws poin of ongn for far bean a finishing The parla ites on impotancs of uheoneeing estke in he fact tha inkags Bees pring ot staking on econ sre fen severely problematic inthe sont tha the cn onl Be hc, Cesifly consummated where there is comsdcable pesca contact and cachage of infomation bere the pasts conceal, ueneacang ‘cts ae ao common where segmented labor markets pra wo dat ‘work can be pat out rom pices who operat in hight segroens to producers in lowsnage pment. Tisor and Tht (1982 BI), have sugested that suboneing ty wl te kad by rer qual eltins besten poder bec ge powerfl pray fs Cahexert srg downard pressure o the nceteacing resol and les powerfl secondary fcr, Where this xcs the te rent are then commonly ped on tote lhboc force inthe abot soe inthe form of edad wages snd infer working onions, ‘Two major specs of mabeonracing cy ae rcoiable-They are termed ial) and apy contain, (Els, 198, Salles 1972 Salle and Schlegel, 1963). Specialy suber aves te Earning our of work thats omplentry tthe maa non of he porn ‘tf Ths, spc subcontract inepaon, 1 for eanple inthe eve of screpac manufac who subeen ‘cee demands for aasioun casings Capac subcracing cont cf oveiow wok that an ehnicaly be dog a hee ut tess fumed ot beeteof temporary ees of orks ons wae capaci Capacity suboruacing is thet form of hocontaldepaon, snuby isaaureitend tobe eycca pheaomeon: gpa eres tar the peak ofthe cenomic qe and ten dunes ante es begin i dcwnward sweep. Saiconsacing ofboth sn vari can be en in ge ders & father expression of the whole problem of uncer i production spies ein fat, an este nto’ of sfopcing the ewe Prefiabilty of prodcin in ations whee fina orp mark ee56 Acctowssarion Processes me coe oe ‘ip 43, Mapa co and matt oe thane preion cay htt en tnnany rte ne Stee ee Saeeeptinceeenty ea po pimar mae Sins g teers ehlaemanseaat Seaman a, sr ee cea roe peoniapestentr tease ee RESuLTIeS oeo ta tee 2nd with equal probably from x moe. With ie ed meso Soe SDR modewnt neces SOE Ewen ston me ee inane rkae PRO ienteaewens sige cl yen eee rk cin ae eae TS See agate ies Aoeiceen errs ee piece menaneraes ne Cesthutvenptiieanemrctemnee EGtctyotiamind rernee Saree ee cadece See EN Say ompem teeters eicncaeutaat eaten seca rere a Agglomeration Processes Timagn that given fi has the option of using ip to ve subcontractors toperfonm asccof work asks, The marginal oss of production asocztd with sing fom one to five subsontactes ae shown in igure 4.4. The Fguc hasbeen consaced in wich a way har the marginal oss are close to the selling pace ofthe puting ox fms product over he interval x {an outcome that can be expected ro occur in the long tun a subeon facts compere among themselves over the going eae fr subsonact ‘work sts clothing fume ajurt thei Sal pees. The stntion expressed Dy fire 44 egnie that che psig out frm ean now rapidly expand ‘Ot eench it total kel of production over a wide ange while tthe ‘Sametime concnuously maximising is profs. Thus, asthe markt for the fms omtput ries o fills, the frm ean eepaly respond by switching forward and backward fom one level of subcontracting to another. The fat ffect wil be a sigan improvement in de long-tan probity of espa Obriouly, the cote feasibly ofthis organizational strategy rests on the posibilty ofthe puting out fem being able to ind appropriate Saboncractors without incusting exesrve addtional ansactons cout. ‘Subxontactons, for thei par, wil want to be asimely aces othe sours of thes work. Hence, in the absence of countervaling forss tending to keep them apart, both puting Out fms and subcontractors vill uly find moch to their advanage o bunch together in peo- raph space. Oe ich countervaing forces the presence of abundant Sind cheap labor reserves inthe Third Woeld, and moch subcontracting hiv in modern industry now involves the puting out of work ver Tong dscances om corto peripheral acs. In spite cf this, thee coninnes58 Acctounarion Paocrssss ‘0 be considerable and intimate locaton interdependence Berwech sy Kinds of puting out and taking on fm ia te lage metropolitan regions ‘of contemporary America. Motoover, ebeontratrs wil abo Want to ‘cosa foe themes as regular a fw of orders through est pesible, and all the moreso whese market uncertainty is preven, By the law of kage numbers, temporal regulary can be enhanced if oners a poet ‘together and then shared among the st of subcontractors. An appon ‘nation ofthis pootng fect can be achieved by meats of locational ag slomeraton. If subcontracts converge toward the center of grat of ‘Prting out fms, they will be lestionally indistingushable fom one another, which soggests that puing exr fms will be wo that degree indifeent 28 to which subconteactor they use and this wil in tora Be ‘maraated into narower Bucustions ia the ow of work through rab. conaactocs compared with theca wher intvidul sbcootasoe atc | eps ew particular pring ou rms, By is nate, this locational | ssuegy wil sings ctaseing wherever i i pinto ef To saps 4 the mater in more general tame, where we bare muuch unecrtay ina given productive sytem, disintegration and agglomeration ean counerace its negative eenomic eer, fo by the law of large nse, de Bow fof work through the whole system is always les uncerain tha the ow ‘ough anyone verily integrated chan PROTOURBAN FORMS ‘Asal of these proceses operate, fictional and spatial complexes of , rode labor come ito existence oa the ndscape of apts, These (/ complexes eiolve through ime a the sizeof the marke increases and 36 (the social division of labor expands. By dic sane token, de hone that hold any given complex together grow tighter and the spatiorpporal sxroctue of exemalized ansectona acy becomes moe iret, The ‘ne resis tha production cost ten steady to decrease everywhere on the temin of de complex in srmputhy with the widening rounds of specialization and diversifcaion which are the inner symptom of se ‘growth. This process isthe source, Ee of deepening exten enone ff sale (which, 26 viewed through the analytics of Young (1528), 1 primatily 2 nonipatil phesomencn), and second, of powerfl and ce, phe spatial agglomeration elfecs. These phenomena ae in tm the ‘foundation of disinctive Vober proces in which ring eves of ouept in a given egion fad eventually to increment in inde productivity Agglomeration Processes % (Kaldor, 1970), As cal, nganiad inde compensate offer the feof clfrinforing pater of economic growth, 7” inthe same way, the crparnveabantages of inkl regions ae ser lway asl spy on ghea nits endonmeets. Mot sacar, thevare esi duced y there developmental gi ofa south ant anges shone Cerny, we coin to many {ietzed peoductin comple ia the nine nd wench cence that were founded on natural occuring resources sch emt i cra, encgy deport, or natal harbor, but the oczutence of ach resources i by no means a necessary precondon of development: On {the conesy, where procewes ofthe socal dvison of abo indus | tpecilsation, aires, ano on come ino play, development cn | frequent eur even where thee no nderyng rears ise what sever. Th, region that te hekng in natal WR, or have ew “The cutie sent them lm score f eter simi rena my semvetine tke of ino pid indi gront ian nial impale, how | SeFfoutow to pues hem he cel ot ep fe ((aiton TAs sams to he hippoed rece a mu of oes “ire US. Simbel, a for cample in te ae of Sion Valley, where tighechnology indus ae taken roe an Hoaished ona major sale (Seow an Angel, 1987), Futheamore, a an emergent complet in 3) given are arts to eps it Deomes 2 potently Ferenc i | ‘Susi innaton, and hs acl ot eral growth ya The | high potential for innovation resides in the nmamersble market niches | ancl new busines oppor rested by the ich organiatonl newocks ele inne tne fe amok ah Many on cutpreneee snd woes prpute inthe ily atts of he complex, and they ze therefore optimal’ posoned take avenge of new {echnical and comme cpoctanis stand when they Bese al 201: Ther onovative pote of expanding comples are ually ‘ant in the perce vera nd rezoralpints that ae pc sebater oftheir bond pein of om ‘Once laced pron complex comes into ing i shen dd together asa uni by the many addkioal agglomeration economic that Sai ng pe ts opt pe On ee een compess may devcop sie by sd within ingle menopalian | Prerion afr example inthe css of he srospace, ching, and kn |= Sets nL Ac, al of her ena er om one Raids age ere eerie ceonomies ar tey engender. Any given comple in any givenco ‘Aoovonnsrio PROCESSES segion wil a ivaaly be ike co indus in other complexes et cher estos vis ng dtance busines transactions ae /f is. The whole sytem of compen, eget withthe sae per [eis then fom an ineicting acruek of economic arity wih {| ary nal and nonlocs muir cee (ed, 1977) be cnet ofthe mesh ca das te ec “The Internal Production Space of proc, indus divesieton, and loans ai Bat they ale) the Metropolis: Some Illustrative sometimes contract over the same field of forces through accelerating = Sketches. rounds of resvucsingjb os, and remploymen: lading ter and demise Ital deal with hese aver ses in ope 10. For dhe moment, _, WEE now in possession of he nidinets ofa gence then of what 7 ve may cal petorban forms, of spaaly Convergent prodution (pecs a tgh st cama emacs ae obs are the very geographical core of sh ban poces in apo, though they are no yet Ay adnan: Be so, hey mae empleo okie tex witha he ema at sc etn motion as Work sek ont housing for themselves, pupae ‘nthe coun of urban Bf and ting fc the spay Segoe ates of mighborbood devlopment hat ae 0 chance fee ofthe large meopelis in onrenpocayepitains INDUSTRIALIZATION AND URBANIZATION Ta pecvious apts Chav deci ow psrban re canes fom the prespatal logic of commodity producion, and how, hrough te itemedition of indus oxpaaton process they take om deft geographical frm. As demonstrated, agglomerative tenden- Gis wil een appear with expel ntensity ie vicinity of large pro- Pulte industies. Howeve, and more generally, I have ab shown that the tare imp oar agglomeration can appt where any complex ‘of imecosking units of preducon sarts to develop and grow through the dision of abo. Quis Requeny, such unis as these wil eons only of smalls, specialized, and highly dsingrated indus establish i “Mach urbanization in capitalism isn fit posited upon vais cme ‘binations of both ngesae base indies tamale (ofen very Inbor ines ds Te Fomer indie nee aoa nporat clement of he ance ofthe lange mopar hepsi the stv the de and consolidation of the American Mansfatuing Bet and down through the er of Ford indtaliation sretching ceugy fom the 19201 wo the extly 19708. Many ofthese indsrer—above all in the ninetenth centar}—depeaded on Reay and balky inpar materials such ‘coal oreo agricultural resources, These materials were (then a 208) Gificul and expensive to conve overlong dances, expel in view of a