Concentrated Economic Power and Silicon Valley

Abstract

Silicon Valley is the computer and microelectronics capital of America. To analysts from different academic disciplines and ideological persuasions, the economy of Silicon Valley has many faces. In the most romantic characterization, the Valley's astonishing success as home base for a myriad of companies that design, produce, and export computers, workstations, microchips, disk drives, and software is mainly a story about supremely—even belligerently—independent entrepreneurs. According to a second interpretation, the Valley is a full-fledged ‘industrial district’ on the north central Italian model, made up of a dense thicket of mostly small and medium-sized (but also some quite large) ‘flexible specialists’ that alternately cooperate and compete with one another, that are embedded in a local political economy with a shared culture and norms, and that may be well connected to the rest of the world but whose interfirm production relationships are thought to be highly localized. There is also a third perspective. Silicon Valley was created by, and remains profoundly dependent on, major multinational corporations and on the fiscal and regulatory support of the national government—especially in the ‘person’ of the US Department of Defense. The Valley is fundamentally a world headquarters of, or at least an important node within, global networks of big firms and their small firm subcontractors and suppliers, and, as such, is subject to the same contradictory tendencies toward concentration of power but decentralization of production that are coming to characterize the entire global market-based economic system. The three aspects of Silicon Valley's political economy—rampant entrepreneurship, an unusually high degree of interfirm circulation of engineering labor and other signs that have become associated with district-like behavior, and the visible hand of major corporations and their government—university partners in shaping the region into a base from which to manage operations that are executed beyond the Valley's domain—are in fact not mutually inconsistent. In this paper, however, I argue that the third constitutes the dominant tendency driving the reproduction of this vibrant regional economy, and has done since the years after World War 2.