Culture of New Capitalism blue-themed book cover and Richard Sennett headshot

The Culture of New Capitalism

The digital economy encourages each of us to be further individualized, quantified and atomized.

That’s a big theme from the 2006 book “The Culture of the New Capitalism” written by sociologist Richard Sennett. The nature of work and the organization of companies was shifting for decades but he spotted a marked shift he called “new capitalism.” This new form of capitalism is characterized by a focus on flexibility, innovation and the constant search for new markets and technologies.

Though 15 years old, the book is still relevant and serves as a good landscape of the academic research and philosophy that underpins an understanding of where we are today.

He argues that this shift led to a culture in which individuals are expected to adapt and learn in order to succeed, and so longterm commitments and relationships are devalued. The book is critical of how this new culture shifts individual identity and community, and the impact it has on social and economic inequality.

Below I share my notes from the book for future reference.

My notes:

  • Port Huron Statement: a founding document of the new left in 1962 challenging both to state socialism and multinational corporations. (My note: compare that with the 1971 Powell memo)
  • The radicals of 50 years ago wanted to dismantle big efforts to get more face to face
  • “Taking institutions apart had not produced more community.”
  • Three challenges to loss of institutions:
    • Time — short term relationships
    • Talent — adding skills on one’s own, meritocracy “celebrates potential ability rather than past achievement”
    • Surrender — how to let go of the past)
  • Author published The Hidden Injuries of Class in 1972 and found working class Boston whites depended on institutions
  • But Bretton Woods breakdown in 1973 led to more international system and outsourcing and 1990s technology accelerated automaton
  • Liquid modernity: Zygmunt Bauman’s 1999 book argued we moved away from a ‘heavy’ and ‘solid’ hardware-focused modernity to a ‘light’ and ‘liquid’, software-based modernity.
  • All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real condition of life and his relations with his kind.” Marx in Communist Manifesto in 1848
  • Before the British agricultural crisis of 1880s, just 4,000 families owned 43% of the country’s wealth
  • Werner Sombart coined “capitalism” in 1902 (after Marx)
  • In 1850, London’s business failure rates topped 70%. This creative destruction of Marx’s time is not constant, it’s cyclical
  • Max Weber writes how firms followed military to improve from “primitive capitalism” to larger and more stable engines; Otto Von Bismarck brought military to civil society as well
  • Robert Wiebe’s 1967 textbook “The Search For Order, 1877-1920”
  • A series of mid-20th century books defined the introduction of this stable order: White’s the Organization Man (1956); C Wright Mill’s White Collar (1951) and Michael Crozier’s The Bureaucratic Phenomenon (1963)
  • By the 1990s, “techies” were about destruction and failure, concepts very antithetical to those mid-20th century perspectives
  • Weber’s Protestant Ethic: It requires an “iron cage” to work inside a bureaucracy
  • He argues the shift from managerial to shareholder capitalism came with the breakdown of Breton Woods agreements. Local and national wealth in local banks moved, followed by pension funds and small private investors
  • Sigmund Warburg is credited with the first hostile takeover, with the 1959 British Aluminum deal
  • Bennett Harrison: “impatient capital”
  • A transition went from share price over corporate dividends
  • Manuel Castells argued that the global economy took to the skies from the ground and place no longer maters
  • Michel Focault in 1995: “panoptic surveillance”
  • “Anxiety attaches to what might happen; dread attaches to what one knows will happen.… Failure in the old pyramid was grounded in dread; failure in the new institution is shaped by anxiety” 53
  • Soros: new economy is about transactions not relationships
  • Two schools of social capital: Putnam on voluntary engagements (high levels of civic engagement bring lower crime) vs Portes and White on networks (Portes did work on second-generation immigrants)
  • Claudio Ciborra on “drifting effects”: research into the effectiveness of bringing in new software at a company showed that those that used software to enhance staff hit gains; Those that tried to replace staff failed
  • Mark Roe: separation of ownership from control
  • “A firm’s culture, like all culture, depends on how ordinary people make sense of an institution, not the explanation which those at the top decree.” (72)
  • Emile Durkheim’s 1893 The Division of Labor in Society: identity concerns not so much what you do with where you belong
  • William Julius Wilson’s research on the importance of work for disempowered black men (More)
  • Katherine Newman’s “McJobs”, which was then a 2007 book by Jerry Newman
  • Authority describes the ability to get voluntary obedience
  • Weber’s Protestant work ethic and its iron cage requires delayed gratification, toiling today for future promise
  • Michael Laskaway led research comparing career planning of young people in the 1970s and those in the early 2000s; the ones in the 1970s thought in terms of long-term strategic goals and could verbalize more specific goals in the Newer cohort (79)
  • “A new geography of power” (81)
  • Three forces shape “the specter of uselessness”: the global labor supply, automation and the management of aging
  • Daniel Bell and Alain Touraine: “post industrial” perspective on new jobs created as others lost, but does it move faster?
  • “Skills extinction” is the fact that “when you acquire a skill, you don’t have a durable possession.” (95)
  • Albert Hirschmann: Young employees “exit “ if they’re not satisfied, while older employees use their “voice” (96)
  • Craftsmanship is “doing something well for its own sake” (104)
  • Craft in code movement was like an informal tech labor union; kicked off in part by the 1999 book The Pragmatic Programmer
  • Old Europe: “positions were possessions”
  • Samuel Pepys has been called the first merit-based bureaucrat
  • European military academies led with meritocracy: ballistic math was required in the 17th century and then ability tests were added in the 18th century , especially Prussian military and St Cyr academies
  • Influential sociologist Otis Dudley Duncan’s work on merit: professions with social prestige are viewed to have real skill/ability/merit
  • Judgment of ability is Janus-faced: both keeps out bad and celebrates good
  • Pierre Bourdieu “distinction” of the elite from 1984
  • The word “potential” was taken by self help efforts
  • The SATs were founded in 972 to find Jefferson’s “natural aristocracy”
  • Michael Young coined “meritocracy” in a 1958 satire
  • In the new capitalism “impatience is institutionalized,” like the rise of budget airlines (128)
  • Robert Reich: “skills elite”, “masters of information” and “symbolic analysts” separate from stagnant middle class in a two tier system
  • The rest of us are abandoned by the loss of pyramidal institutions and companies (though perhaps unions today reflect that)
  • Athens separates the pnyx for politics and the agora for economic. Plato thought economics was greedy and politics represented justice but as Albert Hirschman has documented in his 1977 book the Passions and Interests, by the 16th and 17th centuries trading seemed more peaceful and moderate than politics, which led to violence
  • Proust Erotic law of distance (Proust’s law)
  • Two 20th century arguments for “self consuming passion”
    • Vance Packard’s 1959 The Hidden Persuaders introduced the “motor of fashion,” in which we are tricked into buying new stuff
    • Bernard London‘s 1932 paper introduced “planned obsolescence,” in which cars and clothes are planned to fail
  • But author argues too simple to think the consumer is entirely passive
  • Sharon Zukin: “the consumer lacks the production knowledge that earlier generations commanded” to make informed buying decisions (142)
  • Sociologist Erving Goffman found successful marketing often used “half finished frames” for consumers to fill in the rest
  • “Compound associational effects” in branding
  • Jefferson’s democratic ideals predicted that citizens would rebel every two generations: “I hold it that a little rebellion now and then is a good thing, and is as necessary in the political world as storms in the physical.”
  • Social philosopher Ulrich Beck said that the “risk six society “people are willing to take chances without knowing what will result 159
  • Fewer “citizen craftsmen” too, unwilling to follow the details like we don’t follow how our machines work
  • The mistake of state socialism was that “it thought the capitalist enemy lay in profits and markets rather than in bureaucracy” (180)
  • New capitalism splits power from authority and responsibility
  • New forms of unions
  • Dutch: job sharing
  • One big answer for the future: a kind of universal basic income
  • Insecurity is not a consequence but a feature of markets
  • Status: “you have status when institutions confer legitimacy on you” usefulness carries from this

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