Economic Restructuring - Institutional Arrangements

Institutional Arrangements

When the 1973 oil crisis affected the world capitalist economy, economic restructuring was used to remedy the situation by geographically redistributing production, consumption, and residences. City economies across the globe moved from goods-producing to service-producing outlets. Breakthroughs in transportation and communications made industrial capital much more mobile. Soon, a quaternary or producer services emerged as a fourth basic economic sector where routine low-wage service employment moved to low-cost sites and advanced corporate services centralized in cities. These technological upheavals brought about changes in institutional arrangements with the prominence of large corporations, allied business and financial services, nonprofit and public sector enterprises. Global cities such as New York and London become centers for international finance and headquarters for multinational corporations offering cross currency exchange services as well as buildup of foreign banking and trading. Other cities become regional headquarter centers of low-wage manufacturing. In all these urban areas the corporate complex grows offering banking, insurance, advertising, legal council, and other service functions. Economic restructuring allows markets to expand in size and capacity from regional to national to international scopes. "Please"

Altogether, these institutional arrangements buttressed by improved technology reflect the interconnectedness and internationalization of firms and economic processes. Consequently, capital, goods, and people rapidly flow across borders. Where the mode of regulation began with Fordism and Taylorization in the industrial age then to mass consumption of Keynesian economics policies, it evolves to differentiated and specialized consumption through international competition. Additionally, in the labor market, nonstandard work arrangements develop in the form of part-time work, temporary agency and contract company employment, short-term employment, contingent work, and independent contracting. Global economic changes and technological improvements in communications and information systems encouraged competitive organizations to specialize in production easily and assemble temporary workers quickly for specific projects. Thus, the norm of standard, steady employment unravels beginning in the mid-1970s.

Another shift in institutional arrangement involves public resources. As economic restructuring encourages high-technology service and knowledge-based economies, massive public de-investment results. Across many parts of the U.S. and the industrialized Western nations, steep declines in public outlays occur in housing, schools, social welfare, education, job training, job creation, child care, recreation, and open space. To remedy these cutbacks, privatization is installed as a suitable measure. Though it leads to some improvements in service production, privatization leads to less public accountability and greater unevenness in the distribution of resources. With this reform in privatizing public services, neoliberalism has become the ideological platform of economic restructuring. Free market economic theory has dismantled Keynesian and collectivists’ strategies and promoted the Reagan and Thatcher politics of the 1980s. Soon free trade, flexible labor, and capital flight are used from Washington D.C. to London to Moscow. Moreover, economic restructuring requires decentralization as states hand down power to local governments. Where the federal government focuses on mainly warfare-welfare concerns, local governments focus on productivity. Urban policy reflects this market-oriented shift from once supporting government functions to now endorsing businesses.