To study social processes that exceed national boundaries, or to study social processes that are subnational but are manifestations of globalization in a local area, Sassen argues we need new methodologies.
She identifies four dynamics one must understand to study globalization. First, that globalization destabilizes the nation state through "what is sometimes seen as a return to older imperial spatialities for the economic operations of of the most powerful actor: the formation of a global market for capital, a global trade regime, and the internationalization of manufacturing production" (p. 14). But she argues that this is not identical to old imperial formations because "today's transboundary spatialities have to be produced in a context in which most territory is encased in a thick and highly formalized national framework marked by the exclusive authority of the nation state" (p. 14).
She paints a picture of nation-states that "can be read as the work of rendering national just about all crucial features of society: authority, identity, territory, security, law, and market" (p. 15). Now added to that are subnational scales like global cities and supranational scales like global markets. This is not actorless. It is the "global project of powerful firms... and the growth of supranational components in state work" (p. 15).
Another wrinkle is the "multiscalar character of various global processes" (p. 17). She writes, "These instances cannot easily be accommdated by older nested hierarchies of scale, which position everything that is supranational above the state in the scalar hierarchy and everything that is subnational beneath the state" (p. 17). She gives an example of a financial center in a global city that is at once a local entity but also active in a global market.
Second, because "this variety of multiscalar dynamics point to conditions that cannot be organized as a hierarchy, let alone as a nested hierarchy...Studying the global, then, entails a focus not only on that which is explicitly global in scale but also on locally scaled practices and conditions that are articulated with global dynamics" (p. 18). For example, "globally scaled dynamics, such as the global capital market, are actually partially embedded in subnational sites (financial centers)" (p. 18). Studying this requires new methodologies and theorizations.
Third, Sassen writes about global cities. The choice of term was intended to point out "the specificity of the global as it gets structured in the contemporary city" (p. 24). She offers 5 hypotheses "to help explain the importance of cities in the institutionalization of global economic processes" (p. 25).
- "The greater the geographic dispersal of economic activities [of a corporation] along with their simultaneous integration through telecommunications, the greater the growth and importance of central corporate functions" (p. 25). Basically, if you've got an enormous global company, it takes more to manage it.
- "The more complex these central functions become, the more likely the headquarters of large global firms "outsource" them" (p. 25). So a large, global firm is likely going to outsource things like accounting, legal, PR, advertising, marketing, telecommunications, even manufacturing.
- "The more complex and globalized a specialized service firm's markets are, the more its central functions are subject to agglomeration economies" (p. 26). I think this means that the companies providing the outsourced services for multinational corporations need to be in cities because of all of the things they need that cities offer. Like if you're an advertising firm in New York you have better access to a pool of talent to hire than if you are an advertising firm in rural Iowa, your clients are more likely to have headquarters or offices in town, you're near an international airport, and so on, so it makes it easier to operate in NYC than rural Iowa.
- "The more headquarters outsource their most complex, nonstandardized functions, particularly those subject to uncertain and changing markets and speed, the freer they are to opt for any location because less of the work that is done in the headquarters is subject to agglomeration economies" (p. 26).
- "Insofar that these specialized service firms need to provide a global service... there is a strengthening of cross-border city-to-city transactions and networks" (p. 26) The result is "a series of transnational networks of cities. A corollory is that major business centers in the world today draw their importance from these transnational networks. There is no such entity as a single global city" (p. 27).
Putting all of this together, Sassen concludes that "this economy contains both the capabilities for enormous geographic dispersal and mobility and pronounced territorial concentration of resources necessary for the management and servicing of that dispersal. The management and the servicing of much of the global economic system take place in this growing network of global cities and cities or regions that are better described as having a limited number of global-city functions" (p. 27). She adds "To a large extent, the major business centers in the world today draw their importance from these transnational networks which, in turn, signals a division of functions" (p. 28).
Global cities weaken the national as the spatial unit and subnational scales (cities and regions) are growing in importance at the same time (p. 30). The cross-border dynamics cut across a number of domains - political, cultural, economic, social, and criminal (p. 29). Regulating these cross-border networks cannot necessarily be done by "existing national frameworks" (p. 30). For scholars, new theoretical and empirical frameworks are needed to understand them (p. 31).
Fourth, she writes about "denationalized state agendas and privatized norm making" (p. 32). Because processes and dynamics flow between "localities and local actors" without needing to "move through the hierarchies of national states," "although none of these circumstances alters the geographic boundaries of the national state's territory, they do change the meaning of the state's exclusive authority over that territory" (p. 33).
Sassen points out that the change in the role of the state is often explained through policies associated with economic globalization, such as privatization, deregulation, and financial and trade liberalization. This points to a weakening role of the state. She believes we should also capture how states participate in the creation of "the new frameworks through which globalization is furthered" and the "transformations inside the state" (p. 34).
A section I find particularly powerful reads as follows: "The emergent, often imposed consensus in the community of states on furthering globalization is not merely a political decision: it entails specific types of work by a number of distinct institutions in each country... Furthermore, this work has an ironic outcome insofar as it destabilizes some aspects of state power: the state can be seen as incorporating the global project of its own shrinking role in regulating economic transactions. The state here can be conceived of as representing a technical administrative capacity that cannot be replicated at this time by any other institutional arrangement; furthermore, this capacity is backed by military power, which for some states is a global power. Seen from the perspective of firms operating transnationally, the objective is to ensure the functions traditionally exercised by the state in the national realm of the economy, notably guaranteeing property rights and contracts, only now extended to foreign firms as well" (pp 37-38).
Sassen calls attention to three features in this "new private institutional order" (p. 39). First, "the distinctive features of this new, mostly but not exclusively private institutional order in formation are its capacity to privatize what was heretofore public and to denationalize what were once national authorities and policy agendas" (p. 39). Second, the new institutional order has a new normativity which "comes from the world of private power yet installs itself in the public realm and in so doing helps denationalize national state agendas" (p. 40). And third, "particular institutional components of the national state begin to function as the institutional home for the operation of powerful dynamics constitutive of what we could describe as global capital and global capital markets. In so doing, these state institutions reorient their particular policy work or broad state agendas toward the requirements of the global economy" (p. 40).
Sassen identifies areas of denationalizing of the national state as the increase in rights of foreign firms, the deregulation of cross-border transactions, and the power of supranational organizations (p. 53).
This is just a summary of the first chapter, with a tiny bit from the second.