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Federal Spending and the Regionalization of Technology Development 3 What created the Internet, and why is Northern California at the center of its development? Nothing to do with the government, at least according to Wired, the fashionable technomonthly that promotes the Net as the embodiment of a new paradigm in human development, unshackled by government, scarcity, or even geography . Since its inception, its covers have featured a parade of cybermoguls from such hip antiestablishment outfits as CitiCorp and TCI Cable, all supposedly self-made men riding the wave of cyberspace benefited by nothing other than pluck and a vision of a libertarian world of freedom. There is an almost charming Gatsbyesque quality to this denial of the past in plotting the brave new unregulated future of cyberspace. Less charming to many is the fact that so many people buy not only the magazine but also the ideology that is reflected in so many high-tech firms. Richard Barbrook and Andy Cameron of Britain’s Hypermedia Research Center have labeled this viewpoint the ‘‘California Ideology’’ 83 84 Net Loss in a widely circulated article that notes the convergence of conservative social cutbacks with an ideology that forgets the defense-funded past of the Silicon Valley region. This ideology ‘‘promiscuously combines the free-wheeling spirit of the hippies and the entrepreneurial zeal of the yuppies’’ while ignoring the increasing inequality fueled by information technology.1 Responding to the article, Louis Rossetto, editor and publisher at Wired, denounced the ‘‘laughable Marxist/Fabian kneejerk’’ ideology that overlooked the contrast between Europe’s ‘‘statist’’ support for technology and the process by which the United States had developed its technology, based not on government spending but on capital markets and free market development. ‘‘In point of fact,’’ Rosetto argues, ‘‘it was the cutback in American defense spending following the Vietnam War and the subsequent firing of thousands of California engineers which resulted in the creation of Silicon Valley and the personal computer revolution.’’2 The levels of intellectual repression embedded in this sentence are astounding —from the myth that such companies as Apple Computer emerged from the garages of their designers like Athena from Zeus’s head to the assumption that the concentration of engineering talent in the Bay Area was a fact of nature much like the pleasant climate. And it represses the fact that the very Internet boom that is Wired’s raison d’être, like the semiconductor technology that runs its hardware, are inescapably the products of government support in the United States. At the most obvious level, government spending was the engine of economic and technological growth in the region, from federal contracts that built the intercontinental railroad, to defense contracts that spawned the first wave of electronics companies during and after World War II, to the spending on the Internet funneled through key Bay Area institutions such as Stanford, UC-Berkeley, and Xerox PARC. For decades in Silicon Valley, winning a defense contract was almost the only means through which a start-up company had a chance to enter technology markets against already established firms. As critical, though, was the role of the government in fostering the longterm business and social networks that made the region’s technological innovation possible. Political scientist Robert Putnam has noted that the social capital that fuels regional economic growth is not the result of short-term events but is part of long-term persistent patterns that evolve over lengthy periods of time and embed themselves within the fabric of a region. It was a synergy between federal government and local actors, aided by periodic infusions of federal cash, that slowly evolved the interconnected cooperative model of technological development that became Silicon Valley’s hallmark. Federal Spending and Technology Development 85 Nowhere is this clearer than in the way the region benefited from and in turn contributed to the federal government’s shaping of the open standards of the Internet, standards that in turn reinforced the region’s dominance of the new Internet-related businesses. As was detailed in the preceding chapter, open standards allow dramatically expanded technological possibilities and economic growth, but the reality is that the benefits of such standards-driven growth tend to accrue to regionally concentrated firms in which collaboration can fully exploit the opportunities from open standards. Competing proprietary standards controlled by corporate titans can be directed from geographically scattered enclaves (such as Microsoft’s Bellevue or IBM’s Armonk headquarters), but the Internet’s structure as an open system...


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