Pierre Veltz

The Hyper-Industrial Era

"Seismograph" © Public Domain Archive

The geopolitical upheaval inherent to the urban revolution and the globalization of the economy is founded on the gradual disappearance of both the modern Fordist world vision and our production capabilities. We are living a third Industrial Revolution based on intangibles that is brutally disrupting our organizational paradigms. In order to try to better understand this crisis, the economist Pierre Veltz describes a turning point that he calls “hyper-industrial,” which is characterized by a new form of generalized industry that does not set services apart from other modes of production, and includes the predominance of relationships and the emergence of new organizational forms. He also reflects on metropolization and his concept of an “archipelago economy” linking the new dominant metropolises to each other.

Pierre Veltz is an engineer, sociologist and economist, recipient of the Grand Prix d’Urbanisme in 2017. Former director of the École Nationale des Ponts et Chaussées, he is a specialist of the transformations of organizational structures and territorial dynamics. 

Interview with Gilbert Emont

Gilbert Emont is an economist, director of the Palladio Institute, he is specialized in housing issues.

Industry today

One of the starting points of this issue of Stream is to ask ourselves if we are living in a period period of disruption. You argue that we have entered a “hyper-industrial” era. Could you elaborate on that idea?

I speak of a hyper-industrial era in response to the flawed theories on the alleged transition to a supposedly post-industrial world. These originated in a misguided appreciation of industry as it exists today and its confusion with what it was during the past century, as it formed during the great periods of rationalization at the beginning of the twentieth century in the United States, and during the second half of the twentieth century in Europe. We are shifting away from this conventional industrial world because its management models are obsolete, technology has changed radically, and there is a boom in the service industry, in the manipulation of symbols, and the like, which were not considered standard industrial tasks. These “classical” traits of the industrial era are both shifting and deepening. When François Ascher and others say that we are not in a period of post-modernity but one of hyper-modernity, the idea is exactly the same: the world of design, production, and exchange, which is now coming into being is a world which in many ways is turning its back on the former industrial world—this is notably the case for management, which is clearly broken, with its forms of hierarchy and its division of tasks—but which is also, on the other hand, expanding a number of its historical features of the industrial world taken in its broadest sense. In fact, I am seeing more of a sort of generalized industrialization than an end of industry. As a result, material goods and services are highly interlinked, as are highly capitalized sectors and sectors with low capital requirements.

What defines the long history of industry is the extraordinary concentration of past intelligence which is embedded in devices such as increasingly complex tools and machines, but also know-how, norms and standards; there is also an imaginary construct with a consistently long-term view. A factory is a fantastic concentration of intelligence, something which cannot be found in the service sector. Yet today, we can see that factories, offices, R&D centers, supply chains, platforms and applications, software and hardware are completely merged into one coherent whole. There is global movement to redefine production, distribution, exchange. Is Apple in the industrial or the service sector? Let us stop thinking in terms of outdated categories.

Another thing regarding the hyper-industrial world: today, in all fields, value added is produced not by extending individually programmed tasks, but in the quality of the relationship between operators—the relational ecosystem. There resides the decisive break with the models of Taylorism and Fordism and their emphasis on hyper-specialization and the separation of tasks. Nowadays, value is created in the relationship for instance between users and designers, between the operators of complex systems and designers, for example. That is the gist of my book, Le Nouveau Monde industriel (The New Industrial World, Gallimard, 2008). I expand on the idea of an economy primarily based on relationships and give it concrete content. For instance, for the crucial part of the “industrial” economy that is the management of large technical systems—from transportation networks to telecommunications, the Internet, and so many other things—the conventional concepts of productivity, based on the economy of unitary time, have become obsolete. The main issue has to do with the productivity of capital, that is, reliability, and that is something that occurs through relationships. What makes a blast furnace, a large IT system, a or a rapid transit system work is that people communicate, not only in technical terms but in ordinary ones as well. Do real-time operators, deferred-time operators, maintenance personnel, users, and designers communicate or not? That is the crux of the matter.

The relationships’ effectiveness

Trust becomes a core value, as connected to the spatial dimension…

I have often summarized the transformation by saying that we have shifted from operational productivity to relational productivity. For the latter, however, “infrastructure” such as shared languages and trust are crucial. Flexibility and responsiveness are compounded by the fact that they are based on these resources which were built over a long period of time. Physical territories form one of the major hubs for the construction of trust—they provide the relational externalities which form the hidden yet central resource of value creation—as do diasporas, and all the different forms of social capital.

The third defining element of the hyper-industrial world is the idea that digital technology is radically changing the efficiency of forms of aggregation and cooperation because we do not need the mediation of organizations, in particular that of large firms. Peter Drucker stated that what is wonderful in the industrial society (of the past) is that extraordinary things have been done with ordinary people. In other words, both in the United States and in Europe, we managed to have some absolutely incredible things—the cathedrals of modern times—built by people who arrived in the industrial world as unskilled workers. This was made possible by the mediation of rational organization, for all its flaws. Today, what is new is that we can do extraordinary things with ordinary (but increasingly trained) people without the mediation of a large organization. That is the reason why I follow with interest all new forms of cooperation which aren’t based on the standard model of the large organization. There are a few —and nearly hackneyed—examples: open-source software, Linux, etc. (in truth, the process of aggregation of skills is nevertheless very organized—Linus Torvalds was a great organizer, though not in the traditional sense). And then there are the new emergent forms of cooperative work, all sorts of new structures which make it possible to do collective work on a large scale (because at a small scale, there is no need for a structure) without using a hierarchical, bureaucratic (in the Weberian sense), traditional mode.

That is what the hyper-industrial era is for me. First, a world of generalized industry, where the dichotomy between industry and service is becoming obsolete. Second, efficiency based on the relevance of relationships and not on operational productivity (and which cannot be described by time tracking anymore). Third, the materialization of difficult-to-label hybrid cooperative forms which can be related back to multiple models (sharing and peer-to-peer are just two examples).

Horizontality and metropolization

Aren’t the links between networks and the hyper-industrial world—these organizations which are cropping up without centralization—in a sense contradictory to the concept of a metropolis and to accumulation? What consistency is there between a world which is undergoing “metropolitization” and this conception of an organization of the new hyper-industrial world as something following a rhizomic pattern?

On the contrary, there is a strong affinity between this more horizontal networked world and metropolization. That is the subject I expand on in The Archipelago Economy, PUF, 2014. This new economy based on relationships—with organizations which are less conventional, less centralized, more distributed, and more networked—is perfectly consistent with metropolization. Chains of activity and value chains are presently very segmented due to digital technologies, which makes it possible to partition and coordinate things—for instance in the case of containers in sea freight, etc.—and to deploy them at a global scale. Yet all these major flows of the “Made in the World” intersect and are centered on the hubs and switches of metropolises. They perform these functions because they are also very flexible systems. The hyper-industrial space is also that of generalized “unbundling”: it is much easier to seamlessly and flexibly reorganize a chain of activities in a metropolitan fabric than in the urban fabric of a small town. The wealth of the metropolitan labor market (because a metropolis is first and foremost a huge market for labor and services, made fluid through mobility) and the versatility of infrastructure make continuous reconfigurations possible. It therefore doesn’t come as a surprise that metropolises are where the maximum degree of segmentation of chains of activity and the utmost level of coordination between the chains themselves occur. Jobs which have traditionally been organized that way (I am thinking of the publishing and cinema businesses for instance) have long since found their natural ecosystem in metropolitan areas.

The other aspect which explains the increasing importance of metropolises is the preference for a metropolitan lifestyle—see what Richard Florida says on the “creative class”, a vision I believe is true but slightly weak. Activities are increasingly becoming independent from the conventional technical constraints of location (in respect to raw materials, energy, and the like). The choice of where individuals decide to live favors places where they find life more exciting—which is therefore something crucial. Increasingly, companies move and develop where people want to live, not the reverse. Flexibility is the most significant aspect. Increasingly, we can come back to the old metaphor of life: there are exceptional abilities of rearrangement and resilience. In a metropolis, it is possible to break things down more and then to recombine them in a richer way.

Bruno Belhoste’s book on eighteenth century Paris, Paris Savant (Armand Colin, 2011), is an essential read. It is very interesting, first of all because it opens our eyes to the fact that the knowledge economy is not something new but that pre-revolutionary Paris was a sort of collective brain strongly linked to urban places and institutions. It was the time where D’Alembert, Lavoisier, and many others lived in the same neighborhoods and would meet in cafés and in the academies. There was no separation between applied science and theoretical science—all these people first became interested in applications. There wasn’t a clear separation between what they called “serious” science and “amusing” science either. When the first hot air balloons went up in the sky, they were initially shows where all of Paris converged, rivaling present-day concerts at the Stade de France both in terms of popular reach and celebratory character. That was partly lost during the French Revolution, which simultaneously re-launched other things. Paris at the beginning of the nineteenth century was, scientifically speaking, extraordinarily brilliant.

This was also the case at the end of the nineteenth century, when we had these meetings between inventors and thinkers in very restricted spaces.

Absolutely. Yet over the course of the last century, alongside industrial rationalization, an increasing gap has developed between theoretical science and applied science, between scholars and markets, between amateurs and professionals, between curiosities and the austerity of labs and factories. People like Lavoisier, the founder of modern chemistry, were very active in the field of public hygiene for instance. They would work a lot on the city as a system—in fact, biological metaphors of the city already existed at the time.

The major period of rationalization which extends from the end of the nineteenth century to the end of the twentieth century led to new gaps, closed some doors, and cut some connections, but let us not forget that it was also this industrial, scientific, rationalized, and segmented world which increased our standards of living so much: the productivity surge of the three post-war decades of massive economic growth radically transformed France. Nevertheless, it has bequeathed to us a certain fairly fixed idea of what a city is, of what an industry is, or again, of the difference between science and technology, for a start—things that are now becoming outdated. Moreover, as is often the case, as new ideas take root, we will rediscover some old things under a new form.

Still with the cities at the center and what you call an “archipelago economy”?

Yes, there are two key ideas there: the one which I just explained, basically that globalization and metropolization are two sides of the same coin because the new economy which is now developing has a great affinity for the metropolitan ecosystem. To say it in another way, in the Taylorist and Fordist model it was possible to put the production plants somewhere and the design center somewhere else—something which was done and worked properly because things were normalized and routinized. But once things are less routinized, the metropolitan fabric is much more efficient.

Also, let us not forget that we are now experiencing a boom of the middle classes in emerging countries, something intimately linked to urbanization, which is the main driver of global economic growth. There is a second idea, which is that metropolises operate within a network that tends to absorb a large part of the economic, social, or political vitality of surrounding territories—as a result, the metropolis as an entity distances itself from the nation. Incidentally, I believe that in our basic stock of representations of the world, we have the idea that the nation state is the one natural geopolitical unit. However, this is of course fiction: first of all because there are only few true nation states in the world—some recent ones in Europe—and secondly, because it will probably appear in the future as a transitory form, a gap between the age of empires and the new “political” forms which are yet to appear. The state is and will continue being a major player in the world to come, but both the nation state as a natural form of government and the city as the natural subdivision within the nation state are outdated images. Metropolises, and cities in general, will win back a form of independence, but it will be a networked independence. This explains this idea of an archipelago, crossed by lines, container ships, and the digital equivalent of containers which are the bytes of information sent through the Internet. Once we have these two things—the shipping container and the Internet—as well as the general conditions of open markets, accessibility, and the like, we will have the core of globalization.

My vision is quite different from that of Saskia Sassen because her book is centered on what she calls “global cities,” dominated by finance and more or less disconnected from their national hinterland—something which is true in the case of London and New York but not Paris or Tokyo. What I am saying is quite different, closer to what Michel Lussault also says: generally speaking, the world is becoming more metropolitan and all cities above a certain size are becoming global. Average-sized cities are also caught up in this globalization. You’ve only got to see the brands in big malls—they are the same in Lyon and Aubenas as in Paris and Frankfurt. Globalization affects everything and leads to this idea of an archipelago, but not in the meaning it had in Ancient Greece (Plato and Socrates said that Greek cities were like frogs around a pond—each an autonomous civic and warring entity engaged in both trade and war with one another, shifting between war and trade and a mix of both). Nowadays, metropolises obviously retain a certain personality but they are first and foremost switching places and global network hubs so they are completely different. Increasingly, flows prevail over places and establish places.

Which new paradigm for the urban condition ?

What is novel in your work in architecture and urban design is environmental awareness, which goes beyond ideology, bringing about the idea that large cities form part of the answer to the issue of the environment thanks to their metabolism and their complexity.

There are several emerging paradigms and indeed there is this idea that the environmental and energy transition isn’t an ancillary or marginal issue, but that it lies at the heart of the challenge. At the same time there is this other idea, that of the “smart city,” with connections between both of them, because to be “greener,” being “smarter” is far from useless. The idea behind “smart cities” is that cities will produce increasingly more usable data on themselves.

The key figures of the city are also changing in a very visible way. We are obviously still seeing the regular construction firms, but also IBM, Cisco, and Alstom. Everyone is searching for new paradigms but there are fairly different underlying models. Antoine Picon clearly demonstrated how on the one side, you have the old computer model of the command center—with centralized places which gather data, process them, and feed them back into the system—and on the other side, you have a very different hyper-distributed model, linked to a paradigm of self-organization, with a deep semantic history linked to the living world. That is the world of distributed platforms, where people can develop new applications. Let us take the example of traffic, where both models exist. It is possible to set up cameras on the roads, centralize the information which is then processed and sent back to users. But today, what works best are distributed applications where users themselves enter the data. Traffic information doesn’t come from cameras but from moving people. Horizontal cooperation produces information which is more relevant—it is the same model as for platforms, even if we tend to think only of tightly-closed proprietary platforms such as Apple. We are heading towards a world of open data and I think that such a model is inevitable even if government agencies and private companies try to stand in its way. That is also true for the energy transition, where we have either very centralized models which we try to run from the top, or models in which things are reorganized at a local level. Indeed, one particularly interesting aspect of the energy transition is that once we start talking about renewable energy, we are dealing with sources of energy which are very specific, contingent on time and space, and local. And of course hybridization, the coexistence of small-scale networks and of much larger networks which are crucial for technical regulation, not to mention solidarity.

Maybe we could conclude with the case of the Grand Paris. How do you perceive the application of the principle of the archipelago economy in this area? Can you say a few words of the work on the Grand Paris project and the wide-ranging process of reflection around it during these past few years? Do you feel any relevant models have surfaced through this process ?

I am not saying this aggressively or haughtily but I found the consultation process for the Grand Paris to have produced a rather conservative outcome, even though the images are sometimes breathtaking. I haven’t had the impression that any radically new vision has sprung up. There has been some fascinating stuff and my criticism is neither general nor radical but nevertheless, I feel that the proposals drafted by the architects are only tenuously linked to the changes in the economy, society, working methods, and ways of life. Architects’ proposals remained mostly conventional, with space somewhat conceived for and of itself. There are a few persistent themes: green spaces will be developed all over the place, we will have green walls, that kind of thing. We forced the reintroduction of nature into the city, which is a good thing, but that is not a substitute for reflection on urban dynamics.

The consultation process has been very useful: it put Paris back on the agenda of international communication and ideas on both the Grand Paris and the absolute necessity of overcoming the gap between central Paris and the “suburbs” have gained momentum. A lot of new ideas on space were presented, but what about time? At the beginning we were talking about space and time—the concept of an “event” is becoming absolutely crucial. If I come back to the major paradigms of the hyper-industrial world, I discussed the relational aspect of it but there is another major feature, incidentally linked to the former: nowadays, managing an industrial base or a logistical chain has more to do with managing events and time than space and routines. Events have become absolutely central. Transportation system managers for instance are still stuck on the idea—from the times of conventional industry—that they are managing routine flows. In reality, no flow is routine anymore, they are all constantly disturbed and the real question is to know how we can manage this great bazaar of mobility events.

We continue to consider events as at the margin of routine. We also see that in architecture, which is supposed to make and host events. There too, we are facing a huge magma, which is both complicated and fascinating. It is necessary to depart from form and to take more interest in the changes affecting lifestyles, in particular temporal habits. For instance, there is now an incredible level of permeability between working hours and life outside work. Mobile devices are profoundly changing things. Will people continue cramming themselves onto public transport just to go and sit behind a computer—something they could do in a work center, or at home if they could accommodate that?

I have a major hypothesis, which is still fairly unsubstantiated for the time being: the city is made of fairly specialized infrastructure, with places were we shop, places were we work, places were we relax, places were we live—and modernity has rationalized this. We may completely overhaul the way the city is organized, however. My speculation is instead that in the long run, the city as such will become some sort of a general distributed infrastructure, much less differentiated than today, with multifunctional spaces and fairly reorganized around residential spaces. In some ways, we can see that we are taking that direction, in others, not at all. To get to the heart of the subject with a simple but important example: today’s housing is increasingly smaller, which is totally incoherent with the changes in blended family structures and the increasing intertwining of work and leisure, with a privatization of leisure (home cinemas, for one). There should be more space in dwellings because I feel that many people go to work because they don’t have an extra room at home to work in. This vision has yet to permeate the real estate industry as it is highly structured in distinctive trades. Work centers, now that’s interesting! I think there would be a full range of interesting products of that type to imagine because the limitation of home-based work is obviously social relations, the need to participate in something collective.

In any case, I haven’t seen much in the way of this hypothesis of undifferentiated functions, of the city as a generalized shared infrastructure, despite it being a promising avenue for research.

(This article was published in Stream 03 in 2014.)