[This is Chapter Eleven of Murphey’s book The Emerging Crisis of Economic Displacement.]

 

                                                                 Chapter Eleven

 

                                                       THE SPEED OF CHANGE

 

            The speed at which the wave of change will hit us matters to people in their personal lives.  Older and middle aged people want to know whether they will make it through their careers to retirement.  Those who are younger want to know whether and when the education and experience they have obtained will become obsolete, how they can retrain or otherwise adapt, what will happen to them if they can't, and in general what lies in store for them and their children.  For students in school, preparing for the future has become increasingly problematical.  The best that anybody knows to say to them is that "you had better keep up with computers," since that seems to be the one thing that will obviously be important for everything that is coming up.  Of course, many people and many students just hew the line of the older, established tracks, most of which still exist, hoping to make their way in them and only partly aware that someday a changing world will jolt them into something else.  Indeed, there is today vast opportunity in almost every area for those who reengineer it, again and again in progressive steps, into a successively more integrated adoption of the new technologies.

            My concern for people is one of the reasons for writing this book.  But the level of our discussion must be not so much with the plight of individuals as with the adjustment of ideas and institutions on a societal and even a world level.  The larger, or "macro," scale has much to do with individuals, since only through societal reorganization can a place be assured for them.  The forces of change will be too vast for individuals to cope with themselves and the self-automated processes of the market will be overridden and warped out of shape by them.  As things proceed, the fate of individuals will increasingly depend upon developments beyond their own control.  Everybody will of necessity scramble to find a place, and many will succeed while countless others are marginalized, but increasingly the problems of individuals will only be soluble by restructuring on a larger scale.  

            Will the rate of change allow the world time for everything to be rethought and policies and institutions to be brought into line with the thinking that results?  That's the crucial question in the context of our discussion.  It must, however, remain a question, because specific predictions about timing aren't justifiable.  There is no basis for making them; the process of change is contingent upon far too many variables that either inhibit or accelerate the change.  It is enough that we know that massive forces are at work and that this makes it imperative that we start thinking in terms of them.  If we try to be more specific than that, we run the risk of sensationalizing or hyping the issue, which isn't consistent with a reasoned discussion.  In the course of this chapter I will tell of some authors' estimates of how much time certain things will take, but out of respect to them we should realize that even their time-estimates must be taken as just their best estimates.

            The speed of change is just one side of the coin.  The other depends on us: how long will our adaptation take?  If we rethink quickly, most of the problems can be solved; otherwise, our learning may come only from very painful experience.

           

            I have mentioned several times that "we are just at the beginning," so that we keep in front of us an understanding that much more is to come.  If we thought that what we see today is all that is going to happen, we  wouldn't force ourselves to see the implications of the gigantic forces at work.  It's possible to become so immersed in the activity of the present, including its many opportunities, that we don't see the storm on the horizon. 

            If the main forces keep advancing according to their own tendencies, the storm front will continue to move in quite rapidly.  It would be unsound, however, not to acknowledge that an interruption of existing trends is always possible.  There is very little in human life that lends itself to linear extrapolation. The "argument from inevitability" has long been an important feature of Marxist thought, and all such claims are rightly suspect.  For example, the proliferation of nuclear, chemical and biological weapons may create such a tinderbox that the world is sent into a war that will materially change the direction of things.  But unless some such major interruption occurs, each of the elements in the now-existing process of change -- science, technology, market--is prepared to take off into far more accelerated activity than we have seen so far.            

            Unless addressed, the economic and social dislocations caused by displacement will themselves increasingly threaten an interruption of the movement into non-labor-intensive technology.  In that case, chaos and carnage become considerably more predictable and will interpose a sharp break from our current direction. 

            If, however, there is no interruption, science seems just "on the threshold" of what is possible.  Take, for example, the Human Genome Project, which is in progress but remains to be finished; or the exploration of and knowledge about space.  And from the point of view of those most involved with them, computers are closer to their infancy than to maturity.  In his 1995 book The Road Ahead, Microsoft's Bill Gates says "laboratories are already operating ‘ballistic' transistors that have switching times on the order of a femtosecond.  That is 1/1,000,000,000,000,000 of a second, which is about 10 million times faster than the transistors in today's microprocessors.  The trick is to reduce the size of the chip circuitry and the current flow so that moving electrons don't bump into anything, including each other.  The next state is the ‘single-electron transistor,’ in which a single bit of information is represented by a lone electron."[1] 

            So far as communications are concerned, only a small fraction of the world's population is involved thusfar with the Internet (and for the people who are, their lives are not yet centered around it the way lives will be in the not-too-distant future). 

            Even the global market has just gotten underway.  Both the imports and exports of the United States, for example, are growing rapidly each year, which means an increasing internationalization.  And if all of these things, which are the major factors in the process of change, are "just beginning," so are their consequences.  The budding affluence, the displacement, the churning and insecurity, and the polarization are all just getting started, too.

            The point that we are barely into the beginning stages is recognized by several recent comments by economists.  In 1991, Anthony Patrick Carnevale said that "at present, our general understanding of the new economy far exceeds its acceptance in the American workplace.  In short, we know where we need to go, but we don't know how to get there."  He adds that "the flexible technologies of the new economy, especially information technologies, are in their infancy.  We are still in the most primitive phases of applying these technologies at home and at work."[2]  Economist Paul Krugman emphasizes this probably more than anyone else, since he sees little increase in productivity so far but anticipates much more: "Technologically, the past 15 years have been a parade of wonders: Especially in computation, but also in communication (remember life before the fax?)...Yet economically, the news has been generally dreary... Something is out of kilter here.  Either technology isn't all it's cracked up to be, or we haven't yet seen the impact of the new technology on our economy.  Maybe the next decade will see businesses learn how to use computers, faxes, and fiberoptics...."[3]  Bryan and Farrell said  in 1996 that globalization is only at its mid-stage; that bond markets just started becoming global in the early 1980s; and that these were followed by equity markets--which are just beginning -- in the 1990s.[4]

 

            In each of several areas of technology the start has been slow, but with the world economy poised to jump forward quickly:

            .  Robotics; CIM.  Cohen and Zysman said in their 1987 book that "the robotics industry is still in its infancy."  "The United States is still a long way from any widespread use of...computer integrated manufacturing (CIM) systems.  It is even further from the shared data base that will integrate manufacturing into business strategy."[5]  As we saw in Chapter 2, there were 650,000 robots at work in the world economy by mid-1997.  This is a vast increase over 1987, but far short of what it soon will be; Jeremy Rifkin pointed out in 1995 that "current surveys show that less than 5 percent of companies around the world have even begun to make the transition to the new machine culture."  (In terms of employment, "more than 75 percent of the labor force in most industrial nations [still] engage in work that is little more than simple repetitive tasks.")[6]

            .  Biotechnology.  Yoxen and DiMartino said in 1989 that in Europe "there is now more skepticism about the immediate commercial promise of biotechnology, given the considerable problems of innovating, financing and marketing new products and processes...Even with the enormous technical boost given by recombinant genetics (genetic engineering), by parallel developments in immunology and cell biology (monoclonal antibodies) and by information technology for data storage, data analysis, and process control, it is a very expensive and uncertain business to bring biotechnological inventions to market.  It can be done, as a range of new products demonstrate, but they are far fewer in number than many expected in the late 1970s."[7]

            In an article on "precision farming," Christine Lutton in Forbes in mid-1996 said that its adoption has been slow because costs were still high.  But, she said, "the iron logic of ever cheaper computer power ensures that if precision farming doesn't make economic sense now, it will five or ten years from now."[8]

            .  The Internet.  About 1 million people used the Internet in 1988, and this had grown to 20 million by 1994.  That November, Business Week projected that "from 3.2 million computers around the world today, the Internet is expected to swell to more than 100 million machines in five years."[9]  But even this would barely scratch the surface; more than two years later, in December 1996, David Kalish of the Associated Press wrote that "only about 10 percent of U.S. households have Internet access, far less than the critical mass needed for profits by most advertisers, Web publishers and other companies...Despite this, the Internet is nearing a crucial threshold."[10]

            .  Fiber-optic buildings.  Also in December 1996, a news report about fiber optics said "gossamer strands of ultra-pure glass delivering voice, video and computer data at laser-pulse speed have replaced copper as the backbone of America's telephone and cable television networks.  They are spurring the rapid growth of the Internet."  It projected that "within 10 years, this dazzling conduit to communications' most distant frontiers could be hooked up to individual homes."[11] 

            Ken Ducatel, speaking in the European context, says the construction industry "has been relatively slow to adopt IT [information technology] compared to the rest of manufacturing."  He says the construction industry is, however, being pulled into the future by the demand for new services: "Industry is increasingly expecting new buildings to offer high levels of automation.  There are new demands for integrated security services, the automation of heating control, air conditioning and so forth...Electronic related services in some complex buildings can amount to 50% of construction costs."[12]

            .  DVDs (Digital Versatile Discs, also called Digital Video Discs).  In rapid succession, the CD-ROM is taking the place of floppy discs and now the DVD is "touted as an eventual replacement of CDs, VCR tapes and computer CD-ROMs because it boasts far greater capacity as well as superior sound and visual performance," according to an Associated Press report in late 1996.  "While CD-ROMs can store 650 megabytes of data, DVDs can handle up to 17,000 megabytes."  Nevertheless, the report said "analysts expect it to take time for the new technology to catch on."[13]

            .  Artificial intelligence.  The area of artificial intelligence illustrates both the dangers of over-prediction and the fact that "the last laugh" may be on those who are reluctant to acknowledge change.  A newspaper article in early 1997 quoted the overly enthusiastic prediction that one of the early developers of artificial intelligence made to Life magazine in 1970: "In from three to eight years we will have a machine with the general intelligence of an average human being.  I mean a machine that will be able to read Shakespeare, grease a car, play office politics, tell a joke, have a fight."  The article says investment poured into AI in the early 1980s, but that AI firms "quickly crashed and burned when their technology proved too ‘brittle' to function in the real world."  Those of us in the academic community know, however, that in the late 1990s much work is being done on AI, with increasingly good prospects.

            .  Distance learning, office practices, manual labor, retailing, warehousing.  The literature shows pressure to revolutionize each of these areas, but that change is still at the threshold.  Writing in Higher Education Management in 1990, Kenneth King spoke of the "slow pace of adoption" of information technologies that support teaching and learning.[14]  In my own university's college of business, a growing emphasis on using computers in classwork just began to impact on the average professor in 1997.  "Master classrooms" are being installed, equipped with what is at present the latest in digital technology.  Change seemed slow from King's perspective in 1990, and I am sure it still seems slow today, but the change is coming.

            Ducatel cites a 1990 study that showed that "despite the large-scale introduction of new technology, office practices are generally changing only slowly.  This is especially true for those organizational innovations that redistribute work over time and space."  As to manual work, "the application of IT is low outside of manufacturing.  Retail industry workplaces such as banks, building society offices and shops are in the vanguard of the move to adopt IT."  Senker and Senker, however, speak of retailing's having made "a slow start in the 1980s"; but they agree with Ducatel that "the diffusion of IT in retailing is now gathering pace... Progress with EPoS [Electronic Point of Sale] has been facilitated by the development of worldwide standards for article numbering, through barcodes, which identify products being traded."  They say "the use of electronic trading -- direct communication between firms' computers via a telephone network for enquiries, purchase orders, delivery notes and invoices--is likely to grow enormously in the 1990s.  Direct exchange of electronic data, or EDI, is much more sophisticated than electronic mail."  Senker and Senker also discuss warehousing, saying that "the take up of information technology in warehouses has so far been slow, but it is likely to increase in the future.  Software programs can be used to plan warehouse layout, vehicle loading and route planning.  Innovations in warehouse hardware include highbay automated storage and retrieval systems for palletized unit loads, carousel picking systems, conveyors and parcel sorting systems and guidance networks for automated guided vehicles."[15] 

 

            Change usually occurs through a series of steps rather than by a giant leap forward.  Ducatel and Ian Miles tell of an analysis of manufacturing technology that sees specific tasks being automated first.  This is called "intra-activity automation" and uses stand-alone equipment.  Then several associated activities are automated together.  This is "systems integration," of which Flexible Manufacturing Systems (FMS) and CAD/CAM are examples.  This is followed ultimately by CIM (Computer-Integrated Manufacturing), "in which the whole range of manufacturing functions are integrated under computer control."[16]

            Society in general seems to be going through a similar incremental process.  At home, most people started by using the computer as a delightfully improved typewriter.  Many now use it for easy communication, playing games, customizing greeting cards to friends, accessing information on a multitude of subjects, and making purchases at a distance.  As time goes on, more and more functions will become computer-based, as we saw in the discussion of fiber-optic buildings with their computerized systems of security, heating and air conditioning.  Bill Gates of Microsoft looks forward to the day when everyone will carry a wallet-sized personal computer that interconnects with computers in stores, banks, airports, and other facilities.[17]

 

            The rate of change is affected by a number of factors.  Some inhibit it, others speed it up.  Here are some that the literature says inhibit change:

            .  The time-lag between a new idea and its inclusion in the technology.[18]

            .  "The dead weight of history.  Once invented," Carnevale says, "new technologies are not immediately adopted.  Fear, superstition, vested interest, and instability give the past and present a powerful hold on the future."[19]  Depending upon the culture, the power of existing interests can be enormous to slow or totally block change.  I am reminded of Ayn Rand's book Anthem, where the candlemakers' union was able to bar the electric light.  An article in Fortune told of antiquated practices among car dealers, asking "why has their system lasted so long?"  "One reason," the author said, "is that dealers are independent businessmen protected by a powerful trade association and strong franchise laws."[20]  This is why one of the principles that will be important later when we discuss policies will be that an open competitive market is vital.  A market is the most fertile ground for continued innovation; non-market cultures find many reasons not to be.

            .  The "sunk costs" invested in existing technologies.  Electricity made water and steam power obsolete in 1880, but the use of steam continued to rise in the United States for 30 more years because most homes and businesses had it.[21]

            .  Failures of imagination.  "Most new technologies are used initially to substitute for the technologies they displace," and only later are wholly new uses envisioned.[22]

            .  The wait for "a compatible family of technologies" which is needed to "realize the full potential of the invention."[23]

            .  The build-up to "critical mass."  The Economist said in late 1996 that about half of American workers use computers, compared to only a quarter in 1984.  It told of a "classic study" by Paul David, an economic historian at Stanford University, that suggests "that productivity benefits start to be reaped once the diffusion rate of a technology passes 50%."  It's easy to see why: the usefulness of telephones, just as more recently of FAX machines and of e-mail, depends upon other people's having them.

            .  The high initial cost of new technology, with the price coming down later.  There's an intriguing article in Business Week describing the travail phone companies have gone through in providing updated phone circuits to Santa Rosa, California.  The existing circuits have been too slow for customers to use the Internet conveniently.  Much better technology has been developed, "but paying for this kind of technology is another matter."  The author tells a "case in point": "Around 1990, the phone companies were going to snake an optical fiber to every home.  But that would have cost well over $1,000 per home.  So they decided to extend fiber only partway and use coaxial cable for the rest."  Even this, however, proved too expensive.  The article says, though, that "the technology retreat may be ending.  The cost of cutting-edge gear such as optoelectronic components for fiber networks is dropping."[24]  This story is repeated in countless areas.  A news report in May 1997 on the new "hybrid automobiles" that combine electric and gasoline motors says "Toyota acknowledges it will lose money on the hybrid, although it will sell for about $4,300 more than a comparable regular car."  But note: "Prices are likely to come down as production increases."[25] 

            The drop in price is closely related to the achievement of "critical mass."  Nowhere is this more apparent than in the change-over the United States is making from analog to digital television.  Analog will be abandoned once enough digital sets have been sold to allow it.  But the price of digital sets in mid-1997 ranged from $3,000 as a low to $5,000 as "mid-range."  It is expected that prices will come down to $1,500 by 2005, and there is discussion of low-cost converter boxes.  In the meantime, the process of moving to a highly complex and extremely expensive new technology, considerably better than the old one, remains far more complicated than mere technical questions would make it.[26]  

            .  Outdated management or organizational structures.  Rifkin tells of the concern economists have had in recent years about why the American economy didn't at first experience productivity gains to match its investment in information technology, which during the 1980s amounted to more than $1 trillion.  When productivity shot up in the 1990s it became clear that the problem had been "outmoded organizational structures that were not able to accommodate the new technologies."[27]  This is supported by the Atlanta Business Chronicle, which in 1995 said that "according to most experts, four decades of amazing advances in computer and communications technology had only a small impact on service jobs because the new technologies were inefficiently wed to old organizational methods."  These structures are rapidly being reengineered: "Corporations are being rebuilt to take advantage of technology, productivity is soaring, and white-collar and middle-management jobs are melting away."[28] I mentioned above how "sunk costs" in steam and water power delayed the use of electricity.  Another reason was the difficulty of adapting organizations.  The Economist points out that "even when firms had installed electricity, it still took them a long time to learn how to organize their factories around electric power and to take advantage of its flexibility."[29]

            .  A shortage of engineers and other appropriately trained personnel.  A book in 1983 had good reason to say that "it is quite likely that a shortage of engineers could compromise the expansion of robotics technology."[30]  The chemical company Monsanto ran into "consumer resistance" when it attempted to market bovine somatotropin (BST) to dairy farmers to increase milk production.  The necessary training was more than the farmers wanted to undergo.[31]

            Given the inducements and competitive pressures of the market, the existing workforce does ultimately get retrained and the young are made conversant with the new techniques as part of their education, but this requires a series of steps that take time: such things as the writing and publication of technical manuals, the setting up of seminars, the alteration of college curricula, etc.  All of this happens in due time as people scramble to seize the new opportunities, but none of it is instantaneous.

            .  Political and budgetary vicissitudes.  In the late 1950s, the USSR's launching of Sputnik, the first manmade satellite, startled the American people into a sustained push for technological supremacy. That was an accelerant.  But the Challenger disaster caused a substantial slowing.  Instead of progressing on a straight line, technology is subject to many such vicissitudes.  We saw that again in 1993 when Congress voted to kill the $11 billion Superconducting Supercollider project.              

            .  Legal issues, and the need for the law to adapt.  Libraries have been anxious to make materials available over the Internet.  But Business Week observes that "even if billions of taxpayer dollars were available to get all 15,872 of the nation's public libraries and branches online -- which there aren't--legal issues still must be considered.  Stocking reference works and lending books is one thing.  Dispensing digital copies raises uncharted copyright issues."[32]  "Intellectual property" has become one of the law's up-and-coming areas.  The speed of change and how well economic relations work in the future depend upon how quickly and satisfactorily this body of law can be developed.

             

            Factors that accelerate change also exist.

            .  The most powerful accelerant, forcing change upon those who otherwise might incline toward rest, is competition, especially the competition of low-cost suppliers now that the market in becoming global.  It is enough to grind down the many inhibitors.

            .  An obvious accelerant can come from increasing investment in research and development, and then in follow-up plant, equipment and software.  In 1991, Carnevale said that in the United States investments in information-based technology "now absorb more than 40 percent of all investments in new plants and equipment, compared with 20 percent in 1980 and 6 percent in 1950."[33]

            .  An Associated Press report on fiber-optics says "the technology has advanced at hyper-speed, impelled by the deregulation of the U.S. telecommunications industry in 1982."[34]  This was the removal of a legal and organizational inhibiting factors.

            .  In fact, the reduction of any of the inhibiting factors we have already discussed (or of the many I haven't thought to mention) can allow faster change.  When, as we have seen, the high cost of an initial technology is replaced by lower costs, the stage is set for much swifter adoption.  In late 1996, The Economist spoke of "the vertiginous decline in the price of computer-processing power, which has fallen by an average of around 30% a year in real terms over the past couple of decades...Never has the world seen such a dramatic fall in the price of an industrial input."[35]

            .  Peter and Jacqueline Senker tell why prefabrication has come to be used more quickly in Swedish construction than in many other countries.  Local factors such as inclement weather and high labor costs, which seem to be negatives, make prefabrication desirable.  They cite, too, such industry factors as the links between design and construction, and construction and manufacturing, as well as societal factors such as "a lower level of social discontent with large building systems."[36]

 

            Like driving in an increasingly dense fog where the range of visibility becomes shorter and shorter, the making of predictions today, where they can be made at all, must be over a dramatically shorter time than was possible in the past.  Samuel Sacco says that "futurists who, less than a generation ago, could forecast 20 or 30 years into the future now have trouble seeing any clear trends over the next five years because technology is spawning new technologies which, in turn, spawn technologies."[37]  In an article about agile manufacturing, Business Week says "it's coming faster than anyone expected.  ‘Fundamental transformations of the terms of commerce have always been measured in decades,' says Lehigh's Goldman.  ‘In 1991, I figured it would take 15 years for agile manufacturing to become common practice.  But now, I think it will be the norm within five years.'"[38]  This is reinforced when Owen Edwards uses colorful phrasing to tell us in Forbes ASAP that "in business, nothing lasts forever, and in the technology business a happy heyday lasts about as long as a fruit fly's adolescence."[39]

 

            It is interesting to see what projections different commentators have made (subject to the understanding I mentioned earlier that these are just their best estimates).  We have already seen some; here are others:

            William Greider quotes John F. Welch, Jr., the CEO of General Electric, as saying that "the shakeouts will be more brutal.  The pace of change more rapid."  "What lies ahead, Welch said, is ‘a hurricane.'"[40]

            Peter Drucker wrote in 1993 about "the shift to the knowledge society" and said that "if history is any guide, it will not be completed until 2010 or 2020."[41]  Speaking of factory automation, Fred Block points out that "the impact of this new wave of factory automation has been highly uneven," and says "the diffusion of the new technologies through industry will take many years."[42]

            Jeremy Rifkin, who has written the most insightful book looking ahead, said in 1995 that "researchers predict that the fully automated factory farm is less than twenty years away."  Rifkin himself expects "an economy of near automated production by the mid-decades of the twenty-first century," bringing "civilization ever closer to a near-workerless world."[43]    

            How long will the Humane Genome Project take?  John Carey in Business Week says that "by about 2010, researchers expect to have deciphered the entire human genome, unlocking the secrets to many diseases."[44]

            In an article on the "Robot Revolution" in National Geographic in July 1997, Curt Suplee says that "soon scientists will demonstrate a highway system featuring robotic cars that within 20 years could do all the driving."[45]

            In effect, these predictions point toward immense change within the lifetimes of many now living (far exceeding the incredible changes those of us who are older have witnessed during our own).  From what we are seeing, such expectations seem reasonable.  Just the same, it is well to keep in mind that expectations often aren't realized, at least within the times projected.  In Future Shock in 1970, Alvin Toffler spoke of "a society that will, by the year 2000 or sooner, be armed with robots, advanced computers, personality-altering drugs, brain-stimulating pleasure probes, and similar technological goodies."[46]  His vision hardly matches the reality of 1998--although his prediction has two more years to go.  On a more mundane level, Senker and Senker say that in Europe "early predictions of a rapid decrease in demand for secretarial and clerical workers as a result of the use of IT have not been realized...Although some types of office work are vanishing, others are growing."[47]             

           

            Bill Gates was right in his 1995 book The Road Ahead not to take himself too seriously about his projections.  He said "this is meant to be a serious book, although ten years from now it may not appear that way.  What I've said that turned out right will be considered obvious and what was wrong will be humorous."[48]

            There is an important question, however, that anybody dealing with change has to make a decision about and that I discussed near the end of Chapter 1.  It is whether it is too intellectually dangerous (and potentially embarrassing, although that's of less importance) to revisit the central issues of social and political thought, as I will be doing in later chapters, because of expectations about the future.  This turns largely on whether the market economy will prove as generally satisfactory as most of its supporters have faith it will be, so that the problems of displacement and polarization are largely chimeras.  In light of everything we've reviewed in the preceding chapters, I can't accept a "presumption of spontaneous self-correction" in this situation as an act of ideological faith.  I am compeled to have us start our rethinking now. 

            If it turns out that the market works in a way to avoid all major social dislocations, including an extremity of polarization, I'll have been wrong--and no one will be happier about it than I will.  In that case, the later chapters will have been little more than a "thought exercise."  Come to think of it, that's not a bad thing in itself, since even the philosophy of the free market, like all philosophies, sharpens its self-awareness only through testing. 

 

                                                                   ENDNOTES