The Information Explosion
Wriston, Walter B.
The Information Explosion by Walter B. Wriston
The Information Explosion by Walter B. Wriston
It is said that when Adam took Eve's hand and led her out of the Garden of Eden, he turned to her and said: 'We live in an age of transition.' We still do. People who oppose the free-market system often describe it as a zero-sum game, where if one gains, another loses, so that the sum of net winnings is zero. These people put their emphasis on dividing up available resources, rather than expanding the economy for the benefit of all. Fortunately for all of us their analysis is dead wrong.
All of these dreary concepts have their roots in the idea that finite resources, both human and material will stop economic growth. This is hardly a new idea, but rather one that seems to occur in history when societies are under strain. In fact, it turns out that our economy is growing. We are playing a positive-sum game. And it can be argued persuasively that the factor principally responsible for this happier state of affairs is technology.
The more than ten million new jobs created in the United States in the last five years are America's answer to Karl Marx's fear that technology would be the cause of massive unemployment and the subsequent destruction of our capitalistic society. In fact, if technology is the critical factor in long term economic growth -- and there is a great deal of evidence on this point -- it is equally true that, to create growth, technology must have a climate which allows innovation to flourish. This climate is not always present. Indeed, history is full of examples of lost opportunity occasioned by those with a vested interest in the status quo.
As has usually been true in the past, most of the surprises are being produced by technology, and the way it is used. But however it is employed, one thing is certain: the movement of information, and indeed of some knowledge, at the speed of light and to an enormous audience, has made today's world different in kind, and not just in degree, from the world we used to know. Two events illustrate the point. On 8 January 1815, many good men died in the battle of New Orleans -- all unnecessarily. The battle took place more than two weeks after the peace treaty ending that war had been signed. A sailing ship carrying the news of the treaty simply could not cross the ocean fast enough to prevent the battle. Contrast this with the speed with which the news of President Kennedy's assassination reached the American people. Studies have shown that 90 percent of Americans knew within an hour. It was the first time in history that the population of an entire continent learned about a single event in an hour's time, and that was more than 20 years ago. It is this kind of speed that has transformed the rate of change in the world.
Some years ago Ferdinand Marcos was elected President of the Philippines, and took office without incident. In this year's election the television cameras went into the barrios and the whole world knew the election was fraudulent. Despite Marcos's assertion that he won the election, world opinion, enforced by the instant flow of information forced him into exile. We have seen that technology is on the side of freedom.
The fundamental catalyst of massive change in our society is the transition from several hundred years of technology based on the mechanical model to one based on information. Peter Drucker recently put it this way: 'For these three centuries advances in technology meant -- they do in the mechanical processes -- more speed, higher temperatures, higher pressures. Since the end of World War II ... the model of technology has become the biological process, the events in the physicists' meaning of the term. They are organised around information.'
In the past, machines were flexible in the sense that the user had to adapt his uses to the function of the machine. A drill press, for example, can only be used for one type of operation. This is no longer the case with today's information technology -- it can produce, through the programming of software, whatever product the user wants. Technology makes possible what good management knew but was formerly unable to achieve. This new combination of technologies creates a kind of hydraulics of the mind that is truly revolutionary.
Great technological revolutions which occur in history from time to time have always made the ruling classes nervous, because they sensed -- correctly -- that somehow their power was being undermined. When a man's wealth was expressed by the amount of land he owned, the sovereign, no matter how bad his economic or political policies, did not have to worry about the flight of capital. You literally could not move the farm.
The introduction of money made capital mobile and, inevitably, the sovereign reacted by inventing controls. The onrushing age of information technology gives a whole new dimension to the government's worry about the loss of control of men and money. These fears are well-founded because each new age of technology has affected old power structures and changed the political landscape.
In the past, governments could sometimes pursue poor policies with only local or national consequences. Today, thousands of screens light up in hundreds of trading-rooms around the world bringing news of governmental action, and the consequences of policy are reflected almost instantly in currency rates. There is no longer any place to hide. The Information Standard has now replaced the gold standard and unlike the latter, no nation can resign from it. There is no escape from the flow of data about political or economic policies.
What is different today is that vast amounts of information can be stored in data banks which can be accessed from anywhere on this planet in seconds. Modern information technology is now of an order of magnitude different from even 40 years ago. The five new democracies in Latin America owe part of their establishment to this phenomenon. It was Barbara Ward who taught us that the revolution of rising expectations only occurs when people learn there is an alternative to their lot. Technology brings people this awareness and thus advances the cause of freedom.
All of this also has an impact on the law -- that framework of rules constructed by a free society. How do we protect intellectual property in the age of the Xerox machine, the VCR and direct dialling to most places in the world? Who owns and assigns the radio frequencies of the world, or how should the 200 slots in the geosynchronous belt where satellites may be placed over the earth be allocated, and by whom? The law is no longer able to cope with onrushing technology. And if a national government can't control what its people see or hear, if it cannot retain its citizens' savings at home, if markets are no longer geographical places but blips on a computer screen -- what then has happened to the old ideas of national sovereignty?
In the business and academic communities, a futile argument rages about the relative value to our society of manufacturing jobs and service jobs. Just as real men don't eat quiche, so real men, we are told, don't hold service jobs. Indeed, some executives in heavy industry often dismiss service employment by categorising it as people washing each other's cars. Although its partisans continue to repeat it, this argument has long since lost any validity it may have had. A walk through a modern competitive factory makes the point. Manufacturing plants are already being run by hardware and software, the manufacture and operation of which are classified as service jobs, although the factory turns out hard goods, Digital controls of machine tools are now linked together through communications and software to orchestrate entire production facilities. A recent study by General Motors showed half the money spent on factory automation was for communications.
The entire competitive structure of our world economic system is changing. If a nation wants to be on the cutting edge of technology and that is becoming more and more important, then its scientists must be able to access freely vast data banks.
The good news for the Western World is that this is the kind of development that free societies not only tolerate, but encourage. The sharing of vast data bases -- something totalitarian governments cannot tolerate -- will give us a huge competitive advantage in the years ahead.
Like all change, these developments will be uncomfortable. But all industries will have to adapt to new realities or go the way of the buggy makers. The real gains in the years just ahead will go to companies that understand the revolution being driven by today's technology. It will spawn many new industries, and it will determine which old industries die.