Friday, November 24, 2017

Economic Insanity: Chapter 4 (part 2)

When Speed Looks Like Growth (Part 2)

The Technological Trap
Ever-increasing productivity is possible only in a climate of continually advancing technology. Because of this fact, our present assumptions leave us no choice but to encourage technology to expand as fast as possible. Indeed, the new thinking regarding today’s hypercompetitive global marketplace is that if we are to flourish, we need to achieve the impossible—somehow to come up with endless, brilliant, cheap innovation. If we don’t constantly reach new levels of innovation, we get left behind—as individuals, as companies, as a nation. Contrary to what the experts suggest, however, the question is not, “How can we begin to function at these levels?” but rather, “How long can we pursue this insanity before we self-destruct?”
A consumer society, driven by the demands of an ever-expanding technology, is inherently self-destructive. The problem is that as new technologies replace old ones at an accelerating pace, few consumers or companies can keep up. Only the biggest and wealthiest survive, which results in the concentrating of both power and capital in society.
Technology is such an enticing path to step onto. On the surface, it offers us the solutions to all our problems. New technology gives us an advantage in the marketplace, allows us either to produce less expensively or to charge more for newer, higher-quality products, and enables us to accumulate more capital than our competitors. This is a short-term view, though. To stay ahead in the game, or even to stay in the game, we must invest in ever-newer technology, which, as competition intensifies, becomes more frequent and more expensive.
Consider the computer industry as an example. “Any semiconductor maker aspiring to hold or gain market share,” says Charles Ferguson, “must spend enormous sums of money. Current technology requires, on average, $200 million to $1 billion for each generation of process development, $250 million to $400 million for each factory, and $10 million to $100 million for each major device design.”1 And with each new generation (approximately every four years), the R&D and capital-investment requirements double. This is not a game any small or medium-sized company can join. Only the multibillion-dollar corporations can play. In industries such as this, companies are not merely developing technology to further their own ends; technology is actually driving companies in an insanely steep spiral of repeated investment, production, and obsolescence. Not many companies can survive long in this deadly race, and not many consumers can afford the increasing frequency of obsolescence.
Ironically, corporate America has always operated on the assumption that ever-advancing technology is the way out of the mess, rather than the way in. Organizational America, in myopic devotion to its own self-interest, never has understood that unbridled technology is like cocaine. At first it gives you a sense of euphoria and power, a befuddled optimism that you can accomplish anything. But you quickly become addicted to it and, as time passes, you find you need larger and larger doses just to keep functioning at normal levels. It soon becomes a way of life. You live for the drug. It affects your health and interferes with your everyday obligations, and eventually you can’t afford it, so you steal (from future generations) or go into debt to get another fix. It soon controls your life, and it will kill you unless you can throw off its chains.
Unbridled technology is not a panacea for society’s ills. It is not even a harmless short-term thrill. It is a parasite—it thrives and procreates by consuming its host, because the host is never capable of sustaining both itself and the parasite. Soon the parasite becomes too large and powerful and burdensome. For the host will never be composed of only high-tech, high-paid elements. Society’s inherent mix of mental and manual, high-tech and low-tech members establishes a natural limit to the practical expansion of technology.
If we do not carefully control technology’s expansion, it replaces high-paid low-tech workers with low-cost automated processes, pushes those formerly high-paid production workers into low-paying service-sector jobs, shifts wealth from displaced workers to those who own or control the technology, and forces the lower economic levels of society to go into debt to maintain the lifestyle they are accustomed to. Yes, they may have a few more high-tech possessions, which they are able to own because automation has made them more affordable, but life in general, especially big-ticket items like cars and houses and medical care, become so expensive that fewer and fewer people can afford them. We wind up with many workers in low-paying service sector jobs and significantly fewer in high-wage, low-tech jobs; the average income drops; and the only way we can maintain an increasingly expensive standard of living is to borrow it from our children and grandchildren.
Unless we change our assumptions regarding growth and productivity, there will always be pressure to find newer, cheaper, more brilliant innovations. And the pressure will multiply over time. The ideology of progress and growth insists on faster and faster innovation in a never-ending, ever-expanding spiral of production and consumption. And that spiral is growing steeper today in nearly every industry. But where is this spiral leading us? Are we really moving upward and outward, or are we actually traveling in tighter and tighter circles—like water in a bathtub—before we finally go down the drain?
Can we afford this materialistic ideology? I’m talking real dollars and cents here. You don’t have to be an economist to realize that the suffocating spiral of newer and faster innovation cannot continue forever. Even if we had inexhaustible economic resources, we would eventually bump up against very real physical limits. All the technology in the world can make human beings work only so fast. But we’ll never hit the physical limits, because we’re already hitting economic limits. Our increasing productivity is vanishing into the void even as it decreases our overall purchasing power. It isn’t really making our lives better, not in the comprehensive sense. Although we are working faster and faster, our standard of living and real wages are declining. We cannot afford the demands of ever-accelerating productivity, for it is quickly exhausting and bankrupting us, individually and collectively.

The Technological Assumption
A troubling consequence of our single-minded dedication to increasing productivity is that technology, which can be a valuable tool to better our individual and collective lives, has instead become merely an instrument to make individual businesses and the larger economy grow. Businesses do not develop and invest in new technologies to better society. That may happen by luck or chance, but the truth is that businesses develop technologies for the express purpose of becoming more competitive, capturing market share, and increasing their profits.
This prostituting of technology leads to some unfortunate end results, partly because we have come to assume a connection between technology and quality of life that, in fact, does not exist. This assumption, which I have dubbed the technological assumption, is the largely unspoken but pervasive belief that quality of life is to be measured solely in technological terms. In other words, society advances only as technology advances. Although few would deny that civilization is more than material comforts, and that quality of life has spiritual dimensions, the technological assumption is nonetheless so prevalent (we are constantly immersed in its advertising) that the demands of an ever-expanding technology dictate both the shape and pace of our lives.
Because of this pervasive influence, we simply find ourselves measuring society’s progress in terms of comfort and gadgets and technological wonders—space shuttles, CAT scanners, high- definition TVs, aerodynamic automobiles, laptop computers, laser printers, cordless telephones, fax machines, CD players, microwave ovens—and yet in so many ways these measuring sticks of material progress have contributed to an ongoing societal decadence.
Television, for example, was supposed to be (and still might become) a great educational and informational tool, and yet we are now finding that a generation glued to the tube knows so little about the world it lives in that its ignorance frightens us. If you measure its impact by what most Americans watch on a weekly basis, television has not broadened our horizons. Rather, it has captivated and tranquilized our minds to the extent that we cannot think for ourselves. We simply listen and believe. And sometimes we mimic—and that’s when it gets scary. The fault lies not with the technology itself, of course, but with our use of it, and that use is effectively orchestrated by big business, which has its own agenda.
Profit-driven technology has in many ways made our lives easier, perhaps it has even inadvertently made them better in some ways, but has it made them good? Such conveniences as fax machines, personal computers, microwave ovens, and cellular telephones have enabled us to hurry faster, but have they really improved the quality of our lives? It might be argued they have done just the opposite.
Facsimile machines have taken away even the pretense that some aspects of business are not urgent. Now overnight mail is too slow. Everything has to be done now, now, now. We’ve lost the ability to be patient. As one businessman put it, nowadays people call you on the phone to tell you your fax line’s busy.
What about the computer? Oh, I agree, it has made life less tedious—I would have a hard time without mine, in fact—but I have taught college students who cannot write an intelligible sentence because the word processor now checks their spelling and their grammar, and they apparently assume that it can also think for them. They do not realize that writing is the finest exercise to develop clear thinking. Many of these same students are calculator-bound and can’t do simple arithmetic in their brains. An extreme case was the university senior who reduced a problem on an exam to 2x = 100 and then couldn’t arrive at the value of x without his calculator.
On a much higher plane, computers are opening the doors to perplexing moral questions in such areas as nuclear physics, medicine, and biotechnology. We are walking through those doors eagerly, without asking whether or not those doors should be opened at all, and without accepting the responsibility for the potential consequences of our steps. Technology’s forward march cannot be denied. If it can be done, it should be done, especially if there’s a profit in it.
And we call this civilization? Social progress? Yes, we call it that. For we’ve fully indoctrinated ourselves in scientific capitalism’s (and communism’s) a priori equation: technological advance = societal progress. The problem with this equation is one that General Omar Bradley recognized decades ago: “Our knowledge of science has clearly outstripped our capacity to control it. . . . The world has achieved brilliance without wisdom, power without conscience. Ours is a world of nuclear giants and ethical infants.”
The problem is not in developing new technology that might be of benefit to mankind. Of course we can and should do this. The real problem lies in making technology work for us, rather than allowing ourselves to be driven in undesirable directions by technology’s tendency toward rapid and endless proliferation. “[Jacques Ellul’s] point,” say William Scott and David Hart, “was that although individuals can control single machines, the network of machines and organizations is beyond them: ‘If man can claim to be the master of a machine, and even of every machine considered successively, can he claim to be the master of the technological whole of which each machine is a part?’ It is the whole interlocking network of machines that is the problem. But who, specifically, has the responsibility to control the whole? Indeed, who has the capacity to even understand the whole, let alone control it?”2
We are developing new technology without either the moral sense or the social vision to use it correctly and control its proliferation. Consequently, it is using us, shaping us because we refuse to shape it. The technological economy is in control, and we do its bidding, believing its claim that science, science, and more science are the three magic keys to human progress and happiness.

The Crisis of the Postindustrial Society
Let me put today’s high-tech economy in some kind of historical context. In the early 1800s, 90 percent of the workforce was involved in agriculture. Farming wasn’t merely the occupation of choice—it was the occupation of necessity. It simply took nine out of every ten workers to provide food for society. But increased productivity (mainly due to technology) changed all that. Technological advancements in agriculture made farmers more efficient—in two ways. The farmer could accomplish more with his time, and he could also get a better yield per acre. This has continued now for nearly two centuries. By 1940, one farm worker could supply ten nonfarmers with food. By 1980, those ten had increased to seventy-five, and by 1990 less than 2 percent of the total workforce labored in agriculture. The only downside to all this progress was that it eliminated the need for so many agricultural laborers.
This wasn’t an economic problem, however, for technological advances not only caused more bushels per farmer, they also created numerous new factory jobs. Displaced farm help simply moved to the cities and took jobs in manufacturing facilities. This shift represented a significant change in society—the first major change in centuries, in fact.
This, however, was only the beginning. Over the past century technology has worked a similar transformation in manufacturing. Technological innovations have made factory workers increasingly productive. Consequently, we have need today for far fewer blue-collar workers than ever before. And the recent push to become competitive with foreign producers has only quickened the pace of job reduction for both manufacturing and support personnel.
The only problem is that most displaced manufacturing workers have no comparable-paying jobs to move into, as did their predecessors in agriculture. And our dilemma today isn’t limited to manufacturing. In an attempt to become increasingly competitive, nearly every industry that produces a consumable product is downsizing. The bottom line is that increased productivity is creating an economy that requires fewer and fewer workers of all sorts to produce the goods and services we need and want. And both the competitive nature of our industries and recent technological trends indicate that productivity will continue to increase.
According to a Fortune magazine report in August 1992,3 the number of full-time workers in the United States increased by 13.6 million between 1979 and 1989, but the median weekly wage of those workers (in 1989 dollars) dropped from $409.13 to $398.88. The reason for this wage decrease was the nature of the new jobs. While manufacturing shed some 675,000 jobs, most of them high-paying, 5 million of the 13.6 million new full-time jobs (almost all in services) paid less than $250 per week, $13,000 per year—below the poverty level for a family of four. More than 1.6 million of these new low-paying jobs were in restaurants, stockrooms, and retail sales (in other words, support functions for consumer-oriented rather than producer-oriented enterprises).
As a workforce, we have moved away from making things and toward merely buying and selling things. Because producing the items we need requires fewer and fewer workers, we have become a consumer society, the marketplace where the rest of the world can sell its wares. But what happens when we need only 10 or 20 percent of the population to manufacture the products we need and want? What do the rest of us do? Do we get up each morning, as William Abernathy once suggested, and press each other’s pants? It might be argued that this is exactly what we are doing. A nation of superfluous service workers is not an economically healthy nation, and never can be. This is the dilemma of the postindustrial society.
The crux of the issue is that increased productivity, aimed at making companies competitive (and profitable), is inadvertently creating a greater division between the haves and have-nots and is therefore diluting our ability to consume all that we produce, unless we purchase on credit. Capitalism’s solution to the dilemma of a shrinking manufacturing workforce is to introduce new products—primarily services—at an accelerating pace (to perpetually create new jobs to replace the ones we have eliminated). This curbs unemployment (though not misemployment), pressures us to consume more than ever before, and keeps the wheels of capitalism spinning, but how long can we sustain this expanding spiral of debt-driven economic activity without seeing the whole system collapse? An economy built on an expanding foundation of superfluous products and expendable workers cannot endure forever. Technology-driven productivity improvement is fast creating a society in which the vast majority of us must find work in nonproductive activities.
J. W. Smith points out that “when labor is cut from a production process [through the efficiency of technology], the share of production once claimed by this labor is then claimed by the owners of capital.”4 The rich get richer, and the poor get poorer, and the displaced laborer must find employment in nonproductive work. Because of the social rule “no work, no pay,” nonproductive work will continue to expand as our need for production workers shrinks. Nonproductive work, however, does create two very real products: busywork, which is nothing more than making someone jump through an economic hoop to get a share of society’s total income, and advertising, which is essential in the art of creating a need for superfluous products.
Smith estimates that there are more than “80 million people who are either unemployed or employed nonproductively.”5 If we divided up the productive work equally, he adds, we would need to work only 2.3 days a week. “And since only unnecessary work would be eliminated, there would be no drop in our standard of living.”6 Indeed, imagine all the desirable, society-enhancing things we might accomplish in our spare time, if we were simply to eliminate all the nonproductive jobs that our “no work, no pay” social philosophy necessitates.
Smith’s ideas are intriguing, and they would result in a more equal and sane society, but they don’t even address the issues of limitless growth and technology-driven productivity. To effectively rein in these out-of-control economic engines, we must also strive for fundamental philosophical and structural change.
Any way you slice it, our current assumptions and the solutions that spring from them make no sense at all, which is why I’ve titled this book Economic Insanity, an apt description of our present predicament. But if the capitalist answer is not the right one, which direction are we to turn? To my knowledge there are only three other possible solutions:
1. Establish a pervasive welfare system to support the 80 or 90 percent of workers who are idle, so that they can consume their share of our increasing production.
2. Return to a more primitive technological state, which would reduce our productivity and increase the demand for low-tech workers.
3. Rethink the basic assumptions of capitalism, including endless growth, self-interested competition, nonproductive work, and our current system of unlimited capital ownership (which lies at the heart of both our increasing economic inequality and the compulsive drive to innovate workers out of their jobs).
Option 1 offers little if any hope. We’ve been moving in that direction for long enough now that we can read the writing on the wall. Option 2 is both undesirable and probably impossible. Only the third alternative makes any sense, and it is this alternative that I will explore and attempt to justify in the remainder of this book.
The current system is reaching the end of its useful life. It is creating too great a gap between the haves and have-nots and is based on the illogical premise that growth equals health. As with any living organism, though, this premise is valid only to a certain point. Beyond that point, growth is destructive, and several current indicators suggest that we have indeed reached that point. Consequently, we have but two choices. We can either stand by and watch an out-of-control economy devour our future, or we can replace it with a system that makes more sense for the long term.
1. Charles H. Ferguson, “Computers and the Coming of the U.S. Keiretsu,” Harvard Business Review, July/August, 1990, 55–56.
2. William G. Scott and David K. Hart, Organizational Values in America (New Brunswick, N.J.: Transaction Publishers, 1989), 28–29.
3. “The Job Drought,” Fortune, August 24, 1992.
4. J. W. Smith, “Wasted Time, Wasted Wealth,” In Context (Winter 1993–94): 18.
5. Smith, “Wasted Time,” 21.
6. Smith, “Wasted Time,” 21.

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