The Information Economy
A central prop in _Star Trek: The Next Generation_ is Computer.
Computer is capable of replicating almost anything the crew needs.
Picard and company regularly request food, new parts, clothes and
other necessities from this remarkable machine. Assuming for the
moment that such a thing is theoretically feasible (after all,
the replicator is only recombining molecules -- production at its
most fundamental level), could a society with those capabilities
tolerate homelessness, starvation, illiteracy, or preventable or
curable diseases?
Four centuries separate the crew of the starship Enterprise from
today. But technologically, the distance is not really that great.
The NeXT factory in Fremont was able produce $1 billion worth of
computers a year with eight workers (until the company shut down
production because it was unable to sell its machines).
Bioengineers deploy bacteria to produce plastics in a vat -- no
need for the labor that goes into exploring for oil, drilling it,
building the pipelines, transporting it, processing it, or for
that matter, sending armies overseas to claim it. From raw
material to finished product, less and less labor is required to
produce more and more with robotics, biotechnology, "smart
materials", computers, digital telecommunications, and new
technologies on the way.
In today's high-tech production, raw materials, capital and labor
are replaced with refined information in the form of computer
programs, designs, formulas, compression algorithms, DNA
sequences, and so on. Two inter-related processes are at work. On
the one hand, Science is extracting what Marx called the _in situ_
benefits of nature, yielding useful things with _less_ work, via
better knowledge of the way the world works. On the other hand,
the host of technologies surrounding computers enable machines to
effectively record a workers actions, or even simple thought
processes, and repeat them _ad infinitum_, for all practical
purposes, in the absence of the worker.
One could measure the changeover in a number of ways: the
shrinking size of production runs that represent more design per
unit; the rise in embedded "intelligence" in ROMs in products;
the increase in education required to contribute in any given
field; the percentage of design effort vs. duplication effort in a
product; or the mushrooming percentage of people employed in
information-related work (one study estimates that by 2000, two-
thirds of those employed will work in education or information-
related jobs). Described by Alvin Toffler and others as akin to
the shifting of tectonic plates, the move to the information-
based economy is upsetting the social applecart.
###
Toffler observed almost ten years ago that "[i]f you use a piece
of information, I can use it too. In fact, if we both use it, the
chances are improved that we will produce more information. We
don't 'consume' information like other resources. It is
generative... That by itself, knocks hell out of conventional
economic theories." To put it more bluntly, production based on
the information-intensive technology just isn't compatible with
traditional forms of ownership and distribution.
The incompatibility develops because information, the growing core
of all products, can be reproduced and distributed at a tiny
fraction of the effort of the original. Contemporary production is
more a matter of replication than manufacture. Marx and other
economists noted 100 years ago that the value of an older machine
(or really, any commodity) falls as cheaper but equivalent
versions become available. This is equally true of computers,
steel mills, toasters or corn. And so it is with information. A
copy of PageMaker that cost $500 has the same value as an
unauthorized copy made using a few floppy disks and a couple of
minutes of PC time. Once information gets out and about, its value
drops to the cost of its duplication.
For products like music, books, databases, computer programs,
films, etc., that point is already here. For other products, it is
fast approaching, because more and more manufacturing processes
are becoming information-based, whether it be digital production,
or molecular level manipulation, or genetic code modification. To
quote Toffler again, "Second Wave industries used brute force
technologies--they punched, hammered, rolled, beat, chipped and
chopped, drilled and battered raw materials into the shapes we
needed or wanted ... The Third Wave industries operate at an
altogether deeper level. Instead of banging something into shape,
we reach back into the material itself and reprogram if to assume
the shape we desire."
As this situation continues to ripen, what with molecular
electronics, nanotechnology, and desktop manufacturing -- to name
but a few new technologies -- in the pipe, how can traditional
forms of distribution hold? How does one price something that
effectively has no value (because its duplication cost approaches
zero)? Much less profit from it? If products (as various
formations of information) face virtually no limits in their
replicability, why not have copies of whatever for everyone who
needs it?
In the Summer '91 issue of _Intertek_, author Bruce Sterling made
some particularly observant comments about the information
economy: "Information does want to be free -- it doesn't want to
be $5 a baud. There's something stupid about that... But the idea
of information as a commodity is just wrong. I mean, people say,
'if you could go into Sears and steal chairs they wouldn't stay in
business.' Well if you had a device that could make infinite
chairs for free, Sears would never have come into existence."
###
Sterling's observation that Sears (read capitalism, and one might
add socialism) belong to an era of scarcity raises an interesting
question: Can capitalism coexist with the information age? And
can the information age coexist with capitalism? Certainly, as
even its most ardent critics have observed, capitalism drives
forward technology by demanding a constant revolution in the way
things are made. But squeezing the square peg of information into
the round hole of the industrial-era economy shears off many of
its benefits in the process. In the information economy, the old
structures start to get in the way.
For example, if duplication becomes trivial, and anyone can do it,
the only way that value can be propped up is through the rigorous
enforcement of "intellectual property" laws -- erecting artificial
monopolies to protect the patent or copyright holder. Or, as Tessa
Morris-Suzuki has pointed out, knowledge can only assume a price
when its distribution is strictly controlled. That is, only by
holding information back, only by keeping it in its myriad forms
from reaching its full potential by forcing it through the narrow
channel of the market, can money be made from it.
So, as design and software -- information and knowledge -- become
larger and larger proportions of goods, the economy moves onto the
thin ice of "intellectual property" law. The precariousness of
this kind of economy was evident last year when Advanced Micro
Devices, maker of 386 clone chips, received an unfavorable jury
verdict in its interminable copyright war with Intel. In one day,
its stock dropped by 37% -- losing almost one-half billion dollars
of its value. A federal judge order Borland to halt sales of one
of its flagship products because aspects of their program were
deemed violations of Lotus Corporations copyrights. The future of
Microsoft's Windows (and Apple) was intertwined with a judge's
decision on arcane copyright principles.
Problems emerge not just at the distribution end, but all up and
down the line, starting with the most basic production decisions.
When profitability becomes the determining factor in the knowledge
production (research and development) and information
distribution, society loses something. If information can't turn a
profit, it won't be developed or stored, regardless of its social
value. The president of commercial database vendor Dialog was
quoted in 1986 as saying "We can't afford an investment in
databases that are not going to earn their keep and pay back their
development costs." When asked what areas were not paying their
development costs, he answered, "Humanities." And our universe
shrinks in the process. Pharmaceuticals (essentially information
products) comprise perhaps a more dramatic example -- for
instance, a 1991 World Health Organization report lamented the
fact that development of new tuberculosis-fighting drugs all but
stopped 25 years ago (even though three million die every year
from the disease) because the drugs are "not a big profit maker."
A judge recently held that Burroughs Wellcome's patent on AZT, a
drug used by tens of thousands of AIDS patients to slow the
onslaught of the disease, was valid, allowing the company to
continue to sell the drug under monopoly conditions for several
thousands of dollars a year. Another company had wanted to
produced a generic version of AZT, but was prevented by the judge
from doing so.
Science suffers as well. Competition breeds secrecy, and
information not shared is information robbed of its potential
(because of the synergistic, "generative" effect of combining bits
of information). This is especially true in scientific research.
As corporate funding of university research grows (estimated at $1
billion in 1989), "the information that is produced in the labs
and studies of the faculty is no longer available," UC-San Diego
Professor Herbert Schiller wrote recently. "It goes to the
sponsoring company... It is no wonder that _Science_ [May, 1990]
magazine finds it necessary to publish articles that inquire,
'Data Sharing: A Declining Ethic?' and to comment that,
'Commercial pressures and heightened competition [in the
universities] are testing the notion that scientific data and
materials should be shared'."
The strict adherence to "intellectual property" concepts
constricts information production in other ways. The "legal"
production of new intellectual products (i.e., products which do
not violate other patents or copyrights) becomes increasingly
difficult. Richard Stallman, a League for Programming Freedom
founder, has gone so far as to argue that a person who enforces a
copyright is "harming society as a whole both materially and
spiritually... Copying all or parts of a program is as natural to
a programmer as breathing, and as productive." Through sharing of
ideas and code, newer, better products develop more quickly.
"Arrangements to make people pay for using a program, including
licensing copies," he continues, "always incur a tremendous cost
to society through the cumbersome mechanisms necessary to figure
out how much (that is, which programs) a person must pay for. And
only a police state can force everyone to obey them." Under such
circumstances, only large organizations, with the requisite legal
resources, can bear the risk of such a development effort.
Or, in the struggle to conquer markets, companies needlessly
duplicate efforts to develop new technologies. In addition, the
fruits of competitive research efforts are often products that are
incompatible with each other, wasting learning time, complicating
the flow of data, and adding to the overall economic overhead.
Choosing among, say, competing incompatible database management
products means that users are effectively forced into a product
ghetto and handicapped when communicating with others who use
different products.
Once the products make it to market, information companies, behind
the barricade of copyright and patent protection, may demand
prices far in excess of the cost of research, development, and
production. This pricing prevents their wider distribution and
use. Explaining why product piracy is so widespread in Third World
countries, an economics professor noted, "A typical piece of
computer software costs about as much as the annual earnings of an
average Chinese person. An advanced textbook would cost a middle-
class Indian a month's income."
At the same time, the private, corporate control of information
challenges the democratic tradition. Through corporate ownership
of most of publishing, broadcasting, telecommunications,
computers, software, and so on, "the corporate voice, not
surprisingly, is the loudest in the land," writes Schiller.
"Institutions such as public libraries and the public educational
system, which have provided free and open access to information
and knowledge, are being brought into the corporate sphere, either
through financial dependence or the transformation of information
into a salable good. In either case, the erosion of equal access
to information in the country progresses."
###
The above examples suggest that capitalism has not been entirely
kind to the information age. At the same time though, one could
argue, the information age will not be too kind to capitalism. For
bigger problems emerge than just how to control and price goods
that have a growing information content. As more and more
production is replaced with digitalized forms of human effort and
hyper-productive science, the information economy challenges the
most basic assumptions of our economy.
The industrial era system of capitalism is based on the notion
that people work in exchange for wages. These wages are then spent
to purchase back things. The circulation of goods requires money.
But if the cash nexus is broken -- because jobs, and hence wages,
are no longer available -- the circuit is broken, and the system
goes into a crisis. And this is what has happened. We have the
awful contradiction of an incredibly productive economy, and at
the same time at least six million homeless Americans, alarming
illiteracy rates, and entire sections of society consigned to a
life of permanent unemployment, drugs and prison. In the Third
World, the situation is much, much worse.
Under the euphemism of "re-inventing the corporation" and "the
virtual corporation", hundreds of thousands of jobs are being re-
invented into oblivion. As digital technology speeds up
communication within and among corporate blocs, layers of
management become redundant, as value and capital and inventory
are squeezed out of the production and circulation cycles. This is
the trumpeted "big technology payoff" of just-in-time production,
e-mail and computer networking. The migration of work to cheaper,
usually overseas, labor markets, is itself a function of the new
technology, made possible only by sufficiently fast transportation
and communication technology to transmit orders and designs and
receive finished products in a timely fashion. But in more and
more instances, the labor content in products becomes so small
that proximity to markets becomes a more overriding decision as to
where to locate production.
The typical argument against any long-term technological
unemployment is that as old industries fade into historical
oblivion, new ones rise to absorb the displaced workers. But, as
Tom Forester notes in _High Tech Society_, high technology will
not absorb the numbers of people cast out of industrial
manufacturing. And as for the hopelessly optimistic government
figures for the future of employment in, say the software
industry, even that industry has been hit with stagnation and
retrenchment over the past few years. Improvements in object-
oriented programming techniques and computer-aided software
engineering (CASE) are targeted at reducing labor-costs in
software development. And the globalization of the labor market,
sped up by computer technology and digital telecommunications, is
hitting software production as well. Edward Yourdon speculates in
his recent book, _The Decline and Fall of the American
Programmer_, that the U.S. programmer will go the way of the U.S.
auto worker of the 1970's. Citing the rise of high-skilled, low-
wage technology centers in places like India and the former Soviet
Union, the once-privileged American programmer must now compete
with fellow engineers overseas earning a fraction of American
salaries.
So even for work that does not lend itself to easy automation, or
remains beyond the scope of current technology, the American
worker must compete in the global labor market. Corporations
seeking the maximum advantage are driving down wages to the world
level. (Overall wages in the U.S. have been falling for the past
15 years.) At the same time though, they are pushing more and more
of their goods beyond the reach of the shrinking paycheck. The
primary ways in which American workers have managed to maintain
their household standard of living is by having more members of
the household (particularly women) enter into the workforce. The
unavoidable compulsion by companies to maximize their return on
investment demands that companies throw even more technology at
production, to drive down costs further ("raise productivity").
This only makes the problem worse.
Nor is this to say that there aren't plenty of things that could
be done: for example, environmental reclamation, care for our
aging population, education, or the million different paths of
cultural exploration. It's just that these areas will not generate
a profit unless they can be converted into commodities; and if so,
are pulled into the vortex.
The problem certainly isn't, as Democrats and Republicans alike
have argued in the 1992 election campaign, one of productivity or
"national competitiveness." Productive capacity well exceeds the
market. Farmers are paid not to grow food, apartments sit empty
(the national housing vacancy rate is 7%, far exceeding the number
of homeless), and almost one quarter of factory capacity lies
idle. The problem is not "productivity". The problem is the
inability to _distribute_ the wealth of the economy to those who
need it because the old model breaks down in the face of new
technologies.
###
One of the top-ten best-selling management books, as of this
writing, is Peter Drucker's _Post Capitalist Society_. Obviously,
the theoreticians and apologists of capitalism are having to
wrestle with the implications of the massive re-structuring of the
world economy taking place. They are clear that it must take place
within the framework of capitalist relations. In the brave new
world of the future, that will spell disaster for those who have
no place in the old productive relations, former workers left
without work, or youth who will have no opportunity of
participating in the capitalist, aboveground economy. One might
even speculate that there is a new class in formation, a property-
less class, proletarians in the Roman sense of the term, borne of
the new technological order, as much as the wage-laborer and the
capitalist were the products of historical efforts to grasp and
put to work the science and technology of Renaissance Europe. This
new class would need to fulfill _its_ historical role of reshaping
productive relations, to create a space for itself in the new
technological present.
A 1990 _San Francisco Examiner_ article reported on the work of
computer scientists Hans Moravec of Carnegie Mellon University and
Kalman A. Toth, of Silico-Magnetic Intelligence Corporation. They
described a future where robots and other technologies have lifted
the standard of living, and will have replaced most human labor.
The article then posed, with typical newspaper understatement:
"But if robots indeed are able to take the place of human labor,
critical questions arise... First, how should the wealth produced
by enterprises operated with robot labor be distributed to those
who don't work or who work part time?"
In more and more neighborhoods in the U.S. this question is by no
means an academic one. Communities like South Central L.A., or San
Francisco's Tenderloin, or Cabrini Green, or Detroit, or hundreds
of rural towns are inhabited by those expelled from production (or
never even given a chance to participate). Capitalism as a system
not only offers them nothing, but stands in the way of their
survival. These communities are the advance guard of a future
which many more of us will share, if we do not resolve the
"critical questions."
The notion that big changes in the way a society produces things
is somehow related to social organization is common currency among
economic historians. And societies historically have re-
constructed themselves (not automatically, and certainly not
without some struggle) to correspond to new technologies --
whether it be around the development of agriculture, the water
wheel, the steam engine or the programmable chip. We straddle such
an historical cusp today. Our challenge is to envision and
struggle for social forms that can not only accommodate new
technologies, but can also unleash them for the benefit of all.
What might these social forms look like? Project Gutenberg, the
Free Software Foundation, and the thousands of public domain and
freeware software authors suggest some of the possibilities. But
whatever specific shape they might take, they would emphasize
cooperation, sharing and diversity, because these qualities spark
more information -- social wealth. They would emphasize education,
because education builds the infrastructure for creating new
knowledge. And they would acknowledge the requirement that the
social wealth be distributed on the basis of need, because the
enormously lowered cost of production eliminates scarcity and
wages.
"Computer: Earl Grey tea. Hot."
Jim Davis (1993)
An earlier version of this article appeared in _Intertek_, Volume
3.4. A two issue subscription is available by sending $8 to
_Intertek_, 13 Daffodil Lane, San Carlos, CA 94070. Back issues
are available. Thanks to Michael Stack .