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23 January 2001Printer-friendly versionEmail a friend

Technophobia and technophilia: the dynamic of restraint
In the third in his series demystifying the 'information society', Phil Mullan gives a riposte to technological determinism.

by Phil Mullan

Is there anything new to justify the belief in the new economy?

In answering this question, any appeal to what is happening in the sphere of production is often immediately dismissed. Many proponents of the New Economy see such rational arguments as anachronistic; to discuss productivity, they assert, is an 'Old Economy' perspective that fails to see the wood for the trees. According to this argument, the New Economy is transforming the basis of wealth creation so fundamentally that traditional measures of output growth cannot see them. This new wealth, it is claimed, derives from more intangible 'weightless' factors such as information flows, the new creativity and the power of the network.

What leads otherwise sensible people to believe in these intangible assertions? What accounts for the appeal of what Theodore Roszak appropriately calls 'The Cult of Information'? (1) And why is there such faith in the religion of the New Economy?

As previously noted (2), this faith cannot be explained by the figures. Productivity gains from all the investment in computer technology, communications and new media over a reasonably long period appear quite meagre. This should not be too surprising: no technology exists in isolation, and any technological innovation with the potential to impact upon the economy must be put to work. This does not just mean that other industries buy technology: it needs to be extensively integrated in order to enhance the overall productivity of an economy, or even of specific sectors. Effective integration usually requires reorganisation, and the bigger the potential the bigger the restructuring required. The steam engine alone did not cause the Industrial Revolution: steam power made possible the growth of factories, bringing the benefits of large-scale production, and stimulated other technological innovations in the production of textiles and of iron and steel.

It takes time for the potential gains of a technology to be both recognised and realised. Look at the process of electrification: though Michael Faraday made the initial discovery of electromagnetic induction in 1831, the first power stations did not open in Britain and New York until 1881. Electricity spread only slowly for the next 20 years, reaching less than five percent of households and businesses by 1900. Only by the late 1930s had it reached over half of households and three quarters of businesses. It therefore took 40 to 50 years between the first commercial electricity generator and the more generalised deployment of this power source in Anglo-American industry during the interwar years.

In a sense, the invention of the electric generator was the easy part for the economy as a whole: many things had to change before industry was properly geared up for the economical and productive application of electricity. Previous power systems had to work out their useful economic lives. The physical layouts of buildings and factories and equipment had to be redesigned. Organisational systems needed adaptation. The many modifications and innovations required had to be developed and refined through experience.

While only eccentrics reject the convenience of buying books online, many view the internet as a moral destabiliser
For example, the first electric motors introduced into factories were used as one-for-one replacements for the big steam engines that powered production through a network of levers and pulleys and belts: initially, the factory layout remained pretty much as it was and the productivity gains were limited. Only later was it realised that electricity created the opportunity for having lots of smaller electric motors powering different equipment, which could just be plugged into a power socket. This allowed for productivity gains from redesigning both plant and machines for more efficient working around the requirements of the system of production rather than the system of power transmission.

So it is reasonable for a prolonged gestation period to apply to the new information and communications technologies. What is new is that, today, the principal constraint on IT is a societal mindset that stuggles to cope with the new, post-political, social conditions in which the economy is developing.

Society today is experiencing a sense of dislocation, with the end of almost two centuries of class politics and the traditional institutions and social structures that went with them. In this context, anything that embodies progress and a shift from the status quo - like technology and economic growth - is seen as particularly unsettling. Hence the popular perspective that we are entering a 'Risk Society'; and the fears that, as Felipe Fernandez-Armesto wrote in Millennium, A Historical View of the Past 1000 Years, 'Technological change seems likely to take over from unaided human wickedness as the focus of fears of barbarism' (3). A society which feels uncomfortable with itself tends to experience change as a destructive process. One consequence of this is that, in the spheres of politics and economics, a culture of restraint takes hold.

A society that is unsure of itself also tends to have an exaggerated sense of change and of things being out of control. At a time when the inherited institutions and all forms of social relationships appear more fragile, this tends to give rise to an inflated view of the rapidity of change. Whether this perception of permanent revolution is feared or embraced, the consensus is that we are going through tumultuous times. This view has taken hold even despite the fact that the real dynamic of progress is currently unremarkable.

Even if there is less real progress taking place than the prophets of the information society believe, IT as a technology has the misfortune to be making its mark in an era when progress is not seen as such a good thing anyway. Many hold a deep suspicion of change, particularly of science and experimentation.

The anxieties which greet each small step forward in man's control over nature - from GM foods to genetic cloning - infiltrates attitudes to IT, too. While only eccentrics reject the convenience of buying books or airline tickets online, surveys continue to show that many people view the internet as a moral destabiliser. The association with pornography is a convenient stick with which to beat any new medium. In contrast to the conservative and puritanical reactions which met the early use of still and moving photography for pornographic purposes, self-proclaimed liberals are often the most concerned about the harm that the internet can inflict on society, and especially on the masses.

'Industry is dead, long live the new information economy'
But the problem we face in realising the potential of current technologies is more pervasive than these explicit technophobic tendencies. Technophobia and technophilia are two sides of the same coin - the twin towers of the culture of restraint. Likewise, the reality of a slow pace of innovation and the appearance of rapid change are two sides of economic atrophy.

The elevation of computers and IT by today's technophiliacs parallels the diminution of what is exceptional about man. Superficially, computers appear to approximate to what formerly were seen as distinctive human capabilities: memory (data storage) and thinking (data processing). Hence the possibility for equating machines to man (the artificial intelligence discussion) and, more recently, man to machines. In a climate where man's capabilities are reduced to the banality of machines, it is appropriate that mere machines and technology are seen to take centre stage in determining social changes.

Ironically, it is precisely a loss of faith in human, social progress that has elevated the significance of the technological tools of progress. As the human component of change becomes derided, the technological aspect assumes a distinctive autonomy. New technologies such as the internet are imbued with powers for good and bad which elevate them from a tool to a deus ex machina.

Moreover, the coining of the term 'information society' seems to give some intellectual order to the confusion and unsettlement caused by what appears as an unusually rapid period of change. This label, and its associations with the elevation of the roles of 'knowledge' and 'creativity', seek to make a virtue of contemporary confusion, anxiety and diminished expectations. Specifically, the idea of the 'new information economy' makes a virtue of industrial decline. The definition of information workers is often stretched to pretty much anybody engaged in services. Not so long ago de-industrialisation was seen as an economic problem: for years governments of left and right sought to reverse it, and for years their attempts came to very little. How much better to turn things on their head and declare 'industry is dead, long live the new information economy'.

These labels seem to give freshness and meaning and purpose to a society which is showing more signs of atrophy than genuine exuberance. Unfortunately, when the substance behind the labels is missing, a more general sense of negativity is reinforced, and the genuine opportunities wasted.

The fetishisation of IT downplays the vital input of humans necessary for any technology to work. It replaces the requirement for genuine human innovation, experimentation and creative thinking in order to make the most of any technology, with the supposedly innate characteristics of 'innovation' and 'creativity' embodied within IT. In this sense, the technophiliacs blur an essential truth: that human beings do not just create the technologies but must act upon them for their possibilities to be adequately realised.

Set up a website and, lo and behold, you are part of the e-economy
These sentiments are just as dominant in the business world as among theoreticians of the New Economy, and express themselves here in an extreme form of short-termism. The self-conscious denigration within business of long-term thinking and planning ahead are hostile to the real processes of disruptive change required to make the most of any technological innovation. In his comprehensive book on the apparent revival of the fortunes of US industry in the 1990s, Richard Lester notes the prevalence of this short-termist perspective: 'cost-cutting seems a more common reason for IT investment than expansion.' (4) That there has been rapid productivity growth within some IT sectors, but little evidence of productivity growth elsewhere, would tend to support anecdotal evidence that while many companies are buying IT supplies they are not working out how to integrate them to most positive effect. This illustrates the New Economy v Old Economy dichotomy in practice.

Current business thinking is that 'new' forms of investment in IT are good and 'old' investment in other types of plant and equipment is bad, or wasted. So nobody worries that, while IT investment as a share of total business investment rises, non-IT investment has fallen not just relatively but absolutely as a share of GDP. In the USA, for example, investment in structures and non-IT production equipment as a percentage of GDP fell from nine percent in the 1970s and 80s to seven percent in the 1990s. With this reduced level of modernisation and restructuring within the non-IT economy, the transformative effects even of the IT investment will be limited.

Occasionally the short-termist approach is explicit: investment for the long term is eschewed in favour of the quick fix. More often the reality of restraint is presented positively as some new business fad: Quality, JIT, BPR, shareholder value. At the same time, management is encouraged to abandon the rigidities of strategic planning and adopt a perspective of permanent change management.

The internet fits in well with both these impulses. It has the cachet of fashionability, and it can be adopted quite easily and cheaply as a quick-fix measure. Despite the web's cutting-edge reputation, the result of these business practices is that most web applications are the antithesis of innovation. There is a lot of web activity taking place, but the short-term business culture in the USA and the UK tends to bring out the worst from the web - how it can be applied as a quick fix. Set up a website and, lo and behold, you are part of the e-economy. This used to be called jumping on the bandwagon, and is the opposite of genuine innovation. Real gains for society could only come from proper innovatory practices.

Technology guru Paul Strassmann makes the interesting point that innovation cannot all be lumped together in terms of its economic benefits. He shows that many of the most innovative companies with respect to ecommerce, CRM and other fashionable IT methods have not improved profits. On the contrary, so-called technology laggards tend to be ahead in economic value generation. This could be because these latter companies concentrate more on traditional product and process innovation rather than blue-sky innovation (5).

And Chris Gulker, the London Independent's regular columnist from Silicon Valley, was even more explicit about the lack of New Economy innovation when he wrote in June 2000 (at a time when optimism was still reasonably high): 'Those who can't innovate, accumulate.' He explained that making money is a lot easier than innovating, and there's much more of the former than the latter in Silicon Valley. 'Innovation is about creation', he said, while 'making money is about something entirely different' (6).

Phil Mullan is the author of The Imaginary Time Bomb: Why an Ageing Population Is Not a Social Problem, IB Tauris, 2000 (buy this book from Amazon (UK) or Amazon (USA))

This is the third in his series demystifying the 'information society'.

Read on:

Technophobia and technophilia: the dynamic of restraint by Phil Mullan

Don't Blow IT by Sandy Starr

spiked-issue: Don't blow IT

(1) Theodore Roszak, The Cult of Information: A Neo-Luddite Treatise on High-Tech, Artificial Intelligence, and the True Art of Thinking. Buy this book from Amazon (UK) or Amazon (USA)

(2) See New Economy: what's new? by Phil Mullan

(3) Felipe Armandez-Armesto, Millennium: A Historical View of the Past 1000 Years, p493. Buy this book from Amazon (UK) or Amazon (USA)

(4) Richard Lester, The Productive Edge: A New Strategy for Economic Growth, WW Norton, 1998, p241. Buy this book from Amazon (UK) or Amazon (USA)

(5) See Paul Strassmann, Information Productivity: Assessing Information Management Costs of US Corporations, Information Economics Press, 1999. Buy this book from Amazon (UK) or Amazon (USA)

(6) Independent, 19 June 2000



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