Night Hawks Tapes » Economy

THEME 12: DISCORDANCE

admin — Mon, 08 Feb 2010 07:45:54 +0000

• Unprecedented social issues are beginning to arise, potentially causing massive trauma and conflict.
As we stand on the frontier of the new economy, we can also see the beginnings of a new political economy that will raise far-reaching questions about power, privacy, access, equity, quality of work life, quality of life in general, and the future of the democratic process itself. As tectonic shifts in most aspects of human existence clash with old cultures, significant social conflict will tear at the fabric of structures and institutions.
New social dialectics—the juxtaposition or interaction of conflicting ideas—are emerging.’6 Hegel developed the concept of conflicting forces leading to a synthesis of something new. Man applied the notion to a view of the evolution of societies called dialectical materialism, but history did not evolve as Man had planned. The new economy demands that the notion of dialectic forces be revisited. For example, there are strong pressures for the dispersion of economic and political power. These pressures conflict with old structures that seek to centralize economic and political power.
The nature of work and the requirements of the workforce in the digital economy are fundamentally different. The concept of labor is undergoing a radical redefinition. Just as the percentage of the workforce in agriculture has been declining since the turn of the century, the number of workers involved in the production of goods (the old economy) has been falling for a decade. The new economy is bringing high-paid, high-value jobs, but there is little job mobility between old and new. How will such a huge reorganization of the labor force and its skills occur?
There is a concurrent trend toward self-employment and the creation of small knowledge-based industries providing work on a contract basis. In the digital economy, as intellectual capital becomes the most valuable resource, the means of production shifts from the plant floor into the innovative minds of knowledge workers—those who create value. Compare their emerging power to that of the industrial worker, who could withhold labor by going on strike. Similarly, employers could lock out workers and deny them access to the means of production. Knowledge workers can exert their power in infinitely more complex and effective ways. Bosses can’t deny them access to their own brains. If they are unhappy or feel unwanted, they are likely to set up their own business, as millions have done in the last half decade. A good brain, a telephone, a modem, and a PC are all that’s required to produce. As Miller puts it, “Bosses can’t say I want x tonnes of innovative ideas out of this group, as he used to do with steel.” Knowledge workers require motivation and trusting team relationships to be effective. They have emerging power far beyond anything Marx ever imagined. These owners of the new means of production will be better positioned than ever to share in the bounty. Yet this growing power conflicts with traditional ownership and power structures, which are based on ownership of industrial age assets, specifically capital.
In the new economy, those workers with access to the new infrastructure can participate fully in social and commercial life. Those without access, knowledge, and motivation will tend to fall behind. If not managed properly, this will increase social stratification severely, creating a new underclass. The have-nots will become confronted with the contradiction between the magnificent potential of the new technology on the one hand and their declining quality of life on the other.
In the new economy, learning will more and more be provided by the private sector. This will come about not out of social responsibility but, rather, because working and learning are becoming the same activity for a majority of the workforce and because knowledge is becoming an important part of products. Moreover, the traditional educational institutions are failing to meet the needs of the economy, and there are huge and growing opportunities for learning products and services. This places a greater responsibility on individuals (those who can afford it) to achieve lifelong learning—potentially increasing social chasms. Furthermore, teachers and their unions need to participate and lead in the transformation of education if the old industrial-age type of schools are to have a hope of transforming themselves and surviving. But increasingly, learning can be done without formal institutions, and learning in schools can be done through technology, requiring fewer teachers. This leaves teachers in a Catch-22 situation—become irrelevant by resisting change or possibly become irrelevant by leading it.

THEME 11: GLOBALIZATION

admin — Mon, 08 Feb 2010 07:44:40 +0000

• The new economy is a global economy.
According to MIT professor Paul Krugman, author of Peddling Prosperity, there’s nothing more to the global economy than trade in goods, services, capital, labor, and information. “That’s it,” he says. “There is no more mystical sense in which we have a global economy. We are living in a world which is about as integrated, give or take a few measures, as the world of the 19th century.”
Mr. Krugman, I beg to differ. The new economy is as different from the old economy as a Sea-Doo is from a penny farthing bicycle or e-mail is from the Pony Express.
Just as the bipolar geopolitical world has disintegrated, giving way to a new, dynamic, and volatile global environment, economic walls are falling as well. This phenomenon is related to rise of the new economy. As Peter Drucker says, “Knowledge knows no boundaries.” There is no domestic knowledge and no international knowledge. With knowledge becoming the key resource, there is only a world economy, even though the individual organization operates in a national, regional, or local setting.
Linked to this, and despite the efforts of old paradigm warriors fighting for protectionism, free trade zones are growing in North America and the Pacific Rim. Global customers demand global products. Work is performed globally by exploiting cost advantages of traditional input factors such as labor and raw materials. New economic and political regions and structures (such as the European Union) are leading to a decline in the importance of the nation-state.
As the world economy continues to globalize, the need for stay-ahead management becomes even more crucial. Ad hoc alliances, strategic partnering, and, above all, information technology will be vital for the future. Collaboration is going beyond the old boundaries. “Collaboration in business is no longer confined to conventional two-company alliances, such as joint ventures or marketing accords,” says Benjamin Gomes-Casseres, associate professor at the Harvard Business School. “Today we see groups of companies linking themselves together for a common purpose. Consequently, a new form of competition is spreading across global markets: group versus group.”
Globalization is both chicken and egg. It is driven by and driving the new technology that enables global action. Computer networks allow companies to provide 24-hour service as customer requests are transferred from one time zone to another without the customer ever being aware that the work is being done on the far side of the world. Networks enable smaller fIrms to collaborate in achieving economies of scale. Software development can be conducted on networks, independent of location. The office is no longer a place, it is a global system. Technology is eliminating the “place” in workplace. Home may be where the heart is, but increasingly the office is anywhere the head can be connected.
“These connections will empower us and enhance freedom and democracy. Citizens will be able to communicate—both send and receive information—on a previously unimaginable scale,” said Anne Bingaman, assistant attorney general in the U.S. Department of Justice. “When you think about this, recall scenes from Nazi-occupied Europe of women and men crouched around the wireless, desperate to learn and tell the truth. Or think of citizens behind the iron curtain, searching the short-wave bands for Radio Free Europe or the BBC. And imagine how much more difficult an oppressor’s job is when people yearning for freedom have access to digital computer networks.”
There are few better descriptions on how the new economy is a global one than that cited by former Citicorp chairman Walter Wriston. He’s seen it all. As late as the 1960s, communications between bank staff in New York and their colleagues in Brazil were akin to an adventure. There were so few international lines that once they’d got one, they’d hang onto it even if there were nothing to say, so that when the time came to exchange information, they had an established connection. In Wriston’s words, what happens today is “global conversation.” More than 100 million telephone calls are completed every hour, using 300 million access lines the world over, and the number of calls will triple by 2000. “The entire globe is now tied together in a single electronic market moving at the speed of light,” says Vriston. “There is no place to hide.”

THEME 10: IMMEDIACY

admin — Mon, 08 Feb 2010 07:43:24 +0000

• In an economy based on bits, immediacy becomes a key driver and variable in economic activity and business success.
Product life cycles are cratering. In 1990, automobiles took six years from concept to production. Today they take two years. Hewlett-Packard’s Computer Systems Organization chief Wim Roelandts says that these days most of HP’s revenues come from products that didn’t exist a year ago. In the old economy, an invention (like the Polaroid camera, xerography) ensured a revenue stream for decades. Today, consumer electronics products have a typical lifespan of two months
The new enterprise is a real time enterprise, which is continuously and immediately adjusting to changing business conditions through information immediacy. Goods are received from suppliers and products shipped to customers “just in time,” thus reducing or eliminating the warehousing function and allowing enterprises to shift from mass production to custom on-line production. Customer orders arrive electronically and are instantly processed; corresponding invoices are sent electronically and databases are updated Enterprises seek to “compete in time” effectively.
Electronic data interchange (EDt) is a powerful, if badly misunderstood, example of how the I-Way is creating information immediacy.’1 Advocates of EDI argue that by linking computer systems between suppliers and their customers for purchase orders, invoices, billing, and record keeping, companies can save considerably over manual (nondigital) methods. In fact, EDI goes well beyond those possibilities. It’s just the first splash in a tidal wave of electronic commerce that will shift the metabolism of business to real time and in so doing forever change the relationship between companies.