reflection #3

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Post Industrial?

The Late 20th Century Daniel Bell was a professor of sociology at Harvard University. He was well known for writing influential books. One is called The End of Ideology (1960). In that book, Bell criticizes those who pretend to know how to transform society, how to overcome competing interests and build a future of social harmony. He called their promises a “form of self-deception.” He warned against the confidence they had in their own ideas by reminding readers how Socialism in the Soviet Union led to “the Soviet concentration camps.” Years later, Bell published another book called The Coming of Post-Industrial Society (1973). In this book, Bell examines American society since the mid-20th century. By that time, the United States had long been a “developed” economy. It had gone from underdeveloped to developing in early industrialization, and then developing to developed in later industrialization. Recall the periods of industrialization:

• Early Industrialization – late 1700s to mid-1800s – steam, coal, iron, textiles

• Later Industrialization – late 1800s to mid-1900s – steel, electricity, oil, chemicals In The Coming of Post-Industrial Society, Bell argues that the United States in the late 20th century entered a new stage of economic development – the “Post-Industrial” stage. The obvious question is: What does it mean to say we live in a Post-Industrial society? Let’s start with some numbers about jobs, particularly the types of jobs people do.

Types of Jobs Look at the chart below. It shows the percentage of Americans working in agriculture and manufacturing from 1800 to 2000.

Year Agriculture Manufacturing

1800 74% 2% 1850 55% 15% 1900 40% 20% 1950 12% 25% 1975 4% 26% 2000 2% 15%

From 1800 to 1975, the United States became an increasingly industrial society. Notice how during those years

• a decreasing percentage of Americans worked in agriculture – 74, 55, 40, 12, 4%

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• an increasing percentage of Americans worked in manufacturing – 2, 15, 20, 25, 26% But what happened after 1975? The percentage of Americans working in manufacturing decreased, from 26% (1975) to 15% (2000). This is part of what Bell means by a “Post-Industrial Society”:

• For almost two centuries of industrialization (1800-1975), the percentage of Americans working in manufacturing increased every generation.

• Then after 1975, the percentage of Americans working in manufacturing began decreasing.

• But not because they returned to agriculture. The percentage of Americans working in agriculture decreased as well.

o To be clear, the United States continued to manufacture more and more products after 1975. But it did so with fewer manufacturing workers. Increased productivity in manufacturing meant fewer workers manufactured more goods.

o The same was true in agriculture. Increased productivity meant fewer agricultural workers produced more agricultural goods.

• But if fewer Americans worked in agriculture and, after 1975, fewer Americans worked in manufacturing, then where were Americans working? More and more Americans began to work at new kinds of jobs – neither agricultural nor manufacturing.

So what were these new kinds of jobs? They were jobs related to the new information-based economy.

The Information Age We’ve all probably heard this phrase – “the information age.” It refers to how information- based services and technology became a larger part of the American economy in the late 20th century. As the percentage of Americans working in manufacturing decreased in the late 1900s, the percentage working in information-based services and technology increased. What are information-based services and technology? Let’s start with two examples – education and health care. Each is an information-based service industry, not a manufacturing industry. Professors provide education services and health care workers provide health care services. Look at the two charts below. On the left is the increasing number of colleges and on the right is the increasing percentage of workers in health care from 1950 to 2000.

Year # of Colleges # of Students

1950 1,800 3 million 1975 3,000+ 9+ million 2000 4,000+ 13+ million

Year % in health care

1950 3% 1975 6.5% 2000 10%

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The charts show an increasing number of Americans in the late 1900s working in the information-based services of education and health care. • Again, this is part of what Daniel Bell means by a “Post-Industrial Society.”

• As fewer Americans worked in manufacturing industries, more began working in information-based service industries like education and health care.

• An increasing number of Americans also worked in other information-based services such as financial services and legal services.

It’s not that these types of jobs were entirely new in the late 20th century. There were teachers, doctors, lawyers, and bankers before then. But the percentage of Americans working in these information-based services increased significantly in the late 20th century because the amount and value of information flowing through our society vastly increased. This brings us to the “technology” part of “information-based services and technology.” The amount and value of information vastly increased because of the development of computer technology. • The first working transistor was invented in 1947.

• The integrated circuit or microchip followed in 1958. These technologies greatly increased the ability to produce, process, organize, and communicate information. Think about what this means. Throughout our discussion of Industrialization, we’ve talked about how technology increases productivity, which increases wealth – the self-sustaining growth of capitalism. • Increased productivity in Industrial Society means increased productivity in manufacturing

and transporting goods – textiles, kerosene, steel, railroads, etc.

• Increased productivity in “Post-Industrial Society” means increased productivity in processing, organizing, and communicating information.

• To repeat a point from above, a “Post-Industrial Society” like the United States still manufactures more goods than earlier, but does so with fewer people working in manufacturing. Employment shifts from manufacturing goods to processing and communicating information – i.e., employment shifts to information-based services and technology.

Let’s note a few more mid-20th century developments in computer technology which vastly increased the ability to produce, process, organize, and communicate information. • Early forms of computer networking were developed in 1961 for air defense. The computer

system was called “SAGE.” You can see a brief video here.

• In the 1950s and ’60s, companies such as IBM began producing computers for businesses – computers which could produce, process, and organize information for inventory, payroll, and billing. These computers could make thousands of calculations per second, saving the company time and money.

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• Bill Gates and Steve Jobs were both born in 1955. The computers in the 1940s, ’50s, and ’60s were massive in size and very expensive. By the 1970s and ’80s, IBM, Apple, and Microsoft were making computers smaller, cheaper, and more powerful, increasing computer memory and processing power. Thousands of calculations per second had seemed unbelievably fast in the 1950s and ’60s. By the 1980s, that speed seemed unacceptably slow. The newer, smaller, cheaper computers performed hundreds of thousands and even millions of calculations per second. In the 1990s, the technology of computer networking expanded dramatically, leading to what we now know as the Internet. Internet based companies quickly developed. Amazon was founded in 1994, Google in 1998. Blackboard was created in 1997. Smartphones and tablets followed in the early 2000s.

Types of Jobs (again) & Creative Destruction (again)

We already discussed the increasing numbers of jobs in information-based service industries of the late 20th century– education, health care, finance, and legal services. Let’s also discuss the increasing number of jobs in information-based technology industries in the late 20th and early 21st centuries. These jobs included computer scientists, software engineers, and computer programmers. • Think about what a computer programmer does and how s/he represents “Post-Industrial

Society.”

• The programmer does not manufacture goods, but manipulates symbols to write the codes of computer operating systems and software.

• These symbols and codes are simulations of reality, but simulations which have real world effects in the functioning of computers and software.

Consider the overlap between information services and technology. Some computer programmers (technology) work in finance (services) writing codes for investing in the stock market. The codes make computers automatically buy and sell stocks when they hit certain prices. Other information-based technology jobs include: software and networking security, microchip technology, research and development in nanotechnology and artificial intelligence. At this point, let’s ask the following question: Isn’t this another form of creative destruction? Isn’t the discussion of “Post-Industrial Society” another way of describing the type of creative

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destruction we’ve previously encountered in studying industrialization? Recall these two examples of creative destructions from our discussions of industrialization up to this point. • Manufacturing textiles in early industrialization destroyed jobs in the wool industry.

• Manufacturing kerosene in later industrialization destroyed jobs in the whale hunting industry.

Back to the question: Is the discussion of “Post-Industrial Society” describing another round of creative destruction? The answer is “yes,” information-based services and technology have replaced many manufacturing jobs. Consider the following example: • We as a country still manufacture a lot of cars, refrigerators, washing machines, and

furnaces.

• But we often manufacture more of these goods with fewer manufacturing workers because computer-based robotics perform some of the manufacturing tasks.

• The “destructive” part is this: New computer technology destroys some existing manufacturing jobs. Fewer workers are required to manufacture the same number of cars refrigerators, etc. than in 1975.

• The “creative” part is this: The new technologies – such as computer-based robotics – are based on new jobs in computer science and programming, and the development of artificial intelligence.

• Remember, the “creative” part cannot happen without the “destruction” part. It is not possible to create new technologies which help the economy grow without destroying some existing jobs and industries. An economy which is not destroying jobs is an economy which is not growing. And that means an economy which is not improving health care, education, and other important goods and services.

So “Post-Industrial Society” represents a new round of creative destruction. But if you think through our discussion above you might sense that this new round of creative destruction is distinct from earlier rounds of creative destruction. The distinction is this: Many new “Post-Industrial” jobs – the new jobs in information-based services and technology – require more education than the new jobs in earlier rounds of creative destruction. • These new jobs are often called the “knowledge industry” because they require years of

higher education.

• This educational requirement for many Post-Industrial jobs has led to greater disparities in income between those who have college degrees and those who do not.

• We often call these disparities in income social inequality.

• Consider, for example, the difference in income today between a computer scientist and someone without a college degree. That difference in income is likely greater than the

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difference 50 years ago between a manufacturing worker and someone without a college degree.

• To repeat the point: Many new Post-Industrial jobs in information-based services and technology require more education than the industrial jobs of earlier generations. This increased education has resulted in greater disparities of income between those with and those without college degrees. (Though there are skilled technicians with non-college training who make decent income such as plumbers and electricians.)

• This is another example of how economic progress is multi-dimensional. The information- based services and technology benefit society across generations. Though certain manufacturing jobs are destroyed in the process. And many of the new types of good jobs in Post-Industrial Society include higher education requirements which have resulted in greater disparities of income between those who fulfill these requirements and those who do not.

So differences in income between those with and those without college degrees have increased since 1973 when Daniel Bell published The Coming of Post-Industrial Society. Some political discussions try to find someone or something to blame for these changes in income. Some discussions might blame this or that politician, this or that political party, this or that law, etc. But those types of discussions are usually not helpful. They don’t tend to promote understanding, but highlight how politics often interferes with understanding. The real root of the issue is a new round of creative destruction – a shift in employment from manufacturing to information-based services and technology. That shift has brought with it many wonderful things, from improved health care services and treatments to unlimited information and learning at our fingertips. That shift has made us a much wealthier society and has led to the highest median income in history. It has also brought with it the increasing connection between information-based skills and income. One question going forward is this: To what extent will formal college education continue to be closely related to income? Information-based skills will likely remain related to income. But will those information-based skills remain as closely related to formal college education? Perhaps they will. Though the increasing number of platforms for learning – what we might call education delivery systems – raises interesting questions about how future generations will develop the valuable skills necessary for successful careers.