Managing Turbulent Times

A major impact is going to be in communications. Until now, electronic communication has largely adapted itself to the traditional definition of voice, vision, and graphics as distinct separate kinds of communication. From now on, electronics will increasingly produce total communications. By the middle of 1980 the Business Communications Satellite (a joint venture of IBM, Xerox, and the American satellite company Comsat) should be in operation in the United States. It will make possible simultaneous and instantaneous electronic transmission of voice, of vision, and of graphics (such as documents or charts). This will enable people in twenty-five places anywhere on the face of the globe to be in one visual place where they can talk to each other directly, see each other, and if need be share the same reports, the same documents, the same graphs simultaneously, without leaving their own office or home. The equivalent communications capacity is available in a number of different systems—for instance, in the new telephone exchanges that are being pioneered by the British Post Office and by competitors to the Bell Telephone System in the United States.

As a result, business travel on the airlines has probably passed its peak. Such travel was one of the growth industries of the post-World War II period. It should increasingly become less important, although its place may well be taken (and taken with a vengeance) by travel for vacation, learning, and sheer curiosity, defined as non-business travel. But business travel should become less and less necessary. It will be possible for executives to get together without moving that heavy, inert object, the human body, and inflicting upon it stupefying hours of vibration in stale air. Increasingly, we will be able to meet "in person" without having to move the person.

An equal or more important change will be the ability to substitute electronic transmission of graphics for the shipping of heavy paper. Marshall McLuhan made the headlines in the sixties by predicting that the electronic "message" would replace the old traditional "medium," the printed word, the graphic information. This has not happened and it will not happen. On the contrary, electronics are becoming the main channel for the transmission of graphic, printed information. Until today, we had to put a few grains of ink on half a pound of heavy cellulose through a printing process, and then to transport the inert mass of cellulose over long distances, to be finally hand-carried to the individual audience, slowly and at great cost. But today almost everyone has two printing plants in his home, the telephone and the television set…

The examples given above are not a listing but a sample. What is clear is that the tremendous amount of new knowledge produced in the last thirty years since the end of World War II is now beginning to have an impact on technology. Knowledge is becoming performance, and this means rapid change. The technological change is only a part of the story; social change and social innovation should be equally important. It is highly possible that we can anticipate a period of rapid change in a great number of areas, regardless of the attitude of the public toward technological change. Resistance to change may make it more expensive but is unlikely to slow it down. Resistance to change may mean that economic leadership tomorrow passes from old to new countries, and from old to new industries. In the late nineteenth century Great Britain lost her leadership, which passed to Germany and the United States. And in the period after World War II the Japanese, precisely because they were in many ways technologically backward, could gain leadership in an area that traditional Western industry had largely neglected— high-technology consumer goods. Such shifts may happen again, are indeed likely to happen again. But this does not alter the fact that technology is changing rapidly and that innovation, both technological and social, is speeding up and is likely to change the structure of economy and society.

In publishing, one trend is clearly toward very large systems: a national or worldwide system for the electronic communication of graphics would be very big indeed. At the same time, the conversion of every telephone or television set into a printing plant offers unlimited opportunity for a truly small publication, such as the specialized magazine for the beekeeper that cannot count on more than 10,000 subscribers in the United States, and maybe not more than 25,000 worldwide. If transmitted over the television set, such a magazine might well become economically viable.

There is only one country left where a migration will still continue: the United States. America can expect large-scale migration from Mexico, a very poor country with one of the largest labor surpluses and one of the highest unemployment rates, yet located next to the richest country and one of its richest areas, the Southwest, with a very low supply of indigenous young people for traditional jobs.

There is no way to prevent mass migration from Mexico over an open 2,000-mile border into the United States, both into the Southwest from San Diego to Denver and into the metropolitan areas of the East and Midwest—New York, Philadelphia, and Chicago—with their already large Hispanic populations. Indeed, the Reconquista of southern California by Mexican immigrants has already begun. By the year 2000, Hispanic-Americans should account for some 50 million of an American population of 250 million; they are about 15 million now. Whether they are officially "legal," "illegal," or "quasi-legal" is immaterial. In any event, the Southwest of the United States may be the only region in the developed world to show a sizable growth in traditional manufacturing industry over the next twenty or twenty-five years.

Socially and culturally, a mass migration of Mexicans to the United States will exacerbate racial and ethnic tensions. With a near-majority in America becoming Roman Catholics in a country of the "Protestant ethos," religion might become a political issue again. There might even be a "black backlash" as the "Chicanos" from Mexico threaten to displace the American black as the officially "disadvantaged" and thus officially privileged "minority." But these are exactly the problems the United States is used to and has handled—or mishandled—throughout all her history. Economically, the mass migration from Mexico, whatever the labor unions might say, should be beneficial and should in fact endow American manufacturing with competitive strength such as it has not known for quite some time.

We are about to enter the stage of integrated trade, for this is what production sharing means. Yet economists, theoreticians, and policymakers are totally unprepared for the challenge. In fact, the lack of concepts and of measurements is a serious problem. Our concepts cannot as yet handle production sharing.

A government statistician will record the export of hides from America as "exports" and the import of shoes as "imports"; his figures will nowhere relate the two. The American cattle grower does not even know that his livelihood depends on the sale of foreign-made shoes in the American market, for hides represent the margin between breaking even and making a profit for the livestock grower in Nebraska. Nor, conversely, does the Haitian manufacturer of the soles for these American shoes realize that he depends on hides grown in the United States. No one yet perceives the relationships. And when shoe workers' unions in the United States or shoe manufacturers in North Carolina agitate for a ban on the importation of "cheap foreign imports," no cattle grower in the Great Plains realizes that they are actually agitating to ban the export of American hides on which his livelihood depends. When the American tanning industry—as it does— asks for a ban on sending hides abroad, American shoe retailers (let alone American consumers) do not realize that this would mean having no shoes to sell in American shops. They do not know that there are not enough American workers available to do even a fraction of the tanning needed.

The modern national state was built on the theorem that political territory and economic territory must be congruent, with the unity of the two forged by governmental control of money—a startling heresy when it was first propounded in the sixteenth century. The code word for this new politico economic unit was the term "sovereignty/' Prior to the late sixteenth century, economic and political systems were quite separate. Money was basically beyond political control except insofar as the Prince made a substantial profit by reserving to himself the right to mint coins. Commerce before the seventeenth century was either transnational or purely local. In the Europe of 1500, before the long inflation of the sixteenth century destroyed the economic system of the time, long distance trade was carried out by trading cities, the sixteenth century equivalent of the multinational corporation of today, and equally controversial, equally criticized, equally reviled. The domestic economy was organized around a market town, which was the center of a self-sufficient agrarian economy in which money, while used to calculate, was only in very limited circulation. And long-distance trade and local market town economy were almost completely insulated from each other, the former with free-market prices, the latter with rigid price controls.

The modern national state was born with the assertion that money and credit have to be controlled by the sovereign and that the economy has to be integrated into the political system, if only to provide the Prince with the means to recruit and pay his mercenaries. The modern national state created national markets within which both long-distance commerce and local trade were unified. "Sovereignty" reached its logical climax in Keynes's theories of the late twenties and early thirties which, in effect, proclaimed that a country—or at least a major country such as the Great Britain of his day—could manage its economy irrespective of the world economy, and largely independent of economic fluctuations and business cycles, by managing and manipulating money and credit.