THE FUTURE OF COMPUTER TECHNOLOGY

I. M. Barron

Redbourn, Hertfordshire

The economic consequences

The value of this technology, like any other, is that it can increase productivity. Such increases may be direct, as in the case of the electronic typewriter, where there is an immediate improvement in productivity of 30% because the typist can now correct errors rapidly and perfectly. They may also be indirect as in the case of ignition control for cars, where the reduction in pollution cuts community costs for hospitalisation.

The importance of the microcomputer is that it increases productivity in the information sector, an area of the economy where, so far, there has been little capital investment, so that it is likely to produce a disproportionately high return. This will encourage capital investment in this area, at the expense of the rest of the economy.

Looked at in general terms, the microcomputer must be a good thing. It can probably provide a greater increase in productivity than anything since the steam engine. Such increases are potentially good because they can be converted into increased leisure, an increased standard of living, or whatever else society chooses.

In the past, improvements in productivity have lead to an interplay between increased leisure and increased wealth. Leisure has increased slowly, while wealth has increased at a faster rate. However, commentators on the leisure society may overestimate the effects of improvements in productivity. At the start of the industrial revolution, the average working week was some 80 hours with 20 hours of leisure, although most of which was spent in the production of food. Now, the pattern in the industrialised West is more like 40 hours of work and 60 hours of leisure, although some part of this is wasted in commuting and other forms of leisure.

To achieve a further gain of 40 hours of leisure would require the complete abolition of work, while even a gain of 20 hours requires a doubling of productivity. Thus, while we may indeed do less work in future, the increase in leisure time will be only marginal; under these conditions there may be an even greater incentive to commute gains in productivity into a higher standard of living. Regrettably, the consequences of the microcomputer are unlikely to be as benign as the preceeding discussion suggests.

History shows that each time there has been a significant increase in productivity, this has been followed by unemployment and a severe depression. It happened at the time of the industrial evolution when t he introduction of condensing steam power revolutionised manufacturing. It happened again, when the application of expansive steam power revolutionised agriculture and transport, and later with the introduction of electrical power at the end of the last century.

These economic cycles appear to be an inherent characteristic of the economic system. They have no basis in the technology itself, but represent the response of the economic system to a step function increase in productivity. As such, there is every reason to expect that the microcomputer will generate a similar economic cycle.

The characteristic of these cycles is that in the first phase, the economy speeds up. In the second phase, there is a reversal of this trend, leading to a major depression in the third phase before the economy stabilises again in the final phase. A complete cycle can take 70 to 100 years, and there are clear indications that we are well into the second phase of the cycle caused by the information revolution.

Economists differ in their interpretation of these cycles, but an approximate explanation can be obtained by considering the effect of a step function on the economy. In the first phase, new technology is being developed. It has little impact on the economy as a whole, but creates an expanding sector which is highly profitable and attracts heavy investment. In the second and third phases of the cycle, the effects of this technology are disseminated throughout the economy. To a first order, the economy can be disaggregated into a supply system and a demand system. The supply system is dominated by the corporations and is tightly managed, so it is responsive to economic change. The demand side is represented by the consumer, and by contrast is fragmented, is unable to make good economic judgements and is slow to respond to economic change. In such a situation, given a step function increase in productivity, the demand pattern will only change slowly, moving over a period of time to a higher plateau. The consequences is that the supply side must adjust, and since productivity has been increased, this means a reduced labour force. In the past, this initial shedding of labour has been reinforced thereby accelerating the decline into depression. In the final phase of the cycle, the demand side has at last adjusted to the new level of productivity, and the economy as a whole benefits from the original increase in productivity.

Thus, while there are undoubted long term benefits to be obtained from improvements in productivity, the consequences on a shorter time scale have often been very much to the disadvantage of most of the population. These consequences can be directly traced to the imperfect operation of the economic system under dynamic change and are in no way related to the technology itself.

Thus, the most immediate consequence of our marvellous new technology may be unemployment. This can occur in two ways; firstly, due to the contraction in demand for labour, and secondly due to changing skill or location requirements.

Some sectors of manufacturing industry will certainly be affected as the pattern of demand changes. More important may be the impact on products which directly exploit the microcomputer, or where the microcomputer offers an alternative solution. Within electronics, the effects are already being felt by the television industry and by telecommunications. Even more significant has been the development of the pocket calculator and the electronic watch. These are total silicon products which replace mechanical alternatives. Because the change in technology is so radical, the existing industries have been unable to adapt and have been swept away by innovative companies with the necessary expertise. Looking forward, the same destructive effects can be anticipated in other information dominated products, like cash registers, typewriters and computers. The exploitation of the microcomputer in existing products is also likely to upset the balance in existing industries, enabling companies which take advantage of the technology to grow rapidly, while others, perhaps longer established, or more reputable, decline.

More significant, in terms of employment, is likely to be the impact of the microcomputer on the information sector of the economy. A substantial proportion of the working population, perhaps 65%, have jobs which are primarily concerned with information in some form or other. Cutting across the traditional industrial classifications are jobs like the secretary, the manager, the supervisor each of which is totally concerned with information. Within specific industries, there are civil servants, postmen, librarians, newspaper workers, and so on. All of these jobs will be changed by the use of electronic information systems and it may be expected that the new technology will lead to considerable improvements in productivity and hence to a potentially high level of unemployment in the information sector.