- Perché gli uomini sono fissati con il sesso... e le donne sognano l'amore?
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To be sure, management, like any other work, has its own tools and its own techniques. But just as the essence of medicine is not urinalysis important though that is , the essence of management is not techniques and procedures. The essence of management is to make knowledges productive. Management, in other words, is a social function. And in its practice management is truly a liberal art. The old communities—family, village, parish, and so on—have all but disappeared in the knowledge society.
Their place has largely been taken by the new unit of social integration, the organization. Where community was fate, organization is voluntary membership. Where community claimed the entire person, organization is a means to a person's ends, a tool.
Perché gli uomini sono fissati con il sesso... e le donne sognano l'amore?
For years a hot debate has been raging, especially in the West: Nobody would claim that the new organization is "organic. But who, then, does the community tasks? Two hundred years ago whatever social tasks were being done were done in all societies by a local community. Very few if any of these tasks are being done by the old communities anymore. Nor would they be capable of doing them, considering that they no longer have control of their members or even a firm hold over them. People no longer stay where they were born, either in terms of geography or in terms of social position and status.
By definition, a knowledge society is a society of mobility. And all the social functions of the old communities, whether performed well or poorly and most were performed very poorly indeed , presupposed that the individual and the family would stay put. But the essence of a knowledge society is mobility in terms of where one lives, mobility in terms of what one does, mobility in terms of one's affiliations. People no longer have roots.
People no longer have a neighborhood that controls what their home is like, what they do, and, indeed, what their problems are allowed to be. The knowledge society is a society in which many more people than ever before can be successful. But it is therefore, by definition, also a society in which many more people than ever before can fail, or at least come in second. And if only because the application of knowledge to work has made developed societies so much richer than any earlier society could even dream of becoming, the failures, whether poor people or alcoholics, battered women or juvenile delinquents, are seen as failures of society.
Who, then, takes care of the social tasks in the knowledge society? We cannot ignore them. But the traditional community is incapable of tackling them. Two answers have emerged in the past century or so—a majority answer and a dissenting opinion. Both have proved to be wrong.
The majority answer goes back more than a hundred years, to the s, when Bismarck's Germany took the first faltering steps toward the welfare state. This is still probably the answer that most people accept, especially in the developed countries of the West—even though most people probably no longer fully believe it.
But it has been totally disproved. Modern government, especially since the Second World War, has everywhere become a huge welfare bureaucracy. And the bulk of the budget in every developed country today is devoted to Entitlements—to payments for all kinds of social services. Yet in every developed country society is becoming sicker rather than healthier, and social problems are multiplying. Government has a big role to play in social tasks—the role of policymaker, of standard setter, and, to a substantial extent, of paymaster. But as the agency to run social services, it has proved almost totally incompetent.
I argued then that the new organization—and fifty years ago that meant the large business enterprise—would have to be the community in which the individual would find status and function, with the workplace community becoming the one in and through which social tasks would be organized. In Japan though quite independently and without any debt to me the large employer—government agency or business—has indeed increasingly attempted to serve as a community for its employees.
Lifetime employment is only one affirmation of this. Company housing, company health plans, company vacations, and so on all emphasize for the Japanese employee that the employer, and especially the big corporation, is the community and the successor to yesterday's village—even to yesterday's family.
This, however, has not worked either. There is need, especially in the West, to bring the employee increasingly into the government of the workplace community. What is now called empowerment is very similar to the things I talked about fifty years ago. But it does not create a community. Nor does it create the structure through which the social tasks of the knowledge society can be tackled. In fact, practically all these tasks—whether education or health care; the anomies and diseases of a developed and, especially, a rich society, such as alcohol and drug abuse; or the problems of incompetence and irresponsibility such as those of the underclass in the American city—lie outside the employing institution.
The right answer to the question Who takes care of the social challenges of the knowledge society? The answer is a separate and new social sector. It is less than fifty years, I believe, since we first talked in the United States of the two sectors of a modern society—the "public sector" government and the "private sector" business. In the past twenty years the United States has begun to talk of a third sector, the "nonprofit sector"—those organizations that increasingly take care of the social challenges of a modern society. In the United States, with its tradition of independent and competitive churches, such a sector has always existed.
Even now churches are the largest single part of the social sector in the United States, receiving almost half the money given to charitable institutions, and about a third of the time volunteered by individuals. But the nonchurch part of the social sector has been the growth sector in the United States. In the early s about a million organizations were registered in the United States as nonprofit or charitable organizations doing social-sector work. The overwhelming majority of these, some 70 percent, have come into existence in the past thirty years.
And most are community services concerned with life on this earth rather than with the Kingdom of Heaven. Quite a few of the new organizations are, of course, religious in their orientation, but for the most part these are not churches. They are "parachurches" engaged in a specific social task, such as the rehabilitation of alcohol and drug addicts, the rehabilitation of criminals, or elementary school education. Even within the church segment of the social sector the organizations that have shown the capacity to grow are radically new.
They are the "pastoral" churches, which focus on the spiritual needs of individuals, especially educated knowledge workers, and then put the spiritual energies of their members to work on the social challenges and social problems of the community—especially, of course, the urban community. We still talk of these organizations as "nonprofits.
It means nothing except that under American law these organizations do not pay taxes. Whether they are organized as nonprofit or not is actually irrelevant to their function and behavior. Many American hospitals since or have become "for-profits" and are organized in what legally are business corporations.
They function in exactly the same way as traditional "nonprofit" hospitals. What matters is not the legal basis but that the social-sector institutions have a particular kind of purpose. Government demands compliance; it makes rules and enforces them. Business expects to be paid; it supplies. Social-sector institutions aim at changing the human being. The "product" of a school is the student who has learned something.
The "product" of a hospital is a cured patient. The "product" of a church is a churchgoer whose life is being changed. The task of social-sector organizations is to create human health and well being. Increasingly these organizations of the social sector serve a second and equally important purpose. Modern society and modern polity have become so big and complex that citizenship—that is, responsible participation—is no longer possible.
All we can do as citizens is to vote once every few years and to pay taxes all the time. As a volunteer in a social-sector institution, the individual can again make a difference. In the United States, where there is a long volunteer tradition because of the old independence of the churches, almost every other adult in the s is working at least three—and often five—hours a week as a volunteer in a social-sector organization. Britain is the only other country with something like this tradition, although it exists there to a much lesser extent in part because the British welfare state is far more embracing, but in much larger part because it has an established church—paid for by the state and run as a civil service.
Outside the English-speaking countries there is not much of a volunteer tradition. In fact, the modern state in Europe and Japan has been openly hostile to anything that smacks of volunteerism—most so in France and Japan. It is ancien regime and suspected of being fundamentally subversive. But even in these countries things are changing, because the knowledge society needs the social sector, and the social sector needs the volunteer. But knowledge workers also need a sphere in which they can act as citizens and create a community.
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The workplace does not give it to them. Nothing has been disproved faster than the concept of the "organization man," which was widely accepted forty years ago. In fact, the more satisfying one's knowledge work is, the more one needs a separate sphere of community activity. Many social-sector organizations will become partners with government—as is the case in a great many "privatizations," where, for instance, a city pays for street cleaning and an outside contractor does the work. In American education over the next twenty years there will be more and more government-paid vouchers that will enable parents to put their children into a variety of different schools, some public and tax supported, some private and largely dependent on the income from the vouchers.
These social-sector organizations, although partners with government, also clearly compete with government. The relationship between the two has yet to be worked out—and there is practically no precedent for it. What constitutes performance for social-sector organizations, and especially for those that, being nonprofit and charitable, do not have the discipline of a financial bottom line, has also yet to be worked out. We know that social-sector organizations need management. But what precisely management means for the social-sector organization is just beginning to be studied.
With respect to the management of the nonprofit organization we are in many ways pretty much where we were fifty or sixty years ago with respect to the management of the business enterprise: But one thing is already clear. The knowledge society has to be a society of three sectors: And I submit that it is becoming increasingly clear that through the social sector a modern developed society can again create responsible and achieving citizenship, and can again give individuals—especially knowledge workers—a sphere in which they can make a difference in society and re-create community.
Knowledge has become the key resource, for a nation's military strength as well as for its economic strength. And this knowledge can be acquired only through schooling. It is not tied to any country. It can be created everywhere, fast and cheaply. Finally, it is by definition changing. Knowledge as the key resource is fundamentally different from the traditional key resources of the economist—land, labor, and even capital. That knowledge has become the key resource means that there is a world economy, and that the world economy, rather than the national economy, is in control.
Every country, every industry, and every business will be in an increasingly competitive environment. Every country, every industry, and every business will, in its decisions, have to consider its competitive standing in the world economy and the competitiveness of its knowledge competencies. Politics and policies still center on domestic issues in every country. Few if any politicians, journalists, or civil servants look beyond the boundaries of their own country when a new measure such as taxes, the regulation of business, or social spending is being discussed.
Even in Germany—Europe's most export-conscious and export-dependent major country—this is true. Almost no one in the West asked in what the government's unbridled spending in the East would do to Germany's competitiveness. This will no longer do. Every country and every industry will have to learn that the first question is not Is this measure desirable?
We need to develop in politics something similar to the environmental-impact statement, which in the United States is now required for any government action affecting the quality of the environment: The impact on one's competitive position in the world economy should not necessarily be the main factor in a decision. But to make a decision without considering it has become irresponsible. Altogether, the fact that knowledge has become the key resource means that the standing of a country in the world economy will increasingly determine its domestic prosperity.
Since a country's ability to improve its position in the world economy has been the main and perhaps the sole determinant of performance in the domestic economy. Monetary and fiscal policies have been practically irrelevant, for better and, very largely, even for worse with the single exception of governmental policies creating inflation, which very rapidly undermines both a country's competitive standing in the world economy and its domestic stability and ability to grow. The primacy of foreign affairs is an old political precept going back in European politics to the seventeenth century.
Since the Second World War it has also been accepted in American politics—though only grudgingly so, and only in emergencies. It has always meant that military security was to be given priority over domestic policies, and in all likelihood this is what it will continue to mean, Cold War or no Cold War. But the primacy of foreign affairs is now acquiring a different dimension. This is that a country's competitive position in the world economy—and also an industry's and an organization's—has to be the first consideration in its domestic policies and strategies.
This holds true for a country that is only marginally involved in the world economy should there still be such a one , and for a business that is only marginally involved in the world economy, and for a university that sees itself as totally domestic. Knowledge knows no boundaries. There is no domestic knowledge and no international knowledge. There is only knowledge.
And with knowledge becoming the key resource, there is only a world economy, even though the individual organization in its daily activities operates within a national, regional, or even local setting. Social tasks are increasingly being done by individual organizations, each created for one, and only one, social task, whether education, health care, or street cleaning. Society, therefore, is rapidly becoming pluralist.
Yet our social and political theories still assume that there are no power centers except government. To destroy or at least to render impotent all other power centers was, in fact, the thrust of Western history and Western politics for years, from the fourteenth century on. This drive culminated in the eighteenth and nineteenth centuries, when, except in the United States, such early institutions as still survived—for example, the universities and the churches—became organs of the state, with their functionaries becoming civil servants.
But then, beginning in the mid nineteenth century, new centers arose—the first one, the modern business enterprise, around And since then one new organization after another has come into being. The new institutions—the labor union, the modern hospital, the mega church, the research university—of the society of organizations have no interest in public power. They do not want to be governments.
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But they demand—and, indeed, need—autonomy with respect to their functions. Even at the extreme of Stalinism the managers of major industrial enterprises were largely masters within their enterprises, and the individual industry was largely autonomous. So were the university, the research lab, and the military. In the "pluralism" of yesterday—in societies in which control was shared by various institutions, such as feudal Europe in the Middle Ages and Edo Japan in the seventeenth and eighteenth centuries—pluralist organizations tried to be in control of whatever went on in their community.
At least, they tried to prevent any other organization from having control of any community concern or community institution within their domain. But in the society of organizations each of the new institutions is concerned only with its own purpose and mission. It does not claim power over anything else. But it also does not assume responsibility for anything else.
Who, then, is concerned with the common good? This has always been a central problem of pluralism. No earlier pluralism solved it. The problem remains, but in a new guise. So far it has been seen as imposing limits on social institutions—forbidding them to do things in the pursuit of their mission, function, and interest which encroach upon the public domain or violate public policy. The laws against discrimination—by race, sex, age, educational level, health status, and so on—which have proliferated in the United States in the past forty years all forbid socially undesirable behavior.
But we are increasingly raising the question of the social responsibility of social institutions: What do institutions have to do—in addition to discharging their own functions—to advance the public good? This, however, though nobody seems to realize it, is a demand to return to the old pluralism, the pluralism of feudalism. It is a demand that private hands assume public power.
This could seriously threaten the functioning of the new organizations, as the example of the schools in the United States makes abundantly clear. One of the major reasons for the steady decline in the capacity of the schools to do their job—that is, to teach children elementary knowledge skills—is surely that since the s the United States has increasingly made the schools the carriers of all kinds of social policies: Whether we have actually made any progress in assuaging social ills is highly debatable; so far the schools have not proved particularly effective as tools for social reform.
But making the school the organ of social policies has, without any doubt, severely impaired its capacity to do its own job. The new pluralism has a new problem: This makes doubly important the emergence of a b and functioning social sector. It is an additional reason why the social sector will increasingly be crucial to the performance, if not to the cohesion, of the knowledge society.
Of the new organizations under consideration here, the first to arise, years ago, was the business enterprise. It was only natural, therefore, that the problem of the emerging society of organizations was first seen as the relationship of government and business. It was also natural that the new interests were first seen as economic interests. The first attempt to come to grips with the politics of the emerging society of organizations aimed, therefore, at making economic interests serve the political process.
The first to pursue this goal was an American, Mark Hanna, the restorer of the Republican Party in the s and, in many ways, the founding father of twentieth-century American politics. His definition of politics as a dynamic disequilibrium between the major economic interests—farmers, business, and labor—remained the foundation of American politics until the Second World War.
In fact, Franklin D. Roosevelt restored the Democratic Party by reformulating Hanna. And the basic political position of this philosophy is evident in the title of the most influential political book written during the New Deal years—Politics: Mark Hanna in knew very well that there are plenty of concerns other than economic concerns. And yet it was obvious to him—as it was to Roosevelt forty years later—that economic interests had to be used to integrate all the others. This is still the assumption underlying most analyses of American politics—and, in fact, of politics in all developed countries.
But the assumption is no longer tenable. Underlying Hanna's formula of economic interests is the view of land, labor, and capital as the existing resources. But knowledge, the new resource for economic performance, is not in itself economic. It cannot be bought or sold. The fruits of knowledge, such as the income from a patent, can be bought or sold; the knowledge that went into the patent cannot be conveyed at any price. No matter how much a suffering person is willing to pay a neurosurgeon, the neurosurgeon cannot sell to him—and surely cannot convey to him—the knowledge that is the foundation of the neurosurgeon's performance and income.
The acquisition of knowledge has a cost, as has the acquisition of anything. But the acquisition of knowledge has no price. Economic interests can therefore no longer integrate all other concerns and interests. As soon as knowledge became the key economic resource, the integration of interests—and with it the integration of the pluralism of a modern polity—began to be lost. Increasingly, non-economic interests are becoming the new pluralism—the special interests, the single-cause organizations, and so on. Increasingly, politics is not about "who gets what, when, how" but about values, each of them considered to be an absolute.
Politics is about the right to life of the embryo in the womb as against the right of a woman to control her own body and to abort an embryo. It is about the environment. It is about gaining equality for groups alleged to be oppressed and discriminated against. None of these issues is economic. All are fundamentally moral. Economic interests can be compromised, which is the great strength of basing politics on economic interests. But half a baby, in the biblical story of the judgment of Solomon, is not half a child.
No compromise is possible. To an environmentalist, half an endangered species is an extinct species. This greatly aggravates the crisis of modern government. Newspapers and commentators still tend to report in economic terms what goes on in Washington, in London, in Bonn, or in Tokyo. But more and more of the lobbyists who determine governmental laws and governmental actions are no longer lobbyists for economic interests.
They lobby for and against measures that they—and their paymasters—see as moral, spiritual, cultural. And each of these new moral concerns, each represented by a new organization, claims to stand for an absolute. Dividing their loaf is not compromise; it is treason. There is thus in the society of organizations no one integrating force that pulls individual organizations in society and community into coalition.
The traditional parties—perhaps the most successful political creations of the nineteenth century—can no longer integrate divergent groups and divergent points of view into a common pursuit of power. Rather, they have become battlefields between groups, each of them fighting for absolute victory and not content with anything but total surrender of the enemy.
The twenty-first century will surely be one of continuing social, economic, and political turmoil and challenge, at least in its early decades. What I have called the age of social transformation is not over yet. And the challenges looming ahead may be more serious and more daunting than those posed by the social transformations that have already come about, the social transformations of the twentieth century.
Yet we will not even have a chance to resolve these new and looming problems of tomorrow unless we first address the challenges posed by the developments that are already accomplished facts, the developments reported in the earlier sections of this essay. These are the priority tasks. For only if they are tackled can we in the developed democratic free market countries hope to have the social cohesion, the economic strength, and the governmental capacity needed to tackle the new challenges.
The first order of business—for sociologists, political scientists, and economists; for educators; for business executives, politicians, and nonprofit-group leaders; for people in all walks of life, as parents, as employees, as citizens—is to work on these priority tasks, for few of which we so far have a precedent, let alone tested solutions. We will have to think through education—its purpose, its values, its content. We will have to learn to define the quality of education and the productivity of education, to measure both and to manage both.
We need systematic work on the quality of knowledge and the productivity of knowledge—neither even defined so far. The performance capacity, if not the survival, of any organization in the knowledge society will come increasingly to depend on those two factors. But so will the performance capacity, if not the survival, of any individual in the knowledge society. And what responsibility does knowledge have? What are the responsibilities of the knowledge worker, and especially of a person with highly specialized knowledge?
Increasingly, the policy of any country—and especially of any developed country—will have to give primacy to the country's competitive position in an increasingly competitive world economy. Any proposed domestic policy needs to be shaped so as to improve that position, or at least to minimize adverse impacts on it.
The same holds true for the policies and strategies of any institution within a nation, whether a local government, a business, a university, or a hospital. But then we also need to develop an economic theory appropriate to a world economy in which knowledge has become the key economic resource and the dominant, if not the only, source of comparative advantage. We are beginning to understand the new integrating mechanism: But we still have to think through how to balance two apparently contradictory requirements. Organizations must competently perform the one social function for the sake of which they exist—the school to teach, the hospital to cure the sick, and the business to produce goods, services, or the capital to provide for the risks of the future.
They can do so only if they single-mindedly concentrate on their specialized mission. But there is also society's need for these organizations to take social responsibility—to work on the problems and challenges of the community.
Together these organizations are the community. The emergence of a b, independent, capable social sector—neither public sector nor private sector—is thus a central need of the society of organizations. But by itself it is not enough—the organizations of both the public and the private sector must share in the work. The function of government and its functioning must be central to political thought and political action. The megastate in which this century indulged has not performed, either in its totalitarian or in its democratic version.
It has not delivered on a single one of its promises. And government by countervailing lobbyists is neither particularly effective—in fact, it is paralysis—nor particularly attractive. Yet effective government has never been needed more than in this highly competitive and fast-changing world of ours, in which the dangers created by the pollution of the physical environment are matched only by the dangers of worldwide armaments pollution.
And we do not have even the beginnings of political theory or the political institutions needed for effective government in the knowledge-based society of organizations. If the twentieth century was one of social transformations,. Sandel takes on one of the biggest ethical questions of our time: Is there something wrong with a world in which everything is for sale?
What are the moral limits of markets? In recent decades, market values have crowded out nonmarket norms in almost every aspect of life—medicine, education, government, law, art, sports, even family life and personal relations. Without quite realizing it, Sandel argues, we have drifted from having a market economy to being a market society. Is this where we want to be? In his New York Times bestseller Justice, Sandel showed himself to be a master at illuminating, with clarity and verve, the hard moral questions we confront in our everyday lives.
Wall Street has responded — predictably, I suppose — by whining and throwing temper tantrums. And it has, in a way, been funny to see how childish and thin-skinned the Masters of the Universe turn out to be. Remember when Jamie Dimon of JPMorgan Chase characterized any discussion of income inequality as an attack on the very notion of success?
Once upon a time, this fairy tale tells us, America was a land of lazy managers and slacker workers. Productivity languished, and American industry was fading away in the face of foreign competition. Then square-jawed, tough-minded buyout kings like Mitt Romney and the fictional Gordon Gekko came to the rescue, imposing financial and work discipline. But the result was a great economic revival, whose benefits trickled down to everyone. For the alleged productivity surge never actually happened.
In fact, overall business productivity in America grew faster in the postwar generation, an era in which banks were tightly regulated and private equity barely existed, than it has since our political system decided that greed was good. We now think of America as a nation doomed to perpetual trade deficits, but it was not always thus.
From the s through the s, we generally had more or less balanced trade, exporting about as much as we imported. The big trade deficits only started in the Reagan years, that is, during the era of runaway finance. And what about that trickle-down? It never took place. However, only a small part of those gains got passed on to American workers.
So, no, financial wheeling and dealing did not do wonders for the American economy, and there are real questions about why, exactly, the wheeler-dealers have made so much money while generating such dubious results. But while this behavior may be funny, it is also deeply immoral.
Think about where we are right now, in the fifth year of a slump brought on by irresponsible bankers. The bankers themselves have been bailed out, but the rest of the nation continues to suffer terribly, with long-term unemployment still at levels not seen since the Great Depression, with a whole cohort of young Americans graduating into an abysmal job market. And in the midst of this national nightmare, all too many members of the economic elite seem mainly concerned with the way the president apparently hurt their feelings.
The author uses history to gauge the significance of e-commerce -- "a totally unexpected development" -- and to throw light on the future of "the knowledge worker," his own coinage. The online version of this article appears in three parts. Click here to go to parts two and three.
THE truly revolutionary impact of the Information Revolution is just beginning to be felt. But it is not "information" that fuels this impact. It is not "artificial intelligence. It is something that practically no one foresaw or, indeed, even talked about ten or fifteen years ago: This is profoundly changing economies, markets, and industry structures; products and services and their flow; consumer segmentation, consumer values, and consumer behavior; jobs and labor markets.
But the impact may be even greater on societies and politics and, above all, on the way we see the world and ourselves in it. At the same time, new and unexpected industries will no doubt emerge, and fast. One is already here: Within the next fifty years fish farming may change us from hunters and gatherers on the seas into "marine pastoralists" -- just as a similar innovation some 10, years ago changed our ancestors from hunters and gatherers on the land into agriculturists and pastoralists. It is likely that other new technologies will appear suddenly, leading to major new industries.
What they may be is impossible even to guess at. But it is highly probable -- indeed, nearly certain -- that they will emerge, and fairly soon. And it is nearly certain that few of them -- and few industries based on them -- will come out of computer and information technology. Like biotechnology and fish farming, each will emerge from its own unique and unexpected technology. Of course, these are only predictions. But they are made on the assumption that the Information Revolution will evolve as several earlier technology-based "revolutions" have evolved over the past years, since Gutenberg's printing revolution, around In particular the assumption is that the Information Revolution will be like the Industrial Revolution of the late eighteenth and early nineteenth centuries.
And that is indeed exactly how the Information Revolution has been during its first fifty years. HE Information Revolution is now at the point at which the Industrial Revolution was in the early s, about forty years after James Watt's improved steam engine first installed in was first applied, in , to an industrial operation -- the spinning of cotton. And the steam engine was to the first Industrial Revolution what the computer has been to the Information Revolution -- its trigger, but above all its symbol.
Almost everybody today believes that nothing in economic history has ever moved as fast as, or had a greater impact than, the Information Revolution. But the Industrial Revolution moved at least as fast in the same time span, and had probably an equal impact if not a greater one. In short order it mechanized the great majority of manufacturing processes, beginning with the production of the most important industrial commodity of the eighteenth and early nineteenth centuries: Moore's Law asserts that the price of the Information Revolution's basic element, the microchip, drops by 50 percent every eighteen months.
The same was true of the products whose manufacture was mechanized by the first Industrial Revolution. The price of cotton textiles fell by 90 percent in the fifty years spanning the start of the eighteenth century. The production of cotton textiles increased at least fold in Britain alone in the same period.
And although textiles were the most visible product of its early years, the Industrial Revolution mechanized the production of practically all other major goods, such as paper, glass, leather, and bricks. Its impact was by no means confined to consumer goods. The production of iron and ironware -- for example, wire -- became mechanized and steam-driven as fast as did that of textiles, with the same effects on cost, price, and output.
By the end of the Napoleonic Wars the making of guns was steam-driven throughout Europe; cannons were made ten to twenty times as fast as before, and their cost dropped by more than two thirds. By that time Eli Whitney had similarly mechanized the manufacture of muskets in America and had created the first mass-production industry.
These forty or fifty years gave rise to the factory and the "working class. But psychologically they had come to dominate and soon would politically also. Before there were factories in America, Alexander Hamilton foresaw an industrialized country in his Report on Manufactures. A decade later, in , a French economist, Jean-Baptiste Say, saw that the Industrial Revolution had changed economics by creating the "entrepreneur. The social consequences went far beyond factory and working class. As the historian Paul Johnson has pointed out, in A History of the American People , it was the explosive growth of the steam-engine-based textile industry that revived slavery.
Considered to be practically dead by the Founders of the American Republic, slavery roared back to life as the cotton gin -- soon steam-driven -- created a huge demand for low-cost labor and made breeding slaves America's most profitable industry for some decades. The Industrial Revolution also had a great impact on the family. The nuclear family had long been the unit of production. On the farm and in the artisan's workshop husband, wife, and children worked together. The factory, almost for the first time in history, took worker and work out of the home and moved them into the workplace, leaving family members behind -- whether spouses of adult factory workers or, especially in the early stages, parents of child factory workers.
Indeed, the "crisis of the family" did not begin after the Second World War. It began with the Industrial Revolution -- and was in fact a stock concern of those who opposed the Industrial Revolution and the factory system. The best description of the divorce of work and family, and of its effect on both, is probably Charles Dickens's novel Hard Times.
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But despite all these effects, the Industrial Revolution in its first half century only mechanized the production of goods that had been in existence all along. It tremendously increased output and tremendously decreased cost. It created both consumers and consumer products. But the products themselves had been around all along. And products made in the new factories differed from traditional products only in that they were uniform, with fewer defects than existed in products made by any but the top craftsmen of earlier periods.
There was only one important exception, one new product, in those first fifty years: It had little impact until thirty or forty years later. In fact, until almost the end of the nineteenth century more freight was carried on the world's oceans by sailing vessels than by steamships. Then, in , came the railroad, a product truly without precedent, and it forever changed economy, society, and politics.
In retrospect it is difficult to imagine why the invention of the railroad took so long. Rails to move carts had been around in coal mines for a very long time. What could be more obvious than to put a steam engine on a cart to drive it, rather than have it pushed by people or pulled by horses? But the railroad did not emerge from the cart in the mines. It was developed quite independently. And it was not intended to carry freight. On the contrary, for a long time it was seen only as a way to carry people.
Railroads became freight carriers thirty years later, in America. In fact, as late as the s and s the British engineers who were hired to build the railroads of newly Westernized Japan designed them to carry passengers -- and to this day Japanese railroads are not equipped to carry freight. But until the first railroad actually began to operate, it was virtually unanticipated.
Within five years, however, the Western world was engulfed by the biggest boom history had ever seen -- the railroad boom. Punctuated by the most spectacular busts in economic history, the boom continued in Europe for thirty years, until the late s, by which time most of today's major railroads had been built. The railroad was the truly revolutionary element of the Industrial Revolution, for not only did it create a new economic dimension but also it rapidly changed what I would call the mental geography.
For the first time in history human beings had true mobility. For the first time the horizons of ordinary people expanded. Contemporaries immediately realized that a fundamental change in mentality had occurred.
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A good account of this can be found in what is surely the best portrayal of the Industrial Revolution's society in transition, George Eliot's novel Middlemarch. As the great French historian Fernand Braudel pointed out in his last major work, The Identity of France , it was the railroad that made France into one nation and one culture.
It had previously been a congeries of self-contained regions, held together only politically. And the role of the railroad in creating the American West is, of course, a commonplace in U. IKE the Industrial Revolution two centuries ago, the Information Revolution so far -- that is, since the first computers, in the mids -- has only transformed processes that were here all along. In fact, the real impact of the Information Revolution has not been in the form of "information" at all. Almost none of the effects of information envisaged forty years ago have actually happened.
For instance, there has been practically no change in the way major decisions are made in business or government. But the Information Revolution has routinized traditional processes in an untold number of areas. The software for tuning a piano converts a process that traditionally took three hours into one that takes twenty minutes. There is software for payrolls, for inventory control, for delivery schedules, and for all the other routine processes of a business.
Drawing the inside arrangements of a major building heating, water supply, sewerage, and so on such as a prison or a hospital formerly took, say, twenty-five highly skilled draftsmen up to fifty days; now there is a program that enables one draftsman to do the job in a couple of days, at a tiny fraction of the cost. There is software to help people do their tax returns and software that teaches hospital residents how to take out a gall bladder.
The people who now speculate in the stock market online do exactly what their predecessors in the s did while spending hours each day in a brokerage office. The processes have not been changed at all. They have been routinized, step by step, with a tremendous saving in time and, often, in cost. The psychological impact of the Information Revolution, like that of the Industrial Revolution, has been enormous. It has perhaps been greatest on the way in which young children learn.
Beginning at age four and often earlier , children now rapidly develop computer skills, soon surpassing their elders; computers are their toys and their learning tools. Fifty years hence we may well conclude that there was no "crisis of American education" in the closing years of the twentieth century -- there was only a growing incongruence between the way twentieth-century schools taught and the way late-twentieth-century children learned.
Something similar happened in the sixteenth-century university, a hundred years after the invention of the printing press and movable type. But as to the way we work, the Information Revolution has so far simply routinized what was done all along. The only exception is the CD- ROM , invented around twenty years ago to present operas, university courses, a writer's oeuvre, in an entirely new way. The Meaning of E-commerce.
And like the railroad years ago, e-commerce is creating a new and distinct boom, rapidly changing the economy, society, and politics. A mid-sized company in America's industrial Midwest, founded in the s and now run by the grandchildren of the founder, used to have some 60 percent of the market in inexpensive dinnerware for fast-food eateries, school and office cafeterias, and hospitals within a hundred-mile radius of its factory. China is heavy and breaks easily, so cheap china is traditionally sold within a small area.
Almost overnight this company lost more than half of its market. One of its customers, a hospital cafeteria where someone went "surfing" on the Internet, discovered a European manufacturer that offered china of apparently better quality at a lower price and shipped cheaply by air. Within a few months the main customers in the area shifted to the European supplier.
Few of them, it seems, realize -- let alone care -- that the stuff comes from Europe. In the new mental geography created by the railroad, humanity mastered distance. In the mental geography of e-commerce, distance has been eliminated. There is only one economy and only one market. One consequence of this is that every business must become globally competitive, even if it manufactures or sells only within a local or regional market. The competition is not local anymore -- in fact, it knows no boundaries.
Every company has to become transnational in the way it is run. Yet the traditional multinational may well become obsolete. It manufactures and distributes in a number of distinct geographies, in which it is a local company. But in e-commerce there are neither local companies nor distinct geographies.
Where to manufacture, where to sell, and how to sell will remain important business decisions. But in another twenty years they may no longer determine what a company does, how it does it, and where it does it. At the same time, it is not yet clear what kinds of goods and services will be bought and sold through e-commerce and what kinds will turn out to be unsuitable for it. This has been true whenever a new distribution channel has arisen. Why, for instance, did the railroad change both the mental and the economic geography of the West, whereas the steamboat -- with its equal impact on world trade and passenger traffic -- did neither?
Why was there no "steamboat boom"? Equally unclear has been the impact of more-recent changes in distribution channels -- in the shift, for instance, from the local grocery store to the supermarket, from the individual supermarket to the supermarket chain, and from the supermarket chain to Wal-Mart and other discount chains. It is already clear that the shift to e-commerce will be just as eclectic and unexpected. Here are a few examples. Twenty-five years ago it was generally believed that within a few decades the printed word would be dispatched electronically to individual subscribers' computer screens.
Subscribers would then either read text on their computer screens or download it and print it out. Thus any number of newspapers and magazines, by no means only in the United States, established themselves online; few, so far, have become gold mines. But anyone who twenty years ago predicted the business of Amazon. The first order for the U. Ten years ago one of the world's leading automobile companies made a thorough study of the expected impact on automobile sales of the then emerging Internet.
It concluded that the Internet would become a major distribution channel for used cars, but that customers would still want to see new cars, to touch them, to test-drive them. In actuality, at least so far, most used cars are still being bought not over the Internet but in a dealer's lot. However, as many as half of all new cars sold excluding luxury cars may now actually be "bought" over the Internet. Dealers only deliver cars that customers have chosen well before they enter the dealership. What does this mean for the future of the local automobile dealership, the twentieth century's most profitable small business?
Traders in the American stock-market boom of and increasingly buy and sell online. But investors seem to be shifting away from buying electronically. And whereas almost half of all mutual funds a few years ago were bought electronically, it is estimated that the figure will drop to 35 percent next year and to 20 percent by This is the opposite of what "everybody expected" ten or fifteen years ago.
The fastest-growing e-commerce in the United States is in an area where there was no "commerce" until now -- in jobs for professionals and managers. The result is a completely new labor market. This illustrates another important effect of e-commerce. New distribution channels change who the customers are. They change not only how customers buy but also what they buy. They change consumer behavior, savings patterns, industry structure -- in short, the entire economy.
This is what is now happening, and not only in the United States but increasingly in the rest of the developed world, and in a good many emerging countries, including mainland China. Luther, Machiavelli, and the Salmon. HE railroad made the Industrial Revolution accomplished fact. What had been revolution became establishment. And the boom it triggered lasted almost a hundred years. The technology of the steam engine did not end with the railroad. It led in the s and s to the steam turbine, and in the s and s to the last magnificent American steam locomotives, so beloved by railroad buffs.
But the technology centered on the steam engine and in manufacturing operations ceased to be central. Instead the dynamics of the technology shifted to totally new industries that emerged almost immediately after the railroad was invented, not one of which had anything to do with steam or steam engines. The Pornophonix Roma, Italy.
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