we do not bemoan the fact that when our sons and daughters come of age they cease to grow taller. At adulthood, we entirely redefine the concept of growth. Can we not define the economy similarly? raw material into the components of truly economic goods or the instruments of effective services. The ratio between mass and information is changing, and it must continue to change. Our prosperity depends on it. There is no better example of the shift from a mass economy to an informative one than energy conservation. To conserve means to reduce the amount of mass—in this case, energy, in the form or oil, coal, and gas—used by industry, transportation, and housing. To do so requires information—new technologies, improved designs, and better maintenance. Pacific Gas and Electric, the nation’s largest utility, has realized that it is less expensive to offer no-interest loans to homeowners for insulation and weatherstripping than it is to borrow capital and build new power plants. By applying new ideas and techniques in an effort to decrease existing energy consumption, the economy can produce as much as it had formerly, reducing costs and lowering the ratio of mass to information. The Mellon Institute estimates that the United States can reduce the amount of energy used in producing a GNP dollar from the 55,000 BTUs required in 1973 to 27,000 BTUs by the year 2000. It was the philosophy of the mass economy that conservation was a negligible factor in the ability of the United States to achieve energy independence. All administrations since 1973 have concentrated on new energy production. President Reagan, asked about conservation in his energy policy, described it as ‘being hot in the summer and cold in the winter.’ Despite such government attitudes, the U.S. economy is moving rapidly toward energy conservation, promising to make it one of the biggest industries of the informative economy. It is estimated that by 1990 the energy conservation industry could total between $50 billion and $70 billion. The largest segment would be residential conservation, totaling some $31 billion. Other major areas would be co-generation systems, in which steam wasted in generating electricity would be recaptured to produce heat; more efficient electric motors that could save the United States 10 percent of all the electricity it consumes; energy management systems in large and small buildings; and industrial heat recovery. Further, the U.S. auto industry will be producing cars whose fleet mileage will average 40 miles sician a retainer as long as the patient is healthy; when the patient gets sick, the retainer is dropped until the patient recovers. The incentive on the doctor’s side is to keep the patient healthy, as no benefit is derived from pathology. Since the GNP currently grows as someone gets ill, is an economy in which the GNP goes up when cars last and people are healthy conceivable? Imagining such an economy requires an entirely different comprehension of growth. Ju s t what is growing in our economy? Do we necessarily want all that grows? If we use fewer drugs of X rays or spare parts in our bodies, are we a failing economy? We do not bemoan the fact that when our sons and daughters come of age they cease to grow taller. At adulthood, we entirely redefine the concept of growth. Can we not define the economy similarly? The ‘unremitting cultivation of goods,' as George Gilder, author of Wealth and Poverty, describes a capitalist economy, is but mere inces- sancy. We now require a new definition of growth—a type of growth that will allow us to use our resources more conservatively. If you take what is grown and make it more complex, self-aware, accurate, and effective but do not expand its boundaries or external scope, it will be internally differentiated. What exists will become more refined—more specific to task, function, and need. This requires labor, materials, energy, capital, communication, and virtually all the other components that go into an economy, but the proportion of the components used will be altered. The informative economy will not replace the mass economy; it will absorb and include the mass economy in the course of its evolution. We will need steel, rubber, airplanes, pulp mills, and trucks for centuries. The industrial age was not a failure but an unmitigated success. If we refuse to change and try to extend the industrial age beyond its useful life, we will change success into failure by not recognizing our maturation. The shift of the mass economy to the informative economy can be compared with ‘product life-cycle’ theory. When a successful product is introduced, demand for it grows quickly, and emphasis is placed on the rate of production. As demand begins to be satisfied, variations of the new product are introduced. Again, economic emphasis is on the rate of production to satisfy demand. Eventually, the market approaches saturation, and resources that were formerly directed toward increasing the rate of production are channeled into improving the quality of the product—in production, performance, and cost. While this phenomenon has long been observed in cer- e c o n o m y amounts of capital investment as well as less energy to produce. American cars weigh 30 percent less than they did a decade ago, last longer, and are more fuel-efficient. New housing is smaller, uses fewer building materials, and needs less heating and cooling. Consumers wanting to preserve their standard of living are choosing those products that conform to this adaptation while shunning those that ignore it. The result is less consumption of materials and energy (mass). One way to reduce consumption is through microelectronics. The industrial age mechanized manual labor; now semiconductors and microprocessors are bringing technology to the mind: analysis, communication, design, and decision-making. The microprocessor imparts to manufacturing processes, products, and services much of the power of the human nervous system. Automobile engineers have discarded the bulky carburetor for electronic fuel-injection in order to reduce waste and inBruce McGillivray. crease efficiency. The Boeing 767, part of the new generation of fuel-efficient aircraft, could not have been designed without computers. Such repetitive service occupations as bank teller and telephone operator are being replaced by silicon- chip microprocessors. This is how information is replacing mass—by revolutionizing the design, creation, and function of goods and services. Whether in satellites or subcompact cars, toasters or tractors, semiconductor technology is reducing the size, cost, and energy requirements of products while making them more sophisticated, intelligent, and useful. Whether the conservation of mass is accomplished through the new techniques of computer technology or the virtues of workmanship and design, the informative economy comprises those individuals, companies, and institutions that understand that every unit of physical resource, regardless of whether it is a gallon of oil, a ton of steel, or a stand of timber, will need greatly increased intelligence (informed activity) to transform per gallon—almost triple the 1974 average of 14 miles per gallon. Reagan’s attitudes reflect the commonly held belief that energy conservation is not economic growth whereas energy exploration and development are. If our view of healthy economic growth is synonymous with more, what do we call an economy that consumes less and preserves more? For example, suppose a person who used to buy a new car every three years finds a mechanic who makes •this proposition: he will maintain the new car from the outset for a period of twelve years for a flat fee of $1,000 per year plus parts. The contract, although expensive at first, shifts the advantage, as time goes on, to the owner, who has not had to replace his vehicle in the fourth, seventh, and tenth years. The mechanic will only benefit if he does an excellent job of maintenance. If he does a bad job, the car will break down, and his income per hour will drop. In this situation, society has received the benefit of a car—transportation—for less cost than it would have if it replaced the car; less materials have been used and more labor has been used per year than would have been employed making a new car every three years. The problem is that productivity has gone down and the economy has shrunk, as has the auto industry. Such a practice would be reminiscent of the ancient Chinese method of paying the phy- tain product cycles, the theory has not been applied to the macroeconomy as a whole. In the case of the economy, the underlying reasons for the shift from mass to information are different from those leading to an improved product. In product life-cycle theory, the shift in emphasis from the rate of production to the quality of production is caused by decline in demand. The shift from the mass economy to the informative economy is being caused by a decline in the supply of resources rather than a decline in the demand for goods. In this respect, the econ- omy, during its present period of transition, resembles a species adapting to a changing environment. The mass economy carried with it a sense of unlimited horizons and resources that was confirmed by the falling prices of most raw materials since 1870. That resources in fact are limited is not important, because the economy, if we may ascribe animatedness to it, has acted as though resources were unlimited. Because of this, the 100-year period between 1870 and 1970 was dominated by a high rate of growth and replication. There was no attention given to the maximum carrying capacity of the environment with respect to economic activity because very few obstacles to growth were perceived. This sort of activity is referred to as asymptotic growth Clinton St. Quarterly 37
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