Monday, March 08, 2010

Reading :: Revolutionary Wealth

Revolutionary Wealth: How it will be created and how it will change our lives
By Alvin and Heidi Toffler

Alvin Toffler has been open, particularly in the preface to Powershift, about the fact that his wife Heidi is his coauthor even on the books that bear only his name. For whatever reason, after Powershift, her name started appearing on spines as well as in prefaces. The line of reasoning, however, is still the same - their 2006 book Revolutionary Wealth works within the framework established in previous books dating all the way back to 1970's Future Shock. But, like the other books, it extends that framework to new areas - here, to the question of wealth creation in the 21st century.

The Tofflers acknowledge that new technologies will continue to produce wealth. But they argue that "to forecast the future of wealth, we also need to look not just at the work we do for money but at the unpaid work we all do as 'prosumers'" - that is, work we do as we consume. This blog is one example - but others include Amazon and YouTube reviews, amateur astronomy, and tweeting about speed traps (my examples, not theirs). "Because prosuming is set to explode, the future of the money economy can no longer be understood, let alone forecast, apart from that of the prosumer economy. The two, in fact, are inseparable. Together they form a wealth system" (p.5). So far the Tofflers sound a lot like others who have written about open source, wikis, and other aspects of the new economy. They further postulate that since the US is in the forefront of this shift to a new economy, perhaps that change is at the root of rising anti-Americanism (p.6). (Side note: Phillip Bobbitt argues in The Shield of Achilles, which I will soon review, that the US is leading a move from nation-states to market-states. The argument is somewhat related, but not the same.) They invoke Robert Reich in noting the changes afoot: redefined disciplines, loss of work/life boundaries, porous organizations, transdisciplinarity, and mashups (p.8).

So what do they mean by wealth? “Wealth, in its most general sense, is anything that fulfills needs or wants. And a wealth system is the way wealth is created, whether as money or not” (p.19). They relate wealth to the “waves” described in The Third Wave: The first wealth system was agriculture (p.20; glossed as “growing things” on p.23), the second was industrialism (p.21; glossed as “making things” on p.23), and the third, emerging one is knowledge (p.22; glossed as “serving, thinking, knowing, and experiencing” on p.23). A wealth system, they argue, needs a host society and culture – but these are shaken when two wealth systems collide (p.23).

What goes into a wealth system? The Tofflers propose that there are many “fundamentals,” but only a few “deep fundamentals,” that is, “some fundamentals [that] are so vital to wealth creation that they matter in all economies, at all stages of development, in all cultures and every civilization, past or present” (p.26). These include work (not the same as a job) (p.27) and division of labor (p.27). They also include time, space, and knowledge; these three are covered in their own sections later in the book.

Time, for instance, is covered in Ch.5-8. The Tofflers argue that industrial-age bureaucracies are slowing the move to the new wealth system (p.31). In an open system, it’s impossible to totally synchronize all parts. So what happens when one institution leaves the others behind? Using the analogy of cars on the road, the Tofflers evaluate business (100 mph), civil society (including NGOs) (90 mph), the family (60 mph), labor unions (30 mph), government bureaucratic and regulatory agencies (25 mph), schools (10 mph), global governance (5 mph), political structure in rich countries (3 mph), and law (1 mph) (pp.32-39). We must, they conclude, invent new-style institutions that can keep up and synchronize better (p.40).

Part of that shift involves thinking of labor in new ways. The measure of labor productivity as output per hour, they argue, is a Second Wave measure (p.53). But in a Third Wave economy, each interval of time is worth more than the last (p.55). We’re moving toward customized, personalized time (p.56): a shift to continuous-flow operations that enable individualized consumption schedules, leading in turn to irregular time, demassified time (p.59). (Think about the choice of, say, recording American Idol on Tivo, then tuning in 45 minutes late so that you can fast forward through Kara’s comments.) The interrelated shifts of “acceleration, irregularization, and continuous flow” are changing the landscape of wealth creation, they argue, and “push us farther toward ad-hocracy – the shift away from permanent or long-lasting organizational structures in business to one-shot, short-term organizational formats” (pp.59-60).

Enough on time; let’s talk about space. The Tofflers argue that “wealth, as never before, is on the move” (p.63). Digitalization, for instance, doesn’t transcend space, but it does speed up and facilitate wealth creation (p.66). Partially for that reason, when outsourcing happens, it tends to go to places with political stability and infrastructure as well as labor costs (p.69).

Knowledge is the third deep fundamental. Unlike agriculture and industry, knowledge can be used by many simultaneously (p.99). Knowledge is non-rival; intangible; nonlinear; relational; mates with other knowledge; more profitable than any other product; compressible into symbols or abstractions; storable in smaller and smaller spaces; explicit or implicit; and hard to bottle up (pp.100-101). Increasingly, knowledge becomes part of every job. Learning becomes continual-flow and knowledge has a limited shelf life (p.111). Unfortunately, the Tofflers don’t say much on learning; more unfortunately, they detour into a fairly thin attack on postmodernism in Ch.20, apparently not having read much Latour.

In the next section, the Tofflers tackle prosuming, the invisible economy (p.152). One example is that of the patient who comes to the doctor armed with Internet research, influenced by pop culture and commercials, and full of “take charge” attitude (p.165). But prosuming also gives us a competitive advantage in hypercompetition, which has fueled a shift from sequential to simultaneous activity (p.168). Prosuming increases “producivity,” that is, it increases the growth of the money economy (p.194). Their example is that of the PC gurus who informally help new users get up to speed. Prosumers perform unpaid work; buy capital goods; lend their tools and capital to users in the money economy; improve the housing stock; “marketize” products, services, skills; “demarketize” the same; create value as volunteers; provide valuable free information to for-profit companies; increase the power of consumers; accelerate innovation; create and disseminate knowledge rapidly; and raise children to work in the labor force (pp.199-201). Personally, I think the Tofflers are trying to commoditize everything here, including child-rearing, but I suppose they are trying to look at all factors of wealth creation.

Let’s skip a bit. The Tofflers tread ground that should be familiar to readers of this blog, arguing that capitalism’s assumption of limited supply is challenged by endlessly reproducible intangibles (p.256); suggesting, like Alinsky and Drucker, that stockholders are the realization of the people owning the means of production (pp.259-260); arguing that customized products result in customized prices (p.268); and reviewing the many forms of para-money that are springing up as alternatives to money (p.278). They predict pay-by-the-minute work (see (p.281).

Toward the end of the book, in Ch.44-48, they look at the prospects and dangers for various parts of the globe (China, Japan, Europe, US, misc.). The picture is mixed. They end with an epilogue in which they question the notion of counting jobs – a notion that seems meaningless given the prosumer work, shared jobs, and other changes in work (p.383). They also have other very Toffleresque thoughts about the future, most of which you can imagine if you’ve read their other work. I don’t mean to sound dismissive – the Tofflers’ work is of such scope and within such an established framework that they have been able to make some solid arguments and predictions. But by the same coin, these arguments and predictions are in themselves relatively predictable.

So what’s the takeaway? The book is solid, and provides some characteristically systematic thinking about what various changes mean for wealth creation in the future. I’m not sure I’d put it at the top of my reading list, but it’s worth reading.

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