The Challenge Of New Technology

David Simpson, Jim Love, Jim Walker

• Publisher: Routledge
• Year: 2019
• eBook ISBN: 9781000315196
• Edition: 1
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

This book looks at what has actually happened when new technology has been deployed in an industrial and commercial environment. It considers the economic impact of new technology on three groups of organisations: firms, governments and trade unions.

Part I
Introduction

1 Introduction

All western countries have now embarked on a great revolution in technology. The main areas of rapid technical progress at the present time include microelectronics, information technology, biotechnology, materials technology and energy technology. At the same time, developments in these basic fields are being applied to other areas of dramatic progress such as space technology, and the technology of exploring and exploiting the sea bed.

Technological revolutions in the past have brought about far-reaching economic and social changes. There is every reason to believe that the present revolution in technology will have equally widespread consequences, with perhaps a more rapid momentum than any of its predecessors. Nowhere has the rate of progress been faster than in the microelectronics industry which has evolved in the last forty years. Almost ten years ago Robert Noyce, Chairman of Intel Corporation observed:

Today's microcomputer ... has more computing capacity than the first large electronic computer. It is 20 times faster, has a larger memory, is thousands of times more reliable, consumes the power of a light bulb rather than a locomotive, occupies 1/30,000 the volume, and costs 1/10,000 as much.

It has been estimated that if the same rate of technical progress had been achieved in the motor car industry, then a Rolls Royce today would cost approximately 15 cents and would be able to achieve a fuel consumption performance of several thousand miles per gallon. Everyone who works in business is aware of the quickening pace of activity, where it seems that the more senior the position the more intense the pressures. Even the individual who is immune from the pressures of business life is aware of the increased bustle and pace of day-to-day living. Developments in technology have played an important part in bringing this about.

While the challenges posed by present technical developments are many, the important issues are not primarily technical, but economic and social. These issues are also the least well understood. The benefits of new technology depend not just on the technology itself but on if, when, how and how well it is implemented. Whether we are talking about a housewife buying a programmable washing-machine, a government deciding what type of telecommunications system to adopt for a whole country, or an engineer deciding what kinds of improvement he can make in the operation of a piece of new machinery that has just been installed in his workplace, the effects of new technology are very much what people make of them. Where new technology is deployed, the resulting gains in productivity do not depend simply on the physical characteristics of the new technology itself. Studies have shown that the productivity of identical equipment in different factories can vary greatly. As we shall argue in this book, the decisive factors include the attitude of workers and management, and the organisation of production. The productivity of any given piece of new technology also depends on such associated factors as the provision of specialist services for the financing, distribution and marketing of the product.

This book is about how people react to the opportunities, and sometimes the threats, which new technology poses for them. It is not about the implementation of the whole range of new technologies; there is simply not the space to do this. Throughout this book the phrase 'new technology' is used to designate microprocessor technology and the related information-intensification process.

A microprocessor consists of an integrated circuit that makes up the central processing unit of a microcomputer. It may be used directly for that purpose or it may be used to perform other functions. An integrated circuit is one in which the functions of several discrete components are performed within a single piece of semiconductor material, that is material that may either conduct or not conduct a current. A microprocessor is a tiny fragment (chip) of material, usually of silicon, which contains all the circuitry necessary to perform the processing functions of a computer. Other chips have been developed to act as data storage or memory devices, and still others as controllers of input/output functions. Taking them together one has a very small and very cheap computer. For example, the Hewlett-Packard 9000 microcomputer has as its central processing unit a single microprocessor chip. The HP 9000 costs around $40,000, sits on a desktop and can perform 1 million instructions per second, a capability which allows it to compete with larger computers that have dozens of chips in their central processing units, are the size of refrigerators and cost hundreds of thousands of dollars.

Although it is too soon to say if the microprocessor is the most important technological innovation of recent years, it is certainly the common factor which has speeded the development of many others. The whole range of microprocessor-controlled and related technologies is extraordinarily diverse and it is worthwhile looking very briefly at its history.

The microprocessor is not really a single innovation but is the result of a long series of linked innovations. There is a continuous chain of new electronic devices based on semiconductor materials which stretches from the 'cat's whisker' used in radio sets at the turn of this century, to the latest and most astonishing achievements of modern microelectronics. The totality of these innovations is so massive as to make most single technological innovations pale into insignificance by comparison. Braun and Macdonald (1978) have remarked that a technological innovation is like a river: its growth and development depending on its tributaries, and on the conditions it encounters on its way. The tributaries of an innovation are inventions, other technologies and scientific discoveries. The conditions it encounters in its development are the vagaries of the market-place.

Semiconductor technology has played its most important role in the development of computers; the history of the development of computer technology since the Second World War is conventionally divided into five generations. The first-generation computers of the late 1940s and early 1950s depended on thousands of thermionic valves or vacuum tubes which were huge, expensive and very liable to malfunction. Second-generation computers were made possible by the invention of the transistor on 23 December 1947, the first small solid-state semiconductor. Solid-state devices are units made of semiconducting material, such as germanium, silicon or the 'crystal' (galena) of early radio sets, linked to electrodes. The input signal disturbs relationships between atoms arranged in a lattice formation inside the semiconductor, thereby performing the same function as the valve. Transistors were able to replace valves at a fraction of the cost, size, energy use and heat generation. The further development of transistors in the 1950s permitted a dramatic reduction in computer size and cost, together with a vast increase in capacity. There were also many improvements in computer storage and retrieval capacity at the same time. By the 1960s transistors themselves had diminished in size a thousand-fold.

Third-generation computers resulted from the development of integrated circuitry in a single manufacturing process. The manufacture of integrated circuits developed between 1956 and 1962 when it was discovered that if a small chip of silicon was suitably treated, it would behave as several transistors, instead of just one. It therefore became possible to build an entire circuit on one silicon 'chip', and these could be made cheaply enough for widespread commercial and military use. Small-scale integration, with up to about 10 transistors on a single chip gave way to medium-scale integration, with up to 100 transistors. By the 1970s, large-scale integration (LSI) technology, with thousands of transistors on a chip, made possible the mass-production of 'memory chips' to store data and 'logic chips' to perform calculations.

The fourth-generation of computer technology can be identified with the development, in the late 1970s, of very large-scale integration (VLSI), in which hundreds of thousands of transistors are embedded on a single silicon chip. The single vlsi microprocessor chip at the core of the Hewlett-Packard 9000 computer contains 450,000 transistors.

An important difference between VLSI technology and its predecessor, is that, at lower densities, circuits could be produced without automated equipment. As recently as 1983, fully 80 per cent of the circuits sold by us manufacturers were assembled and tested in low-technology plants, usually in developing countries, using semi-skilled labour. However, when the circuits are so densely packed that the lines are perhaps two millionths of a metre apart, then VLSI production requires a largely automated process, from the design of the circuits right through to the packaging.

Although integrated circuit technology has not yet reached the limits of its development, there are waiting in the wings even more dramatic computing technologies, based on 'magnetic bubbles' and lasers, which will carry still further the remarkable progress which has hitherto been made in speed of performance, reliability, miniaturisation and cheapness.

It is precisely because microprocessors are so small, so cheap, so powerful and so reliable that they are spreading into every branch of economic activity and social life. The microprocessor is becoming a universal tool, because it makes it possible for unskilled people to perform routinely a large variety of complex functions. A simple example is the pocket calculator, which allows its operator to perform many mathematical functions which he would not otherwise be able to do for himself.

Another application, whose wider importance is just beginning to make itself felt, is to be found in the development of information technology. Information technology is the coming together of three hitherto separate technologies—those of communications, computers and office equipment. At the heart of this convergence is one common factor, the microprocessor. From the user's point of view, information technology means rapid, reliable and low-cost transmission of messages received as sound, image or electronic signals from anywhere in the world to anywhere else. This is combined with a capability for the cheap and rapid storage, reproduction and pre-programmed processing of these messages.

A further development in computer technology is the projected fifth-generation computer. Since it has not yet been invented, we shall not be discussing it in this book, except to comment in Chapter 11 on the research programmes which at this moment are being directed in Japan, the United States and Europe towards its realisation. Even if the objectives of this ambitious research programme should not be realised fully, it seems certain that enough will be achieved to maintain at least to the end of this century the remarkable momentum of progress which has been sustained so far in the development of microprocessor technology.

That technology has already spread rapidly. A 1984 survey of 1200 factories in Britain identified approximately 100 different types of product ranging from fork-lift trucks, pressure gauges, sewing-machines, petrol pumps and cash registers, to washing-machines, toys and medical equipment, which incorporated microprocessors. In the same survey a similar number of production processes were identified as being controlled by microprocessors, ranging from blending, colour sorting and moulding, to laminating, drilling, painting and even pricing. In fact, the existing and potential uses of microprocessors are so pervasive that it is difficult to think of any area of economic activity that will not be affected by it very shortly.

Given that there is such a wide range of microprocessor-controlled and related technologies one must obviously be cautious in generalising about their effects. Some of these technologies have general effects, others are quite specific. Likewise, some human reactions to the deployment of a given piece of new technology are common; others are highly individual. Furthermore, even where a relevant technology is well understood, it is changing all the time and many of its more important consequences may be quite unpredictable. This does not apply only to basic research discoveries, but also to the improvements in new technology which occur once it has been put in place. For instance, automatic cash dispensers were originally intended to be located inside banks: it was only later, when their potential began to be realised, that they were moved first of all to outside walls of the banks, and then to non-banking outlets such as hospitals and supermarkets. This is a contemporary example of something which has long been known to economic historians: namely that increases in productivity can sometimes arise as much from continuous small improvements in the operation of new machinery on the job (learning-by-doing) as from the first application of spectacular new inventions. Thus for example, James Watt's famous invention of the separate condenser doubled the efficiency of then existing steam engines, but in the following 50 years the efficiency of steam engines rose a further fourfold within the basic Watt technology.

New technology is not the only factor bringing about economic and social change at the present time, but it is certainly an important one.

There have already been a number of books on the subject of new technology and its effects on modern society. Some of these, (e.g. The Computerisation of Society by Simon Nora) have been extremely distinguished. But most of these works date from the late 1970s, before the effects of the new wave of technology had made themselves felt. Consequently, in a fast-changing situation, many of them are now out of date. Still earlier, but perhaps less notable, studies were remarkable for the dire warnings which they contained of the dehumanising and unemployment-creating effects of new technology. Studies of what has actually happened, including our own, do not bear out these alarmist fears (although it is early days yet). It is true that unemployment has risen dramatically in most of the industrialised countries in the last 10 years, but few of those best placed to judge have attributed this principally to the effects of new technology.

There have indeed been a growing number of empirical studies of the effects of new technology in recent years. They largely take the form of very specific case-studies: they have been well described as 'semi-isolated clusters of facts organised by special purpose theories' (Nelson and Winter, 1982). Of course, all facts have to be organised by some kind of theory, and the facts presented in this book are no exception. It is therefore only right that we should begin by setting out our own view of the nature of economic growth in modern society, i.e. the framework into which the particular ideas expressed in this book are fitted and by which the empirical evidence reviewed and expounded here is interpreted.

Ours is an evolutionary view of the economy and society in market economy countries, characterised by competitive innovation between firms. There is a continuing qualitative change in products, processes and equipment, and in human tasks and organisations. Progress in these dimensions, like progress in technology itself, is of an uneven, groping character, marked by uncertainty and by the existence of transient gains and losses. The changes which take place are neither continuous nor smooth. Change is disruptive, and a faster rate of change means even greater disturbance.

For example, changes in technology can switch cost advantages between firms and countries in sudden and unpredictable ways. A firm which is put under competitive pressure as a result of a rival's technical advantage, must either reduce its costs (perhaps by changing its internal organisation), or go out of business, thereby changing the organisation of the industry. The disruptive effects of a change in technology are particularly severe for specific forms of capital, and for workers with specific skills. Their earnings can be abruptly reduced, and in the extreme case they can become permanently redundant. Nothing can be done about obsolete specific capital, but labour redundancy is an organisational problem, which we believe is a responsibility for firms, governments and workers themselves to resolve.

Such disruptive effects of change may be less visible, because they are less direct, than the positive gains, but they are no less a consequence. The process of economic growth is therefore a process of 'creative destruction'. For the individual firm in this process there is not one, but many, survival strategies: so the economic world is characterised by a diversity of observed characteristics of firms.

Much has been written on the subject of how new technology moves from being simply an improvement in formal knowledge (invention), to being commerically successful (innovation). This book is not concerned with such questions. It looks at the deployment of new technology from the point of view of the typical firm which does not itself engage in significant research and development expenditures, but which is content to buy new technology 'off the shelf, as it were, when it becomes available on the market. Different firms, of course, react with different speed to the availability of new technology on the market. In our own survey we tried to draw a distinction between those firms which were quick off the mark in adopting new technology (the adaptors), and others which did not avail themselves of the opportunities which their competitors had seized (the laggards).

Whether a firm moved quickly or slowly, all were agreed that the motive which drove them to adopt new technology could be summed up in the single word: competitiveness. The need to keep ahead of, or at least abreast of, whatever one's competitors were doing in terms of the adoption of cost-reducing process technology or quality-improving product technology was cited time and again as the single most important reason for adopting new technology. This confirms the results of other studies which have shown, for example, that new technology is regarded as the 'cutting-edge' of competitiveness in Japan.

New technology can improve the competitive position of a firm in many ways, but most often it does so by reducing the firm's labour costs per unit of output. This can mean a reduction in the number of people directly employed in that firm, whether in factories or in offices or both, although if the firm is able to increase its output sufficiently, as has happened in many fast-growing industries, this need not be the case. To the extent that the firm which successfully deploys the new technology can increase its market share at the expense of a rival which is still using the older, higher-cost technology, then the new technology may indirectly bring about job losses by causing lay-offs amongst the firm's rival and other less successful competitors.

The effects of new technology on overall employment in a country is a controversial and complicated question, which we look at in Chapter 6. Apart from the job losses which new technology brings about, both directly and indirectly, there are of course job gains which can be attributed to it. There are first of all the jobs which are created in order to manufacture the capital equipment which embodies the new technology. Then the higher incomes which the use of new technology makes possible (either in the form of higher wages or higher profits or both) should result in higher consumer and investment spending. But some of these effects are very difficult to pin down, and will vary from one circumstance to another. In one instance, the overall job-creating effects of the deployment of a particular piece of new technology may outweigh the overall job-destroying effects: in another instance they may not. If there are net gains in jobs, many of these may be outside the country. Even if job gains outnumber job losses, there still remains the major problem of moving workers from 'old' to 'new' jobs. This is perhaps the single most important challenge in the field of economic policy facing the governments of industrialised societies...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Preface
• PART I INTRODUCTION
• PART II EFFECTS OF NEW TECHNOLOGY
• PART III CHALLENGES
• References and Further Reading
• Indexes