Year XXVII, 1985, Number 1, Page 11
The Technological Challenge
GUIDO MONTANI
This working document puts forward some observations which are complementary to both the preceding document on “The Economic and Monetary Prospects” and the Albert-Ball Report, presented to the European Parliament in July 1983, in which the costs of “Non-Europe”, as regards the technological lag behind the USA and Japan, are clearly specified.
The battle for the European Union has now begun. On its success will depend the possibility of beginning to replace “Non-Europe” by an effective European government, to which the citizens, the cultural, social and political forces and, of course, the European Parliament may entrust the task of implementing the necessary policies to respond to the technological challenge. The aim of this document is to provide the basic elements for reflection on this matter.
First of all, the main characteristics of the technological challenge facing Europe today need to be described. As is well-known, Europe’s technological gap vis-à-vis the USA and Japan is only a symptom of a wider phenomenon. The long-term tendency towards the displacement (décentrage, to use Braudel’s term) of the core of world economic development from the Atlantic to the Pacific would in fact seem to be confirmed. The technological, commercial and financial interchange between Europe and the USA which has effectively constituted the driving-force of post-war international development would, therefore, seem to have begun to decline. In its place, the new development pole of the Pacific is gaining strength, thanks not only to the contribution of a dynamic Japanese economy, but also to the emergence, on the Pacific’s Asiatic shores, of newly industrialized countries and the Chinese colossus. A highly integrated market has thus been formed in which Australia acts as a gigantic reservoir of raw materials (until recently directed mainly towards Europe) for the voracious industries of the northern Pacific, now in part located – even in the case of technologically mature sector – outside the USA and Japan, both of which have had to stem the challenge posed by the industrial production of Asia’s former underdeveloped countries. The development prospects for this new economic macro-region are so alluring that the USA is now in the process of re-orientating its foreign policy in terms of a reinforcement of its economic, diplomatic and military links with the countries of the Pacific.
Europe must therefore, in the first place, be fully aware of the world character of the technological challenge, which includes not only relations between developed economies, but also with the Third World, and it must also recognize the need to adopt a response capable of reversing a trend which would relegate her to a peripheral role in world development. In the second place, Europe needs to fully appreciate the global character of the technological-productive challenge, both for society and for the State. It is no accident that the creation of a post-industrial society should be talked of ever more insistently today. Perhaps, more correctly, we ought to say that the old mode of industrial production is in the process of being supplanted by the new scientific mode of production (whose main economic features are described in the Note in the appendix). What needs to be stressed here, however, is that we are faced with a productive revolution with economic, social, urban and, of course, political consequences of major importance. It is, therefore, essential, that new methods of government be sought: that the contemporary challenge could be met with the institutions of the last century is unthinkable. The fundamental factor impeding progress, so far as economic policies are concerned, is the monopoly, at the national level, of the most important instruments of economic policy (currency and finance, principally). The crisis in the Welfare State, which many people wrongly attribute to a bad mixture of private and public in the economy, is, in reality, caused by the inability of national governments to solve problems which are local or continental (if not world-wide) in dimension.
The rational control of contemporary technological-productive development is only possible with a new model of society and State, one that is more open and diversified than the 19th century style centralized bureaucratic national State. The creation of a new model of State can only begin in Europe, where the old structures are in their death throes. With the realization of the European Union, the foundations will be laid for achieving a comprehensive system of democratic government of public affairs ranging all the way from the local to the European level, and for leading the whole world towards a policy of peace and international justice. What might be the first economic policy priorities of the new Europe are indicated, in brief, below.
1. Labour and employment. Employment, especially in Europe, is subject to a two-fold structural threat today: on the one hand, the offensive of the developing countries of the Third World which supply low-priced products and, on the other, the need to achieve accelerated industrial restructuring, which consists, in practice, in the introduction of automated processes and the shedding of redundant manpower in order to be competitive with the more dynamic economies. The old Keynesian prescriptions for full employment no longer succeed in their intention and have repeatedly demonstrated their limitations (the most recent example are the attempts at socialism in France, prior to Mitterrand’s European turnaround). This is not only due to the phenomenon (described in the Albert-Ball Report) of the dispersion within the Community of the effects of a national investment, but is also due to the impossibility of boosting employment by investments which, if made in the technologically advanced sectors, end up sooner or later by curbing employment.
The central objective of Keynesian policies, namely that of guaranteeing a job to all those who do not want to remain inactive, is still possible, but by other means. Instead of aiming at the growth of consumer demand, as occurred in the post-war period, it has to be recognised that today the greatest expansion – and one full of promise for the future – is taking place in services, both public and private. On this basis, with a view to providing everyone with a job, it is necessary: a) to mobilize the various levels of government – and in particular local authorities – with a view to the formation of plans for the expansion of public services, or for support to the private sector, so as to create a supply of jobs which may more than satisfy the demand for new employment of youngsters coming into the labour market or by those abandoning obsolete activities; and b) to ensure that the new responsibilities incumbent on the local authorities in matters of employment be matched by the conferment of effective fiscal sovereignty, co-ordinated with all the levels of government in accordance with the principles of fiscal federalism. Contrary to what is commonly assumed, local authorities can make an important contribution in the fight against inflation. In the first place, if employment policy is implemented by authorities with no power to issue money, the creation of new jobs cannot be financed in exclusively monetary terms. In the second place, at the local level, it is possible to reduce the cost of public services to the essential. This may be done through the activation of community service with a view to enhancing the value of social solidarity, which many people tend to forget if the public service is reduced, on the one hand, to a burden for the taxpayer and, on the other, to a professional service. It goes without saying that the structures of community service should be open to all citizens, irrespective of age, who want to devote their voluntary work to the service of the community. Moreover, young people of both sexes should, at the
end of their studies, perform a term of compulsory community
service, as a complement to their curriculum.
end of their studies, perform a term of compulsory community
service, as a complement to their curriculum.
These public intervention measures should be combined with a reform of the credit market and firm. The advent of new technologies means that it is no longer true that maximum efficiency corresponds to the maximum size of the firm. Cases of small and medium businesses holding their own and even beating the great giants of industry are becoming increasingly frequent. Nonetheless, the trend towards the formation of new, more dynamic businesses is often curbed by the old attitudes of the banking system which is wary about placing its confidence in new entrepreneurs and favours the already existing giants. Appropriate Community legislation to promote the formation of co-operative ventures is needed. In many cases, workers who have been made redundant, but who are equipped with great skills, could themselves become entrepreneurs if they were not prevented from doing so by the lack of credit.
Lastly, at the national level, the adoption of a modern incomes policy, which can be fulfilled with the traditional instruments of fiscal policy, is essential. Certain differences of income between the public and the private sector would no longer be justifiable, once job security has been guaranteed to everyone. The objective of an incomes policy would be to define, periodically, the range between minimum and maximum incomes that is compatible with criteria of efficiency and equity.
2. Advanced technology. In view of the characteristics of contemporary applied science (the big science that requires long-term and highly costly programmes), in Europe it is clearly only possible to organize development effectively at the Community level. Indeed, both the European Parliament and the executive Commission have already formulated excellent projects, based mainly on the policy of awarding contracts. The successes of the Ariane project (which even the Japanese are trying to imitate), in the field of space exploration and exploitation, demonstrate that Europe, when it acts in unison, is more than able to stand up to world competition. It should, however, be clearly said that at least three obstacles still impede effective European planning of advanced scientific research: a) the paucity of funds allocated to it by the Community budget; b) the jealousies of national industries which seek the protection of their respective governments and impede the creation of a standardized European market (inter alia this is one of the causes of the ease with which Japanese and American penetration has been achieved); and c) the national protection of the results of research with military applications. This was the main reason for the failure of Euratom. It is clear that major progress towards the complete “Europeanisation” of scientific research can only be made if Europe succeeds in making progress in the field of common defence.
3. European responsibilities in the government of the world economy. The modern world economy, right from its distant post-feudal origins, has been developed on the basis of the core-periphery model, with phases of expansion and enlargement often characterized by technological, financial and productive décentrages. The peoples and States of the past passively suffered the overwhelming force – for good or for bad – of world capitalism. But this subordinate role of the peripheral and semi-peripheral regions is no longer either acceptable or possible. Not only is Europe trying to reorganize its forces in response to the challenge of the Pacific, but also Third World countries are demanding, with increasing energy, to be helped in their emancipation. Nor is it possible to ignore the blatant contradiction between the power now acquired by man over the biosphere (thanks to technologies that have made the destruction of the whole terrestrial globe conceivable) and his inability to guarantee the rational use of these powers. Man has learnt how to govern nature, but is not yet capable of subjecting himself to the government of reason. The roots of this lethal malaise are to be traced to the division of the world into sovereign States: a division which has been the cause of wars, imperialism and poverty.
Once the basis of its political unity has been laid, Europe could make a decisive contribution to the problem of the rational control of the world process of development by initiating at least two major political projects.
a) The core-periphery logic that dominates world development is the inevitable result of the lack of world planning. The primary task of Europe is that of extricating herself – together with economically complementary areas of Africa and the Middle-East – from the subordinate role to which she would be condemned by the new international division of labour. The European Union must sponsor a major international development plan (the first on this scale in the history of the world economy). The socialist countries of Eastern Europe should also be invited to participate in this plan, which would have the explicit objective of extricating African and Asian regions from their backwardness, by means of integrated industrialization projects and the creation of public works. Just as the Pacific area is fuelling its powerful ability to compete thanks to the interchange between highly differentiated countries (in terms of natural resources and income levels), so European industry could, in turn, benefit from a strong expansion impulse provided by the potential demand of new peoples for European technology and products. The prerequisite for this plan is clearly greater financial capacity on the part of Europe, and this can only be achieved by the use of the ECD as an international currency.
b) The forces of progress may easily be turned into the forces of destruction and death if international policy should fail to abandon the logic of power politics. Even the fragile and inadequate instruments of international co-operation, first and foremost the UN, are continually being undermined or sabotaged in their operation today by the unbridgeable divide between the two Superpowers. This is eloquently testified by UNESCO’s current crisis. A reversal of this trend is necessary, and it is only from Europe that a decisive impulse may come for launching a policy designed to democratize and reinforce the organization of world government. Besides, the world is today faced by a series of problems very similar in nature to those that generated the European Community in the post-war period. A good example is that of the Law of the Seas which recognises the oceans and the sea-beds (rich in minerals now capable of being industrially exploited) as the “common heritage of mankind” and entrusts their sovereignty and control to an “international Authority”, whose powers are very similar to those of the Head Authority of the ECSC: it has its own budget, may autonomously exploit biological and mineral marine resources, may subject multinational enterprises to its controls, may launch international loans, and may invest its revenues in programmes benefiting the development of the Third World. It is thus an embryonic body for democratic planning and control of world economic resources. It is hard therefore to justify the attitude of those European countries, such as Great Britain and Germany, who, together with the United States, have opposed its establishment in the hope of exploiting their own technological superiority to gain possession of those natural resources that are still res nullius. This is a selfish and short-sighted policy because it conflicts with Europe’s real long-term interest in the North-South dialogue and the goal of superseding of the opposing blocs policy.
A historic responsibility now awaits Europe. Science has by its very nature a universal vocation. Politics are still national, and each government attempts to bend human knowledge to the service of its own national interests. Complete automation of the economy would permit man to emancipate himself from his biblical condemnation to toil. The exceptional conditions which made the wonderful blossoming of Greek civilization possible for a small nucleus of free men could be repeated on a world scale for all individuals and all peoples, because the exploitation of man by man is no longer a prerequisite of material prosperity. But for progress to be made in this direction, we need, on the one hand, to free the development of international scientific cooperation from the gag of power politics, which means in practice lifting the military secrecy placed on scientific discoveries (provisions, it goes without saying, that can only be introduced insofar as the campaign for universal disarmament makes progress) and, on the other, to endow the UN with effective control over major scientific programmes of interest to the whole of mankind.
The objective is one which can only be achieved in the long term. But Europe, by campaigning for the universal exploitation of the fruits of knowledge, would also create the conditions for the effective union of all the peoples of the earth in a great universal republic, in which the distances between centre and periphery, between weak and strong, between rich and poor, would, once and for all, be abolished.
Note on the economic aspects
of the scientific mode of production.
of the scientific mode of production.
The purpose of this note is to summarise the characteristics of the scientific mode of production which is, in the countries where industrialization occurred early on, supplanting the old industrial mode of production, while in its turn the latter is being adopted by the developing countries. These are the roots of industrial restructuring as a world phenomenon.
The term “scientific mode of production” is preferable to that of “post-industrial society” employed by some sociologists such as D. Bell and A. Touraine, because the term “post-industrial society” designates only the decline of the old world, while leaving the emergence of the new one indeterminate. For the same reason it does not seem sufficient to speak of the “scientific and technological revolution”, as proposed by the Czech philosopher R. Richta, because reference to the second, third, fourth (etc. ?) industrial revolution is now a source of confusion.
The main economic characteristics of the new mode of production may be summarized as follows.
1. The trend towards the disappearance of the role of the manual worker. In cottage industries and in factories, which represented the basic cell of economic development, first at the European and then at the world level, production occurred thanks to the harmonious conjunction of human labour with the machine. This productive combination represented substantial progress over the agricultural age, in which man had learnt to regenerate the products of nature harvested for consumption, and over the arts and crafts age in which production, generally by hand, occurred only in small quantities. In the factory, by contrast, it proved possible to produce goods in large quantities and at low prices. Gradually material prosperity spread to all the strata of society. But the manual worker, reduced to a mere appendage of the machine, was condemned to a repetitive and alienating form of labour.
Modern technologies, especially thanks to the application of electronics, permit the complete automation of the production process. The factory without workers is beginning to come into operation in Japan, in the USA and even in Europe. A few skilled personnel are sufficient for the control of standardized production which once required an assembly line employing thousands of workers.
It is estimated that by the end of the century the size of the industrial sector in the advanced countries (which in some cases employed, in the past, up to 45% of the active workforce) will decline to approximately 7-9% of the working population, while at the same time maintaining its current productive potential, thanks to enormous increases in efficiency generated by technological progress.
2. The development of the service sector. In European pre-industrial societies – and in the underdeveloped countries – the workforce employed in agriculture was up to 70-90% of the working population. During the industrialization phase, a process of urbanization and “growing proletarization of society” was registered, involving a large-scale transfer of population from agriculture to industry. In the current phase, the service sector, which absorbed no more than 10-15% of the working population in the 19th century, has now expanded to absorb 60% in Europe and 65-70% in the USA. Services may be subdivided into consumption services and production services. It is calculated that approximately 50% of the total are production services, i.e. activities complementary to strictly industrial processes. It is, therefore, incorrect to speak of the restriction of the industrial base as a process of “deindustrialization”. The expansion of the service sector merely represents a special form of modern industrial production, where intelligent activities with a high degree of individuality predominate – at least from a quantitative viewpoint – over the monotonous and repetitive tasks of the phase preceding automation. The productive role of the service sector thus needs to be explicitly recognized. The expansion of the service sector also responds to another need: the growing demand for public services (education, health, etc.). The USA, which leads the world in the creation of new jobs, has only been able to achieve this leading position thanks to the development of the public services sector. The State is destined to become the main employer on the market of the new service economy.
3. The new enterprise. “The division of labour is limited by the extent of the market”, Adam Smith rightly pointed out. And in fact the main driving feature of the traditional industrial enterprise was the phenomenon which economists call “increasing returns to scale”, i.e. the possibility of obtaining an increase in productivity by enlarging the size of the enterprise. This possibility depends on the fact that the manual worker becomes faster in performing the necessary operations the simpler they are, in other words, the greater the degree of the division of labour is, which in turn depends on the quantity produced (the size of market). This type of growth involves: a) the creation of big urban industrial concentrations: b) the creation of big industrial and financial empires; and c) the rigid distinction, within the enterprise, between managers and workers: a division in which – as Taylor has theorized – only mechanical and impersonal functions are reserved for subordinates, in the interests of maximum productive efficiency. And Taylor’s model of enterprise is one that is common both to the capitalist economies of the West and the socialist ones of the East. In modern “post-industrial” or “scientific” society, a radical reform of the enterprise becomes conceivable, thanks to the automation of the production process, the general diffusion of education and the more equitable distribution of property. The forms of ownership and control of production, hitherto based on the autocratic power of financial capital, may progressively give way to modern forms of self-management (not to be confused with 19th century worker self-management, which was not based on the material suppression of the distinction between managers and managed). The contribution of the intelligent work of technicians, engineers, economists, etc., will come to play a predominant role in efficient industrial production, while the power of financial capital is destined to a slow decline (Keynes spoke of the euthanasia of the rentier). The factory of the future will become more like a university department and less like the mill of the age of Marx and Schumpeter in which the entrepreneur-demiurge directed his workers like a general commanding his troops. The juridical structure of modern technologically-advanced enterprise will probably revive the model of co-operative societies.
