High On Technology

In almost every home and workplace in America, we are already witnessing reason for great hope-the first flowering of the man-made miracle of high technology, a field pioneered and still led by our country."

- President Ronlad Reagan
State of the Union address, January 26, 1983

"We will be upgrading jobs through automation. I think we will be changing all our collars to white."

- Michael W. Hart
Director of Personnel Relations
National Semi-Conductor Corp.
(Business Week, March 28, 1983)

"It stinks, but you can't stop automation."

- Robert Clark, laid off from
Ford's Lorain, Ohio assembly plant
(Wall Street Journal, April 13, 1983)

High technology is a central facet of the overall restructuring of the world economy which is being promoted by corporate and government leaders in the United States, Western Europe, and Japan as the way to overcome the decade-old combination of inflation, falling output, and deep recession.

Their optimistic scenario envisions "sunrise" high tech industries as the province of the advanced countries, thus preserving wage levels and livings standards in those countries. The older "smokestack" industries would be shifted to a small group of lower wage developing countries. The Asian "gang of four" (South Korea, Taiwan, Hong Kong, and Singapore) would lead in this area followed by India, the largest Latin American states (Brazil, Mexico, and Argentina), and a new group of countries which have been prodded into light manufactured exports such as the Philippines, Malaysia, Thailand, and China.

By following this scenario, multinationals are in essence creating a new global division of labor. Backed by government incentives, they have parcelled out lowskilled manufacturing jobs - even in high tech - to the Third World, predominantly to women. At the same time, the more glamorous high tech jobs - management, engineering, marketing, and other "service" functions - are increasingly becoming the domain of a highly paid, largely male work force in the developed countries. This polarization process is being accompanied by shrinking employment in agriculture, as agribusiness and mechanization move ahead.

The high tech era underway is also marked by an unprecedented wave of corporate mergers, sometimes between multinationals based in different countries. As the costs of developing new electronic or automation equipment escalates, companies are finding that linking up with erstwhile competitors is a logical and more profitable alternative. One of the more visible examples is in the automobile industry, where General Motors is entering a joint venture with Toyota to produce small cars, and has already started a joint venture with the Japanese robot manufacturer Fanuc. And in electronics, the Dutch giant Philip has joined up with AT&T to manufacture and sell digital exchanges for telephone networks around the world.

In the U.S. alone, a number of U.S. computer and semiconductor firms led by Control Data have formed a research consortium to compete with their Japanese rivals (see MM, January 1984), while many large communications companies are investing in smaller companies to guarantee supplies and access to newly developed technology. Some recent examples: IBM's purchase of 12 percent of Intel, a leading semiconductor manufacturer, and 15 percent of Rolm, producer of telephone exchanges.

The onset of the computer age has also led to the movement of multinationals into a broad range of service industries previously left to smaller business. These service industries include localized banking and insurance companies, shipping, tourism, advertising, and accounting. Corporations have acquired these interests as part of their large-scale move toward global production, which requires the dovetailing of services such as telecommunications to coordinate production units, shipping to link those units, and promotion and retail networks to pull in new consumers. As a result, corporations have achieved large economies of scale by organizing individual units into chains and managing them from a centralized and computerized office in the manner that Hertz organized its car rental business 20 years ago. At the same time, service industries in the U.S. are investing heavily in research and development of new technology, accounting for nearly a third of total investment in that sector in 1981.

All of these developments are advertised by their proponents as leading toward less toilsome, more interesting work, new products ranging from home computers to pathbreaking vaccines, widening choices of entertainment and information, enhanced international stability, and better lives for all.

There is, however, another side of the coin. These changes are also leading to the decline of the middle class in advanced countries and are sharply polarizing incomes between the rich and poor, with many of the new products available to only the more privileged sectors of society. Large conglomerates like Litton, and Gulf and Western, which produce dozens of different products, frequently sell, move, or simply close less profitable subsidiaries and plants. This, in turn, leads to heightened job insecurity and the weakening of community ties.

As with technological revolutions of the past, the driving force behind the multinationals' constant technical innovations is their need to blaze open new markets and to establish greater control over workers, consumers, suppliers, and small businesses. The new technologies that conquer distance and enhance communications have opened new markets in rural areas and Third World countries, while new products and sales technologies have enlarged existing markets by reshaping wants.

For example, developments in computer technology have opened markets for such things as home computers, information services, computer dating and teleconferencing, while multinationals have increased their power over consumers by extending the sophistication and reach of advertising, and their ability to control pricing. Small businesses are becoming an increasingly significant market for specialized products such as computers made exclusively by multinational high tech firms, while some small firms produce parts and provide services under specification of multinationals.

For workers, technical changes in the workplace has meant even greater control by management over the productive process as the basic process of "deskilling" workers, dating back to the changed organization of the assembly line at the turn of the century, continues with the introduction of new equipment. Examples are new cash registers which don't require the cashier to remember prices or know how to figure change, the division of work into narrow, simple tasks in the microelectronics industry, and computer-controlled carts carrying parts to workers as they are needed in up-to-date auto factories. When these innovations don't decrease the workforce, they lead to dull, repetitive work and to short training times. Workers then have few opportunities to develop skills that might keep management from replacing them at will.

In addition, multinationals based in the U.S. have responded to heightened international competition in recent years by forcing workers to take "givebacks," cuts in pay or benefits. The result is growing corporate power to discipline workers, prevent unionization, and keep wages down.

These recent developments are results of what is now designated as high technology.

High tech: what is it?

There is no clear, generally accepted meaning of this term, but "high tech" generally refers to technology that is conceptually complex. It requires much engineering, so that an unusually high percentage of a high tech firm's employees are engineers and scientists.

High technology products and processes, deeply based on science and laboratories, require exceptionally precise conditions: dustless and so-called ultraclean rooms where workers put together items like video cassettes; temperatures that vary less than a degree; exact micro-weights of various chemicals; near exact positioning; and precise timing and assembly. Products must go through elaborate inspection. All this precision, and the need to have precision monitoring instruments to maintain it, makes automatic control seem both essential and feasible, allowing relatively unskilled operators to perform many of the repetitive production tasks. In the beginning

The genesis of high technology was the enormous growth in military spending and research that occurred after World War II. Out of the wartime industries that pulled the U.S. out of the depression emerged new technologies like radar, jet planes, and nuclear weapons, and over the next thirty years military spending on such technologies helped sustain continued economic growth while making the United States the uncontested world power.

Besides supporting the development of products ranging from satellites to computer-assisted manufacturing of new materials, military procurement was essential to many other nascent industries, such as computers, scientific instruments, and semiconductors. In 1950, U.S. government purchases accounted for 92 percent of sales in the aerospace industry and in 1954 the government was the only major purchaser of computers. As late as 1977, federal government purchases accounted for large percentages of sales of many industries, including aircraft (56 percent), radio and communications equipment (57 percent), and engineering and scientific instruments (12 percent). At present, the government purchases 80 percent of all supercomputers.

Military research has also been responsible for developing the " factory without workers" perfected by Japanese manufacturers. During the Korean War under the "Rockfor ordinance plan," arms factories automatically manufactured 155 mm shells. In 1965, Lockheed Corporation designed the first computer-aided design and manufacturing system for the U.S. Air Force. The Air Force and NASA are now jointly funding a $75 million project to develop a completely automated factory.

Military research has played a much smaller role in other countries. Nevertheless, Japanese manufacturers, as well as their counterparts in Western Europe, relied on government aid to develop new technology and help them compete in world markets in the postwar period. Governments accepted the task of underwriting basic science, which often was so complex that only the very large or very specialized corporations were in a position to use the results through their own staff or applied scientists. Particularly in Japan, the technological direction for the whole country was guided by special government departments working closely with the largest corporations.

Since the 1970s, a new sense of urgency has entered the technology race as further geographic expansion of existing markets. The absence of new markets meant heightened competition for existing demand; and in this situation more and more governments, corporations, and economists have come to pin their hopes on a new industrial revolution, a move into high technology - or as Daniel Bell long ago termed it, "the post-industrial society."

Essentially, both government and corporate planners see hope for their countries or companies through a basic technological revolution that, like the introduction of the automobile in the past, will change the way of life so much that a whole series of new needs will develop. Just as automobiles made possible suburbs, shopping malls, and giant amusement parks, the new technology - which has come to be symbolized by the silicon semiconductor chip - will stimulate economic activity far beyond the confines of any particular corporation.

Economists have traditionally justified international trade on the grounds of "comparative advantage," the notion that when Venetian craftsmen specialized in glass-blowing and Flemish craftsmen in wool fabrics, trade between the two benefited both. Later, when organized technology and science had helped end the skill monopolies of old guilds, the major genuine comparative advantage was a result of different climate and resources: Sweden can produce good steel and trade for cotton grown in the southern U.S. However, technological progress has led to greater resource independence. Sweden can manufacture synthetic fibers using wood from its forest; glass-based composites can often replace steel and so forth.

The only remaining basis of "comparative advantage" will soon be different wage-rates and labor laws. Multinationals have taken advantage of this by setting up "global assembly lines." Each step of manufacturing processes takes place in the location that maximizes return on investment. For this to be possible, there has to be a high degree of coordination between different facilities; the complex design process has to be coordinated so that parts fit together; inventory and shipment to markets must be carefully organized; complex and sophisticated accounting procedures are imperative.

This erosion of comparative advantage places enormous downward pressure on wages in the United States as multinationals demand that workers accept pay more in line with what they are offered in nearby Third World countries. The contrast between rich and poor in the U.S. is beginning to resemble Third World cities, with a large group of low paid personal service workers-in fast foods, laundries, and child care-for the managerial and professional elite.

On the high-tech merry-go-round

At the same time that comparative advantage has been eroding, there has been an overall shift in the world economy. Over the past decade, technological developments have exercised the most profound impact on agriculture and industry, whittling down the workforces in both areas in many countries. Left to fill the vacuum for the growing millions of unemployed is the vast "informal" service sector. Overall, this is a highly stratified mishmash of sectors ranging from millions of unskilled/ deskilled workers at one end to the highly paid corporate technicians, professionals, and managers at the other. Attempts at unionization in this sector have been difficult, and far less successful than in "smokestack" industries.

For unions, the deskilling and decentralized production requires new forms of organizing. So does the related fact that those lucky enough to be employed in a high tech world can expect to change jobs many times in their careers as plants close, corporations merge or divide, and technologies change rapidly. And there are often serious health hazards involved in high tech work (see MM April 1983).

Winners and losers

For consumers, the inner workings of high tech products are often difficult or impossible to understand. (How does a microchip or a digital watch work? You can't tell by taking one apart or by watching it.) Also, for the same reason, it's difficult for local craftspeople to be able to understand how to repair these products. Repair often boils down to purchasing and plugging in a whole new, equally mysterious "module" or subunit. (Auto mechanics versed in gears, hoses, and cylinders are at a loss with cars containing electronic parts.)

In the United States, the military domination of high tech research may have played a part in actually decreasing U.S. productivity, damaging the competitiveness of U.S. products abroad. This is the view of Robert Reich, author of The Next American Frontier, who has termed military spending the U.S. version of industrial policy. According to Reich, the Pentagon funds 30 percent of U.S. research and development; in the aircraft industry the figure is 70 percent, in communications, 48 percent. This compares with direct Japanese government funding of only 16 percent of the country's research and development.

Reich's views are shared by industrial engineer Seymour Melman of Columbia University. Reich and Melman argue that, while U.S. defense markets have led to major technical breakthroughs and dramatic drops in price in the semiconductor, communications, and laser industries, the social costs has been great inefficiency because so many contracts are awarded without competitive bidding. According to Melman, U.S. management practices not linked to efficiency or cost control have saddled American industry with needlessly expensive products and factories top-heavy with management. Melman and Reich also argue that without this luxury, Japan sustained employment by turning out efficient low cost products, and aiming their technological developments at the world commercial market. Thus, the U.S. trade deficit has increased, while the overall competitiveness of American industry has been seriously damaged.

But most of the blame for the drop in U.S. productivity has been placed on the workers rather than their managers. Thus corporate managers have reacted to the decline by locating production abroad ant reorganizing the international division o1 labor.

For the Third World, high tech create: other problems. In the first place, the introduction of new technology is usually controlled by a multinational. Host countries have little say over such decisions as shifting production. Second, the lack of control means increased dependence on developed countries and multinational corporations. Third World countries are unlikely to be able to acquire special materials, scientists, instruments, and equipment they would need to be able to make, repair, or modify high tech products on their own. And third, corporate control of high tech, especially in communications, can often mean cultural domination by developed countries, especially when technology like microelectronics or computer software replaces local methods of communication or indigenous knowledge.

None of this should suggest that high tech doesn't pose major challenges to multinationals, however. Among the most salient issues:

First, high tech forces a company to sink large amounts of investment in engineering. Since engineering involves a great deal of creativity, the outcome cannot be planned accurately in advance and corporations have trouble controlling costs. Also, hierarchical management often does not work very well for this complex engineering process.

Second, as technologies grow in complexity, even a large company cannot hire all the technological specialists it needs; it has to use the whole technological community. As a result, development could become an issue in the public domain, beyond the exclusive control of multinationals. One corporate response has been to forge new agreements for joint research and development, and to establish a complex web of cross-licensing agreements to utilize each other's patents and protect themselves as a group from smaller, possibly more innovative competitors.

Finally, production of high technology, because it involves microscopic processes (bacteria in the case of biotechnology, microchips for computers), does not really require the gigantic factory of the past. What has to be large is the technological staff. Small decentralized production is a natural model for many of these products.

For the present, technology remains firmly in the hands of the multinationals. The speed with which many new technologies have been introduced has left most of those affected by the technology on the defensive. Meaningful challenges to this control by workers, consumers, and communities requires new thinking along with education, training, organizing, and dialogue, a process which has begun in many parts of the world. What is increasingly clear is that these challenges must move beyond simply softening the impact of new technologies (safety precautions, job retraining, etc.). Instead they must address the centers of control and decision making-the multinationals and governments themselves.