EUROPEAN PAPERS ON THE NEW WELFARE

Technological Changes, the Reversal of Age Pyramids and the Future of Retirement Systems

2.3 The Post-Industrial Revolution: the Third, Fourth and Fifth Waves

Just as the machine seemed to be invincible, the signs of a gathering new wave, based not on muscle but on information processing, were coming: the wave of the post-industrial revolution.
The post-industrial revolution is actually composed of a series of several distinct waves: the wave of information technology, the wave of communication technology, and the wave of knowledge. Like the previous waves, each of the new waves is very powerful, and is followed by drastic changes in the economy, by globalisation of markets, by automation of industries and an exponential increase in the amount of information generated.
The post-industrial revolution is characterised by a shift from an industry-based culture, to a culture based on information, communication and knowledge, were services are taking a substantial part of all activities. The technology and culture have a clear impact on our economy (how society earns its living), but they also present significant new challenges to the way that people and organisations think, operate and are managed. At the same time they are responsible for remarkable demographic and social changes.
The post-industrial economy is based on quick communication, on the ability to deliver information at an unprecedented speed and to transfer, store and process huge databases at very low cost, and on the ability to make machines that design and build other machines. These features are not restricted to the business or manufacturing environments. They are already affecting our homes, cars, our entertainment and health. And they have a great impact on society and how society views itself and the world.
The new communication and information processing and storage capabilities open up a tremendous potential for a wide variety of retirement and insurance products. At the same time, the demographic changes, and the new ways of thinking result in changing needs.
The waves of the post-industrial revolution are accelerating and the time interval between the waves is getting drastically shorter. It took millennia for the agricultural wave to spread, it took two centuries for the industrial revolution to spread, and it has taken only about a decade for each of the post-industrial waves to ‘flood’ the world. The rate of change is being influenced by the information technology, and it keeps accelerating. We hardly get used to one wave, and the second is already storming the door. (Just think about the punched cards and telex machines of the 1960s, the IBM ball typewriter and the electronic calculator of the 1970s, the PC and word processors of the 1980s, the fax machine, and the email of the 1990s, and the World Wide Web and cellular phones of recent years).
The acceleration is even more noticeable in countries that are joining the process now. Due to the communication technology wave, information flows fast and even the most remote countries cannot stay outside of the process. In other words, the industrial revolution that took one to two centuries in Europe will take just a few decades and maybe only a few years, in the countries joining the process now. Moreover, the newcomers will also have to deal simultaneously with the more recent waves as well. This means that the social and economic pressures that accompany the development process will be far stronger in these countries. Like wave interference in physics, the acceleration of technological wave frequencies creates potential clashes between the waves, were the post-industrial waves hit a society that has just started its industrialisation stage. Such acceleration strengthens social and economic pressures within the country and may also incite political and economic tensions with their neighbours.

2.4 What Will Happen after the Post-Industrial Revolution?

The technological waves are a multi-faceted phenomenon. Technological developments are strongly connected with economic progress, with demographic changes, with social and political changes, and even with religion and cultural issues. In his seminal book Huntington argued that the world should be viewed as a set of several cultural ‘civilisations’, showing that economic progress and modernisation does not necessarily mean Westernisation. He has also shown the increasing threat of violence arising from renewed conflicts between countries and cultures that base their traditions on religious faith and dogma.
The technological waves do not spread evenly over the world. They are typically delayed at certain invisible border lines. These border lines, which can be seen by viewing the geographical distribution of countries by their developmental stage, typically coincide with the border lines of the civilisations (the cultural and religious features that tie a certain region together). There are many indicators that can show the level of development that a country has reached: mortality, GDP per capita, health indicators, etc. On the world map, they all follow quite similar patterns, as the following figures on the distribution of phones (number of lines per 1000 people) and life expectancy at birth show. These rankings generally agree with the ranking by many other indicators, and are quite similar to the border lines of Huntington’s civilisations.

Figure 2: Fixed Line and Mobile Phone Subscribers, 2002
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Source: World Bank.

Figure 3: Life Expectancy at Birth, 2002
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Source: World Bank.

It is quite difficult to predict what will happen next. Assuming that we will experience other, very frequent, new technological waves, and that this will happen simultaneously with fast and accelerating absorption of the recent waves by the currently less developed countries, any one of several conflicting scenarios may result.
On the one hand we may find a very developed new world, which has a common culture, and in which the authoritarian regimes (both right and left) will generally be replaced by liberal capitalistic democratic governments. This may lead to Fukuyama’s (1992) ‘last man’ capitalistic utopia — a highly technological world, with growing economies, and mild capitalism which is strongly tuned to social desires and needs. The main thing that is required in order to reach this utopia is a way to harness the restless desire of people for recognition, and prevent it from leading humanity to chaos.
On the other hand, the continuing development may create very strong tensions between cultures, accompanied by economic tension between the ‘haves’ and the ‘have not’ that may lead to Huntington’s (1993, 1996) clash of civilisations, or to Fukuyama’s ‘first man’ nightmare — where people are continuously engaged in pointless bloody fighting.

2.5 The Power of Information and its Effects on Employment

The post-industrial waves are being driven by a new emerging force: information and knowledge. Until the industrial revolution, the economy was driven by the traditional three factors of production: land, labour and capital, which are limited, exclusive and diminishable. The problem of the economist was driven by the need to allocate scarce resources, and this led to the ‘limits to growth’ theory (Meadows et al. 1972). This is no more the case when we talk about knowledge. Information and knowledge are new factors of production. They are unlimited, renewable, endlessly interchangeable and reusable resources. When one downloads software, the original still remains were it was, and can still be used there, whereas whenever a company ships a tangible product, like a desk, a computer, a car, these items leave the company’s possession and cannot be used again by the company.
In a world dominated by the post-industrial revolution, the concept of mass production and mass merchandising is replaced by the concept of manufacturing and selling one unit at a low price. In this new world with its huge diversity, the consumer, swamped with products and information, is exposed to the problem of ‘over-choice’.
One of the emerging results of the new waves is a drastic change in the social demands for greater freedom and individuation, which prevented the realisation of George Orwell’s ‘1984’ nightmare. The post-industrial era is characterised by enormous changes in the social and political way of thinking, one of its manifestations being the weakening and even decay of political parties. Interests are now split between splinter groups, each being focused on a narrow, specific target, which will eventually lead to a new political system. Socialism was motivated by a reaction to the evils of the industrial revolution, and it managed to make remarkable political, social and economic changes in the world. It collapsed due to its inability to adjust to the dramatic and quick changes that came with the technological waves of the post-industrial revolution.
The post-industrial revolution has had profound effects on the family and social structure. The family unit has undergone dramatic changes. We now have single-parent families, zero-parent families, same-sex families, families of remarried, blended families, virtual families, families of convenience, etc. In addition, a large proportion of women are being attracted to employment outside their homes. The old concept that a man must be the primary breadwinner of the family, while the spouse is supposed to take care of the home, is dying. Both men and women work and take turns taking care of the home and family, depending on whose job pays more or who is working (this is sometimes referred to as the ‘androgynous family’). In this context, telecommunication can also help some people do much of their work from their homes. Thus, it is quite obvious that a traditional retirement system, based mainly on the husband financing his wife’s old age, is no longer relevant and valid.


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