Socialist Party documents

New Technology and Globalisation

[Back] [Next]

New Technology and Globalisation - can a capitalist slump be avoided?

The 1990s has been a difficult decade for socialists and Marxists. The colossal pro-capitalist, pro-market ideological campaign following the collapse of Stalinism in 1989-91 has had a significant effect in shifting the right-wing leaders of the labour movement internationally even more decisively towards the right.

Those organisations and parties which claim to be 'Marxist', and even those who stand in the Trotskyist tradition, have not escaped unscathed. Many have been severely weakened and some have disappeared.

Some, seeking to deny reality, even when it strikes them on the nose, refuse to recognise that capitalism has been restored to Eastern Europe and the former Soviet Union.

Others, belatedly coming to terms with a new situation, have drawn completely pessimistic conclusions: capitalism, they argue, has been enormously strengthened.

Marxism and socialism have been pushed back for decades if not longer. All that remains is to retreat to the study, prepare for future distant struggles of the working class, or dissolve the revolutionary party into broad formations of the working class.

It is no exaggeration to say that only the CWI on an international plane, and the Socialist Party (formerly Militant) in Britain have furnished an analysis of the general world situation following the collapse of Stalinism which, in a balanced way, has rearmed its members to face up to the situation in the late 1990s and as we go into a new century. (See World Relations resolution adopted at the CWI 7th World Congress in November 1998, published in the new book, Global Turmoil).

But given the huge weight of pro-bourgeois, pro-market ideology, the Socialist Party could not remain immune from the pressures which this exerted on the ranks of the Marxist and Trotskyist movement.

There are periods in history when a correct analysis and programme, or the presence of many Marxs, Engels, Lenins and Trotskys for that matter, cannot decisively advance the movement.

There are many periods in history when the forces of Marxism have been reduced to small groups. The Bolshevik Party, following the defeat of the 1905-07 revolution in Russia, enormously contracted.

Its organisation within Russia was reduced to a shell and Trotsky informs us that Lenin's adherents were reduced to a handful.

The 1990s has not been a similar period of black reaction, either in Britain or internationally, as was the case in Russia during this period.

The effects of the collapse of Stalinism and with it the planned economy have been primarily ideological.

It was a defeat for the working class but not the same crushing social reverse and the change in world class relations that followed the triumphs of Hitler, Mussolini and Franco.

At the same time the 'acceptance of the market' was vital to the capitalists in order to introduce flexibility, short-time working, the lengthening of the working day, etc.

This did modify the relationship of forces in favour of the capitalists but not as in the 1930s. For a temporary, historical period this has had a profound effect.

It has primarily affected the summits of the labour movement which, in turn, has percolated down and affected the ranks of the former workers' parties and big sections of the working class.

In this situation, the older generation dropped away and were not fully replaced by fresh forces from the new generation who, in the main, have not yet decisively moved into action.

As we move towards the end of the decade, however, this is beginning to change. One thing that can now be stated with certainty is that, under the impact of a growing economic, social and political impasse for capitalism, a new generation will emerge who can and will be won to the banner of Marxism/Trotskyism.

The Socialist Party has been pushed back in membership. But because of its analysis and activity, the party and the CWI have escaped the fate of other groupings which have experienced not just a contraction in influence and membership but disintegration.

Nevertheless, the present position of the Socialist Party seems to be weakened in comparison to our influential position in the 1980s.

It should never be forgotten that Militant in Liverpool, which exercised a decisive influence in the Merseyside labour movement, terrified the bourgeoisie and the right wing of the labour movement with the mass campaign which forced Thatcher to retreat.

It can never be erased from history that Militant was the decisive force which organised and led the poll tax struggle which brought down Thatcher, the fountainhead of capitalist reaction in Britain and throughout the world in the 1980s.

Moreover, the present leadership and members of the Socialist Party are the ones who led these battles politically and organisationally.

Naturally, given the perceived weakness of the Socialist Party, at least in terms of membership all the past enemies of Militant have descended like a pack of jackals to attack, smear, denigrate and predict our 'terminal decline' and to once more write our obituaries.

This is not the first time that we have faced this. Following the expulsion of the five members of the Militant Editorial Board in 1983, the right wing of the labour movement believed that they had 'beheaded' Militant.

After our expulsion, the Labour Party rank and file selected three comrades - Dave Nellist, Terry Fields and Pat Wall - as parliamentary candidates who subsequently became MPs.

Moreover, the ranks of our organisation were swelled during the 1980s following the expulsion of the Liverpool and other Militants.

We once more read of our 'imminent collapse'. We again rose, seemingly Lazarus-like, from the dead to lead the mighty anti-poll tax battle.

Even on the difficult terrain of the 1990s, no other left-wing organisation in Britain can boast the record which the Socialist Party has.

We played a prominent role on a British and all-European level with Youth against Racism in Europe (YRE).

This had a decisive effect in the anti-racist, anti-fascist struggle following the murder of Stephen Lawrence.

No other party or organisation has managed to maintain as much of an organised position in the trade unions as the Socialist Party, which can point to members in leading positions in major trade unions where they have a decisive effect within the left in some trade unions, in building broad lefts, and on key workers' struggles.

Haughty, generally miniscule, rival 'Marxist' and 'Trotskyist' organisations sit in judgement of the Socialist Party when they have never led, nor will ever lead, any successful strike or struggle of the working class, or occupy any decisive influence within the broad labour movement.

A cottage industry has emerged, almost solely concerned about what our party does or says, its internal debates and development.

The array of critics have now been joined by ex-comrades of the Socialist Party in Merseyside. Naturally, their criticisms of the Socialist Party are manna from heaven for the opponents of the Socialist Party.

Some of these comrades in the past occupied important positions in the Socialist Party. Their document, The Political Evolution of the Militant/Socialist Party in the 1990s - Merseyside's View, has come as no surprise to the leaders of our party on the Executive Committee and the National Committee.

A section of our members have also been aware for a long time of the political trajectory of these comrades which has now led them to break both organisationally and politically from the clear perspectives and programme of the Socialist Party.

They write, 'This document has been collectively discussed and produced by comrades on Merseyside who have recently left or been suspended from the Socialist Party'.

They may claim that their document is a 'collective' criticism of the Socialist Party. In reality, it is written by Dave Cotterill, former regional secretary of the Socialist Party on Merseyside.

We by no means absolve the other ex-comrades of the Merseyside Socialist Party from the mistakes in the document.

But the ideas elaborated are substantially those which Dave Cotterill put forward in a series of discussions at the National Committee of the Socialist Party over a period of years before his resignation in 1998.

His views were debated extensively and rejected by a big majority. (However in the main we will use the term 'Merseyside ex-comrades' to describe the group of ex-comrades of the Socialist Party who have endorsed his document. When we deal with the particular arguments of Dave Cotterill we will name him.)

It is not true that the document represents the views of the 'Merseyside comrades'. This suggests that a majority of Socialist Party members on Merseyside adhere to these views.

A handful of former Socialist Party members who are loosely grouped around Dave Cotterill support these ideas.

The leading trade unionists in Unison, long-standing members of the party such as Tony Aitman, who was in our ranks long before Dave Cotterill or his supporters, Tony Mulhearn who played a decisive role together with Peter Taaffe and other British EC members in the Liverpool Council battles of the 1980s, Paul Astbury, Deputy Leader of the Labour Group after Derek Hatton's expulsion from the Labour Party, Harry Smith and many other veterans of the struggle as well as the best of the new generation, remain with the Socialist Party.

Moreover, Dave Cotterill was not suspended or expelled from the Socialist Party, but left when the Executive Committee of the Socialist Party asked questions about his involvement in a project on Merseyside (in effect a non-governmental organisation [NGO]) which arose out of the dockers' strike, which he was involved in as a paid official of the Socialist Party.

It is the right and the duty of the national leadership of our party to seek information about the involvement of party officials, in particular, in organisations financed from outside our party.

This is particularly important in view of the suspicions that workers have of 'politicians' and the recent widespread reports of corruption of New Labour luminaries.

Militant in the past, and now the Socialist Party, has a spotless banner on these issues. We have always demanded openness and transparency in order to avoid any suspicions of workers that we were a party 'like any other'.

In asking for information, the Executive Committee of the Socialist Party was not suggesting any impropriety but was asking for clarification.

The comrades claim that they are concentrating on 'the politics and not the organisational issues'. Organisation is an inference from politics and not vice versa.

The organisational methods of a party flow from its general perspectives, analysis, programme, etc. Nevertheless, the organisational differences on a whole series of issues were the starting point for more fundamental issues on which the 'Merseyside ex-comrades' broke from the Socialist Party.

They like to pretend that they were excluded because of 'their political positions'. They were not suspended from the Socialist Party because of the political positions outlined in this document.

They were suspended because they refused to accept the basic organisational requirements of membership of the party.

They refused to pay nationally agreed membership dues, or advocate agreed party policy (see Members Bulletin 34 for details).

They were offered the opportunity to appeal to the party conference in March 1999, but refused to do so.

This served to confirm the impression that they no longer wished to be members of the party. They represent, in our opinion, a fundamental departure from the positions of the Socialist Party, as we will outline below, and are set on a course which will lead to a complete break with Marxism and Trotskyism.

The 'Merseyside Socialists' are a right-wing, opportunist split from the Socialist Party.

Nevertheless, they would still have been accepted as members of the party and the CWI. They were given full rights to explain their position verbally but, despite our urgings, they did not produce any substantial alternative written analysis to that of the CWI or the party leadership.

Why did they not produce a document, such as the one that they have now circulated, in the three years they were raising verbal differences at our National Committee? Why did they wait until three weeks before the National Conference of the Socialist Party - and after Dave Cotterill had left the Socialist Party - to set their ideas down on paper? The spoken word is elastic, less precise than ideas written down.

It would have been possible to have had a very fruitful debate on their written ideas within the Socialist Party.

The leadership of the Socialist Party urged them to do this many times. They complied with this request only when they left the party.

It is ludicrous for our critics, amongst whom now must be included the ex-comrades of the Socialist Party on Merseyside, to claim that debate and discussion is not the norm within our organisation.

On the issues of Scotland, on France, let alone the name-change debate, we have seen an almost endless production of documents for internal discussion and debate.

Few organisations in the world - never mind Britain - can rival the scale or level of debate which has taken place.

There is not a single case of any member of the party or the CWI being prohibited from putting forward a written criticism of the leadership of the party.

Other organisations with access to our internal material have complained that they could not keep up with the volume of written material produced by the Socialist Party on the name debate and on Scotland.

The present assorted critics of the Socialist Party were aptly described by Trotsky:

'They pick out faults, exchange all sorts of tit-bits and gossip concerning happenings among the party "tops". They always locate a leader who initiates them into all the "secrets". Discussion is their native element.

'No amount of democracy is ever enough for them. For the war of words they seek the fourth dimension. They become jittery, they revolve in a vicious circle, and they quench their thirst with salt water.' [In Defense of Marxism, p92, Pioneer Publishers]

This description of the petty-bourgeois opposition to the Trotskyists in the Socialist Workers Party in the USA in the 1930s perfectly describes the pseudo-democratic critics of the Socialist Party today:

'Do you want to know the organisational programme of the opposition? It consists of a mad hunt for the fourth dimension of party democracy.

'In practice this means burying politics beneath discussion; and burying centralism beneath the anarchy of the intellectual circles.' [Ibid p92]

It remains an incontestable fact that those critics, who the Merseyside ex-comrades turn to in political justification for their ideas, have not been 'excluded' or expelled from the Socialist Party but have left because they were incapable of convincing the ranks of the party of their ideas.

Such was the position of the miniscule Hearse/Bulaitis faction which, after it got only a handful of votes at our special conference on the name change, immediately left to take their place amongst the myriad of tiny sectlets.

Dave Cotterill and his supporters were not expelled from the Socialist Party. He left and the rest did not take up our offer to appeal against their 'suspension' (because they did not accept the basic requirements of membership of the party - see Members Bulletin 34).

There is not one substantial, critical work by the Merseyside ex-members of the policies, strategy and tactics and organisation of the Socialist Party while they were members.

They pretend to a lofty disdain for 'polemics', while their document is a sustained 'polemic' (written with the benefit of 'hindsight', which is a truly wonderful thing!) of past positions of the Socialist Party which they subscribed to or, at least, never mentioned - in most cases - that they had serious differences.

Moreover, this 'anti-group' refers disdainfully to 'Trotskyist infighting'. We do not subscribe to the view that the struggles of small groupings are of no historical significance.

The theoretical battles which were fought out amongst small groups of Russian revolutionaries in exile, in the back alleys of Paris, the pubs in London, or flea-infested barns in Brussels, were part of a necessary process, sharpening the political weapons without which the greatest social overturn in history - the Russian revolution - would not have been possible.

Without the struggles of past generations of Marxists, particularly the pioneers of Trotskyism in Britain, the success of Militant would not have been possible.

Therefore, a thorough answer to the theoretical backsliding of the Merseyside ex-comrades is necessary in preparing the forces of Marxism for the battles to come.

They claim that the criticism is well grounded in 'facts'. On the contrary, as we will show, their facts are distorted and the whole method of elaborating past positions of the Socialist Party is thoroughly dishonest.

Their document is a complete revision of everything which Militant, and now the Socialist Party, has fought for, not over the last few years of the 1990s, but over decades.

The criticisms go back even to the 1960s. No matter. We are compelled to show the reader just how dishonest this tendency is and to map out its future theoretical degeneration.

The 'Merseyside ex-comrades' are a sectarian fragment who combine gross theoretical opportunist blunders with ultra-left positions on issues such as the unions.

In writing their document, they firmly plant their feet on a bed of chicken feathers! This mighty edifice, running to 50 pages - with promises of morel - in reality, rests on two major criticisms of our position on the collapse of Stalinism, and our economic perspectives.

It is a criticism of the Socialist Party and the CWI on the twin theoretical pillars which have sustained us in the 1990s and which meant that we remained as a coherent Marxist/Trotskyist force.

The Timing of an Economic Slump

They describe the Socialist Party leadership as 'primitive slumpists'. This is a phrase which they have borrowed from us, like many other things in this document, such as, the need for political economy', without, unfortunately, understanding what we meant by these terms. 'Primitive slumpists' were those alleged Trotskyists, like the late Gerry Healy of the Workers Revolutionary Party, who prophesied during the boom period of 1950-75 that a 'slump' and, in their view its corollary 'fascism', were immediately on the agenda.

We have never adopted such a crude position. Indeed, at the time of the financial crash of 1987 we fought Ted Grant and his supporters within the ranks of Militant for precisely putting forward this position. In The Rise of Militant we wrote:

What did the October [1987] share crash signify? The answer to this question was hotly disputed within the ranks of Militant.

On the very day of the collapse Ted Grant argued that this was a precursor to a new 1929-type slump. His thinking was unfortunately reflected in the pages of Militant.

In its initial comments on these developments it stated: "A major slump in production and trade is assured, perhaps even before the summer of 1988."

Michael Roberts, who shared his view, stated that the October crash "is a barometer predicting the impending storm that will exceed anything experienced by capitalism in the post-war period, possibly matching the great slump of the 1930s."

'The morning after the crash, capitalist journals, like The Economist, for instance, were predicting that an economic slump would follow in the wake of "Black Monday".

However, it soon became evident that the central banks of Europe, Japan and the US would use their resources to bail out world capitalism.

Yet Ted Grant continued with his crude interpretation of the 1987 crash and dogmatically asserted his views at every turn.

He was supported by Roberts and Woods, but was opposed by myself [Peter Taaffe], Lynn Walsh, Bob Labi and others. The discussion around this issue within the Militant National Editorial Board and the working Editorial Board was searching and at times very sharp.

The opponents of Ted Grant rejected the perspective of an immediate slump. This, unbelievably, was pictured by Grant as taking place within a year.

Such an approach could completely disorientate supporters. If it should not come to pass, as was likely, we argued, a mood of disappointment, if not dejection, could set in amongst Militant supporters.

It was necessary to approach these events in a balanced way. The collapse in share prices did indicate growing difficulties for world capitalism.

At a certain stage the 1980s boom would give way to a recession, but it was very unlikely that it would be along the lines of 1929-33.

World capitalism still possessed huge layers of fat which it could eat into in order to stave off an immediate crisis.

There would of course be limits to this; short-term measures could be taken which would only have the effect of piling up problems and aggravating the crisis at a later stage.

The Taaffe, Walsh and Labi grouping on the NEB argued that it was possible for Japanese and German capitalism, with their enormous surpluses, to step in to underwrite the dollar and support financial markets, thereby temporarily staving off an industrial crisis.

Contrary to the analysis of Ted Grant this is exactly what happened. A revival of world capitalism took place in the aftermath of the October 1987 crisis.

Indeed, the huge injection of credit fuelled a growth of world capitalism at a greater rate than in the period prior to the crash.

It was agreed that the underlying crisis of world capitalism would assert itself at a certain stage. This it did in the recession of the early 1990s.

But timing in politics, and it should be added in the art of political economy, is important. Ultra-left sects, like a clock permanently stuck at one minute to midnight, have predicted a 1929 type slump for four or five decades.

They play into the hands of the capitalist ideologists, who picture Marxists as being incapable of analysing real processes in a balanced fashion. [The Rise of Militant, pp 447-448]

Now they are making the opposite - and just as serious - error on the economic perspectives for capitalism in the next period.

They are looking at the present position through 1987 spectacles in an entirely changed situation. Moreover, they appeal to the past positions of those who left the ranks of the CWI, such as Paul Storey, ex-leader of our South African section, and the tiny Hearse/Bulaitis faction.

Paul Storey decided to leave the revolutionary movement for a professional career, a very profitable commercial lawyer's practice.

But, in order to justify this, he attempted to politically demoralise and disintegrate our South African section.

If he had been successful, the organisation's dissolution would have been used as 'justification' for his retreat 'to the study', pending an unspecified, more favourable future period.

Then the working class would suddenly re-emerge and he would take his position once more in the front rank!

The authors state:

As Paul Storey from the South African section pointed out at the time of the split (1992), "The tendency has probably made an incorrect basic appraisal of the period since 1974, relying too much on assumptions which have not been retested".

Unfortunately, Paul's analysis, especially the part describing the impact of computer technologies, was disregarded by the International Secretariat (IS) of the CWI.

His views were described as "un-Marxist", and reflected him viewing this as an "un-revolutionary period".

New Technology

Paul Storey's ideas were debated out fully within the Socialist Party (then Militant) and the CWI and were decisively rejected.

A few quotes from his document, Addendum on Some Points of Theory, illustrate his reformist adaptation (which fitted in with his desire to return to the business world) to what appeared to be a resurgent and strong capitalism in the early 1990s.

He stated: 'I believe, we have passed into the early stages of a new epoch in the development of the productive forces (from machinofacture to "computerfacture" for want of a better term)... we are bound to make endless mistakes unless we begin the analysis of all fundamental questions from that point' (p4).

He wanted the CWI to 'pose the question of a decisive technological revolution occurring at the base of society, examine its implications and try to confirm it by careful empirical proof.'

Clearly Paul Storey and now, following him, the Merseyside ex-comrades, subscribe to the idea that 'computerfacture', married to globalisation (in effect, a decisive technological revolution) has ushered in a new, sustained period of growth for capitalism.

These ideas in the early 1990s were ultimately just a reflection of the thinking of the bourgeoisie as a whole.

The answer of the CWI was not to ignore the developments of new technology, computers or globalisation, as the ex-comrades argue, but to soberly analyse the effects of this on the economy and on economic perspectives for capitalism.

The application of technology is not a new issue for Marxists. How and under what circumstances it affects the prospects of growth in the productive forces was commented on by Marx in relation to 19th century British capitalism.

A 'technological revolution' as a way out for capitalism is limited by the stage through which capitalism is passing.

In the 1930s, for example, many new inventions - plastics, rubber, etc - already existed. However, they could not be fully implemented because of general stagnation in the productive forces.

This only became possible as a result of the post-1945 world boom. This boom arose because of the massive demand created in the US by the onset of the war, particularly in industries which could utilise the new technologies.

The destruction in Europe - the slaughter of value both of constant capital (factories, etc.) and variable capital (workers) - also cleared the ground for new productive methods and a structural upswing of capitalism.

The fundamental argument of the Socialist Party, and the CWI was that 'new technology' was an important new development with particular effects in some fields.

This has had a decisive effect in the information technology and financial sectors but also to parts of industry.

However, the effects of the 'technological revolution' have been misunderstood by Paul Storey and his latter-day converts.

Micro-technology has been applied to and transformed some sections of industry. However as opposed to the 1950-75 boom its application has been intensive and not extensive.

It has also been accompanied by cuts in the workforce, slashing of wages, etc., and the transfer of resources to a handful of countries in the underdeveloped world.

Rather than avoiding crisis it has enormously aggravated it in Asia and elsewhere. The economic story of the 1990s is the limited application of technology in most industries.

This is a consequence - in the final analysis - of the overall situation of capitalism. It could be argued that it is in a 'long wave' of economic depression (replacing the 'long wave' of the boom of 1950-75). This idea is now rejected by the Merseyside ex-comrades.

It is ridiculous to argue, as they do that, 'Globalisation was denied as a concept by the SP leadership, except in regard to financial transactions. The Asian Tigers were regarded initially as not important to the world economy and not important in the globalisation process.' There is not one article written by the leadership of the CWI or the Socialist Party which can substantiate this claim.

We never denied globalisation, in the sense of an extension and development of the world division of labour, nor did we ever say that the 'Asian Tigers' were 'not important'.

What we fought against were the exaggerations of those, like Paul Storey and now Dave Cotterill, of the effects of globalisation and new technology.

We rejected completely that this was facilitating a 'higher stage of capitalism', of growth and stability.

Globalisation, which first began to develop in the 1970s, did represent a new phase in the evolution of capitalism.

But this did not indicate the opening up of a boom period for capitalism. On the contrary, the economic crisis of 1974/75 signified a new period of 'depression'.

The 1990s, seen as the 'end of history' by the bourgeoisie at the beginning of the decade, have already experienced one recession and are on the eve of another, or possibly a slump.

We also showed that the Asian Tigers developed for special historical and economic reasons and did not represent the future of the countries of the underdeveloped world.

What now are the immediate effects of 'new technology'? Alan Greenspan, head of the US Federal Reserve Bank, recently emphasised the role of information technology and related industries in the 1990s' 'boom' in the US.

However, he then went on to point out that they 'were less important' than the technological revolutions around the turn of the last century, leading to the introduction of the motor car, aircraft, telephone, and the beginnings of radio.

This point is underlined in a recent book by Charles Jonscher, Wired Life: Who We Are in the Digital Age.

This author substantiates the arguments we deployed against Paul Storey's exaggerations (and now the ex-comrades' similar mistakes).

Jonscher shows that this new technology has, in the main, been used in the field of information technology and the finance sector, rather than the productive process as a whole.

To underline our arguments we will give lengthy quotes from Jonscher. Looking at the issue from an historical angle he writes:

In 1879 Thomas Alva Edison invented the lightbulb in New Jersey and Ernst von Siemens built the first electric streetcar in Berlin...

German engineers had put gasoline engines into vehicles. Henry Ford, pioneer of mass production, began manufacture in the USA in 1896, and by 1900 powered automobiles started to replace horse-carts in large quantities.

Just three years later the Wright brothers made the first powered flight, fulfilling a dream which had fascinated mankind since the earliest times.

The outbreak of World War One in 1914 brought horrifying confirmation of the rate of technological change.

Aeroplanes fought in the sky and huge factories churned out munitions and chemical weapons for a conflict which, in terms of human cost, had no precedent.

The ensuing years brought further breakneck developments in science and technology. Plastics appeared commercially in the 1920s, as did mass-produced steel.

Skyscrapers began to dominate city skylines. Electricity was fed to every city house, providing power for lighting, pumps, kitchen appliances and the first electronic radios and sound systems.

In the 1950s, in the boom years following the end of World War Two, most of the remaining elements of modern industrial life were put in place.

Domestic appliances from washing machines to vacuum cleaners became ubiquitous. The countryside was crisscrossed with asphalt highways on which travelled cars at up to and over 150 kilometres per hour, the best of them equipped with power steering, electrically adjusted seats, air suspension and automatic transmission.

The, first commercial jet was in service by 1952, and intercontinental air travel became routine. In 1959 the Soviet spaceprobe Lunik [Luna] 2 reached the moon. Technology had advanced from horse-drawn carts to space travel in a single lifetime.

The transition from the nineteenth to the twentieth century had been a period not only of great technological change but also of unprecedented political and social upheaval. [Wired Life, pp1-2]

Jonscher goes on to point out, however:

In Paris and New York, the patterns of day-to-day life are broadly unchanged. Some new architectural styles and models of cars have appeared, but traffic still tails back, as it has for decades, at the approaches to the cities.

People walk along the same streets and avenues, between offices and apartment blocks, coffee shops and restaurants.

The infrastructures supplying gas, electricity and water still date in large part from the first half of the century.

Our lifestyles have not been transformed by rocket travel, magnetic levitation or automated houses. Remarkable though it might seem to the optimist futurist of 1950, fifty years on we are still pulling up at the same petrol stations to fill the tanks of cars that have internal combustion engines, pistons and crankshafts, gearboxes and differentials.

We end this half-century much as we began it, using ironing boards to press our clothes, vacuum cleaners to do the cleaning and a wrench to fix a leaking tap. Infectious diseases are still rife.

Four decades ago, technology took a curious turn. A new generation of researchers in scientific and technological laboratories chose to work not on making tougher steels and bigger rocket engines but on etching myriad logic gates into strips of silicon, and on writing software that would turn these silicon circuits into problem-solving machines.

The technology of the future was to be the electronic manipulation, storage and transmission of information.

This technology was to create a world of keyboards and screens, of multimedia and video games, of electronic highways. The digital age had been born...

The triumph of the new industry now seems complete. The term "high technology" has become synonymous with computer technology.

By 1990 US business was spending more on office equipment to automate the handling of information than on all the technology of physical production put together - factory equipment, petrochemical complexes, transportation systems, construction projects and the like.

Microsoft Inc produces software - 0s and 1s encoded magnetically on disks - yet it is worth more on the stock exchange than the whole of the US automobile industry, the epitome of industrial mass production, put together. [pp 4-5]

Jonscher (an accepted expert in IT) answers those who have argued that new technology will extend the life of capitalism when he writes:

The modest impact of new technology on productivity reflects the fact that not all information work is equally susceptible to automation.

A legal opinion is generated by the mind of a lawyer; this underlying product is not susceptible to automation by information technology even though the technology will cope well with the processing and delivery of it once it has been encoded as alphabetic text.

Banking may seem to be all about numbers but at bottom it is still about borrowing money from customers and finding safe access to invest in it.

In short, the great majority of "information workers" do not spend their days doing what could by any stretch be called computing.

As the computer community was to discover, the next level of human information handling -processing - was going to be a lot more difficult to digitalize than communication had been. And thereafter the highest level, thinking, was going to prove impossible. [p 197]

Jonscher also comments:

While, in the Darwinian struggle for customers and staff, businesses must keep reasonably up to date, every business will have to keep up with what office technology has to offer, the improvement in the economy as a whole will be limited by a fact so obvious that it is seldom said straight out This is that over 80 per cent of the final output of the economy - of Gross National Product - is of a physical rather than informational character it consists of housing, food and vehicles rather than banking or educational services. [p226]

On the same theme he states:

The amount spent on information-technology support for the US economy in 1997 was an extraordinary $225 billion.

The ratio of expenditure by US businesses on technical support for the office as opposed to industrial processes, which, we recall, had reached 1:1 by the end of the 1980s, has now shot up to 2:1 in favour of the white-collar sector.

The automobile factories of Detroit are spending more on information technology to support the office functions of general management, marketing, customer communications and accounting than on the much-vaunted automation of the plants themselves.

US hospitals invest more on computer technology for administration than in the wards and operating theatres.

Other advanced economies either show a similar imbalance or, lacking quite such a large investment in computerization of offices, are hurrying to catch up.

Professor Eric Brynjolfsson of MIT, who specializes in researching the productivity of IT investment, in reviewing the techniques used by major companies to justify such expenditure observes that "they reveal surprisingly little formal analysis".

Corporate executives seem to rely on the belief that there is something intrinsically different about technology investment, which couldn't - and therefore needn't - be subject to the usual rigours of investment justification.

The 1990s continued to witness curious phenomenon: computer investments rising at record rates while scholars and pundits hoped for but could not find any formal justification for this. [p 201]

Interestingly, Jonscher makes concessions to Marxist ideas without mentioning Marx when he states:

The Labour Theory of Value is a concept in classical economic thinking which originated in 1662 in a treatise written by the English economist Sir William Petty.

He observed that the main determinant of the exchange value of a commodity is the amount of labour which goes into its production.

This concept, much refined over the centuries, can still serve as our guide to where value will lie in the information age.

The computer is commoditizing the processing of digital data, not of human knowledge, and if it is not bringing the expected gains it is because what goes down in cost also goes down in value. The value has stayed, so far, with the creative energies of people. [p208]

Once more on the impact of new technology on productivity he states:

There is also the vexed question of what the new technology will do to assist in enhancing prosperity.

Hopes of a white-collar-based transformation of business performance, as dramatic as that achieved by the Industrial Revolution, must be downplayed.

Office automation will help to sell cars and fill airline seats, but will not manufacture those cars or make those planes fly.

We must be realistic about the fact that, while the new technology is as important as the old as a competitive tool, it does not compare as a contributor to overall economic output. [p224]

... To some degree the use of information technology in a modern company setting provides a kind of corporate hygiene factor -crisp cleanliness in the office, with the data sorted, filed and available on demand.

Consider the contrary scenario. Instead of taking machinery away from the staff in the offices of General Motors, go down to the factory floor and take it away from the operatives there. Give them hand tools, hammers and the like, and tell them to make cars! [pp 225-226]

Jonscher reinforces a point which we have made on the difficulties of applying IT and 'new technology' to all industries and at the same rate which has been used in banking, office work, etc. He writes:

Industrial and chemical processes have a rich complexity which requires great flexibility in any system of rules that is to control it. Traditional approaches to computing have had difficulty coping with this complexity.

'Fuzzy logic', as opposed to 'digital logic', holds out the possibility of applying technology to industry but it is in an early stage. He writes:

Fuzzy logic is a mere speck on the canvas of the world-wide adoption of information technology. There is an estimated 1,000 programmers specializing in this field in Japan and a few hundred in the United States. [pp 234-235]

Rather than showing a way out for capitalism it is precisely in those industries where new technology has been applied widely that the most devastating effects of the slump which now grips East Asia are being felt.

Huge surpluses in the car industry, in the computer chip industry exist, together with a classical 'glut', the colossal overproduction of goods.

In every respect the perspectives of Storey, and his belated supporters, have proved to be erroneous.

[Back] [Next]