The Future of Work
Corporations, Government and Service Providers from education to health will need to radically change to succeed and prosper in a knowledge based economy. We are at the cusp and we need to think and adapt at lightning speed.
Mass production or industrialization has given us prosperity for a hundred years and made our success to date. It has not been limited to factories but has included almost every corner of our society. It has produced huge economic and human gain and wrought tremendous damage to those that could not or did not evolve and keep up.
Knowledge was industrialized by the Guttenberg Press. Then “education was industrialized to provide large numbers of capable doctors, lawyers, workers and teachers. Energy production was industrialized to provide cheap, available power for factories, homes and offices. Agriculture was industrialized to provide reliable, economical food sources. The change affected almost every corner of our society”- Mary Adams, co-author of Intangible Capital: Putting Knowledge to Work in the 21st Century Organization
This industrialization process occurred rapidly and at an ever accelerating speed fuelled by “relatively cheap energy, the relative lack of importance placed by society on externalities (such as pollution, social balance and health risks), the availability of large workforces, and continued returns available from mechanization that provided greater and greater returns on the work of employees”.
When we could no longer continue this relentless growth in Western Europe or North America, we simply shifted it off shore to a lower cost environment.
When Germany, the US and now Japan began to limit the growth of Nuclear power we simply negotiated deals with poorer more desperate countries. Some futurists predict North America will soon be buying enormous supplies of battery power from battery ships that produce their power in nuclear reactors on other’s shores and ferry it to Europe and the US to meet their auto pollution standards.
However this has wrecked our economy and driven us into ever increasing foreign trade deficits.
Robert Blecker, PhD, Visiting Fellow, Economic Policy Institute believes “There is a long-term worsening trade balance trend throughout Europe and the US since the 1960s, largely brought on by a declining competitiveness due to social, labour and environmental restrictions in these developed countries.
This deterioration in trade performance requires either a continuous depreciation of the euro and dollar, or a decrease in comparative standards of living between the west and east”.
Current industrialized advanced countries like Europe and America are in danger of falling into a “vicious circle of decline,”
So what is the solution?
We can build tariff barriers and remake our industrial economy but then we would lower our standard of living if we could not continue to benefit from low cost off shoring.
The other alternative is to remake our economy based on a knowledge system and reclaim our advancement of wealth without sacrificing our social systems, the world’s environmental balance or the economies of low cost off shore labour.
“What will this new model look like? Moving into the knowledge era does not mean the rise of services and consumption and the decline of production as some profess. Humans will have the same needs to live. Housing, transportation, consumer goods, food, healthcare, education will all remain constants in our economy. These needs require a production sector. But this new production sector will be built under a new system based on the knowledge economy.” - Mary Adams
“The solutions that will emerge in the knowledge economy will turn many industrial models on their head. The industrial economy was based on control of scarce resources and top down flows of knowledge. If I owned the factory, I told you what to do. The knowledge economy in contrast is based on leveraging a theoretically infinite resource (knowledge). I can’t own or control knowledge beyond a very limited set of circumstances. So in the long run, I can’t tell you what to do. I need you to voluntarily cooperate and collaborate with me.”
The knowledge economy will be an outsourced bottom up model where innovation comes from voluntary collaboration. This knowledge based innovation model will compete with the old industrialized model and when it wins it will attract scarce resources such as capital. The collaborators with the knowledge or idea will then be in control rather than the owner of the scarce resource.
The easiest place to see the implications of this bottom-up dynamic instead of top down is in the sphere of social media and IT-related projects where knowledge moves around the world constantly without a lot of top-down control.
Mike Mandell, the chief economist at BusinessWeek, postulates “As we move into this new kind of production economy, there will continue to be great tension between top-down, large-scale solutions and bottom-up, smaller-scale solutions. For example, do we need a national energy grid or instead can we use neighbourhood energy networks? Do we need large-scale, subsidized production of basic foods like corn, milk and soy or smaller-scale local production of vegetables in urban gardens? “
China has enormous capital, cheap labour and relaxed environmental controls. We can’t win in a game where the rules benefit them. We need to leverage the benefits of a knowledge based economy.
As an example will the cost advantage remain with self-assembled furniture shipped halfway around the world or will we discover ways to not ship lumber from Canada and the US just to bring it back again as a finished product. Maybe the answer is in smaller and small town factories using alternative energy such as solar and wind and using the innovation of a knowledge based work force. Localized production will require cost effective sustainable energy production systems and a move to smaller equally efficient manufacturing systems. This is likely to mean outsourcing and collaboration.
In the short run, we have to live in both worlds. We have to fight the cost competition from industrial China. But we can’t ignore the opportunities of the knowledge era. The future is in using knowledge to radically knowledge-ize every aspect of our lives and economy. Based on this new paradigm production has an exciting future.
Mary Adams is the co-author of Intangible Capital: Putting Knowledge to Work in the 21st Century Organization Mary studied at Rice University (BA Political Science) and the American Graduate School of International Management (Thunderbird-MA International Management).
She is a CMC (Certified Management Consultant), a certification mark awarded by the
Institute of Management Consultants USA for meeting the highest standards of consulting and adherence to the ethical canons of the profession.
Robert A. Blecker, Ph.D.is Professor of Economics, American University and
Visiting Fellow Economic Policy Institute. Professor Blecker’s research interests include international trade, open economy macroeconomics, the value of the dollar and the US trade deficits, and the history of economic thought, and political economy.
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