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WHERE THE CHIPS MAY FALL BETWEEN THE FIRST AND THIRD WORLDS

by Robert M. Young

There is an intense and increasingly alarming debate going on among economists, electronics experts and trade unionists about the consequences of new microelectronic technologies in the developed countries. Their effects on the third world are not yet central to that debate and at present can only be glimpsed, but the omens for both levels of development are bad. As things now stand many developing economies attempt to raise capital and industrialise by exporting primary products and cheap consumer goods. The new technology may allow the developed countries to reclaim their former role in cultivation and production and reverse the trend which has depended on cheap labour and raw materials in developing countries. In order to grasp the probable effects of microelectronics on the international division of labour and the likely further widening of the gap between rich and poor nations, it is necessary first to look at the nature of the new technology and the problems it is raising in Britain.

It is only as jobs are affected that the impact of these versatile tiny computers — called microprocessors — is beginning to dawn on the general public. For example, union reaction to new printing technology which uses microprocessors led to the suspension of publication of the London Times. The introduction of word processors (microprocessor-based typing systems) in office work has meant increases in productivity of up to 100% over conventional typing and filing, while at the same time eliminating many jobs completely. Every home with a television set and telephone may one day be reached by the new British Post Office view-data service, Prestel, which uses microprocessors to give access to l00,000 pages of information of all sorts, with 10,000 pages being added every month. This will have far-reaching consequences for consumption habits and jobs in the service sector of the economy.

The technology which is producing these upheavals is genuinely amazing. It has been clear for decades that computers can make calculations and store and process information far beyond human performance. But until now the two problem of size and cost have limited the imagination and made many new applications uneconomical. The qualitative change has occurred with silicon chip technology which goes far beyond what the radio tube and transistor can handle. The electronic circuits of a small computer can fit onto a single chip a few millimetres square. You can already put more than 16,000 units on one, and there is fierce competition for the next generation of circuits. Over a million units per chip are predicted by 1990, and many chips can fit into a small space, making compact storage and processing of vast amounts of information simple and cheap.

Most people have encountered this technology only in the form of handy pocket calculators, and the rapidly falling prices in this industry show just how competitive it is. A technological lead over other firms can disappear in a matter of months, leaving the loser with large obsolete stocks. The basic cost of the chip is approaching a negligible fraction of a penny, so that it is becoming economical to automate any process which can be reduced to specifiable procedures, however complicated. By the end of the century the price will depend on the equipment surrounding the chip — the 'software' — since the cost of memory and processing will be, effectively, zero.

What this means in practice is that all sorts of jobs become easier, or simply disappear, as the machine takes over control of production and absorbs craft skills from people. Typesetting disappears: a writer can, in effect, type straight on to the presses. A 60% loss of jobs is predicted 1n the British newspaper industry and the effects on book and periodical printing have not yet been estimated. There are analogous labour-saving innovations in electronic news-gathering for television.

In the general office a word processor now on the market can reproduce standard letters or paragraphs from a large memory store, integrate corrections or revisions and print out any number of copies of a final version with extraordinary rapidity. All paper filing can be eliminated, and typists’ work, speed, errors and rests can be automatically monitored The next step is the production of voice-activated and voice-synthesising chips which can easily translate between print and sound This could be followed by very cheap telecommunications making 'teleconferencing' an attractive alternative to the printed word. These are not wild speculations but the predictions of the British Government Think Tank.

So far the number of word processors in Britain is only two per cent of the US total and fourteen per cent of the West German. But a recent survey by a trade union researcher estimates that 2.6 million British workers whose jobs involve handling information will lose those jobs by 1985 and that 3.9 million will do so by 1990. The West German trade unions predict that by 1990 two million of the country’s secretarial jobs will be lost.

On the other hand, multinational companies like Texas Instruments, Motorola, IBM and ITT, as well as the customers to whom they sell the new technology, cannot afford not to adopt it, since they would otherwise lose out in international competition. The same is true of the national economies of developed countries.

In order not to be left out of the race the British Government is investing 100 million in three newly-created firms to develop and market microelectronic technology. There is already some doubt as to whether their designs will come on the market in time to win, but they feel that Britain must take this silicon chip gamble in order to meet the employment needs of the future. Having fallen a long way down the line already, it is felt that the country must re-tool at a level so fundamental as to amount to 'reindustrialisation'. In addition to current unemployment, there is the prospect of two million extra workers looking for jobs in Britain by 1990 because of the rising birth rate.

The gamble is that the new technology will generate jobs throughout the economy. In the microelectronic industry itself a recent survey by A. D. Little which was commissioned by several governments, forecast one million new jobs by 1987, but 60% of those will be in the US. The net effects are not easy to predict. Massive job losses seem inevitable in the information and secretarial sectors, but who can say what the balance of expansion and contraction of industries and services will be when people do their shopping and reading and plan their holidays from their home television computer and information terminal (now available for 24 per month, but recall the plummeting prices of pocket calculators)?

In general manufacturing the consequences are a lot clearer. Complex skilled jobs such as engine-boring, paint-spraying and welding can now be automated with cheap microprocessor controls. A machine simply observes and records the subtle movements of a craftsperson and then programmes automated machines to bore, spray, weld or whatever, but much faster This is beginning to happen on a very broad scale. There is even computer-aided designing of new products and processes.

The new print technology, word processors, home computer planned holidays and automated manufacturing may seem a long way from the labour processes in developing countries, but the indirect effects are very stark indeed. Whatever the net effect on jobs in the developed countries turns out to be, these innovations are likely to make things much worse for the developing nations by recouping production from countries which have only lately benefited from high labour costs in the developed world. In recent years some countries have thrived on labour-intensive manufacturing. This has included making radios and shoes in South Korea, printing in Hong Kong, cotton clothes in Sri Lanka, and even the etching of circuits on the current generation of microprocessor chips in Taiwan

But the dramatic promise of microprocessor-based manufacturing drastically reduces the need for living labour. The labour embalmed in the machine can do it more cheaply and reliably, without rest periods, wage demands or militancy.

The likely result is, for example, that a firm in Leicester, which is now making stockings with one woman tending sixteen machines and is on the verge of going out of business and handing over to Hong Kong, will be able to acquire the new technology and once again become profitable, hence preventing a potentially lucrative form of manufacturing from moving to the third world. In due course the same is likely to be true of agricultural cultivation. The cotton-picking machine currently in use does the work of forty people. A greatly more flexible one could harvest this — and many another — crop more efficiently.

The availability of cheap labour in the developing countries will simply cease to matter, and the present drift of labour-intensive cultivation, manufacturing and assembly to those countries will be reversed. Similarly, the claim that other benefits, such as literacy, follow in the wake of technological development, will lose their basis.

If the employment consequences of microprocessors in the developed countries are uncertain, the social effects are even more so. Rather vague noises are being made about 'increased leisure’, 'abandoning the work ethic', and 'cradle-to-grave-education’ At present these appear to be little more than euphemisms for unemployment, but with the extra provisos that the jobless should be kept off the streets and out of the pubs. But if one looks beyond, to the effects on countries which are only beginning to acquire intermediate technologies which are themselves rapidly being made obsolete by the qualitative changes being wrought by microelectronics, then a world-scale employment crisis seems imminent.

In the long run, profits can only be derived from living labour. In competitive industries with very heavy investment in equipment, this means that faster and faster cycles of technological innovation are required to counteract the falling rate of profit which accompanies a higher ratio of machinery to workers. It might be argued that developing countries could manufacture the new technologies even more cheaply, but the rate of change of the market depends critically on a wide base of scientific and technological expertise which exists only in a small number of countries. Similarly, developing countries might be able to benefit greatly by buying and applying the new technology, but this must be set against the fact that what such economies require is not labour-saving devices but tasks for unemployed workers to do.

Here lies the fundamental contradiction of microelectronic technology. Economists point out that the entrepreneurial control of wealth production cannot be allowed to go its own way unless it maintains and increases the availability of jobs. The new technology generates its profits by eliminating jobs and gaining greater control over those that remain. It has been compared to the controversial neutron bomb which kills personnel but leaves buildings relatively unaffected. The microprocessor is, as it were, a miniature ’neutron computer': it does away with jobs but leaves the factory intact. It also produces impressive profits for the companies which can keep up with the increasing rate of technologic. change .

This is a genuine technological revolution on a par with steam power, the factory system and the moving assembly line. But in the frenzied silicon chip gamble the third world, yet again, is likely to rake in a lot less of the chips than the first.

1918 words

Copyright: The Author

Address for correspondence: 26 Freegrove Road, London N7 9RQ
robert@rmy1.demon.co.uk


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Ian Pitchford and Robert M. Young - Last updated: 28 May, 2005 02:29 PM

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