Introduction to the information society

Introduction to the information society

Phuah Eng Chye (1 July 2017)

The economics profession has been in an introspective mood since the financial crisis of 2007. As the period of economic stagnation lengthened, there was realisation that conventional theories and policies weren’t working which induced a sense of helplessness. Economic advice was shunted aside and policies were increasingly shaped with a populist feel to bore down on “foreign” scapegoats such as globalisation and immigrants. These policies are likely to have a bad ending; as will be evident in due course.

But populist policies are opportunistically occupying a policy vacuum left by the obsolescence of economic theories and policies whose origins can be traced to an industrial economy. It is in the context of filling this policy vacuum that I wish to introduce the concept of the information society and to discuss why it has been difficult to formulate new information-based paradigms to guide us out of the economic cul-de-sac.

The transition of an economy from industrial output to one substantially driven by information had been long anticipated. In this regard, the two main ideological paths were charted by the great economists, Karl Marx in the late 19th century and John Maynard Keynes in 1930.

Paul Mason noted[1] Marx had imagined an economy “in which the main role of machines was to produce, and the main role of people was to supervise them. He was clear that in such an economy the main productive force would be information…Given what Marxism was to become – a theory of exploitation based on the theft of labour time – this is a revolutionary statement. It suggests that – once knowledge becomes a productive force in its own right, vastly outweighing the actual labour spent creating a machine – the big question becomes not wages versus profits but who controls what Marx called the power of knowledge.”

Paul Mason suggests this led Marx to the following conclusions. “First…a knowledge solution is cheap and limitless. Second…knowledge-driven capitalism cannot support a price mechanism whereby the value of something is dictated by the value of inputs needed to produce it. It is impossible to properly value inputs when they come in the form of social knowledge…For Marx, knowledge-based capitalism creates a contradiction – between the forces of production and social relations. These form the material conditions to [blow capitalism’s] foundations sky high.” Karl Marx’s vision of the information society is thus interpreted within his paradigms on capitalist exploitation and a divisive society stratified by class.

The alternative path was explored by John Maynard Keynes who mulled about “a new disease…technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour…for the first time since his creation man will be faced with his real, his permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well…Yet there is no country and no people, I think, who can look forward to the age of leisure and of abundance without a dread. For we have been trained too long to strive and not to enjoy. It is a fearful problem for the ordinary person, with no special talents, to occupy himself, especially if he no longer has roots in the soil or in custom or in the beloved conventions of a traditional society.”[2] John Maynard Keynes thus views the information society from his paradigm of unemployment and growth. He views automation as leading to abundance and causing massive unemployment, worsening inequality and economic stagnation.

Further exploration of the information society occurred in the 1970s and 1980s. Frank Webster notes technological change stimulated discussion “about what information technology (IT) was set to do to us. Then favoured topics were the end of work, the advent of a leisure society, the totally automated factory in which robots did everything.” More recently, it is the Information Technology Revolution which is triggering the inevitable social and economic consequences where “work will be transformed, education upturned, corporate structures revitalised, democracy itself reassessed.”

“It seems to me that most people ask themselves, at one time or another, what sort of society is it in which we live? How can we make sense of what is going on with our world? And where is it all taking us?…We are told that we are entering an information age, that a new mode of information predominates, that ours is now an e-society, that we must come to terms with a weightless economy driven by information, that we have moved into a global information economy…To some it constitutes the beginning of a truly professionalised and caring society while to others it represents a tightening of control over the citizenry; to some it heralds the emergence of a highly educated public which has ready access to knowledge while to others it means a deluge of trivia, sensationalism and misleading propaganda…It seemed that, on many sides, people were marshalling yet another grandiose term to identify the germane features of our time. But simultaneously thinkers were remarkably divergent in their interpretations of what form this information took, why it was central to our present systems, and how it was affecting social, economic and political relationships.”

Frank Webster (2006) Theories of the information society

Frank Webster notes “scholars acknowledge that there is something special about information”, but that “there is little agreement about its major characteristics and its significance”. In this regard, work on the information society spans across many academic disciplines and is viewed from multiple dimensions in terms of ideology, its technical features, education or its social and business aspects. New paradigms and buzzwords such as the California ideology, cognitive capitalism, cyber, digital, knowledge, managerial capitalism, networks, post-capitalist, post-Fordism, post-industrial, the 4th industrial revolution, wired and zero marginal costs have been thrown around to describe the forthcoming social and economic upheavals.

In tandem with this, many studies and policies were formulated to position economies to benefit from technology or to understand its impact particularly on employment or competitiveness. But interest in the information society paradigm tended to be faddish. While this was partly due to changing economic conditions, there was also considerable difficulty in constructing a rigorous model that could provide definite answers in an economy lacking defined boundaries and subject to constant disruption. The information society paradigm has thus proven to be an elusive task. Like the proverbial blind men feeling the elephant, economists are only able to describe the fragments they feel. As a result, the information society remains stranded at the periphery, a novelty rather than an integral aspect of mainstream theory and policy.

But robust and holistic information society paradigms are badly needed as we cannot leave our economic future in the hands of the tried and tested ideas of the industrial world. Industrial paradigms are based on physical concepts and are ill-suited to guiding us forward in a landscape that is now undeniably information-driven. If we are unable to accurately define the challenges posed by the information society, then we are unlikely to come out with the right policies. At a starting point, I believe it is important to have a realistic description of economic behaviour and the landscape for the information society. This is what I hope to do in my forthcoming articles on how an economy powered by information behaves differently from one built on physical production.

References

Frank Webster (2006) Theories of the information society. Third edition. Routledge.

John Maynard Keynes (1930) “Economic possibilities for our grandchildren”. Scanned from Essays in Persuasion, New York: W.W.Norton & Co., 1963, pp. 358-373. http://www.econ.yale.edu/smith/econ116a/keynes1.pdf

Paul Mason (2015) Postcapitalism: A guide to our future. Penguin

Phuah Eng Chye (2015) Policy paradigms for the anorexic and financialised economy: Managing the transition to an information societyhttp://www.amazon.com/dp/B01AWRAKJG

[1] Paul Mason based his comments on Karl Marx’s Grundrisse (which included a section called Fragment on Machines) which was not translated into English and published until the mid-20th century.

[2] John Maynard Keynes

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