Wednesday, March 16, 2011

The Fundamentals of Industrial Ideologies: Maximization

The Third Wave, A. Toffler

The split-up of production and consumption also created, in all Second Wave societies, a case of obsessive "macro-philia"—a kind of Texan infatuation with bigness and growth. If it were true that long production runs in the factory would produce lower unit costs, then, by analogy, increases in scale would produce economies in other activities as well. "Big" became synonymous with "efficient" and maximization became the fifth key principle.

Cities and nations would boast of having the tallest skyscraper, the largest dam, or the world's biggest miniature golf course. Since bigness, moreover, was the result of growth, most industrial governments, corporations, and other organizations pursued the ideal of growth frenetically.

Japanese workers and managers at the Matsushita Electric Company would jointly chorus each day:

... Doing our best to promote production,
Sending our goods to the people of the world,
Endlessly and continuously.
Like water gushing from a fountain.
Grow, industry, Grow, Grow, Grow!
Harmony and sincerity!
Matsushita Electric!

In 1960, as the United States completed the stage of traditional industrialism and began to feel the first effects of the Third Wave of change, its fifty largest industrial corporations had grown to employ an average of 80,000 workers each. General Motors alone employed 595,000, and one utility, Vail's AT&T, employed 736,000 women and men. This meant, at an average household size of 3.3 that year, that well over 2,000,000 people were dependent upon paychecks from this one company alone—a group equal to one half the population of the entire country when Hamilton and Washington were stitching it into a nation. [..]

AT&T was a special case and, of course, Americans were peculiarly addicted to bigness. But macrophilia was no monopoly of the Americans. In France in 1963 fourteen hundred firms—a mere 1 percent of all companies—employed fully 38 percent of the work force. Governments in Germany, Britain, and other countries actively encouraged mergers to create even larger companies, in the belief that larger scale would help them compete against the American giants.

Nor was this scale maximization simply a reflection of profit maximization. Marx had associated the "increasing scale of industrial establishments" with the "wider development of their material powers". Lenin, in turn, argued that "huge enterprises, trusts and syndicates had brought the mass production technique to its highest level of development." His first order of business after the Soviet revolution was to consolidate Russian economic life into the smallest possible number of the largest possible units. Stalin pushed even harder for maximum scale and built vast new projects—the steel complex at Magnitogorsk, another at Zaporozhstal, the Balkhash copper smelting plant, the tractor plants at Kharkov and Stalingrad. He would ask how large a given American installation was, then order construction of an even larger one.

In The Cult of Bigness in Soviet Economic Planning, Dr. Leon M. Herman writes: "In various parts of the USSR, in fact, local politicians became involved in a race for attracting the 'world's largest projects.'" By 1938 the Communist party warned against "gigantomania," but with little effect Even today Soviet and East European communist leaders are victims of what Herman calls "the addiction to bigness'

Such faith in sheer scale derived from narrow Second Wave assumptions about the nature of "efficiency." But the macrophilia of industrialism went beyond mere plants. It was reflected in the aggregation of many different kinds of data into the statistical tool known as Gross National Product, which measured the "scale" of an economy by totting up the value of goods and services produced in it This tool of the Second Wave economists had many failings. From the point of view of GNP it didn't matter whether the output was in the form of food, education and health services, or munitions. The hiring of a crew to build a home or to demolish one both added to GNP, even though one activity added to the stock of housing and the other subtracted from it GNP also, because it measured only market activity or exchanges, relegated to insignificance a whole vital sector of the economy based on unpaid production—child-rearing and housework, for example.

Despite these shortcomings, Second Wave governments around the world entered into a blind race to increase GNP at all costs, maximizing "growth" even at the risk of ecological and social disaster. The macrophiliac principle was built so deeply into the industrial mentality that nothing seemed more reasonable. Maximization went along with standardization, specialization, and the other industrial ground rules.