Listening to the Future
SEGAL, HARVEY H.
Listening to the Future Microcosm: The Quantum Revolution in Economics and Technology By George Gilder Simon and Schuster. 426 pp. $19.95. Reviewed by Harvey H. Segal Author, "Corporate...
...But there was hardly a need for Gilder to cook the technological books in this provocative, brilliantly insightful account of the development of the microchip and its economic impact...
...The changes, far from being limited to more efficient pieces of capital equipment, are having an impact on industrial organization...
...Such a development will be the wider manifestation of the trend toward downward diffusion or decentralization of power Gilder so clearly documents in the evolution of the computer...
...Mead changed that situation with a hierarchical or top-down approach to chip architecture...
...Still, thechip war between the A'sand the B's continues...
...By dint of his own work plus that of collaborators and students, the new method culminated in the invention of the silicon compiler, making it possible to design chips on computers...
...Because Wealth and Poverty, his bestselling "supply side" tract of 1981, identified George Gilder as an A, critics are insinuating that Microcosm is tendentiously tailored to fit his ideological preconceptions...
...and Japanese producers were locked in a struggle over shares of the memory chip market...
...It was a technological feat assuring the obsolescence of successive generations of computers, to say nothing of other electronic devices...
...The plant was one of the last surviving monuments to the first Henry's obsession with vertical integration...
...Since newtechnology is slowly diffused to older industries, we are only beginning to realize the contribution microchips and computers can make to overall productivity...
...But a few paragraphs later I read disconcertingly that: "To comprehend nature, we have to stop thinking of the world as basically material and begin imagining it as a manifestation of consciousness...
...Its purpose was to prevent the Japanese "dumping" of 64-kilobyte dynamic random access memory chips (64k-DRAMs) below cost in the U.S...
...In concentrating his analysis on the cutting edge of high technology, Gilder perforce ignores the less dramatic, yet highly important economic effects of the quantum revolution...
...Detroit's Big Three are relying less on in-house captives for glass, transmissions, or body panels, and more on price-competitive outside suppliers...
...The microchip industry establishment, however, was hardly enchanted by Mead's brainchild...
...With the enormous fiber optic capacity for transmitting laser signal information, householders will be able to pick and choose from a huge and perpetually changing menu of instantly available video programs...
...But the cartel soon foundered on a technological reef...
...The military's influence is being exerted, too, through the Defense Advanced Research Projects Agency (DAMA), which has over $1 billion to spend...
...Gilder is on very shaky ground when he baldly asserts that the "bureaucrats'" devaluation of the dollar "at the behest of farmers and uncompetitive commodity producers," inflicted injury on the chip and computer industries...
...Relatively few types of chips were generated, and nearly all were standard models with demonstrated markets...
...Etched onto this wafer are millions of transistors that are integrated into circuits fashioned to perform a growing variety of specialized functions...
...In order to distance himself from the crudely mechanistic materialism prevalent prior to the quantum revolution in physics, Gilder speaks endlessly of the "overthrow of matter...
...The puny 64k-DRAM, like the Model ? and the vacuum tube, is now history...
...he called them "vulture capitalists...
...They account not only for the increasing capabilities and sharply declining prices of computers, but are also essential to telecommunications, automotive ignition and transmission systems, the robots on factory production lines, and myriad other products and processes...
...Carver Mead, the towering figure in Gilder's intellectual pantheon, is a physicist at the California Institute of Technology whose visionary ideas revolutionized the design and production of microchips...
...The bureaucrats in MITT, in the Defense Department and in the corporate boardrooms failed because they ignored Carver Mead's admonition: "Listen to technology and find out what it is telling you...
...Arguably the most far-reaching technological innovation of the latter half of this century, amicrochip is a wafer of silicon, a semiconductor of electricity refined from sand...
...Moreover, his implicit assumption—unexpected from a member of the A team—that bureaucrats can move dollar exchange rates at will is one that just won't wash...
...Some of his formulations are arresting...
...Our silicon sultans lobbied for trade protection in the name of the national defense, and howled as gifted followers of Carver Mead jumped the corporate ships to set up their own custom shops...
...Although I do not think that is likely to happen for another 20 years, once households are connected to a fiber optic network, both current network and cable TV will be replaced by what Gilder calls "telecomputer" technology...
...Its shopping list includes high definition television (HDTV), a technology that Gilder dismisses as hopelessly obsolete in a persuasive chapter entitled "The Death of Television...
...None of the flaws in Microcosm is fatal, but some should be noted...
...In a world of massive international capital flows, bureaucrats can no more control exchange rates than the prices of 64-k DRAMS...
...Computers and robots are spurring a healthy vertical disintegration of the domestic automobile industry, through the strengthening of highly specialized independent producers of components...
...Any objective analyst—even a reflexive ? who might blanch at Gilder's eccentric ebulliency—will agree that they are diffusing rather than centralizing economic power...
...In this regard, a most symbolic, though little noted, sign of the times is Ford's recent decision to sell its River Rouge steel works to Japanese investors...
...seems to be to reduce philosophy to a mechanistic positivism, to reduce history to statistical fluctuations and class exploitations, to deconstruct literature to a flux of words and writers' neuroses, and to banish heroes from human life...
...Electronic creativity, as Gilder notes, was being stifled...
...My other objection is philosophic...
...In the summer of 1986 the U.S...
...Reviewed by Harvey H. Segal Author, "Corporate Makeover: The Reshaping of the American Economy" Beatrice Webb used to pigeonhole everyone she knew as either an A or a B, an anarchist or a bureaucrat...
...Happily, Microcosm, indisputably the best of Gilder's eight books, is strong enough to withstand that incursion of silicon Platonism...
...Consequently, microchips are everywhere...
...One executive, who two decades earlier was himself a daring chip entrepreneur, denounced Silicon Valley's venture capitalists for financing new startups...
...Department of Commerce and Defense and Japan's Ministry of International Trade (MITI) eagerly drew up an agreement to form a chip cartel in answer to the giant foundries' pleas for help...
...Previously, the owners of silicon foundries costing hundreds of millions of dollars employed one of a few high-technology priests to laboriously fashion the prototypes of commodity chips that were then mass-produced...
...Microchips are creating a wide spectrum of opportunities for entrepreneurs as well as greatly enhancing theef ficiency, and hence the viability, of smaller businesses...
...In 1988, Sematech, achip industry research and development consortium, was established with the help of a $500 million matching grant from the Pentagon...
...Mead likened that era to a world where the owners of printing presses decided what would be written...
...On one side are the Harvard-MIT proponents of an "industrial policy" and their big chip foundry allies, on the other the technological determinists of the Mead-Gilder entrepreneurial camp...
...A prime example of what Joseph A. Schumpeter, the grand theoretician of economic innovation, termed "creative destruction," the silicon compiler undermined the power of the large chip foundries: IBM, Intel, National Semiconductor, Motorola, and Texas Instrument...
...He offers no coherent explanation of the alleged injuries...
...To make matters worse, the compiler was coming on stream at a time when U.S...
...To date, the ? camp has been short on victories but it is long on armaments...
...Transistors—the fruit of advances in solid state physics—switch and amplify electrical currents many times faster than the considerably more expensive vacuum tubes they supplanted...
...The radio frequency and geographical monopolies of the centralized broadcasting networks and cable systems will thus be broken...
...Gilder believes that fiber optics—cables woven of glass fibers no thicker than a human hair that are already carrying up to 50,000 simultaneous telephone calls on one pair—will doom television as we know it...
...Microchips and fiber optical networks— after overcoming the stiff political opposition that seems virtually inevitable —will accomplish the same end in telecommunications, a broad category that embraces the electronic dissemination of information...
...By replacing vacuum tubes and dense systems of expensive copper wire, the microchip doomed John von Neumann's mainframe architecture, and paved the way for ever more powerful personal computers and specialized workstations...
...I cheered when I came across this passage: "The highest purpose of the leading universities...
Vol. 73 • January 1990 • No. 1
