The New York Times Book (sic) Review for March 6, 1994 ran a feature piece reviewing a CD-ROM. "Microsoft Art Gallery," an interactive digitized catalog of Britain's National Gallery collection, won a rave. Just point and click, and you can pull up paintings by artist, period, or genre; you can also get spoken critical commentaries and painter biographies; you can zoom in or print out, all for $79.95. The Times's treatment of a CD-ROM as a virtual book has to be a kind of cultural watershed. The information revolution, decades after predictions of its imminence, has finally reached a popular critical mass.
Or, perhaps, a critical elite? Tens of millions of people now use electronic mail, computer bulletin boards, libraries and databases, or "telecommute" from home. Tens of millions more, many in such relatively humble jobs as checkout clerk and bank teller, routinely use computers at work. And after decades of rather pedestrian use of Macs and PCs in the classroom as adjuncts of rote learning, the potential of interactive multimedia pedagogy is at last beginning to permeate.
But if knowledge is power, one has to wonder who will get to use these marvelous, empowering tools. In principle, they are available to all, and at ever diminishing cost. A multimedia 486-level PC, complete with CD-ROM and fax-modem, is already available for under $1,500—less than most second-hand cars. Potentially, the enhanced PC will be the greatest boon to bootstrap learning since Carnegie's free libraries. This is surely the optimistic reading of Paul Starr's cover article on computer simulation games. One could imagine a world in which children from all social classes came of age learning to use this technology in grade school; Math Blaster would drive out Space Invaders, and computers truly would become the great equalizers. But will they? Will the information highway make us more connected as a people—or more separate?
In its architecture, the information age seemingly heralds equality. Not only is the hardware cheap and getting cheaper. The pricing structure of information itself is like no physical commodity; it is close to free. The economist Paul Romer emphasizes the powerful distinction between "rival" and "non-rival" goods in an information age. A rival good is a material object; if I have it, you can't have it. Information, as Romer notes, is the quintessential non-rival good. Once devised, a software package, a database, a learning program can be made available to all, at almost no marginal cost. Distribution is also nearly free, for pure information has no physicality. The designers of Bitnet, the inter-university computer network, acknowledged these factors when they devised "usage-insensitive pricing." Once you pay a basic membership charge, usage is free. Data manipulation is not metered, like usage of electricity or gas or the telephone. Bitnet's sponsors did this knowingly, to take advantage of the unique economic characteristics of pure knowledge—to maximize use rather than ration it by price, as we do in the allocation of rival physical goods.
Information networks deliver a kind of horizontal equity. Once a user is conversant with the technology, he or she is the equal of anyone else on line. The cyberworld is an almost-pure free marketplace of ideas. And as their enthusiasts keep telling us, computer networks are populist, free-wheeling, decentralized, and egalitarian, to the point of being splendidly anarchic.
Vertical equality, however, is another matter. It remains to be seen whether the computer will truly pervade the entire society in the manner of telephones, TVs, and cars. As they have become more user-friendly, computers have already become a commodity—but for an educated and relatively affluent segment of society. And if this remains the case, the information society will connect the educated, but intensify the separation of the classes. Without attendant efforts to overcome basic social inequalities, the presumed equality of access to technology will recall Anatole France's famous observation that the law in its majesty prohibited the rich and the poor alike from sleeping under the bridges of the Seine.
Beyond the question of meaningful access, the information society portends the intensification of other inegalitarian trends that have marked the recent past—if we let it. This is the pessimistic inference one can draw from reading four otherwise unconnected pieces in this issue of TAP: Starr's "Seductions of Sim ," Richard Rothstein's "The Global Hiring Hall," Louis Lowenstein's "The Predators' Accomplice," and Robert Frank's "Talent and the Winner-Take-All Society."
Begin with Frank. In an essay stimulated by Derek Bok's 1993 book, The Price of Talent, Frank identifies a growing trend toward what he calls "winner-take-all markets." His metaphor is free agency in professional sports, which allows a few superstars, only marginally more skilled than their teammates, to reap astronomical salaries. A corporation is likewise a team enterprise. But as Frank and Lowenstein both suggest, financial manipulators often take the lion's share of the gain.
Winner-take-all markets reflect increased marketization on a global scale, combined with the information revolution. Globalization, mediated by cheap electronic information flows, sweeps away customary and regulatory barriers that once produced a more broadly equal distribution of earnings. Globalization/computerization also enlarges markets, which means that a Michael Jackson or a Nancy Kerrigan or a Microsoft Art Gallery now have the entire world as their stage—and their market. Obtain a brief monopoly niche, and you will get rich.
The information revolution implies widening inequality in several other ways. Robert Reich has observed that a global economy divides workers into symbolic analysts and routine drones. This is true a fortiori in an information society. The archetypal symbolic analysts include both Lowenstein's takeover artists (who often fail to add value) and Microsoft's monkish code writers—who add significant value. Some 2,200 of Microsoft's software writers are already millionaires, in holdings of company stock. In the slow lane of the information highway—I promise this will be the last metaphor—are the armies of people who merely work with computers, but routinely rather than creatively. Although today's bank teller/checkout clerk/claims processor is significantly more productive than her counterpart of a generation ago, her wage is on average 15 to 20 percent lower.
Why? The reasons include winner-take-all effects (more money to the takeover artists and computer programmers; less to routine computer clerks), as well as persistently high unemployment, which undercuts pressures to raise wages with productivity. And of course globalization of labor markets—facilitated by the same information revolution—puts U.S. workers into competition with the billions of under-employed workers of the Third World. Rothstein's global hiring hall depresses wages for routine workers with nothing special to sell. And the same globalization of markets makes it harder to organize unions, or for existing unions to succeed in their traditional mission of raising the incomes of wage workers.
More troubling and more subtle is the fact that the information society seems to confer new legitimacy on these widening inequalities. If freer and freer markets dictate that Microsoft CEO Bill Gates is worth $7 billion and that the local checkout clerk is worth $4 an hour, it must be so. In Mickey Kaus's rendition of the winner-take-all argument (in his 1992 book The End of Equality), the rising forces of inequality not only reflect merit; they are so well entrenched that it is futile to fight them. Offsetting civic forces—unions, regulation, the redistributive welfare state—supposedly frustrate desert and hence economic efficiency.
In George Gilder's version of the story, in his 1989 book Microcosm, laissez-faire economics are inherent in the new cyber-economy. The old mass-production economy was centralized, standardized, and routinized. It lent itself to hierarchies, to unions, to state regulation, to uniform wages, to stability. The new information economy is above all decentralized and democratic, fluid and unpredictable. Gilder proclaimed an age that would "overthrow matter" and define worth in terms of ideas. "Rather than a New Industrial State, this era will disclose the new impotence of the state." If you have the smarts to open a software boutique, all it takes is a home computer and imagination. In the information economy, you can found a billion-dollar company in your garage. Go for it.
Implicitly, if you don't get with the program you've only yourself to blame. In the emerging parable of merit and reward, the millionaire cyber-nerd at Microsoft is the information-age counterpart of the urban Korean grocer, already a famous neo-conservative icon as a latter-day Horatio Alger. If Korean grocers can make it in America, working the entire family 15 hours a day, why can't inner-city blacks make it? It must be their own fault. A generation ago, Washington Post cartoonist Herblock lampooned the conservatism of Barry Goldwater, heir to a dry goods chain, by having him lecture an urchin: "If you had any initiative, you would go out and inherit a department store." It is somewhat harder to parody Gilder lecturing children of the slums to learn computer programming.
Cyber-economics is Adam Smith economics in a second sense. The technology is presumably moving so fast that it can't (or shouldn't) be regulated. Even a decade ago, one could differentiate the computer industry from the software industry from the telephone industry from the broadcasting industry from the cable industry from the entertainment industry—each with its own regulatory schema. Regulation was predicated either on monopoly (telephones, cable) or on scarcity (broadcasting). Now these are all blending into one undifferentiated whole, with giant mergers paving the way and yielding more winner-take-all windfalls in the process.
If scarcity was the predicate of the 1934 Communications Act, there is no longer scarcity on the supply side. We can have an infinite supply of information offerings and interactions. There is of course scarcity on the demand side—one's ability to partake is limited by one's purse—but this is an afterthought. In his recent paper on the administration's information policy, Vice President Gore generally accepts the premise that we should substitute competition for regulation. Make sure that every home has at least two competing, full-service vendors of interactive services, and then let market forces rip. To equalize the demand side, Gore is for mandates and compensatory outlays, too. But given budgetary constraints, the temptation will be to leave the demand side to the market.
All of the foregoing means that for those of us who worry about deepening inequalities, the information age is tantalizingly double-edged. Looking backward, we may discover that the widening inequalities of the Reagan era—based largely on shifts in tax and transfer policy—were only stage-setters. The new inequality is based on deeper forces—a blend of technology and a resurgent market, with all the implied moral legitimacy that confers.
For example, the "virtual corporation," previously mentioned in this space, consists of a small core of entrepreneur/ owners and an outer circle of contingent employees. The concept is touted not just as a useful strategy of corporate downsizing. It also carries ideological weight. It is not accidental that the metaphor—virtual—is cybernetic, for the information highway facilitates a loose corporate web connected by modem rather than physical affinity or long-term relationship. The worker brings to the marketplace only his human capital. The virtual corporation pays only for the value the worker can add. If the worker gets weary of the insecurity, the solution is obvious. He should become an entrepreneur himself. We are all Bill Gates—or at least we should be.
The presumption of a level playing field, in which everything is meritocratic, is of course mythic. Even if opportunities were truly equal, which they are not, it is hard to imagine a viable society composed of cyber-billionaires and data-entry drones.
An information economy does generate some mid-range jobs that are the cybernetic equivalent of auto assembler. Anyone with a home computer has had the experience of calling the manufacturer's phone support number and conferring with technicians who make roughly the wage of a skilled factory worker, and probably have a lot more fun. As the cyber-society becomes pervasive, there will be more such jobs. But contrary to the enthusiasts of training as the economic cure-all, it is unlikely that there will be enough of them.
And there remain the wide disparities in who gets to learn and use tools like Microsoft Art Gallery. Millions of homes are wired to the information highway. But precious few are in the inner city. Overwhelmingly, it is children of affluence, in prosperous school districts with supportive and available parents, who are using computers as instructional entertainment and playing SimCity in their spare time.
Educational computer games are indeed seductive and empowering for those with access to them. But for a child of the slums the available instrument of empowerment is more likely to be a handgun or a hit of crack. We have become a society in which the well-off can flick a switch and be entranced by a parallel universe where the opportunities are boundless and the only constraint is the number of spare hours in the day—while someone else is homeless on their doorstep.
Paul Starr's piece suggests that the very seductiveness of "edutainment" products like SimCity invites even children from deprived homes to join in the games. One can imagine a strategy of saving the next generation with a saturation dose of cyber-instruction in the schools, coupled with heroic job creation. One can also imagine income-redistribution schemes to offset the widening market inequalities, as well as new strategies of regulation to keep up with the changing technologies. But such a strategy demands public outlays. That in turn requires a politics somewhat out of harmony with the implicit values of the information age, for all the reasons noted above.
"Virtual communities"—far-flung affinity groups connected only by E-mail—may create surprising solidarities. But they are mainly private solidarities and seldom civic ones, and rarely the kind that support political interventions such as income redistribution and enhanced social spending. On the contrary, the political values that flourish at places like the Microsoft campus are just what a Douglas Coupland or a George Gilder might predict—a libertarian politics that is liberal on such issues as the environment, gay rights, privacy—but convinced that income reflects merit, and skeptical of taxes, social spending, and regulation. The fact that unions have failed to make even a toehold in Silicon Valley perfectly reflects the entrepreneurial, individualist-paternalist subculture. Coupland's lightly fictionalized and scathing picture of life at Microsoft, in the January issue of Wired magazine, was appropriately titled "Microserfs."
Still, the smartest commentators on technology and society, such as Shoshana Zuboff, and Charles Sable and Michael Piore, have resisted the sort of technological determinism that is the implicit worry of this essay. Though the information society may disguise political questions and make it harder to sustain a mixed economy, how we use the technology is still ultimately a political choice.
Recently, the Federal Communications Commission determined that local cable companies were using their monopoly power to overcharge consumers, The FCC ordered cuts in local cable charges, averaging seven percent. This, in turn, helped precipitate the collapse of the proposed merger of the cable giant TCI with Bell Atlantic, which had been predicated on continued windfall profits. The Wall Street Journal chastised the new FCC chairman, Reed Hundt, for failing to appreciate the sublime connection between monopoly cable profits and capital investment in the next wave of technology: "The Clinton FCC, faced with a. . .decisive [technological] moment, lurches to dilute an entire industry's cash flow."
However unintentionally, the Journal underscores the reality that the information age doesn't moot regulatory questions. It only poses them in new forms: How much money should cable monopolies be allowed to gouge from consumers? Should we excuse monopoly profits as necessary sources of investment? (Joseph Schumpeter would be pleased; Adam Smith would not.) How shall the available spectrum be allocated? How much market share should a Microsoft be allowed to corner before it is deemed a predatory monopoly? Is Windows an improper rip-off of Mac? Which innovations should be in the public domain? There is no intuitive "free market" solution.
The social policy questions don't go away either. Don't we benefit as a society by broadening the access to these new tools? How many more like Bill Gates might emerge if they had access to adequately funded schools? Would Gates really stop inventing software if society doubled the man's taxes in order help finance public education? It is not sufficient to wait for self-educated cyberpunks to stumble on the allure of the Net.
Nor do the issues of labor regulation posed by Rothstein disappear. If we want to stand by as our high-wage society converges with the world's most benighted ones, that too is a political choice. Knowledge will help, but training by itself won't stop a global wage race to the bottom. Even the presumed connection of income and merit, as Robert Frank suggests, cannot condone the actual income distribution that our imperfect market society creates. Some of Gates's fortune is the result of his brilliance and entrepreneurial zeal and the public's appetite for computers. Some of it reflects publicly subsidized education and R&D, as well as copyright, patent and anti-trust laws which (so far) allow Microsoft to be a near-monopoly.
Thus the paradox: cyber-society offers equality of opportunity, but left alone it celebrates a new inequality of result based on market forces, privatism, and the distributive chasms of presumed merit. Whether that turns out to be the actual result depends on familiar, pre-cybernetic questions of regulation, distribution, and social investment. Contrary to Gilder, we do not—cannot—live in a Platonic economy of pure ideas. Few of us spend all our waking hours on-line. Turn off the computer and we still live in an unequal, material, fleshly world where millions of people are homeless or jobless. Cyber-wealth doesn't change that. Indeed, our society is one in which we think twice about carrying the new computer home from the store, lest we get mugged. Whether that matters is also a political choice.