A new society is emerging around the world, a new type of economy based on knowledge. This new society is well-nigh upon folks in the West. Hereabouts and elsewhere it is just around the corner. Perhaps a suitable topic for after-Iftar discussions in Kuwait would be the implications for social and economic planning and development …..
….. by Paul D Kennedy
One of the most significant things happening today is that the nature of work is changing. This implies fundamental changes in how a country’s economy will operate and in the structure and governance of society.
Most noticeably, the proportion of manual labourers and factory workers in the total labour forces in the developed world is decreasing rapidly.
Fifty years ago about half the American labour force was made up of manual workers but today less than 25% of Americans make their living from manual labour. During the same period the percentage of factory workers shrunk from 35% to 15% of the labour force. Figures for Britain are similar. Factory workers in Germany and Japan now constitute about 25% of the total labour force and this percentage is shrinking steadily.
The only fast-growing group in the work forces in the developed economies are ‘knowledge workers’, people whose jobs require advanced formal schooling. Knowledge workers now account for one-third of the American workforce, outnumbering factory workers by two to one.
Knowledge workers can be divided into two types: ‘Advanced-knowledge workers’ and ‘knowledge technologists’.
Advanced-knowledge workers are people with considerable theoretical knowledge and learning. These include members of the traditional professions, such as doctors, dentists, lawyers, teachers, scientists, clerics, engineers, and accountants. These workers have been around for hundreds of years, though their numbers have increased vastly over the last century.
Knowledge technologists include nurses, computer technicians, software designers, programmers, x-ray technicians, laboratory analysts, dental technicians, social case workers, administrators, etc. Though these people do much of their work by hand or spend a great deal of their time doing relatively unskilled work, such as filing, they are identified by and paid for their knowledge, which is acquired in formal education rather than through the apprenticeships used to train skilled craftsmen in the last century.
Knowledge technologists are the largest group of knowledge workers, yet (except for nurses) they barely existed a 100 years ago. Now they outnumber all other categories of workers and their numbers are growing exponentially, particularly in computers, education and manufacturing. In another 20 years or so knowledge technologists are expected to make up about 40% of the total work forces in all developed countries.
Knowledge is today the key resource to economic success. It is also scarce. This means that knowledge workers, as collective owners of the means of production, are the new capitalists. But as a group they are also capitalists in the old sense of the word, through their stakes in mutual funds and pension funds, which are now the main shareholders in many large corporations in the West. Knowledge technologists will be the dominant social and political force in the new society.
The implications of all this for human values and for human behaviour, for the management of people, for economics and politics is not yet clearly understood. What is clear however is that the economy and society that is now emerging rapidly in the developed world will be radically different from the economy and society of the late 20th century.
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The coming dominance of the knowledge technologists will have several discernible effects on society. These include a genuine liberation for women in the workplace, a rising need for continuing education, a growing sense of professionalism that will reduce employee loyalty and dramatically alter the master-servant relationship, and increased opportunities for upward mobility.
Until now the role of women in the workforce has been different from that of men. There was men’s work and there was women’s work, on the farms, in the shops, even in the factories of the last century, which perhaps originated in the physical differences between men and women. But this is changing rapidly.
Knowledge work is ‘unisex’ – it can be done equally well by both men and women. Knowledge workers, whatever their genders, apply the same knowledge, do the same work, and are judged by the same standards. In the new work-place women are becoming the equals of men (not because of feminists pressure but) because of the change in the nature of work itself.
Over the next several decades, educational services will boom as knowledge workers are provided with the formal education they need to become knowledge workers initially and with continuing education to keep their knowledge up to date.
So far only a few countries provide formal academic preparation for knowledge technologists. But just as new institutions to meet new needs always appeared in the past, educational institutions to prepare knowledge technologists will grow rapidly in all developed and emerging countries.
But, because technical knowledge becomes obsolete rapidly, there will also be a need for the continuing education of technologists once they are already well-trained and highly knowledgeable. Much of this continuing education though will be delivered in new ways, such as work-seminars and on-line training programmes.
Due to the specialised nature of technical knowledge, knowledge technologists are regarding themselves more and more as professionals. This has two main implications for their behaviour – their loyalty to their employer is likely to be diluted and their relationship with their employer is likely to change.
Most knowledge workers probably feel they have more in common with someone who practices the same specialism in another institution than with their colleagues at their own organisation who work in a different knowledge area. Imagine a workplace or an entire economy in which 40% of employees feel that their prime loyalty is to their professional association rather than their actual employer. Such persons are unlikely to hesitate when they feel the time has come to move on.
This sense of professionalism also means that the workplace no longer consists of bosses and subordinates but instead is made up of professionals interacting with other professionals. Knowledge workers tend to see themselves as the equals of those who retain their services, and expect to be treated as such and not as mere ‘employees’. This has serious implications for the maintenance of discipline in the workplace.
Upward mobility within the knowledge society, perhaps the first true meritocracy, is potentially unlimited. Knowledge differs from all other means of production in that it cannot be inherited or bequeathed. It has to be acquired anew by every individual and everyone starts out with the same base of total ignorance, and the only way to acquire knowledge is through a codified learning process. There are no short-cuts, and success in the new knowledge-society will increasingly depend on what you know rather than who you know.
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Another of the most significant things happening today is that throughout the developed world manufacturing is declining as a generator of wealth and jobs.
The decline of manufacturing as a creator of wealth can be seen in the dramatic fall in the relative purchasing power of manufactured goods over the past 40 years. In 2000 it took five times as many units of manufactured goods to buy the main knowledge products, healthcare and education, as it had done four decades earlier.
The relative importance of manufacturing in the gross domestic product (GDP) of the developed economies is also declining. In 1960 manufacturing was the centre of the economies of the developed countries but by 2000 it was easily outranked, as a contributor to GDP, by the financial sector.
The manufacturing sector’s ability to create jobs in the developed world is shrinking rapidly. Due to rising productivity, the sector’s share of total employment has roughly halved in the last 40 years. Forty years ago in the developed world, labour costs in manufacturing were about 30% of total manufacturing costs, but now they are about 15% at the most, excluding car making plants.
The most believable forecast for 2020 suggests that manufacturing output in the developed countries will have doubled from today’s levels, but those employed in manufacturing will number little more than 10% of the total workforce.
The decline of manufacturing as a producer of wealth and jobs is changing the world’s economic and political landscape. The ‘economic miracles’ of the second half of the 20th century – Japan, Hong Kong, Taiwan, South Korea, Singapore – were based on exports, to the rich countries, of manufactured goods that were produced with technology from the developed world using the labour-costs of emerging countries. This will no longer work due to rising protectionism as regional economic blocks, such as the EU, NAFTA or Merco-sur, begin protecting themselves against producers from outside their region with high non-tariff barriers, as is already happening.
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Do the coming changes in Western economies – the rise of knowledge workers, the liberation of women in the workplace, the evolution of knowledge as an asset and the need to continuously keep up to date, the spreading professionalism that is altering the relationship between employers and employees, the social fluidity that will result from increased opportunities for upward mobility, the demise of manufacturing as a prime creator of wealth and jobs – have any relevance here in Kuwait? The answer must surely be ‘yes’.
Won’t new business forms, and perhaps social structures, be required in Kuwait, as elsewhere, to cope with those changes that are essentially mental? Again the answer must be ‘yes’. But what form will these new structures need to take?
Won’t all these great changes affect how the State should set its economic development strategies? Again, ‘yes’.
No one questions the country’s need to diversify its single-resource economy, based on oil, both to provide for the time when, in the somewhat distant future, the oil runs out and, more pressingly, to create jobs for the thousands of young Kuwaitis who are finishing their schooling each year.
But is going the manufacturing route the best way to develop the economy? The answer is probably ‘yes’ if the objective is to derive added value from the country’s sole natural resource. But if the objective is to provide jobs for the next generation, the answer is probably ‘no’ – the number of jobs that can be created by investing in manufacturing nowadays is much less than the number of jobs that can be created by investing the same funds in other business areas.
These other business areas include the financial and investment sectors, the most international of businesses, which in Kuwait are fairly well developed. And of course there are the information technology and related sectors, which seem well suited to Kuwait with its young, well-educated population. There are probably plenty of other business areas in which Kuwait could play a leading role also.
So perhaps some evening after Iftar during this Month of Ramadan the serious analysis and debate will begin on how the coming big change will affect Kuwait.
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© Paul D Kennedy, November 2001
