Computers and Social Change
[ Main Index | Chapter Index ]

Computers and Social Change
Part Three. The Computer Transformation of Work


What jobs did your parents have? Your grandparents? When we reach your great, great grandparents' generation the chances are very good that you will say farmer. Today there are few farmers; structural change during the Industrial Revolution eliminated them.

What jobs will people have four generations from now? It may be as difficult for us to imagine as it would have been for farmers of the early 1800's to imagine the economic institutions of today. In the short run, however, we can observe changes taking place in the structure of work.


When we analyze work in terms of the actual people performing jobs, we use the concept of a labor force -- all the people who work for wages. When we are interested in the jobs themselves, rather than the individuals in them, we use the concepts of occupation and industry. Occupation refers to the tasks performed by a person, such as computer programming. Industry refers to what is produced by the company employing the person. For instance, a programmer could be working for a bank, a manufacturing firm or an educational institution. His or her occupation would be the same in each case, but his or her industry would be different. The computer transformation of work involves different issues depending on whether we are analyzing the effects on the labor force or the effects on occupation and industry.

7.1.1 The Labor Force

In terms of social norms, the labor force is all the people who are or "should be" working. Popularly, this includes all able-bodied adults, with some debate over whether those responsible for small children "should" or "shouldn't" work. Everyone who either has a job or is looking for a job is "in" the labor force. But the way we officially measure the labor force is more restrictive; it leaves many people uncounted. The United States labor force is defined by the Bureau of Labor Statistics as all the people over the age of 16 who are employed, unemployed, or in the military. This may sound like everybody, but the way employment and unemployment are measured creates a conceptual gap between our social and our statistical understandings of work.

You are officially employed if you did any work at all for pay (or worked at least 15 hour unpaid for a family business) during the week that the monthly Current Population Survey is taken. You are also employed if you are away from your job on unpaid vacation, on strike, sick, or stranded by a snowstorm. In the extreme case, a person who worked for one hour a month at minimum wage could be counted as employed. About a fifth of the U.S. labor force is now employed part-time. People who have a full time job but want longer hours or more suitable work at higher pay make up another substantial portion of the employed.

If you are out of work, you still won't be counted as unemployed unless you were available for work (not seriously ill, not enrolled full-time in school, and not waiting to start a new job you've already been hired for). Also, unless you made a serious effort to find work (job applications, not just reading the want ads), you are not unemployed -- you're "out" of the labor force. This leaves out students, full-time housewives, and people in hospitals or jails, as well as those who don't have jobs but who have given up looking (the "discouraged workers"). The official unemployment rate thus understates the number of people who are without regular work in a social sense.

7.1.2 Occupation

The occupational structure of a society consists of all available jobs, filled or not. Since occupational structures contain thousands of different positions, descriptions of job categories are more convenient than long lists. Several different classification schemes have been developed; Table 7-1 shows some common occupational categories.


0. Professional, technical, and related workers
1. Administrative, executive, and managerial workers
2. Clerical workers
3. Sales workers
4. Farmers, fishermen, hunters, loggers, and related workers
5. Miners, quarrymen, and related workers
6. Workers in transport and communication occupations
7/8. Craftsmen, production-process workers, and laborers not elsewhere classified
9. Service, sport, and recreation workers
X. Workers not classifable by occupation
Not Included in theis Classification: members of the armed forces

"Blue collar" (categories 4-9) and "white collar" (categories 0-3) describe the social distinction between clean and dirty work. White collar managerial, professional, technical, clerical and sales employees could wear white shirts to work without getting them filthy. Sometimes the lower status ranks of clerical and sales occupations are called "pink collar" work, describing the fact that the people in them are overwhelmingly female.

It should be kept in mind that occupational and labor force categories were created to provide useful statistical descriptions of society. In a study of the rural Philippine economy, I used many categories of agricultural occupations -- like coconut tree climber -- and the category non-agricultural occupations for everyone else. The categories chosen by governments and international agencies are important because they define the data base that future researchers will have to use. Economic activities not reported to statistical agencies are especially difficult to study. Mowing someone's lawn, selling illegal drugs, fixing dinner for your family, or writing a computer program for someone who fixes your car in return are all examples of informal economic activities. One of the reasons researchers don't have good information on the spread of small- scale computer-based entrepeneurial activity is that people don't report it.

7.1.3 Industry

Table 7-2 shows some of the commonly used industrial categories.


0. Agriculture, forestry, hunting, and fishing
1. Mining and quarrying
2/3. Manufacturing
4. Construction
5. Electricity, gas, water, and sanitary services
6. Commerce
7. Transportation, storage, and communication
8. Services
9. Activities not adequately described

Industries are usually divided into sectors, but different analyses use slightly different definition of which products belong to which sector. The primary (also called extractive) sector includes agriculture, forestry, hunting, and fishing. It often also includes mining. The concept behind the primary sector is the extraction of raw materials from the environment.

The secondary sector of the economy is the one that transforms raw materials into manufactured products. This includes the construction and public utilities (gas, electricity, water, and sanitation). Sometimes it also includes transportation, storage and communications industries. When studying computer technology and industrial sector change, it is hard to compare data that counts the communications industry in different sectors. The service sector includes the rest of the economy -- all those industries that produce services rather than goods.

7.1.4 "High-Tech" Industry

"High Tech" is a popular rather than a technical term. In the labor analyst's terms, "high-tech" industry is mainly located in the communications industry, and in the manufacture of electrical machinery, appliances and supplies. Some labor force analysis has been done with high tech defined as a new industrial sector (Burgan, 1985), but, because no standard definition has been made, we don't have good data that can be compared from one study to another.

The term "high tech" is sometimes used by people to mean a particular form of professional occupation. Although the occupations in the computer industry include managers, engineers, hardware and software specialists, sales and documentation personnel, and equipment operators, it is important to note that many "high tech" jobs are for janitors, receptionists, electronic component assemblers, and other rather poorly-paid personnel.


When new products are produced or the number of people involved in making an old product decreases, structural change in industy occurs. During the Industrial Revolution there was a structural change from agricultural industries to manufacturing ones. At present we are experiencing a shift from manufacturing jobs to service sector jobs. Besides changing available jobs, industrial change redistributes economic power among corporations. In competetitive industries, many small firms compete to sell their products. When industrial concentration occurs, large firms buy up or force their competititors out of business. Since the Industrial Revolution, competition has also occurred among nations marketing their products in the world economy.

As we enter what Daniel Bell (1980) has called the Information Society, industries and occupations which produce and distribute information are becoming central to the economy. In an analysis of the U.S. economy, Marc Porat (1978) argued that the production and distribution of information accounts for about half of the U.S. gross national product and more than half of all salaries. About twenty years earlier, the information industries were estimated at only half of that (Machlup, 1962). As more information products are made, analysts have found the three sector model of industry less useful. Figure 7-1 shows Daniel Bell's four sector breakdown of the U.S. economy over the past century. A re-analysis of old industry data made it possible to estimate the growth of the information sector. In Table 7-3, Bell compares the characteristics of the Information Society with those of Industrial and Pre-Industrial societies.

FIGURE 7-1. FOUR SECTOR MODEL OF THE U.S. WORK FORCE, 1860-1980 [not available yet]
TABLE 7-3. THE INFORMATION SOCIETY [will be handed out in class]
The industries that produce and distribute the most information products are the media. These include the traditional media of publishing, motion pictures, radio, television, telephone, telegraph, and the mail service. They also include new media such as cable TV and new forms of voice, image, and text transmission. The technological and organizational base of these new information industries is the manufacture and distribution of computers, electronic components and the equipment for printing, image creation, and transmission.

7.2.1 Publishing

The publishing industry produces books, newspapers, magazines, and government documents. The U.S. Government Printing Office and the Library of Congress are the major public producers and distributers of printed media. In the private sector, the centralization of publishing into fewer large firms has occurred in the U.S. despite laws against multiple ownership of local newspapers (Branscomb, 1984). In France and other European countries, there has been a similar concentration of press ownership since World War II (Frieberg, 1981). Book publishing, on the other hand, has long been one of the most open and competitive of U.S. industries (Coser, et. al. 1982).

Computers in Publishing. The introduction of computer technology into publishing appears likely to revolutionize the industry. This is not because of books and magazines about computers, though they were the fastest growing area of publishing in 1982 and 1983 (Wall Street Journal, April 14, 1983:1; Newsweek, October 4, 1982:75). Instead, it is because computer technology is being used to change the way printed materials are made. Computer systems already available from Xerox and Hewlett-Packard allow text, graphics, and data to be integrated and printed (Douglas, 1983). The Association of American Publishers has begun a project to develop standards for the preparation of electronic manuscripts that would allow them to be transmitted directly from authors to publishers. At present most books produced on a word processor (like the one you are reading now) must be converted to hardcopy and typeset before publishing. This creates a delay of several months between manuscript completion and publication. The Library of Congress is conducting a study for the U.S. Senate on the future of the book in the age of electronic publishing.

One of the advantages of automated publishing is that is makes the rapid production of small quantities of books economically feasible. The economics of the factory assembly line made mass production of large quantities of identical products most profitable. Applying factory organizational logic to book production, some publishers have been concentrating on the high-volume market for textbooks and best-sellers, making it more difficult for authors and readers with more specialized interests. With computerized publishing, the work of setting up a printing run can be automated. No major changes in machinery are required to switch production to the next book. For example, one small company offers hardcover reprints of out-of-print books, conference proceedings, and books too specialized for non-computerized publishers. They promise delivery within three weeks at competetive prices. "In-house" corporate publishing has boomed as low cost equipment makes it possible to integrate word processing and printing equipment. A computer manufacturer, Digital Equipment Corporation, is now New England's largest publisher. Nationwide in 1985 there were about 100 firms specilizing in computer-aided publishing (Bushnell, 1985).

The effects of this revolution on labor in the publishing industry are mixed (Wallace, 1985; Blauner, 1963:Chapter 3). In Sweden, the printer's labor union is actively involved in planning the future of electronic publishing. They anticipate skill enhancement and new responsibility. In other places, labor unions have been wiped out by the new technologies. British newspaper publisher Robert Murdoch fired his printers, replacing them with electricial workers, according to a London analyst, "Want to be members of successful businesses rather than going for proletarian solidarity (Fortune, March 3, 1986:8)." Paperless Society? Although some analysts envision our reading books directly from our home computer screens (Moses, 1980), students who read this book when it was only a file on their university computer unanimously chose to make hardcopy versions. "It is difficult," said one, "to use a yellow hi-liter on your terminal screen". "Besides," said another, "I like to read under a tree or in the bathtub." They also complained of headaches and blurred vision. Among the advantages of electronic books are the ability to add interactive graphics, film, and sound to the text (Yankelovich, Meyrowitz, and van Dam, 1985). As an electronic book, this one had all of the disadvantages and few of the advantages. It did allow multiple readers to access it and was interactive in the sense that students could get me to change the text. But that feature caused problems for students who wanted to know which version of a chapter was the "right" one. And the whole experiment in paperless books used up a lot of computer paper.

Although the advent of electronic print media is sometimes predicted to give us a "paperless" society (Vyssotsky, 1980:131), other observers see more paper being used as the ease of making copies increases (Strassmann, 1985:19). An analyst of electronic funds transfer systems for banking observed: "It is ironic that a system designed to eliminate the need for paper has so many paper requirements" (Zaki, 1983:114). One humorist added up all the paper that went into publicizing and providing background material for a lecture on the paperless office, asking the speaker to explain why he used so much paper to argue that we would use less.

The Xerox Corporation (which has a stake in the fate of paper copies) explains the changing uses of paper by comparing early presses and modern computers:

Before Gutenberg, paper was used mainly for information storage; the printing press helped transform it into an information transmission medium. Now, computerization of information is emphazing the importance of paper as a medium of action (1984).

According to them, computers will replace paper for the storage of information, but paper will continue to be used for working with information. Indeed, as paper becomes a temporary working medium, we may use even more of it than before. In writing this book I collected two filing cabinets and several bookcases full of notes and copies of articles. The computer printouts for early drafts of the manuscript are stacked all over my home and university offices. I estimate the volume of paper to be about ten times as great as for an earlier book written without a computer -- but that one took five years and this one was done in three.

7.2.2 The Production of Visual Information

In Understanding Media (1964) Marshall McLuhan argued that film changes the temporal and spatial dimensions of our experience. Complex spatial configurations of images replace the linear information of printed texts. Electronic speeds take over from slower mechanical sequences. In Media Power (1985) David Altheide argues that the mass media alter our public perceptions of time and space by providing what he calls "formats" for understanding everyday events. Media formats organize our experience of events that are farther away in space but nearer in time than ever before.

But film and television are not made in order to change our concepts of time and space. They are made to be sold to viewers and to sell the products of their sponsers. Movies and television are two of the growing information industries, predictions about their social effects are predictions about the effects of commoditiy production. Computers in the Movies. Commercial movie production began in America and U.S. firms still dominate the industry. In the 1920's 4/5 of all the films shown in the world were made in Hollywood. Before they were subjected to anti-monopoly regulation in the 1950's eight companies produced 95% of America's motion pictures; today they make about 60% (Branscomb, 1984). Film production is today a diversified and more competetive industry that makes products for television, advertizing, and music as well as for movie theatres.

The impact of computers on the motion picture industry has been primarily through the special effects of computer graphics. Combining Disney studio's development of animated cartoons in the 1920's with Bell Lab's development of computer animation in the 1960's, a number of companies were formed to provide computer graphics for films. Information International's Star Wars, Lucasfilm's Star Trek II and Disney Studio's Tron are among the best known products of the computer revolution in movies (Fox and Waite, 1984). Less well known is the extent to which these developments were sponsored by public funding of computer imaging techniques through the Defense Department and National Aeronautics and Space Agency. The same special effects that brought us images of the sands of Mars and the moons of Jupiter now give us fantasy images of starfighters and cartoon characters (Fischer, 1985; Rogers and Goldberg, 1986). Art and Advertizing. The future of computer graphics is not limited to special effects in the movies (Myers, 1985). Just as graphics specialists left the space program for Hollywood, animators are now moving from Hollywood to Madison Avenue (Johnson, 1985). The anticipated merger of computer graphics and videotex will connect the production of images to the catalog sales of traditional goods (Chang, 1985). Retailers are experimenting with illustrated electronic catalogs from which people can shop from home via personal computer. Customers in electronic dressing rooms can "try on" clothes in front of a computerized mirror that shows them how they will look in a new dress (Pauly and Friday, 1985). If you watch television, you have probably noticed the computer revolution in commercials, sports, and newsprogram captions.

The power of the advertizing industry has grown considerably in recent years (Stephen Fox, 1984). The increasing ties between business and the creators of artistic images is questioned by artists who fear that innovation in the art field will be inhibited (McGuigan, et. al., 1985). Even more worrysome to some observers is the degree to which cultural symbols are shaped by the advertizing industry. Television commercials are often illustrated examples of how we should achieve intimacy and status in our social relationships. The distinction between program and commercial is hard to recognize in the Saturday cartoons or game shows that feature commercial products. It can also be difficult to tell the difference between political campaigns and advertizing campaigns. I suspect that an awkward and unattractive individual like Abraham Lincoln would be hard to sell as a modern Presidential candidate. Computers in Broadcasting and Common Carrier Service. Broadcasting and common carrier services are two industries that distribute cultural information. Broadcasting includes radio and television; common carriers include postal, telegraph, and telephone services. Both industries are being transformed by computer technology. Technological innovations have created regulatory confusion over our categories of broadcasting, publishing, and common carriers. This is because, with the new technologies such as satellite transmissions, it getting harder and harder to tell television, telephone, and mail service apart (Glatzer, 1983; Pool, 1983). A variety of terms -- videotex, teleconferencing, telemarketing, and electronic mail -- have been coined to describe what are sometimes simply called the "new communication media".

Computers in broadcasting have contributed to the development of new channel capability by utilizing satellite, microwave relay and cable technology. What this means is that we now have the capacity for more radio and TV stations in the same area. If we had only two channels, you would have a private choice between only two programs. Your governmental representatives would have to choose two out of all possible information providers. (If everyone broadcast on the same channel at the same time, you would get interference and no program at all).

Cable television is a new media challenge to the broadcasting industry, having reached an estimated 50% of U.S. homes by 1983. It represents a much wider range of available channels and the possibility of greater programming diversity. Although cable TV has been regulated in the U.S. as a broadcasting industry, it has the technological capacity to offer voice, data, and video transmission services (Boel and Hauser, 1984). Cable TV's future in computer communications rests on the fate of legislation that would allow it to compete with common carriers (Winther, 1984; Haber, 1984).

Common carriers are being deregulated by the U.S. government, as discussed in Chapter 9. In the context of deregulation, it is difficult to predict the future of telephone and other data transmission industries, beyond an immediate flurry of entrepeneurial activity followed by a "shake- out". Some analysts predict significantly higer rates for individual households and fear that the poor will have more difficulty affording local telephone service (Mosca, 1983). Others fear a deterioration of transmission line quality and service in unprofitable neighborhoods, towns, and regions.

Changes in the U.S. postal system can be expected, as new telecommunications technology erases the distinctions between telecommunications and mail service. Federal Express, an overnight shipping service, entered the electronic mail business with Zapmail, which offers facsimile transmission of pictures (Louis, 1984). Its major competitor in 1984 was MCI Mail, an outgrowth of a long-distance telephone service. With prices falling and the U. S. Post Office dropping out of its electronic mail experiment, other vendors like General Electric's Quik-Comm and Western Union's EasyLink were fighting for market shares (Achiron, 1984; Warner, 1984; Rivkin, 1984).

Computers also facilitate the integration of transmissions, replays, statistics, communication and graphics. The 1984 Olympic coverage, financed by 35 high-tech corporations, represented the most elaborate application of new technology to news coverage to date (Ward and Maremaa, 1984). My local MTV station uses computers more modestly to keep track of the most requested rock video films. At one time I considered programming my computer to call the station a few hundred times a week and play them a tape asking for "We Are the World". Instead, I worked on the problem of who would have the most influence if public opinion were collected directly from home computers via common carriers.

The possibilities for social integration through broadcasting and common carriers extend far beyond the Olympics. The Live Aid Concert on July 13, 1985, brought international musicians, audiences, and technologies together to raise money for African famine relief. Critics deplored the advertizements of Live-Aid's corporate sponsors (three of whom were doing business in South Africa), the tight schedule that reduced performers' spontaneity, and the behavior of the Philadelphia audience who booed the Russian video contribution and left mountains of trash. But even critics reported moments when:

One could feel actually involved in something larger, as an active participant in a truly global village (Corn, 1985).
7.2.3 The Microelectronics Industry

The microelectronics industry began in the 1950's, built on earlier developments in wireless transmission, vacuum tubes, and solid state physics. 1947, the year William Shockley invented the transistor at Bell Labs, is often used to mark the start of what has become a major world industry (Braun and McDonald, 1978). Transistors are made of materials like silicon which are semiconductors of electricity. They were applied to the infant computer industry in the 1960's, replacing vacuum tubes to create a second generation of computers. By the end of the 1970's so many new semiconductor firms were located around Palo Alto, California, that Santa Clara County became known as "Silicon Valley".

As shown in Figure 7-2, transistors were much smaller than vacuum tubes. They also had fewer problems of heat dissapation. The even smaller integrated circuits developed in the 1960's led to a third generation of computers. The invention of semiconductor memories, single chip calculators, and very large scale integrated (VLSI) circuits producted the fourth generation computer after 1978. Chip Wars. Silicon chips are the basic component of computers and a major product of the semicondustor industry. They are also the subject of a complex international industry conflict. As of 1980, the basic raw material for chip production, high-grade polysilicon, was supplied by only 10 companies worldwide (Forbes, Nov. 10, 1980). 40% of the U.S. market for trichlorosilane (a key ingredient in polysilicon) was supplied by a single company -- Union Carbide (Global Electronic News 8, March, 1981:1). New materials like gallium arsenide or organic polymers are being investigted as replacements for silicon chips, but in the 1980's silicon remains the basic raw material for the computer industry.

Although there has been recent publicity about U.S. decline in world market share of chip production (Uttal, 1984), the ten largest U.S. firms had 39.5% of the world market in 1978. U.S. companies increased their share of the world's market from 54.9% in 1969 to 64.7% in 1982 (Braun and Macdonald, 1982:10,151-153). By 1985, although U.S. industry had lost some ground, it still controlled 83% of the domestic market, 55% of the European market, and 47% elsewhere. Arguments that the U.S. is losing its share of chip production are usually arguments about, not U.S. companies. There has been trend for U.S. firms to locate their manufacturing operations in other countries. As early as 1978, half of the employees in U.S. semiconductor manufacturing firms were located overseas (Braun and Macdonald, 1982:158). This explains how U.S. companies asking Congress for protection from Japanese imports can claim that they only have about 10% of the Japanese market while the Japanese claim they have 20%. Half of our sales to Japan are of chips made by U.S. companies overseas (Global Electronics, August, 1985:1).

The world market shows few signs of settling into a single nation, not even Japan. Other countries, whose labor costs are lower, are trying to attract plants or start their own industries. In 1985 I participated in an Italian government conference in Genova. Its purpose was to investigate the prospects and problems of bringing American microelectronics technology to the city where Christopher Columbus was born. It reminded me of the historical connections among the world's countries and convinced me that the U.S. microelectronics industry isn't ours any more than the Industrial Revolution belonged to England. Wage Wars. From the viewpoint of American workers, the economic war over chip production is a serious one. But they lose jobs when American companies like Atari move overseas as well as when other nations' manufacturing operations become more competitive in the world market. This situation puts pressure on people's wages all over the world. In each nation, businesses argue that higher worker pay and better benefits would make them less competitive. International companies promise new industry to governments that can guarantee a cheap and disciplined labor force. Environmental protections for employees and communities are also inhibited when companies claim they can't afford to locate in areas that require pollution, health, and safety controls.

Although it is politically convenient to blame our social problems of industrial change on Japan, no one country can protect itself from the world economy. The private troubles of each nation's economy are part of global issues of economic change. American workers who blame unemployment and falling wages on foreign workers don't realize how often foreign workers blame their low wages and political oppression on American companies.

7.2.4 The Computer Industry

Although the generations of computers are usually defined by their underlying technologies, there are differences in other characteristics as well. First generation machines were large and slow, without high level languages. In 1957 I saw a first generation UNIVAC machine that filled a huge room in Washington, DC. Keeping its large vacuum tubes cool (especially in the summer) was a constant difficulty. Programming first generation machines was even harder; it involved rewiring components.

Second generation machines (like the IBM 1401 and 7090) were cheaper, used less space, and ran faster and cooler. By today's standards, programming them was difficult. Although some high level languages like COBOL and FORTRAN were developed, the relatively slow speeds, small memory, and scarce access meant that more work was required of programmers. In a university class I took in the mid-1960's, only four batch runs were allowed for each student to get a successfully working program. The only aid to debugging was an printout of the entire contents of the computer's memory in the octal number system. Although some terminals were in use, punched cards were our usual input medium.

Time-sharing appeared in the second generation with Digital Equipment Corporation's PDP-10, as did mini-computers like DEC's PDP-8 and IBM's 1130. But it was not until the third generation during the late 1960's that multi-user systems and minis "took off". But the third generation was over almost as soon as it began. Third generation time-sharing computers such as the IBM 360 and minis like the PDP-11 were quickly overtaken by the fourth generation machines. Industrial Boom: The Fourth Generation. In a review of the computers in the 1970's, B. O. Evans (1980) pointed to two important trends in hardware that made the fourth generation the beginning of the widespread use of computers. First, the cost of processor time and storage dropped precipitously. Today's data manipulations cost only a few percent of their first generation counterparts. Second, the use of terminals rose from less than 30% of all computers in 1970 to more than 50% in 1980, allowing the costs of service to be widely shared among small users. After 1972, the microprocessor became the basis of the microcomputer, and personal computing, aimed at the small scale user, became a major trend in fourth generation machines. With the growth of networks and data communications, microcomputers could also challenge larger time-sharing systems for business and scientific customers.

To Evans analysis of the reasons for the success of fourth genertion computers must be added the advantages of forth generation languages. They are based on procedural queries, rather than on mathematical formulas (like FORTRAN) or on business record systems (like COBOL). It takes about one tenth the time to write a program in one of the fourth genertion languages (Desmond, 1985). When the Live Aid Concert received 180,000 donations in England instead of the expected 30,000, a 4th generation language was used to write a pledge processing program in only three days. Using the program, it took 40 volunteer operators only two days to convert the pledges into magnetic tape records for credit card companies. The rapid processing earned Live Aid an estimated $350,000 in extra interest on the donations (Desmond, 1985). Domestic Competition: Minis and Micros. In the IEEE's special "State of Computing" issue of Computer (1984), C. Gordon Bell characterizes the minicomputer industry as being in a state of competetitive flux. Of the 91 U.S. firms producing minicomputers between 1968 and 1972, 38 went out of the business, 10 merged with larger companies, and 21 stopped building minis. DEC, with its Vax-11 supermini, was one of the only manufacturers to successfully make the transition from the third to the fourth generation.

Figure 7-3 shows the rapid growth of the personal computer industry in the early 1980's. The PC market is a particularly volatile one. Osborne,

with 4% of the U.S. market and a 300% growth rate in market share during 1982, was bankrupt in 1983. Two years later, Osborne was back in business. IBM and Apple are still the two largest manufacturers, but competition is fierce. Although marketed as "home and educational computers", PC's are also used for business and scientific applications. A major reason for this is the rapid growth of networks and data transmission facilities that can link personal computers to one another or to large data bases and computational facilities. International Competition: The Fifth Generation. Recent developments in "supercomputers" (like the CRAY) are sometimes called the beginning of a fifth generation in computers. Artificial intelligence, natural language interfaces, and parallel processing will make fifth generation machines more complicated and more powerful than their fourth generation counterparts. Competition in the computer industry has also grown; in the Fifth generation, its focus is international.

In the manufacture of computers, calculators, and data processing machines, a 1983 U.S. International Trade Commission report noted that U.S. imports have tripled since 1978 while exports have only doubled. Although these figures lead some analysts to argue that we are being overwhelmed by Japan ("America's High-Tech Crisis", 1985), the dollar value of our 1982 exports of computer equipment to Japan was 94.2% of the value of our imports from them. As the U.S. balance of computer industry trade (exports minus imports) fell badly during 1983 and 1984, the high value of the U.S. dollar in the world currency market was a large part of the problem. A "strong" dollar makes U.S. made computers very expensive and makes those made in other countries much cheaper. Other problems more directly caused by the industry itself are its reported low productivity and failure to invest in non-military research and development.

As is the case with electronic components, some of our imports are equipment produced by American firms overseas. For example, the IBM PC costs $860 to manufacture (as of 1985). Of the $465 paid to American firms, about half is spent for parts made overseas. However, despite the automation of domestic computer and calculator production and the trend towards offshore manufacturing, employment in this industrial sector rose slightly in the U.S. during the early 1980's as the industry expanded. For information on the current status of the computer industry, you should consult one of its trade publications, such as Computerworld, or watch for articles in business publications like the Wall Streed Journal or Fortune. Software. The U.S. software industry, as shown in Figure 7-4, has grown up with fourth generation hardware. As of 1983, the U.S. supplied two- thirds of the world's market. The industry is characterized by many small companies and rapid growth. Although an assessment of U.S. software's competetiveness finds that: "The software industry is virtually the only high-technology area in the US that has not seen its leadership eroded by foreign competition" (Myers, 1985), European and Japanese firms already supply much of their domestic market and are considering plans to increase their world market shares. The future of software is, like the rest of the industry, part of the international economic system.

Next Chapter | Main Contents