One of the most difficult tasks in economics is the forecasting of destructive cycles in new technology. The economics scientist and historian Joseph Schumpeter frequently wrote about the underlying cycles within industrial society that bring about irreversible technical change. He used the term creative destruction and he saw it as a process in which capitalism contained within the very strands of motion which forced radical departures from previous industrial structures.
Industrial Innovation Cycles of Creative Destruction and Opportunity
We saw such change and the industrial revisions that were wrought upon languages and hardware in the computer industry of the 1970's, which was dominated by computer companies that are now only residues of their former selves. It has been more than twenty five years since the commercial computer industry was hit by the introduction of the software of Microsoft and the microcomputer of IBM. Neither of these innovations were new or superior technologies, but they pushed forward a massive sociological and sweeping industrial cycle of innovation of proportions that the world had never seen before.
The World of Bill Gates as Viewed by an Macro Economic Historian
The company of Bill Gates, who I met at the time, being in the business of picking industrial winners, was shrewd enough to realize that its business was that of publishing and enabling. Bill therefore chose to maximize market size by means of a broad approach to industrial reform that was staggering at the time and strongly resisted at every level and within almost every industry, especially those that had vested in the use of very large processors running very awkward software.
A scientific analysis of economic industrial history, as I found out at the University of Cambridge in England was resisted by mainstream economics professors that could not cope with the idea that technology was a fundamental component of economic management even at the macro level. This notion is still resisted at the peril of those industrial nations who focus on theories of money economics and inflation failing to deal adequately with issues of employment and industrial change. The science of economics as it now stands is glaringly inadequate as an integrative field to merge the processes of a changing knowledge base, innovation of technology, industrial restructuring and money.
The results are examined as one would examine migration. Oops, industry just migrated from our former industrial base. Wonder what caused that. As the ill grounded economist would say, "Gee, I am not sure whether my economic ideas can tell you what to do about this. Guess you should inflate the housing market and then steel oil and blow something up. That should create more jobs, especially as we clean up the mess afterwards."
The economics theoreticians are still plying their medicine without comprehending the real technical forces at play and how to incorporate these into economic science. Thus, when there is a structural crisis, the real problems of enabling balanced industrial change are slipped behind a curtain of silence and politics determines the outcome, not science. Such an approach will produce a desert in the former industrial economies and an enormous underachievement of potentials. The real success of Bill Clinton was to appoint an advisor that also knew something about industrial change, look what happened, when the advisor left!
At the time of the introduction of the IBM PC, there was both software in the form of the MP/M system and hardware in the form of Techtronix systems, but these were never innovated in the way that could initiate a whole industrial cycle of creative destruction. Bill Gates at the time in 1981/2 talked to me several times as I presented myself as an Excel Developer. We had long discussions about the future of the BASIC language, which he claimed could be adapted to do almost anything and I argued that it should be, encouraging him to engage in the project of making BASIC available everywhere as a tool that everyone associated with computer processing could use.
As an economist, I could see that BASIC was a wonderful language tool that if published properly could revolutionize software development and bring about enormous change, at the time unthinkable. In the same discussion, which went on so long that his assistant had to pull him away, Bill and I talked about languages for a new era of microprocessors that I claimed would replace the single INTEL processor, rather a clugger, but aimed in the right direction. Bill claimed the processor was up to the task, but I was defiant and said that he needed to introduce language that would enable several processors to talk to each other and do specialized tasks.
This was an easy step for me to make logically, as an economist, because of Adam Smith, but technically Gates was reliant on INTEL's offering and his ownership of a single processor language tool. Getting multiple processors to talk between chips and within chips was very primitive, if you remember how the PCs and INTEL chips were configured in 1981. In fact, no company, not even the military suppliers had developed the appropriate language tools. The Motorola 68000 chip was technically superior to the INTEL chip, but the INTEL chip had attempted to integrate graphics in a way that was novel and interesting at the time albeit insufficient when compared to what Tektronix was doing. But, Tektronix was not innovating and Miscrosoft was. Both had the BASIC language and potential technology, but one was feeding from miltiary contracts. Oops!
Why Is the Language of Computing Changing and Where is It Going
The enormous revolution of the present day microcomputer industry arises from the use of a common language by device users and hosting providers. Google and Linux are the tip of an iceberg floating towards the Microsoft Titanic. Watch out for rips in strategy.
