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<div class="clear toprow"><span class="article-section">[In memory of
Peter Drucker who died November 11th, almost 96. -Terry]<br>
<br>
Also, see: <a class="moz-txt-link-rfc2396E"
href="http://www.economist.com/displaystory.cfm?story_id=5165460"><
http://www.economist.com/displaystory.cfm?story_id=5165460 ></a><br>
[</span>Trusting the teacher in the grey-flannel suit]<span
class="article-section"><br>
</span><span class="article-section"></span>
<pre><a class="moz-txt-link-rfc2396E"
href="http://www.economist.com/surveys/displayStory.cfm?story_id=770819">< http://www.economist.com/surveys/displayStory.cfm?story_id=770819 ></a>
</pre>
<span class="article-section"><br>
Surveys</span></div>
<!-- top-title -->
<p class="fly-title">SURVEY: THE NEAR FUTURE</p>
<h1>The next society</h1>
<p class="info">Nov 1st 2001<br>
>From <em>The Economist</em> print edition</p>
<h2>Tomorrow is closer than you think. Peter Drucker<a
href="http://www.economist.com/surveys/displayStory.cfm?story_id=770819#footnote1">*</a>
explains how it will differ from today, and what needs to be done to
prepare for it</h2>
<div class="content-image-full" style="width: 330px;"><br>
</div>
<p>THE new economy may or may not materialise, but there is no doubt
that the next society will be with us shortly. In the developed world,
and probably in the emerging countries as well, this new society will
be a good deal more important than the new economy (if any). It will be
quite different from the society of the late 20th century, and also
different from what most people expect. Much of it will be
unprecedented. And most of it is already here, or is rapidly emerging.</p>
<p>In the developed countries, the dominant factor in the next society
will be something to which most people are only just beginning to pay
attention: the rapid growth in the older population and the rapid
shrinking of the younger generation. Politicians everywhere still
promise to save the existing pensions system, but they—and their
constituents—know perfectly well that in another 25 years people will
have to keep working until their mid-70s, health permitting. </p>
<p>What has not yet sunk in is that a growing number of older
people—say those over 50—will not keep on working as traditional
full-time nine-to-five employees, but will participate in the labour
force in many new and different ways: as temporaries, as part-timers,
as consultants, on special assignments and so on. What used to be
personnel and are now known as human-resources departments still assume
that those who work for an organisation are full-time employees.
Employment laws and regulations are based on the same assumption.
Within 20 or 25 years, however, perhaps as many as half the people who
work for an organisation will not be employed by it, certainly not on a
full-time basis. This will be especially true for older people. New
ways of working with people at arm's length will increasingly become
the central managerial issue of employing organisations, and not just
of businesses.</p>
<p>The shrinking of the younger population will cause an even greater
upheaval, if only because nothing like this has happened since the
dying centuries of the Roman empire. In every single developed country,
but also in China and Brazil, the birth rate is now well below the
replacement rate of 2.2 live births per woman of reproductive age.
Politically, this means that immigration will become an important—and
highly divisive—issue in all rich countries. It will cut across all
traditional political alignments. Economically, the decline in the
young population will change markets in fundamental ways. Growth in
family formation has been the driving force of all domestic markets in
the developed world, but the rate of family formation is certain to
fall steadily unless bolstered by large-scale immigration of younger
people. The homogeneous mass market that emerged in all rich countries
after the second world war has been youth-determined from the start. It
will now become middle-age-determined, or perhaps more likely it will
split into two: a middle-age-determined mass market and a much smaller
youth-determined one. And because the supply of young people will
shrink, creating new employment patterns to attract and hold the
growing number of older people (especially older educated people) will
become increasingly important.</p>
<br>
<h2>Knowledge is all</h2>
<p> The next society will be a knowledge society. Knowledge will be its
key resource, and knowledge workers will be the dominant group in its
workforce. Its three main characteristics will be:</p>
<p>•Borderlessness, because knowledge travels even more effortlessly
than money.</p>
<p>•Upward mobility, available to everyone through easily acquired
formal education.</p>
<p>•The potential for failure as well as success. Anyone can acquire
the “means of production”, ie, the knowledge required for the job, but
not everyone can win.</p>
<p>Together, those three characteristics will make the knowledge
society a highly competitive one, for organisations and individuals
alike. Information technology, although only one of many new features
of the next society, is already having one hugely important effect: it
is allowing knowledge to spread near-instantly, and making it
accessible to everyone. Given the ease and speed at which information
travels, every institution in the knowledge society—not only
businesses, but also schools, universities, hospitals and increasingly
government agencies too—has to be globally competitive, even though
most organisations will continue to be local in their activities and in
their markets. This is because the Internet will keep customers
everywhere informed on what is available anywhere in the world, and at
what price. </p>
<div class="pullquote">Knowledge technologists are likely to become the
dominant social—and perhaps also political—force over the next decades</div>
<p>This new knowledge economy will rely heavily on knowledge workers.
At present, this term is widely used to describe people with
considerable theoretical knowledge and learning: doctors, lawyers,
teachers, accountants, chemical engineers. But the most striking growth
will be in “knowledge technologists”: computer technicians, software
designers, analysts in clinical labs, manufacturing technologists,
paralegals. These people are as much manual workers as they are
knowledge workers; in fact, they usually spend far more time working
with their hands than with their brains. But their manual work is based
on a substantial amount of theoretical knowledge which can be acquired
only through formal education, not through an apprenticeship. They are
not, as a rule, much better paid than traditional skilled workers, but
they see themselves as “professionals”. Just as unskilled manual
workers in manufacturing were the dominant social and political force
in the 20th century, knowledge technologists are likely to become the
dominant social—and perhaps also political—force over the next decades.
</p>
<br>
The new protectionism
<p>Structurally, too, the next society is already diverging from the
society almost all of us still live in. The 20th century saw the rapid
decline of the sector that had dominated society for 10,000 years:
agriculture. In volume terms, farm production now is at least four or
five times what it was before the first world war. But in 1913 farm
products accounted for 70% of world trade, whereas now their share is
at most 17%. In the early years of the 20th century, agriculture in
most developed countries was the largest single contributor to <span
class="scaps">GDP</span>;
now in rich countries its contribution has dwindled to the point of
becoming marginal. And the farm population is down to a tiny proportion
of the total.</p>
<p>Manufacturing has travelled a long way down the same road. Since the
second world war, manufacturing output in the developed world has
probably tripled in volume, but inflation-adjusted manufacturing prices
have fallen steadily, whereas the cost of prime knowledge
products—health care and education—has tripled, again adjusted for
inflation. The relative purchasing power of manufactured goods against
knowledge products is now only one-fifth or one-sixth of what it was 50
years ago. Manufacturing employment in America has fallen from 35% of
the workforce in the 1950s to less than half that now, without causing
much social disruption. But it may be too much to hope for an equally
easy transition in countries such as Japan or Germany, where
blue-collar manufacturing workers still make up 25-30% of the labour
force.</p>
<div class="pullquote">The decline of manufacturing will trigger an
explosion of manufacturing protectionism</div>
<p>The decline of farming as a producer of wealth and of livelihoods
has allowed farm protectionism to spread to a degree that would have
been unthinkable before the second world war. In the same way, the
decline of manufacturing will trigger an explosion of manufacturing
protectionism—even as lip service continues to be paid to free trade.
This protectionism may not necessarily take the form of traditional
tariffs, but of subsidies, quotas and regulations of all kinds. Even
more likely, regional blocks will emerge that trade freely internally
but are highly protectionist externally. The European Union, <span
class="scaps">NAFTA </span>and Mercosur already point in that
direction.</p>
<br>
<h2>The future of the corporation</h2>
<p>Statistically, multinational companies play much the same part in
the world economy as they did in 1913. But they have become very
different animals. Multinationals in 1913 were domestic firms with
subsidiaries abroad, each of them self-contained, in charge of a
politically defined territory, and highly autonomous. Multinationals
now tend to be organised globally along product or service lines. But
like the multinationals of 1913, they are held together and controlled
by ownership. By contrast, the multinationals of 2025 are likely to be
held together and controlled by strategy. There will still be
ownership, of course. But alliances, joint ventures, minority stakes,
know-how agreements and contracts will increasingly be the building
blocks of a confederation. This kind of organisation will need a new
kind of top management. </p>
<p>In most countries, and even in a good many large and complex
companies, top management is still seen as an extension of operating
management. Tomorrow's top management, however, is likely to be a
distinct and separate organ: it will stand for the company. One of the
most important jobs ahead for the top management of the big company of
tomorrow, and especially of the multinational, will be to balance the
conflicting demands on business being made by the need for both
short-term and long-term results, and by the corporation's various
constituencies: customers, shareholders (especially institutional
investors and pension funds), knowledge employees and communities.</p>
<p><br>
Against
that background, this survey will seek to answer two questions: what
can and should managements do now to be ready for the next society? And
what other big changes may lie ahead of which we are as yet unaware?</p>
<br>
<div class="footnotes">
<p>*
Peter Drucker is a writer, teacher and consultant who has published 32
books, mostly on various aspects of society, economics, politics and
management. Born in 1909 in Vienna, Mr Drucker was educated in Austria
and England, and holds a doctorate from Frankfurt University. Since
1971 he has been Professor of Social Science and Management at
Claremont Graduate University, California.</p>
</div>
<pre class="moz-signature" cols="55">
--
"Only a zit on the wart on the heinie of progress." Copyright 1992, Frank Rice
Terry W. Colvin, Sierra Vista, Arizona (USA) < fortean1 at mindspring.com >
Alternate: < fortean1 at msn.com >
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