Friday Book: Knowledge, power and freedom

LIVING ON THIN AIR:

THE NEW ECONOMY

BY CHARLES LEADBEATER, VIKING, pounds 17.99

IN THE 1940s, computers were human. It was a job description: a computer was a person, usually a lowly woman, who carried out computations, sitting in a room full of other computers. The "architecture" of a microprocessor still reflects the physical arrangement of these flesh-and-blood computers in a room, so that the work could flow logically between them on the production line.

It is only just over half a century since programmable computing by machine moved out of the realm of theory, putting that earlier generation of human computers out of work. Now there are 10 billion semi-conductors in operation around the world, and survivalists in the US are stockpiling water, food and fuel to prepare for the onslaught of the millennium bug on the world's silicon chips.

Computers worldwide are due to break down on the stroke of midnight on 31 December because they will think it is 1900 again. Some of us find it hard to understand why a confusion about the date will stop our microwaves working, and rather hope the bug pessimists will spend the next two years eating cold baked beans in the dark anyway. Still, the Y2K problem, testifies to the pervasiveness of computers in modern life.

It may well be that the phase of heroic technical advance in computing is coming to an end. After all, every technology is breathtakingly new and exciting, and then all of a sudden becomes commonplace. Yet the economic, social and political ramifications of this technological revolution are still unclear.

Living on Thin Air is a book about these human consequences of machine progress. I have to own up to reading it with the critical eye of someone who wrote a similar book, The Weightless World, a couple of years ago. Charles Leadbeater is a person of influence, however. His research informed the Competitiveness White Paper published last December by the Department of Trade and Industry, and he is praised on the dust jacket by luminaries including Tony Blair and Peter Mandelson.

Not surprisingly, the book's economic analysis seemed to me unoriginal, although very clear and accessible. I think it is now well understood that value lies increasingly in intangibles, in knowledge and creativity, and that the human brain has become the key resource of modern capitalism.

Charles Leadbeater does give some nice examples of how knowledge becomes embedded in ways that create wealth. Cooking know-how used to be passed on as women copied their mothers while making traditional dishes in the kitchen at home. Now, anybody can buy the know-how of a Thai or Italian mum packaged by a food manufacturer in their local supermarket, or they can acquire the know-how by watching Delia Smith on TV or buying her books.

His strength, however, lies in the institutional insights. As he points out, "A society organised to maximise the production and distribution of knowledge would have radically redesigned institutions and organisations, both public and private."

And he is, rightly, optimistic about the potential unleashed by these technical and economic changes. "Societies become more democratic as people become more literate, numerate and knowledgeable... We make ourselves better off as a society by our ability to generate, store, distribute and use knowledge more effectively. Political empowerment and economic opportunity stem from the same root: the spread of knowledge."

The book acknowledges the insecurities and failures caused by rapid economic change. It is a lucky minority of people that can embrace change with unshaded eagerness. Most do not believe in techno-utopia; dystopia is the dominant theme of so much of our debate about technical and economic advance. Even its biggest fans would have to admit that cyber-fiction is a noir genre.

Believers in the potential of the new economy, like Charles Leadbeater and myself, have therefore to engage with the fears of the majority and focus more on the processes by which gains in prosperity will be captured and shared. He points out here that the old economy still dominates the collective vision. "The old economy, for all its limitations delivered a potent mass fantasy: if you worked hard and saved you would be rewarded with security, a steadily rising income and a stable and settled retirement... The benefits of the new economy - an e-mail address - are more esoteric."

In other words, the new economy still lacks the vision thing. The interplay of culture with politics and technology will determine how prosperous our society can become and whether that prosperity will also bear democratic fruit. Either way, it will happen slowly and not necessarily in the obvious ways. After all, 19th-century innovations did not become deeply embedded in society until the early 20th century, when the Modernist movement in the arts formed a counterpoint to Fordism in the factories. Millennium bug permitting, today's new technologies will bring their own new isms in the 21st century.