Many analysts argue t h a t if the iriforrnation society is "different", a fundamental p a r t of this difference is concerned with t h e society's economic behavior. .Masuda (1980) characterizes t h e economic s t r u c - t u r e of his idealized cornputopia as a synergistic economy, with increased self-production of information by users and s h a r e d utilization of information. Although h e does not provide a detailed discussion of the concept, it s e e m s c l e a r t h a t in his view such a n economy will be
based on t h e production a n d exchange of information. This will be the dominating force, r a t h e r t h a n t h e production a n d distribution of m a t e r i a l goods e i t h e r t h r o u g h a m a r k e t or a planned economy. He does n o t discuss t h e relationship between production a n d exchange of infor- mation a n d t h a t of m a t e r i a l goods; presumably s o m e s o r t of linkage will have t o evolve a s t h e information economy g e t s u n d e r way.
Other a u t h o r s s e e a f u n d a m e n t a l contradiction between a western- style industrial economy a n d t h e evolving information society, if t h a t society is t o serve h u m a n beings r a t h e r t h a n develop into a m o r e effec- tive m e a n s of enslaving t h e m . Engberg (1979), for example, suggests t h a t t h e principle of competition for m a t e r i a l goods embodied in economic behavior i n t h e i n d u s t r i a l society is inconsistent with t h e free exchange of information principles fundamental t o t h e information society: h e equates t h e idea of competitiveness with t h e development of t h e work ethic, a n d (in t h e information society context) a n u n n e c e s s a r y distinction between work a n d free time. Other analysts have considered t h a t t h e evolving information society h a s m u c h in common with t h e non-money economy of t h e informal (and non-taxable) exchange of goods a n d services which is becoming a n unofficial a d j u n c t t o t h e formal economic behavior of i n d u s t r i a l societies.
Some characteristics of the i n f o r m a t i o n economy. P a r k e r in his 1976 s e m i n a r paper discusses s o m e of t h e contradictions a n d difficulties i n h e r e n t in applying converitional econornics t o t h e information society in its p r e s e n t manifestation. In his view, information is n o t a commo- dity, a commodity being a p r o d u c t of "matter-energy"; however, informa- tion is always associated with s o m e m i n i m u m arnount of m a t l e r o r energy a s t h e information c a r r i e r . In practice i t is difficult to s e p a r a t e t h e two forms frorn a n economic point of view, s i n c e it is t h e combina- tion of t h e two in t h e form of information goods and services which a r e bought a n d soltl in t h e m a r k e t place in t h e s a m e way a s physical goods.
But, a s P a r k e r says, "information a s s u c h is not a commodity t h a t c a n be readily bought a n d sold. We do not have satisfactory u n i t s for measuring quantities of iriforrnation or for establishing a price p e r unit".
Echoing this t h o u g h t Thornpsori (1979) h a s comment.ed on t h e concept of
information as a n economic good, and how it might be handled and exchanged. He advances t h e hypothesis t h a t "the new transformative wealth-creating class of innovative applications of this new technology appears inhibited by some constraining factors ... stemming from two sources: (1) o u r perceptions of utility a n d wealth, or in a word, econom- ics; a n d (2) o u r use of language". He views t h e optimization of t h e bene- fit from the use of information technology a s involving t h e establish- m e n t of an information m a r k e t place, requiring a new type of mass medium for t h e exchange process (perhaps a parallel concept with Masuda's information utility), linked by user-friendly networks which would be necessary in designing and organizing t h e m a r k e t place. Its i n f r a s t r u c t u r e m u s t be such t h a t i t encourages the suppliers a n d users t o i n t e r a c t synergistically. In a later paper (1982) t h e s a m e a u t h o r r e t u r n s t o the t h e m e of t h e information m a r k e t place, adding t h a t it is necessary to find ways of operating i t t h a t have the appearance of treat- ing wealth: but by wealth it s e e m s clear t h a t something different is m e a n t t h a n a value which c a n be expressed in monetary t e r m s .
Both Parker and Thompson emphasize t h e point t h a t , in t e r m s of
"value", information is radically different from physical commodities. In general, the original possessor of inkormation does not lose value when he passes it on to someone else. In fact, it'could be said t h a t (aside from s e c r e t information) a piece of information gains (social) value each time it is used, unlike t h e tangible goods of t h e industrial society (which, if they a r e usable, usually have less monetary value a t each reuse). Not only does information in general gain in value wit11 each acquisition, but the marginal cost of distributing it t o the ( N + l ) t h user is minimal, once t h e original cost of production and distribution to N u s e r s has been met..
P a r k e r points out t h a t this property makes it hfficult to c r e a t e incentives for t h e original production of informat.ion. However, h e also s t r e s s e s the difficulties e n c o u n t e r e d when society a t t e m p t s t o legally enforce property rights in information, as though it were a material good. Thompson underlines an i n h e r e n t economic contradiction: the m o r e a piece of information is copied, for example, by taping a song broadcast on t h e radio, t h e m o r e it can be said t o gain in social value;
f r o m t h e point of view of the money economy, however, value is lost since the m a n u f a c t u r e r of t h e medium ( t h e original record) a n d t h e owner of t h e copyright lose a sale e a c h time a copy is made.
The c e n t r a l problem of Thompson's new information m a r k e t place is therefore how value is to be determined, if not in t e r m s of money. Obvi- ously something more complex than an audience-rating system is required, but t h e question is still open: i.s i t necessary to derive a new, non-monetary measure of value for t h e economics of t h e information society, and if so, how should t h i s be done with t h e needs of the transi- tion phase in mind?
The present price of information. If Masuda, Engberg, and Thompson a r e right in suggesting t h a t m o n e t a r y values m u s t be superseded in t h e new information economics, t h e r e would s e e m to be no sign of a t r e n d in this direction in respect of information in our p r e s e n t society. In t h e more traditional areas of information provision, s u c h as local or national public libraries, the original concept t h a t information is a basic r e s o u r c e like water, for which t h e user does not have t o pay directly, still survives.
However, t h e application of informatics and telematics t o t h e problems of retrieving and selecting relevant items of scientific, technical, medi- cal, economic, and o t h e r informat,ion for t h e professional u s e r has, if anything, resulted in a m u c h closer association of monetary value in t h e rigorous application of complex price scales p e r unit of information or per unit of t i m e t h e information system is occupied.
Before t h e advent of computerized information retrieval systems, retrieval of relevant l i t e r a t u r e i t e m s was a function performed without specific charge by t h e reference librarian: on-line information retrieval using continental o r worldwide c o m p u t e r networks h a s now become a major international business with significant u s e r charges. It is noteworthy t h a t the user pays n o t only t h e added value of t h e use of communications and the h o s t c o m p u l e r facility enabling the relevant references to be sorted and delivered t o his screen, b u t also for t h e information itself.
In some c o u n t r i e s , t h e practice of photocopying for private study a n d r e s e a r c h purposes is still allowed, b u t in o t h e r s copyright legislation is becoming increasingly invoked t o provide a legal m e a n s for charging royalties on photocopies. Now t h a t t h e automatic ordering a n d elec- t r o n i c delivery of full t e x t s is becoming a practical proposition, publish- e r s propose t o u s e t h i s technology t o regain control over copying by licensing a n d royalty a r r a n g e m e n t s , whether t h e copy is electronic or a photocopy.
In s u m m a r y , t h e r e f o r e , the computerization process in t h e informa- tion field itself h a s s o f a r led t o t h e generation of a n information m a r k e t place based e n t i r e l y on c a s h value, and whose c h a r a c t e r i s t i c s a r e i n no way dissimilar t o a n y o t h e r manifestation of a m a r k e t economy. If t h e a u t h o r s previously c i t e d a r e c o r r e c t in t h e i r concept it s e e m s c l e a r t h a t t h e transition between t h e m o n e t a r y m a r k e t place a n d non-monetary m a r k e t place for information i s by no m e a n s straightforward.
For t h e p r e s e n t , t h e i n v e s t m e n t s made by information producers a n d suppliers have t o be recovered with a sufficient r e t u r n t o m e e t t h e cost of supplying technologically-advanced information products. The issues t h e r e f o r e r e d u c e t o t h e following: assuming t h a t a new non- m o n e t a r y information economy is broadly attainable a t some f u t u r e point in t i m e , what a r e t h e characteristics'of the transitional s y s t e m a s
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distinct from t h e information m a r k e t place as we know it today? Can policies be identified, both a t t h e level of t h e information industry itself a n d a t t h e g o v e r n m e n t a l level, which should be followed to ease this t r a n s i t i o n ?
Investment. If t h e new information society with i t s new economic c o n c e p t s is r e g a r d e d a s both desirable and attainable, policy m a k e r s m u s t also satisfactorily deal with t h e problem of how i n v e s t m e n t is t o be d i r e c t e d i n t o providing new information technology facilities which will form t h e i n f r a s t r u c t u r e for t h a t society itself. Under p r e s e n t cir- c u m s t a n c e s it is q u i t e clear t h a t i n v e s t m e n t for computers, communica- tion networks a n d new iriformation systems, data banks, e t c . m u s t be m a d e on t h e basis of a n expected m o n e t a r y r e t u r n , a t l e a s t in t h e private s e c t o r , o r a s a d i r e c t result of g o v e r n m e n t subsidies o r c e n t r a l
planning. In any case, t h e funds required m u s t c o m e from e a r n i n g s , whether Rom t h e information s e c t o r or from o t h e r p a r t s of t h e econ- omy. It would therefore s e e m t h a t a n i m p o r t a n t issue for t h e t r a n s i t i o n period is how t h e n e c e s s a r y i n v e s t m e n t capital c a n be provided, the degree t o which (in m a r k e t econorr,ies) private capital needs t o be sup- plemented, a n d whether o r n o t machinery i s required t o s t e e r invest- m e n t s into priority channels. How a r e priorities to be d e t e r m i n e d ?
A ualue added approach. S t r a s s m a n n (1982) h a s shown t h a t , in deci- sions relating t o t h e i n t r o d u c t i o n of information technology a t t h e e n t e r - prise level, s t a n d a r d economic doctrine as r e p r e s e n t e d by a c c o u n t i n g systems r e s u l t s in policies dominated by cost saving, t h e m a i n ingredient in productivity g a i n s in industrial economics. He points o u t t h a t t h e n e t gain t o t h e e n t e r p r i s e is m u c h g r e a t e r if a value added approach is taken, a n d t h a t t h i s leads to quite different policies c e n t e r e d a r o u n d maximizing productivity by reorganizing t h e work ( a n d t h e organizations carrying o u t t h e work), a n d by redeploying a n d r e t r a i n i n g surplus labor. He gives examples of how a value added analysis provides a m e a n s for optimizing e n t e r p r i s e i n v e s t m e n t in information technology since i t c a n indicate t h e overall i m p o r t a n c e of different component,^, r a t h e r t h a n merely t h e d e g r e e t o which they save costs.
Does t h i s type of approach offer t h e possibility of bridging t h e g a p between m a t t e r - e n e r g y economics a n d t h e view of information p e r s e as an economic good? Does t h e value added c o n c e p t provide a s y s t e m of m e a s u r e m e n t which potentially m a k e s for b e t t e r policy analysis in implementing information technology a t t h e national or s u p r a n a t i o n a l level t h a n t h e existing economic tools? S t r a s s m a n n ' s answer s e e n i s t o be a qualified "Yes": t h e qualification lies in t h e need t o develop new organization a n d m a n a g e m e n t s t r u c t u r e s in t h e public s e c t o r , in adrli- tion t o economic tools, t o d i r e c t t h e large a m o u n t s of capital i n v e s t m e n t in information technology r e q u i r e d t o maximize productivity in t h e s e r - vice s e c t o r of t h e economy a s a whole. To quote: " t h e g r e a t e s t challenge a h e a d lies in transforming t h e information-intensive ant1 e x t r e m e l y inef- ficient service s e c t o r s of o u r economy into organizations t h a t a r e n i u c h m o r e responsive t o unique c u s t o m e r needs a t a low m a n a g e m e n t cost".
P a r k e r in his 1976 paper made t h e s a m e point from a different angle: a t a t i m e when t h e information s e c t o r is the largest in o u r society, a n d when t h e application of information technology is t h e m e a n s t o obtain productivity gains, it could also be counterproductive to pour m o r e money into labor-intensive information a c tivitles: i n s t e a d , g o v e r n m e n t s should devote r e s o u r c e s t o improving productivity i n t h e iriformation s e c t o r itself. It may be observed t h a t Parker, too, s t r e s s e s t h e n e e d for s t r u c t u r a l a n d institutional c h a n g e s t o make o p t i m u m use of informa- tion technology.
Returning t o t h e question of new economic tools a s t h e o t h e r major c o m p o n e n t of policy decisions for applications of information technol- ogy, both S t r a s s m a n n a n d P a r k e r s t r e s s t h e n e e d for new insights. The f o r m e r points o u t t h a t new information network planning is almost entirely concerned with t h e cost of equipment, microelectronics a n d associated services. Under a complete accounting system, t h e major cost i s found t o be n o t hardware (probably reducing to negligible propor- tion of t h e total), a n d operation, b u t non-technological costs, s u c h a s training, s t a r t - u p inefficiency, a n d consultancy. These organizational costs apparently only decrease slowly a s experience is doubled: "the g a p between t h e very rapid decline i n cost of technology a n d t h e slow
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d e c r e a s e in social learning c o s t s is n o t adequately understood nowadays
...
The technology application choices m a y have to b e dictated m u c h m o r e by t h e training a n d usability expenses t h a n by a n y o t h e r considera- tion. The c u l t u r a l acceptability of information technology t h e n e m e r g e s as o n e of t h e primary influences if we want t o elevate o u r analysis t o t h e national level" (Strassman 1982).It s e e m s therefore t h a t those who have written on t h i s subject r e g a r d t h e development of new economic insights a s essential if we a r e t o u n d e r s t a n d how t o m a n a g e t h e information society t h a t exists now, a n d if we a r e t o be able t o exercise some control over i t s future develop- m e n t . Whether o r not Masuda's new information society with i t s dif- f e r e n t economic values is r e g a r d e d as a realizable objective or not, most would agree t h a t t h e r e a r e u r g e n t economic issues in t h e p r e s e n t stage which a r e imperfectly understood. Moreover, investment decisioris on
information technology and its applications a t t h e e n t e r p r i s e and national level have to be made now a n d in the future, and i t s e e m s t h a t t h e analytic procedures and m e a s u r e m e n t systems developed in industrial-age economics do not seem to work very well in t h i s r e s p e c t . The a r g u m e n t s advanced by Parker, Thompson and S t r a s s m a n n would suggest t h a t a different approach is required--one which embodies a m u c h more flexible a n d interdisciplinary view; the economic issues a r e seen t o be intimately c o n n e c t e d with social issues such a s employment, education a n d retraining and, of course, with organizational and struc- t u r a l change.
The r e s e a r c h questions which e m e r g e from t h e discussion of t h e effects of information technologies (IT) on work and employment, busi- ness and m a n a g e m e n t , developing countries, education a n d learning, c u l t u r e and values, international regulation for social benefit, and t h e economic value of information may be summarized a s follows:
Work and Employment:
- How does IT affect job c o n t e n t ?
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Will new jobs be c r e a t e d t o replace those lost through IT?-
How can labor utilization be planned to adapt t o s t r u c t u r a l changes in industry a n d service sectors due t o IT? For instance, How can IT be applied to increase productivity without decreasing t h e labor force? or How can labor be redeployed or r e t r a i n e d t o improve quality of output?-
How effective a r e policies to shorten t h e work week o r to encourage job-sharing in averting unemployment associ- a t e d with IT?B u s i n e s s a n d M a n a g e m e n t :
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What would constitute an optimum industrial s t r u c t u r e in t e r m s of type a n d size of enterprises in t h e IT field? What differences a r e c r e a t e d by the type of i n d u s t r y under dis- cussion (i.e., c o m p u t e r industries vs a u t o industries)?-
At what level of aggregation should policies be formulated (global, international, national)? How can high-level policy m e a s u r e s b e implemented while mantaining public control and fair c o r p o r a t e behavior (taking i n t o consideration inter-industry variation)?- What a r e t h e implications of IT for improving adrninistra- tive productivity in t h e service sector? What a r e i t s impli- cations for managerial priorities, employee behavior, a n d organizational effectiveness?
Developing C o u n t r i e s :
- How c a n IT resources be applied to the development pro- cess itself? (That is, t o improve Third World possibilities for getting a foothold in wealth-producing technology; or for building up t h e i r infrastructure t o p e r m i t e n t r y i n t o world m a r k e t s ) .
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What a r e implications of IT for technical assistance a n d development aid programs?-
What kind of effect will IT have on employment opportuni- ties in t h e Third World? Will IT widen o r narrow t h e gap in wealth between developed and developing regions?-
What kind of effect could IT have on t h e Third World as a m a r k e t for developed countries' products?E d u c a t i o n a n d L e a r n i n g :
- How will information technology affect t h e quality of edu- cation?
- How can t h e d e m o c r a t i c access of all s e c t o r s of t h e popula- tion t o training in IT be assured?
- How c a n t h e n e e d e d volume a n d types of f u t u r e education and vocational training facilities be forecast? How c a n s u c h planning be r e l a t e d t o t h e employment m a r k e t ?
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How c a n t h e c o n t e n t of educational c u r r i c u l a be made m o r e quickly responsive t o t h e r e q u i r e m e n t s of t h e labor m a r k e t ? Is i t possible t o m a k e t h e school system as sensi- tive t o m a r k e t n e e d s a s t h e c o m p u t e r i n d u s t r y is t o i t s m a r k e t ?C u l t u r e a n d Values:
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To what e x t e n t will IT r e s u l t in a t r e n d t o a c c e l e r a t e decen- tralization of t h e working and social environment?-
Should s u c h a t r e n d be maintained?- What would be i t s secondary effects, for exmple in u r b a n planning. t r a n s p o r t a t i o n , a n d telecommunications?
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Is i t probable t h a t information technology will c o n t r i b u t e significantly t o t h e development of new forms of social ine- quality by c r e a t i n g a new have-not, computer-illiterate class?h t e r n a t i o n a l R e g u l a t i o n f o r Soccial B e n e f i t :
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To what e x t e n t is i t necessary a n d desirable t o regulate t h e transborder flow of d a t a a n d electronic information pro- ducts t o m i n i m i z e social disbenefits, especially in t h e fields of privacy a n d s e c u r i t y of d a t a relating t o t h i r d par- ties?-
What a r e t h e modalities for a n y desirable level of control of transborder d a t a flow?R e E c o n o m i c Value o f E n f o r n a t i o n :
The social issues s u m m a r i z e d above a r e closely bound u p with economic aspects: new insights i n t o the economics of informa- tion, particularly in value m e a s u r e m e n t , appear to be a n inseparable p a r t uf t h e i r analysis. Attention should t h e r e f o r e be paid t o t h e following:
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Monitoring studies quantifying t h e development of t h e information s e c t o r of t h e economy.- If information does n o t behave as a m a t e r i a l commodity, identification of o t h e r possibilities for value m e a s u r e m e n t . - Examination of hypotheses s u c h as t h a t m a n y kinds of information gain in value with e a c h acquisition, while t h e marginal cost of distributing i t t o t h e ( n + l ) t h u s e r is minimal.
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The u s e of a value-added approach r a t h e r t h a n simple cost-saving c r i t e r i a t o m a k e decisions on introducing new information technology a t t h e enterprise level; a n d t h e implications of c r i t e r i a based on value-added on organiza- tion a n d m a n a g e m e n t s t r u c t u r e s .-
If s u c h economic c r i t e r i a t o be of value in decision makjng a t t h e e n t e r p r i s e level, could t h e y be a d a p t e d as c r i t e r i a for information-intensive activities in t h e public s e c t o r ?Beyond identification of i m p a c t s a n d issues from a survey of c u r r e n t thinking, t h e a u t h o r s also felt a n e e d t o survey t h e s t a t e of policy mak- ing itself. However, with t h e r e s o u r c e s a n d t i m e available in 1983, it was n o t possible t o m a k e a n in-depth evaluation of policies now being pur- s u e d by g o v e r n m e n t s and i n d u s t r y to deal with t h e m a n y issues associ- a t e d with t h e emerging information society. We did Find, flowever, t h a t in several c o u n t r i e s (both market-economy a n d socialist), policies have been a n n o u n c e d t o expand information technology and microelect.ronics industries. Driving forces appear t o be a perceived n e e d t o improve
national self-sufficiency, t o i n c r e a s e automation and robotization, a n d to compete for export m a r k e t s . In o u r preliminary survey it was m o r e diffi- c u l t to find coherent national policies directly r e l a t e d t o t h e social issues, though piecemeal a p p r o a c h e s have been suggested a n d some small-scale pilot programs have been s e t up. There does not s e e m t o be an awareness, however, t h a t more comprehensive policies, in general, a r e or will be needed.
In his paper on the "Economic and Social Impacts of Modern Elec- tronic Technology" provided i n Appendix I1 by permission of t h e a u t h o r , Vasko has noted policy initiatives in several countries, including the USA, Japan, t h e Netherlands, Sweden, t h e United Kingdom, France, Austria, the Federal Republic of Germany, a n d t h e socialist countries of Eastern Europe. On a regional level, activities have been u n d e r t a k e n i n s u c h pro- g r a m s a s FAST (Commission of t h e European Communities 1982), and o t h e r initiatives have been designed t o improve the position of t h e EEC countries in micro-electronics a n d information technology genera.11~.
Priorities for future r e s e a r c h would be t o f u r t h e r identify policy options developed a t the national a n d international levels, a n d to initiate t h e process of policy evaluation.
The list of r e s e a r c h questions identified in this r e p o r t c o n s t i t u t e s a first step in a n a t t e m p t t o delineate t h e c o n t e n t of a possible IIASA- coordinated, cooperative, multi-cultural, and multi-disciplinary r e s e a r c h program focusing on t h e socio-economic i m p a c t s of new information technologies. A next s t e p would be to narrow t h e r e s e a r c h options by carrying o u t a broad-ranging survey of decision makers or by hol.d.ing a workshop t o determine levels of i n t e r e s t in particular topics and their national and international relevance. A workshop could also serve a s a forum to discuss whether IIASA's most productive role would be t o serve:
(1) as a clearinghouse, keeping national r e s e a r c h e r s informed about the projects of colleagues i n obher countries, (2) a s a coordinator of a research project of which components a r e undertaken i n national insti- t u t e s , or (3) as a focus for in-house research on a topic of manageable size.
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APPENDIX I
BIBLIOGRAPHY
OF
IlASA RESEARCHIN
THE FLEU) OF INEDRMATIONTECHNOLOGY
I. APPLICATIONS OF INFORMATION AND TELECOMM~ICATIONS