Chapter 19: Innovating our Way to the Next Industrial Revolution

Peter M. Senge Goran Carstedt

Overview

Much of what is being said about the New Economy is not all that new. Waves of discontinuous technological change have occurred before in the industrial age, sparked by innovations such as the steam engine in the eighteenth century; railroads, steel, electrification, and telecommunications in the nineteenth century; and auto and air transport, synthetic fibers, and television in the first half of the twentieth century. Each of those technologies led to what economist Joseph Schumpeter called "creative destruction", in which old industries died and new ones were born. Far from signaling the end of the industrial era, these waves of disruptive technologies accelerated and extended it.

What would constitute the beginnings of a truly postindustrial age? Only fundamental shifts in how the economic system affects the larger systems within which it resides—namely, society and nature. In many ways, the industrial age has been an era of harvesting natural and social capital in order to create financial and productive capital. So far there is little evidence that the New Economy is changing that.

The industrial-age assault on natural capital continues. Vague hopes about "bits for atoms" and "demassification" are naive at best, echoes of talk about "paperless offices" 20 years ago. The rate of losing species has not slowed. Most New Economy products end up where Old Economy products do: in increasingly scarce landfills. Globalization is destroying the last remnants of stewardship for natural resources in industries such as forest products: Today, buy-and-sell decisions are executed by faceless agents living on the other side of the world from the people and ecosystems whose futures they decide. Moreover, New Economy growth stimulates related growth in Old Economy industries—along with the familiar pattern of suburban sprawl, pollution, loss of habitat, and competition for natural resources.

The New Economy's effects on social capital are more complex but no less disturbing.^[1] Industrial progress has tended to destroy cultural as well as biological diversity, despite the protests of marginalized groups like the Proven al farmers who oppose the globalization of food production. Likewise, although changes in traditional family and community structures have brought greater freedom for women and many ethnic groups, the past decade also has brought worldwide increases in divorce rates, single-parent families, and "street" children. Global markets, capital flows, and e-commerce open up new opportunities for emerging economies, but they also create new generations of technological haves and have-nots. According to the World Bank, the poorest quartile of humankind has seen its share of global income fall from 2.5 percent to 1.25 percent over the past 25 years. More immediately, eroding social capital manifests in the isolation, violence, and frenzy of modern living. Individuals and small circles of friends carve out increasingly private lives amidst increasingly distrustful strangers, preferring to "bowl alone".We almost take for granted road rage, deaths of spectators at sporting matches, and kids shooting kids at school.^[2] The "24-7" job has become the norm in many industries, the latest step in subjugating our lives to the clock, a process begun with the mechanization of work at the outset of the industrial era.

Judged by its impact on natural and social capital, so far the New Economy looks more like the next wave of the industrial era than a truly postindustrial era. Why should we care? Because the basic development patterns of the industrial era are not sustainable. As U.S. National Academy of Sciences home secretary Peter Raven says, quoting the Wildlife Conservation Society's George Schaller, "We cannot afford another century like the last one". Plus, there are other possibilities.

^[1]Social capital refers to "connections among individuals—social networks and the norms of reciprocity and trustworthiness that arise with them"; see Putnam (2000, 19). It is also the necessary context for developing human capital—skills and knowledge embedded in people; see Coleman (1988).

^[2]Why Is Everyone So Short-Tempered? 2000.