Twenty years ago, in the fall of 1976, Dr. Kenneth Boulding
challenged a group of scholars at Iowa State University with the
provocative statement: "The factors of production are no longer
land, labor, and capital. The factor of production is
entrepreneurship. It is composed of information and
creativity. Thus the factors of production in this new
economic age are information and creativity." The group of
scholars disagreed with him, some very strongly. Most believed
that since Dr. Boulding was a world class economist, he was
simply making bold statements to get a reaction from the
audience. He, of course, was serious. Dr. Boulding saw what the
futurist Alvin Toffler saw in the early 1970s in his books
Future Shock and The Third Wave--radical changes in
how society would work and reorganized their lifestyles. Mr.
Toffler saw the changes in demographics and changing
technologies, while Dr. Boulding saw it as fundamental
economic changes.
Dr. Boulding understood that land was simply no longer a major issue in economic growth. Witness the example of Argentina and Singapore. In 1914 Argentina had the second richest population per capita in the world while Singapore was 75th. In the year 2000 Singapore will surpass the U.K. in per capita income and Argentina will still not be up to the 75th place. In less than three generations, Argentina and Singapore switched places. Argentina is land rich and Singapore is land poor. Land is no longer a factor of production.
It use to be that capital begat capital and those countries that had it could get more of it and those that didn't couldn't--the old case of if I have money I can get a loan I don't need but if I don't have any money and need a loan, I don't qualify and can't get a loan. Yet for the last twenty years and certainly true today money is referred to as "E-Money"--Electronic Money. It travels at 310, 453 kilometers per second--the speed of light. You want it, you got it--anytime and anywhere. Observe the world order and see that countries that save and have capital regularly loan to countries that don't save very much that want to borrow it. World financial markets process the flow fast to all willing to pay/receive. The swap market was created in 1979 and now is a $9 trillion (C$12 trillion) world market. The financial engineering industry (derivatives) came from no where in 1986 to a $15 trillion (C$20 trillion) world market today.
Capital is no longer a factor of production.
The supply of labor, likewise, does not matter. Countries rich in labor supply, such as present day India, are not models of rapid economic growth, nor is it's neighbor China. Japan, however, with a critical labor shortage (so short in fact that they had to develop the robotics industry to cover their shortages) has enjoyed outstanding economic growth. Observe the close relationship between low unemployment rates and high economic growth rates. Labor is no longer a factor of production.
The economic theory of growth based on land, labor and capital is no longer useful (if it ever really was). A countries' economy is dependent in the information age on both information and the creativity of its people. Peter Drucker calls it the knowledge world. Thus the worker of the future is a knowledge worker--someone that creatively puts information to work.
Information was once a very powerful tool because it was costly to obtain, costly to store and retrieve and costly to use. The whole field of management during the last 75 years has evolved around how information is obtained, stored/retrieved and used.In fact, management in essence became information. Companies, organizations and governments were and are organized around information. Yet the electronic revolution of the last 50 years has changed everything about information. Information is now becoming decentralized. It is no longer controlled at every management level--everyone is now gaining access. The Internet use to be available to only those involved with governmental military matters and certain universities. It now estimated to have at least 35 million users world wide with an annual growth rate of 5-7 million. A new computer is turned on every 2 seconds, 24 hours per day, 365 days per year in the United States; every 3 seconds in Canada and every 6 seconds in the EEC and Japan. In three years the forecast is every 3 seconds for the EEC and Japan. Global cellular phone systems such as Iridium and Teledesic and two-way pagers like SkyTel bring the world economies and people together. Twenty four hour world information systems for news such as CNN (Cable News Network) provide the world with current events. Now anyone that wants information has it. Every week the world publishes 40,000 scientific papers. The World Futures Society estimates that knowledge is now doubling every 15 months! When the third millennium dawns on January 1, 2001 the knowledge base will be doubling every 11 months. In less than 5 years we will have a new world--every year!!!!
Information is no longer a factor of production.
What we are left with as a factor of production is creativity.
It is not that the others--land, labor, capital and information
are important, they are. However, they are available to
everyone--everywhere. Everyone can have all four of them--thus
everyone is competitive. The playing field for businesses
everywhere is rapidly becoming the same. The only way to
set yourself apart is with the only factor of production that
matters in this new knowledge
world--creativity.
The importance of creativity as a competitive edge emerges
more clearly when the current state of economic activity is
studied with more detail. It is no surprise that economic
activity within the G7 nations has been good over the last
several years and will continue to get better--even boom over the
next two decades. What is causing this activity and why a boom?
No surprises--just demographics. In the United States, I call it
the 81 million pound gorilla. Demographers call it the Baby Boom
Generation--81 million people born between 1946 and 1964 in the
United States. In Canada it is a 9 million pound gorilla. In the
United States and Canada they officially became 75% of the labor
force in 1995. They "own" the economy in both the United States
and Canada. They have 40% more income than their parents did at a
similar point in their life. Furthermore, they will inherit from
their parents $7 trillion (C$9.3 trillion). They are the richest
consumers to ever exist in recorded history. But this is not
confined to just the United States. It exists in Europe and Japan
to the same extent. It is relatively the same for Canada, United
States, Japan and the EEC with different peaks/cycles. The U.S.
has a peak in baby boomers at age 33 (Same for Canada). The peak
in spending for adults in most developed societies is age 47-49.
Thus for the U.S. and Canada there will be a continued increase
in spending for at least another 16 years (from 1993)--well into
the next century (2009). Japan's baby boomer generation peaks at
age 44 thus they have increased spending only for another 5 years
(until 1998). The EEC is 6 years lagged by age from the U.S. at
age 27 thus they can expect a peak in economic activity in
2015-2016. From an economic standpoint neither the U.S., Canada
or the EEC should be worried that their economies will falter
between now and the year 2009 for the U.S. and Canada and 2016
for the EEC. Indeed they will boom between now and then. They
will of course take pauses for a breath of fresh air, but they
will not slow down for many years to come. They will be driven by
the baby boomer's desire to spend.
In addition to the baby boomers spending waves that are driving the economics of the U.S., Canada and the EEC they also have innovation waves. In the U.S. and Canada they have just entered the second of three waves of innovation. The EEC's baby boomers will enter the second of the three waves in two years (1998). The combination of the spending waves and the innovation waves means the economies of the U.S., Canada and the EEC at the beginning of the next century will be Hyper-Cyber Economies (HCEs).
They will be Hyper because the rate of new product
introductions will stagger the imagination. In the U.S. and
Canada the current rate of new product introduction is one every
17 seconds and 10 high tech services. In 2001 it will be 17
products and 200 high tech services every second. Since
the EEC's baby boomer wave is lagged by 6 years with the U.S. the
EEC can expect a similar wave of new products/services at least
by 2007. Since consumers can't possibly buy and use all of the
products and services that will be offered, the shelf life will
be much shorter. The saying in the U.S. is "You have to learn to
succeed very fast". Sony has a shelf life of a new high tech
electronic product currently that runs about 90 days. For the
year 2001 they believe it will be 18 days! Since the Sony Walkman
was introduced in 1979, there has been over 240 new versions--a
new Walkman every three weeks! Sony as well as many other
companies has developed a new attitude for the Hyper-Cyber
Economy--YOU GET UP EVERY MORNING TRYING TO PUT YOURSELF OUT OF
BUSINESS--BECAUSE IF YOU DON'T, SOMEONE ELSE WILL.
The economies will be Cyber because the computer via
communication technologies is the driving technology. Computers
will be (practically are now)limitless in their ability to
store/retrieve information. The computer is leaving the world of
silicone and entering the biological world. DNA computers are
already being used and will in the next century be the ultimate
machine. They will powered by Bio-batteries (developed in England
in 1995). A living computer powered by a living
battery--limitless capacity and power. To understand the power of
DNA computers, use the example of the human eye. It have
approximately 10 million eye cells to process vision for the
brain biochemically. It would take a Cray supercomputer,
currently the world's largest, 24 hours a day for 100 years to do
the same calculations an eye performs biochemically in one
second. Computers in the next century will be limitless. Thus the
Cyber economy. A Cyber economy does not need land nor labor in
the traditional sense, the capital it needs is minimal(and
available in cyperspace) but it does need vast amounts of
information (available in cyperspace) and the one factor of
production--creativity. Therefore the labor shift
is away from needing people to perform manual labor to needing
Peter Ducker's knowledge worker--a cyber worker that deals in
creative use of information.
Even though creativity will be the one major factor of production driving the Hyper-Cyber Economy, it is not a free good. Indeed it is one of the scarcest! It is available to all humans, has not been shown to be related to IQ or intelligence, it is not blocked by physical disabilities and exists in limitless potential supply, yet it is the scarcest of all factors of production. Why?
Studies in the U.S. has shown that by age 40, the average human has 2% of the creativity they had at age 5! Furthermore, from age 5 to 7, creativity goes down by 90%! That is the beginning age group for school, yet school is only part of the reason. The ages 5-7 are when most social factors get imposed--what to say, how to say it, what is expected, how to act, what you can do and what you cannot do. People develop early their patterns of thinking and rarely change--thus the significant drop in creativity.
However, there is great hope and ample evidence to suggest it can be reversed and changed. Doug Hall, a former Master Marketing Inventor at Proctor and Gamble, has proven that creativity can be reestablished. Major university studies confirm that the minimum amount of creativity that an individual can get back is 500%, average of 1100% and a maximum that is off the scale. Mr. Hall uses a program called Stimulated Response. Sometimes it's as simple as giving people a list to trigger a response. Other studies show that creativity is stifled because of cultures, spouses, children, family, communities and most importantly--corporate cultures. Because of this, it's easy to see why innovative companies foster creativity by changing the way they run their organizations. Increased creativity is the reason the team approach has been used as a new worker model. Teams are tough to manage, difficult to administer and have many problems that traditional work units do not have, yet they foster creativity.
In the U.S. approximately 7% of the Fortune 500 companies now are hiring new employees based upon attitude, not formal education. Ideally they will take a formally educated person with a great attitude over just attitude, but given a choice of formal education or attitude, they are opting for attitude. They have found that workers with a great attitude also are very creative.
Additionally, there is another major movement in the U.S. with the creative companies--Open Access. It started with the late Sam Walton, founder of WalMart. He wanted to link his information system with his suppliers. The suppliers resisted. Finally after eight years, Proctor and Gamble and WalMart linked their information systems. When a WalMart sells a product, Proctor and Gamble knows it and can coordinate production. Now information is no longer the major factor of production--its linked between WalMart and Proctor and Gamble and available to both--now what will drive them into world dominance is creativity. Both companies hire on attitude--not education.
What do the WalMarts, Proctor and Gambles and other
approximately 7% of the top companies in the world do to foster
creativity? Simple--they create a corporate culture that allows
workers to express their creativity without fear of failure. They
have what is called an Autocatalytic System. Once it is started,
it continues to function by causing all workers to become more
creative. Sam Walton's attitude was that he would reward
employees (called associates) for trying things. If they didn't
work, no problem. That was a success. A failure to Sam Walton was
when an associate tried something and it didn't work and then
they tried it again without changing anything. Success was in
trying. Which means that his associates functioned in an
autocatalytic way--new ideas begat new ideas and the process
doesn't stop.
What does all of this have to do with agriculture? Exactly the same as for all other industries--creativity is the currency of the future. In agriculture it is even more critical since we deal with life systems that are much more complex than manufacturing systems. Two major areas surface in the new agriculture that will drive them into the next century--Biotech and Linked Systems.
As stated earlier, the new computers are DNA computers driven by bio-batteries. Thus agriculture will be responsible for the computer industry in the next century. Biology in general is where physics was at the turn of this century. In fact the next century is being called the Biology Century. We currently now so little about life on this planet that we can give a scientific name to less than 10% of it. Of the life that has lived on this planet, 99.9% is extinct. Yet biotech has already recreated a portion of extinct life and only scratched the surface of existing life. This new field is called computational biology, computational chemistry and computational physics because new computer technology lets scientists build products atom by atom. The list of what is currently going on is long, in the next century it will be limitless.
As large as the revolution is in biotech, it pales compared to the new linked systems that are being produced in agriculture. Putting computers, GPS systems, molecular traps, global information systems, and biology together creates the worlds greatest agricultural system. Its called Prescription Agriculture. The ability to identify each plant and animals needs exactly and deliver the nutrients just in time. Impossible? Already being done, both in plants and animals. In animals Micro Chemical, Amarillo, Texas is already doing it for beef cattle in feed yards. Each animal is "branded" electronically and monitored from birth to death for exactly that animal needs. Needless to say, productivity is outstanding. Inputs minimized. Environmental impacts reduced. Profits increased. In plants, a multi-national company is communicating with plants via molecular traps electronically under the soil surface delivering nutrients exactly as the plant needs them. No excess nutrients to go into ground or surface water supplies. Productivity increases of 100%!!!
In the future, in agriculture, in the U.S. and Canada no plant or animal will be grown without a prescription--for that animal/plant.
Take it one step beyond and add all of the information concerning what consumers want to buy globally and now you have a totally linked system. Its called Franchised Prescription Agriculture (FPA). In a FPA world, no product is produced without a consumer order. That product will be produced exactly for that consumer.
The U.S., Canada and the EEC will prosper during the next two decades. In fact, other than a mild pause or two the next two decades will be boom times. The baby boomers will assure that it will happen. These boom times will produce the Hyper-Cyber Economy that will be driven by a creativity. Those companies and countries that foster it, reward it and use it will "own" the Hyper-Cyber Economy. Likewise, the agricultural industry will be dominated by Franchised Prescription Agriculture and the U.S. and Canada will be the world leaders. The profits from FPA will be so large that most people will not believe it possible. Yet a simple lesson shows it is possible--Bill Gates and Microsoft. We have made a college drop out the richest man in the world not counting inheritance because he has made the computer useful to each of us. His currency? Creativity.