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Tonight's Council program, entitled America's Revolutionary Wealth and its Impact Around the World features bestselling author and futurist Alvin Toffler in conversation with Andreas Kluth, technology correspondent for the Economist. Alvin Toffler recently coauthored the book Revolutionary Wealth with his wife, Heidi Toffler. In their new book, the Tofflers survey the technological and economic developments that are shaping the world's future. They also examine how the rising wealth of the United States is bringing profound and controversial changes to societies and cultures worldwide. For more than 4 decades, Alvin Toffler has been one of the world's most insightful and influential voices in business and intellectual life. Alvin and Heidi Toffler's work has influenced presidents and prime ministers as well as educators, psychologists, and social scientists. Their books include such classics as Future Shock, Third Wave, Power Shift, and War and Anti-War. They are known for having forecasted many features of contemporary life including the acceleration of daily life, the decline of the nuclear family, and the rise of religion decades ago. They also anticipated cloning, virtual reality, and information overload. In the area of management and business, the Tofflers also forecasted the shift from mass manufacturing to services and not work, the digital revolution, nano- and biotechnology, and the waves of corporate restructuring decades in advance. On the world scale, they predicted the ending of the Soviet Union, the reunification of Germany, and the massive growth of the Asian Pacific economy more than 10 years before these events made global headlines. Since 1996, Alvin and Heidi Toffler have worked as advisors to companies and governments worldwide on advances in economics, technology, and social change. Mr. Toffler has served as a visiting professor at Cornell University, a faculty member of the New School for Social Research, a visiting scholar at the Russell Sage Foundation, a White House Correspondent, and an editor of Fortune Magazine. Andreas Kluth has been writing for the Economist since 1997 and is currently a technology correspondent based in the San Francisco Bay Area. From 2000-2003 he was based in Hong Kong covering business and finance throughout China and Southeast Asia. Mr. Kluth is also a teaching fellow at the graduate school of journalism at UC Berkeley and he is a regular commentator on NPR's Marketplace. Please join me in welcoming Alvin Toffler and Andreas Kluth. Thank you Mary Ann, thank you Alvin for joining us. Congratulations on your latest book, I just finished it last night, 391 pages. The main problem for an event such as this is that there's about two world-shaking, earth-shattering role trends on each page, so where do we start? Because we can very easily go off on some strange tangent right from the start and never to be seen again, so I thought maybe we'd start with the most obvious thing is which the two words in the title, because this is actually non obvious. How did you choose Revolutionary Wealth? What's revolutionary about it, about the wealth? Well, I should say that in choosing it was not easy. There was a lot of back and forth with our publisher. The purpose of the wording is intended to convey the following: The changes that we're going through economically are not just economic, they're also social, they're also political, they're also cultural. If we go back to the Industrial Revolution, that was not just the steam engine, that was not just technology, it transformed the way of life, gave rise to an entirely new civilization. And we believe that that's what's happening now, and therefore it is revolutionary. It's not the stock market, it's not what stock is going to go up or down, it's an enormous change that we are either the privilege or suffering from to be alive at this moment in history, but it's a really amazing moment, so that is why we think that what's happening now is a historical revolution, not just, and revolution is used to say a change of regime, or a new diet, you know, but in fact this is something really big that we're living through, we try to convey that idea. As to wealth, we use that word in a different meaning than usual. We believe as many do, but I think work on this concept, that wealth is not all money, that there are other kinds of wealth created, there's social wealth, there's cultural wealth, many different kinds of wealth and the book talks about the interrelationship between those nonmonetary forms of wealth creation, and the money system, how do they interact. Most people here will know, but some may have forgotten that you've coined words in your previous books and you're again coining words in this one that seem like maybe repeat the pattern that have almost become part of the vocabulary, like prosumer' would be a key one, but I wonder if we could maybe home in on the main features of the Revolutionary Wealth system that you see coming and perhaps with some of the words you use to describe it, and I'll just throw out a few here by way of wheying your appetite: demassification, prosumer, obsolege, and non-rival goods, and in any order you choose Just give me one at a time. Well let's deal with; let's choose maybe the prosumer. Yeah. Basically we argue in Revolutionary Wealth that there is, that the economy as we know it what we measure the money economy is actually part of a larger phenomenon called a wealth system. There is in that wealth system, there is a non-monetary economy which I already referred to, the things we do we don't get paid for. And a lot of the things we do that we don't get paid for actually have a big impact on money economy. Largely unmeasured, unnoted, undescribed by economists. Largely. So if you put these two together at their interaction makes a wealth system which then in itself is a subsystem of a civilization. Civilization is the big piece and wealth system is part of a civilization and within that wealth system there are these two, the monetary and nonmonetary economies. And prosumer is a term we use, we coined it because it contains production, pro-, and consumption, -sum. So we argue that people, originally when we coined the term in 1980 in our book the Third Wave we referred to it as people who produce for themselves. All of our ancestors did. They grew their own food, they built their own shacks, they sewed their own clothes, they made their own boots, because there was no money economy. There was no trade, nothing. They had to, and we used the term in that way in our book the Third Wave. In this book, we stay with that, but expand it somewhat and we talk about it essentially as unpaid labor that we all do, whether it's cleaning up the kitchen, whether it's painting the house, or whether it's getting on an airplane at our own expense and going to Achae in Indonesia after the tsunami to volunteer. Volunteer efforts, a lot of NGO efforts. These things produced change in the society which had impacts on the money economy but are seldom recognized in that sense. And so once you start thinking about that, it changes many of our definitions. For example, it's frequently said in the big debates about pensions that old people are nonproductive, well, caring for somebody's kids, that's not unproductive. Take another example, which we, rather indelicate one that I occasionally say at corporate meetings. How productive would your workforce be if no one had toilet-trained it? That was a mom. That was a mom, and she didn't get paid for doing that, that was not a job, and yet it has an enormous impact on the economy. Could you run the economy if there were no language? Families teach the language, introduce children to language, so there are many ways and many activities that occur outside what economists call the economy which have big impacts on the economy, and the phrase that we frequently hear is, In the economy, there is no free lunch. What we argue is that there is in fact an enormous free lunch which is going into the paid economy from the unpaid economy, and prosuming is essentially unpaid work that we do unpaid activities that are not part of the money economy but are essential to our wealth and our health and our way of life. Now let's just tease out a subtlety that comes from that, which is, you've already said it, it's not actually new, in fact, it's the oldest thing there is, prosuming, borrowing from your previous books, but there's that first second and third wave of economic models. The first wave, even before that as hunter-gatherers we were entirely prosumers, as first wave agrarian types we were prosumers. We sort of lost it a little bit during the second wave and now it's coming back, so given that we all actually agree that it's not that new, what is new about it for us? What's new is that we now are being, the money economy is producing technologies that we then use for prosuming purposes and make tremendous changes. Best example is Linux, the Linux operating system. Here's a guy in Finland of all places sitting there unhappy with the program he has on his computer and says, you know, I think I can do better than that, and it started as a hobby on the side, not being paid for it, not officially being asked to do it, just on his own, writes what we now call Linux, puts it out on the web, and pretty soon thousands of programmers are tweaking it, fixing it, improving it... all volunteer work. All volunteer work! Nobody measures it, but Microsoft now sure measures it, because it's shaking the entire industry and the entire world, and you have countries like China and Brazil that have made it official policy that their government agencies must use Linux, partly because of what it is, and partly to give Microsoft and the United States, you know, the finger. So is it eventually are we talking about a trend towards DIY worldwide abetted perhaps by technologies that didn't exist during the industrial age that will make it easier for us and disrupt the money economy, or would you go so far as to say that, give it another 100 years and it's again back to the first wave we'll be entirely prosuming, there won't be a money economy as such? Well I'm not gutsy enough to say that, because I think the money economy serves very valuable purposes, but I think that the place of the money economy is going to radically expand, and if you keep up with some of the technology, you probably know more about this than I do, but desktop manufacturing, I do believe that in a matter of a decade or two, we will have a device that we could probably buy someplace, put it on our desk or in our kitchen or something, and use it to actually create, to make things. It's a kind of extension, a multi-dimensional extension of the printer, your friendly printer that you now use with your computer, and so we're going to arm individuals with all kinds of tools and technologies that permit them to do things that permit them to do things that they previously had to pay for. And the perfect example, I think, if you look around the room there may not be many of my age, but the people in this room who will no doubt remember that when we wanted to take photographs we had to take the roll of film into usually a drug store, right, and we gave it to them, and they sent it to Rochester, NY so Kodak could develop and print it and then send it back, we'd pay the drug store. Well now, you do it in your hand. You have technology, you make the photograph, you can manipulate, you can change the color, and you can transmit it all in that little gizmo in your hand, so that what's happened is that the money economy which produced these new technologies give us tools with which we can create value by ourselves without having to rely, without spending additional money to get it done, so those are just a few examples, but also volunteering, volunteer work, a lot of NGO work, all these things are created, they create value and they do not, they're not separate from the money economy. They are the non-money part of a wealth system, and unless you understand the interactions of these two, I think we will continue to get the kinds of forecasts from economists that we unfortunately are currently exposed to. Let's talk a bit about knowledge. You've got interesting things to say about that in the book. Tell me first of all if this is an oversimplification: That the revolutionary wealth system that we're moving into is entirely driven by knowledge and that this raises interesting new issues about what happens to previously held knowledge that is now obsolage according to you. Obsolage is my favorite word in the whole book. It's a word we cooked up to mean obsolete knowledge. Most of the decisions we make in our daily life are based on obsolete knowledge. The most, including the White House and our own kitchen, okay, and one reason for that is getting more and more true, because as change accelerates, the rate at which knowledge becomes obsolete accelerates. So we all have what we call in the book Emily's Attic filled with information and ideas that are simply obsolete but stored up there forever, and as a result much of what we believe will be in another decade or so, if we were able to look back on it we'll say, How did we ever believe that knowledge? It's stupid! And don't be afraid of being stupid because Aristotle was stupid, da Vinci was stupid, if you read the things they actually believed in their time, you can't believe it. You can't believe that they believed it. It was wildly, wildly absurd by our new understanding of nature and reality. So probably we're doing the same thing, except that living in a time of accelerating change, the base, the supply of knowledge that is relevant is as I say, constantly changing, more and more of it is being left behind by events and therefore is not necessarily a good basis for decision making. I think most of us will find it unbelievably unsettling, in fact as you were speaking I was for some reason remembering an anecdote I read somewhere that a few decades after the printing press was invented during the Renaissance there were some suicides among scholars and et cetera because suddenly, up to that point it was quite possible for someone to have read all the books that existed and therefore be considered, I'm there, I've made it. Suddenly that was no longer possible and they saw their entire livelihood floating down the river, and this depressed them so much that they decided to end it right then and there. Based on what you've said so far about obsolage, why wouldn't we be doing the same thing? Well are there any publishers in the room? Book publishers? I think they're very worried. You may, some of you may have seen yesterday's New York Times magazine which had an article by our friend Kevin Kelly, literally about the future of the book, and argues that what's happening is that right now a book is a stand-alone device, so you've got hundreds of thousands of them in the library perhaps, but each one is separate from the rest, and he's talking about the way we handle knowledge, we're going to be able to by digitizing all this stuff, we're going to be able to search for concepts across many many books simultaneously and manipulate and do all kinds of things epistemologically that we cannot now do, and these will have tremendous cultural impacts, but we don't know, we don't think the way, we don't think the way we need to think in order to understand that, because we haven't been exposed to that kind of a global universal library is what he talks about, and the changes, the speed of changes, the relationships, and the desynchronization in society, that is that many of the academic disciplines and again many of the things we know, our beliefs are not keeping up with the change, so if you look at a particular academic discipline for example, and you've got a professor who very often is teaching much the way or much, lecture notes, has the same lecture notes as 10 years ago, 20 years ago, but that's not a criticism necessarily of the individual. It's the way it is, and stuff is getting out there faster and faster, and getting ahead of us. And that's part of the larger thing that I want to talk about, desynchronization. Yeah, you mean demessification Desynchronization. Yes, let's move on to that, because on very sort of pretty device fairly early on is you set up a car race with 9 cars, and essentially the premise is that if every part of society were moving towards the new world and revolutionary wealth at the same speed that'd be great, but the tension from the journalist's point of view, where it gets interesting is that we're going at very different speeds. You don't explicitly say anybody's going backwards, but presumably... Let me tell you what the nine cars are in this race so we're looking at a stretch of highway, 9 cars start, and the problem is they're all going at different speeds. Racing ahead is the Company as an institution. Following close behind are institutions like NGOS, civil society, and pretty fast still, I think in your book is the Family, although here you actually said American family, whereas usually you keep it to worldwide trends. Behind that is labor unions which are now starting to move quite slowly in the cars, then government regulators, all of that, then the school system you have a special enmity for, so I'm sure you'll... basically almost standing still is the United Nations, IMF, (word undetermined), all of those post-war institutions, supernational... political parties very slow and the law is essentially standing still. Can you run an economy even a money economy, let alone a wealth system, can you run a society in which businesses and economic activity is going at 100 miles an hour, and the schools which are supposed to prepare generation for, that's not all, but I mean we all know that an education is not just about getting a job, it's about thinking and living and understanding a lot more, but it includes getting a job, or at least being able to play an economically useful role in society, so can you have an economy in which the business sector is changing at 100 miles and hour and the schools are not changing at all, they're changing at 10 miles an hour, so I use the example of cars coming down a speedway or a highway, and a cop with a radar gun measuring the different speeds, and when you get to the education car, it's got steam coming out of the front, it's got a flat tire, it's rumbling along, but it certainly is not keeping up with the other elements or institutions in society that need it. So the acceleration of change, which we wrote about in Future Shock but never got into this, we talk about the desynchronization of the economy and the society, and I hasten to say that we don't argue that everything has to be perfectly synchronized, you can't have that, it's unnatural, if it were there'd be no innovation, there'd be no life in the system, but too much desynchronization will blow the engine so to speak to use an old industrial age figure of speech. Let's slow down a little bit because most people here will not have had a chance to read the book again, so give a sense of how the faster moving cars are moving so fast, so the company or, in fact, of greater interest the family, exactly what makes them so fast-moving? What does their speed, the speed of those institutions consist of at the moment? Well in the case of the companies, we're talking about a market economy, competition is driving much of the speed, and the other, of course, is the radical increase in the knowledge available to us, so if we are in business, we're running a company, we have to change rapidly and we also have new tools with which to do this, we have totally new products, new markets, new everything, so we have to make those changes rapidly or we're simply not in business, and it's competition that in good measure drives that. As for the schools, public schools, there's no competition. There's no pressure in that sense. Now that doesn't mean, by the way I just want to say I don't hate teachers, my sister is a teacher, believe me, this is not aimed at the teachers, it's the system. The system was designed from an industrial society to produce young people who would fit in a factory, who would work on an assembly line, and that's what it's very good at doing, but the assembly lines have gone away. Why do kids have to show up on time? Because in an agrarian society, the family goes out to the field and picks the, you know, the vegetable, if one member's late, one of the other members of the family fill in a few minutes, but don't come late on an assembly line, because then you keep a thousand people standing alongside doing nothing, and that's expensive. So industrialism required synchronization, people showing up exactly on time and so forth, sending kids marching from class to class, they do rote and repetitive work, that's what you do in factories, right? I worked in factories. And you have to ask yourself, what are all these millions of kids doing in a yellow bus every morning? What they're doing is learning to commute! So they're being prepared, it's funny, but it's also true, if you read the history of the public school system in the late 1800s, they talked about, We need to create generations, with what they called industrial discipline. The economy demanded industrial discipline, and that's when business got involved in pushing public education. Prior to that it didn't. When it decided it needed another work force, they created or helped create this model. And the model would have been very appropriate as long as we're an industrial society, which we're not. Now while we're on the topic that's another one we're going to have some fun with, broad historical circularities, because if we go back to the first wave, education was a prosumption kind of activity, it was done in the home, we were prosumers, although to be fair, it was mostly not done at all, so will it be the case that we'll look back at the industrial age, at the Second Wave as an interlude of mass markets, mass media, mass everything including mass education and it will seem strange to us that we ever had this kind of school system because we have gone back to prosumers in education? Well the answer is yes, but, and the but is this; I don't believe that history ever repeats itself because depending on what scale you're looking at and what you're talking about, there's a big context out there. For example, this is not to do with education, but there's a lot of discussion of what are the characteristics of an al-Qaeda terrorist? And you're familiar by now with the list. Usually not poor, middle class, reasonably educated, young, et cetera, it lists maybe a dozen characteristics. I'm reading a book and the question arises, and there's that list, except for one thing: It's from the 1500s, and it is the terrorism between Catholics and Calvinists. So you would be tempted to say history repeats itself. I don't accept that because they didn't have a world with weapons of mass destruction, and therefore the external context of an event, even when they seemed similar, the external context is different, and sometimes phenomenally different, so I'm very, I'm always very careful about picturing it as a circle, as a cyclical event, but again, I think you're right about what we say, that you had prosuming was the way of life, and prosuming will play a bigger and bigger part. Whether that will do away with the money economy at some point, or whether it will do away with markets and so far, I'm not prepared to say. It's too early to be able to say that, but certainly the way we now think about these things is, it's obsolege, it's obsolete, and these are by the smartest people, this is, economists are smart! Some of them are brilliant. But they grew up studying and industrial world, and it is not the world we're in. The... Can I tell the Canais story? Of course. Francois Canais was the physician to Madame Pompadour in the French Royal Court, but he was also a genius, and despite the fact that he was a leading doctor and probably knew more about blood and bloodstreams than anyone in Europe or the World at that time, also wrote about economics. There were no discipline, no intellectual disciplines set up the way we have in universities, and he wrote about economics, he wrote about grain production, he wrote about politics and the lack of, we would call it democracy, he didn't call it democracy, but how tough it was in China and so forth and so on, and he also invented the forerunner of what we commonly would call today input/output analysis. So he was a genius. However, he lived at a time in which he looked at the world around him and concluded that there were only two groups in society who were truly productive. They were landowners and peasants. Everybody else, he said, was sterile. He couldn't imagine that a few decades or generations down the pike, it would be that sterile population that was making the industrial revolution and that in fact became the dominant economic force. So he saw he was wonderful at seeing parts of it but he missed the big picture, and I think that in much of our thinking about these issues, we miss the big picture. By the way, in saying this, I'm not suggesting that you can predict what's going to happen. We try not to use the word predict because it implies a certainty that we don't have at we can't have. But you can see big evolving patterns taking place and try to make some sense of it. Anyway, he's one of my sort of favorite characters, Canais. I wonder if we can... We'll have some questions in a moment. Stay with that theme for just one more moment and now introduce your other word that you coined, demessification. I happen to completely agree with you about all these, the mass media mass manufacturing mass education, that that was the past, that we're still sort of living with the legacies of it, but to what extent can we say what should happen in let's say education, and what will prevent it from happening? Do you have a vision of what a post-mass education system would look like? Well the answer to that is not a richly elaborated one. But there are lots and lots of things that could be done. The first thing is to recognize that training kids for the mass system is not training them, it's harming them. And so what I would like to see is a great diversity of approaches and not just courses, but for example, I've always asked myself this question: I hated math. And indeed, I'm a mathematical ignoramus. The question, the question that always came out was Why do I have to study Algebra? And parents always say, Because it will be good for you in the future. Well that presupposes the parent knows the future first of all, and second of all it's not very persuasive. So it occurs to me there's a way, maybe we could get kids to see a reason for learning algebra, and I've always thought about, Why can't we put together a team of kids with a teacher and maybe outside citizens who participate and take them to solve a little local community problem? Traffic jams, or some piece of pollution or something which just happens to require algebra to solve the problem, and then when you say, Why do I need to learn that? You don't have that issue. Say, We've got to solve this problem. It's action learning, not the abstraction. But that's just one of a thousand eventual ways I think of doing this. By the way I'd like to give a plug to a gentleman whose name is not very well known in this country although he's living here, and his name is Sir Ken Robinson, and Ken is a Brit as you might imagine from the Sir, but he has written widely and wisely on creativity in education, and he's the education advisor to the Getty Museum, and he goes around the world and answers this question a lot better than I can.