Computer Conservatism : INTO THE QUANTUM ERA OF MICROCOSM Economics and Technology <i> by George Gilder (Simon & Schuster: $19.95; 359 pp.; 0-671-50969-1 </i>

The computer, especially the microcomputer, has wrought many fundamental changes in our lives, our businesses and our economy in recent years. Much greater change looms just ahead and it will be a happy change, according to George Gilder.

Based heavily on the ideas and accomplishments of Caltech physicist Carver Mead, “Into the Quantum Era of Microcosm: Economics and Technology” predicts great things for America’s future.

For instance, the demise of television as we know it. In its place will come computer screens of unimagined fidelity with access to a huge array of entertainment and information services. Japan’s present 10-year lead in the development of high definition television (HDTV) will be rendered useless in the process.

And the demise of war and international conflict as we know it. The Strategic Defense Initiative, or Star Wars, will succeed in neutralizing nuclear weapons, Gilder argues. At the same time, greater emphasis on the products of the intellect, such as computer chips, will reduce the importance and value of natural resources and the geopolitical boundaries and battles over control of those resources.

If Gilder’s “Microcosm” is right, reading his book is like an entrance exam into the exciting 1990s and the glorious 21st Century beyond.

The entrepreneur, at least the scientifically gifted entrepreneur, will be both the benefactor and beneficiary of this new order.

Those without interest in the subject, however, or worse, without access to the kind of education that would enable them to comprehend what Gilder is writing about would seem doomed to sit out the new game on the sidelines.

Certainly Mead’s credentials as one of the leading figures in recent computer technology are beyond question. He invented a commercially important variation of the transistor in the 1960s. In the late ‘70s he played a major role in development of a radically improved method of designing and manufacturing microprocessor chips. And in the late ‘80s he has left the now commonplace world of digital computing behind to work on neural networks and analog processors based on biological models.

Gilder has earned his own credentials as a champion of political and economic conservatism with his past books including “Wealth and Poverty,” “The Spirit of Enterprise,” “Sexual Suicide” and “Men and Marriage.”

The microcosm of Gilder’s book is an infinitesimal place where the rules of quantum physics enable ever more complex computer logic designs to be executed ever more quickly and cheaply.

It is an invisible world where the physical and economic rules are different than those of the more tangible physical world we are used to, the macrocosm. There is a threshold that separates the two worlds and when it is crossed, the familiar economic and technological rules that have governed business and industry are changed, Gilder argues.

By way of illustration he cites what happened as the number of transistor circuits that could be packed onto a silicon chip increased.

As the transistors became smaller and more numerous, placing the thin wires needed to connect them became more and more difficult. The threshold into the microcosm was crossed when scientists learned how to replace the wires with silicon pathways.

Once crossed, as Gilder describes it, the power of the microprocessors grew in great leaps with virtually no increase in cost. The design of the chips--the work that could be performed with the design--governed the value of the chip, not the cost of manufacturing it.

It is this descent into the microcosm that Mead is now making with his neural networked analog designs that will fuel the predicted explosion in computing power that Gilder writes about. These highly specialized machines will supersede the digital computers of today with their keyboards and monitors. Instead, the computers of Gilder’s version of tomorrow will see and listen and talk.

That is, if governments will leave the scientific entrepreneurs alone long enough for them to make it happen, in Gilder’s view.

Entrepreneurs unfettered by governmental policies and regulations are the pillars of this new economic structure, according to Gilder. He writes compellingly of the folly of the Reagan Administration’s trade embargo against Japanese memory chips, as have others. In that episode, the Japanese were able to boost prices and profits for their commodity chips that all American computer manufacturers needed for their products. As a result, the American computer manufacturers were penalized and American chip manufacturers benefitted little.

Whether this episode proves that all trade barriers are counterproductive is the subject of endless debate among experts with different ideas than Gilder and the cast of science-heroes he writes about.

For Gilder, however, there is no countervailing viewpoint. The United States, despite its policies, has won the chip wars, he argues. Japan is stuck with production of the commodity chips that sell cheaply because there is nothing unique in their design, while we are the undisputed leaders in the high value chips such as the Intel and Motorola families of microprocessors.

“The global microcosm,” he writes, “has permanently shifted the world balance of power in favor of entrepreneurs”

“Trade can never balance,” he continues, “as long as entrepreneurs can dispatch capital wherever they wish in response to new opportunities or in flight from oppressive taxes and protectionist barriers.”

You don’t have to buy into Gilder’s economic philosophy and optimism to find his book rewarding. If you ignore the final five chapters along with some of the more blatant entrepreneurial assertions sprinkled throughout the rest of the book, you still have a well-crafted explanation of what the computer age is all about. The commented bibliography is an excellent trail guide for those in search of more detail.

Some readers may find there is too much detail, especially in the early chapters. I’m not sure you really have to comprehend quantum physics, as Gilder maintains, to understand the essence of transistors, very large scale integrated (VLSI) microchips, silicon compilers and neural networks.

Fortunately, of course, you come equipped with a wonderful analog input device that will let you skim over the tough, boring stuff to find the entertaining anecdotes.

From “Into the Quantum Era of Microcosm.”:

“Today, the ascendant nations and corporations are masters not of land and material resources but of ideas and technologies. Japan and other barren Asian islands have become the world’s fastest-growing economies. Electronics is the world’s fastest-growing major industry. Computer software, a pure product of mind, is the chief source of added value in world commerce. The global network of telecommunications carries more valuable goods than all the world’s supertankers. Today, wealth comes not to the rulers of slave labor but to the liberators of human creativity, not to the conquerors of land but to the emancipators of mind.

Impelled by an accelerating surge of innovation, this trend will transform man’s relations with nature in the twenty-first century. The overthrow of matter will reach beyond technology and impel the overthrow of matter in business organization. Devaluing large accumulations of fixed physical capital, the change will favor entrepreneurs over large bureaucracies of all kinds. The overthrow of matter in business will reverberate through geopolitics and exalt the nations in command of creative minds over the nations in command over land and resources. Military power will accrue more and more to the masters of information technology. Finally, the overthrow of matter will stultify all materialist philosophy and open new vistas of human imagination and moral revival.”