PERSPECTIVE ON CHANGE : Efficient Capitalism Runs Amok : Economic structures fall in years, not generations; dislocations are more than people, families and communities can bear.

It is now an undisputed truth that capitalism, unobstructed by public regulations, private monopolies, strong trade unions or cultural inhibitions, is the best engine of economic growth. That the capitalist engine achieves such growth because its competitive pressure destroys old economic structures, allowing more efficient structures to rise, is also perfectly obvious. And, finally, that these same structural changes can inflict more disruption than workers, firms, entire industries and their localities can absorb has long been recognized.

What is new about the present situation is only a matter of degree, an acceleration in the pace of the structural changes that come with economic growth. But that is enough to make all the difference in the world. Structural change, with all of its personal upheavals and social disruptions, is now quite rapid even when there is zero growth, becoming that much faster when economies do grow.

One obvious cause is the worldwide retreat of public ownership, central planning and administrative direction, with all their rigidities inimical to innovation, economic growth, individual dislocations and social disruptions alike.

From Argentina to Zambia, with the entire communist world in between, the state ownership of economic enterprises was once seen as the guarantor of the public interest; it is now regarded as the guarantee of bureaucratic idleness, technical stagnation and outright thievery. Efficient central planning is now known to be impossible, simply because no group of mere humans can determine next year’s demand for everything from tower cranes to toothpicks. Even “administrative direction,” once gloriously successful in Japan, Korea and Taiwan and at least helpful in France (though ineffective and/or corrupt almost everywhere else), is now being abandoned even in Japan, having been jettisoned long ago almost everywhere else.

Another obvious cause of accelerated structural change is the much-celebrated unification of village, provincial, regional and national economies into a single global economic ocean. This unification is being accomplished by the removal of import barriers, capital-export prohibitions, investment controls and licensing restrictions on the sale of transnational services; the advent and rapid geographic spread of reliable, cheap and instant telecommunications; lower transport costs due to the waning material content of commerce and the improvement of air services, harbors and roads, notably in rural Asia and Latin America, if not Africa; the diffusion of technologies for the production of export goods or components, even in otherwise backward local economies, and the uniformity of demand created by transnational mass media imagery and advertising. The overall effect of “globalization” is that any production anywhere can expand far beyond the limits of the domestic market, insofar as it is competitive--and of course that any production anywhere, and the related employment, can be displaced at any time by cheaper production elsewhere.

A domestic cause of structural change is the rather sudden arrival of the long-awaited, long-delayed increases in administrative and clerical efficiencies from electronic computation, data storage, reproduction and communications. With generational change, even senior managers can now work those machines if they want to, thereby allowing them to understand their uses, abuses and non-uses. Junior managers are increasingly compelled to use those machines in place of clerical help and clerical companionship. Computer networks also allow managers to literally oversee, right on their own screens, the work that their underlings are doing or not doing, giving computerized tasks the same transparency as assembly-line work, with the same immediate visibility of inefficient procedures, inefficient habits and inefficient employees. This late-arriving wave of efficiency has suddenly exposed white-collar workers to the workplace dislocations, mass firings and diminishing employment prospects that have long been the lot of blue-collar industrial workers in mature economies.

Even though the U.S. economy is in full recovery, white-collar job reductions are being announced by one famous corporation after another, dressed in the trendy language of the latest management-consultant books as “restructuring” or, more fancifully, “re-engineering” the corporation. Telephone-answering secretaries are displaced by voice-mail systems, letter-writing secretaries by computer word-processing software and fax boards, filing secretaries by electronic memories, with the consequent displacement of clerical supervisors. Junior administrators are displaced by automated paper-flow processing, with the consequent displacement of their administrative supervisors. Higher up the pyramid, many middle managers are no longer needed to supervise the doings and undoings of both clerical and administrative employees.

The displacement of old skills, trades and entire industries (along with their dependent localities) by more efficient new skills, trades and entire industries is now apt to span years, sometimes very few years, rather than generations. The same rate of structural change that favors prosperity, uplifting nations and regions around the world, now brutally exceeds the adaptive limits of many individuals, families and communities in the United States.

The political right calls only for more deregulation and structural change. The left still offers more redistribution, by way of programs aimed at the poor. A vast political space in the worried middle is thus left vacant. The 1992 election-year caprices of Ross Perot briefly occupied that space in the United States, and Vladimir Zhirinovsky’s bizarre excesses are now occupying the vacuum in the peculiar conditions of Russia, where personal economic insecurity is the only problem that counts for most people. Unless mainstream political forces respond more creatively, we may soon see worse.