The Second Industrial Revolution

Against a backdrop of economic turbulence, an economist and a political scientist find that changing tastes and new technology may be ushering in an age of craftsmanship.

 

Infrequently in human history, a series of developments arrive that are so startling, so contradictory to our understanding of the world we live in, that they alter forever the landscapes of work and home life. Such was the case with the Industrial Revolution in the late eighteenth and early nineteenth centuries. Now, according to Massachusetts Institute of Technology professors Michael J. Piore and Charles F. Sabel, co-authors of The Second Industrial Divide: Possibilities for Prosperity (Basic Books Inc., 1984), we may have reached another such historical juncture.

The first industrial divide ushered in the reign of mass production, with rigidly defined divisions of labor, standardized products, and large-scale corporations. The new developments portend a shift toward an economy of "flexible specialization," with less hierarchical organizations, more (and more customized) consumer goods, and increased market share for smaller-scale companies.

Piore and Sabel's prognosis is both disturbing and hopeful. The bad news is that the economic turbulence of the past decade is neither temporary nor an aberration.Mass-production society is under siege from forces that are so powerful that the halcyon days of the postwar period have been banished forever. The good news is that out of this constant turmoil may emerge a less rigidified economy: efficient, yet on a human scale, and flexible enough to avoid the extremes of the business cycle. Piore and Sabel caution that nothing is for certain, as the mass producers have yet to mount their final defenses, and small and medium-size companies still need to adapt quickly to the flexible technologies as they become available.

Piore and Sabel's provocative thesis was born, of all places, in a Paris cafe. The two had known of each other's work through mutual friends, but it was at this meeting in 1975 that Piore the economist and Sabel the political scientist began their decade-long collaboration. It led them to Italy, France, Germany, and the United States, where they searched for clues to the industrial transformation in interviews with businesspeople, labor leaders, government officials, and academics.

Their efforts were recognized when both men were awarded the prestigious MacArthur Fellowship, which is given annually to outstanding individuals. And The Harvard Business Review recently reviewed their book, The Second Industrial Divide, describing it as "quite simply, a tour de force. . . . It is a book that could become a landmark."

Piore, 44, and Sabel, 37, fit the image of serious scholars: spectacled, bearded, alternately thoughtful and animated, steeped in Industrial Age history, and yet deeply curious about the world around them. In Piore's MIT office -- lined with books, piled high with papers, with the requisite degree of clutter, a typewriter tucked into one corner and nary a personal computer in sight -- Piore and Sabel were interviewed for INC. by Karl Frieden.

INC.: You have an idea, we gather, that the whole course of economic history may be changing?

SABEL: Well, we believe that the industrial world has entered a crucial period. Mass production, with its hard-and-fast divisions of labor and standardized products, may be giving way to craft production, with its flatter organizational structures and greater variety of consumer goods.

INC.: But mass production has been the dominant mode of production in the twentieth century. Washing machines, televisions, automobiles -- much of what we associate with affluence is provided by mass producers. You're saying that this process is reversible?

PIORE: We dispute the notion that mass production is the one and only path of technical progress. Mass production, with its lower costs per unit of production, supplanted craft production during the first industrial divide in the nineteenth century. But the historical circumstances have changed. On the one hand, new technologies, like the computer, have developed, which have lowered the cost and increased the innovative capabilities of craft production. So you're getting a more dynamic craft system -- what we call flexible specialization.

At the same time, the costs of mass production have increased. A combination of the saturation of demand for mass-produced goods in the wealtheir nations, and more intensified competition for markets from newly emerged Third World mass producers has made the system more unwieldy and increased the cost of stabilizing demand within it.

INC.: So you believe that the mass-production economy as we know it -- with large companies turning out standardized products -- will follow the craft-production economy to the dustbin of history?

PIORE: Actually, mass production never completely displaced craft production. What happened was that craft production was subordinated and limited to certain subsidiary roles. It lost its technological dynamism and was no longer the engine of economic growth. This could happen to mass production. You would still have it, but it wouldn't be the lead element in the economy.

INC.: How is all of this going to play itself out? How will we know when we have crossed the industrial divide?

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