The interplay of the three economies creates crucial, but still unrecognized, challenges for America and American businesses. The nation's high-skill, high-wage industrial growth is throttled by the dominance of Kluge politics in urban centers. The Provincial industries that America fosters outside its stalemated urban regions offer the nation a one-way ticket to a second-class society: low-wage jobs that will migrate again if regional workers seek better compensation; bottom-end products and services dependent on high-value-added knowledge fostered elsewhere; and because of tax breaks and other relocation incentives to businesses, less money available to pay for schools, technology, and other critical engines of upward mobility. So there will be fewer resources to cope with the country's underclass, a problem even the most remote Provincial states cannot hope to evade.
Yet, the peculiar feature of American politics is that there is no champion for the Networked economy. Democrats are the standard-bearers for the Kluges. Trapped by their bureaucratic, public-sector base, they can offer only the most leaden, 1930s-era-type metaphors (the "information superhighway" or the "National Information Infrastructure," for example) when they even pretend to address Networked-economy issues.
The Provincial economy is solidly Republican. Superficially, it promises a high-tech but family-value world, combining the security of small-town America with Internet links to maintain urban contacts. Networked businesses know, however, that faxes and electronic mail are poor substitutes for the constant interpersonal transactions that drive their sector, and they realize they're competing against businesses in other countries, like Japan, where companies enjoy both global network access and dense physical proximity. To lead the pack, a business has to be networked where the action is, not surfing the Web from an Idaho bunker.
Given those choices, most of the nation's productive Networked small and midsize businesses have become antipolitical, living in the quixotic hope that government will simply ignore them if they ignore it. Surviving in the shadow of urban Kluge politics, much of America's Networked industries have simply shifted to stealth mode, becoming invisible to the media and to political elites.
That political retreat forces many Networked companies either to opt for life as an embattled enterprise in hostile urban regions where Kluge interests are sacrosanct or to move to far less dynamic Provincial communities. The future, however, belongs to Networked companies: only they can offer the flexibility, teamwork, and unique products and skills that produce high wages and profits for a nation in the international economy.
How will you know if you've made it in the new economy? Unlike uncreative businesses in the periphery, you will have a fluid workforce, constantly expanding markets, and business partners -- suppliers and customers alike -- that vary as fast as you can think of and identify new applications for your company's skills. And if you, together with countless other Networked companies, can achieve such successes, you'll profit no matter what the increasingly complex, cutthroat global economy may throw your way during the next millennium.
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David Friedman is a research fellow in the MIT Japan program. His most recent article for Inc. was "The Enemy Within," published in October 1995.
20 QUESTIONS
Where does your company fit among America's three economies? Here's a quick way to determine if you're a Networked, Provincial, or Kluge enterprise
1. Which does your company value most?
a. Constant interaction with other companies and individuals to define new products and services
b. Locating in regions with the lowest wage, regulatory, and tax burdens
c. Gaining access to key public officials
2. Which best describes your company's staff?
a. Individuals whose responsibilities are constantly evolving and among whom lines of authority are blurred
b. A kingdom where the CEO's word is law
c. Tenured senior employees administering teams of untenured underlings
3. Which best describes the business-development activities your company would pursue?
a. A daily diet of telephone calls, meetings, and chance encounters with previous collaborators or new contacts they recommend
b. Offering to cut the price of core products or services to stimulate sales
c. A detailed response to an RFP (request for proposal)
4. Which best describes what your management would most like to achieve?
a. Teaming up with other specialized businesses to develop new products no one ever thought of before
b. Doing big mail-order turnover from a converted barn in Kalispell, Mont.
c. Getting a 2% surcharge for your products or services approved by the relevant bureaucracy
