Microcosm is an unusual text containing nuggets of pure gold under tons of overburden. Author George Gilder gets brownie points [...]

November 1 1989 by Lawrence G And Blackmon

Microcosm is an unusual text containing nuggets of pure gold under tons of overburden. Author George Gilder gets brownie points when he comments in his bibliography that “[Ideas and Information] is a splendid short text by the director of Bell Labs. It is a useful guide for any unclear technological explanations in Microcosm, from computer software code to neural networks.” Gilder and Penzias first met each other at Chief Executive’s Innovation Roundtable (Jan./Feb. 1989) and subsequently got together and exchanged views, some of which, Gilder says, shaped passages of his hook.

George Gilder is clearly a visionary and seems to want to be an evangelist as well. Evangelist, a word with religious overtones, is particularly apt as it comes from the Greek meaning “bearer of good news.” For him there is an “old” religion whose Moses was Sir Isaac Newton and a “new” religion whose saviour is Max Planck. The Old Testament consists of Newtonian physics; the New Testament, of Planck’s quantum theory. Needless to say, there have been “revelations” since the first appearance of the quantum theory.

To quote Gilder: “The macrocosm may be defined as the visible domain of matter, seen from the outside and ruled by the laws of classical physics. The microcosm is the invisible domain, ruled and revealed by the laws of modern physics. In the beginning was the word, the idea. By crashing into the inner sanctums of the material world, in the microcosm, mankind overcame the regnant superstitions of matter and regained contact with the primal powers of mind and spirit. In this unifying search is the secret of the reconciliation of science with religion.” This is pretty heady stuff. Note how he inserted “In the beginning was the word” and, two sentences later, reconciled science and religion. Has a new cult of St. George just made its appearance?

This revelation of the microcosm, which is essentially a discovery of modern physics, is readily translated and transposed into a unifying economic, political and social theory. For example, “With the overthrow of the constraints of material scarcity, gravity, and friction, large bureaucracies in government and business lose their power over individual creators and entrepreneurs. The most valuable capital is now the capital of human mind and spirit.” Having thus laid his groundwork, the author first looks to the development and then to the application and implications of electronic technology.

Gilder covers the development of electronic technology comprehensively. Unfortunately, he cobbles it up at times with statements like this: “Campbells company’s most valuable asset, beyond its ideas, was a compaction algorithm that Jones had developed from a Bell Labs model. It allowed the scaling down of Complementary MOS technology into difficult nonlinear volt warps near 1-micron geometries.” Ouch. Technological explanations such as this are so interwoven with biographical and historical information that it frequently taxes the reader’s patience to filter out the extraneous detail.

If there is anything that has taken Gilder’s fancy as much as quantum theory, it is melding into it the Boston Consulting Group’s learning or experience curve, which affirms that costs will drop 20-30 percent with each doubling of accumulated volume. The ptoduction of transistors and other electronic parts by the billons affords proof positive of the validity of the experience curve. The author loves that curve and goes on to say, “The learning curve is the most fundamental fact of microcosmic business strategy…and its benefits largely reflect the replacement of uncertainty with knowledge. This curve is the fundamental law of economic growth and progress.”

When Gilder looks to the future, the reader is well-advised to fasten his seat-belt. Though he may not be able to claim originality for all of his projections, he may be the first to support their probability with quantum theory. For example, we in the U.S. are only now tions on the shipment of electronic gear into the Soviet bloc of nations. It would appear that the only reason for the relaxation is that equivalent product and identical technology is already being provided from Western Europe, Japan, Taiwan and Korea. As Gilder implies, the lack of economic progress in the Soviet sphere can be attributed to their centralized control of electronic communications and copying equipment. Glasnost may be the beginning of the reversal of this policy. When computer equipment floods a nation and information flows freely among individual citizens, totalitarian control is doomed. Hope is therefore held out that computers may be the agent that saves Gorbachev’s cookies economically and literally forces the USSR out of the totalitarian mode. U.S. policy, therefore, should instead make computers and their technology readily available to the Soviets and accelerate the dissolution of their totalitarian centralized control.

Nothing has occupied the pages of business publications more in recent times than the apparent hold that Japanese firms have on semiconductor production. Gilder takes issue with the doomsayers who see the end of American leadership of the electronic world. First, he notes that Japan‘s share of the dynamic random access memory (DRAM) market is not 85-90 percent, but 65 percent when the captive production of IBM and AT&T is taken into account. Second, he points out that factories producing DRAMs, however much they are “brilliant feats in the architecture of ideas,” are “obsolescent nearly the day they are built…and were the material masks, not the precious essence of the microcosm.” In plainer words, the guy who designs will win the ball game, not the guy who put up $250 million to build a plant to produce a highly specialized commodity. He continues, “Most portentously, the silicon compiler will move industrial power away from commodity chip designers and toward systems architects.” The silicon compiler is analogous to an electronic catalyst when employed in designing a town of 5,000 right clown to the last faucet and light switch. The U.S., he clearly believes, leads Japan and Western Europe in software and systems design and will continue to do so.

Prophecy. “Within ten years the only keyboards with a growing market will be on music synthesizers. In offices, hand entry will be as archaic as mechanical typewriting today. Unless IBM can respond successfully, such [keyboard-based] products could menace the company.” The author points out that voice-activated systems already exist and only need a tincture of time for the experience curve to make them economically available. This rather striking view of the future derives from consideration of the present state and future growth of artificial intelligence (AI). Ever since Norbert Wiener’s seminal book, Cybernetics, scientists have been fascinated with the notion of AI, and never more so than at present. Those working in Al seem to have gotten past the first obstacle by accepting that “the human mind operates by principles beyond current scientific knowledge. The purpose of neural technology is not to usurp the mind, but to serve it with the first truly intelligent machines.” Or as Penzias has put it, “Early researchers overstepped by using words like ‘intelligence’ and `reasoning’ as synonyms for the manipulation of list-based information structures.” Thus, on this score, the number one Al target is voice activation as a replacement for the keyboard (see Cover Story, p. 56).

Perhaps the most striking prophecy made by Gilder is that by the turn of the century, broadcast TV will be dead, barring interference from government. The means to this end already exist in the form of fiber optic cable. When telephone systems have replaced their copper cable with fiber optics and are provided with faster memories (using parallel access technology), the experience curve will do its work again and make the equivalent of high-definition TV (HDTV) accessible for every household. It follows that HDTV of the sort found in Japan and Europe today will vanish with the death of broadcast TV. The reader must recall that broadcast TV depends upon frequencies limited in number by Mother Nature and regulated by government. Cable TV as we know it today is based on copper lines serving isolated systems subject to the usual governmental control. Telephone systems by contrast are universally connected among all senders and receivers. It follows also that information, in every possible form, from every possible source, will also be made available to every individual, wherever he or she may be. It is the author’s assertion that such developments are inevitable, that only time remains to bring them into general availability, and that only interfering politicians will delay their use. CEOs, the world is changing fast, so you had better get George Gilder’s book and be prepared for those changes.

Arno Penzias, in Ideas and Information, wants the reader to know how powerful are the electronic tools for managing commerce, industry, and public institutions, a purpose quite different from Gilder’s. To accomplish this he takes the reader by the hand and teaches in simple language how the machinery of electronics works. For those, who must be legion, who do not really know what a transistor is or how a semiconductor works, this is just the book.

As Penzias sets out to “demystify information processing,” he reminds us that this technology comprehends a great many old tools: alphabets, paper, writing, printing, arithmetic, etc. He observes that people in “information work,” i.e., just about everybody today, travel a circular path from information to decision making to action and back to information. He states unequivocally that a healthy flow of information separates winning organizations from losers.

Penzias takes on the computer with one of the simplest definitions I have yet seen. “A bare computer boils down to little more than a pocket calculator that can push its own buttons and remember what it has done.” He instructs us that rules underlie all languages, and that in computer languages, rules come first. By rules, we are to understand he means logic. He adds that judgment must guide logic. In other words, judgment is what humans must supply, logic what computers will furnish after their human master has put them in business. But then he tosses in a definition of judgment not found in my dictionaries: “the ability to make successful decisions with incomplete information.”

Like Gilder, Penzias sees us moving toward “an increasingly information-based economy,” with value to be found more in such intangible assets as the intellectual property of patents, designs, business plans, trade secrets, computer software, etc. For most companies he likewise sees the really valuable asset in the knowledge of its employees, enhanced and extrapolated by the leverage of information. Although he yields the clairvoyant and metaphysical field to Gilder, he sees no apparent limit to the reach of the human mind.