Alvin Toffler at Microsoft

I attended a talk by Alvin Toffler this afternoon on Microsoft campus. Alvin Toffler has been one of my heroes since my teen years when I read his early books, like Futureshock, The Third Wave, and Powershift. I purchased his new book following the talk.

A Talk on Revolutionary Wealth

by Alvin Toffler

May 2, 2006 - Microsoft Corporation

This was a talk centered around the new book by Alvin Toffer and his wife, Heidi Toffler. The Tofflers do not use the words “predict” and “trend” in their book. Revolutionary Wealth took about a dozen years to write. These are quick notes from the talk by Toffler.

The Tofflers do not believe in the superspecialization that most economists rely on for their work. The argument of the book is that we are in the process of developing a new kind of “wealth system” today.

From the beginning of economics, the old argument was that the soil or land was the only source of productivity. This is the basis of the original ideas behind the economic models that became our current system. This missed the work of all other classes and dismissed it. Later, it became the source of much wealth.

Alvin Toffler wants his book to address where we are going today.

There are Two Big Ideas in the book:

Big Idea #1

Below the surface, there are deep fundamentals. The fundamentals we hear about all of the time in economics. This is defined by Toffler as: “Those variables that have been in important in EVERY economic system from hunting and agrarian down to today.” These are elements that cannot be escaped from in any economic system.

There are three deep fundamentals that are the most important at this stage:

a) Time - the acceleration of change over time. This creates a whole host of problems that are not recognized by economists. One example of these problems is the issue of synchronization between different economic factors. Look at the rate of change in various institutions: family, corporations, the educational system. How fast are these changing in relation to the changes in other institutions of society. This is especially apparent in the divisions between public and private institutions and their relative speeds to each other.

b) Space - meaning spatial or geographical. There are two especially big changes here right now: (1) An enormous transfer of wealth into Asia in our lifetimes. (2) Wealth through operations in Space. By this, Toffler is focusing on satellites and the wealth created through satellite communications and tools. In his opinion, this may be the single most important change in economics in human history.

c) Knowledge - This has been called the “Oil of the New Economy,” which is misleading. This is related to facts or “factoids” which are then linked into information. Information put into a context creates knowledge. Toffler coined a new term in his earlier work, which is “Obseledge” or “Obsolete Knowledge.” What is the percent of obseledge in our thinking and how many of our decisions are being made from obsolete knowledge? The growing attack on science is of special concern to Toffler here. Knowledge is non-rival. If I use a piece of knowledge, you can still use it as well. In fact, by using it together, we can create even more. Knowledge can be used without depletion. Knowledge is not based on scarcity but is, instead, inexhaustible. Knowledge is also non-linear because small insights can cause sudden growth or changes in knowledge. Knowledge is also highly portable because it can be converted to data and transmitted to others, individually or group. It can be stored and it is hard to bottle up because it spreads or leaks. It is fundamentally different than the primary resources that economics are otherwise based on.

How do we determine truth or what to believe (six ways):

  1. Consensus - This how people make group decisions but consensus is often wrong.
  2. Consistency - If something is inconsistent with previous facts, we maintain doubt about it.
  3. How Long Have We Believed Something - The idea that something lasts this long must be valid.
  4. Authority - Something is true because a person, a book, etc. say it is true. If we trust or believe this person, what they say must be true.

Toffler skipped to the end to:

  1. Science - This is the only one in which its participants are paid and win Nobel Prizes to disprove prior truth, not simply to affirm prior truth.

If we lose science from society, we will lose something amazing. Scientists are underestimating the amount of attacks against them right now. The attacks come from a wide variety of disparate groups. Science is dependent on a favorable host culture in order to operate. Hollywood is on participant in this process by changing scientists from heroes to villains in movies and media.

We need to rethink the fundamentals currently used to measure economics and society around the deep fundamentals.

Big Idea #2

Re-Evalutating Prosuming - “Prosuming” is the combination of “Produce” and “Consume,” used in The Third Wave by Alvin Toffler. The act of prosuming is when people produce their own goods for their own consumption or use. People doing this are prosumers.

We used to think that “Doing it Yourself” was primitive and pre-industrial. It was thought that as industrialization spread, there would be less prosuming. People would produce less for themselves. Toffler now argues that the reverse is true. There is a massive amount of things produced by people outside of the money economy for themselves that have a massive impact on the money economy.

There is the money economy, studied by economists. There is the Non-Money Economy, which they do not take into account. This leads to the “Wealth System,” that Toffler’s book is focusing on. Each of these two things are subsystems of the Wealth System. The Wealth System is a subsystem of the Civilizational System.

An example of the Non-Money Economy used by Toffler is Home Depot. People purchase goods at Home Depot to do things themselves. The purchases at Home Depot are accounted for by economists but the sweat work done with these goods is not taken into account at all by them.

Open Source software is another example of the Non-Money Economy. Linus Torvalds managed to shake up an industry without being part of the wealth system of that industry.

Volunteers and volunteer work is another part of the Non-Money Economy which isn’t directly measured within the Money Economy.

People often start doing something as a hobby and eventually become good at it over time. “Famous Amos” cookies started out as the hobby of a businessman to make cookies. Something that was outside of the Money Economy was eventually brought into it. Open Source work is the opposite of this where something in the money economy was transferred to the Non-Money Economy.

How do you learn to use a computer? 150,000,000 Americans know how to use a computer to some degree. The most common way to learn is through a “Guru” who knows more than you. You learn from this person and knowledge is transferred to you until you know what you are doing or even learn more than your own guru. Then you show others. This is a common way that people learn things.

Economics cannot be separated from the Social, the Culture, and the Political.

Additional Notes:

Toffler mentioned during Q&A that he feels that the “New Economy” actually started in the 1950s. The 1950s are seen as being slow and without much change but actually there were millions of men with the GI Bill getting educations and improving themselves. The space program started in the 1950s and there lessons in technology and organization that came out of it. Jet Aviation began to link the country. Television went from almost no presence in homes to being ubiquitous by the end. The birth control pill was also introduced in the 1950s. This was a technologically and culturally active period.

Toffler sees the 1950s as laying the basis for the knowledge economy that exists today.