Muller Capitalism (5)

Jerry Z Muller writes about the growth of service industries and decline of manufacturing. Globilisation has reinforced the trends.

In 1973, the sociologist Daniel Bell noted that in the advanced capitalist world, knowledge, science and technology were driving a transformation to what he termed “post-industrial society’. Just as manufacturing had previously displaced agriculture as the major source of employment, he argued, so the service sector was now displacing manufacturing.

In a post-industrial, knowledge-based economy, the production of manufactured goods depended more on technological inputs than on the skills of the workers who actually built and assembled the products. That meant a relative decline in the need for and economic value of skilled and semi-skilled factory workers—just as there had previously been a decline in the need for and value of agriculture labourers. In such and economy, the skills in demand included scientific and technical knowledge and the ability to work with information. The revolution in information technology that has swept through the economy in recent decades meanwhile has only exacerbated these trends....

Globalisation has not caused this pattern of increasingly unequal returns to human capital but reinforced it. As the manufactured goods and routine services are outsourced, the wages of the relatively unskilled and uneducated in advanced capitalist societies decline further, unless these people are somehow able to find remunerative employment in the untradeable sector.