But nobody knows what caused the two baby busts, or the baby boom of the 1940s. Both busts occurred when the economy was doing well, which in theory should have encouraged people to have lots of children. And the baby boom should never have happened, because historically birth rates have always gone down after a big war. The truth is that we simply do not understand what determines birth rates in modern societies. So demographics will not only be the most important factor in the next society, it will also be the least predictable and least controllable one.
The New Workforce
Knowledge workers are the new capitalists
A century ago, the overwhelming majority of people in developed countries worked with their hands: on farms, in domestic service, in small craft shops and (at that time still a small minority) in factories. Fifty years later, the proportion of manual workers in the American labour force had dropped to around half, and factory workers had become the largest single section of the workforce, making up 35% of the total. Now, another 50 years later, fewer than a quarter of American workers make their living from manual jobs. Factory workers still account for the majority of the manual workers, but their share of the total workforce is down to around 15% — more or less back to what it had been 100 years earlier.
Of all the big developed countries, America now has the smallest proportion of factory workers in its labour force. Britain is not far behind. In Japan and Germany, their share is still around a quarter, but it is shrinking steadily. To some extent this is a matter of definition. Data-processing employees of a manufacturing firm, such as the Ford Motor Company, are counted as employed in manufacturing, but when Ford outsources its data processing, the same people doing exactly the same work are instantly redefined as service workers. However, too much should not be made of this. Many studies in manufacturing businesses have shown that the decline in the number of people who actually work in the plant is roughly the same as the shrinkage reported in the national figures.
Before the first world war there was not even a word for people who made their living other than by manual work. The term “service worker” was coined around 1920, but it has turned out to be rather misleading. These days, fewer than half of all non-manual workers are actually service workers. The only fast-growing group in the workforce, in America and in every other developed country, are “knowledge workers” — people whose jobs require formal and advanced schooling. They now account for a full third of the American workforce, outnumbering factory workers by two to one. In another 20 years or so, they are likely to make up close to two-fifths of the workforce of all rich countries.
The terms “knowledge industries”, “knowledge work” and “knowledge worker” are only 40 years old. They were coined around 1960, simultaneously but independently; the first by a Princeton economist, Fritz Machlup, the second and third by this writer. Now everyone uses them, but as yet hardly anyone understands their implications for human values and human behaviour, for managing people and making them productive, for economics and for politics. What is already clear, however, is that the emerging knowledge society and knowledge economy will be radically different from the society and economy of the late 20th century, in the following ways.