Essay: How a weighty issue has changed the world economy

In her new book out tomorrow, Diane Coyle, Economics Editor, offers a new metaphor, `weightlessness', to help us sharpen our understanding of social and political change in today's world.

What is the really big trend underlying the economic and social upheavals of the late twentieth century? Globalisation? Globaloney. The idea that globalisation is the key to understanding the world is just a true cliche. The key to understanding what is happening is that the advanced industrial economies are not putting on weight. Literal weight, that is. They are growing bigger without growing heavier.

Viewing the world through the lens of a new metaphor, weightlessness, suggests a radically different approach to the policies needed to react to the genuine economic dislocations that are taking place. It is a more realistic vision than the doom or utopia scenarios of those who focus on globalisation, neither inevitably apocalyptic nor necessarily utopian. You do not have to become an extremist about weightlessness. It restores the possibility of normal political debate.

Economic output used to consist of big, physical things, such as steel girders, huge cars, and heavy wooden furniture. During the past half century or so, technological and economic changes have meant we produce things of much less bulk: transistors rather than vacuum tubes, fibre optic cables or satellite broadcasting rather than copper wire, plastics rather than metals. Materials have changed and miniaturisation is pervasive. The size of the developed economies has grown more than threefold in the past half century, but the weight of economic output has barely climbed.

It started with miniaturisation and the use of new materials, but has been accelerated by the expansion of services as opposed to manufacturing. This switch includes not only the knowledge economy, which makes up half of national output in the OECD countries, and the growth of services ranging from management consultancy to the music industry that make extensive use of computer technologies, but also low-technology services such as fast food.

Although some of the technological leaps driving weightlessness are not all that recent, their embodiment in our economies is new - it takes upwards of 40 years for businesses to adopt new technologies. It requires advances in design and organisation before it can take place. New buildings weigh less than those of equal floor space erected in the 1950s because of organisational change as much as the use of improved materials. Open plan working, after all, requires far fewer internal walls.

Perhaps the ultimate proof that new technologies are finally being implemented throughout the economy lies in the now well-known fact that the microchip in a musical greetings card contains more computer power than we had on the entire planet in 1945. But the implications of these facts of life are not widely understood. People have the deeply ingrained habit of thinking about economic value as something with physical presence. This is decreasingly true. Economic value is dematerialising. Economic weightlessness, rather than the growth of trade or deregulation, is driving globalisation, as intangibles do not respect physical boundaries.

The spread of dematerialised economic activity is down to the phenomenal cluster of advances in computer and telecommunications technology. The computing power of a microchip doubles roughly every 18 months. The cost has fallen at an equally astonishing pace, halving every two years. So the information processing power that cost me a precious pounds 1 on a Digital Equipment Corporation VAX mainframe as a hard-up economics student in 1980 would today cost less than 0.01 pence.

The economics profession is only just starting to investigate the properties of weightlessness. The value in our economy - whatever it is we are willing to pay money for - has less and less physical mass. Whether it is software code, genetic codes, the creative content of a film or piece of music, the design of a new pair of sunglasses or the vigilance of a security guard or helpfulness of a shop assistant, value no longer lies in three- dimensional objects. We will pay for amusement, for style, for convenience, for speed, for creativity, for beauty - but when it comes to commodities, we have turned into skinflints, and want the cheapest possible. We will buy either a cheap T-shirt or we will buy a designer shirt for 20 to 50 times as much. This has made the defence of intellectual property one of the fiercest of economic battlegrounds.

Profound technological change always involves economic upheaval. It also has always meant very rapid growth in living standards. Unfortunately, the gain follows the pain by some distance. Weightlessness, like any technical development, interacts with other fundamental changes, such as demographic and social trends, and the sweep of political history. These are playing together in ways that make us feel we live in an age of insecurity. Scarcely a week goes by without the publication of a tract predicting mass unemployment, social upheaval or ecological disaster as a result of the march of global capitalism.

The weightless world is certainly in danger of being seen as the playground of a privileged international technocracy. They are the glossy, healthy, glamorous executives of countless advertisements and television series, presented as the models for our aspirations. This fortunate minority should not be allowed to get away with presenting the economic transformation of our world as a merely technical question, a matter of hard facts, rather than difficult choices. A new politics of weightlessness is needed so that the benefits can be captured and shared, and the technocrats made accountable for economic success or failure.

It is too easy for political elites to claim that features of weightless economies - such as the accelerated decline of traditional manufacturing and loss of work overseas, the demise of the 9-to-5 breadwinners' job, and "superstar" incomes alongside growing income inequality - are inevitable, and that therefore nothing can be done about them. It is wrong to proclaim the end of politics. True, the identification of citizenship with the nation state is drawing to a close. Cities will rise in power and the movement of people will become more fluid, ending the social contract that guarantees the welfare of a citizen within fixed borders. The idea of full employment, of a full-time job paying enough to support a family for all who want it, is also dying. Both the nature of work and the influence governments have over employment have already changed irreversibly.

Weightlessness is inexorable, but there is nothing inevitable about the way technology is going to shape the industrial societies. Just as the inequalities generated by the Industrial Revolution created the political dynamic that led to the extension of the vote, the creation of social insurance and the redistribution of income through the national economy, so the scarcities and inequalities of the late 20th century will prompt a political reaction. It is the increasing weightlessness of the economy that is making matters such as the inequality of access to education, the shortage of understanding as opposed to raw information, the unfair ownership and control of communications technologies and the need for an adequate defence of intellectual property the most pressing of political issues.

The Weightless World, is published by Capstone, price pounds 18.99.