Free Jihad vs. McWorld by Benjamin Barber Page B

considerations in mind, it is difficult to treat the electronics and computers sector of the hard goods economy as discrete from the high-tech service sector or from the social attitudes that sector mediates. To act as general contractor for the information superhighway but yield control over the nature and content of the traffic for which it will act as a conduit is to misconceive where power lies in McWorld. Industry leaders like IBM, Sony, Toshiba, Matshui, and Nintendo have not fallen prey to such a misconception. They are busy seeking ways through mergers, acquisitions, and buyouts to extend their hardware business (high-tech paving) into the software sector (traffic control and governance over who or what rides in the vehicles). Telephone companies (the Baby Bells), cable corporations, and software producers (film studios) and distributors (Blockbuster Video) are eyeing one another with appetites whetted by social Darwinism and the belief that ultimately capitalism is about monopoly and that only a few of them can emerge from the coming software struggle as winners.
    Seen from the perspective of this intra-American competition, this shift from products to services mirrors an economy-wide trend andcorrects the impression given by high-tech manufacturing that America is in a steep decline. In hardware, to be sure, what were once American monopolies have given way to intense rivalry with the Europeans and the Japanese. For example, in 1974 the United States exercised a complete monopoly over the production of sophisticated DRAM memory chips essential to computers. By 1980, the U.S. share had fallen to 56 percent while Japan’s share had risen to 40 percent. Seven years later, the United States produced less than a fifth and the Japanese more than three-quarters of DRAM chips. 1 Similar stories can be told about semiconductors, where the American share has fallen from double Japan’s in 1980 to less than Japan’s today, and telecommunications equipment where Japan rose from fourth place among producers in 1980 to first today, while the United States languishes in third place barely ahead of Sweden. 2 Even research and development spending—a longtime American virtue—has plateaued and after peaking at $94 billion in 1989 has fallen back to under $90 billion. 3 There are many explanations for these trends including the absence of an American state effort to match Japan’s industrial policy, unfair trade practices, and the costs of maintaining a defense from whose responsibilities the Japanese have been largely exempted.
    Yet services and soft goods are where the action is, and in this domain the American story is rather different. Services have gone from being the poor cousin of the global economy to being its first citizen. In the year 1990,
Fortune
magazine, which had been tracking hard corporations for decades, finally noticed that service no longer meant just food and travel but included finance, information, and telecommunications and that it comprised over 60 percent of GDP and accounted for eight out of every ten American workers. 4 The result: a new annual list surveying “The World’s Largest Service Companies.” On the 1990 list of top five hundred service corporations, the United States led with 150 (Japan followed with 106, with Britain, 49, and Germany, 41, trailing). In 1992, America remained the leader with 135, although with its prominence diminished in commercial banks (8 of the top 10 and 31 of the top 100 were Japanese versus 8 of the top 100 for the United States, with Citicorp as the first American bank on the list at number 271) and life insurance companies (where 7 of the top 10 were Japanese). With 128companies on the top 500, Japan seemed to be closing in on the American lead. 5 In software, information, and entertainment, however, America is pulling away.
    The extraordinary significance of this new infotainment service sector to the new world economy can be seen by its impact on the often