S+B: If value is being created, but no money is changing hands, how do you measure that?
TOFFLER: Measuring things does not necessarily make them important, and unmeasured things are not necessarily unimportant.
On the other hand, although I’m not a mathematician or an expert on metrics, I believe everything can, in principle, be measured, at least to some degree, by measuring a “surrogate” that is presumed to be analogous to the phenomenon at hand.
In 1967, I wrote a paper for the Annals of the American Academy of Political and Social Science called “The Art of Measuring the Arts.” My purpose was to show exactly how we can go about measuring this seemingly unmeasurable field and its impact on the economy. For example, you can ask, looking at a country’s output of the arts, to what degree is it diverse? To what degree does it meet high technical standards? How do critics and scholars evaluate it? These are categories that can be defined and measured.
The surrogate you choose becomes very important. For knowledge, it might be the sum total of gigabytes of data stored on an organization’s hard disks, which you can measure to a reasonable approximation. But measuring bits and bytes as a surrogate for knowledge is inadequate because they don’t tell us about its content, and because every chunk of knowledge has a limited shelf life; at some point that knowledge becomes obsolete, or, as we say, turns into “obsoledge” — ideas and assumptions that have been falsified by change and surrogates or proxies that are no longer appropriate to the topic at hand. In fact, given the acceleration of change, companies, individuals, and governments base many of their daily decisions on “obsoledge.”
Recently, the idea of social indicators — which became an issue in academic sociology in the 1960s — has picked up steam again and gone global as a means of identifying surrogates and ways to measure them. The chief proponent of this approach is the U.S. Government Accountability Office (GAO), headed by David Walker. I’m on the advisory board. They have a massive project, working with countries and governments all over the world, to create a coherent set of indicators that bear on noneconomic wealth.
In advanced economies, the degree of intangibility in society’s property base is spiraling upward. As Baruch Lev, author of Intangibles and a professor of finance at New York University, points out, the life and death of corporations is now based on innovation, and that means a huge growth in intangibles. [See “The World’s Most Exciting Accountant,” by Art Kleiner, s+b, Summer 2004.]
Speeds of Change
S+B: In the book, you write of education’s failure to move from the industrial age to the knowledge economy. Is homeschooling a prosumer response to this crisis?
TOFFLER: Yes, now that you mention it. It is an important and growing form of prosuming. The parents do it themselves, because the market does not supply what they want or need, or for that matter what the market needs.
Think about how we learned to use personal computers. PC use went from zero to hundreds of millions of people who know and use PCs routinely, and nobody went to school to learn how.
Instead, chances are you found a “guru,” and a guru was anyone who bought his PC a week before you bought yours. And there were user groups — volunteers passing valuable knowledge back and forth. If you agree that the PC has had an impact on productivity in the money economy, then the fact that people taught each other how to use this thing without money changing hands is another example of what a big impact prosumers can have on the money economy. Add these things together — homeschooling, teaching how to use PCs, Linux, etc. — and you begin to understand this big invisible economic force. People have written about each of these pieces, but haven’t seen them as part of a huge nonmoney economy interacting with the money economy.