Gilder starts his message with some bold statements:
The central event of the twentieth century is the overthrow of matter. In technology, economics, and the politics of nations, wealth in the form of physical resources is steadily declining in value and significance. The powers of mind are everywhere ascendant over the brute force of things. This change marks a great historic divide. Dominating previous human history was the movement and manipulation of massive objects against friction and gravity. ... Wealth and power came mainly to the possessor of material things or to the ruler of military forces capable of conquering the physical means of production: land, labor, and capitol. Today, the ascendant nations and corporations are masters not of land and material resources but of ideas and technologies. Japan and other barren Asian islands have become the world's fastest-growing economies. Electronics is the world's fastest growing major industry. Computer software, a pure product of mind, is the chief source of added value in world commerce. The global network of telecommunications carries more valuable goods than all the world's super tankers. Today, wealth comes not to the rulers of slave labor but to the liberators of human creativity, not to the conquerors of land but to the emancipators of mind. Impelled by an accelerating surge of innovation, this trend will transform man's relations with nature in the twenty-first century. The overthrow of matter will reach beyond technology and impel the overthrow of matter in business organization. Devaluing large accumulations of fixed physical capital, the change will favor entrepreneurs over large bureaucracies of all kinds. The overthrow of matter in business will reverberate through geopolitics and exalt the nations in command of creative minds over the nations in command over land and resources. Military power will accrue more and more to the masters of information technology. Finally, the overthrow of matter will stultify all materialist philosophy and open new vistas of human imagination and moral revival. The exemplary technology of this era is the microchip ... the computer inscribed on a tiny piece of processed material. More than any other invention, this device epitomizes the overthrow of matter .
Boy, this is heady stuff. And all this flows from the invention of the microchip? Yes, that is Gilder's message and it is hard to accept it because most of us do not understand the underlying quantum physics. We are used to observing the larger world, the one populated by land, labor, and capital ... the one that seems to be going away due to the new quantum physics.
Max Planck, the discoverer of the quantum, offered the key when he asserted that the new science entailed a movement from the 'visible and directly controllable to the invisible sphere, from the macrocosm to the microcosm.' The macrocosm may be defined as the visible domain of matter, seen from the outside and ruled by the laws of classical physics. The microcosm is the invisible domain, ruled and revealed by the laws of modern physics.
We can see where Gilder got the microcosm ... from Planck.
Gilder traces the microcosm to the invention of the transistor by William Shockley of the AT&T Bell Laboratories, and the quantum physics that led to Shockley's invention. To Gilder, these developments led to the quantum era in which the central event is the overthrow of matter
Shockley led the team that plunged into the microcosm of solid-state physics and invented the transistor. At the heart of all-digital electronics, this invention still reverberates through the world economy and imposes its centrifugal rules of enterprise. This law of the microcosm dictates exponential rises in computer efficiency as transistors become smaller. It is this law that drives the bulk of the world's computations to ever-cheaper machines and pushes intelligence from the center to the fringes of all networks .
Gilder tells us that the microcosm "spewed some 100 million personal computers around the world and endowed individuals at a workstation with the creative power of factory owners of the Industrial Age." Let's look deeper at Gilder's views on the microcosm, this time at how the transistor took us out of the Industrial Revolution and into the Information Revolution.
From time to time, the structure of nations and economies goes through a technological wringer: a new invention radically reduces the price of a key factor of production and precipitates an industrial revolution. Before long, every competitive business in the economy must wring out the residue of the old costs and customs from all its products and practices.
The steam engine, for example, drastically reduced the price of physical force. Once wrested at great expense from human and animal muscle, power now pulsed cheaply and tirelessly from machines burning coal and oil. Throughout the world, dominance inexorably shifted to businesses and nations that reorganized themselves to exploit the suddenly cheap resource. Eventually every human industry and activity, from agriculture and sea transport to printing and war, had to centralize and capitalize itself to take advantage of the new technology.
Putting the world through the technological wringer over the last three decades has been the integrated circuit, the IC. Invented by Robert Noyce of Intel and Jack Kirby of Texas Instruments in 1959, the IC put the entire systems of tiny transistor switches, capacitors, resistors, diodes, and other once-costly electronic devices on one tiny microchip. Made chiefly of silicon, aluminum and oxygen -- the three most common substances in the earth's crust -- the microchip eventually reduced the price of electronic circuitry by a factor of 1 million.
Endowing every engineer or PC hacker of the Information Age with the creative power potential of a factory owner of the Industrial Age, the microchip reversed the centralizing thrust of the previous era. All nations and businesses had to adapt to the centrifugal law of the microcosm, flattening hierarchies, out sources services, liberating engineers, shedding middle management. If you did not adapt your business systems to the new regime, you would no longer be a factor in the world balance of economic and military power .
The reader may ask whether there is anything new here. The libraries are littered with articles and books about the industrial and information revolutions, why repeat it yet another time. The difference is that Gilder sees all this as a simple matter of physics. The industrial revolution allowed firms to take advantage of the physics of machines and energy, and the information revolution is allowing us to take advantage of the physics of digital components. The first implication of this new physics was the power and economy of packing transistors closer and closer together onto microchips: they became "free" and their proximity increased their power. The more you packed them together, the better they worked. This leads to the optimal solution of many, many microchips that are more and more powerful, each doing its own thing, as opposed to a collection of microchips organized at the center and coordinated with software. The central approach does not work because of complexity, which is said to increase with the square of the number of nodes. But one of the key discoveries of the microcosm was that complexity grows exponentially only off the chip.
In the microcosm, on particular slivers of silicon, efficacy grows far faster than complexity. Therefore, power must move down, not up. This rule applies most powerfully to the users of the technology. In volume, anything on a chip is cheap. But as you move out of the microcosm, prices rise exponentially. A connection on a chip costs a few millionths of a cent, while the cost of a lead from a plastic package is about a cent, a wire on a printed circuit board is 10 cents, backplane links between boards are on the order of a dollar apiece, and links between computes, whether on copper cables or through fiber-optic threads or off satellites, cost between a few thousand and millions of dollars to consummate .
This packing of transistors into microchips is not going to end anytime soon. If we simply follow the learning curve that is common to all electronics, we see that we will have "a billion-transistor chip that could equal the output of 20 Cray 2 super computer central processing units and be made for less than $100."
STOP! Think about this for a minute. I know that numbers like this are commonly thrown around, but this future microcosm is bound to happen (it's in the physics) and it means that individuals will have almost limitless and cheap computing power on their desks or in their hands. Computing will be limitless and essentially free, just as transistors are free today. This situation will come to us in a evolutionary manner, with a 30 to 50 percent improvement each and every year. But looked at from the perspective of a decade, we are seeing a discontinuous change from a world of precious computing resources to a world of free computing resources.
Gilder maps the laws of the microcosm into world of work and organization.
Provided that complexity is concentrated on single chips rather than spread across massive networks, the power of the chip grows much faster than the power of a host processor running a vast system of many terminals. The power of the individual commanding a single workstation -- or small network of specialized terminals -- increases far faster than the power of an overall bureaucratic system. The chip designers, computer architects, and process engineers using these workstations -- more potent by far than mainframes of a decade ago -- are far less dependent on bureaucracy for capital and support than their predecessors. The more intellectual functionality placed on single chips and the fewer expensive interconnections, the more power that can be cheaply available to individuals. The organization of enterprise follows the organization of the chip. The power of entrepreneurs using distributed information technology grows far faster than the power of large institutions attempting to bring information technology to heel. Rather than pushing decisions up through the hierarchy, the power of microelectronics pulls them remorselessly down to the individual. This is the law of the microcosm. This is the secret of the new American challenge in the global economy.
This is a view of the individual in control ... the entity that
quantum physics is making the more efficient and productive than
collections of individuals organized and directed from the center.
Although most of us do not have a deep understanding of the underlying
physics, we can begin to accept this conclusion because it agrees
with our current observations and experiences ... we are seeing
old organizations dissolve as firms try to find new structures
that will allow them to take advantage of individuals.