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The Digital Economy: Promise and Peril in the Age of Networked Intelligence

Author: Don Tapscott
Publisher: New York: McGraw-Hill, 1996
Review Published: November 1997

 REVIEW 1: Will Winton

In the past fifteen years -- not to mention the last five especially -- the success of computer and computer-related technologies have seemingly defied the laws of economic physics. Trading at astronomical multiples of their (often potential) earnings, shares in companies such as Microsoft, Netscape, Sun, Cyrix, and a plethora of others have made many young entrepreneurs rich, fattened the bottom lines of countless mutual funds, and created an industry as powerful as that of the automobile in the 1960s.

Concurrently, but not surprisingly, a new market for writers arose during this period. Computer entrepreneurs, engineers, speculators, and writers all weighed in on where technology would lead society, its impact on culture, and, most importantly, its impact on economic bottom lines. This last category has proved to be the most bountiful, especially to that species of economic weatherman, the "guru." Highly compensated, usually articulate, and always ready with the pertinent chart, graphic or statistic, a guru's peripatetic journey through boardroom and ballroom pumps their particular take on the computer industry, the computer market, and, the next "wave" within a volatile industry. A sort of cross between Pheneas Barnum and George Jetson, they conduct tours for the well-heeled executive into the rosy future.

The Digital Economy: Promise and Peril in the Age of Networked Intelligence offers a guru's musings on the future of a society increasingly dependent on computers and computer networks. Written by Don Tapscott, the "internationally sought consultant, speaker and writer," The Digital Economy attempts to chart the hitherto unknown waters of an economy based on the movement of vast amounts of data via electronic networks. This "new economy," long prophesied by futurists is, according to Tapscott's book, on the brink of fruition, with benefits not only for business, but for human society at large. Written in an aggressive, frenetic style reminiscent of a motivational speech, The Digital Economy encourages the reader to jump aboard the bandwagon before the parade leaves town. Tapscott defines his ideas, parlays any number of examples supporting his thesis, and ends with a series of exhortations for the business leader (for whom this book is written) to seize the reins and march lockstep into the future. This tidy package offers the less perspicuous reader a simple, straightforward look at the economic future of not only the United States, but the world in general. Alas, if only the future -- virtual and otherwise -- were that simple!

"Thriving in the New Economy," the first part of four major subsections within The Digital Economy, puts forth Mr. Tapscott's view of any number of things, from history to economic theory. In the section, which takes up a good third of the book, the author attempts to weave a historical/social/economic substructure upon which to build later. His success is quite mixed. Mr. Tapscott's presentation of "Twelve Themes of the New Economy" is a jargon-laden, rather convoluted foray into the roots of our (supposed) "economy." Tapscott makes reference of everyone from Hawthorne to Marx, with dollops of the easy, quasi-history that has made the Discovery Channel such a hit. "Twelve Themes of the New Economy" seeks to convince the reader that, for better or worse, he or she better hop on the author's bandwagon-or else. Larded with pretentious catch-words and phrases (Molecularlization? Disintermediation?), "Twelve Themes" would have the ardent post-structuralist blush with envy. Unfortunately, Mr. Tapscott's efforts encourage the more scrupulous reader to assay his underlying arguments -- to the detriment of the author, if not the satisfaction of the reader.

Mr. Tapscott's discussion of "discordance," or the "unprecedented social upheavals....potentially causing massive trauma and conflict" (p.66) suffers from not only trite analysis (he mentions Hegel, but shows no real understanding of Hegelian dialectics), but more importantly, from his inflated sense of the dramatic. He uses Marx as a fetish to launch into dire warnings between the digital "haves" and "have-not's." Interestingly, Mr. Tapscott is undeterred by historical accuracy, social reality or even common sense.

Mr. Tapscott fills The Digital Economy with impressive looking graphs and flow charts, many of which come from the "New Paradigm Learning Company," whose president is none other than...Mr. Don Tapscott. Mr. Tapscott goes as far as beginning a chapter with a quote from himself! The Digital Economy suffers from the author's over-assuredness and ego. There is no distance between the author's argument and the need to shill his particular vision of the future. They are one and the same and suffer as a result.

Part Two of The Digital Economy fares somewhat better, as the author has real-world examples to muse upon. Chapter Five, "The Internetworked Business At Work," presents a few well-known case studies (Federal Express and Boeing) to detail how computerization and automation proved pivotal to renewed growth and expansion. Arguably, both Boeing and FedEx have benefited greatly and taken full advantage of improved computers and computer networks, as has his third example, Wal-Mart.

The Digital Economy is frustrating if only for the fact that clearly Mr. Tapscott has an interesting viewpoint on the rapidly expanding digital economy. His sound points are lost in a tidal wave of shallow assertions and unsubstantiated (or at least, one-sided) arguments. His chapter on governmental use of networked technologies provides good reading, if no real profound insight (minor factual oversights do creep in). As an author, however, Mr. Tapscott cannot let good insight rest. Upon reading "Learning In the Digital Economy," one cannot help but asking whether Mr. Tapscott had an unhappy educational experience. His treatment of higher education as nothing more than training ground for happy "digital workers" belies his ignorance of the subtleties of a education on the mind. Mr. Tapscott's protestations to the contrary, education is not to prepare the student for work, it is to prepare him or her (one hopes) for a life of critical thinking. Of course, The Digital Economy is not targeted at those who look at education as anything other than a rung on the corporate ladder, so such criticism must be muted.

The Digital Economy, jacket hype aside, is aimed squarely at a targeted audience: namely, executives of large corporations seeking "guidance" in the area of "digitization." Mr. Tapscott conveniently comes to the rescue with a book that purports to hold the answer -- seminar not included. The truth be reckoned, however, nobody knows the extent and scope that computers will penetrate the economy. Although they are part and parcel of much of what constitutes "modern" life, one can only catch glimpses of the computer's full impact. Microsoft has been notable in catching trends early and exploiting those trends for great profit. In late 1994, as the World Wide Web was catching fire (at least in the imagination of the media), Gates chose not to enter into the foray. It was only after considerable outside pressure to "take control" that he did. Gates' initial assumptions concerning the Web were correct. A great reference tool, a perfect vehicle for pornography, an interface filled with clever gimmicks, the Web has yet to make many people (pornographers aside) very rich. Indeed, the Microsoft Network, or MSN, originally a proprietary network that expanded onto the Web, recently announced a series of layoffs and cutbacks. The reason? MSN was not making money. For the richest corporation in the world to make such as move is instructive. Moreover, if one takes Justice Department accusations seriously, Microsoft resorted to illegal means to "capture" the market for Web browsers. A compelling argument can be made that this would not have been the case had the Web proved to be as fecund as the likes of Mr. Tapscott makes it out to be. The "Digital Economy" is rent with dead ends and minefields, even for the experienced.

Mr. Tapscott ultimately suffers from comparison with other, more sedate examinations of the rise of computer networks. Manuel Castells' groundbreaking book, The Rise of the Network Society, is, for example, a cynosure for those genuinely interested in the impact computer networks will have on human society, not to mention the World economy. The difference between the two books could not be more notable; Castells' prose is cool, studied, and exceeding well-researched while Mr. Tapscott's broad assertions and pallid observations fall prey to not only factual inconsistencies, but, more importantly, from logical torpor. Mr. Tapscott chooses the facile epistemology of the marketing expert, rather than the steady eye of the attentive scholar.

Resting upon the sandy foundation of the first two, the last two parts of The Digital Economy serve as the stages from which Mr. Tapscott peddles his wares. Mr. Tapscott's rationale shines clearly. The book is, in effect, a print version of the motivational seminars given every day to corporate America. Instead of lecturing on presentation skills, dressing for success or writing effective memos, Mr. Tapscott focuses on computers and network technology. "Leadership for the Internetworked Business" is perhaps the best example of Mr. Tapscott's "motivational therapy." In it, the author claims to have "introduced the concept of internetworked leadership as an effective approach for business transformation for the new enterprise" (p.249). This is a broad but unfortunately erroneous claim. Armies have long depended upon "internetworked leadership" to win battles. The executive (for whom this book is written) would do better to read Xenophon's Anabasis than The Digital Economy.

The final section, "Leadership for the Digital Frontier," only serves to reinforce the sense of "what could have been but isn't" in Mr. Tapscott's writing. The section manifests the fundamental problem with The Digital Economy. The section attempts to tie up the many loose ends left by the rest of the book but cannot . Mr. Tapscott's purpose in writing The Digital Economy was to give the reader an idea of the impact of computers and computer networks on the economic future. Unfortunately, he is never clear about exactly whose future it is, where it will take place, or why his vision is more valid than, say, the local computer repairman. He opens the sea cocks of his own ship by producing a book full of interesting arguments with weak or, at least to this reviewer, non-existent premises. As noted above, predictions of the future are notoriously suspect. The book's last chapter, "The New Responsibilities of Business," is a thirty-five page attempt at redefining the future in terms of a very American brand of capitalism. This is an amazing conceit and one that will ultimately be as vain as nineteenth century British claims to the "sun never setting on the Empire."

The Digital Economy is an easy read and, like the "beach book" should be read cum granis salis. Worthier, more thoughtful ruminations abound. Nevertheless, The Digital Economy has sat on The New York Times Bestseller List. Mr. Tapscott has doubtlessly made a fair shilling from this book. If, to pilfer H.L. Mencken, "nobody has ever gone broke underestimating American tastes," then fewer still have become paupers underestimating their intelligence, either.

Will Winton:
Will Winton is an artist. He earned his master's degree in American studies from the University of Maryland.  <wcwinton@hotmail.com>

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