Atanu Dey On India's Development

The Age of Profound Ignorance

We find ourselves in the midst of a transition, from the industrial-value-added analog world to the information-value-added digital world of the future. The relatively static world of the past is giving way to a dynamic world that defies comprehension and easy descriptions. The institutions that worked in the past are losing their relevance in an accelerating and rapidly changing world economy – one that is getting more interdependent and interrelated. This change is more radical than that which accompanied the transition from a primarily agricultural to an industrial economy.

To be sure, it is not the case that agriculture and industry do not matter any more. They do as they form the basic substrate upon which any economy necessarily rests. But they are not sufficient for meeting all the current and future demands of a modern economy. The post-industrial information economy produces and consumes products that embody knowledge. Economic success will increasingly depend on the ability to competitively produce knowledge goods.

The future is not what it used to be. The future of a century ago was not as unpredictable as today’s because the set of possible futures was small. Our present uncertainty about the future has expanded not just in the size of the set but we don’t even know what each possible future contains. The trend is undeniable: as we humans become more powerful in controlling our present, the future becomes less predictable. The boundaries of our ignorance and the range of uncertainties expand beyond human cognition. Our “unknowledge” of the future is unbounded.

It took thousands of years to go from the invention of the wheel to powered flight; it took only an additional 65 years for humans to walk on the moon. Just 50 years ago, IBM’s 5 MB disc drive was state of the art. It cost (in today’s dollars) approximately $250,000 and was as big as a fridge. Today 5 GB – a thousand-fold more storage – costs a dollar. Each year humans create additional exabytes (10^18 bytes) of information. That is, each year more information is created than was created in the entire history of humanity. Technological advance can no longer be plotted on linear graphs; they require logarithmic scales.

Impressive technological advancement at a collective level implies that any individual is totally incapable of even comprehending the technology, leave alone control it in any meaningful sense. It is obvious that nobody knows how to build, say, a modern commercial jetliner. One may know a bit about the avionics, another may know a bit about jet turbines, and yet another about advanced composite materials, and so on. But no one knows it all.

Human ignorance manifests itself on three other dimensions in the production of goods and services. First, no one knows what the future goods and services will be. Second, no one knows who will produce those. And finally, what their impact on human society will be is a mystery. Look no further than the Internet to evaluate human ignorance along those dimensions. Could anyone have predicted any of the services we take for granted today even 25 years ago? Could anyone have picked the winners? Too many young people are doing jobs today that did not exist when they were born.

So how do we prepare to meet an unknowable and uncertain future? Not surprisingly, the answer must lie in the same forces that actually create the future. Every advance in human technology – which is essentially embodied knowledge – is the result of entrepreneurial activity. The innate drive to build ever higher upon the existing base of knowledge finds its full expression in economically free societies. Economic freedom and the freedom to organize lie at the core of humanity’s remarkable successes.

It was possible in the static past to organize society under dictatorial authority. The feudal lords, and later kings and emperors, managed somehow to control relatively primitive society in a manner. But progress imposed enormous informational demands which no central authority could even theoretically possess. Communism’s fall is evidence that even a slightly complex economy cannot be controlled because even if one has the power of coercion, no one has the knowledge to do so. Free enterprise created the complex modern world of today and free enterprise alone will not only continue to shape the future but will provide us the means to meet that future.

To prosper – indeed merely to survive – in the future would require skills that we cannot fully imagine. Certainly a small percentage of the people will continue to be engaged in occupations that have existed for generations but the majority, especially in advanced economies, will be working at jobs that require high degrees of specialization and years of training. Those who are entering the educational system today will retire around 2070. That world is as hard for us to imagine as our world would have been for a caveman. Which imposes some very special requirements on the educational system.

The current educational system was geared to a world of the past, a world where command and control was still not entirely impossible. In India, that system served the needs of a very small segment of society and achieved only a very qualified success. It is strictly out of the bounds of the possible that the present system can ever meet the future needs and for the population at large. Innovation in India’s education system is absolutely essential and continued state control will condemn not only the system to irrelevance but the entire economy as well.

So how do we get an education system that works for the present and the future? Private enterprise and innovation are conjoined twins, sharing the cardio-vascular system of economic freedom. Entrepreneurship creates immense wealth that permeates healthy economies. Entrepreneurship alone has the capacity to create innovations in education that no bureaucrat or centralized planning authority can ever hope to achieve. Yes, central control can control but it cannot create.

In an age where each of us is immensely ignorant relative to the sum total of human knowledge, the skills that the individual acquires over a lifetime of learning cannot be imparted by an educational system that was created for a different world. The resources for building that educational system is out there. All that society has to do is to keep the state out of it so that private enterprise can do its job – which it invariably does. The role of the state is limited to light-handed regulation.

Liberalization of the education system from the political-bureaucratic nexus is absolutely necessary. Without economic freedom, we cannot expect the entrepreneurial innovation required to make the educational system keep pace with the dramatic changes that the future has in store. It would be profoundly ignorant to not liberalize education.

{This article was published in the Aug 2007 special issue of Pragati called “Rejuvenating India.” You can download the entire issue here (pdf 2.3MB). }

  • Pingback: Atanu Dey on India’s Development » Pragati — Rejuvinating India

  • Some Hobo Indian

    Some education is better than no education. As millions of our children have NO EDUCATION, and the government clearly does not have the resources to reach them, the only solution is PRIVATE CAPITAL.
    Obviously quality of education will not be the greatest. BUT WOULD YOU RATHER HAVE A CHILD WITH NO EDUCATION, or some education?

    And from the financing perspective, the best way for government to maximize its funds is to SUBSIDIZE private capital building schools. A lot more schools will be built that way.

    LIBERALIZING THE EDUCATION SECTOR IS THE MOST IMPORTANT THING INDIA SHOULD DO NOW.

  • Pingback: Indian fiction new, old, and ancient » Blog Archive » In Pragati