Economics Article 3

The prime factor of production can and must be transformed.

  • Since the application of highly specialized scientific and technical knowledge directly affects the other factors of production,
  • it is possible to begin transforming technical and economic growth into real development by steadily improving their ratios of desired to undesired effects.
  • Such a transformation may be accomplished by means of preventive approaches, which make use of the knowledge we have of how technique affects human life, society and the biosphere in order to obtain the desired results but at the same time prevent or greatly minimize harmful effects.
  • Strategically, such a transformation is best initiated in the engineering, management and regulation of technology because it will have the most direct effects on the economy,
  • and thus performs a catalytic role in spreading preventive approaches to other areas.
  • Corporations would gradually be transformed from wealth extractors into wealth producers,
  • and this would have a parallel effect on national economies and eventually the global economy.
  • All this would be achieved by substantially reducing the costs incurred in the production of wealth,
  • primarily by reducing social, health and environmental expenditures.
  • Such a transformation of the prime factor of production would in effect reduce the scale of the economy as a subsystem of the biosphere, which ecological economists like Daly (1996) have shown to be too large and thus uneconomic.
  • The suggested economic strategy is mostly synergistic with his proposals.
  • In the initial stages of the proposed strategy, governments are not likely to be targeted by international speculators.
  • As the proposed strategy spreads, a Tobin-like tax must be imposed on the international mobility of capital. Its purpose would be to reduce the extractive speculative bubble, ensure that progressive governments are not targeted by global speculators, help pay for the transition to a post-fossil fuel and materials era, and help fund genuine development in the south.
  • In Canada, we have come very close to initiating the first step on the road to implementing the above strategy.
  • In 1995, the Premier’s Council of Ontario (advisory body to the Premier on scientific, technical and economic matters) and the author had independently come to the same conclusion: the Ontario economy could deliver goods and services with far lower burdens on human life, society and the biosphere.
  • Doing so would be the most effective way of making the economy more competitive through cost reduction.
  • The potential for doing so could be tapped by reorganizing professional education and licensing requirements to ensure a more preventively-oriented practice.
  • The first step would involve university reform — a subject to be returned to later.
  • A round table was struck to work out the details.
  • Unfortunately, the strategy was stillborn because a newly-elected government disbanded the Premier’s Council, presumably in the conviction that the Market would take care of our problems more efficiently. Ontario has paid a heavy price for this decision.
  • In 2002, the concept of preventive approaches for the engineering, management and regulation of technology was recognized as one of 25 recent leading Canadian innovations (Downey and Claxton, 2002).
  • In 2003, a similar venture was being planned on the national level.
  • The Natural Sciences and Engineering Research Council (NSERC) and the Social Sciences and Humanities Research Council (SSHRC) proposed Society, Technology and Science 21 (STS21), of which the facilitation of the development of preventive approaches by reorienting teaching and research in the Canadian universities was to be a major component.
  • It amounted to a strategic initiative to reorient the prime factor of production in the Canadian economy.
  • Unfortunately, it was not approved by the governing body of SSHRC.
  • These setbacks will undoubtedly be temporary.
  • The nation that will first implement this strategy will gain such competitive advantages that all other nations will be compelled to follow suit.
  • It must be remembered that such advantages will be associated with dramatic improvements in the health and sustainability of communities.
  • There is no question that the potential of preventive approaches is enormous, but the inertia in the system is very high.
  • For example, most members of engineering and business faculties in our universities immediately dismiss this potential on the grounds that there is no such thing as a free lunch.
  • Indeed, if we continue to deal with our problems in an end-of-pipe fashion, operating to higher social and environmental standards would cost a great deal of money.
  • However, if many of these problems can be prevented or significantly reduced by the transformation of the prime factor of production, a little ingenuity could go a long way.
  • It amounts to a second Keynesian revolution in economics and in economic policies by creating economies that serve people as opposed to economically enslaving them to the Market.
  • This third part will examine how this economic initiative of redirecting the economy from its present path of wealth extraction to one of wealth production and development can begin in the technology-related professions, by transforming teaching and research in the universities.
  • Once these transformations are underway, parallel transformations can be made in the organizations of corporations, governments and consulting firms.
  • This will allow them to take advantage of the new skills of the graduates from these reoriented disciplines and specialties.
  • For example, social, health and environmental standards could steadily be raised as the capabilities of preventive approaches make this possible, thereby shrinking the regulatory regime to what cannot be prevented or reduced.
  • In addition, the hemorrhaging of manufacturing jobs to areas of the world where there are few standards or where standards are not enforced, can be greatly slowed down.
  • All this would mark a gigantic step in slowing down the race to the bottom that the current short-sighted system based on free trade, without adequate social, health and environmental standards, forces on humanity.

Engineering as a Paradigm

  • How would most of us react to an instructor who teaches young people to drive a car by focusing on its performance as indicated by the gauges on the dashboard and only occasionally glancing out the windows?
  • Would we not insist on that instructor losing his or her teaching and driving licenses?
  • This is exactly how we as engineering faculty teach young people to “drive” technology into the future; and this has been established beyond a shade of reasonable doubt for some 25 years, yet our profession has done little about it.

The Study

  • Some 25 years ago, a comprehensive study of engineering education at the University of Toronto asked the following two questions: How well do we teach future engineers to understand the influence technology has on human life, society and the biosphere?
  • (the equivalent of looking out the windows of our professions) and: To what extent do we teach them to use this understanding in a negative feedback mode to adjust design and decision-making to achieve the desired results and at the same time prevent or greatly minimize harmful effects?
  • (the equivalent of making steering and pedal corrections).
  • These two questions were converted into extensively tested research instruments to permit the quantitative scoring of the undergraduate engineering curriculum.
  • The results showed that the answer to both questions was: almost nothing.
  • Details of these research instruments are shown in Table 1, and an overview of the scores is shown in Table 2.
  • It should be noted that the scores reflect the upper limit of what is achieved, since any course material relevant to the above two questions was evaluated in a non-critical fashion, that is, it was not assessed in terms of what was known in the relevant disciplines.
  • The results were widely circulated to the deans of most Canadian and US engineering schools, given the similarity of the requirements of the Canadian Engineering Accreditation Board and the Accreditation Board for Engineering and Technology.
  • The results were also forwarded to these boards and the Canadian Engineering Academy.
  • Despite some polite gestures, the seriousness of the implications of the findings was ignored.
  • Our profession cannot claim to protect the public interest except in the narrowest technical sense of the term, which should raise questions regarding its ability to regulate itself.
  • As part of the proposed strategy for transforming the prime factor of production, the legislation that enables the engineering profession to regulate itself on the condition of protecting public interest should be modified.
  • This should ensure that outside supervision is able to set and impose, if necessary, the targets that the profession must meet in order to effectively contribute to the proposed strategy, resulting in a more comprehensive protection of the public interest.
  • The accreditation boards must change their requirements, which are increasingly suffocating innovative changes, including the ones in this proposal.
  • Without outside pressure, this might take another century.

Table 2: Faculty Scores
Core courses 1 0.5 0.5 0.4 0.1 0.8 0.3 0.5 0.4
2 0.3 0.7 0.3 0.6 0.5 0.2 0.3 0.4
3 0.7 1.2 0.7 1.6 0.7 0.9 1.0
4 1.8 1.4 1.3 1.5
N 30 38 29 18 25 32 26
Core and techni-
cal electives 1 0.5 0.4 0.4 0.3 0.8 0.3 0.6 0.5
2 0.4 0.6 0.4 0.6 0.5 0.3 0.4 0.5
3 0.7 1.1 0.6 0.7 1.5 0.8 0.9 0.9
4 1.5 1.5 0.8 1.1 1.3 0.9 0.5 1.1
N 57 51 67 94 43 67 47
Publications Score 0.2 0.6 0.1 0.2 0.6 0.2 0.3 0.3
N 367 237 306 204 121 290 169
Key to abbreviations: CHE – Chemical Engineering; CIV – Civil Engineering;
ELE – Electrical Engineering; ESC – Engineering Science; IND – Industrial Engineering; MEC – Mechanical Engineering; MMS – Metallurgy and Materials Science; N – Number of courses scored.

Engineering and Our Knowledge Infrastructures

  • In order to examine how the introduction of preventive approaches in engineering, teaching and research might affect the knowledge infrastructure of a society, and hence its role as a prime factor of production, I will briefly revisit the three primary negative characteristics mentioned in Part 1.
  • These may be interpreted in terms of the metaphor introduced in the previous subsection.
  • The institutionalization of an end-of-pipe approach for dealing with undesired consequences is the equivalent of concentrating on the performance of the car as indicated by the gauges on the dashboard until interrupted by the experience of a crash that compels the driver to look out of the windows.
  • It should be noted that this institutionalization of end-of-pipe approaches goes well beyond the way we teach future engineers to “drive” technology.
  • It includes the way we teach business administration, management science and accounting, as well as the almost complete absence of a precautionary orientation in the legal and regulatory framework.
  • Even the remedies that have been put into place, such as the international environmental standards (ISO14000) and the best “green” practices have, for a variety of reasons, completely missed the point (Nakajima and Vanderburg, 2005b, 2006).
  • In all these cases, either the preventive potential of the approaches was completely ignored (as in ISO14000) or was so watered down as to be ineffectual, as in the case of the German automobile industry with its take-back approaches (Nakajima and Vanderburg, 2005c).
  • The same conclusion was reached for the computer and information industry (Nakajima and Vanderburg, 2005a).
  • In contrast, it is possible to compile an inventory of piecemeal preventive approaches (Vanderburg et al, 2001; Vanderburg and Khan, 2001; Vanderburg and Khan, 2004; Vanderburg et al, 2004).
  • Following this inventory, the conceptual framework of preventive approaches was used to compile preventively-oriented design principles and strategies in the areas of application of materials and production, energy, work and cities (Vanderburg, 2000).
  • These can then be integrated further to constitute a comprehensive strategy that corporations can use for the engineering, management and regulation of their product lines and manufacturing technologies.
  • It must be emphasized that a fragmentary and piecemeal use of preventive approaches amounts to the introduction of elements into a corporate business strategy that are incompatible with its organization and business culture.
  • It should be remembered that the so-called technology paradox (referring to the weak correlation that existed between investments in computer and information technology and increases in labour productivity) could not be resolved until it was recognized that the corporation had to be completely “re-engineered” in order to take full advantage of this new technology.
  • Of course, the re-engineering generated a new end-of-pipe approach in the form of the management of technological change (Vanderburg, 2005).
  • This and similar developments may be interpreted by the commonplace that an organization divided against itself cannot stand.
  • The introduction of preventive approaches is not to be regarded as an “optional extra” that can be added here and there as management sees fit.
  • It amounts to a genuine rethinking of the corporation, in order to return it to what it was originally chartered to do (Bakan, 2004).
  • The potential of preventive approaches may be glimpsed from the following examples.
  • We are currently producing pollutants (products we produce but cannot sell) at a much higher rate than desired goods and services.
  • A study by the American Academy of Engineering estimates that of all the raw materials we extract from the biosphere, 93% is turned into undesired products (pollutants) and only 7% into goods and services (Allenby and Richards, 1994).
  • Our electricity-based energy systems appear to be well-engineered and managed until we bring into the “system” the way we use electricity (Vanderburg, 2008).
  • It then turns out that, in many cases, electricity can be saved (negatively produced) at half the cost of generating it.
  • Some time ago, Blue Cross was the largest supplier of the largest corporation in the world.
  • Apparently, physically and mentally ill workers were the company’s most valuable undesired output (Karasek and Theorell, 1990).
  • To deal with these and other health problems resulted in an unsustainable “disease care” system, which could have been reduced by the introduction of preventive approaches, not only into workplaces but also into our food system and into the way we build cities (to mention the three primary determinants of health).
  • In sum, it is not difficult to teach the practitioners of a discipline or specialty to look out of its “windows” to see where the consequences of their decisions fall.
  • It involves identifying those disciplines and specialties that examine these consequences and internalizing them into the original discipline and specialty, with the result that they are then able to practice preventively, much like the way they drive their cars.
  • In this way, the trade-off between breadth and depth can be altered and supporting organizational changes can be made in the universities (Vanderburg, 2006).
  • Once the knowledge infrastructure has been modified in this way, it is not difficult to design engineering and business strategies that corporations can use to gain competitive advantages, even against those manufacturers that move from place to place to externalize as many costs as possible.
  • In the present free trade and globalization regime, the corporations that are most successful in externalizing costs are rewarded;
  • and for this reason this system is entirely unsustainable from an economic, social and environmental perspective.
  • It is a race to the lowest common denominator based on the worst possible ratio of desired to undesired effects of our technical and economic “systems”.
  • Once we recognize that there is nothing natural about the Market, unemployment and homo economicus, contrary to the assumptions of monetarism, the door opens wide to an alternative future that will have no difficulty in vastly improving on the present.
  • It simply is a question of genuine leadership in our universities, corporations and governments.
  • I am confident that the modest proposals for preventively- oriented strategies in the areas of materials and production, energy, work and cities referred to earlier (Vanderburg, 2000) can be vastly improved once the knowledge infrastructures are in place and the reorientation of the prime factor of production can be sustained.
  • The second negative characteristic of contemporary knowledge infrastructures amounts to the disciplines and specialties making their “windows” onto the world more and more opaque as the level of specialization increases.
  • This involves suspending their practitioners in a triple abstraction that effectively bars them from understanding how their efforts fit into, interact with and depend on the world.
  • It makes it next to impossible for them to turn the present situation around because they are unable to link their practices to the increasingly global issues humanity will have to deal with.
  • Moreover, this triple abstraction ensures that the ratio of desired to undesired effects produced with the prime factor of production of highly specialized knowledge will continue to deteriorate.
  • Specialties improve everything on their own terms, as opposed to their contribution to how everything is related to everything else as assessed by human and cultural values.
  • Hence, the improvement of performance tends to undermine the internal integrality and context-compatibility of what has been made “better”.
  • As a civilization we succeed brilliantly in the domain of improving performance and fail equally spectacularly to prevent performance from undermining our lives and our world.
  • Putting a discipline or specialty in closer contact with the reality it manipulates, its practitioners must take what I have referred to as bridge courses (Vanderburg, 2006a), which examine how technology has progressively woven itself into the fabric of how everything is related to everything else.
  • Such courses construct an intellectual map showing how a particular discipline or specialty is related to all others in the interconnectedness of our world.
  • These bridge courses overcome the dualism in the undergraduate curricula between the “technical core” and the “complementary studies” components to pave the way for the establishment of the negative feedback required to preventively “drive” the practices of the specialists.
  • Once again, this is not difficult to accomplish.
  • For years, a program of such courses has been offered in the Faculty of Applied Science and Engineering at the University of Toronto to engineering and sociology students.
  • It has deeply affected a minority of students, but it has made few inroads into the curriculum, in no small measure due to the lack of leadership of the Canadian Engineering Accreditation Board in coming to grips with the responsibilities of the engineering profession.
  • Once these kinds of barriers are out of the way, a synergistic relationship can be established between a knowing and doing embedded in experience and culture and a knowing and doing separated from experience and culture (Vanderburg, 2005).
  • The limitations of the one can be dealt with by the strengths of the other, and vice versa.
  • This is especially important for engineering design, which continues to falter along in a fog of confusion between design exemplars and analytical exemplars (Vanderburg, 2005).
  • The third limitation of contemporary knowledge infrastructures follows directly from the previous one.
  • It amounts to our response to the frequent “crashes” of technology into human life, society and the biosphere.
  • The “system’s” response has been to reinforce and improve what we are already doing.
  • For example, the course scores reported in Tables 1 and 2 have not changed at all since the study was originally undertaken, despite our growing awareness of the many issues humanity faces.
  • There is a complete disconnect, thanks to the triple abstraction.
  • The response to the environmental crisis by engineering faculties has been the creation of environmental programs, but such programs are almost entirely based on end-of-pipe approaches.
  • It is no wonder that politicians and the public accept that operating to higher environmental standards can be accomplished only at a great cost to the economy, and that Market-based solutions such as tradeable pollution permits are perhaps the most efficient approach.
  • This fails to go to the root of the problem.
  • All engineering disciplines and specialties contribute enormously to the “production” of the environmental crisis.
  • Hence, the solution is in preventively reorienting them to improve the ratio of desired to undesired effects.
  • Environmental programs ought to have assisted all engineering departments to prevent whatever environmental harm possible, and to mitigate in an end-of-pipe fashion whatever cannot be prevented.
  • We are now watching the same mistakes being repeated all over again with a new fashion: energy.
  • Instead of going to the root of the problem, namely our addiction to energy, and carefully looking at the demand-side options along with supply-side ones, there is a new bandwagon: “green” supply alternatives.
  • The bluff of the hydrogen economy (Vanderburg, 2006b) and of alternative energy (Vanderburg, 2008) once again show that we are not willing to get to the root of the problem.
  • Energy issues must be internalized into all branches of engineering as well as the environmental consequences; and this can be done only by introducing preventive approaches.
  • No current energy initiatives come even close to doing so.
  • In other words, the third negative characteristic of the present factor of production of highly specialized knowledge can be stated as follows.
  • If a genuine solution cannot be achieved simply by optimizing one or more aspects of the process of obtaining the desired results from requisite inputs, the present organization of the prime factor of production will ensure that the likelihood of its happening is either small or non-existent.
  • It is the equivalent of recognizing that there are too many car crashes, and that the solution is to add more gauges on the dashboard to give an even more comprehensive picture of the performance of the vehicle to the driver, and to eliminate the risk of flying glass by having no windows.
  • It would be the triumph of the triple abstraction — a complete desymbolization of highly specialized human knowing and doing.
  • Our technological creativity must be liberated from this triple abstraction.
  • For example, it does not take a great deal of historical background to recognize that the three production systems of the 20th century (the Fordist-Taylorist system, the lean production system, and the Volvo Uddevalla system) each emerged in response to very different economic, social, cultural and environmental conditions.
  • These conditions no longer exist.
  • However, little or no imagination is going into inventing a production system for the 21st century that would respond to conditions of high unemployment and underemployment and a scarcity of natural resources.
  • We are still not willing to recognize that a different balance between human and natural productivity has to be struck as part of a comprehensive preventive strategy.
  • It is not difficult to accomplish. The elements of the above systems that have good ratios of desired to undesired effects can be incorporated into a new overall concept, with similar results.
  • I recently explained one such concept to a former executive of a leading automotive manufacturer in order to get his assessment as to its feasibility, and the answer was affirmative.
  • I am no specialist in production.
  • The concept was simply developed from my understanding of how technology influences human life, society and the biosphere and how we can use this understanding to create preventively- oriented alternatives to so-called state-of-the-art practices.
  • Typically, such alternatives are non-cumulative and therefore will not emerge from the specialties that, in the present intellectual and professional division of labour, would be expected to come up with them.
  • I have little doubt, therefore, that when the present prime factor of production based on specialized knowledge is reoriented by introducing bridge courses into the socialization of future practitioners, and when preventive approaches are built up through a dialogue with these courses and the “standard” technical courses, a whole new world will open up to their creativity and imagination.
  • Examples of this kind can be multiplied indefinitely.
  • It is not reasonable to expect that the solution to the traffic congestion in our cities lies in making our current transportation systems more efficient.
  • It may well be that the real solution lies in reducing the need for mobility by rethinking urban form, and this is clearly beyond the domain of traditional traffic engineering.
  • The message is an obvious one.

Club of Rome

  • Anything that grows exponentially on a finite planet is not sustainable.
  • A genuine solution has to focus on the reasons for this exponential growth.
  • This is exactly what the current prime factor of production of highly specialized knowledge is unable to accomplish.
  • However, the introduction of preventive approaches based on a synergy between knowledge breadth and depth can gradually transform the present intellectual and professional division of labour, and along with it, the knowledge infrastructures acting as a prime factor of production.
  • Our civilization can then get back to how humanity has always lived on the planet.
  • We need to pull back from the fundamental shift this civilization has undergone during the 20th century.
  • It no longer asked how this or that could improve human life but how it could yield the greatest performance.
  • This is the equivalent of (individually and collectively) having lost the ability to drive technology and the economy into the future in a manner that serves society without endangering the biosphere.

The Wager of the 21st Century

  • Our findings may be summed up as follows.
  • For as long as we can go back, human groups and societies have symbolized their immediate experience in terms of its meaning and value for human life and society.
  • Making sense of and living in the world by means of symbolization (as opposed to evolutionary adaptation) has produced the successes and failures of previous civilizations.
  • From this perspective, human cultures should be regarded as the real prime factors of production.
  • During the last century, humanity began to desymbolize these cultures by shifting from a primary reliance on symbolization to one based on desymbolization.
  • The result was discipline-based, highly-specialized knowing and doing separated from experience and culture (Vanderburg, 2005).
  • Essentially, customs and traditions that guided traditional societies have been replaced by knowledge infrastructures, which were found to have three primary shortcomings.
  • They institutionalize an end-of-pipe approach to the problems created by the application of these knowledge infrastructures,
  • making the “system” top-heavy as well as uneconomic, socially non-viable and environmentally unsustainable.
  • Second, the application of these knowledge infrastructures results in an increase in the performance of everything on its own terms, thereby undermining its internal integrality and external context-compatibility.
  • Third, genuine solutions can rarely be achieved by optimizing performance, and consequently are beyond the reach of the present knowledge infrastructures.
  • For this reason, the “system” attempts to address the problems faced by humanity by doing more of the kinds of things that produced the problems to begin with.
  • It is a classic case of positive feedback that ensures the collapse of any system.
  • In the meantime, contemporary civilization wagers that the creation of new techniques can outpace the problems created by earlier ones, but growing evidence suggests that this is not the case.
  • For this reason, I have argued that restructuring the knowledge infrastructures on the basis of which contemporary societies evolve their ways of life is a top priority for humanity.
  • Elsewhere (Vanderburg, 2006), I have described in some detail how this can be done, beginning with the technology-related professions.
  • The introduction of preventive approaches is a necessary but not sufficient development to begin to address the roots of our economic, social and environmental crises.
  • A bridgehead for reforming the engineering profession has been created, despite massive resistance (Vanderburg, 2000).
  • The next initiative should come from the Canadian Engineering Accreditation Board and the U.S. Accreditation Board for Engineering and Technology:
  • to phase in a set of requirements to ensure that future engineers graduate with a minimal competence in knowing how technology affects human life, society and the biosphere and how to use this understanding in a negative feedback mode to achieve a steady improvement in the ratio of desired to undesired effects of design and decision-making.
  • If the engineering accreditation boards continue to be silent on this front, I believe the case should be made that contemporary societies can no longer afford a self-regulating engineering profession that needlessly imposes a great deal of preventable harm on human life, society and the biosphere, which makes contemporary ways of life uneconomic, as well as unsustainable.
  • In an age in which technology has woven itself into almost everything, our societies can no longer afford a “protection of the public interest” that has been arbitrarily limited to a narrow technical scope.
  • The profession must declare, as a matter of urgency, the need to educate future engineers who are as socially and environmentally literate as they are technically competent.
  • The detailed plans for reforming the engineering profession can readily be extended to the management and regulation of technology.
  • Doing so will transform one area of the knowledge infrastructures of contemporary societies.
  • However, envisaging these changes is one thing and implementing them is quite another, because the present intellectual and professional division of labour and the knowledge infrastructures built up with it are deeply rooted in the secular myths of contemporary society, by which we anchor and orient our individual and collective human life in the world.
  • Forgetting this secular religious dimension of our situation is failing to understand all previous collapses of civilizations.
  • The proposed reforms of the technology-related disciplines and specialties must be complemented by corresponding reforms of the social and environmental sciences.
  • The “intellectual worlds” of the latter are full of human beings, societies and ecosystems but little or no technology, while the “worlds” of the professions are full of technology and little else.
  • Again, how these parts of our contemporary knowledge infrastructures can be reformed has also been suggested (Vanderburg, 2006).
  • These plans include economics, which must provide guidance to the technology-related portions of the knowledge infrastructures in terms of what is economic and what is not.
  • Once extensive university reforms are underway, graduates will have the capability to initiate parallel reforms in corporations, consulting firms, governments and non-governmental agencies.
  • We have enslaved ourselves to a kind of technical and economic growth from which we can begin to liberate ourselves by restructuring the prime factor of production of highly-specialized knowledge. Whether we have the courage to do this will be the real wager of the 21st century.
  • It will irreversibly alter the course of human history in one way or another.


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