Is this Europe's decade?

A view from America: Alvin Toffler

In Lisbon last March, Europe's leaders declared their goal of overtaking the US in high tech by 2010. Toffler scoffs: "It sounded very much to me like Kruschev's 1956 statement 'We shall bury the West,' which turned out to be one of the worst forecasts of the twentieth century."

The roots of Europe's handicap, the futurologist declares, go back to the late 1940s when European leaders began the sweeping project of European unification, hoping to rebuild the continent's shattered industrial infrastructure. But all the while something significant was happening in the US: in 1956, for the first time, service workers outnumbered blue collar workers. America had stumbled on to the knowledge society.

"Technologies slam into the US but Europe pays zero attention to the IT revolution," Toffler continues. Even when Japan successfully adopted technology, he says, Europe ignored IT and instead "tried to recreate the manufacturing base of Europe on the second wave ideas of the industrial revolution".

Toffler sees a symbol of Europe's outmoded thinking in the EU's huge agricultural subsidies that dwarf spending on technology research. "Europe feeds its first wave [agrarian] sector and starves its third wave sector and then wonders why it has high unemployment. But the answer is simple - because all its second wave manufacturing work goes to Bangladesh where costs are cheaper. This represents a massive failure on grand economic strategy for a continent that is supposedly more strategically oriented than ours."

Toffler insists that such vehement criticism is not just schadenfreude. "It's not coming from hostility but regret," he maintains.

To Toffler, the superstructure of the EU is outmoded. "Brussels has essentially exhibited the same industrial thinking that made sense 50 years ago but little sense today. It is trying to harmonise everything it can lay its hands on. It's a captive of industrial society, but bigger is not better. We're moving away from those principles towards flatter, more networked organisations."

And he predicts total crisis for the European political system, as it creates a more centralised bureaucracy. "Trying to impose the euro on countries as different as Portugal and Germany promotes a degree of political instability. You need adaptability and flexibility, but the EU takes it away and makes countries less capable of local adaptation."

Moreover, Toffler doesn't believe that the dotcom stock market dive will be of any benefit to Europe as it plays catch-up. "To think that the stock market values of dotcoms reflect real economic values is silly - they reflect hype and paranoia - but we in America still have this incredible electronic infrastructure.

"Thus a crash would probably affect Europe far worse than the US because the US economy is much more nimble and its people more motivated to bounce back quickly. We would recover sooner because everything's more accelerated here."

Finally, Toffler bemoans how Europe is about to throw away the one chance it has to regain its standing in the world. "The next phase of technological advance is a shift to biotech. Whereas Europe has a strong pharmaceutical base and one would think it has an edge in this related field, there is profound cultural technophobia that holds Europe back. Western Europeans have turned this from a rational question about biotech into Fleet Street hype and French trade politics."

Alvin Toffler is co-founder and director of Toffler Associates and author of Future Shock (Pan, £8.99/16 euros) A European perspective: Will HuttonAmerica's decade-long economic miracle was a "bubble built on a bubble", says Hutton emphatically. Now the tide is turning against US hegemony. "In the US, 200 dotcoms went down the drain last year together with US$15 billion (16 billion euros) in VC money. There are so many weak links in the US economic system that it's impossible to list them all," he declares.

And Hutton argues that American industry's preoccupation with IT, far from being the economy's salvation, may help spark an American recession. Companies have overinvested in laptops, servers and Web sites they don't need.

Yet Europe, he says, is doing "rather well thank you very much". In the last three years it has created six million new jobs.

"We just haven't lost our heads and created a stock market that is distorting economic structures," he points out. "It's a case of the hare and the tortoise. And now I am enjoying watching the hare get exhausted and be overtaken by our European tortoise."

To Hutton, one of Europe's greatest assets is a state welfare system that allows people who have been laid off to get good levels of retraining. "Our stabilisers are so much better that even if there is a downswing in the economy it will not be as drastic as in the US," he affirms.

Hutton also believes that any attempt to evaluate the relative economies must include a value judgement about the kind of economic culture that you prize. "We prefer to invest in capital equipment and so we have more holidays and shorter weeks.

"You must ask what kind of society you want to live in. What's the point of the American lifestyle in which you work a 60 hour week and have two weeks off every year?"

The economic commentator is also keen to shatter the myth that Europe is anti-entrepreneurial. "It's simply not true. Toffler simply doesn't know or understand anything about the people who are successful in Europe. We are all capitalist economies that have grown at approximately the same rate as the US over the years.

"What is true is that Europe goes in for less spectacular rolls of the dice. It prefers steadier structures and so you have less spectacular wins.

"But you can't just ignore companies like Nokia or Porsche or Vodafone - or Renault, for instance, which came up with the idea for the people carrier that has been widely copied in the States."

Hutton is confident that Europe is about to assume leadership of the tech world. He grants the US an unassailable lead in Internet technologies, but argues that these have now lost their lustre.

Meanwhile, the UK has a lead in software programming (especially in the burgeoning market for games), the Scandinavians are way ahead of anyone in the mobile communications field, and the Germans are the clear front-runners when it comes to biotech.

Hutton concludes: "The last ten years was the decade of America. Before that it was the decade of Asia, and there is no doubt that the next ten years will be the decade of Europe. That view does not make me arrogant. It's simply that the baton passes from one capitalist situation to another as different structures become appropriate.

"We're looking at a Europe of 500 million people, the highest GDP in the world and a single currency. It will be a truly formidable power."

Will Hutton is chief executive of the Industrial Society and author of On the Edge: Living with Global Capitalism (Vintage, £8.99/16 euros)

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