Japan's Fifth Generation Computers; J. J. Davis

John JeffersonDavis JAPAN'S "FIFTHGENERATION"COMPUTERS: THREATTO THE FREE MARKET? "In my opinion, your contemplated conduct is an unequivocal combina tion in violation of the antitrust laws of the United States."! This was the response of San Francisco antitrust lawyer Joseph M. Alioto to the for mation of the Microelectronics and Computer Technology Corporation ("MCC"), a consortium of twelve major high-tech corporations in cluding Honeywell, Motorola, RCA, and Control Data. These American corporations formed the new group in order to pool their research re sources for a more effective response to the challenge of the Japanese "Fifth Generation" computer initia tive. Japanese leaders in government, industry, and the universities have mapped out a master plan for the Dr. Davis is Associate Professor of Theology at Gor don-Conwell Theological Seminary in South Hamil ton, Massachusetts, and author of the forthcoming book, Your Wealth In God's World.

next decade to catapult Japan into the forefront of the world economy of the 1990s. The Japanese plan calls for a $100 million, eight-year effort to capture the world lead in the field of "supercomputers," the incredibly fast computers such as the Cray-1 manufactured by Cray Research of Minneapolis, capable of executing 100 million instructions per second. These super-fast machines perform vital functions in weather forecast ing, industrial design, and in de fense applications. The Japanese also plan to spend $500 million in a ten-year effort to achieve world dominance in the strategic area of artificial intelli gence, one of the most exciting fields in computer research today. The Japanese have seen that in the new Information Age economy of the 1980s and 1990s, computer science holds the key to dominance in the world economy. American 741 742 THE FREEMAN December computer scientists such as Profes sor Edward Feigenbaum of Stanford are warning that unless decisive ac tion is taken soon, America could easily find itself as knowledge-de pendent on Japan in the 1990s as it was oil-dependent on the Middle East during the 1970s.2 Japanese Lead in Marketing of 64K RAM Chips The United States has already lost a preliminary skirmish in the global computer wars. The Japanese have now captured 70 per cent of the world market in 64K Random Access Memory chips, the microprocessing devices which are at the heart of the modern microcomputer. These chips were invented in America, by engi neers at the Intel Corporation in California, and opened up an entire new world of information process ing. They serve as the "brains" of countless devices ranging from mi crowave ovens to personal comput ers. With real justification, these sil icon chips have been called the "crude oil of the 1980s" -so much new wealth and employment have they created.

Japanese leaders in industry and government were quick to respond to the new economic opportunities created by the microprocessing chip. The Japanese government provided $300 million for research and devel opment, worked out a cooperative arrangement among five companies, and Japan proceeded to achieve dominance in the world market for 64K computer chips.3 Their chips had done to American industry what their digital watches had done to the Swiss watch industry. Is it really the case that the Jap anese "Fifth Generation" challenge represents a grave threat not only to the American economy in the 1980s and 1990s, but to the very vi ability of classical free-market eco nomics itself? How could this be the case? The dilemma arises because there are voices which are now call ing for massive government initia tive as the only way for America to successfully respond to the Japanese computer threat: Only if govern ment takes the initiative, coordi nates the planning, and sets the goals, and provides massive financ ing, can America's economic sur vival be assured.

According to Prof. Feigenbaum, "America needs a national plan of action, a kind of space shuttle pro gram for the knowledge systems of the future."4 Are we really left with the dilemma of a choice between the classical free market and economic ruin, or massive government inter vention and economic survival? The new realities of the Information Age do challenge classical free market principles, but before it can be seen how this threat has been exagger ated, it is important to appreciate more fully the new developments 1983 JAPAN'S "FIFTH GENERATION" COMPUTERS 743 that are on the horizon in the "Fifth Generation" of computers. The Promiseof the Fifth Generation The phrase "Fifth Generation" re fers to stages in the evolution of computer technology. The first gen eration of computers was based on vacuum tube technology; the sec ond, on the transistor; the third on the integrated circuit, which com bined many transistors on a single circuit board; the fourth, on micro processor chips with large-scale in tegration (LSI) and very large-scale integration (VLSI) of the compo nents. Each "generation" saw an in crease in speed and computing power, together with a reduction in size and cost.

Computers that in 1960 filled en tire rooms and could only be af forded by government, industry and universities can now be matched by desk-top and portable models that are affordable to the consumer. Between the years 1946 and 1960, the num ber of computers increased from zero to ten thousand; between 1960 and 1980, the number of computers ex ploded from ten thousand to ten mil lion, and continues to expand at a phenomenal rate. 5 The "Fifth Generation" will see the development of artificial intelli gence, "computers that think." This means not merely another quanti tative improvement in computing technology, with all the economic implications which that has en tailed, but a new qualitative leap for human civilization and the world economy. Already computer scientists have developed such "expert systems" which mimic the reasoning pro cesses of experts in medicine and en gineering. The Caduceus system de veloped by scientists at the University of Pittsburgh assists doc tors in performing intricate diagno ses in internal medicine, at times with a degree of accuracy surpass ing even the most experienced hu man diagnosticians. The Dart sys tem developed at Stanford can diagnose computer system malfunc tions in the field, thus saving costly "down time." The Programmer's Ap prentice developed at M.I.T. assists human operators in the design and debugging of complex computer pro grams. 6 These "expert systems," and many others like them which are already in use or presently under develop ment, combine vast stores of rele vant information, together with de tailed programs which mimic the reasoning processes used by experts in the field. These programs are con structed by "know ledge engineers"

who interview the experts, "pick their brains" for their val uable know l edge, and translate this into a form that the computer scientist can use in writing a program that emulates 744 THE FREEMAN December the reasoning of the human expert. The development of "computers that think"-in contrast to ma chines that merely respond to pre programmed instructions-has vast implications for the world economy. It scarcely seems an exaggeration to predict that the widespread diffu sion of artificial intelligence will have an impact on human society compa rable to, if not greater than, the in vention of the automobile or the printing press. The Industrial Revolution magni fied the power of human muscle with the introduction of the steam en gine. The Fifth Generation will mean a new post-industrial revolution, where the power of the human mind itself will be magnified by the new computer technology. Just as the steam engine raised the standard of living in the industrialized nations, so the new generation of "thinking computers" promises a new plateau of economic well-being for those na tions that are alert enough to seize the opportunities.

The Fifth Generation: No Real Threat to the Free Market While the Japanese Fifth Gener ation project represents a real chal lenge to American leadership in the world economy, it by no means sig nals the end of classical free-market principles. Such alarmist predic tions represent a misreading of the true situation, as well as a failure to recognize the true resilience and creativity of the American system. The research and marketing strategies of the Intel Corporation are a good case in point. For the last several years the California com puter-chip firm has been reeling un der the impact of a recession and the fierce competition from Japanese manufacturers. Having lost the bat tle for the 64K chip, Intel is not giv ing up and acquiescing to a place of permanent inferiority in the world of microelectronics. Even though its 1982 profits were down 25 per cent from the previous year, Intel is planning to invest $130 million in research and development and $150 million in new plants and equip ment in an effort to regain its com petitive edge. 7 According to some es timates, Intel has succeeded in cap turing 70 per cent of the market in the new 16-bit chip technology-a design that can process information more quickly than the eight-bit de signs that characterize most per sonal computers in use today.

According to industry sources, IBM, the giant of the world com puter industry, has quietly formed a team of 25 scientists to counter the Japanese Fifth Generation project. 8 Last year IBM's gross income reached a record $34 billion dollars, and prof its surged more than 20 per cent. Af ter the Justice Department dropped a thirteen-year long antitrust suit in January of 1982, IBM executives 1983 JAPAN'S "FIFTH GENERATION" COMPUTERS 745 began to map out an aggressive new strategy for leadership in every field of computer technology: biomedical systems, factory automation, educa tional systems, telecommunications, and artificial intelligence. As of 1982 IBM had increased its research and development budget to a massive $2.6 billion-numbers which far ex ceed the Japanese efforts. Even without government help, "Big Blue," as IBM is known in the trade, would represent by itself a formidable threat to the Japanese plan. Any predictions of assured Japanese dominance would at this point be quite premature.

Suggestions that the government subsidized Japanese computer chal lenge make free-market principles obsolete also overlook the new con text of the globalized economy. In ternational trade is nothing new, of course, but the growing extent of the interdependence and interpenetra tion of national economies does ap pear to be a genuinely new factor in the world scene. Ford's new car, the Escort, is assembled in the United States, Britain, and Germany from parts manufactured in Japan, Bra zil, Britain, Spain, and Italy. Volks wagen provides the engines for the Dodge Omni and Horizon cars, and Mitsubishi of Japan the engines for the Dodge Colt, the Plymouth Champ, the Dodge Challenger, and the Plymouth Sapporo. Volkswagen builds commercial vehicles with parts made in Brazil and Mexico.9 The point here is that in the new globalized economy, many of the an titrust laws dating all the way back to the nineteenth century, and which focused on the problems of a na tional economy, need to be re thought in light of the new economic realities. A cooperative research venture such as the Microelectron ics and Computer Technology Cor poration does not eliminate compet ition; it is merely a rational response to the realities of international com petition.

As long as government does not unfairly favor or subsidize one cor poration over another, such cooper ati ve research ventures should be encouraged by government in order to keep American industry competi tive. Neither is free cooperation be tween government, industry, and the universities inconsistent with free market principles, so long as gov ernment does not favor or exclude some corporations at the expense of others. Such cooperation is essential in areas such as computer technol ogy which affect both the United States' economic future and its na tional security. The FutureIs Bright The free-market tradition has nothing to fear from the revolution ary advances that are on the horizon in computer technology. The com puter has opened a new frontier for 746 THE FREEMAN entrepreneurship and personal cre ativity that promises to surpass the discovery of petroleum and the in vention of the automobile in its po tential for creating new forms of em ployment and higher standards of living for all.

Sirjang Tandon of India worked in restaurants as a busboy in order to pay for his American engineering education. After working for IBM and Memorex, Tandon decided to start his own computer-components busi ness in his garage. Today the Tan don Corporation is one of the lead ing manufacturers of disk drives, the vital components which store infor mation in a computer. The net worth of the Tandon Corporation is $1.5 billion, with sales projected at $270 million this year. Says Tandon, now an American citizen, "Every time I travel around the world, I like this country better. "10 On the global level, the new com puter technology presents a test of strength not merely of Japan vs. the United States, but even more broadly, a crucial test of controlled, socialistic economies and economies where the private sector remains the prime mover. Analysts such as Pro fessor William Griffith ofM.LT. pre dict that in this race the Soviet Union will fall further and further behind the United States and Japan. The Soviet system is a system without free competition and a rational pric ing system, and one which places a premium on political orthodoxy rather than technological efficiency.

Consequently, the Soviet system is really an "anti-management sys tem," according to Griffith, "doomed to finish last."11 Rather than being a fatal threat to the free market system, the Fifth Generation of computer technology will, in the long run, demonstrate the superiority of the initiative, risk taking, and creativity characteristic' of a free economy. The benefits will not be automatic, however; the United States, if it is to maintain its leadership in the global economy, must rise to this new challenge as it has met the challenges of the past. , -FOOTNOTESI"The Race to Build a Supercomputer," Newsweek, July 4, 1983, p. 61. 2Edward A. Feigenbaum and Pamela Mc Corduck, The Fifth Generation: Artificial Intel ligence and Japan's Computer Challenge to the World (Reading, Mass.: Addison-Wesley, 1983), pp. 2, 3 and jacket. 3Bernard J. O'Keefe, "We Did It to Ourselves," Boston Globe, July 5, 1983, p. 44.

4Feigenbaum, op. cit., p. 3. 5The Futurist, February 1983, p. II. 6Feigenbaum, op. cit., pp. 244-50. 7Marilyn Chase, ''The Chip Race," Wall Street Journal, February 4, 1983, pp. 1, 13. 8"The Giant Takes Command," Newsweek, July 11, 1983, p. 57. 9John Naisbitt, Megatrends (New York: War ner Books, 1982), p. 65. 1°"Still the Land of Opportunity?" U.S. News & World Report, July 4, 1983, pp. 37, 38. llWilliam E. Griffith, "High-tech Charging Onto World Scene," Boston Globe,June 27, 1983, p.2.