SOCIOECONOMIC STRUCTURES

In very broad terms, two nonoverlapping socioeconomic structures are industrial and military, depending on whether the customers are an elite group of people, such as the military and/or state, or consumers, that is, the people. Among others, there is also a commodities socioeconomic structure exemplified by OPEC countries. Some FSU countries are probably already key players in this type of structure (Einhorn 1994).

Production figures are a natural metric for assessing the relative strengths of the military and industrial components of a military-industrial complex. Production figures for military customers are at least an order of magnitude, sometimes many orders of magnitude, smaller (with profit margins per unit manufactured correspondingly larger) than those of industrial enterprises (Footnote 12).

Profit margins in high-tech industrial enterprises depend crucially on throughput and yield that in turn are correlated to materials knowledge and processing strategies seeking to optimize both yield and throughput in mass production. As production increases, unit price falls and new products with better features emerge that make whole industries obsolete practically overnight (Chandler 1990).

This feature of overnight obsolescence or paradigm shifts is reflected in the tenfold increase in performance to price ratio every 3.5 years in the computer/ semiconductor industry (Prokesch 1993). Indeed, one of the many reasons LCDs have moved from niche to strategic status in the high-tech business is that they are silicon compatible and have all of the features required to bring the power of silicon microelectronics to an increasingly broader base of people: portable computers; multimedia and portable telecommunications; new, cheaper, smarter, and portable consumer products.

Inasmuch as the FSU now fits into an industrial-military complex that can be separated into an industrial component and a military one, the industrial component now largely overlaps the military component. Products from a predominantly industrial, service- oriented complex are appealingly designed because their primary objective is to focus the power of technology on improving peoples' lives. This takes mass production and marketing skills that come from a large number of people with a variety of talents.

In contrast, a key feature of the military component is manufacturing to tight specifications a relatively small quantity of rugged products destined for reliable performance in the execution of demanding but specific applications. Expense and product aesthetics are not significant factors in military applications.

While each country has different factions that can be identified as military- or consumer-driven (Footnote 13), the FSU is now in transition from a primarily military- driven economy to an emerging consumer-driven market economy.

The WTEC panel was impressed by ambitious plans discussed in the FSU for its future in the high-tech market, and the disparity between services that are now options only for an elite group but not for the rest of the country. The FSU has many customers to serve, not exploit. Among other assets the FSU can surely count on are its healthy, bright children now choosing economics, business, and law over science and mathematics. (See Business Prespective.)


Published: December 1994; WTEC Hyper-Librarian