03/11/2014 07:38 am ET Updated May 11, 2014

The Third Wave Revisited

Peering into the future is the best way of understanding the past and the present. But what is even more revealing than a view of the future is to go back and look at somebody's attempt to reveal the future some years ago. What did they get right and what did they get wrong? And what does that tell us about the unfolding nature of reality? This week I look at one of the best ever attempts at futurology -- Alvin Toffler's seminal 1980 book, The Third Wave.

His thesis is easily stated. There have been three types of civilization since the dawn of history. Toffler uses the metaphor of "waves" to describe how each new civilization clashes with and begins to supplant the previous one.

The First Wave

The first wave was agricultural society, which was fundamentally the same throughout the world and through the vast majority of history:

"From China and India to Benin and Mexico, in Greece and Rome, civilizations rose and fell ... However, beneath their differences lay fundamental similarities. In all of them, land was the basis of the economy, life, culture, family structure, and politics. In all of them, life was organized around the village. In all of them, a simple division of labor prevailed and a few clearly defined castes and classes arose: a nobility, a priesthood, warriors, helots, slaves or serfs. In all of them, power was rigidly authoritarian."

"Until 1650-1750, therefore, we can speak of a First Wave world. Despite ... hints of the industrial future, agricultural civilization dominated the planet and seemed destined to do so for ever."

The Second Wave

But then the second wave -- the industrial revolution -- transformed the most advanced parts of society. Industrialism brought more powerful technologies, bigger cities, faster transport, and mass education. There were three basic second wave institutions -- the nuclear family, the factory-style school, and the corporation. In 1901 United States Steel was the world's first billion dollar corporation, and "by 1919 there were half a dozen such behemoths".

Second wave civilization was characterized by six principles that ran through every aspect of daily life:

• Standardization

• Specialization

• Synchronization -- everything had to be done at the same time (workers had to arrive at factories at precisely the same time, as did travelers on a train)

• Maximization -- "a kind of Texan infatuation with bigness and growth"

• Concentration -- dependence on highly concentrated deposits of fossil fuel, concentration of capital and a few dominant companies in each industry, concentration in big cities

• Centralization -- power centralized in a few institutions, especially the nation state and its bureaucracy

Toffler actually highlighted another trend, though curiously not adding it as a seventh theme -- that of acceleration. "The pace of first wave life was slow. Communications were so primitive ..." Under the first wave, channels of communication were reserved for the rich and powerful. "The second wave smashed this monopoly ... second wave technology required 'mass-ive' movements of information."

Importantly, Toffler saw industrial society as basically the same, whether capitalist or communist. "The obsessive concern with money, goods, and things," he wrote, "is a reflection not of capitalism or socialism, but of industrialism."

So what was Toffler's third wave?

"The third wave," he said, "is, at one and the same time, highly technological and anti-industrial ... the emergent civilization carries us beyond standardization, synchronization, and centralization, beyond the concentration of energy, money, and power." The third wave supplanted industrialism.

One of the little-noticed curiosities of Toffler's book is that he never supplies a name or a definition of the third wave -- it has to be picked up from hints. But the thrust is basically technological change. "From the mid-1950s," he correctly observed, old-fashioned and electro-mechanical industries such as textiles or iron and steel, "began to be transferred to developing countries, where labor was cheaper." By contrast, the third wave was manifest in the growth of four new industries:

• Electronics and computers

• The space industry

• "Into the depths" -- mining of the oceans for food and minerals

• "the gene industry" -- what we now call biotechnology.

He also says that "information has become the world's fastest growing and most important industry", one that cuts across his four other industries.

He also said that "the essence of second wave manufacture was the long 'run' of millions of identical, standardized products. By contrast, the essence of third wave manufacture is the short run of partially customized products."

He claimed that the new economy required decentralization. "Only disaggregated, increasingly decentralized economic management can work in the new economy, for it, too, is becoming progressively decentralized at the very moment it seems global and uniform ... All these anti-centralist tendencies -- in politics, in corporate and government organizations, and in the economy itself (reinforced by parallel developments in the media, the distribution of computer power, energy systems, and in many other fields) -- are creating a wholly new society."

In other words, what others have called the "post-industrial" society, or in my own phrases "the personalized economy", "the age of creative individuals", or "the age of mass imagination".

What did Toffler Get Right?

He was not the first to draw attention to the trend to post-industrial society, but he did pinpoint six trends with uncanny accuracy:

• The move to his five main industries (including communications) -- most fundamentally the shift to electronics -- and the "offshoring" of basic old industries to the developing countries. It is interesting that when management consultants McKinsey produced In Search of Excellence two years after Toffler, the "excellent companies" included several in the old economy that were about to decline. Toffler was more insightful about business than the business experts.

• The decentralized characteristic of new business and society. He was one of the first to stress the new role of renewable energy, and his book gave great impetus to the "radical right" -- libertarians who believed in freedom in every direction, in a decentralized economy and decentralized government, but also greater personal and social freedom and "green" values. As he predicted, "third wave society will be built on segmentation and diversity" and "a profusion of lifestyles and more highly individualized personalities".

• Toffler was absolutely right about the role of knowledge and imagination in the new world. "For third wave civilization, the most basic resource of all -- one that can never be exhausted -- is information, including imagination."

• He drew attention to the possibility of reuniting the role of producer and consumer -- using the ugly word "prosumer" to connote this change. He drew attention to the trend to DIY (do it yourself) in everything from home improvement to pregnancy tests to therapy (the self-help movement). We can see the role of consumers in helping producers in the rise of supermarkets, in the fast food industry (the customer is her own waitress), in budget airlines (checking in online and carrying bags to the plane), and in ordering a customized computer from Dell. Toffler was absolutely right about increased personalization of goods and the decreased cost in providing variety.

• He highlighted the acceleration of life, both under the second wave, and especially under the third -- "the faster pace at which historical change occurs".

• Finally, Toffler recognized the downside of increased freedom. "We must recognize three basic requirements for any individual: the need for community, structure, and meaning ... the collapse of second wave institutions breaks down structure and meaning in our lives. Individuals need life structure. The absence of structure breeds breakdown." This may be Toffler's most important conclusion, a hugely bigger challenge today than it was in 1980.

An incredibly impressive list of achievements. Future predictions are usually wrong, or half-right at best. Toffler got it mainly right and expressed the upside and downside of the age of imagination in terms that we should heed right now.

Yet we can learn even more about the present and the future from the few vital things that Toffler got wrong in his predictions. That will be the subject of next week's post -- same time, same place, in seven days. Meanwhile, have a happy and thoughtful week!