Peter Schwartz has created a storm of controversy with his talk of a Long Boom. The founder of the Global Business Network, a management consulting group, argues that technology is ushering in decades of boundless well-being. But lots of businesses, not to mention investors, worry we might just be in a speculative bubble. So Context decided to challenge Mr. Schwartz a bit. Eminent pollster Daniel Yankelovich, who has tracked the rise and fall of many big ideas, agreed to take the more skeptical side of the debate. What follows is an unusually thought-provoking discussion.

PETER SCHWARTZ: The idea for the Long Boom began from my experience in talking to a great many audiences over the last several years. I encountered a remarkable degree of pessimism. I would ask how many people thought their children's lives would be better than their own. If I got a really optimistic audience, maybe 20% thought the future would be better than the present or the past.

Overwhelmingly, people felt that their children's lives—their employment, education, lifestyles, everything from the environment to crime, all the basic qualities of life—were going to get worse. Somehow or other, they felt we had peaked as a society, and it was downhill from here.

This began at a time when the Cold War had ended, the nuclear threat was gone, and the economy was doing well. But, we were still in the era of down-sizing, corporate restructuring, and so on, and there was an enormous amount of insecurity in the air.

So I started thinking: Was there a plausible optimistic scenario out there that could play the kind of role that the vision of the future in, say, the 1950s and '60s did for our parents' generation? I think that vision motivated an enormous amount of positive change—investment, development, growth, investment in education, and so on—because people believed it was worth investing for a positive future.

I focused on two fundamental issues. One was the role of technology. I could see five technologies that were beginning to hit and that would continue to hit for at least a couple of decades, both changing how we do what we do today and creating whole new industries. Those five were: computers, telecommunications, biotechnology, new forms of energy (particularly fuel cells) and nanotechnology—molecular-scale engineering.

The other had to do with global integration. The point there is that the scope of people participating in the global economy was expanding steadily. In the last wave of growth, in the '50s and '60s, we had on the order of 500 million people participating in the international economy—the people in the U.S., Europe, and Japan. Now it's on the order of between two billion and three billion. In other words, three to five to six times as many people are playing the game this time as last time.

The Long Boom is based on the logic of those two factors together—plus one more. During the last period of growth, we were not especially concerned about the issues of long-term environmental sustainability. Now we need to be. But, fortunately, the technologies that we're looking at would all reduce the impact of human economic activity on the environment. So, one can imagine a scenario of increased economic prosperity with diminishing consequences for the environment. Let me stop there.

CONTEXT: One aspect of the Long Boom that shows up a lot in discussions on the stock market concerns whether we're getting radical productivity improvements through technology or whether we're kidding ourselves. Can you comment before I ask Dan for his initial thoughts?

SCHWARTZ: The issue is actually fairly simple. I think we have our measures really wrong. We have very good measures for an industrial era where the number of hours that it took a man to make a ton of steel was an appropriate measure of productivity. But the number of hours it takes a person to have a new idea or to learn a new skill is not very closely related to the dollar value of that time. The knowledge economy needs new measures. We are not yet even beginning to measure our economy appropriately. When we invent better measures, I suspect we will be quite surprised at how much more productive we have become.

DANIEL YANKELOVICH: I certainly agree. The key skill these days is knowledge in various forms of human capital. And it is not easy to measure human capital. It doesn't show up on the balance sheet. By the way, measuring the wrong things always happens in times of great change.

In the first few decades in which the computer became important, the costs of gearing up and the costs of all the mistakes that people made canceled out the promised improvements in productivity. I think that the first phase of experimentation is now over. Some of the promised productivity from improvements in computers is beginning to kick in.

I want to respond more broadly to what Peter said by emphasizing our areas of agreement. They are broader than the areas of disagreement. The areas of disagreement are actually focused on just a few points.

In general, I think Peter is right about the early '90s. There was an actual turning point, which you don't often get in history. It happened with the dramatic reversal in George Bush's fortunes. In a matter of weeks, he plunged from the highest popularity rating that the polls have ever measured to, I believe, the lowest. That marked the shift from our euphoria about the end of the Gulf War to a realization that our economic problems were going to last longer than people had thought.

I believe the hope that Peter expressed in the Long Boom idea is necessary to counteract doom and gloom. I also think that Peter achieved what he wanted to achieve, which is to stimulate thought, discussion, and debate. Presenting the idea in vivid colors is probably a more successful way of stimulating debate and discussion than a more balanced, shades-of-gray statement might be.

I certainly agree with Peter's idea that there will be greater participation in the global economy and an explosion of technologies, many of which are not as destructive to the environment as some older technologies.

One of my concerns about his Long Boom thesis is that it seems to assign all vitality and responsibility to the market and technology, and not leave room for other factors. The Long Boom assumes that the market will somehow automatically take care of those who lose out because of advances in technology. And, as Peter acknowledges, there will be losers. While those with relevant skills benefit enormously, the punishment for a lack of skills is brutal.

Willy-nilly, technology creates winners and losers in a vivid and remarkable way. Yet I see no sign that the market, in its normal unfolding, is going to do anything except exacerbate the problems of the losers.

SCHWARTZ: Frankly, I believe that, structurally, the federal government has proved itself remarkably inept in many, many areas—particularly in domestic affairs. The cause has to do with the conflicting policy objectives of the several parties and ideologies at work there. Whatever the reason, we find ourselves constantly in half-way measures. Take health care. We're unable to provide the equivalent of national health care that most European countries do, and we wind up with an incredibly expensive, complicated, high-technology system for health. Or take education. We could go down the list.

So, my argument is not philosophical, with respect to whether the government should address the kind of problem you describe. It is simply practical. It says that we have a system of government that doesn't work very well.

YANKELOVICH: The alternative to inept government is not no government. The alternative is not the economic market. Part of my fundamental concern is with a way of thinking that says, pick one or the other—either the market or the government.

I agree there is a consensus in this country that national government doesn't know what it's doing on most social issues. The consensus is even enunciated in Clinton's famous phrase, "The era of big government is over."

I remember the time when, whenever there was a problem, and people started to talk about a solution, they turned to government. That's one of the most amazing changes in our society—that when you talk solutions, you don't automatically talk government policy.

But if government leaves that kind of vacuum, how do you fill it? We're still scrambling around trying to figure that one out. I believe in what (former Sen.) Bill Bradley calls the third leg of the stool—not government, not the market, but "civil society." So I am concerned with the theory that the vacuum automatically gets filled by the market alone.

What is happening to health care is a backlash against that ideology of the market. Managed care was supposed to be a showcase for how market competition could improve care and cut costs. Instead, managed care is giving the market a black eye! People are suddenly saying, "Hey, you mean someone has an incentive to withhold care from me? What kind of a system is that?"

There is a kind of social Darwinism in the United States today. The view is that the market decides who are winners and who are losers, as in the state of nature, and that's the way life is. You just accept it. But that never used to be. In fact, there still is in the country a great concern across the parties with maintaining the safety net for those who get pushed aside. That feeling is one of the reasons that, oddly enough, Republican women helped Clinton get elected. Those women were concerned that their fellow Republicans were riding roughshod over their concerns about the safety net.

SCHWARTZ: Can we turn to the other question: the dark side of technology? For me, the question is: Is this a permanent structural change that we're moving toward—in which more and more people are left in worse conditions because they lack certain skills and because of the nature of the technology? Or is this a transition issue? I think you address the issue very differently depending upon whether it is permanent or transitory.

We've been through a number of technology transitions in which skills have been rendered obsolete, lives have been disrupted, communities have been disrupted. They are inevitable. They are permanent. For agriculture workers, for instance, that's it. That world is gone. We'll never go back to having 60% of people working in agriculture.

The question here in my mind is: Is the world in front of us going to open up and create sufficient room for people of less ability to participate effectively?

My instinct is that, over time, the technology will become easier to use, and the playing field will be leveled some. Let me use a simple analogy. In 1900, if you owned a car, you really had to be a mechanic, because the thing was going to break down. You probably even had to make some of your own spare parts. Only those who were exceptionally mechanically adept—or very wealthy, meaning they could have a number of people handle problems for them—could own the car.

In this economy, unlike the economy of three or four centuries ago, it will be intelligence and knowledge that are exceptionally rewarded and not physical strength or the ability to fight a battle or plow a field. In that sense, the reward structure is permanently changing.

YANKELOVICH: Where I part company with you is with suggestions you've made that somehow increased affluence will create a spirit of generosity, which will then be converted into programs that will bring people up to speed with the technology. And that the market will provide a humane safety net in cases where it's not possible to bring people up to speed.

Now, I hope that happens. I think there's a very good chance, but not by the automatic workings of the market.

All you have to do is look at places where market economies dominate in one or another form, Indonesia, China, Japan, Hong Kong, Singapore— even our own downsizing economy. If there's self-correction, it's not going to come from the market. It's going to come from this "civil society." It's going to come from the culture. It's going to come from other sources, and it has to be deliberate.

Moral virtues are being attributed to the market that don't go with the market. Openness, democracy, freedom, choice, flexibility, adaptability to change, self-improvement, responsibility, fear. Those virtues all belong to the culture and individuals, not with some abstract market mechanism.

SCHWARTZ: The question for me has to do with whether values need to be institutionalized as government policy or whether we can rely on the behavior of the community.

Let me cite two examples, where we can see that community pressure is working and that the policy approach is not.

One is the issue of smoking, where we've seen a dramatic change in America. No one would come into my house today and light a cigarette, whereas 25 years ago they would have. They would have just said, "Where's the ashtray?" Smoking has become socially unacceptable as we've come to realize it is inappropriate.

Compare that with drug prohibition, which has, in my view, failed terribly and produced horrible consequences. Government tried to force a change of behavior on society that it will not and cannot make. In fact, government policy has produced far worse consequences than the actual behavior itself.

The other example is philanthropy and the new generation of young wealthy. What I see going on is that they're being shamed into giving away their money. Bill Gates et al. are being shamed by their fellows in their community. Nobody is compelling them to give away their money. Nobody is saying, "You have to." But they're being embarrassed at public meetings, at cocktail parties, in the communities that they live in. They're being embarrassed by their neighbors and friends in a way that I think is deeply American. They're being told, "Your behavior is inappropriate. You need to give away some of your wealth." And they are, in fact, beginning to do so.

So I have a great deal of faith, maybe too much, in American society to solve its problems without government intervention.

YANKELOVICH: I think they're wonderful examples, and I think you're absolutely right, but I disagree that these things will somehow automatically happen.

SCHWARTZ: I obviously believe in the power of the civil society and the importance of it. So that's not an issue. The question is: By what mechanism do those cultural values and civic virtues get expressed best? I think that in the past—from FDR through Richard Nixon—we would look to the government to achieve the ends we desired. But then that trust in government began to break.

What I'm saying is that I see those same civic virtues now more manifest in market-like behavior and less institutionalized in mechanisms of policy and governance.