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major industry, and policy in such cases has tended to follow the lines of compensatory short-run aid under the equity criterion.

V. SOME NOTES ON THE NATIONAL REALITY

Other studies commissioned in this series consider the structure and evolution of the territorial distribution, structure, and dynamics of the American society. This brief section makes no pretense of summarizing this complex, powerful, and baffling aspect of our social experience. Rather, it seeks to point to a very few matters of extraordinary importance that are commonly neglected or misunderstood. The first of these is the reliance of territorially oriented programs on manufacturing as the economic base to cure local ills. Central city slums, remote Indian reservations, deathly poor agricultural regions, industrial and mining centers that have come to less, all pitch their hopes in the attraction of industry. This industry is represented, in the mind of the public and that of policy-makers, as manufacturing plants which, humming with activity, put hundreds and thousands of local people to work. This picture happily comes to pass from time to time, but occasional local successes must not deceive us into relying on manufacturing for national unemployment and underemployment problems. The plain truth is that there are not enough of these jobs to go around for all of those who hope for them, so that there cannot be a national solution to the problems of local distress. Consider the reality of the shifting composition of our economy. (See Figure 1.) From 1950 to 1970 non-agricultural employment rose by 56%, while manufacturing employment rose by 27%, a bit less than half. But manufacturing itself had changed during those years. The proportion of managers, salesmen, technicians, accountants, and others other than production workers increased from 18% in 1950 to 28% in 1970. Thus, the total rise of production workers in the twentyyear period was only 12.2%, or one-and-one-half million production jobs in manufacturing. Compare this to a rise more than twenty million in the civilian labor force, and to the decline of five-and-one-half million jobs in agriculture.

Obviously, since distressed areas and other claimants for manufacturing will specialize in branch plants, they will specialize in production workers. Even if all prosperous areas renounced any

Figure 1. Employees on non-agricultural payrolls, manufacturing employment, production workers in manufacturing, nonproduction workers in manufacturing, and farm employment, 1919-1970.

T

non-agricaltural employ

manufacturing employment

production

workers in

manufacturing

non-productio workers in manufacturing

farm employment

1970

Source of data: Handbook of Labor Statistics, 1971, U.S. Department of Labor, Bureau of Labor Statistics, Bulletin 1705.

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claim to such jobs, there are simply not enough of them being formed for national territorial policies to use them as a principal instrument. In other words, the stereotype of factories as a principal economic activity and their location as a fulcrum of national territorial policy is a myth which unfortunately prevails too widely.

A second related reality is the rise of the service sector. This phenomenon has been widely recognized and most completely documented and discussed by Victor Fuchs and most recently by Daniel Bell. Its magnitude is even greater than commonly realized if it is recognized that even within the manufacturing sector there has been a rise of non-production workers who are a form of service sector. But for all of this, we know very little about the structure of the service economy and about the logic of its location patterns. The SIC classification of the service sector is singularly opaque and provides few leads for understanding it. Economic statistics generally are couched in terms of units of physical production which make it virtually impossible to sort out the creative inputs of services. Consider for instance musical tapes and records: the physical object being sold is merely the outward manifestation of a product whose value is created by the artists and by the complex of recording companies, artists' agents, radio stations, and so forth. The price of the object bears little relation to the cost of its physical production. Further, the output of most service activities is measured in national accounts as merely the cost of the inputs. This in effect prevents the analysis of variations in local productivity and comparative advantage.

For territorial purposes the low state of theory and information with respect to the service sector is illustrated by the most commonly used techniques. Input-output and its variants are based almost exclusively on a conception of physical inputs and physical outputs, with the service sector trailing in statistically dependent constant relationships. There is no recognition of the dynamics and contribution of these activities. This returns us to the discussion in Section IV of the distinction between efficiency and development with the prosperity objective. The most rapid rates of development are clearly taking place, in a spatially differentiated manner, within the service or postindustrial sector. Yet our techniques of regional

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analysis treat this as a technologically static sector linked by constant relations to physical production. Similarly, the available location theory is predicated exclusively on the location of physical production. There is hardly a beginning of an understanding, let alone a theory, of the location of the postindustrial sector.

A hypothesis may be put forth here. We have seen that the manufacturing sector, through the rise in non-production jobs, becomes more like the service sector. It may be expected that this service portion of manufacturing may follow a logic of location comparable to that of certain services. Conversely, it appears that many services, as they routinize many of their procedures and devise capital-intensive technologies for their operations, may become more like manufacturing, able to ship their inputs and outputs over long distances, searching for semi-skilled work forces, for large sites, and so forth. Of course, their inputs and outputs are information, and the shipment is transmission by phone or cable rather than by trucks or rail, but we see already that firms such as credit cards, insurance, all types of travel reservations, publishing, direct mail advertising, and certain exchanges can and do locate in places which would have been impossibly remote a few years ago. Thus, the hypothesis is that a dual process is at work: while the slow-growing manufacturing is becoming more like services, the rapidly growing services are becoming more like manufacturing.

If this hypothesis is correct, it has very important implications for the future evolution of the territorial aspects of our society, and it suggests certain lines of possible public intervention through investment in communications networks and their regulation (by legislation and by the FCC) comparable to our earlier development of railroads and highways. It has implications also in terms of training programs and other development strategies. But even if this hypothesis is not correct, the fact remains that it is urgent that we arrive at a better understanding of this emerging reality.

A third and related point has been discussed already but bears repetition here. This is that jobs today are only one source of personal income. In 1970 wage and salary disbursements and other labor income accounted for only 71% of personal income, and this does not take