As an example of the problem Abernathy and Hayes see, they cite a manager who said, "In the last year, on the basis of high capital risk, I turned down new products at a rate at leasttwice what I did a year ago. But in every caseI tell my people to go back and bring me some new product ideas." (Ibid., p. 72) Abernathy and Hayes argue that if companies are to maintain or recapture inter- national competitive status, more risks, not fewer, must be taken in innovative production and market development.
A recent management survey likewise suggestedthat while U.S. workers are only two-thirds as productive as their grandfathers were, the fault lies with man- agers, not workers. According to the study, 30 percent of a work day is lost through "scheduling problems, unclear communication of assignments, im-
proper staffing and poor discipline."
The preceding overview has focused on internal indictators of the status of human capital. These seemto suggesta growing weakness. The quality of hu- man capital is also affected by the prevailing societal mentality and by the educa- tional institutions (family and school), which have also turned less favorable to high economic growth (See Etzioni, 1983).
As far as one can tell, major segments of the capital goods sectorwere seri- ously undermaintained from the 1950sto the early 1980s. Plants, machines, and equipment in several key industries grew obsolescentand managersdid not keep pace with the installation of new machines by competitors overseas.This seems to be the case in such major American industries as autos and steel, as well as rubber, textiles, and, for different reasons, shipbuilding. One survey found that at the end of 1978, although some industries had made considerable progress in modernization during the previous two years, the proportion of technologically outmoded plant and equipment was 26 percent in iron and steel, 25 percent in rubber, 18 percent in mining, and 17 percent in autos, trucks, and parts (Eco- nomic Dept. of McGraw Hill Publications, 1978,p. 7). Other industries, suchas petroleum and chemicals, showed stronger innovative signs. The manufacturers surveyed reported that it would cost $126.4 billion to replace all technologically outmoded facilities with the best new plants and equipment (Ibid., p. I). Since this figure excludes all nonmanufacturing industries as well asthe manufacturers who did not reply to the survey, the total outlay neededfor modernization would obviously have been much greater.
It might be said that the decline of someindustries and the rise of others is part of the adaptation of the economy to changing conditions. There is considerable truth in this argument. For instance, in a world of rising oil costs it might serve well to "reduce capacity" in auto manufacturing and build up energy explora- tion. At issue is not drawing up a masterplan but accepting the market's way of adjusting to changed circumstances. At the same time, it is clear that on balance the total American capital goods sector did not fare well between 1950 and the