Special K

George Kozmetsky and the technopolis concept

By Ralph Tomlinson
December 1989; pages 3, 10-11; Volume 1, No. 3

George Kozmetsky believes in the military-industrial complex - it has made him one of the 100 wealthiest people in Texas and one of the 400 richest in the United States. But to maintain America's role in what he calls the "hypercompetitive" global market, Kozmetsky advocates a new military-government-business-academia partnership. Yet this new partnership is only one element in Kozmetsky's strategy to rebuild the U.S. economy. IC2, or the Innovation, Creativity, and Capital Institute, established in 1977 by Kozmetsky on the University of Texas at Austin campus, has become the impetus for transforming the economic policies of the UT System, Austin, and the nation.

Deep background

Kozmetsky came to UT in 1966 as dean of both the College of Business Administration and the Graduate School of Business, as well as the UT System's Executive Associate for Economic Affairs. He began his academic career as a Harvard Business School instructor, and later became an assistant professor at the Carnegie Institute of Technology Graduate School of Industrial Administration. He left Carnegie in 1952 to take his first post with a major defense contractor - on Hughes Aircraft's Technical Staff at the Advanced Electronics Laboratory.

Thus began Kozmetsky's 20-year hiatus from academia. He moved to Litton Industries in 1954, eventually rising to Corporate Vice-President and Assistant General Manager of Litton's Electronic Equipments Division. Litton has long been involved in the nuclear-weapons industry and defense electronics. Litton has worked with Lockheed on the Navy's nuclear missile programs, assisted in developing cruise missile guidance systems, devised electronic countermeasures systems for the B-52, and jamming systems for other nuclear-capable aircraft.

In 1960, Kozmetsky and a fellow Litton employee, Henry Singleton, founded Teledyne, Inc. Many Americans are familiar with Teledyne's consumer electronics - those wonderful gadgets that are under everyone's Christmas tree one year and at everyone's garage sale the next. But the company also manufactures specialty metals, aircraft engines, remote-piloted aircraft, spacecraft and avionics equipment: all defense-related products.

Kozmetsky continues to serve as Teledyne's director, and on Litton's Board of Directors. In 1977, 11 years after his arrival at UT, Kozmetsky created IC2, first known as the Institute for Constructive Capitalism, later renamed the Innovation, Creativity, and Capital Institute. IC2, according to IC2 Institute: the First Decade, 1977-1987, was established "to subject capitalism to the objective scrutiny of academic research and provide ideas about the ways in which the private sector may respond more effectively to help solve society's problems in a time of rapid socioeconomic and cultural change."

IC2 and industrial policy

Special K and Raymond Smilor
Institute Director George Kozmetsky and Executive Director Raymond W. Smilor

In other words, the institute's main objective is economic planning. While capitalists belittle the centralized planning inherent to so-called communist nations, the U.S. economy is just as planned as any other nation's.

Our economic planning differs from the communist countries only in that we plan on an industry-by-industry basis, or even firm-by-firm, while communist bureaucrats centralize all industrial decisions.

The similarities between communist and capitalist economic planning becomes even more evident when the planners cooperate. IC2, for example, lists "collaborative efforts" not only with several capitalist-oriented European and Asian institutes, but also with China's Beijing Institute of Information and Control, the Institute for Industrial Economics, the National Research Center for Science and Technology for Development and the Technological Innovation Corporation of China. Of the other seven nations mentioned in the report, IC2 collaborates with the same number of institutions in only one other country - Japan.

But Kozmetsky's ultimate collaborative efforts are aimed at creating a new form of city-state - the technopolis. The technopolis is a euphemism of the creation of a national industrial policy, which is, in the final analysis, American's domestic response to foreign political and economic challenges. In foreign policy, America uses trade, monetary or even military policy to respond to threats such as nationalization or commercial competition by foreign governments. This domestic element of the response requires a rethinking of past mistakes and the creation of "new institutional relationships" to counter these challenges.

That's what "Creating the Technopolis" - the title of one of Kozmetsky's books - is all about. "New institutional alliances, driven by the rapid increase in and diversity of new technologies, are altering the strategy and tactics of economic development. As a result, communities across the world are seeking to create modern technopolies or city-states that interactively link technology commercialization with public and private sectors to spur economic growth and diversification," according to Creating the Technopolis: High Technology Development in Austin, Texas, an article first published in the Journal of Business Venturing.

IC2's strategy for building the technopolis focuses on seven segments: "the university, large technology companies, small technology companies, federal government, state government, local government, and support groups." And, as the article's title implies, Austin has become a laboratory for this economic experiment. Developing the technopolis requires three elements: a "coordinated approach to high-technology company development, the presence of a high-quality research university, and the importance of a network of influencers or 'executive champions,'" all of which are present in Austin. And many are a direct result of the IC2's influence.

IC2 and UT

At the heart of Austin's economic restructuring is the University of Texas. In their aforementioned article, Creating the Technopolis, IC2 Executive Director, Raymond W. Smilor; David V. Gibson, a UT assistant professor of management and information systems and an IC2 research fellow; and Kozmetsky, the institute's director; state their view of the University's mission:

"The nucleus in the development of the technopolis is the university segment. The research university plays a key role in the fostering of research and development activities; the attraction of key scholars and talented graduate students; the spinoffs of new companies; the attraction of major technology-based firms; as a magnet for federal and private sector funding; and as a general source of ideas, employees, and consultants for high-technology as well as infrastructure companies. The University of Texas at Austin ... has played a key role in the development and perception of Austin as a technopolis."

The student remains mysteriously absent from this account of the university's role, except as future high-tech industry employees.

As an example of the University's importance in attracting technology, the article offers a case study of Tracor, which was founded by four physicists employed at UT's Defense Research Laboratory. The laboratory, established in 1942, was later renamed the Applied Research Laboratory and marked the beginning of UT's Balcones Research Park.

Exalting Tracor as a model for the future city-state has proven a poor choice. Adm. Bobby Inman, former director of both Naval Intelligence and the National Security Agency, and former Deputy Director of the CIA, has driven Tracor to the brink of bankruptcy. The Austin American-Statesman quoted one business analyst as calling Inman's recent leveraged-buyout of Tracor either "criminal or stupid." Inman controls Tracor through Westmark Co. - a holding company established to purchase defense firms - and is the only member of Tracor's board of directors. While Inman may not understand the delicacies of junk bonds and leveraged-buyouts, he has been a key player in Austin's high-tech industry.

Inman credits Kozmetsky with luring Microelectronics and Computer Technology Corporation, the artificial intelligence - and - software research consortium founded by Inman, to Austin in 1983. And even before Kozmetsky labeled his theories of restructuring our economy "creating the technopolis," Kozmetsky advocated forming a new coalition, a new "paradigm," to enhance our economy. A technopolis, of course, doesn't come cheap - Kozmetsky and other advocates convinced the UT System to purchase land and buildings worth $14 million, as well as some $20 million in computers and research capital, to attract MCC to Austin.

UT and SDI: the defense industry and the technopolis

Ronald Reagan's March, 1983 announcement of the Strategic Defense Initiative provided Kozmetsky with a vehicle to accelerate the formation of this new coalition. "The Microelectronic and Computer Technology Corporation and UT's Center for Electromechanics are part of the new paradigm for SDI," according to Kozmetsky. As the Cold War melts, SDI may become moot. But by studying IC2's role as a lobbyist for SDI, in attracting SDI-related industries to Austin and to Texas, and as a proponent of the commercialization of SDI technology, we can gain some insights into Kozmetsky's technopolis.

For thousands of years, new technology has played a big role in the defense industry. In the Bible, the people of Judah won many battles, but "even with the help of the Lord could not prevail over the inhabitants of the valley, because they had chariots of iron." But the modern technopolis demands a method of quantifying the value of technology - some formula to derive technology's monetary worth. Kozmetsky echoed those sentiments when he spoke at the NATO Symposium on Work, Organizations and Technological Changes in Garmisch-Partenkirchen, W. Germany.

Kozmetsky said that "Technology is a body of knowledge, knowledge is wealth and power, and whoever controls technology controls other resources. Hence, one may say that technology is a master resource." In the late 1970s and early 1980s, many feared that Japan was gaining control of technology, the "master" resource.

Judging from the environment in which Kozmetsky offered this syllogism, and the defense industry's fascination with technology, it's obvious that many were beginning to consider technology not only a master resource, but also a strategic resource.

And when President Reagan announced SDI, defense contractors were not the only ones with their "snouts ... already twitching to get to the trough," as one British defense contractor characterized his nation's desire to join in SDI research. Although some assert that SDI was Reagan's personal fantasy, he certainly wasn't the originator of the idea of a space-based weapons system. Hans Mark, former Air Force Secretary, former Deputy Director of the NASA and currently UT System Chancellor, was an early advocate of the militarization of space and a life-long admirer of military technology.

By late 1983, only months after the President's speech, Austin had already attracted MCC, and Kozmetsky was at UT-Arlington hawking a research center to study robotics and artificial intelligence. In a 1985 Austin American-Statesman article, Kozmetsky notes that: "At the heart of any effective ballistic missile defense system will be a computerized battle management system capable of analyzing millions of pieces of data every second ... The concentrated research effort into supercomputers, artificial intelligence, and computer software will enormously benefit society..."

That same year, IC2 established the Large-Scale Programs Institute at UT-Austin "to study and stimulate the planning, development, evaluation, management and implementation of large-scale technological projects and programs. Examples include the space program, the Panama Canal, and selected defense, public works, transportation, and energy projects that require large capital, a long-time commitment, and have impact on large human populations." Kozmetsky servers as LSPI president.

All this brainpower didn't go to waste. In October 1985, LSPI, the RGK Foundation (whose president is Ronya Kozmetsky), IC2 and Deloitte Haskins & Sells (an accounting and consulting firm with offices in 69 countries, which provides "a full range of integrated services to clients in electronics, medical, high technology manufacturing, and related industries") sponsored a conference on "Commercializing Strategic Defense Technologies: Promises and Projects."

Kozmetsky, addressing the participants assembled in Austin, called SDI "one of the most exciting research programs in U.S. history." Kozmetsky said SDI could generate up to $1 trillion for the private sector. In other words, Kozmetsky's interest in SDI had little to do with "national security." He wanted Austin to get its share of the $1 trillion dollars. Former defense securities James Schlesinger and Harold Brown performed a study confirming Kozmetsky's figures - they estimated that SDI deployment would cost $1 trillion, a huge financial boon for the handful of contractors and universities qualified to participate. The perpetuation of the SDI policy, for Kozmetsky and the University, hinged not on its merits as a nuclear deterrent but as a money maker. The result amounts to a brand of military Keynesianism. Militarization, if Kozmetsky had anything to say about it, would become the driving force of the Austin economy. And in a town with over 300 defense contractors, the potential constituency for such a policy would be large.

But that's not how they portrayed SDI to the public, or to Congress. Less than two months later, Gerold Yonas, Chief Scientist and Acting Deputy Director of the Strategic Defense Initiative Organization, was assuring the House Committee on Banking, Finance and Urban Affairs that SDI "is not oriented toward commercial spinoff. That is not the purpose of this program. The program is to provide the basis for a decision which affects national security in a profound way. It is not a commercial program."

Yonas was replying to the concerns of some committee members, who feared that publicly funded SDI research would benefit the private sector, not only in the United States, but also internationally.

Yet an essay by Yonas appears in the book, Commercializing SDI Technologies. Portions of the book, published in 1987 and sponsored by IC2, were first presented at the institute's 1985 conference. The book opens with an essay by Robert Lawrence Kuhn, an IC2, senior research fellow.

"Although SDI is a program to research the feasibility of an effective defense against ballistic missiles and is not primarily an engine of industrial technological advance, one cannot ignore its potential to augment the American economic power.

"For whereas the defense impenetrability of SDI's systems may be open to debate, the economic endowment of its hypermodern technology is not," writes Kuhn.

But is military research the best method of revitalizing America's economy? Does it really produce spinoffs? An article from the weekly Die Zeit of Hamburg, Germany, reprinted in the March, 1986 edition of the World Press Review, notes that the civilian benefits of military research are widely exaggerated. Japan's consumer electronics industry invented the microchip, for example, and Teflon, often cited as a result of aerospace research, was invented by DuPont in 1938.

According to the article, titled Does Arms Spending Aid Science? a study sponsored by the W. German government found that the only example of a successful "military-to-civilian technology transfer" was air transportation.

Yet Kozmetsky and his cohorts at IC2 remain intent on channeling billions of dollars from taxpayers' pockets into the defense contractors' coffers. Under the guise of national security, American industrialists have bilked the public and corrupted our universities.

As Jeremy Rifkin, of the Foundation for Economic Trends points out, "Large-scale technology and tools reduce the role of the individual's intimate involvement in his or her work and foster authoritarian workplaces." The choices are obvious. Either we can live in the technopolis, or we can adopt Rifkin's vision of the future, in which "small-scale workshops and farms and businesses ... [that] rely upon appropriate technology, will greatly improve our lives by enhancing the way we spend most of our waking hours."