The Digital Hand, Volume 2: How Computers Changed the Work of American Financial, Telecommunications, Media, and Entertainment Industries (review)

This large and extensive volume is the second in an ambitious projected three-volume series that examines nothing less than how the information revolution of the second half of the twentieth century impacted every aspect of the U.S. economy. The first volume, weighing in at a mere 500 pages or so, was The Digital Hand: How Computers Changed the Work of American Manufacturing, Transportation, and Retail Industries (Oxford University Press, New York, 2004). As its title suggests, it covered the physical industries that were the traditional backbone of the American business (sixteen industries in five industrial clusters, accounting for almost one-half of the U.S. economy). The third volume is planned to cover the government and private not-for-profit sectors, including, notably education.

The present volume is then perhaps potentially the most interesting because it covers the information-centered portion of the economy that one would most expect to be revolutionized by the advent of the computer. Furthermore, the four clusters in the title account for some 40 percent of the U.S. economy and are seen by many observers to be only growing in importance.

The volume is organized, as the first was, by industrial cluster. In each instance—finance, telecommunications, media, and entertainment—James Cortada first describes the role of the cluster in the U.S. economy and traces its full history in broad strokes. He then goes industry by industry and seeks to analyze the impact of computing on it in the past 50 years. Within each cluster, he focuses on the key industries—for example, finance comprises banking, insurance, and brokerage, each of which gets its own chapter. Within each chapter, Cortada zeroes in on certain key cases. At the end of each chapter, he then tries to summarize the trends and their implications. In the volume's final chapter, he then tries to make broad conclusions, which he terms "Lessons Learned, Implications for Management."

Cortada is ideally if not uniquely qualified to approach this important topic. He has been a technologist and a businessman but has also published several important books on computer history. As his title suggests, Cortada feels that just as the work of Alfred D. Chandler, Jr. (The Visible Hand, Cambridge, Mass., 1977) expanded on the explanation of market forces begun by Adam Smith (The Invisible Hand) by incorporating management, his work can add the dimension of technology. In that regard, he also draws on pioneering economists such as Joseph Schumpeter. This is an important attempt at synthesis, and Cortada is to be commended both for taking it on and for what he has managed to accomplish. The material is exhaustively researched and extensively footnoted. Charts and tables help to summarize the data, and the occasional photograph reminds us that technologies and business are not abstract concepts but are human activities.

That being stated, there are some flaws. This volume (like its predecessor) is more business history than technology history. At the same time, as business history, it is focused on the functional aspects of business and ignores more cultural aspects, such as labor history. In fact, there is only scant mention of the consumers of the goods and services of the industries described here, as if innovation was primarily about the supply side only.

The volume also suffers from its own incredible breadth. Although some case studies are fascinating, others seem missing. We learn about ATMs, online banking, and so forth but see nothing of spreadsheets, which surely must have revolutionized the day-to-day manner of doing business for most inhabitants of the banking world.

All in all, however, the importance and the strengths of this volume outweigh the weaknesses. Too often historians of business do not pay close enough attention to technology, whereas historians of technology ignore the business context...