The various stages through which the service economy has evolved are as follows:
1) Pre-Industrial Stage: Life was characterized as a game against nature. Working with muscle power and tradition, the labor force had been engaged in agriculture, mining, and fishing. Life was conditioned by the elements, such as the weather, soil quality, and water availability. The rhythm of life was shaped by nature, and the pace of work varied with the seasons.
Productivity had been low and bore little evidence of technology. Social life revolves around the extended household, and this combination of low productivity and large population results in high rates of underemployment (workers not fully utilized). Many seek positions in services, but of the person or household variety. Pre-industrial societies are agrarian and structured around tradition, routine, and authority.
2) Industrial Stage: The period between the 18th and 19th centuries is regarded as the industrial revolution era world over. There were many inventions, new transportation modes, technological breakthroughs, and scientific discoveries during this period, especially in European countries.
The predominant activity in industrial society was the production of goods. The focus of attention was on making more with less. Energy and machines multiplied the output per labor-hour and structured the nature of work. Work is accomplished in the artificial environment of the factory, and people tend the machines.
The rhythm of life is machine-paced and dominated by rigid working hours and time clocks. The standard of living becomes measured by the quantity of goods, but note that the complexity of coordinating the production and distribution of goods results in the creation of large bureaucratic and hierarchic organizations.
These organizations are designed with specific roles for their members, and their operation tends to be impersonal, with persons treated as things.
3) Post-Industrial Society: While an industrial society defines the standard of living by the number of goods, the post-industrial society is concerned with the quality of life, as measured by services such as health, education, and recreation. A central figure is a professional person because the information is the key resource rather than energy or physical strength.
After the 19th century, when major industries were already established and when people’s income was expected to grow more, their requirements became more “materialistic,” They began to demand more services in the health, education, and entertainment sectors.
According to Bell, “The transformation from an industrial to a post-industrial society occurs in many ways.”
- There is a natural development of services, such as transportation and utilities, to support industrial development. As labor-saving devices are introduced into the production process, more workers engage in non-manufacturing activities, such as maintenance and repair.
- Growth of the population and mass consumption of goods increase wholesale and retail trade, banking, real estate, and insurance.
- As income increases, the proportion spent on food and home necessities decreases, and the remainder creates a demand for durables and then for services.
According to Ernst Engel, a Prussian statistician of the 19th century, “As family incomes increase, the percentage spent on food and durables drops while consumption of services that reflect a desire for a more enriched life increases correspondingly.”
This phenomenon is analogous to the Maslow hierarchy of needs, which says that once the basic requirements of food and shelter are satisfied, people seek physical goods and, finally, personal development.
Higher education becomes the condition for entry into a post-industrial society, which requires its population’s professional and technical skills. Also, claims for more services and social justice lead to a growth in government.
Concerns for environmental protection require government intervention and illustrate the interdependent and even global character of post-industrial problems. The table given above summarizes the features that characterize the pre-industrial, industrial, and post-industrial stages of economic development.