The Fourth Industrial Revolution: Boom or Bust ?

The annual meeting of the World Economic Forum was held in Davos, during which, the theme of “the fourth industrial revolution” was brought forward. In more specific words, it was about how to “manage” the fourth industrial revolution. I intend to familiarize you with this idea as I believe we would be hearing that a lot in the days to come. Understanding the socio-economic changes that have come about since the start of the industrial revolution in the 18th century helps make sense of the 4 phase of the revolution.

James Watt’s steam engine kick started an expansionary era where the prime economic base moved towards industries from agriculture. Endless possibilities emerged firstly from England which later trickled down to the rest of Europe and then America. This period and transition is labelled as the industrial revolution. The second was facilitated by the developments in electricity, transport, chemicals, and especially mass production. The effect of the second industrial revolution was evident during the First World War, which was the landmark of modern warfare. The effects of the industrial revolution did spread into other regions including Japan and Russia, which was evident by the 1940s and the Second World War. The third industrial revolution was brought forward by the development and diffusion of information and communication technology

The fourth industrial revolution is defined by the disappearing boundaries between the physical, biological and digital spheres. This is due to modern technological advancements in the areas of artificial intelligence, robotics, genetics, nanotechnology, 3-D printing, internet of things and the list goes on. Despite still being a contested idea and the lack of consensus that the fourth industrial revolution is real, the effects of the above listed fields of technology are widely felt.

This stage of the industrial revolution will empower millions. A network of people who are easily accessible to each other can bring about great possibilities. Artificial intelligence is used now on self driving cars, drones, virtual reality devices and even holograms. 3-D printing has completely changed engineering and CAD/CAM processes giving the individual the opportunity to explore and innovate. Vast amount of data are processed, transferred and stored without limitations on speed or mobility. Engineers, Designers, Scientists, Doctors and Entrepreneurs alike, utilize these aspects of modern technology to bring unprecedented changes in their fields respectively.

To date, a small fraction of the community has been able to experience and enjoy the benefits of innovation. The knowledge gap between various sectors of society has widened both nationally and globally. Even though the developing communities are better off now than they were 30 years ago, it is questionable that these communities are ready to understand and absorb the benefits of the fourth industrial revolution. Many of us would take for granted the ease of which we do everything, about how easy it is to make a reservation, order a cab, shop, do transactions in a matter of seconds. But this ‘new normal’ is far from being generally experienced phenomena. Hence, in a time where we feel that internet is an “essential” aspect of our lives whilst others struggle to secure their source of income, it is important that we do not new technologies bring forward a greater polarization in society.

In terms of economics, these changes do not favour the uneducated and the vulnerable communities of the society. Firms in developed countries are already going through technology intensive changes in all parts of the business cycle. It can be argued that this is not merely due to profit maximizing intentions but rather to retain market share as competitors constantly search for points to exploit. The winners of the market would not be determined by the final product itself as shared knowledge and technologies erase any major difference between products of the same category. The determining factors of who is more successful will be based on how firms incorporate up-to date technologies to the business cycle. Even the consumers and the demand in the markets have undergone change, with customers expecting more personal, more advance, more artistic products. The reason for this is the availability of product knowledge and the availability to a vast selection of substitutes. As a result, this automatically demand more technical knowledge from the employee, more out of the box thinking and more adaptability in terms of multi-disciplinary approaches to work. The value of the individual to a firm would be further diminished as new technologies that can substitute the individual, is introduced every day.

Despite all the great possibilities that the fourth industrial revolution will bring, it also carries a great chance that it will transform the existing system to a polarized, winner-takes-all economy. As mentioned above, while economies demand for high skill workers, automation takes place, and an elite sector of the community owns the technologies, the poorest would never really get an opportunity to incorporate them to the modern world. Even though smartphones are cheap and accessing the internet is a matter of connecting to a wifi network, the understanding that can make a society progressive is often absent. The structural issues that emerged during the first industrial revolution which gave the developed countries an edge over the rest still exist.

Governments do understand that the ‘modern day’ demands different approaches of public engagement. With individuals empowered and connected to networks that spread across national borders, it is no longer possible to keep state activities out in the dark. It is commonly seen where governments feel the upward pressure on wrong policy decisions as it is easier than ever to organize and voice out public opinion. We see communities stand against human rights violation, environmental destruction, corruption and other malpractices and this is quite different from the political culture that existed before in time. On the other hand the new technologies provide governments with new tools for public regulation, such as public surveillance and control over digital infrastructure.

The ability of governments and even individuals to adapt would determine their success under this new era. Today we live in a world full of disruptive technologies that can replace the human in many tasks, in a world where data transfer takes milliseconds, in a world where various sectors are interchanging there expertise to incorporate and gain a competitive edge. Along with these, new security threats, new political threats and new economic threats too, have emerged. Davos 2016 was a start, and with time we would hear more of the real opportunities and threats of the fourth industrial revolution. What is important is that we acknowledge that we live in a fast moving world which includes all the above mentioned aspects, whether we like it or not.

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