The 4th Industrial Revolution: A Packaging of Transformative Change?

Thinking & Analysis

MAY 2018

The World Economic Forum (WEF) is best known as the organiser of the annual media spectacle at Davos that brings world leaders together from government and business to show off their ski apparel while making pronouncements about the state of the world.  The WEF is the key promoter of a vision of the future, the 4th industrial revolution (4IR) or Industry 4.0, if you prefer its other label. The prophesizing of the next industrial revolution is an old trope, mobilised both for mundane sales pitches and Utopian visions of a glorious future enabled by a succession of new technologies.  This time around, Klaus Schwab (WEF’s founder and leader), is promoting a vision of transformative change that involves the merging of digital, biological and physical systems to create a cornucopia of new business opportunities accompanied by the uncertainties of major disruption and upheaval.  By the way, one gets to four by adding electrification and the assembly line (2IR), digitisation and automation (3IR) to the earlier changes brought about by steam power and early mechanisation (the 1IR).  In the 4IR, digital technologies enable the massive expansion of genetic design; artificial intelligence (AI) empowers self-starting robots and self-driving vehicles; and advances in the neurosciences blur the interface between humans and their creations.  To their credit, Schwab and colleagues realise that this vision has dark shadows as well as rays of light.  The WEF is an organisation committed to forging international cooperation – a substantial amount of cooperation will be needed to keep those dark shadows at bay. Extensive cooperation, and transformative policy thinking, with approaches that are truly ground-breaking – not just packaged as such.  A revolution is not a revolution unless it bucks trends, forms, ideas, and systems.

If we step back into the world in which we live, we might ask what this vision offers to address current difficulties? The ‘grand’ and ‘wicked’ challenges of climate change, resource exhaustion, income-distribution inequities and the persistence of exclusion and poverty.  These global dilemmas are not ignored but rather enfolded into the 4IR vision.  Are you concerned about greenhouse gases arising from global transport?  The 4IR will bring fundamental change in automobility (those self-driving cars), local production of goods (that new 3D printing), and genetically engineered forests to capture CO2.  If one reads carefully, you will find the need for regulation in the form of carbon taxes which will provide the incentives (and business opportunities) for these and other technological possibilities. All very Frame 2 from a Transformative Innovation Policy perspective.  Similarly, the abundance of innovation stemming from science-based developments will offer the means to re-mediate resource exhaustion with new materials; tackle income-distribution inequities with a re-skilling of the labour force; and stamp-out exclusion and poverty with genetically modified crops.

The 4IR is about techno-optimism and techno-optimists always have a fix that might, in principle, be able to address social needs and challenges.  Sometimes they are right.  However, what has probably changed is the confidence that such solutions don’t exact costs and consequences.  More often, the collateral damage and dislocation accompanying implementation of solutions further deepens the challenges that societies face.  Techno-optimism has had a long license to pursue and implement such remedies.  Perhaps it is time to consider some terms and conditions for its renewal.

Let’s take the example of those AI powered robots which have received so much attention of late with grave predictions of massive job losses.  Historically, responsibility for technological unemployment (innovation-based productivity improvements that eliminate jobs) has been assigned to the displaced workers and society more generally.  If the employment impact of deploying AI-powered robots is going to be large, perhaps it is now time to share the costs of developing jobs for those workers who are displaced.  In other contexts, it is often argued that the private sector is more efficient – why should this be less true of managing displaced human resources?  This is one of many examples where the assumptions underlying modern society need to be re-examined to bring about transformations.  Should human resources be ‘freely disposable’ or do companies have larger responsibilities to the people that make their current activities possible? Some will say that such changes will impede progress which then leads to questions of progress towards what and for whom?

In the techno-optimists’ view of the world, limits are only temporary impediments.  Thus, the claim is that 4IR will alleviate these limits with a long series of innovations – new materials, increased efficiencies and even approaches to the circular economy (greatly increased recycle and reuse approaching no new resource extraction).  Again, to their credit, the promoters of the 4IR set the objective as improving human welfare while remaining agnostic whether economic growth is the best, let alone the sole, measure of this improvement.  What is lacking, however, is a convincing ‘balance sheet’ showing the costs as well as benefits of the 4IR.  Within the vision of 4IR, this balance sheet is evened up by a combination of ex post regulation and economic incentives (e.g. carbon taxes).  The elements of the balance sheet also have a cost in terms of political will and sustained government commitment which, at best, is uneven.  The balance sheet issue is a side point for 4IR promoters because the 4IR, like other revolutionary predictions, presents an either/or choice – either progress toward the 4IR or being left behind.  The rhetoric of being left behind is a way of conveying not only the urgency but also the inevitability of the 4IR. It nails the sale. But, does the 4IR version of the future really take us on to a new, transformative trajectory or are we simply on a new section of the same, worn path?

The audience for the 4IR vision is a mix of decision-makers in the private and public sector, and the science and engineering actors.  There will also be new actors – entrepreneurs who seize upon the opportunities the 4IR offers adding to the private sector decision-maker community.  It is this audience that is expected to make the revolution.  In other words, the existing distribution of power and decision-making is seen as unchanging in the 4IR vision.  Those outside this audience will need to adapt to the changes – by assuring their children receive the appropriate education in STEM (science, technology, engineering, and mathematics) subjects and by finding their own way in this new world.  Ideas about changes in democratic participation and voice are at the far periphery of the discussion.

The 4IR is big and bold – it promises a fundamental transformation of the world in which we live.  However, as packaged by the WEF, the 4IR vision lacks the wisdom that we should have gained from earlier industrial visions, excludes most individuals who will be affected in making choices about how it develops, and poses a stark choice between hastening to adjust to the change or being left behind.  Instead, transformative system change should involve new, deeper and more inclusive means of governing and adapting to change that acknowledge that there are many paths toward the future.  Selecting the ones we follow should be negotiated by all those who will live in that future.


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