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The next big thing

There is talk of the fourth industrial revolution. How about spreading the benefits of the preceding three?

Written by Bhaskar Chakravorti | Published: February 6, 2016 12:11 am
make in india, world economic forum, world economic forum annual meeting, meeting in Davos, davos meeting, india growth, india economic growth A man walks at the main entrance of the congress center where the World Economic Forum will take place later this week in Davos, Switzerland, Monday Jan. 18, 2016. (AP Photo/Michel Euler)

The Swiss mountain town of Davos has gone quiet. About a fortnight ago, however, it was abuzz with talk of the fourth industrial revolution: Robots, 3D-printed human organs, driverless cars. Soon it will be time to turn to another global confab, to celebrate India’s preparations to embrace the first industrial revolution; a Make in India extravaganza between February 13-18.

In case you were wondering, the doyen of Davos, Klaus Schwab, in a recent piece in Foreign Affairs, explained the fourth industrial revolution as one that is “building on the third, the digital revolution that has been occurring since the middle of the last century. It is characterised by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.” In other words, this sounds like an inflection point from where one could be launched into staggeringly many directions. Fortunately, we can plan our personal revolutionary itinerary thanks to the World Economic Forum September 2015 report, “Deep Shift”, which lines up the tipping points for key technologies in a most orderly way: Robots and automation (tipping point 2021); Internet of things, wearable Internet, 3D printing and manufacturing (tipping point 2022); supercomputers in our pockets (tipping point 2023); driverless cars (tipping point 2026). Betting on bitcoin? Sorry, you’ve got to wait it out till 2027. And if you are patient, there will be more technological fusion in the years to come: Nanotechnology, genomics, quantum computing, to name a few.

Putting aside our natural fascination with the next big things, the entire reason for getting excited about these industrial revolutions is that, purportedly, they make us better off. Certainly, the first (1760-1850) had set the precedent with dramatic increases in the GDP per capita in the industrialising countries, a trend that continued with the second (1850-1910) based on more complex technologies, such as the internal combustion engine and electricity. However, it should be noted that the take-off of the industrialised world went hand-in-hand with a marked divide between the West and the rest: The first two industrial revolutions gave rise to the industrial haves and have-nots.

Of course, we can look back and ask: Why were Britain and Europe the lucky ones? Why didn’t the revolution begin or even spread elsewhere? There is, of course, no end of theories. Was it Calvinism that encouraged rationality, pragmatism and material gain that promoted industriousness and entrepreneurship? Did Europe get an irreproducible benefit from centuries of colonial plunder at the expense of the have-not societies? Was it “open science”, the Renaissance, the decline of monarchy and inclusive governance? Was Jared Diamond right when

he cited the advantage of geography, climate and natural resources? The real answer is probably a systemic one — some combination of many factors.

Regardless of the reasons for asymmetric development, the third revolution — the one based on digital technologies — was supposed to have been the redeemer of these past sins or systemic advantages; it was meant to be the first truly trickle-down revolution, if you will. Enthusiasts have talked excitedly about the benefits of the simple act of putting mobile phones in people’s hands.

Unfortunately, the third revolution is yet to deliver on its trickle-down promise. Our research on the state of the digital planet suggested that countries around the world are not only at very different stages of digital

evolution, they are also moving at very different speeds. The World Bank’s World Development Report (January) confirms these asymmetries with some sobering statistics: 4.4 billion people have never been online, almost two billion are untouched by digital technologies and 400 million live outside the mobile cellular signal range. Eighty per cent of India has not been online; a little over 70 per cent of Africans have never been online. Even where digital technologies have reached, the economics makes it unreachable. One GB of mobile data in Botswana costs more than twice that of Germany, while fixed-line broadband is 35 times as expensive in Indonesia as it is in Germany.

The third industrial revolution may even have been a bit of a waste on the beneficiaries of the first two industrial revolutions. There are serious questions about how useful these technologies have been for increasing productivity in the industrialised world. According to economist Robert Gordon, the average growth of output per worker in the US was 2.3 per cent a year between 1891 and 1972, a rate matched only briefly between 1996 and 2004, before falling to 1.3 per cent between 2004 and 2012. Granted that not all benefits of digital technologies are captured by productivity statistics; yet, this data is quite damning. In contrast, in the have-not countries, the impact could look very different simply because digital technologies can help these nations play catch-up.

In sum, while the historian Arnold Toynbee may have started popularising the idea of the industrial revolution back in the 19th century, these revolutions — all three of them — are not widely distributed even in the 21st century. My suggestion to our world’s visionaries for the next Davos agenda: Let’s put more innovative energy against getting industrial revolutions, one through three, and their spread to the next six billion. If countries, such as India, with a hundred times the population of 19th century Britain, can get to the first industrial revolution, through Make in India or some other form of catch-up, double its GDP per capita in a tenth of the time that it took Britain and, simultaneously, manage the burgeoning disasters of urban pollution, water shortages and chronic diseases en route — that alone would be revolutionary. Rinse and repeat in other parts of the have-not world. Then we might have a fifth industrial revolution on our hands at a scale thousands of times that of the first. It might even eclipse the impact of the fourth that was all the rage at Davos this year.

The writer is senior associate dean of international business & finance at The Fletcher School at Tufts University and the founding executive director of Fletcher’s Institute for Business in the Global Context. He is author of ‘The Slow Pace of Fast Change’

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  1. K
    Feb 6, 2016 at 11:54 am
    Previous industrialisations have not yielded substantial benefits to the poor. They have also caused environmental degradation. Wordsworth rightly pointed out the perils of haphazard industrial development. The more industrialisation advances, the more poor will be pushed to backfoot. Unemployment rises as machinery replaces men. Only a few corporates would reap the benefits while vast majority would grope in the dark.
    1. A
      Feb 6, 2016 at 1:33 pm
      Labeling is an Art , so too is the art of rankings of the westerners. ( For ex: giving a select someone, MISS WORLD le). On what basis such revolutions are named may not be of relevance if one notices the cries, '' Rich are getting richer- etc'' and repeat attacks of epidemics in advanced Nations. They highly support own agri-outputs to sit back and enjoy others' misfortunes? In Final analysis, except for few technological marvels benefiting as a w, the humankind, rest have all gone into war-fares. Once a Nation builds advanced warfare items, it has to use it- thus, we eliminate time and again a few fellow human-beings on one pretext or other, and justify that too. Or, export them to buy vital items needed to live? Last revolution of automobiles had created a mess; so next revolution will solve it is it? One revolution inducted nuclear bombs- another will find ways to safe-guard from these, is it? Now, how many modern-day diseases have arisen? Will there be another revolution to eliminate them too? ALL talks of revolutions are labels- usually adopted by western powers to frighten havenots or those behind, to make hay while that LABEL shines! There are no compulsions to anyone to go through any of these so-called revolutions - if finally all we get are World wars- 1, 2 ,3 etc etc. But we always call developments later to them, spin-offs!
      1. A
        Arun Sharma
        Feb 6, 2016 at 6:59 am
        Agreed with writer that poor countries still have to get benefit of first industrial revolution. But mobile internet technology will reach to all soon. But we need to see if this will uplift living standards besides giving access to information and entertainment.
        1. M
          Feb 6, 2016 at 7:49 am
          Humanity has to first deal with issues of energy security, rising inequality and the environmental mess created by the first industrial revolution. These are more pressing issues before the benefit of this impending so-called fourth industrial revolution is recognised. It may well turn out more to be a fad that never fulfilled its promise. But provided the above issues are tackled the future can very well be glorious
          1. S
            Feb 8, 2016 at 2:57 am
            Inequality in opportunities and economic conditions is a direct result of feudal systems. In the modern world, there are still remains of feudalism intact. All these forms of feudalisms contribute to the inequalities in opportunities as well as economic status of people. One of these feudal remains can be directly identified and there are of a couple others that are more insidious but make even greater contribution to inequalities in opportunities. The first and possibly the less harmful is the presence of various royalties - the Saudi king, the British queen, the orted kings, queens, princes and princesses of Europe and Asia. This can be directly recognized as feudal and the world can not call itself modern in governance till these systems of royalties vanish. The second form of feudalism is indirect, flourishing unabashedly in the so called democracies - which is, the entrenchment of dynasties within the different realms ociated with democracy. The different political parties in Indian subsonent - Congress party in India, various dals and Kazhagams in India and the different parties in stan and Bangladesh spring readliy to mind. This dynastic entrenchment stunts the onset of real democracy and subverts the real gains democratic forms of governance can provide.To counter this feudalism, political parties and deocratic insutions have to self regulate and people must force them to restrain from such tendencies of dynastic entrenchment. There is another form of feudalism that is even more indirect and is even more insidious, and possibly the greatest and most direct contributor to inequalities. It is much less recognized as feudal as it thrives even in what are considered the developed and elite parts of the world, and is even hailed as free enterprise wich is supposed to usher in economic freedom for the mes. The free enterprise as of now is a misnomer because it indulges directly in the use of the feudal mechanism of employment. Employment is a surrepious form of feudalism in that, employment, for the tenure monopoizes an enterprise's hold over an individual's productive potential and time. Full-time employment is completely devoid of distribution of risk for the employee. An enterprise spreads risks across multiple clients, multiple business opportunities as well as multiple employees. Full time employment constrains an employee in taking all the risk with one employer. This creates a stranglehold of employers over employees, while also making the employer a disproportionate beneficiary of the economic results. To counter this sort of feudalism, employee work hours must be capped at say four in a day or about 20-25 in a week with a given employer. People who want to work more or earn more as employees can work with other employers. This spreads the risk to an extent for the employee and enables people to explore avanues other than employment too. And it can reduce the levels of unemployment across people. Even more desirable would be to do way with the system of employment altogether, which can be instrumental in bringing down the disproportionate nature of benefits. People will organize themselves as enterprises that collaborate with other enterprises to produce products and services.Doing away with employment can really bring down the spread of feudalism and can create much more equal work conditions in economic sphere than what is possible now. Making people responsible for their governments as well as their own work is the desirable direction to take.
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