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’