The fourth industrial revolution
Klaus Schwab, the founder and chair of the World Economic Forum (WEF), has been at the forefront of meme making in the business world for decades.
He takes a lot of the credit for people everywhere using the word ‘stakeholder’, as in “stakeholder engagement”.
He is also the not-so-hidden hand behind gluing the word ‘social’ on to just about everything, particularly to the notion of “social entrepreneur”.
Last year the WEF tried to counter the rising tide of anger about inequality by designing an “inclusive growth” index that shifts the focus away from taxing the rich towards “less vaguely aspirational” targets.
For this year’s WEF meeting in Davos, Schwab has dug up US economist WW Rostow from his grave and pronounced the beginning of the so-called fourth industrial revolution.
Rostow started using the term in the 1980s to refer to “microelectronics, genetics, robots, lasers, new industrial materials and new methods of communication”.
It started in the mid-1970s, according to one of Rostow’s many essays on the subject.
To the list of revolutionary technologies, Schwab has added artificial intelligence, 3-D printing and the internet of things, which boils down to the automation of telling machines what to do.
In the 1980s, like now, the prediction was widespread about technological advancements causing unemployment in the rich world and the possibility that the developing world could “leapfrog” into a new phase of economic growth.
The key concern is inequality, says Schwab in an essay released by the WEF.
He is “convinced of one thing”: that the job market will increasingly split into polar “low skill/low wage” and “high skill/high wage” segments.
“The largest beneficiaries of innovation tend to be the providers of intellectual and physical capital – the innovators, shareholders and investors,” he says. This “explains the rising gap in wealth between those dependent on capital versus labour”.
In the new fourth industrial revolution paradigm, inequality is largely the result of technology, argues Schwab. That is in stark contrast to the usual suspects identified in the inequality debate, including a lack of productive reinvestment of profits, speculative financial bubbles, pro-rich tax reforms, illicit financial outflows and “supermanagers” paying themselves too much.
But what does it mean?
The first major WEF publication this week was The Future of Jobs – an attempt to predict what the fourth industrial revolution means for workers.
The publication is based on an online multiple-choice opinion survey of HR and strategy managers at about 366 companies in 13 countries, mostly large multinationals.
The authors explicitly warn that the results cannot really be extrapolated to the world at large and that the calculations around job losses are just “illustrative”.
The survey, in essence, represents the viewpoints of managers in large corporations on which kinds of jobs they will be able to automate in the near future.
The answer is overwhelmingly whitecollar administrative jobs. Manufacturing jobs come in second. Nevertheless, the WEF this week promoted the report, emphasising the prediction that the revolution will cost about 7 million jobs and create 2 million by 2020.
The International Labour Organisation released its own annual World Employment and Social Outlook Report this week, estimating global employment to be at 3.3 billion – making the revolution a threat for 0.2% of the globe’s workers in the immediate future.
That rises to 0.4% when that half of the world’s workforce engaged in small-scale farming and informal activities is left out.
Swiss Bank UBS produced an additional white paper about the fourth industrial revolution for the WEF this week.
It also makes dire predictions about what the revolution will do to the world and, in true WEF fashion, creates an index to rank countries by their “readiness to take advantage” of the new technologies.
Like most WEF-related research, it is based on the electronic opinion surveys the organisation sends to executives at companies all over the world every year.
Despite the talk of a new and unprecedented stage in global economic life, the concrete advice UBS comes up with is very traditional: more labour “flexibility” and stronger protections for intellectual property.
The bank also trumpets its own research into automating much of its payment systems to cut out “middle-skill administrative labour”, echoing the WEF’s own report on likely short-term victims of new technologies.
WEF chairman and founder Klaus Schwab