The fourth in­dus­trial rev­o­lu­tion

CityPress - - Business - DE­WALD VAN RENS­BURG de­wald.vrens­burg@city­

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

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