Peril & Promise: “The Fourth Industrial Revolution” And The Reality Gap

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The theme at World Economic Forum 2016 was a “Fourth Industrial Revolution” predicting the radical overhaul of industry towards “cyberphysicality” and severe challenges in terms of tackling resulting unemployment. Some startups are already working on the problem.

The annual extravaganza for the global financial and opinion-making elite held in Davos, Switzerland last week sparked habitual concerns about the remoteness of the decision-making vanguard of the elite from the broader concerns of the global populace, particularly (as every year) at a time of great economic, political and technological upheaval.

Nonetheless, perchance as part of a bid to counteract this impression, the overarching theme this year for the World Economic Forum (WEF) was concern for the division of the economic haves and have-nots on the cusp of what the WEF calls the “Fourth Industrial Revolution”. According to Founder and Executive Chairman Klaus Schwab, the WEF seeks to understand this revolution in terms of a

“…comprehensive and globally shared view of how technology is affecting our lives and reshaping our economic, social, cultural and human environments. There has never been a time of greater promise, or greater peril.”

A Fourth Industrial Revolution?

A “Fourth Industrial Revolution” may be a ‘smart’ way to conceptualize what the WEF suggests is the dawn of a brave new world of combining robotics, hardware and overwhelming computing power to expand information technology beyond “mere” software and into “cyber-physical systems” and the so-called “Internet of Things”.

The underlying concept (challenged by some) is that this 4th revolution, projected to be underway in the next five years and an actuality by 2020, causally follows the first industrial revolution of steam powered machinery and mechanically powered equipment in the late 18th century, the second industrial revolution of electrical power, mass production and the division of labour in the late 19th century, and the third revolution of automated production and then Information Technology in the mid- to late 20th century.

Clearly, the rate at which the world is experiencing industrial (and other) revolutions is accelerating, redoubling challenges for the political management of their inevitable social side effects, such as the broad reallocation of economic and structural resources, rising unemployment because of the totalizing shift in manufacturing and organizational wherewithal to the tech industry, and the accompanying redundancy and shortening utility of existing skill-sets and educations.

Conversely, the ideological justification from powerful tech hubs like Silicon Valley for advancing this agenda of quasi-universally transposing computing power to hardware (and thus further affecting the near-totality of human experience) is problem-solving across multiple industries, whether in health care or transportation (e.g. autonomous cars, artificial intelligence, nanotechnology, etc.) as efficiently as possible via, among other things, the enormous increases in productivity facilitated by automation and the reduced need for the resource of actual human labour. Eo ipso, according to these self-proclaimed prophets, technology can, and should, solve everything.

The central political problem facing policy makers in this automated world, then, is the chasm between, on one hand, increasingly creating a world that can vastly improve the quality of life for the already privileged and deliver on most immediate service and comfort needs, but which simultaneously deprives those left behind this drive towards “techno-utopia” of the socio-economic means for basic survival, limiting their social mobility and exacerbating hardship, and creating an ever-widening gulf of inequality between those employed by or around the tech industry and those condemned to forever stand without it.

A Greater Promise, Or A Greater Peril?

Ergo, Schwab’s ascription of both great promise and great peril to our revolutionary times. The WEF commissioned a report for the Davos event entitled “The Future of Jobs”, which forecasts that

“…current trends could lead to a net employment impact of more than 5.1 million jobs lost to disruptive labour market changes over the period 2015–2020, with a total loss of 7.1 million jobs — two thirds of which are concentrated in the Office and Administrative job family — and a total gain of 2 million jobs, in several smaller job families.”

In other words, the race to transition from not just manufacturing, but traditional office jobs and increasingly also the service sector to an emerging cluster of jobs in “several smaller job families” – many of which will presumably be temporary or part-time, as these too are gradually overhauled by automation and superseded by new technical needs – is creating not just a nationally or regionally-based form of unemployment influenced by local conditions but, increasingly, a more properly global one perpetrated by universalizing socio-economic tendencies. For perspective, the loss of 5 million jobs over the next five years amounts to the entirety of a small European nation like Denmark reaching total unemployment.

According to the report, the industries that will be hit the hardest are: office and administrative, manufacturing and production, construction, arts, entertainment and legal services (!). By contrast relatively smaller gains are forecasted to be made in the business, management, computer, engineering and sales sectors. It is worth noting that because of shrinking consumer bases, businesses will also face increasing challenges: According to Schwab,

“[w]ithout targeted action today to manage the near-term transition and build a workforce with futureproof skills, governments will have to cope with ever-growing unemployment and inequality, and businesses with a shrinking consumer base.”

Irrespective of the promises of Industrial Revolution 4.0, then, the underlying point is clearly that not everything can be outsourced to automation or technical innovation, and that there will be an intensifying pressure on governments and individuals to provide solutions while managing this transition. The need for critical thinking resources, whether at individual or governmental levels, appears more paramount than ever, and something that cannot simply be outsourced to algorithms or artificial intelligence.


These challenges extend to entrepreneurship. It is increasingly clear that a great part of making up the labour deficit is going to have to come from the ingenuity and enterprise of individuals themselves being capable of marketing and capitalizing on unique skills, continually evolving these so as to render them, in Schwab’s phrase, “futureproof”.

Among the top skills identified by the WEF report required by 2020 are: complex problem solving, critical thinking and creativity, and including, perhaps surprisingly, emotional intelligence and “cognitive flexibility.” These to some extent are expected to replace current sought-after skills such as quality control, service orientation and “active listening”. Obvious contradictions notwithstanding, of interest is that the report thereby broadly emphasizes the need for “people skills”.

As if to reflect this, some entrepreneurs and startups are also now focussing energies beyond developing superfluous gaming, communication or party apps onto expanding into areas traditionally occupied by the (failing) Human Resources departments of traditional organizations and businesses in the effort to promote and create new jobs, by offering opportunities to connect talents and skills with needs and new initiatives. Vienna-based StartUs, for instance, is a burgeoning platform that seeks to unite business opportunities with talent and job openings on a Europe-wide basis by trying to match individuals and businesses across Europe directly, circumventing European national borders and engendering mobility and possibility.

Substantive challenges remain to this kind of model (as to many startup ventures – how to grow the business and compensate and retain employees while waiting for an infusion of venture capital, as opposed to being able to estimate revenue based on sales of tangible products?). It is, however, an indication of how individuals are being enjoined to be entrepreneurial about their single greatest resource – themselves. This will likely become the norm rather than the exception so as to survive the overhaul of industry and for individuals to be in a position to retrain and overcome the unemployment trap, and can therefore likely be counted among the challenges and normative underpinnings of “Industrial Revolution 4.0” .

The elite at Davos may often be justly criticized for its distance from the masses, but the WEF’s recognition this year of the challenges facing both the masses and the ruling classes coincides with increasing evidence of the masses’ own initiative and recognition of the necessity of overcoming the reality gap – by themselves.



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