The Fourth Industrial Revolution does not exist!

It is finally out the book conceptualized two years ago by German economist Klaus Schwab, inventor of the “exclusive Davos Club”  (the World Economic Forum).

It took him two years to get from the initial definition paper published by the Foreign Affairs Review (which can be viewed here based on the original Davos paper that can be downloaded here )   to the actual book that is presented by the publisher as a great novelty in the panorama of the new ideas (but really only repeats in the “chow and spit” format, concepts that Jeremy Rifkin has been expressing in due and fully researched fashon for the last 30 years, since he wrote his book “Entropy“.

Mr

Schwaub, defines his idea of Fourth Industrial Revolution” as  “ the inexorable shift from simple digitization (the Third Industrial Revolution) to innovation based on combinations of technologies (the Fourth Industrial Revolution)“. This very statement suggests that the author did not took the bother to even read the back of the cover of THE THIRD INDUSTRIAL REVOLUTION, book, never mind reading “THE ZERO MARGINAL COST SOCIETY” where all the aspects of the “the innovation based on combinations of technologies” are exhaustively covered since 2014, when he did not even know that Industrial Revolutions exist.

Schwab argues (echoing Rifkin)   “the key technologies driving this revolution and discusses the major impacts expected on government, business, civil society and individu­als. … We all have the opportunity to contribute to developing new frame­works that advance progress”.

But the only concrete suggestion that comes out from his pen is a warning at risks implied by the possible social riots that will be unleashed by the unavoidable effects to “disrupt the labor market” . In fact Schwaub argues that “the revolution could yield greater inequality, particularly in its potential to disrupt labor markets. As automation substitutes for labor across the entire economy, the net displacement of workers by machines might exacerbate the gap between returns to capital and returns to labor. On the other hand, it is also possible that the displacement of workers by technology
will, in aggregate, result in a net increase in safe and rewarding jobs.
We cannot foresee at this point which scenario is likely to emerge, and history suggests that
the outcome is likely to be some combination of the two.

Yes, Mr Schwaub belongs to that old school that thinks that economic scenarios “emerge”  alone by themselves like irresistable forces of nature,  No possible doubt that “economic scenarios”  are designed and forged by man. They simply “happen” by decision of the Gods of the Economy (with Capital E) because the Economy is a Science governed by unchangeable laws like Physics, laws which human beings cannot govern or influence but can only observe and suffer.

Then the Author goes on.

Discontent can also be fueled by the pervasiveness of digital technologies and the dynamics
of information sharing typified by social media. More than 30 percent of the global population
now uses social media platforms to connect, learn, and share information. In an ideal world, these interactions would provide an opportunity for cross­cultural understanding and
cohesion. However, they can also create and propagate unrealistic expectations as to what
constitutes success for an individual or a group, as well as offer opportunities for extreme
ideas and ideologies to spread.

Yes because, you know? all these people enabled by new technologies might get the wrong idea and pursue protagonism true false ideologies spread…

Also government must be aware of the danger!

As the physical, digital, and biological worlds continue to converge, new technologies and platforms will increasingly enable citizens to engage with governments, voice their opinions, coordinate their efforts, and even circumvent the supervision of public authorities.”

God forbid! Do not let the citizen  use the new technologies and platforms to circumvent the supervision of public authorities. The government must be in charge. Of course not with businesses. That would be an intrusion in economic freedom. But when it comes to simple citizen, then the government must use all its authority to prevent “citizen to engage with covernments”…

The analysis on what the government should and shuould not do in face of this new “citizen enabling” revolution goes on: ”

“Ultimately, the ability of government systems and public authorities to adapt will determine their survival. If they prove capable of embracing a world of disruptive change, subjecting their structures to the levels of transparency and efficiency that will enable them to maintain their competitive edge, they will endure. If they cannot evolve, they will face increasing trouble.
This will be particularly true in the realm of regulation. Current systems of public policy and decision-making evolved alongside the Second Industrial Revolution, when decision-makers had time to study a specific issue and develop the necessary response or appropriate regulatory framework. The whole process was designed to be linear and mechanistic, following a strict “top down” approach.
But such an approach is no longer feasible. Given the Fourth Industrial Revolution’s rapid pace of change and broad impacts, legislators and regulators are being challenged to an unprecedented degree and for the most part are proving unable to cope.
How, then, can they preserve the interest of the consumers and the public at large while continuing to support innovation and technological development? By embracing “agile” governance, just as the private sector has increasingly adopted agile responses to software development and business operations more generally. “

Finally, Mr Schwab becomes a faithful supporter of Jeremy Rifkin’s vision and concluding on a high note declares that “In the end, it all comes down to people and values. We need to shape a future that works for all of us by putting people first and empowering them. In its most pessimistic, dehumanized form, the Fourth Industrial Revolution may indeed have the potential to “robotize” humanity and thus to deprive us of our heart and soul. But as a complement to the best parts of human nature—creativity, empathy, stewardship—it can also lift humanity into a new collective and moral consciousness based on a shared sense of destiny. It is incumbent on us all to make sure the latter prevails

But these are just words. The facts remain that governments must “embrace agile governance” and “mantain their competitive edge” (a concept that should not apply to public powers but only to private businesses).

Bearing in mind that the above mentioned definitions given by the authors, of the Third and the Fourth Industrial Revolutions clearly shows that he has not understood either, we then go now to see more in detail how according to Mr Schwab the industrial revolutions can be recognized:

Schwab says that the First Industrial Revolution introduced steam-powered and mechanized production. The Second Industrial Revolution introduced electric power and mass-production processes. The Third Industrial Revolution introduced the digitalization of technology. He then declares that “now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the end of the last revolution. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.”

But here’s the hitch. The very nature of digitalization — which characterizes the Third Industrial Revolution — is its ability to reduce communications, visual, auditory, physical, and biological systems, to pure information that can then be reorganized into vast interactive networks that operate much like complex ecosystems. In other words, it is the interconnected nature of digitalization technology that allows us to penetrate borders and “blur the lines between the physical, digital, and biological spheres.” Digitalization’s modus operandi is “interconnectivity and network building.”  In other words the  “simple digitization” that is supposed to characterize the Third Industrial Revolution and the “innovation based on combinations of technologies”  that is supposed to connote the Fourth Industrial Revolution, perfectly coincide in the Third Industrial Revolution. That’s what digitalization has been doing, with increasing sophistication, for several decades. This is what defines the very architecture of the Third Industrial Revolution.

Which raises the question: why, then, a Fourth Industrial Revolution? Here we should ask the enlightement of Jeremy Rifkin who, in an editorial published by th Huffington Post on January the 15th (that you can read in its full lenght at this link:  https://www.huffingtonpost.com/jeremy-rifkin/the-2016-world-economic-f_b_8975326.html ) explains: “Perhaps, realizing he’s on thin ground, arguing that “blurring the lines” between the physical, digital, and biological world is somehow a qualitatively “new development” that necessitates the postulation of a Fourth Industrial Revolution, Professor Schwab switches his argument away from what the technology does, concentrating rather on the dramatic temporal, spatial, and organizational effects of digitalization, suggesting that the changes are so pronounced that they warrant the exiting of the Third Industrial Revolution and the entrance of the Fourth Industrial Revolution onto the world stage. Schwab writes, “there are three reasons why today’s transformations represent not merely a prolongation of the Third Industrial Revolution, but rather the arrival of a Fourth and distinct one: velocity, scope, and systems impact.” On closer examination, Schwab’s argument that a qualitative change in the velocity, scope, and systems impact of the new technologies forces a shift from a Third to a Fourth Industrial Revolution fails to hold up on several grounds.
The plunging fixed costs of digital technology, the near zero marginal cost of utilizing it and the intrinsic interconnected nature of the technology itself is what has enabled a qualitative leap in “velocity, scope, and systems impact” for the past twenty-five years. Certainly Professor Schwab is aware that digital technology — the heart of the Third Industrial Revolution — has been responsible for unleashing exponential curves, disrupting entire sectors of the economy, and creating new business models for several decades, beginning with the doubling of capacity and the halving of cost of computer chips at Intel, bringing the cost of computing to near Zero Marginal Cost.
Wherever digital technology has spread — personal computers, cell phones, the World Wide Web, social media, data storage, digital music and video, renewable energy technology, fabrication technology, robotics, artificial intelligence, gene splicing and gene sequencing, synthetic biology, GPS tracking, and now the Internet of Things — the velocity, scope, and systems impact has been both exponential and transformative. Again, this has been going on for decades.

The music industry, television, the news media, the knowledge sector, and more recently, the energy sector, transport sector, and retail sector have been massively disrupted and diminished by the free sharing of music, YouTube videos, e-books, social media, Wikipedia, and Massive Open Online Courses at near Zero Marginal Cost. Millions of people are also producing renewable energy at near Zero Marginal Cost, car sharing and home sharing at low marginal cost, producing 3D printed products at low marginal cost, and increasingly transferring their shopping to virtual retail. At the same time, while traditional industries have declined, thousands of new entrepreneurial enterprises — some profit driven, others nonprofit — have arisen. These new enterprises are harnessing the productivity potential of the digital revolution by creating the digital platforms, algorithms, apps, and interconnections, speeding humanity into the digital era and a Third Industrial Revolution.

Still, despite the fact that for several decades now, the introduction and spread of digital technology and accompanying networks across sector after sector has gone hand-in-hand with exponential curves whose velocity, scope, and systems impact has been massively disruptive and forced a wholesale rethinking of the way we do business, Professor Schwab argues that “the speed of current breakthroughs has no historic precedent.” Quite the contrary.

Nor are exponential curves and velocity, scope, and systems impact only unique to the digital revolution. Consider, for example, the exponential curves and the velocity, scope, and systems impact that accompanied the First Industrial Revolution as society was forced to make a wholesale transformation from a largely agricultural society to an industrial economy in less than four decades. Would Professor Schwab have said that the dramatic change in velocity, scope, and systems impact during the First Industrial Revolution justify naming it a Second Industrial Revolution at some point, even though the defining technologies of the First Industrial Revolution were still operational and not yet replaced by the Second Industrial Revolution technologies and infrastructure? Doubtful!”

What makes a break between Industrial Revolutions os not a quantitative change in pace and velocity of the defining technologies, but a quality change in those technologies. This happens, (explains Rifkin), when three defining technologies emerge and converge to create what we call in engineering, a general purpose technology platform that fundamentally changes the way we manage, power, and move economic activity: new communication technologies to more efficiently manage economic activity; new sources of energy to more efficiently power economic activity; and new modes of transportation to more efficiently move economic activity.
For example, in the 19th century, steam-powered printing and the telegraph, abundant coal, and locomotives on national rail systems gave rise to the First Industrial Revolution. In the 20th Century, centralized electricity, the telephone, radio and television, cheap oil, and internal combustion vehicles on national road systems converged to create an infrastructure for the Second Industrial Revolution.

These are not simple quantitative changes of the technologies velocity and pace! These are quality indications of an historic great economic paradigm shift!
That’s what qualifies as a new industrial revolution and not a simple modulation of intensity of the same industrial revolution.

This is where Mt Schwaub theory falls to its epic fail!

As Jeremy Rifkin concludes, ” The Third Industrial Revolution — the digital revolution — has yet to reach its vast potential, making it far too early to declare it over and done. It is possible that a new technology revolution, as powerful, expansive, and far-reaching in its impact on society as digitalization, will come along in the near or distant future, at which time we might affix the label “Fourth Industrial Revolution.” Until then, we can safely mantain that the Fourth Industrial Revolution does not exist!