It is so easy to get frustrated with what is wrong with current global socio-economic developments. Many feel that today’s world lacks the good political leadership that is so essential for long-term prosperity based on sustainable economic growth.

But there is another reality that is far more positive, even if it is rarely brought to our attention by the media.

The World Economic Forum (WEF) annual jamboree in Davos in Switzerland is a melting pot of ideas for political, academic and business leaders. This year the founder and executive chairman of the WEF Klaus Schwab wrote an interesting article on the advent of the ‘Fourth Industrial Revolution’. The digital revolution has transformed the life of the last two generations, but major technology breakthroughs in a number of fields, like artificial intelligence and nanotechnology, are heralding a new industrial revolution that will change the way the next two or three generations will function.

Many are aware of the great changes that the latter part of the 18th century brought about thanks to the new tools and manufacturing processes based on steam and water power. This was the dawn of mechanised machine-based products that replaced laborious hand-made goods.

This first industrial revolution was followed by the massive use of steel to make railroads, cars, chemicals, petroleum, electricity, the telephone and radio. Mass production was the hallmark of industrial life in the 19th and early 20th century. The third industrial revolution started in the latter half of the 20th century with the advent of digital technologies and computers. The dominance of the IT industry that automated processes and introduced robotics to practically every industry is a reality that we take for granted today.

A fusion of technologies that are blurring the lines between the physical, digital and biological spheres

Schwab encapsulates the definition of what the Fourth Industrial Revolution is all about when he says: “A Fourth Industrial Revolution 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 are blurring the lines between the physical, digital and biological spheres.”

The extent to which this Fourth Industrial Revolution will affect the quality of life remains an unknown factor. Some believe that the Fourth is merely an extension of the Third. Others, like Schwab, believe that the changes in people’s lives after this new phase of innovation will be profound.

Schwab argues that the Fourth Revolution will be characterised by velocity. The effect brought about by innovation will be felt much earlier than in previous major industrial changes. Moreover, these changes will affect almost every industry in every country. For a time we will need to deal with massive disruption. Changes in quantum computing will also have a tremendous effect on business systems: “The breadth and depth of these changes herald the transformation of entire systems of production, management and governance.”

The scenario in which “billions of people connected by mobile devices, with unprecedented processing power, storage capacity and access to knowledge” could create endless opportunities for improvement in people’s quality of life. Continuous breakthroughs in artificial intelligence, robotics, autonomous vehicles, 3-D printing, nanotechnology, biotechnology materials science, energy storage and quantum computing are the enablers that will change the way we work and live. But it will also cause major disruptions in economies and societies.

The Third Revolution gave rise to trade globalisation that left many workers unemployed in western economies as manufacturing capacity moved to low-cost developing countries. Unskilled human labour, even in developing economies, will continue to be the major victim of technological advances.

It is difficult to forecast the downside effects of the Fourth Industrial Revolution on sections of our society. Schwab believes that in the future, talent – rather than capital – will represent the critical factor of production. This will give rise to a job market increasingly segregated into low-skill/low-pay and high-skill/high-pay segments, which in turn will lead to an increase in social tensions.

These sobering comments are a clear indication that the next phase of industrialisation will present daunting challenges to business as well as political leaders. Business leaders will have to satisfy more demanding customers’ expectations. They will also have to collaborate more among themselves to promote innovation. The way that business organisations are managed will also have to change.

The way governments function will have to undergo a transformation to deal with the new technological, economic realities that will cause major social tensions and disruptions.

johncassarwhite@yahoo.com

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