Jan 23rd 2016

Should Davos delegates live in fear of the ‘Fourth Industrial Revolution’?

by Geoffrey M. Hodgson

Research Professor, Hertfordshire Business School, University of Hertfordshire

The World Economic Forum Meeting at Davos, Switzerland this year is all about navigating a path through the “Fourth Industrial Revolution”. Preceding industrial revolutions were centred on machinery, electrified mass production, and computers. The fourth is premised on emerging breakthrough technologies based on artificial intelligence, nanotechnology, brain research, robots, the internet of things, and much else.

Beneath the branding and the hype, major technological changes are happening that will have enormous implications for the organization of business, the pattern of work, daily life, and the future of capitalism. The rapid pace of change is set to continue, and the world will be very different in 30 years from now.

The publicity for the Davos meeting portends a world of joblessness, low productivity and inequality. But are these inevitable, and haven’t we heard such warnings before? It would be a mistake for delegates to assume that technological changes lead automatically to one set of possible socio-economic outcomes.

Getting it wrong

There is not a one-way causal relationship between technology and socio-economic arrangements. Causality works in both directions.

Financial, corporate, research and other institutions are necessary to finance, facilitate and nurture technological innovation. Furthermore, the diverse institutional arrangements that exist in modern global capitalism – compare the US, Japan, Germany, the UK and China, for example – show that similar technologies can be hosted by quite different financial, legal and business institutions. Consequently, technology alone is not the predictor of the kinds of socio-economic arrangements that may emerge in the next 30 years. 

When considering the future impact of technology, two great economists got it very wrong in the past. In Capital, Karl Marx argued that new technology under capitalism would lead inevitably to the deskilling of the workforce. But as Alfred Marshall pointed out, machines first replace the most monotonous and muscular labour. Other forms of work, involving adaptive skills and judgement, are less-readily replaced by machines.

Marx’s prediction of widespread deskilling has failed to materialise. Historical evidence shows that machines can enhance skills rather than reduce them. But this does not mean that extensive deskilling is ruled out: it is a possible scenario for the future.

Information economy

In another prediction, John Maynard Keynes predicted in 1930 a dramatic shortening of the average working day. He argued that his hypothetical grandchildren might have to work only 15 hours a week to satisfy their material needs. It is true that the average number of working hours has decreased in developed countries, but to nowhere near the levels envisaged by Keynes. Another prediction that has failed to materialise.

Both Marx and Keynes over-stressed the material aspects of production and underestimated the way in which economies entail the processing of information as well as the making of things. Any technology has to be organised, with effective communication between those involved. Specialist organisational, administrative and communication skills are required.

Making connections. A Health Blog, CC BY-SA

With the growing complexity of capitalism, this facet and type of work has increased relentlessly over the last 200 years. It has now reached the point that the majority of work in developed economies involves the processing of information, rather than the production of material things.

Real risks

But we are told that the Fourth Industrial Revolution may change all this, and that is why the Davos delegates are being asked to gravely consider the implications.

The World Economic Forum’s take on the Fourth Industrial Revolution.

One of its key features is that artificial intelligence will develop to the point that it can replace humans in making judgements and in the administration of complex systems. It is also suggested that artificially intelligent systems will soon be able to learn and innovate.

Given this, then, both Marx’s and Keynes’s scenarios become more feasible. We can now, just about, imagine a world run by robots and computers. Humans would be consigned to a life of enforced leisure, a world where humans have no need to learn productive skills.

But this is not necessarily the outcome of the new technology. While artificial intelligence may become capable of sophisticated judgements, it is likely that a number of intuitive human skills will be irreplaceable for a long time to come. Furthermore, it would be both difficult and dangerous to program decisions concerning moral judgement into a machine. These factors leave an important and potentially large space for human intervention.

But within that debate over the future of our information economy lies a genuine, and palpable risk. There are large inequalities in the distribution of wealth, and these will remain unless the high concentration of ownership of capitalizable assets is reduced. Crucially, much capitalizable wealth owned by corporations now consists of immaterial, information-based assets. There is a concomitant danger that monopoly control of key information will also stifle the innovation that allows us to manage this transition.

The outcome of the Fourth Industrial Revolution will depend as much on political and other developments as on technology itself. What is certain, as both Paul Mason and I have discussed in recent books, is that the 21st century will bring massive changes to economic systems and our patterns of work.

This article was originally published on The Conversation. Read the original article.

Geoffrey M. Hodgson is Research Professor in Business Studies at the University of Hertfordshire

He is author of over 15 books, over 130 articles in academic journals, and over 80 articles in academic books. Editor-in-Chief of the Journal of Institutional Economics, published by Cambridge University Press

Principal fields of academic interest: institutional economics, evolutionary economics, the methodology of economics, the history of economic thought, the nature of the firm, social theory.


Browse articles by author

More Essays

May 1st 2021
EXTRACT: " The sad reality is that the Mizrahim (Jews of Middle Eastern and North African descent) were discriminated against from the day of Israel’s inception, whose Ashkenazi (European Jewish) leaders viewed them as intellectually inferior, “backward,” and “too Arab,” and treated them as such, largely because the Ashkenazim agenda was to maintain their upper-class status while controlling the levers of power, which remain prevalent to this day." ..... " The greatest heartbreaking outcome is that for yet another generation of Israelis, growing up in these debilitating conditions has a direct effect on their cognitive development. A 2015 study published in Nature Neuroscience found that “family income is significantly correlated with children’s brain size…increases in income were associated with the greatest increases in brain surface area among the poorest children.” "
Apr 25th 2021
EXTRACT: "We all owe Farah Nabulsi an enormous debt of gratitude. In a short 24-minute film, The Present, she has exposed the oppressive indecency of the Israeli occupation while telling the deeply moving story of a Palestinian family. What is especially exciting is that after winning awards at a number of international film festivals​, Ms. Nabulsi has been nominated for an Academy Award for this remarkable work of art. " 
Apr 25th 2021
EXTRACT: "When I crashed to the floor of my home in Bordeaux recently after two months of Covid-19 dizziness, I was annoyed. The next day I collapsed again. Now I was worried. What I didn’t know was that my brain was sloshing around inside my skull, causing a mild concussion. Nor did I know that I was in for a whole new world of weird and wonderful hallucinations."
Apr 13th 2021
EXTRACT: "Overall, our review has found that there isn’t evidence to back up the claims that veganism is good for your heart. But that is partly because there are few studies ....... But veganism may have other health benefits. Vegans have been found to have a healthier weight and lower blood glucose levels than those who consume meat and dairy. They are also less likely to develop cancer, high blood pressure and diabetes. "
Apr 8th 2021
EXTRACT: "Pollock’s universe, the universe of Mural, cannot be said to be a rational universe. Nor is it simply devoid of all sense. It is not a purely imaginary world, although in it everything is in a constant state of flux. Mural invokes one of the oldest questions of philosophy, a question going back to the Pre-Socratic philosophers Parmenides and Heraclitus – namely, whether the nature of Reality constitutes unchanging permanence or constant movement and flux. For Pollock, the only thing that is truly unchanging is change itself. The only certainty is that all is uncertain."
Apr 8th 2021
EXTRACT: "Many present day politicians appear to have psychopathic and narcissistic traits too. It’s easy to spot such leaders, because they are always authoritarian, following hardline policies. They try to subvert democracy, to reduce the freedom of the press and clamp down on dissent. They are obsessed with national prestige, and often persecute minority groups. And they are always corrupt and lacking in moral principles."
Apr 6th 2021
EXTRACT: "This has led some to claim that not just half, but perhaps nearly all advertising money is wasted, at least online. There are similar results outside of commerce. One review of field experiments in political campaigning argued “the best estimate of the effects of campaign contact and advertising on Americans’ candidates choices in general elections is zero”. Zero!"
Mar 30th 2021
EXTRACT: "The Father is an extraordinary film, from Florian Zeller’s 2012 play entitled Le Père and directed by Zeller. I’m here to tell you why it is a ‘must see’." EDITOR'S NOTE: The official trailer is attached to the review.
Mar 28th 2021
EXTRACT: "Picasso was 26 in 1907, when he completed the Demoiselles; de Kooning was 48 in 1952, when he finished Woman I.  The difference in their ages was not an accident, for studies of hundreds of painters have revealed a striking regularity - the conceptual painters who preconceive their paintings, from Raphael to Warhol, consistently make their greatest contributions earlier in their careers than experimental painters, from Rembrandt to Pollock, who paint directly, without preparatory studies."
Mar 26th 2021
EXTRACT: "Mental toughness levels are influenced by many different factors. While genetics are partly responsible, a person’s environment is also relevant. For example, both positive experiences while you’re young and mental toughness training programmes have been found to make people mentally tougher."
Mar 20th 2021

The city of Homs has been ravaged by war, leaving millions of people homeless an

Mar 20th 2021
EXTRACT: "There are two main rival models of ethics: one is based on rights, the other on duties. The rights-based model, which traces its philosophical origins to the work of John Locke in the 17th century, starts from the assumption that individuals have rights ....... According to this approach, duties are related to rights, but only in a subordinate role. My right to health implies a duty on my country to provide some healthcare services, to the best of its abilities. This is arguably the dominant interpretation when philosophers talk about rights, including human rights." ........ "Your right to get sick, or to risk getting sick, could imply a duty on others to look after you during your illness." ..... "The pre-eminence of rights in our moral compass has vindicated unacceptable levels of selfishness. It is imperative to undertake a fundamental duty not to get sick, and to do everything in our means to avoid causing others to get sick. Morally speaking, duties should come first and should not be subordinated to rights." ..... "Putting duties before rights is not a new, revolutionary idea. In fact it is one of the oldest rules in the book of ethics. Primum non nocere, or first do no harm, is the core principle in the Hippocratic Oath historically taken by doctors, widely attributed to the ancient Greek philosopher and physician Hippocrates. It is also a fundamental principle in the moral philosophy of the Roman statesman Marcus Tullius Cicero, who in De Officiis (On Duties) argues that the first task of justice is to prevent men and women from causing harm to others."
Mar 18th 2021
EXTRACT: "Several studies have recently compared the difference between antibodies produced straight after a coronavirus infection and those that can be detected six months later. The findings have been both impressive and reassuring. Although there are fewer coronavirus-specific antibodies detectable in the blood six months after infection, the antibodies that remain have undergone significant changes. …….. the “mature” antibodies were better at recognising the variants."
Mar 15th 2021
EXTRACT: "Like Shakespeare, Goya sees evil as something existing in itself – indeed, the horror of evil arises precisely from its excess. It overflows and refuses to be contained by or integrated into our categories of reason or comprehension. By its very nature, evil refuses to remain within prescribed bounds – to remain fixed, say, within an economy where evil is counterbalanced by good. Evil is always excess of evil." ....... "Nowhere is this more evident than in war. Goya offers us a profound and sustained meditation on the nature of war ........ The image of a Napoleonic soldier gazing indifferently on a man who has been summarily hanged, probably by his own belt, expresses the tragedy of war – its dehumanization of both war’s victims and victors."
Mar 14th 2021
EXTRACT: "A blockchain company has bought a piece of Banksy artwork and burnt it. But instead of destroying the value of the art, they claim to have made it more valuable, because it was sold as a piece of blockchain art. The company behind the stunt, called Injective Protocol, bought the screen print from a New York gallery. They then live-streamed its burning on the Twitter account BurntBanksy. But why would anyone buy a piece of art just to burn it? Understanding the answer requires us to delve into the tricky world of blockchain or “NFT” art."
Mar 14th 2021
EXTRACT: "Exercise is good for your health at every age – and you can reap the benefits no matter how late in life you start. But our latest research has shown another benefit of being physically active throughout life. We found that in the US, people who were more physically active as teenagers and throughout adulthood had lower healthcare costs."
Mar 10th 2021
EXTRACT: "Although around one in 14 people over 65 have Alzheimer’s disease, there’s still no cure, and no way to prevent the disease from progressing. But a recent study may bring us one step closer to preventing Alzheimer’s. The trial, which was conducted on animals, has found a specific molecule can prevent the buildup of a toxic protein known to cause Alzheimer’s in the brain."
Feb 24th 2021
EXTRACT: "The art historian George Kubler observed that scholars in the humanities “pretend to despise measurement because of its ‘scientific’ nature.” As if to illustrate his point Robert Storr, former dean of Yale’s School of Art, declared that artistic success is “completely unquantifiable.” In fact, however, artistic success can be quantified, in several ways. One of these is based on the analysis of texts produced by art scholars, and this measure can give us a systematic understanding of how changes in recent art have produced changes in the canon of art history."
Feb 24th 2021
EXTRACT: "The most politically sensitive option we looked at was the virus escaping from a laboratory. We concluded this was extremely unlikely."
Feb 16th 2021
EXTRACT: ".... these men were completely unaware that they had put their lives in the hands of doctors who not only had no intention of healing them but were committed to observing them until the final autopsy – since it was believed that an autopsy alone could scientifically confirm the study’s findings. As one researcher wrote in a 1933 letter to a colleague, “As I see, we have no further interest in these patients until they die.” ...... The unquestionable ethical failure of Tuskegee is one with which we must grapple, and of which we must never lose sight, lest we allow such moral disasters to repeat themselves. "