By Bo Westas

Researcher at DIK.

/Angles

The fourth industrial revolution is here: labour market, economic factors and competences

Karl Marx (1850) once famously stated that revolutions are the locomotives of history. Let us begin with this proposition but turn it on its head and say that locomotives – and more generally technologies – are the revolutions of history. Our focus then moves from social and political conflicts to industrial and technological breakthroughs and disruptions. If we take this perspective and look back in history, what do we see? We can discern three distinct revolutions, and as a number of observers have recently argued, we might be on the brink of a fourth revolution – a revolution that has the potential to be the most disrupting of them all. Therefore, it was timely that “Mastering the Fourth Industrial Revolution” was the overarching theme when politicians, scientists and industrial leaders met earlier this year at the World Economic Forum in Davos, Switzerland (see, for example, World Economic Forum, 2016).

The first industrial revolution began during the second half of the 18^th century with the advent of steam engines and mechanical production. Human handicraft was replaced by machines, e.g. the Spinning Jenny. The workhorse would gradually be replaced by steam engines and locomotives. This was the breakthrough of modernity[1]. In reaction to the social transformations created by the new technologies, romanticism became a dominant aesthetic form. The second industrial revolution occurred a century later, from circa 1870. In this phase, steam was increasingly replaced by electricity and oil and small-scale mechanical production gave way to large scale industrial production, mass production. Emblematic of this era is the assembly line, e.g. in Henry Ford’s car factories. Moreover, this period was not only characterised by mass-production of things, the invention of different forms of mass media laid the ground for the production of masses, social masses. During this technological disruption, modernism becomes the dominant aesthetic form. If we move forward another century, we encounter the third industrial revolution in the 60-70s. Traditional industry is now being gradually transformed by electronics, computers and information and communication technology (ICT). In the factories, the mass of blue-collar workers are increasingly being replaced by robots as we enter a phase of automated production. This is the period when we enter postmodernity[2]. In the aesthetic field we first encounter the optimistic Factory-produced pop-art by Andy “I want to be a machine” Warhol. This is later followed by postmodern scepticism and eclecticism. According to the French thinker Jean Baudrillard, this is when art – like Warhol’s Brillo boxes – implodes into reality and art history ends. Art continues, but art history is, so to say, history (Gane, 1993, p. 94).

Now, less than 50 years on from the third revolution, we may be entering a fourth revolution where the boundaries between the physical, the digital and the biological worlds break down. According to Klaus Schwab, the founder and executive chairman of the World Economic Forum, this revolution has the potential to transform the way we live, work and relate to each other in much deeper ways than any of the preceding ones (Schwab, 2016). Schwab says that there are three things distinguishing the fourth revolution from the preceding ones: velocity, scope and systems impact. We now move at an exponential pace rather than a linear one. The revolution has immediate consequences not only for one or a couple of industrial sectors, but disrupts almost every industrial sector. Finally, the breadth and depth of these disruptions calls into question our entire systems of production, management and governance. We cannot yet see how the fourth industrial revolution will play out, but we can already identify a number of its building blocks: artificial intelligence (AI), internet of things (IoT), big data, 3D printing, virtual reality (VR), biotechnology, nanotechnology, robotics and quantum computing. Some writers see an optimistic, almost utopian future, while others paint a more dystopian picture[3]. Where will it all end? Nobody knows for sure, but sooner or later – in 30-70 years according to most writers – we will reach some sort of event horizon described in 1983 by the science-fiction author Vernor Vinge as “a singularity”:

“We will soon create intelligences greater than our own… When this happen, human history will have reached a kind of singularity, an intellectual transition as impenetrable as the knotted space-time at the center of a black hole, and the world will pass far beyond our understanding” (Brynjolfsson, 2014, p. 254).

I do not want to side with either utopians or dystopians. I believe in human agency; our future depends on what choices we make and what actions we take. I do, however, see a number of problems we have to tackle. Leaving aside the so called “great challenges”, i.e. environment, climate, demography, migration, I want to mention three sets of obstacles we will have to deal with when entering the fourth industrial revolution. The first set concerns jobs and the labour market, the second relates to economic factors and the third concerns competences and the relevance of today’s school, education and training.

First, what influence will the fourth industrial revolution have on jobs and the labour market? If we are to believe recent analyses and projections, the impact of the new technologies will be strong and far-reaching. According to the two Oxford researchers Frey and Osborne, almost half of total US employment is at risk of being lost due to computerisation (Frey & Osborne, 2013). In a follow-up study examining the Swedish labour market, Stefan Fölster came to the conclusion that over 50 percent of the existing jobs in Sweden can be replaced with computers and robots during the next 20 years[4]. This process of replacement does not hit the labour market in an even way. It strikes hardest at middle-class jobs. The result is a labour market increasingly segregated into “low-skill/low-pay” and “high-skill/high-pay” segments. Middle-class jobs disappear, no matter if they are blue-collar or white-collar. This process has consequences far beyond the labour market. It leads to political instability. Even as far back as ancient Greece, Aristotle warned of the negative political consequences of a hollowing out of the middle class. The polarisation in the ongoing American presidential race has been interpreted in just these terms, i.e. the hollowing out of the middle class.

Of course, new jobs will be created. Look back 100 years and you will find that many of today’s jobs did not exist. That may be a comforting thought – until you realise that computers may actually overtake many of the new jobs too. So this time, it might actually be different. We may finally face what John Maynard Keynes almost 90 years ago termed “technological unemployment”:

“We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come – namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour” (Keynes, 1930, p. 3).

But are jobs all that important? After all, leisure time is not all that bad. You may not have a steady job, but there will always be things to do. You can spend your time on, for example, consumption, communal creativity or contingent temporary jobs (Thompson, 2015). Perhaps we will even reach that Marxian utopia where you can do “one thing today and another tomorrow, to hunt in the morning, to fish in the afternoon, rear cattle in the evening, criticize after dinner, just as I have in mind, without ever becoming hunter, fisherman, shepherd or critic” (Marx, 1845). Unemployment is not an eternal concept, but something that was born with industrialisation and factory work. The real problem is not whether you have a steady job, but whether you have enough money for a reasonable living standard. This leads us to the second set of obstacles.

The technologies of the fourth industrial revolution follow a “winner-takes-all” logic. They may still be locally developed, but they almost instantly have a global reach and impact. What consequences follow from this fact? Erik Brynjolfsson and Andrew McAfee explain one fundamental fact in their book The Second Machine Age, namely that relative advantage leads to absolute domination:

“In a traditional market, someone who is 90 percent as skilled or works 90 percent as hard creates 90 percent as much value and thus can earn 90 percent as much money. That’s absolute performance. By contrast, a software programmer who writes a slightly better mapping application – one that loads a little faster, has slightly more complete data, or prettier icons – might completely dominate a market” (Brynjolfsson & McAfee, 2014, p. 153).

As you can see from this example, a slight advantage turns into a total win; the logic of the fourth revolution has a tendency to lead to greater inequality. This is bad news since our starting point is a situation where the richest one percent have more wealth than the rest of the world combined (OXFAM, 2016). Thus, we already have an extremely unstable system, and into this system we inject technologies that further enhances economic inequalities and, consequently, more instability. And as if this was not enough we are – despite the harsh austerity measures that have been implemented in a number of European countries – steadily building up a rising global debt burden (Bank for International Settlements, 2016). In the short-run, many of the world’s central banks, including the European Central Bank (ECB), have handled these problems by turning to negative rates and money-printing. In the long run, however, this is not a viable policy. If we extrapolate curves describing debt and inequality, we can see that they point toward a future where we could face a possible social revolution.

The global wealth pyramid. Source: James Davies, Rodrigo Lluberas and Anthony Shorrocks, Credit Suisse Global Wealth Databook 2015, as included in Global Wealth Report 2015.

Third, if we want to avoid a society dangerously divided along economic and political lines one of the most important things we can do is to invest in education and training, and from an early school-age instil an ability for lifelong learning in all members of society. It is questionable, though, whether today’s education system (from primary education to tertiary) has a form and a content that is conductive to the development of competences necessary for active and productive participation in the society and work-life of the future. I would argue that today’s school system – at least on primary and secondary level – was developed to satisfy the needs of the second industrial revolution. And we are now on the brink of the fourth revolution. The European Union has been foresighted and has defined eight key competences for lifelong learning (European Union, 2006). These competences should play a much more prominent role in the design of a school for the future.

A reform of the school system will not directly benefit today’s art and cultural management students. However, this does not mean that they are losers. I would actually argue the opposite, that they are better equipped than most other groups. A recent report from World Economic Forum, “The Future of Jobs. Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution”, lists the Top 10 skills needed in 2020 based on information from chief human resources and strategy officers from leading global employers[5]. The list looks like this:

1. Complex problem solving
2. Critical thinking
3. Creativity
4. People management
5. Coordinating with others
6. Emotional intelligence
7. Judgement and decision making
8. Service orientation
9. Negotiation
10. Cognitive flexibility

Now, as a trade union “policy professional” I may have a partial view on things, but I find the above skills prominent among many professional groups in the fields of culture, communication and media, not least among arts and cultural managers. This leads me to a fairly positive conclusion: admittedly, going into the fourth industrial revolution, the labour market and society as a whole face challenges and changes, but professionals in the fields of culture, communication and media are not in a worse position than other groups in the labour market. On the contrary, there are reasons to believe that there will be a growing demand for their skills and competences.

Questions for further discussion

1. The industrial revolutions were accompanied by “aesthetic reactions”. The first revolution by romanticism, the second by modernism, the third by pop art followed by postmodernism. Is it possible to identify an aesthetic reaction to the fourth industrial revolution? If so, how would you characterise it?

2. Work can be seen as three things: a means to produce goods, a means to earn income and an activity that gives meaning to life. If robots and artificial intelligences take over a large part of work connected to the production of necessary goods, we are left with two problems: a) work is a way to earn income. How do we create a viable and sustainable economy if there is a scarcity of paid jobs? Could a “universal basic income” be a solution?, and b) a paid job is not necessarily the meaning of life, but work may be. Or is this positive idea we have about work giving meaning to life just an ideological construct stemming out of the Protestant Ethic (Weber)?

3. In my view cultural managers have many of the top 10 skills listed above. Am I right about this? If I am right, do cultural managers acquire these skills during training or through work experience?

References

BANK FOR INTERNATIONAL SETTLEMENTS (March 2016) BIS Quarterly Review. http://www.bis.org/publ/qtrpdf/r_qt1603.htm

BRYNJOLFSSON, E. & MCAFEE, A. (2014) The Second Machine Age. New York: W.W. Norton.

EUROPEAN UNION (2006) Key competences for lifelong learning. http://eur-lex.europa.eu/legal-content/BG/TXT/?uri=URISERV:c11090

FREY, C. B. & OSBORNE, M. A. (2013) The Future of Employment: How susceptible are jobs to computerisation? http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf.

GANE, M. (ed.) (1993) Baudrillard Live. London and New York: Routledge.

KEYNES, J. M. (1930) “Economic Possibilities for our Grandchildren”. http://www.econ.yale.edu/smith/econ116a/keynes1.pdf

KURZWEIL, R. (2005) The Singularity is Near. New York: Penguin.

MARX, K. (1845) The German Ideology. https://www.marxists.org/archive/marx/works/1845/german-ideology/ch01a.htm

MARX, K. (1850) Class Struggle in France. https://www.marxists.org/archive/marx/works/1850/class-struggles-france/ch03.htm#locomotives

OSTROM, N. (2014) Superintelligence. Oxford: Oxford University Press.

OXFAM. “An Economy for the 1%”. OXFAM Briefing Paper, 210, 18 January 2016. https://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/bp210-economy-one-percent-tax-havens-180116-en_0.pdf

SCHWAB, K. (2016) The Fourth Industrial Revolution. World Economic Forum 2016.

STIFTELSEN FÖR STRATEGISK FORSKNING (2014) Vartannat jobb automatiseras inom 20 år – utmaningar för Sverige. Sweden: Trydells Tryckeri.

THOMPSON, D. (2015) “A World without Work”. The Atlantic, July-August 2015. http://www.theatlantic.com/magazine/archive/2015/07/world-without-work/395294/

WORLD ECONOMIC FORUM (19 January 2016). “The 10 skills you need to thrive in the Fourth Industrial Revolution”. https://www.weforum.org/agenda/2016/01/the-10-skills-you-need-to-thrive-in-the-fourth-industrial-revolution.

[1] When did we enter modernity? This is a contested question people write long books about. In my own understanding, the advent of modernity coincides with the period when Goethe worked on Faust (1770-1830). Goethe’s Faust is actually one of the best descriptions of what happens to human relationships and society when industrial modernity replaces agrarian rurality.

[2] Have we ever entered postmodernity? There are differences of opinion on this question. Sometimes these differences are simply due to confusion between “postmodernism” and “postmodernity”. Postmodernism refers to an aesthetic movement, while postmodernity refers to a historic moment. My own opinion is that it is possible to detect a significant break with the logic of modernity. I would even go as far as arguing for a precise date for the transition into postmodernity: August 15, 1971. On that day the US president Nixon ended the convertibility of the American dollar into gold. Consequently, currencies lost a material footing and began to float relative to each other, and soon the relativity of currencies translated into the more generalized relativity of all values that is so central to postmodernity.

[3] For an optimistic view see, for instance, Ray Kurzweil (2005). Nick Ostrom (2014) present us with a more problematic future in Superintelligence.

[4] More information in Stiftelsen för strategisk forskning (2014) (only in Swedish).

[5] For a short overview, see World Economic Forum (2016). For the full report, see http://www3.weforum.org/docs/WEF_Future_of_Jobs.pdf.

Bo Westas

Bo Westas is a researcher at DIK, which is a Swedish trade union organising academically trained experts in the fields of culture, communication and media. Before joining DIK Bo Westas worked as a teacher in Cultural Studies at Uppsala University. He studied philosophy at undergraduate level and Peace and Conflict research at postgraduate level.

Header image: Rugosidades by Daniel Godoy on Flickr// CC BY-NC-SA 2.0