Book review, EU – Baltic States, Technology

Evidences of present changes abound: mobile supercomputers, artificially-intelligent robots, self-driving cars, neuro-technological brain enhancements and genetic transformations, to name a few.  

Historic transformation periods in the previous “revolutions” have been profound too; but the ramifications of the latest technological revolution are more profound than in any other period in human history. The author postulates that we are in a new historic period dubbed “the fourth industrial revolution”, or 4IR*).

Professor Klaus Schwab, founder and executive chairman of the World Economic Forum, has been at the centre of global affairs for over four decades. He is convinced that crowd-sourcing ideas, insights and wisdom from business, government, civil society and youth leaders, could “uncover the future” and ensure that mankind shall take collective responsibility to ensure that 4IR produce positive outcomes.  

His purpose is definite: the raising awareness of the 4IR’s scale, speed and impact; specifying core developmental/economic issues and highlighting possible responses; and providing a platform for public-private partnerships to address challenges and unlock opportunities.

*) Schwab K. The Fourth Industrial Revolution. - World Economic Forum, Cologny/Geneva.-2016, -184 pp. The book can be downloaded from the following link: http://www.amazon.com/Fourth-Industrial-Revolution-Klaus-Schwab/dp/1944835008/ref=tmm_pap_swatch_0?_encoding=UTF8&qid=&sr=

The book was presented at the last World Economic Forum in January 2016; our magazine has written about the event and Forum’s revolutionary insight into the global future.

See: Davos proclaims the “fourth industrial revolution” (27.01.2016)

4IR: general impact and consequences

Professor Schwab records three components (called “drivers” and “megatrends”) of the “new revolution” (pp. 14-26): = physical, = digital, and = biological. All three are closely interrelated, though each having its own importance on peoples’ lives.

Thus, there are several physical “manifestations”, e.g. autonomous vehicles, 3D printing, advanced robotics and mew materials, for example graphene.

Digital component, often called “internet of all things” (IoT), revolutionizes relationships between “things” (products, services, places, etc.) and people, e.g. Uber, Airbnb and Alibaba.  

Innovations in biological realm (and genetics, in particular), the author claims are breath-taking as well.

Mentioned components of the 4IR are supplemented by the “tipping points”, giving rise to their practical applications and implementation. Already in 2015, the World Economic Forum identified 21(presently added two more) such tipping points described in appendix, which according to 800 executives and experts would shape human future. Among them are familiar, but most often quite new technologies that would break into human societies in the near future.

For example, 82 % of respondents expect “implantable technologies/ devices” (tipping point nr 1) to occur by 2025.

Pacemakers and cochlear implants, smart tattoos and unique chips, these are some of the devices that would help in behavior monitoring and health functions.

Another striking example, tipping point nr 4 “wearable internet”: more than 90 % of respondents think that by 2025 about 10% of people will be wearing clothes connected to the internet. Ralph Loren has already developed a sport shirt that provides real-time workout data by measuring sweat output, heart rate, breathing intensity, etc.

Personally, I think that tipping point nr 9 “connected home” has an extraordinary importance for economies in the Baltic States. Presently, most of the energy used at homes is for direct personal consumption, i.e. heating and lighting. The former can be reduced by more appropriate isolation, the latter by modernised internet traffic through home automation, enabling people to control home appliances, for example by web-connected thermostats to turn on/off heating devices. About 70 % of respondents expect this tipping point to occur in the coming decade.

And so is the importance for Baltics of tipping point nr 11 “big data for decisions”, which 85% of respondents expect to have occurred by 2025. The ability to manage data on communities is evolving from the big-data processing technologies through automation of current decision-making programs. Such automated data processing will enable business and governments to provide quicker and more efficient access to data that have been processed manually previously. Numerous jobs will be obsolete while new skills and jobs to be created.        

4IRs impact on economic development

Probably, some interest for decision-makers of BC/BK magazine would be the 4IR’s impacts on national and global economy, described in chapter 3 (pp. 28-105). Thus, the author sees that there will be a decline in global growth to 2% (instead of about 5% in previous years); ageing (as an economic notion) will affect greatly national economic development: i.e. purchase of expensive items (e.g. big homes, luxury cars and furniture) will decrease, reduced entrepreneurial risks because aging workers tend to retire comfortably; generally, people will “work smarter rather than harder” (p.31).

Proof of author’s importance is seen in recent aging issues analysis as the ageing is mirrored in present European workforce. Demographic change is occurring in the EU states: consistently low birth rates and higher life expectancy will transform the shape both the EU-28’s age pyramid and lead to an increased burden on those of working age to provide for the social expenditure required by the ageing population for a range of related services.

For example, the employment rate of older persons is predicted to increase from 50.2 % (2013) to 67.1 % in 2060 across the EU-28 with the strongest increases in Greece, Hungary, Spain, Slovenia, Cyprus, Malta, Italy, the Czech Republic and Slovakia.  

http://europa.eu/rapid/press-release_MEMO-16-1421_en.htm?locale=en

The positive effects on productivity the author explains by the three following factors: 4IR offers “the opportunity to integrate the unmet needs of 2 billion people into the global economy”, while increasing demands for new product and services (p.33). Second, the 4IR will greatly increase people’s ability to address “negative externalities”. Third, government and businesses want to transform their organisations to realize fully potential advantages of digital agenda.

The author goes even further; he acknowledges that a combination of structural and systematic factors in development will force governments “to rewrite economic textbooks” (p.34). I would add: maybe even change existing government-business development models to include the threatening trends…

For example, corresponding changes will occur in employment and labour substitution as the new technologies will dramatically change the nature of work, automation will substitute for labour and new skills and jobs will appear.     

Conclusion

The book is well worth reading: first, the author shows a complete catalogue of all the changes that would change society. Second, for each “tipping point” he mentions potential benefits, negative impacts and shifts in action. Third, the author reveals some challenges that have to be dealt with and taken into consideration in future in order to avoid disasters while gaining benefits.

The transformation, which is presently seen in scientific research and development, has been at an unprecedented scale over past decades, e.g. info-, bio-, nano-, neuro- and cogno-technologies, just to name a few. They are already disrupting social structures, business and development models, the workings of both democratic and authoritarian polities around the world.

The author’s intent is rewarding: has combines the structural frame of physical, digital and biological drivers, with a brief discussion of inflection points, and consideration of the impacts of the emerging technologies on individuals, the economy, business, society, national policies and international security.

The author comes with an important conclusion for politicians posing responsibilities to ensure that a set of established common 4IR’s values would drive policy choices and “enact the changes that will make the 4IR an opportunity for all” (p.13).  

The changes, dubbed “the fourth industrial revolution”, will have serious implications for national policies and economic governance. That means, politicians and decision-makers shall take Schwab’s book available at Amazon.com, as a pocket book of a perspective socio-economic and political guidance.