Fourth Industrial Revolution?? Maybe not.....

Just after starting my second slog through Schwab's 'the fourth industrial revolution' noted in yesterday's post, I see Paul Krugman's review of 'The Rise and Fall of American Growth' by Robert Gordon. Gordon's magnum opus suggests that Schwab's futurism is overblown. (see also Thomas Edsall's excellent piece on the divide and debate between optimistic and pessimistic economists. Also, see this Slate article that chronicles how many times over the past 75 years the term "fourth industrial revolution" has been fetched up to describe a recent or coming advance.) Some clips from Klugman's review:

...[Gordon] has argued that the I.T. revolution is less important than any one of the five Great Inventions that powered economic growth from 1870 to 1970: electricity, urban sanitation, chemicals and pharmaceuticals, the internal combustion engine and modern communication.

What happened between 1870 and 1940, he argues, and I would agree, is what real transformation looks like. Any claims about current progress need to be compared with that baseline to see how they measure up.

And it’s hard not to agree with him that nothing that has happened since is remotely comparable. Urban life in America on the eve of World War II was already recognizably modern; you or I could walk into a 1940s apartment, with its indoor plumbing, gas range, electric lights, refrigerator and telephone, and we’d find it basically functional. We’d be annoyed at the lack of television and Internet — but not horrified or disgusted.

By contrast, urban Americans from 1940 walking into 1870-style accommodations — which they could still do in the rural South — were indeed horrified and disgusted. Life fundamentally improved between 1870 and 1940 in a way it hasn’t since.

One of Gordon's arguments against the techno-optimists is that:

...genuinely major innovations normally bring about big changes in business practices, in what workplaces look like and how they function. And there were some changes along those lines between the mid-1990s and the mid-2000s — but not much since, which is evidence for Gordon’s claim that the main impact of the I.T. revolution has already happened.

Techno-futurists would argue strongly against this, citing the rise of the sharing economy, entities like Airbnb and Uber, and changes in the workplace from hierarchical to distributed organization.

Gordon suggests that the future is all too likely to be marked by stagnant living standards for most Americans, because the effects of slowing technological progress will be reinforced by a set of “headwinds”: rising inequality, a plateau in education levels, an aging population and more.

It’s a shocking prediction for a society whose self-image, arguably its very identity, is bound up with the expectation of constant progress. And you have to wonder about the social and political consequences of another generation of stagnation or decline in working-class incomes.

Of course, Gordon could be wrong: Maybe we’re on the cusp of truly transformative change, say from artificial intelligence or radical progress in biology (which would bring their own risks). But he makes a powerful case. Perhaps the future isn’t what it used to be.