The Era's Biggest Modus Vivendi
It took almost 120 years to spread the spindle, the hallmark of the first industrial revolution, to spread outside of Europe. By contrast, the internet and the Artificial Intelligence permeated across the globe in less than a decade. Digital technologies at their core are not new, but in a break with the third industrial revolution, they are becoming more sophisticated and integrated and are, as a result, transforming societies and the global economy. This is the reason why Massachusetts Institute of Technology (MIT) Professors Erik Brynjolfsson and Andrew McAfee
have famously referred to this period as ‘the second machine age-2, the title of their 2014 book, stating that the world is at an inflection point where the effect of these digital technologies will manifest with 'full force' through automation and the making of 'unprecedented things'.
A term coined at the Hannover Fair in 2011, Industry 4.0 will revolutionize the organization of global value chains. By enabling ‘smart factories’, the fourth industrial revolution creates a world in which virtual and physical systems of manufacturing globally cooperate with each other in a flexible way. The Industry 4.0 however, is not only about smart and connected machines and systems. With Automation and AI, its scope has widened. As the wider scenario unfolds, the revolution sews the potential to yield greater inequality, particularly in labour markets and the potential to enlarge the scope of the labour market at the same time. It all boils down to that one key question for both employees and employers as to how to better the anticipating changes in the labour market to prevent 'sudden', 'unexpected' and unnecessary redundancies in the future? As robots powered by AI substitute labour across the entire economy, the net displacement of workers by machines might exacerbate the gap between returns to capital and returns to labour. On the other hand, it is also possible that the displacement of workers by such AI will, in aggregate, result in a net increase in safe and rewarding jobs. The future cannot be foreseen at this point, predicting which scenario is likely to emerge, and history suggests that the outcome is likely to be some combination of the two.