So apparently we are due for a fourth industrial revolution,
which might come as a surprise to you because as far as most people can tell we have only had one
industrial revolution, and some nations haven’t even got around to that one yet.
All the same, this promise of a radical shift in the way we live our lives has got a lot of
economists very excited and maybe a little bit anxious, both for very good reasons.
The first industrial revolution, you know the one that we all think
is the only industrial revolution was responsible for giving us production.
This production went on to define our way of life in the modern world
where people in advanced economies have access to practically unlimited food,
robust housing, and bits and bobs to fulfill our every little desire.
The world before this was very stagnant. The idea that we have economic growth
at all, where society is always advancing and every generation is
richer than the one that came before it is a surprisingly modern ideology.
What’s more, is that it’s not something that we are guaranteed. We can only get
so good at making stuff given our current set of technologies and resources,
and in fact, we might already be starting to see this plateau.
Arguably the rollout of smartphones that gave us unlimited access to information
wherever we were, was the last great paradigm shift in how we lived our lives.
13 years later this technology is improving but it doesn’t offer anything fundamentally
different to the way that we live our lives, run our economies or advance our standard of living.
But maybe we are getting ahead of ourselves.
To really know what to expect from this supposedly incipient fourth revolution
we must first understand a few key things.
How do economists define an industrial revolution?
What is a revolution and what is just some cool new technology?
What were those other two industrial revolutions?
What is going to be the fourth industrial revolution?
And will this make our modern economies look like the land before steam engines?
Intro add
Now before we start trying to predict the future of the ways
that our society is rapidly going to change it’s probably responsible to first understand
what economists define as an industrial revolution.
And the answer is eehhuhhh well it depends.
Some economists are real purists and they will argue that there was only one
industrial revolution and everything in our modern economy is ultimately
just a continuation of technological advances that make production easier.
You know the type of economists that will insist
on listening to the beatles on their 12 inch record player.
For what it’s worth historians kind of agree with them and the industrial revolution
is just a blanker term given to the time between the mid-1700s and late 1800s in Europe.
But there is a more flexible definition that makes an “industrial revolution”
more of a process rather than an event that has been.
This definition classes an Industrial revolution as a
systematic shift in technology that changes and improves the way that business is done,
while creating new businesses across all industries in the economy.
A bit of a mouthful but let’s apply it to the first industrial revolution.
The adoption of steam power and mechanized production was a systematic shift in technology
from the hand tools that were used before this, it certainly improved the way that
business was done and it even drove massive shifts in the way society was structured.
And it did this while creating new businesses and jobs all across the economy and in all industries.
And I actually want to focus on that last point because it is very important. All industries is
the differentiating factor between an industrial revolution and just a cool piece of technology.
Youtube for example has improved businesses while making all new ones. If I told someone
I was a YouTuber 16 years ago they would probably ship my off to the asylum, if I tell someone the
same thing today, they say... they don’t care... But at least they know what I am talking about.
But of course, YouTube did not drive an industrial revolution because while it
has fundamentally changed the way that media is consumed,
it hasn’t really changed the way that we farm food, or produce cars, or lend money.
So that kind of begs the question then What were those other revolutions?
You may not know this but the first industrial revolution kind of ran our of puff at the end
of the 1800’s. New inventions were few and far between and for the most part society
had fallen into a status quoe where they could produce textiles and bricks en masse.
This was still a huge achievement, but the machines making this all possible
were still very hard to produce and limited in their functionality.
You would be hard-pressed to tell the difference in the quality of life between 1801 and 1851,
which historically is an insignificant amount of time, but imagine if our world
today did not grow wealthier over a 50 year period. People would lose their minds.
Fortunately for the progress of humanity this started to
pick back up again in the 70’s… the 1870’s.
The period from here until the early 20th century was punctuated by a few key creations.
Most notably, standardisation, the bessemer process and the telegram.
Standardization was a surprisingly big deal, before this all machines working in the world
were custom contraptions specific to one factory, or textile mill or farm.
These custom made machines were obviously extremely expensive
and made even more so by the fact that any repair
required the direct attention of a blacksmith to make new custom parts from scratch.
Imagine if you needed to get new brake pads for your car,
but the mechanic had to cast the steel from scratch to match the specific size of your
axel bolts and tyre. Think of what the parts and labor on that invoice would be,
then think of how many people would stop driving if it got that expensive, and then think of how
much poorer the world would be without our most heavily utilized form of transport.
Using a set standard for nuts bolts and screws basically did
to machines what the printing press did do books.
The number of machines out there working in the economy skyrocketed and repairs were made
far cheaper and easier by parts that fit any machine out there with the same specifications.
The next component of the second revolution was the Bessemer process
wich allowed for the easy production of steel.
A common misconception is that it actually made steel production possible which isn’t entirely
correct, steel had been produced for hundreds of years before that,
but it was a very tedious process and it was only really used for things where
performance was vital, things like guns and swords and that was pretty much it.
Steel back then was kind of like titanium today,
very expensive, very useful but used very sparingly. But this bessemer process which
was basically blowing a big ol pot of iron and carbon soup made steel production easy, and cheap.
So cheap that even big old ships and skyscrapers could be made out of the
stuff which was fantastic because iron is waaaayyy worse than steel.
I did one single course on materials science at university and real engineering has subscribed
to this channel so I am obviously qualified to talk about this stuff,
but if you tried to build a car out of iron, it would end up weighing 8 tons,
sagging in the middle, and snapping like toffee if you closed the door to hard.
The modern world is built on steel and we were sure to tell everybody about it,
with our wiz bang new telegrams.
We take instant communications for granted today,
but the ability to send information from one side of a country to the other
in less than a week changed the world in more ways than I could possibly list.
Needless to say these three innovations gave rise to a new wave of growth in around the world,
and ushered in the united states as the worlds largest economy, beating out china which was
still larger than the united kingdom despite their technological advantage.
This was the first time in history that industry decided who was the top dog.
Now this revolution is in many ways still driving growth to this very day,
we continue to build larger ships, operate larger and more efficient machinery,
and drive cars made possible by steel and standardisation.
That is to say that there was not the same lul between the third and second
industrial revolution like there was between the first and second.
Unless you could the great depression, which you shouldn’t because that was a whole other thing.
Rather the advent of computers and digitized data storage
further accelerated the growth that was made possible by the second industrial revolution.
This is equally as easy to see, there are very few jobs in the world today that don’t require
some kind of interaction with a computer, and even in their most rudimentary form,
they were game-changing in the way they could work with large pools of information.
Even if you forgot about the internet because don’t worry we will get to that,
just think about your own job. I am confident a good portion of you watching would not know how
anything got done before a PC was a standard-issue on a work desk.
Computers today are almost inseparable from the way that we live and work and they have
made us as individuals for more productive and also far less productive all at the same time.
But we are again starting to fall into a situation where their usefulness is not providing much more
utility. Most white collar workers in the world today will use excel, powerpoint, a web browser,
and if they are really technical maybe some kind of programming suite, or media editing software.
The thing with all of these applications is that the first few would work pretty much the same
on a 10-year-old computer, and even those last two tasks are still possible on such a machine.
For what it’s worth I edit these video’s on a computer that is 7 years old now, but
please like and subscribe so Mr economics man can get myself one of them new 3090’s.
But either way if we want to continue to grow forever we are going to need new technologies
that radically change the way we do things rather than slightly improve on them every year.
And fortunately, that might just be what we get with
The Fourth Revolution
There are developments on the horizon that will work to accelerate the progress
of society just as much as anything else we have spoken about thus far.
With the big caveat that they have to be made a reality first.
We can envision something like a time machine and even speculate about such a machines applications,
but we don’t have any practical way of making one
so we arent exactly working those into our models for future growth just yet.
A little bit closer to reality is the creation of artificial intelligence
with a robust level of general intelligence.
This is still something we have yet to actually
create but we have been getting closer and closer year on year.
Artificial intelligence could do to computers what steel manufacturing did to iron.
Take a technology that had helped economies for a long time,
and just make it radically better and easier to work with.
And that’s a pretty common theme amongst all of the other developments
that economists are lumping into a fourth industrial revolution.
This includes everything from global internet access, advanced 3d printing,
quantum computing, blockchain technology all the way up to things like human implants.
To an outside observer, these may just look like a logical progression from
the suite of technologies that we have available to us today but they are not,
they all have the ability to radically change the world that we live in across all industries.
However this confusion is actually part of the reason why some economists
have advocated for clumping the revolutions into sub categories.
The industrial revolutions 1 and 2 with parts a and b.
Industrial revolution 1 part A, gave the world mechanization then there was a bit of a lul before
part b came along and made those initial advances a whole lot better in almost every way possible.
Industrial revolution 2 part a gave the world computers then there was a bit of a lul before
part b came along and made those initial advances a whole lot better in almost every way possible.
While this categorization probably makes a little bit more sense it doesn’t really
attract as much attention as giving them each their own special number
so make of it what you will. But if there is a takeaway from all of this
it’s that amongst all the doom and gloom in the world at the moment, most economists are
still optimistic that we will continue to grow wealthier and more prosperous into the future.