Book review: The Fourth Industrial Revolution – get ready for robots and more inequality

World Economic Forum founder Klaus Schwab predicts a world in which technology will take many jobs. But will automation lead to severe inequality and social unrest?

A protest banner reads ‘Arms produce refugees’, at the World Economic Forum in Davos, Switzerland, last year. The annual meeting brings together chief executives, heads of state and economists to discuss issues such as the climate, technology and conflict. Michel Euler / AP Photo.
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The Switzerland-based, German-born business professor Klaus Schwab and his brainchild, the World Economic Forum, kick up a fierce dust storm of opinion: brickbats or bouquets depending upon the observer.

The non-profit foundation has won singular international renown for its annual conferences high in the Swiss Alps at the resort town of Davos, where the world’s mighty – a global who’s who of chief executives, government heads, big-name economists, and other high-profile movers and shakers – come together each January to thrash out what they see as the challenges of our age.

It has come a long way since 1971, when Schwab, teaching at the University of Geneva, founded the European Management Forum with the aim of importing American management practices to Europe.

At the start, the get-together was just executives and financiers who shared a common frustration with Europe’s business culture. But the organisation and its mission grew, taking on ever-larger issues in the name of “improving the state of the world.” In 1987, it became the WEF, and expanded its invitees to the world’s most powerful politicos, and, a decade later, even international NGOs, political dissidents and celebrities.

Despite all the glitz, it has the reputation of an informal event where the world’s important and visionary take time out to discuss and philosophise on technology, security and conflict, the environment, globalisation and more.

The WEF’s detractors, however, understand it very differently, namely as a tiny global cabal devoted to expanding its own power and largesse. Critics like the Netherlands’ left-leaning think tank Transnational Institute (TNI) charges that it serves as a vehicle for neoliberalism’s agenda, having helped pave the way for the financial sector’s primacy of place in the global economy, the expansion of corporate trade agreements and the segueing of emerging economies into the club of the über-elite.

The window dressing of a few token NGOs aside, TNI says it is the gathering place for the titans of corporate and financial power who promote and profit off the expansion of global markets. The WEF, argues a TNI study, has been “a consistent forum for advanced ‘networking’ and deal-making between companies, occasional geopolitical announcements and agreements, and for the promotion of ‘global governance’ in a world governed of global markets.”

Despite the distance between these opposing views of the WEF, there's actually quite a bit in Schwab's manifesto The Fourth Industrial Revolution that even disparate ideological adversaries can take from: in its analysis, though not necessarily the conclusion.

Schwab’s not the first to herald a “fourth industrial revolution”, and indeed much of his analysis draws on the works of contemporary authors, which he duly acknowledges. What most of us know as the industrial revolution – the advent of the age of industrial production, powered by railroads and steam engines across parts of the world in the course of the late 1700s and much of the 1800s – is just the first such paradigm-shattering transformation that Schwab and colleagues attribute to the technological progress of modernity. The second was characterised by the spread of electricity to homes and factories of mass production, the third industrial revolution kicked off in the 1960s with modern computers and digitalisation.

The fourth epic shift worthy of the label “revolution” is currently in progress, argues Schwab. It takes off from the spread of digitalisation and information technology, but is defined by a much more ubiquitous and mobile internet, smaller and more powerful sensors, artificial intelligence (AI), and machine learning. Its manifestations include the likes of “smart factories” engaged in virtual commerce, as well as gene sequencing, nanotechnology, renewable energy and quantum computing.

At the centre of it, the “internet of things” will expand in all directions, linking our physical world with the internet in ways we can today hardly imagine. “It is the fusion of these technologies and their interaction across the physical, digital and biological domains that make the fourth industrial revolution fundamentally different from previous [ones],” says Schwab.

Waxing a bit grandiose, Schwab claims that tomorrow’s technology portends nothing less than a “transformation of mankind”. The world economy, society and human identity, he says, will change more than they did during any of the past three industrial revolutions – and it’s going to happen faster, too, in light of how quickly our technologies are shooting forward.

Schwab recognizes that there’s lots of money for those on the inside track to make, but benefits for others, too. But his main concern belies the charge of his critics, that it is all about money. Schwab’s overriding concern is the supply side of this new world economy, namely the worlds of work and production. The technology sector, ever more enhanced by advanced robotics and digitalisation, will need fewer and fewer workers and labour-intensive factories. Driverless cars, drones and 3-D printers will do the work while robots will take over much of the heavy lifting.

Income and wealth will become ever more skewed, inequality ever-greater with the concentration of benefits landing in the hands of the fewer and fewer. His aim, Schwab alleges, is to turn our new realities into “an opportunity for all”, as the world’s population grows from 7.2 billion today to an expected nine billion by 2050.

It sounds against the grain but Schwab recognizes that nations with gaping disparities in wealth are more prone to violence, social unrest, higher levels of illness and degrees of incarceration. In the past two decades, the middle-class has lost out as its access to education, health, pensions and home ownership has declined.

“A winner-takes-all market economy,” Schwab argues to the Davos community, “to which the middle-class has increasingly limited access, may percolate into democratic malaise and dereliction, which compound social challenges.” And those challenges include extremist parties, violent religious fundamentalism and human trafficking, among other negative by-products.

As for the fate of mankind itself, the business professor is less astute. The fourth industrial revolution will change “not just what we do but who we are”. Our notions of privacy and ownership, our consumption patterns, relationships and social hierarchies are all going to change, too, although he doesn’t go into it in any depth – which is good, as here he’s clearly out of his.

And in formulating a response to a worst-case scenario, Schwab becomes even vaguer, which is exactly what his critics would expect, however concerned his analysis might appear about the fortunes of the working-class and have-nots. Schwab recommends mobilising “the collective wisdom of our minds, hearts and souls”. It is “good leaders” and “decision makers” who he exhorts to work together across borders and “implement integrated ideas and solutions that will result in sustainable change”.

This is pretty hollow stuff in the end, against the background of the dire plight that humanity might soon find itself, according to Schwab. He opts not to pick up on – or even refute – ideas for an international transactions tax, for example, the revenue of which could go towards retraining workers or bolstering social security nets for those who have fallen between the cracks. In general, progressive taxes could help to restore some semblance of equality, but this is probably too much for his clientele.

Schwab ultimately sees any redistribution of wealth that happens, happening out of the goodness of the hearts of the super-elite, not as a result of social movements, political parties or the empowerment of those who actually do the work. Schwab never questions the larger system – just its means.

The Fourth Industrial Revolution makes many relevant, insightful points (a good number of which, though, had been made before). But Schwab and his stripe have to expand their reading lists beyond those studies produced by one another.

Maybe the next WEF annual should be moved from rarified Davos to a location more affected by the trends and shifts of our times. And instead of a handful of NGOs, open it up to many dozens of on-the-ground groups and lateral thinkers who are thinking outside the box.

Schwab is an exceptional organiser and networker; he could bring the world’s powerful into contact with ideas that they otherwise wouldn’t hear. It makes more sense than the echo chamber that Davos has become. There’s no greater evidence of this than Schwab’s own book.

Paul Hockenos is the author of the forthcoming Berlin Calling: A Story of Anarchy, Music, the Wall, and the Birth of the New Berlin, published by The New Press.