Are We Ready For The Exponential Age?
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The world is at a strategic inflection point. Recent events point to the intense stress faced by the existing social-economic-political order. The global economic slowdown, environmental degradation, anti-globalisation rhetoric and rising populism in the West are symptoms that the current system is finally reaching its growth limits.
Conversely, the advent of the sharing economy, meteoric boom of start-up ecosystems, revitalised interest in space exploration, and technological advancements in recent times are positive indicators of a brave new world ahead.
Are we on the brink of a techno-economic revolution that will pit the industrial-age creations against an accelerating train of intelligence-based technologies?
Where Now, Where Next?
World Economic Forum founder Klaus Schwab predicts that profound change is ahead of us: “In its scale, scope and complexity, what I consider to be the Fourth Industrial Revolution is unlike anything humankind has experienced before.”
Silicon Valley-based Singularity University – a global community that inspire, educate and empower leaders to apply exponential technologies to solve humanity’s grand challenges– is founded on the belief that technology is accelerating the rate of change and propelling human progress towards take-off along the exponential curve.
The first phase of the industrial revolution, which occurred between 1760 to 1820, give birth to the Mechanical Economy. Foundational inventions, such as the steam engine, mechanisation and locomotive, were pioneered. The second phase from 1870 to 1914 heralded the “true” Industrial Economy and was characterised by the combustion engine, electricity and steel.
Similarly, in the modern era, the knowledge revolution has been unfolding in a two-stage fashion. The 1969 to 2015 period saw breakthroughs in computing, with the advent of the microprocessor, personal computer and Internet giving birth to the Information Economy.
The next phase, or the Fourth Industrial Revolution is now upon us. In this new era, digital cognitive-based technologies, including artificial intelligence, smart robotics and autonomous vehicles, will power the Intelligence Economy.
While the opening phases of the industrial and knowledge revolutions achieved only linear improvements to productivity, economic growth and societal change, the latter stages bend the gradual curve towards the exponential vertical.
The leap from Information Economy to Intelligence Economy will flip the roles of workers and machines; from a system of workers as the primary operators of machines that propel the economy, to an automated organism where machines are the new operators – albeit invented, engineered and optimised by innovators.
Also read: Do Initial Coin Offerings represent the inevitable disruption of Venture Capital?
Now Comes the Digital Disruption of Economies
Disruptive innovations are much cheaper substitutes to existing products, methods or resources. Such innovations can cause the disruption of individual businesses, and the disruption of whole industries at the aggregate level. In extreme cases, national economies are next in line to be disrupted.
For instance, advanced fracking was the disruptive technology that sparked the shale gas revolution, disrupting conventional energy companies and the oil and gas industry at large. Entire economies in oil and gas exporting countries have been disrupted, bringing oil prices down from US$130 (S$180) to the new normal of US$50 per barrel price. When prolonged, this economic disruption can cause painful ramifications. Already, Venezuela, the country with most proven oil reserves, is confronted with severe political unrest, economic collapse and food shortages.
In the next decade or so, I expect intelligent technologies to create the same domino effect on businesses, industries and economies, possibly on an even more epic proportion and widespread basis. Intelligent technologies will be a cheaper, and eventually better performing, substitute to human resources, threatening to disrupt trillion dollar industries and national economies.
Ultimately, the underlying political systems, which are inherently “industrial”, would be severely undermined in the post-industrial age.
Prospects of Technological Unemployment
Many blue as well as white collar professionals will be affected by this “creative destruction” of jobs. At risk are not merely the millions of routine factory and transportation jobs, but also “predictable” white collar work.
A McKinsey Global Institute report estimated that automation of knowledge work will generate between US$5.2 trillion and US$6.7 trillion a year of economic impact in 2025. In its “Digital Disruption” paper, Citibank warned that the coming of the “Uber moment” in banking could eliminate 1.8 million or 30 per cent of total jobs in the United States and Europe between 2015 and 2025.
In Asia’s AI Agenda survey by MIT Technology Review (Nov 2016), 71 per cent of senior human resource executives think that advancements in artificial intelligence and robotics will lead to substantial job losses over the next five years.
Nascent industries and new occupations will blossom, but the new jobs are expected to be a fraction of those destroyed. Furthermore, new occupations usually require remarkably different skillsets and higher qualifications from those which were automated. The fear is that under-qualified youth and rising numbers of the unemployed could become chronically unemployable.
“Industrial” Governments Next At Risk
Today, many governments in the West are already grappling with myriad economic challenges, from deepening wealth disparity, burgeoning national debt, lacklustre job growth to ageing societies. Developing countries, on the other hand, are pre-occupied with uplifting their economies through industrial development, resources extraction and workforce education.
Should technological unemployment ensue, many countries will be ill-prepared to withstand severe shocks to their political, economic and social realms. Tremendous and unrealistic pressure would be piled on governments to save the day. Imagine the political carnage, in say China, India or Indonesia, if millions of jobs in the factory or offshored back offices are eliminated in a flash. Or if advanced countries are battered by 30 per cent unemployment rate. Alibaba founder Jack Ma cautions that “In the next 30 years, the world will see much more pain than happiness. Social conflicts in the next three decades will have an impact on all sorts of industries and walks of life.”
Post-industrial, Post-capitalist
In this brave new world, age-old doctrines need to be re-examined and seemingly hypothetical questions require serious discourse. As Al Gore puts it, “National policies, regional strategies, and long-accepted economic theories are now irrelevant to the new realities of our new hyper-connected, tightly integrated, highly interactive, and technologically revolutionized economy”.
For instance, without a strong middle class, who will pay to consume goods and services? What is the risk to national stability when unemployment reaches chronic levels? How should governments overhaul their rigid political structures and even constitutions to administer their fractured countries? Would basic guaranteed income or negative income taxes become a necessary evil? In sum, how can we design a post-capitalist and post-industrial political, economic and social model that is fit for the new epoch?
There are no quick and easy answers but it is crucial that we initiate global conversations, experiment with fresh ideas and ponder alternative systems to pre-empt the “black elephant” challenges brought about by intelligent technologies.
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Charlie Ang is a Business Futurist whose specialty is in analyzing, foreseeing and explaining the impact of technologies on the future of the economy, industries, companies, education and jobs. Besides being a highly sought-after futures speaker and thought leader, he is also an innovation strategist (as Founding President of The Innovators Institute, Co-founder of The Innovators Network), venture investor (Partner and Head for Singapore at KIATT, a deep technology and commercial science global venture capital firm) and a technology educator (Ambassador of SingularityU Singapore, which is the worldwide alumni network of Singularity University).
References
- Disruptive technologies: Advances that will transform life, business, and the global economy
- Asia’s AI Agenda
- Citi GPS: Digital Disruption
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