The Post-Modern Industrial Revolution is here

Man living in caves used to spend almost all of his/her time to support his/her survival and existence. There was no assurance of food, shelter or the life itself. We have evolved as humans to the point where we are willing to give up around 1/3^rd of our day so we could spend the remaining time comfortably and fulfill our needs. Will this hold in the future too? Will we work to live or will there be an opportunity to fulfill any higher purposes in our lives than to support our mere existence? How will technological advancements affect this? Let us analyse how the current system operates.

The market system is based on one-person meeting needs of another and getting paid for his/her services and pay others to get their services. The cycle goes on. Although it has increased in complexity, but the overall system has not changed considerably. For example, people employed in the industry get paid by the owner of the factory for their services/labour which he/she earns through selling the products to the consumers. However, this all might change very soon.

We are at the verge of the fourth industrial revolution (Industry 4.0). In a nutshell, it’s about automation, robotics, big data analytics and a few other technological advancements that the industry is quickly adapting. A detailed discussion on the Industry 4.0 will take several books perhaps so the focus of discussion will be on automation and robotics in today’s article.

Big manufacturing firms are moving towards automation and robotics which will result in big job losses. The motivation for this is efficient, cheaper, customized products that maximise the profit. The first type of jobs that will be replaced will be those involving manual labour, repetitive natured jobs. McKensey and company’s reports suggests that based on today’s technology, only 5% of the current jobs can be fully automated. However, 60% of all the tasks carried out in various jobs can be fully automated. Over time, this will expand to jobs increasingly more complex in nature. To top it up, robots can make new robots so job creation in the robotics sector will also be limited.

In this scenario, the balance of people providing services and getting paid for the work will be lost and the circle will break as the role of providers is partially taken up by robots to some extent. The problem with robots is they are producers but not consumers so the cash flows in one direction only.

If no intervention is made and market is left to balance itself out, then at least in the short run, there will be lots of people with no income and plenty of time at hand. So now we have a situation where products are cheap, but the purchasing power of the people is very low. This is not a good scenario for anyone as reduced purchasing power of consumers will hit sales hence profits and the consumers will be hit by not being able to meet even the basic needs resulting in lower living standards. Divide between the rich and poor will increase, crime rate will soar, and overall, world will be a poorer, miserable place.

Now the question is can we the humans of 21^st century living in post-normal times deal with this situation and get a good deal for everyone. Are there any strategies and policies that we can collectively follow to make this world a better place for everyone? Can we stop the technological progress made by humanity turning into a curse? Can the large MNCs and manufacturing firms be persuaded that it is in their benefit to employ more people and will that not halt the technological advancement? Will we not be restricting the use of technology and hence the benefits of it? Is there a third way?

I believe there is. Employing more people for shorter working hours will result in more people having the share of the pie. Working 20 hours a week rather than 40 will improve the health and well-being. Type of jobs available will most likely be of creative nature. There is a chance that the productivity will be replaced with creativity. Governments can play a role by providing trainings to improve the chances of one finding work and at the same time guaranteeing the minimum income for the entire population. The expenses can be covered by increased taxation to the corporate sector. Next big question could be will it make us lazy and hence hinder our future progress. Current studies suggest otherwise. The concept of minimum income and spare time has been tried in various countries including India. An increase in the entrepreneurial activity has been found. Local economy flourished as people’s purchasing power went up. Everyone was a winner at the end.

Future can be bright and scary. These technological advancements for whom whole of humanity has directly or indirectly contributed and paid for can take us to verge of extinction and lives of despair or elevate us to live the lives of fulfilment and joy (whatever that fulfilment and joy might mean to you). It all depends on how we collectively deal with the challenges and questions posed to us.

Naeem Minhas