We have entered a fourth industrial revolution according to Klaus Schwab, founder of the World Economic Forum. And his treatise provides a valuable platform on which to view human progress from a technological viewpoint over the past several centuries, via four revolutions. The term ‘utility’ is relevant in this regard, because each technological revolution affects all businesses and all households in a pervasive and utilitarian manner.
Actually, there have been five technological revolutions, as shown in the chart below: transport (road and water); power (water and steam, then electricity); and ICT (electronics and computers, then AI, fast broadband and analytics). But these are technological, not industrial, revolutions. There have been just three industrial revolutions, utilising five technologies.
The first technological revolution was transport (road and water) in the modern Agrarian Age. The modern Agrarian Age began in the second millennium, but started much, much later in Australia, which was isolated from the rest of world for tens of millenniums. But it should be said that the world’s standard of living did not grow anywhere near as fast in that age of progress as in following ages and their technological revolutions.
Power was the utility of the Industrial Age of manufacturing and construction, and came in two stages, water and steam in the first stage, and electricity in the second stage. Economic growth and standards of living (SOLs) began to rise exponentially for the first time in history.
ICT is the utility in our current age of service industry domination. IBISWorld identifies this as the Infotronics Age, which began in the mid-1960s. This age has also come in two stages, electronics and computers in the first stage, and then, from 2007 onwards, the digital era of AI, fast broadband and analytics.
But should we treat the period since 2007 as a new age of progress in its own right? Do we need to? Perhaps not, given that new ages of progress have always commenced with the outsourcing of DIY activities, not the invention of new technologies. Consumer desire and financial ability to outsource from DIY to DIFM (do-it-for-me) always comes first in the creation of a new age of progress. Inventors and scientists can be among the most frustrated people on earth by inventing too early (sometimes by decades), too late, or being beaten by a better technology.
The chart below shows the growth of new industries via outsourcing by households and businesses over several centuries.
Agriculture and mining (primary industries), and transport, wholesaling and retailing (tertiary industries) became dominant in the modern Agrarian Age up to the 1860s in Australia (much earlier in the UK) via the outsourcing of growing one’s own food and outsourcing commerce or, as said earlier, the switch from DIY to DIFM.
Secondary industries (value-added primary industries) emerged between the mid-1860s and the mid-1960s in the form of manufacturing, construction and utilities such as water and sewerage. These had largely been DIY activities before they were outsourced from the 1860s onwards. Power was the underpinning technology in this age of progress, not the driver.
In our current Infotronics age, households and businesses, both domestic and foreign, outsource services. These services are quaternary (fourth level) and quinary (fifth level), being all the rest of the industries on the above chart. Already in 2017, just over halfway through this new age to 2050, these service industries account for 60% or more of all annual investment, GDP and jobs.
The supporting utility, or technological revolution, for these and the other industries, and the nation’s 9.4 million households, is ICT. Yes, in two stages, with the second stage being a turbocharged version of the first stage, just as electricity was in the Industrial Age. But, the second stage is not a new age, because the new industries are the same ones as in the first stage of ICT. Of course, some older service (and goods) industries are being eliminated, but that was happening in the first stage of ICT too.
We need always to be careful not to put technology at the front of any new age of progress. It never is; it always ranks third in line in cause and effect, a powerful utility as it always is.
The first driver of new ages is the willingness and financial capability of consumers (households and businesses) to outsource a DIY activity to a DIFM activity and thereby earn the status of a new ‘industry’, instead of an activity.
The second driver is entrepreneurship, the entrepreneurs that conjure up new ways of doing things better, faster and cheaper. With 509 classes of industry now in the economy, three times the number of just over a century ago, we have seen a lot of entrepreneurs.
Utilities or industrial ‘revolutions’ are third cab off the rank. The difference in their contribution to the economy is that they are not industry-specific, but pervasive and utilitarian to all businesses and households. Ubiquitous indeed.
It is this pervasiveness and cleverness of the digital era that is scaring and exhilarating populations everywhere. Talk of robots displacing humans, massive unemployment and other silly wild forecasts do not help. Such dire predictions are Malthusian and far fetched. And, incidentally, we have only outsourced just over a third of the DIY activities being converted into DIFM (new industries and jobs) in the current Infotronics Age, which in turn is not due to be replaced with another new age until the middle of this 21st century. The list below reminds us of these new industries. And there is at least another 6 million jobs to add to our current 12 million jobs in there.
No, the sky is not falling as in Chicken Little. We are progressing to a better world, as always.
For a printable PDF of this article, click here.
Phil Ruthven has partnered with Wilkinson Publishing to release his first book, Fast-Changing World, due for release in July. In a series of articles, spanning the past five years of his illustrious career as Australia’s most respected strategist and futurist, Phil sets the story straight on a range of contemporary issues including the Australian housing market, the 2016 US Election and whether a recession is looming or not. In our current social, political and economic climate, Fast-Changing World provides a refreshing alternative to the ‘fake news’ we have grown accustomed to in recent years.
Click here to pre-order a copy of Fast-Changing World today.