New industrial revolution: myth or reality?

7 m.   |  2019-01-09

January 23-26 of 2018, The World Economic Forum of Davos took place in Switzerland, recording new realities and new risks of the most recent global economic developments. The Davos Forum particularly touched upon the economic and technological developmental risks, advancements and the overwhelming expectations from the community.

It is an indisputable fact that technologies are the main motives of economic growth and profits. Since the last century, the developed countries have recorded super-profits due to the globalization of the world economic activities (the main distributors of new technologies). Most of these developing countries recorded their success during their recognition of the opportunities presented by globalization. (favorable investment environment, integration in global values and so on).

In this context, the advantages of the American, Japanese, Asian, and Chinese economic models are obvious. Clause Shvab, the founder of the World Economic Forum, put the term “The 4th Industrial Revolution” into use in 2016 in his work called “The 4th Industrial Revolution.” He also mentioned it at the Davos Conference in 2018. The previous three revolutions recorded in the global economy, were related to the steam engine invention of the late 17th century, the mass production age of the late 19th century and the digital revolution of the late 20th century.

Nowadays, we are at the edge of the new revolutionary era, when the harmonization of all the technologies and combining of physical, bio, digital, even governmental technologies are expected. More vividly, these technologies include artificial intellect, industrial robots, machine robots, 3D printing and so on. This technological age constituted as a “myth” about a few decades ago, now it is a reality: for instance, internet-based trade, online payments, automatic trains in the subway, innovations in healthcare, Sophia intellect-robot, who participated in the Davos Conference and in The Summit of Francophonie, held in Armenia.

The pivotal part of this revolution is again the industry, but viewed from a different perspective, it implies a “Re-industrialization” of the economy. Nevertheless, why re…?, because of the simple reason, that at the beginning of the third millennium  the “cheap labor force” factor has not guaranteed super-profits, it has already been replaced by the technologies per se, the activation of the world’s internal resources, the regional developments and the integration of national economies to the global technological development.

Now, with robotics production a reality with a triumph of “clever factories” in the world it is sometimes called “Industry 4.0” a new mentality and a new economic model. Certainly, the results of the 4th industrial revolution will sometimes be indefinable and stormy, particularly in the labor market, where the gap will deepen between job offers and job demands, between quality and non-quality jobs, which will inturn aggravate the social tension that often worries global society in all the countries around the world.

T he human civilization is progressing; with new approaches, paradigms and mentalities. At the beginning of the previous century, V. Kondratev, the Russian economist forecasted the inevitability of the long-term economic cycles (waves), the main motivation of which are new technologies. The Kondratev waves consist of 4 main periods, or as he likes to put it “4 seasonal changes”, each season conceivably shows the reality of the economy and accordingly relates it to the behavior of governments.

Moreover, the changes in the weather contribute to the accumulation of new technologies, new investment, the formation of new branches and new spheres, which will become a basis for a new revolution, or in other words a new technical-economic paradigm.

Therefore, the long-termed economic crises, in contrast to the short-term and middle term crisis, only bring about conundrums in one or more of the fields of the economy. This not only sharpens the economic contradictions, but also contributes to the emergence of technologies and innovative thinking turning it into a new developmental beginning.

Now, the 21th century is likely to become a carrier of a new “Kontradev wave”, the basis of which are again the technologies already consolidated, harmonized and aimed at the person, and the realization of the human interests. The world is already noticing the factors outlining the 4th Industrial revolution- “Industry 4.0” and is trying to be “protected” from these contributing elements mentioned above. Hence, a new indicator, which is an inclusive development index for the country’s economic performance assessment, is offered at the same Davos Conference, due to which the results of the country’s social-economic development are directly reflected in the inclusive level.

The fact is that countries have recorded successes due to various factors in their development, many of the advanced countries, such as the USA, Germany, France, Japan recorded their achievements due to their powerful industrial complexes, while some of the developing countries, such as China and new industrial countries: South Korea, Singapore, Hong Kong, Taiwan and so on, recorded their achievements due to the ability to provide cheap and quality labor.

Others were awarded by category of resources the countries that are rich in oil resources, such as Iran, Iraq, Saudi Arabia, United Arab Emirates, Qatar, and so on. The above mentioned countries, which have high rates of the economic growth, cannot retain their position amongst the developed countries relying on natural resources, unless they find other various elements that can offer a  rise of their welfare.

T he existing systems set to assess country’s economic levels are at this time necessary but not sufficient enough. While assessing the country’s development level, it is important to involve indicators such as the average life expectancy, the fair distribution of income, the level of poverty and unemployment, leisure time, intergenerational justice, cultural and ecological factors and so on, which are primarily conditioned by the introduction of new technologies in almost all the fields of human activities. Therefore, in the nearest future, the reshuffling of powers will inevitably put Asian countries ahead to take the first place with a new technological lifestyles, the way of governance, social institutions and in general a new mentality.

These countries could overcome their economic downturn and provide high rates of economic growth and continual development by competing with industrial countries, such as the USA, France, Germany and other nations in a relatively short period of the 20th century. It is not a coincidence, that the last financial-economic crisis of 2018 was overcome first by the Asian abovementioned countries, especially China, in the field of science and research, due to active investments.

Moreover, in 2017 the license applications introduced by the World Intellectual Property Organization “Patent Cooperation treaty” were based on the North-American and European regions, respectively 35.65% and 34.1 % of shares. In 2017 these regions’ results formed accordingly 24.2% and 24.9%. While, during the above mentioned years, the unprecedented growth was recorded in the international market of technologies of the Asian region, by forming 27.6% and 49.1% respectively. Thus, one can conclude, that the new industrial revolution is not a “myth” but reality. The long-term cycles are vital and, spring will certainly shift to summer and autumn to winter in the seasons of global economy starting a new economic cycle in the middle of the 21th century.

Hence, revolutions, developments, crisis, and a new beginnings in the times of human civilization are awaited with revolutionary roles assigned to technologies. New technologies and innovative capital are the precondition for high economic growth and at the same time the motive for a new economic cycle. Therefore, long-term cycles with their revolutionary roles are vital and not a “myth’, and the 4th industrial revolution, lasting till the second half of the 21st century, is a complete reality.

Let us be optimistic and hope that the 21st century will be followed by the 22nd with its weather and achievements: new professions, more leisure time for the employees, individuals with a new mentality and finally with the high level of human welfare.