Page 37 - The Fourth Industrial Revolution

textbooks. The fourth industrial revolution has the potential both to increase

economic growth and to alleviate some of the major global challenges we
collectively face. We need, however, to also recognize and manage the
negative impacts it can have, particularly with regard to inequality,
employment and labour markets.

3.1.2 Employment

Despite the potential positive impact of technology on economic growth, it
is nonetheless essential to address its possible negative impact, at least in

the short term, on the labour market. Fears about the impact of technology on
jobs are not new. In 1931, the economist John Maynard Keynes famously
warned about widespread technological unemployment “due to our
discovery of means of economising the use of labour outrunning the pace at
22
which we can find new uses for labour”. This proved to be wrong but
what if this time it were true? Over the past few years, the debate has been
reignited by evidence of computers substituting for a number of jobs, most
notably bookkeepers, cashiers and telephone operators.

The reasons why the new technology revolution will provoke more
upheaval than the previous industrial revolutions are those already

mentioned in the introduction: speed (everything is happening at a much
faster pace than ever before), breadth and depth (so many radical changes
are occurring simultaneously), and the complete transformation of entire
systems.

In light of these driving factors, there is one certainty: New technologies
will dramatically change the nature of work across all industries and

occupations. The fundamental uncertainty has to do with the extent to which
automation will substitute for labour. How long will this take and how far
will it go?

To get a grasp on this, we have to understand the two competing effects that
technology exercises on employment. First, there is a destruction effect as

technology-fuelled disruption and automation substitute capital for labour,
forcing workers to become unemployed or to reallocate their skills
elsewhere. Second, this destruction effect is accompanied by a
capitalization effect in which the demand for new goods and services

37