Revolution No 4
- The world economy is changing, and Nepal is once again in danger of missing out
Jan 23, 2017-
One typical habit of Nepali political leaders is that once they come to power, they promise to deliver an economic revolution, and proclaim that it is time not for political movements but for unleashing development. To what extent they grasp the meaning of economic revolution is one thing, but knowing that the world is entering a Fourth Industrial Revolution is quite another. This year too, as in 2016, the World Economic Forum in Davos, Switzerland is pondering the implications of this transformation.
The days gone by
The First Industrial Revolution lasted eight and a half decades, from 1784 to 1870. It basically replaced muscle power with machine power in the production process. It mechanised the means of production. The invention of the steam engine paved the way for the development of railways which, in turn, helped to bring raw materials to market and expanded it tremendously. In the pursuit of markets and resources, it also paved the way for colonisation. Many political ideas were born during this period. French economist Thomas Piketty has claimed that it is either during industrial revolutions or war that economic inequality gets reduced.
The credit for the Second Industrial Revolution in the 20th century (1870-1969) goes to Henry Ford for introducing the assembly line production system. It is said that it took a full 27 months to produce his first car, but when he switched to an assembly line, production time got reduced to a mere 2 hours. Imagine the savings in time and labour. Ford was a genius of his age, a visionary leader who fully exploited the concept of division of labour and paved the way for a system of mass production. This is also the time when a scientific approach was applied to management
theory for the first time, giving birth to ‘scientific management’.
Ford was very aware that the mass production system would not survive without mass consumption, and the latter would not survive without an adequate increase in worker wages. So he doubled the wages of his factory workers without ever having to face union pressure. His management philosophy: If a car factory worker cannot buy a car during his lifetime, how would he be motivated to manufacture cars? And this is what he had to say about his customers: “Any customer can have a car painted any colour that he wants so long as it is black.” Ford cars only came in black because black paint absorbs sunlight and helps to dry the paint quickly. Definitely, his infinite quest for efficiency is unbelievable. If the push for the First Industrial Revolution came from the invention of the steam engine, the push for the second revolution came from the use of electricity. Electric power made it possible to run factories 24 hours a day, eliminating time constraints.
The Third Industrial Revolution that started in the late 20th century is marked by extensive use of computers, information technology and automation. The machine power that replaced muscle power is now replaced by brain power. Imagine the value of electricity. During the Second Industrial Revolution, it helped to light up the world; and during the Third Industrial Revolution, it became part of our brains. When computers operate on electricity, it becomes part of our brain. Management guru Peter Drucker wrote about ‘knowledge workers’, and that with their ascendance, the division and the inevitable conflict between capital and the labour classes that Karl Marx wrote so much about, got wiped out. With knowledge of power, labour became capital itself.
Into the future
Klaus Schwab, the founder of the World Economic Forum, speaks of the arrival of the Fourth Industrial Revolution. He explains, “The First Industrial Revolution used water and steam power to mechanise production. The second used electric power to create mass production. The third used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the third, the digital revolution that has been occurring since the middle of the last century. It is characterised by a fusion of technologies that is blurring the lines between the physical, digital and biological spheres.”
The Fourth Industrial Revolution includes arrival of amazing machines like 3D printers, extensive use of robots, artificial intelligence (AI) and biotechnology. If automation was the key word during the Third Industrial Revolution, flexibility, agility and customised production systems are the key words of the Fourth Industrial Revolution. Last year, Uber introduced driverless vehicles; with the arrival of bitcoins and block chain technology, we are heading towards a cashless society. Drones are already doing amazing things. The arrival of mass open online courses (mooc) is expected to put an end to personalised teaching jobs and make many teachers unemployed. AI will even eradicate skill-oriented jobs in journalism, teaching, music, art and literature. The shape of things to come is totally unpredictable and unbelievable. We should be prepared to see things that we might have never thought about. Digital disruption has already brought new business models like the ones depicted by the World Bank in the accompanying chart.
Our political leaders may be adept at talking about economic revolution, but history reveals that we have totally missed out on the opportunities provided by the first three industrial revolutions. When the first and second industrial revolutions were taking place, Nepal remained virtually closed and isolated from the outside world. Though electricity was introduced way back in 1911 and Kathmandu’s residents were lucky enough to see motor cars even before roads got paved, these inventions were imported only for the benefit and enjoyment of an exclusive class. The general public was kept outside or left untouched by the influence of global changes from successive industrial revolutions. Even till today, we remain busy managing never ending, ever unfolding political transitions. The Nepali people currently own more mobile phones than toilets; however, given the political situation in the country, there is a greater chance that we may miss the Fourth Industrial Revolution.
Manandhar is a freelance consultant
Published: 23-01-2017 08:22