There’s a FOURTH Industrial Revolution? (part 3) The Third Industrial Revolution

I remember learning about THE Industrial Revolution in grade school…

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And in the last year have read many articles detailing disruption and innovation occurring right now…

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But I embarrassed to say that I honestly can’t tell you what happened during what revolution, why it was important, or what was revolutionized, innovated, and disrupted

  • When did the revolutions occur?

  • How did they affect people?

  • What new industries arose?

  • Who made money during those times and how?

  • Who were the big players?

The World’s First Industrial Revolution by Channel 4

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The point of these posts is to answer three questions

  • What were the “other” Revolutions?

  • What IS the Fourth Industrial Revolution? #4IR

  • How can we invest logically with a mindset on the current revolution?

The Third Industrial Revolution

  • Further advanced manufacturing capabilities and allowed unparalleled global communication
  • Occurred during the second half of the 20th Century
  • Automation and Globalization are major themes
    • Automation of several manufacturing processes while
    • Logistics and transportation improvements supported the space between production and consumption
    • Gave rise to global production networks (globalization) as an outcome of trade liberalization and lower transport costs
    • Minimization of input costs, particularly related to labor
    • New levels business efficiencies never before seen
  • Introduction of IT Technologies

Who got rich?

Bill Gates!

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“The Third Great Wave”

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Both the first Industrial Revolution, starting in the late 18th century, and the second one, around 100 years later, had victims who lost their jobs to Cartwright’s power loom and later to Edison’s electric lighting, Benz’s horseless carriage and countless other inventions that changed the world.

But those inventions also immeasurably improved many people’s lives, sweeping away old economic structures and transforming society. They created new economic opportunity on a mass scale, with plenty of new work to replace the old.

  • The third great wave of invention and economic disruption, set off by advances in computing and information and communication technology (ICT) in the late 20th century, delivered a similar mixture of social stress and economic transformation
  • Powerful computing was made possible by the development of the integrated circuit in the 1950s
  • The digital revolution is opening up a great divide between a skilled and wealthy few and the rest of society

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Automation

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The main advantages of automation are

  • Increased throughput or productivity
  • Improved quality or increased predictability of quality
  • Improved robustness (consistency), of processes or product
  • Increased consistency of output
  • Reduced direct human labor costs and expenses

The following methods are often employed to improve productivity, quality, or robustness

  • Install automation in operations to reduce cycle time
  • Install automation where a high degree of accuracy is required
  • Replacing human operators in tasks that involve hard physical or monotonous work
  • Replacing humans in tasks done in dangerous environments (i.e. fire, space, volcanoes, nuclear facilities, underwater, etc.
  • Performing tasks that are beyond human capabilities of size, weight, speed, endurance, etc.
  • Economic improvement: Automation may improve in economy of enterprises, society or most of humanity. For example, when an enterprise invests in automation, technology recovers its investment; or when a state or country increases its income due to automation like Germany or Japan in the 20th Century
  • Reduces operation time and work handling time significantly
  • Frees up workers to take on other roles
  • Provides higher level jobs in the development, deployment, maintenance and running of the automated processes

The main disadvantages of automation are

  • Security Threats/Vulnerability: An automated system may have a limited level of intelligence, and is therefore more susceptible to committing errors outside of its immediate scope of knowledge (e.g., it is typically unable to apply the rules of simple logic to general propositions)
  • Unpredictable/excessive development costs: The research and development cost of automating a process may exceed the cost saved by the automation itself
  • High initial cost: The automation of a new product or plant typically requires a very large initial investment in comparison with the unit cost of the product, although the cost of automation may be spread among many products and over time

In manufacturing, the purpose of automation has shifted to issues broader than productivity, cost, and time.

Globalization

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During the 19th century, globalization approached its modern form as a direct result of the industrial revolution

Transportation

  • Industrialization allowed standardized production of household items using economies of scale while rapid population growth created sustained demand for commodities.
  • In the 19th century, steamships reduced the cost of international transport significantly and railroads made inland transport cheaper
  • The transport revolution occurred some time between 1820 and 1850
  • More nations embraced international trade
  • Globalization in this period was decisively shaped by nineteenth-century imperialism such as in Africa and Asia
  • The invention of shipping containers in 1956 helped advance the globalization of commerce

A World Connected

  • In the late 19th and early 20th century, the connectivity of the world’s economies and cultures grew very quickly
  • This slowed down from the 1910s onward due to the World Wars and the Cold War but picked up again in the 1980s and 1990s
  • The revolutions of 1989 and subsequent liberalization in many parts of the world resulted in a significant expansion of global connectivity
  • The migration and movement of people can also be highlighted as a prominent feature of the globalization process
  • In the period between 1965–90, the proportion of the labor force migrating approximately doubled
  • Most migration occurred between the developing countries and least developed countries (LDCs)
  • The Internet has become influential in connecting people across the world
  • As of June 2012, more than 2.4 billion people—over a third of the world’s human population—have used the services of the Internet

Growth of globalization has never been smooth

  • One influential event was the late 2000s recession, which was associated with lower growth (such as cross-border phone calls and Skype usage) or even temporarily negative growth (such as trade) of global interconnectedness
  • The DHL Global Connectedness Index studies four main types of cross-border flow
    • Trade (in both goods and services)
    • Information
    • People (including tourists, students and migrants)
    • Capital
  • It shows that the depth of global integration fell by about one-tenth after 2008, but by 2013 had recovered well above its pre-crash peak
  • The report also found a shift of economic activity to emerging economies
  • Globalized society offers a complex web of forces and factors that bring people, cultures, markets, beliefs and practices into increasingly greater proximity to one another

Modern Globalization can be broken down into several themes

  • Economic Globalization

  • Cultural Globalization

  • Political Globalization

Economic Globalization

  • Is the increasing economic interdependence of national economies across the world through a rapid increase in cross-border movement of goods, service, technology and capital
  • Whereas the globalization of business is centered around the diminution of international trade regulations as well as tariffs, taxes, and other impediments that suppresses global trade, economic globalization is the process of increasing economic integration between countries, leading to the emergence of a global marketplace or a single world market
  • Depending on the paradigm, economic globalization can be viewed as either a positive or a negative phenomenon
  • Economic globalization comprises the globalization of production, markets, competition, technology, and corporations and industries
  • Current globalization trends can be largely accounted for by developed economies integrating with less developed economies by means of foreign direct investment, the reduction of trade barriers as well as other economic reforms and, in many cases, immigration
  • In 1944, 44 nations attended the Bretton Woods Conference with a purpose of stabilizing world currencies and establishing credit for international trade in the post World War II era
  • While the international economic order envisioned by the conference gave way to the neo-liberal economic order prevalent today, the conference established many of the organizations essential to advancement towards a close-knit global economy and global financial system, such as the World Bank, the International Monetary Fund, and the International Trade Organization
  • As an example, Chinese economic reform began to open China to globalization in the 1980s
    • Scholars find that China has attained a degree of openness that is unprecedented among large and populous nations, with competition from foreign goods in almost every sector of the economy
    • Foreign investment helped to greatly increase product quality and knowledge and standards, especially in heavy industry
    • China’s experience supports the assertion that globalization greatly increases wealth for poor countries
    • During 2005–2007, and again from 2010–2013, the Port of Shanghai held the title as the world’s busiest port
  • In India, business process outsourcing has been described as the “primary engine of the country’s development over the next few decades, contributing broadly to GDP growth, employment growth, and poverty alleviation”

Cultural Globalization

  • Refers to the transmission of ideas, meanings and values around the world in such a way as to extend and intensify social relations
  • This process is marked by the common consumption of cultures that have been diffused by the Internet, popular culture media, and international travel
  • This has added to processes of commodity exchange and colonization which have a longer history of carrying cultural meaning around the globe
  • The circulation of cultures enables individuals to partake in extended social relations that cross national and regional borders
  • The creation and expansion of such social relations is not merely observed on a material level
  • Cultural globalization involves the formation of shared norms and knowledge with which people associate their individual and collective cultural identities
  • It brings increasing interconnectedness among different populations and cultures
  • Cultural globalization has increased cross-cultural contacts but may be accompanied by a decrease in the uniqueness of once-isolated communities
  • For example, sushi is available in Germany as well as Japan but Euro-Disney outdraws the city of Paris, potentially reducing demand for “authentic” French pastry
  • Globalization’s contribution to the alienation of individuals from their traditions may be modest compared to the impact of modernity itself, as alleged by existentialists such as Jean-Paul Sartre and Albert Camus
  • Globalization has expanded recreational opportunities by spreading pop culture, particularly via the Internet and satellite television
  • Religious movements were among the earliest cultural elements to globalize, being spread by force, migration, evangelists, imperialists and traders
  • Christianity, Islam, Buddhism and more recently sects such as Mormonism, which have taken root and influenced endemic cultures in places far from their origins
  • The diffusion of certain cuisines such as American fast food chains is a visible aspect of cultural globalization
  • The two most successful global food and beverage outlets, McDonald’s andStarbucks, are American companies often cited as examples of globalization, with over 32,000 and 18,000 locations operating worldwide, respectively, as of 2008
  • The Big Mac Index is an informal measure of purchasing power parity among world currencies
  • Scholarly opinion typically states that globalization and Americanization are different phenomena
  • The term globalization implies transformation: cultural practices including traditional music can be lost or turned into a fusion of traditions
    • Music has an important role in economic and cultural development during globalization
    • Music genres such as jazz and reggae began locally and later became international phenomena
    • Globalization gave support to the World Music phenomenon by allowing music from developing countries to reach broader audiences
    • The term “World Music” was originally intended for ethnic-specific music
    • Now, globalization is expanding its scope such that the term often includes hybrid sub-genres such as “World fusion”, “Global fusion”, “Ethnic fusion”, and Worldbeat

Political Globalization

  • Globalization may ultimately reduce the importance of nation states
  • Supranational institutions such as the European Union, the WTO, the G8 or the International Criminal Court replace or extend national functions to facilitate international agreement
  • In particular, the globalization of the US grand strategy may have already reduced the importance of both nation states and the above-mentioned supranational institutions
  • Some observers attribute a relative decline in US power to globalization, particularly due to the country’s high trade deficit
  • This led to a global power shift towards Asian states, particularly China, which unleashed market forces and achieved tremendous growth rates
  • As of 2011, the Chinese economy was on track to overtake the United States by 2025
  • Increasingly, non-governmental organizations influence public policy across national boundaries, including humanitarian aid and developmental efforts
  • As a response to globalization, some countries have embraced isolationist policies
  • For example, the North Korean government makes it very difficult for foreigners to enter the country and strictly monitors their activities when they do
    • Aid workers are subject to considerable scrutiny and excluded from places and regions the government does not wish them to enter
    • Citizens cannot freely leave the country

Is Globalization a Bad Thing?

  • A number of international polls have shown that residents of Africa and Asia tend to view globalization more favorably than residents of Europe or North America
    • In Africa, a Gallup poll found that 70% of the population views globalization favorably
    • The BBC found that 50% of people believed that economic globalization was proceeding too rapidly, while 35% believed it was proceeding too slowly
  • Initially, college educated workers were likely to support globalization
  • Less educated workers, who were more likely to compete with immigrants and workers in developing countries, tended to be opponents
  • The situation changed after the financial crisis of 2007
    • According to a 1997 poll 58% of college graduates said globalization had been good for the U.S.
    • By 2008 only 33% thought it was good
    • Respondents with high school education also became more opposed

Some critics of globalization argue that it harms the diversity of cultures

  • As a dominating country’s culture is introduced into a receiving country through globalization, it can become a threat to the diversity of local culture
  • Some argue that globalization may ultimately lead to Westernization or Americanization of culture, where the dominating cultural concepts of economically and politically powerful Western countries spread and cause harm on local cultures
  • So, globalization, a diverse phenomenon, relates to a multilateral political world and to the increase of cultural objects and markets between countries
  • The Indian experience particularly reveals the plurality of the impact of cultural globalization

In general, globalization may ultimately reduce the importance of nation states

  • Supranational institutions such as the European Union, the WTO, the G8 or the International Criminal Court replace or extend national functions to facilitate international agreement
  • In particular, the globalization of the US grand strategy may have already reduced the importance of both nation states and the above-mentioned supranational institutions
  • Polarization increased dramatically after the establishment of the WTO in 1995
  • This event and subsequent protests led to a large-scale anti-globalization movement


Globalization – Created with Haiku Deck, presentation software that inspires;

Anti-Globalization

Consists of a number of criticisms of globalization

  • Critical of the globalization of corporate capitalism
  • Opposition to capital market integration
  • Issues with social justice and inequality
  • Anti-consumerism
  • Anti-global governance
  • Environmentalist opposition

Resistance against European colonialism and U.S. imperialism

  • Anti-Globalization movement can be traced back through the lineage of the movement of a 500-year-old history of resistance against European colonialism and U.S. imperialism
  • This refers to the continent of Africa being colonized and stripped of their resources by the Europeans in the 19th century
  • It is also related closely with the anti-Vietnam war mobilizations between 1960 and 1970, with worldwide protests against the adjustment of structure in Africa, Asia, and Latin America

As summarized by Noam Chomsky

The dominant propaganda systems have appropriated the term “globalization” to refer to the specific version of international economic integration that they favor, which privileges the rights of investors and lenders, those of people being incidental. In accord with this usage, those who favor a different form of international integration, which privileges the rights of human beings, become “anti-globalist.”

This is simply vulgar propaganda, like the term “anti-Soviet” used by the most disgusting commissars to refer to dissidents.

It is not only vulgar, but idiotic. Take the World Social Forum (WSF), called “anti-globalization” in the propaganda system – which happens to include the media, the educated classes, etc., with rare exceptions. The WSF is a paradigm example of globalization. It is a gathering of huge numbers of people from all over the world, from just about every corner of life one can think of, apart from the extremely narrow highly privileged elites who meet at the competing World Economic Forum, and are called “pro-globalization” by the propaganda system.

Coming up next…

There’s a FOURTH Industrial Revolution? (part 4) Finally! #4IR

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