4th Industrial Revolution: Change is coming?

by Sonny Africa

Constant technological progress invariably showcases the huge creative potential of people and the immense possibilities to build a society without poverty. We all aspire to a society that continuously improves everyone’s well-being and that is within the planet’s ecological capacity. Outside of abhorrent weapons technology, new technology is always exciting for its promise to bring humanity towards a shimmering future.

It is no different with the so-called fourth industrial revolution the world is supposedly entering. Beyond quibbling on what counts as ‘revolutionary’ or how many industrial revolutions there have been, the development of new technologies is incontrovertible. The breakthroughs are stunning in robotics, artificial intelligence, 3D printing, nanotechnology, neurotechnology, biotechnology, quantum computing, energy storage and elsewhere.

These will doubtless change the way many live, work and relate to one another. The steam engine brought workers together in coordinated mechanized production. The internet and social media brought people together as well as, somewhat ironically, disconnected us from each other. But the most important question is how far these technologies fundamentally improve the conditions of billions of poor people. And do they close their widening gap with the very richest who, literally, control the world?

Miracles in the making?

New technology is always dazzling. But there’s more than enough experience from past technological ‘revolutions’ to teach us to be more measured in our enthusiasm.

New technologies create opportunities and expand potential. But the extent to which these promises are realized is not automatic. Nor are their benefits always uniformly or widely shared. The disruption to workers and their livelihoods from adopting new technologies also cannot be downplayed.

Our experience with past emergent technologies is a case in point. The Philippine economy remains backward and exclusionary in important respects despite many waves of technological change in the last decades and even centuries. There have already been great advances in agricultural technologies and productivity worldwide. Yet the majority of our farmers still use hand tools and farm animals which are technologies used as early as five millennia ago in 3,000-2,000 BC in Mesopotamia. There is still vast rural poverty.

The so-called third industrial revolution in electronics, computers and the internet started in the 1970s and is nearly 50 years running. Yet the highest technology production in the country is by foreign firms in import-dependent export enclaves largely disconnected from the rest of the economy. Domestic science and technology is even stifled by increasingly stringent intellectual property rights restrictions.

Will the so-called fourth industrial revolution create opportunities? Technology may create opportunities. But what really happens and who benefits is determined by who’s in control of these technologies. The government has a hugely important role in ensuring that the country rides the new technological wave on terms beneficial to the economy and to the people.

Left to its own devices, the market will not create real opportunities for the country. Take the case of outsourcing. The internet is still widely hailed and credited with the business process outsourcing (BPO) and call center boom. But among its dark sides is repressing the creativity and ingenuity of hundreds of thousands of our youth who have been incentivized to do routine and monotonous work as cheap labor for largely foreign companies.

What are the implications of a ‘fourth industrial revolution’ on the Philippine economy? It is hard to generalize because so many disparate technologies are involved. Among the most prominent are robotics, artificial intelligence, 3D printing and others improving production efficiency. Adopting these will only become more compelling as their costs drop and productivity increases — to the point that they will be cheaper than labor and, hence, more profitable to use.

Working class gains?

New technologies can be very welcome to the extent that they end tedious, repetitive and dangerous work. This is aside from the importance of technological progress for greater productivity and long-run economic growth.

But if the benefits of current technologies are not shared under prevailing economic arrangements, there is no reason to expect that the benefits of new technologies will be shared in the future. Absent a real change in government policy with greater intervention in the economy, the new technologies will just exacerbate already very adverse trends in the labor market.

To begin with, the majority of the work force is actually in the informal sector working in backward conditions with low pay, no or low benefits, and constant economic insecurity. Tens of millions aspire to regular decent work in the formal sector but such work is already under grave threat as it is.

The tendency in recent decades is for greater flexibilization of work, especially growing contractualization. This has greatly weakened workers’ leverage and increased downward pressure on wages and benefits as well as aggravated job insecurity. New technologies that make workers even more replaceable will make this situation worse. The lowest skilled and hence relatively least productive workers are worst off.

Employers have in recent decades also intensified their monitoring and control of workers’ actions and movements to optimize these for greater productivity and profit. New technologies will likely lead to even stricter employee monitoring and greater workplace stress for them.

Labor problems will reach their peak upon the eventual steady or sudden displacement of huge numbers of workers. They will not find other work if domestic agriculture and Filipino industry have not progressed substantially by then, and if we have not been able to correct the economy’s imbalanced service-orientedness.

As it is, for instance, the hailed foreign transnational corporation (TNC)-driven expansion of the manufacturing sector is not resulting in a commensurate increase in manufacturing jobs. The manufacturing sector has been growing rapidly and expanded 61.8% between 2010 and 2017. Average annual growth of 7.6% in the 2010-2017 period is also well above the historical average of some 5% since 1950. But then manufacturing employment only grew by 14.8% between 2010 and 2017 indicating already quite capital-intensive production. Adopting new technologies just means even greater capital-intensity.

The long-term problem is also that the new technologies will just morph global production lines. These will be shaped to be even more footloose according to the decisions of foreign TNCs about what production arrangements are most profitable for them. Moreover, greater opening to foreign investment will mean that technologically-advanced foreign capital will just dominate local education, research and development, and production systems even more.

These trends highlight how the government really has to take charge of the economy’s direction. Government should not let itself be overly influenced by what is acceptable or desired by foreign TNCs in their rational self-interested drive for profit maximization.

Philippine progress?

There is a thread in discussions about the ‘fourth industrial revolution’ that workers should ‘reboot’ and ‘retool’ themselves to become competitive. To be sure, all workers should at all times be continuously learning and developing and being more productive to drive economic and social progress. The problem in current circumstances, however, is that workers are expected to improve not for themselves or society but so that they will be profitable for firms to hire.

Looked at in this way, the problem is not that workers should become ‘competitive’ but that the economy should be reorganized such that workers’ labors and growing productivity redound to themselves and to overall economic progress.

The real issue is that the government should develop domestic agriculture and build Filipino industry. It should as well ensure that the gains from growth are distributed evenly. It is not about merely embracing the ‘fourth industrial revolution’ but about advancing national development and upholding the people’s rights and welfare.

Of course this means developing Filipino capacity in the most advanced technologies possible. Indigenous technological progress is a vital element for sustained and sustainable national economic development. We need to aim for agricultural modernization and especially to become a high technology industrial power.

But it also means that steps need to be taken to ensure that the gains from technological and economic progress are distributed better. Workers have to be trained and their incomes increased with higher wages and benefits. Real land distribution and support to agriculture will incentivize and enable higher farm productivity. Wealth and assets have to be distributed and made more socially productive through higher taxes on the rich that finance, among others, greatly expanded public social services and social protection. The means of production have to be in the hands of the many rather than of a private profit-seeking few.

The country is far from prepared. Real unemployment including unreported discouraged workers is at record levels. Skills levels are wanting with many of our most skilled workers even forced abroad in the millions for lack of domestic prospects. Displaced workers are weakly protected under an inadequate social protection system. Most fundamentally, decades of reckless and premature globalization have prevented the development of a high-productivity Filipino industrial, service, and agricultural base.

The economy and indeed our politics have to be made much more democratic. Technology is society’s knowledge and the sum of its social practice. In a general sense the beneficiaries of technology cannot and should not just be investors, shareholders, and the innovators whose talent they buy. Technological revolutions can make governance more agile – but, more importantly, a social revolution is needed to make our politics more democratic.

New and emerging technologies are real markers that the country is heading to the future. But this is not necessarily a shining future and history is unequivocal about the scenario that is likely to emerge. If the government does not undertake the bold measures needed to radically transform our economy and society for the better, the majority of Filipinos and the national economy will remain mired in a recycled trajectory of backwardness and poverty.

Our systems of production, consumption and governance need to be urgently transformed. But the most urgent change is not simply to produce more and better products and services. The most important change is to distribute economic gains much more evenly, for the majority of people to be in control of their lives, and for these to be done in a way that the planet sustains society. ###




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