In a recent speech called “The Future of Work,” Bank of England Governor Mark Carney addressed how artificial intelligence, automation, interconnectivity, and other elements of the Fourth Industrial Revolution will change the way we work.
The way we work already has changed enormously. In Carney’s words, economies are being reorganized into “a series of distributed peer-to-peer connections across powerful networks”. “Intangible capital is now more important than physical capital”. . . “We are entering an age when anyone will be able to produce anything anywhere through 3-D printing, where anyone can broadcast their performance globally via YouTube or sell to China whatever the size of their business via Tmall.”
But in some ways, Carney doesn’t see the Fourth Industrial Revolution as so different from the previous three – neither the First Industrial Revolution from the late 18th century (steam engine and urbanization); nor the Second from the late 19th century (electricity, mass production, oil and steel); nor the Third from the late 20th century (electronics, the internet, and info technologies).
All industrial revolutions, Carney says, involve three effects: Destruction, Productivity, and Creation. The Destruction happens when technology replaces labor, and wages and employment stagnate or decline. The Productivity effect is where technology makes those who are in work more productive and boosts their wages while increasing returns to the owners of capital – but also results in job polarization. Some people do well and some do poorly. Creation is what makes things better. That is where new technologies eventually create new tasks and new livelihoods that enable labor to thrive again.
Historically, the effects of Destruction have never been permanent. But it does take time for Creation to kick in and counter the Destruction effect. Carney notes, “The benefits of the First Industrial Revolution, which began in the latter half of the 18th century, were not felt fully in productivity and wages until the second half of the 19th.” That is a long time – and things may play out similarly this time.
But the Fourth Industrial Revolution also will be different from the previous three in this way: In the past, technology largely substituted for routine manual tasks – that is, “human hands,” but not “human heads.” Today, we’re looking at technologies that will reach the realm of “human heads” — tasks involving reasoning, sensory perception, and cognitive content.
So what will be left for humans to do? Many interesting answers have been offered to this question. But fascinatingly, Carney suggests that the future of work for humans may be to provide “hearts” – “that is, tasks that require emotional intelligence, originality or social skills such as persuasion or caring for others.”
Perhaps even more fascinating is Carney’s suggestion that the new technologies of the Fourth Industrial Revolution could enable “new forms of bespoke mass creativity” and that as a result, we could return to an economy where cottage industries and “human hands” again have great value.
Coming full circle to return to cottage industries? Imagine that.