How can we create a new industrial revolution?

Saturday 2 November, 14:0015:30, Frobisher Auditorium 2Battle for the Economy

For better or worse, most commentators would agree that today’s society has come about thanks to a series of rapid leaps forward in technology and production, from the Industrial Revolution of eighteenth-century Britain through to the IT revolution that began in the mid-Seventies. Through these periods, there have been enormous improvements both in the speed and efficiency with which we could make existing products, but also a vast increase in new products, services and possibilities for living.

Now there is much talk of a new industrial revolution. Klaus Schwab, founder of the World Economic Forum, which organises the famous Davos summits, is credited with the concept of the Fourth Industrial Revolution. Schwab argues we are in the midst of a technological revolution that is ‘blurring the lines between the physical, digital and biological spheres’. Others point to the way new technologies like ‘artificial intelligence, autonomous vehicles and the internet of things are merging with humans’ physical lives’, through such things as voice-activated assistants, facial ID recognition or digital health-care sensors. Schwab argues that such technologies will transform our lives in the way previous technical revolutions have.

Yet while there is much talk of technological possibilities, we also live in an era of stagnating productivity, declining investment and an aversion to taking risks. For example, there are regular complaints from commentators and politicians that long-term investment in manufacturing and new industries is weak while financial services receive a disproportionate share of resources. Official statistics note that research and development (R&D) expenditure in the UK was just 1.69 per cent of GDP last year, well below the OECD’s suggested target of three per cent. Critics argue that even this paltry expenditure is all too often focused on R&D with a quick payoff rather than ‘blue sky’ research that could produce major changes in the next few decades.

Moreover, a wider culture of risk aversion, critics observe, means that some breakthrough technologies – like genetic modification of food crops – struggle even to be approved by regulators, never mind developing their potential to transform society. There are also worries that a new industrial revolution is more of a problem than a benefit, with workers replaced by automation and artificial intelligence and jobs lost forever. This play-it-safe mood is in stark contrast with the willingness of the US government to make the investment, and for brave astronauts to take the personal risks, to put a man on the Moon 50 years ago.

Do we need a new industrial revolution – and what are the barriers to creating one? Will new technologies really transform our society or is the hype around them a distraction from more important issues? How can we raise productivity when there is so little investment in research and development? Can we learn to be a risk-taking, innovative society once more?