I sometimes pause to remember that just a few years ago, before we were worried that AI would take all our jobs, we were worried that new robotics technologies would take all our jobs. And before that, we were worried that automation would take over all the work. Can we learn about the current industrial revolution from previous industrial revolutions?
Arthur H. Goldsmith delivered the 2022 Presidential Address to the Southern Economic Association. “The 4th Industrial Revolution and the future of work: Reasons to worry and policies to consider.” The written version (co-authored with James F. Casey) is now posted online ahead of publication. Southern Economic Journal.
What were the first three industrial revolutions? As Goldsmith said:
The first IRs appeared in England around 1765 with the advent of the steam engine to mechanize production, particularly in agriculture, mining, and transportation. … The second IR arrived in 1865, about 100 years after the first. Electricity and internal combustion engines, new power sources, were representative technological developments of the 2nd IR. … The third IR, or digital revolution, begins again around 1970, about 100 years after the previous IR. Digitization entails representing information bit by bit, while tertiary IR is about ways to store, transmit and analyze data using a suite of new machines and advances in coding (e.g. HTML) (Goldfarb & Tucker, 2019). The advent of personal computers, supercomputers, and the Internet of Things has enabled rapid advancements in communications and science through research and development, including automation of industrial processes, space exploration, and the human genome project.
So what is the 4th Industrial Revolution? Goldsmith argues that the technological changes of the last 10 to 20 years are not simply a continuation of the digital revolution, but a separate industrial revolution.
In the era of digitalization, brilliant new technologies such as 3D printing, nanotechnology, artificial intelligence, machine learning, quantum computing, big data, and cloud storage have emerged in recent years. At the same time, existing technologies such as industrial robots, vision systems, sensors, and algorithms have also advanced significantly. 4IR is the result of integrating these technologies in creative and productive ways with robotics and artificial intelligence at the center of change. Perhaps the most visible form of this evolution is generative AI, which combines machine learning and artificial intelligence guided by the structure of the human brain to learn numerous relationships and patterns through exposure to vast amounts of data. It will be. This technology can generate data including text, images, audio, and code. …
The speed, scope and system (e.g. production, management and governance) impact of 4IR is astounding. Robot density, the number of industrial robots per 10,000 workers, a standard indicator of manufacturing automation, doubled globally between 2017 and 2022 (Heer, 2021, 2024). This is incredible speed. In contrast, in the United States, robot density more than tripled between 1995 and 2017 ( Bharadwaj & Dvorkin, 2019 ) and rose another 12% between 2020 and 2022. Likewise, the pace of artificial intelligence activity in recent years has been impressive. Enterprise AI investment spending in the United States increased 423% from 13 billion to 68 billion between 2015 and 2020 (Statista Research Team, 2022), and global growth in artificial intelligence investment has advanced at an even faster pace since 2020. (Thormundsson, 2023). $13 billion in 2015, $92 billion in 2022
Readers will learn from Goldsmith’s account that the U.S. and global economies are actually only at the beginning of the Fourth Industrial Revolution. So any discussion of what impact it might have is necessarily speculative. He wrote: “The most important question is: will automation reduce the number of jobs, or will mechanization create so many new jobs, which in turn will increase employment?”
I confess that I am skeptical about phrasing this problem in terms of total jobs. An economist pointed out to me a long time ago that the single biggest factor determining the number of jobs in any economy is a country’s population. So the key issue seems to be less about the sheer number of jobs and more about whether this industrial revolution will lead to persistent unemployment at historically high levels, or to a pattern of typical levels of unemployment but at higher rates. Number of workers in low-wage jobs. Goldsmith argues this point as follows:
This is a fundamental conceptual difference between the Fourth Industrial Revolution and previous industrial revolutions, where technological advancements were considered technology neutral. Technological advances have improved the productivity and workplace performance of workers with various levels of formal education. The impact of the technology-biased versus technology-neutral difference is profound. This is because it undermines the employment prospects and earnings of middle-class people with moderate levels of formal education, while simultaneously improving the economic situation of individuals with high levels. of formal education.
At least to me, it is not clear whether the 4th Industrial Revolution will be different in this way. I have been reading for decades that the Third Industrial Revolution entailed ‘skill-based’ technological change and in this way helped to increase income inequality from around 1980 onwards. Moreover, there is currently very limited evidence available on the impact of artificial intelligence. This suggests that workplace tools may be particularly valuable to low-skilled rather than high-skilled workers. The fundamental reason is that AI tools can actually make existing expertise more accessible to everyone. This is more helpful to those with less experience or skills.
However, it is not (yet) clear that AI will lead to greater technological mobility of workers than previous industrial revolutions, but nevertheless, in a healthy economy that is constantly changing and evolving, some workers will no longer have the skills and experience they developed in their traditional jobs. We learned that it was not highly regarded in the market. In response to these persistent problems, I have argued in the past for “active labor market policies” (e.g. here and here). While the United States currently emphasizes ‘passive’ labor market policies such as unemployment insurance payments and safety net support for low-income people, ‘active’ labor market policies will expand the government’s role in job search and training.
In particular, Goldsmith emphasized the potential role of the federal government as a coordinator and certification mechanism for “certification programs.” As Goldsmith points out, private companies like Google have already taken some important steps in this direction.
Google launched its skills development initiative, the Google Career Certificate Program, in 2020 (Google, 2021; Hess, 2020). The program offers certificates in IT support, data analysis, project management, UX design, and Android development. The curriculum for each certificate was developed by Google and taught exclusively online by Google employees using the learning platform Coursera. These certificate programs are self-paced, designed to be completed in three to six months, and do not require a college degree for admission. It costs $49 per month to use the Coursera platform, and Google has awarded 100,000 need-based scholarships to qualified applicants. Google also awarded $10 million in grants to three nonprofits that partner with Google to provide workforce development to target groups, including women, veterans, and underrepresented groups. The Google Career Certificates Employer Consortium (Google, 2024) includes over 150 U.S. companies, including Deloitte, Target, and Verizon, that are considering Google Career Certificate graduates for entry-level jobs that typically require a four-year college degree. Additionally, certification holders have access to an exclusive, fast-tracked employment platform when applying for jobs with consortium employers. This initiative could be expanded by independently developing or co-developing additional certification programs and involving governments and additional companies leading the delivery.
For me, the biggest challenge with a certification program is focus. Each program should focus on a specific skill and not be filled with many other topics and skills that may be good but need to be separated into many different things. Another certificate. This kind of focus will help reduce program costs and the time needed to qualify for the certificate and will encourage workers to see it as a viable option.
