Automation and survival of the liberal order

The world is at the cusp of a major technological transformation. Many analysts view this as the arrival of the Fourth Industrial Revolution. The disruptive innovations in information and communication technologies and their impact are likely to make previous revolutions pale in comparison.

Of course, this is not to say that previous industrial revolutions were not transformative. They did bring about major transformations, albeit in an incremental and orderly fashion. It is well known how the invention of water and steam power facilitated the First Industrial Revolution that went on to mechanize the modes of production, transforming work and life in most parts of Europe. The invention of electric power in the early 19th century laid the foundations for mass production of industrial goods and their transportation, including exploitation of natural resources worldwide, which in many ways paced up trade and globalization.

The arrival of electronics and information technology further accelerated globalization and helped expand a consumption driven economic order. These industrial revolutions which brought about massive improvements in transportation and communication systems and expanded consumer choices also helped in flattening up national boundaries and rigid identities. In many ways, these industrial cycles culminated in establishing global capitalist economies which in turn helped generate millions of jobs, raised income and cut poverty to a record level.

Yet, these transformations came mostly in an orderly and incremental manner. The leaders and change managers had ample time to attend to newer demands and manage transformations. This is a completely different story under the new information and communication technology regime that thrives in disruptions.

In its scale, breadth and complexity, the transformation is unlike anything mankind has experienced before. The political economy of 21st century digital technology is dramatically different from the revolutions that preceded it. Compared to previous ones (which were mostly linear and predictable), the current industrial phase is exponential. According to the World Economic Forum's latest report, digital technology's disruptive impact is being felt in every industry, in every country and the breadth and depth of its impact is transforming the entire system of production, management and governance.

While digital technology is greatly enhancing productivity and improving quality, such as "democratizing spaces" and "creating multiple points for access" and the empowerment for hitherto groups and individuals, it is at the same time sharpening the levels and intensity of inequalities.

According to economists Erik Brybjolfsson and Andrew McAfee, technology is widening inequality as it potentially disrupts the existing labor market. While it is too early to say which way the scenario will likely work out, analysts like David Autor and Daron Acemoglu of MIT believe people with lower skills and education are increasingly finding themselves replaced by machines. For these analysts, technology has destroyed large swathes of work in the middle-skilled section, creating a process economists call "labor-force polarization."

To this, Thomas Piketty calls a "winner-takes-all" economy which offers very limited access to the middle class. The middle class which strongly endorsed market economies and liberal democracies in the previous decades is no longer showing the same commitment to these values. Digitization is pacing up democratic malaise and dereliction to an unbelievable level, with deeper consequences. The growing dissatisfaction of the working population largely caused by technology (read automation) was in vivid display during the recent elections in Europe and America. The technology-led disruptions are being ably used to their advantage by the demagogues and politicians with extreme ideologies.

Beyond the economics of it, digitalization is fundamentally reshaping civic life, reordering state-citizen relationships and recreating new norms and new identities. These tools which in previous decades contributed to accelerate globalization by "flattening" the barriers of regions and narrowing identities, ironically is "hardening" or even reviving "older" and largely forgotten identities.

While democratization of technology is enabling groups and communities to articulate and protect their identities and interests, the same technology and its widespread access are powering exclusionary instincts. Assimilation of "outsiders" in new communities is becoming a thing of past. This in many ways goes against the core tenets of globalization and the liberal trading system which ironically brought in new technologies.

Most importantly, digital technology and its increasing access by citizens is resetting the state-citizen conversation and changing the old grammar of public engagement. Governments across the world are finding it difficult to cope with the demands and expectations of smartphone-connected citizens having access to all kinds of information. In short, the world, particularly the liberal order, is set for major shocks.

Niranjan Sahoo is Senior Fellow, Observer Research Foundation, New Delhi.

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.