Happy new year to all of you faithful readers of the Fourth Revolution blog! I wish you and your family a lot of happiness, health, prosperity… and change!
For your pleasure, here are some of the most popular posts in 2015:
In the next years and decades we will witness more frequent events of collapse of organizations and companies which we thought were almost like institutions in the economic landscape.
A bank run, the typical extreme event where a quasi-institution falls
That’s at least the view of Jeremy Rifkin in his interesting book ‘The Zero Marginal Cost Society‘. He quotes an economist of the XXth century, Oskar Lange, to have said: “The stability of the capitalist system is shaken by the alternation of attempts to stop economic progress in order to protect old investments and tremendous collapses when those attempts fail“. It was true in all times. Today more and more industries struggle to defend their position and their investments as the Fourth Revolution spreads. The more they are in oligopolistic or monopolistic situation, the longer they will resist – and the harder the fall will be. The larger and global they are, the more widespread the consequences will be.
As we move into the Collaborative Age in the next few years and decades we can expect some dramatic collapses to happen as many dominating organizations will resist until the end while their economic model will crumble.
This is an observation, but not a causal fact. What could explain this effect? “Broad historical changes have tilted financial incentives away from war and toward trade. Russett and Oneal found that it was not just the level of bilateral trade between the two nations in a pair that contributed to peace, but the dependence of each country on trade across the board: a country that is open to the global economy is less likely to find itself in a militarized dispute”
It thus seems that bringing countries or communities into the flow of world trade and increasing the dependency on exchange would be a great way to foster world peace. The dramatic increase in worldwide trade could be an explanation of the much more peaceful times we are enjoying since the end of WW2.
In the Collaborative Age, bringing people and communities into the worldwide exchange of ideas should also improve peace and understanding. We then need to be particularly wary of those communities that close themselves to the outside world.
With the Fourth Revolution came the collapse of creative industries such as the music industry, the publishing industry etc. It is relevant to ask what became of the artists and creators. Were they also destroyed by the tsunami? In an excellent piece ‘The Creative Apocalypse That Wasn’t‘, the New York Times Magazine gives a clear answer: no, actually the artists are rather thriving. It is the industry around them that crumbled.
Focus the value on the artist, not the industry around him
The entire business model of creativity has been put on its head. The collapse was incredible: “The global music industry peaked just before Napster’s debut, during the heyday of CD sales, when it reaped what would amount today to almost $60 billion in revenue. Now the industry worldwide reports roughly $15 billion in revenue from recorded music, a financial Armageddon even if you consider that CDs are much more expensive to produce and distribute than digital tracks.”
Obviously, recordings don’t sell so well any more and their value has decreased. To compensate, live shows are an increasing part of the value creation, and their price has increased tremendously (“In 1999, when Britney Spears ruled the airwaves, the music business took in around $10 billion in live-music revenue internationally; in 2014, live music generated almost $30 billion in revenue“). And, in general, there are more professional musicians now than before, which shows that one way or the other, they get a share of the remaining value.
I definitely concur with the conclusion of the article: “I suspect the profound change lies at the boundaries of professionalism. It has never been easier to start making money from creative work, for your passion to undertake that critical leap from pure hobby to part-time income source. […] From the consumer’s perspective, blurring the boundaries has an obvious benefit: It widens the pool of potential talent. But it also has an important social merit. Widening the pool means that more people are earning income by doing what they love.”
Overall the Collaborative Age encourages expression and creates value and income for creators. The border between full-time and part-time professional is just blurring like in many other occupations.
With the Fourth Revolution, we can’t escape being photographed, recognized and tagged. Lately I was waiting to cross a street in Singapore when a Google Car passed by – and there am I on Google Streetview. My face is blurred but I remain quite recognizable!
Me waiting to cross a street in Singapore – on Google Streetview!
Often on the streets we meet people taking pictures with their phones and it is quite certain that we must be in the background of numerous shots. Face recognition algorithms (such as Facebook’s) have certainly identified us in many situations, not to mention the public video surveillance systems.
Public space is more public than ever, and broadcast worldwide. Even private space is not so safe (I am surprised by the number of people in Asia who constantly cover the video camera of their laptop for fear of pirates shooting videos!). Many videos and sound tracks leak that are taken in otherwise supposedly private meetings.
That’s definitely a trend we can’t escape. I understand people are anxious with this change in particular if they’re caught in an unsuitable situation. Personally it makes me sometimes uneasy to think that in theory, someone could certainly track in detail my whereabouts (not to mention the GPS on the phone I carry). On the other hand, it can also be enhanced safety compared to the situation years ago.
As with everything, we will need to learn how to put safeguards and take advantage of the phenomenal advantages of modern technology. This one might be tougher as it visibly enters our private life.
Antireductionism “advocates that not all properties of a system can be explained in terms of its constituent parts and their interactions” [Wikipedia]. It stands opposed to reductionism, the approach typical of the Industrial Age, which considered that the behavior of entire systems can be explained completely by a description of their individual constituent parts and their interactions.
In the 18th century people thought animals could be described as a mechanical apparatus
Already the philosophers of Enlightment struggled a bit with reductionism that was contradicting our free will. Still, the mechanistic view of reality dominated science and our understanding of the world until far into the 20th century.
Today in many areas such as chaos, systems biology, evolutionary economics, and network theory, we know that complex, unpredictable behavior arises from large collections of simple components.
“By the mid-twentieth century, many scientists realized that such phenomena cannot be pigeonholed into any single discipline but require an interdisciplinary understanding based on scientific foundations that have not yet been invented. Several attempts at building those foundations include (among others) the fields of cybernetics, synergetics, systems science, and, more recently, the science of complex systems.” writes Melanie Mitchell in ‘Complexity: A Guided Tour‘.
The study of complex systems is an emerging and still very incomplete science. It is the hallmark of the Collaborative Age.
Moravec’s paradox says that “contrary to traditional assumptions, high-level reasoning requires very little computation, but low-level sensorimotor skills require enormous computational resources“. In other words, our unconscious capabilities are much more difficult to implement than our high level, conscious abilities.
A semi-autonomous robot having balance problems at the 2015 DARPA challenge
As Wikipedia explains, “One possible explanation of the paradox, offered by Moravec, is based on evolution. All human skills are implemented biologically, using machinery designed by the process of natural selection. In the course of their evolution, natural selection has tended to preserve design improvements and optimizations. The older a skill is, the more time natural selection has had to improve the design. Abstract thought developed only very recently, and consequently, we should not expect its implementation to be particularly efficient“.
There is not reason why we won’t be able to built fully balanced robots in a few years (it took a decade from the first DARPA autonomous driving vehicle challenge to have fully functioning prototypes on the roads).
Yet it is really amazing to realize that those deeply engrained bodily functions we take for granted are the most difficult to reproduce! – whereas we think they are rather low-level functions.
On a yearly basis, Mary Meeker of Kleiner Perkins Caufield & Byers gives an important talk about the state of the internet (Internet trends). It is a very commented set of slides (the link to the slidepack and the presentation video below). Ijust want to comment two slides here.
Good news: the Fourth Revolution is pervading our society increasingly. The slide gives a measure of the impact depending on the area. Some progress needs to happen on the government and regulatory side for sure. Personally I believe that education is today quite more disrupted than what she shows here.
On the bad news side, we are spending more and more time in front of a screen!! This is great news for advertisers but not necessarily for us. And yes, we’re communicating less in real life and more and more with your devices… and still watching TV as much as before!
Here are the links to the set of slides on slideshare
In the wake of the energy revolution that unfolds quietly (see our post on solar power), power utilities face tough decisions. Their model is generally an industrial-age model where efficiency is gain by ever bigger power stations that benefit from scale effects to produce cheap power.
How long will be centralized power generation model survive?
The drawback is of course, the size of these stations and the related need for a very extensive distribution network, and also that to be profitable, investments need to be used for a large number of decades. Nuclear Power Plants for example, are now typically designed to last 60 years or more to amortize the investment cost.
Today, those utilities face a double threat:
the development of competitive distributed generation, which diminishes consumption from centralized stations and creates distribution network instability,
the increasing cost and lack of proper control on large power stations investments, for a variety of factors.
A new urban landscape we need to get used to!
Centralized production capability will remain needed for a long time, in particular due to large industrial consumers and the need to have the capability to support power networks in case of extreme conditions. Yet it is will become increasingly difficult to justify the huge investments with the uncertainties of the market over the next decades. A major factor will be to be much more reliable in predicting the actual cost and schedule of construction projects. Some effort is needed in that respect in the power industry.
Utilities will soon face significant challenges to their traditional business model and they’d better take the issue upfront than become defensive. A major shift will happen, and as in all good things, a balanced approach that can be adaptable is always better than to bet too much on a single way of producing power. With some effort, thanks to our connectivity and processing capability, we will be able to manage the associated complexity of multiple sources of energy.
Facebook commissioned a study to Deloitte that shows that it adds more than $200 billion to the global economy and 4.5 million jobs. Of course that might be a bit inflated being a study commissioned by the culprit, but that still makes one think about the global value generated by a new tool that was created in 2004 (The report, though, does not comment on the possible value and jobs it destroyed elsewhere).
So what are the areas that have been considered for this evaluation?
In this study, there are mainly three:
65%: marketing effects of course (creating value through increased marketing)
22%: connectivity effects (consumers are enticed to buy new terminals to stay connected on Facebook!)
13%: platform effects (creating value by developing and selling apps for the facebook platform)
The percentages vary depending on the country, for example in India, the connectivity effect is relatively much larger.
Facebook seems to be on its way to develop a sustainable business model, creating value and jobs while enabling many remote connections, conversations and sharing that would have been impossible to imagine even ten years ago. Like another candidate, Google, is it becoming a candidate to be one of our new institutions of the Collaborative Age?
We need to remember that salaried work in large corporations as we know it is an invention of the Industrial Age. Before that, most craftsmen were on their own, selling their services. They learnt by being an apprentice for a while and by travelling around places to gather the best practices.
Like the craftsman in the middle ages, the KEEN is nomadic independent worker
What is happening now on the labor market can be seen in fact as a return to a situation quite akin to the previous Agricultural Age for learned ans skilled labor: independent craftsmen that move from project to project and learn through experience and travel.
Of course there are quite a few differences: many valuable crafts are now intellectual and not necessarily manual, a much larger proportion of total population is sufficiently learned to enter the category, apprenticeship still exists in a somewhat less formal way in the form of years of experience and mentoring, etc.
The interesting part is the similarities: craftsmen need to know how to market themselves and not just be good at their craft; their value increases with international exposure and nomadic habits; they are engaged on a project basis rather than a continuous basis; and this creates a higher inequality in compensation, where common skills become a commodity and rare skills are highly valued.
Salaried work in large organizations governed by scientific management methods is what we consider normal employment. In fact it will just be a blip in the history of labor relations. Let’s make the best of it and look in the future of the independent craftsmen that join to realize incredible projects like the cathedral builders of old!
I explained in the Fourth Revolution book how the concept of citizenship would have to evolve to face the reality of the onset of the Collaborative Age. The news from Estonia last year about the launch of the e-citizenship program is one step in that direction.
e-citizens get registered and can then use their pass for a variety of purposes including relation with the public service, authentication of documents, running a business in Estonia from abroad… (more on the current benefits on e-estonia.com!).
Of course that status cannot be used to enter Europe physically or vote in Estonia, but the experiment – which Estonia probably believes will be extremely beneficial to its economy – basically creates a virtual country with a much large citizenship, and possibly significant value creation.
This is just the start of the blurring of the lines of the nation state as it was formalized by the Industrial Revolution. I can’t wait to see what this experiment will lead to!
Some more links for those of you who are interested: E-citizens unite: Estonia opens its digital borders (New Scientist) and a detailed link about users on the official website.
For your pleasure, here are some of the most popular posts in 2015:
