Since the First Industrial Revolution, growth and welfare have depended upon increasing the efficiency of production.
The First Industrial Revolution began in England in the late 18th century, following in the wake of James Watt and his steam engine. (A Second Industrial Revolution would occur late in the 19th century and involve the development of the steel industry and giant corporations.)
The launch of corporations, specialization, manufacturing, electricity, and the computer all increased productivity, GDP – and thereby wages and national welfare.
Higher wages spur the consumption of more goods and services, but also bigger national budgets through tax collection. A virtuous circle of prosperity was created.
Some citizens gained more than others, creating persistent inter-generational inequality; but, in absolute terms, economic means were enhanced across all major population segments.
Many now see this relationship – between productive efficiency and economic growth and wages – breaking down in the Fourth Industrial Revolution (4IR).
See Andrew Yang.
Digital technology, automated software, and artificial intelligence is creating digital societies; mass services are replacing mass manufacturing as the source of welfare and productivity enhancement, and shared assets are supplanting exclusive asset ownership.
The three-century reign of the manufacturing nation is beginning to close.
Welcome to the age of the platform nations.
While some nations will continue to try to compete at a physical level, we are entering a new phase of globalization, where digital technologies are changing the nature of commerce and prosperity.
Protecting the past for nostalgia and votes may be a sound policy on the campaign trail, but makes little sense for long-term economic security and success.
-Marc
Marc A. Ross is a globalization strategist and communications advisor working at the intersection of globalization, disruption, and politics. Ross is the founder of Brigadoon.
