Understanding the new wave of technological breakthroughs that are reshaping the economy.
The world needs to stop looking backward. Since the 2008 financial crisis, we have wasted far too much energy trying to return to the days of rapid economic expansion.
The flawed assumption that the post-crisis world’s challenges were only temporary has underpinned policies that have yielded only lackluster recoveries, while failing to address key problems like high unemployment and rising inequality.
“ In this new era, economic growth will occur more slowly – but potentially more sustainably.”
A New Era
In this new era, economic growth will occur more slowly – but potentially more sustainably – than it did before the crisis. And technological change will be its driving force. Indeed, just as the Industrial Revolution transformed the productive potential of societies in the nineteenth and twentieth centuries, a new wave of technological breakthroughs is reshaping economic and even social dynamics today. The difference is that this revolution’s impact will be even greater.
One outstanding feature of this revolution is the scope and scale of its disruptiveness. The Industrial Revolution occurred relatively slowly, like long waves in the ocean; though it began in the 1780s, its impact was not really felt until the 1830s and 1840s. The current technological revolution, by contrast, hits economies like a tsunami, with little warning and inexorable force.
The pace of change has been accelerated by the interconnected nature of today’s world. Technological progress is occurring within a complex and deeply integrated ecosystem, meaning that it simultaneously affects economic structures, governments, security arrangements, and people’s daily lives.
In order to prepare a country to reap the benefits of rapid, far-reaching change, policymakers must account for the entirety of the ecosystem in which it is taking place, ensuring that government, business, and society all adjust to every shift. In other words, competing in the twenty-first century economy will require relentless adaptation.
“Every practice and standard will have to be rethought. ”
The manufacturing industry, meanwhile, will be similarly transformed by 3D printing technology. Supply chains will be eliminated or reshaped – an expectation that the CEO of a major aluminum manufacturer recently described. He knows that, in order to succeed, firms will have to anticipate and respond to such trends. Gone are the days of big fish eating small fish. In the post-post-crisis world, fast fish will dominate – and slow fish will die.
Reshaping Who We Are
But the current technological revolution is not just reshaping what we produce and how we produce it; it is fundamentally reshaping who we are – our habits, interests, and worldviews.
Consider the vast difference between the way young people and older generations interpret privacy in the Internet age. It is also extending our lifespans, with one in two babies born today in Switzerland expected to live more than 100 years.
On balance, the impact of technological progress will be positive. But that does not negate the massive challenge it will pose.
“The current technological revolution is fundamentally reshaping who we are. ”
Government, more than any other sector, can shape the impact of technological change, ensuring that challenges are addressed and opportunities are seized. Indeed, it should be at the forefront of such change, by creating an environment that encourages private-sector innovation and creativity, while ensuring that citizens are equipped to compete.
Of course, governments cannot always be ahead of the curve. They will also have to react and respond to new needs and demands, such as the expectation that public services meet the same level of high-tech efficiency and convenience that private companies offer.
Change may be frightening, but it is inevitable. And, in fact, it is an important source of opportunity to improve our systems, our strategies, and ourselves. The latest wave of technological change is far from cresting. We should be excited – and filled with hope – by where it could take us.
This article first appeared on February 12, 2015 on Project Syndicate and was republished with permission.