Stakeholder Capitalism Ch.6: Technology — will smart robots replace us?

In a series of blogpost, I’m reflecting on the book Stakeholder Capitalism, written by Klaus Schwab with Peter Vanham.

This chapter might be one of the book I like most. The authors do a wonderful job describing the history of technological revolutions impacting society.

Luddites and smart adapters

The future is now – factories are replacing human blue collar workers with robots, and white collar administrative workers with smart algorithms. Sometimes, fear of new technology and job loss causes civil unrest, such as was the case of the Luddites in 19th century England.

Klaus Schwab understands this: “I too share the concern over the future of work in this era of automation.” He refers to The Future of Employment, a 2013 study of Carl Frey and Michael Osborne, and to The Technology Trap, a 2019 follow-up book by Frey. The risk of losing jobs is real, but fear is a poor response.

The beauty of Stakeholder Capitalism is shown in Denmark, where labor unions embrace new technology and facilitate upskilling of their members. They aren’t afraid of new technology and job loss. New technology is creating new jobs. They work together with employers and the government to get the most out of it – resulting in low employment and good incomes. All stakeholders are involved.

However, Denmark and Signapore are as remarkable as they are unique. Many other countries have experiences huge job losses. Factory jobs were offshored to cheaper countries, but also half of the job loss was due to automatization. Many employees couldn’t catch up – a tradition of continuous retraining and reskilling, such as exists in Denmark and Singapore, does not exist in most other countries.

How did we get here?

The book gives a very nice to read overview of the main technological revolutions and how these developments impacted society. I will not summarize this part in this review – just read the book yourself – but will mention the revolutions identified by the authors, which are well agreed upon:

• Pre-Industrial Revolution, the invention of farming. This led to fixed settlements, food security and storage, and the first empires. (In a footnote, the authors mention Harari being “much less upbeat” about the resulting food quality and quantity. I agree with Harari – hunters and gatherers often had a very healthy, natural and free lifestyle.)
• First Industrial Revolution, the invention of steam. This made possible machinery for factories and fast travelling using steamships and steam-powered trains. It transformed capitalism – before, capitalism was bound to trade. Now, capital was used to fund production (factories). The lower class, factory workers, were often exploited. This resulted in the rise of socialism. In the US, less socialist reforms were made; instead monopolies were broken up.
• Second Industrial Revolution, the invention of the combustion engine and electricity. Especially after the world wars this resulted in improved living conditions for most homes. A welfare state ensued, combined with optimism about enterprises and capitalism, such as voiced by Milton Friedman. Negative consequences would appear a few decades later.
• Third Industrial Revolution, the breakthrough of the internet and information technology after the 1980s. The backoffice was decoupled from manufactoring, also geographically; white collar workers became much more productive. Most income classes profited, but in the West the middle class stagnated.
• Fourth Industrial Revolution, the expected developments of Artificial Intelligence and biotech.

Big Guys, such as Microsoft

The technological revolution brought about by information technology was romantic. Small companies started out of a garage, such as Apple and Microsoft. But they kept growing, got leading positions, and became monopolies. Such big guys might stifle the economy and competition, concentrating wealth and power in the hands of a few.

Microsoft was misusing its power, was nearly broken up in the US, and got heavily fined by the European Commission. I remember these times as I was working as a system administrator, holding the much-wanted Microsoft Certified Systems Engineer qualification, but was also playing with Linux and BeOS. Those two operating systems are not mentioned in the book, but I want to share my personal experiences and memories with those alternatives to Windows.

The BeOS operating system had a nice user interface and was especially good with multimedia and very fast. However it didn’t become the next OS for Apple and it could not survive the onslaught of the Microsoft monopoly. Microsoft, “the evil empire” as it became known to many computer enthusiasts, forbade computer manufactures (OEMs) to install other operating systems such as BeOS on their hardware, otherwise Microsoft would not allow their monopoly OS, Windows, to by used by said OEMs. BeOS went black but started a litigation process. Microsoft had to pay Be Inc. more than 23 million USD.

A Brief History of Be Inc, BeOS, and the BeBox

🔗 https://youtu.be/a3cLySY5W3w

In those days, BeOS clearly outperformed Windows (I still have a BeOS installation CD), but competition was indeed impossible because of the monopoly position that was misused by Microsoft. They also had to compete with Linux, an open source alternative to UNIX. Today, Linux is used in mainframes, in most smartphones (Android), by Google, Apple and Facebook in their data centers, and even Microsoft is now a gold partner of the Linux Foundation.

However, most desktop computing is still done using Windows – a promising competitor, BeOS, didn’t have a chance to compete, and Microsoft continued to monopolize the desktop.

Although the book mentions strong actions taken by the European Commission (EC), they forget to include another very nice action taken by the EC. Microsoft was forced to open up document format specifications and communication protocols. This made it possible to develop open source alternatives that could open documents created by Microsoft Office and could interact with Windows file servers. A brilliant move in my opinion. To supervise the deal, the EC appointed a computer science professor known for loving UNIX and suspected of hating Microsoft products. Again, brilliant 🙂

Today Microsoft is behaving much better and also integrating Linux in their Windows desktop. A lot of virtual servers in their Azure could environment run Linux and Microsoft is busy integrating Linux in their hypervisor platform. Most computer programmers and system administrators are happy about it, and Microsoft is also motivated because of the revenue it brings.

Artificial Intelligence and BioTech

I love this Fourth Industrial Revolution. I included courses on AI while at university, and got instruction on machine learning in both a computer science faculty and a medical faculty. The combination of AI with medical technology is strong indeed. I’m still proud of being one of the co-authors on the use of an electronic nose for the detection of sarcoidosis.

So, what have the authors to say about this subject? A lot, actually, as Klaus Schwarbalready wrote a book about this developmant, aptly titled The Fourth Industrial Revolition, which I haven’t read, so I’ll limit myself to responding to this chapter of Stakeholder Capitalism.

Algorithms that stimulate social bubbles can indeed sow division, although I’m unsure if it is fair to attribute this only to the algorithms. Polarization and division is growing, as was already noted by the authors. Yes, digital social networks can enhance such divisions, but deeper roots were already there.

In my review of chapter four, I already noted other causes of division, including immigration and multiculturalism. The very stable situation in Denmark might be related to their efforts to limit immigration, to enforce a mainstream Danish culture (in German: Leitkultur), and to the fact that Denmark has no serious religious divisions. For Singapore, the situation might be different – also note the more open, capitalistic approach taken by Singapore, although a culturally traditional tendency can also be found there. Both countries are quite independent. Denmark is a member of the EU, but doesn’t participate in the euro (well, maybe a bit) and has made agreements with the EU for certain exceptions.

The authors don’t jump into the risks of growing artificiality for us as humans. Artificial environments, combined with artificial intelligence, artificial (group) identities, artificial bodies, or artificial tech-enhanced bodies, and so on: how will it affect our human nature, of minds, or societies? I understand this to be outside the scope of the book. Still it could hugely affect the well-being (economy?) of humans – both in a good way and in a very bad way.

Governments, tax, and tech

The relationship between fast technological progress and slow government processes is not working well. Governments were often slow and bureaucratic. Again, the deeper roots were already there, but now it is becoming more evident.

That raises the question how governments are going to collect taxes. Society pays for infrastructure, security, education, often also for medical costs, but robots don’t pay income tax. Companies paying each other using anonymous cryptocurrencies are hard to control. The authors call for new regulatory and frameworks.

Climate crisis?

The next chapter is about the climate crisis as perceived by the authors. I already made a few critical remarks on that subject in my review of chapter 2. As they did praise the poorly educated Greta Thunberg, known for wearing extremists antifa clothing, and made simplistic assumptions on climate, I have a bad premonition about the next chapter. But I’ll read it first before commenting further.

If you want to follow my adventure with this book, just follow this weblog or check my twitterfeed or Facebook timeline with the hashtag #wefbookclub or the mention @WEFBookClub for the next few weeks. You might also order the book, and maybe even join the WEF Book Club on Facebook, so you can make this a participatory experience for yourself.

Also check the index page of my review series that I will update as I add blogposts on this subject.

Deze blogpost werd in december 2022 overgezet van WordPress naar een methode gebaseerd op Markdown; het is mogelijk dat hierbij fouten of wijzigingen zijn ontstaan t.o.v. de originele blogpost.