- The Fourth Industrial Revolution (4IR) will create deeper inequalities across Asia by consolidating intellectual capital in a few already advanced states
- The barriers to entry to developed status will be much higher than in the past and take far longer than it used to – “development limbo” will be widespread across Asia
- On the political front, left-wing political platforms may become increasingly popular in Asian developing states as social mobility remains depressed
- This would herald prolonged competition and conflict between the new Left and the still existing military establishment in many Asian states
We never fully understand the impact of revolutions until the next one comes along. We have seen this before when the Third Industrial Revolution’s breakthrough in internet connectivity resulted in the kind of networked revolts in the Middle East (early 2010s) and the type of online activism across the Western world against sexual harassment, climate change, and police brutality, many years after the Revolution began.
The “Fourth Industrial Revolution” (4IR) is well underway, and like the ones that came before, its effects will only be known much later on. But we can make some reasonable guesses as to its political consequences in specific areas by putting together what we know are the entrenched interests in those places and how those interests might be endangered by the changes to economic and social life.
Popular anticipation of Asia’s rise in the 21st century belies the many challenges that it faces in the 4IR. For one, economic development is not uniform across the region, even within sub-regions such as Southeast Asia and South Asia.
As the 4IR accelerates the speed in which technological progress occurs, states that already enjoy a talent and capital advantage will continue to benefit disproportionately.
In the 4IR, the driving force of economic growth will switch from advanced manufacturing to hyper-skilled talent resources. And states that are able to marshal these talents through not just high salaries, but also “perks”, “liveability”, and the other intangible qualities of a society that attract will become new areas of competition.
A few places that are in pole position – Japan, South Korea, Singapore, Hong Kong SAR, and Taiwan – to reap the most rewards from the 4IR will also be places that will need to decide what level of economic dynamism will come at the expense of some social harmony.
As talent is highly mobile, competing for the best talent will inescapably involve liberalising migration policies – in addition to optimising business set up procedures and reducing corporation taxes – but these are also frequently the sources of economic dissatisfaction among locals.
Asian economies that have not matured will face much higher barriers to development than those faced by the four “Asian Tigers” after the 1960s.
A positive loop of development and prosperity will operate in the 4IR. Countries that have the necessary infrastructure to host an ecosystem of innovation will stand to gain the most in the 4IR, and others who fail to do so will find it increasingly difficult to build alternative ecosystems because flows of talent will not be responsive to costs determinations alone.
Instead, talent and capital will move to places where R&D funding, high quality education standards, rapid testbed-ding, and other efficiencies prevail; and these have been harder to achieve than merely driving costs down.
The growth of the middle classes in Asia, oft-seen as the panacea for the global economy in the 21st century, is unlikely to rise steadily or quietly. The idea that a large middle class would set countries up towards a more progressive politics has been largely debunked. The middle class in the developed world today are some of the most vulnerable constituencies.
In the US and in Europe, moderate political platforms have been displaced by populist movements. And while there is a creeping sense in which those trends will affect Asia, the more likely scenario is that we will see a deep split in the sociopolitical climate between the developed states and those still undergoing developing.
In developed states, conflicts between local workers and expatriate or new migrants will become profound due to talent mobility in the 4IR. Political contests will also be defined more frequently on the question of native rights.
Corporations that wish to survive the discord need to be more active in making their hiring practices transparent or to present them more publicly if they are already transparent. Corporation-society relations ought to be a much more heavily invested function of any multinational operating in Asia.
The developing states – in particular those in Southeast Asia – will experience a different challenge. As the 4IR advances, inequalities resulting from higher returns on hyper-skilled talent over labour will exacerbate social tensions.
These inequalities will not be felt merely at the level of incomes (in fact many Asian countries have shown to have declining inequality since the 1990s), but on a emotive one as well. Opportunity inequalities will begin to matter more because cross-country comparisons has become easier to make for the average citizen. And the sense of opportunity at home is increasingly being lost from poor governance and outward migration to more developed cities.
On the political front, left-wing political platforms are set to gain renewed popularity across Asia. These New Left movements are likely to guarantee the middle classes a minimum and universal standard of living as a response to rapid automation and capital outflows resulting in the lost of a vast number of low-skilled jobs.
The appeal of the New Left will be felt most keenly in the developing Asian states where the military establishment retains a strong hand in the economy, not least because the latter has benefited tremendously from their close corporate compacts with big businesses for decades. Any calls to dismantle those relationships would deeply threaten the establishment’s survival, eliciting a strong and potentially violent response.
While Asia’s military establishments have survived for decades through many past economic crises, the old formula of state capitalism has been threatened by the need to adapt quickly to disruptive technology that has thus far exceeded the ability of most governments to regulate effectively.
The future of Asia in the 4IR is a future of enormous value though concentrated in pockets of Asia’s most developed cities. Elsewhere, prolonged social conflict is expected due to the difficulties faced by the middle classes to transform into a hyper-skilled workforce.
How prolonged and how intense these conflicts will be will depend, among other things, on the resolve of governments to distribute the (little) gains there are left in a far more equitable and just manner than before.
By Elizabeth P Tang