The Third Industrial Revolution

by Jörgen Eriksson on March 8, 2013

“Nations exist not only as functions of a particular kind of territorial state or the aspiration to establish one … but also in the context of a particular stage of technological and economic development”
– Eric Hobsbawm

Spinning JennyThe breakthrough in development that we call the industrial revolution was closely linked to a small number of innovations, beginning in the second half of the 18th century, through a small number of inventors being able to communicate and develop effectively and quickly about their new farming and factory techniques. With the development of computers and information technology in the recent 40 years one might argue that we have been through yet another such phase, but according to Jeremy Rifkin at the Wharton School of the University of Pennsylvania, we may just be at the starting point. To explain this story, let us start by going back in time.

The First Industrial Revolution

The Age of RevolutionsIn his book The Age of Revolution, the British historian Eric Hobsbawm followed the death of ancient traditions, the triumph of new classes, and the emergence of new technologies, sciences, and ideologies, with vast intellectual daring and elegance. The book is a part of the authors epic four-volume history of the modern world, along with The Age of Capitalism, The Age of Empire, and The Age of Extremes.

The book describes how the first industrial revolution was the transition to new manufacturing processes in the period from about 1760 to 1840. The transition included going from hand production methods to machines, new chemical manufacturing and iron production processes, improved efficiency of water power, the increasing use of steam power and development of machine tools and replaceable parts. The transition also included the change from wood and other bio-fuels to coal.

The first industrial revolution began in Britain and within a few decades spread to Western Europe and the United States. It marked a major turning point in history and almost every aspect of daily life was influenced in some way. Most notably, average income and population began to exhibit unprecedented sustained growth.

The Second Industrial Revolution

By the middle of the 19th century there was a significant increase in scientific understanding of chemistry and thermodynamics and by the last quarter of the century both of these sciences were near their present day level. Science was continually improved and evolved into a modern engineering discipline, laying the foundation for industrialized mass-production.

Second Industrial RevolutionThen at the close of the nineteenth century, industrialization and urbanization marked the end of the traditional understanding of society as rooted in agriculture. This second industrial revolution transformed western societies into an urban-centered, industrial-based culture, which was an entirely new social reality based on science and technology.

During this phase, we saw the introduction of the oil fired steam turbine and internal combustion driven steel ships, light bulbs and commercialization of electricity, the development of the airplane, the practical commercialization of the automobile, mass production of consumer goods, the perfection of canning, mechanical refrigeration and other food preservation techniques, and the invention of the telephone.

Development of new technologies and rapid change replaced the old static world order. While the first industrial revolution had centered on iron, steam technologies and textile production, the second industrial revolution revolved around steel, railroads, electricity, and chemicals.

The last quarter of the 19th century saw the greatest increase in economic growth in such a short period ever experienced in history. Living standards improved significantly in the newly industrialized countries as the prices of goods fell dramatically due to increased productivity. Capitalism was born with iconic great industrialists like Andrew Carnegie, John D. Rockefeller, and Cornelius Vanderbilt leading the development.

The Third Industrial Revolution

The Third Industrial RevolutionI have just finished reading a thought provoking book called “The Third Industrial Revolution”, written in 2011 by Jeremy Rifkin who is a senior lecturer at the Wharton School’s Executive Education Program at the University of Pennsylvania.

The sign of a well-written and well-argued book is that it challenges your world view by making you re-think and review your position. It does not matter if it convinces you. It matters that it makes you sharpen your thought process. The Third Industrial Revolution does this well.

Rifkin’s theory is that we are on the brink of a third industrial revolution that will change the world’s economies and societies as dramatically as the first and second industrial revolutions did.

Rifkin points out that each industrial revolution can be linked to innovations in both communications and energy and we are close to a tipping point where this is about to happen again. 

  • The first industrial revolution was characterized by steam powered printing technology, greatly encouraging mass literacy  and communication for the first time in history.  Coal was the primary source of energy for an economy based on industrial factory manufacturing and a rail system that spanned continents allowed numerous new people to travel.  Worldwide average income and population growth increased dramatically as a result and increased peoples possibility to make their own life choices. 
  • The second industrial revolution was characterized by the advent of radio and telephone communications, and the use of electricity in homes.  And of course the automobile and interstate highways that came with it changed the way that cities were built and brought us into the petroleum based economy.

Jeremy RifkinAccording to Rifkin, the industrial age, powered by oil and other fossil fuels, is now spiraling into a dangerous endgame. The price of gas and food are climbing, unemployment remains high, the housing market in western economies is in stagnation, consumer and government debt is soaring, and the recovery is slowing.

Facing the prospect of a collapse of the global economy, humanity is desperate for a sustainable economic game plan to take us into the future. In his book, Rifkin explores how internet technologies and renewable energy are merging to create a powerful third industrial revolution.

Rifkin suggests that the pace we switch to small scale renewable energy sources will accelerate and he asks us to imagine hundreds of millions of people producing their own green energy in their homes, offices, and factories, converting our buildings to power plants, and sharing it with each other in a distributed smart energy grid, just like we now create and share information online.

Rifkin describes how the third industrial revolution will create thousands of businesses, millions of jobs, and develop a fundamental reordering of human relationships, from hierarchical to lateral power where creativity and innovation is a cornerstone even more than today. This will impact the way we conduct commerce, govern society, educate our children, and engage in civic life. The political, cultural and economic implications of this are staggering. 

Solar Wind powerThe technologies associated with the first and second industrial revolutions, such as coal and oil extraction and refining, and rail and highway infrastructure, are extremely capital intensive.  The high costs led to a hierarchical economy with monopolistic utilities controlling the flow of information and energy. As we spend resources in the traditional economy, we have gradually less and less left than we started out with.

Because resources such as the sun and wind are essentially free, once the renewable energy infrastructure is in place, our society can potentially transform to a collaborative knowledge economy where we gain more value from sharing resources rather than buying them. In the knowledge economy, development of resources add up so we have increasingly more and more, rather than less.

While the third industrial revolution economy allows people to produce their own virtual information and energy, a new digital manufacturing revolution opens up the possibility of decentralization in the production of goods. In the new era, everyone can potentially be their own manufacturer. The process is called 3-D printing. More about this in a following blog post.

Interview with Jeremy Rifkin

The Third Industrial Revolution

About Jörgen Eriksson :

Jörgen Eriksson is the founder of Bearing and is the Chairman of the firm since it was created. He has successfully expanded Bearing into covering projects on four continents. He is also Adjunct Professor of Innovation Management at the International University of Monaco and at Universitat Politècnica de Catalunya in Barcelona and he is an active member of the Founders Alliance organisation.

Working with consulting engagements across Bearings practices, he has over the past fifteen years participated in and supervised a large number of client projects, from innovation system development and place development and branding, to merger and acquisition assignments and leading edge research and business development activities for key clients.

His new book, Branding for Hooligans, will be published in 2015. It is about how innovation and branding are key survival factors in our modern times of hyper competitive markets.

Prior to Bearing, he was Director of Europe, Middle East, and Africa for Trema Treasury Management, a technology and consulting services provider, supplying financial software solutions for the global financial industry, Clients included The European Central Bank, Citibank, SEB, South African reserve Bank, Deutsche Bank, Abu Dhabi Investment Authority (ADIA), as well as many other large financial institutions and Fortune 500 companies.

Early in his career Eriksson was educated at the Stockholm School of Economics, where he studied economics, financial economics and philosophy. He then worked in Scandinavian investment banks and also for the Swedish Institute of National Defense Research.

You can contact Jörgen on e-mail jorgen.eriksson@bearing-consulting.com, connect on LinkedIn on http://fr.linkedin.com/pub/jörgen-eriksson/0/38/8a0/ and follow him on twitter on joreri508.

{ 3 comments… read them below or add one }

Jörgen Eriksson Jörgen Eriksson March 14, 2013 at 17:08

According to a new report today from the Solar Energy Industries Association and GTM Research, last year there was a record-breaking 3.3 gigawatts worth of solar panels, or 16 million individual solar panels, installed in the United States., making solar power the fastest growing energy source domestically.

In comparison, a large nuclear or coal plant can be about a gigawatt, so there was the equivalent of three of these types of large power plants installed across rooftops in the U.S. in 2012. The 3.3 GW worth of solar panels was more than the three previous years combined, says the report, and showed a 76 percent growth over 2011.

john waller April 14, 2014 at 18:51

There was an article in the NY times about solar panels that are supposed to last 25 to 30 years failing after only two years.Reasons vary from using untested materials to cost cutting to importing them from
china where they’re cheaple made.So WHY isn’t Rifkin speaking out on this?Why isn’t Rifkin taking legal
action against these solar panel companies and demanding an investigation as to why these panels are
failing?After all,solar energy is vital to his Third Industrial Revolution.You think Rifkin would let the
Biotechnology Industry get away with something like this?The problem is Rifkin’s playing favorites.Rifkin’s
in favor of renewable energy.He’s doesn’t want to hear any problems or complaints about it.He doesn’t care about these panels failing.All he cares about is putting solar panels on every roof in the country so
that his Third Industrial Revolution becomes a reality at our expense.

pee July 25, 2014 at 04:25

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