Book Reviews

Book Reviews Finance & Development, December 2016, Vol. 53, No. 4

Revolution Evolution Klaus Schwab

The Fourth Industrial Revolution

Crown Business, New York, 2017, 192 pp.,

$28 (hardcover).

In this admirably short and graceful book, Klaus Schwab takes us on a breathless tour of a technological, economic, and social revolution. The first industrial revolution moved us from muscle to mechanical power between 1760 and 1840, the second brought mass production in the late 19th and 20th centuries, and the third delivered mainframes, PCs, and the internet through the 1990s. The fourth, according to Schwab, builds on the third but is much broader and more significant. Machines are becoming smart and connected, contributing to a dynamic fusion of technologies in the physical, digital, and biological and leading to change “unlike anything humankind has experienced before.”

Discussion of the economic and social implications of the current technological revolution is now familiar. What is distinctive in this book is the “spirit of Davos.” Schwab is the founder and head of the World Economic Forum (WEF), an independent international NGO dedicated to improving the world and famous for its annual assembly in Davos of leaders from “business, government, civil society, faith, academia, and the young generation.” Schwab draws on his WEF contacts and a rich set of WEF reports to grapple with what this revolution means for businesses, governments, individuals, and society.

The book starts with a whirlwind tour through the “megatrends” of the ongoing revolution: artificial intelligence, robotics, the internet of things, autonomous vehicles, 3D printing, nanotechnology, biotechnology, and so on. Schwab emphasizes not the individual technologies but the overall sweep of change: the unprecedented diffusion of “disruptors” such as Airbnb, the iPhone, and now autonomous cars; and a reduced role for workers. The “big three” companies in Silicon Valley in 2014 had the same revenues as the big three Detroit car companies in 1990, three times the market capitalization, and one-tenth the workers.

Tremendous economic growth will ensue. Schwab looks past Robert Gordon’s deflating fact that, in the United States at least, we have seen not a takeoff but rather a slowdown in productivity growth since 1970, except for a brief internet-fueled boom in the 1990s. He argues that the payoff is not yet here, because, as his WEF contacts tell him, the fourth industrial revolution is...