History promises no return to calm from rising geopolitical risk – fDi Intelligence History promises no return to calm from rising geopolitical risk – fDi Intelligence

The fourth industrial revolution, driven by advances in artificial intelligence and automation as well as the digitization of our daily lives, is just getting underway, arriving at a time of significant geopolitical risk and stress.

That timing is not a coincidence, as Osler Special Advisor and former Governor of the Bank of Canada Stephen Poloz writes in a recent op-ed published in fDi Intelligence: “although not always obvious, disruptive innovations are a core driver of today’s geopolitics.”

Stephen explores how the first three industrial revolutions — the steam engine in the mid-1800s, electricity in the early 20^th century and the computer chip and proliferation of the Internet beginning in the mid-1980s — eventually benefited everyone in society, but in their early years led to K-shaped economies of rising income inequality within countries.

In the case of the first two, they were also accompanied by two world wars and the Great Depression, among other catastrophes. A series of jobless recoveries, low inflation and a build-up of speculative leverage following the third eventually culminated in the global financial crisis.

“The disenfranchised become increasingly influential, driving political polarisation and encouraging populist policies,” Stephen writes, as those at the bottom of the economic ladder struggle to adapt to the new landscape. “The consequent increased focus on domestic issues and anti-global policies creates an international leadership vacuum, opening the door to geopolitical opportunism.”

Today, nationalism, regional conflicts and other challenges are again on the rise.

“We are entering a new historical phase that will either reject or align with this logic that industrial revolutions are marked by rising inequalities, populism and financial crisis.”

“If history does indeed repeat itself,” Stephen warns, “we will see growing labour market stress over the coming years, even if economies seem strong, and growing income inequality. This time, technological stress will land on a wider swath of society, as AI will disrupt occupations across the task spectrum.”

“There are many possible paths forward, and none are easy.”

You can read Stephen’s full op-ed, “History promises no return to calm from rising geopolitical risk,” on the fDi Intelligence website.