The world is changing fast and to keep up you need local knowledge with global context.
As the Fourth Industrial Revolution is ripped apart, sewn back together, only to be put back in the shredder before something usable pops out – what does it all mean for those on the southern tip of Africa? Lionel Bisschoff, author of the book Societal Renaissance, feels South Africa is not ready for such a revolution. And the problem with revolutions is that they don’t wait. The revolution makes a mockery of the current National Development Plan and no matter what is done, the majority of the current 8 million unemployed will never find work in the agricultural, manufacturing or corporate service sectors. Radical change is needed so the country doesn’t fall further behind. An interesting read. – Stuart Lowman
By Lionel Bisschoff*
In the snow covered Alps of Switzerland the rich and powerful have gathered yet again to rub shoulders, shake hands and discuss the main theme of this year’s World Economic Forum event: “The Fourth Industrial Revolution”.
Their fireside chats over cognac and fondue may seem very far removed from the troubles of the average South African. In fact, this could not be farther from the truth. The discussions in Davos go straight to the heart of your future, my future and the future of each and every South African.
– because the Fourth Industrial Revolution will either enable a prosperous South Africa for all by 2030, or will cause our society to implode long before then
– because the Fourth Industrial Revolution makes a mockery of our National Development Plan
I have been researching the potential impact of the Fourth Industrial Revolution on South Africa over the past six years and collected my findings and recommendations in the freely available book Societal Renaissance.
First off, what is the Fourth Industrial Revolution? In the words of the World Economic Forum:
“The First Industrial Revolution used water and steam power to mechanize production. The Second used electric power to create mass production. The Third used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.”
For a more in depth introduction, see the UBS white paper and associated video prepared for this year’s Davos get together.
So where is South Africa in the context of this global revolution? Well, things don’t look too good.
An opportunity lost
South Africa, and the African continent, has missed out on the bounty of outsourced manual labour. That opportunity is now gone. What happened?
In the 1970’s containerisation enabled the global integration of supply chains and the offshoring of low wage manual labour. Asian countries used this opportunity to wean their populace off small scale agriculture and each create the basis of a modern manufacturing and services based economy. Japan, Singapore, Korea etc. The giant called China is still in the throes of this transition.
Africa largely did not, focusing on resource extraction and some commercial agriculture but with the majority of the population remaining in the world of subsistence agriculture. In South Africa the damage was compounded by the idiotic policies of the Apartheid government.
The bad news is this – the world no longer requires our manual labour. Massively increasing our exports and local consumption of agricultural and manufactured goods will not require any significant increase in labour. The machines will do the work. The same applies to corporate services which is being automated at speed. See Amelia and her digital clones.
The reality? Contrary to the NDP, no matter what we do, the majority of our current 8 million unemployed will never find work in the agricultural, manufacturing or corporate service sectors. We can save more, we can attract more investment, we can export more, we can be more efficient, whatever. It will still not lead to the majority of our 8 million unemployed being employed in these sectors.
Automation will significantly raise the living standards of developed countries. Yes, there will be some social tension as they figure out how to divide the goods and services produced by the machines, but in comparison to us this is a nice problem to have. As I see it, developed countries will be in what I call a joy economy by 2030. The production and distribution of safety and sustenance related goods will be largely automated. What remains is the joy economy: reality TV, games, funny cat videos, interesting new drugs…
Unless systemic interventions are implemented, automation will lead to the increased wealth stratification of African societies. People are flocking to cities yet there is no work in the cities. Slums are growing at 2 million souls per year across Africa.
South Africa is stuck. We do not yet have western infrastructure, we have millions of unemployed and our current societal systems are incapable of taking us to a joy economy by 2030.
Let us look at building high quality urban housing and associated basic services for our citizens. Currently we use debt based money creation to finance construction. Someone puts up some capital, a bank creates the other 90% backed up by debt, the infrastructure is built and then the ones using the infrastructure must pay back the debt over 30 years or so, plus interest to the banks.
Are we rapidly building dense urban infrastructure? No. There is no private debt based business case. We all suspect that the majority of people moving into the newly constructed housing would not have jobs, therefore they would not be able to pay back the debt. Therefore no construction and urban slums are growing fast.
The game is up. The market ain’t gonna do it for us.
Our current societal system will not allow us to migrate to a joy economy by 2030. If we carry on as we do now, the rich will get fewer and richer and build higher walls, the middle class will be hollowed out and the poor will get poorer. A veritable powder keg just waiting for the spark that will tear it all asunder.
What to do?
Tinkering will not help. Radical change is our only option. I outline the reforms needed in my book. South Africa and other developing countries must:
“explicitly and transparently intertwine society, politics and money through the democratised and decentralised creation, allocation and destruction of constrained and unconstrained credit and non-credit based money in an open economy”
Much is covered in the above statement. Below I expand slightly on two key areas that must be reformed at speed:
- Our monetary system.
Our debt and interest based system of money creation will not work for us. We need a combination of interest free social debt based money creation in conjunction with citizen focussed quantitative easing. See here and my book for more information.
The majority of newly created money must be locally constrained and exchanged on a single national blockchain based platform. This is because our current heavily integrated monetary system and global supply chains constrain our rate of local co-operation to the rate of export. A situation which from 1945 up to 1980 Europe and the US did not face: before the abolishment of widespread capital controls and globalisation, exactly the period in which the majority of their core infrastructure was built. The manual labour bounty exploited by Asian countries from 1970 to now is also gone.
Our current monetary system must be reformed.
- Open Economy and construction
Through the creation of locally constrained money we can activate millions of our unemployed toward building our needed infrastructure. The goal is not enrichment of a few nor the creation of asset bubbles and inflation. Therefore broad distribution of money must be ensured in conjunction with an increased production of basic goods. See here for developing countries, increased money creation, inflation, asset bubbles and increased production relate to each other, and how to go about it.
Therefore establish full construction value chain co-operatives as well as basic goods co-operatives, financed via open platforms, all on a single erp system open to the public. Full transparency.
Decentralised, broad based, socially financed, competitive production of the infrastructure and basic goods we need.
Through the next 15 years we create the core infrastructure we need in conjunction with locally produced basic goods. If we do so we should be able to successfully migrate to a joy economy by 2030. If we do not, expect societal unrest on a grand scale.
We do not have a choice.
South Africa requires a Societal Renaissance.
*Lionel Bisschoff, entrepreneur, author, speaker, consultant and coach focused on South Africa and the world’s journey to the knowledge worker economy and beyond.
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