Great Power Politics in the Fourth Industrial Revolution

The Geoeconomics of Technological Sovereignty

Glenn Diesen

• Publisher: I.B. Tauris
• Year: 2021
• ISBN:
  9780755607020
• Edition: 1
• Topic: Economics
• Subtopic: Political Economy
• Index: Economics

Why and how will the fourth industrial revolution impact great power politics? Here, Glenn Diesen utilizes a neoclassical approach to great power politics to assess how far the development of AI, national and localized technological ecosystems and cyber-warfare will affect great power politics in the next century. The reliance of modern economies on technological advances, Diesen argues, also compels states to intervene radically in economics and the lives of citizens, as automation radically alters the economies of tomorrow. A groundbreaking attempt to contextualize the fourth industrial revolution, and analyse its effects on politics and international relations.

1

Technologies of the Fourth Industrial Revolution: Towards national strategies

Introduction

Technologies have always granted power to states that could master them for economic, military and political purposes. The status quo in the international system is constantly disrupted as technological innovations create new instruments that shift the international distribution of power. This chapter explores the technologies of the Fourth Industrial Revolution and how great powers gradually adapt with new national strategies.

Western societies made a grand discovery in the First Industrial Revolution – that machinery could increase productivity and prosperity as a positive-sum game, making it possible to attain wealth without war, plunder and extortion. Almost the entirety of the world’s population had lived in poverty throughout history. This changed in the mid-eighteenth century when the First Industrial Revolution unleashed unprecedented productivity and wealth creation. Furthermore, the incentives for embracing liberal economic ideas to organize the new economy translated into political liberalism and the elevation of human freedoms.

A second grand discovery from the Industrial Revolution was that advances in innovation and productivity follow an exponential growth curve rather than a gradual growth curve. With the amplified efficiency of each new technology, the path to the next technological breakthrough becomes shorter. Consequently, the technological evolution curve has become increasingly steep and shows no indication of levelling out. States must therefore prepare for an impending technological and intelligence explosion. The exponential growth of digital technologies unlocks a variety of new technologies. Only a few years ago, for example, the technology needed to produce self-driving cars was deemed to be an excessively complex cognitive task for machines to manage, but today, that technology has already been tested and commercialized. The socio-political implications of these technologies, however, and their influence on the economic and military competition among great powers remain unclear.

This chapter will first assess how the characteristics of great powers have changed with successive industrial revolutions. Second, it argues that the development of AI is perhaps the most important component of the Fourth Industrial Revolution, and that states must develop AI if they hope to maintain their great power status. Although previous technologies created tools to automate physical labour, AI is unique in automating cognitive tasks. AI improves all other technologies and is already outperforming humans in certain areas of research and development. Third, this chapter explores technologies that disrupt industrial capabilities. These include robotics, automation, self-driving cars, 3D printing, nanotechnology, the Internet of Things, blockchain, cryptocurrencies, neurotechnology and biotechnology. Last, it assesses the emerging strategies of great powers in the Fourth Industrial Revolution. It concludes that the variables defining great power status are undergoing fundamental changes as the industries that have traditionally underpinned industrial society become obsolete. National strategies indicate that rivalry between great powers will be prioritized above other considerations.

Great powers and industrial revolutions

Great powers are defined by their ability to act independently and to exert their influence on a global scale with economic, military and diplomatic power. Mearsheimer (1990: 7) defines a pole in the global system as having a ‘reasonable prospect of defending itself against the leading state in the system by its own efforts’. By this definition, the international system has very few great powers at a time when the world is transitioning away from unipolarity. The end of the military and ideological rivalry that defined the Cold War and the turn towards a global capitalist system mark a shift in great power politics. Whereas, in the era of geopolitics, power was measured almost exclusively in terms of military strength and territory, in the current era of geoeconomics, it is measured more by influence over global markets.

The First Industrial Revolution in the mid-eighteenth century was characterized by the mechanization of agriculture and by steam-powered machines replacing human labour in industry. Britain took the lead for a variety of reasons. Britain’s geography as an island state produced favourable conditions for Parliament to legislate land ownership and enclosures, and this sparked an agricultural revolution (Quigley 1979). Britain also had an abundance of cheap and easily extractable coal that replaced wood to fuel steam-powered machines. The First Industrial Revolution was itself a product of great power politics because the growing demand for weaponry put pressures on production efficiency, and the resulting mass production of weapons altered the strategies and tactics of warfare. The amount of wealth the British amassed from favourable trade with its colonies increased demand for high-end products for the affluent. Britain was also under pressure to improve its own efficiency in the textile industry to compete with textile products from India.

The Second Industrial Revolution in the mid-nineteenth century was largely defined by mass production. Electricity replaced steam power, and the development of the combustion engine generated demand for oil and gas. The Bessemer Process enabled the rapid and cheap production of steel, giving rise to the vast expansion of railroads and factories. The improved efficiency of production in factories, transportation by rail, and communication by telegraph led to the greatest economic growth of human history. Occurring between the 1870s and 1890s, it is also commonly characterized as the first wave of globalization. The emergence of steel as a strategic industry also sparked a competition for leadership in steel production between the United States, Britain, Germany, France and Japan. The US embrace of the Second Industrial Revolution laid the foundation for a technological rise that it has sustained ever since. The utility of the telegraph and railroads during the US Civil War was later converted into tools to serve commerce. Railroads also became America’s first modern corporation due to their large size, national reach, mass employment, and highly developed organizational methods. Large corporations and supporting bureaucracies emerged, giving rise to a consumer society and more complex relations between the state and corporations.

Germany’s use of the railway to integrate German lands also augmented war-fighting capabilities by enhancing mobility for troops that could be despatched to both Western and Eastern fronts. Russia reduced rail connectivity with Europe by using a different track gauge as an obstacle to invading armies. The railway in Pacific Russia was similarly designed for military purposes, away from the frontline, thus reducing its ability to advance economic connectivity. The growth of British industry fuelled a modern system of banking and finance that became dominant in the world and developed financial dependencies abroad as international trade surged. Furthermore, harnessing the world’s financial power enabled Britain to construct the most powerful navy in the world to dominate the seas and establish control over maritime commerce. The global rivalry through the nineteenth century between Britain as a maritime power and Russia as a land power soon gave way to the rise of new powers that had industrialized rapidly – primarily the United States, Germany and Japan. The combination of economic developments, societal disruptions and new and powerful weaponry unleashed destructive warfare that ended the primacy Western European powers had enjoyed since the early 1500s. Industrialization through import substitution in interwar Central and Eastern Europe failed due to its focus on old technologies and sectors that were already in decline in more developed states (Berend 2000: 318).

The Third Industrial Revolution in the mid-twentieth century was a digital revolution. Microprocessors and transistors revolutionized the industry, and nuclear technology became crucial in this period. Nuclear weapons became a key condition for great power status, which was subsequently acquired by all permanent members of the UN Security Council – the United States, the Soviet Union, the UK, France and China. US leadership leapt forward during this period, with rapid technological advances cementing its geoeconomic dominance and military superiority. The space race produced unexpected synergy among technologies such as satellite communication with GPS for the Americans and GLONASS for the Soviets (Skolnikoff 1994). The Soviet Union harnessed nuclear power and other technologies, but its ability to compete in the digital revolution was limited as the decentralized function of digital technologies could not be applied optimally in a centralized and authoritarian system. Furthermore, the communists’ detachment from international markets meant that the technologies could not easily be converted into economic statecraft and geoeconomic power.

Increasingly large and complex global value chains and a new wave of globalization emerged due to the combination of reduced transportation costs, liberal economics, the clear international division of labour, and a unique international distribution of power. The exponential growth of digital technologies took a major leap in the 1990s with the personal computer, Microsoft’s operating system and the rapid expansion of the Internet. The digital revolution focused on communication technologies, intensifying the state’s competition for information dissemination vis-à-vis the people and foreign actors. The fossil fuels that have degraded the environment and biodiversity are gradually beginning to give way to renewable green energy. The digital revolution made information and technology intangible commodities on the market. Unlike other commodities, their value does not degrade when consumed.

Defining the Fourth Industrial Revolution

The Fourth Industrial Revolution – a term coined by Klaus Schwab (2016) – is now underway and was conceptualized as the shift away from simple digital innovations associated with communications technology. It represents major progress and builds upon the introduction of the computer chip and superconductor from the Third Industrial Revolution.

The principal distinction and break from the previous digital revolution is the ‘velocity, scope, and systems impact’ (Schwab 2016: 3). Because the Fourth Industrial Revolution builds upon the digital revolution, it has elicited fair criticism as a mere continuation of the Third Industrial Revolution (Rifkin 2016). Nevertheless, this book refers to the Fourth Industrial Revolution as the combination of new disruptive technologies that are making previous technologies obsolete. A key distinction from the Third Industrial Revolution is that the digital world is merging with the physical world. The dawn of a distinctively new period in human history was expressed succinctly by Bill Gates (2007), who argued: ‘we may be on the verge of a new era, when the PC will get up off the desktop and allow us to see, hear, touch and manipulate objects in places where we are not physically present’. Indeed, a new era does seem to be emerging, as new technologies disrupt the labour market, capitalism, political liberalism, military competition, the social fabric, and, as a result, great power politics.

Paradoxically, the Fourth Industrial Revolution might mark the end of the industrial era that lasted two centuries. The technological innovations that created the conditions for a mass labour force, liberal economics and industrial thinking that is still with us today might soon become obsolete. The Fourth Industrial Revolution might also be the first environmentally sustainable revolution by making the transition away from fossil fuels. Industrial revolutions involve not only the acquisition and implementation of technology, but also the need to manage the disruptions caused by those technologies. Schwab (2016: 7) argues:

Ultimately, the ability of government systems and public authorities to adapt will determine their survival. If they prove capable of embracing a world of disruptive change, subjecting their structures to the levels of transparency and efficiency that will enable them to maintain their competitive edge, they will endure. If they cannot evolve, they will face increasing trouble.

The Fourth Industrial Revolution is set to drastically accelerate the speed of changes and disruptions to the international system as technologies advance rapidly and simultaneously. Exponential growth accelerates as digital technologies amass an unprecedented amount of information that is then processed rapidly – which is instrumental in advancing all other technologies. Machine learning, or the ability of computers to learn and improve their own algorithms and become more intelligent, is on the path to an intellectual explosion in the automation of the cognitive. AI unlocks and intensifies technological advances across the spectrum of automation, robotics, nanotechnology, neurotechnology, biotechnology and digital systems such as the Internet of Things, digital ledger technology, cloud computing and related technologies.

A distinctively new era is evident as mankind’s relationship with machines undergoes a reversal in terms of the acquisition of knowledge. Past industrial revolutions consisted of scientists developing technologies or products, with machines then replicating and automating the process. The Fourth Industrial Revolution is making machines the innovators. AI involves self-learning through the discovery of patterns and the hypothesizing of causal relationships, leaving human scientists to make sense of the algorithms generated and to attempt to replicate the best solutions produced by the machines.

The unpredictability of technological development is largely due to its exponential growth, also known as accelerating speed. A common misconception about digital technology is the belief that it develops along a linear trajectory with the gradual development of existing technologies. Instead, the speed of development and subsequent application of computer technologies is accelerating exponentially. Moore’s Law, the observation that the number of transistors successfully placed on a computer chip doubles approximately every 18 to 24 months, has been valid for the past four decades. For example, Intel launched a computer chip with 2,300 transistors in 1971, 29,000 transistors in 1978, 250,000 in 1988, 9.5 million in 1999, 1.16 billion in 2011, 8 billion in 2016 and 50 billion most recently. With components now approaching the size of atoms, we are approaching the physical limits of Moore’s Law as it applies to the manufacture of computer chips. Nevertheless, the development of quantum computers will seemingly be the next step in the development of information technology and would radically increase computing speed.

The race to develop the most powerful supercomputers has followed a similar path and will have a major influence on the international distribution of power in the future. Supercomputers were developed to achieve technological progress, economic competitiveness and military security. In 2009, the US-made Cray supercomputer had the most powerful processing capacity in the world at 1.76 petaflops. By 2016, China’s Sunway TaihuLight supercomputer with 93 petaflops was on top, and the United States only re-established its leadership in mid-2018 with the launch of its Summit supercomputer boasting 122 petaflops. The latest US victory could be short-lived, however, because China is planning to release its Tianhe-3 by 2020, a new supercomputer that measures processing speed in exaflops (1,000 petaflops). Although China and the United States hold the lead with such tech areas as Silicon Valley (Palo Alto) and Shenzhen, other large powers such as Russia, Japan, South Korea, India, Germany, France and the UK are also developing supercomputers – a result of the new international distribution of power.

Artificial intelligence

The world’s six largest companies in 2018 were all tech corporations that are also among the main developers of AI – Apple, Amazon, Alphabet (Google), Microsoft, Facebook and Alibaba. AI is a reference to intelligent machines. More specifically, AI is the cognitive function of machines that includes the ability to recognize patterns, solve problems and perhaps one day even achieve self-awareness. AI is comparable to electricity for its nearly universal application and as a tool for advancing other technologies – making it the most important feature of the Fourth Industrial Revolution.

In machine learning, computers devise algorithms themselves. Before AI, human programmers developed algorithms by which computers would calculate or solve problems. By contrast, the neural network approach does not teach computers the rules of games and imitate human strategies to win. Rather, the system is self-learning, imitating the human brain by making connections through experience. Vast amounts of data must be fed into the computer and then the computer must be given specific inputs regarding that date. This allows the computer to discover patterns that it expresses as algorithms. For example, a computer can be fed a million images of mammograms and then told which show evidence of breast cancer and which do not. Using AI, the computer then identifies patterns that even scientists might not have discovered and records them as algorithms for identifying breast cancer. Similarly, AI software for extending credit has been developed by entering the computer data of people who borrowed money and then informing the computer which people were able and unable to repay their loans. The strength and utility of such AI programs are their ability to continuously develop and train software to identify breast cancer or assess a loan application with superhuman speed and accuracy. Data is commonly called ‘the new oil’. This analogy can be misleading, however, because not all data is the same (Varian 2018). The main limitation of AI is that it only works within a single domain, and AI software developed for detecting breast cancer cannot be used to drive cars.

Artificial intelligence research focuses extensively on board games and video games as narrowly defined tasks in controlled environments where all possible variables and outcomes can be observed and measured. After years of failing to live up to exaggerated expectations, AI now performs beyond expectations by defeating leading human minds in increasingly complex contests of skill. In 1979, the world champion in backgammon was the first to lose to a machine. Two decades later, in 1997, world chess champion Gary Kasparov lost to IBM’s Deep Blue software. The development of IBM’s Watson program went another major step forward by managing to win the game show Jeopardy. This was a formidable achievement because the machine had to acquire knowledge in a wide range of fields and decipher intricate and often opaque phrases and statements. Watson’s impressive achievements were then topped by Google’s AlphaGo program that was developed to play Go – a board game that is more complex than chess and that was believed to lie beyond the cognitive functioning abilities of machines. AlphaGo defeated the first professional Go player in October 2015, and through self-learning, went on to defeat the Go world champion in 2017. Leading AI experts had thought that the AlphaGo victory was still a decade away. The moment signified the triumph of machine over Man and mobilized interest in AI by the Chinese public (Lee 2018). The cognitive development of AI was also demonstrated by Libratus, a poker-playing program that defeated leading poker players in a poker tournament. This victory was particularly astounding because poker involves a major psychological component – for example, in choosing when to bluff, determining when other players are bluffing and deciding when and how much to raise or when to fold.

AI requires two key components – processing power and data. Quantity is quality in the age of AI because machine learning depends on greater computing power to analyse ever-greater amounts of data. Both these criteria are now being met. The operation of Moore’s Law has radically elevated the processing power of supercomputers, and it has recently become possible to capture huge amounts of data. AI has great significance in terms of first-mover advantage, but it remains a portfolio technology with a variety of limited applications. Moore’s Law migh...

Table of contents

• Cover
• Halftitle Page
• Title Page
• Dedication
• Contents 
• Foreword by Dr Vladimir Yakunin,
• Introduction: The geoeconomics of industrial revolutions
• 1 Technologies of the Fourth Industrial Revolution: Towards national strategies
• 2 The geoeconomics of technological sovereignty: Managing diffusion
• 3 Techno-nationalism and reshoring: Fragmentation of the international division of labour
• 4 The rise of the tech giants and the authoritarian state: Seizing the means of production
• 5 Political communication: The state, the individual and foreign powers
• 6 Geoeconomics without capitalism: Decoupling capital from labour
• 7 The great societal transformation: Geoeconomics without Gemeinschaft?
• 8 Killer robots and the return of the great power wars
• 9 Global governance: Power, legitimacy and ungovernable technologies
• Conclusion: Towards technological sovereignty
• Bibliography
• Index
• Imprint