DAVID ROTHKOPF

The Third Industrial Revolution

N THE LATE 19th Century, roughly half of Americans Now, however, signs suggest that another enormous
worked in agriculture. By 2000, that fraction had change is afoot—only this time, the folks in charge are
fallen to under 2 percent. During the last century not adjusting.
alone, we have seen those involved in the production Once upon a time, the U.S. economy grew in tandem
of goods (from mining to manufacturing to construc- with the productivity of American workers, leading to
tion) fall from about a third of the population to just the creation of jobs and wealth across society. During this
under one in five. Over the same period, the proportion century's first decade, however, this relationship no longer
of Americans involved in services more than doubled, applied. GDP grew and productivity climbed, while job
from 31 percent in 1900 to almost 80 percent by the turn creation slowed to a crawl, median incomes fell—and the
of the last century. Since 1900, the rich got richer.
number of farms in the United States This is not just a problem for the
has fallen 63 percent, and the average United States. Emerging economies—
farm size has grown by two-thirds. even China—are facing a similar
The U.S. economy has, in the past phenomenon. Erik Brynjolfsson and
150 years, seen stunning changes. It Andrew McAfee, digital-business spe-
has gone from agrarian to industrial- cialists at MIT, describe the disconnect
ized, from primarily rural to primar- in grim detail in Race Against the Ma-
ily urban and suburban—from one in chine, their book about what might be
which primarily men worked to one in called a third Industrial Revolution.
which by 2010 more than half of profes- They explain that massive increases
sional workers were women, from one in productivity due to the happy mar-
in which most people did not complete riage of information technology and
high school to one in which 40 percent advanced manufacturing techniques are
of 18- to 24-year-olds are enrolled in The economy of tomorrow having a chilling, unprecedented effect
college, from one in which most Ameri- is milikely to look much on job creation.
can companies made their money in the hke that of yesterday. The potential consequences as fewer
United States to one in which about half jobs are created for the middle classes,
the sales of S&P 500 companies come But did you even once hear while wealthy investors rack up the prof-
from other countries. anyone discuss this duriug its, are great and unsettling. Brynjolfsson
We should be comforted by this story the U.S. presidential and McAfee argue that what's happening
of adaptation. The result has been un- election season or over will have the same devastating effect on
precedented benefits across society, from white-collar jobs that recent technological
GDP growth to rising standards of liv-
the course of the never- advances have had on traditional middle-
ing. This has been not one industrial ending dehates about the class jobs—in other words, lawyers and
revolution but a whole series of upheav- European debt crisis? accountants may well start feeling the
als culminating in the massive shift in same pain that assembly-line workers
recent decades from manufacturing to have been experiencing for decades.
services, powered by globalization and new technologies. Profound as the impact of such changes may be, they
Naturally, the folks in charge had to adjust. Protection- are not the only global market shifts that will demand new
ism that may have worked in the 19th century proved a thinking from policymakers. Eor one thing, the depend-
calamity by the early 20th. Gold-based currencies were able engines of economic growth—developed countries—
ultimately replaced by fiat alternatives. New data were have stalled. Second, the new engines of growth—the big
needed to judge economic health. New regulations were emerging economies—have also hit idle speed. One top
needed to protect society and individual citizens. Indeed, IMF official recently predicted to me that Europe will be
national economic institutions like the Federal Reserve in recession for the next five years and that growth in the
and the Securities and Fxchange Commission have had BRICS might well fall to 60 or 70 percent of current levels
to be augmented by coordination with similar groups in for the same period.
other countries to ensure market stability, liquidity, and
crisis response. Continued on page 87^

88 FOREIGN POLICY

As a journalist I wanted to know
everything about what he had seen
or done, but as a son, I was afraid
of what I might discover.
and disclosure, and how he, how anyone for that matter, went
about recruiting Soviets, a crowning achievement for any Amer-
ican spy. My father told me something he had learned from
one of his teachers, a former Soviet intelligence official who had
defected to the United States and was by then, in 1969, working
for the CIA in Washington, D.C., training young recruits. You'll
never be able to recruit a Soviet with Sears, Roebuck catalogs
or golden tales about the capitalist high life, the Soviet officer
told the class. "Soviets recruit themselves," the teacher said. His
students just needed to learn how to be—or how to become—
"the kind of person" in whom Soviets would entrust their fate.
Over the course of my career in journalism, I've spent years
reporting in conflict zones—in Afghanistan and Iraq, and across
Africa—and trying to live up to my father's advice to become
the "kind of person" who could procure and then deliver valu-
able information. Digging into my father's past, however, I
found myself using the same methods he had taught me—elicit-
ing information rather than asking for it outright, making my-
self available for him, trying to build conversations rather than
interrogations.
Eventually I discovered that he had not, in fact, been on the
same rooftop the night of the Tlatelolco massacre. This was not
a journalistic revelation so much as it was a personal one. I had
wanted to confirm through my reporting what I already knew
as a human being—that my father was a good man. He had
become a CIA spy in Mexico, but he had never come anywhere
close to being involved in a dirty-war massacre. As a reporter,
I sort of wished he had told me more. But as a son, I couldn't
have been more relieved. If there is a coda to any of this, it is
that I will only ever know part of the truth. My father's life, and
mine to a certain extent, will only ever be a story. Any child of a
spy will tell you the same thing. ¡39
Scott C. Johnson, a former Newsweek foreign correspon-
dent, is author of the family memoir The Wolf and the
Watchman.
mmm
>^ Continued from page 88
Four years after Lehman Brothers imploded, we're still un-
sure what risks are being built into the global economy thanks
to the ongoing proliferation of complex, opaquefinancialin-
struments like derivatives, which now carry more value than
all the printed money on Earth many times over. It gets worse:
With increased computing power, markets are growing vastly
more volatile, and the advent of trading based on previously
unmanageable data sets is only going to accelerate this trend
and give special advantages to those able to gather and pro-
cess massive amounts of information rapidly.
So the economy of tomorrow is unlikely to look much like
that of yesterday. But did you even once hear anyone discuss
this paradigm shift during the U.S. presidential election season
or over the course of the never-ending debates about the Eu-
ropean debt crisis? As argued in books like Race Against the
Machine and confirmed daily in the headlines, the new global
economy will force us to rethink our most fundamental as-
sumptions, whether it's how many hours we should work each
week or an education system that stops once people enter the
workforce—to say nothing of government's role in redistrib-
uting wealth from the few who harness the technologies to the
rest who will be dislocated by the changes.
Perhaps with election seasons and leadership changes be-
hind us, world leaders will be able to begin discussing what
the transition to this new economy will entail. But we already
know what won't work: trying to use the same old dog-eared
playbook to address an en-
tirely new set of challenges. We already know
A good place to start would what won't work:
be setting aside our hopes of
simply going back to where trying to use the
we once were, creating manu- same old dog-
facturing jobs we'll never see
again, ones that haven't been eared playbook
outsourced to another coun- to address an
try but to the past. Another is
to recognize that the keys to
entirely new set of
growth will be the new infra- chidlenges.
structure and education demanded by a rapidly reconstituted
labor force.
But that means embracing the future, not running away
from it. You can't run an entire economy on nostalgia. That's
why it's so frustrating to be stuck with leaders whose main
idea for a better tomorrow is to go back to the ways of yester-
day; hsten to them talk, and you'll have a hard time deciding
whether their approach is that of an ostrich burying its head
in the sand—or a deer frozen in the headlights. S3
David Rothkopf is CEO and editor at large o/" FOREIGN POLICY.
FOREIGN POLICY (ISSN 0015-7228) November 2012, issue number 196. Published seven
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