The Industrial Revolution 4.0, which is none

Robotization, Internet of Things, artificial intelligence or blockchain – the keyword barometer (read Bullshit Barometer) is a big hit when these terms are mentioned. Be it experts, media representatives or hobby philosophers, they all speak, write or philosophize at the same conferences about the same consequences of these phenomena that bring about change. 

These discussions, speculations and trends are summarized under the term “digitalization”. Of course, today it is a completely meaningless weasel word (read bullshit word again), which is why a new term such as digital transformation had to be created. 

For the innumerable PowerPoint presentations created in this context, the term “digital revolution” has become established alongside that of the Industrial Revolution 4.0. To simplify matters, the history of human civilization is divided into four successive developmental phases.

Apart from the fact that there is no uniform pattern in any individual development phases, it is clear that such simplification can hardly be correct. According to the Bonini paradox: “Everything simple is wrong, everything complicated is useless”.

Wrong perception of history

However, the term Industrial Revolution 4.0 is extremely inappropriate – in general as well as in concrete terms.  The whole concept of an industrial revolution is probably nonsensical. Anyone who reduces economic history to individual revolutions, some of which are even defined fairly precisely in terms of timing, paints a misleading picture. 

Exponential changes, which are generally perceived as revolutionary change, have the inherent tendency that hardly anything seems to be happening for a long time until things finally take off very quickly. However, fundamental change is always perceived by the masses only in the late phase of exponential development and then equated with “revolution”. The causal cause of the exponential event lies much earlier though.

The same applies to digitization or the Industrial Revolution 4.0. Today, the consequences of change are so noticeable because we are already well advanced in the exponential development. But where is their causal origin? It is very hard to find a definite cause. However, the invention of the MOSFET, also known as a metal oxide semiconductor field-effect transistor, would be a good point to start. MOSFET was invented in 1959 and is today the basic component of modern electronics and the most frequently manufactured device of all. A total of over 13 sextillions (1.3 × 10^22) MOSFETs are said to exist.

It is the simple principle of transistors – the combination of switches – that has ultimately made scaling more and more efficient and thus electronicized the world. Finally, and this is a consequential phenomenon discovered by Silicon Valley pioneer Marc Andreessen, it is software that has begun to devour the world. In this way, the reality of people’s lives has been and continues to be increasingly digitalized. Software is becoming relatively more relevant than hardware – in many respects, the former even replaces the latter.

Dematerialization and Deinstitutionalization

The Industrial Revolution 4.0 is therefore not only a sudden, selective revolution, but has less and less to do with the term industry as such. Contemporary change is manifested in the fact that we are leaving the industrial age and moving into the age of computers, software, and cryptography.

After the transistor, embodied by computers and software, cryptography as a further field of computer science is likely to be the driving force in the foreseeable future. Due to our increasingly digital reality, data and information are becoming more and more important – which is also expressed in their increasing value. Cryptography helps to encrypt information and to put it into the exclusive hands of individuals. After the dematerialization of the economic and production structure, which is already progressing, the deinstitutionalization of the entire value and service chain is now underway.

Bitcoin is probably the most obvious manifestation of this development. As a digitally artificially scarce cryptoasset, it can be controlled independently of any third party. As a pure informational store of value, Bitcoin is a fascinating and at the same time uncanny phenomenon: Values in the order of several million to billions of dollars can theoretically be stored in the head – or better, the memory – without further ado. 

In combination with the smartphone and the Internet, various exponential technologies come together here to a certain extent. Bitcoin is currently flourishing on the ground the laid beforehand and will, in turn, produce second- and third-round effects. The smartphone is the epitome of dematerialization, while Bitcoin embodies deinstitutionalization. Both are driven by the spread of the Internet. So the revolution is in full swing – and this is indeed a revolution. 

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