From the TUC

Tim’s East Asia Diary: Part Four: Is a Fourth Industrial Revolution Possible?

24 Sep 2013, by in Economics, Environment

My time in Beijing has been every bit as fascinating as I hoped it would be. Among the highlights was an interview with Dr Hu Angang from Tsinghua University. As I mentioned in my previous post, Dr Hu has argued that China must develop a new, sustainable model of industry. In Dr Hu’s words, China must move from being a “black cat” to a “green cat”. At our meeting, I had the chance to find out more about this idea.

Dr Hu argues for a model of economic development that takes in China’s history, including elements of traditional Chinese philosophy, Marxism and the reforming spirit of Deng Xiaoping. He begins by calling on traditional Chinese scholars Zhuangzi (369-286 BC) and Dong Honshu (179-104 BC), who argued that humanity and nature are inseparable. Moreover, humanity should be in harmony with nature. And the concept of the conservation of nature dates back to Mencius (372-289 BC) and Xunzi (ca 312-230 BC).

Dr Hu then quotes the dialectics of nature developed by Frederic Engels. This, according to Dr Hu, systematically understood the relationship between humanity and nature for the first time in the history of Western philosophy. Hu quotes Engels as saying: “Let us not, however, flatter ourselves overmuch on account of our human conquest over nature. For each such conquest takes its revenge on us.”

Dr Hu argues that, in the 20th century, as fears for the environment mounted, the western concept of sustainable development quickly achieved a global consensus. However, Dr Hu argues that this is a passive modification of unfettered development. It remains rooted in a system based on high consumption, over consumption and high emissions. Green development, by contrast, should seek rational consumption, low consumption, low emissions and the preservation of ecological capital.

Dr Hu argues that there are eight elements to a green industrial revolution:

  • First, a green industrial revolution will require the participation of all countries and regions, as the accumulation of greenhouse gases is a global problem;
  • Second, industrial production will have to undergo constant change, marked by rapid technological innovation in key industries and technologies;
  • Third, various types of economic institutions must participate, including multinational corporations and SMEs, as well as non-profit making social organisations;
  • Fourth, the energy industry must move towards non-fossil based fuels;
  • Fifth, the use of pricing information is increasingly important for resource allocation;
  • Sixth, the trend towards greater consumption marked by previous industrial revolutions must be reversed, attaining a self-regulating consumption pattern based on introspection;
  • Seventh, countries in the global south must become more clearly aware of the importance of ecological assets;
  • Eighth, economic growth must be decoupled from carbon emissions.

This last point is particularly important. Dr Hu wonders what wealth actually means. GDP measures economic wealth and the Human Development Index developed by the United Nations Development Programme measures social wealth. In reality, human wealth also includes natural wealth, yet we have not yet developed a method of measuring the latter. Such a measure is necessary.

Dr Hu argues for a measure of green GDP, which is made up of nominal GDP, minus natural asset losses (such as energy depletion and deforestation), minus natural disasters losses, plus investment in human capital plus green investment, plus an external natural capital input.

Dr Hu believes we are on the cusp of a Fourth Industrial Revolution. The first industrial revolution, in the second half of the 18th century, was based on the steam engine. The second, from the mid 19th to the mid 20th century, took in electricity and railways. The third, from 1950 to 2000, was the information age.  But if we are to meet our ecological needs going forward, we are now ready for a Fourth Industrial Revolution – and Dr Hu believes China is in the position to lead the way.

It’s fascinating stuff, even if it is hard to summarise such a detailed argument (and a long book, a copy of which I took away with me) in a short blogpost. Is it pie in the sky? Maybe. But China is the world’s most polluting country at present and Hu Angang is a senior advisor to the Chinese Government. I’m very glad he’s thinking about these issues.