Back in May I wrote this blog post and gave this podcast interview arguing that the key to getting the UK economy to recover from the Covid induced recession was to invest in the fourth industrial revolution. I argued that if the UK embraced the digital technology revolution that is taking place around the world we should be able to bounce back from the recession and repay the debt. We would be able to repay the debt due to economic growth. Economic growth is likely as Industry 4.0 is predicted to be bigger that any of the previous three industrial revolutions.
In terms of the economic logic my argument is essentially Keynesian. The central argument in Keynesianism is that government debt is not a problem if the money is focussed on stimulating the economy as economic growth will generate tax revenue in the future. The argument is essentially the opposite of the logic of austerity. Austerity argues that the economy is like a household budget and you must therefore balance the books. For Keynesianism the metaphor of thinking of the economy as being like a business is more relevant and in business you sometimes need to borrow to grow a business, and through business growth the debt can be repaid later.
As outlined in this guardian article It appears that the UK government is now planning on investing in fourth industrial revolution focussed companies to stimulate the UK economy, very much in line with my earlier blogs. It also appears that this plan is right at the center of the UK spat with the EU over The Withdraw Agreement and state aid limits.
I am not suggesting that the UK government is planning on investing in fourth industrial revolution firms, because I have been advocating this approach. Whilst it would be nice to think that people in government have read my blogs and that these have influenced policy, I am aware that I am not the only person advocating the economic benefits of industry 4.0.
I find it interesting that a Conservative government now appears to be adopting an anti-austerity Keynesian economic position. Traditionally the economic positions of the two major political parties has been Monetarism vs Keynesianism, with The Labour Party, typically advocating a more Keynesian position. I also find it bizarre that one of the arguments against tech investment plans, outlined in this Guardian article is that attempting to pick winners is socialist and that instead it would be better to simply leave it to the market. Whilst the current tory government do appear to be moving away from the Austerity policies of the Cameron Tory government, socialist is not a word that I would associate with them.
In case you have not been following discussion about the withdraw agreement. As part of Brexit negotiations the UK government is proposing plans to override the withdraw agreement previously signed off by the UK parliament and signed by the UK and EU. It formed the basis of the oven ready deal highlighted at the general election in December 2019. More detail is outlined here. Controversy has emerged with accusations that overriding the signed agreement would break international law as outlined here
I should perhaps also clarify that when advocating the need for Industry 4.0 investment, I do not suggest that a more digital future is necessarily beneficial, and it is unlikely to be beneficial for everyone. This article highlights some of the challenges in a post Brexit Industry 4.0 future. Key points include: digital growth requires innovation and immigrants have historically been innovators, the skills and expertise required are specialist and there are already skill shortages in some tech related jobs and finally that digital change may bring with it chaos as well as growth.
Consideration of the threats as well as opportunities of digital futures was central to my PhD research. I argued that we need to be careful not to naively assume that a digital future would be better. Consideration of what could go wrong is required to avoid sleepwalking into a digital dystopia. That said, the world is moving in a digital direction. It is however up to us what kind of digital future we want. It is also far from certain that the UK will be at the forefront of the fourth industrial revolution, countries around the world will be competing with each other to take the lead in this new revolution, I guess that is why the UK government is not keen on having limits placed on how much it can invest in supporting British companies move into this arena.