Internet of Things – the third industrial revolution

The 'internet of things' will affect global business profoundly, says Jeremy Rifkin

The ‘internet of things’ will affect global business profoundly. But the UK is well placed to take advantage – thanks to robust social enterprises and a strong not-for-profit sector.

Last month David Cameron attended a technology trade fair in Germany with Angela Merkel, pledging an extra £45m to develop the ‘internet of things’ [everyday devices that communicate over the internet] and more than doubling previous funding. “We are on the brink of a new industrial revolution and I want us – the UK and Germany – to lead it,” he said. The internet of things is coming, and Britain wants to be ready.

Globally, there are 11 billion sensors connecting devices-to-devices-to-people. By 2020, it will be 50 billion, with a prediction of 100 trillion sensors by 2030. Everything and everyone is being connected – resource-flows, production lines, factories, warehouses, freight on roads, retail stores, households and so on. Any homeowner or small firm can have access to this data-flow, using the analytics and algorithms to program software for their own value chain. This will allow more people to become ‘prosumers’ – just like the third of the human race producing and sharing their own information and entertainment at near-zero marginal cost.

But the democratisation of this communication and knowledge also means the internet of things will allow us to dramatically increase efficiency and productivity. How? By creating services from renewable energies (once you’ve installed solar panels or wind turbines, the actual energy is free) and 3D printing (anybody with an open-source 3D printer can produce goods with recycled plastic and paper), both of which reduce marginal costs to near-zero. Just as now, when people produce and send each other information and videos for almost free, within 20 years we should be able to do that with goods and services on the internet of things.

For British entrepreneurs, there are enormous opportunities. The first is infrastructure. The move to the third industrial revolution (where internet technology converges with renewable energies) will provide millions of jobs over the next four decades. Job opportunities will be created by the move to renewable energies, converting buildings into micro power-plants, installing hydrogen and other storable technologies, developing the ‘energy internet’ [a continent-wide, internet-configured power grid] and transport logistics. It will possibly be the last wave of mass employment, because once the new system arrives, it’ll be smart and will only need small supervisory forces.

Between 2030 and 2050, employment should also migrate to the not-for-profit sector. It’s already the fastest-growing sector, especially in the UK. We’re going to find many entrepreneurs going back and forth between profit-making and non-profit-making sectors, creating hybrid types that are social entrepreneurial enterprises.

That’s why young people entering business schools see themselves as social entrepreneurs. Britain has more social enterprises per capita than anywhere else. It’s estimated there are some 70,000 social enterprises in the UK, employing almost a million people and contributing £18.5bn to the British economy.

Another reason why there’ll be a vast expansion of SMEs, start-ups and social enterprises is that in this third industrial revolution everybody will have access to big data, analytics and algorithms – not just Google. This means anybody, very quickly, can make a new product, not just forms of entertainment.

Britain is in a good position to embrace these changes. It has a society with a strong entrepreneurial market, a robust not-for-profit sector and a third sector well honed in sharing things. The UK is also good at producing co-operatives, which will be essential to this third industrial revolution. In Germany and Denmark, many small firms are supplying co-operative electricity – none of the big power companies are producing this new energy as they can’t scale laterally.

The internet of things will take 30 to 50 years to take shape. It will be a protracted but interesting paradigm shift. By 2030-40 I believe we’ll be living in a mixed system, part-capitalist, part-social, with people in social and managerial positions. That might seem improbable. However, if anybody in 1990 said that, by 2014, a third of the human race will be producing and sharing entertainment and information at near-zero marginal cost on cheap mobile phones, we would have thought that ridiculous, too.

This article is an edited version of a telephone conversation which took place between Director and the author in March 2014


About author

Jeremy Rifkin

Jeremy Rifkin

Jeremy Rifkin is president of the Foundation on Economic Trends and a bestselling author.

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