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The Industrial Revolution: How far has we go & What has changed?

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Historical Events

Event Summary

Industrial revolution is the process of transitioning from an agricultural and handicraft economy to one dominated by industry and machine manufacture in modern history known as the Industrial Revolution. This technique began in the 18th century in Britain and expanded around the world from there.

I. Key Takeaways


  • Steam Engine invented in Industrial Revolution 1.0  boosted human productivity by 8 times and fueled the development of  other sectors (textile,  agriculture, transportation, etc).

  • Discovery of the Assembly line in Industrial Revolution 2.0 was utilized in Mass Production, thus increasing 23% in portion of outputs while decreasing 25% in labors.

  • Internet invention marked the advent of Industrial Revolution 3.0, creating the big technology firms contributing a huge amount of global GDP by that time.

  • The birth of Machine Learning in the Industrial Revolution 4.0 was utilized to tackle four key issues of manufacturers, including enhancement of productivity, boosting information for big data, product improvement, and forecasting inaccuracy.


II. What is Industrial Revolution and an overview of its impacts on economy


Industrial revolution is the process of transitioning from an agricultural and handicraft economy to one dominated by industry and machine manufacture in modern history known as the Industrial Revolution. This technique began in the 18th century in Britain and expanded around the world from there.


Hence, in the Industrial Revolution, agriculture and handicrafts-based economies were converted into economies based on large-scale industry, automated manufacturing, and the factory system. Specifically, existing industries by that time became more productive and efficient as a result of new equipment, new power sources, and new ways of arranging labor. Why is that the case? To further explain, the familiar Cobb Douglas function is utilized, which implies that productivity is affected by four variables, one of which is technology. Other inputs, such as labor, capital, and land, will not have a significant impact on productivity and product quality in the long run. The reason is the increase in one of three factors in the long run, namely labor, capital or land will bear a limitation (i.e. limited population, limited land, limited machines), whereas technology enhancement is not a limiting factor. Consequently, the Industrial Revolution, which concentrates on technology enhancement will obviously boost the output in production.


Since then, our society has undergone four Industrial Revolution including Industrial Revolution 1.0, 2.0, 3.0, 4.0 and now is heading to 5.0. Before diving into knowing what Industrial Revolution 5.0 is, the prerequisite understanding should be the history of the past Industrial Revolution processes, including the time, the causes, and major impacts of those on the whole world economy.


1. Industrial Revolution 1.0- The Steam Power


Shall we start with the origin of the Industrial Revolution- Industry 1.0? It all started in the 18th century in the United Kingdom. The invention of steam power and the mechanization of production were the two most significant breakthroughs. In 1765, a Scottish engineer called James Watt developed a highly efficient steam engine. In comparison with the traditional horsepower, the new invention was proved to replace 10 of cart-pulling horses – or 10 horsepower. Specifically, Watt did an experiment in which each horse pushed with a force of 180 pounds. Watt calculated that one horsepower was equal to 33,000 foot-pounds (1pound= 1.36 newton metres) of effort done in one minute by a horse. Imagine a 33-pound pail of water being raised from the bottom of a 1000-foot deep well in 60 seconds by one horse.


Steam power had a huge influence on travel, production, and trade. The introduction of steam engines on railroads allowed huge amounts of commodities and raw resources to be transported across nations. The industries could be situated anywhere because the newly developed engine did not rely only on water power. Steam power became the major power source, growing from 5% to 80% of total power generation in the US.


In short, the Industrial Revolution 1.0 was a watershed moment in history, impacting a wide range of industries including textiles, agriculture, transportation, etc. as well as practically every facet of everyday life.


2. Industrial Revolution 2.0- Assembly Line


The 2nd Industrial Revolution began in the 19th century with the discovery of electricity, and assembly line production.

Because untrained employees could not be readily educated to do specialized jobs, assembly line manufacturing became the key element in increasing productivity and lowering labor costs by the beginning of the nineteenth century. Henry Ford's model T vehicle was the assembly line's most successful achievement. In fact, Henry Ford took the notion of mass production into automotive manufacture, and radically changed it in the process. Previously, a whole automobile was built at a single station; currently, automobiles are created in partial phases on a conveyor belt, which is much faster and less expensive. Ford was able to transfer heavy goods from one place to another, allowing them to mass-produce automobiles like the Ford Model T. For a single automobile, the production time was reduced from half a day to 90 minutes. This Revolution also resulted in cheaper prices, greater salaries, an 8-hour workweek, boosted pay from $2.34 to $5 per day, and reduced the cost of automobiles from $810 to $310. Besides, it is reported that Ford's plant reorganization during that time resulted in a 25% reduction in personnel while boosting output per employee by 23%.

Apart from the assembly line, centralized power, telephones, radio, and television, as well as inexpensive gasoline and internal combustion cars on national highway networks, converged in the twentieth century to provide the foundation for the Second Industrial Revolution.


3. Industrial Revolution 3.0- The Internet


The 3rd Revolution began in the 1970s with the use of memory-programmable controllers and computers to partially automate processes. With the advancement of these technologies, humans will be able to automate the entire process without the need for human intervention. The third Revolution, often known as the Digital Revolution, marks the start of the Information Age. During this time, the invention of the Internet is believed to be the key invention indicating the birth of Industrial Revolution 3.0.


It is obvious that private businesses have always been looking for innovative ways to enhance productivity and lower the marginal cost of manufacturing and delivering products and services so that they can maximize profits for both stakeholders and shareholders, and differentiate themselves from competitors. Hence, the emergence of the Internet is believed to usher in a technological revolution that has the potential to unleash "extreme productivity", lowering the cost of communication, energy, transportation, and many other physical products and services in the traditional economy. For example, over the last ten years, the usage of the Internet to manage buying in supply chains has grown significantly. Research shows that the Internet is used in a number of procurement applications, such as communicating with suppliers, obtaining vendor price quotations, and purchasing from vendor catalogs. The usage of the Internet has simplified the purchasing function in American businesses. General Electric, for example, has cut its buying personnel by more than 50% and allows each department to shop from vendor catalogs online. Order-cycle times, which are the times they take from when an order is placed to when it is delivered to the company, have been cut in half.


Furthermore, the invention of the Internet is reported to generate new business like Google and Facebook, which are big giants that help contribute to a huge amount of global GDP. According to Internet World Stats, the global population has surpassed 7 billion people, with 2 billion of them using the Internet. E-commerce produces around $8.000 billion in revenue (B2B + B2C).The Internet accounts for 3.4 percent of GDP in the 13 nations studied, a greater percentage than agriculture (2.2 percent), utilities (2.1 percent), or the education sector (3 percent ). The Internet is expected to create a total added value of 1.6.72 billion US dollars, or 2.9 percent of global GDP.

To sum up, the invention of the Internet marked an advent of the 3.0 digital era with a huge contribution to the birth of big tech companies participating in increasing the global GDP.


4. Industrial Revolution 4.0- Machine Learning


Breakthroughs in remarkable methods such as robotics, artificial intelligence, nanotechnology, quantum computing, biotechnology, the Internet of Things, distributed computing, 3D printing, and autonomous transportation characterize the 4.0 Industry age. People no longer rely on labor, land, or entrepreneurs to enhance outputs, thanks to the fast advancement of technology in the 4.0 age.

With the advent of machine learning, four key issues of manufacturers had been solved, including enhancement of productivity, boosting information for big data, product improvement, and forecasting inaccuracy. As for productivity improvement, according to PWC, machine learning in economics has the potential to boost productivity by 14.3% by 2030. Meanwhile, according to Indeed.com, demand for data scientists has increased by 29% year over year and by an almost inconceivable 344 percent since 2013. Regarding product enhancement, machine learning algorithms can conduct hundreds of surveys, “talk” with thousands of people around the world, and evaluate all available data in order to create a solution that is 100 percent effective and meets market demands. Lastly, for the utilization of machine learning in trend projections, it is proved with 87% of accuracy.


Furthermore, in the near future, many present jobs and responsibilities will be handled fully or largely by machine learning algorithms. McDonald's, for example, has a drive-thru system. According to an annual analysis by market researcher SeeLevel HX, the typical McDoanld's drive-thru will take 6 minutes and 18 seconds in 2019. However, the business subsequently reduced it to 5 minutes and 49 seconds. McDonald's has also implemented new technologies in order to improve its operations and attract consumers to buy more meals in recent years. It tried artificial intelligence devices that read license plates to forecast purchases in select places, as well as mobile orders that clients could pick up at the drive-thru window.


To summarize, with the growth of 4.0 Industry, technology may link consumers, suppliers, partners, manufacturing equipment and goods, and produce throughout the product and service cycle, regardless of the kind of business.