Tuesday, April 4, 2006

3rd Industrial Revolution

Mises Article talks about three industrial revolutions.

The first revolution brought drastic changes to England from the middle of the 18th century to the middle of the 19th century. A few inventions and technological innovations gave rise to the factory system and the working population formerly laboring in agriculture found better employment in industrial production. The revolution spread to Western Europe and the United States a generation or two later. It has moved to some other countries ever since.

Economic historians also speak of a second Industrial Revolution that left its mark on the 20th century and is spreading to other parts of the industrial world. They are referring to the powerful shift from manufacturing toward services. Throughout the old industrial world the number of industrial jobs has declined slowly while the number of service positions has risen continuously. By now, only one-sixth of US non-farming jobs are in goods-producing industries while five-sixths render services.

A third Industrial Revolution is now making its appearance in the United States and other industrial countries. And just like the first two, it is bound to introduce many changes and force millions of people to make painful adjustments. It is an "information revolution" that greatly expands the scope of tradable services and tends to move many service jobs offshore to India, China, and other industrial newcomers where labor is much cheaper. Defined by its consequences, it may also be called the "offshoring revolution."

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