Saturday, 26 December 2015


A personal Message from Dirk Helbing
Dear FuturICT Supporters

This has been another momentous year. The digital revolution is on its way at full pace. Many countries have invested into data-driven governance. The idea that "more data is more knowledge, more knowledge is more power, and more power is more success" has promoted the concept of a "benevolent dictator" or "wise king", able to predict and control the world in an optimal way. This "magic formula" seems to be the main reason for the massive collection of personal data, which companies and governments alike have engaged in. 

The concept of the benevolent dictator implies that democracy would be overhauled. In Silicon Valley there have been many voices claiming that democracy is an "outdated technology," which has to be replaced by something else. Similar arguments have been put forward by politicians in a variety of countries. There is an acute danger that democracy would be ended in response to challenges and threats such as climate change, resource shortages, and terrorism. However, recent data-driven analyses show that democracy is not a luxury, in contrast to what has been claimed by increasingly many people before.

The anti-democratic trend is dangerous and needs to be stopped. First, because ending freedom, participation, and justice would end in socio-political instability and finally in revolution or war. (Similar instabilities have occurred during the transition from the agricultural to the industrial society and from there to the service society.) Second, because the above magic formula is based on flawed assumptions.

Society is not a machine. It cannot be steered like a car. Interaction - and the resulting complex dynamics of the system - changes everything. We know this, for example, from spontaneous breakdowns of traffic flow. Even if we could read the minds of all drivers, such "phantom traffic jams" could not be prevented. But there is a way to prevent them, based on the use of suitable driver assistant systems: distributed control approaches, using knowledge from complexity science.

The paradigm of data-driven optimization would possibly work if we knew the right goal function; moreover, the world would have to change slowly enough, it would have to be sufficiently well predictable, and simple enough. However, all these preconditions are not fulfilled. As we continue to network the world, its complexity grows faster than the data volume, the processing power and the data that can be transmitted. Many aspects of the world are emergent and hardly predictable. The world is quickly changing by innovation, and we need even more of it! Not even the goal function is well-known: should it be gross national product per capita or sustainability, power or peace, average lifespan or happiness? In such cases, (co-) evolution, adaptation, and resilience are the right paradigms, not optimization.
I have spent last year to make decision-makers around the globe aware of these things, to save democracy, to get better information systems on the way than those that are based on mass surveillance and brute-force data mining; to argue for interdisciplinary and global collaboration; for approaches built on transparency and trust; for open and participatory systems, because they mobilize the capacity of the entire society; and for systems based on diversity and pluralism, because they promote innovation, societal resilience, and collective intelligence.

I would like to ask you to engage strongly along these lines too. Because if we don't manage to get things on the right way, we may lose many societal, economic, legal and cultural achievements of the past centuries; we might see one of the darkest periods of human history; something much worse than "1984 - Big Brother is watching you": a society, in which we might lose our freedom, enslaved by a citizen score that would give us plus or minus points for everything we do, where the government and big corporations would determine how we should live our lives.

My recent Nature Commentary "Build Digital Democracy" and an article in Spektrum der Wissenschaft - the German version of Scientific American - have elaborated on this, to alert the public. This might have come just in the very last moment.

Fortunately, there is some encouraging news too: The USA have started to invest in a new strategy. It seems they are betting on a combination of reindustrialization on the one hand, and citizen science and combinatorial innovation on the other. Even Google has embarked on a new strategy with the founding of Alphabet, which aims to make the company less dependent on personalized advertising. And Apple has recognized the value of privacy as a competitive advantage.   People also increasingly understand that the digital economy is not a zero-sum game. In the area of the Internet of Things, Google has engaged in open innovation, and it recently made its Tensorflow Artificial Intelligence software open source. Tesla Motors has opened up many of its patents, and many billionaires have recently promised to donate large sums of money for good. So, we see many signs of change.

The benefit of open information exchange is becoming increasingly evident. Sharing information often increases the value of information, inventions, and companies. If properly organized, the digital economy provides almost unlimited possibilities because intangible goods can be reproduced as often as we like. In fact, more and more money will be earned in virtual worlds. This relates not just to computer games; Bitcoin has even shown that bits can be turned into gold. Almost nobody believed this were possible.

Let's hope the development will continue in this direction. In that case, the digital revolution will take a positive path. But it's too early to relax. We need to be highly alert and ready to defend the constitutional principles of our society. Otherwise our societies will most likely end up disrespecting human rights and fighting wars.

I am sure our community will experience an exciting year 2016, and I look forward to the interaction and collaboration with you!

Best wishes, Happy Holidays, and Seasons Greetings,


PS: Here is some further news - please remember to send us input about your own news and success stories, so we can feature it in the next newsletter.

March 31, 2015: Blog "Implementing change in a complex world: Responding to complexity in socio-economic system: how to build a smart and resilient society
April 10, 2015: Lecture "Toward Government 3.0: Scientific Policy Decision-making" discusses the problems of Big Data and Artificial Intelligence and calls for a global, interdisciplinary collaboration 
April 15, 2015: Blog "Societal, economic, ethical and legal challenges of the Digital Revolution: From Big Data to deep learning, Artificial Intelligence, and manipulative technologies
April 16, 2015: Book „Thinking Ahead: Essays on Big Data, Digital Revolution, and Participatory Market Society“ 
June 4, 2015: Open Letter on the Digital Economy 
August 6 2015: Larry Page announces that Google is to become less dependent on personalized advertisements
August 10, 2015: Google is turned into Alphabet
August 30, 2015: The book "The Automation of Society Is Next" appears as preprint
September 16, 2015: The leading scientific journal "Nature" publishes the articles "How to solve the World's Biggest Problems" and "Interdisciplinarity: How to catalyze cooperation"
Interdisciplinarity has become all the rage as scientists tackle climate change and other intractable issues. But there is still strong resistance to crossing borders...!/menu/main/topColumns/topLeftColumn/pdf/525308a.pdf
September 22, 2105: Nature paper "Climate Policy: Democracy is not an inconvenience"
September, 24th-28th, 2015: UN General Assembly. The Pope underlines the importance of freedom, human rights and decentralization; the Presidents of America and China are calling for more democracy - let's see this happen!
September 29, 2015: Apple turns the protection of the privacy of its users into a sales pitch
October 6, 2015: The backdoor law in the USA is abandoned.The European Court stops the "safe harbor“ agreement and criticizes mass surveillance as incompatible with human rights.

October 7, 2015: The journal Nature calls for "crowd-sourced research"
November 5, 2015: Nature Commentary "Build Digital Democracy"
November 7, 2015: The Economist announces TU Delft's PhD program in "Engineering Social Technologies for a Responsible Digital Future"
November 9, 2015: Talk "Breaking the Wall to Digital Democracy" at the Falling Walls Conference in Berlin
November 12, 2015: The Digital Manifesto "Digital Democracy Rather than Data Dictatorship" appears in Spektrum der Wissenschaft (in German); many newspapers report
November 13, 2015: TERROR ATTACKS IN PARIS - THE SETBACK! Will France and Poland lose their democracies? Is your country stable?
December 2, 2015: Preprint "Democracy-Growth Dynamics for Richer and Poorer Countries" presents a data-driven analysis showing that “Democracy is not a Luxury”December 11, 2105: Elon Musk, Peter Thiel and others invest 1 billion dollars into OpenAI and stress: “A.I. should be an extension of individual human wills and, in the spirit of liberty, as broadly and evenly distributed as possible.”
December 12, 2015: All countries support the Paris climate agreement to reduce global warming
December 17, 2015: The European Data Protection Directive is decided
December 31, 2015/January 1, 2016: The start of a happy New Year and a new era!

Thursday, 3 December 2015

Democracy is not a Luxury

by Heinrich Nax

"Does democracy cause growth, or is it a luxury enjoyed by wealthy countries that slows growth down?“ This is a question that one frequently hears these days.

The Austrian economist Joseph Schumpeter was first to address this question in his book "Capitalism, Socialism, and Democracy" in 1942, at a time when Austria had fallen into the hands of Nazi Germany, after having been one of the most important countries in the world before. This question continues to be of central concern, not only for political economists and development economists. Over the past decades, stirred by the disagreement of prominent scientists such as Milton Friedman (1962) and Seymour Martin Lipset (1959) over the corrent answer, this issue has been looked at time and again.

Famously, the American macroeconomist Robert Barro (1996) found that "the net effect of democracy on growth performance cross-nationally over the last five decades is negative or null" (Gerring, Bond, Barndt and Moreno 2005, p.323). Analyses of this kind have fueled arguments for the position that democracy is a luxury enjoyed by wealthy countries, which creates obstacles for economic development. Other scientists have disagreed with this finding (for example, Gerring et al. 2005). Their findings indicate that only sustained democracy has the virtue of facilitating the accumulation of physical, human, social and political capitals, which in turn leads to growth.

Again, one is left with two conflicting sets of evidence. However, there are two recent breakthroughs, which show that democracy is indeed no luxury. Acemoglu, Naidu, Restrepo and Robinson (2015) show that `regime transitions' and their precise timing are crucial. Democratization has a large positive effect on growth: "by estimating the effects on growth of the unprecedented spread of democracy around the world in the last 50 years [...] estimates imply that a country that transitions from non-democracy to democracy achieves about 20 percent higher GDP per capita in the next 25 years" (Acemoglu et al. 2015, p. 1).

However, the question whether established democracies have incentives to de-democratize remained unsolved. Precisely this question was now addressed by Nax and Schorr (2015). Their data-driven study using high-performance computers reveals "short-run economic incentives to de-democratization for the most economically and democratically developed nations. [However,] These short-run boosts come with intermediate-run reductions of political capitals and with long-run reductions in growth" (Nax and Schorr 2015). Therefore, democracy is more than a luxury. Giving up on it would be a terrible mistake.

Further information can be found in

H.H. Nax and A.B. Schorr, Democracy-Growth Dynamics for Richer and Poorer Countries,see
- D. Acemoglu, S. Naidu, P. Restrepo, and J. A. Robinson. Democracy does cause growth. NBER Working Paper, pages 323-64, 2015.
- R.J. Barro. Democracy and growth. Journal of Economic Growth, 1(1):1-27, 1996.
 - M. Friedman. Capitalism and freedom. University of Chicago Press, 1962.
 - J. Gerring, P. Bond, W.T. Barndt, and C. Moreno. Democracy and economic growth: A historical perspective. World Politics, 57:323-64, 2005.
- S. M. Lipset. Some social requisites of democracy: Economic development and political legitimacy. The American Political Science Review, 53(1):pp. 69-105,

- H. H. Nax, A. B. Schorr. Democracy-growth dynamics for richer and poorer
Countries. , 2015.
- J. Schumpeter. Capitalism, socialism and democracy. Harper, New
York/London, 1942.