Thursday, 26 January 2017

THE GOLDEN AGE – How to Build a Better Digital Society

by Dirk Helbing (ETH Zurich/TU Delft)

Introduction: Another Revolution or War?

PDF of article can be downloaded here

As it turns out, we are in the middle of a revolution – the digital revolution. This revolution isn’t just about technology: it will reinvent most business models and transform all economic sectors, but, it will also fundamentally change the organization of our society. The best way to imagine this transition may be the metamorphosis of a caterpillar into a butterfly. In a few years, the world will look very different…

This does perhaps sound exaggerated – but then again, probably not. We are now seeing a perfect storm that has been created by the confluence of many powerful new digital technologies. This includes social media, cloud storage and cloud computing, Big Data, Artificial Intelligence and cognitive computing, robotics, 3D printing, the Internet of Things, Blockchain Technology, and Virtual Reality. Smartphones are just one example of a technology deemed science fiction two decades ago, but is now real and ubiquitous. Many people cannot imagine an existence without these technologies anymore.

The digital technologies described above now reorganize our world. Companies such as Microsoft, Apple, Google, Amazon and Facebook, established 15 to 40 years ago, often in garages by students without academic degrees, are now among the most valuable companies of the world. By way of disruptive innovations, these technology giants have overtaken the traditional large corporations in the oil or car industries.

The company AirBnb is now challenging the hotel business. Uber is troubling the taxi, transport and logistics sectors. Bitcoin, the digital currency, threatens the big banks. With its fashionable electric cars, Tesla makes classical car companies look out-dated. Google plans to replace today’s individual vehicle traffic by promoting “transport as a service” based on self-driving cars. We may soon have the same level of mobility that we have today while using only 15 percent of today’s vehicles. Parking lots, garages, traffic police and more, may soon be things of the past. 3D printers enable the cheap production of personalized products. In perspective, global mass production will be gradually replaced by individually customized, locally created products.

These are just some of the notable trends. However, anyone who thinks that the digital revolution is just about faster Internet, smarter devices, more data, better services, and new business models largely underestimates the “creative destruction” that comes along with digital technologies.

Thanks to new machine learning approaches such as “deep learning”, recent progress in the area of Artificial Intelligence has been remarkable. These systems learn by themselves, and they are getting smarter at an exponentially accelerating pace. By now, intelligent computer algorithms can perform as well as humans in terms of reading text, understanding spoken language, or recognizing patterns. They can also learn repetitive and rule-based procedures. They tend to make less mistakes, do not get tired, and do not complain. They also do not have to pay taxes. In other words, it is only a matter of time until they will replace human jobs. This will also hit many middle-class jobs. Later on, however, I will explain how we can turn this into an opportunity.

Some people hope that, for each job lost, a new one will be created, and that these jobs will be better than those today as economic progress advances. However, people may forget that the transition from the agricultural to the industrial society, as well as the transition from there to the service society, was accompanied by serious financial and economic crises, by revolutions and wars. Many countries are already in the midst of a financial and economic crisis, and in some countries, the unemployment rate of young people has passed 50 percent. In many places, the effective incomes in the lower and middle class have been stagnant or decreasing, while the level of inequality has grown dramatically.

In 2016, Oxfam revealed that 50 percent of the world’s property was in the hands of 62 people. By 2017, half of the world’s property had ended up in the hands of only 8 people. Four of them are Americans running big IT companies. In the meantime, the level of inequality is comparable to the situation before the French revolution. This implies that the purchasing power of people is eroding, such that further economic development is obstructed. Consumers can no longer afford buying all the products that companies can provide. Many companies and banks could cease to exist, and the richest segment of people (“the elite”) start to worry about an impending revolution. The current situation is highly unstable and does not seem to serve anyone well. The rise of populism is one result of this.

So it appears that the current world order is breaking down. Even though we have better technologies and more data than ever before, these have been accompanied by increased global challenges. As the world becomes more networked, systemic complexity is growing faster than the data available to describe it, and the amount of data is accumulating faster than the data we can process and transmit. Paradoxically, even though technological solutions are more powerful than ever, attempts to control the world in a top-down way appear to fail. At the World Economic Forum in 2017, representatives of the elites could no longer deny the impending crisis. The success principles of the past – globalization, optimization and regulation – did not seem to work well nor to persuade people anymore. After president Trump’s inauguration, the German Minister of Exterior, Frank-Walter Steinmeier, and chancellor Angela Merkel both announced the end of a historical era. This may be the end of globalism and capitalism as we know it.

There are several reasons for these developments, and they are all based on self-created problems. The first reason is that, as we go on networking the world, the complexity is increasing factorially, at an amazing pace. Importantly, in a highly connected world, the intended effects will often not result because of side effects, feedback effects, domino effects, and cascading effects. Cascading effects, in particular, can easily get out of hand through a series of coupled events, which may end disastrously. Electrical blackouts are one example.

The second reason is the attempt to steer each individual’s behaviour (I will discuss this later in detail). Today, those who run our societies change their “commands” at the same speed at which individuals are trying to adjust to them. This undermines a hierarchical organization, which requires a slower speed of change on the controlling “top” level as compared to the controlled “bottom” level. Natural hierarchies exemplify this, as they occur in physics (atoms, molecules, solid bodies, planets, solar systems, galaxies) and biology (cells, organs, organisms, social communities, organizations, societies).

We are living in times where our employers, the state, and companies are all the time trying to make us do all sorts of things. This obviously causes a fragmentation of attention and action, distraction and chaos. This will be elaborated in more detail later. One result of this development is, that we are increasingly locked in informational filter bubbles or personalized echo chambers. This makes us lose our ability to understand other points of view, or to find reasonable compromises and consensus. Consequently, conflict and extremism in our societies have increased, which in turn undermines social cohesion. One might say that our society is increasingly divided into social atoms, which are now trying to find new bonds. Populism is a side effect of this.

I must stress that this has created a highly dangerous situation, which has the potential to collapse today’s social order and also that of the world. This development was predicted years ago, but little has been done to stop the underlying cascading effects. Now that we are at the tipping point, this means that our future is more uncertain and unpredictable than ever. As a consequence, people may lose orientation. For example, we may end up with a data-driven version of fascism (a big brother society or “brave new world”), or of communism (a “benevolent dictatorship” that believes it knows what would be best for everyone and imposes this on us), or of feudalism (a “surveillance capitalism” that serves us according to our “personal value”, as measured by a “citizen score”).

However, we may also make the conscious decision to upgrade democracy and capitalism as we know it, by digital means. On the whole, standing at a tipping point creates unprecedented opportunities for mankind to re-invent society, and to build a better world. However, if we continue as before, we may stand to experience the breakout of large-scale wars. Such wars are quite likely, and they may break out for several reasons:

  • The new wave of automation driven by artificial intelligence and robotics may cause unemployment to sky-rocket, and undermine the stability of societies, which can easily lead to a war.
  • The spread of populism and nationalism implies dangers for peace as well, as it often values people of different ethnic origin and cultural background differently. Cultures that consider themselves superior, however, tend to wage wars against those they consider inferior. This tendency is further nourished by the claim that “war is the mother of invention” (Heraclitus even said, “of everything”).
  • The probability that we may see a financial and economic collapse is also quite high. In fact, the Limit to Growth study, which tries to anticipate the future fate of our planet, predicts such collapse in the imminent future. The on-going financial crisis makes it clear that capitalism as we know it, is failing. Mass unemployment in many countries, public and private debt levels, low economic growth rates and negative interest rates indicate that we have reached a point of no return. At the 2017 Davos meeting, many have concluded that capitalism 1.0 is losing support – it will (have to) be replaced by something else.
  • Impending future resource shortages will cause further problems, which can also precipitate a war.
  • Climate change could instigate wars as well, namely by desertification, the deterioration of once fruitful soil, or natural disasters (e.g. floods). It is also expected that climate change may cause the largest loss of species since the extinction of the dinosaurs, which may undermine our ecosystem and our food chain. 
  • Furthermore, we may see cultural or religious clashes, and this seems to be already happening.
  •  A worrying concern is poor maturity in the constructive use of social media and digital technologies. Shit storms, hate speech, and fake news are illustrations of this. We have to look back in history to the days when the printing press was invented. One result was the 30-year war that claimed the lives of 5-8 million people. Similarly, the invention of the radio was an important factor in the success of the Nazi regime. Radio enabled the spread of propaganda on a previously unprecedented scale, from which people were not able to distance themselves enough. This result was the Holocaust and World War II, which claimed up to 80 million lives. Today social media news has become the battlefield of a world-wide disinformation war. Shit storms, hate speech, and fake news appear to get out of hand. How will this play out?
In conclusion, there are multiple factors present that can contribute towards large-scale wars. Given the “nuclear overkill”, this could claim an unprecedented number of victims and, in all likelihood, make large swathes of our planet uninhabitable. Should this happen, it would be the most shameful event of human history, and we would never be able to believe in human values or civilisation again.

What makes me optimistic, however, is the fact that we know about all these dangers and we have history to learn from.

Solving the above problems is not a trivial exercise. However, new solutions have been recently proposed. The crucial issue for us is whether these new ideas spread quickly enough, and whether politics will have the courage to implement them now.

Making the right decisions and taking appropriate actions has become a matter of life and death. If we go on as before, we will probably experience a number of global disasters. I am convinced, however, that the time to create a framework for global prosperity and peace has come.

In the following chapters, I will describe the issues with our current socio-economic approach in further detail, and why it is outdated and destined to fail. I will also present an alternative vision of a better future for everyone – one that is based on the success principles of co-creation, co-evolution, collective intelligence, and self-organization. I am convinced that these principles are able to lift our economy and society to the next level. This should make society more resilient to unexpected developments and shocks (sometimes called “black swans”). Without a doubt, we have arrived at a crossroad. The question we must now ask ourselves is: Will we have the courage follow a new path, or will we continue our old path and fall off the cliff?

(Comments and inputs to are welcome!)

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