Global Reset: A Socio-Ecological Finance System to Boost Sustainability

by Dirk Helbing (ETH Zurich/TU Delft)


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Lack of sustainability is our biggest existential threat.

Humanity is largely overusing the Earth’s resources. We are consuming more than what is renewable. Currently, we would need at least 1.5 planets to maintain our lifestyle. Would everyone have the standard of living of European countries, we would even need to have 3.5 Earths at our disposal. The USA even consumes 4.5 times as much as what the Earth can sustainably maintain. That is why they engage in a race to Mars. Getting hold of Mars’ resources, if we can accomplish this, would be the next stage of globalization. But it may come too late…

The current over-consumption of industrialized countries leads to a scarcity of resources elsewhere. This is probably the reason of many conflicts and wars today, of revolutions, mass migration, terrorism. While those problems could be kept at bay in the past, mass migration and terrorism show that the problems caused by us come ever closer.

Let’s face it: if we don’t get the lack of sustainability fixed, the world will end in disaster. If we go on as before, at least one third of the world’s population will die in the coming decades. That would be more than 2.5 billion people – more than the US, European, Russian and Chinese people taken together! That is why the danger of a World War III is popping up on the news so often. A global nuclear war, however, could make the entire Northern hemisphere uninhabitable.

In fact, predictions for the Earth don’t look good. All computer simulations of the world’s future predict an impeding economic and population collapse. This is known at least since “The Limits to Growth” study commissioned by the Club of Rome, and the “Global 2000” study issued by the former president Bill Clinton. The UN Sustainability Agenda 2030 is giving the world less than 15 years of time to solve this problem. That is, lack of sustainability has become a matter of life and death for all of us.

Is there a solution at all, beside depopulating the planet? Yes, indeed! Today, an average consumer in an industrialized country produces more than 600 kilograms of waste per year – about 50 tons in a lifetime. And this does not even include the waste produced by companies. In a lifetime, most of us throw away several cars, boards, sofas, TV sets, computers, smart phones and many more things. This would be enough for several people! So, we neither have an overpopulation problem nor a shortage of resources. We just have an organisational problem, but a serious one.

Our economy is not using and distributing available resources well. We need a circular economy rather than linear supply chains, where fresh resources are used to produce consumer goods, which are finally thrown away. Currently, some people die of obesity, others of hunger. This does not make any sense. While the world’s food production is enough for everyone – 30-40% food is thrown away. Nevertheless, millions of people die of starvation every year, and the situation is expected to deteriorate.

Therefore, what we really need to do is to change our economic system such that supply chains are closed and a circular and sharing economy results. Then, the world’s resources would be enough for everyone. The question is, how to build this circular and sharing economy? In some countries, politicians have tried hard to promote recycling by laws and regulations, but things did not get very far.

Today, millions of responsible citizens recycle glass, sort waste, bring back old batteries etc. However, even in the most advanced countries, we don’t have anything that comes even close to a circular economy. Developments look more promising for the sharing economy, but so far it is dominated by a few companies such as Uber and AirBnB. We are still far from an open and participatory information, innovation, service and product ecosystem, in which everyone can contribute with their own products, services and ideas.

Therefore, to boost the emergence of a full-fledged circular and sharing economy, we need to create new market forces. This brings us to a new socio-ecological financial system, which I sometimes call “finance 4.0” (the number does not really matter). What I have in mind is an exchange platform that combines the Internet of Things with Blockchain Technology and Complexity Science. Let me explain this in in more detail.

The Internet of Things comprises a large number of measurement sensors that are connected to the Internet. Such sensors can now be used to measure features of their environment cheaply. One could say, these sensors make it possible to give ordinary things senses and allow them to “perceive” their environment. Combined with Artificial Intelligence and actuators (i.e. active elements), one can even build things that respond to such “perceptions” in a “smart” way. This gives them something like an own, artificial “life”. At least we can give things autonomy now. For example, self-driving cars are using radar sensors, video cameras and other sensor systems to get a picture of their environment. In response, they drive the car autonomously, as decided by machine intelligence.

In particular, with Internet of Things sensors, we can now easily measure negative externalities such as noise, light, temperature, acceleration, rotation, location, and many other undesirable things. So, let us assume we would use such sensors to measure carbon dioxide (CO2), stress, all sorts of emissions, and waste of various kinds. Further assume that we would measure positive externalities such as social cooperation, health, education, or the reuse of different kinds of waste.

Then, we could build a multi-dimensional incentive system on top of these measurements that gives each negative externality a price and each positive externality a value. For the sake of illustration, imagine we would use black, red, blue, green, yellow and all sorts of differently colored eCoins to price the different kinds of externalities. These different eCoins could be implemented by means of Blockchain technology.

With this multi-dimensional incentive system, we could then implement real-time feedbacks and reward desirable externalities, while discouraging undesirable ones. This differentiated reward system would be much more suitable to manage complex systems such as our economy or society than the one-dimensional money system we have today.

Our current money system is based on a utilitarian approach which ranks the entire world on a one-dimensional scale. It is clear that such a one-dimensional approach is oversimplifying world affairs and needs. It creates a hierarchy and a power structure, which makes the world go ‘round, i.e. governs by force. However, it is not suited as a coordination system for today’s complex world.

To illustrate the issue, let us imagine the production process of a complicated chemical or medical drug. Here, it will certainly not be enough to control a single variable such as the temperature. Instead, it will be necessary to control the temperature, pressure, and concentrations of all sorts of ingredients, and perhaps even arrange for several different subsequent processes.

Similarly, our human body cannot thrive by varying just one variable such as the amount of water we drink. We rather need a variety of substances such as water, proteins, carbohydrates, vitamins, and minerals. Normally, these cannot be substituted for each other. If one of the necessary substances is lacking, our body will not perform well or even fall ill. So, why should it be possible to run our economy or society with one-dimensional money?

It is clear that a more differentiated, multi-dimensional approach promises better results, and this has a reason. Many complex systems are made up of so many autonomously (re-)acting parts that it is difficult to make them do what you want them to do. Often, strong interactions within a complex systems lead to unexpected side effects, feedback effects or cascading effects, which cannot be simply controlled in a top-down way. However, there is a way to make these systems well-behaved. Complex systems tend to self-organize, i.e. to come up with their own characteristic kinds of structures, properties, and functions. By changing the interactions, one can change the outcomes. It’s a focus of Complexity Science to study, what kinds of interactions produce particular outcomes. “Mechanism design” is the discipline that studies, how to choose, specify or change interaction mechanisms in such a way that the desired outcomes would result. The Nervousnet project my team is working on, is aiming to produce a platform that would eventually allow to create context-dependent incentives and interactions such that desirable outcomes would occur by self-organization. Boosting a circular economy is one of the goals. However, it would require a much larger-scale approach to get there by 2030. It’s possible, but governments would urgently have to take action.

Citizen Score

by Dirk Helbing (ETH Zurich/TU Delft)

Chapter 3: Citizen Score 

of the forthcoming book THE GOLDEN AGE – How to Build a Better Digital Society

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If we extrapolate the growth of inequality in the world and consider the growth of debt over time, it is not so far-fetched to assume that, one day, the great majority of the wealth of the world would be in the hands of just a few people, or even just one person. Poverty is not just a problem of developing countries. We also have more than 45 million people living on food stamps in the USA.

Hence, one day, the exchange of goods based on buying and selling in a common, open market place would not work any longer. According to the OECD, the World Economic Forum, and the International Monetary Funds, the degree of inequality is strangling the economic development already now. You may wonder how people would buy goods and services in the future.

The following is a possible approach. Suppose all people had an electronic identity under which all sorts of data about people is being stored. Furthermore, assume that all people would be characterized by a number, which would determine its rank in society, based on criteria determined by those who govern the world. Let us call this number the Citizen Score. Than this score could be used to decide rights of access to a certain service or good. Assume that there are Mercedes cars for 20 million people in the world. Then, among all people interested in such a car, those people who have the highest ranks would get this car. The same thing would apply to anything else.

In such a system, money would not be needed anymore. Your reputation or name would by the good or service of your liking – if your rank is just high enough. You would just have to present the identity chip, a tiny little thing in your forehand, and that would be it! No money bills, no coins, no credit cards. You would just have to present your identity chip. This sounds quite comfortable – as long as you would be entitled to get the good or service you are up to. If you are not, then there would be no chance whatsoever to get access to this good or service. There would not be any money to buy it for you.

Currently, of course, many of us are enjoying a life that offers many of us more than we actually need. In our consumer societies, there is quite a bit of luxury, and the number of people who lack food or shelter seem to be relatively small in industrialized societies. However, this would not hold forever. If the Limit to Growth study, Global 2000, and other simulation studies about the world’s future in face of dwindling resources are right, we would soon run into all kinds of possible resource shortages. In fact, these models predict serious economic collapse for the very near future, and a drastic reduction of the world population from 2030 onwards.

In such a world, many of the resources that most people in industrialized societies are enjoying today would become a luxury, which would be restricted to a small societal elite. This could include the use of water and electricity, the availability of medicine, the availability of meat, the right to use a car, and many more things. In such a society, people would struggle to improve their Citizen Score to obtain slightly better living conditions. They would desperately try to fulfil the expectations of those who rule the world by determining the way the Citizen Score works.

Therefore, the Citizen Score is a governance system, not just a payment system. It would define a perfectly hierarchical system, in other words, a new kind of data-driven feudalism. If your Citizen Score is high enough, you will get “everything for free”. If it is low, you will have to be lucky to get certain products or services at all – even those that may be needed to survive. For example, if the number of available immunization shots in case of a global pandemic are small, your Citizen Score could easily decide over your life or death. The ethical issues of such a system have recently been discussed in the science fiction novel “iGod” by Willemijn Dicke.

The Citizen Score is also intended to decide about the jobs one could get and the countries one might visit. In other words, the Citizen Score system would influence all spheres of life. Particularly, when resources get short, the Citizen Score is a tool that can be used to reduce consumption by any amount needed or wanted. Such resource shortages could also be artificially introduced. For example, the world has recently faced surprising shortages of certain kinds of medicines, which were previously available in sufficient amounts. So, what kind of data would decide about your future fate?

Pretty much any kind of data. Your consumption habits. Your behaviour. Your interests and reading patterns. For example, if you read articles that are critical of government policies, this would generate minus points. If you would make negative comments on social media platforms, this would be even worse. So, any kind of public dissent would be punished. Your health conditions and whether you are doing something for your fitness would be considered as well. Furthermore, your eating habits might also be considered. Excess consumption of fat, sugar or meet might be negatively rated. Above all, it is not just your own behaviour that matters, but also the behaviour of your friends, family, neighbours or colleagues. So, if you meet people with a low Citizen Score, it would reduce your score as well.

If you think this dystopian nightmare could not happen to Western democracies, you must be warned. One of the revelations of Edward Snowden on mass surveillance concerned a similar system in Great Britain, called “Karma Police”. This system also considers the videos you watch on the Internet, and even the radio programs and songs you are listening to. Moreover, WikiLeaks’s recent Vault 7 revelations have shown that the CIA has been hacking basically all our electronic devices, from smartphones to smart TVs, and all services from Skype to WhatsApp.

It is also known that online newspapers report your reading habits to about 10 companies collecting data about you, and that all the links you have clicked in the past years are evaluated by more than 40 authorities in the United Kingdom, even if you deleted them. It would be highly naïve to assume that this data is just being used to determine criminals and terrorists. It is highly likely that the personal data collected about us – mostly without our knowledge – is being used to determine Citizen Scores, to produce digital doubles of use for the purpose of computer simulation, to target us for particular products and services, and to manipulate our attention, opinions, emotions, decisions and behaviours with personalized information (Big Nudging).

Besides mass surveillance, behavioural manipulation by Big Nudging, and Citizen Scores, there is a further tool that we need to get concerned about: predictive policing. What is currently being used to prevent or reduce terrorism, crime, and drug consumption, can be easily extended to minorities, intellectuals and dissidents. Suppose the government would plan to implement a new policy that people may not agree with. Then, it would be possible to determine likely opponents beforehand and to lock them away in order to avoid public resistance.

It is clear that all the measures taken together are perfect tools to run an autocratic or even totalitarian society. Once they exist, it is very likely that they would be misused sooner or later. Do we have sufficient awareness and safeguards against such misuse – against the creation of a data-driven dictatorship or technological totalitarism? Unfortunately, doubts are in place. This is the more concerning, as the technology to run a data-driven dictatorship are already in place – and it is hard to believe that such a dictatorship would be “benevolent”, as some people seem to suggest. It is time to wake up and build another kind of digital society! How could it look like?

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At the Edge

by Dirk Helbing (ETH Zurich/TU Delft)

Chapter 2 "At the Edge". 

of the forthcoming book THE GOLDEN AGE – How to Build a Better Digital Society


Pdf of this chapter can be downloaded here

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History books are full of examples about the disintegration of complex human societies. The highly developed Maya Civilization collapsed, and the Roman Empire gradually declined. Mesopotamia and Ancient Egypt were also known for thriving cultures, but this was a long time ago. Some declines of cultures had external origins, such as foreign invasions or environmental disasters. However, in many cases, societal transformations were caused by internal factors, namely a situation where the problem-solving approach of a society did not match its challenges anymore.

 

Two of the driving forces of societal transformation are population size and complexity. As population grows, a process of division of labour sets in. People will focus on offering products and services that they can more successfully produce than others, which in turn allows those to focus on their own talents. This process of specialization leads to increasing diversification and growing complexity. On the one hand, this tends to increase economic efficiency and prosperity, on the other hand it creates the challenge of coordination.

This diversification process has, in particular, caused a transition from primitive anarchic societies to feudalistic societies, which were ruled by nobility and kings in a top-down way. In a sense, they offered coordination, which created public benefits. The peak of centralized power was probably reached during the reign of Luis XIV. However, centralized autocratic control tends to restrain diversity, which obstructs innovation. Eventually, this makes autocratic systems dysfunctional, as they do not manage to keep up with environmental, cultural, demographic and technological change.

For example, when the steam engine was invented, this boosted productivity so much that no country could stay apart. The economic success of countries, which were exposed to military and economic competition, required entrepreneurial freedom. As the coordination by a king was limiting the economic development too much, the centralized control system collapsed and a decentralized approach emerged, driven by entrepreneurs.

But it did not end there. The early entrepreneurs did not care much about the environment and about workers either. As the industrialization progressed, entrepreneurs accumulated unprecedented wealth, while many workers lost their jobs and the basis of their existence. The inequality among people reached unprecedented levels, and many families struggled for their lives. As a consequence, the pitchforks were coming. The French revolution could not be stopped. It ended with a new societal framework based on liberty, equality, and solidarity (liberte, egalite, fraternite). In Austria and Germany, it took a world war until the emperors resigned.

Empirical data show that, throughout the world, transitions from autocratic to democratic regimes tend to occur when the gross national product per person, i.e. the economic development, crosses a certain critical threshold. Then, a system based on the division of power and broader participation results. Typically, this creates service societies, which are based on coordination and success principles such as administration, optimization, and globalization. Furthermore, legal regulations increase social and ecological standards such that growing economic efficiency does not produce too much unemployment. To cope with all the laws, new specialists are employed. Public schools and universities are established to deliver these specialists. In such a way, private, public, and environmental benefits become reasonably balanced, and prosperity spreads widely. By now, most people in developed countries enjoy a comfort of live that not even kings could have just a few centuries ago.

Of course, not everyone can live like a king. The Earth just does not have enough resources for this. And this is the problem we are running into – a problem that may actually decide about life and death. This problem is known since at least 1972, when Meadows and others published the book “The Limits to Growth”, a computer simulation study of exponential economic and population growth under conditions of limited resources. This study was commissioned by the Club of Rome and funded by the Volkswagen Foundation.

No matter what model parameters were chosen in the equations describing the world’s development, their computer simulations always ended in economic and population collapse. Their updated prediction is that economic collapse is just about to occur, while population collapse will start in 2030. By the end of this century, the world’s population would be largely diminished. In other words, if we ran our societies as before, billions of people would die. Was the world doomed?

Of course, the study was highly controversial. Many people did not want to hear this message, others started the environmental movement. Bill Clinton decided to commission another study, to get an independent point of view. This study, “Global 2000”, comprised more than 1000 pages. In essence, it came to the same conclusions: there would not be enough resources for everyone. As a consequence, a struggle for the world’s remaining resources set in. This triggered globalisation and wars to get access to those resources.

Many people did not bother to know why these wars were happening, why we had financial and economic crises, mass migration, and terrorism. However, if you think about it, it becomes clear that these problems have all one cause in common: our overuse of resources. Industrialized societies consume between 3.5 and 4.5 as much resources than what can be provided sustainably. This causes a scarcity of resources elsewhere and, hence, the conflicts and wars and mass migration and terrorism that we see throughout the world.

If we wanted to change this, we would have to create a sustainable economy. It seems, however, we would have to give up on high standards of living – a message that does not win elections. So, people were kept happy with the old Roman principle of “bread and circuses”, while big business volunteered to solve the world’s problems in the meantime. The neoliberal approach demanded not put any obstacles into the way. Only then, problems could be solved efficiently…

Since then, the economic credo was that any problem, which would become big enough, would create incentives for engineers to solve it. In this way, any existential threat would be fixed sooner or later. In fact, many new technologies and business fields have been created – from nuclear fusion to fission, from wind to solar power, from biofuel production to genetically modified food. Scientific and technological progress has been remarkable, but the world’s problems are still unsolved. The energy and resource consumption per person have further increased. Soil is degrading and water gets scarce in many areas of the world. Side effects of new technologies create additional problems.

We should ask ourselves this question: “What if something is fundamentally wrong with this approach?” Albert Einstein said: “We can’t solve problems by using the same kind of thinking that created them.” So, what is our current approach? Basically, whenever there is a problem, a committee will try to identify all promising solutions and pick the one that appears to be the best. Today, this solution will often be identified with the use of Big Data and Artificial Intelligence. The optimum solution will then be “rolled out” globally. In many cases, this will be done by big international corporations. “Economies of scale”, i.e. additional gains in efficiency when producing huge amounts of products or services, seem to speak for monopolies. Free trade agreements promote large-scale solutions, implemented by global corporations.

This all sounds plausible. So, what could possibly be wrong with implementing an optimal solution worldwide? The issue is that this creates a lack of diversity, which makes the world more vulnerable to unexpected developments. It might also happen that the wrong goal function is chosen. For example, most of the world maximized profits rather than sustainability.

We must further be aware that any technological solution has side effects. Big solutions tend to cause big problems sooner or later. This can easily become a global threat. Modern pesticides are an example for this. The degradation of soil and water systems by industrial-scale agriculture is another one. Nuclear waste is a third one. Rolling out a single solution worldwide and over-standardization is actually the reason why so many problems have become of global scale. To make our world more resilient, it is necessary to return to more pluralistic and locally adapted solutions.

However, global vulnerability and too-big-to-fail problems are not the only issues we must worry about. Another one is the low innovation rate of most big companies. Innovation is slowed down by various factors: First, big businesses may not be exposed to the same degree of competition. For example, they often use patents to keep competitors at a distance, or they lobby for standards that favour their own products. Second, big companies tend to buy small innovative companies. In many cases, this is done just to take competitors out of the market or to keep them under control. Third, as diversity is the motor of innovation – lack of diversity decelerates innovation. It is, therefore, no wonder that we do not have enough and the right kinds of innovations to fix the world’s problems.

My claim is that we have ended up in trouble because the world was shaped by the ideas of only a few people. This has created a tunnel view. When the Limit to Growth study concluded that it was not enough to change the parameters to avoid future collapse, the right conclusion would have been that the system of equations – and the socio-economic system described by it – had to be changed in order to avert collapse. Instead of innovating the system, we have innovated within the existing system, which could not succeed. And, so, the efforts of the past decades have not been able to solve our problems.

Recently, politics has realized that things did not work out. They have brought the Paris Climate agreement on the way, and they are pushing now for open data, open science, open access, and open innovation. But is this enough to save us, and does it come on time?

Probably not. According to the updated Limit to Growth predictions, the economic collapse is expected any time now. In fact, the Pentagon has prepared for mass civil unrest. The level of inequality is now comparable to the times before the French revolution. Even though I do not mind people being rich, there is a much more fundamental problem that needs to be fixed. Namely, as the OECD, the World Economic Forum (WEF) and the International Monetary Fund (IMF) have stressed, the level of inequality is now so large that it obstructs further economic development. There is just not enough buying power to allow sufficiently many small and medium-sized companies to thrive.

If we want new ideas and business models to succeed, we must allow old companies to die, poor people to become rich, and rich people to become poor. Our current system, however, has been designed in such a way that those who are on top will almost ever stay on top. It has been shown that the richest families 600 years ago are still among the richest families today. While this increases the stability of our society, it undermines its resilience, i.e. its ability to adapt to changes. As a consequence, we are likely to see a big collapse rather than many small failures and successes, as it is needed for the evolution and progress of our society.

The tunnel view of our society becomes evident when reviewing developments in the past decades: while the principle of economic efficiency was once restricted to the economy, “utilitarian thinking” has eventually spread to many other sectors that had different goal functions before: this concerns public goods (for example, electricity and water production), the health system (which increasingly optimizes who gets certain treatments and who does not), politics (creating a “market-conform democracy”), science (increasingly having to engage with business and to deliver marketable ideas), religion (Easter, Christmas as consumer events), and culture (considering the arts market, for example). This has basically undermined the pluralistic value system and the separation of public and private spheres that a flourishing society needs.

We have increasingly squeezed our beautiful, multi-faceted, pluralistic, multi-dimensional world into a one-dimensional system ruled by money. In such a “utilitarian” system, the value and power of a person or institution is determined only by its wealth. This approach is perfect to create a strictly hierarchical system, in which money makes the world go ‘round. However, this is not a system in which the best ideas win. Instead, the one who owns more money can determine what will happen. This creates a system of winners and losers – in fact, many losers and very few winners. In other word, the system does not work for everybody. It has worked for the developed world, as long as there was an abundance of resources. But now, resources are getting short…

Would we have reduced our consumption of non-renewable resources by 3 percent each year, we would have a sustainable economy by now. Unfortunately, we have not drawn the right conclusions from the Limits to Growth study in the 1970ies. And so, many people get to feel shortages now. During the last economic crisis, tens of millions have lost their jobs and are kept at the existential minimum since then. While one would think that this would reduce the consumption of resources, it turns out that the economy has not become more sustainable than in the 1970ies – on the contrary! The world’s consumption of resources is bigger than ever. The entire strategy to optimize the world has failed, and thus the system of today will break into pieces sooner or later.

However, rather than mobilising the power of ideas of everyone to find solutions that we need, people are being distracted from the state of the world – by public and social media, by entertainment, fake news and games. We are made to believe that it is just a matter of time until the economic situation will improve again and full employment will return. The truth is far from this. In many European countries, youth unemployment is already above 50 percent, and Artificial Intelligence is about to cause another wave of automation. Experts believe that many of today’s tasks will be performed by intelligent algorithms and machines in a couple of years.

Even though there are no exact numbers, our societies will probably have to reinvent half of the economy in just two or three decades, if we want to have jobs for all and a sustainable, low-carbon economy by 2030, as the United Nations demand. The sustainability goals of the UN Agenda 2030 would, of course, be easy to reach, if a billion people or more happened to die. Therefore, an optimisation approach implies serious moral dilemmas. Just imagine to live in a world in which it became acceptable to kill people to save the planet. Then, all sorts of terrible things would happen…

The real hard challenge is to reach sustainability without a population collapse. However, I personally believe we should not be desperate, as there is a solution, which I will explain in the later chapters of this book. So far, however, there is no evidence that the necessary decisions to implement this solution have been made. Instead, another kind of system is on the way, a dystopian eco-totalitarism. This brings us to a crossroads. If things ought to end well, our lives will have to change – we have to decide for a new path.

Why is it not possible to continue as before? This is not only because resources would get short, but also because of today’s money system. As discussed at the World Economic Forum in Davos, there are many signs that capitalism 1.0 – the capitalism we know it – will not work much longer. Inequality and unemployment have reached a critical level, which makes societies break apart.

It is also concerning that economic growth has been poor for almost a decade now. This sounds like good news to those who demand de-growth, but it is actually not, because today’s capitalism needs growth to pay back loans, on which most investments are based, plus the interest rates. As interest rates for debts are higher than interest rates for savings, the overall debt level in the world tends to increase. This is certainly true for public debts, which kept increasing for decades. And so it is just a matter of time until some countries cannot carry the burden of their debts anymore. In order to delay their bankruptcy, interest rates have been pushed below zero, which however threatens the savings of ordinary people.

What is worse: zero and negative interest rates blind the “eye of capitalism”. Traditionally, the competition for higher turnouts (dividends, interest rates) has driven the successful allocation of capital. However, if loans are cheap or taking loans becomes a means to make money, capital will increasingly misallocated. Low or negative interest rates are also an existential threat for life insurances and pension funds. However, if the central banks raise the interest rates again, as they have indicated, then it is likely that many home owners, banks, companies and even countries will go bankrupt. Unfortunately, governments will not anymore be able to absorb the problem by increasing their debts. This time, the financial system will collapse, if we do not push the reset button.

By that time, however, most assets will be in the hands of just a few people. As I mentioned before, 8 people currently own as much as the poorest 50 percent of this planet. If one considers that the Federal Reserve (FED) is privately owned and the European Central Bank is also private in part (as are most other central banks around the world), it becomes clear that most of the world is owned by just a few families. The Quantitative Easing programs, which has created trillions of new dollars and Euros to keep the world economy from collapsing, has largely accelerated this concentration of wealth. So, what will happen next?

Today, the money system is designed in such a way that the central banks and their owners earn money, when governments or banks need loans. A similar thing applies, when companies need loans from banks. In fact, the largest amount of money is created by private banks, but these are owned by pretty much the same families as well. In other words, the worse our economies are doing and the more debts they are making, the more is the world owned by just a few people – who don’t have to do anything but create this money from nothing. This implies some crucial question: “Is this reasonable, is it fair, or is it at least useful? If our countries are owned by a few super-rich individuals, are we still free? What are their plans with this world? And what are the alternatives?”

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The dream to control the world and why it is failing

Global Reset: Upgrading Society in the Digital Age

By Dirk Helbing

Foreword

 

We are free. We are free to reinvent the world as we like. Most people have not realized it yet. However, even though the US military budget exceeds that of all other countries in the world together, the era of American supremacy has ended. Now that the USA needs to focus on its own domestic affairs, and we are left free to make our own choices. The people of the world can finally figure out their own ways of living – now that they have to. It is no longer necessary to wait until the USA and its strategic think tanks tell the rest of the world what to do.

This is actually a historic opportunity – for us, for the world, and for America, too. The America-dominated era had industrialized the world, and created previously unseen levels of luxury. It also created a financial industry to make it happen, and a digital infrastructure to watch and control the world. Yet, it has failed to solve the existential challenges of our planet: climate change, environmental destruction, resource depletion. This lack of sustainability is causing wars, mass migration, and a future heading for disaster. A new approach – one that brings people and nature in balance – is urgently needed.

It turns out that the reinvention of the world has already started. The digital revolution provides us the tools for a new historical age. Within the space of a few years, we have seen many new technologies, ranging from cloud computing to Big Data, from Artificial Intelligence (AI) to cognitive computing to robotics, from the Internet of Things to Blockchain technology, from Virtual Reality to 3D printing. Now is the perfect storm. All products, services, and business models can be digitally reinvented – and it is happening right now.

The world’s attention has turned to Google’s self-driving cars, Tesla’s electrical cars, and Uber’s transport as a service. While Germany, once famous for its car industry, has plagued by the diesel emission scandals. Suddenly, new players (such as Uber and Tesla) and outsiders (such as Google when it comes to cars) are invading well-established sectors of economy. And this is just the beginning...

The company AirBnb, even though it does not own any hotels, now sells the most overnight stays in the world. Bitcoin has reinvented money, and banks have started to worry about their future. 3D printers can now build entire houses in a single day for just 10,000 Dollars, and  a 57-storey skyscraper has been built in just 3 weeks. This is a revolution!

The digital revolution is also behind a new wave of automation – and it is bigger than any such wave before. Artificial intelligence systems can now read text, talk, and translate languages in real-time. They can recognize patterns and contents of pictures. They can learn anything that works according to rules or is repetitive. AI systems can therefore potentially take over anything from to administration of medical diagnoses, to jurisdiction. AI technology threatens not only low-skilled labour, but also white-collar jobs.

It becomes increasingly clear that no sector of economy will stay the same, and all institutions of society will change – without exception and within a very short time. For Europe, this is a particular concern, because the leading hardware, software, and data companies (with very few exceptions) are located in other continents. Even though “industry 4.0” seems to be successful in creating automated solutions for industrial production – do you know the names of the leading companies?.

This is probably a side effect of globalization as we know it. We thought that we do not have to excel in every single technology, and that every country would specialise in producing what it is best in, and buy the other technologies elsewhere. However, in the case of digital technologies, this was obviously a mistake. Now, we depend on hardware, software, and data we can’t trust anymore. As we will later see, the sovereignty of people, companies and countries is seriously under threat.

To date, it appears that Europe lacks a coherent digital strategy. We have a digital single market, but what are the products and services? Even if Europe would now manage to mobilize the capital, the patents, the technologies and labour force to generate the same growth rate as the Silicon Valley – this backlog would grow further and increasingly faster, because of the exponentially accelerating nature of the digital sector. This in principle would apply, if we continue the same digitization strategy.

However, there are alternatives. One approach that promises to produce faster than exponential growth is combinatorial innovation. This would be based on openness, and require sufficient interoperability based on a reciprocity principle in order not to be exploited. Such an approach would produce a participatory information and innovation ecosystem, in which everyone could benefit from.

The possibilities of the digital realm are unlimited, because the digital world is non-material in nature. This is a game-changer. If we understand and use this well, we can live in a world of sustainability, prosperity and peace. We could be world leaders in the creation of this new age – a new historical era! So, what are we waiting for?

FuturICT 2.0: Participatory Information and Communication Technologies (ICT) for a Better Future

The world is faced with existential threats. The financial crisis of 2007-8 and its consequences still endanger the stability of Europe and the world economy. Resource shortages are imminent. Climate change may wipe out one sixth of all species. Terror, wars, and mass migration create increasing challenges. All of this results from our lack of sustainability. To manage scarce resources and endangered people, powerful global information systems have been built, based on Big Data and Artificial Intelligence. But at the same time, cybercrime and other misuse of Information and Communication Technologies are exploding. The before mentioned problems are still largely unsolved, and automation is expected to claim a large amount of jobs within just a few years. The digital transformation of our society progresses at full steam.

This situation inspired the FuturICT initiative back in 2010. The initiative called for a major, flagship-size effort to address these challenges by unleashing the full potential of Information and Communication Technologies. At that time, it became clear that emerging fields such as Data Science, Computational Social Science and Global Systems Science would offer promising new approaches to the above problems. However, the solutions at that time were still vague. This has changed, and that is why a FuturICT 2.0 project is timely. As Albert Einstein stressed, problems cannot be solved within the prevailing paradigm that created them. In fact, the World Economic Forum has identified 10 key global challenges, which cannot be addressed with conventional means including today's Big Data approaches, which imply problems such as over-fitting and mistaking correlations for causality. Therefore, disruptive innovations are needed.

FuturICT 2.0 offers such disruptive innovations, which addresses the root of the above problems: lack of sustainability. The combination of the Internet of Things with Blockchain Technology and Complexity Science creates an entirely new opportunity to address our challenges. We discuss this under the label "finance 4.0", which stands for a multi-dimensional incentive system to manage complex systems and promote a circular and sharing economy that would allow to create a high quality of life for more people with less resources. The finance 4.0 system is liberal, democratic, pluralistic, participatory, social and ecological. It makes use of the unlimited, immaterial nature of information, boosts combinatorial innovation and creates opportunities for all, by fostering an open and participatory information, innovation, production and service ecosystem. It realizes that our current success principles of globalization, optimization, regulation and administration have served us well, but have also reached their limits. For this reason, FuturICT 2.0 explores the potentials of complementary success principles such as co-creation, co-evolution, collective intelligence, self-organization, and self-regulation. Information and communication systems, which empower everyone to take better decisions, to be more creative and innovative, and to coordinate and cooperate with others, would lead to better business models, products and services, smarter cities and smarter societies. In other words, the combination of smart technologies with smart citizens will be the success formula for the future. Our work on governance 4.0 and on the open and participatory Nervousnet platform to create data for all by involving citizens are heading exactly in this direction.

The subjects that FuturICT 2.0 addresses are critical and urgent. The project will bring together and enlarge the communities of social (qualitative and quantitative), computational and complexity scientists, foster inter-, multi-, and trans-disciplinary collaboration and exchange - and pave the way for a scientific and organizational framework for the emerging digital economy and society. On an organizational level, we will apply the instrument of jointly-supervised ICTSS projects in addition to the traditional workshops, exchanges, and meetings. On a technological level, we will bring together Big Data, Artificial Intelligence, Agent-based Simulation, Internet of Things, Blockchain Technology, and Complexity Science, and assess the implications from a social science and systemic perspective. On a methodological level, we will combine mathematical modeling with massive computer simulations, data science, and large-scale experimental approaches, including laboratory and web experiments, crowd sourcing and citizen science, virtual and augmented reality, and multi-player online games. They are important building blocks of a new global ICT system and future society. Addressing these topics together will finally allow the global ICT system to adapt to social and cultural needs, react to unforeseen events and make our society more resilient. By putting together key partners with a strong involvement of industry and junior scientists from various complementary fields, we expect to make significant progress towards the ultimate goal of the FuturICT 2.0 initiative: to find a path towards understanding and managing complex, global, socially interactive systems, with a focus on sustainability, resilience, cooperation, and value creation. 

Links:

FUTURICT 2.0 
www.futurict2.eu