Business, Finance and Technology

The impact of digitization on modern society

Winners and Losers in Technological Development

Over thousands of years, humanity has prospered from with a series of breakthrough technologies, which have indeed enriched our lives in many innovative ways. For instance, we are now able to store hundreds of years of knowledge in one tiny universal serial bus, and through quantum computing we can experience a world in which the time it takes for a 300-digit integer to be decomposed by an existing supercomputer may be reduced to about 30 minutes. In the near future, the cloning of human beings may lead to the eradication of HIV/AIDS, while Albert Einstein’s Theory of (Special) Relativity could even allow us to experience time travel someday.

On the other hand, fears exist due to the recent speed of technological advancement. For instance, watching AlphaGo based on artificial intelligence winning the Go match against Sedol Lee, the 18-time world champion, many felt not just fascination but also fear that artificial intelligence may have already crossed a certain line. Another example is Sophia, an artificial intelligence robot, who was granted citizenship of Saudi Arabia for the first time and who was invited as a speaker at the Future Investment Initiative conference in 2017, where she demonstrated a sense of humour akin to that of a human being. This unfortunately reminded us of the uncanny valley hypothesis.

Whichever of the above two viewpoints you may support, the bigger issue is ascertaining the degree to which technological innovation has actually improved the world and forecasting whether such innovation in the future will ensure a happier and fairer world.

One might claim that technological advances have particularly improved the lives of the poor. For instance, it has enabled poor rural children to obtain vast swathes of knowledge by paying a small fee for Internet use. It is therefore the case that through the benefits of such technological innovation, the poor have been able to increase their productivity in a short period of time and have also been able to plan and live a better life.

The opposite discourse is that technology is making the world unequal. It claims that technology’s benefits tend to be reserved for those with the most financial means. It is also true that many people have lost their jobs and have been forced to live on the streets after their positions were taken over by machines, while some who can make good use of technology, such as the founders of Facebook, Amazon, and Google, have quickly become the world’s biggest conglomerates with immeasurable wealth. Silicon Valley is one of the most technologically advanced and innovative places in the world but also one of the most unequal regions in the US.

Given its ambivalence, technological progress has helped humanity prosper, and many have benefited from its advancements, while at the same time it has contributed to making societies unequal and unjust. In effect, an innovative world driven by intelligent information technology is expected to be associated with six megatrends: People and the Internet; Computing, Communications and Storage Everywhere; the Internet of Things; Artificial Intelligence and Big Data; the Sharing Economy and Distributed Trust; and the Digitisation of Matter. Such a technological revolution will accelerate the convergence between technology and society by interconnecting people, objects and information so that the ripple effect on society as a whole will be much greater than that of past technology. According to a survey conducted by the World Economic Forum, the tipping point for a significant number of evolutionary technological innovations is expected to come in about ten years.

However, no one knows when such convergence technologies will appear and how influential their social impact will be. The uncertainties that surround us will probably expand, which prompts greater social anxiety and confusion. For this reason, we cannot neglect the importance of the role of the state. In the stage of convergence technology-driven competition, the state should play an even more active role, rather than leaving it to market where accountability is limited. Although the pace of convergence of new technologies that are naturally generated through market dynamics cannot be controlled, at least the state can play a captain’s role by designing deregulation policies to ensure that convergence technologies are better suited to what the nation wants economically and socially. On the contrary, the state should secure some time to improve its societal adaptive capacity to minimise social confusion and conflict when accommodating such rapidly emerging innovative technologies. This can be achieved mainly by imposing and enforcing timely and appropriate regulations.

In the forthcoming Industrial Revolution, the winner vs losers in industrial competition and even the rise vs the fall of the nation will be determined much quicker than in the past, and this will depend on a state’s capacity to quickly adapt to new dynamic environments. In other words, countries may be divided into those that have survived and those that have been left behind. Besides, the era of convergence technologies may lead countries to reform that shares the newly shaped socio-political (or cultural) systems or economic fundamentals.

Today, with so much unpredictability surrounding us, would it be worthwhile to rethink the words of Thomas Hobbes, who used Leviathan (a sea monster referenced in the Hebrew Bible) as a metaphor to describe the Raison d'être of State? Here, I believe that the state is crucial, especially in this age of exponentiality.

‘Government is necessary, not because man is naturally bad... but because man is by nature more individualistic than social.’—Thomas Hobbes, An English political philosopher (1588−1679).

Seung-Jin Baek is a South Korean Economist, working at various United Nations Economic and Social Commissions. His research focus lies at the nexus of multidimensional inequality and sustainable transformation and is broadly applicable, most notably to the fields of development policy and political economy.

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