A Reflection on Digital Economics

I am a political scientist by training. I’ve always thought that term to be a bit of an oxymoron (my degrees are actually in “government”). Like all social science, the idea that you can easily quantify and explain what is fundamentally human behavior is quixotic. Indeed, that’s why I have always found the field so fascinating and at the same time infuriating. It is the exploration of the unknowable human mind that has been the common thread through my lifelong intellectual journey.

My senior thesis as an undergraduate was about how the German government engaged in an attempt to reconstruct the cultural paradigms of its neighbors across the Iron Curtain, leading to the fall of the Berlin Wall in 1989. In the 1990s I went on to examine the resurgence of nationalism in spite of the lessons of a century of devastation caused by this popular delusion. My latest work on technology is also rooted in an understanding of human nature. Learn at Your Own Risk, which comes out this week, is an exploration of how teaching can be rethought under a new digital paradigm and Discovering Digital Humanity (coming in 2021) is an exploration of how our paradigms of innovation and storytelling are potentially impacted by technological shifts. I like to call it a “relationship manual” for our relationship with technology.

The one thread through all of this is my attempt to understand how groups of humans respond to challenges, whether they are created by the systems they themselves set up or by much larger forces such as industrial and technological change or the global environmental challenges that have emerged as a result of a combination of those two factors. This is echoed in Kim Stanley Robinson’s book The Ministry for the Future, which I am reading as part of Bryan Alexander’s book club.

Like Robinson, I have always played with the notion of systems as mental constructs. They are an outgrowth of the human need to organize the world into understandable patterns. I have always questioned the reality of these patterns, approaching them from a fundamentally constructivist perspective. For instance, in grad school I studied under one of the leading proponents of the Realist theory of international relations, which holds that power and balances of power are what dictate international behavior. For my semester paper for him I argued that Realism did lead to World War I but only because all of the major players believed that was how the world worked, and therefore reacted accordingly to their perceptions in the shifts of the power balances of Europe in 1914 (he liked it).

Robinson likes pointing out that our acceptance of modern economics and finance is in large part responsible for our slide into long-term climate chaos. He is right. Classical economics and its modern derivatives (as well as its revolutionary challenges in Communism) are all products of Industrial Age thinking. This kind of thinking brings with it the fundamental notion of the nation and world as factories and humans as being fundamentally in service to the shop floor. This thinking probably reached its apogee during World War II as countries such as the US and USSR became massive production floors for converting resources into tanks, planes, ships, fuel, food, and guns. The technology of that era required this kind of thinking. It was a massive effort to produce the fleets and armies necessary to defeat Imperial Japan and Nazi Germany and those powers lost the war in large part because they did not have the resources to keep up with “factories” of the Allies.

The mental paradigm generated by Industrial Age technological constructs persisted into the Cold War and beyond. It has made a resurgence lately in Trumpism, Hindu nationalism, Brexit, and other nationalist morbidities. What the leaders of these “new nationalist” movements have failed to recognize is that the technological world has shifted out from underneath them. The shop floor has spread across the globe and been miniaturized. Increasingly, the resources necessary for what used to require massive factories and technological infrastructure are becoming lightweight and portable. Tasks can be stripped away from tools. Instead of “we need to build a railroad” the question becomes “we need to get from Houston to Austin.” Digital Age technological affordances allow us to strip down our thinking to its essential roots.

We have systemically failed to realize this and instead continue to operate on the same basis as the Soviets did in meeting the German onslaught in 1941: bigger and more massive will win the war. He who has the most resources wins. The latter part of the 20th Century increasingly put this to the lie. When Vietnam showed it could defeat the greatest power of the century (albeit at great cost) it should have been a wakeup call. When the Soviet Bloc fell, not to NATO tanks but to “people power,” that should have been a wakeup call. When national power was measured by the size of its factory floor and its ability to harness (and control) the resources necessary to power that shop floor, the economics of the Industrial Age makes sense, regardless of whether you frame it in capitalist or socialist terms. However, as the end of the Cold War and beyond proved, economic notions based on scale and resources have become increasingly irrelevant in an age where size and scale no longer matter.

The Digital Age no longer requires economies of scale to have an outsized impact on the world. The problem is that we still don’t seem to understand its impact on the economics or the politics of our time. You no longer need a massive factory to build T-34s (or T-90s) when now you can build a drone with off-the-shelf interchangeable parts that can take out a tank (or even an aircraft carrier) remotely. It says something when ISIS, a semi-nationalist organization with almost no resource base, was in the process of building jet drones during its brief existence on the world stage. Our economic theory, however, clings to the notion that you still need Industrial Age economies of scale to meet the tasks of the 21st Century. From teaching to transportation to defense to all manner of production, this is no longer the case in more and more areas of our societies.

Our paradigms just haven’t shifted accordingly. Economics is one such paradigm and it’s time for economists (and all manner of social scientists) to recognize that their paradigms are as constructed as all of the rest of ours are. Education, production, climate change, and democracy are all human challenges. Human challenges are met by shifting systems of thinking, not means of production or access to resources. The first step in constructing a more sustainable, human-centered future is recognizing that these systems increasingly reside in our collective minds, not in the real world. Overcoming our collective mental gears is where we will find the means to address all of these challenges.

Technology should allow us to see the world of the possible, not chain us to the shop floor. Economics should reflect this and become a “science” of the possible and not a science fundamentally based on scarcity. Scarcity leads to rationing and inequality. Some things should never be rationed. Human potential is at the top of that list. Human potential cannot be achieved in bankrupt societies on a broken planet. Shifting that paradigm should be at the top of every social scientist’s agenda.