We are faced with the growing complexity and diversity of an increasingly interdependent world. But Big Data and Artificial Intelligence, while potentially powerful and useful, are not a panacea for our problems. The idea of super-governments or multi-national companies running the world like a perfect clockwork is doomed to fail. Therefore, we must learn to turn complexity and diversity into our advantage. This requires a distributed governance approach. Now, the „Internet of Things“ enables self-organizing systems, which can create socio-economic order and many benefits from the bottom-up. While solving the problem of over-regulation, this can harness diversity and foster innovation, collective intelligence, societal resilience, and individual happiness.
Having and using more data is not always better (e.g. due to the problem of “over-fitting”, “spurious correlations”, or classification errors, which can make conclusions meaningless or wrong).2
Even if individual decisions can be correctly predicted in more than 95% of all cases, this does not mean that the macro-level socio-economic outcome would be predicted well.3
In complex dynamical systems with many interacting components, even the perfect knowledge of all individual component properties does not necessarily allow one to predict what happens if components interact.4 In fact, interactions may cause new, “emergent” system properties.
The most important issue is whether a system is stable or unstable. In case of stability, variations in individual behavior do not make a significant difference, i.e. we don’t need to know what the individuals do. In contrast, in case of instability the system is often not predictable or controllable due to amplification and cascading effects.5
In complex socio-economic systems, surprises will sooner or later happen. Therefore, our economy and society should be organized in a way that can flexibly respond to disruptions. Socio-economic systems should be able to resist shocks and recover from them quickly and well. This is best ensured by a modular, “resilient” system design.6
In complex dynamical systems, which vary a lot, are hard to predict and cannot be optimized in real-time, distributed control can outperform top-down control attempts by flexibly adapting to local conditions and needs.
While distributed control may be emulated by centralized control, a centralized approach might fail to identify the variables that matter.7 Depending on the problem, centralized control is also considerably more expensive, and it may be less efficient and effective.8
Filtering out information that matters is a great challenge. Explanatory models that are combined with little, but suitable kinds of data are best to inform decision-makers. Such models also indicate what kind of data is needed.9
Diversity and complexity are not our problem. They come along with innovation, socio-economic differentiation and cultural evolution. However, we have to learn how to use diversity and complexity to our advantage. This requires us to understand the hidden forces behind socio-economic change as well as to use self-organization and digital assistants to support the coordination of actors with diverse interests and goals. These digital assistants could harness the potentials of artificial and collective intelligence.
Diversity is also crucial for distributed collective intelligence, which is better suited to respond to the combinatorial complexity of our world than an artificial superintelligent system.10
11.1 Cybernetic Society Versus Synergetic Society: Why Top-Down Control Will Fail
We have seen that, after the automation of production and the invention of self-driving cars, the automation of society is next. However, there are two kinds of automation: centralized top-down control and bottom-up self-organization based on distributed control. The first option, corresponding to a technocratic solution, might be called a cybernetic society, while the second one might be called a synergetic society, as it builds on the local coordination of autonomous processes and on catalyzing mutual benefits.
New kinds of information systems will certainly allow us to manage the world more successfully, but we must be careful about the approach we take. Would a cybernetic society work, or would a synergetic society be better? It turns out that, for a number of reasons, it would be impossible for a supercomputer to optimize the world in real-time. The attempt to create a data-driven “crystal ball” to predict the future and a “magic wand” to impose the desired changes would sooner or later fail. While digital tools, which collect a large fraction of the world’s data, can certainly be powerful, they would not work reliably.
Therefore, a centrally controlled cybernetic society would sometimes make mistakes. But as a powerful information tool might have a large-scale systemic influence, a single mistake could be highly destructive. For example, imagine powerful digital tools to get in the hands of a misguided group of individuals or a criminal organization. This could easily create a despotic regime. Therefore, the more powerful an information systems is, the greater are the safety measures needed to protect citizens and companies from potential harm.11 Today, however, no information system seems to be a hundred percent secure. Most companies and public institutions have been hacked already.
Surprisingly, not even a “benevolent dictator” or “wise king” with the very best intentions and all the data and technology in the world could make optimal decisions. First, although computational power grows exponentially, the data volume grows even faster. Therefore, no single person, company or institution will ever be able to optimize our rapidly changing world in real-time. Supercomputers cannot even perfectly optimize the traffic lights in a big city. This is because the computational effort required becomes insurmountable when the traffic system is large.
Second, our ability to optimize systems in real-time from the top-down even decreases, as the complexity of man-made systems grows faster than the data volume. As a result, our relative lack of computational power will increase rather than decrease over time. Despite this, business leaders and policymakers have so far focused their efforts on attempting to control complexity from the top-down through many regulations, laws and enforcement institutions. While this approach has served us reasonably well for a long time, it is eventually coming to its limits. It has led to over-regulation and high debt, while many ills of the world are still not cured. In fact, we seem to have more problems than ever. To solve them, we don’t need more power, but more wisdom, and more citizen participation.
11.2 Omnibenevolence Doesn’t Exist—It’s an Illusion, Despotism
For all the above reasons, I question the usefulness of mass surveillance with the aim to enable a top-down controlled “cybernetic society” ruled by a “benevolent dictator” or “wise king”. Such a technocratic approach is dangerous and totalitarian in nature. We must also realize that it is impossible to be omnibenevolent,12 i.e. to make decisions that benefit everyone. This is because people pursue different goals. Such pluralism, however, is essential for the survival and success of our species, i.e. for our ability to master challenges of various kinds.
The Big Data dream—which promises almost infinite knowledge and power to governments and a select elite of companies—turns out to be a dangerous illusion. Big Data is far from being a universal panacea for all the world’s ills. Big Data has not even solved Silicon Valley’s problems, and the rest of the world is much larger, more diverse, and more complex. Therefore, it is time to wake up from this dream before it becomes a nightmare and stop clinging to the flawed logic of our current data-driven approach to Big Data, which is based on mass surveillance. The terrible terror attacks in Boston and Paris, for example, have shown that mass surveillance can’t guarantee safety. The same applies to security. Organized crime using digital backdoors (such as “zero day exploits”) causes an exponential increase of cybercrime, which currently produces losses of $3 trillion per year.13
The attempt to control individuals may have even caused an increasing loss of control. Indeed, studies show that extremism and crime often result from a failure to integrate communities of minorities or migrants into society (i.e. from socio-economic marginalization and a failure to create a culture of mutual respect).14 Control is certainly not a good substitute for trust.15 Whoever wields power must carefully avoid violating widely accepted moral, cultural or legal values, as this can seriously undermine trust, legitimacy, and power. In the long run, this can substantially weaken the credibility of companies and governments and their core interests. It might even produce a legitimacy crisis and loss of control.
I have further shown that, in a multi-cultural world, the use of coercive means tends to be counter-productive. Therefore, power based on force tends to be unstable in the long run. Constructive power, in contrast, requires citizen consent and a trustful, symbiotic relationship, in which all parties, including citizens, benefit. Thus, we need institutions that can help us to establish and maintain a proper balance between various interests and to foster the self-organization of our society and economy.
11.3 Time for a New Approach
Where will the digital revolution take us? (see Appendix 11.1) Due to many instances of misuse, public trust in conventional Big Data uses has been undermined. But the digital revolution does not necessarily mean that we must forfeit our human rights, decision-making autonomy, dignity, and democracy. There are better ways to create social order and socio-economic well-being than by amassing vast quantities of sensitive personal data and establishing surveillance of all kinds—from speed control to Internet control and, one day, perhaps even mind control.16
To understand the complexity of our world and turn it into our advantage we need collective intelligence, which requires diversity rather than conformity.17 In order to manage our future in an increasingly complex society, it is important to encourage and consider multiple perspectives. A symbiotic relationship with digitally literate citizens, customers and users is key to success. Our society can only live up to its capacity, if it makes best use of the skills, ideas and resources of its citizens. It will be of strategic importance to offer participatory social, economic, and political opportunities. In future, those societies will be leading, which manage to create a win-win-win situation between businesses, citizens, and state.
Generally, to reap the benefits of the digital revolution, I recommend engaging more in distributed storage, processing, and control. In complex systems, a decentralized kind of organization can be superior to a centralized system.18 This is surprising, but a centralized approach often ignores local knowledge (since it is usually not possible to centrally process all local information). Bottlenecks such as insufficient processing power and data transmission rates are limiting factors, also in future. The use of local knowledge, in contrast, allows decentralized approaches to thrive.
The local interactions between the many components of a complex dynamical system can produce emergent structures, properties, or functionalities based on self-organization. However, as traffic jams, crowd disasters, financial crises and “tragedies of the commons” show, self-organization does not always create desirable outcomes. Nevertheless, these phenomena are now reasonably well understood and can be replicated using mathematical models and computer simulations. Those simulations tell us that the negative outcomes of self-organization can often be avoided by changing the interaction rules, i.e. the mechanisms by which the components of the system interact. In some cases such as traffic flows or the financial system, simply altering the system’s parameters (such as the vehicle density or interest rate) can avoid or reduce undesirable consequences. In fact, while the “invisible hand” (which may be seen as another term for “self-organization”) often fails if network effects or externalities matter,19 we can now overcome such failure. 300 years after the concept of the “invisible hand” was invented, we can let it work for us! The sensor networks behind the “Internet of Things” enables us to realize Adam Smith’s brilliant vision of self-organizing systems for the first time in human history. While this is an unprecedented opportunity to make our increasingly complex world manageable again, we need to fundamentally change the way we think about global governance.
The emergence of the “Internet of Things” means that we will soon be able to measure almost anything in real time, using networks of sensors that can communicate with each other in a wireless way. Interestingly, to support self-organization, it is not necessary to store the measured data for long. Therefore, the collection of as much data as possible, which is at the core of today’s Big-Data paradigm, can be replaced by a superior Smart Data approach, where tailored measurements are made to produce temporary data for specific uses. Such real-time measurements would be sufficient to provide the information needed for the self-organized structures, properties and functions which we may want to produce. Moreover, as I have underlined before, it is anyway impossible to process all of the data currently available. Storing more data does not necessarily mean better results—it’s just more expensive. So, why should we retain more data in the first place?
Thus, to fully unleash the power of information, we will need to go beyond the brute-force machine learning approach of contemporary Big Data analytics. We must learn to combine knowledge from computer science, complexity science and the social sciences to get the measurements and interactions right. So far, we have rarely combined the knowledge and skills from these disparate disciplines effectively. Silicon Valley is probably too technology-driven, while the social sciences tend to underutilize technology. Both don’t pay enough attention to complexity science, but it’s value for solving real-world problems will soon be obvious. The golden age of complexity science is near.
11.4 How to Make the “Invisible Hand” Work
Interactions between the components of a complex dynamical system produce “externalities”, i.e. external effects such as reputation, happiness, or wealth, emissions, waste, or noise, or other consequences that affect the environment or others in a positive or negative way. These externalities can be altered by introducing or modifying feedback loops in the system, for example, by introducing value exchange. Such feedbacks allow the system components to adapt to the local conditions in ways that produce or restore the desired functionality. In economic systems, feedback mechanisms are often produced by financial costs or rewards, while in social systems it is common to use incentives or sanctions. However, certain kinds of information exchange and coordination mechanisms can be even more efficient (“altruistic signaling”, for instance). It is also important to consider that the use of a single feedback mechanism (such as money) is usually too restricted to let a complex socio-economic system self-organize successfully, and therefore we need a multi-dimensional incentive and value exchange system, as I have proposed before.
To allow for real-time measurements of our world, my collaborators and I have started to work on a distributed Digital Nervous System as a participatory citizen web. With this enabling technology, called Nervousnet, one could measure externalities and feed them back to the decision-making entities20 in such a way that efficient and desirable outcomes are produced. For example, one could build assistant systems to dissolve traffic jams or produce fluent traffic flows in cities. One could also build an assistant system to stabilize global supply chains and thereby reduce the “bullwhip effect” that would otherwise produce booms and recessions. Furthermore, one could build digital assistants to support cooperation and avoid conflict. These “Social Technologies” would help one to ensure favorable outcomes of interactions for all sides.
In fact, interactions between two entities (be it people, companies, or institutions) can basically have four possible outcomes:
- 1.
If an interaction would be unfavorable for both entities, as it is often the case in conflicts and wars, the interaction should be avoided.
- 2.
If the interaction would be favorable for one side, but bad for the other and negative overall, the interaction should also be avoided. To ensure this, the second entity should be protected from exploitation by the first one.
- 3.
If the interaction would be favorable for one side and bad for the other, but positive overall, it can be turned into a win-win situation by means of a value transfer.
- 4.
Finally, if the interaction would be beneficial for both sides, one should engage in it, but one might still decide to share the overall benefits in a fairer way by means of a value exchange.
Digital assistants could support us in all these situations. They could help us to create situational awareness, including the potential side effects and risks implied by certain decisions and (inter)actions. Without such assistants, we would certainly overlook many opportunities for beneficial interactions we could actually engage in. Digital assistants could also help us to organize protection against exploitation, which would otherwise deteriorate the overall state of the system. And finally, Social Technologies could support us with multi-dimensional value exchange, as I discussed it before. Social Technologies can assist us particularly in avoiding the systemic instabilities which are the main source of our unsolved problems.
11.5 The Secrets of Self-Organization
At times, self-organization seems to be almost magic. So, how does it work? Surprisingly, it is often based on simple local interactions which enable mutual adaptation. Social norms, for example, are akin to the physical forces governing the universe. They determine our everyday lives based on compliance mechanisms such as sanctions and rewards. In contrast to physics, however, the socio-economic forces governing the structure, dynamics, and functions of our society may change due to innovation.
Besides negative compliance mechanisms such as peer punishment, money is an important reward mechanism in our society, but not the only one. Indeed, social reward mechanisms can be even more effective than money. The weakness of today’s financial system is that money is de facto one-dimensional. In future, we will need a more diverse, multi-dimensional incentive and exchange system to manage complex dynamical systems. These can now be created, because the virtual world offers novel ways to create incentive mechanisms. Rating and reputation systems are good examples.
Finally, self-organization requires suitable sets of rules to work well. But how to foster self-organization and the emergence of societally beneficial interaction rules? Over time, top-down regulation has produced over-regulation and inequality.21 A self-organization approach, in contrast, may overcome such problems (at least to some extent), as it aims at maximizing opportunities rather than hampering them through standardization and unsatisfactory compromises (see Appendix 11.2). Proper self-rule achieves the goals set while fostering socio-economic diversity, innovation, happiness and the resilience of the overall system. Local experimentation supports socio-economic and cultural evolution. However, favorable self-organization requires an active endeavor to find and implement suitable sets of rules. This is not trivial and its importance should not be underestimated.
11.6 Cultures as Collections of Invisible Success Principles
In the past, humans haven’t been very good at identifying suitable interaction rules, which has impeded self-organized and decentralized governance approaches. Fortunately, recently developed tools can help us to identify suitable institutional settings and interaction rules (“rules of the game”) that can produce favorable self-organization. For example, one can perform experiments more easily than ever before. In fact, we can test out different permutations and combinations of various new rules in advance with the aid of computer simulations, lab or web experiments, interactive multi-player online games, or Virtual Worlds.22 We can also try to identify the hidden mechanisms on which the cultures of the world are based. These cultural mechanisms, in fact, are highly important for the success of well-functioning societies and their resilience to disruptions. Surprisingly, most of these success principles are not explicitly known, but are “internalized” subconsciously while we grow up. This situation may be compared with the time when we didn’t have alphabets to express our knowledge in writing. However, if we managed to explicate and formalize the success principles of the world’s cultures, we could combine them in entirely new ways. The project which I propose to achieve this might be called “Culturepedia” or “Cultural Genome Project”.
Illustration of innovation in a framework of self-organizing, self-controlling and self-regulating systems, as it may be realized in a so-called Policy Wind Tunnel
11.7 Locality as Success Principle of the Universe
Albert Einstein (1879–1955) pointed out that “we cannot solve our problems with the same kind of thinking that created them”. But information and communication technologies now enable new approaches. Distributed bottom-up governance considering externalities might be used to manage complex dynamical systems such as our society more efficiently.23 It is a promising alternative to classical top-down control, which is based on thousands of complicated laws and regulations that inhibit innovation and produce high costs.
Distributed systems are based on real-time interactions at a local level (where “local” does not necessarily refer to geographic space). Locality is very important in our universe. Most physical forces are extremely short-range. Locality is also crucial to self-organizing processes in socio-economic systems. For example, niches that support diversity and innovation can only exist locally. Moreover, local interactions foster cooperation, as we have seen it in a previous chapter. One might even say that the most interesting socio-economic phenomena are based on co-evolutionary processes that happen on the meso-level, which is a layer between individual system components and the entire system.
So we need to be aware of the importance of locality in complex systems and use it to our benefit. This leads us to the concepts of “glocality” and “glocalization”—approaches where people aim to reach global goals based on local activities, using locally adapted solutions. What practical implications may this have for the way we should manage complex and global systems in future?
11.8 Cities as Agents of Change
Elaborating further on the thoughts above, how would a decentralized, bottom-up organization change the way we govern our increasingly complex world? It would mean that, besides trying to find global solutions through institutions like the United Nations, we would have to build complementary institutions focused on local challenges and opportunities, namely cities and regions. For many years, we have failed to negotiate binding global agreements to reduce climate change. As a consequence, climate action has been dramatically delayed. It has also proved impossible to solve a number of other problems. Maybe a bottom-up approach would be more effective at times?
In fact, more than half of the world’s inhabitants live in cities now, and the percentage is steadily growing. Cities are the places where the problems occur and where the solutions are developed and applied. Urban areas are often centers of pollution and crime, but also of production and innovation.24 Cities are most threatened by disasters, too. Thus, our efforts to increase societal resilience need to focus on them.
In this context, it is worth listening to the insights of the former chief city planner of New York City, Alexandros Washburn, as expressed in his book on “The Nature of Urban Design”.25 Interestingly, although New York is the leading metropolis of the twentieth century, it has no master plan. Instead, it gradually adapts to the local needs of its neighborhoods. Washburn emphasizes how important it was that he could influence everything, while he underlines that he could control nothing. He contends that the first and foremost priority of any urban planner should be to listen, and that the function of public space should be to build public trust by bringing a wide variety of people together. He argues that in order to make the city more resilient and simultaneously meet quantitative, qualitative, and natural needs, it must be managed through an intricate interplay of top-down and bottom-up governance processes, pretty much as I have discussed it in the previous chapters. The same can be said about the “virtual cities” on the Internet, i.e. the social communities that have formed in the digital world, where transparency is also important to foster trust.
11.9 City Olympics to Improve the World
Going a step further, in full agreement with Nobel prize winner Elinor Ostrom’s “polycentric” approach to solving global problems,26 I believe that cities and social communities can be important agents of global change. A suitable combination of competition and collaboration among cities can advance us in our efforts to solve the challenges of the twenty-first century. If we manage to find ways to make our cities smarter, this will make our planet smarter.27 In this way, acting locally will cause a global change for the better. For example, I recently proposed that we might establish something like a “City Olympics” to address global problems such as climate change.28
As we know, calls to combat climate change are often met with skepticism by companies and citizens, who see it as a threat to their preferred ways of business and life, and that’s why these attempts receive so little support. However, doing something for our climate could be rewarding and even fun, if we ran a climate-oriented City Olympics every few years. These events would have a sporting spirit, whereby cities all over the world would engage in a friendly competition to develop the best science, technology, and architecture to counter climate change. They would also compete to achieve the highest degree of citizen engagement (in terms of environmental-friendly mobility, investments in renewable energy technology, better thermal insulation, and more). These events could be presented by the public media in pretty exciting ways. Furthermore, after each Climate Olympics, there would be a cooperative phase, where the best ideas, technologies and urban governance concepts would be exchanged among the participating cities, thereby allowing them to make faster progress. Which city or country can reach its climate goals first? Let’s be ambitious! While we may dislike regulations that tell us what to do, we love competitions, we love winners, and we love cooperation, too!
We could address other global challenges in a similar way. This would simply mean a change of the disciplines in which cities and regions compete. It also seems natural that cities would form global networks with other cities that struggle with similar problems. Exchanging knowledge, ideas, technology and experts, or supporting each other when disaster strikes would give such global networks of cities an advantage. Why shouldn’t we have an alliance of cities that takes a lead in supporting better, climate-friendly technologies? Just suppose that cities next to rising oceans, such as New York City, Singapore, London, Hamburg, Sydney, and a few others would start this together. Wouldn’t that create a first-mover advantage, which others would soon seek to copy?
11.10 Just a Thought: Regions Rather Than Nations?
The “glocality” principle “think global, act local” can be implemented in various ways. For example, it might be beneficial to establish governance structures based on representatives of regions. Global negotiations between nation states have often failed, because nations have acted selfishly and often wielded veto powers. But what if we built institutions that could make decisions from the bottom-up in parallel to the top-down institutions we already have today? An institution such as a council of regions, for example, might help to reach agreements that are better adjusted to local needs and would provide more space for local cultures and diversity. We might even have institutions working towards the same goals in parallel from the top-down and the bottom-up. Wouldn’t such a competition between two institutional frameworks accelerate progress?
To have a strong degree of legitimacy, regional representatives should be directly elected. In order to avoid political casts, all adult citizens should be eligible to be a candidate, regardless of whether they belong to a political party or not. Moreover, it would promote integration if all adult residents of a region (including foreigners) would have the right to vote. Remember that lack of participation is one of the most important factors causing crime, extremism and conflict.
To solve problems that have trans-regional relevance, the corresponding regional parliaments could send representatives for a limited time into trans-regional and global councils, which would be established to address specific problems. After all, these representatives would know best how to serve the needs of the people they are representing. To ensure flexibility and avoid accumulation of power and corruption, the global representatives of the regional parliaments should rotate every few months, or have a mandate which is restricted to certain subjects, or both.
11.11 How to Manage Our Future: Some Proposals for Immediate Action
In recent years, I have spoken to a lot of people, many of whom expect that we will soon see major changes. There are many signs that our world has become unstable and that global conflict or war might result due to power shifts, but also due to systemic instabilities that have internal rather than external reasons. If we want to manage a smooth transition into a better future, we must change not only what we are doing, but also the way we are doing it, and how we think about the world. In particular, we need to learn how information, stronger interactions and increased interdependencies are changing our systems.
People expect that governments act on their behalf, but this doesn’t mean that they want governments to micromanage their lives. In fact, citizens are calling for more opportunities to participate in decisions about matters which concern them. In this regard, new opportunities are now emerging. New information and communication systems can support participatory decision-making and coordination.
- 1.
Improve systemic resilience. Most global or large-scale networks (and to an even greater degree, networks of networks) are prone to highly damaging cascading effects. Therefore, the basic functionality of our critical infrastructure is vulnerable. To make such systems more resilient, it is important to apply modular design principles, as they are common in management science. As a consequence, we must do at least two things. First, we need to build “shock absorbers” or “engineered breaking points” into our systems, which can effectively stop cascades by decoupling different parts of the network.29 Second, we must learn to use diversity as an asset. For example, to achieve sustainable and good systemic solutions, it’s important to combine diverse solutions in ways that create “collective intelligence” and resilient systems. This requires a joint effort of all stakeholders, which will typical involve independent representatives from politics, business, science, and the citizenry. It would be useful if, besides professional politicians, independent, qualified citizens would be represented in decision-making bodies as well.30
- 2.
Reduce laws and regulations in order to support diversity and its many positive side effects. Diversity is not only the basis of societal resilience, but also of cultural evolution and individual happiness. Furthermore, diversity drives innovation, collective intelligence and economic well-being. Thus, the complaints of companies about over-regulation and the reservations of citizens about attempts to standardize their cultures, lives, and cities must be taken seriously. Otherwise, great projects such as the European Union may fail in the long run. We should try to combine the strengths of different cultures rather than making them all the same. Copying the leading economic system is not the best solution.31 Therefore, we might proceed as follows: every law (apart from constitutional principles) could have a limited term of validity. Over-standardization should be avoided. Instead, it is important to create opportunities. Therefore, we should allow different self-organizing systems to coexist and compete with each other. Importantly, when trying to reach high-level social or environmental standards or similar goals, countries, cities and companies shouldn’t be compelled to implement a single, “one-size-fits-all” solution. In the very best sense of pluralism, one should have a choice of at least two or three options, which are based on best practice. Then, a culturally and locally fitting solution can be found. This will increase diversity and resilience, as there is probably not just one good solution, but several. It will also increase societal support.32 Finally, in many cases, compulsory regulations can be replaced by best practice guidelines, thereby helping everyone to improve established practices.
- 3.
Build a reputation system to promote awareness, quality and responsible action. If we reduce the number of laws and regulations, we need to replace them with something else. More freedom can be given to decision-makers if they behave more responsibly. Merit-based and reputation systems can be used to promote considerate and responsible action. They can foster cooperation and social order in efficient and effective ways. In fact, reputation systems are rapidly spreading across the Internet precisely because they are so useful. They help to give customers better services, and allow sellers to get a higher price for better quality products and services. However, reputation systems could be improved in a numbers of ways. Attempts to manipulate rankings or to spam the system should be discouraged. Facts, advertisements and opinions should be clearly distinguished from each other. It should be possible to post ratings in an anonymous, pseudonymous and personal capacity, but these distinct forms of engagement should be assigned different weights. Reputation and recommendation systems should be community-specific, and based on multiple quality criteria. Users should be able to choose, configure, create and share information filters and recommendation algorithms, in order to support pluralism and create an evolving ecosystem of increasingly better information filters.
- 4.
Rebalance top-down and bottom-up decision-making according to the well-established principle of subsidiarity.33 In order to enable everyone to make better-informed decisions and act more effectively, we need to build open and participatory information platforms. This will empower people to contribute to the management of our systems from the bottom-up, producing outcomes which are more attuned to the diverse local needs, considering local knowledge that matters. Altogether, we will increasingly see a change away from hierarchical decision-making (“you should do this!”) towards autonomous but other-regarding activities (“I can do something that needs to be done!”). This obviously needs differentiated multi-dimensional reward systems and information platforms that help to coordinate local activities and facilitate the self-regulation of communities. Such systems could also resolve many conflicts of interest through a self-organized system of community moderators, who would consider the externalities associated with decisions and actions. These community moderators will judge and foster compliance with local rules, while staying within the framework of the fundamental, constitutional principles. They should be instated for a limited time period, based on their previous record of respecting both, fundamental principles and local (community) rules.
- 5.
Establish a new data format based on the data cord principle to enable informational self-determination and micro-payments. I have pointed out that some of the current problems associated with the Internet extend beyond issues of security and cybercrime. These problems mainly result from a lack of user control over their personal data, a lack of accountability, and an inability to easily reward companies and people for the data, ideas and cultural goods they produce. I think that all of these problems could be solved by a combination of a Personal Data Store34 (i.e. a personal mailbox for data) with special encryption techniques and a new kind of data format based on the concept of a “data cord”. This system would connect the contents of each data store with the respective producer or owner and allow them to control access to their data.35 In case of personal data, the subject of the data should be considered the owner, and he or she should be able to control the rights of third parties to use it. Furthermore, a micro-payment system should enable a multi-dimensional value exchange. The more often data is copied or used, the more (material or immaterial) profit would be automatically distributed to the different beneficiaries on the value-generating chain. Such a micro-payment approach would be superior to our current system of intellectual property rights (IPR), such as the software patenting system. Current IPR approaches tend to inhibit the efficient co-evolution of ideas, which is pivotal to the success of human culture.36
- 6.
Create a multi-dimensional financial system to have a backup system and make our financial system more functional and resilient. We have seen that our financial system is more fragile than we thought, and we cannot rule out that it might collapse one day. It is essential, therefore, to establish a backup financial system, which could facilitate economic exchange if our current system fails. Therefore, I am calling for a complementary, multi-dimensional exchange system. This would create welcome competition with our current financial system, and thus help it to improve. In fact, we currently see peer-to-peer payment and lending systems emerging. If they meet certain quality standards and serve public interests (such as providing loans so that companies can invest), governments could support the development of such systems. For example, such payment systems could be subject to a special tax status and fewer regulations (as long as these systems are not “too big to fail”). The current payment systems (including BitCoin) are not yet perfect, but competition37 will lead to further innovations. In particular, I have pointed out that a one-dimensional incentive system does not allow our complex socio-economic systems to self-organize and function well. For this reason, a multi-dimensional reward and exchange system is needed (which I call “multi-dimensional finance”). This would be akin to having several bank accounts for different kinds of use.
- 7.
Use information systems and other measurement methods to determine externalities and compensate for them. For self-organization to work well, it is important to quantify the externalities of decisions and actions. For example, people and companies could be rewarded for external benefits created by them. Similarly, if everyone had to pay for the damage produced, this would strongly reduce the frequency and size of such damage. An important step, therefore, is to build an infrastructure that is able to measure and quantify benefits and damage to our physical and biological environment, and also to our socio-economic system (“social capital”, for example). The sensor networks underlying the emerging “Internet of Things” can now serve this goal, but it will also be important to increase awareness and create incentives for responsible behavior.
- 8.
Tax systemic risks and provide rewards for transparency, responsibility, data access, informational self-determination, and open innovation.38 Besides charging for damage which has already occurred, it would also make sense to charge for likely socio-economic damage (“systemic risks”), similarly to how insurance companies calculate the risks posed by individuals. In the past, we have often had business models that lead to “tragedies of the commons” or that undermine privacy, pollute the Web with spam, or advertise products and services in ways that are barely distinguishable from user ratings and facts. For the time being, until we figure out a better approach, taxation might be a relatively simple and straight-forward way to improve our techno-socio-economic systems, including information systems. Rather than taxing labor more than profits from financial investments or robotic production, a tax on systemic risks would make sense and reduce risks. This would encourage the modularization or simplification of complex systems which would increase their resilience. It would also encourage firms to collect “Smart Data” rather than Big Data (i.e. discourage the collection of huge quantities of data that are of limited use and are often quite problematic in many ways). So, it might be worth considering to introduce a progressive tax on the number of network links, and to promote openness, transparency, interoperability, participatory opportunities, and informational self-determination through tax incentives. Such an approach could reward local interactions and the provision of high-quality data, while encouraging the deletion of old and irrelevant data. Moreover, the development of participatory information systems that would benefit everyone could be incentivized, too. The money generated from the taxation measures mentioned above could be used to pay for public information infrastructures and other necessary institutions for the digital age to come. This would help to quickly build a mutually beneficial information ecosystem. In other words, suitable kinds of taxation could reward desirable and responsible innovation and the private activities which contribute to this process. Finally, let me stress that such taxation schemes should not stand in the way of Open Data and open innovation, and they should not be based on surveillance. Free, open, high-quality data should be tax exempt. In this context, one should also remember that the additional economic value accrued from Open Data has been estimated by McKinsey to be of the order of $3–5 trillion globally per year.39 It would be great if everyone could get a share of this cake!
- 9.
Build the infrastructure and institutions for the digital society. I believe that, so far, no country in the world is well prepared for the digital era to come and the new principles governing it. Therefore, it would make sense to engage in an Apollo-like program. The equivalent of a Space Agency in the field of Information and Communication Technology (ICT) could produce an Innovation Alliance with a mission to develop institutions and informational infrastructures for the emerging digital era. This is crucial in order to respond to the challenges of the twenty-first century in a smart way and to release the full potential of information for our society. For illustration, it is instructive to recall the numerous factors that enabled the success of the automotive age. The first prerequisite was the invention of cars and the emergence of mass production. Public roads, gas stations, and parking lots were then constructed to provide the infrastructure to make these vehicles useful. The establishment of driving schools and driver licenses enabled the population to develop the skillset necessary to benefit from this new transport technology. Traffic rules, traffic signs, speed controls, and traffic police were used to ensure that the traffic system ran smoothly. Finally, the invention of new technologies such as guardrails, anti-lock braking systems (ABS) and airbags greatly improved the safety of vehicles. All of this requires many billions of dollars of investment each year. In fact, we invest a lot of resources into the agricultural sector, the industrial sector, and the service sector. But are we investing enough in the emerging digital sector? While the digital revolution certainly creates new challenges for our societies, it also opens up many promising opportunities to address the challenges we are faced with.
What do we need to do to make the digital age a great success? First of all, we need to build trustworthy, transparent, open, and participatory information and communication systems, which are compatible with our cultural values. For example, it would make sense to establish a citizen web to manage a joint “Internet of Things” and enable complex self-organizing systems by means of real-time measurements and feedbacks. I call the intelligent information platform needed for this the “Planetary Nervous System”. This platform could also fuel a new kind of search engine. To protect privacy, all data collected about individuals should be saved in a Personal Data Store. Subject to the consent of the individual in question, this data could be processed in a decentralized way by third-party trustworthy information brokers, which would allow everyone to control the use of their potentially sensitive personal data. A micro-payment system would allow data providers, intellectual property right holders, and innovators to be rewarded for their services. It would also encourage the exploration of much-needed new intellectual property right paradigms. A pluralistic, user-centric reputation system would promote responsible behavior in the virtual (and real) world. It would even enable the establishment of a new, multi-dimensional value exchange system, which would overcome the weaknesses of the current financial system by providing additional adaptability. A global participatory platform would empower everyone to contribute data, computer algorithms and related ratings, and to benefit from the contributions of others (either for free or for a fee). It would also use next-generation social media to measure, produce and protect social capital (which encompasses network-based social attributes such as trust, reputation, and cooperativeness). A job and project platform would support crowdsourcing, collaboration, and socio-economic co-creation. Altogether, this would build a rapidly growing information and innovation ecosystem, which would unleash the potential of data for business, politics, science and citizens alike. We could also create a digital mirror world which would use sophisticated computer simulations to assess the likely risks and opportunities associated with decisions we might make. Furthermore, digital assistants and Social Technologies could help us to cope with the diversity of our world and benefit from it. Finally, Interactive Virtual Worlds, potentially based on different economic systems, decision-making institutions, and intellectual property rights, would allow us to unleash the full creative potential. They could also help us to identify suitable institutional settings and interaction rules for self-organizing systems, before we deploy them in the real world.
- 10.
Build a new educational system that prepares people for the digital age to come and for creative work. It becomes increasingly clear that most of our current institutions and jobs will fundamentally change. Much of the work, which has been performed by people in the past, will be done by computers, algorithms, or robots in the future. This particularly applies to procedural and rule-based work. Hence, many people will have to find other work, which will revolve around their ability to create information and knowledge, including cultural products. Rather than standardized education, we will need more personalized education and training to foster creativity and imagination. I propose that the fundamental skills should encompass languages, mathematics, computer science, and the ability to find relevant information and critically evaluate it. This would empower people to curate information and to produce new knowledge. In addition, skills enabling people to share knowledge, collaborate with others, and create services and products collaboratively, while bearing in mind the externalities, will become increasingly important. In future, those seeking paid work must be able to concentrate on tasks, but also to flexibly adapt to new opportunities. Furthermore, they will have to apply an interaction- and systems-oriented way of thinking in order to understand and manage the complex dynamical systems around us. In conclusion, digital literacy and good education will be more important than ever.
With these preparations, the emerging “Internet of Things” and participatory information platforms could unleash the power of information and turn the digital society into a great opportunity for everyone. All it takes to make the digital age a great success is the will to establish the necessary institutions. Are we ready for this?
11.12 Let’s Get Started!
Of course, governments can help to set this in motion, and they should! Spending on wars in the past 15 years has cost the world many lives and many trillions of dollars. Instead, we could have used this money to build the basis for the digital society of the future. Why shouldn’t we assist people in making better decisions, by providing good information? For this, access to high-quality information is key, which in turn requires openness and transparency. Participatory opportunities can create added value and trust. Citizens have become part of our global information system. They should now be able to contribute to the collective intelligence needed to solve the increasingly complex problems of our world. A “new deal on data” should treat citizens as first-class partners in exploring the opportunities of the future and in mastering our challenges.(see Footnote 34)
Regardless of whether politicians support self-organization or not, companies will increasingly use the underlying success principles to create more efficient systems and make money with them. That’s simply the logic of automation implied by the digital revolution. As self-organizing systems spread, they will also change the way our world is governed. Advances in Information and Communication Technologies will drive this process. But the citizens can drive it, too!
Given that Instagram was initially built by 13 people and WhatsApp by around 50, it is clear that a few people can now have impact on a global scale. Moreover, note that Wikipedia has a lot of contributors, and OpenStreetMap is now supported by 1.5 million volunteers. Thus, citizens don’t have to wait. They can take action themselves. The Information and Communication Technologies of the future will enable us to change the world for the better! We can build a user-controlled Internet of Things ourselves as a citizen web. We can measure externalities of socio-economic activities. We can create a “Culturepedia” to collect information about the various success principles on which our cultures are based. We can build digital assistants and other Social Technologies to understand each other better and interact successfully. We can establish and run pluralistic information platforms to share data, algorithms, and information filters. And we can create a global maker community to produce our own products.
Thanks to the digital revolution, incredible inventions have become possible. Many utopian dreams are not science fiction anymore. We are only limited by our own imagination and our will to shape our future together. Do you want to be part of it? Then, follow the FuturICT blog40 and social media channels, join the Nervousnet community,41 and contribute to a trustworthy and respectful, participatory society, using the power of information.
Now, everything is finally coming together: science, politics, business, and social affairs. We can create self-organizing and self-improving systems with massively increased efficiency in a way that is perfectly compatible with participation and democratic principles. This approach respects the autonomy of decision-making and supports free entrepreneurship. However, the consideration of externalities will also create benefits for our environment and society. So, what are we waiting for? Let’s build this all together! The next two chapters will explicate in more detail how.
11.13 Appendix 1: Where Might the Digital Revolution Take Us?
In this book, it became obvious that we need to see the world in a different light, as entirely new principles will apply. In future, the world won’t be well characterized by political categories such as “left” or “right.” It will have its own logic: “future-oriented” is probably the best way of putting it. Even though the digital era will be unprecedentedly different, we can already see it on the horizon. We can analyze the new trends that will underpin the digital revolution and draw conclusions by studying the transformative “forces” at work.
It is entirely possible that we experience a phase of super-governance driven by Big Data. However, I predict that societies will eventually use the “Internet of Things” to build decentralized and self-organized governance structures. This will happen because such systems have the potential to be more effective and efficient in promoting innovation, flexibility, adaptiveness and resilience. In short, they are superior.
The self-organization approach described above has nothing to do with anarchism. It is consistent with human rights and constitutional principles, and it combines the best elements of democracies and market systems. It is also very different from communism and socialism. First, rather than involving a command economy, this approach implies as little top-down planning and control as possible. Second, rather than redistributing wealth, it creates socio-economic opportunities for everyone. It enables individuals to help themselves and to cooperate more effectively. Self-organization is built on individual self-determination (“self-control”) within a framework that promotes collective intelligence and helps everyone to make better decisions. This framework is also designed to encourage responsible, other-regarding behavior.
Suitably designed reputation and merit-based systems can be a powerful catalyst for cooperation and socio-economic progress in a globalized world. If properly implemented, the economic system of the future will be more efficient and effective. Today, we still have an unbalanced and dysfunctional struggle between top-down regulation and bottom-up self-organization. This causes frictional losses, conflict and high costs. The expense of maintaining this over-regulated system has become unsustainable. Most industrialized countries have reached historical heights of public debt levels in the order of 100–200% of gross domestic product (GDP) or more. Nobody knows how we will ever pay for this, never mind the cost of even more regulation.
In the coming decades, however, I expect a superior digital society to emerge in most of the world. In the previous chapter, I have given examples showing that a participatory market society is already on its way (for example, the “sharing economy” and the quickly growing “makers community” reflect this well). The participatory market society will build on the new opportunities created by modern information and communication systems. To get a better idea of how this society might approximately look like, it is useful to discuss the Swiss system, which comes closest to my imagination of how the Participatory Market Society might work.
The Swiss system works pretty well and is based on a number of important features. It is a federally organized system, which harnesses great science and good education. It exhibits a form of direct democracy, where people can vote on many issues of public concern (remarkably, Swiss voters also decided in recent referenda not to increase holidays and not to reduce taxes!). Swiss society is multilingual and multicultural and based on a consensus-oriented tradition of decision-making. A political culture of multi-party power-sharing at all levels of government including the executive ensures that no one person or party accumulates too much power. Consistent investments have resulted in a well-maintained public infrastructure and an excellent public transportation system. Switzerland has low levels of debt in comparison to other industrialized countries. Nevertheless, I expect this kind of system to further evolve consistently with its socio-economic and cultural traditions, by taking advantage of the new opportunities created by modern Information and Communication Technology and by exploring better mechanisms to create collective intelligence.
Furthermore, note that self-organization is a conservative approach in that it builds on principles that have already been proven to work in our societies—and on core cultural and ethical values (see also Appendix 14.1). By accounting for externalities, it helps us to create more sustainable systems, to preserve our environment, and to make our society more resilient. This is achieved by enabling our society to better adapt to new conditions, including technological, environmental, and demographic changes. But what if we prefer our society to stay as it is? Can we preserve our current society, or go back to how it was before? Many of us wish that we could—we had a good time in the past! But this is a romantic wish and dangerous dream, because we can’t stop our economy and our societies from progressing. Indeed we shouldn’t really want to stop this progress, because we would miss out on great opportunities. Other countries would surely use these to gain a competitive advantage. Why would we want to fall back, if we could lead this development?
11.14 Appendix 2: Future Governance: Options Rather Than Compromises
People might be more satisfied with our governance outcomes if decisions would involve or consider all those that are affected by a decision, regardless of whether it is about a local, regional, national, supranational, global, commercial, or community issue. In principle, we could now establish such decision-making processes using electronic participatory voting platforms. Individual points of view could be collected in an argument map, such as a debate graph, to work out a reasonable number of perspectives on the problem. Then, representatives of these different perspectives should talk to each other in a round-table-like setting and try to integrate different perspectives as much as they can. This process would eventually elaborate a small number of good alternatives (say, two or three). These should ideally be interoperable. A democratic vote would then be used to decide between these alternatives. The relative number of votes of everyone might depend on his or her respective externalities. However, with the exception of a few fundamental principles, we should not strive to implement just one solution everywhere in the world. A suitable degree of diversity and culturally fitting solutions are important. Moreover, solutions should be regularly evaluated to further improve them over time according to the evolutionary principles of innovation and spreading of superior solutions.
I would like to suggest that the more diverse a community is the smaller the decision areas should be chosen (e.g. cities or regions). Problems that can only be addressed by a homogenous solution (i.e. by global standardization) require sufficiently large and diverse committees to reflect the various perspectives sufficiently well. Otherwise collective intelligence cannot be successfully built. Let’s assume we have various perspectives i. Then, each could be represented by a*ln Wi people, rounded down to integer numbers, where ln denotes the natural logarithm and Wi stands for the expected externalities of the respective decision on those that are represented by perspective i (for example, the contribution that would have to be made to create a new collective good). Finally, a is a constant that determines the overall size of the committee. I also think that a supermajority (ideally about two thirds of all votes) should be required to establish laws which are intended to be permanent. Usually, such a high level of support can only be established by allowing for a number of different options, from which companies or regions could choose the most suitable one.42 This decision procedure would enable some degree of standardization while also creating opportunities that fit local culture and needs. In other words the self-organization approach aims to create options rather than compromises for everyone. This can harness the power of diversity, collective intelligence, and combinatorial innovation, which will be the basis of successful digital societies in the twenty-first century.