IPAIT V, PARLIAMENT OF FINLAND, HELSINKI 17.1.2007
Human competency development in the Information Society
Can Global Information Society Sustain Egalitarian Democracy?
Risto Linturi, Chairman R. Linturi Plc, www.linturi.fi
Distinguished audience,
We used to live in a hierarchical world where kings, queens, prime ministers and presidents each ruled strongly in their own areas. Now the world has become chaotically complex. Total is more than sum of its parts. Many of our current technologies have spread because they support powerful ideas of easy interaction between all the worlds’ people. Disturbances spread equally easily.
There are changes for the better and changes for the worse. I will illustrate some of the changes – what new questions arise, what possibilities and threats we face? Some problems are global. Schedules and consequences differ in different cultures and economic situations. My viewpoint is western and narrow.
I will concentrate on technology. It is certainly not our brain that has grown so fast. Most hunter gatherers in New Guinea used to know well over one thousand useful species and plants, where to find them, how to hunt and prepare them and when and how to use them. This is a huge volume of useful information. Way more than my old biology teacher knew of anything. Most academic people in industrialized societies never learn so many useful topics thoroughly. It is not that we now know more than before as individuals. We certainly survive and even get rich with far less information than ever before. You only need one talent.
Adam Smith laid the foundation of today’s market economy. His theory has it’s faults but productivity does grow with specialization and exchange. 25 years ago I designed a microcomputer and programmed its operating system. I was a specialist who knew the whole area from top to bottom. Today that is impossible. You need at least ten best specialists in Finland to cover the same area because the complexity has grown. Specialization does destroy traditional market when products become complex and differentiate. Comparison becomes impossible. This is why economists now talk so much about trust and social capital and social networks.
But anyhow - we are productive because we specialize. Jointly we know much more than ever before. Individually I am afraid we easily lose sight of the whole. There is increasingly much information that we cannot handle and understand. We leave decisions to specialists, but they do not understand the side-effects. Everything is connected and there are no renaissance-men any longer. It is easier than ever to make colossal mistakes. Both specialization and efficient infrastructure lead to this.
Let us visit ancient Greece. It can be debated whether you could call it democracy, if only landowners got to vote. But this was not the only difference. They initially thought that people should decide common things together, nobody should have power over them. People who did not attend the meetings to share their situations were called idiotiko. Today that means private in Greek. How can you decide what is mutual interest if you do not know the mutual situation. You just guess how others really feel and you end up having to live in hypocrisy. Privacy is quite high in just the same countries where hypocrisy is high. But let us continue one brief moment with the Greeks. Philosopher Plato was very good at manipulating words. He got his money from tyrants of many small Greek states. He trained their youth. He proposed that the real question is how to select the one who decides. But can you really call it a democracy if you select a tyrant every four years? Democracies around the world seem to have very different answers to this question. And very few places allow us to group freely to decide our mutual destinies. We all have laws against treason or blasphemy and we all want to decide how other people lead their lives.
Capital-intensive industrialization in market economies is not possible without advanced book keeping methods and stock market. Tax collection, citizenry, intellectual property right system and various other systems would have been impossible to enforce without relatively advanced information handling methods. New technologies do not only build societal structures. They also aid in dismantling old constructs. Totalitarian systems have become harder to maintain as practically every place around the world can be connected to worldwide communication. Synchronized mob movement against oppression is easier than ever before.
In 2020 computers and networks will again become thousands of times faster. All the million movies ever produced will squeeze in my new home computer. Applications will be smart enough to learn as they go. Emotional algorithms are under intensive study and it seems possible that computers both recognise and project emotions and even utilize emotions to enhance their own learning capabilities and simplify their goal-seeking algorithms. Satellite positioning systems, walking talking robots, flying and spying robotic bombs and satellite imaging will fundamentally change our lives and behaviour patterns before I retire.
Genetic engineering is currently taking its first steps. Technologies will develop rapidly, and by 2020 a large body of useful - and less useful - properties of plants and living organisms will have been harnessed for human application. The organic world offers a myriad of opportunities - plants and creatures that can detect and produce electricity, change their skin colour, breathe in water, shine in the dark, and produce an endless supply of chemicals and objects of hard and soft materials. Many of these capabilities will be harnessed and used as building tools, peripherals and platforms for future ICT systems. Genetic will also be produced easily. Hopefully we learn fast enough to cure the problems these will cause. They cannot be prevented.
Materials sciences, nanotechnology and many other branches will develop astounding new applications just as the biotech and information sciences, but the most mind-blowing changes will come out of cross-fertilization between the various disciplines. Technology will be developed above all to meet economic and societal needs. Hence it is also important to understand that the greatest impact of technical advance is a catalytic one. The structures of the economy and of the society - even of our individual values - will alter as a consequence of technological change. You may wonder if some of these issues are too far out, or if they will affect only the most developed nations. When I visited Tanzania I noticed that digital calculators are cheaper than pencil and paper. Mobile phones are cheaper than landline phones. Perhaps biotechnology likewise becomes cheaper than the old energy intensive chemicals. That might save us from global warming. But let us now return to the past.
When society stabilized enough to limit the use of violence, the best way to acquire great wealth was trade. Information flow was slow and erratic. Trading empires controlled the information flow and largest part of transport. Investments concentrated into these activities from Caesars time to Napoleons time in European history. Only after public communication routes were opened and public transport became available the rules changed. One hundred years after Napoleon, trains fared all across Europe hundred kilometres per hour; telegrams were getting popular.
Manufacturing gained importance and became better means to make profit than trade. Humankind turned its attention to studying better manufacturing methods and products and power shifted to cultures whose customs and communications methods were better suited to investments in industrialization than trade.
Now again our communication system has evolved much beyond any expectations. Corporations are valued for their expected future earnings, and wealth is acquired by interpreting early warning signals and changes in those future expectations. Globalization, standardization, increasing co-operation between networked companies, and fierce competition has decreased profits in manufacturing.
After Berlin, walls are breaking everywhere - and without protective walls you have to be more efficient or sneaky. Otherwise you lose your customers, citizens or employees and finally your investors and your job. Ideas have now almost a free market. This used to be different. I used to fight against invisible walls just dozen years ago – it was possible to get ample funding in Finland for your idea only from big corporations We had no option economy and no real independent risk funding. Corporations held economic power within their fields and they did not want change. Free market is a frightening thing, but it does not just create inequality, it also may remove problems and empower those who have good ideas. Money is no longer associated with power only. It may combine with productivity, creativity and vision.
One of the most fundamental trends is that costs related to all sorts of market transactions continue to decrease. Mobile phone and internet are still causing turmoil in such countries that have suppressed information flow.
As ideas now move across boarders and also material exchange is easier than ever, we have increasing pressures to harmonize various socioeconomic rules across the globe. Another aspect comes from the theory of chaos. David Ruelle has compared economic development to a liquid that is heated. We increase dynamics by lessening friction. It is ever faster to re-organize as transaction cost gets lower and lower. Simultaneously with new productivity increases we are increasing energy in the society thus doubly accumulating potential for turbulent behaviour.
We can see the turbulence now clearly. Some areas rise like skyrockets and some are totally chaotic. Terrorists move easily, use highly productive weapons in societies that cannot defend themselves any better than spearmen against armoured horsemen. Some societies are very productive and some areas very weak; if travel is easy we will see increasing turmoil in those weak areas and it acts as safe heavens to turmoil. EU has one strategy with its neighbouring countries. EU is trying to minimize income differences in neighbouring countries. This may not be enough as the problem clearly is global. But it is also evident that the current global American strategy is not useful.
Internet and mobile phones have enabled easy collaboration between people around the world. There are remotely operated machinery allowing remote telework even in such delicate jobs as surgery. Robots are being developed, which handle simple situations autonomously but allow human remote intervention in case of complicated situations. Combined with virtual reality, these robots allow their operators to be present in dozens of places almost simultaneously.
As mobile communication has become commonplace it is not longer difficult to set up sensors and other monitoring devices on self-moving platforms. We can gather information from almost anywhere and every field of life. The newest mobile phones have enough memory capacity to store several weeks’ worth of speech and few hours’ video information. DNA analysis is almost cheap enough for individual usage and everyday practice in criminal laboratories. We have all become potential detectives and we can publish our findings anonymously through the Internet. Information is abundant and it is easier to acquire than ever before. People check backgrounds of each other before meetings. Most of us have been mentioned in some web pages. And if we have not, that is also suspicious.
We used to think highly of our own mental capabilities. Chess computers, neural networks, genetic algorithms and their applications in various fields have made it apparent that computers are capable of both deductive and inductive reasoning, experimental learning, pattern recognition and goal seeking functions. Google news - computer edited real time news, could fool almost any reader to believe that a professional news editor has selected the news and edited the front page. We see continuously new areas where computers do the analysis and reasoning that used to be appointed to highly esteemed and experienced individuals. Within the next decade we will see household robots that recognise and react to emotions.
With nano crystals we get digital tattooing to enable tattooed wristwatches, pulse meters or compasses. A tattooed emotional snake might also be very popular.
Some enhancements will enable us to recall everything that we ever heard and very soon everything that ever was spoken in the radio or television. With future speech recognition and mass storage this will be almost as easy as searching for web-pages or email for indexed key words. We will also be able to see and hear things that do not exist. Street signs can be removed when they can be shown on our virtual glasses or on the windshield.
All these networks and information appliances have made it easy to acquire information and employ experts. More and more of the value of products turn out to be bits. Copying is very cheap with machines but intellectual property rights protect the monopoly of the inventor. Creativity has become one of the key success factors - creativity and sensitivity to the needs of others and the networked structures of our society. This will increases pressures for and against the intellectual property rights as they maintain artificial division of wealth in favour of the first inventors and their associates. The crucial core of free trade is actually enforcement of monopoly rights.
Creativity drives currently against hierarchical and mass market structures. In this new culture everyone’s creativity and individual identity is appreciated. Nokia was the first major company to follow Alvin Toffler’s advice and allow its customers to take individually part in product design by deciding what ringing tone and what cover art and even what features they would prefer. Nokia phones almost resemble the other famous Finnish originated phenomenon, Linux, which allows you to design your own operating system features to be included in the next global release for everyone to share. This is very different culture to the previous careful product designs where nobody was allowed to tamper with the grand designs.
In our self-organizing world nothing usually happens unless people get interested and decide to join in. Internet was such an idea. I used to promote networks by showing I could answer my doorbell with my mobile phone when travelling. Few years ago it was also nice to joke about looking inside my fridge with my mobile phone. Today those visions have used up their strength. It is quite common in Finland to pay your parking, tram, carwash or movie with your mobile phone.
I believe that all digital media could be symmetrical. Someone wants to put a camera in front of her goldfish bowl. There might be more than ten people who would like it much better than what comes from the TV. Someone else might send an email to all members of the MG club to say that he will change his carburettor at six pm. The most widely spread Finnish movie, a parody of Star Trek was a hobby project. Many musicians have risen to fame distributing songs free in the internet.
Sadly the regulator jointly with operators lead development to a hierarchical direction. All technological issues have their consequences. Some technologies are basically egalitarian and some others are hierarchical. Huge investment into digital tv is one example of these misguided visions. If the same amount of money would have been invested to internet television, anyone could have had their own tv-stations. Now we have only few companies who can decide what is worth seeing in the tv.
Alvin Toffler started his visionary book: “The Third Wave” followingly: "A new civilization is emerging in our lives and blind men everywhere are trying to suppress it!" But this is not just a question of being blind to change. Very often those in power are afraid that they would lose their positions if things change. It may be that we should run and not fall behind. But blind men do not run very fast.
Jules Verne started writing science fiction in 1860’s. He wrote about Paris one hundred years in the future. He saw that streets would be full of cars. But he also saw that industrialization would make us faceless. Verne saw that faceless ownership through shareholding system and corporate production systems would rob us of many basic values that hold the society together. This same concept was repeated by many philosophers some one hundred years ago. Charles Chaplin demonstrated it very well in his movie The Modern Times.
Francis Fukuyama shows statistics in his book “The Great Disruption”. He shows how in the years of information technology – crime has increased fifty fold in United States and twenty fold in many European countries. Societal norms are breaking.
There is something in this industrialized information technology that is not good for us. Alvin Toffler analysed in early eighties what Verne predicted. Hierarchical information structures make individuals lose much of their significance. People become anonymous and their actions are invisible to others but their boss.
Fukuyama saw statistical signs of things turning better lately. He did not offer any good explanations. But New York Times foreign columnist Thomas Friedman explained in his book about globalisation “The Lexus and the Olive Tree” many recent phenomena connecting them to the advances of the Internet and transparent society. He saw that hierarchies are breaking, mostly to a positive end result.
But let us think about wider issues. Internet is often referred to as a global village. It is easy to find new business acquaintances and start co-operating. This fast paced networked business model requires a similar model of non-hierarchical trust that existed before the industrial revolution. If you are a bully I will easily find it out from rumours in the Internet. If you are a good guy, I can trust you and do business with you without long contractual negotiations. It seems that a good mechanism for rumours helps businesses to network. Privacy and secrecy decreases feeling of trust.
It seems that there was not enough positive feedback for trust and honour in our western industrial society. For that reason we shifted towards hedonistic values and selfish behaviour patterns. All ill deeds were handled according to the hierarchical organisational routes and absolute privacy was considered everyman’s right. This suited the industrial society and mass marketing but it does not match the needs of our networked era. It is questionable whether honour has any meaning if you cannot lose it in the eyes of your fellow beings. Government is not our mother.
As information technology decreases transaction cost, decreases cost of distribution and copying there is a major shift in organisational productivity. Well-informed, creative individuals become more valuable compared to people who obediently follow their bosses’ instructions. These empowered employees are also more satisfied with their lives. But naturally this is a risk for those in power. And there are other risks as well when you give powerful new tools to ordinary users. Computer users can create huge damage as we have seen too many times with computer viruses.
You know that there is a serial number in each bank note. Also the cars and guns have identification numbers. Power over others and accountability must go hand in hand. There is however a complex issue with privacy. Many people are afraid of big corporations and their own government who might misuse their personal information.
In Finland organizations are not allowed to collect private information – very much opposite to what has been the case in USA. Perhaps due to this, people in Finland are not commonly afraid and do not wish for a complete anonymity. They understand that anonymity for everybody would include criminals. I have been promoting a solution where the net would save tracing information in such a way that it could only be used if several organizations co-operate. And simultaneously corporations and the government were to be restricted so that they could not abuse the information. This would help to catch whoever broadcast copyrighted material illegally or sent nasty viruses or a blackmail letter to me. There would be balance and trust without a need for web spy agencies who work in secrecy, only for themselves and those in power.
Internet task force has informed that forthcoming versions of Ipv6 would include mechanisms for tracing messages to individual machines. This might mean licence plates and this should mean full support for strong encryption and a worldwide legislation to ban corporations and governments from collecting extensive user information into their databases without users’ approval. This would create a balance where networks would be safe and everybody would equally get information on others - no big brother but small brothers peeking from every possible hole. Just as in small villages, where doors could be kept unlocked and corruption would have no hierarchical structure to turn to.
Internet enables us to do many things in a new way. Simultaneously, it threatens a multitude of old structures and concepts. Let us return to the two most important concepts in politics: the state and democracy. A state is a power structure inside a geographically limited area. The power is financed by collecting taxes from events inside the state boarders.
But more and more of our wealth and activity has transformed into bits and bits - they know of no boarders. Bits move freely in virtual reality and nobody knows where they go or come from. Individual freedom is growing - I might work, I might spend or earn money - nobody knows. Local governments rule less and less of the activities of their citizens. They collect less and less taxes from what happens inside their boarders because bits are not local and they will easily find tax heavens.
Naturally we solve part of this problem by joining forces with all other states and by enforcing taxes and legislation with international agreements. We might actually form a world state for virtual reality. But what then happens to democracy and individual freedom - what is individual freedom and democracy when bureaucrats across the world state create rules and the so-called free market handles all executive tasks in the non-local virtual realm. Democracy works best in small communities where people feel that there really are common problems to be addressed.
I have wondered if there could be such a thing as a democratic virtual community with its own set of responsibilities and rights similar to physical communities inside every larger state. It would be an intriguing thought as more and more of our common problems and activities are common with people outside our physical realm. Currently the citizens in virtual reality feel pretty much like they lived in someone’s back yard where their landlords set all the rules and limitations.
I have also wondered if the Internet could be a democratic virtual realm whose constitution would be under the jurisdiction of UN. Internet community could register as residents, they could vote and they would have basic rights as we have in the physical states even when we visit someone else’s property. This is s strange idea only if you are too much bound by geography. It is not more than few hundred years ago when we had several states that had no distinct geographical boarders. Hansa-alliance was one and Burgundy was another but clearly Assyria and several older states were not ruled by boarders but by hierarchical social networks. I am certain; Current Wild West practice in the Internet might change, if it was clearly governed by those who wish to live there.
It seems popular nowadays to claim that information technology will enhance the gap between the rich and the poor. Some talk about rich and poor countries, others about individuals and families. Basically I tend to agree with the late Milton Friedman. Generally, technological advances have favoured the poor more than the rich. Emperors did not need running water, they had running slaves.
All around us we see people and countries, which are falling behind while others seem to get more and more ahead. This would prove something if it were not a false vision. Perhaps we tend to forget that while this world becomes unjust to some it simultaneously becomes fairer to many others. Many developing countries are showing stronger growth than industrialized countries. One could also see many signs of old power structures falling and a more egalitarian society emerging.
There are few important principles, which guide major changes in today’s economic structures. A greater portion of the value of goods and services consists of bits than ever before. This part of value chain may exist practically anywhere. This increases value of skilled labour in developing countries. This is seen in statistical numbers of many developing economies. Large part of export i.e. from India is bits.
The law of increasing return plays a role in the digital economy as production cost and distribution cost approaches zero. You can think about one fax or one Internet browser. By themselves they are worthless. They only become useful when enough people start using them. Due to this principle many companies give away very much of their products practically for free to get high enough number of users for a healthy user community. This does not show in statistics as anything free is worth nothing.
Few other trends are also noteworthy when thinking about the digital divide. All sorts of transaction costs are decreasing because of information technology. This leads to outsourcing because big corporate hierarchies do not any more offer advantages and their inherent slow reaction times are more harmful than ever. Also governments outsource old hierarchical structures. Pension funds, individuals and venture companies search continuously for good ideas all over the world in order to invest in them. In order to get working capital companies need to be open and reliable and much of the same goes also for states.
There are many confusing signs as several socioeconomic structures change. However it seems clear that every government who seriously thinks about productivity in the global marketplace should put effort in creating possibilities for all citizens to get useful education. There used to be a time when citizens were kept in ignorance in order for those in power to stay there. In today’s society most rulers realize that this path leads to weakening economy. Outside totalitarian regimes weakened economy usually leads to a change in government.
Distances lose their significance; information delivery becomes much cheaper through the networks than through physical means; new technology starts empowering people all over the world. It seems inevitable that many developing countries get to take part in global affairs.
When we think about inequality from the individual point of view, we will see some people get rich from very poor surroundings and spreading those riches around. Many will also get poorer in the rich countries as labour will compete globally. Differences between various areas will lessen but differences within any particular area might stay high and even increase. This is seen now all over the world. Reason for the greatest income differences are structural and could be corrected by politicians. I claim the largest single reason for inequality in market economy is intellectual property laws. Other reasons are comparable limitations to competition. Without these structural rigidities and limitations, our personal differences would not amount to such huge income differences.
It can be shown mathematically and historically that static structures increase income differences and slow down growth. Dynamic structures reduce income differences and increase growth. But sadly dynamic structures also increase insecurity. It may well be that many slaves felt secure and Plato did manage to prove that class society is very stabile. Stability and security should not be our main drivers. We cannot be governed with fear, freedom and self governance is risky but worth it.
If all the positive benefits of networking could be harnessed – developing nations could prosper and sustainable growth could be reached as much of the material production can be replaced by virtual systems with decreasing energy consumption.