A few weeks ago, we wrote about the notion that the successive technological revolutions of the last 250 years can also be understood as a single “Deep Transition” towards industrial modernization. Following the authors who introduced this idea, we argued that a new Deep Transition has been set in motion and this one is supposed to fix the fundamental problems of modernization we experience today: pollution, climate change and (global) inequality. This week, we ask what the resulting socio-economic paradigm could look like and what role digital technology can play in all of this.

Our observations

• According to Johan Schot and his co-authors, a Deep Transition (DT) can be understood as “a series of connected and sustained fundamental transformations, of a wide range of socio-technical systems in a similar direction”. Together, these processes produce (and build on) a shared rule set of best practices, go-to technologies, economic institutions and metrics to measure success. As for the foregone DT, this direction was industrial modernity and it was fully focused on increasing productivity and monetary gains.
• As the authors of the original papers argued, the next DT is likely to do away with this single-minded industrial paradigm and make for a broader-minded and more sustainable and egalitarian socio-economic system. We can already distinguish signs that a new socio-economic system is in the making. The debate around a broader definition of welfare (instead of steering on GDP alone) is gaining momentum and the same is true for (related) ideas such as doughnut economics or the circular
• More concretely, taxes may shift from labor to consumption and resource usage (e.g. the Ex’tax initiative) or to capital, and (consumer) prices of goods and services may come to represent true costs (i.e. internalizing the costs of negative externalities in product prices).
• With the rise of the sensor-based economy and data analytics, digital technology holds the promise of measuring everything (e.g. in the context of smart cities) and as such create the (real-time) dashboards needed to put the abovementioned ideas into practice.
• Technologically, digitization and AI will thus be at the core of this DT. Others have also pointed to the fundamental changes that AI will bring about, although their articulation of the coming DT is somewhat different. In The Second Machine Age, Brynjolfsson and McAfee are similarly optimistic, Yuval Harari describes how A.I. will transform humanity and Elon Musk even predicts that A.I. will come to dominate us.

Connecting the dots

From a technological perspective, the first DT was mostly about mechanization and the substitution of traditional sources of power (water, animals, humans) by engines of different sorts. Along with technological change, the entire socio-economic system shifted towards a single-minded focus on economic growth and money as the pivotal metric.The next DT may also encompass such a double shift of strongly interrelated technological and societal change. On the one hand, there’s information technology and its offspring (e.g. A.I. and quantum computing) leading to a new economy that is fueled by data and which produces insights about our activities, their consequences and potential solutions. On the other hand, there’s the societal shift towards a more open-minded system in which a broader definition of welfare becomes key to (political and business) decision-making and true costs will be charged for goods and services.Indeed, one could argue that IT and this societal shift already joined forces when they both began in the post-WOII era. That is, our understanding of the problems caused by the first DT is (partly) enabled by the rise of information technology as it laid bare the scale of problems and allowed for a more systematic analysis of the nature of these problems (e.g. early climate change models or studies into growing inequality). And the direct impact of globalization (resulting from new modes of transportation which stem from the first DT) and new communication technologies may be problematic in terms of resource use and unfair distribution of wealth, indirectly, it also forces us (and decision-makers) to take hitherto faraway regions and people into account and do them justice.Today, information technology is a vital enabler of cleaner means of production, an energy system based on renewables (e.g. wind turbines or smart grids). Looking forward, more data will likely force us to acknowledge the broader impact of our (consumer) practices and the vast interrelations between different societal and economic domains. In other words, data could force us to adopt a broader definition of welfare, simply because we will see the bigger picture and, practically, it will be possible to calculate and charge the “true costs” of any product or service. On a higher level, fine-grained simulations of the economic, environmental and societal consequences of certain decisions may come to influence public and private decision-making.To be sure, history has shown that technological innovation never benefits everyone and everything and there will always be downsides. However, with a little optimism, there is reason enough to believe that the next generation(s) of IT will actually be a source of inspiration and a decisive enabler for societies that want to turn the tide of industrial modernization.

Implications

• We can already distinguish a moralization of society (for better or worse) due to social media and the ability to record and communicate wrongdoings (e.g. #metoo, the Black Lives Matter movement or the Panama Papers). The datafication of society will bring this moralization to a higher level and start to impact businesses and governments. To some extent, consumers are already taking the lead in the moralization of consumption and the growing popularity of “good” products (see also our note on ethical consumption in this Macroscope).
• The case of natural gas extraction in the Netherlands clearly illustrates how a combination of broader societal considerations and the power of data (on the relation between extraction and earthquakes) can lead to decisions with enormous monetary costs, but potentially great societal benefits. More of such decisions, in which the logic of mainstream economics is subordinated to a broader idea of the Good Life, are likely to follow in the future.
• Key economic and societal metrics will change. Some of these have not been imagined yet, others we have already thought of, but will only become measurable over time (e.g. internalizing externalities). Cf. by the end of the 19th century, statistics of the American economy were almost incalculable (it took more than 10 years to finalize each (10-yearly) census. The development of punch card machines proved vital in tallying up census data and keeping track of economic development.