“Technology makes a useful servant but a dangerous master.”
– Christian Lous Lange
It seems trite to use this phrase but interesting to note that it’s nearly 100 years old. In our era it is digital technology that calls, siren-like, with its promise of a blanket cure for everything from climate change to education. In the spotlight now is our relationship with it and its influence on the global economic system. A finite world of resources requires us to shift away from an economy based on extraction towards one based on distribution if we are not to head towards what Jonathon Porrit in his book Capitalism As If The World Matters calls ‘irreversible collapse.’
Urbanization, one of the megatrends of this century, will play a key role in this. A staggering 1.4 million people move from the countryside to cities worldwide each week. And from an economic viewpoint, cities are where the action happens, with some 80% of global GDP created in cities in 2015.
The Engine of Growth
Economic development should not become the favorite piñata for a more sustainable agenda, though. Growth has brought with it an advance in social development that is startling in its scale and speed. Figures for illiteracy, child mortality, violent crime and disease have plummeted and the global middle class enjoy access to goods and services unimaginable even 30 years ago.
The problem lies with the recipe for growth: transforming natural resources into an economic engine has proven so successful that it is falling victim to its own success. It’s sustained three industrial revolutions and heralded the Anthropocene. The industrial, extractive model of wealth creation functioned effectively during the nineteenth and early twentieth centuries when populations – and their environmental footprints – were smaller. What is less well understood, in today’s world of abstract digital services, is that this system of resource extraction continues to underpin the most advanced economies today. This becomes a problem as the global population continues to increase towards 10n billion and finite natural capital correspondingly dwindles. Our engine starts to run out of fuel and our metric of success, ‘growth,’ becomes increasingly difficult to sustain.
|Population size||Economic system||Era|
|800m||Agriculture||5000 BC – 1800|
|5bn||Industrial||1800 – present day|
|7-11bn||Digital?||New model needed to reconcile people and planet|
Table 1. Population increases enabled by increasingly developed economic systems
How innovative are we in the 21st Century?
There is a strong case to be made for arguing against the idea that digital = innovation, particularly when compared to historical inventions. How would you choose between access to electricity (developed in the nineteenth century) and owning a smartphone?
On a global scale, the data point to a slowing trend in terms of average output per worker despite the increases in R&D budgets, university graduates and government incentives. It is time for a recalibration of how we define GDP, according to its inventor Simon Kuznets: “Distinctions must be kept in mind between quantity and quality of growth, between costs and returns and between the short and long run.”
The more pernicious side of a growth-based economy is in its so-called ‘externalities,’ also referred to as the ‘dark matter of growth ’ by Walter McMahon, and named so because they are poorly understood and largely undetected. An externality can be thought of as a failure of pricing goods and services which don’t account for the negative effects of hard-to-measure outputs such as air pollution. And in fact if you combine the impact of externalities with today’s model of extractive growth you get to a stage of negative profit margins across many major industries.
The Digital Catalyst
What is clear is the speed at which digital tech can be used to disrupt established markets. The result is an increase in the velocity of the economy, which doesn’t translate into net-positive growth or impact. The small amount of growth which is happening is eating itself. We are, on a grand scale, cannibalizing the planet’s resources to support an unsustainable system. The rise of digital is being used to put ‘industrialism on steroids,’ accentuating the extractive character so evident in our present-day economy.
There is also the social cost of the rise of new business models like the sharing, or access, economy. Take Uber – to paraphrase Trebor Scholz – there is nothing more feudal than an economic model based on workers providing their own capital for tools while bearing the risk of individual failure and deriving profits for the owner of an algorithm.
The situation we find ourselves in is an ever faster moving economy being ‘disrupted’ at ever smaller intervals built on a shrinking runway of natural resources. The question then is how can digital move towards a certifiably positive contribution for people and planet?
Discussions about sustainability, recycling or resource efficiency induce fatigue and are heavy with failure. Instead of a ‘less bad’ approach that doesn’t change the underlying principles, an entirely new operating system is needed. One that produces a deep re-design instead of tinkering around the edges. It is in this kind of system that digital can be used as a tool to unlock innovation rather than reinforce the rut our geo-economics currently sits in.
The Urban Bellwether
As the global urban population grows to 70% by 2050, so will there be a commensurate rise in the economic power of cities. City-states, found in contemporary form in Southeast Asia, are likely to become more important in the West for defining a country’s reputation and economic strategy. In the capacity of socio-economic bellwether, a city therefore can choose to lead on specific development areas.
To give one example, given the huge level of waste at a structural and individual level, cities will become important resource-aggregators of ‘waste’ materials. Currently, the market value for materials considered waste is low, but what if cities set local policy to drive innovation in a secondary reuse market? Or, as the authors of A Good Disruption suggest, encouraging its reuse through a take-back scheme that would create a market for manufacturers or members of the public?
The uptake of circular economy principles, based on feedback, continues apace in cities. Feedback-rich systems are commonly found in the natural world, where the interconnectedness of each component builds resilience. IT has the ability to help us untangle this complexity and introduce connectivity into hardware, software and human interaction.
The internet of things (IoT) is a perfect example of the similarities between digital and natural systems. According to Janine Benyus, Co-founder of the Biomimicry Institute: “The IoT and circular economy are mutually reinforcing..the natural world is network based…leading to systems that are resilient, decentralized, self-repairing and scalable without experiencing complexity problems.” Cities, as focal points for material flows, promise opportunity with IoT-enabled developments like localized smart energy networks and sustainable domestic water usage.
The opportunity here is the opportunity for a value-redefining reboot. Can smart assets become intelligent enough to lead a reduction in material use while redistributing value equitably for human society?
Re-Designing The Model
Perhaps a fundamental reset is needed in order that we don’t fall victim to our own success. The premise of industrial efficiency as the only guiding light for a society transitioning from an industrial to digital age neither serves people nor the planet. The challenge then is in redefining what kind of system we want to create. Trebor Scholz suggests a model, platform cooperativism, which clones the “technological heart of online platforms and unites workers, owners, communities and cities in solidarity.” This is a bold idea but perhaps radical enough to correct our course and create organizations which sustain marketplaces rather than colonize them, moving us towards owning our tech rather than being subjugated by it.