Saturday, May 23, 2020

New Economic Realities: Datanomics of the 21st Century

Data is integral to any business operation. Companies constantly seek out new sources of competitive advantage based on developments in data and technology in order to make accurate predictions and intelligent decisions about where to invest their resources. Data analytics, traditionally known as market research and internal analysis, is being used to assess risks and identify growth opportunities and is becoming a valuable tool to many organizations. In today’s business environment, it’s impossible to operate without data, in fact, it now becomes a primary asset. The Economist has called it the new oil that will ensure future prosperity.

The data economy began with electronic information systems called ‘relational databases’, first invented in 1969. Presently, the amount of data we produce doubles every year. In other words, in 2019 we produced as much data as in the entire history of humankind through 2017. Every minute we produce hundreds of thousands of Google searches and Facebook posts. These contain information that reveals how we think and feel. Soon, most things around us, including our clothing, also will be connected to the Internet. It’s estimated that by 2025 there will be 80 billion networked devices, 10 times more than people on Earth. Then, with immersive computing going mainstream, with connectivity explosion going beyond 5G networks currently under deployment and 6G currently under development, the amount of data will double every month.

Data is indispensable but companies need the right kind of data to grow their business: Data needs to be accurate, up-to-date and relevant. To unlock the full value of data, organizations need to extract meaningful insights aligned with their objectives, in much the same way that oil is refined for specific purposes. Businesses are collecting ever-growing volumes of information from all kinds of sources, including websites, enterprise applications, social media, mobile devices, and increasingly the Internet of Things (IoT). Advanced data analytics becomes ‘data mining’ which is the automated process of scrutinizing massive amounts of data to determine trends and patterns, to establish relationships, to solve business problems or generate new opportunities.

The Age of Dataism, where everything from your shopping habits to your biometrics is subsistence for machine learning algorithms that want to understand everything about you, has many great benefits. All that data might be used to revamp up user experience; it could be used to assist in everything from healthcare to emergency response. Technological advances like the Internet of Things, smart home and self-driving cars could be the next step in time-saving and convenience in the same way that electrical appliances like the refrigerator and air conditioner were decades earlier. Also, they will be easing us deeper into a world of “participatory surveillance,” where we exchange comfort and convenience for an external presence that’s always monitoring us in the background. We’ll be entering an era when this transactional data exchange may no longer be optional.

The algorithms are everywhere – like the Internet or electricity – and once AI becomes integrated in our day-by-day life there’s no getting rid of it. We’ve seen that before. The invention of the steam engine turned sailing into a hobby and cars replaced horses. Stakeholders of organizations may ultimately push algorithmic management into mainstream use. Not only does this type of management provide more transparency, it also prevents embezzlement, favoritism, and mischievous actions. Office politics will soon become irrelevant. The AI-executive will always follow the board’s strategy. One would find the AI-supercharged Global Brain at the center of every company, facilitating interactions and access to information. One of the most crucial components of the new data-driven “experience economy” would be an open, borderless, payment protocol based on ‘blockchain’ technology, such as Bitcoin and Ethereum. We may soon see the emergence of other even more advanced payment protocols, such as ‘holochains’Over time, most corporations will convert to 100% virtual entities, doubling the size of data economy over the course of just few years.

The growth of this new digital economy is predicated on fluidity of data not on withholding or buffering of data. In time, we’ll learn to distribute data in fairer ways and even monetize personal data but it may be painful growth ­– many people are still stuck in the 20th century mentality. We well may be the very last generation that cares so much about privacy. If history has taught us anything, it’s that humans are willing to give up more privacy than they tend to realize. At the turn of the century, it would have been unthinkable we’d all allow ourselves to be tracked by our cars, phones, and instant check-ins to neighborhood locations; but now most of us see it as a worthy trade-off for optimized commutes and dating. As we continue walking that fine line between exploitation and exploration into a more high-tech future, we’ll make more concessions previously inconceivable to most of us. Fast forward few years ahead, we’ll have less privacy but we’ll gain so much more in return – safety, convenience, crime prevention, immediate disaster response, and easier access to information.

As machines and algorithms get smarter, they’ll inevitably replace a widening share of the global workforce. The proposals to alleviate the burden on the most vulnerable segment of population vary, but they share a common premise. A robot tax and financial transaction fees on high-frequency trading could raise revenue to retrain those displaced workers, or provide them with a basic income. The real threat in economic milieu is that automation will amplify economic disparities to such an extreme that life will become unlivable, leading to unprecedented social unrest and economically devastating revolts. A future scenario, like in the movie “Elysium” (2013), where the majority of humans live a subsistence-level income funded by the outputs of a robotic labor force, while a “1 percent” upper class – those in control of the robots – build their empires and reach for the stars, is not exactly appealing. Yet, this is a scenario that’s depressingly familiar today. If we don’t make the course corrections, humans may find themselves in a situation where they must compete for whatever paid jobs are still available to humans in the robot-dominated workforce.

According to the 2018 study by Harvard University, 51% of Americans between the ages of 18 and 29 no longer support capitalism. For millennials in particular, the binaries of capitalism vs. socialism, or capitalism vs. communism, are shallow and outmoded. Far more likely is that people are realizing – either consciously or at some gut level – that there’s something fundamentally flawed about a system that is based on elitism, artificial scarcity, and cutthroat competition. It is based on fear and greed which is especially visible in the capital markets. This far-from-fair system has corporations as its dominant players that possess insectoid intelligence, if viewed as “superminds,” and have their single goal turning natural and human resources into capital, and do so more and more each year, regardless of the costs to human well-being and to the environment. 

Our descendants may look at us as a violent species willing to spend 1/5 of GDP (in the U.S.) on funding the military and willing to kill each other off instead of using those economic resources on science and technology. They would probably wonder why we failed for so long to prioritize peace and progress. Should you talk to someone in the 2040s, they would probably refer to the capitalist period of our history, as we now refer to feudalism.

-Alex Vikoulov

P.S. This article is adapted from The Syntellect Hypothesis: Five Paradigms of the Mind's Evolution in which a long chapter is specifically dedicated to economics. Why am I talking about economics in the philosophy book? In our interdependent world, everything is woven into the tapestry of life and our today’s livelihood heavily depends on economy. In the long run, capitalism won’t survive, nation-states won’t survive – we will but as a new technological species – through a metamorphosis on the planetary scale – the human-machine “caterpillar” transforming into a higher-dimensional “butterfly.”

*Image Credit: Shutterstock

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