Reframing Society in terms of the digital revolution

Following on to the UTC’s 40th birthday conference “Innovating Innovation”, UT again, in partnership with the Conference of the French University Principals and Vice-chancellors organized a seminar January 31, 2014 on the theme “Digital Innovation and Creativity”, UTC’s Prof. Yann Moulier Boutang (economics) delivered a lecture on the question “Can digital technologies create economic and social wealth?” Here is an English version transcript:

Reframing Society in terms of the digital revolution

Questions such as the nature of Progress and Machinism are very commonplace in political economy. They were analysed by John Hicks in “Ricardo and Machines”, and revealed a dual issue of technical progress: jobs destroyed and jobs created are not the same – peasant farmers are not industrial workers – and a time lag between the destruction and the creation. Between 1790 and 1820, the deleterious effects of technical progress on employment were almost instantaneous, accompanied by revolutionary movements, and the rehabilitation of the country was only observed as of 1840. Here we have a time lag of 60 years! Could we draw a parallel with what we observe today?

Is Digital the new credo? 
Let us compare: the advent of digital technologies is an innovative breakthrough, not a muscular substitution but one that relates to our basic left hemisphere cerebral functions, which are more complex (extending form pure logic to understanding, etc.) par computing devices. Effects are not on simple services or muscular-based task, but on knowledge-based jobs. The advent of digital technologies revolutionizes substantially the role of knowledge including scientific knowledge. Our concern now is not to be engaged in “pluri-“ or “multi-“ disciplinary studies but rather to adopt a “trans-disciplinary” approach. In projects where a large number of specialties are involved, how are the actors supposed to speak the same language? Social sciences have an opportunity here to recover a non-negligible role and indeed can no longer be hemmed in to the role off public relations and communication of “hard, material sciences”; they can and should be involved, like any other artists or creators, in transdisciplinarity industrial and technological projects. Since 1973 and the first oil crisis, with the associate apathetic slump of employment, growth – when there was growth – was characterized by low recruitment and creation of low value jobs. The labour market was bipolarized and the middle classes were evicted. The most striking illustration here is the case of Germany with, on one hand, its extraordinary performance in manufactured goods, in chemistry and in nanotechnologies and, on the other, a labour market hiring and employing Romanians at 3.5€/hr. As a result, we see chickens and hens being road-hauled to German slaughter-houses and their carcasses returning to France, all of which is, of course, ‘excellent’ for our balance of trade. This bipolarized market and the strong economic pressures on the middle classes are not exactly conducive to building a harmonious Society. When a ‘fordian’ salary compromise becomes systematically systematic, macro-and micro economic problems arise and are followed by people out in the streets, behind barricades. France has a lot of experience in this logical succession of events.

Specific features of a digital revolution 
The digital revolution brings with it a large number of fundamental differences compared with a Ricardian model. Basic worker positions have not decreased, on a global scale. There has been no reduction of working classes in emerging countries. Digital innovation is a long-term process and will not diminish, contrary to the arrival and impact of steal engines and railroads, which took some 30 years to mature. From computers to superconductivity, and optical fibres, the impact of new digital technologies is on a much longer time scale, relayed by a parallel thrust in uses of nanotechnologies that have brought phenomenal amplification to technical progress per se. Moreover, it is probably a phenomenon that runs counter to an older theory about circulation of information and goods, which stipulated that innovation is a form of slow digestion by Society of the lightning-swift and overwhelming discoveries we owe to scientists. Today, in contradistinction, the acceleration is rapidly growing apace. The phenomena observed are concomitant with an ecological urgency. They are occurring in a framework where resources are becoming rarefied, for example the sources and now depleted sites of rare earths needed and incorporated in every tactile digital device today. This differs from the situation that happened during the industrial revolution who simply did not care a damn about destroying the countryside inasmuch as there was endless coal, iron ore and other resources to be collected and used. The ongoing revolution is taking place in a context where industrialization and circulation of services and goods are having to face constraints that are not only organizational or economic, but also must comply with very stringent ecological demands. Our era must now deal with these specific problems that hitherto did not exist in and after the industrial revolution.

Engineers caught between marketing and finance 
Moreover, the relationship between the production sector and Society has been reversed. The previous model complied with a simple form of logic, starting with the notion of the advancement of science, followed by dissemination in Society which is the outlet, a not a fundamental design of the products. Society discovered railroads once the underlying technical innovation was well established. Today we are witnessing ‘downstream revenge’ – it is now impossible to design products without first considering ‘downstream’ in a renewed, reshuffled, marketplace. The digital era is heralding the arrival of consumer-actors who are paying increased attention to non-market factors, such as trust, co-operation, and customer “care”. Those who now order products from engineers are the persons in charge of Sales divisions, which previously were in low esteem compared with R&D and Methods services. Financial staff have also put the engineers in a corner, so to speak, in terms of returns on investments (ROI). The digital revolution, as distinct from the industrial revolution, contains in its DNA the hurdles for classic business models. To gather data related to direct marketing we must now have contributive platforms for design and utilizations, and access to these must be free. This alone raises new problems: the digital revolution is sapping the merchant goods model that had been comforted through the industrial revolution. It is generating a dual crisis, not only in terms of intellectual property rights (IP) but also about the interface between public and private sectors.

A cognitive, intellectual proletarian class 
The fraction of manufactured goods value in the added value and national GDPs is falling sharply. Numerous European industrial sectors are under the threat extinction. The tertiary service sectors are now rationalized, as manufacturing industries were before and, indeed, we now can observe a 4th or quaternary sector. We must now include corporate subdivision break-downs and globalized work forces. Jobs in our local territories must be preserved, but the innovation eco-systems only deal with a small part inasmuch as production tends to go to locations and countries where labour costs are lowest. The digital revolution necessarily induces a reinforced mental taylorism, additional stress as to job security and the arrival of a new, cognitive, intellectual proletarian class.

Reframing questions about growth and employment 
The digital revolution also has its positive side: it is leading to democratic dissemination of education and to activities in ‘open’ knowledge, ‘open’ data, ‘open’ innovation which more than ever before have multiplied our access to knowledge. It encourages inventiveness and creativity through collaborative platforms, search engines, social networking. It has generated new and growing market models where huge corporations have emerged such as Google® or Facebook® in the tertiary sector. These groups are now able to branch out into others domains, such as transportation or health. Public policies are profiting too, to the extent that they can be better fine-tuned. Following directives from the EC in Brussels, public services are now invited to provide open, real-time data and also to make the data accessible to third parties. For example, changes can radically transform certain traditional actors. The French national rail operator SNCF have concluded that by making all their train time tables easy to access, a company lie Google can become the prime gateway to ticket sales, thereby depriving the SNCF of its partnerships with car-hire companies, hotels, etc., and consequently leading to loss of revenues. Questions like these must be addressed. We must manage the digital transformation of our economies in a manner compatible with societal objectives and hence reframe the questions of growth and employment. It is outside factory structures and salaried jobs, taken in their precise connotation that societal and economic answers are to be found. This, in fact presupposes an institutional revolution related to our redistribution system such that we can build new models to partly substitute for the concept of the salaried job position, today in total disarray.