Digital Transition Phase

Transition phase. That humanity is in phase transition on its way to a digitalised society (the liquid society) will gradually become clear to everyone. Where that digitised society differs from the current one, however, is another point. The vast majority of people believe that the current basic structure of the world will remain more or less the same. But that will with great certainty not be the case.

Eroding nation states. The digitising world will also profoundly affect the ancient country structures, the nation-states with their sovereign powers. The current nation-states, with the exception of the US and China, are increasingly losing their grip on world affairs. And it is highly questionable whether even China and the US, despite their clatter of weapons, can curb the digital forces that are disrupting society. What’s going on?

Digitization doesn’t stop at borders. Digitisation has the property of ignoring existing laws, national borders, the power of nation-states, international institutions. Digitisation is a new technological development which, in contrast to previous technological or industrial developments, is largely “underground”. It is a development that really turns everything upside down, from the lives of individual citizens, to corporate structures, to the development of nations.

A digital peat fire. Digitisation is the driving force behind globalisation and migration flows. These are developments that really nobody, not even Mr Trump or Mr Xi, can stop. Digital developments and their effect on everything that exists in society is like an underground peat fire, which at unexpected moments rises above ground. Digital developments are neither good nor bad, as are all technological developments. They just happen and it is mankind who uses the technologies for better or for worse.

Turning point. More and more people are calling for control of new developments, because more and more people see and notice that all kinds of things are getting out of hand. In a next article (the Digital Black Hole) countless things that are getting out of hand will be discussed. The key question is whether all will stay as it is or whether humanity is really on a turning point, of profound, fundamental social changes. Undoubtedly the latter is at stake. Digitisation is much more than social media and online shopping concepts. It is much more than the hackers who block or steal the data files of a few. Digitisation is an unparalleled “game changer” that will completely and profoundly disrupt society in the decades to come.

Everything connected with everything. Digital developments, the internet and social media in particular have done something that has never happened to mankind in any other way before. That is that literally anyone (with internet connection) can come into contact with anyone else at any moment. That in itself seems to be something silly, but it is not. Of course everyone could predict that it would be nice if a grandmother in the Netherlands could send a movie to a cousin in Australia. But what nobody predicted is that millions of people will suddenly and shamelessly go on the internet talking about anything and everything. As it were, a complete short-circuit has arisen on earth between all people, but also devices (Internet or Things). This option suddenly offers countless possibilities that are currently developing at lightning speed. Everyone can know what is happening elsewhere. Everyone can inform everyone else about events or important matters. Everyone can digitally group with kindred spirits. Anyone can digitally attack or threaten anyone else. But they can also help or encourage others.

New world order. As a result, thousands of new, digital communities suddenly emerge. Across classical cultures, physical borders, language borders, political barriers. It was the author McLuhan in the sixties who, through his book: “The medium is the message”, pointed out the gigantic impact of a medium on society, regardless of the content of a message. His message is clearly demonstrated and proven with the advent of social media. Social media are in the meantime deeply rooted in the existence of billions of people and are often the most important source of information or activities. But apart from social media, the internet in a broader sense has also led to thousands of new forms of communication between companies, scientists, artists, politicians, opinion leaders, and so on. This has led to millions of new forms of collaboration, particularly in the private sphere among consumers and businesses.

Boundaries start flowing: the liquid society is emerging. The many new networks and digital groups in all kinds of sectors have eroding effects on traditional forms of governance and the organisational form of sectors. The first sectors touched were retail and travel, but in fact all sectors are upside down and are busy in the process of establishing digital platforms or services. As a result, enormous shifts are taking place within all sectors, both private and public. And in many business sectors it is pumping or drowning. Either one goes along and plays a primary role in the digitisation transformation, or one is phased out. And then it’s usually, and crucially, about replacing thousands of nationally organised business models and sectors with international platforms. This blurs national borders and makes national legislation less relevant. The world is changing from a fixed structure to a more fluid one: digitisation melts the world down into one digitally intertwined world.

Production growth stagnates; just digital grow. In most countries we are currently seeing an economic standstill in classic sectors, such as construction, production, transport. On the other hand, we are seeing an impetuous growth in all kinds of digital services. Those who are active on the stock exchange and put their money in ASML, Google, Apple, Amazon, etc. were the lucky buyers and often managed to make dozens of percent profit per year. However, those who had put their money into the traditional sectors have hardly experienced any growth, or only decline. At the moment, economic growth is mainly driven by tech companies and platforms. And that is precisely the conversion of thousands of classic, nationally organised sectors to international digital business models.

Governments confused. Governments are stumbling behind all these developments on. Contrary to companies and consumers, governments hardly work together digitally. At the national level there is great confusion about how sectors such as health care, banks, insurance, social services, etc. need to be restructured. How to deal with all kinds of new forms of work on the labour market, such as the self-employed, as well as the demand for other forms of work (much more technology and IT, much less traditional occupations). All kinds of issues that need to be tackled internationally, such as data privacy, cyber crime, migration, infrastructure, are completely deadlocked because national governments do not know how to cooperate internationally on these issues.

National compartmentalization. Politicians are still on their way of national compartmentalisation, like with such matters as an Electronic Patients File (EDP), or Digital Passport, while it has long been clear that these matters can only be solved internationally. Laws, especially fiscal laws, are no longer good because the new platforms use a business model that is not taxable under the old nationalist rulings. There must be international tax frameworks for the tech giants and platforms. National governments are miles behind consumers and businesses in collaborating and communicating with each other online.

Opposites worsen. And what a few policymakers, usually in back rooms, whisper: “we need to do much more together internationally, because nationally it doesn’t work anymore”, is not in the front rooms, because populist currents with a lot of noise precipitate everything that doesn’t fit in their nationalistic, populist stall. In summary, these are many and perfect ingredients for a major crisis.

Crisis is therefore inevitable. Digitisation is unstoppable and continues. Simply because the consumer embraces the benefits of many digital things offered by the platforms. And because companies like to work together internationally, as do scientists and many others. But the populist movements, partly with the help of their fear messages on social media, are fighting tooth and nail against more international cooperation. Europe, in particular, with an extremely weak governance and countries that have problems with their domestic governance, will have a tough time in the coming years. But also the US and China will not be able to escape the ongoing digitisation proces. Even these big powerful countries will eventually have to bow to the digitisation, which will force them to globalise their activities, even though this may take another ten or twenty years. After all, companies and scientists will continue to cooperate internationally. More and more issues (climate, migration, cybercrime, etc.) are getting completely stuck at the national level and are forcing also the US and China to cooperate more multilaterally.

What does the liquid society look like ? If nation states have to give up their sovereignty more and more, what will replace it ? Which structures will disappear, which new ones will take their place ? That in a following article.

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