Covid and the growth of digital capitalism

Throughout the lockdowns that many governments imposed, corporations took steps to permit folks to work on-line simply, buy items with out having to enter a brick-and-mortar retailer, and entertain themselves with out venturing exterior. The massive winners had been corporations like Amazon, Apple, and Netflix, whose market worth has soared in the course of the disaster.

Because it occurs, such so-called digital capitalism hinges exactly on decreasing bodily interactions and allotting with the necessity for face-to-face conferences. Covid-19 has rendered many actions digital; for instance, healthcare consultations at the moment are usually carried out remotely. The pandemic has thus allowed the dominant gamers in digital industries to conduct a full-scale experiment relating to the digital world’s assimilation of the bodily one.

To know why the digital financial system goes hand in hand with the necessity to defend oneself from face-to-face interplay, it helps to learn (or re-read) the French economist Jean Fourastié’s seminal 1948 e-book The Nice Hope of the Twentieth Century. Fourastié provided an optimistic imaginative and prescient of the world to return: after agrarian society, which cultivated the soil, and industrial society, which labored with matter, human beings within the service society would lastly domesticate themselves. Schooling, well being, and leisure could be central to the brand new world.

“The civilization of the tertiary sector might be good; half or three-quarters of the inhabitants will take pleasure in the benefits of larger schooling,” Fourastié wrote. “Inside a number of generations, initiative even in low-skill work, and the variety of the technique of transportation and of leisure actions, will favour the individualist tendencies of human beings.” Subsequently, he concluded, “the time is coming when historical past could have superior far sufficient that human beings can legitimately endeavour to elaborate the philosophy of the brand new age, and work in a much less oppressive darkness in direction of a dramatic beginning. In liberating humanity from the labour that inanimate matter can execute on its behalf, the machine should lead us to jobs that, of all created beings, solely human beings can carry out: these of mental tradition and ethical enchancment.”

The concept of a transition to a “humanized” society prompted many commentaries—Léon Blum, who within the Nineteen Thirties served as France’s first socialist prime minister, wrote an enthusiastic overview of the e-book when it was printed—however all recognized a central downside: it anticipated a world with out financial development. Fourastié himself had little question that the service society, by now not being topic to the invasion of machines, would make development disappear. If the commodity an individual sells is the time they spend with others, then development is by definition restricted by the point out there.

This offers rise to what economists name “Baumol’s price illness”, a time period coined by William J. Baumol and William G. Bowen within the Nineteen Sixties. Development is essentially stored in examine when one has to fulfill in individual, whether or not to look at sufferers, train a category, or carry out a play. It’s potential, in fact, to “work extra to earn extra”, as former French President Nicolas Sarkozy as soon as urged his fellow residents to do, however it will by no means be potential thereby to double one’s earnings each 15 years, as occurred within the industrial world of the Fifties and Nineteen Sixties.

With out digital know-how, all service-industry employees lack economies of scale that will enable a single supplier to succeed in an ever-greater variety of shoppers. The idea of economies of scale—whereby a enterprise can improve manufacturing whereas maintaining its prices the identical or growing them solely a bit of—is prime in financial evaluation. It permits a agency to set in movement a virtuous cycle: the bigger its buyer base grows, the extra its enterprise thrives. In any other case, past a sure measurement, the corporate is condemned to stagnate.

Attaining the utmost profit from economies of scale within the service sector requires new applied sciences that may improve the producers’ influence. Movie and tv, for instance, have allowed actors to carry out earlier than ever-larger audiences.

It took a very long time, and quite a lot of trial and error, to discover a resolution to the cost-disease downside. However the reply seems to lie in at the moment’s rising digital society: one has solely to transform human beings of flesh and spirit into knowledge units—bits of details about our well being or our wishes—in order that we could develop into a part of the digital world, the place we might be managed by algorithms. To attain “effectivity”, everybody should develop into knowledge bits that may be processed by different knowledge bits.

Synthetic-intelligence software program will be capable of deal with, advise, and entertain a limiteless variety of shoppers, offered they’ve been digitized beforehand. When a watch on my wrist analyzes my important indicators, an algorithm can develop a personalized resolution to my well being issues. The prophetic 2013 movie Her depicts an AI with the capability for emotion— and the bewitching voice of the actress Scarlett Johansson—that’s in love with a number of million folks without delay. Such is the promise introduced by Homo digitalis: that of a world emancipated from the bounds of the human physique.

As Fourastié predicted, human beings are central to the service society, however they need to first be digitized with a view to fulfill at the moment’s inexhaustible thirst for development. The good covid-19 lockdown has made clear that development as soon as once more turns into potential on-line as soon as persons are free of the crucial of face-to-face encounters.

Clearly, the massive query is whether or not the digital remedy might be worse than the illness. Are robots going to exchange people and improve poverty? Will industrial assembly-line work give technique to a Taylorism of the thoughts, through Fb and Netflix?

By way of a rare curvature of historic time, the previous questions of the commercial world are resurfacing on the coronary heart of the digital one that’s changing it. Will we due to this fact must reprise each stage of the previous world—together with its episodes of ethical chapter, monetary crises, and financial insecurity—or can we do higher? In 2022, we could begin to discover out. ©2021/PROJECT SYNDICATE (www.project-syndicate.org)

Daniel Cohen is president of board of administrators of the Paris Faculty of Economics.