Digital Economy Dispatch #017

3rd January 2021

In 2021, What Will You Value?

I’m not a fan of New Year resolutions. I am unconvinced by movies in which the bad guy changes into paragon of virtue overnight.  I don’t really see the world as that black-and-white, nor why the turn of a calendar page should make a big difference from one day to the next. But I am thinking of making an exception this year. For many, 2020 was very tough year. And for all of us it has brought a raft of changes in lifestyle, perceptions, priorities, and working practices. It feels good to look ahead with a fresh blank page in front of us.

So, as we head in to 2021 what can we expect for the digital economy? I would like to suggest that a dominant focus this year will be to understand more about value. Why it matters. What it means. How it is measured. Who gets it. Let me explain.

Over the last few years there has been increasing concern that despite its obvious advantages, the digital transformation of business and society is in danger of creating a more polarized world that is amplifying our differences rather than celebrating our common characteristics and needs. It is enabling the privileged few rather than offering a springboard for a better world for all. Increasingly the challenge to those individuals and organizations leading digital transformation has been to accept the responsibility for the implications of the current technology shift. This is seen in the ongoing debates concerning data privacy, sustainable use of resources, taxation of online revenues, regulation of platform economies, digital worker rights, and much more.

This ongoing conversation is perhaps best seen in the writing of Maria Mazzucato. In her recent books, “The Entrepreneurial State” and “The Value of Everything”, she makes very strong arguments that the role of the state in driving the digital economy has been under appreciated and a new alliance between public and private institutions is required to ensure that the wealth this has created is more responsibly distributed for the benefit of all. It is a theme that has been picked up by several academics, politicians, and industry commentators.

Although this discussion has been building up a head of steam for some time, her work and thinking have been especially relevant as organizations respond to the current pandemic. Times of crisis always lead to deep critical reflection. A chance to reassess many of the things we hold dear. This was brought home to me in the past few days as I caught up with 2 sets of materials I have had on my long reading backlog for some time.

The first, published in 2017, is the book by Dave Birch entitled “Before Babylon, Beyond Bitcoin: From money we understand to money that understands us”. His masterful storytelling of the history of money reveals a great deal about what society values, how people exchange value, and why these matter in a digital economy. Dave describes the journey as we move from a physical notion of money (“money as atoms”) to digital representations of physical money (“money as bits about atoms”) to digital money (“money as bits”).

One of his key observations is that this shift is not simply a change in the medium. It is a more fundamental reorientation of our view of value and exchange of value. Emerging digital approaches to money such as peer-to-peer exchange using mobile wallets and digital currency alternatives such as bitcoin are ways of expressing who we trust, what we value, and how we view risk. His vision for the future of money looks more like a digital version of past approaches using myriad local currency solutions that reflect our trust network rather than a digital version of today’s centrally controlled approach. Fascinating stuff and essential reading to understand our digital future.

The second is the set of Reith Lectures recorded by the BBC from Mark Carney, the former Governor of the Bank of England, on “How we get what we value”. In a remarkably prescient move, Carney left his role at the Bank of England in March 2020, just as the magnitude of the covid-19 crisis was becoming clear. He has taken the past few months to reflect on his 9 years in office in the context of the pandemic.

His reflections focus on a key question: How do we decide what is valuable, and what do we do about it? In these lectures he views much of his role in the past decade through the lens of this question. His conclusion is that there has been a major shift in what we value (our “values”) and how we then prioritize pricing actions to recognize and support this (their “value”). For example, he sees our view of sustainability of the environment to be a major factor in the way we place a price on many of the things we value.  Similarly, echoing Mazzucato’s work, he recognizes the importance of public service and acknowledges that in light of current circumstances many now see it has been undervalued. As a consequence, he sees a reprioritization of value in the light of these values to be inevitable.

What does this mean in practice for 2021? My hope is that the struggles of the past year present a major opportunity for those interested in the digital economy. A chance to reassess not only the way that digital technology is used, but also to begin a deeper review of where and how it will make a difference in all of our lives. As we see the light appearing through the clouds of 2020, we are presented with an unprecedented silver lining: an open door to guide digital transformation within a new set of values appropriate for a digital age. That’s a great opportunity we must not ignore. And a chance to see 2021 as an important new beginning.

Digital Economy Tidbits

The story of AI in 2020, by Andreesen Horowitz. Link.

Much like databases became a core part of software back in the 1980s, we have entered a new era of “AI/ML inside” software. So, what will the business models look like and do the economics (and ways we have of measuring existing software businesses) apply when AI/ML is inside?

Here’s a view from the analysts at a16z.

It’s time to make tech work for society, not the other way around. Link.

A useful short declaration from Dame Wendy Hall highlighting the relationship between data and society. Main message is that it is time to refocus on public trust in technology.

In 2021 we will see increasing demand for a new kind of social contract, one which recognises the challenges and benefits that technology of all kinds brings to our daily lives, and ensures that governments must act responsibly when it comes to dealing with technology.

Mission Economy – The latest book from Mariana Mazzucato? Link.

This is bound to have a big impact on UK government digital economic policy in 2021. Mazzucato's work is a major influence in today's response to the pandemic.

Taking her inspiration from the ‘moonshot’ programmes which successfully co-ordinated public and private sectors on a massive scale, Mariana Mazzucato calls for the same level of boldness and experimentation to be applied to the biggest problems of our time. We must, she argues, rethink the capacities and role of government within the economy and society, and above all recover a sense of public purpose.