The Digital Revolution and the New Social Contract

This research program analyzes the digital domain and the fracture of our social contract to advance realistic solutions for future agreements.

In the last two years, humans generated more data than in the past twenty thousand. Today there are over 8 billion connected devices but that figure will jump to 40 billion by 2025 with the coming of age of the Internet of Things. This systemic shift in how we operate, communicate, register and process data will change our economy, politics and social interactions. The implications of digital transformation are manifold and range from a changing landscape of economic power, to the redefinition of privacy, to the geopolitical implications of the emergence of data.

This process, however, also brings with it numerous challenges linked to the generation and distribution of income. The Social Contract—that in the US was centered around social mobility and in Europe around economic security—looks increasingly broken and the gap between the highly skilled and everyone else is growing. These technological and economic transformations have reshaped the relationships between education, work, opportunities and welfare, rendering our previous social contract outdated, and making it necessary to establish a new one that benefits everyone.

The understanding and governance of systemic shifts of this nature requires a new set of policies and regulations to foster innovation around data and its governance while improving social inclusion. This research program tries to support this process by analyzing the transformation of the digital domain and the fracture of our social contract from a multidisciplinary perspective and advancing new and realistic solutions for future agreements.

The first work package (Digital Economy, 2022), analyzed the social impact of the digital economy and how to achieve inclusion while fostering innovation. The second work package (Data Economy, 2023) studies the emergence and governance of the data economy.

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THE RESEARCH PROJECT
The project is being developed across four work packages that will run in sequence with overlaps. The first three address different questions raised by the emergence of the digital revolution at the individual, company, regional, national and European levels. They rely on the input of top researchers in the field from top institutions with a global approach, but also from researchers with a regional focus as well as professionals from the private sector, thus drawing lessons from the different fields to provide a holistic analysis that will serve as the basis of a fourth work package related to the new social contract, with proposals and recommendations for policy makers.

1. THE DIGITAL ECONOMY (2022)

This first work package analyzes the social impact of the digital economy and the resulting power relations while drawing conclusions on how the social contract needs to evolve to respond to the new reality.

Our report deconstructs the perception that technology and the digital economy are the solutions to deep social problems. Trends in the digital economy reveal that institutions, which have previously not satisfied citizen demands, are now under closer scrutiny and criticism. Many of the developments in the digital economy, such as blockchain and crypto, aim to replace existing institutions and structures of authority because they failed in the past in the eyes of many.

Digital inclusion cannot be the victim of innovation. Therefore, it should not be argued that there is an inevitable trade-off. On the contrary, societies need to work to find the balance that brings everyone along according to their social particularities and contexts.

Publications:

  • The Digital Economy and the New Social Contract Report (2022) by Otero and Iglesias
  • Policy Paper 1 Can the EU Digital Markets Act Achieve its Goals? (2022) by Renda
  • Policy Paper 2 Is There Social Value in Crypto Economics? (2022) by Dempsey, Otero and Iglesias
  • Policy Paper 3 Closing the Digital Skill Gap (2022) by Stephany
  • Policy Paper 4 Supporting SMEs in the Digital Transformation (2022) by Meier, Köhne, Wolf and Gerling
  • Policy Paper 5 Digital Inclusion vs. Innovation Momentum (2022) by Chakravorti, Chaturvedi and Compton
  • Policy Paper 6 Public Sector Artificial Intelligence Strategies (2022) by Entsminger
  • Policy Paper 7 Technological Foresight (2022) by Loesekrug-Pietri
  • Policy Paper 8 Cultivating Resilience in Rural Areas (2022) by Pordomingo and Tomasello.

Partners: Fletcher School at Tufts University, Humboldt Institute for Internet and Society, Oxford Internet Institute, Institute for Innovation and Public Purpose at University College London, Centre for Digital Governance at Hertie School, Joint European Disruptive Initiative (JEDI), and Centre for European Policy Studies (CEPS).

2. THE DATA ECONOMY (2023)

The second work package studies the emergence and governance of the data economy, and how it can be fair, competitive, and safe. 

EU regulators want to promote innovative data-driven services, increase consumer choice, reduce costs, and stimulate competition, while giving control over data to companies and people who generate them. How should regulators define, regulate, and supervise the data economy to achieve this? How should the EU approach it? The overall aim needs to be to build a concept of data economy within the internal market, across all sectors.

In order to have a positive impact on the economy and society, the future data economy should be fair, competitive, and safe. It should have the same rules for all participants, promote incentives – e.g., compensation – for innovation, and fairly allocate liability to better protect consumers, also from a privacy point of view.

Publications:

  • Policy Paper 9 – Data Policy: A Conceptual Framework (2023) by Renda
  • Policy Paper 10 – Data Collaboratives: Enabling a Healthy Data Economy through Partnerships by Verhulst
  • Policy Paper 11 – Towards a Fair Data Economy: Key Lessons from Finland on Building a National Roadmap (2023) by Halenius, Rastas, Toivanen and Kippo
  • Policy Paper 12 – Digital Public Infrastructures: Lessons from India for a Thriving Data Economy (2023) by Sharma, Ramanathan, Iyier and Abraham 
  • Policy Paper 13 – TBA

3. POWER IN THE DIGITAL ERA

Upcoming

Geopolitical confrontation is shifting from the public to the private and digital space and possibly to a combination between the two. The technological race led by the US and China is impacting companies and supply chains across the world, as a new security dimension of digital sovereignty gains relevance. The issue of who “owns” the capacity to foster innovation, has or denies access to knowledge, controls data, has the necessary hard and soft infrastructure, and shapes and enforces legislation in the digital domain, will be central to the geopolitical considerations of the coming decades.

Some of the questions this work package will address include:

  • What is the contour of great power conflict in the 21st century and where does Europe stand?
  • How is the technological race changing the power relation between states, and between states and companies?
  • What form of global/European governance is needed to mitigate these new challenges?
  • How can states and companies protect themselves from cybersecurity threats?
  • How can artificial intelligence be transparent and accountable to consumers and citizens?
  • Who will write the new rules of the (geopolitical) game in this digital revolution?
  • Will we see the emergence of different digital ecosystems, and will they be inter-operational?
  • Or are we bound to the emergence of digital blocs and geopolitical conflict?

4. A NEW SOCIAL CONTRACT

Upcoming

The digital transformation brings with it numerous challenges linked to the generation and distribution of income. Over the past five decades the world economy has been shaped by globalisation and technology. However, productivity gains and workers’ salaries have been decoupling, making a large share of Western workers experience stagnant or falling real incomes. The rise of illiberal populism and the decreasing belief in democracy is the clearest manifestation of this social and economic crisis. How to address this fracture is perhaps one of the great questions of the digital age.

Some of the questions this work package will address include:

  • How does a fair and effective regulatory and tax system look like for the digital age?
  • How can the digital laggards (at the individual, company, regional and country level) catch up with the average?
  • How will biotechnology shape the future citizen? How will it impact the relationship between people and their governments in a new social contract?
  • How can governments and companies combat the polarisation of politics?
  • How can ownership and empowerment be developed in the digital revolution?
  • What role should the private sector play in a new social contract?
  • How can the state maintain effectiveness and transparency?
  • Is the Western model of liberal democracies able to compete with the techno-authoritarianism of China?


RESEARCH TEAM

ADVISORY BOARD