The Great Reset: Paradigm Shift or Paradigm Maintenance? In response to the economic, social and political disruptions of COVID-19, The World Economic Forum launched its Great Reset Initiative in a virtual conference in January 2021. Leaders from the political, business, civil society and scholarly communities joined forces to reframe the global agenda and to fashion a new approach to development that is more inclusive, sustainable, and diverse. Reflections on the proposals put forward in the Great Reset Initiative examine whether the new Davos Agenda represents a reset or a repackaging of the faltering market-led development paradigm, while seeking useful lessons for moving forward.
In the second article in the series, Assistant Professor in International Development Laura Mann questions the common narrative from the World Economic Forum on the need for low and middle incomes to embrace digitisation and to lower any barriers to digital investment and trade. She then sketches out the most concerning trends of digitisation and how the pandemic might be accelerating them.
Taking in the talks and pieces written under the heading of ‘Tech for Good’ at the WEF Forum, one immediate observation is that tech firms sense much opportunity within the COVID-19 Pandemic. Their posts are full of talk about “disruption” and their desire never to return to the “status quo”. While they explain this desire in terms of wanting to address the climate emergency and make the world a more inclusive, sustainable, (what buzz words have I missed?) place, many of their calls for disruption seem fuelled by commercial interests.
Those worried about global inequality should narrow their eyes and read between the lines. In this brief post, I sketch out some of the most concerning trends of digitisation and how the pandemic might be accelerating them. Overall, I stress the case that digitisation appears to be deepening global hierarchies of production and leading to ever greater levels of concentration of wealth and knowledge.
In several WEF posts, authors speak about the need for low and middle incomes to embrace digitisation and to lower any barriers to digital investment and trade. The pandemic is presented as an opportunity for firms and countries to upgrade their systems and to embrace new digital ways of working and organising themselves. In some cases, this ‘encouragement’ is being pushed through aid programs or through heavy-handed trade negotiations.
Readers should be aware that technology firms – and the associated trade negotiators of high-income countries – have long been waging a concerted effort to embed what they term ‘the free flow of data’ into legally binding trade agreements. By making digitisation explicitly a trade issue, tech firms and negotiators seek to gain greater control- through WTO membership and binding trade enforcement- over the emerging digital economy. Any attempts by national governments to favour domestic digital suppliers or to introduce data governance are recoded as trade protectionism. For those interested in these trade struggles, please see the work of Deborah James, Shamel Azmeh and the trade negotiators themselves.
Typically, tech firms and their lobbyists present the benefits of digitisation solely in terms of efficiency gains and reductions in transaction costs. By eliminating such ‘friction,’ tech firms promise low- and middle-income countries a productivity boom and greater levels of investment. Cash transfer programs- in place of dedicated spending on health, education and other social policies- are similarly presented in terms of efficiency and choice. However, it would be wrong to view digital technologies solely through the lens of efficiency, for behind the scenes (or wires) of digitisation, a much more profound restructuring of work, production and services is taking place.
Digitisation comes on the heels of other technological changes, which starting in the 1980s, allowed managers to unbundle production, and identify and isolate those tasks requiring skills and knowledge from those that did not. This unbundling allowed firms to break-down production and first outsource processes to low wage regions within countries, and then later, to offshore them abroad. In some cases, these production shifts allowed low- and middle-income countries to benefit from investment and integration into global production networks. In other cases, integration led to ‘adverse incorporation’.
However, as I have recently written with my co-author, Jana Kleibert, digitisation is intensifying these processes. As production becomes increasingly routinised and managers more able to eliminate skills- and in some cases, human cognition- the developmental opportunities of such restructuring narrow and diminish. Meanwhile existing firms within the sector have positioned themselves as gatekeepers to more knowledge intensive and higher value opportunities. Rather than digitisation flattening the global economy and ushering in global convergence, as Thomas Friedman and Richard Baldwin once naively prophesied, digitisation appears to be strengthening distinct global hierarchies of production.
While such restructuring has transformed global trade and production, it is also changing the way people work within national economies too. Warehouse staff no longer need to categorise- and therefore to think- about the layout of their warehouses; handheld devices record their movements and tell them where to go. If they fall sick or attempt to unionise, managers can swap them out for healthier or more compliant workers. Similarly, a taxi driver no longer needs to know the geography of her city nor the particular rhythms of traffic and market demand. The value of her comparative advantages – or the knowledge and expertise gleaned from her experience – has been eroded. She becomes a cog in the system, easily substituted for another. This restructuring of skills and contextual advantage is occurring, at varying speeds, across the economy, in fields such as health, agriculture, education, to name just a few.
The pandemic threatens to deepen these tendencies as we are forced, through necessary social distancing and lockdown measures – to subject ourselves to greater levels of routinisation and productivity surveillance. The more we routinise and digitise production, the easier it becomes for managers and tech developers to re-order our work in ways that eliminate the need for skills, knowledge, and experience. In the process, they seek to diminish our bargaining power and our ability to disrupt and shape production to reflect our needs. While the technology provider may promise investors greater efficiency, the overall outcome is an intensification of competition among workers and a reduction in choice for consumers. This concentration of wealth and knowledge will have profound impacts, not just on economic competition between high, middle and low-income countries, but also, fundamentally, on the social compacts that hold market-based democracies together.
In high income countries, we are rapidly moving towards a situation in which employment is becoming less important to peoples’ standard of living and where wealth ownership- in the form of inheritance, housing stock and other financial assets- is becoming paramount. Meanwhile in low- and middle-income countries, those global hierarchies of production- and the concentrations of data and expertise they entail- make it harder for workers and firms to benefit from globalisation and foreign investment going forward. Thus, for all their talk of inclusive capitalism and global convergence, digital tech firms appear to be driving us in the opposite direction. Without some countervailing force, in the form of economic redistribution and re-investment, more and more people are likely to remove their consent from the social compact.Thus, while we might imagine all the ‘goods’ that technology can provide, we must ask ‘good for whom’? And focus attention on the most pressing political economic discussion not happening at Davos this year, that long-overdue discussion about the need for taxation, financial intervention and cross-subsidisation, not just within national economies- through programs like basic income grants and more active labour market policies- but also globally and inter-generationally as well.
This article is part of the The Great Reset: Paradigm Shift or Paradigm Maintenance? series.
The views expressed in this post are those of the author and in no way reflect those of the International Development LSE blog or the London School of Economics and Political Science.