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Digitalization and degrowth

By: Steffen Lange


Digitalization degrowth

A highly relevant subject for degrowth

Apparently, everybody is talking about digitalization. It was the central topic at the last World Economic Summit in Davos; recently, two German ministries have published White Papers (BMWE, BMAS) on the issue, and it’s all over newspapers and magazines. It is said to revolutionize not only industrial production (Industry 4.0) but almost any aspect of our lives: Digital devices change the way we consume (online-shopping), we communicate (social media), our mobility forms (car and bike sharing, autonomous cars) and the way we organize our communities (smart cities). It has also entered the political sphere: In the US election the rationalization of jobs due to digital technologies was a central motivation for Trump voters and additionally, the use of digital media, in particular Facebook, was influential in the election campaigns. Hence, we see that digitalization plays a major role in economic as well as in political contexts. The discourse on digitalization has been dominated for many years by authors who take as a given how digital technologies look like and how it changes economic, social and political processes. In this view, the only question we as a society can address is how to organize the changes of digitalization in a socially acceptable manner (Brynjolfsson and McAfee, 2014). Increasingly there is also a debate however, that it is possible to shape digital technologies and their applications in different forms. This opens up the discussion for various possible “digital futures”. In any case, one basic statement holds true: The impacts of digitalization might very well shape (or disrupt) many institutions and relations of our current society. How those arrangements will look like is a crucial question of the 21st century. Therefore, social movements need and should engage in the topic. Change always creates winners and losers – and social movements can help to prevent that the less privileged in society bear the costs. Change also means the chance for interventions. New rules need to be developed, new compromises are to be negotiated. That is the time for social movements to effectively engage. Social movements, which ought to raise their voice in the vivid discourse, are the environmental movement in general and the degrowth movement in particular. This is also because in the coming years, the application of digital technologies will affect key topics of these movements. And it will lead to new risks as well as new opportunities of intervention. I see mainly five areas, where topics of the degrowth community and the debates on digitalization intertwine: 1. growth and decoupling, 2. the smart dictatorship, 3. inequality and jobs, 4. global justice and 5. convivial digitalization.

Growth and Decoupling

One of the central promises of digitalization is economic growth. In Germany, the discourse on digitalization is driven by the influential industries, who have come up with the term Industrie 4.0 (engl.: industry 4.0) (a good introduction provides this Arte documentary (German)). It implies the application of new digital technologies in production processes, in particular to organize production with less human labor. In other words: It means to increase labor productivity. If this development is only half as revolutionary as promised, labor productivity will rise significantly. One possible scenario is that these increases in productivity are used for a new phase of economic growth. In case of full-time employment, large increases in labor productivity imply high growth in GDP. As Niko Paech (2017) and Tilman Santarius (2017) have argued, this puts the question of decoupling economic growth from environmental throughput back on the agenda. It appears to be improbable that digitalization (the application of information- and communication technologies, ICTs) will allow for a sufficient decoupling. As a reminder: We need to speed up our increases in resource-efficiency from a current average of 1.5% to 4.4% to reach climate goals – and even that would only keep us under 2 °C (and not 1.5 °C as recommended by many environmental scientists) to a probability of 66% (Antal and van den Bergh, 2016). Research so far shows a positive relationship between digitalization, energy use and economic growth. The (preliminary) analysis is that digitalization simultaneously leads to economic growth (as it leads to higher labor productivity) and to more energy use (because ICTs need energy to work) (Salahuddin and Khorshed, 2016; Cardona et al., 2013). And even if it was possible to use digitalization to decouple economic growth from greenhouse gases: It would probably lead to other environmental problems, in particular regarding resource extraction (see the discussion below on global aspects). This does not mean that digitalization has to be negative in general when it comes to environmental sustainability. The transition to 100% renewables is difficult to imagine without digital technologies. They allow adjusting the demand for energy (by households and firms) to the supply that is becoming less flexible as sun and wind are barely controllable. However, the current economic structure including its continuous generation of economic growth countervails such positive features. The question is therefore, how to use the opportunities of digitalization while preventing its adverse environmental effects. Decoupling has been a central topic in the degrowth community. It is one of the strongest arguments against continuous economic growth. My impression is that in the near future, this debate will necessarily include the role of digital technologies. In fact, the debate is already starting, as proponents of “Industry 4.0” promise large increases in resource efficiency (Final report of the working group Industry 4.0, 2013) and therefore a positive contribution by digitalization to the environmental question. The degrowth community should engage in this discussion: For one, to stay at the top of the decoupling debate, but also to cast a critical eye on the question what environmental effects digitalization will have.

The smart dictatorship?

Harald Welzer develops a grim view on the possible implications of digitalization in his book Die Smarte Diktatur (engl.: the smart dictatorship). His argument: By using digital technologies (emails, social media, apps, internet searches etc.), each individual generates detailed data on herself. Additionally, the internet of things, i.e. sensors in our clothes, toothbrush, car and fridge etc. can accelerate data harvesting immensely in the future. This allows whoever has access to the data to manipulate or even control the individuals. In the near future, the data will include literally every aspect of life: There is potentially data on what time you stand up and leave your house, how you get to work, who your friends are, what coffee/books/music/travel destination you like, which articles you read, what political views you have, what you know and what you don’t know etc. etc. Companies use these data to sell you products. You get individualized google search results and personalized commercials on most websites. Political actors use the data to influence voting behavior. As we have seen in the US election, personalized Facebook communication has become an integral part of election campaigns. Governments can use data to manipulate and control people. Since Edward Snowden, we know that secret services (at least the NSA) have access to most of internet communications. This allows them to get a detailed view on the population and to anticipate possible threats and opposition movements. Another scary example is the situation in China. There, services similar to those of Facebook, Google, Instagram, Whatsapp, electronic payments etc. are all combined in one hand: The app “WeShare”. The vast majority of people uses it and the government has access to the data generated (a great explanation of the app and its potential implications gives this video by the New York Times). Hence, we have already reached a situation of “a smart dictatorship”. If the vision of a degrowth society implies a relatively equitable distribution of power (as I would argue), the issue of data ownership and access to data cannot be excluded from the debate. Other actors (e.g. Netzpolitik.org and Chaos Computer Club have been working on such issues for many years in Germany) and movements are certainly more familiar with these issues and have been campaigning on it for a long time. Nonetheless, the connection to degrowth is strong – in particular, the use of data for environmental purposes (e.g. the energy transition) must not come at the expense of privacy. More generally speaking, the debate of the eco-dictatorship receives a new turn regarding the availability of data and degrowth proponents could play an important role in opposing such approaches.

Inequality and Jobs

Most analyses of digitalization predict that it will increase inequalities and lead to the rationalization of many jobs (Brynjolfsson and McAfee, 2014). Let’s start with jobs: This phase of technological change will not only continue rationalizing physical jobs (e.g. factories and logistics) but also cognitive jobs. To give a few examples: Autonomous vehicles may make the large number of truck and cab drivers obsolete; translation programs replace translation services; certain articles are being written by algorithms; teachers are replaced by online tutorials. It is important to understand that it suffices to replace part of a job – so that the remaining tasks can be redistributed among the remaining employees – to increase unemployment. Several studies have tried to assess how many jobs will be rationalized by digitalization. Frey and Osborne (2013) estimated that it could be 47% of jobs in the USA. The same calculation reveals a reduction of 42% in Germany (ZEW, 2015). The Centre for European Economic Research (ZEW, 2016) on the other hand forecasts 9% in the USA and 12% in Germany. The great difference is due to the question, whether jobs can be rationalized although only part of the tasks conducted in the jobs can be done by machines or algorithms. A study by the Institute for Employment Research (IAB, 2016) even comes to the conclusion that digitalization generates as many jobs as it rationalizes. However, this is due to a massive increase in economic growth – which would be problematic from an environmental perspective. These developments on the labor market are one reason for increasing inequalities: People who used to have well-paid and secure jobs are forced into unemployment or must accept more precarious jobs. While middle and low-paid professions are most affected, certain qualifications (in particular complex tasks and of course jobs in informatics and engineering) are increasingly demanded. This leads to rising wages for employees whose wages are already high. As a result, wage inequality increases. Additionally, the distribution of income between wages and capital changes – with an increasing part of income going to the owners of capital. Intuitively speaking, the more robots and software is used in production, the more the people, who own the robots and software, earn. If degrowth is about an “equitable downscaling of production and consumption” (Schneider, Kallis and Martinez-Alier, 2010), these developments are anything but unimportant. In the end, the questions of who owns the means of production and how production is distributed among society, are back on the table.

Global justice

There is a lot to be said about the relation between digitalization and global justice. Some examples: The application of information- and communication technologies implies an immense increase in the demand for certain raw materials (DERA, 2016). This often implies environmental problems in the region of the exploitation sites (PowerShift, 2017). Furthermore, labor rights are often violated in the exploitation of such resources and also in the manufacturing of digital devices (Amnesty International, 2016). Digitalization also fosters the development that access to such materials are of vital importance to industries around the world – implying further (geo-)political engagements (e.g. the German industry asks the German government to guarantee access to such resources in order to serve the increasing demand).

Convivial digitalization?

Does that mean everything looks gloomy in the light of digitalization? No, there are indeed also positive potentials related to it. One has already been mentioned: Digitalization can help to facilitate the energy transition to renewable energies. It also allows for a more decentralized generation of energy. Whether this is controlled by a few firms, the government or many small producers depends on the economic, political and social factors – and this is where NGOs, social movements and other civil actors can intervene. Digitalization has also played a central role in the rise of the sharing economy, as it allows easier communication on who has what to offer and who needs what (be it bikes, cars, clothes, rooms, etc.). In the last years, the sharing economy has become dominated by large companies (Uber, AirBnB, Amazon, etc.). However, this does not necessarily have to be the case. Examples like Fairmondo show how the digital economy could be organized as platform cooperativism or open cooperativism – that is democratically, decentral, fair and sustainable. However, such approaches are still rare and small. Again, I would argue that this could be different if broader social and economic conditions would be different. Digitalization is likely a topic to stay. It seems to have a similarity with the process of globalization: It is related to most of the important aspects of a socio-ecological transformation. As for globalization, it had proved a good idea to not oppose it altogether, but to take a critical stand towards certain aspects, namely economic globalization. Likewise for digitalization: it can help to improve decentral forms of economic organization and foster the networking of people and movements. Hence its positive aspects should be fostered, while the negative consequences must be confined. The degrowth movement seems to be perfectly equipped to take up the debate as of which role digitalization can and should play for the transformation of society.

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Steffen Lange

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