In the last three years, the European Union has been giving a fight for the future. It is a systematic effort of the European Institutions, mainly the Parliament and the Commission, to make the EU the global leader in the Fourth Industrial Revolution.
The Fourth Industrial Revolution is about the impact of exponential technologies, like artificial intelligence, blockchain, data analytics, inter alia, on the way we live, interact, work, do business and organize our government. Historically, the relationship between technology and growth was always exponential (even in periods when it seemed linear), but never before we did we come so close to what philosophers and futurists call “singularity”. Of course, it is not the job of a politician to define singularity, if any, or how far we are from there, but it is apparent to everyone that we have never before experienced such technological breakthroughs to such a wide extent, in such a short time.
Not surprisingly, there was always a link between science fiction and economic history. Nevertheless, this link was never so apparent as it is today. The challenges affect each and everyone of us both as individuals and as members of society. Sharp technological improvements were always accompanied by a melancholy about the purpose of humanity, uncertainty about the future and even fear about the relevance of fundamental institutions like family, the religious community, the nation and a wide range of political and institutional settings that gave to every person not just certainty and standards but also formed its identity.
The transition of the society from one stage to another is not necessarily path-dependant. However, the political discourse about the future in periods of radical change often reaches the extremes. Sometime a “Savonarola” emerges from the crowd, he seems to gain the mind and the heart of wide audiences, he conquers the political chessboard, but always, sooner or later, people wake up, condemn Savonarola, move from the denial to acceptance, and finally endorse the new situation.
The European Union should provide for the Peoples of our Continent the leadership framework and the leadership quality for this transition. What should we collectively do in order to understand this ever-changing technological cosmos, endorse its uncertainties, and reap the benefits of the “Second Machine Age”, in a people-friendly and socially-friendly way?
In the last few years we experience several hypes, like the hype of the blockchain technology. The expectations were high. It seemed that traditional value chains, legacy models and business processes, spanning from the role of the notaries in the transfer of real-estate property to the monopoly of the Central Bank to issue the legal tender, were under question. In an era of institutional uncertainty, blockchain seems to bring a new concept of trust. Traditional economic players became defensive and willing to safeguard their legacy business models and roles in the economy. What was the response of the EU in this “fourth-industrial-revolution” crash test?
Last year, the European Parliament accepted my request for a blockchain Resolution and trusted me to be the Rapporteur of the file. Having in mind that I had to reach consensus among diverse actors, it was necessary to explore the parameters of a regulatory approach toward this technology that will allow legal certainty without creating frictions that would stifle innovation.
I proposed to base our approch on clear principles. The two main ones where technology neutrality and business model neutrality. The first principle sets the stage and frames everything around the idea that we do not regulate the technology per se but its uses. The second principle creates a distance between the regulator and the business actors, both legacy and disruptive ones. It is not the responsibility of the regulator to favour one business model over another. For example, if people prefer to use for their financial services a disrupting fintech firm over an old established bank, then let the people make their free choice. Our responsibility is to ensure legal certainty and clear definition.
The European Parliament voted the file with absolute majority. Blockchain was a crash test of how the EU should react to the challenges of a disruptive technology. How it should endorse the uncertainty and create space for use cases that will allow the development of new standards, good practices and optimal uses.
The success in blockchain will also determine the space of the efficient frontier in other more complicated technologies like Artificial Intelligence and Machine Learning. Having robots as agents of our life and giving them control in making decisions creates immense ethical issues. Algorithmically speaking it is a typical constrained optimization problem. The machine should act based on an optimization function designed with restrictions that rule out potential unethical outcomes. It is easy to speak about the solutions but difficult to implement them. The European Union has already explored options and ethical priorities, including the burden of liability in case of failure.
Dealing with change and uncertainty in a responsible way is not just about the benefits that these new exponential technologies bring to the table. It is also about a new way of thinking that exponential technologies will inspire us to adopt as citizens, consumers, business actors and politicians.
The way we will deal with fourth industrial revolution can only be preamble to the new challenges of a Fifth Industrial Revolution that quantum computing may bring at some point in the future. Europe should work hard and invest in positive disruption for 2030. The new Multiannual Financial Framework and the InvestEU vehicle will provide real solutions to this direction. We have already created significant fiscal space and market instruments as well as opportunities for vibrant and robust innovation ecosystems.
I believe that the EU, despite the criticism, is on its way to providing for the European citizens good quality leadership toward the Second Machine Age. The impact of this leadership is as uncertain as the impact of these new technologies. However, the framework is already in place and other global actors, like the US or Asian economies, already follow our example. It is a great opportunity for Europe to be the global technology leader and a new model of governance that can provide global solutions in a decentralized way.