Digitalization is at the vanguard of technological revolution. The innate ability to transform analog information into digital data has brought a whole stream of technological disruptions. Converting any piece of information to a stream of bits, storing and processing them at a growing speed and low-cost, is at the very heart of the globalization process.
Digitalization is an incredible force of positive progress. It allows children in remote areas access to almost infinite sources of information through their mobile phones. And access to information means access to education. Digitalization democratizes information, improving access to health and public services, and fuels the development of technologies in advanced economies.
Yet capitalism, based on principles of scarcity, seems unprepared for digitalization. Inequality is growing dramatically all around the planet. In a technically possible hyper-productive and inclusive world, wealth seems to find its own niche in a tiny segment of the population. Wages decay, and economic growth is not able to create enough jobs. New forms of populism arise and uncountable threats appear to the post-capitalist global society. However, a world of abundance is possible, for technological availability can liberate unlimited resources (production, energy, water, health, computational power, information, education or social interaction). The current global crisis is not a crisis of fundamental resources.
Why does capitalism fail in a scenario of abundance? We identify four reasons of systemic failure (“four S framework”): surpassing reactions of the financial system (erratic hype cycles), short-termism as an extended managerial culture, singularization of the value created by digital markets (making physical value chains vanish), and substitution of employees by machines.
The consequences of these malfunctions are a growing labor instability, social inequality and environmental damage. They create new paradoxes. Is it possible to have a capitalism based on corporations without employees? What will the role of the corporation be in this new scenario? The same driver responsible for creating wealthy organizations –technological progress- may also be the origin of extreme inequality. And without sustained employment opportunities, who will be buying products and services from these super-efficient, highly automated corporations? New forms of financial market regulation, new managerial thinking, new kinds of organizations and new formulas of social innovation will be required.
The purpose of this essay is to positively encourage a debate on the paradox of the emergence of growing global inequality at the precise moment when abundance is possible. This essay intends to analyze and synthesize what is failing, what are the consequences, and identify potential solutions to transform our economy towards a more sustainable, inclusive and prosperous future.