As I learn more about the current global financial crisis and watch the crisis unfold and expand, I cannot help thinking that the crisis is a stark reminder of our increasingly digital existence. The digital society is here and I sense we may have been able to avoid this crisis if we had some of the important bits like global governance in place.
Perhaps if consumers had been more proactive in demanding full traceability of their liability from their financial service providers, then the story could have been different. I believe a consumer-centered design of financial services could have made consumers think twice before taking on loans that they were unable to service.
With the uptake of telephony and commercial air travel our society has gradually gone global over the last 35 years or so. The advanced nature of digitisation of our business transactions has made it very easy to use services that are very complex on the inside but deceptively simple on the outside. Borrowing and lending have grown wildly and without any sense of “ownership”, global governance nor traceability. The speed and lack of transparency have made this network of transactions impossible to manage — at least from the perspective of avoiding negligence and fraud. This has happended despite the fact that the banking sector has a robust institute like the BIS that sets guidelines for monetary stability. However, BIS cannot enforce these guidelines — that is left to the individual nations.
It is inconceivable that our physical society would have exploited the innovations of the industrial age without the standardisation brought on by national and international bodies like ISO. But, our digital society is still young but moving fast — and I believe we have not yet even conceived the standards that are needed to enforce security, traceability and interoperability — some of the key requirements for collaboration without friction. We are barely at the early stages of standards for technical interoperability, something that allows software to collaborate. We have not yet scratched the surface of semantic and organisational interoperability — that what is needed for organisations to operate and govern in a consistent manner.
Commerce in the world is advancing, and with an increasing amount of value-creation coming from the service economy. Not just finance, but healthcare and education sectors. Interoperability is then a neccessary condition for good and effective governance, but this governance must be global — not in the sense of a hierarchical “one global head” sense, but in a consensus-driven format — not unlike the way the Internet is managed.
Can our political and business leaders work on creating this platform without stifling innovation and entrepreneurship? I believe the time is right for government and commercial players to collaborate in creating a platform for innovation for the service economy. And for consumer-citizens to be aware of their role in making this platform useful.
PS! In some earlier posts I refered to this platform as the “societal digital infrastructure”