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Dr William H Janeway, Faculty of Economics:

Reflections on the effects of the digital revolution

I have been reflecting for some years on the perverse feedback effects of the digital revolution. Sponsored in all its particulars by the American state, it has enabled parallel and reinforcing waves of globalization, automation and financialization that have challenged the capacity of the state to serve and support its con-stituents. Further, of course, it has undermined the integrity of the political process on which the authority of the state ultimately rests. All of this is intensified radi-cally by the Covid-19 pandemic.

The pandemic has also illuminated a systemic consequence: deployment of digital technologies has eliminated frictions in the flow of goods and services and capital and people (outsourcing/gig work). The elimination of these frictions has radically increased the efficiency of the system at the expense of resilience and robustness: the buffer stocks, as we have been learning at great cost, do not exist. As we learned about the financial system in 2008, when such tightly coupled systems, unmediated by buffers, fail, they fail catastrophically.

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