Simulating Social Complexity

The Automation of Society is Next: How to Survive the Digital Revolution

von Dirk Helbing, 2015

Draft auf Researchgate, 2015

(Cache)

CONTENTS

1 THE DIGITAL SOCIETY: A better future or worse? 11

2 COMPLEXITY TIME BOMB: When systems get out of control 27

3 SOCIAL FORCES: Revealing the causes of success and disaster 45

4 GOOGLE AS GOD? The dangerous promise of Big Data 71

5 GENIE OUT OF THE BOTTLE: Major socio-economic shifts ahead 93

6 DIGITALLY ASSISTED SELF-ORGANIZATION: Making the invisible hand work 113

7 HOW SOCIETY WORKS: Social order by self-organization 137

8 NETWORKED MINDS: Where human evolution is heading 157

9 ECONOMY 4.0: A participatory market society is born 181

10 THE SELF-ORGANIZING SOCIETY: Taking the future in our hands 209

Excerpts from

Chapter 3: SOCIAL FORCES: Revealing the causes of success and disaster 

page 50

The sensor networks, on which the "Internet of Things" is based, will enable us to perform real-time measurements of almost everything. They can be used to build a "Planetary Nervous System" (PNS), an intelligent information platform proposed by the FuturICT project The In fact, my team has started to develop such an information platform, called Nervousnet.67 Nervousnet will harness the power of the Internet of Things for everyone's benefit and will be built and managed in a participatory way, as a "Citizen Web".68 We Similar to OpenStreetMap, we will develop this system together with an emerging network of volunteers, who are committed to developing the project further.

This collaborative approach will give citizens control over their personal data, in accordance with their right of informational self-determination, and create new opportunities for everyone. Nervousnet will not only offer the possibility to contribute to the measurement of our world, in order to jointly create something like a real-time data Wikipedia. Nervousnet will also establish a social mining paradigm, where users are given freedom and incentives to collect, share and use data in ways that do not aim to undermine privacy. Appendix 3.1 provides further information on the platform. With your help, it may very well become a cornerstone of the public information infrastructure of the emergent digital society. So why don't you join us in building the Nervousnet platform or in measuring the world around us?iv

pages 67 - 68

APPENDIX 3.1: Nervousnet: A decentralized digital nervous system

(see YouTube Video. The Nervousnet app can be downloaded via Apple's AppStore and Google's play.)

The Nervousnet project, has started to work on such an open and participatory, distributed information platform for real-time data.xiii Nervousnet is an open source project, which believes in the importance of privacy, informational self-determination and trust. If you download the Nervousnet app to your smartphone, you can choose to turn about 10 different sensors separately on or off, such as the accelerometer, light or noise sensors. You can measure data about your environment for yourself (kept on your smartphone) or share it with others (as decided by yourself). External sensors for 'smart home' and other applications can be added (for example, weather or health sensors). To maximize informational self- control, the user can also determine the recording rate, and soon also the storage time after which the data will be deleted. Shared data are anonymized. In addition, we are working on data encryption and plan to add a personal data store,108 which will allow you to determine what kind of data you want to share with whom, for what purpose, and for what period of time.

Nervousnet will be run as a Citizen Web, built and managed by its users. It will allow all developers to add measurement procedures and apps. For example, you may run games, scientific measurement projects, or business applications on top of the Nervousnet platform. So, anyone can add data- driven services and products. For security and conceptual reasons (such as scalability and fault-tolerance), 

Nervousnet is based on distributed data and control. To promote responsible use, Nervousnet will integrate reputation, qualification, and community-based self-governing mechanisms, determining accessible sensors, data volume and functionality. All this is intended to catalyze a novel information, innovation and production ecosystem to create societal benefits, business opportunities, and new jobs.

Nervousnet will offer five main functionalities. 

1. it will empower us to collectively measure the world around us in real time. For example, it will allow us to quantify external effects of our interactions with the environment and others (such as noise and emissions, but also economic, social and immaterial value created). Such measurements can help to create a circular economy and more sustainable systems.
2. Nervousnet will help to create awareness about the problems and opportunities around us. It will warn us of the side effects of certain decisions and actions (e.g. the amount of CO2 emissions produced) and support us in identifying and implementing better alternatives (e.g. how to use public transport comfortably).
3. the Nervousnet data stream will establish something like a 'CERN for society'. It will allow us to reveal the hidden regularities and forces underlying socio-economic change. This will create the knowledge to establish a Global System Science,109 which is needed to master our future in a highly complex and interdependent world.
4. the combination of this knowledge with real-time data will enable us to build self-organizing systems, using real-time feedbacks. With the right kinds of interactions, a complex dynamical system can create a huge variety of self-stabilizing structures, properties and functions in a way that is self- organized and enormously efficient. For example, self-controlled traffic lights, which flexibly respond to local vehicle flows, can dramatically reduce urban congestion compared to the classical, centralized control approach.110 By using the Internet of Everything many production processes can similarly benefit (often summarized under the label 'industry 4.0').
5. Nervousnet will support a network of distributed artificial and human intelligence. Digital assistants will support us not only in everyday situations, but also in bringing knowledge, ideas, and resources efficiently together. By creating such 'collective intelligence', we will be able to master the combinatorial complexity of our increasingly interdependent world much better.

Excerpts from

Chapter 7: HOW SOCIETY WORKS: Social order by self-organization 

pages 153 - 154

Digital assistants

When two people or companies interact, there are just four possible outcomes, which relate to coordination failures and conflicts of interest. 

1. The first possibility is that of a lose-lose situation. In such cases, it is best to avoid the interaction completely. For this, we need information technologies that make us aware of the possible negative side effects associated with an interaction: if we know the social and environmental implications of our interactions, we can make better decisions. Therefore, measuring the externalities of our actions is important in order to avoid unforeseen damage. In fact, if we had to pay for negative externalities of our decisions and actions and if we would earn on positive externalities, this would help us to reduce the divergence between private and collective interests. As a result, self-interested decisions of individuals and companies would be less likely to cause economic or environmental damage.
2. The second possibility is a bad win-lose situation. In such cases, one party is interested in the interaction, but the other side would like to avoid it, and the overall effect would be negative. In such situations, increasing awareness may help, but social mechanisms to protect people (or firms) from exploitation are necessary, too. I will address this in detail in Appendix 7.2.
3. The third possibility is a good win-lose situation. While the interaction would benefit one party at the expense of another, there would be an overall systemic benefit from the interaction nevertheless. Obviously, in this scenario one party would like to engage, while the other would like to avoid the interaction. It is possible, however, to turn such win-lose situations into win-win situations by compensating the otherwise losing party. For this, a value exchange system is needed. Then, the interaction can be made mutually beneficial and attractive.
4. Finally, the fourth possibility is a win-win situation. Although both parties profit, one may decide to divide the overall benefit in a fair way. Again, this requires a value exchange system. In addition, cooperation can be fostered by making people aware of opportunities they might otherwise miss. In fact, every day we walk past hundreds of people who share interests with us while we don't know about it. In this respect, digital assistants can help us take advantage of hundreds of opportunities that would otherwise be missed, unleashing unimaginable socio-economic potential. If we had suitable information systems to assist us, we could easily engage with people of diverse cultural backgrounds and interests in ways that create opportunities and avoid conflict.

The above-described Social Technologies can now be built. Smartphones are already becoming digital assistants to manage our lives. They help us to find products, nice restaurants, travel routes and people with similar interests. They also enable a real-time translation from one language to another. In future, such digital assistants will pay more attention to the interactions between people and companies, producing mutual benefits for all involved. This will play an important role in overcoming cultural barriers and in minimizing environmental damage, too.

Eventually, Social Technologies will help us to avoid bad interactions, to discover and take advantage of good opportunities, and to transform potentially negative interactions into mutually beneficial cooperation. In this way, the "interoperability" between diverse systems and interests is largely increased, while coordination failures and conflicts are considerably reduced. I am, therefore, convinced that Social Technologies can produce enormous value, both material and immaterial. Some social media platforms are now worth billions of dollars. How much more value could digital assistants and other Social Technologies create?

page 155

APPENDIX 7.2: Towards distributed security, based on selforganization

Let me finally address the question whether bottom-up self-organization is dangerous for society? In fact, since the Arab Spring, governments all over the world are afraid of "twitter revolutions". Therefore, are social media destabilizing political systems? Do governments need to censor free speech or control the algorithms that spread messages through social media platforms? Probably not. First, the Arab Spring was triggered by high food prices,239 i.e. deprivation, and not by anarchism. Second, encroaching on free speech would obstruct our society's ability to innovate and to detect and address problems early on.

But how to reach a high level of security in a system which is based on the principle of distributed bottom-up self-organization? Let me give an example. One of the most astonishing complex systems in the world is our body's immune system. Even though we are bombarded every day by thousands of viruses, bacteria and other harmful agents, our immune system protects us pretty well for about 50-100 years. Our immune system is probably more effective than any other protection system we know. What is even more surprising is that, in contrast to our central nervous system, the immune system is organized in a decentralized way. This is no coincidence. It is well known that decentralized systems tend to be more resilient to disruptive events. While targeted attacks or local disruptions can make a centralized system fail, a decentralized system will usually survive such disruptions and recover. In fact, this is the reason why the Internet is so robust.240 So why don't we protect information systems using in-built "digital immune systems"?241 This should also entail a reputation system, which could serve as a kind of "social immune system". In the following, I will describe just a few aspects of how this might work.

page 156

Community-based moderation

Information exchange and communication on the Web have quickly changed. In the beginning, there was almost no regulation in place. These were the days of the Wild Wild Web, and people often did not respect human dignity and the rights of companies when posting comments. However, one can see a gradual evolution of self-governance mechanisms in open and participatory systems over time.

Early on, public comments in news forums were published without moderation. This led to a lot of low-quality content. Later, comments were increasingly checked for their legality (and for their respect of human dignity) before they went online. Then, it became possible to comment on comments. Now, comments are rated by readers, and good ones get pushed to the top. The next logical step is to rate commenters generally242 and rate the quality of judgments of those who rate others (by "karma points"). Thus, we can see the gradual evolution of a self-governing system that constructively channels free speech. Therefore, I believe that it is possible to encourage responsible use of the Internet, mainly through self- organization.

The great majority of malicious behavior can probably be controlled using crowd-based mechanisms. Such approaches include reporting inappropriate content and ranking user-generated content based on suitable reputation mechanisms. To handle the remaining, complicated cases, one can use a system of community moderators and complaints procedures. Such community moderators would be determined based on their performance in satisfying lower-level community expectations (the "local culture"), while staying within the framework set by higher-level principles (such as laws and constitutional principles). In this way, community moderators would complement our legal framework, and most problems could be solved in a community-based way. Therefore, only a few cases will require legal mediation. Most activities would be self-governed through a system of sanctions and rewards by peers. In the following chapters 

• Ch. 8: Networked Minds, 
• Ch. 9: Economy 4.0, 
• Ch. 10: The Self-Organizing Society, 

I will explain in more detail how information technology will enable people and companies to coordinate their interests in entirely new ways.

Excerpts from

Chapter 8: NETWORKED MINDS

Where Human Evolution Is Heading

pages 158 - 159

Today, we have a much more nuanced understanding of crowds and swarm intelligence. We can explain why crowds are sometimes benign, but cause trouble in other circumstances. For the wisdom of crowds to work, first, independent information gathering is crucial. Second, opinion formation should be decentralized, drawing on local knowledge and specialization. Third, a larger diversity of opinions tends to increase the quality of the outcome. The same applies to the diversity of in communication patterns. Too much communication, however, can make the group as a whole less intelligent.

In fact, if people collect information and evaluate it independently from each other, and if these diverse streams of information are suitably aggregated afterwards, this often creates better results than even the best experts can produce. This is also more or less the way in which prediction markets work. These markets have been surprisingly successful in anticipating election outcomes or the success of new movies, for example. Interestingly, prediction markets were inspired by the principles that ants and bees use to find the most promising sources of food. Such complex self-organizing animal societies have always amazed people, especially because they are based on surprisingly simple rules of interaction.

In contrast, the "wisdom of the crowd" is undermined, if people are influenced by others while searching for information or making up their minds. This can sometimes create very bad outcomes, as misjudgments can easily spread if individuals copy each others' opinions. For example, in Asch's conformity experiments, people had to publicly state which one of three lines was equal in length to another line presented to them. Before the participant answered the question, other people gave incorrect answers (as they were instructed). As a consequence, the participant typically answered incorrectly, too, even though the recognition task was simple. Recent experiments that Jan Lorenz, Heiko Rauhut, Frank Schweitzer and I performed, show that people are even influenced by the opinions of others when they are not exposed to social pressure. This demonstrates that the wisdom of crowds is sensitive to manipulation attempts and social influence, and that's why one shouldn't try to influence how people search for information and make decisions, as nudging does.

... we need to find out how growing amounts of information and the increased interconnectedness of people create new opportunities. It becomes possible, for example, to overcome "tragedies of the commons" and to support the generation of collective intelligence.

page 159

Impossibility of one unifying utility function

The "utility function" supposedly quantifies

• the payoffs (i.e. earnings) or
• stable individual preferences

of every actor. Any behavior deviating from such selfish utility maximization is believed to be irrational and to create disadvantages ("economic Darwinism").

[But] self-regarding rational choice (homo economicus: humans and firms are completely egoistic, rationally striving to maximize their utility in every situation) is just one possible mode of decision-making. Human decisions are often driven by other factors in ways that make it impossible to integrate them all in one "utility function". Trying to do this, as it is common, compares "apples with oranges".

Instead, I claim that people are driven by a variety of different incentive systems, and that they switch between them. ... Many of them are related with intrinsic hormonal, emotional, and nervous processes (the latter include the "amygdala" area of the brain and the part of the nervous system called the "solar plexus"). If we neglect these factors, we cannot gain a good understanding of human behavior. ...

In addition, the importance of the different reward systems varies from one person to the next. This implies different preferences and personalities ("characters"). ... it is not possible to define one personal utility function, which stays constant over time (or changes slowly). Instead I believe that, at any point in time, one kind of reward is given priority and the others are temporarily relegated. Once this reward has been gained, another desire is given priority to and so on. This might be compared to how competing traffic flows are managed at an intersection – temporarily prioritizing one flow after another. Once a queue of vehicles has been cleared, another one is prioritized by giving it a green light. Similarly, when one of our desires has been satisfied, we give priority to another one et cetera, until the first drive becomes strong again and demands our attention. ... If [we] cannot derive pleasure from consumption and possessions, from social recognition, or from intellectual activities, then, sexual adventures, adrenaline flashes or other kicks may become more important.

pages 163 -164

Being social is rewarding, too

Humans are not only driven by the reward systems mentioned above. We are also social beings, driven by social desires and that's why social media are so successful and changing our behavior, too. In fact, most people have empathy (compassion) in that they feel for others. Empathy is reflected by emotions and expressed to others by gestures and facial expressions. It even seems that all humans on our globe share some fundamental facial expressions (anger, disgust, fear, happiness, sadness, and surprise). According to Paul Ekman (*1934), these expressions are universal, as they are independent of language and culture.

P. Ekman, W. V. Friesen and P. Ellsworth, Emotion in the Human Face: Guidelines for Research and a Review of Findings (Pergamon, New York, 1972); P. Ekman and W. Friesen, Facial Action Coding System: A Technique for the Measurement of Facial Movement (Consulting Psychologists Press, Palo Alto, 1978); Paul Ekman, Wallace V. Friesen, and Joseph C. Hager, Facial Action Coding System: The Manual on CD ROM (A Human Face, Salt Lake City, 2002)

However, our social desires go further than that. For example, we seek social recognition.

The main reason for the propensity of humans to network is that we are fundamentally social beings. In some sense, we are all "networked minds". The increasing tendency of many people to form networks using social media such as Facebook, Twitter and WhatsApp underlines and reinforces this. It has even the potential to fundamentally change the way our society and economy work. Social networking through information and communication systems can stimulate our curiosity, strengthen our social desires, and support collective intelligence.

The evolution of "networked minds" - A Computer Model

It's interesting to ask why humans are actually social beings at all? Why do we have social desires? And how is this compatible with our hypothetical selfishness and the principle of the survival of the fittest? To study this, we developed a computer model which simulates the interactions between utility-maximizing individuals exposed to the merciless forces of evolution. Specifically, we simulated the "prisoner's dilemma", a special kind of social dilemma. Here, two actors engage in a social interaction where it would be favorable for everyone to cooperate, but non-cooperative behavior is tempting and, hence, cooperative behavior is risky.

In such scenarios, the selfish "homo economicus" would never cooperate, as non-cooperative behavior yields a higher payoff than cooperation in every single decision. This undermines cooperation, and the result is a "tragedy of the commons": the most favorable situation – where everyone cooperates – does not occur naturally, because it is unstable, and the resulting outcome is undesirable. The reasons are similar to why free- flowing traffic breaks down when a road is too busy.

In our own computer simulations of the prisoner's dilemma, we distinguished between the actual behavior of simulated individuals (cooperative or not) from their individual preferences. We assumed that the preferences result from a trait called "friendliness", which governs how likely somebody is to consider the consequences of their own actions on others (how "other-regarding" they are).

To be consistent with mainstream economics, the computer agents representing individuals were assumed to maximize their utility function, given the behavior of the "neighbors" they were interacting with. The utility function was specified in such a way that individuals could consider more than just their own payoff from an interaction. They could also give some weight to the payoffs of their interaction partners. This weight was proportional to the "friendliness" of the individual and was set to zero for everyone at the beginning of the simulation. Thus, initially, everyone was absolutely selfish, and the payoff that others received from an interaction was given no weight (corresponding to what we call "homo economicus").

Additionally, [in our computer simulations of the system's evolution over time, including from generation to generation] we assumed

• that the friendliness trait could be passed on to others, either genetically or through education,
• the likelihood that someone would have offspring increased solely depending on their own payoff (not utility),
• if persons cooperated but were exploited by everyone they interacted with, they would receive no payoff. As a result, these persons would also have no offspring [i.e. the space they occupied in the animation became vacant].
• if people managed to have payoffs and offspring, the friendliness of an offspring tended toward that of the parent,
• there was a certain natural mutation rate, which was specified such that it did not implicitly promote significant values of friendliness.

Results

• Offspring who lived close to their parents (which means intergenerational migration being low) tended to evolve into a more friendly form of "homo socialis" and cared more about the payoffs of others! Interestingly, this scenario corresponds to the conditions in which humans actually raise their children.
• The evolution of other-regarding preferences is quite surprising. Even though none of the assumptions of the above model promotes cooperative behavior or other-regarding preferences in isolation, they create socially favorable behavior in the community. The only possible explanation is that interaction effects between the above rules change the overall outcome.
• Another interesting finding is the evolution of "cooperation between strangers", meaning that genetically unrelated individuals begin to cooperate.

The following video of a typical run of our computer simulations illustrates this well (see also Fig. 8.2 in here).

Emergence of the homo socialis and cooperation between strangers (video)

Agents play a spatial Prisoner's Dilemma with their direct meighbors again and again. They generate offspring and die.

Chapter 10:

The Self-Organizing Society

pages 209 f

• quantity of data: Having and using more data is not always better (e.g. due to the problem of "over-fitting", "spurious correlations", or classification errors, which can make conclusions meaningless or wrong).
• individual vs. macro-level: Even if individual decisions can be correctly predicted in more than 95% of all cases, this does not mean that the macro-level socio-economic outcome would be predicted well.
• interactions causing new emergent system properties: In complex dynamical systems with many interacting components, even the perfect knowledge of all individual component properties does not necessarily allow one to predict what happens if components interact. In fact, interactions may cause new, "emergent" system properties.
• stability: The most important issue is whether a system is stable or unstable. In case of stability, variations in individual behavior do not make a significant difference, i.e. we don't need to know what the individuals do. In contrast, in case of instability the system is typically not controllable due to amplification and cascade effects.
• resiliency: In complex socio-economic systems, surprises will sooner or later happen. Therefore, our economy and society should be organized in a way that can flexibly respond to disruptions. Socio-economic systems should be able to resist shocks and recover from them quickly and well. This is best ensured by a modular, "resilient" system design.
• distributed control: In complex dynamical systems, which vary a lot, are hard to predict and cannot be optimized in real-time, distributed control can outperform top-down control attempts by flexibly adapting to local conditions and needs.
• filtering information: While distributed control may be emulated by centralized control, a centralized approach might fail to identify the variables that matter.  Depending on the problem, centralized control is also considerably more expensive, and it may be less efficient and effective. Filtering out information that matters is a great challenge. Explanatory models that are combined with little, but suitable kinds of data are best to inform decision-makers. Such models also indicate what kind of data is needed.
• how to use diversity: digital assistants: Diversity and complexity are not our problem. They come along with innovation, socio-economic differentiation and cultural evolution. However, we have to learn how to use diversity and complexity to our advantage. This requires us to understand the hidden forces behind socio-economic change as well as to use self-organization and digital assistants (see below) to support the coordination of actors with diverse interests and goals. These digital assistants could harness the potentials of artificial and collective intelligence.
• distributed collective intelligence: Diversity is also crucial for distributed collective intelligence, which is better suited to respond to the combinatorial complexity of our world than an artificial superintelligent system.

pages 213

Immanuel Kant, one of the masterminds of the age of enlightenment, argued that a state that decides how its citizens should be happy is a despot. He wrote: "It thus becomes evident that the principle of Happiness, which is properly incapable of any definite determination as a principle, may be the occasion of much evil in the sphere of political Right, just as it is in the sphere of morals. And this will hold good even with the best intentions on the part of those who teach and inculcate it. The sovereign acting on this principle determines to make the people happy according to his notions, and he becomes a despot", see here. In fact, the greatest humanitarian disasters in our history were caused by people who wanted to impose a better world order on a large number of people, see here. Socioeconomic misery or war were frequent medium-term outcomes. These resulted from reduced diversity and damage to the (eco-)systemic organization and self-organized functionality of society. Social networks and cultural norms can be very effective in creating social order and resilience.

page 214

Thus, we need institutions that can help us establish and maintain a proper balance between various interests and to foster the self-organization of our society and economy.

To understand the complexity of our world and turn it into our advantage we need collective intelligence, which requires diversity rather than conformity. In order to manage our future in an increasingly complex society, it is important to encourage and consider multiple perspectives. A symbiotic relationship with digitally literate citizens, customers and users is key to success. Our society can only live up to its capacity, if it makes best use of the skills, ideas and resources of its citizens. It will be of strategic importance to offer participatory social, economic, and political opportunities. In future, those societies will be leading, which manage to create a win-win-win situation business, citizens, and state.

page 215

... simulations tell us that the negative outcomes of self-organization can often be avoided by changing the interaction rules, i.e. the mechanisms by which the components of the system interact. In some cases such as traffic flows or the financial system, simply altering the system's parameters (such as the vehicle density or interest rate) can avoid or reduce undesirable consequences. In fact, while the "invisible hand" (which may be seen as another term for "self-organization") often fails if network effects or externalities matter, we can now overcome such failure.

page 216 - 217

Interactions between the components of a complex dynamical system produce "externalities", i.e. external effects such as reputation, happiness, or wealth, emissions, waste, or noise, or other consequences that affect the environment or others in a positive or negative way. These externalities can be altered by introducing or modifying feedback loops in the system, for example, by introducing value exchange. Such feedbacks allow the system components to adapt to the local conditions in ways that produce or restore the desired functionality. In economic systems, feedback mechanisms are often produced by financial costs or rewards, while in social systems it is common to use incentives or sanctions. However, certain kinds of information exchange and coordination mechanisms can be even more efficient ("altruistic signaling", for instance). It is also important to consider that the use of a single feedback mechanism (such as money) is usually too restricted to let a complex socio-economic system self-organize successfully, and therefore we need a multi-dimensional incentive and value exchange system (see item 6. below), as I have proposed before.

To allow for real-time measurements of our world, my collaborators and I have recently started to build a distributed "Planetary Nervous System" as a participatory citizen web. With this enabling technology, called Nervousnet (Appendix 3.1, p. 67 ff), we can measure externalities and feed them back to the decision-making entities in such a way that efficient and desirable outcomes are produced. For example,

• one can build assistant systems to dissolve traffic jams or produce fluent traffic flows in cities.
• One could also build an assistant system to stabilize global supply chains and thereby reduce the "bullwhip effect" that would otherwise produce booms and recessions. Furthermore,
• one could build digital assistants (see below) to support cooperation and avoid conflict.

These "Social Technologies" would help one to ensure favorable outcomes of interactions for all sides. In fact, interactions between two entities (be it people, companies, or institutions) can basically have four possible outcomes:

1. If an interaction would be unfavorable for both entities, as is often the case in conflicts and wars, the interaction should be avoided.

2. If the interaction would be favorable for one side, but bad for the other and negative overall, the interaction should also be avoided. To ensure this, the second entity should be protected from exploitation by the first one.

3. If the interaction would be favorable for one side and bad for the other, but positive overall, it can be turned into a win-win situation by means of a value transfer.

4. Finally, if the interaction would be beneficial for both sides, one should engage in it, but one might still decide to share the overall benefits in a fairer way by means of a value exchange.

Digital assistants could support us in all these situations. They could help us to create situational awareness, including the potential side effects and risks implied by certain decisions and (inter)actions. Without such assistants, we would certainly overlook many opportunities for beneficial interactions we could actually engage in. Digital assistants could also help us to organize protection against exploitation, which would otherwise deteriorate the overall state of the system.

And finally, Social Technologies could support us with multi-dimensional value exchange, as I discussed before (appendix 9.2). Social Technologies can assist us particularly in avoiding the systemic instabilities which are the main source of our unsolved problems.

pages 218 - 219

The secrets of self-organization

At times, self-organization seems to be almost magic. So, how does it work? Surprisingly, it is often based on simple local interactions which enable mutual adaptation. Social norms, for example, are akin to the physical forces governing the universe. They determine our everyday lives based on compliance mechanisms such as sanctions and rewards. In contrast to physics, however, the socio-economic forces governing the structure, dynamics, and functions of our society may change due to innovation.

Besides negative compliance mechanisms such as peer punishment, money is an important reward mechanism in our society, but not the only one. Indeed, social reward mechanisms can be even more effective than money. The weakness of today's financial system is that money is de facto one-dimensional. In future, we will need a more diverse, multi-dimensional incentive and exchange system to manage complex dynamical systems. These can now be created, because the virtual world offers novel ways to create incentive mechanisms. Reputation systems, ratings and scores are good examples.

Finally, self-organization requires suitable sets of rules to work well. But how to foster self-organization and the emergence of societally beneficial interaction rules? Over time, top-down regulation has produced overregulation and inequality. A self-organization approach, in contrast, may overcome these problems (at least to some extent), as it aims at maximizing opportunities rather than hampering them through standardization and unsatisfactory compromises (see Appendix 10.2). Self-rule fosters socioeconomic diversity, innovation, happiness and the resilience of the overall system. Local experimentation supports socio-economic and cultural evolution. However, favorable self-organization requires an active endeavor to find and implement suitable sets of rules. This is not trivial and its importance should not be underestimated.

Cultures as collections of invisible success principles

In the past, humans haven't been very good at identifying suitable interaction rules, which has impeded self-organized and decentralized governance approaches. Fortunately, recently developed tools can help us to identify suitable institutional settings and interaction rules ("rules of the game") that can produce favorable self-organization. For example, one can perform experiments more easily than ever before. In fact, we can test out different permutations and combinations of various new rules in advance with the aid of computer simulations, lab or web experiments, interactive multi-player online games, or Virtual Worlds. We can also try to identify the hidden mechanisms on which the cultures of the world are based. These cultural mechanisms, in fact, are highly important for the success of wellfunctioning societies and their resilience to disruptions. Surprisingly, most of these success principles are not explicitly known, but are "internalized" subconsciously while we grow up. This situation may be compared with the time when we didn't have alphabets to express our knowledge in writing. However, if we managed to explicate and formalize the success principles of the world's cultures, we could combine them in entirely new ways. The project which I propose to achieve this might be called "Culturepedia" or "Cultural Genome Project".

The above implies three important differences with conventional policymaking as we know it today.

1. computer simulations and interactive Virtual Worlds can be used as a kind of "policy wind tunnel" to explore the implications of different sets of rules in advance.
2. alternative sets of rules can be continuously generated and tested.
3. the most promising set of rules would be implemented on a large scale only after prior testing.

page 221

Why shouldn't we have an alliance of cities that takes a lead in supporting better, climate-friendly technologies? Just suppose that cities next to rising oceans, such as New York City, Singapore, London, Hamburg, Sydney, and a few others would start this together. Wouldn't that create a first-mover advantage, which others would soon seek to copy?

pages 222 -230

How to manage our future: some proposals for immediate action

1. Improve systemic resilience. Most global or large-scale networks (and to an even greater degree, networks of networks) are prone to highly damaging cascade effects. Therefore, the basic functionality of our critical infrastructure is vulnerable. To make such systems more resilient, it is important to apply modular design principles, as they are common in management science. As a consequence, we must do at least two things. First, we need to build "shock absorbers" or "engineered breaking points" into our systems, which can effectively stop cascades by decoupling different parts of the network. xvii Second, we must learn to understand and use diversity as an asset. For example, to achieve sustainable and good systemic solutions, it's important to combine diverse solutions in ways that create "collective intelligence" and resilient systems. This requires a joint effort of all stakeholders, which will typical involve independent representatives from politics, business, science, and the citizenry. It would be useful if, besides professional politicians, independent, qualified citizens would be represented in decision-making bodies as well.
2. Reduce laws and regulations in order to support diversity and its many positive side effects. Diversity is not only the basis of societal resilience, but also of cultural evolution and individual happiness. Furthermore, diversity drives innovation, collective intelligence and economic well-being. Thus, the complaints of companies about over-regulation and the reservations of citizens about attempts to standardize their cultures, lives, and cities must be taken seriously. Otherwise, great projects such as the European Union may fail in the long run. We should try to combine the strengths of different cultures rather than making them all the same. Copying the leading economic system is not the best solution. Therefore, we might proceed as follows: every law (apart from constitutional principles) could have a limited term of validity. Over-standardization should be avoided. Instead, it is important to create opportunities. Therefore, we should allow different self-organizing systems to coexist and compete with each other. Importantly, when trying to reach high-level social or environmental standards or similar goals, countries, cities and companies shouldn't be compelled to implement a single, "one-size-fits-all" solution. In the very best sense of pluralism, one should have a choice of two or three options, which are based on best practice. Then, a culturally and locally fitting solution can be found. This will increase diversity and resilience, as there is probably not just one good solution, but several. It will also increase societal support for these laws. Finally, in many cases, compulsory regulations can be replaced by guidelines, thereby helping everyone to improve established practices.
3. Build a reputation system to promote awareness, quality and responsible action. If we reduce the number of laws and regulations, we need to replace them with something else. More freedom can be given to decision-makers if they behave more responsibly. Merit-based and reputation systems can be used to promote considerate and responsible action. They can foster cooperation and social order in efficient and effective ways. In fact, reputation systems are rapidly spreading across the Internet precisely because they are so useful. They help to give customers better services, and allow sellers to get a higher price for better quality products and services. However, reputation systems could be improved in a numbers of ways. Attempts to manipulate rankings or to spam the system should be discouraged. Facts, advertisements and opinions should be clearly distinguished from each other. It should be possible to post ratings in an anonymous, pseudonymous and personal capacity, but these distinct forms of engagement should be assigned different weights. Reputation and recommendation systems should be community-specific, and based on multiple quality criteria. Users should be able to choose, configure, create and share information filters and recommendation algorithms, in order to support pluralism and create an evolving ecosystem of increasingly better information filters. 4.
4. Rebalance top-down and bottom-up decision-making according to the well-established principle of subsidiarity. In order to enable everyone to make better informed decisions and act more effectively, we need to build open and participatory information platforms. This will empower people to contribute to the management of our systems from the bottom-up, producing outcomes which are more attuned to the diverse local needs, considering local knowledge that matters. Altogether, we will increasingly see a change away from hierarchical decision-making ("you should do this!") towards autonomous but other-regarding activities ("I can do something that needs to be done!"). This obviously needs differentiated multi-dimensional reward systems and information platforms that help to coordinate local activities and facilitate the self-regulation of communities. Such systems could also resolve many conflicts of interest through a self-organized system of community moderators, who would consider the externalities associated with decisions and actions. These community moderators will judge and foster compliance with local rules, while staying within the framework of the fundamental, constitutional principles. They should be instated for a limited time period, based on their previous record of respecting both, fundamental principles and local rules.
5. Establish a new data format based on the data cord principle to enable informational self-determination and micro-payments. I have pointed out that some of the current problems associated with the Internet extend beyond issues of security and cybercrime. These problems mainly result from a lack of user control over their personal data, a lack of accountability, and an inability to easily reward companies and people for the data, ideas and cultural goods they produce. I think that all of these problems could be solved by a combination of a Personal Data Store (i.e. a personal mailbox for data) with special encryption techniques and a new kind of data format based on the concept of a "data cord". This system would connect the contents of each data store with the respective producer or owner and allow them to control access to their data. In the case of personal data, the subject of the data should be considered the owner, and he or she should be able to control the rights of third parties to use it. Furthermore, a micro-payment system should enable a multi-dimensional value exchange. The more often data is copied or used, the more (material or immaterial) profit would be automatically distributed to the different beneficiaries on the value-generating chain. Such a micro-payment system approach would be superior to our current system of intellectual property rights (IPR), such as the software patenting system. Current IPR approaches tend to inhibit the efficient co-evolution of ideas, which is pivotal to the success of human culture.
6. Create a multi-dimensional financial system to have a backup system and make our financial system more functional and resilient. We have seen that our financial system is more fragile than we thought, and we cannot rule out that it could collapse one day. It is essential, therefore, to establish a backup financial system, which could facilitate economic exchange if our current system fails. Therefore, I am calling for a complementary, multi-dimensional exchange system. This would create welcome competition with our current financial system, and thus help it to improve. In fact, we currently see peer-to-peer payment and lending systems emerging. If they meet certain quality standards and serve public interests (such as providing loans so that companies can invest), governments could support the development of such systems. For example, such payment systems could be subject to a special tax status and fewer regulations (as long as these systems are not "too big to fail"). The current payment systems (including BitCoin) are not yet perfect, but competition will lead to further innovations. In particular, I have pointed out that a one-dimensional incentive system does not allow our complex socio-economic systems to self-organize and function well. For this reason, a multi-dimensional reward and exchange system is needed (which I call "multi-dimensional finance"). This would be akin to having several bank accounts for different kinds of use.
7. Use information systems and other measurement methods to determine externalities and compensate for them. For self-organization to work well, it is important to quantify the externalities of decisions and actions. For example, people and companies could be rewarded for external benefits created by them. Similarly, if everyone had to pay for the damage they produce, this would strongly reduce the frequency and size of such damage. An important step, therefore, is to build an infrastructure that is able to measure and quantify benefits and damage to our physical and biological environment, and also to our socio-economic system (such as "social capital"). The sensor networks underlying the emerging "Internet of Things" can now serve this goal, but it will also be important to increase awareness and create incentives for responsible behavior.
8. Tax systemic risks and provide rewards for transparency, responsibility, data access, informational self-determination, and open innovation. Besides charging for damage which has already occurred, it would also make sense to charge for likely socio-economic damage ("systemic risks"), similarly to how insurance companies calculate the risks posed by individuals. In the past, we have often had business models that lead to "tragedies of the commons" or that undermine privacy, pollute the web with spam, or advertise products and services in ways that are barely distinguishable from user ratings and facts. For the time being, until we figure out a better approach, taxation might be a relatively simple and straight-forward way to improve our techno-socio-economic systems, including information systems. Rather than taxing labor more than profits from financial investments or robotic production, a tax on systemic risks would reduce such risks. This would encourage the modularization or simplification of complex systems which would increase their resilience. It would also encourage firms to collect "Smart Data" rather than Big Data (i.e. discourage the collection of huge quantities of data that are of limited use and are often quite problematic in many ways). So, it might be worth considering to introduce a progressive tax on the number of network links, and to promote openness, transparency, interoperability, participatory opportunities, and informational self-determination through tax incentives. Such an approach could reward local interactions and the provision of high-quality data, while encouraging the deletion of old and irrelevant data. Moreover, the development of participatory information systems that would benefit everyone could be incentivized, too. The money generated from the taxation measures mentioned above could be used to pay for public information infrastructures and other necessary institutions for the digital age to come. This would help to quickly build a mutually beneficial information ecosystem. In other words, suitable kinds of taxation could reward desirable and responsible innovation and the private activities which contribute to this process. Finally, let me stress that such taxation schemes should not stand in the way of Open Data and open innovation, and they should not be based on surveillance. Free, open, and high-quality data should be tax exempt. In this context, one should also remember that the additional economic value accrued from Open Data has been estimated by McKinsey to be of the order of $3-5 trillion globally per year. It would be great if everyone could get a share of this cake!
9. Build the infrastructure and institutions for the digital society. I believe that, so far, no country in the world is well prepared for the digital era to come and the new principles governing it. Therefore, it would make sense to engage in an Apollo-like program. The equivalent of a Space Agency in the field of Information and Communication Technology (ICT) could produce an Innovation Alliance with a mission to develop institutions and informational infrastructures for the emerging digital era. This is crucial in order to respond to the challenges of the 21st century in a smart way and to release the full potential of information for our society.
• For illustration, it is instructive to recall the numerous factors that enabled the success of the automotive age. The first prerequisite was the invention of cars and the emergence of mass production. Public roads, gas stations, and parking lots were then constructed to provide the infrastructure to make these vehicles useful. The establishment of driving schools and driver licenses enabled the population to develop the skillset necessary to benefit from this new transport technology. Traffic rules, traffic signs, speed controls, and traffic police were used to ensure that the traffic system ran smoothly. Finally, the invention of new technologies such as guardrails, anti-lock braking systems (ABS) and airbags greatly improved the safety of vehicles.
• All of this requires many billions of dollars of investment each year. In fact, we invest a lot of resources into the agricultural sector, the industrial sector, and the service sector. But are we investing enough in the emerging digital sector? While the digital revolution certainly creates new challenges for our societies, it also opens up many promising opportunities to address the challenges we are faced with.
• What do we need to do to make the digital age a great success?
• First of all, we need to build trustworthy, transparent, open, and participatory information and communication systems, which are compatible with our cultural values. For example, it would make sense to establish a citizen web to manage a joint "Internet of Things" and enable complex self-organizing systems by means of real-time measurements and feedbacks. I call the intelligent information platform needed for this the "Planetary Nervous System". This platform could also fuel a new kind of search engine.
• To protect privacy, all data collected about individuals should be saved in a Personal Data Store. Subject to the consent of the individual in question, this data could be processed in a decentralized way by third-party trustworthy information brokers, which would allow everyone to control the use of their potentially sensitive personal data.
• A micro-payment system would allow data providers, intellectual property right holders, and innovators to be rewarded for their services. It would also encourage the exploration of much-needed new intellectual property right paradigms.
• A pluralistic, user-centric reputation system would promote responsible behavior in the virtual (and real) world. It would even enable the establishment of a new, multi-dimensional value exchange system, which would overcome the weaknesses of the current financial system by providing additional adaptability.
• A global participatory platform would empower everyone to contribute data, computer algorithms and related ratings, and to benefit from the contributions of others (either for free or for a fee).
• It would also use next-generation social media to measure, produce and protect social capital (which encompasses network-based social attributes such as trust, reputation, and cooperativeness).
• A job and project platform would support crowdsourcing, collaboration, and socio-economic co-creation.
• Altogether, this would build a rapidly growing information and innovation ecosystem, which would unleash the potential of data for business, politics, science and citizens alike.
• We could also create a digital mirror world which would use sophisticated computer simulations to assess the likely risks and opportunities associated with decisions we might make.
• Furthermore, digital assistants and Social Technologies could help us to cope with the diversity of our world and benefit from it.
• Finally, Interactive Virtual Worlds, potentially based on different economic systems, decision-making institutions, and intellectual property rights, would allow us to unleash the full creative potential. They could also help us identify suitable institutional settings and interaction rules for self-organizing systems, before we deploy them in the real world.
10. Build a new educational system that prepares people for the digital age to come and for creative work. It becomes increasingly clear that most of our current institutions and jobs will fundamentally change. Much of the work, which has been performed by people in the past, will be done by computers, algorithms, or robots in future. This particularly applies to procedural and rule-based work. Hence, many people will have to find other work, which will revolve around their ability to create information and knowledge, including cultural products. Rather than standardized education, we will need more personalized education and training to foster creativity and imagination. I propose that the fundamental skills should encompass languages, mathematics, computer programming, and the ability to find relevant information and critically evaluate it. This would empower people to curate information and to produce new knowledge. In addition, skills enabling people to share knowledge, collaborate with others, and create services and products collaboratively, while bearing in mind the externalities, will become increasingly important. In future, those seeking paid work must be able to concentrate on tasks, but also to flexibly adapt to new opportunities. Furthermore, they will have to apply an interaction- and systems-oriented way of thinking in order to understand and manage the complex dynamical systems around us. In conclusion, digital literacy and good education will be more important than ever.
11. With these preparations, the emerging "Internet of Things" and participatory information platforms could unleash the power of information and turn the digital society into a great opportunity for everyone. All it takes to make the digital age a great success is the will to establish the necessary institutions. Are we ready for this?

Dictatorship 4.0: How the digital revolution threatens out freedom - and what our alternatives are

by Dirk Helbing (ETH Zurich/TU Delft), June 2017 (in cache)

... Each one of us has a digital double. This is a kind of blackbox, which is fed with our personal data. This data has usually been tapped without our knowledge and, thanks to machine learning, the resulting double behaves similar to us. What is the intended purpose of such digital doubles?

World simulations such as "Sentient World" can simulate global war games on computers. But your digital double could also be used

• to identify the best ways to trick you into buying a particular product,
• downloading a Trojan onto your PC to make it hackable, or
• to hate particular colleagues, neighbors, or fellow human beings.
• In addition, one could find out who would protest if democracy or the freedom of press were abolished, and these people could be incarcerated proactively “for the sake of public security” - the keyword here is "predictive policing".

Since the "Arab Spring", such technologies have increasingly been used to destabilize states or to stabilize autocratic regimes. Since then, they have been continuously improved. Now, such cyber weapons are also applied to the own citizens. These technologies are suited to replace democracy – which many IT visionaries have called an "outdated technology" - with a data-driven "benevolent dictatorship". All that is needed for this is a big disaster or crisis fueling a public outcry for "more security". Then, the technological instruments of the "brave new world" might be fully used. Read the book "iGod" by Willemijn Dicke to understand how this could end. It’s an urgent warning, a final wake-up call!

In the event of a crisis, the Chinese "Citizen Score" would probably be applied, too. The Citizen Score boils all of your data down to a single number (which by the way encompasses your health data, which can continuously be monitored and evaluated by your smartphone). This number comprises all of your activities and your social network as well. You repaid your loan with a delay? Minus points! You read critical news about your government? Minus points! You have the “wrong” friends? Minus points! [Even if your behavior is perfectly ok, the behavior of your friends or neighbors could mess up your entire life. (Helbing, May 2017)] In any case, the resulting Citizen Score would determine your interest rates, the jobs offered to you, and travel visa for other countries - at least in China.

A similar system exists in the UK, where the Citizen Score is called "Karma Police". It also evaluates the videos you watch on the Internet and the radio programs you hear. Don’t believe such scoring systems do not exist everywhere by now! What is their purpose, you might ask? The Citizen Score would serve to decide who will get access to what kinds of resources, when they get scarce! Such scarcity may also be artificially produced, for example, to reach the goal of reducing global CO2 emissions and mitigate climate change. It is said that a related resolution of the UN General Assembly will be adopted on September 23, 2017.

As a result, the Citizen Score would lead to a neo-feudal society. You can imagine who is most enthusiastic about the prospect of this system and who has brought it to life... If you have a high score, you will get everything you desire, no matter how bad the situation in the rest of the world are. The people who commissioned the system would certainly be among this tiny elite. For the rest of us, it would depend on our Citizen Score whether we could still have a car, obtain certain medicine, or eat meat regularly. In order to get plus rather than minus points, many would not question the instructions through their smart devices – they would just follow them. Thus, people may soon be turned from citizens into subordinates again.

This sounds like a terribly dystopian science fiction - but unfortunately it is not! The technologies described above are available and ready for use. You might wonder why all this has been developed? The answer is that our economy is not sustainable! The world consumes 1.5 times the resources that are renewable. A typical European country consumes 3.5 times as much, and the USA 4.5 times as much. In order to avoid serious crises and disasters, humanity must quickly reduce this factor to one. The Citizen Score might help to get in this direction, but we would then live in a digital command economy with digital food stamps - a more totalitarian world than ever! For the most part, this would not be a life worth living anymore - we would simply struggle for survival.

There are much better ways to create a sustainable world by 2030! So far, however, these alternatives have been blocked by people with vested interests who care more about power and wealth than about our future. Here are some options:

1. We could regularly organize City Olympics, where cities around the world would regularly compete for the best environmental-friendly, energy-efficient, resource-saving and crisis-proof solutions. There would be different fields of competition, as well as various "weight classes" (small and large cities, for example). This competition would involve science, but also business, politics and the media. In particular, mobilizing the people to use resources more efficiently and to buy more environmentally-friendly products and technologies would be important. Information about the best technologies, organizational principles and mobilization strategies could then be exchanged between the cities every other year. This strategy implies a combination of competition and cooperation between cities. Moreover, if the resulting innovations were made available for free in the spirit of "Open Innovation", the solutions could be further developed by everyone. This would lead to a fast and widespread adoption of the best solutions.
2. The financial and monetary system, which has been in crisis for years, should be replaced with a socio-ecological “finance system 4.0+”. This would work as follows: Using the sensors of the Internet of Things, which are also in our smartphones, we could measure the impact of our actions on the environment and other people. This would enable us to quantify "negative externalities" such as noise, CO2, and all sorts of waste. Similarly, "positive externalities" such as cooperation, education, health, and the recycling of resources could also be measured. Using Blockchain technology – similar to the one behind the digital currency "Bitcoin" - different externalities could then be assigned a price or value. This would lead to a multi-dimensional incentive or financial system, which would be good for the real-time control of complex systems.
   With suitable incentives, the financial system could be aligned with social values and environmental requirements. In this way, new market forces could be unleashed, which would bring about a circular and sharing economy. This could provide a high quality of life for more people with fewer resources. It would also benefit companies, citizens and the state alike.
3. So-called “market-conform democracy”, which has obviously not solved the world’s problems and has weakened our democracy, could be replaced by "democratic capitalism". This would reinvent the way money is being created. Instead of feeding billions of fresh Euros into the system from the top, as it is the case with "quantitative easing", an "investment premium" would be transferred to a special bank account of each citizen. However, this money could not be used for yourself or saved. It would have to be invested in good ideas, projects and commitments of others, such that you could support whatever you consider important and right. This would be like "crowdfunding for all", or an economic “right to vote” for investments that affect yourself. If such an approach were combined with Open Data and Open Innovation, it would drive rapid and pluralistic innovation, which would lead to much faster and more flexible solutions of humanity's problems.
4. An upgrade of democracy to boost “collective intelligence” and coordination by means of digital platforms would also be possible.

These are just some of the untapped opportunities we have. All of these proposals are perfectly compatible with the fundamental values of our society. Democracy and capitalism - so far the two most successful forms of organization in human history - could be “happily married” with each other and digitally upgraded. In this way, we could tackle the problems of the future more successfully - and reach the next level of our economic, social, political and cultural system. A new chapter of the history is about to begin. It's now up to us to write it!

Version: 24.5.2018

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