Introduction

The Book at a Glance

Humanity has arrived in the information and knowledge society. Over the last twenty years, books, music, films, and photos have been digitized. Today, people even manage their social contacts through “apps” and internet platforms. These major changes have also made many people afraid of further change. They wonder what else may be coming, what will happen to jobs, or whether a dictatorial surveillance state will emerge. Some even fear the end of humanity if artificial intelligences take over the earth.

Back in the 1980s there were books with titles such as “The Data Network: Computers Threaten Freedom” [BK83]. There were already fears of job losses caused by computers and robots. No sooner had anxious observers accepted computers and the internet as less dangerous than new fears appeared: Big Data, data science, self-driving cars, and artificial intelligence.

Is the situation really that dangerous?

Answering this question requires knowledge from many different fields. Unfortunately, today’s education system is highly theoretical and separates computer science, economics, physics, history, psychology, and sociology from one another. But to answer the question above, we need a little of everything. We have to think “holistically,” in networks and complex systems. We also have to leave the ivory tower of academia and look at the situation inside companies. Some basic knowledge of data and computer science is useful as well.

This book covers enough of all these topics to make the situation much easier to assess after reading it. It is aimed at “beginners” with no prior knowledge. The individual chapters are relatively independent, so the book can still be read profitably even if you only “skim” certain sections because, for example, the topic is too theoretical or too mathematical for you.

The most important foundation of this book is the science of “complex systems.” It is not yet very well known, but it is intuitively easy to learn. The word “complex” is often used colloquially and usually means “very difficult” or “hard to understand.” In Chapter 2 “Systems and Networks”, the foundations of simple, complicated, and complex systems are explained using examples. Graphs and networks can be used to visualize and analyze these systems, and agent-based modeling (ABM) can be used to simulate them.

The second foundation of this book is human intelligence, which is covered in Chapter 3 “Human Beings”. According to findings from behavioral economics and psychology, human abilities are limited. With the help of game theory, however, people can still use them to their advantage.

The third foundation is Chapter 4 “History”, which gives a very brief and abstract overview of human history. It emphasizes, in particular, the role of exchange, trade, and technological development. It explains why “knowledge” is more important today than “capital.”

Armed with this basic knowledge, we can consider Chapter 5, “The Economy as a Complex System”. The economy is an information system, and prices transmit information. The chapter explains why traditional economics should be expanded with insights from complex systems. It also explains basic economic concepts, such as how markets work and how supply, demand, and price are related.

The fifth foundation of this book is data, discussed in Chapter 6 “The Raw Material: Data”. Different kinds of data are explained using examples. The chapter then shows where data matters in computer systems and in industry. It introduces different databases and explains how data is processed in data warehouses and interpreted with business intelligence.

How useful knowledge is derived from data is the topic of Chapter 7 “Data Science: From Data to Knowledge”. The term data science brings together a range of techniques for analyzing data with computers and drawing statistical conclusions from it. So-called decision trees are introduced as one example.

Chapter 8 “Artificial Intelligence” goes one step further. It explains how computers can be taught intelligent behavior and asks whether computers are already as intelligent as humans. To do this, the concept of “intelligence” also has to be examined critically. The technology behind self-driving cars is sketched using neural networks. Finally, the chapter examines whether computers can truly become more intelligent than humans.

Chapter 9 “The Digital Economy” examines the impact of the technologies described above on the economy and, therefore, of course, on society. Digitalization, networking, and exponential growth have produced a digital economy that differs greatly from the traditional economy. Innovation has become more important than competition. Instead of company size and market dominance, adaptability and “agility” are required. The chapter explains the new business models that have emerged, as well as social networks.

Chapter 10 “The Future” ventures a look into the near future. The Internet of Things will bring another step in digitalization. The chapter explains the technology of the Internet of Things and several new applications. It also touches on the distant future through the idea of the singularity.

New technical inventions often trigger economic change. This usually leads to conflicts of interest. Established companies want to protect their market position against newcomers. Employees fear for their jobs. Small and new companies, by contrast, want free and unhindered access to the market. This leads to political debates in which people are often divided into two camps: “for more government” versus “for more market.” This issue is discussed in Chapter 11 “… and Politics”, which presents an approach that takes insights from complex systems into account.

Finally, Chapter 12 “Summary and Conclusion” summarizes the most important insights once more and draws a conclusion.

What Is Not Covered in This Book

Technological development is such a broad field that no one can be knowledgeable about every topic at once. Specialization has advanced so far that one has to go either broad or deep. For that reason, many technologies and sciences with great potential cannot be covered in this book. True to the motto “Stick to your last,” this book focuses on information technology (IT).

That is why, for example, the following topics are not covered: 3D printing, quantum computers, autonomous flying drones, smart materials, nanotechnology, genomics, biosciences, and genetics. These are, of course, all interesting fields in which many new things will happen. Their absence from this book is not meant to imply that they will be unimportant in the future.

The Political Dimension

Technological change has led to major economic change. There have been winners, such as the large new internet companies, and losers, such as traditional media companies. Technological progress therefore always has a political dimension.

When German Chancellor Angela Merkel (CDU) said in 2013, “The internet is uncharted territory for all of us,” she was met with mockery and scorn. Many people found the statement funny because, as consumers, they had known the internet for more than 15 years. But was Ms. Merkel speaking as a consumer or as a politician? If she was speaking from a politician’s perspective, she meant that policymakers were still unsure how to treat the new technologies. Was the internet to be regulated more heavily? On the other hand, the internet also continues to develop every day. New applications emerge every day. Anyone who wants to can discover some “uncharted territory” on the internet every day.

In 2015, the President of the European Parliament, Martin Schulz (SPD), called for a “political debate” in the foreword to the book “Technological Totalitarianism: A Debate” and declared “Why we must fight now” [Sch15]. The title alone already suggests how one-sided this “debate” is. This is a very dangerous development because computer scientists, engineers, and other technically minded people have almost no voice in the German public sphere, and certainly none in politics. In large parts of society, technical experts are seen as “nerds” who can be laughed at a little, like the physicists in the TV series “The Big Bang Theory.” They tend to appear in the media as critics of US companies or the NSA, that is, when they can be used politically. A technical expert cannot easily argue on television against a politically trained but technically uneducated journalist. Professors might be able to do so, but they in turn have very different economic interests from startup founders and do not see the dangers of political regulation. Representatives of large companies also have very different interests from medium-sized businesses and startups.

But the biggest problem with this “debate” is that many participants have an outdated view of history and humanity dating back to Karl Marx, do not know newer developments in economics, know nothing about the usefulness of data science, and completely lack entrepreneurial knowledge. Missing basic knowledge leads to a wrong assessment of the situation. A wrong analysis, in turn, leads to wrong policy. And wrong economic policy in information technology would have devastating consequences, as this book explains.

Notes on the Book

Important statements are marked with a gray box.

Important: Significant statements are highlighted with a box like this.

Some diagrams in this book use icons from OSA; see http://www.opensecurityarchitecture.org/cms/about/license-terms for the license. Commercial use of the icons is permitted under this license, provided the source is indicated.