Luohan Academy

Digital Technology and the COVID-19 Outbreak

Last month Luohan Academy held an online conference through Zoom. It was hosted by Jiangong Zhou, a senior advisor at the Luohan Academy and former editor of Yicai Global. The Academy invited a cohort of experts in the fields of communications, sociologists, psychologists, and anthropologists, to explore the evolving relationship between digital technology and society amid the COVID-19. The following are few summarized points made by Luohan Academy’s managing director Long Chen.

The COVID-19 outbreak is an extreme stress test of our shared digital subsistence in China and has brought about numerous changes. Especially in the relationship between technology and humans, as evidenced by the transformation of business modes, information, and emotional connections.

Why Does Digital Technology Stand Apart?    

To put in perspective how technology is reshaping society, let us look at how the ongoing digital revolution differs from the previous technological revolutions. The sharp reduction in information cost is the fundamental cause behind digital technology-induced transformations. According to Moore's Law, the efficiency of information processing doubles every 1.5 to 2.0 years, while its cost halves in the same amount of time. Over the past half-century or so, virtually every sector has experienced a radical shift just as predicted by Gordon Moore, former Intel president and the man for which Moore’s Law is named after. However, another key reason for these changes is the non-exclusivity of information; that is, information can be shared by an unlimited number of users. Unlike other resources such as oil, data can be used, leveraged, and exhausted repeatedly. The confluence of its exponential cost reduction and non-exclusivity has led to unprecedented shared involvement. Almost everyone is a stakeholder of data; whether is it is a producer, contributor, a sharer, a beneficiary, an influencer, or any combination of them; this is the fundamental cause for the digital revolution.

Throughout history, all other previous technological revolutions have, so far, been top-down upheavals, originating from elites and then cascading slowly down through the entire society. Yet, the digital revolution is completely different. It is the ordinary individuals that are rising among the most active users of digital technology; thus, establishing a different relationship between traditional technologies and their users.

Take e-commerce, for example, Rural Taobao, an initiative directed at poorer and less developed areas around China, enables many ordinary rural residents to deal in small commodities trading via the Internet and e-commerce. Luohan Academy’s surveys find that despite little to no education, sometimes no higher than primary schooling, these online shop owners, on average, earn no less than their non-e-business peers with a college degree. This is precisely the reason why the underdogs, the poor and disadvantaged, from migrant workers to the elderly, are embracing the Internet. The first change to traditional sectors that digital technology and “Internet Plus*” has brought is inclusivity.

* "Internet Plus" refers to the application of the internet and other information technology in conventional industries.

However, new technologies, especially revolutionary ones, are met with resistance. Two examples from world history, the Westernization Movement in China and the Meiji Restoration in Japan more than a hundred years ago, show what happens when one nation resists new technology and the other embraces it. China resisted industrialization while Japan invited it. Both China and Japan had distinctly different attitudes towards new technologies and reaped very different results. The former advocated the doctrine of state governance: with Traditional Chinese Values being at its essence. Japan rapidly industrialized and westernized in the same period, quickly becoming a global superpower. Let this be a lesson; history has shown the adoption of new technologies has long-term benefits, improved welfare, and a more prosperous nation, albeit Japan later went on to become a major instigator in WWII.

Digital Technology will Reconstruct Our Society  

The ongoing outbreak has put us under a very extreme stress test and has rendered the bulk of our offline operations, please excuse the pun, offline. Consumers can no longer go out, and lifestyles that we once took for granted have ceased overnight. However, in their place, offline-to-online services, online education, telecommuting, and many others have surged. Despite being ongoing, the change in habits caused by the sudden and systemic shock to our offline system will most likely stay with us long after the outbreak wanes.

Sweeping Adaptive Changes are Needed for Businesses and Organizations

Telecommuting gives employees more flexibility but also requires sufficient preparations for the transition. For example, an organization with a high level of digitization and cloud computing can more effectively transition to teleworking. While other, less advanced firms might find it difficult. The efficiency enhancement is related to both the characteristics of an organization itself and its integration with digital technology.

Within an enterprise, relationships between an enterprise and its users also have drastically changed. Recently, many firms are changing their business models, shifting from offline to online, and this trend will continue, simple offline operations will be fewer and fewer in the future. For example, amid the outbreak, Starbucks transformed from a sit-down café to a pick-up and delivery operation, while this won’t last, many of their customers will continue to prefer pick-up and delivery to eating-in. If the bulk of your business runs offline, even if sound at the moment, the outbreak has been a rude awakening for many businesses.

The Change in Information Dissemination

Unlike SARS 17 years ago or even H1N1 in 2009, when there was little to no internet connectivity, let alone 4G and 5G wireless systems, a fundamental change has taken place in information dissemination and public responses during the ongoing outbreak. Today, social networks allow for quick access to detailed knowledge about infectious diseases and rumors. “Infodemics,” in most cases, stem from the ignorance, as in the case of the Black Death. During the Black Death, which claimed the lives of tens of millions in Europe during the Middle Ages, false and sometimes deliberate rumors caused the deaths of innocent citizens, Jews, for example, were wrongfully persecuted for having thought to be harbingers of the disease. While this is an extreme case, reduced literacy rates and rumors all led the way for panic. In some instances, COVID-19 has led to similar reactions, and we have seen an uptick in xenophobia and racism. 

Hundreds of years since the Black Death, a famous debate in the economics world unfolded on the topic of centralized vs. decentralized governance. F. A. Hayek, an Austrian-British economist, and philosopher best known for his defense of classical liberalism, argued that the central role of the market is to integrate scattered and discrete information, to have the "invisible hand" play its part, a process of wisdom that centralized governance can’t offer.

However, the outbreak has created a surge of all kinds of information swirling around, from experts, governments, enterprises, and the general public. It is very similar to a market, various pieces of discrete information scattered everywhere and gathered here and there. All the while, potential buyers are looking for, screening out, and finding out what the right product is for themselves. Put bluntly; it is an information transaction. However, these transactions are not safe from fraudsters and tricksters who want to sell rumors, lies, and fake news. The market is based on the exchange of information and is specific to our digital era. It involves an unprecedented number of agents of all types, often as many a billion. The positive is the immense value of information integration and information sharing, giving rise to idea markets, while, on the other hand, it is fraught with fake news. Therefore, reducing the externality of false information must be central in compating outbreaks. 

Redefining the Emotional Connection Between Humans and Technology

An ancient Chinese fable The Butterfly Dream of Chuang Tzu, poses a famous philosophical question: are we living in a virtual world? COVID-19 presents us with a relatively extreme opportunity: we are forced suddenly to have a more intensive connection with technology. For example, one under home quarantine might find themselves chatting with their Tmall Genie*, not merely using it to play a song but looking to have a very basic and fundamental human-to-human conversation. These are not stories based on science fiction, recently, responding to a plea from a mother who lost her only child, Alibaba’s DAMO Academy succeeded in restoring the voice of the mother’s deceased daughter by leveraging speech recognition and AI.

* Tmall Genie is an Alibaba developed voice assistant speaker

Without digital technology, those confined by quarantine, couldn’t have so easily come by fruits, vegetables, and delivery. In short, the outbreak has changed many views on technology. Its acceptance and dependence have gradually replaced an erstwhile lukewarm or even repellent attitude.

Technology will continue to help further liberate humanity. In the film, the Modern Times, Charlie Chaplin, shows that the obsessive pursuit of profit and efficiency reduces humans as slaves to the machine. However, “Modern Times” was a movie based on fears generated from the industrial revolution. The industrial revolution is most known for the exploitation of workers. Frederick Winslow Taylor, an American mechanical engineer who sought to improve industrial efficiency, believed that humans were tools to exploit employees to the highest possible extent. However, George Elton Mayo, an Australian born psychologist, industrial researcher, and organizational theorist, whose experiment in a textile plant in Philadelphia, later showed that employees are enterprises’ capital and a firm’s vitality comes from the creativity of their employees, and their overall efficiency depends upon the collaboration efficiency of employees. Now, in the digital revolution, while employees are still essential, consumers are becoming more important, and production also has to be arranged around consumers. Now, we, at last, understand the fundamental law of technology and nature: the more advanced the technology, the more liberated humanity.

History has proved that technology never changes the essence of agents, their emotions, business, or information. But technology improves the methods of production in every aspect from their forms to their efficiency. This is the general trend over the past two hundred years and will continue in the future. Technology will bring more freedom to humans. Yet, technology also presents emerging challenges and uncertainties. The case was, is, and will always be: how to better leverage technology to benefit humanity? As 2001 Nobel Laureate and Luohan Academy academic committee member Michael Spence, once said, we often think we need to shape ourselves around technology. However, that's not the case. We can develop technology around ourselves.




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