Bhagirathi Panda.
The celebrated Austrian economist Joseph Schumpeterhad coined the phrase “Creative Destruction” and contextualised it with the role of the entrepreneur to explain the process of economic growth in an economy. The implication of this expression is that economic growth is all about continuous innovation in products, processes and organisation incessantly replacing the existing arrangements in such spheres. Therefore, new avenues of employment can be created in any society by creatively destroying (disruption) the existing arrangements of production of goods and services, processes and organisations”. The current situation arising out of Covid 19 can best be described in the Schumpeterian tradition as “Pandemic Disruption”. The difference is that the former is the outcome of a conscious and convinced decision, whereas the latter is sudden, thrust upon and absolutely uncertain.
Notwithstanding the gloom, death, distortions that Covid 19 has caused to human society and world economy, it also provides an opportunity for human ingenuity and resilience to get creative in matters of varied human activities that includes production, consumption, trade, entertainment, health, academics, governance, media, games etc. Post pandemic, one area that is certainly going to see much of expansion through creative pursuits is “Digital Life” i.e. living life in the digital space. Before the onset of Covid 19, the economic and social spaces had already started adopting to digital life at some magnitude. Humans have started doing work and remain connected using computers, internet, email, WhatsApp, Facebook etc. Students and teachers have now access to information, study materials, video lectures, and online educational depositories at the click of a mouse. Health professionals are better handling their patients with instantaneous retrieval of their medical history, being guided on their surgery from super specialists spread anywhere in the world and advising their patients on medical requirements and procedures anytime and anywhere.
‘Pandemic Disruption’ from now on will be pushing for adaptation and depth in this digital life through business and governance innovations using Big Data, Internet of Things,Artificial Intelligence(AI) and 3D & 4D printing. The ‘NewNormal’ which has already started manifesting and is expected to manifest in increased magnitude and intensity as an outcome of this ‘pandemic disruption’, will significantly add to the activity basket and vector in digital life. Online work from home, online marketing, online teaching, online conference and meetings, online publications, online entertainment, online games, online medical consultation and treatment, online media, virtual wedding and birthday celebration etc. are going to be the new normals in the digital life. These new normals qualifying and pervading our digital life will have their benefits and challenges for individuals and societies. Some of the intended benefits in the economic and social spaces will be (i) reduction in transactions, transportation and travel costs, (ii) convergence and benchmarking of standards in production, teaching and other services and (iii) reduction in information asymmetry and improvement in access to various services including citizen and government interfaces, (iv) better integration of technology in digital space.
At the micro or firm level, transaction costs arise because of (i) owning or hiring defined property (ii) business and investment negotiations in procuring different material resources, finances, technology, business processes, sales and marketing of products and (iii) enforcement of contracts. For example, one of the basic requirements for establishing a school or university or an office or a factory is to own land or hire it. In a country like ours where property rights in some regions (like the North East) are not well defined, ownership of property is a problem. In the changing times, in the digital space, many of the activities of the school, university, industrial and business units, government can be done online, thereby reducing/minimising the pressure on land and space requirements. With respect to the cost of negotiation, it is a fact that in our economy any new entrepreneur, when he or she starts an enterprise, has to go for different types of negotiations with various agencies -be it for procurement of raw materials, other inputs,capital, sales and marketing of products or services etc. In the presence of incomplete information, cost of negotiation of contracts increases.
With concentrated digital life, he or she will be able to take informed decisions reducing the cost of negotiations in making contracts. Similarly, institutions, enterprises and individuals today spend a lot of time and money in travels and transportation. Take the case of business and academic conferences. This pandemic has taught us that many such events can now be hosted on the e-platform saving time and resources. During the recent lockdown, a number of universities and higher education institutions including NEHU have conducted Ph.D. Viva-voce examinations for research scholars using online platforms like Google Meet, Webex, Zoom etc. In one of the Ph.D. Viva-Voce examinations recently conducted by a department in my School in NEHU, there were more than 30 enthusiastic participants. On many occasions even in the usual offline classroom setting, the number of participation remains less than 30. Another pertinent observation is that many of the research scholars who normally feel shy of interacting in the conventional setting, were freely interacting on the online platform without inhibition. Switching over to digital space may help us in benchmarking of standards in teaching, production and other economic and social activities.
Take the case of teaching. Increased teaching activity in the digital space would lead to competition among the faculty to improve upon their teaching materials and delivery. Best practices in activity domains will emerge in enlarged numbers and be available to all easily. This would expand the choice space and quality requirements of the students. Similarly, seamless increased flow of information, would negate the disadvantages of information asymmetry, enabling the agents (Institutions, producers, consumers, teachers, students etc.) to take timely and informed decisions. The digital man and woman(Citizen) can have better access to a number of public and private services such as banking, airlines, railways, registration of vehicles, properties, births and deaths, passports, land and property registration, entertainment to name a few. Finally, increased use of and improvements in the digital space enables seamless integration of various technologies for effective delivery of a service or a product. Take the example of conducting online teaching. Here the teacher uses a mobile, computer, internet, softwares, social platforms and his prepared reading materials to reach out effectively to his or her students.
However, this pandemic disruption and its push for digital life is expected to have its social and economic costs and challenges too. These are expected to manifest in the forms of diminished social capital, upsurge in mental health problems, frictional unemployment and the imperative of enhancing and improving our internet and digital infrastructure. More activity in the digital space would limit social interactions leading to less social capital generation in the society. Take the case of a College or University. In addition to teaching, conventional university space provides a number of opportunities to the students to enhance their capability vector. They can participate in sports, debates, discussion forums, cultural programmes, campus cleaning and environment improvement activities, social service and extension activities through NSS or NCC and extension programmes to name a few.
The process of socialisation and acculturation in the University prepares them to take up leadership roles in the larger society once they are out of the university. How would the digital life factor in these values and activities in the digital space? Studies are bringing out more and more instances of the young and the old developing loneliness and other serious mental health issues leading to suicides in extreme cases. One of the immediate fallout of increased digital life in the short period will be joblessness (frictional unemployment) and in the long run change in the nature of employment. Jobs will become more contractual and project based. Employers will demand more and more work from the existing workers.Productivity per employee may increase in some of the services sectors because of seamless integration of technologies like Artificial intelligence, Robotics, Internet of Things, leading to less demand for workers with existing skills.
The span of Skill redundancy will be much faster. Some of the existing services and economic activities may disappear. However, the biggest challenge for developing countries like ours will be how to provide for the required physical infrastructure to one and all in all the regions of the country. High mobile penetration is not enough. The digital life that we are talking of here requires assured high speed internet connectivity at affordable cost. Technology integration is a great enabler, provided the access to quality internet services are available to all.As it stands today, many are not having such facilities. The manifestations of these social and economic costs and the associated cultural shocks, have the potential to significantly alter the practice of institutions (like school, college, University etc.), government and work office. Then, what is our response as a society?To be pragmatic, we do not have an escape from the imminent digital life. ‘Pandemic Disruption’ would certainly push for intense ‘Schumpeterian Creative Destruction’. Our prudence lies in making efforts to minimise the social and economic costs, to contain the cultural shock and to maximise on the benefits by improving the physical internet connectivity and integrating technology seamlessly without jettisoning the values that fundamentally make us human and social.
(The author teaches at the department of Economics, NEHU, Shillong)