Written by James Moffat, CEO of New Future Foundation
In part one of this essay we discussed how the increasing digitality of society has coincided with a relative decline in US and Western hegemony. In part two, we try to understand why the tools and institutions that made liberal democracies successful in the 20th century are now failing them in the increasingly digital 21st century.
The crisis in Western hegemony can be characterised by an erosion of trust in many of the foundational beliefs and institutions upon which Western society is built. Whilst there are many types of trust, specifically I am referring to institutional trust and generalised trust – trust in one’s peers in general and trust in the institutions of the state. Trust in the mechanisms of security is a record low. Driven by failure in the War on Terror and Afghanistan, in the past five years, trust in the US military has dropped significantly within the US; a 2021 poll by the Reagan Institute found that 56 percent of Americans surveyed now said they have “a great deal of trust and confidence” in the military, down from 70 percent in 2018. Researchers saw a similar drop in confidence in law enforcement in recent years (down from 50 percent to 39 percent). According to Roger Zakheim, Director, Ronald Reagan Institute: “Americans are experiencing a sense of pessimism in almost every question [regarding] confidence or trust… The numbers are generally ticking down”.
Much of this mistrust is driven by the ideological war being played out in the digital and media space. This is driven by the use of digital for radicalization, asymmetric warfare, ideological aggression, direct cyber attacks and warfare. Western military and regulatory institutions are increasingly focused on this emerging digital frontier. US Federal government spending on cybersecurity is rising sharply, estimated at around $18.8 billion USD in 2021-2. As well as declining trust in the mechanisms of security, there has been a decline of trust in our political institutions. On both sides of the Atlantic, trust in politicians is at historically low levels. OECD research found that in 2022 only 50 percent of citizens trust their government – a figure trending downwards. Many technologists have stated their concerns about the ability of our democratic institutions to survive the rise and disruption of the digital age, whilst others say the digital revolution renders traditional democracies incapable of meeting the obligations of governance in a fast moving, agile world dominated by global corporate tech giants. Certainly, governments have failed miserably in their objective of taxing these tech-monsters, and without tax revenue, government grinds to a halt.
Corporate Tax Rates, 28 G20 and OECD Countries, 1983-2015
Source: CBT Corporate tax ranking 2012, Oxford University
Meanwhile, in the age of fake news and alternative facts, figures show trust in the media has declined by around 10 percent on average over the last decade. According to the Edelman Trust Barometer:“The ‘global infodemic ’has driven trust in all news sources to record lows with social media (35 percent) and owned media (41 percent) the least trusted; traditional media (53 percent) saw the largest drop in trust at eight points globally.” The rise of digital media has led this downward trend, with social media the least trusted source of all. The digitisation of media has lowered the barriers of entry to publishing and distribution, whilst algorithms, data and dynamic media have provided us with tools that increase its potency and addictiveness. Research by The World Economic Forum shows that by selecting what information reaches which users, digital media can alter human decisions and pose risks to civil society. As Anna Lembeke puts it in her book, Dopamine Nation, if digital media is the drug, the mobile phone is the “modern-day hypodermic needle”.
Source: Edelman Trust Barometer, 2021
Digital media has become a battleground of the hearts and minds. Whilst radicals have used it as a tool to influence the vulnerable, state and state-sponsored propagandists seek to influence opinions and even affect the outcome of elections. Examples include the Cambridge Analytica scandal, to Princeton University research showing how Twitter affects voting decisions, to Carole Cadwalladr’s investigation into Brexit and the influence on that vote by… ‘A shadowy global operation involving big data, billionaire friends of Trump and the disparate forces of the Leave campaign…’. The rise of digital media has led us to become increasingly less confident in our information sources and more susceptible to influence.
Our financial institutions have also been undermined by a decline in trust. The 2008 financial crisis destroyed trust in central banks and governments to effectively manage money supply and the economy. Even a decade later, the majority of Britons did not trust banks and thought they did not face severe enough penalties for their part in the 2008 financial crisis. In 2021, whilst the COVID-19 pandemic saw some recovery in trust for banks, confidence in the financial sector as a whole took a tumble. More generally, rising financial inequality over the past three decades has driven down overall levels of trusts amongst peers in society. Trust is always lower in societies where the difference between the wealthiest and poorest is higher. In the OECD, the average income of the richest 10% of the population is about nine times that of the poorest 10 %, the highest level for the past half-century.
The emergence of new digital elites able to exponentially scale their capital, with a whole range of digital tools and armies of experts to help them to avoid the attempts of state apparatus to effectively tax them and redistribute wealth, widens the gap between the richest and the rest. Uncertainty and fears of social decline and exclusion have even reached the middle classes in many societies. The rich and educated are far more likely to have access to the exponential toolkit of digital wealth creation tools Pew Internet & American Life Project.
An accelerating trend
Trust in Western security, economic, media and political institutions has declined, in part because they are analogue institutions in an increasing digital society and economy. Without institutional reform, the problem will only accelerate as society digitizes further. The COVID-19 pandemic has accelerated digital uptake, while half the world’s population are now online with most of the other half forecasted to be connected by 2030. These two trends are inextricably linked, with digital providing the tools that are transforming our society and economy, but at the same time undermining trust in the established analogue institutions of Western society and state. These are institutions designed to work in a world of limited access to information and knowledge, where the institution was able to act as gatekeeper to information and facts.
Without this analogue monopoly on information, trust and credibility has declined. As Western society has digitised, it has ‘lifted the veil’ on the inner workings of the Western institutions of government, society and the economy and people do not like what they see. In the 21st century, in an increasingly digital context, free, democratic, liberal, western society governed by analogue institutions conceived in the 19th and 20th Century is at risk. Furthermore, many decisions now made debated and dissected in the full view of a digital citizenship appear absurd to the viewer. This is called the ‘fallacy of composition’ and occurs when people apply the logic of their individual context to institutional, state level decision making. This applies to topics such as the ever expanding national debt and complex and seemingly inconsistent covid mixing rules.
What can be done to stop this decline? In the next article we will explore how crypto might solve some of these problems and offer an antidote to the West’s ills.
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