Is our social model the next Facit?

Earlier this week, economist Mårten Blix presented a report on the impact of digitalization on the economy.

The conclusions are both hopeful and challenging. They hold the potential for a better society where resources are used more intelligently, decisions are made on a better basis and new solutions to many challenges become possible.

At the same time, new digital opportunities are challenging established models and systems that have worked well so far. For example, our welfare society is largely financed by taxes on labor. What happens if large groups are excluded from the labor market when robots and algorithms become more productive?

Today, innovative start-ups are challenging industry after industry. And at the same time, they employ far fewer people than the traditional companies they are outcompeting.

Forty years earlier, the Facit industrial group was the world leader in mechanical calculators. But they had the wrong skills to understand and react in time to the new market conditions made possible by advances in electrical engineering. Internal conflicts between adapting to the new and respecting the old caused the group to fall paralyzed into a black hole.

The difference with the technology shift that brought down Facit is that digitalization is happening on a broad front. Companies like Kry.se, Baghitch and iZettle are challenging traditional healthcare, logistics and payment solutions. To name a few examples. What they have in common is that they have used new technology to increase productivity while lowering prices and raising quality.

Digital technologies are now pushing the boundaries of what is possible. Previous structural transformations have been more limited to individual sectors of society and over time. And because digital transformation is both broad and rapid, it is challenging larger parts of society than before.

An important question that Mårten Blix raises in his report is whether our institutions, the social partners, the Riksdag and the government, have the ability to implement the structural reforms required to take advantage of the potential of digitalisation while minimizing its risks. It requires knowledge, insight and political courage to dare to invest more in what we can get than what we have.

For those thirsting for knowledge, Mårten's report is a good start. He is also a member of the Digital Challenge think tank' s advisory board on the future of work. Which problematizes the effects of digitalisation on the labour market.