Innovation and foreign policy

At first glance, innovation and foreign policy seem worlds apart. Researchers, entrepreneurs, and business people on one side, ambassadors, diplomats, and policy makers on the other. But they have more in common than first meets the eye. And more need to collaborate than ever before.

Foreign policy itself is innovative

Sometimes, the business of foreign affairs comes across as rather stale, a highly ritualised exchange of diplomatic notes, only remotely related to our everyday lives. However, beyond that superficial impression, the making of foreign policy has demonstrated its innovative capabilities many times; just think about the concept of the Westphalian state, or the international order established in particular after the Second World War.

Looking for more current examples, consider the adoption of the European General Data Protection Regulation (GDPR) and the appointment of a Technology Ambassador for Denmark. You might actually enjoy watching Democracy, the documentary movie on the genesis of the GDPR, starring Jan-Philipp Albrecht, who as a Member of the European Parliament served as the rapporteur for the GDPR. Equally insightful is the talk on Reinventing Diplomacy in the Digital Area, given by Casper Klynge, Denmark’s –and actually the world’s– first Tech Ambassador.

Despite their distinctly different roles, Albrecht and Klynge both symbolise a very timely trend: novel approaches in foreign policy that respond to the challenges of the Digital Revolution. And I’ll argue that we need many more such policy innovations that shape innovation policies.

The challenges of making innovation policy

Any innovation policy is directed toward the future. You might recall Alwin Toffler’s famous stance that ‘The future always comes too fast and in the wrong order‘: Our ideas and expectations of what that future is or should be are quite frankly ambiguous. And when it comes to the future impact of ongoing technology developments, we are simply confused. You’ll find a graphical depiction of that confusion in the well-known technology hype cycles, or you might prefer Amara’s Law to express this phenomenon:

We tend to overestimate the effect of a technology in the short run
and underestimate the effect in the long run.

So we are overly hopeful for the near-term, and way too pessimistic for the longer-term; a mix of impatience and ready disappointment. The important about this confusion is that citizens and policy makers usually sit on opposite ends of this spectrum, and they should play different roles. While citizens (or consumers, or customers) may well get carried away by the immediate hype and the inflated hopes for near-term gains, policy makers cannot afford that myopic perspective. Policy makers must focus their attention on the long-term effects, realistically assess the risks and opportunities in the longer run, and devise policies that prepare society for those.

The key reason for this focus on the more distant future is the interplay between society and technological developments, which presents a genuine dilemma that was first described by David Collingridge in his 1980 book ‘The Social Control of Technology’. What became known as the Collingridge Dilemma frames the challenges of policy-making quite appropriately:

When change is easy,
the need for it cannot be foreseen;

when the need for change is apparent,
change has become expensive, difficult, and time-consuming.

The second part addresses the near future: When you have clear idea of the desired outcomes, you don’t have the means to achieve those easily. The first part talks about the longer term: For those things you could change easily, you don’t exactly know what the desired outcome should be. You’ll have to make such decisions under deep uncertainty. And that’s exactly the challenge of making innovation policy, regardless of the approach you might pursue. Whether you seek to establish funding mechanisms to de-risk long-term investments in technology developments, set objectives and prioritise research efforts on topics that should receive governmental support, refine patent laws and Intellectual Property Rights to incentivise industry research, or provide an education system from kindergarten to higher education, including life-long learning: for all these approaches, you need to take into account the full context of demographic trends, current industry base and future market opportunities, and the uncertainties surrounding their specific future course.

Beyond the shadow of a doubt, policy-making under these conditions is tough. And it’s gotten even tougher over the last few decades.

Why innovation policy is no longer ‘just’ domestic

It would be way too simple to just cite globalisation as the sole cause of the internationalisation of innovation policy. True, the growing competition over the best brains or access to the fastest-growing markets is reshaping an innovation supply chain that is becoming ever more globally connected and entangled. But underneath that obvious trend there’s a more fundamental change that disrupts our traditional ways of making laws and implementing policies. That’s where today’s innovation policy necessarily blends into foreign policy.

Let’s go through the argument, starting with the historic backdrop. Since the Peace of Westphalia in 1648, we uphold the concept of a nation state, based on a given territory, formed by the people living there, sharing a common culture. That’s our basic frame for making and enforcing law; initially still under feudal rule, but gradually shifting to the democratic rule we appreciate today. Furthermore, this concept of the Westphalian nation state serves as the foundation for the international order that emerged after the Second World War. To the present day, we adhere to the basic principle that law is attached to land, and that law applies to people based on citizenship or at least residence. Woven through, you’ll find our fundamental idea of community: the unity of people, territory, culture.

At least, that’s been the dominant concept until very recently. But with the rise of the platform economy and social media in particular, we see the emergence of a new concept of community, connected essentially through information technology. In this new concept, vicinity and neighbourhood are no longer defined by the number of physical steps you take to get there, literally, in the real world. Today, the concept of ‘near‘ is shaped by the number of clicks you need to reach out, it’s a fully virtual concept of near-ness. And with that, the idea of community is now fully detached from any physical constraint. There’s nothing wrong with that in general, but it poses tremendous challenges that are rarely acknowledged, in particular for the way in which we manage our legal affairs.

If you keep in mind that our idea of a state is based on territory, and the concept of law is based on the territorial nation state, then the rise of Facebook, Google, Amazon, Twitter, Airbnb, Netflix, and several others means nothing less than the advent of powerful non-state actors. And they do not only disrupt the business world, they also put to the test our principles of making and enforcing laws and regulations. These emergent, multi-layered, nested, overlapping, virtual communities exist ‘outside‘ our established notion of ‘the law‘. Of course that doesn’t make them ‘illegal‘ in a strict sense. More precisely, they transcend many legal systems (a.k.a. nation states), each of them only partially. And that causes a challenge for those companies (after all, they are for-profit organisations): to comply with the collective of all the laws that the individual parts of the community are subject to, without any established authority to actually make binding law for the entire community. That is a genuine conundrum.

Facebook as the case in point

Facebook’s community standards yield a highly illustrative example.  These standards represented the “regulation” that Facebook (the company) defines –and keeps adjusting and re-defining– as the guiding principles and the rules for the user community to comply with. Technically speaking, these community standards are imposed on the community by a for-profit service provider; they are neither defined nor legitimised by the community in any way or form. Still, they are the reference regulation that Facebook cites when asked about its compliance with either national or international laws regarding, e.g., protecting individual privacy or removing hate speech, explicit content, or terrorist propaganda. And that singular focus on the community standards leaves a bitter taste with users, citizens and law-makers alike that Facebook might be trying to evade the law. Hence the hearings in the U.S. Senate and the European Parliament earlier this year; but despite good intentions and high hopes, both left many questions unanswered.

There’s an elephant in the room that Facebook has not addressed yet, that Facebook doesn’t seem to be ready to deal with. In this regard, Mark Zuckerberg’s recent note on Facebook’s blueprint for content governance and enforcement is quite insightful. Between the lines, this blueprint demonstrates a serious conflict of interest between the two roles he is trying to fulfill at the same time: the CEO of a for-profit company that operates a social media platform, and the custodian of the user community’s best interest. A successful CEO couldn’t credibly act as the custodian, and a trustworthy custodian wouldn’t maximise the company’s profit. In actual fact, the interests of the company and those of the community are light-years apart, separated by a business model based on revenue from micro-targetted advertising. Therefore, the very idea of combining both roles in a single hand violates one of the dearest principles of liberal democracies: the separation of powers.

Of course criticism is cheap, in particular when good advice is in short supply. Facebook is evolving, and I sincerely hope it’ll evolve faster to take the community’s interest and the extant legal frameworks seriously. The blueprint holds some promise that it could mature in a somewhat useful direction, provided that Facebook addresses some core challenges such as those identified by Tarleton Gillespie on Slate. In the end, either Facebook itself finds ways to ensure compliance with laws and regulations, or policy makers will have to assert the citizens’ and users’ interests with all the available tools, including litigation, e.g., under anti-trust regulations, or amending existing laws.

International policies for the Digital Revolution …

The Digital Revolution presents challenges of all sorts, not just technological, but for business, macro-economics, politics and society alike. We cannot escape those disruptions, hence we must try to shape them: Collingridge Dilemma at its best. This is the time for innovation policy that is truly innovative, that embraces novelty and avoids unintended consequences rather than trying to just get by with the ideas that have worked of the past.

The GDPR and Danish Tech Ambassador present two very promising approaches. One represents the most advanced legal framework on the planet to define and enforce the rules for data collection and use, with clear focus on protecting citizens’ privacy. The other is a foreign policy experiment (Casper Klynge’s own words) that seeks to establish an effective communication channel between the platform economy and governments, i.e., between the new non-state actors and the established state actors. And I for one firmly believe that we need more experimentation of this kind.

As we do our homework and think about the challenges ahead, about emerging alternative solutions, about desirable and undesirable outcomes, we are automatically confronted with lots of buzz and little substance. The overwhelming noise makes it almost impossible to identify the essential signals that we should really pay attention to. But separating wheat from chaff is exactly what we have to do in order to shape the digital future in the best interest of our societies. We must find better ways to devise effective innovation policy. And foreign policy should play a major role.

To offer at least some initial orientation, I’ll dive into some guiding questions to ask and signals to look for in the upcoming posts, outcomes to avoid and trends to pursue.