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Keeping Regulation up to Speed with Technology Innovation

David Rimmer, Research Associate at Leading Edge Forum, considers the challenges faced when deciding how to regulate new technology

The increasingly heated discussion around fake news and online electoral manipulation demonstrates a pressing challenge in today’s technology-driven times: how to regulate new technology? In this instance, the technology in question is social media platforms, but the same issue is playing out across many technologies in every aspect of our economy and society.

At first glance, the question may not seem a central concern, but what is at stake is whether we as a society control technology or technology controls us – or indeed, whether whoever controls technology controls us. Key decisions around technology regulation will determine who we are as a species (gene editing), who lives and who dies (medical interventions), what we eat and hence what we are (anti-biotics for farm animals and genetically modified crops), how we communicate as a society (social media platforms) and the world we live in (emissions controls).

Of course, risk is only one side of equation, because “Technological change drives long-term economic growth, productivity and improvement in living standards.” Moreover, meeting today’s energy and environmental challenges will be much more difficult without new technology . Ultimately, the success of advanced economies rests on their ability to mine the technology frontier and diffuse technology from frontier firms to the rest of the economy .

Technology innovation creates a modern-day commons dilemma

Deciding if and how to regulate the use of new technologies is at heart a collective action problem. Since individual companies can exploit new technology in ways that may be at the expense of wider society, in essence, we have a 21st century variation on the age-old commons dilemma where people’s short-term selfish interests may be at odds with long-term group interests .

Preventing a 21st century tragedy of the commons

So, what must we do to prevent a 21st century tragedy of the commons where over-exploitation of resources has catastrophic long-term results? In my belief, we need to evolve our regulatory institutions in three respects:

  • Technology expertise – How do regulators (society’s delegates) ensure that they have sufficient understanding of emerging technology and its potential impact to advise and regulate effectively?
  • Education, engagement and trust – How do regulators educate and engage with the public and businesses so that their decisions are suitably informed and understood? Here the process matters as much as the outcome. So an important subsidiary question is: how is public trust in regulators and their experts maintained, with society confident that their decisions strike the correct balance of stakeholder interests and short- and long-term factors?
  • Oversight – What powers should regulators have and how can the public directly, or through their political representatives, ensure appropriate oversight?

Institutional innovation must match technological innovation

Right now, regulation of technology is a peripheral topic in our national conversation, but that must change unless we want to learn only through our mistakes and regulation is only reformed in the light of failure. We need new institutional models, not just new regulations. This may sound like a tall order, yet Douglass North, the Nobel Prize-winning economist, and a school of followers have shown how the progress of humanity is above all a story of the advancement of institutions. Put simply, institutions are how humans solve problems together, and it’s through changing our institutions that we will solve the problem of how to harness new technologies in the interests of society as a whole.

In combatting Covid-19 we see fast-forwarded with astonishing urgency and gravity the same challenge of collective action through our institutions. We can only hope that lessons will carry over into how we regulate technology – a challenge that is not going away.

1) The OECD Jobs Strategy: Technology, Productivity and Job Creation: Best Policy Practices,
2) David Moschella & Robert D. Atkinson, The Enterprise Automation Imperative: Why Modern Societies Will Need All the Productivity They Can Get, LEF, January 2020
3) Dan Andrews, Chiara Criscuolo & Peter N. Gal, Frontier Firms, Technology Diffusion and Public Policy: Micro Evidence from OECD Countries, OECD, November 2015
4) Tragedy of the Commons, Wikipedia