"To recover from the coronavirus crisis we'll need to combine human, artificial and economic intelligence"
We spoke to Joan Torrent, Professor of Economics, principal investigator of the i2TIC group at the Universitat Oberta de Catalunya's (UOC) Faculty of Economics and Business, and a specialist in ICTs and artificial intelligence. When discussing the economic and health crisis resulting from the coronavirus pandemic, in his mind there can be no recovery without both artificial and economic intelligence. However, he adds: "But make no mistake, neither will be possible without human intelligence." He reflects on a new economic paradigm in which technologies play a major role, both to solve the crisis and the subsequent recovery, and on how new technologies and artificial intelligence may be the key to the economic policies to come "post-lockdown".
According to a recent 40 dB survey published in El País, Spaniards are more concerned about the economic consequences of COVID-19 than the related health impacts. What do you think about that?
Putting aside for a moment that it is very difficult to separate a health crisis from an economic one, it's important to highlight that it's people who make the economy. It is of vital importance that we truly think about how we are facing this pandemic and the crises that it provokes and, even more importantly, what we are going to do to recover from them. Looking at everything going on around us these days, I think that technology – artificial intelligence and collaborative platforms most of all – will make a real difference, now and in the future.
What role do you think artificial intelligence will play in economic recovery in the wake of the coronavirus?
I think that artificial intelligence will be paramount in solving the health crisis. It can help us predict how the virus will behave as well as those who have it, and this information could in turn help keep the health system from becoming oversaturated. Honestly, it surprises me that this global health crisis doesn't have a global response yet, which is leading many countries to make the same mistakes as those who have gone before them. Artificial intelligence could be the key to moving us closer to a global response to the pandemic, both in terms of health and the economy.
Regarding economic recovery, what do you think the first steps will be?
We are dealing with a devastating crisis, the root of which has nothing to do with the economy, but it affects everyone just the same. This is known as an 'external symmetric shock' and is a rarely seen phenomenon. Fortunately, we do have a reference: the Spanish flu of 1918. Then we saw how these global crisis situations were a good time to develop Keynesian policies, which many countries began to do, especially after the Stock Market Crash of 1929.
What do these policies involve exactly?
For starters, we need to prepare for a more or less extended period of exceptionality in which we see the economic flow come to a standstill. And that is where massive injections of capital and public spending to take the brunt of it come in. Don't write off seeing things that have up until now been unthinkable, like moratoria or tax exemptions for businesses and citizens. If the economy grinds to a halt, taxes make little sense.
But in a context of elevated debt, who ends up paying for these Keynesian recipes? That's the big question we'll have to answer in the coming months. In already very in-debt countries like Spain and Italy, it will have to be the European Central Bank who assumes a large part of the public debt (John Keynes already spoke of a central bank and a global currency). However, this won't be enough and it will be interesting to see how we handle the debt on a global scale.
But these policies will only help ameliorate the problem of demand, and this is a crisis of supply as well. That's where we'll have to revisit the theories of Joseph Schumpeter. The global economy's longest period of stability, growth and reduced inequalities came after the Spanish flu and the two World Wars, and was thanks to the 2nd Industrial Revolution.
So what role will technology play in all this?
If we manage to harness the capabilities of the technological base offered by the second wave of digitization, which has artificial intelligence at the helm, as well as the push for change generated by the coronavirus crisis (or other crises like climate change), we'll be able to shape a period of growth and stability out of the 4th Industrial Revolution. Of course, global planning and regulation bodies must be set up, that's a given. Time will tell what happens with nation states as the 21st century progresses.
And in your opinion, what political system will accompany this 4th Industrial Revolution?
That remains to be seen but is worth addressing. We still don't know to what extent China's non-democratic, to put it one way, system was beneficial in containing the virus. Or to put it another way, we don't know to what extent democratic systems and their limited capacity in certain aspects, such as using fear to encourage people to self-isolate, has actually been beneficial to the virus' spread. I'm sad to say that one of the effects of the coronavirus crisis will be our having to fiercely defend the democratic culture, because the temptation to curtail liberties of all kinds can already be seen.
Going back to the economy: do you think companies' robotization and digitization processes will fall by the wayside?
I actually think the current crisis will very much encourage the use of robotics in production, because we are facing a scenario ruled by uncertainty over how the virus and the needs for lockdown will progress in which we also have to factor in this external symmetric shock to supply and demand. Being able to predict how the market will behave and any possible changes will be top of the list.
In addition we'll also have a scattered workforce that will be able to produce but who will require a certain flexibility. So technologies that can predict behaviour, allow activities to be carried out remotely and organize a flexible work flow will gain ground and I would bet that artificial intelligence will come out on top.
Lockdown has shown us the power of the platform economy. How do you think it's going to evolve in the coming stages?
Artificial intelligence's learning capacity coupled with disintermediation or a more direct link between economic agents will give platforms an unbeatable competitive leg up. You just have to look at the activity these days on platforms that bring products and supplies to those in confinement. This business model can be extrapolated to any branch of the economy.
And how will this model affect labour relations?
Any time we change how work is organized, labour relations and the social contract between businesses, employees and government also have to change. In this new model we're talking about, technology allows us to control the physical world from the virtual one; workers become a part of the productive process that is complemented by a technology that learns and collaborates. In this scenario, collective bargaining and social contracts based on contracts and salaries according to productivity levels cease to make sense. We have to come together and draw up a new social contract that establishes new conditions for governing work in the 21st century.
What fate awaits SMEs in Spain?
In the current climate, SMEs are an endangered economic agent. If big corporations are having trouble surviving in a situation of uncertainty, lockdown and teleworking, SMEs have it even worse. There really is no other option than to expect the mortality rate among this sector of the business fabric to skyrocket. But it's also true that SMEs' main competitive advantage has always been their flexibility and those who are able to mobilize and adapt will come out of this alive and many will evolve.
However, all this will depend on public policies that are able to provide the necessary capital. Again we look to Keynes and Schumpeter, but this time in symbiosis. Beating the virus and overcoming the crisis will rely on combining artificial and economic intelligence. But make no mistake, neither will be possible without human intelligence. Now is the time for caution; we need to listen to the intelligence of our health system and follow their recommendations to the letter. And all get ready for a brave new world.