How Technology Impacts Society: A Forecast for the 21st Century

This article is an excerpt from the Shortform book guide to "The Sovereign Individual" by James Dale Davidson and Lord William Rees-Mogg. Shortform has the world's best summaries and analyses of books you should be reading.

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What advantages do small businesses and individuals have over large companies? What’s the future of warfare? How might virtual assistants be weaponized?

In The Sovereign Individual, James Davidson and William Rees-Mogg explain how technology impacts society. Writing in the 1990s, they contend that circumstances and technological developments have always shaped society and will continue to do so.

Read more to learn about the ways technology influences civilization, including some of Davidson and Rees-Mogg’s predictions for the 21st century.

How Technology Impacts Society

Davidson and Rees-Mogg explore how technology impacts society, predicting that new and soon-to-be-available technologies are changing circumstances to favor smaller entities as they did in the past—both economically and militarily. This is why they expect that many nations will fragment into smaller sovereignties in the 21st century (the primary focus of their book). We’ll take a look at the specific technologies that Davidson and Rees-Mogg expect will transform society. Writing in the 1990s, they expected all these developments to take place by 2025.

The Virtual Economy

Davidson and Rees-Mogg predicted that commerce and financial assets would increasingly migrate from localized physical economies into the online virtual economy. Furthermore, the online economy would be largely beyond governments’ ability to tax or otherwise regulate, for three reasons.

First, assets and businesses that exist in cyberspace aren’t tied to any particular location. This means that no nation really has jurisdiction over them, because governments (as we know them) exercise authority over areas with well-defined geographical boundaries. If you’re running a business that’s all online, and the government tries to interfere with your business, you can just move to a different jurisdiction where they won’t bother you.

Second, the authors expect that encryption technology will make online transactions completely private—no one except the parties involved in the transaction would know who did business with whom or how much money changed hands. This would make reporting your income from online transactions strictly voluntary since there’s no way the government can find out about it unless you tell them.

Third, Davidson and Rees-Mogg expect that online transactions will increasingly be conducted with digital currencies, rather than fiat currencies that are controlled by national governments. They envision these digital currencies as encrypted receipts for gold or other commodities with stable value. They would be issued by a new breed of banks whose business is all online and whose infrastructure is distributed across many locations in many different countries. Again, this would put them largely beyond the reach of tax authorities or other government regulators, because if any one of their locations was threatened with regulation, they would simply close it.

Collectively, these changes will give small, mobile businesses and individuals a competitive edge over large companies that are heavily invested in physical infrastructure. This is because their immobile infrastructure makes them vulnerable to taxation and other regulations that online-only businesses can easily avoid.

Computerized Warfare

Davidson and Rees-Mogg also predict that military operations will increasingly take place in cyberspace. There are two dimensions to online warfare: First, as valuable businesses and financial assets migrate from the physical world to the online economy, they present a target for hackers—the soldiers and warlords of cyberspace.

Second, as physical infrastructure becomes increasingly computerized, it, too, becomes vulnerable to hackers. Instead of torpedoing a battleship, you could hack into its computerized control systems and shut it down, or even make it self-destruct.

The transition from physical war to cyberwar will diminish the significance of army size in deciding the outcome of wars. This tends to favor smaller nations, or at least removes the military advantage that larger countries have had.

Progress Check: Computerized Warfare

Davidson and Rees-Mogg’s predictions about the technology of cyber warfare have proven quite accurate. Perhaps the best example of a cyberweapon deployed since they made their predictions is the “Stuxnet” virus, which disabled about a thousand uranium enrichment centrifuges at the Natanz nuclear facility in Iran in 2009. The attack was likely an attempt to cripple Iran’s nuclear program, thereby preventing Iran from developing nuclear weapons. However, no one has publically assumed responsibility for the attack, and the exact origin of Stuxnet remains unknown.

However, despite the demonstrated capabilities of cyberweapons like Stuxnet, computerized warfare has not displaced conventional warfare to the extent that Davidson and Rees-Mogg predicted. There could be multiple reasons for this.

First, as we noted above, the cyber economy has not yet displaced the physical economy to quite the extent they anticipated, and so cyberspace is not yet valuable enough to become the primary battleground for military conflicts.

Second, it may be that coding advanced cyberweapons is more difficult and labor-intensive than the authors expected. If that’s the case, then they don’t level the military playing field as much for small players, and so the small players have less incentive to develop them. However, as AI increasingly becomes a force multiplier for programmers, perhaps advanced cyberweapons will soon become available to people with more limited resources, just as Davidson and Rees-Mogg predicted.

High-Powered Virtual Assistants

Finally, Davidson and Rees-Mogg expect that virtual assistants (bots, algorithms, and AIs) will replace many professional workers, such as lawyers, doctors, and administrative assistants. These virtual assistants will greatly increase your individual capacity for getting things done because they will work tirelessly on your behalf without wages or living expenses and with unswerving loyalty.

They could also be weaponized as a deterrent to people who might wish to harm you or take your wealth: If you have an army of virtual detectives and virtual hackers that are programmed to perform investigations on your behalf and launch a cyberwar against anyone they find to have wronged you, that gives people an incentive not to wrong you. And your virtual assistants will continue to function after your death, so if someone murdered you, your AI would avenge your death. Again, this knowledge will act as a deterrent to would-be murderers.

By acting as force multipliers, AI virtual assistants will enable individuals and small, efficient organizations to do as much work as larger, less-efficient organizations. This will give small businesses higher profit margins than large corporations. For that matter, it will also make small, efficient security forces a match for large national armies.

Progress Check: Virtual Assistants

Artificial intelligence and related algorithms have advanced a lot since Davidson and Rees-Mogg made their predictions in the 1990s, but as of 2023, they haven’t reached the level that the authors predicted they’d attain. While AI tools are beginning to extend information workers’ productivity in much the way that Davidson and Rees-Mogg predicted, they’re still a limited force multiplier because they only solve specific problems and require very specific instructions.

As Peter Thiel explains in Zero to One, the main reason for this is that computers only excel at certain things, like crunching numbers. But while computers outperform humans at numerical calculations, humans have a decided advantage over computers at things like object recognition and value judgments. He argues that programmers have wasted a lot of time trying to make computers mimic human behavior, instead of focusing on applications that computers are better suited for.

Some of the behavior that Davidson and Rees-Mogg expected from virtual assistants is easy for humans but hard for computers. For example, tasks like conducting a criminal investigation or designing a marketing campaign involve a lot of data collection and prediction (which AI is good at) but also some judgment calls, which AI can’t make very well.

How Technology Impacts Society: A Forecast for the 21st Century