How a technological revolution could save the EU in a post-Brexit world

31 January 2017 9:55am

7 July 2016. By Magnus Franklin.

The traumatic political upheaval that culminated in the UK voting to leave the EU has thrust the bloc’s many bureaucratic shortcomings to center stage. The EU’s democratic processes were too opaque, cumbersome and centralized to meet the challenges of the 21st century — or so the criticism went.

But what if the answer to these flaws were to be found in a technological fix, rather than a bureaucratic Band-Aid? What if innovation — and in particular a bookkeeping technology called “blockchain” — could revolutionize policymaking to make it nimble, responsive and faster to implement than anyone would believe possible?

Internet-paced rulemaking would allay concerns in some corners that laws are unable to keep pace with fast-moving markets and technological developments. But companies may argue that the speedy adoption and implementation of laws could come at the expense of legal certainty.

These are the questions that the EU’s top innovation bureaucrat, Robert Madelin, has grappled with in a 346-page report, which urges the bloc’s institutions to embrace technological progress as a means to reinvent the legislative process. To do so, Madelin argues, could bring about an EU in which information could be accessed and distributed in ways inconceivable in a brick-and-mortar world.

“Imagine this scenario for creating a piece of legislation,” Madelin writes: “Design online legislative initiative; issue guidance; monitor conformance; modify guidance; identify the recalcitrant; issue threat of punitive intervention; assess peer pressure; evaluate legislative impact . . . all in a week.”

This process could apply to matters ranging from corporate tax rates to “a new motorway speed limit,” he says. “If we think this unlikely, we know little of how the Internet already functions for citizens and businesses.”

‘Needy candidates’

And Madelin is happy to name institutional names when describing parts of the EU administration crying out for fast-track legislating. “Needy candidates for Internet-readiness assistance abound in the current Commission Work Program — from financial services, to mobility of workers,” he writes.

The cornerstone of the revolution, in Madelin’s vision, would be an until-now poorly understood technology weaving its way into the mainstream: blockchain, a digital bookkeeping system that is set to relegate the web to a supporting role.

“[W]ith the event of blockchain, the Internet will become the primary medium for the transfer of value and supervision of obligation,” writes Madelin, who is the top policy advisor on innovation for the European Commission’s in-house think tank, the European Political Strategy Center.

“It has been said that when we look back in 20 years people will say of the Internet that its primary function is to enable blockchain — in much the same way as copper wires were seen through much of the past century as the means to enable telephony,” Madelin’s report says.

Versatile tool

Blockchain technology involves a digital spreadsheet listing a chain of timestamped “blocks” of valid transactions. This means that entire ledgers of transactions can be stored in many places in a network simultaneously, rather than in a central location.

The ubiquity of the ledgers makes it impossible for a single participant in the process to trick the system. Any glitch in one blockchain wouldn’t match the ledgers in other parts of the system, which would invalidate the transaction.

But blockchain is revolutionary not just because it is difficult to fool, but also because it eliminates the need for a central organization to hold the ledgers. Institutions that now have a central verification point — such as banks, social-security systems, governments, telecom operators — could lose that role.

Blockchain rose to fame as the core of virtual currency Bitcoin, and the banking industry is now familiar with the technology. But more recently, other sectors are discovering that it can be a versatile tool.

In particular, blockchain could upend the current regime, in which digital goods can be infinitely reproduced, replacing it with a system in which virtual items can pass from one owner to another. Any set of transactions — whether a logistics chain or a policymaking process — could be verified by using a blockchain system.

“Sooner rather than later we will find ourselves taking a leap into a completely different conception of regulating economic and personal behavior, as blockchaining continues to spread beyond its genesis [with Bitcoin] to, for example, smart contracts, healthcare records and beyond,” says Madelin in the report.

“If we think this unlikely, we know little of how the Internet already functions for citizens and businesses,” says Madelin, a former top bureaucrat in the EU’s digital-policy department.

Reshaping democracy

Madelin’s long history of pushing for new ways of organizing policymaking could be dismissed by some as his latest visionary gamble on the future. But there are several reasons why blockchain is different.

The simplicity of the system makes it easy to understand, meaning it doesn’t require endless tomes of governance rules and interpretative analysis to work. The technology also has credibility because it has been tested in the high-stakes field of monetary transactions.

Add to that the pressing need for the EU to regain its mojo, and blockchain offers an elegant technical solution to reinvent the European project.

The game changer for those who deal with the process of drafting and implementing legislation could be the notion of “guidance” — a feedback loop that shows whether regulation and guidelines are being followed on the ground. “Could guidance become the new legislative norm?” Madelin’s report asks.

But while the blockchain revolution may help assuage the concerns of Euroskeptics who complain about a lack of transparency and responsiveness in the legislative process, Madelin concedes it may also spark some soul-searching about what groundbreaking changes could mean for our understanding of policymaking.

“What does this do to the democratic process itself?” the report asks, suggesting a scenario in which parliamentary committee discussions lasting six months “will become as unthinkable as a Google home page that doesn’t change every day.”

“What will the new role of parliaments be?” Madelin asks. “What will the role of the EU Parliament and Council be?”

With a summit of EU leaders called for September to draft a new mission statement for the bloc in a post-Brexit world, this report could present a now-or-never chance to deploy technology in a bid to salvage the union.

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