Building the New Economy

How to empower people and communities with user-centric data ownership, transparent and accountable algorithms, and secure digital transaction systems.  

Data is now central to the economy, government, and health systems—so why are data and the AI systems that interpret the data in the hands of so few people? Building the New Economy calls for us to reinvent the ways that data and artificial intelligence are used in civic and government systems. Arguing that we need to think about data as a new type of capital, the authors show that the use of data trusts and distributed ledgers can empower people and communities with user-centric data ownership, transparent and accountable algorithms, machine learning fairness principles and methodologies, and secure digital transaction systems.  
 
It’s well known that social media generate disinformation and that mobile phone tracking apps threaten privacy. But these same technologies may also enable the creation of more agile systems in which power and decision-making are distributed among stakeholders rather than concentrated in a few hands. Offering both big ideas and detailed blueprints, the authors describe such key building blocks as data cooperatives, tokenized funding mechanisms, and tradecoin architecture. They also discuss technical issues, including how to build an ecosystem of trusted data, the implementation of digital currencies, and interoperability, and consider the evolution of computational law systems.
 Chapter 1. Building the New Economy: What We Need and How to Get There by Alex Pentland
Part I. The Human Perspective: New Types of Engagement
Chapter 2. Building Data Cooperatives by Alex Pentland and Thomas Hardjono
Chapter 3. Shared Data: Backbone of a New Knowledge Economy by José Parra-Moyano, Karl Schmedders and Alex Pentland
Chapter 4. Empowering Innovation through Data Cooperatives by Thomas Hardjono and Alex Pentland
Chapter 5. From Securitization to Tokenization by Charles Chang
Part II. Resilient Systems: Making Society Work Better
Chapter 6. The Tradecoin System by Alexander Lipton, Thomas Hardjono and Alex Pentland
Chapter 7. Health IT: Algorithms, Privacy, and Data by Thomas Hardjono, Anne Kim and Alex Pentland
Chapter 8. Narrow Banks and Flat-Backed Tokens by Alexander Lipton, Thomas Hardjono and Alex Pentland
Chapter 9. Stable Network Dynamics in a Tokenized Financial Ecosystem by Shahar Somin, Goren Gordon, Alex Pentland, Erez Shmueli and Yaniv Altshuler
Part III. Data and AI, a New Ecology
Chapter 10. Toward an Ecosystem of Trusted Data and AI by Alex Pentland and Thomas Hardjono
Chapter 11. Stablecoins by Alexander Lipton, Aetienne Sardon, Fabian Schär and Christian Schüpbach
Chapter 12. Interoperability of Distributed Systems by Thomas Hardjono, Alexander Lipton and Alex Pentland
Chapter 13. Exchange Networks for Virtual Assets by Thomas Hardjono, Alexander Lipton and Alex Pentland
Part IV. Conclusions
Chapter 14. Conclusion: Legal Algorithms by Alex Pentland
Contributors
Index“Beating the pandemic is a tough challenge, but also an opportunity to retool for the bigger disruptions of digitization and AI. Building the New Economy brings together the best thinking on exactly how to do that, with perfect combination of rigor and relevance.”
—Erik Brynjolfsson, Stanford University
 
“These essays together offer depth and a path forward. Required reading for a sane future.”
—Lawrence Lessig, Harvard University
 
“Each chapter of Building the New Economy tackles an urgent and important societal question, from how to build effective health surveillance without a national healthcare system to how to protect people’s right to control their own data while exploiting its economic value, to how to enjoy the economic benefits of asset-backed securitization while reducing fraud. This boundary-pushing preview of the future we could have is a must-read for policymakers, thought leaders, and all of us wishing to reimagine and build a better society on the other side of the pandemic.”
—Beth Noveck, former Deputy CTO, United States
 
“An assembly of some of the brightest minds in engineering and data science, Building the New Economy bravely tackles not only what the economy needs of technology in our crisis-riddled age, but also what technology demands of financial ecosystems in order for it to make our lives more efficient, fairer, and safer. An ingenious collection of essays, the book provides a fresh new perspective on some of the most cutting-edge technologies of our time.”
—Chris Brummer, Georgetown UniversityAlex “Sandy” Pentland directs the MIT-wide initiative MITConnection Science. Called one of the “seven most powerful data scientists in the world” by Forbes, he has cofounded more than a dozen companies and is the author of Honest Signals (MIT Press) and Social Physics. Alexander Lipton is Professor and Dean’s Fellow at the Jerusalem Business School at the Hebrew University of Jerusalem, Cofounder and Chief Information Officer at Sila, and Connection Fellow at MIT. Thomas Hardjono is Technology Director of the MIT Connection Science and the MIT Trust::Data Consortium.