Man and the State in the Digital Economy

The digitalization of the economy has created a condition of statehood completely unknown thus far in human history. Internet services, the sector for creating and maintaining technological infrastructure, and digital products and services, including software-managed industries, have created a transnational economic environment. Nation-states increasingly have less control over economic processes and the economic activity of people in this global environment. Public institutions functioning in the nation-states that were created during the industrial age of the 20th century are not prepared to operate in a digital, transnational economic environment. The tax, pension, and health systems of nation-states, the labor laws, trade unions, and many other public institutions are not designed to function in a global economic and digital economy. National governments have diminishing opportunities to exercise the fiscal sovereignty of the nation-state over its citizens, especially in the area of corporate taxes and personal income taxes. The social spending and pension systems of a number of countries in the Western world are under extreme pressure, and not only because of rising expenditures on health care, social services, and pensions. They are ineffective because they have been designed to operate and provide services in relatively closed national markets with low social mobility.