Talk by Umberto Sulpasso, Senior Fellow of Centre for Digital Future, University of Southern California, Los Angeles at the Conference at Vivekananda International Foundation (VIF), 18 December 2017

Director Dr. Arvind Gupta, Chairman and Dr. Rajiv Kumar, Vice Chancellor of NITI Aayog,

“Take up one idea. Make that one idea your life - think of it, dream of it, live on that idea. Be full of that idea. This is the way to success. Swami Vivekananda”.

I want to start by quoting such a great thinker because, following Vivekananda’s suggestion, I concentrated all my scientific energy of last years with the goal of defining the ‘Gross Domestic Knowledge Product’ (GDKP) of India. Therefore, to be able to present it in this Foundation seems to me the arrival to the best possible shore.

Dr. Arvind Gupta, thank you very much for your invitation to share with such an important audience, in such an outstanding Foundation, some modest thoughts on which is based my book titled ‘Darwinomics’. At the end, I will close my remarks making a reference to one of your observation in your previous speech, which Dr. Gupta, is extremely relevant for what we discuss today.

And thanks a lot to Ambassador Shetty and Ambassasor Fabian who made this meeting possible; and special thanks to the Chair, Dr. Rajiv Kumar, who was the first supporter of this idea in India. With typical pragmatically constructive American approach, he said “Let’s do it”, after of our first meeting when having just arrived from Los Angeles I appreciated very much. If GDKP India 2018, as I hope after this meeting, becomes a reality, the reference will be to my model, which has been defined and improved thanks to Dr. Rajiv Kumar’s unparalleled knowledge of Indian economy.

I started my talk with a quote of Vivekananda because I used to read Vivekananda texts much before this pleasant event. Since long, I love Indian culture, art, music and I am often fully immersed in the philosophical books this splendid country has produced over centuries, I should say millennia. In the special shelves of my library Indian philosophic writers live together with Greek philosophic writers. Books of Plato, Aristotle, Parmenides, Diogenes, Zenon are together with books of Kapila, Kanada, Pantajali, Shankaraya, my favoured Abinavagupta and Ramakrishna. And Vivekananda had always a special place. Since it is not fair to forget some names, I want to mention two authors of history of western and Indian philosophy who pay proper homage to all of them. For history of western philosophy I recall Bertrand Russell, a genius of philosophical intellectual life for decent values, and for history of Indian philosophy I want to remember Surendranath Das Gupta, a man who dictated to his friends the last paragraph of his book a few hours before his death that he knowingly expected while talking with them, like Socrates.

I make this initial reference to crossed Greek and Indian philosophy because both are the real foundations of ‘Darwinomics’, a word that connects two fundamental elements of humankind: Economics and Evolution. Darwinomics is intended to indicate with this combination a new horizon not just for economics, but for a specific type of economics which could be a factor for human evolution in Darwinian terms.

Let’s then start with economic part of the word. In Darwinomics the assumption is that we need a total new model of economics linked to the Darwin vision of evolution if humankind has to survive and that model we have to elaborate quite fast because we are heading towards dramatic world disasters.

We live in wonderful times for innovation and science. We are able to send probes outside the solar system and manage to move from here some man made machine to land on Mars or on some part of a comet when no more then a couple of centuries ago comets were still considered as omen of bad events coming from distant worlds. At the same time, biology has been able to identify - and finally declare beyond any doubt - the absolute common human biological structure, thus getting rid of any idea of race predominance or distinction, while pharmacological innovation is saving it from disastrous infectious disease that swept the world with millions of deaths. All that is wonderful, but the most revolutionary change on human life of our age is in communication, because it refers and impacts literally daily upon all human beings.

Never in history we could even think of being able to making an instantaneous person-to-person communication across thousands of miles, or viewing simultaneously the same event across the entire planet, or enabling a single person to communicate instantaneously to millions of people, be that a politician or a commoner. Extraordinary scientific and social advances have the most dramatic impact on economy, but quite surprisingly, economy has not yet taken care of it. We do live in wonderful times but with enormous economic disparities, because not all people in the world share the benefits of economic progress. That has happened always in human history, but today there is a revolutionary element to be considered that could endanger life of all of us. That disparity, by means of TV, internet, satellite programs, is wide clear to everybody, and through digital connections it could easily provoke rebellions, destructions, fights managed from outside, violence and upheavals engineered on global scale from far distant places, degenerating uncontrolled mass violence and ending up in global wars. This is why consideration of human disparities should give rise to new economic models which should mix development with global communication.

On the contrary, in these wonderful times, the existing economic models are missing wonderful opportunities that science could afford to fight famine, to improve basic living standards for billions of people, avoid climate disruption and halt poisoning air and sea. Not only such wonderful opportunities are missed but there is insistence on promotion of development models based on use of scarce resources and forcible acquisitions from other countries. Those old fashioned economic models are a ‘zero sum’ game where one country’s raw material has to be obtained to the detriment of raw materials of others, spontaneously or forcibly, with trade agreements or with wars, which, with the mass communication of today, leads to disastrous events. Let’s not forget that we live in a world where violence can erupt in any place and instantaneously viewed all over the world to instigate and spread further rebellion. Obviously, we need new economic models to take care of scarcity of raw material and use it better, and those models must take care of amazing communication frontiers that never existed before.

We economists (I feel to be part of that family even though I criticise some of its members) invented wonderful financial tools, stock markets, trade agreements; we reduced trade barriers, we brought circulation of money to extraordinary velocity. Let’s face it, we did wonderful job, but at the end of the 20th Century, we failed to understand that communication revolution would create a most dramatic challenge in shape of economics mixed with security. Why economists do not take it into consideration and continue to deal with acquisition of scarce raw materials from everywhere? The reason, to my mind, lies on lack of philosophical education among those who practice in the field of economics. It is said that over the door of Plato’s school was written: “No entrance for those who ignore mathematics”; in my view, at the door of economic school it should be written, “No entrance for those who ignore communication”. In the Western world, we use to date event according to ‘Before’ or ‘After’ Christ. In world’s economy, we need start thinking in terms ‘Before and After Internet’. But then, what should be the pillars of a new economic model?

Darwinomics is to promote an economic model that is able to catch the combination of IT revolution with what is by far the most significant human raw material: knowledge. Since knowledge is the most important man made raw material and IT revolution makes its circulation possible among all human beings, Darwinomics promotes a new economic model based on quantitative production and circulation of knowledge produced everywhere, and by everyone, and circulating it everywhere and with every one. The presumption is that increase of knowledge production will greatly increase the GDP level of a country, maximizing the use of raw material for every country and at the same time, reduce disparities and conflicts. And if Darwinomics promotes an economic model based on communication and knowledge, what country in the world is better suited to promote it than India, with its fantastic history of philosophical and applied knowledge. A country where knowledge in all its infinite varieties is so much important that its wonderful sacred books are named Veda, that means knowledge.

We embark therefore on the difficult journey of trying to explore theoretical benefits of quantifying the wealth of nation in terms of knowledge but before that let us delve in few words, the first part of the word Darwinomics.

In what has become a recognised law of evolution, Darwin states that those species that will survive are those who adjust better to change. What happens to species that do not adapt to change? Obviously they disappear. Darwin is referring his principle to the species. But mankind too is a specie, and therefore that principle will apply to humanity as well, but with one very peculiar and frightening possibility that this specie might be the first one to suffer self-created disappearance.

A famous biologist, Myers, proved in his work that on a theoretical ledger of intelligence, the most intelligent species last for less time. Bacteria exist since millions of years, much longer than the scarce few hundred thousands years of our existence, and they are going to last much longer after the disappearance of human species. The ominous signs of Myers’ predictions are everywhere available: massive destructive weapons burgeoning instead of diminishing; climate change produced by uncontrolled production and destruction; poisoning of land and sea by means of no biodegradable garbage etc., all seem to make the terrible forecast made by a great biologist to be true. When we think of 50 thousands nuclear weapons produced where ten or fifteen of them would suffice to erase any civilisation on earth, we tend to agree on Myers’ assumption. And the question all scientists should ask themselves is: what level of questionable intelligence has been reached when we put to danger our own existence?

Roaches seem, according to the great biologist, well equipped with sufficient scarce intelligence to survive human species. On this point we might ask ourselves if in times of genetic manipulation do we prefer our descendants to be humans or to turn them to roaches? The theoretical premise of Darwinomics is that we don’t want our kids to become roaches in order to survive. Individuals not only want to survive but they want to remain the species they are and want to live well. But in the post- Internet age, we can do that only with a new model of economy linked to mass production of knowledge and mass distribution of it. Let’s then enter into more specific aspects of GDKP India, which I call a cockpit to be offered to your visionary leader, Modi, who wants to lead India into the digital age and make it a modern country for all its future generations to compete at world’s highest levels.

GDKP as Cockpit for Indian Government’s Navigation

Cockpit is a space, usually enclosed, in the forward fuselage of an airplane containing the flying controls, instrument panel and seats for the pilot and co-pilot or flight crew. GDKP is a cockpit for a knowledge driven nation that contains strategic references, special tools for a knowledge driven economy and the Prime Minister’s (PM) decision making to enhance GDP, improve social equality and market decisions. I don’t want to bother this audience with complex technical aspects of GDKP but it is useful to share some specifications I made to create the model:-

a. GDKP had to be a quantitative economic notion like GDP, and not just a collection of relevant data. In other words, it had to end up in a number.

b. That number has to be comparable to the GDP and permit the ratio of GDP to GDKP ratio to assess the ‘K’ factor of the nation, that is to say, the ‘Knowledge Multiplier’ in terms of GDP from investing in knowledge.

c. That number has to be comparable with GDKP of other countries, as it is with GDP, but it has to have its own specifications. In other words, not only we have to have international standard GDKP but also national cultural GDKP in order to specifically protect and save the contribution of national knowledge to the wealth of nation.
Given those parameters, let’s make clear what would make the model a specially powerful tool for India:-

a. It will quantify the production, use and circulation of knowledge referring, as it does the GDP, to the whole population of a country. As in GDP we measure the contribution of a worker on the assembly line of Tata’s motor, we also have to measure the worker’s contribution to GDKP.

b Since we want to upgrade the knowledge level of the whole country, GDKP reduces all knowledge to common goods, or service, bought and sold on the market.

Here the key is to pass from traditional concept of knowledge as unquantifiable entity reserved for selected people and structures to a mass produced version of knowledge which empowers India on global scale. In the GDKP model, knowledge is something traded, produced, bought and sold by all people, which in economic terms gives India a sort of monopolistic advantage of enormous demographic potentiality. Think of a ‘knowledge class’ of 50 millions people, unthinkable elsewhere, to be developed as GDKP, and achievable through a policy of knowledge enhancement of over a billion of people. The immense effect of GDKP could uplift economic development far higher than other less populated and advanced countries and assure a most relevant role for India on global scale. In a ‘K’ factor nation having knowledge driven economy, the demographic effect of over a billion people can be astonishing. The reason I always wanted to apply the GDKP model to India or China is because these countries can move from being demographic bombs to knowledge bombs - peaceful bombs, of course.

At this stage, it is useful to indicate some aspects of the model which would provide PM Modi with new powerful tools of managing the country and taking it, as he desires in his visionary approach, to a modern digital economy.

Flight Control Strategical Reference

The first reference we have in cockpit is the CKPM, or Country Knowledge Producing Matrix, thanks to which the country has been visualised as texture of knowledge production. Here your PM will see through our model, the flow of production of knowledge – as what knowledge is produced and by whom.

The second element we have is the CKUP, or Country Knowledge User Matrix, which is intended to give the government the texture of users of knowledge. Here the structure is exactly the same as in the CKPM except that here we catch the consumer of knowledge - what of produced knowledge is used, and by whom.

The third fundamental element of the model is the construction of the Individual Cost of Learning. We have an Index of the Cost of Living; your PM has to have key information on Cost of learning in urban or rural areas, by age brackets and by sectors of employment.

Obviously there will be an economic innovation burden for the first country that moves from a theoretical model to its practical application in the country itself. And we are very lucky to have here Rajiv Kumar, a great economist of international standing. His book ‘The Many Features of India’ is fundamental for developing this country and his last book ‘Modi’s Challenges’ is the key reference for the adaptation of GDKP model to India. And I dare say Rajiv, that you will support the idea of calculating the GDKP India 2018; you have unique competence for such a modern initiative. But I also want to mention Ashish Kumar who as DG of Central Statistic office of India made an excellent preliminary calculation of GDKP India for two years and compared that to over 40 countries. As I said, those are preliminary calculation and lot of work still has to be done to get to the final results, but there is great merit in showing a workable relation with the National Accounting System. At the end of this document you may find the letter that Ashish Kumar sent to this conference in case there was not possible a workable skype connection.

Sitting in the cockpit of GDKP, the PM observes the flow of knowledge produced and consumed of India. Watching the display he will be aware that he can take decisions in budgeting, thus maximising the multiplier impact of some specific economy sector (in favouring overall knowledge circulation, increasing the digital role of economy and in social policy). He will also see a full set of private market opportunities promoting higher role of knowledge in private investment to increase the GDP and the wealth of individual companies (favouring optimal capital formation balance, creating over-the-counter knowledge company, market based on knowledge-price (K/P) ratios, and favouring a financial private investor risk analysis based on knowledge investment).

Our pilot now gives his attention to the instrumental panel. He wants to increase GDP pushing high the K-factor impact in one or more of the indicated areas and he can properly introduce some crashing new instruments. Here I will mention some of the new main potential instruments he may want to promote to make India a full-fledged knowledge driven nation. I just mention these, reserving these for discussion or for further meetings. Here are some of the said instruments:-

a. Individual Educational Credit Card, which I got adopted in Italy for two years;

b. Educational Family Bonds, not redeemable tax favoured subscription bond usable only for educational payments as kids grow up;

c. India’s National Knowledge Distant Educational Platform, created to get every individual producing knowledge to be able to sell it to all Indians and make a business out of his knowledge;

d. India’s Knowledge Valleys, a physical space made in areas where special goods are made, where all knowledge connected items to that production can be conveyed to favour selling abroad - say for instance, a ‘Saree Knowledge Valley’ in Benares etc.

e. India’s Knowledge Money, a special K-money issued by producers of knowledge that can be spent in a knowledge market that has a special status in fiscal policy, defined by the national or state governments;

f. India’s Knowledge Money Central Bank, a central institution that controls and defines the credibility of K-money emission and the condition and rates upon which it can be redeemed.

Please let me add that Knowledge Money and India’s Knowledge Money Central Bank could really become one of most modern innovation in international money market and attract a lot of foreign money.

We have been talking of GDKP-INDIA as an instrument of economy, both to enhance the value of GDP and to assure a proper role to private investors in building a knowledge driven Indian economy. But there are some other aspects on which we should give proper attention for better business, diplomacy, and finally, security. Here I will refer to a world center for GDKP risk analysis in financing, Triple-K, Triple-A, K/P, WSJ and DOW Index. And let’s not forget direct business benefits for India’s economy. To mention only software and business publishing; software is an enormous business opportunity for the Indian software houses to be the first to elaborate the simulation model of GDKP which has to be applied across the nation, to states and then abroad. In business publishing, let’s not forget that the most important business newspaper, The Wall Street Journal, comes from the most important stock index Dow John Industrial Average. But it could as well promote the long researched vision of risk analysis in financing, introducing the Triple-K in addition to Triple-A, the K/P ratio in addition to the price-earning (P/E) ratio and finally the GDKP Index at the level of DOW Index K/P ratio for all the stocks listed under business journal of GDKP Index.

But before closing I would like to mention a recent CNN report: Facebook and Amazon have joined an exclusive club open to only the richest companies in the world, both have crossed the half-a-trillion mark. Facebook exceeded $500 billion in market value for the first time as Mark Zuckerberg's company continued its rapid ascent. Amazon hit the $500 billion milestone for the first time. Only three companies, all in the technical industry, are worth more right now: Apple ($798 billion), Google parent company Alphabet ($667 billion) and Microsoft ($571 billion).

The meteoric rise of their stocks - each are up more than 40% this year alone - further enriches these companies' visionary founders. Jeff Bezos, 53, started Amazon in 1995 and just surpassed Microsoft co-founder Bill Gates on Thursday as the world's richest person. Zuckerberg, who is just 33 years old and is a Harvard drop-out, is now worth more than $69 billion, according to Forbes. Facebook's $500 billion milestone looks stunning considering the social networking giant has only been public for five years. But today Facebook boasts more than 2 billion users. Amazon has altered the way people shop, creating enormous turmoil for retailers.

I wanted to mention these data because I have to ask to all of you one question: What prevents India from playing a direct role in this market? Please notice that three of the five mentioned companies do not sell physical goods and the question is, what do they sell? They sell the most modern version of knowledge, which I call information/relation knowledge. In my opinion this is the most relevant American revolution of the last decades, comparable to introduction of atomic weapons because it daily impacts billions of people and it is not far away the day in which it will record daily interactions of 70 to 80 percent of the world population. That is to say, 5 or 6 billion people exchanging information/relation knowledge no matter which country these individuals are living in, or their age, or gender and physical status. And again, why India, with its extraordinary love for knowledge and with its phenomenal demographic potential is not taking a lead in this evolution of knowledge market which has so powerful impact on economy and so critical to security? I would like to close my talk with some considerations linked to these questions.

We made quite a journey from Darwinomics to GDKP-India and we have arrived at the end of our conversations. On the first day of this journey, one person sitting here, Ambassador Fabian, a strong supporter of GDKP-India, made me notice that in his monumental work, Toybin considered India origin of three civilization.

As I said at the beginning, I would like to mention an extremely important speech Dr. Arvind Gupta gave some times ago, asking as to why India’s culture, which is so important, gets so little credit abroad, and, as he added, even within the country. I found that talk extremely important for GDKP-India much before I had the pleasure of meeting him because for sure he raises a fundamental question everybody here should address to find an answer. My suggestion is that India should learn how to promote its society’s enormous knowledge treasure and its wonderful capacity to produce more knowledge. And here, there is an important initiative I would like to present.

I have been thinking since long time to establish a Club Gandhi, Chomsky, Voltaire, which would represent top visionaries in the area of good knowledge. Presenting this idea here and adding the name of Vivekananda is something that pleases me very much. Chomsky with whom I often share opinions, is one of the world’s top intellectuals, always fighting for decent approach to life that Vivekananda had. To get him involved with the GDKP would be a great achievement. Dr. Gupta, it is my conviction that with GDKP-India we will not only provide a wonderful tool to your visionary PM Modi to help him manage in a proper way the historical entry of India into a knowledge driven economy, but will also help in overcoming the limitations you pointed out and which requires everybody to offer some solution.

It is my wish that the combination of Vivekananda International Foundation and the NITI Aayog, with two so remarkable persons present here, Dr. Arvind Gupta and Dr. Rajiv Kumar, can make GDKP-India 2018 become a reality. And let me close with a famous statement of John Kennedy: When we talk of Knowledge not only I personally feel I am Indian, but I am convinced that everybody should feel they are Indians. Thank you very much for your attention.

Note:

1. My email is [email protected] . Please write me for any clarification.

2. www.digitalcenter.org /gdkp is the centre of University of Southern California where you can find lots of material relevant for GDKP India including articles and some assessments

3. Here there is an attachment of a letter of Ashish Kumar to the conference

Message From Shri Ashish Kumar, Former Director General of Central Statistics Office, Ministry of Statistics and Programme Implementation, Government of India, 17 December, 2017

Dear Participants of the meeting, Colleagues and Friends,

I would like to thank Vivekanand Foundation for organizing a discussion on the concept of ‘Gross Domestic Knowledge Product’ (GDKP) specially in the context of India. I also apologize for not being personally and physically present in such an important meeting.

We all agree that India has been the hub of knowledge for the rest of the world, be it knowledge of outside or inside, the worldly knowledge or the knowledge of self, Atman. We have shown light to the world on how the life should be lived and how the balance in life (Yoga) should be achieved. This status of India being leader in knowledge generation and dissemination got compromised later due to various internal conflicts in our country, domination by invaders and colonization. After the independence, the country has started the process of building up and has again taken leadership in many areas and disciplines. This is specially notable in the area of Statistics and now in IT sector.

Our team comprising of eminent economists and ambassadors-Prof Umberto Sulpasso, Mr K.P. Fabian, Mr Balkrishna Shetty, Mr Rajiv Kumar and me as Statistician devoted considerable time to develop understanding the role ‘Knowledge’ plays in development of societies, its key ingredients and also how this can be measured and used for policy making. My role in this journey has been to develop a metric to measure the knowledge related contribution in the overall economic development. This work was undertaken when I was Director General of Central Statistics Office in the Ministry of Statistics and Programme Implementation in Government of India in 2015. Using internationally accepted concept and standard of System of National Accounts including Supply Use Tables, we tried to define the concept of knowledge as comprising of “new knowledge’ generation and dissemination of ‘existing knowledge’. This is an attempt to develop a satellite account relating to knowledge sector from the whole of national accounts. Developing satellite accounts is a part of regular exercise of national accountants. India has been leader in Asia Pacific region in developing Tourism Satellite Accounts. Therefore, such an account with various disaggregations can be developed in National Statistics Offices engaged in production of National Accounts Statistics. This ‘knowledge account’ with its disaggregations at the State and lower levels can be a very important policy instrument for giving thrust to knowledge producing and knowledge disseminating industries/ activities.

We initially did the exercise of production of GDKP for India based on the Supply Use Tables generated for the first time in India. Later, we expanded this exercise to cover many countries. I am sure Professor Umberto will be sharing the methodology adopted for the purpose and results obtained. One of the major finding of this exercise has been that growth in GDKP can be taken as predictor of GDP. There may be some time lag in the two indicators, but the lag can be tracked and reduced by efficient policy actions. It is further possible to identify the areas where there has been large contributions and what has been its effect on GDP. This can be an effective instrument to determine investment priorities. The exercise also brought out number of limitations in segregation of information from the existing data collection systems for development of satellite account on knowledge. I think there is a need to improve this system over the years.

I hope the Government of india shall take a big step in accepting this statistics as a measure as important as GDP and would use it for policy formulation.

I must again apologize for my inability to personally join such an important meeting. I wish a fruitful discussion in the meeting. I would like to inform that these are my personal views and not of my organization in which I am working at present.