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INDUSTRY 4.0-ERA TECHNOLOGY (AI, BIG DATA, BLOCKCHAIN, AND DAO): DOES THE LAW NEED BETTER MEMES?

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Abstract

This essay surveys legal issues raised by the wave of technological innovations that are defining the present era, known as Industry 4.0. These include the standards governing the gathering, keeping, use, and transfer of data, defining relationships when technology enables novel employment interactions, and fundamental questions about liability and legal personhood. After examining these distinct directions for future research, the essay concludes by urging that those of us in the legal profession—academics, practicing attorneys, judges, and policy-makers—become uncharacteristically proactive. It is explained that, absent our proactive involvement, advances in technology alone are not likely to bring about fundamental progress away from fundamental societal problems rooted in the 1st Industrial Revolution.
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INDUSTRY 4.0 ERA TECHNOLOGY (AI, BIG DATA,
BLOCKCHAIN, DAO): WHY THE LAW NEEDS NEW MEMES
By: Adam Sulkowski*
I. INTRODUCTION
The Fourth Industrial Revolution is disrupting the field of law, as evidenced
by disputes over data ownership and privacy,1 legal liability for Artificial
Intelligence (AI),2 and litigation on the issue of whether a gig economy worker
is an independent contractor or an employee.3 In fact, the founder and CEO of
the World Economic Forum, Klaus Schwab, has already derided the field of law,
proclaiming that it is mired in the era of the Second Industrial Revolution.4
This essay extends an invitation to action, encouraging further research and
policy-making to at least catch-up to—if not anticipate and be proactively ready
for—emerging realities. This essay is part of a wider conversation which is
inevitably evolving out of novel legal controversies. For example, who or what
should a court hold accountable when a vehicle run by AI programmed by
members of a Decentralized Autonomous Organization (DAO) hurts someone,
and, if the members as individuals are—for whatever reason—judgment-proof,
* Associate Professor, Babson College. B.A., 1996, College of William & Mary; M.B.A., 1999,
Boston College, Carroll School of Management; J.D., 2000, Boston College Law School. The
author thanks Mystica Alexander, Associate Professor at Bentley University, for her help.
1 See Bennett Cyphers et al., Data Privacy Scandals and Public Policy Picking Up Speed: 2018 in
Review, ELECTRONIC FRONTIER FOUND. (Dec. 31, 2018), https://www.eff.org/deeplinks/2018/12/
data-privacy-scandals-and-public-policy-picking-speed-2018-year-review [https://perma.cc/S648-
7QN5]; see also Molly Wood, Goodbye, 2018 — A Year of Data and Privacy Scandals,
MARKETPLACE (Dec. 31, 2018), https://www.marketplace.org/2018/12/31/tech/goodbye-2018-
year-data-privacy-scandals [https://perma.cc/6MX2-REG3].
2 See Emerging Technology from the arXiv, When an AI Finally Kills Someone, Who Will Be
Responsible?, MIT TECH. REV. (Mar. 12, 2018), https://www.technologyreview.com/s/610459/
when-an-ai-finally-kills-someone-who-will-be-responsible [https://perma.cc/VSB5-LETQ].
3 See Mike Kappel, The End Of An Era? How The ABC Test Could Affect Your Use of Independent
Contractors, FORBES (Aug. 8, 2018, 9:10 AM), https://www.forbes.com/sites/mikekappel/2018/08/
08/the-end-of-an-era-how-the-abc-test-could-affect-your-use-of-independent-contractors/
#32bbfc5d1f66 [https://perma.cc/U7TW-7AEP].
4 See Klaus Schwab, The Fourth Industrial Revolution: What It Means, How to Respond, WORLD
ECON. FORUM (Jan. 14, 2016), https://www.weforum.org/agenda/2016/01/the-fourth-industrial-
revolution-what-it-means-and-how-to-respond [https://perma.cc/CRF5-UWBR].
2 KAN. J.L. & PUB. POLY Vol. XXIX:1
can the AI itself be liable?5 Or can a court hold the DAO liable, making the
organization pay like a human or a conventional business organization?6 More
broadly, should ethical standards be “hardcoded” into automated processes of
organizations, as blockchain-enabled smart contracts allow?7
This essay proceeds as follows. Section II clarifies some fundamental
terminology. Section III then surveys the issues raised by the current wave of
innovations. This Section delves into the legal issues—including prohibitions,
what is permissible, and affirmative duties—that are relevant to the gathering,
keeping, use, and transfer of data.8 Section IV identifies the challenge of
defining the relationships and attendant obligations between individuals and
entities in an era when technology enables interactions that do not fit neatly into
preexisting categories.9 Finally, Section V highlights that—in their own way and
yet in a related vein—AI, automation, and the advent of the DAO all raise
fundamental questions about liability and legal personhood.10
Currently, Industry 4.0 era innovations impact norms related to information
and interrelationships, and they will inevitably raise fundamental questions
related to liability and legal personhood.11 Section VI concludes by urging that
those in the legal profession—academics, practicing attorneys, judges, and
policy-makers—should become uncharacteristically proactive. This Section
proposes that our world of legal constructs should not only keep up with the
realities enabled by twenty-first century technologies but should also put
guardrails on how they are deployed, steering their uses and outcomes to be
consistent with sound public policy.12
5 See Emerging Technology from the arXiv, AI Can Be Made Legally Accountable for Its Decisions,
MIT TECH. REV. (Nov. 15, 2017), https://www.technologyreview.com/s/609495/ai-can-be-made-
legally-accountable-for-its-decisions/ [https://perma.cc/M4VJ-RBXL] [hereinafter Emerging
Technology from the arXiv, AI Can Be Made Legally Accountable].
6 See Stephen D. Palley, How to Sue a Decentralized Autonomous Organization, COINDESK (Mar.
20, 2016), https://www.coindesk.com/how-to-sue-a-decentralized-autonomous-organization
[https://perma.cc/VVU4-K9RJ].
7 See generally Adam J. Sulkowski, The Tao of DAO: Hardcoding Business Ethics on Blockchain,
2 BUS. & FIN. L. REV. (forthcoming 2020) [hereinafter Sulkowski, The Tao of Dao].
8 See Rahul Telang, A Privacy and Security Policy Infrastructure for Big Data, 10 I/S: J.L. & POL'Y
FOR INFO. SOC'Y 783, 783 (2015); Shawn M. Boyne, Data Protection in the United States, 66 AM.
J. COMP. L. 299, 299 (2018).
9 See Saranicole A. Duaban, Workers for On-Demand Businesses—Employees or Independent
Contractors?, FED. LAW., May 2016, at 8, 8; Julia Tomassetti, Digital Platform Work as Interactive
Service Work, 22 EMP. RTS. & EMP. POL'Y J. 1, 4–5 (2018).
10 See Emerging Technology from the arXiv, AI Can Be Made Legally Accountable, supra note 5;
Palley, supra note 6.
11 See Laila Metjahic, Deconstructing the DAO: The Need for Legal Recognition and the
Application of Securities Laws to Decentralized Organizations, 39 CARDOZO L. REV. 1533, 1536
(2018).
12 Adam J. Sulkowski, Blockchain, Business Supply Chains, Sustainability, and Law: The Future
of Governance, Legal Frameworks, and Lawyers?, 43 DEL. J. CORP. L. 303, 340–45 (2019); see
also Joan MacLeod Heminway & Adam J. Sulkowski, Blockchains, Corporate Governance, and
the Lawyer’s Role, 65 WAYNE L. REV. 17, 22–23 (2019).
2019 SULKOWSKI: INDUSTRY 4.0 ERA TECH 3
II. TERMINOLOGY: AI, BLOCKCHAIN, DAO, INDUSTRY 4.0
Before proceeding further, this Section provides a brief primer on the
terminology that the remainder of this essay will use.
Artificial Intelligence (AI) is the simulation—or surpassing—of human
intelligence processes by computer systems.13 It is used almost interchangeably
with machine learning, which is defined as an application of AI to provide
systems the ability to learn and improve from experience without human
guidance.14 Familiar examples of AI in everyday life include using the voice
recognition technology in cell phones and interfacing with digital assistants that
speak back to us.15
Blockchain is a means of distributed record-keeping.16 This technology
enables smart contracts, which are self-executing agreements.17 Manifesting the
legal conceptualization of a corporation as a nexus of contracts, a DAO
endeavors to replace the administrative structures of business organizations
with—literally—a set of smart contracts that define each party’s relationship,
rights, and duties.18 In other words, the outcome would be an organization of
human individuals working together without the traditional administrative
overhead, inefficiencies, and potential proclivities for self-dealing and
corruption that come with having human managers allocating resources and
directing employees.19
Industry 4.0 is the term coined to describe the changes to the manufacturing
sector wrought by a combination of greater availability of data, AI, better
human-virtual world interfacing, automation, and 3D printing.20 While Industry
4.0 may have originally been intended to apply to the evolution of factories, the
term has, in common parlance, started to serve as shorthand to describe the
13 See generally STUART J. RUSSELL & PETER NORVIG, ARTIFICIAL INTELLIGENCE: A MODERN
APPROACH (3d ed. 2016); see also NILS J. NILSSON, PRINCIPLES OF ARTIFICIAL INTELLIGENCE 1
(2014).
14 See generally Carbonell et al., An Overview of Machine Learning, in MACHINE LEARNING: AN
ARTIFICIAL INTELLIGENCE APPROACH 3, 3–4 (Ryszard S. Michalski et al. eds., 2013).
15 See Will Knight, Facial Recognition has to be Regulated to Protect the Public, Says AI Report,
MIT TECH. REV. (Dec. 6, 2018), https://www.technologyreview.com/s/612552/facial-recognition-
has-to-be-regulated-to-protect-the-public-says-ai-report/ [https://perma.cc/Z5XH-P6VJ]; The
Manifest, 16 Examples of Artificial Intelligence (AI) in Your Everyday Life, MEDIUM (Sep. 26,
2018), https://medium.com/@the_manifest/16-examples-of-artificial-intelligence-ai-in-your-
everyday-life-655b2e6a49de [https://perma.cc/7AXD-G5F5].
16 MELANIE SWAN, BLOCKCHAIN: BLUEPRINT FOR A NEW ECONOMY x–xi (2015).
17 VITALIK BUTERIN, ETHEREUM WHITE PAPER: A NEXT-GENERATION SMART CONTRACT &
DECENTRALIZED APPLICATION PLATFORM 1 (2013), https://pdfs.semanticscholar.org/0dbb/8a54
ca5066b82fa086bbf5db4c54b947719a.pdf?ga=2.265248655.1414026395.1569282479-82921821
3.1569282479 [https://perma.cc/CQ87-VMBZ].
18 See Alex Norta, Creation of Smart-Contracting Collaborations for Decentralized Autonomous
Organizations, in PERSPECTIVES IN BUSINESS INFORMATICS RESEARCH 1, 1–2
(Raimundas Matulevičius & Marlon Dumas eds., 2015).
19 See Palley, supra note 7.
20 See Erik Hofmann & Marco Rüsch, Industry 4.0 and the Current Status as Well as Future
Prospects on Logistics, 89 COMPUTERS INDUSTRY 23, 24–25 (2017).
4 KAN. J.L. & PUB. POLY Vol. XXIX:1
current era of simultaneous and convergent qualitative leaps in the development
of various technologies that impact many fields of human endeavors.21 For
example, beyond manufacturing, blockchain-based cryptocurrencies have
attracted the interest of both speculators and monetary experts, including the
Managing Director and Chairwoman of the International Monetary Fund,
Christine Lagarde.22 Because it is a record-keeping technology, blockchain-
based records are clearly relevant in several legal contexts, becoming explicitly
recognized as legitimate in a growing numbering of states23 including, for
example, Arizona24 and Delaware.25
Further, as illustrated by Uber, continuous geolocation, monitoring, and
interfacing with digital platforms has enabled the gig economy phenomenon.26
In the context of leisure and recreation, human-virtual world interaction has led
to massive growth of gaming in terms of global reach and human hours spent in
artificial worlds.27 It is difficult to imagine a field of human activity these digital
technology trends will not affect.28 Yet, aside from literature focused upon
blockchain-based cryptocurrencies, there is a comparative lack of legal
scholarship dealing with the full range (and combinations) of the technologies
described above (especially considering the scale and variety of disruptive
implications for businesses, governments, daily lives, the practice of law, and
the profound existential questions at stake).
III. DATA: DUTIES, PROHIBITIONS, AND WHAT IS PERMISSIBLE
Shoshana Zuboff, Charles Edward Wilson Professor Emerita at Harvard
21 “It is the fusion of these technologies [AI, big data, Internet of Things, bioinformatics] and their
interaction across the physical, digital and biological domains that make the fourth industrial
revolution fundamentally different from previous revolutions . . . diffusing much faster and more
widely than in previous ones.” KLAUS SCHWAB, THE FOURTH INDUSTRIAL REVOLUTION 7–8
(2017).
22 See generally Christine Lagarde, Central Banking and Fintech: A Brave New World,
INNOVATIONS: TECH., GOVERNANCE, GLOBALIZATION, Summer–Fall 2018, at 4.
23 For the status of various state-level initiatives to recognize blockchain records, see Heather
Morton, Blockchain 2019 Legislation, NATL CONF. ST. LEGISLATURES (July 23, 2019),
http://www.ncsl.org/research/financial-services-and-commerce/blockchain-2019-legislation.aspx
[https://perma.cc/XM2Z-B6B8].
24 ARIZ. REV. STAT. ANN. § 44-7061 (2017).
25 DEL. CODE ANN. tit. 8, § 224 (West 2017) (amending to allow the use of distributed ledger
technology to create and maintain corporate records).
26 Kate Abrosimova, Building an App Like Uber: What Is the Uber App Made from?, MEDIUM
(May 22, 2014), https://medium.com/yalantis-mobile/uber-underlying-technologies-and-how-it-
actually-works-526f55b37c6f [https://perma.cc/K7F7-4V3P].
27 See Research & Markets, Global Virtual Reality Gaming Market 2018-2023: Market Expected
to Grow at a CAGR of 26%, PR NEWSWIRE (Sept. 10, 2018, 9:15 PM),
https://www.prnewswire.com/news-releases/global-virtual-reality-gaming-market-2018-2023-
market-expected-to-grow-at-a-cagr-of-26-300709527.html [https://perma.cc/U3UK-4TXW].
28 Ron Miller, Technology is Disrupting Everything, TECHCRUNCH (Mar. 16, 2016, 10:04 AM),
https://techcrunch.com/2016/03/16/technology-is-disrupting-everything/ [https://perma.cc/4FUU-
CXAM].
2019 SULKOWSKI: INDUSTRY 4.0 ERA TECH 5
Business School, explains that we are in the era of surveillance capitalism.29
Data gathering is constant and ubiquitous, and data gatherers leverage this
information to both predict and influence us.30 In fact, some consider data to be
the oil of the 21st- century capitalism.31
Whether a data collection and dissemination scandal involves the
government,32 the private sector,33 or both,34 it is hard to escape meta-questions
about the optimal setting of boundaries and conditions for data gathering and the
consequences for misuse. For example, what data can, must, or must not be
gathered on customers, employees, other stakeholders, and impacts on the
environment? There are already negative potential legal consequences for not
performing criminal background checks when hiring for certain positions35 or
not keeping records related to workplace health and safety.36 Regulation-by-
disclosure37 is an effective tool for bringing about desirable public policy ends,38
alongside being an effective tool of management.39 In another realm, data
29 See generally SHOSHANA ZUBOFF, THE AGE OF SURVEILLANCE CAPITALISM: THE FIGHT FOR A
HUMAN FUTURE AT THE NEW FRONTIER OF POWER 8 (2019).
30 See id.
31 See KAI-FU LEE, AI SUPERPOWERS: CHINA, SILICON VALLEY, AND THE NEW WORLD ORDER
50 (2018).
32 See, e.g., Barton Gellman & Laura Poitras, U.S., British Intelligence Mining Data from Nine U.S.
Internet Companies in Broad Secret Program, WASH. POST (June 7, 2013),
https://www.washingtonpost.com/investigations/us-intelligence-mining-data-from-nine-us-
internet-companies-in-broad-secret-program/2013/06/06/3a0c0da8-cebf-11e2-8845-
d970ccb04497_story.html?noredirect=on&utm_term=.91a93298b0db [https://perma.cc/QA2Z-
ZGP5].
33 See Alexis C. Madrigal, What We Know About Facebook’s Latest Data Scandal, ATLANTIC (June
4, 2018), https://www.theatlantic.com/technology/archive/2018/06/what-we-know-about-
facebooks-latest-data-scandal/561992/[https://perma.cc/JBK7-VDYU]; see also James Sanders &
Dan Patterson, Facebook Data Privacy Scandal: A Cheat Sheet Tech Republic, TECH REPUBLIC
(Dec. 11, 2018, 10:52 AM), https://www.techrepublic.com/article/facebook-data-privacy-scandal-
a-cheat-sheet/ [https://perma.cc/56AC-ESXQ].
34 See Lev Grossman, Inside Apple CEO Tim Cook’s Fight with the FBI, TIME (Mar. 17, 2016),
http://time.com/4262480/tim-cook-apple-fbi-2/ [https://perma.cc/DTQ8-FX33].
35 Patricia M. Harris & Kimberly S. Keller, Ex-Offenders Need Not Apply: The Criminal
Background Check in Hiring Decisions, 21 J. CONTEMP. CRIM. JUS. 6, 8 (2005).
36 See Helen F. Hiser, Recent Updates in OSHA Reporting Requirements and Maximum Penalties,
28 S.C. LAW. 16, 16 (2017).
37 The mandatory disclosure of data on employment equity, safety, and environmental risk. See Jodi
L. Short & Michael W. Toffel, Making Self-Regulation More Than Merely Symbolic: The Critical
Role of the Legal Environment, 55 ADMIN. SCI. Q. 361, 362 (2010); see also Kathryn E. Durham-
Hammer, Left to Wonder: Reevaluating, Reforming, and Implementing the Emergency Planning
and Community Right-to-Know Act of 1986, 29 COLUM. J. ENVTL. L. 323, 325 (2004).
38 See Adam J. Sulkowski, City Sustainability Reporting: An Emerging and Desirable Legal
Necessity, 33 PACE ENVTL. L. REV. 278–79, 296–99 (2016) [hereinafter Sulkowski, City
Sustainability Reporting].
39 See Mustafa V. Uzumeri, ISO 9000 and Other Metastandards: Principles for Management
Practice?, ACAD. MGMT. EXECUTIVE, Feb. 1997, at 21, 22–23.
6 KAN. J.L. & PUB. POLY Vol. XXIX:1
availability is essential for green taxes40 and proactive legal strategies.41 As the
adage goes, “‘we manage what we measure.’”42 However, what are the limits on
gathering, keeping, requesting, and using data? Should data gathering be
restricted, in light of existing evidence that the use of data and algorithms can
result in unintended discrimination against disadvantaged demographics?43 On
the other hand, can governments even attempt to regulate in some arenas without
requiring the collection, keeping, and sharing of relevant data?44
Another fruitful stream of research involves financial reporting. Publicly
traded corporations must disclose to investors information deemed to be
material.45 U.S. securities law defines the materiality principle by considering
the expectations of reasonable investors.46 As a result, it seems that what is
considered material information could change based on evolving expectations
of investors in the context of omnipresent and uninterrupted monitoring of
information, including impacts on people and the environment.47
IV. NEW RELATIONSHIPS
New technologies have led to new employment platforms, causing worker
status to defy easy classification into existing categories. For example, the roles
of people employed in the gig economy48 may fit certain definitional criteria for
being considered employees, yet these individuals arguably also match
fundamental criteria to be considered independent contractors.49 Which set of
principles should a court therefore apply when an Uber driver demands the
40 Mystica Alexander et al., Sustainability & Tax Policy: Fixing a Patchwork of Policies with a
Coherent Federal Framework, 35 VA. ENVTL. L.J. 1, 56 (2016).
41 Gerlinde Berger-Walliser et al., Using Proactive Legal Strategies for Corporate Environmental
Sustainability, 6 MICH. J. ENVTL. & ADMIN. L., 1, 28–29 (2017).
42 Adam J. Sulkowski & D. Steven White, A Happiness Kuznets Curve? Using Model-Based
Cluster Analysis to Group Countries Based on Happiness, Development, Income, and Carbon
Emissions, 18 ENVT, DEV. & SUSTAINABILITY 1095, 1097 (2016).
43 See Gideon Mann & Cathy O’Neil, Hiring Algorithms Are Not Neutral, HARV. BUS. REV. (Dec.
9, 2016), https://hbr.org/2016/12/hiring-algorithms-are-not-neutral [https://perma.cc/7J64-
NN6W].
44 See generally Maureen Giovannini, What Gets Measured Gets Done: Achieving Results Through
Diversity and Inclusion, J. FOR QUALITY & PARTICIPATION, Winter 2004, at 21, 21; but see Adam
J. Sulkowski, Cyber-Extortion: Duties and Liabilities Related to the Elephant in the Server Room,
2007 U. ILL. J.L. TECH. & POLY 19 (2007) (articulating the perspective that the risk of potential
liability based on existing common law principles ought to be enough to encourage companies to
be more circumspect with their data systems).
45 See Adam J. Sulkowski & Sandra Waddock, Beyond Sustainability Reporting: Integrated
Reporting Is Practiced, Required, and More Would Be Better, 10 U. ST. THOMAS L.J. 1060, 1061
(2013) [hereinafter Sulkowski & Waddock, Beyond Sustainability Reporting].
46 Id. at 1070.
47 See Sulkowski, City Sustainability Reporting, supra note 38, at 290.
48 This is also described as the sharing, platform, or taking economy. See Ryan Calo & Alex
Rosenblat, The Taking Economy: Uber, Information, and Power, 117 COLUM. L. REV. 1623, 1625
(2017).
49 Miriam A. Cherry, Beyond Misclassification: The Digital Transformation of Work, 37 COMP.
LAB. L. & POLY J. 577, 578 (2016).
2019 SULKOWSKI: INDUSTRY 4.0 ERA TECH 7
health or disability benefits of an employee or negligently wounds or kills a
pedestrian or even assaults a passenger?50 Further, would entrepreneurs,
workers, and society benefit from the creation of new employment categories?51
Do all of these stakeholders benefit from a laissez-faire approach to regulation,
since some claim that it boosts the chances of discriminated-against groups
finding opportunities to legally trade their labor for value,52 or should new
employment platforms be regulated or banned, based on equally compelling
evidence and arguments that they can function as tools of exploitation?53
V. THE POWER OF ARTIFICES, SUCH AS CORPORATE PERSONHOOD
Any sustained coordinated action among people requires shared fictions.54
Our imagined notions are given precise definition, enforceable authority, and
impact physical reality through the use of law.55 For example, we collectively
imagine that corporations, such as Google, exist as legal persons56 with the only
quibble being that some jurists have preferred to describe corporate legal
personhood using variations on the word “artifice” as opposed to fiction.”57
These fictions extend to imaginary handcuffs—for example, fiduciary duties—
that require actions and loyalties of those in contractual relations with Google.
Our shared mental models for understanding reality and legal artifices for
maintaining or creating new realities are an example of memes.58
***
To further illustrate and appreciate the power of legal fictions, it is valuable
to briefly contemplate the aptness of the metaphors used above. In the United
50 See Duaban, supra note 9.
51 See Miriam A. Cherry & Antonio Aloisi, “Dependent Contractors” in the Gig Economy: A
Comparative Approach, 66 AM. U. L. REV. 635, 637 (2017).
52 The employment terms that result from a gig economy platform have been shown to be fairer
than those arising in conventional contexts. Annabel Denham, The Gig Economy Is the Future and
Women Can Lead the Charge, TELEGRAPH (Apr. 11, 2018, 7:00 AM),
https://www.telegraph.co.uk/women/business/everyone-benefiting-gig-economy-apart-women/
[https://perma.cc/4LEM-U8SM].
53 See Niels van Doorn, Platform Labor: On the Gendered and Racialized Exploitation of Low-
Income Service Work in the ‘On-Demand’ Economy, 20 INFO., COMM. & SOCY 898, 904–05
(2017).
54 See YUVAL N. HARARI, HOMO DEUS: A BRIEF HISTORY OF TOMORROW 150–52 (2017).
55 Examples include the rights and duties of public and private sector entities and the notions of
property and jurisdiction. As will be explained shortly, shared fictions can have enormous
significance over lives in physical reality.
56 See John Dewey, The Historic Background of Corporate Legal Personality, 35 YALE L.J. 655,
669 (1926).
57 See Arthur W. Machen, Jr., Corporate Personality, 24 HARV. L. REV. 253, 256 (1911).
58 The author is among those who have previously noted the power of memes in management and
in solving civilizational existential problems. See Adam J. Sulkowski & Sandra Waddock,
Midas, Cassandra & the Buddha: Curing Delusional Growth Myopia by Focusing on Thriving, J.
OF CORP. CITIZENSHIP, Mar. 2016, at 15, 15 [hereinafter Sulkowski & Waddock, Midas,
Cassandra & the Buddha]. The term meme was introduced by Richard Dawkins in 1976 to denote
a replicated unit of cultural transmission. RICHARD DAWKINS, THE SELFISH GENE 192 (2d ed.
1989).
8 KAN. J.L. & PUB. POLY Vol. XXIX:1
States, the country with the largest incarcerated population,59 the handcuffs are
not entirely metaphorical in the context of our private prison industry, inasmuch
as the imagined legal duty of an executive to maximize shareholder value lead
to the very real sale of an inmate’s labor, which is exempted from minimum
wages standards.60 The law allows the inmate to be profitably caged because a
court may have concluded, for example, that the individual sold a cannabis plant,
an act that people (depending on the state) may have imagined to be criminal.61
At present, political donations are imagined to be constitutionally protected free
speech. So, a lucrative prison corporation is currently empowered to influence
lawmakers to continually criminalize the possession of certain vegetation as part
of its effort to increase its revenue by forcibly warehousing more people.62
***
The observations above concern classic legal questions and quandaries
related to our imaginary friends and sometimes masters: business
organizations.63 First, assuming conventional structures using existing tools, is
it possible to guide these imaginary beasts to behave better, despite the incentive
of their nominal leaders to harm people and the environment as a side effect of
profit-seeking?64 Is it a means to “take the blinders off” these imaginary beings
and help decision-makers take into account real risks and opportunities
connected to people and ecosystems through enhanced gathering and publication
of data on societal and environmental impacts?65 Would deeper and more
comprehensive data monitoring by business organizations that explicitly co-
prioritize societal and environment stewardship,66 enabled by more inclusive
59 This includes by percentage and in absolute numbers. Drew Kann, 5 Facts Behind America's
High Incarceration Rate, CNN (Apr. 21, 2019, 2:50 PM), https://www.cnn.com/2018/06/28/us/
mass-incarceration-five-key-facts/index.html [https://perma.cc/Z8FZ-9ED8].
60 Jaron Browne, Rooted in Slavery: Prison Labor Exploitation, RACE, POVERTY & ENVT, Spring
2010, at 78, 80.
61 Depending on the place and context, the law still imagines marijuana as forbidden; DISA Global
Solution provides a regularly updated map and tables of states where marijuana is fully legal,
partially legalized, or fully illegal. See Map of Marijuana Legality by State, DISA GLOBAL
SOLUTIONS, https://disa.com/map-of-marijuana-legality-by-state (last updated Oct. 2019)
[https://perma.cc/6WJ4-73VZ].
62 R. W. Anderson, Marijuana Prohibition and Rent Seeking, 34 HOMO OECONOMICUS 33, 44
(2017).
63 William M. Geldart, Legal Personality, 27 L.Q. REV. 90, 93–94 (1911). It bears pointing out that
legal personhood is not limited to organizations established for the purpose of making profit.
64 See generally Adam J. Sulkowski, Ultra Vires Statutes: Alive, Kicking, and a Means of
Circumventing the Scalia Standing Gauntlet in Environmental Litigation, 24 J. ENVTL. L. & LITIG.
75 (2009); Adam J. Sulkowski & Kent Greenfield, A Bridle, a Prod, and a Big Stick: An Evaluation
of Class Actions, Shareholder Proposals, and the Ultra Vires Doctrine as Methods for Controlling
Corporate Behavior, 79 ST. JOHNS L. REV. 929, 930 (2005).
65 See Sulkowski & Waddock, Beyond Sustainability Reporting, supra note 45, at 1079–80.
66 For example, benefit corporations. See Frank Tantone, Keeping the “Benefit” in Benefit
Corporations: How and Why New York State Should Continue to Foster and Develop Benefit
Corporation Legislation, 30 J. CIV. RTS. & ECON. DEV. 215, 219 (2017); see also What Is a Benefit
Corporation?, BENEFIT CORP., https://benefitcorp.net/what-is-a-benefit-corporation
[https://perma.cc/D7Z9-2KLW].
2019 SULKOWSKI: INDUSTRY 4.0 ERA TECH 9
managerial practices67 and new certifications,68 help create artificial beings that
create more value and less harm?69 Especially, if “first, do no harm” or “do not
be evil” or “create net zero harm to the environment” were literally encoded into
the rules of a DAO, would we at last have an artificial legal person with the DNA
of a harmless and good neighbor,70 rather than that of what has been
characterized as a psychopath?71
However, ultimately, the following is perhaps one of the most profound
legal and public policy questions related to the creation of DAOs: in replacing
human administration by encoding values, duties, and consequences
electronically, could we create an organization that is “hard-coded” to not break
the law and/or not to harm?72 If a nexus of self-executing smart contracts
replaced conventional corporate hierarchies and overhead,73 it may have the
effect of eliminating attendant inefficiencies, limitations, susceptibilities to
corruption, self-dealing, and costs. The more that values and rules are entrusted
to code, the more that algorithms are entrusted to bring our mental models of
67 Such as the German legal expectation of labor representation on boards. See generally Justin Fox,
Why German Corporate Boards Include Workers, BLOOMBERG OPINION (Aug. 24, 2018, 9:00
AM), https://www.bloomberg.com/opinion/articles/2018-08-24/why-german-corporate-boards-
include-workers-for-co-determination [https://perma.cc/8AYF-QN57]. Another example of an
inclusive approach to management is holocracy. Ethan Bernstein et al., Beyond the Holacracy
Hype, HARV. BUS. REV., July–Aug. 2016, at 40, https://hbr.org/2016/07/beyond-the-holacracy-
hype [https://perma.cc/PV5G-Q73L].
68 The B Corp movement is one example of a relatively new certification. See About B Corps,
CERTIFIED B CORP., https://bcorporation.net/about-b-corps [https://perma.cc/4NAV-XHPF].
Alternatively, the Principles of Responsible Management Education (PRME) can provide a source
of guidance in running a business ethically. See Adam J. Sulkowski, Rodolfo's Casa Caribe in
Cuba: Business, Law, and Ethics of Investing in a Start‐up in Havana, 34 J. LEGAL STUDIES EDUC.
127, 152–54 (2017).
69 For examples of research on the practice and impacts of data publication on the functioning of
businesses, see generally Christopher J. Hughey & Adam J. Sulkowski, More Disclosure = Better
CSR Reputation? An Examination of CSR Reputation Leaders and Laggards in the Global Oil &
Gas Industry, 12 J. ACAD. BUS. & ECON. 24 (2012); Jia Wu et al., Environmental Disclosure,
Firm Performance, and Firm Characteristics: An Analysis of S&P 100 Firms, 10 J. ACAD. BUS.
& ECON. 73 (2010); Lu Wei et al., The Relationships between Environmental Management, Firm
Value and Other Firm Attributes: Evidence from Chinese Manufacturing Industry, 10 INTL J.
ENVT & SUSTAINABLE DEV. 78 (2011); Cassandra Walsh & Adam J. Sulkowski, A Greener
Company Makes for Happier Employees More So Than Does a More Valuable One: A
Regression Analysis of Employee Satisfaction, Perceived Environmental Performance and Firm
Financial Value, 11 INTERDISC. ENVTL. REV. 274 (2010); Adam J. Sulkowski, The Growing
Trend of Voluntary Corporate Responsibility Disclosure and Its Implications for Real Estate
Attorneys, 38 REAL EST. L.J. 4, 475 (2010); Adam J. Sulkowski & D. Steven White, Financial
Performance, Pollution Measures, and the Propensity to Use Corporate Responsibility
Reporting: Implications for Business and Legal Scholarship, 21 COLO. J. INTL ENVTL. L. &
POLY 491 (2010); Adam J. Sulkowski et al., Corporate Responsibility Reporting in China, India,
Japan, and the West: One Mantra Does Not Fit All, 42 NEW ENG. L. REV. 787 (2008).
70 See Sulkowski, The Tao of DAO, supra note 8 (manuscript at 4).
71 See JOEL BAKAN, THE CORPORATION: THE PATHOLOGICAL PURSUIT OF PROFIT AND POWER
135 (2004).
72 See Sulkowski, The Tao of DAO, supra note 8 (manuscript at 4).
73 See id.
10 KAN. J.L. & PUB. POLY Vol. XXIX:1
what “ought to be” into reality.74 Technologies for gathering and processing data
are giving algorithms near omniscience of our daily lives, and, with the advent
of the Internet of Things, could be given omnipotence in some contexts, such as
controlling networked autonomous vehicles in the context of transportation.75
Relating back to laws concerning data, making policy necessitates the
prioritization of interests and impacts, including the rights and duties of people
and entities. This in turn will require deciding what data can—or must or must
not be—tracked, acted upon, or disclosed.
Regardless of forms and structures of business—even with humans in C-
suites still nominally in control of decisions—could plans and actions be made
in a way that considers input and impact data related to people and ecosystems,
such as to enable better management of organizations, and better public policy
outcomes?76 Arabesque, CSRHub, and Datamaran hope to do so by aggregating
and digesting societal and environmental data so that stakeholders and business
leaders can consume, understand, and act upon it.77
The academic community has also noted the potential of Industry 4.0 to
improve environmental efficiency.78 There is no doubt, practically by definition,
that enhanced measurement and use of data is a sine qua non, if organizations
and, collectively, civilization are to achieve net zero harm to natural life
systems,79 much less restorative impacts on society and ecosystems.80
Yet, so far, our technological tools alone have not encouraged us to solve
problems, even as solutions seem to abound.81 Rather, the deliberate and shared
imagination of what ought to be must be realized using the tools of our
discipline.82 A shared vision of what ought to be is in turn predicated upon our
shared models, memes, and artifices for understanding and creating reality.83 Yet
our models and memes—our simplified and shared abstractions of reality—can
74 Put another way, this phenomenon has been described as translating the “wet code” of human
norms into the “dry code” of computer language. Nick Szabo, Wet Code and Dry, UNENUMERATED
(Aug. 24, 2008, 2:51 PM), http://unenumerated.blogspot.com/2006/11/wet-code-and-
dry.html[https://perma.cc/B8QB-YRMC].
75 See HARARI, supra note 54, at 314–15 (2017).
76 See Adam J. Sulkowski et al., Shake Your Stakeholder: Firms Leading Engagement to Cocreate
Sustainable Value, 31 ORG. & ENVT 223, 223–24 (2018); see also Raquel Antolín-López et al.,
Deconstructing Corporate Sustainability: A Comparison of Stakeholder Metrics, J. CLEANER
PRODUCTION, Nov. 2016, at 5, 13.
77 Adam J. Sulkowski, 20 Years Ago He Gave Cannibals Forks. Now John Asks: Where’s the
Disruption?, HUFFPOST (July 10, 2017, 9:30 AM), https://www.huffpost.com/entry/20-years-ago
-he-gave-cannibals-forks-now-john-asks_b_59637fabe4b085e766b51450
[https://perma.cc/ASM6-6QRJ].
78 E.g., Tim Stock & Guenther Seliger, Opportunities of Sustainable Manufacturing in Industry 4.0,
40 PROCEDIA CIRP 536, 540 (2016).
79 See JOHN ELKINGTON, THE ZERONAUTS: BREAKING THE SUSTAINABILITY BARRIER 26 (2012).
80 See GUNTER PAULI, THE BLUE ECONOMY 3.0: THE MARRIAGE OF SCIENCE, INNOVATION AND
ENTREPRENEURSHIP CREATES A NEW BUSINESS MODEL THAT TRANSFORMS SOCIETY 2–3 (2017).
81 See id.
82 See Sulkowski & Waddock, Midas, Cassandra & the Buddha, supra note 58, at 34.
83 See id. at 38–39.
2019 SULKOWSKI: INDUSTRY 4.0 ERA TECH 11
vary depending on experiences. It is in the crucible of political debates that we
arrive at an adequately popular shared understanding to then construct the
binding rules and artifices specified in our laws. This means lawyers and legal
scholars need to be proactive in the public conversations about reality-changing
technologies.
VI. CONCLUSION
As previously discussed, Industry 4.0 is the term coined to describe
current changes in manufacturing, begging at least three questions: (1) is the
term broad enough to encompass all the technological changes we are
experiencing, (2) are we truly in the era of the Fourth Industrial Revolution, and
(3) what is the role of law and policy—and scholars and practitioners of
governance and regulation—in this era?
Perhaps it is more accurate to say that humanity might be on the cusp of the
beginning of Society Version 2.0.84 However, we have not broken past some key
physical realities and societal norms—what we might call Society 1.0—begat
by the First Industrial Revolution, as explained below.
First, current impacts of technological changes are not limited to the
manufacturing sector. Technological disruptions and resulting disputes extend
to services, finance, daily life, non-manufacturing employment, entertainment,
and public sectors.
Second, regarding physical realities and societal norms tying us to the First
Industrial Revolution, our economy is still primarily (a) fossil-powered,85 (b)
based on a wasteful, linear supply chain—a take-make-waste model that cannot
last,86 (c) consumerism-based,87 and (d) defined by man-made, sometimes
deadly, and unsustainable inequalities.88 Together, these four attributes are
arguably the defining design principles of Society 1.0 and a consequence of the
First Industrial Revolution.
84 Society 2.0 will be further defined below. The term has been used before in different contexts,
including business, academia, and a U.S. State Department initiative. See, e.g., Zack Brisson,
Society 2.0, REBOOT (Jan. 24, 2011), https://reboot.org/2011/01/24/society-2-0/
[https://perma.cc/ALC7-FRSW].
85 Global Energy Demand Grew by 2.1% in 2017, and Carbon Emissions Rose for the First Time
Since 2014, INTL ENERGY AGENCY (Mar. 22, 2018), https://www.iea.org/newsroom/news/2018
/march/global-energy-demand-grew-by-21-in-2017-and-carbon-emissions-rose-for-the-firs.html
[https://perma.cc/MJ9P-8APN].
86 Rather than primarily based on cradle-to-cradle design and a circular flow of reused materials.
See Only 9% of the World's Plastic is Recycled, ECONOMIST (Mar. 6, 2018),
https://www.economist.com/graphic-detail/2018/03/06/only-9-of-the-worlds-plastic-is-recycled
[https://perma.cc/9RZJ-3LHZ].
87 For example, spending on consumer goods account for about 68 percent of U.S. economic
activity. See Federal Reserve Economic Data (FRED), Personal Consumption Expenditures/Gross
Domestic Product, FED. RES. BANK ST. LOUIS, https://fred.stlouisfed.org/graph/?g=hh3
[https://perma.cc/L3DH-LJYX].
88 See THOMAS PIKETTY, CAPITAL IN THE TWENTY-FIRST CENTURY 443–47 (Arthur Goldhammer
trans., 2014) (2013).
12 KAN. J.L. & PUB. POLY Vol. XXIX:1
Third, while the mix of current technological revolutions, including AI, big
data, and blockchain, could help us get to Society 2.0,89 it is not a 100 percent
guarantee that it will break us free of 18th-, 19th-, and 20th- century errors and
fundamental societal design flaws that cannot last, and which we as a society
have grown to accept as normal. This will rather depend on shared
understandings and collective human will, as made enforceable through law and
governance. Without breaking our reliance on the four design features listed
above90 as (a)-(d), it is premature to say we have truly graduated past Dickensian
elements of the First Industrial Revolution—not just in our manufacturing sector
but as a society.
The “so what?” implication is that law, policy, and governance are arenas
where we can—as individuals and working together with others in organizations
and societies—decide on guardrails to help steer and nudge technology and
markets to serve desired ends.91 New technologies on their own, like the Internet,
can otherwise fail to bring the changes that idealists hope(d), and instead become
dystopian tools of surveillance and influence, reinforcing problematic patterns
and structures rather than advancing norms. Nor will any imaginable
combination of new technologies guarantee how one deploys them, and to what
end. The collectively imagined artifices expressed in law are vital for fostering
opportunities, limiting risks, coordinating actions, setting boundaries, and
determining consequences when one breaches limitations or inflicts harm. The
deployment of technologies and outcomes will depend on humanity’s values,
mindset, memes, and models of seeing the world92 and can be steered by the
norms and rules that these support, as ultimately formalized in private and public
law.93
It is therefore imperative that legal scholars, practitioners, and
policymakers proactively wrestle with “what if” questions related to current
technological changes, especially as these scenarios continue to rapidly move
from the domain of imaginative hypotheticals and into the realm of daily reality.
89 The essay defines it here as a set of norms for human activity that are different than (a)-(d) listed
above.
90 See supra notes 85–88 and accompanying text.
91 See Lital Marom, How Regulations Could Determine the Future of Innovation and the Gig
Economy, FORBES (Nov. 1, 2018, 07:30 AM), https://www.forbes.com/sites/forbescoachescouncil/
2018/11/01/how-regulations-will-determine-the-future-of-innovation-and-the-gig-economy
/#35f5298e5f43 [https://perma.cc/WF7Z-7CCW].
92 See Sulkowski & Waddock, Midas, Cassandra & the Buddha, supra note 58, at 18; see also LEE,
supra note 31.
93 See Dewey, supra note 56, at 655.
... [ [116][117][118][119] 9 ...
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