The spark that ignited the rapid increase in demand for digital transformation can undoubtedly be identified as the COVID-19 pandemic. It was during this unprecedented crisis that the shift of life and economy to the digital environment proved to be a useful tool for the everyday. Digitalisation can thus be seen as a potential tool for coping with other unprecedented crises that may occur in the future.

The second reason given for this is to increase the efficiency of businesses and, at the same time, reduce the costs that will be incurred if these new technologies and practices are adopted. This will ultimately lead to an increase in the competitiveness of the whole economy and economic growth.

However, the argument of pandemics, but also of economic growth, omits one fundamental fact, which ultimately stems from a misperception of the objectives and setting of the conditions for digital transformation. This fact is the different performances of the private and public sectors in adapting to change, gathering information and working effectively with it. This is therefore another of the many forms of the problem of economic calculation, a debate that has been going on between advocates of freedom and advocates of the state since the days of economists F. A. Hayek and Ludwig von Mises.

Indeed, an empirical example of the divergent performance of the state and the private sector in the field of digitalisation was already visible during the pandemic. Despite the initial problems caused by the surge in demand, digital platforms were able to adapt relatively quickly to the crisis situation.

Communication platforms such as Zoom, Google Meet, and Microsoft Teams were quite often overloaded in the early days due to the high number of participants, but it did not take long for this problem to be solved. And not only has it been solved, but the new situation has even forced these platforms to innovate and create new features to improve the quality of service so as to win consumers over in the competitive battle.

Another shining example is the development of e-commerce and delivery services, without which it would have been very difficult to get by during lockdown. Here too, in the beginning, it took quite a long time for the goods themselves to reach the consumer, and the websites themselves were often overloaded. Some traders did not even have this tool at their disposal. However, it quickly spread to the vast majority of companies and was further innovated and developed.

The state, however, was sadly not nearly as fast and innovative. Its actions and efforts to digitise its services during (and even after) the pandemic can be described as a failure, in contrast to the performance of the private sector. Merely moving services and platforms that already existed, especially those relating to communication with the state (filing various applications or submitting documents) as well as payment of transactions with the state (filing tax returns and other fees), some governments have so far failed to go digital even at this basic level. If we compare this with how quickly the private sector has been able to digitise the ability to communicate with each other and to transact with each other, these are indeed trivial results.

Now, after the end of the pandemic, digitisation is seen as one common process, as a whole. However, the reality could not be further from this statement. The digitisation of the private sector and that of the public sector are two different processes, and their effectiveness is also very different, as the example of the pandemic shows. The erroneous consequence stemming from the homogeneous perception of digitisation is then the missionary approach of the state in the process of this transformation. The state, the same state that was lagging behind in digitalisation, is determined to lead the private sector by the hand and advise it on where to invest its money.

This effort is to be mediated mainly through the Recovery Plan, which will provide the necessary funding for this initiative, and shaped by the objectives of the European Digital Decade, which set out individual milestones (for example, at least 75% of European businesses using AI/Big Data technologies). The setting of these objectives is both arbitrary and, more importantly, risks ignoring any costs and their comparison with benefits.

In short, there is a determination to centralise digitalisation, which may not be wise. The argument then again remains the great use during the pandemic crisis and the possible need to blitz these technologies during other crises. However, as it turns out, rapid adaptation is not a strength of state economic policy. It can therefore be assumed that in the event of another crisis requiring the use of digital technologies, the private sector would again be able to adapt in a flash. The preparedness argument therefore falls away.

As for the economic growth argument, the aforementioned cost-benefit analysis should again be mentioned here. If it were advantageous for businesses to adopt the targets set by the EU, they would do so themselves, as they have already demonstrated during the pandemic. This missionary approach should perhaps be abandoned in favour of a more observational approach where the state learns from the private sector.

This article was written by Filip Blaha. Filip is a Czech campaigner and a fellow with Young Voices Europe. Filip also studies economic analysis at Masaryk University in Brno and works with the Centre for Economic and Market Analysis (CETA), where he focuses on issues related to environmental protection, waste management, energy and digitisation.