Paradigm Lost
Digital Networks Have Destroyed the Industrial Paradigm
Here’s How to Make Them Work for Democracy
1. Will the Postwar Order Survive? From Brazil and Venezuela, to India and China, and throughout the United States, Eastern Europe and the Near and Middle East, tyrants, rogues, oligarchs and fools rush in to fill a void created by an unraveling liberal order. The attacks are like a multi-headed hydra from Greek mythology: autocrats, ideological and religious insurgents, technological platforms, the Russians, the Chinese. Every rich democracy that could conceivably push against the autocratic tide is now subsumed by some version of it. The skirmishes engulf the peripheries where once-great powers meddled the most — the Middle East, South America, Eastern Europe — underlying the deep conflicts resurrected by receding empires from Rome through the Ottoman Turks, as well as the vast conflictual realms of Austria, Britain and the Soviet Union. The establishment is too invested in old tools and positions, while insurgents can’t see beyond grabbing and institutionalizing Power.¹ The problem is systemic, synchronized around the globe and across the political divide, suggesting the postwar order itself is at a breaking point.
Science historian Thomas Kuhn described comparable gyrations in the context of scientific revolutions as “crises of the reigning paradigm.”² From the perspective of Power, we are witnessing a paradigm shift on a grander stage: the inevitable collapse of the Industrial Age and terrifying rise of the Network Era. Its arrival has all the makings of a multigenerational conflagration like the Thirty Years’ War of the Reformation that felled a quarter of Central Europe’s population in the 17th century, the Napoleonic Wars that followed the French Revolution, which devastated the same terrain a century later, and the two World Wars of industrialization that took 100 million lives in the early 20th century.³ On a hot, angry and nuclearized planet, with 70 million people already displaced, the stakes are much higher: the dignity, integrity and diversity of life itself (see Chart 1, below).⁴
Autocrats today have the first-mover advantage, as did tyrants from every past era, precisely because they are unhampered by inclusive norms and values. Fortunately, democracies are the Houdini acts of modern history. They will have to reorganize their societies around a new paradigm of networked technologies and shed their dried-out industrial skin the way they did earlier agrarian, religious and aristocratic orders. This essay will explore how they can tap the infinite possibilities, capacity and creativity of digitalization’s virtual universe, freeing up desperately needed physical resources in a world literally on fire.⁵ Inclusive transformation without the grim reapers of multigenerational wars, depressions, plagues and servitude would be democracy’s crowning achievement. Otherwise, it stands to suffer a shameful and prolonged abdication to weaker but laser-focused adversaries who share only one merciless goal: ruthless mastery over people, the earth and its resources.
2. Life Is Changing. What is really changing is the organization of life itself. The fusion of two technology behemoths 40 years ago — telephones and computers — created digital networks that eventually altered the balance of Power between people and institutions. Digitalization enables Power’s critical components — status, stories, images, money and a great deal of property — to be stored, manipulated and replicated across more than 10 billion devices, while networks spread and amplify that Power at lightning speed globally across an unfathomable 130 trillion web pages, apps and user accounts.⁶ Digital networks and the age they have ushered in have been called everything from The Second Machine Age, The Third Wave, The Fourth Industrial Revolution, and even the Seventh Sense and the Ninth Mercantile Order.⁷ And yet, their relationship to Power and societies is barely understood, with forecasts swinging wildly from misguided optimism to fatalistic pessimism. To make sense of the gyrations, network effects have to be reconsidered through the unsentimental lens of Power itself.
First, digital networks are new and distinct from the underlying computer age that gave them birth because they enable people to quickly work around traditional institutions like governments, multinationals, parties and the media. This makes these tools asymmetric, able to hit far above their weight class in status, money and political Power. Second, digital networks create lots of noise and feedback that amplify both truths and lies; stories can be told quickly and viscerally and promoted and amplified cheaply and instantaneously. Third, the underlying technologies — computers, smartphones, networks, data analysis and artificial intelligence — are all progressing rapidly but their combination is growing even faster, creating a fundamentally different type of Power: fluid and adaptive, at lightning speed. Taken together, these forces exhibit a highly unstable superlinear growth trajectory, a seemingly boundless expansion that every credible model predicts must crash at some point unless the system is transformed into a wholly new and different state of organization.⁸
Moreover, the Network Era is just hitting its stride. Networked machines tied to sensors, data and self-teaching software under the catch-all banner of artificial intelligence can monitor, adapt and manipulate emotions even better, and add physical force to their weaponry. Such powerful tools can lead to an explosion in productivity and creativity to relieve exhausted communities and ecosystems of the toxic debris of older technologies. However, mindless “intelligent” algorithms in the hands of equally unconscious political and business autocrats threaten the opposite (see Chart 2 below). If a small oligarchy or autocracy succeeds in hoarding this capability — or, going further, embedding it in their robots, bodies and offspring — then networked Power stands to surpass atoms and steel as the ultimate weapon to enslave and destroy. That seems not only to be the goal, but the daily land grab by populists, autocrats and monopolists of every stripe today.
3. The Collapse of the Industrial Age. Tailwinds from technological disruption, even outsized ones, are generally absorbed by growing orders. In fact, clashes and friction generally make them stronger — that is, until the systems become old and frail, when the same forces destroy them. Memories of mighty unifying struggles for freedom fade and corruption becomes progressively legalized as monopolies, subsidies, property law, gentrified enclaves and tax shelters.⁹ The emulsifying balm of shared sacrifice evaporates just as access to the levers of Power consolidates. In network terms, what was once connective tissue for the many becomes protective tissue for the few, eventually choking off the system’s lifeblood. What didn’t kill you made you stronger, but eventually what made you stronger kills you.¹⁰ This rise-and-fall pattern is widely observed as an s-shaped growth curve in organisms, ecosystems and belief systems like brands, genres, ideologies and empires (see Chart 3 below). As physicist Geoffrey West puts it: “ Dissipative forces…are continually and inextricably at work leading to the degradation of all systems….As we begin to lose the multiple localized battles against entropy, we age, ultimately losing the war and succumbing to death. Entropy kills.”¹¹
When a social order becomes old and frayed, the anxiety — real and imagined — that it no longer protects communities leads to a degradation of aspiration. Expectations for those left out of the tightening circle of privilege spiral down psychologist Abraham Maslow’s famous hierarchy of needs, from the “higher” goals of self-actualization and morality “down” to basic necessities of belonging, safety and survival (see Chart 4 below).¹² Twentieth century historian Arnold Toynbee described the debasement of citizenry in “A Study of History” as “a state of feeling rather than a matter of outward circumstance.”¹³ Social science understands it today as a collapse of social capital in communities left hollowed out from the gold rush of cosmopolitan connectivity.¹⁴ The resulting collapse of a ruling paradigm — like the notion of a great industrial middle class — provokes what sociologist Manuel Castells calls “resistance identities,” hateful of “others” who believe or behave differently, and against the old order itself.¹⁵ The conflict is made infinitely worse throughout history by elite incomprehension. Protagonists are criminalized as ignorant, predatory and depraved — the way the urban blacks and hip-hop were during the 1980s — rather than the inconvenient truth of what they are actually going through: systematic failures of network inclusion.¹⁶
While no one knows for sure what tips a reigning order into collapse, history’s surest bet is a disempowered — “proletarianized,” in Toynbee’s description — middle class. Their wrath is more decisive than the reactions of disadvantaged minorities with heavier burdens precisely because settled majorities can commandeer parties, institutions, money, media and churches. Thus a seemingly indestructible middle-class identity is atomized into warring particles, amplified by the centrifuges of technological media. The unspeakable is repeated incessantly, and the unthinkable is eventually committed on a massive scale.¹⁷
To survive, democracy must thrive, conveying a confident new vision of harnessing the age’s technological wonders for the many, pried out of the grasp of the few. No ideologies do that today, not because they don’t contain truths, but because they are largely out-of-date in the face of digital networks. Western democracies will have to overhaul their understanding of citizenship, property, community capital and monopoly Power, and renew their social contracts to unlock the vast hope of a new era. In doing so, they would be going in the opposite direction from autocrats and platform oligarchs, freeing up badly needed resources to heal broken communities and ecosystems.
4. Network Democracy. Present-day events are incomprehensible without mapping them to the forceful changes that network technologies are inflicting on a feeble system. Most importantly, the basic geometry of network connections automatically favors incumbents, innovators and gatekeepers because they have better access to new connections. These Power laws create new hierarchies that are often more virulent than the old regimes they upend. Networks’ basic tendency toward stratification can be mitigated by activating networks’ other essential properties. Peer-to-peer networks make the world small by enabling people, machines, information and stories to find shortcuts in their travels, creating so-called small world effects. Those effects are built up by weak ties, the Power of connecting through loose affiliations instead of relying on immediate family, friends and colleagues. Feedback — the volatile interaction of data, energy and particles — dramatically amplifies the reach of everyday citizens connected through digital networks. We see how small worlds, weak ties and feedback loops combine to create asymmetric Power in our everyday experience of movements we agree and disagree with.
Against the relentless force of digital networks, every ideology will have to retool in the way Europe’s social orders reinvented themselves under enormous pressure from the mighty conflicts arising from the Reformation, Enlightenment and Industrialization. Outmoded notions of property, work, capital and borders are always the first to go, changes that transform understandings of citizenship and nationhood. Managing surges in Power, distributing energy to all organs so that the organism can survive and thrive, retaining the system’s integrity while cycling through innovations, aberrations and externalities, is network management.¹⁸
Property: A citizen’s data, the fruit of their daily life — the images, digital footprint, messages and stories — must be the property of those individuals, families and communities the way songs are of songwriters. It is critical to start with property because throughout the ages conflicts over ownership underlie battles for inclusion. No less so in the virtual realm. When citizens and communities actually own and license their own data and content, their bounty comes with responsibility and accountability; “paid speech” would no longer hide under the guise of its opposite, “free speech.” Democracies will have to band together to confront platforms and their abuses, putting the lie to Brexit’s and the Trump administration’s attacks on their own alliances. Rather than solely relying on algorithms, businesses and bureaucrats, democracies will have to enable armies of citizens with a real stake in content to arbitrate truthfulness in the way the vast Wikipedia apparatus negotiates its millions of posts.¹⁹ If people have a clear and meaningful financial stake in the exploitation of their digital and cultural footprints, they will care more.
Work: Digital technology has deflated incomes, status and opportunity by inflating the reach and monetization of connected hubs, top executives and famous performers.²⁰ Unions and guilds are faded brands with blunt instruments. It would be better to surgically empower specific skill sets and force platforms and employers to bid for them. Care, creative and protective work are riddled with supply asymmetries that distort their market value: Mothers can’t easily hold out for more pay; soldiers and police put service above valuing their lives; teachers can’t get royalties from the future success of their students. The full impact of an individual or enterprise is part of a continuous value chain starting from infant care through education, health, mentorship, loans, equity and retirement. Venture capital and private equity funds, as well as investment bankers, are able to meticulously calculate and value their contributions to different milestones in companies’ evolutions from cradle to grave; the same logic can be applied to larger contributions of education, health and care. The sprawling system of taxing everyone — including Europe’s loathed value-added tax (VAT) that isolates and taxes every sliver of work layered into a product — can be inverted to provide value-added compensation for the paid and unpaid work, data and government funding baked into corporate and national wealth. Innovations, processes and products that technologists and economists call worker-enabling technology — which make workers more productive — should carry an economic premium including tax breaks and subsidies, while labor-replacing technology can and should be taxed and regulated to reflect its social cost.²¹ While this might seem like interfering in the “free market,” it is the opposite: fixing the distortions that even most liberal economists today admit represent labor and product markets choked by the grasping claws of monopolies.²² These innovations promise to create bottom-up productivity that is sustainable, like tech-enabled nurses doing much of the work of expensive and often insular doctors, law firms delegating routine legal work to paralegals, and mechanics replacing expensive service departments at car dealerships — in short, the opposite of many businesses’ and investors’ top-down, largely ideological zeal to weaken and ultimately replace workers.²³
Wealth: Today knowledge drives wealth, and money is the commodity that chases it. The Network Era’s Power laws create astronomical monopoly profits by hoarding information. Rewards for innovation mushroom into vast fortunes well beyond any market incentive to innovate or compete. As such, platform and property monopolies are the opposite of “creative destruction” popularized by economist Joseph Schumpeter. They are its negation, ruthlessly controlling, manipulating and stifling commerce, community, communication and innovation. Surplus wealth from monopolies of business and property should be taxed, period. Broader notions that are increasingly popular on the left, such as taxing all wealth, may be ideologically attractive, and even appropriate, but they’re likely not a sustainable network solution. It would be more straightforward to assess monopoly wealth using established antitrust indicators of market dominance as practiced over 70 years by the European Union. Despite an abundance of establishment doubters — many of them also wrong about the 2007–2010 financial crisis and monopoly abuse — properly attributing, taxing and investing monopoly wealth skims could yield life-changing capital between $50,000 to $100,000 per family, more than most middle-class home-ownership wealth.²⁴
Monopoly Power: In network terms, a monopoly of business or government destroys the societies that allow it to fester by strangling vital access points to Power, making them rigid, stratified and stagnant.²⁵ Through this prism, monopoly is the institutionalization of corruption. My friend and technology investor Roger McNamee, in his book “Zucked,” was one of the early and powerful insider voices to call out how toxic tech monopolies in particular are to democracy, society and human dignity.²⁶ However, study after study shows that monopolistic concentration is endemic, in part driven by spillovers from technology’s network effects.²⁷ Because of Europe’s catastrophic experience of monopolies conspiring with fascism, regulators there know, identify, measure and remedy monopoly Power of every kind, when unshackled from nationalist lobbying.²⁸ However, the most valuable tool hides in plain sight, in the platforms’ own tool chest of how to scale: interoperability.²⁹ It complements people’s ownership and portability of their data and content by forcing monopoly platforms open to competitors. This open architecture is frequently deployed by platforms seeking to grow; later, the openness is inevitably clawed back or manipulated to favor the platform’s own products.³⁰ Compulsory, sustained and predictable interoperability for dominant platforms would turbocharge innovation, consumer choice and privacy, while leaving dismemberment and regulation, which often backfire, as “nuclear options” instead of the default first move.
Capital: How to invest the surplus monopoly wealth so abundant today? Certainly, just paying people is an option much discussed: universal basic income. However, to most working people, and economists focused on the long run, it looks like a libertarian payoff that doesn’t resolve underlying issues of access and participation. Much better to invest in universal capital accounts that can be used for enhanced education, housing, health, childcare, creativity and small business entrepreneurialism. Rich families create trust funds for their children, and some resource-rich nations like the Gulf Emirates and Norway have sovereign wealth funds for their citizens. The same principle should be put to work for citizens, families and communities in the Network Era. Universal capital accounts would sustainably reinvest the vast bounty of surplus technological and property wealth to empower real direct investment by individuals and communities that can accomplish their goals far more efficiently than strapped municipalities, siloed government departments and politicized treasuries.
Borders: Vast continental agglomerations don’t cohere well with the passing of the mass-communications Industrial Age. Long-standing fissures like North/South and East/West divides in the US and Europe, as well as national, regional and ethnic cultures, are digitally amplified at the very time the unifying narrative of a vast industrial middle class is fraying. And yet, most nations and states are too small to tackle transnational capital and technology. Meanwhile, digitalization enables cosmopolitan megacities to gobble up talent without the traditional spillovers to their regions. In his book, “Connectography,” international relations consultant Parag Khanna explains how regional supply chains are evolving into culturally linked exchanges of products, money and knowledge — value chains — across interacting physical and digital circuits. Leading economists are beginning to empirically confirm the value of substantial regional surpluses beyond strict borders.³¹ The network approach is to explicitly tie knowledge centers like universities with production, media and regional culture to create coherent networks that have unique strengths.³² Khanna argues the US can mobilize its coasts, the Midwest, its mountains and plains, and southern regions into coherent value chains (see Chart 5 below).³³ The European Union is hampered by the hapless and amorphous euro. It would be more effective to split the eurozone into three historically linked bands: technically innovative Nordic countries, cultural Southern Europe, and cosmopolitan centers of finance and industry in between the two, from Paris to Berlin. Two examples illustrate the Power of coordinated regional action: Culturally rich Southern Europe can lead a post-Netflix European answer to Hollywood that is already eyed by media moguls, while the US Midwest can leverage its legacy tech enclaves to lead in manufacturing and agribusiness, bypassing the insular East and West coasts altogether.³⁴
Instead of all-encompassing expensive and wasteful manifestos, New Deals and Marshall Plans, the Network Era calls for emergent strategies: deceptively simple innovations that are iterated and adapted at the right moment to become dominant, the way Google, Facebook and Amazon upended leadership in crowded markets from search (Ask.com and Alta Vista) to social media (Friendster, Myspace) and retailing (Barnes & Noble, Walmart).³⁵ Emergence argues against currently topical behemoths like US left-wing Democrats’ Medicare-for-all collectivization in favor of more practical measures like extending pre-existing public plans.³⁶ It rejects the UK left’s scheme to nationalize private education in favor of forcing elite institutions to compete for funding against well-endowed government schools based on social outcomes.³⁷ Network solutions advocate for monopoly taxes and interoperable systems over indiscriminate wealth taxes and decades-long trials to dismember monopolies long after they’ve done their damage. A network strategy with enormous economic scope and ambition, like the value chains mentioned above, would still have to start with deceptive modesty, digitally and physically connecting communities, learning centers and industries in regions that share geographic and cultural ties, rather than imposing gargantuan and monolithic spending schemes on entire nations with vastly differentiated communities and geographies.
It is not true that large-scale plans never worked or can never work. They did in the Industrial Age, and many operate today, however controversially, like the US’s Affordable Care Act. However, the corrosive feedback inherent in complex systems is amplified by digital networks. That means that today, the road to sustainable large-scale transformation is much more likely to be paved by emergent strategies, the way minimally invasive micro-procedures have progressively replaced many forms of complicated and risky open-heart surgery.³⁸ The new paradigm is based on established principles of ecosystem management rather than nationalization or privatization. Networked systems aren’t mechanistic factories to be built, connected and supplied; they are more akin to fishing nets where pulling on one knot in any direction immediately affects all the other knots in the net. This view of societies mitigates the risk of “organ rejections” against scale industrial appropriations on the societal level. Fascism’s oldest and most effective trick is driving the reasonably well-off into the arms of autocrats out of fear of confiscation.³⁹
Democracy’s ideological adversaries have caught on to emergence. China’s Communist Party, in particular, is well into a 40-year embrace of networked growth, and the world is watching. Yet China’s synthesis promises the worst of both worlds: dog-eat-dog Dickensian capitalism in the service of a paranoid Orwellian communist state. Economists Daron Acemoglu and James Robinson invoke a large body of historical evidence in “Why Nations Fail” to show that these extractive systems like China’s dictatorship inevitably suffocate themselves.⁴⁰ Political scientist and China scholar Jessica Chen Weiss is surely right when she argues in “A World Safe for Autocracy?”: “In the end, the best way to respond to China is to make democracy work better.”⁴¹
5. Paradigm Regained. Taken together, property, work, capital, borders and the diffusion of Power largely shape notions of citizenship and nationhood through the ages. Transforming data and content into property that earns for citizens; revaluing work, wealth and regions as part of economic value chains; and taxing and normalizing monopoly Power give new meaning to what Acemoglu and Robinson, mentioned above, call inclusive institutions: mediators between citizens and societies that are devilishly hard to calibrate and yet essential to civilizational success.⁴² Only democracies have any incentive to turn a negative-sum game of fighting for dwindling physical resources into the positive-sum outcome of creating greater and cleaner treasures across the nearly infinite realm of human imagination. They must avoid the bitter lessons of the 1930s, when incessant bickering between democratic groupings gave fascists their decisive openings in Europe’s heartlands of Italy, Germany and Spain. Just beyond democracies’ present-day squabbles lies a vast new horizon of dignity, creativity and sustainable wealth if they harness the Power of the Network Era. Inclusive access to networks of knowledge, care, culture and capital is democracy in the 21st century. Through that prism, nations are judged on the adeptness with which they manage their interconnected identities and relationships, within their borders and between each other — the exact opposite of Trump and Brexit.
Science historian Thomas Kuhn, mentioned earlier, observed that a new paradigm cannot attempt to resolve every question that confronts it: “Rather, it is a whole new way of regarding the problems.”⁴³ The network paradigm provides the desperately needed unifying prism and a sustainable new horizon in which vital social justice, environmental, community and national programs can grow without crowding each other out on a parched and frayed planet.
Physicist Geoffrey West, a pioneer of complex systems theory, concludes his epic, “Scale,” with a dire warning about today’s outmoded industrial paradigm: “Existing strategies have, to a large extent, failed to come to terms with…the pervasive interconnectedness and interdependency of energy, resources, and environmental, ecological, economic, social, and political systems.… Continuing to pursue limited and single-system approaches to the many problems we face without developing a unifying framework risks the possibility that we will squander huge financial and social capital and fail miserably in addressing the really big question, resulting in dire consequences.”⁴⁴
West’s logic leads directly to spiritual teacher Eckhardt Tolle’s conclusion in “A New Earth”: “When faced with a radical crisis, when the old way of being in the world, of interacting with each other and with the realm of nature doesn’t work anymore, when survival is threatened by seemingly insurmountable problems, an individual life form — or a species — will either die or become extinct or rise above the limitations of its condition through an evolutionary leap.”⁴⁵
That evolutionary leap to a new paradigm is neatly summarized by network scientist Duncan Watts’s conclusion to his primer on networks, “Six Degrees: The Science of a Connected Age”: “…the first great lesson of the connected age: we may all have our own burdens, but like it or not, we must bear each other’s burdens as well.”⁴⁶
St. Paul drew the same lesson, two millennia earlier, from Jesus Christ’s teachings: “For the whole law is fulfilled in one statement, namely, ‘You shall love your neighbor as yourself.’ But if you go on biting and devouring one another, beware that you are not consumed by one another.”⁴⁷
Late Rome, Ming China and the Ottomans doomed themselves and their heirs to decay, humiliation and poverty by grinding in the opposite direction of exclusion and equivocation, thus turning their backs to the new paradigms that would ultimately destroy them. We should resist that fate and embrace the Network Era for the sake of our children and the planet.
Footnotes accessible here.
