inefficiency of hierarchical government.
Politicians and voters remain the captives of a postwar campaign vocabulary in which the former pledge to the latter that they will provide not just additional public goods but also “create jobs” without significantly increasing the cost to most voters in terms of taxation. The history of President Barack Obama’s Administration can be told as a series of pledges to increase employment (“the stimulus”), reduce the risk of financial crisis, and provide universal health insurance. The President’s popularity has declined fastest when, as with the Patient Protection and Affordable Care Act, the inability of the Federal government to fulfill these pledges efficiently has been most exposed. The shortcomings of the website Healthcare.gov in many ways epitomized the fundamental problem: In the age of Amazon, consumers expect basic functionality from websites. Daily Show host Jon Stewart spoke for hundreds of thousands of frustrated users when he taunted former Health and Human Services head Kathleen Sebelius: “I’m going to try and download every movie ever made, and you’re going to try to sign up for Obamacare, and we’ll see which happens first.”
Yet the trials and tribulations of “Obamacare” are merely a microcosm for a much more profound problem. The modern state, at least in its democratic variant, has evolved a familiar solution to the problem of increasing the provision of public goods without making proportionate increases to taxation, and that is to finance current government consumption through borrowing, while at the same time encouraging citizens to increase their own leverage by various fiscal incentives, such as the deductibility of mortgage interest payments. The vast increase of private debt that preceded the financial crisis of 2008 was succeeded by a comparably vast increase in public debt. At the same time, central banks took increasingly unorthodox steps to shore up tottering banks and plunging asset markets by purchases of securities in exchange for excess reserves. With short-term interest rates at zero, “quantitative easing” was designed to keep long-term interest rates low too. The financial world watches with bated breath to see how QE can be “tapered” and when short-term rates will be raised. Most economists nevertheless take for granted the U.S. government’s ability to print its own currency without limit. Many assume that this offers some relatively easy way out of trouble if rising interest rates threaten to make debt service intolerably burdensome. But this assumption may be wrong.
Since ancient times, states have exploited their ability to issue currency, whether coins stamped with the king’s likeness or electronic dollars on a screen. But if the new networks are in the process of creating an alternative form of money, such as Bitcoin purports to be, then perhaps the time-honored state privilege to debase the currency is at risk. Bitcoin offers many advantages over a fiat currency like the U.S. dollar. As a means of payment—especially for online transactions—it is faster, cheaper, and more secure than a credit card. As a store of value it has many of the key attributes of gold, notably finite supply. As a unit of account it is having teething troubles, but that is because it has become an attractive speculative object. It is too early to predict that Bitcoin will succeed as a parallel currency, but it is also too early to predict that it will fail. In any case, governments can fail, too.
Where governments fail most egregiously, new networks may well increase the probability of successful revolution. The revolutionary events that swept the Middle East and North Africa beginning in Tunisia in December 2010—the so-called Arab Spring—were certainly facilitated by various kinds of information technology, even if for most Arabs it was probably the television channel Al Jazeera more than Facebook or Twitter that spread the news of the revolution. Most recently, the revolutionaries in Kiev who overthrew Ukrainian President Viktor Yanukovych made effective use of social networks to organize their protests in the Maidan and to disseminate their critique of Yanukovych and his cronies.
Yet it would be naive to assume that we are witnessing the dawn of a new era of free and equal netizens, all empowered by technology to speak truth to (and about) power, just as it would be naive to assume that the hierarchical state is doomed, if not to revolutionary downfall then at least to a permanent diminution of its capacity for social control.
Modern networks have prospered, paradoxically, in ways that are profoundly inegalitarian. That is because ownership of the information infrastructure and the rents from it are so concentrated. Google at the time of writing is worth $359 billion by market capitalization. About 16 percent of its shares, worth $58 billion, are owned by its founders, Larry Page and Sergey Brin. The market capitalization of Facebook is $161 billion; 28 percent of the shares, worth $45 billion, are owned by its founder Mark Zuckerberg. If Thomas Piketty needs further proof of his thesis that the world is reverting to the inequality of a century ago because, absent world wars and revolutions, the rate of return on capital (and the rate of growth of executive compensation) tends to outstrip the rate of growth of aggregate income, it is there in abundance in Silicon Valley. Granted, the young and very wealthy people who literally own the modern networks tend to have somewhat liberal political views. A few of them are libertarians. But few of them would welcome Gallic rates of taxation, much less a French-style egalitarian revolution.
At the same time, the hierarchical state has not been slow to appreciate the opportunities that the new social networks present. Edward Snowden’s most startling revelation was the complicity of companies like Google, Apple, Yahoo, and Facebook in the National Security Agency’s global surveillance programs, notably PRISM. It is all very well for Mark Zuckerberg to complain that he has been “so confused and frustrated by the repeated reports of the behavior of the U.S. government” and to declare self-righteously: “When our engineers work tirelessly to improve security, we imagine we’re protecting you against criminals, not our own government.” But he knows full well that since at least 2009 Facebook has responded to tens of thousands of U.S. government requests for information about Facebook users. If not for Snowden’s leaks, we would not have known just how freely the NSA was making use of the provisions of the Foreign Intelligence Surveillance Act.
The owners of the networks are also well aware that plotting jihad is not the principal use to which their technology is put, any more than plotting revolution is. They owe their security much more to network surfers’ apathy than to the NSA. Most people do not go online to participate in flash mobs. Most women seem to prefer shopping and gossiping; most men prefer sports and pornography. All those neural quirks produced by evolution make us complete suckers for the cascading stimuli of tweets, Instagrams, and Facebook pokes from members of our electronic kinship group. The networks cater to our solipsism (selfies), our short attention spans (140 characters), and our seemingly insatiable appetite for “news” about “celebrities.”
In the networked world, the danger is not popular insurrection but indifference; the political challenge is not to withstand popular anger but to transmit any kind of signal through the noise. What can focus us, albeit briefly, on the tiresome business of how we are governed or, at least, by whom? When we speak of “populism” today, we mean simply a politics that is audible as well as intelligible to the man in the street. Not that the man in the street is actually in the street. Far more likely, he is the man slumped on his sofa, his attention skipping fitfully from television to laptop to tablet to smartphone and back to television. And what gets his attention? The end of history? The clash of civilizations? The answer turns out to be the narcissism of small differences.
Liberals denounce conservatives with astonishing vituperation; Republicans inveigh against Democrats. But to the rest of the world what is striking are the strange things nearly all Americans agree about (for example, that children should be packed off to camps in the summer). Many English people are outraged about immigrant Romanians. But to East Asian eyes the English are scarcely distinguishable from Romanians. (Indeed, in many parts of formerly working-class England people live much as the reviled Roma are alleged to: in squalor.)
It is no accident that most of the world’s conflicts today are not between civilizations, as Samuel Huntington foresaw, but between neighbors. That, after all, is what is really going on in Syria, Iraq, and the Central African Republic, not to mention Ukraine. Can anyone other than a Russian or a Ukrainian tell a Russian and a Ukrainian apart? And yet how readily one is pitted against the other, and how distractingly.
At times, it can seem as if we are condemned to try to understand our own time with conceptual frameworks more than half a century old. Since the financial crisis that began in 2007, many economists have been reduced to recycling the ideas of John Maynard Keynes, who died in 1946. At the same time, analysts of international relations seem to be stuck with terminology that dates from roughly the same period: “realism” or “idealism”, containment or appeasement. (George Kennan’s “Long Telegram” was dispatched just two months before Keynes’s death.)
Yet our own time is profoundly different from the mid-20th century. The near-autarkic, commanding and controlling states that emerged from the Depression, World War II, and the early Cold War exist only as pale shadows of their former selves. Today, the combination of technological innovation and international economic integration has created entirely new forms of organization—vast, privately owned networks—that were scarcely dreamt of by Keynes and Kennan. We must ask ourselves: Are these new networks really emancipating us from the tyranny of the hierarchical empire-states? Or will the hierarchies ultimately take over the networks as they did a century ago, in 1914, successfully subordinating them to the priorities of the national security state?
A libertarian utopia of free and equal netizens—all networked together, sharing all available data with maximum transparency and minimal privacy settings—has a certain appeal, especially to the young. It is romantic to picture these netizens, like the workers in Lang’s Metropolis, spontaneously rising up against the world’s corrupt hierarchies. Yet the suspicion cannot be dismissed that, despite all the hype of the Information Age and all the brouhaha about Messrs. Snowden and Assange, the old hierarchies and new networks are in the process of reaching a quiet accommodation with one another, much as thrones and telephones did a century ago. We shall all know what it means when (as begins to be imaginable) Sheryl Sandberg leans all the way into the White House. It will mean that Metropolis lives on.
Niall Ferguson is Laurence A. Tisch Professor of History at Harvard and senior fellow at the Hoover Institution. His most recent book is The Great Degeneration: How Institutions Decay and Economies Die (Penguin Press).
