The End of the World as We Know It

Will the new economy destroy freedom, democracy and capitalism in the United States? As the federal government intervenes heavily in the financial markets and buys up financial institutions, we are witnessing a fatal collision of “free market capitalism” with “state-run corporate capitalism“.

Economic structures determine political structures. In the classic model of the United States, free market capitalism led to the freedoms of democracy. In fascist Germany of the 1930s, corporations gained control of the economy and, in exchange, supported the political dictatorship of a corporatist Germany.

In her new book, “Give Me Liberty”, Naomi Wolf offers the view that the United States is rapidly becoming a “closed society” and that our constitution is being destroyed before our eyes.

Step one: hyping an external threat that is terrifying.
Step two: creating a secret prison system that is outside the rule of law where torture takes place.
Step three: a paramilitary force not answerable to the people.
Step four: an institutional surveillance apparatus imposed on the citizens.
Step five: infiltrate and harass citizen’s groups.
Step six: engage in arbitrary detention and release.
etc…

Do these steps describe the rise of fascist Germany in the 1930’s or changes currently occurring in the United States? Both.

Germany in 1932 was a parliamentary democracy with political parties, newspapers and human rights organizations. In the 20th century, every rise in dictatorship has followed the same exact “blueprint” for closing down a democracy. They all follow the same ten steps according to Naomi Wolf. Think Hitler, Mussolini, and Stalin. Petty dictators in Latin America, Thailand, Burma have also followed the blueprint. She claims that these same ten steps are under way in the United States right now.

According to Wolf we are now in a crises because the rule of democracy is crumbling and is rapidly being replaced by the foundations for a dictatorship.

“I want to go back to what are the core principles that America is supposed to give us because we are being manipulated and brainwashed so far away from that; with fake democracy and fake patriotism.”

“A coup has taken place. And people need to know how to fight back.” (Naomi Wolf)

I have to say that I do not disagree with Naomi Wolf. The “free marketplace” and the historic structures of capitalism have now been destroyed. This process has actually been slowly accruing since the last Great Depression but has taken an accelerated pace in 2008.

The federal government’s wiretapping of US citizens is clearly a breach of traditional constitutional rights. The US president now claims the power to arrest and torture anyone he deems to be an “enemy combatant”. There are reports of a US Army Division about to be deployed from Iraq to US soil.

If the financial markets are no longer “free” then how will we the people be “free” in any meaningful sense? If fear and false “security” have replaced our constitutional rights then the US constitution is dead. Looking in the rear view mirror, our “American” way life has been left behind, dying on the side of the road.

However, concurrently, we are living in a time of tectonic social and technological upheavals never before witnessed in history. The collapse of the institutions of free market capitalism occurs precisely at a time of emergence of something new.

Steven Johnson published a book called “Emergence” right at the time of the September 11th, 2001 attack. The book was about the power and creative potential of urban density; of connecting people and putting them together in one place and sharing ideas together. Johnson lives in New York City in close proximity to the site of the destroyed Twin Towers.

Johnson was able to observe that in the days immediately following the Twin Towers attack, the streets were vibrantly alive with people. He reports that his neighborhood, the West Village, had never seemed more lively. Despite the enormity of the “terrorist” attack 20 blocks to the south, the City was working and vibrant. The “system” of the City was thriving.

Although cities are centralized in space, they are decentralized in function. They don’t have an executive branch upon which the entire city operations rely. Who builds a City? Who builds a neighborhood? Johnson notes that it is “everybody and nobody”. Everybody contributes a small little part. No single person is in charge.

This is increasingly what we are experiencing with the World Wide Web -- the internet. The internet is a global brain.

We are on the brink of truly global social organization, according to another author Robert Wright. Originally humans developed hunter-gatherer villages. Early agriculture led to chiefdoms of local control. With the invention of writing you started getting cities. Eventually social organization led to empires.

Robert Wright, notes that social organization can extend beyond political boundaries as in, for example, the Silk Road which connected the Chinese empire to the Roman empire. So, you had social complexity spanning an entire continent even though a single political structure did not. Today, we have nation states. This is a growth in social complexity over time.

Social organization has now reached the global level. So…how do we all get along now? Are we heading to a one-world government? Do we have any choice?

Of course, you and I resist the idea of unified, world-wide government the same way the agrarian chiefdoms resisted being merged into nation states, But the natural flow of ten thousand years of history points towards a single global economy and, therefore, a single unified political structure.

Some people will rightfully be concerned about having economic and political power of the entire planet increasingly concentrated into fewer and fewer hands. History is filled with stories about a power elite taking control over the masses. Looking into the rear view mirror of history, further concentration of political power sure seems like a bad idea.

But the future we are heading into may not actually be fully informed by the past.

Clay Shirky writes about the internet and talks about a growing distinction between “institutions” and “collaboration”. The historical, classic way to get something done in the world is to start an institution. You get resources together, you start an institution (either public or private), and you use the institution to coordinate the activities of the group.

But as Shirky points out, most recently the costs of communicating with other people -- of coordinating activity -- has become vastly cheaper. The internet now allows us to communicate and to coordinate activity easily and cheaply without the need for classical institutional structures.

Equally as important, the internet allows the general public to participate and cooperate with projects without becoming hired professionals and without the limitations of traditional institutions. Shirky provides the example of the website Flicker which allows total strangers to provide photos of an event that they have all attended and to have them tagged in such a way that a collection of photos taken by many, “unorganized”, unprofessional photographers can be viewed by anyone on the planet.

Similarly, the lack of “institution” can be observed in today’s use of cell phones which reduces the need for established planning in exchange for something like “I’ll just call you after work and we’ll figure out how to hook up then”. Shirky says that this is a replacement of “planning” with “coordination“. “We are now able to do that kind of thing with groups.” Instead of having a five year plan for the website Wikipedia, we can now just say that we will coordinate the effort as we go. We are now well enough coordinated that we don’t have to decide in advance what to do.

As Shirky notes, “the tension is between institution as enabler and institution as obstacle. Institutions hate being told that they are obstacles. One of the first things that happens when you institutionalize a problem -- the first goal of the institution immediately shifts from whatever the nominal goal was to preservation. So, when institutions are told that they are obstacles and that there are other ways of coordinating the value, they go through something like the Kubler-Ross stages: denial, anger, bargaining, and acceptance.”

A good example is how Microsoft develops operating system hardware and how Linux develops operating system hardware. Microsoft is a closed private institution. Linux is an “open source” collaboration model. The fact that a single programmer can move into a non-professional relationship with Linux, offer one software improvement, and then never be heard from again, is the kind of value that is unreachable in classic institutional systems.

“This is a revolution. This is a really profound change in the way human systems are organized. It is a revolution in that it is a change in equilibrium. It is a whole new way of doing things. As with the printing press, if it is really a revolution, it doesn‘t take us from point A to point B. It takes us from point A to chaos.” The printing press precipitated 200 years of chaos, moving from a world where the Catholic Church was the organizing political force to a new world order in 1648 of the nation state with the Treaty of Westphalia. (Shirky)

Yochai Benkler, a professor of entrepreneurial legal studies, has additional insights into the value of “open source” economics. Benkler notes that in the year 1835, James Gordon Bennett created the first mass circulation newspaper in New York City for a cost of about $10,000. in today’s money. By 15 years later in 1850, doing the same thing would come to cost 2.5 million dollars in today’s dollars. This is the critical change that is being inverted by the internet today -- the emergence of “social production“.

The contrast is that previously, classical producers had to be able to raise substantial money to initiate a new product -- they were market-based or publicly-owned. But with the rise of the internet we have a radical change in the way that information, production, and exchange is capitalized. The way that the capitalization now happens is radically distributed instead of concentrated into a few hands.

What this means is that for the first time since the industrial revolution, the most important components of our information economy are now in the hands of the population at large. Communications and computations capability are now in the hands of the entire population. And human creativity is encouraged. Rather than the institution deciding who gets “hired” and which ideas get promoted, all individuals can promote their own ideas.

The internet server software Apache was created by a loose collection of volunteer writers. Again, the institutionalized competitor was Microsoft. But now the open source Apache software controls 70% of the market and the private institution Microsoft software controls only 20% of the Web server market.

This sort of open source collaborative, cooperative approach to projects on the Web has become a dominant means of getting things done. For example, search engine Google “outsources” to the Web community as a whole to decide which websites are the most relevant which, in turn, directs other people to those so chosen websites.

It used to be too expensive to have decentralized social production out in society. What we are seeing now is the emergence of this economic system of “social sharing and exchange”, according to Benkler.

“A new social phenomenon is emerging. It is creating a new form of competition. Peer to peer networks are assaulting the recording industry. Free/open source software is taking market share from Microsoft. Skype potentially threatens the telecomms. Wikipedia competes with on-line encyclopedias. But it also opens new sources of opportunities for businesses.” (Benkler)

Economic structures determine political structures. New technology is creating tools for a “collaborative” economy in direct competition with the historical, “closed” institutions.

The traditional high cost to enter the market place is being replaced by the internet which makes the tools of communication, coordination and marketing potentially available to anyone.

While the United States political structure is clearly experiencing pressure to become less “democratic” and less “free”, the competing force of “open source”, social production could ultimately lead us towards a more free worldwide economy with possibilities for a revival of true democracy.