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Throughout the twentieth century, modernists have been proclaiming that technology
would transform world politics. In 1910 Norman Angell declared that economic
interdependence rendered wars irrational and looked forward to the day when they would
become obsolete. Modernists in the 1970s saw telecommunications and jet travel as
creating a global village, and believed that the territorial state, which has dominated
world politics since the feudal age, was being eclipsed by nonterritorial actors such as
multinational corporations, transnational social movements, and international
organizations. Likewise, prophets such as Peter Drucker, Alvin and Heidi Toffler, and
Esther Dyson argue that today's information revolution is ending hierarchical
bureaucracies and leading to a new electronic feudalism with overlapping communities
and jurisdictions laying claim to multiple layers of citizens' identities and loyalties.
The modernists of past generations were partly right. Angell's understanding of the
impact of war on interdependence was insightful: World War I wrought unprecedented
destruction, not only on the battlefield but also on the social and political systems that
had thrived during the relatively peaceful years since 1815. As the modernists of the
1970s predicted, multinational corporations, nongovernmental organizations (ngos), and
global financial markets have become immensely more significant. But the state has been
more resilient than modernists anticipated. States continue to command the loyalties of
the vast majority of the world's people, and their control over material resources in most
wealthy countries has stayed at a third to half of GDP.
The modernists of 1910 and the 1970s were right about the direction of change but
simplistic about its consequences. Like pundits on the information revolution, they
moved too directly from technology to political consequences without sufficiently
considering the continuity of beliefs, the persistence of institutions, or the strategic
options available to statesmen. They failed to analyze how holders of power could wield
that power to shape or distort patterns of interdependence that cut across national
Twenty years ago, in our book Power and Interdependence (1977), we analyzed the
politics of such transnational issues as trade, monetary relations, and oceans policy,
writing that "modernists point correctly to the fundamental changes now taking place, but
they often assume without sufficient analysis that advances in technology and increases
in social and economic transactions will lead to a new world in which states, and their
control of force, will no longer be important. Traditionalists are adept at showing flaws in
the modernist vision by pointing out how military interdependence continues, but find it
very difficult accurately to interpret today's multidimensional economic, social, and
ecological interdependence." This is still true for the information age in which cyberspace
is itself a "place," everywhere and nowhere.
Prophets of a new cyberworld, like modernists before them, often overlook how much the
new world overlaps and rests on the traditional world in which power depends on
geographically based institutions. In 1998, 100 million people use the Internet. Even if
this number reaches a billion in 2005, as some experts predict, a large portion of the
world's people will not participate. Moreover, globalization is far from universal. Three-
quarters of the world's population does not own a telephone, much less a modem and
computer. Rules will be necessary to govern cyberspace, not only protecting lawful users
from criminals but ensuring intellectual property rights. Rules require authority, whether
in the form of public government or private or community governance. Classic issues of
politics--who governs and on what terms--are as relevant to cyberspace as to the real
Interdependence among societies is not new. What is new is the virtual erasing of costs of
communicating over distance as a result of the information revolution. The actual
transmission costs have become negligible; hence the amount of information that can be
transmitted is effectively infinite. Computing power has doubled every 18 months for the
last 30 years. It now costs less than one percent of what it did in the early 1970s.
Similarly, growth of the Internet and the World Wide Web has been exponential. Internet
traffic doubles every 100 days. Communications bandwidths are expanding rapidly, and
communications costs continue to fall. As late as 1980, phone calls over copper wire
could carry one page of information per second; today a thin strand of optical fiber can
transmit 90,000 volumes in a second. As with steam at the end of the eighteenth century
and electricity at the end of the nineteenth, productivity growth has lagged as society
learns to utilize the new technologies. Although many industries and firms have
undergone rapid structural changes since the 1980s, the economic transformation is far
from complete. We are still in the early stages of the information revolution.
matter less and countries are connected by multiple social and political relationships.
Now anyone with a computer can be a desktop publisher, and anyone with a modem can
communicate with distant parts of the globe at a trivial cost. Earlier transnational flows
were heavily controlled by large bureaucracies like multinational corporations or the
Catholic Church. Such organizations remain important, but the dramatic cheapening of
information transmission has opened the field to loosely structured network organizations
and even individuals. These NGOs and networks are particularly effective in penetrating
states without regard to borders and using domestic constituencies to force political
leaders to focus on their preferred agendas. The information revolution has vastly
However, the information revolution has not made dramatic changes in the two
other conditions of complex interdependence. Military force still plays a significant role
in relations between states, and in a crunch, security still outranks other issues in foreign
policy. One reason that the information revolution has not transformed world politics to a
new politics of complete complex interdepence is that information does not flow in a
vacuum but in political space that is already occupied. Another is that outside the
democractic zone of peace, the world of states is not a world of complex
interdependence. In many areas, realist assumptions about the dominance of military
force and security issues remain valid. For the last four centuries states have established
the political structure within which information flows across borders. Indeed, the
information revolution itself can be understood only within the context of the
globalization of the world economy, which itself was deliberately fostered by U.S. policy
and international institutions for half a century after the end of World War II. In the late
1940s the United States sought to create an open international economy to forestall
another depression and contain communism. The resulting international institutions,
formed on the basis of multilateral principles, put a premium on markets and information
and de-emphasized military rivalry. It has become increasingly costly for states to turn
away from these patterns of interdependence.
The quantity of information available in cyberspace means little by itself. The quality of
information and distinctions between types of information are probably more important.
Information does not just exist; it is created. When one considers the incentives to create
information, three different types of information that are sources of power become
financial compensation. The sender benefits from the receiver believing the information
and hence has incentives to produce it. Motives may vary. Scientific information is a
public good, but persuasive messages, such as political ones, are more self-serving.
Marketing, broadcasting, and propaganda are all examples of free information. The
explosion in the quantity of free information is perhaps the most dramatic effect of the
price. Senders neither gain nor lose by others believing the information, apart from the
compensation they receive. For such information to be available on the Internet, issues of
property rights must be resolved so that producers of information can be compensated by
users. Creating commercial information before one's competitors can-assuming that
intellectual property rights can be enforced-generates enormous profits, especially for
pioneers, as the history of Microsoft demonstrates. The rapid growth of electronic
commerce and the increase in global competition will be other important effects of the
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