The Square and the Tower: Networks and Power

Niall Ferguson, “The Square and the Tower: Networks and Power,” Penguin Press, 2017, 431 pp.

This book tells the story of the interaction between networks and hierarchies from ancient times until the recent past.  The central thesis is that social networks have always been much more important in history than most historians, fixated as they have been on hierarchical organizations such as states and individuals, have allowed—but never more so than in two periods.  The first ‘networked era’ followed the introduction of the printing press to Europe in the late fifteenth century and lasted until the end of the eighteenth century.  The second—our own time – dates from the 1970s.  The intervening period, from the late 1790s until the late 1960s, saw the opposite trend when hierarchical institutions re-established their control and successfully shut down or co-opted networks.  The zenith of hierarchically organized power was, in fact, the mid-twentieth century – the era of totalitarian regimes and total war.

My Notes:

Pg. xxii:  Is it better today to be in a network, which gives you influence, than in a hierarchy, which gives you power?  (Of course, far from being the opposite of a network, a hierarchy is just a special kind of a network [p. 39])

Pg. 11f:  Had Trump lost the election, he would have launched Trump TV as a television network.  One of the many reasons why he did not lose was that Russia’s intelligence network did its utmost to damage his rival’s reputation, using the website WikiLeaks and the television network RT as its principal instruments.  According to intelligence reports, Russian intelligence gained access to Democratic National Committee networks and maintained that access until at least June 2016, systematically publishing the emails it obtained through WikiLeaks.  Another reason was that the Islamist attacks carried out in the twelve months before the election, including two in the US (in San Bernardino and Orlando).  These attacks enhanced the appeal of Trump’s pledges to remove one by one the support networks for Radical Islam in this country.

Pg. 17:  According to the evolutionary anthropologist Robin Dunbar, our larger brain, evolved to enable us to function in relatively large social groups of around 150 (compared with around fifty for chimpanzees).

Pg. 23:  Explanation of Books Title:  In Siena in Tuscany – the tower representing secular power stands right next to, and indeed overshadows the square where market transactions and other forms of public exchange took place. 

Pg. 26:  Homophily: our tendency to gravitate towards people similar to us, might be regarded as the first law of social networks.  (It might also define gated communities.  Lately, I keep coming across this word in my reading.).

Pg. 65:  So sparse were the networks in Asia that the fourteenth-century bubonic plague took four years to travel across Asia.  But the impact was very different in Europe, where roughly half the population died (including perhaps three-quarters of the population of Southern Europe), compared with Asia.  The main institutional difference between the west and the east of Eurasia after 1500, however, was that networks in the west were relatively freer from hierarchical dominance than those in the east.  No monolithic empire recurred in the west; multiple and often weak principalities prevails, with the papacy and the loosely structured Holy Roman Empire as the sole remnants of Roman imperial power, while Byzantium considered itself to be the true heir of the emperors. 

 Pg. 71:  The decisive breakthrough that prefigured the age of European world domination was not the Italian Renaissance so much as the Iberian age of exploration.

Pg. 83:  Without Gutenberg, Luther might well have become just another heretic whom the Church burned at the stake, like Jan Hus.  His original ninety-five theses, primarily a critique of corrupt practices such as the sale of indulgences, were originally sent as a letter to the Archbishop of Mains in October 1517.  By the time Luther was officially condemned as a heretic in 1521, his writings were all over German-speaking Europe.  The printing press has justly been called ‘a decisive point of no-return in human history.’ On average the real price of books in England fell by 90 percent between the late 1400s and the late 1500s.  The decline in the price of a PC between 1977 and 2004 followed a very similar trajectory.  The Reformation had wholly unintended consequences, in that it was a religious movement that contributed to Europe’s secularization.

Pg. 95:  European intellectual history in the seventeenth and eighteenth centuries was characterized by a succession of network-driven waves of innovation, of which the Scientific Revolution and the Enlightenment were the most important.

Pg. 146:  Like the intellectual and political revolutions of the nineteenth century, the Industrial Revolution was the product of networks.  No ruler ordered it.  In addition, there were also capital networks, which allowed entrepreneurs and investors to pool information and resources, and technological networks, which enable the exchange of productivity-enhancing innovations.  Capital intensive ventures such as joint-stock canal companies or insurance companies were heavily reliant on investor networks.  In all these networks, kinship, friendship, and shared religion played a part. 

Pg. 151:  In the years after 1815 the chaos that had been unleashed in the 1790s was brought under control by the imposition of a new ‘concert’ under the collective supervision of the five great powers, among them a restored French monarchy.  Throughout the nineteenth century, monarchy remained the predominant political form in the world.  The royal elite entered into a symbiotic relationship with a new plutocratic elite.  And, the Bourbons in France who attempted an unqualified return to the ancient regime did not last long.

Pg. 152:  The map of the world by 1900 was an imperial jigsaw, with eleven Western empires controlling disproportionate shares (58 percent) and economic output (74 percent).  Even the US acquired overseas colonies.

Pg. 152:  The most remarkable thing about the vast British Empire was how lightly it was garrisoned.  The German socialist Ferdinand Lassalle in 1862 called it a night-watchman state.

Pg. 169:  Europe in the nineteenth century was relatively peaceful, China was not.  The civil war that swept the Qing Empire between 1850 and 1865 directly or indirectly caused the deaths of between 20 million and 70 million people.

Pg. 179:  It is a common misapprehension to think that the populist backlash of the late nineteenth century had something to do with the origins of the First World War.  The two are in fact almost wholly unrelated.  The catalyst for populist movements on both sides of the Atlantic was the financial crisis of 1873.  The populist era was largely at an end by the middle of the 1890s.  By that time, the various populist policies and preoccupations – protectionism, immigration restriction, bimetallism, anti-Semitism – had been absorbed wholly or partially by established political parties.  By the turn of the century, the initiative had passed from populists to progressives, or Social Democrats as they were known in Europe, where organized labor was much more susceptible to the theories of Karl Mark.  The progressives’ remedies – which included higher direct taxation, state pensions, increased regulation of the labor market, weakening of private monopolies and public ownership of utilities – were ultimately more compelling and politically marketable than the populist’ had been.

Pg. 193:  A general European war broke out in 1914 for the simple reason that the order established at Vienna in 1815 broke down.  The correct historical question to ask is why that happened, not whose fault it was.  And the answer is: Bismarck’s removal (in 1890).  After Bismarck had gone, Kissinger argued, the great-power system aggravated rather than buffered disputes.  Over time, political leaders lost control over their own tactics’ and in the end, the military planning ran away with diplomacy.’  From 1890 onwards there was a significant probability of a conflict that would pit Germany and Austria-Hungary against France and Russia.  The only surprise about WWI is that it did not happen sooner.

Pg. 213:  All but one of the German plots to win WWI failed.  For instance, the 25,000 guns sent to Ireland could not make a revolution of the doomed Easter Rising.  The attempt to bring Mexico into the war by proposing the reconquest of New Mexico, Texas and Arizona failed when the Zimmerman telegram was intercepted.  However, the plot to send Lenin to Moscow worked.

Pg. 262:  When the Racketeer Influenced and Corrupt Organizations Act (RICO Act) became law in 1970, the American Mafia was demolished with striking ease.  The Mafia network had made the fatal mistake of becoming the hierarchy depicted in the movies (think Godfather.  Also, it might have helped that J. Edgar Hoover died in 1972).

The black American civil rights movement, even though the object of harassment by the authorities (think J. Edgar) continued to flourish as their networks in the churches were renewed each Sunday. (Remember the solidarity network in Poland.  Tyranny’s do not like religious organizations unless they can control them—like China now approving Catholic Bishops).

Pg. 342:  The causes of the 2008 financial crisis can be summarized:

1.      Major banks became dangerously undercapitalized, exploiting regulatory loopholes to increase their leverage ratios.

2.     Markets were flooded with asset-backed securities such as collateralized debt obligations that rating agencies egregiously mispriced.

3.     The Federal Reserve allowed monetary policy to be too loose between 2002 and 2004.

4.     Politicians created economically foolish incentives for poor Americans to become home-owners.

5.     Derivatives such as credit default swaps were sold on a massive scale, on the basis of unrealistic risk models.

6.     Flows of capital from emerging markets, especially China, to the US helped to inflate the American real estate bubble.

Pg. 360:  The world by 2010 was on the brink of two revolutions, each driven to a significant extent by the effects of information technology.  The first was a revolution of rising expectations in the developing world.  The second was a revolution of falling expectations in the developed world.  There is less inequality in the developing world, but rising inequality in the developed world.  Driving this is a synthesis of technological change and global integration—that simultaneously made the world as a whole more ‘flat’ and yet caused American society (in Charles Murray’s phrase) to ‘come apart’. [See my report on that book, “Coming Apart”].

Pg. 363:  All over the developed world, mortality rates are declining and lifespans are lengthening, but not in (non-Hispanic) white America, and especially not amongst those middle-aged white Americans whose education did not extend beyond secondary school.  For this group, aged between forty-five and fifty-four, the mortality rate from poisonings (mostly drug over-dosed) rose more than fourfold between 1999 and 2013, from 14 to 58 per 100,000, while mortality from chronic liver diseases and cirrhosis rose by 50 percent.   

Pg. 375:  The world now finds itself in the grip of an epidemic of Islamist terror.  Of the last sixteen years, the worst year for terrorism was 2014, with ninety-three countries experiencing attacks and close to 33,000 people killed.  The second worst was 2015, with over 29,000 deaths.  Four radical Islamic groups were responsible for three-quarters of all deaths from terrorism: Islamic State, Boko Haram, the Taliban, and al-Qaeda.

Pg. 385:  Trump had 32 percent more Twitter followers than Clinton and 87 percent more supporters on Facebook.  A few days before the election Trump had 12 million Facebook ‘Likes’, 4 million more than Clinton. 

Pg. 405:  Networks were the key to what happened in American politics in 2016.  There was the grassroots network of support that the Trump campaign built – and that built itself – on the platforms of Facebook, Twitter, and Breitbart.  These were the forgotten men and women who turned out on 8 November to defeat the global special interests and failed and corrupt political establishment that Trumps’ opponent was alleged to personify.

Pg. 410:  Cyber defense lags ten years behind cyber-attack, not least because of a new version of the impossible trinity: ‘Systems can be fast, open, or secure, but only two of these three at a time.’ 

Pg. 417:  The possibility exists that information and computer technology could enable Beijing to build a system of ‘social credit’, analogous to financial credit in the West, that would ‘allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step’.  (In fact, China is  already doing this in selected areas).

Pg. 422:  The lesson of history is that trusting in networks to run the world is a recipe for anarchy: at best, power ends up in the hands of the Illuminati, but more likely it ends up in the hands of the Jacobins.