Technology, society and power

Thoughts on how the Internet and innovation are reordering social dynamics

Quick summary:

• People develop technology, which in turn shapes the society people are part of

• This circular feedback loop lead to shifts in social order and institutions

• Technological changes lead to a re-examination of status and power structures

• Most institutions are based on hierarchies, but the Internet favors peer-to-peer

• Today, we see fights over using tech to entrench top-down power or upending it

The 3 steps in reacting to technological change

Over the summer, I caught up listening to past episodes of The Knowledge Project podcast from Shane Parrish of Farnam Street. One of the most intriguing interviews was with Marc Andreessen, co-founder of Netscape and the Andreessen Horowitz VC firm. Andreessen is controversial and opinionated and while I don’t always agree with his views, I do find his insights to be thought-provoking and worth listening to. In this particular interview, Parrish asked Andreessen to recommend a book that he had been re-reading and gaining new insights. Surprisingly, Andreessen cited a book originally published back in n1962 titled Men, Machines, and Modern Times by Elting Morison.

In his book, Morison asserts that there is a consistent pattern in the reaction of people to technological change: 1) ignoring it, 2) rational rebuttal, 3) name-calling. That is, initially most people choose to ignore a new technology presuming that it is unneeded; next, they attempt to rationalize their position by arguing against the need for it; and finally when these attempts to argue against it fail, people then resort to attacks and more emotional push back to the changes occurring due to the new technology. Morison goes on to argue that all technological changes are societal changes; in particular, new technology brings about a reordering of status and power. As a result, technological change inspires fierce battles among various factions in society, and these battles over power and status tend to be quite vicious. Sound familiar?

As technology changes, so do power structures

Andreessen goes on to mention the influence of another book, The Square and the Tower by historian Niall Ferguson. Ferguson’s book argues that there have been two major social structures that have dominated throughout history: hierarchies and peer-to-peer networks. One is top-down, the other is a bottom-up approach. Over the course of modern history, humans have shown the ability to create larger and more stable institutions based on the rule of law: that is, based on “word power” where lawyers and politicians are the major power players. Major hierarchies such as governments and large corporations have favored a particular type of personality: “the organization man” that favored consensus over individuality. However, with the advent of the Internet has grown numerous offshoots of peer-to-peer (P2P) networks from social media to the platform/ecosystem model. P2P has become popular for everything from ride sharing to vacation rentals, food delivery to dog-sitting. These new Internet-enabled startups are based on Big Data, algorithms, and “math power” where mathematicians and engineers are the major power players.

One key question that I touched on in a recent edition of Forestview is the ability of technology to substitute for institutions; specifically, the question of whether people who are increasingly skeptical of institutions are justified to place their trust in algorithms instead. Andreessen argues in his podcast interview that while the Internet has proven its ability to tear down hierarchical institutions, it has not shown the ability to effectively replace them on a consistent basis. In addition, central institutions often look to co-opt technology and use it to defend its position of power. Andreessen contends that as new ways of doing things become evident, incumbents will fight back, sector by sector. On top of this dynamic, successful startups tend to become incumbents themselves and shift from an attacking “pirate” mentality to defend their gains, moving to a “navy” mentality. In Andreessen’s estimation, this shift from startup to incumbent generally happens at the 5-year mark which is usually when successful startups have attained something of value they seek to protect. For example, he cites Google as a firm that went from tremendous innovation in its search product to staunchly defending their position at the cost of new impactful innovations.

Fighting between being top-down or bottom-up

Andreessen argues that being an incumbent is hard because “the Empire has to win 100% of the time”. He further states that it is easy for existing firms to “get lazy” over time due to their success and that it is necessary to have a “forcing function” to fully think through new ideas or strategies. This forcing function can come from new external competitive threats or from newer generations who have grown up using the Internet and have lots of ideas and new ways of doing things. Alternatively, many legacy institutions look for competitive edges by bending the rules and advantages in their favor; Andreessen says this is “corruption” and calls many entrenched interests “cartels” between government and businesses. Andreessen makes a distinction between being pro-business and pro-market: he states that many countries such as the United States had a “weird hybrid” system today that is neither fully capitalism subject to market discipline nor socialist or communist either.

Regardless of whether you agree with all of Marc Andreessen’s views, it is worth examining closely the historical patterns of technological advancement and related societal upheavals. Those that push back against the effects of technological shifts does not mean that they are a modern Luddite but rather that these changes impact us all, some favorably while others not as much. Above all, we live in a world full of accelerating technological change and continue to struggle with its pace and implications. Finding ways to shape and/or successfully adapt to these shifts is critical for our future success, individually and collectively.

What thoughts do you have on how technology affects the balance of power in society? Are there some overarching themes in your view or it is more haphazard? Do you sense there is a tug-of-war between factions struggling to maintain power or grab hold of it? Who are some winners and losers during this time of uncertainty and upheaval? Who benefits and who suffers as a result of these seismic shifts? What is missing from this debate that we should be discussing more as a society?