Emergence, Crisis, and Replacement of the Era of Decentralized Networks

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• Article: Emergence, Crisis, and Replacement of the Era of Decentralized Networks. By David de Ugarte

Excerpted from the Book: The Power of Networks. [1]


David de Ugarte:

The Emergence of Decentralized Networks

Case study of how technology influences power structures. David de Ugarte examines how the telegraph was instrumental in creating decentralized networks and world structures.

David de Ugarte:

“Technology, and particularly communications technology, generates the conditions of possibility for changes in power structures. Daniel R. Headrick argues in The Tools of Empire that 19th century European imperialism, which at one point controlled three quarters of the surface of the Earth, only became possible when transport and communications technology resulted in the establishment of economic networks […] After all, before a colony could become valuable and annexed to a European economy, a communication and transport network had to be laid.

The key element that made possible the division of Africa in Berlin in 1885 was the previous existence of a primitive network of instantaneous telecommunications: the telegraph.

The first telegraph line between the United Kingdom and France was made available to the public in November 1851. The first direct message between London and Paris was sent a few months later. In 1858, the first transatlantic cable linked the United States with the European network. It was the beginning of what Tom Standage called, in a wonderfully epic book, “the Victorian Internet”.

Even though Standage displays in his book a rather ironic attitude towards the eventual effect that the telegraph had on diplomatic relations (inasmuch as it completely modified military strategy), it is nonetheless interesting that the three countries that were first linked by that network have remained allies to our day. The telegraph not only joined the United States’, Britain’s and France’s stock exchanges, but also brought together and merged their respective economic interests, providing the drive both for the earliest globalisation and for imperialism. And that drive was more powerful than the rivalry generated by the centrifugal force that was the competition between the three countries.

Moreover, the creation of news agencies (Associated Press and Reuters), the direct descendants of the telegraph, contributed to the establishment of an agenda in the public debate between the three powers.

It is hard to understand nowadays the extent of the importance that news agencies had for democracy. The main advance was at first that they made it possible for national and global news to be included in the local press at a time when literacy was on the rise, as a result both of production needs (machines required more and more complex skills from workers) and of the educational activity within the trade movement itself.

But by introducing national and international affairs – until then the exclusive matter of government elites – into the popular press (and not only the “bourgeois” press, well beyond the means of most people both because of its price and its language), foreign and State policy became something about which any citizen, whatever his social class, could have an opinion. Arguments for census suffrage became obsolete because information and opinion now belonged to the entire citizenship.

In fact, the telegraph was also the main factor in the rise of new topics and new values. It made it possible for trade unions to envisage coordinated actions in France and England. The 1864 call for the conference which would eventually become the basis for the First International was a direct consequence of the engineering work by which the first telegraphic cable was laid beneath the English Channel. Trade unions and workers' associations were keen to foil factory owners' plans to avoid strikes by moving production from one side of the channel to the other. They saw very clearly that the telegraph made it possible to coordinate their own demands. Proletarian internationalism, which would become a trademark of the end of the 19th century and the first third of the 20th century, was – like its polar opposite, imperialism – a possibility which was only opened by that first international web of copper cables.

But the complete political translation of the consequences of the new information structure would come later, in the Second International (1889). Its aim was to promote large organisations which would coordinate social movements on a national level, and which by entering the political arena would defend workers' interests in national parliaments.

We can say that the original socialdemocratic movement and its model, the SPD, are the children of that “decentralised”(but not distributed) vision of the world, from its territorial arrangement to its conception of the State. The case of French Socialism is particularly striking, as its history is linked not to Paris but to a small provincial town, ClermontFerrand, which happened to lie at the centre of the French railway and telegraph network. Nowadays we find it natural (because it is so usual) that power should be conceived of in a decentralised way,that human organisations (States, companies, associations, etc.) should be articulated in hierarchical levels corresponding to territorial spaces. We are also comfortable with the structure of social and political representation derived from such a decentralised conception of power, as well as with the fact that it takes place through the gradual centralisation (local, regional, national, international, global, etc.) of decisions taken over an equal universe of topics at each level.

Decentralised structures were originally the result of the effective interconnection of centralised networks, but in the long run they produced their own logic, generating new, higher, non-national nodes, such as news agencies at first, and later on the first multinational companies. IBM displayed the extreme vigour of the autonomous hierarchisation of its nodes when it acted as a supplier for both sides during the Second World War. According to certain researchers, the internal logic of IBM was that of a “pure” decentralised organisation, where any branch of the tree can be isolated from the rest. The Nazi government pressed IBM for information about the Allies' technology, and Roosevelt in turn tried to use IBM to block the German management system. IBM's response was to give both sides a symmetrical ultimatum, together with a promise of complete impermeability – only the Founding President of IBM (the cusp node in the hierarchical decentralised tree) would be in possession of the information from both sides. In order to make this possible, the German branch of the multinational had become completely independent in 1941.

The first network revolution, which shaped our world, was the passage from the tendency towards centralised, national organisations characteristic of the modern State to the tendency towards decentralised, international entities in the 19th and 20th centuries. We have gone from local strata to national classes, from wars between States to wars between blocks and alliances, from colonies to imperialism, from clubparties to mass parties. And it was all made possible by the first great revolution in telecommunications.” (http://deugarte.com/gomi/the-power-of-networks.pdf)

The Crisis of Decentralized Networks

David de Ugarte:

“But even then there were already signs that the global decentralised system was approaching critical point. The value of system production kept increasing dramatically by comparison to its weight in tonnes. The percentage of that value due to the scientific and technical components of production became ever more crucial. But as the system relied more and more heavily on science and creativity, it became increasingly clear that the incentive system provided by the hierarchical decentralised production model was a burden slowing the process down. The first cultural responses started soon after, snowballing into a mass phenomenon with the 1968 students' movement in the United States. New values and new topics were on the rise. At the crossroads of computer science and academe, a new kind of character appeared: the hacker. As Eric S. Raymond described it in his famous book, the hacker's model of intellectual production and information processes, created within the main American universities, looked like a bazaar rather than a cathedral (which Raymond likened traditional companies to).

The first two skirmishes which the thentiny circle of hackers engaged in would come to have global consequences. The first one, in 1969, was started by Whitfield Diffie, a young mathematician who had travelled all over the United States in search of scattered clues concerning the (secret) evolution of cryptography since the beginning of the world war. By interviewing war veterans and combing through libraries and memories, he created the fragmentary map of a hidden world. He was funded by no one – Diffie, a purebred hacker, possibly the first hacker in the information society, did it all for art's sake. He would soon come farther than any intelligence system had ever reached: he discovered and implemented asymmetric cryptography, the current basis for all secure communications. Thanks to him, cryptography ceased to be restricted to the world of (military) secrecy, and passed into the domain of private use – from the closed community of intelligence, it fell into the hands of hackers and applied mathematicians, to the great annoyance (and endless court battles) of American government agencies.

When reading Steven Levy's wonderful telling of this epic in Crypto, one cannot help but wonder how on earth that could happen. How could the most paranoid scientific bureaucracy in history, fifteen years before the fall of the Berlin Wall, let something as important as the possibility of secure asymmetric ciphering slip through their fingers? How could a few hippies fool them and effectively render the until then almighty agencies helpless? How could IBM just not notice?

What had happened was only a harbinger of the world to come. The answer is simple: the logic of incentive systems. As any economist could tell you, the incentives which the old closed system could provide were not in alignment with the new aims to be achieved. It was only a matter of time for a Diffie to turn up.

The second battle is still being fought. The man responsible for starting it may be the most famous hacker in history, Richard Stallman. Unwilling to accept that he could be prevented from sharing or improving on his own developments, Stallman launched a devastating criticism against software copyright. As a result, GNU, GNULinux, and other licences were created, which would constitute the basis for the first great structure of free property in distributed development – the free software movement.

But two things had been previously necessary for all this new, alternative production system to burst forth: the development of personal computing tools, and a distributed global network of communications between them. That is, the PC and the Internet.

Let us go back to 1975 in Los Altos, California. A clichéd image: two hackers sharing a workshop in a garage. They build and sell Blue Boxes, circuits which when connected to the phone fool Bell terminals and allow callers to make free calls. The hackers are Steve Jobs and Steve Wozniak. Wozniak puts forward the project of building a computer for personal use at the Homebrew Center, a club for electronics hackers. Jobs comes up with a plan: he will sell his van if Wozniak sells his calculator (calculators were still quite expensive then), and they will both set up an assembly workshop in the garage. But Jobs works for Hewlett Packard. The terms of his contract force him to offer any ideas he might want to develop to HP before working on them on his own. Jobs and Wozniak arrange a meeting with HP and try to sell them the idea. The response from HP is as expected: computers are for managing large social processes, they require much more power than a smaller machine could ever have, and moreover a small computer would be useless in the home. A personal computer would be something like a bonsai tree which would never take root. Who would ever want such a thing?

And indeed Apple I was not particularly powerful: 4 Kb which could be increased to four more, with optional cassette storage. But that was the first step towards turning HAL off. Apple II was launched in April 1977, and Apple III, which already had a 48Kb capacity, in 1979. After that, nobody had to explain any more what a personal computer was, or what it was for. In universities, the budding hacker communities took Jobs and Wozniak's cue and started building computers. In 1980 IBM followed suit and designed the first IBM PC, in an attempt to ride the turning tide.

The idea wasn't bad. It involved selling, assembling, and designing, within an open architecture, computers made from cheap thirdparty components. All the power of the IBM brand should be enough to swallow the nascent domestic market whole, and keep possible licenser-granters and clonemakers within specific segments.

But that's not what happened. Things had changed. IBM thought of its machines as relatively autonomous substitutes for the old dumbeddown terminals. It thought of PCs as cogs within the old centralised architecture, thicker branches for its trees. Because they had a universal openarchitecture model, electronics hackers were able to start building their own componentcompatible machines, and even to sell them much cheaper than the blue giant's originals. The hacker's dream – to make a living from computers – was becoming true. Electronics hackers in the 70s ended up setting up their own little workshops, stores, and garages. Without techie defenders, Apple would eventually disappear even from the underground, but PCs would gradually become detached from IBM.

When you have more than one computer at home, even if you are only setting someone else's computer up for them, it's inevitable that you'll be tempted to turn them into a network. When your friends have a modem and you can devote a computer to sharing stuff with them, it's inevitable – particularly when local calls are free – that you will leave it on all day, connected, so that your friends can connect to your computer whenever they feel like it.

The more powerful PCs became, the more powerful the hackers' network architectures grew too.

Like a creeper growing on a tree, the use of this new kind of tool gradually spread and became distinct throughout the eighties. That was when the structures that would shape the new world were created: LAN home networks, the first BBS, Usenet – different inventions by different people with different motivations. The advent of free, mass consumption Internet drew ever nearer. It was what the changing times were calling for. Even though hackers didn't realise it then, all those innovations were expressing not only the hackers' own way of selforganisation and of representing reality, but the entire architecture of a new world which would have to be represented and organised as a network in order to work and give rise to a new kind of incentive. Soon an increasingly dense creeper made up of little bonsai computers would smother HAL and disconnect him for ever.

A few paragraphs have taken us on a dazzling journey.

The decentralisation which had arisen as a possibility with the advent of the telegraph restructured the world almost completely after the Second World War. But a global, decentralised world is a world with huge management needs, a world requiring computers and instantaneous information. Information, technology, and creativity became increasingly important for production value. But it is hard to encourage creativity and scientific development within a decentralised hierarchic structure.” (http://deugarte.com/gomi/the-power-of-networks.pdf)

Hacker Culture as the successor to the decentralized systems era

David de Ugarte:

“Hacker culture represents the alternative mode of organisation characteristic of the incentive system demanded by those selforganised research groups. This is an incentive system that questions socalled “intellectualproperty” and the very topology of information structure. In order to create, in order to generate value, hackers require free access to information sources. Every node demands its own right to connect to other nodes without going through any centralnode filters. In this way, they can further develop the technological tools they have inherited. PCs and the Internet are the instruments for computing and data transmission within a distributed structure.

But information structures are not innocent in the least. Topology entails values. And as Himanen points out, the hacker movement has developed a work ethics based on recognition, not remuneration, and an ethics of time in which the Calvinist dichotomy between labour (understood as a divine punishment) and joyful “leisure” has disappeared. These values have become attached to the design of new tools and the cultural and political changes which they have brought about. Yes: political changes. For the changes in the structure of information brought about by the Internet have opened the floodgates to a new distribution of power. The Internet, connecting millions of hierarchically equal small computers, has led to an era of distributed networks and to the possibility of going from a world in which power is decentralised to a world in which power is distributed. And that is the world we are building.” (http://deugarte.com/gomi/the-power-of-networks.pdf)