The Square and the Tower - Niall Ferguson

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Fresh off the press (January 2018), with the catchy subtitle “Networks and power, from the Freemasons to Facebook,” and praise from Eric Schmidt: “Silicon Valley needed a history lesson and Ferguson has provided it,” Niall Ferguson’s new book caught my eyes. However, at 400+ pages, the book was a slog through seemingly disconnected narratives and at-times paragraphs of irrelevant (to me and the general reader) names.

Ferguson's aim in the The Square and the Tower is to avoid the "tyranny of the archives,"  and find an alternative to the dominant historiographical paradigm that understates the role of networks in explaining major changes dating back to the Age of Discovery and the Reformation. Instead, Ferguson contextualizes these changes as disruptive challenges posed to established hierarchies by networks. And out of this approach comes the key dichotomy, between network and hierarchy and question "is it better to be a network, which gives you influence, than in a hierarchy, which gives you power?" Additionally, Ferguson introduces some network vocabulary such as degree, betweenness, closeness, structural holes, scale-free / fat-tailed networks, and homophily, and throughout the book has interspersed some network graphs, but except in the case of Kissinger's memoirs, these weren't analyzed sufficiently to be useful.

The author aims to show us how analysis history through the lens of network structure can enlighten our perspective of the future. Perhaps this is true, but when it comes to the most important networks of the modern era, Ferguson's insight appears to be entirely absent. In his closing chapters, Ferguson concedes that "there are now two kinds of people in the world: those who own and run the networks, and those who merely use them."  But as to what this portends for our future, Ferguson is demonstrably silent; although, the obvious is pointed out, e.g.  6/8 richest people are from tech, etc.. For example, Ferguson (authoritatively, having written a voluminous multi-partite biography which he is still working on) introduces Kissinger as a member of the emergent networked order, but fails introduce us to other members of said order. In another case, Ferguson outlines the disruptive potential of cryptocurrencies (and their surprising concentration in China  whose exchange BTCC accounts for ~3/4 of all BTC trades), but only for a paragraph.

Some points/quotes

Evan Williams (Twitter co-founder): “I thought once everybody could speak freely and exchange information and ideas, the world is automatically going to be a better place. I was wrong about that.” 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 most likely it ends up in the hands of the Jacobins.

The pentarchy formed from the Congress of Vienna provided remarkable stability for the better part of a century. Today, we confront the same choice, but those who favor a world run by networks will not end up with the interconnected utopia of their dreams but with a world divided between FANG and BAT and prone to pathologies where malignant sub-networks exploit the opportunities of the Internet to spread virus-like memes and mendacities.

"Anyone who claims the valley is meritocratic is someone who has profited vastly from it via nonmeritocratic means like happenstance, membership in a privileged cohort or some concealed act of absolute skullduggery." The global social network, in other words, is itself owned by an exclusive network of Silicon Valley insiders.

Other points

  • Hierarchies are a special kind of network with a central point of failure
  • Networks are not easily directed towards a common objective; they may be spontaneously creative, but they are not strategic
  • Scale-free / fat-tailed networks, are resistant to attack... even  after 80% of nodes are removed, the average distance between nodes is practically the same
  • On the basis of betweenness centrality, Xi Jinping is as powerful as any leader since Jiang Zemin, and much more powerful than Deng Xiaoping
  • The Age of Discovery / Reformation can be reframed as the collision of networks; the former was the collision of a European network and a non-European hierarchy
  • The Rothschilds and the Coburg dynasty were amazingly well-networked thanks to intermarriage: of 15/21 marriages between Mayer Amschel's children from 1824-77 were between his direct descendants
  • The network of the Enlightenment was more Francocentric than international
  • George Washington and Paul Revere wouldn't have been as influential were it not for their membership of the Masonic brotherhood
  • America was founded with a peculiarly egalitarian character of colonial society that made a dense network of civic associations possible, which Tocqueville saw as key to countering the danger of tyranny in modern democracies and therefore ultimately key to America's success
  • The British Empire was successful thanks to its imperial strategy of indirect rule made possible by its uniquely extensive communication networks, steam power, and electricity
    • The first cross-Channel cable was laid in 1851, by 1880, there was ~100,000 miles of cables, only possible thanks to rubber from Malaya; the first railway line in India was laid in 1853, in 50 years, 25,000 miles had been laid; the cost of shipping a bushel of wheat from NY to Liverpool was halved between 1830-1880 and again 1880-1914; 42 day journey from England-Cape Town cut to 19 days from 1850-90
    • And all of this was enabled by informal intellectual networks: rubber seeds from Brazil (that eventually were cultivated in Malaya) were sent from Brazil to London and subsidized by the secretary of the Royal Geographical Society, but the research and development was done by the Royal Botanical Gardens
  • "Successful networks evade public attention; unsuccessful ones attract it; and it is their notoriety,  rather than their achievement, that leads to their over-representation. This was true of the Illuminati in the late eighteenth-century Germany."
  • Degrees of separation: for directors of Fortune 1000 companies, it is 4.6; for Facebook users it was 3.74 in 2012 and 3.57 in 2016
  • George Soros was successful in shorting the British pound because he was part of a network; it was the collective effort of his network of hedge funds that broke the peg
  • Stan McChrystal learned in Iraq that in counter-insurgency it takes a network to defeat a network
  • In WW1, the German Reich had only 3 viable strategies: a decisive land victory, disrupting trade, or fomenting revolution. In fact, this last strategy was rather enthusiastically pursued by the Germans in both the Arab states (jihad) and in Russia (Bolshevism, $800m in today's money was channeled to Lenin and his associates)

In Siena, the outline of the cathedral tower overshadows the Piazza below. The tower represents secular power and the square represents the market, and the image of the two illustrate the tension between hierarchical orders and distributed networks, the central theme of the book.