Media and New Capitalism in the Digital Age The Spirit of Networks

1999). The state withdrew not only from intervening in the workings of the market but also from ownership of The Commanding Heights of the economy through privatization (Yergin and Stanislaw 1998). The state also withdrew from the funding and operation of many welfare mechanisms that were put in place in order to provide a buffer zone between individuals and the market (Piven and Cloward 1997). More and more spheres of social life are administered by the free market or were modeled after a market-like rationale (Somers and Block 2005). There has been a trend toward privatization by way of shifting risks and responsibility from the state to individuals, and there has also been a process of privatization in the world of work, where a class compact has been substituted by individual contracts. The decline in market regulation and income redistribution (or in fact the rise of upward redistribution [Duggan 2003]) has also led to an increase in class inequality within national boundaries and between nation states (Milanovic 2007; Harvey 2005, 2009).

The second trend characteristic of the disembeddedness of markets in post-Fordism is disorganization. Disorganization (Lash and Urry 1987; Offe 1984b)—partially a consequence of the marketization of society—refers to a process whereby markets, the economy, and social life in general have become more liquid (Bauman 2000), more chaotic, and more complex (Urry 2003). The globalization of financial markets has made capital more mobile, leaving local markets more volatile and unstable as a result (Sassen 1999; Sennet 2006; Harvey 2005). Production has become more flexible, constantly adapting to changing markets’ demands; production and consumption cycles have been accelerating (Harvey 1989; Agger 2004; Rosa 2003). Companies have shifted their organization from a vertical model of a top-down, hierarchized bureaucracy to a horizontal, dehierarchized, and decentralized network (Castells 1996; Sennet 2006). Flexible, lean, just-intime production has made work life more “mean” (Harrison 1997), and increasingly more precarious, unstable, and unpredictable (Bauman 2001). Tenured workers have been replaced by part-timers and flextimers, working on ad hoc projects rather than developing a linear career path (Castells 1996; Sennet 2000). Economic risks (as well as spoils) have been individualized (Bauman 1998, 2001; Beck 1992, 2000).

These two dynamics were brought about not only as a result of the structural constrains of capitalism but also by the force of an ideological and political struggle between Keynesianism, welfarism, embedded liberalism, and social democracy, on the one hand, and market fundamentalism and neoliberalism, on the other (Somers and Block 2005; Duggan 2003). One of the staples of Keynesianism involved tighter state regulation of its macroeconomic indicators. This meant that while markets remained essentially free, they were further embedded in society (Polanyi 2001). This had given us a period of four decades of embedded liberalism (Harvey 2005), or “traditional mixed economy” (Yergin and Stanislaw 1998, 127). Diminishing state revenues in the 1970s mark the beginning of increasing skepticism of that constellation. A new model appeared that undermined the central tenets of Keynesianism and sought to solve the inherent contradictions of the welfare state (Offe 1984a).

46

Media and New Capitalism in the Digital Age

Since Thatcherism in the United Kingdom was one of the original formulations of the new economic doxa of neoliberalism, it is worthwhile recounting its history here. The neoliberal reformers in Britain identified the source of the economic crisis of the 1970s as “‘thirty years of socialistic fashions’ and ‘statism’—three decades of looking to government to solve problems and run the economy” (Yergin and Stanislaw 1998, 99). The new objective for the government, they asserted, should be the creation of wealth, even at the cost of creating inequality and mass unemployment (Yergin and Stanislaw 1998, 101–2). In Britain, this mostly took the form of privatization, a measure that not only had immediate policy consequences but also was part of a larger political and ideological project of transforming Fordist society and its political culture. Privatization—the transfer of industries and services from state ownership and management to the market—was seen as a means of “changing the balance in society” (Yergin and Stanislaw 1998, 115). It represented a critique of the notion that centralized “government knowledge” is superior to decentralized “business (or market) knowledge.” Moreover, privatization was seen as contributing to an ideology of individualism aimed at “overturning the previous collectivist consensus and replacing it with free-market economics and rigorous individualism” (Frith 1994, 1). Assessing the legacy of Thatcherism, Yergin and Stanislaw conclude that “Thatcherism shifted the emphasis from state responsibility to individual responsibility, and sough to give first priority to initiative, incentives, and wealth generation rather than redistribution and equality. It celebrated entrepreneurship . . . By the end of 1990s, it would turn out that Margaret Thatcher had established the new economic agenda around the world” (Yergin and Stanislaw 1998, 123).

This new economic agenda—neoliberalism—not only has become the dominant economic policy in Western capitalist societies (and increasingly a global doxa) but also has helped shape a new political culture in these societies. As an academic and popular discourse, neoliberalism gave a legitimation for the new, post-Fordist constellation of power between capital, labor, and the state and, especially, reasserted the need to liberate the market from political oversight and integrate social life as much as possible into markets. In this transformation, the role of the digital discourse was paramount.

Network Market

47

This chapter examines the digital discourse at the intersection of network technology and the market. It introduces key texts in Wired magazine that deal with contemporary economy and specifically with the transformations in the workings of the free market due to network technology. According to the digital discourse, as the market is integrated into network technology, it becomes more frictionless and more rational; it is rendered more self-regulating and hence demands almost no external political regulation; and it becomes more chaotic and unstable and, in turn, requires the nodes of the network—both individuals and companies—to be flexible and adaptive to an ever-changing environment. These narratives of a network market provide a cognitive map that explains the transformation from the embedded liberalism of the Fordist era to the neoliberalism of the post-Fordist era. By relying on a technologistic framework, the digital discourse on the network market legitimates the trend whereby markets are becoming more autonomous and disembedded from social regulation and are seen as ideal mechanisms for the administration of social reproduction. Through a close reading of the similarities between the digital discourse and neoliberal discourse, this chapter uncovers the degree to which the notion of network markets in the digital discourse is founded on the basic image of markets as portrayed by neoliberal theory. The notion of networks is rooted and constructed within the paradigm of markets—that is, as a template to understand not only markets but also society as markets. Set within the theoretical framework of this book, this chapter argues that the discourse on network markets legitimizes and depoliticizes the withdrawal of the Keynesian welfare state and the emergence of a new economic regime of neoliberalism. This chapter also points out the degree to which the network market is seen as a response to the humanist critique of capitalism and a transcendence of the limitations set forth by the embedded market of the Fordist era.

The chapter proceeds by analyzing two key dynamics that lie at the heart of the digital-discourse explanation of the revolutionary nature of the network economy: spontaneous order and chaos. According to the digital discourse, the new economic and market rationality of the network economy relies on spontaneous order, which in turn is premised on network technology. The contemporary realities of flux, instability, unpredictability, and chaos in the market are tied in the digital discourse to the market being more networked and its operation based on spontaneous order. The last part of the chapter adds another dimension to the analysis by discussing the theoretical underpinning of neoliberalism. Through a discussion on spontaneous order and chaos in neoliberal theory, this chapter shows the transposition of a theoretical model and a political project into a technologistic and seemingly apolitical discourse. The concluding discussion clarifies the theoretical significance of the affinity between neoliberalism as a market ideology and the discourse on network technology within Habermas’s framework of a technologistic political legitimation.

48

Media and New Capitalism in the Digital Age

Spontaneous Order as Network Rationality

D_UMB NOD_ES_, SMART N_ETWORK

One of the foundational texts describing (as well as prescribing) the new workings of the network market is “New Rules for the New Economy” (Kelly 1997)¹ by Kevin Kelly, Wired’s editor in chief. I will focus my analysis of the discourse on the network market mostly on a close reading of this text, as well as some other articles from Wired. The most exciting feature of the digital revolution, according to Kelly, is the emergence of the network as the prominent paradigm of technological architecture and, in turn, of economic activity. As Kelly puts it, “The new economy is about communication” (1998, 5)²; specifically, it is about the ability of disparate units to be networked or of individual nodes to communicate amongst themselves.

Kelly begins his analysis of the economy with a close examination of its underlying technology; a technological analysis that is supposed to unravel the shape of contemporary society. He notes that “dumb chips”— simple processors designed to perform very limited computational tasks— are becoming much more popular than the more sophisticated computer chips (Kelly 1998, 10–11). Computer chips (such as the central processing units [CPUs] within PCs) are characterized by self-sufficiency; that is, they are stand-alone, autonomous units. Dump chips, on the other hand, only make sense within a network structure. Each of these chips is “dumb,” but as we are “connecting these billion nodes, one by one” (12), these small, not-so-intelligent machines become something else; they gain new qualities of “smartness” (14) and rationality (16).

Such a network is characterized by a high level of rationality that is brought about not by any single supercomputer, which in itself is external to the network and controls its operation—an omniscient eye in the sky, or a Big Brother that watches over the network. Instead, network rationality is brought about by the mere interlinking of dumb chips—and more generally, individual nodes—into a web. Intelligence, knowledge, and economic rationality, according to Kelly, reside not in any individual node but only in the network, and it comes about only through the new technological ability of nodes to come together in a collective rational action—that is, to “swarm” (12). Order and rationality are brought about by the interlinking of simple, irrational nodes. This type of order, Kelly says, emerges in any system that employs network architecture— biological, technological, economic, cultural, and social. Thus, Kelly is able to extrapolate from the technological level to other realms, such as intelligence. For example, he asserts that “when connected into a swarm, small thoughts become smart” (12). The interconnection of many small, simple-minded parts results in a qualitative leap—so that “small” becomes not simply big but “smart.” Using the same model, Kelly explains human consciousness as the communicative cooperation of dumb neurons: “Our brains,” Kelly says, “tap into dumb power by clumping dumb neurons into consciousness” (13). Networks are mechanisms for radical qualitative transformations and for achieving a gestalt, or a whole that is bigger than the sum of its parts.

Network Market

49

It is important to infer what Kelly is suggesting, especially as it pertains to the status of nodes vis-à-vis a technological network, or that of individuals vis-à-vis markets and society. If consciousness (as well as smartness and rationality) is the result of the cooperation of dumb neurons (as well as dumb chips, nodes, or individuals), the corollary is that reflexivity (i.e., the ability to evaluate rationality, or the ability to apply rationality to asses rationality [see Beck, Giddens, and Lash 1994]) resides not in any single node but only in the network. None of these small nodes can comprehend the complexity of the network’s rationality. Kelly sums up this lesson by maintaining that “no one is as smart as everyone” (Kelly 1998, 13); he therefore redefines smartness as an inherently network quality. This simple technological premise regarding the inability of any one node to comprehend the complexity of the web would, as we will shortly see, prove to be consequential when explaining actors in markets and the futile attempt of any agency to comprehend markets, let alone control them.

A N_EW KIND OF ORD_ER

How does network rationality come about? According to Kelly, as long as disparate units are interconnected by technologically enabled networks, rationality and order will emerge spontaneously. After citing evidence for the emergence of spontaneous intelligence and rationality in networks from a variety of case studies in technology and nature Kelly draws two general rules—rules, we should be reminded by the title of his article and book—for the new economy: “Dumb parts, properly connected into a swarm, yield smart results” (Kelly 1998, 13); and “The surest way to smartness is through massive dumbness” (14). Put together, these rules suggest that the network is the best mechanism to produce rationality. Moreover, it suggests that superior rationality can solely be the product of networks. Intelligence and rationality are achieved not by improving on the performance of individual nodes but by connecting them to each other. Sophistication and progress is created by very limited, shortsighted, and unreflexive agents. This network vision of rationality heralds, according to Kelly, the death of an alternative—and once hegemonic— vision of rationality encapsulated in the notion of artificial intelligence: a centralized, self-sufficient, and omniscient supercomputer (14). Rationality, in conclusion, involves two elements: dumb nodes and the mechanism that connects them and self-regulates their action. The Internet and other network technology serve not simply as the quintessential metaphor for this new rationality but indeed as the material basis for its execution.

50

Media and New Capitalism in the Digital Age

The various concepts used to account for this new form of network architecture and network rationality in the digital discourse is very telling. “Distributed power” (Anderson 2002, Luman 2005, Leslie 1997), “smart mobs” (Rheingold 2003, Sterling 2005, Kelly 2005), “the wisdom of crowds” (Surowiecki 2004), “swarm intelligence” (Bonabeau, Dorigo, and Theraulaz 1999), “dumb power” (Kelly 1998), “spontaneous order” (Strogatz 2003, Regis 1994, Postrel 1998, Kelly 1993), and “hidden order” (Holland 1996) all play on a similar linguistic device: an oxymoron. These duos tie together the irrational (the fuzzy and undirected) with the rational (the instrumental, purposive, and focused). In all of them, a “bad” thing (which incidentally characterized Fordist society) is rendered “good” by the power of network technology and, more generally, by the architecture of the network. Power’s coerciveness and oppressiveness is curbed by being distributed in a way that flattens and diminishes the very poignancy of power; the threatening mob—a bundle of thoughtless individuals homogenized and manipulated by a “mass society”—becomes smart and thoughtful; and order, which we were led to believe requires centralization and control lest it devolves into entropy, is achieved spontaneously. This teasing use of oxymorons defies our intuitive and wellestablished notions of rationality.

With network technology, these idioms suggest, we are entering a new level of rationality that is superior to the old one both in process (which is rendered more democratic and collaborative) and in result (which becomes more instrumental and efficient). This type of superior rationality, as suggested by these duos, is inextricably tied to a new architecture of organization; rationality and network go hand in hand. These duos also do something else. They help imagine a notion of society comprised of individuals, and of social dynamics that are reducible to the unrestrained actions of free individuals. They suggest that the coordination of these individuals into a rational society comes about without any central, constructed, and overt mechanism but with one that is “hidden,” “distributed,” and “spontaneous.” I will get back to this theme at more length later in this chapter.

Network Market

51

Network technology is revolutionary according to the digital discourse since it provides the technological space for the leap from the irrational (nodes) to the rational (network) to take place.³ The counterintuitive leap between the two orders—the simple-minded, short-sighted, dumb nodes on the one hand and the smart, rational collective, on the other hand—is contemplated also in “The Swarmbots Are Coming” (Dorigo 2004). The article begins with a conundrum from natural history: “Ants are simple creatures, yet they can perform complicated tasks,” and, perhaps most surprisingly, do it “without any centralized control” (Dorigo 2004). How can the simple grow to be complicated? How can the dumb become smart? Most importantly, how can this be achieved without a centralized “brain”? The answer, the article suggests, is to be found in the architecture of the network, where smart mobs can thrive. Making an unproblematic and direct leap between the biological and social orders, the author suggests that ants can teach us how to make the economy work better: “Boil down ant behavior and what do you get? A new set of business tools known as ant algorithms: basic behaviors that can be programmed into a large number of independent software agents to solve human problems . . . The ability to swarm, adapt, and optimize makes ant algorithms a crucial technology for the information age, especially as everyday objects become ever smarter. The rules that insects live by turn out to be perfectly suited to the high tech anthill” (Dorigo 2004). Hence, order and rationality emerge spontaneously and effortlessly, not by some ingenious and centralized brain, but by the networking of multiple simple nodes.

These are the technological bases of Kelly’s elaborate analysis of market rationality in the digital age. These characteristics of the network, says Kelly, are now leaking through the ubiquity of network technology into the workings of the economy. Economic rationality and economic growth have now come to be dependent on the harnessing of the power of the “distributed bottom” (Kelly 1998, 14), and the workings of the economy have increasingly come to resemble this technological form. Hence, when Kelly asserts the centrality of communication to the network economy, he is specifically excited about the possibility of a greater market rationality to emerge from the interconnection of small and simple parts. Simply put, the weaving of network technology into the fabric of the market renders its workings more rational.

52

Media and New Capitalism in the Digital Age

ORDER WITHO_UT ORDERING: DECENTRA_LIZATION AND DEHIERARCHIZATION

As stated previously, one of the most important implications of this new rationality is that it cannot be managed, programmed, and directed from any central point. It works best when it is left to its own devices—that is, when it is self-regulated. Luckily, the argument goes, the requirement for self-regulation can now be satisfactorily attained with network technology. These complex systems (such as the market) can regulate themselves through the internal mechanisms of networks: decentralization, flexibility, and adaptability. Network rationality is markedly different from the previous model of rationality that prevailed in industrial society. It is in fact a complete reversal of industrial rationality, which entailed a hierarchical and centralized organization of command and control. As Nicholas Negroponte—founder of the MIT Media Lab, author of Being Digital (1996), and a contributor to Wired magazine—puts it, network technology undermines authority, since in a network “nobody is in charge . . . The Net—a reliable system composed of loosely connected and imperfect parts that work because nobody is in control—shakes up all our centralist notions, and hierarchy goes away by example” (Negroponte 1997). Networks entail (and require) the collapse of any centralized oversight.

Kelly further exemplifies decentralization and dehierarchization with Cemex. This Mexican company, Kelly reports, is able to excel where others have failed—delivering a time-sensitive product like cement—by switching from rigid centralized planning, to a just-in-time technique, where drivers, not management, schedule deliveries in real time. With the aid of network technology the drivers form a smart mob: “The drivers formed a flock of trucks crisscrossing the town. If a contractor called in and order . . . the available truck closest to the site at the time would make the delivery” (Kelly 1998, 15). In this, as well as other cases, the lesson that Kelly draws is that “no central brain coordinates; the [result] comes from the swarm of minibrains” (15). For Kelly, this is a story about the toppling of the centralized brain in the economy, an overthrow of the prenetwork, bureaucratic organization (be it management or the state) that could presumably grasp the whole picture and hence be able to coordinate the work of disparate units. This old type of big brain, as opposed to the new “minibrains,” is too slow and inadequate to manage the complexity of systems such as a cement company, let alone the market. Such systems are indeed so complex that no one can manage them. But with the power of network technology, they can now manage themselves through the connection of many dumb ones into a smart whole. As Kelly puts it, “Dumb parts, properly connected into a swarm”—that is, through the tools of network technology, “yield smart results” (13).

Network Market

53

The toppling of hierarchy as a characteristic inherent to the new network rationality is reiterated in “The New Facts of Life” (Meyer 2004). In Chapter 7 I elaborate on the underlying cosmology of the digital discourse, which considers network technology to be compatible with the universal laws of nature. Here, the narrative of network technology as facilitating a social transformation in accordance with the universal laws of nature is applied to explain the transposition of spontaneous order and mob action from the biological to the social realm. Social constructs, the article asserts, act just as if they were living things: “Markets and power grids have much in common with plants and animals . . . It turns out that many of life’s properties . . . show up in systems generally regarded as nonliving” (Meyer 2004). Among these “life’s properties” (i.e., the unchanging laws of the universe) now showing up in human-made systems are, according to the article, emergence and self-organization: “Emergence describes the way unpredictable patterns arise from innumerable interactions between independent parts . . . Self-organization is a basic emergent behavior. Plants and animals assemble and regulate themselves independent of any hierarchy for planning or management” (Meyer 2004). The underlying narrative is quite straightforward: organizations modeled after a network architecture work best when they are ungoverned and left to self-regulate.

The article further makes this point with the example of unmanned aerial vehicles, or UAVs. Programmed with only simple rules, UAVs are able “to direct themselves better than any dispatcher could” (Meyer 2004). They are networked and self-taught: “If one is shot down over Afghanistan, all drones everywhere gain improved responses to that form of attack.” As the article points out, this network principle has been known in nature for ages. The way UAVs work “is precisely how bacteria develop resistance to antibiotics, only faster” (Meyer 2004).

But these network characteristics are now showing up not only in nature and technology but also in society. “Oddly enough,” the article continues, “our growing knowledge of life processes could have its biggest impact in the social sciences. Social systems, after all, are made up of interacting agents, i.e., people. When we become adept at applying these insights to the social sphere, we’ll be able to run simulations that reveal, say, the conditions under which Iraq would reconstruct itself. At that point, the new science of life will help us not only live better, but live better together” (Meyer 2004). Society, in this piece, is rendered a particular case of the general template of networks, individuals are “interacting agents,” and society progresses through self-regulated, self-taught processes. We humans, this narrative implies, have been investing too much energy in planning, managing, and controlling social processes in a centralized, top-down manner, when really the best results can be achieved by simply letting the “distributed bottom” (Kelly 1998, 14) communicate, coordinate, and swarm.

54

Media and New Capitalism in the Digital Age

According to Kelly, this new type of rationality, based on decentralization and self-regulation, is so innovative, revolutionary, and unintuitive that for the uninitiated, the working of the network may sometimes have the semblance of irrationality. For example, “Your [electronic] mail may go to Timbuktu and back on its way across town. A centralized switching system would never direct messages in such a wasteful manner. But the inefficiencies of individual parts is overcome by the incredible reliability of the system as a whole” (16). The network may look irrational, wasteful, and chaotic, but Kelly reassures—as we will further see—that these are in fact the very symptoms of a healthy and vibrant network and represent a new, superior form of rationality.

If decentralization is the path to building a society based on spontaneous order, what is the role of centralization and hierarchy in the network society? Kelly is no anarchist, and he certainly does not go as far as calling for the outright toppling of any form of central planning and governance. But the network, he insists, needs only “minimal governance” (18). Kelly, therefore, suggests focusing on the new territory of networks, arguing that “at present, there is far more to be gained by pushing the boundaries of what can be done by the bottom than by focusing on what can be done at the top” (18). The potentialities of a top-centralized governance have been historically exhausted, and it is therefore no longer a viable path for change. Progress can only come from exploring and tapping into the “bottom” option.

Chaos and Progress

So far, I have explored the underlying technologistic arguments of the digital discourse regarding the emergence of a new rationality, which is the result of the interconnection of disparate nodes. I have also pointed out some of the social implications of such rationality. But the full force of the argument—and from the point of view of this book, where the hegemonic dimension of the digital discourse comes into light—comes when Wired switches from discussing technological, biological, and small-scale organizational scenarios to a discussion of the network economy as a whole. After all, the incentive for the technological discussion in Wired is ultimately to unravel its social consequences. As Kelly puts it, “The internet model has many lessons for the new economy” (16). As I said above, in the digital discourse, network technology is seen not only as a material basis for contemporary economy but also as its metaphor.

Network Market

55