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Journal of a Wayward Philosopher
The Rise of the Information Age
February 23, 2016
Hot Springs, VA
"If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of everyone, and the receiver cannot dispossess himself of it. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density at any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation."
The S&P closed out Monday at $1,945. Gold closed at $1,208 per ounce. Crude Oil closed at $33.30 per barrel, and the 10-year Treasury rate closed at 1.77%. Bitcoin is trading around $423 per BTC today.
The world has undergone a massive change over the past several decades – the type of change from which there is no return. This change has been the transition from the Industrial Age to the Information Age; a transition which is still in its infancy.
The Industrial Revolution, which began in the mid-to-late 18th century, has lifted more than a billion people from the shackles of poverty, raised standards of living exponentially, and it has created the world in which we live today. Even people of the most modest means in the developed world today enjoy far more comforts and luxuries than the wealthiest kings and nobles of the pre-industrialist era.
Commerce was the driving force behind industrialism, and the market system spawned from free trade and free enterprise. For all of its revolutionary and wealth-creating qualities, the Industrial Age carried one major limitation, however; it required highly rigid centralization. Note that this was not necessarily a flaw; simply a limiting factor.
The reason centralization is a limiting factor is because centralized institutions require a certain degree of administrative bureaucracy in order to function. This applies to corporations just as it applies to governments, and it is why corporate organizational structures fundamentally resemble government hierarchies. All of these institutions employ pyramidal hierarchies: there are a few people at the top who send orders down to the people comprising the chain below them who pass those orders on down the hierarchy. Each successive chain is progressively larger as you work your way down the organizational chart.
The problem with bureaucracies is that they are slow, inefficient, and they carry conflicting incentives and disincentives across the various chains of authority. These problems become magnified as the bureaucracy grows, and the one consistent incentive present in all bureaucracies is the desire to grow in size, wealth, and power. As an institution grows, its focus becomes less on innovation and wealth-creation, and more on suppressing competition. Therein lies the limiting aspect of centralization.
This is why the very institutions responsible for empowering individuals and enriching civilization on a mass scale always seem to stagnate and become parasitic over time. The banking system and the educational system – both at the primary and university level – are two examples that immediately come to mind. You could put national governments in the category of stagnant and parasitic as well, but I am not sure that any government, anywhere, has ever empowered individuals or enriched civilization; at best they were simply benign at formation… and that’s a stretch.
So the institutional systems of the Industrial Age began, and I paint with a broad brush here, as liberators and innovators. These systems grew to encompass most of the globe, and they came to be thought of as permanent. For many, perhaps they still are.
Francis Fukuyama penned an essay back in 1989 titled The End of History? which suggested that humanity may have reached the end of its sociocultural evolution with the collapse of the Soviet Union. Francis made a number of good points in his essay, and overall it made perfect sense at the height of the Industrial Age.
But God has a sense of humor and the Universe is unequivocally characterized by change and paradox. The Information Age was steadily beginning its ascent precisely as Mr. Fukuyama was proclaiming the supreme permanency of western regulatory democracy and its established institutional systems. Little did the Establishment know that a new disrupting force was rising from the ether.
In fact, Timothy C. May had already penned and presented his powerful manifesto a year earlier at the Crypto 88 conference. History may very well point to Mr. May’s manifesto as the definitive beginning to the Information Age. Here’s May:
A specter is haunting the modern world… Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner. Two persons may exchange messages, conduct business, and negotiate electronic contracts without ever knowing the True Name, or legal identity, of the other…
Reputations will be of central importance, far more important in dealings than even the credit ratings of today. These developments will alter completely the nature of government regulation, the ability to tax and control economic interactions, the ability to keep information secret, and will even alter the nature of trust and reputation…
Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure, so too will cryptologic methods fundamentally alter the nature of corporations and of government interference in economic transactions…
The nature of the Information Age was elegantly documented by John Perry Barlow in his A Declaration of Independence of Cyberspace, which was written in 1996 as a response to the Establishment’s general attempt to suppress the rise of the Information Age, and specifically the Telecommunications Reform Act. Here’s Barlow:
Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather…
We have no elected government, nor are we likely to have one, so I address you with no greater authority than that with which liberty itself always speaks. I declare the global social space we are building to be naturally independent of the tyrannies you seek to impose on us. You have no moral right to rule us nor do you possess any methods of enforcement we have true reason to fear.
Governments derive their just powers from the consent of the governed. You have neither solicited nor received ours. We did not invite you. You do not know us, nor do you know our world. Cyberspace does not lie within your borders. Do not think that you can build it, as though it were a public construction project. You cannot. It is an act of nature and it grows itself through our collective actions.
You have not engaged in our great and gathering conversation, nor did you create the wealth of our marketplaces. You do not know our culture, our ethics, or the unwritten codes that already provide our society more order than could be obtained by any of your impositions.
You claim there are problems among us that you need to solve. You use this claim as an excuse to invade our precincts. Many of these problems don't exist. Where there are real conflicts, where there are wrongs, we will identify them and address them by our means. We are forming our own Social Contract. This governance will arise according to the conditions of our world, not yours. Our world is different.
Cyberspace consists of transactions, relationships, and thought itself, arrayed like a standing wave in the web of our communications. Ours is a world that is both everywhere and nowhere, but it is not where bodies live.
We are creating a world that all may enter without privilege or prejudice accorded by race, economic power, military force, or station of birth.
We are creating a world where anyone, anywhere may express his or her beliefs, no matter how singular, without fear of being coerced into silence or conformity.
Your legal concepts of property, expression, identity, movement, and context do not apply to us. They are all based on matter, and there is no matter here.
Our identities have no bodies, so, unlike you, we cannot obtain order by physical coercion. We believe that from ethics, enlightened self-interest, and the commonweal, our governance will emerge. Our identities may be distributed across many of your jurisdictions. The only law that all our constituent cultures would generally recognize is the Golden Rule. We hope we will be able to build our particular solutions on that basis. But we cannot accept the solutions you are attempting to impose…
We will create a civilization of the Mind in Cyberspace. May it be more humane and fair than the world your governments have made before.
This Declaration may sound extremely strange to us at this current moment in history as we continue to transition into the Information Age, but I can’t help but notice that we already live in the digital world depicted in Barlow's writing. Almost every facet of our lives today is tied to or facilitated by the Internet.
Our methods of communicating with one another are now primarily digital in nature. Physical meetings have been replaced by digital communications. Cell phones have replaced landlines. Text messages have replaced phone calls. Emails have replaced letters. Webinars have replaced business meetings.
Our methods of finance – both commercial and personal – are now primarily digital. Bank accounts are completely digital in nature, as is money itself. Aside from physical cash and hard assets, all of the financial wealth of the world exists exclusively as digits in Cyberspace. This includes stocks and bonds which are now digital in nature. While physical certificates still exist, they are almost exclusively warehoused by intermediaries whose ownership records are digitally housed.
A large percentage of commerce is digital in nature as well. People purchase goods and services online using their digital money and credit in vast quantities every single day. Similarly, a large percentage of entertainment is now digital in nature. There are far more people streaming movies from Netflix, YouTube, or Vimeo on any given Friday night than there are people going out to the theatre.
Virtually all office workers work in a digital world as they sit in front of a computer screen all day, every day. If you observe people out in public places, you will notice that most people are connected to the digital world via their smart phone screen for a large portion of the free time outside of work as well.
We already live primarily in a digital world, and the Information Age is only in its infancy. Ten years from now nearly everything we use on a daily basis will be connected to the Internet.
The beauty of the Information Age is the rise of decentralization and individual self-empowerment. The downside is the diminishment of personal interaction as well as certain cultural norms and long-standing traditions. More on this next week.
In the mean-time, one of my favorite mediums for understanding the transition into the Information Age is a book called The Sovereign Individual: Mastering the Transition to the Information Age by James Davidson and William Rees-Mogg. I can't recommend it enough.
Also, to better understand the digital nature of the modern monetary system, as well as corresponding financial strategies, please see my online course Finance for Freedom: Master Your Finances in 30 Days. You can get the course for a flat $4 until March 1 as part of our leap year promotion here.
More to come
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