The Sovereign Individual - Mastering the Transition to the Information Age - YouTube - PR Report #6 The Sovereign Individual::Chapter 6 - The Megapolitics Of The Information Age
This PR report summarizes Chapter 6 of "The Sovereign Individual," titled "The Megapolitics of the Information Age: The Triumph of Efficiency Over Power." The chapter delves into the historical tension between protection and extortion, arguing that the Information Age is shifting the balance in favor of individual protection and diminished government power.
The authors begin by framing history's central challenge as the need to defend against violent aggression, citing Frederick C. Lane's work on the economic meaning of war and protection. Lane emphasizes that the control of violence fundamentally shapes resource allocation and economic activity, making government's primary role one of protection. In the industrial age (the 20th century), the framework was largely defined by the dichotomy of protection versus extortion.
Protection is defined as safeguarding against harm, while extortion is obtaining something through force or threats. The rise of large-scale factories and mass production enterprises in the 20th century coincided with the growth of larger governments and labor unions. This, according to the authors, tipped the scales toward extortion. While incomes rose throughout the century, government revenues increased even more dramatically through various forms of taxation on owners (corporate, property, severance taxes) and workers (income taxes). The cost of protection ostensibly provided by the government became less than what it charged through taxation. The authors argued that government operates like a business run by its employees, which lacks incentives to reduce prices (taxes).
Similarly, labor unions, utilizing tactics like boycotts and strikes, were able to secure rising incomes for their members. However, the authors argue that the Information Age marks a shift in this dynamic, swinging the pendulum back in favor of protection. In contrast to the centralized capital and wealth of the industrial era, which was vulnerable to seizure, the Information Age is characterized by information-based products and services, micro-processing technology, workstations rather than factories, and small, autonomous organizations or even individuals.
The authors draw a parallel between the historical inability to establish monopolies of coercion on the open sea and the likely impossibility of monopolizing cyberspace. They argue that the infinite and boundary-less nature of cyberspace makes it nearly impossible for any government to exert absolute control.
The report then lists several characteristics of information technology that contribute to this shift:
1. **Negligible Natural Resource Content:** Information technology is not dependent on geographical proximity to natural resources.
2. **High Portability:** Information-based businesses are less bound to specific locations.
3. **Lowered Scale of Enterprise:** Delivering significant value in the information economy doesn't require massive operations.
4. **Reduced Likelihood of Broad Social Support for Above-Market Wages:** Tactics like boycotts and strikes are less likely to resonate in the dispersed information landscape.
5. **Lower Capital Costs:** Setting up an information-based business requires less initial investment.
6. **Shortened Product Life Cycle:** Products in the Information Age have shorter lifespans compared to the industrial era.
7. **Simultaneous and Dispersed Activity:** Information technology is not typically sequential but simultaneous and dispersed.
8. **Individualized Work:** Micro-processing technologies put downward pressure on the returns of violence.
Cyberspace-based assets and services will be less threatened by government territorial monopolies on violence, making them easier to protect from shakedowns, theft, and predation. This immunity thwarts the nation-state and union tactics that flourished in the 20th century, potentially rendering government less relevant as a physical protector.
The authors argue that government will be no better equipped to protect bank balances in cyberspace than individuals themselves, forcing downward pressure on taxes. The cyber economy is poised to expose the welfare state to genuine competition, resulting in protection costs being significantly less than extortion.
In summary, the 20th century witnessed the rise of large-scale factories and centralized capital, making it vulnerable to predation through government taxation and union coercion. In contrast, information-age enterprises, operating in a decentralized, geographically agnostic, and less capital-intensive environment, can expect significantly lower taxation and coercion. Labor unions would diminish without large capital groupings to exploit, and governments would face downward pressure on their ability to tax beyond the cost of their primary service: protection.