Keynote "Learning Across Boundaries: Exploring the Diversity of Systemic Theory and Practice". Presented at the 58th Conference of the ISSS at GWU School of Business at George Washington University, Washington, DC., from the 27th of July to the 1st of August, 2014.
Text of On Network Capitalism, Ernesto van Peborgh, ISSS Keynote, George Washington University, July 2014
58th. Conference of the ISSS July 2014
On Network Capitalism By Ernesto van Peborgh
This is Paul Baran, a Polish-American engineer who was a pioneer in the development of computer networks.
At the most critical and tense moment in the Cold War and in the face of an imminent nuclear attack, the Department of Defense of the United States asked Baran to develop a means of communication capable of resisting a such attack.
His logic evolved from that of a centralized network to a distributed one. These are the drawings Baran published in his work On Distributed Communications.
He was able to prove that, even when 50% of the distributed networks nodes were destroyed, the system did not collapse. Whats more, it was much more resilient than the previous network.
by Paul Butler Fifty years later, humankind has braided itself into a networked of interconnected minds. This is Facebook almost 1.5 billion people connected exchanging knowledge, ideas and solutions without pause. by Paul Butler
by Paul Butler This photograph marks the change and speed of the times. In just eight years, each one of us is carrying an amazingly high-tech communications device connected to a cloud of minds. ! Vatican City, 2007, Benedicto Vatican City, 2013, Francisco
Our underlying Matrix has evolved, as Barans did. We are standing on a new behavioral matrix for humankind, and this affects all our social, economic and cultural processes. !
2007 Time magazine clearly illustrates this with its person of the year; in 2007 We (You, Me) became the person of the year Broadcasting shifted into the hands of citizens, we acquired the ability to reach the world from our computers. A Home computer had the same communications potential as a TV Broadcasting Channel, both in audience scope and editing capabilities.
2011 In 2011, the same magazine shows a new character: the protester, a person who understood how social networks could be used for organizing oneself differently it began with the Indignados in Puerta del Sol, Tahir Square, Zuccoty Park with OWS, and recently in Brazil. Below the traditional medias radar are people organizing themselves to generate a change.
Our socioeconomic and cultural structures dont change in a linear manner they do so in exponential leaps. We are now experiencing new normals: knowledge and communication capabilities that did not exist ten years ago, today have become a necessity. WhatsApp was hardly known six months ago today its valued at US$ 19 billion and over 500 million people using it. Towards a new balance system 2000 2010 2020
We drive into the future using only our rearview mirror. Marshall McLuhan
Marshall McLuhan, perhaps the nest theorist of communications in the last century, said that we go towards the future gripping the rearview mirror, because we cant, we are unable or we dont want to see that the world has changed and we are unable to leave the ancient logic.
At present a new communications and organization matrix is replacing our logic. As a result, a new cosmology rules our social order and this change has essential implications for our culture and our socioeconomic structures.
This change in the matrix will have a deep impact on the structure of one of the most powerful forces dominating humankind capitalism.
Capitalism is at a crossroad .or so the Capitalists are saying.
Thinking Capitalism as a System In order to understand its scope and assess its effects, we need to analyze it from a systemic perspective. Thinking of capitalism as a system will enable us to understand how a change in its underlying matrix impacts its morphology and workings.
Elements Interconnected PurposeSystem = * * A system is a group of interconnected elements that fullls a purpose
Elements Interconnected PurposeSystem = * * ! The systems theory argues that when one of the elements is changed there is a change in the system. A change in the system triggers feedback loops that again change the elements and again change the purpose. !
Elements Interconnected PurposeSystem = * * ! We are in the midst of the greatest interconnectivity process ever experienced by civilization in such a short time. ! The I is what is driving the system at this time. !
The great difference between these two paradigms is interconnectivity. In the one on the left everything has to go through a central node. ! ! How will that affect capitalism?
Our organizations all the companies all our communications in the last century were based on this matrix logic.
This centralized structure not only enabled the accommodation of the hierarchical rationale and power dynamics of capitalism, but also drove its vertical integration and economies of scale.
Interconnectivity is limited, since communication ows must pass through the central node.
Broadcasting replicates this logic: It consists of mass messages issued from a powerful power central node to passive nodes which do not communicate with each other and which receive the message without being able to modify or retransmit it.
Our new distributed matrix on the other hand, has far ampler and deeper possibilities and derivations, not just at the communications and organizational levels, but also because of the potential generated by the interaction among the networks nodes.
In the distributed matrix communication ows independently of the nodes, as Paul Baran demonstrated with his experiment.
Elements Interconnections Emergent A systems greatest property is not found in its separate elements, but that which emerges from the system. The emergent is the systems unique property. ! Emergence is the systems unique property
Elements Interconnections Emergent properties are found for example in Water: oxygen and hydrogen cannot separately achieve the properties of water. ! H2 O Emergent
We are in the midst of the greatest interconnectivity process ever experienced by civilization. by Paul Butler The I is what is driving the system at this time.
It is impossible for Capitalism to remain outside the impact of this matrix structure. As an open system it shall necessarily be affected in its logics and primordial function. The dramatic changes we are experiencing in interconnectivity imply a dramatic impact on Capitalism as a system.
Internet of knowledge Internet of Collaboration This impact can be analyzed from a dual perspective: the Internet of knowledge and Internet of Collaboration
Internet of knowledge
Elinor Ostrom was awarded the Nobel Prize in Economics in 2009 On the basis of tools present the Web 2.0 she resolved some Governance issues of what is known as the tragedy of the commons. What is the tragedy of the commons? Any system human beings use, where the benets are individual, but the cost is shared among everyone, deteriorates: a meadow, a shing area, an irrigation area, the oceans, the Amazonia, the planet This lady installed in our agendas a new governance system which goes beyond the State and the Markets.
In her new book, Understanding Knowledge as a Commons Ostrom argues that there is an emergent in the networks which is being created by humankind a collective knowledge which is a commons available for everyone.
Networks are not just about interconnectivity between persons (which is what traditional marketing seeks) but the emergent of this system, which is a new capital. Its a social capital that didnt exist 4 or 5 years ago, which today is available for everyone and which may be managed from system level.