What Made - and Still Makes - Western Civilization Great

INSTITUTIONS AS TOOLS OR SACRED OBJECTS

The battle between social conservatives and progressives

In last week’s speech in Poland, Trump warned about a threat to Western Civilization. He mentioned “history” six times and spoke of          “the bonds of history, culture, and memory,” and “the bonds of culture, faith, and tradition.” Speaking for the right, Trump is proudly pointing to the West as having a superior tradition worth fighting for.

Douglas Murray, author of The Strange Death of Europe: Immigration, Identity, Islam, argues that the Left in Europe is essentially embarrassed to argue that their culture is really better than any other and authorities have actually looked away number of atrocities, including honor killings (families killing their own sisters and daughters because of their shame at who they’ve married) because it might seem racist to prosecute these as crimes.

So we have the Right arguing for tradition and the Left arguing for cultural relativism. The one would head backwards and the other would stand around awkwardly, apologizing for seeming to suggest that their ways are any better than that of any other people.

What seems to be missing is the appreciation for history without treating historical institutions as sacred or a culture as synonymous with race or nationalism (which it is not).

The West was seemingly the first to do something that set it apart and set it on the road to progress. This is worth defending.

INSTITUTIONS AS SACRED OBJECTS OR SIMPLY TOOLS

How we think about institutions defines our communities. Three ways to characterize the great institutions of the West like church, state, and bank are:

1       Sacred objects that must be preserved: this the attitude of the social conservative
2.      Obsolete objects that must be eradicated: this the attitude of the radical
3.      Simply tools that everyone should have access to: this is the attitude of the progressive

The debate in the West today is between social conservatives and progressives. The radicals who in past generations argued to outlaw religion (as the French Revolutionaries and Soviets did), financial markets (as communists throughout the world did last century) and even the nation-state (as anarchists have) are largely ignored in today’s political debates. Institutions separate us from the other primates and the real argument is not over whether we should have them but how we should treat them.

The most defining revolutions of the West were led by progressives and transformed these institutions:

1.      Church - the battle between Protestants and Catholics that gave us freedom of religion between about 1300 and 1700
2.      Nation-state – the battle between royalists and revolutionaries that gave us democracy between about 1700 and 1900
3.      Bank - the democratization of financial markets that gave us the American dream between about 1900 and 2000

Each revolution turned a dominant institution ruled by elites into a tool used by the average person. These were not one-time events. For instance, democracy was a revolution but it took centuries more to extend it from white, property owning Protestant men to even 18-year-old minority women. Early forms of religious freedom just gave you a choice between Catholic, Calvinist and Lutheran, not the thousands of denominations and religions (including atheism) available today. Like economic progress, this social progress isn’t something that happens one year and then stops; it is on-going and progress is as dependent on social change as it is on technological change.

Social conservatives are more likely to wonder about the intentions of founding fathers. If you see institutions as tools, though, the idea of protecting them from change is about as odd as insisting that Rudolf Diesel or Henry Ford never intended for us to drive cars with cup holders or GPS. Even if true it’s irrelevant to those of us alive now.

It’s difficult to understand how visceral is the reaction to Trump without understanding how differently social conservatives and progressives think about our major institutions.

FREEDOM OF RELIGION

First amendment:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

As it turns out, freedom of religion, free speech, a free press and political activism are all intertwined. Our founding fathers had genius enough to see that and packaged them into the same amendment. All have to do with freedom of thought but started with freedom of religion.

In 1302, Pope Boniface issued a bull that asserted his lordship over all of Christendom. By 1648 the Treaty of Westphalia essentially took away the pope’s power to dictate religion to a ruler and the ruler’s power to dictate religion to the people. The battle for freedom of religion played out between roughly 1300 and 1700 and gave us terrible atrocities like the Spanish Inquisition and the Thirty Years War that killed about ten percent of Europe’s population before reaching a resolution.

Had freedom of religion merely brought peace, that would have been enough. There is more, though. Once you’re free to choose your beliefs, you might just choose to base those beliefs on scientific evidence rather than religious revelation. As it turns out, freedom of religion allows scientific thinking to flourish.

In the early 1600s, the Church put Galileo under house arrest; by the late 1600s, England made Newton the Master of the Mint. Freedom of religion enabled the rise of science.

Progressives see in Trump’s travel ban targeted at Muslims not just a challenge to freedom of religion, which is reason enough to be upset. They see it as an attack on freedom of thought. Trump “knows” that Islam is the wrong religion and that climate change is not real and that he’s being attacked by “fake news.” Social conservatives see Trump as protecting their true and sacred religion; progressives see him as attacking freedom of thought.

DEMOCRACY

The next big revolution played out between about 1700 and 1900. At its beginning monarchs had absolute power and by its end those monarchs were either constrained by law or had been removed. The nation-state had become a tool for the average person and not just the elites. Rule of law and a representative government are foundational to democracy and both continue to evolve.

Newton defined laws that could apply universally to any object, from planet to moon to apple. His friend John Locke argued for laws that would apply universally to any person, from aristocrat to merchant to laborer. Laws that governed the natural world and should govern the social world were a focus of the Enlightenment thinkers who inspired democratic revolutions.

When Trump asks the head of the FBI not to investigate his National Security Adviser, this is a challenge to the rule of law, taking us back to the old system of personal privilege. When he leads a task force to investigate voter fraud (that all studies suggest is nonexistent), he is actually moving to make voting more restrictive. (Although he does seem rather sanguine about foreign interference, even if he’s trying to block Americans without photo ID.)

The invention of the car was dramatic but no one with a choice between a Tesla and a Model T would choose to drive the T. Like the car, democracy continues to evolve. If 1776 was the moment Americans “invented” modern democracy it is worth remembering that voting rights continue to expand to include more people over time. It took 200 years before the 18 year olds we sent to war could vote.

The real question is, who should be able to define the policies that define the community they live in? Put differently, is the government a tool for anyone to use or is it reserved for just a few? Progressives and social conservatives have very different answers to this.

THE AMERICAN DREAM

The most recent of our great institutions to be made a tool of the masses and not just the elites is the bank (or, more broadly, financial markets that include credit and investment markets). This access has helped people to become more affluent and more able to define their own lifestyle.

The levels of consumption that enable individuals to pursue the American dream would not be possible without modern capital markets. Warren Buffet argues that his upper-middle class neighbors in Nebraska live better than John D. Rockefeller did roughly a century ago. The cars, smart phones, TVs, and polio vaccines the average American now has rely on vast amounts of capital. The billions it takes to produce and purchase this vast array of goods would boggle the mind of any adult living in 1900, even John D. Rockefeller.

Access to financial markets gives the individual access to the American dream and the credit card and 401(k) account might be the simplest symbols of this broadening of access. Keynesian economics is another element of this revolution.

One of Keynes most overlooked insights into capital markets was this: capital markets could reach equilibrium before labor markets did. In other words, it was possible for capitalists to stop investing before a community reached full employment. If capital markets were just tools for elites, communities would have to accept this; if they were to be tools for the masses, communities would have to adopt policies that changed this. Keynes gave us options for this.

Unemployment during the Great Depression hit 25%; during the Great Recession, it peaked at 10%. One big reason for the differences in severity was the application of Keynesian stimulus; Bernanke did all he could to prop up credit markets to encourage investment and consumption. Like church and state before it, the bank has been made a tool for the average person. Interest rates were used to maximize employment, not returns to capital.

Social conservatives don’t like the Federal Reserve or its charter to subject financial markets to larger goals like employment. Again, as with church and state, they feel that what we’ve inherited is sacred and should not be changed. For them, Keynesian is a bad word. The battle between social conservatives and progressives over banking regulations and Federal Reserve policy often seems obscure but there is a reason that bank is the first part of bankrupt. The consequences of getting this policy wrong are severe.

INSTITUTIONS AS TOOLS

For centuries, progress has followed from letting more people have access to these great institutions, using them as tools for their own benefit. Life got better when our founding fathers extended the use of government from just aristocrats to landed gentry; it got better again when it was extended to women in the early 20th century and to minorities in the late 20th century. There is no evidence that progress now lies in the opposite direction, in restricting rather than broadening access to freedom of religion, democracy, and the American dream. The more that people have been able to use church, state and bank as tools for their own lives, the better the world has become.

The Real Story Behind Trump's Adulation of Putin (and why golden showers is a generous explanation)

Trump has been critical - even dismissive - of Reagan and George W. Bush, Obama and Clinton. Meanwhile, he's had nothing but good to say about Vladimir Putin. Trump's Secretary of State nominee, former Exxon CEO Rex Tillerson, challenged China's claims on the South China Sea in a way that led China's state controlled media to warn that this would led to war between the US and China. War. Mexico's peso has dropped since Trump's election. Trump has never said anything good about the Chinese or Mexicans or tried to appease them. Trump has had only good things to say about Putin and the Russians. Only good. The contrast between how he talks about American leaders and Russia's leader, between how he deals with China and Mexico and how he deals with Russia, could not be more stark.

So why does this matter? Isn't it true that it would be good for the US to get along with Russia, as Trump says? And isn't it an asset that Putin likes Trump?

In fact, it is alarming that Trump is so enamored of Putin.

First of all, Trump has expressed envy for Putin's ability to jail and kill political opponents and critical journalists. You might argue that there is no way that Trump can imitate Putin's dictatorial actions here in the US and I'll say that the very fact that he leans in that direction guarantees that he'll do things no recent president has done. But there is a deeper reason to feel revulsion towards Trump's adulation of Putin.

This is most succinctly captured in the Ukraine's situation.

Eastern Ukraine shares a border with Russia and many of its values. People there watch TV, are fond of strong leaders who don't confuse them with debates and subtleties, they're afraid of the disruption of capitalism and foreign trade and they distrust liberal values that challenge their religion, homophobia and misogyny.

Western Ukrainians aspire to become more integrated with Western Europe, are on the internet, like grassroots movements with all their chaos, uncertainty and debates, yearn for open markets and trade, and prefer science and minority rights.

Putin clearly wants the whole of Ukraine to again be under his influence. He's already invaded the Crimea, claiming that he has a right to do that because people there like him better. In July, the same month in which he won the Republican nomination, Trump stated that he would recognize the Russian "annexation" of Crimea, leaving the invasion unchallenged. A month later, the Trump team made only one change to the Republican platform, leaving everything else untouched. Their only change? They removed a pledge from the Republican Party to provide military assistance to the Ukrainian government against the rebels in the East, rebels supported by Putin.

Trump is doing everything Putin would want while continuing to praise a man Marco Rubio recently suggested was a war criminal (citing not only the massive number of civilians Russian bombs have recently killed in Syria but the 300,000 citizens Putin killed in Chechnya years ago). I actually think the notion that he's doing all of this because the Russians are blackmailing him over sexually compromising videos is one of the more generous interpretations of why he's so enamored of Putin. For people who really like the West and its direction over the last 500 years, the idea that our new president shares their appreciation for Western values but doesn't want people to know about his sexual perversions is a better explanation than that he thinks more like Eastern Ukrainians than Western ones.

I don't know if the Russians are blackmailing Trump. I think it's scarier if they are not, if the real explanation is that Trump truly prefers Putin's model of governance to that of Reagan, Bush, Clinton and Obama's. He's already shown contempt for a free press that would challenge him and expressed an on again, off again desire to "lock up" the woman who dared to run against him. He's got a narcissistic personality and sense of himself as uniquely special; these two qualities alone make him more like dictators than the traditional American president.

Will we ever find out whether Trump's actually being handled by the Russians? That outcome would actually make me feel more relieved than what I currently suspect: Putin doesn't have to do anything but be Putin to win Trump's admiration and friendship.

There is a Japanese proverb that translates to, "When the character of a man is not clear, look at his friends." Out of 200+ world leaders, Trump has already made it clear which one he feels a special affinity for. That should scare everyone more than sexual perversion.

The Deep Roots of America's Gun Culture

Along the 2,000 miles of border between San Diego and Corpus Christi, there are about 6,700 gun dealers. All on the American side, of course: guns are illegal in bullet-ridden Mexico.

Perhaps the reason that Americans love their guns has its roots deep in the collective history of Western Civilization.

The conservative impulse is always a desire for what once was, a pull towards some idealized past. This is not to say that it is at odds with progress: Renaissance thinkers sought to return to what they saw as the glorious past of the Greeks and Romans. They were not deliberately trying to create something new but were, instead, trying to revive the classical world that had died centuries before.

Conservatives try to retain what is – or even return to what they imagine once was. Religious conservatives feel a pull towards a past in which the church could define society. Social conservatives want to return to an imagined past in which social mores were more clear, were simpler, when mores were more moral.

Without understanding what came before the nation-state, one can’t really understand the love of guns in this country. It seems to have its roots in feudal Europe, a pull towards an idealized world that came before the rule of the state.

Few realize that feudal Europe was a world in which disputes were settled by, well, feuds. There was no recognized central government and if two families or regions or people had a difference, they settled it through negotiation, trickery, or force.

Although clergy were prohibited from carrying arms, everyone else was expected to be armed and prepared to defend himself. Rights were not guaranteed but had to be fought for and “war” regularly broke out between families, groups, and even individuals. Although this seems to us like anarchy, these feuds were one characteristic of feudalism.

Medieval society was closer to anarchy than anything we know of as a modern nation-state. Force was used to settle issues and anyone could wage war against anyone else. Feuds were common in this age of feudalism. If this seems primitive, American readers might do well to remember what happened to the chief author of the Federalist Papers, which did so much to define the United States. Even for him, law did not offer an honorable resolution to disagreement: Hamilton, the first American Treasury Secretary, was killed in a duel because Aaron Burr thought that Hamilton’s criticism ruined his candidacy. The bill of rights that included a right to bear arms drew from this earlier time of feuds when the individual distrusted government’s monopoly on power. Even this constitutional genius had more regard for honor than law; culture changes slowly and involves more than just reason. Although they didn’t use pistols, many a medieval man died as did Hamilton, although for them there would have been, for them, no alternative of resorting to law rather than a personal duel or feud.

Conservatives today have a love of guns because theirs is still an uneasy trust in the machinations of justice as administered by the state.

Now for us normal people, the thought of justice administered by force rather than law or reason seems unreasonable. And perhaps many conservatives would articulate the same thing. But in some deeper recess of their coerced social evolution, they still pull back from the idea of ceding power to faceless bureaucrats. The right to bear arms becomes sacred because it represents at a real and visceral level the last bastion of resistance against the monopoly on power that the state uses as the basis for everything else it imposes upon its citizens – from laws, regulations, and taxes. 

Social Invention & the Fourth Economy

1. Social Invention & Progress

In the earliest grades, children learn that technological inventions fuel progress. Things like the wheel, the iron plow, the automobile, and computer obviously made ours a different world.

Less obviously, social inventions are essential to progress. Tribes, city-states, nation-states, and international organizations have made it possible for larger groups of increasingly specialized people to cooperate to create a new world. Like microwave ovens, churches, governments, banks, and corporations have also made ours a different world from the one in which our ancestors lived.

We're about to enter a new economy, one in which the act of social invention (a broader application of the notion of entrepreneurship) will become as normal as the introduction of new products. At first, this will seem disorientating, but our grandkids will think it is normal. It will be a period of unprecedented prosperity and individual freedom.

2. Waves of Social Invention

Social invention often looks like revolution. When innovators change how people worship, or challenge the king’s authority, innovation will probably be violent. Indeed, the acceptance of change without violent resistance is a fairly novel experience in humanity’s history, and a big reason that the pace of progress is accelerating.

Social invention can occur in a wide variety of domains, from Macarena dance moves to currency arbitrage. Some of this innovation is random and in some of it one can discern a pattern.

Between about 1300 to 1700, a wave of social and technological inventions produced the first economy. As land, or natural resources, was the basis of wealth in this economy, one can simply refer to this as an agricultural economy. Technological inventions like the seed drill and steel plow enabled farmers to produce more and new technology like the compass made it possible for anyone to sell their products more widely, capturing a higher price as trade emerged across even oceans. Meanwhile, social inventions like Martin Luther’s challenge to the papacy and Henry VIII’s making himself the head of the Church of England were key to the eclipse of the nation-state over the church. This maelstrom of innovation produced an agricultural economy, the first market economy in lieu of a traditional economy.

Once natural resources were being traded widely (think of Italy without the tomato, Ireland without the potato, and England without tea and you begin to get a sense of how transformed Europe was by the flow of new products across oceans), the next step in creating value was processing. Wood and wool has less value than lumber and textiles. Processing natural resources into finished products was the work of the industrial revolution. This, too, required a panoply of technological and social inventions. Democracy did for the nation-state what the Reformation did for the church – dispersing power in the dominant institution outwards to a wider group.

In the last century, the most advanced countries have hosted the latest wave of technological and social inventions, culminating in the information economy. Technology like the computer and telephone, coupled with innovations like the modern corporation and university have produced the most advanced economy yet.

3. Social Evolution is Not Done Yet

But this most recent economy will not be the last. The pattern of invention and revolution since about 1300 suggests that we are on the cusp of one more wave of innovation. One more economy, one more society, has yet to emerge. As with every new economy before it, this one will transform our philosophy, our dominant institution, the social order, and the individual. And unlike the emergence of the first economy that took place over a period of hundreds of years, this one will emerge in about half a century.

Read the rest of the posting here at The Next Transformation.

Inventing Civilization - Again

Imagine you lived in a community with houses lit only by sky lights made of magnifying glass. The problem is, this design leads to fires as the light focused on objects causes them to spontaneously combust. If you lived in such a place, you’d likely be so busy fighting fires that you’d have little time or inclination to understand the design flaw, much less fix it.

Our society has reached a similar point. Our mental models – our view of the world – are such that many of our problems are actually structured into our society. We live in a fractured world that has been fractured by a fractured world view. Our society is based on the belief that if only each individual were to do what is best for self, society will automatically improve. Perhaps the most famous quote of Adam Smith’s is “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

In our fractured world view, we believe that if only schools focused more on excelling in education, society would improve. If only businesses focused more on profits, society would thrive. If only politicians focused more on legislation, society would be better. And so on.

But in fact, we’re all humans being human, as much as our institutions want us to pretend to be students or employees or citizens. As the systems thinker Russell Ackoff points out, to focus on play or work or learning in isolation is never as effective as allowing play, work, and learning to blend and interact. To improve a school’s education separate from some idea of how one would improve society as a whole is a meaningless exercise that ultimately leads to nonsense like a concentration on standardized tests. To focus on profits without focusing on improving lives leads to the oddly perverse process of claiming success even while destroying one’s habitat.
The basis for today's dominant world view traces back to Descarte's rules for thinking - a notion that the world is best understood by breaking it into pieces. If the individual pursues his own self-interest, or the organization pursues its own interest, the world will be made better. That mental model helped our ancestors to invent the modern world. That mental model has also been rendered obsolete by its own success.

What has happened in a world of 6 billion people, 200 nations, and 2 million corporations is that we've run out of room to engage in such a philosophy, to use such a mental model. It is as if we've prospered with moves that work only with considerable independence and elbow room, conditions that have faded.

One simple fact of economic development is this: the more advanced the economy the more interdependent. You can live independent of others, but your lifestyle will be like that of Tom Hanks' character in Cast Away - simple, crude, and fragile. As we enjoy more affluence, we increasingly depend on the ideas and technology, the work and products of others. Rarely is a product so simple that it can be made by a single person; more often what we consume is the product of corporations, of teams of people.

And yet our underlying philosophy is still geared towards an atomistic viewpoint, a construct that assumes the ability to work, live, and act in isolation. It is as though our all our models assume a vacuum and yet we live in wind tunnels. Many of our social problems have less to do with reality and our ability to address problems in reality than with how out of sorts are our social constructs, based as they are on mental models that are no longer effective approximations of reality. Global warming, for instance, is not techologically impossible or even terribly difficult to solve. It is a problem that traces back to the failure of social constructs as much as failure of technology - there are not even institutions responsible for this problem. The world we've invented includes few social constructs designed to deal with highly interdependent global realities.

Our reality is massively interdependent and full of emergent phenomenon - phenomenon that comes out of the interaction between two elements and not from the focus on any one element. Until we adapt a mental model to accord with this - and begin to design society in response to this reality - we'll continue to create our own most pressing problems.

The DNA of Social Evolution

DNA is coded by the sequence of four bases. I'd argue for a parallel in social development. At a high level, any society is defined by social order, its dominant institution, economy, and worldview. I'd argue further that a change in one of these has the potential to trigger changes in all, just as the purchase of a new software application might trigger the purchase of a new operating system which might trigger the purchase of a new computer system.



Social Order
The simplest indication of how a society is defined might be seen in its tallest buildings. In medieval Europe, the tallest buildings were cathedrals and churches. Later, castles, parliamentary buildings, banks, and corporate headquarters followed.

Since about 1300, there has been a succession of dominant institutions: church, state, bank, and corporation. In various times and places, the dominant institution is not necessarily the one that has the most physical power but, rather, the one that most structures and shapes the attention and goals of the average person. In 1100 AD, most people conformed their daily lives to the church. Today, it is no longer church bells but, rather, consumption and production of corporate goods that shapes the pattern of most lives.

Dominant Institution
A society dominated by the church is very different from one dominated by the corporation. But how power is distributed within the church or corporation also makes a difference. Quite simply, there are two extremes in the distribution of power within any institution: power held by elites or power distributed to the masses. It is one thing to live in a society dominated by the state, by politics; it is quite another to live in a dictatorship or democracy.

Economy
Agricultural, industrial, information, or entrepreneurial economies are very different, but all are market economies. An entrepreneurial economy is just now beginning to emerge. This emergence will have a sweeping influence, just as did the emergence of the information economy in about 1900 and the industrial economy in about 1700.

Worldview
This is perhaps the most subtle yet most defining of the four elements. How we make sense of the world defines so much else. And a worldview, like glasses, is made to be seen through rather than seen.

Since about 1300, the worldviews that have defined the West are the Renaissance, Enlightenment, and Pragmatism. Systems thinking is the set of glasses being adopted by more and more people.

Revolution
We rightfully call the change from agricultural to industrial economies an economic revolution. Intellectual, social, and institutional revolutions characterize the change of each of these elements. Western Civilization has thus far been defined by a pattern of revolutions, seen in the table above.

Moving into the Entrepreneurial Economy

The defining figure in an agricultural economy is the farmer with a hoe.
The defining figure in an industrial economy is the factory worker helping to manufacture back hoes.
The defining figure in an information economy is the engineer who works on design plans for the back hoe.

The work of the factory work can substitute for quite a few farmers. (You can see in the above graph that farm workers were about 80-some% of the working population in 1800 and about ~3% of the working population in 1980.)

The knowledge worker, too, can replace a number of factory workers. (Think about how a newly designed robot - the product of a knowledge worker - can replace numerous factory workers.)

My own vision of a movement into an entrepreneurial economy is that the portion of the work force categorized as entrepreneur will grow as did the factory worker in the 1800s and the information (or knowledge) worker in the 1900s.

Manufacturing in the 1500s involved little alteration to raw materials: wheat was ground, wool was spun, and grapes crushed and aged. Yet by the 1800s the processing was more sophisticated. Manufacturing assumes a mature market for raw goods - and the manufacturer uses raw goods as inputs to a process that creates more value than the mere trade of raw goods.

The information economy arose out of the complexity of the industrial economy. As machinery, products, processes, markets, and distribution became more complex, it created a demand for more sophisticated workers. Education that shared knowledge about principles in design, engineering, advertising, and sales became important in the creation of a skilled work force - the best jobs increasingly required university education. The information economy assumes a mature market for capital - and the knowledge workers use capital goods as the material to be manipulated into greater value just as the capitalists uses raw materials to be manipulated into greater value.

We now have a very mature information economy. This forms a great foundation for an entrepreneurial economy that could build on information technology. If entrepreneurship is about bringing together raw materials, capital, and labor (or, more specifically, knowledge workers), then it assumes information networks that make dynamic markets cost-effective. The information economy will be the foundation for the coming entrepreneurial economy.

One difference that will characterize the entrepreneurial economy is the role of the worker. Traditionally, a knowledge worker sold his / her skills to the corporation that transformed those efforts into value on the market in the form of goods or services. Entrepreneurs or managers were responsible for correctly orchestrating such efforts into projects and tasks that created market value; if they did well, these entrepreneurs and managers were handsomely rewarded. The entrepreneurial economy will change that arrangement. An increasing percentage of knowledge workers (a percentage that I suspect will not exceed 30 or 40% by 2050) will work as entrepreneurs themselves. By that I partly mean that they will offer their services through a dynamic market rather than a traditional salaried position. Their pay will be linked to profits from particular projects or activities. We'll have the corporate equivalent of self-organizing complexity rather than central, command and control economies.

This will drive further advances in information technology, just as the industrial revolution transformed agricultural and the information economy has transformed industry. And this change will simply be the start of a more complex change that will transform the modern corporation into something that looks more like an incubator than a bureaucracy.

This will change so many things about how we conceive of corporations today. This and related, required changes will disperse power outwards from paternalistic managers towards individual workers. It will create opportunities that don't exist today. And it will link to the driving force of progress throughout the history of Western Civilization - increased autonomy for the individual.

Time for a Populist Movement

The Rothschild brothers didn’t seem like elites when they began their career. Mayer Rothschild began his life living in a Frankfurt ghetto, forced to leave the sidewalk when even a young child ordered him to “Step aside, Jew!” But he was a successful merchant who had the vision to send four of his five sons to the most important cities in Europe.

Mayer's son Nathan Rothschild was in London when the English began their war against Napoleon. This war was incredibly expensive. Coordinating efforts with his brothers, Nathan was able to raise huge sums of money for the British government by selling war bonds throughout Europe – primarily through his brothers in Frankfurt, Paris, Vienna, and Naples. While helping to finance the British government, Nathan made the Rothschild brothers rich and famous. By the time of his death in 1836, he might have had more liquid wealth than anyone in the world. Because they helped to invent modern financial markets, the Rothschild brothers rose from the German ghetto to become elites with power enough to dictate terms to kings.

The Rothschild brothers and others like JP Morgan helped to pioneer modern financial markets. Then, in the next century, philosophers like Keynes, policy-makers like FDR, and business visionaries like Charlie Merrill and Dee Hock “democratized” financial markets, creating access to credit and investment markets for the people. Alan Greenspan or Ben Bernanke is supposed to manage interest rates and reserve rates so as to do what is best for the general economy and the average person – not just a few powerful bankers. Access to financial markets once reserved for the elites is now considered a right.

Martin Luther, John Calvin, Huldrych Zwingli, and John Knox were among the revolutionaries who wrested control of the church away from the elites and helped to put it into the hands of the people in the domain of religion.

Later, Louis XIV and Henry VIII help to pioneer the nation-state and then, centuries later, revolutionaries like Jefferson and Franklin wrested control away from the elites and into the hands of the people.

The swings between power held by the elites and the people seem to me inevitable. The elites pioneer and prosper. They are the social inventors who create the great institutions like church, state, and corporation. These individuals deserve fame and fortune. But once those inventions have become an integral part of the social fabric, along come revolutionaries who turn control of these inventions over from the elites to the people.

Next up for Western Civilization? Wresting control away from the CEOs, the last of the monarchs, and putting power into the hands of the investors, employees, and communities whose fate is so inexorably tied up in the actions of the corporation.

Am I a populist or an elitist? A Republican who wants the people’s interest represented by a trusted group of elites or a Democrat who wants the people to directly represent their own interests? At this point in history, I’m a populist, a Democrat ready to see the power of the powerful corporation dispersed.

Entrepreneurship Reaches a Tipping Point (Or, the Coming Popularization of Entrepreneurship)

"Don't ask yourself what the world needs; ask yourself what makes you come alive. And then go and do that. Because what the world needs are people who have come alive."
- Harold Whitman

Entrepreneurs gain autonomy by changing society. When Ray Kroc gets us to change our eating habits or Little Richard get us to change our dance moves, they get rich. Getting rich is part of what gives them autonomy, letting them do what they want. Often what they want to do falls into the category of more entrepreneurship. What Ray Kroc enjoys is building a burger empire and Little Richard loves singing and playing to packed auditoriums. While some of us build model train sets, entrepreneurs actually use social trends as building blocks to “live the life of their dreams,” as the get-rich advertisements put it.

The Beatles were entrepreneurs. They changed society by creating songs about love, consciousness, and Rocky Raccoon. They challenged social conventions.

Henry Crowell was an entrepreneur. When he completed his oatmeal factory in 1882, he had a problem. His factory produced twice as much oatmeal as Americans ate. So, he invented breakfast cereal, packaging bulk meal into 24 ounce boxes labeled with the familiar Quaker Oats brand. He changed eating habits.

Martin Luther was an entrepreneur. He changed how people worship.

We are used to a small elite group playing the role of entrepreneurs. This has defined our history ... so far. Historically, elites change society and the rest of us conform to it.

Entrepreneurship is, basically, an act of social invention and I think that its path will, in some ways, follow the path of product invention. We’ve only gotten good at product invention in the last century. Today, many companies can confidently plan projects that result in patents and new products - a notion that would have seemed preposterous to the inventor in his shop in the early 19th century. There are certain principles behind product invention. We’re less clear about the principles that define social invention, but I predict that within a few decades our attempts at social invention will look more like our current efforts at product invention. That is, we’ll regularly engage in such acts and often succeed at creating new organizations and social changes that change how we live. Groups will regularly and intentionally engage in social invention. We’ll see the popularization of entrepreneurship.

You can work hard to be a better factory worker. Discipline and effort make a difference. But it makes more difference if you change the definition of work, change the system in which someone can work to be disciplined and conscientious. An engineer can produce more value in a day than can a factory worker (who, in turn, can produce more value than a farm worker). An Industrial Revolution or entering an Information Age raises productivity of the disciplined and the not so disciplined alike.

We can try to conform ourselves to the systems as they now stand. We can try to be better engineers or marketing experts or what have you. But we can be more productive if we change those roles to those of entrepreneurs – expecting employees to create new organizations that have equity value. We’ll soon come to expect teams to collaborate in social invention just as we expect today’s teams to collaborate in product invention.

The popularization of entrepreneurship will mean that the individual will come into the world less expectant of finding a place in it than of creating a place in it.

What will be examples of this? The child with the learning disability will have all his learning adapted to his strengths instead of focusing on overcoming his disability. Rather than grade the child on his performance within the educational system, we will adapt the system to the child’s passions, flaws, strengths, and society’s values and markets. (One reason that the very idea of grading is so nonsensical is that it assumes that it is the individual who needs to adapt to an organization that is usually obsolete by decades rather than adapting the organization to the child who is alive and in the world today.) And the child with learning disabilities? That is all of us. Anyone can be made stupid by the right challenge or circumstance. Organizations of all kinds - educational or corporate - will increasingly be expected to adapt to the individual.

Entrepreneurs, finally, are people who look about the social milieu and see the possibility of creating something new. The act of inventing this new organization or social practice is itself an act through which they can create their own potential. Additionally, once they’ve completed their social invention, they now have a vehicle through which they can realize their own potential. After he helps to invent rock and roll, Little Richard can continue to perform within the form.

"Realize their potential for what?" you may ask. If it is an act of successful entrepreneurship, it is the potential to create value for the community. And in this we have the most delightful paradox - the individual can do the most for the community only by changing that community so that it better conforms to the individual.

Transform Self or Transform Society?

"We have become the tools of our tools," Ralph Waldo Emerson wrote some 150 years ago.

Think about the various ways in which we subordinate our goals to the goals of our tools - the institutions like bank, corporations, and nations that, presumably, are mere tools for humanity. People go through hell because of odd religious beliefs, suffer financial stress after banks give them money, and miss out on profitable opportunities because of work commitments.

One of my beliefs is that we're on the verge of a new economy, a social revolution. The Industrial Revolution did at least two things: it transformed that era's dominant institution (the nation-state of absolute monarchs) and it helped society overcome the limit of capital. Banks, bond and stock markets, and factories were all social inventions designed to overcome the limit to progress - capital - and their explosion in popularity defined the Industrial Revolution.

In the last century, another economy emerged. This Information Age transformed society's dominant institution (the financial market of robber barons) and overcame the limit of knowledge workers. The modern university, information technology and the modern corporation were all social inventions designed to overcome the limit to progress - knowledge workers - and their explosion in popularity defined the Information Age.

The new economy will not be designed to overcome the limit of land, capital, or knowledge work. Rather, it will be designed to overcome the limit of entrepreneurship. It will transform today's dominant institution - the corporation.

What is entrepreneurship? It is the act of social invention, of institutionalizing a source of value for the community. Steve Jobs and Henry Ford are entrepreneurs; less obviously, so was Thomas Jefferson and Martin Luther. They are to organizations what inventors are to products.

One element of entrepreneurship rarely commented upon is the relationship of the entrepreneur to the institution. Most of us conform our selves to the institutions in which we find ourselves; an entrepreneur founds an institution that they conform to the entrepreneur.

The economy of the last century was defined by the popularization of knowledge work. Think of the explosion in the levels of education from 1900 to 2000. In 1900, only a small fraction of the American population between the age of 13 and 17 was engaged in formal education; by 2000, only a small fraction was not engaged in formal education. Imagine a similar increase in entrepreneurship during the next fifty years.

The economy of this century will be defined by the popularization of entrepreneurship.

One consequence is the transformation of what it means to become better. Efforts to change the self - self-help, "becoming a better person," and realizing one's potential -- will themselves be fundamentally changed. Instead of working to conform the self to society, we'll be conforming society to our selves. I don't believe it is possible to overstate the implications of this shift.

Western Civilization has been defined by amazing institutions and the role of the individual has been to conform to those institutions. We are called up on to be good Christians by the Church, good citizens by the nation-state, fiscally responsible by the bank, and good employees by the corporation.

What if the average person were shaping institutions to realize his or her potential rather than conforming to institutions?

Will the Nation-State Be Obsolete by 2100?

I wonder if the nation-state hasn't outlived its usefulness.

City-states had largely disappeared by the time of the Enlightenment. By the time that Germany and Italy became nation-states in the late 19th century, most of the West had coagulated into nation-state form. A nation-state had more military power than a city-state and by eradicating trade barriers within the country, nation-states stimulated trade and prosperity. Conditions of the 18th and 19th centuries seemed to make the city-state obsolete; perhaps the conditions of the 21st century will make the nation-state obsolete.

In today's world, the nation-state seems increasingly ineffectual at dealing with real problems. It isn't particularly suited to the major issues of the present. Pandemics, terrorism, financial crisis, immigration, trade, economic prosperity and, of course, global climate change are all issues that thumb their noses at national boundaries. Already in Europe, nation-states are gradually giving more power over to the EU. I suspect that this is a trend (that will, as all such trends, suffer reversals).

It is difficult to think of what nation-states are still uniquely suited to do; they still seem to have a monopoly on starting truly horrific wars. We now have about 200 nations on this little planet. It's not obvious that we can afford for even 10 or 20 percent of them to be strutting around with nuclear-equipped armies. It might make sense to emasculate the nation-state before this creation of ours destroys us.

“If you said, ‘Let’s design a problem that human institutions can’t deal with,’ you couldn’t find one better than global warming.”
- Henry Jacoby, MIT School of Management