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10 January 2018

What is it about power?

As COSLA and Scottish Government’s Local Governance Review get underway, questions relating to power, what it is, where it resides, how it is exercised and the extent to which people are prepared to share it, will inevitably get a good airing. Some would argue that the very essence of power is changing, and even dissolving, as a result of the advent of digital networks and globalisation. Others argue that these influences have had quite the opposite effect. Jeff Mulgan, CEO of NESTA, shares his thoughts.




By Geoff Mulgan

A popular argument of the last 20 years – repeated in many books, op-eds and talks – claims that power has dissolved thanks to the combination of digital networks and globalisation. In one version power has been replaced by unpredictability. The bosses who once dominated great hierarchies are now timid servants of forces beyond their control. In another version power has been radically decentralised and passed out to us, whether in our roles as consumers, citizens or netizens.

These arguments were particularly well expressed in Moses Naim’s recent book The End of Power, which was loudly praised by Facebook’s Mark Zuckerberg.

His endorsement confirmed an odd pattern. The argument that power is disappearing is particularly popular amongst very powerful people. A couple of decades ago the argument appeared regularly in the speeches of Rupert Murdoch and the writings of Bill Gates, to name just two, at a time when both were immensely powerful and becoming more so.

So is the argument right? And why do powerful people like the argument that power has disappeared?

Let’s start by asking how convincing it is to suggest that power has diminished. Unfortunately there is no simple index of power concentration. It’s true that US presidents have less power than they did, especially when faced with a hostile Congress (though past ones couldn’t send drones at will to the other side of the world as President Obama can). But at a global level there are surely more, not less, strong leaders now than a generation ago. President Xi is the most powerful leader China has had for decades. Vladimir Putin in Russia and Narendra Modi in India stand out relative to their predecessors. Angela Merkel is the most powerful leader Europe has had for several generations. Contrary to many optimistic predictions, it remains all too possible to be a despotic dictator, just as it remains all too possible for them to stop their citizens accessing challenging material on the internet.

In business the disappearing power argument is equally tenuous. The average tenure of corporate CEOs has shrunk, as has the life expectancy of businesses. But seen in the long view there is probably now more concentration of power and wealth in business - particularly in the digital industries - than at any time since the late 19th century, when a previous generation of dominant firms grew to great wealth on the back of a previous wave of technological change. Estimates of the turnover of the top 1,000 companies worldwide, for example, show that they have a significantly larger, not smaller, share of world GDP.

These patterns have many causes. But the most obvious mistake made by advocates of the view that new communications technologies automatically promote decentralisation is that in reality technologies simultaneously strengthen both hierarchies and networks (I wrote a whole book on this 25 years ago, Communication and Control: networks and the new economies of communication). This is one of many reasons why Egypt is run by a strong-man, not by the social media savvy protesters of Tahrir Square, and why Wallmart and Amazon dominate US retailing and have huge power over their suppliers.

Network power

In many of these examples corporate and government hierarchies exert power within networks - and exercise new kinds of networked power. In the economy, network technologies enable economies of scale of a magnitude unimaginable in the industrial economy – the market dominance of a Microsoft or Google is of a different order to that of GM or GE in the 20thcentury. Easier use and combination of data tends to benefit the big and broad more than the small and narrow, even though both can gain. They also allow what economists call ‘economies of scope’  – the ability to achieve savings, and profits, by linking neighbouring fields through the same platforms (which is why Uber may come to dominate driverless car systems as well as taxis, just as Amazon has come to dominate so many fields of retail and software).

In all of these cases quite extraordinary concentrations of power become possible in networked economies. Entrepreneurs don’t usually seek this power, but they gain it as a byproduct of their core activity. And for those interested in power there is the chance to amplify it still further by using it to straddle different fields, linking business, finance, media, politics and philanthropy (as the careers of Berlusconi, Gates, Bloomberg and others have shown).

I’ll write in due course some thoughts on how these unprecedented concentrations of power can be harnessed for the common good. But here I just want to ask why the thesis of disappearing power is so popular, and particularly amongst the rich.

I’ve heard two, very opposite, explanations. The cynical answer is that today’s powerful want power without the responsibility. By claiming that any concentration of power is at best temporary, they disarm potential regulators, campaigners and legislators who might otherwise try to rein them in. If power really has been dissolved, who can reasonably hold them to account for any of the ills of the world? The intellectuals churning out books along these lines become the equivalent of what Lenin called ‘useful fools’, providing the ideological space for the powerful to do what they want.

A more benign explanation is that we would all like to believe in a world where power is distributed more equally, and today’s new rich, particularly the ones in digital land, are just hopeful idealists who are as vulnerable to wishful thinking as the rest of us. Many of the pioneers of Silicon Valley were very democratic in spirit, and suspicious of hierarchy and rules. They may have started out intertwined with big government, big business and the big military, but soon added an opposite ethos of hacking and opening up. It’s not surprising that many hoped that history was on the side of decentralisation, distributed power and flatter structures.


A similar optimism could also explain why so many people who aren’t powerful want to believe the argument that power is dissolving away. It’s not just that they’re gullible, though they may be. It’s also that the sight of huge concentrations of power in politics and business so offends our hopes and assumptions that we just want to wish them away.

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