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Who Wins in the Web Age?


Who Wins in the Web Age? 
 Internet Empowers the Little Guy, but Social
Gap Is Also Growing - `Frankenstein' and `Fahrenheit 451'  Have Been

Alan Murray
Article published in The Wall Street Journal, 27th June 2000 

It is difficult to live in the U.S. at the turn of the millennium and not be optimistic.  The constant threat of annihilation that was part of the Cold War has been eliminated. The once-confident predictions of American economic decline have been thoroughly disproved. And two centuries of dismal predictions about the dehumanizing effects of technology -- from Mary Shelley's "Frankenstein" to "Fahrenheit 451" -- have been discredited. 

Instead, the century that witnessed history's great struggle with communism and fascism has ended with a remarkable celebration of human freedom. The walls that separate nations have crumbled. Technology has not devalued individual human life; it has elevated it, creating new opportunities, new connections, new freedoms. The human imagination has not been suppressed; it has been liberated, in ways unimaginable even a decade or two ago. To be alive in America today is to face an exhilarating wealth of choices.  But what kind of New Society will this New Economy create? And, in particular, what will it do to the widening gap between rich and poor people, rich and poor nations, that is one of the most disturbing bequests of the final decades of the 20th century? 

The answer to that question is far from clear. For at war in the New Economy are two great myths -- the Populist Myth and the Monopolist Myth. And which is the more powerful remains to be seen.  

The Populist Myth is the most popular at the moment, favored by the editors of Wired magazine and countless other technology enthusiasts, who argue fervently that this new world empowers the little guy. A generation ago, there was a sense that the big corporations controlled our lives and ran the world; John Kenneth Galbraith's "The New Industrial State" was the defining text, and IBM was the corporate standard of the computer world. But then came Apple, started in a suburban bedroom, championing the notion of a personal computer on every desktop. The myth was captured in the famous advertisement that Apple aired during the 1984 Super Bowl, in which a lone female runner tossed a sledgehammer through the ominous screen visage of Big Brother. 

The Internet has strengthened the Populist Myth by democratizing information. Hierarchies, based on the upward flow of information, have been flattened. Anyone with a modem can gather nearly as much intelligence as the CIA, access nearly as much knowledge as resides in the Library of Congress in Washington, and play in the global marketplace on nearly equal footing with General Motors. Or so the myth contends. 

"When a majority of people get connected," says Steve Case, America Online's chief executive, "it will put the consumer in charge in ways that weren't really possible before. They can get the information they want, when they want, the way they want, on topics they care about. . . . It will give them more perfect information in a more perfect market." 

But in his courtroom in Washington, Judge Thomas Penfield Jackson has reminded all that countering this Populist Myth is a powerful Monopolist Myth. Companies like Microsoft or Cisco or America Online have acquired huge power and wealth at a pace that would make the robber barons of the Gilded Age blush. And amid the talk about empowering the little guy, already-giant companies are merging at a surprising rate. 

Scholars of the new economy talk of the "economies of scale" that rapidly propel today's businesses to such proportions. In software and network businesses, the costs of expansion are often small or nil, while the benefits from expansion are enormous. Such markets are thought to eventually "tip" to one or two big players and squeeze out the also-rans. If there is a big advantage to being the "first mover" in this world, as so many in today's business world contend, then there must also be an advantage to the people and the nations who are first to enjoy the benefits. And what does that leave for the latecomers? 

In a winner-take-all world, the losers don't have much to look forward to. 

James Wolfensohn is one of the optimists. As president of the World Bank, he can recite some of the grimmer statistics of the existing order. Half the world's people survive on the equivalent of less than $2 (2.13 euros) a day. Nearly a quarter survive on $1 a day. Over the past four decades, the gap between per capita income in the world's richest and poorest nations has doubled. 

Yet Mr. Wolfensohn believes the new technology has the power to alter that. Today's information technologies "change the nature of society, as is and will be happening in China and in many of the former countries of the Soviet Union, and as I believe can happen in Africa."  Much of the value of that technology, Mr. Wolfensohn contends, is as a tool for basic training. "If countries are to develop, they need to build capacity in governance, and they need to strengthen their legal, financial and other systems," he says. "It has become clear that just throwing money at countries where there isn't a structure doesn't make a lot of sense." 

Every Saturday morning, he says, 300 mayors in Latin America connect from remote locations to hear basic lessons on running a city government, taught via the Monterrey Institute of Technology in Mexico and sponsored by the World Bank. A similar program has been set up to help bureaucrats in African countries who are fighting corruption. The bank recently opened up 13 videoconferencing centers around the globe and by the end of next year will have as many as 100.  

"We are now doing 400 videoconferences a month, by satellite," Mr. Wolfensohn says. "We are putting computers in villages where the villagers want them, where they may not have water or power."  

He adds: "I am personally convinced that the use of Internet technology and modern communications technology will be a leveler in terms of opportunity." 

Mohsen Khalil of the World Bank says the economic benefits have already begun for some developing countries. He tells of the artisans in Kenya who, by marketing their goods over the Internet, have increased their export earnings to $2 million from $10,000. "This is a great opportunity to connect to the global marketplace," he says.  

Nicholas Negroponte, one of the leading thinkers on the digital world, goes even further. He says most people greatly underestimate the leverage that the Internet provides to those who now lag behind. He predicts that within a few years, the developing world will represent more than half of the traffic on the global Internet. 

"I'm a very optimistic person, so discount as you wish," he said in an e-mail interview. "But in the case of Third World leapfrogging, I have seen lots of it firsthand, notably in China, Latin America, and remote places like the nation of Nui. In fact, isolation adds even further incentive and explains some of the extraordinary statistics of Net usage in places like Iceland." 

But count Steve Woolgar a skeptic. He is one of the few who has actually attempted to study how these rapid technological and economic changes affect society. He heads up a multimillion-dollar, 25-university project called "Virtual Society?" that is funded by the British government and held its first conference in London this month. 

His main conclusion: "We have to do everything we can to combat what I call `cyberbole'" -- exaggerated claims about the effect the new technology has on society. Indeed, much of the research done by his group suggests the problems of social division in a society "far outweigh what the Internet can bring to them." 

Middle-class and professional people may be using the new networks to their advantage, but others aren't. One study, for instance, showed that cyberkiosks and cybercafes intended to expand access to the Internet were primarily being used by people who had access elsewhere anyway. Another paper, titled "They Came, They Surfed, They Went Back to the Beach", documents how the Internet is more of a fad for many young people than it is a source of empowerment. 

Mr. Woolgar gives a slide-show presentation that include quotes like the following: "Over the course of a few years, a new communications technology annihilated distance and shrank the world faster and further than ever before. A world-wide communications network whose cables spanned continents and oceans, it revolutionized business practices and gave rise to new forms of crime." 

The subject: not the Internet, but the telegraph, in 1840. "In the end, this will probably be like the telephone," Mr. Woolgar guesses. "This huge new revolution that didn't make much difference to existing social structures." 

William Dutton, a professor at the Annenberg School of Communications at the University of South Carolina, agrees. Since the beginning of the computer age nearly a half century ago, he says, some social observers have seen the computer as a force for centralizing power, while others have seen it as a democratizing force. In the `60s the former held sway; today, the latter do.
But both positions, he says, "are overly deterministic." Society's development depends on many other factors.  

If the history of the past two decades has taught anything, it should be that forecasting such things is a tricky business. Even a decade ago, no one came close to imagining the world we live in today. Why should anyone presume we can forecast the world a generation from now? 

But both the Populist Myth and the Monopolist Myth reflect important parts of this developing new world. In the end, says the World Bank's Mr. Wolfensohn, it's inevitable that some will benefit more than others. 

But overall, the new technologies ensure better opportunities for a larger number. More people will have more access to more information than ever before. And that information is power. 

(Adapted from the book The Wealth of Choices by Alan Murray, Washington bureau chief of The Wall Street Journal. Copyright 2000 by Alan Murray. Published by Crown Business, a trademark of Random House Inc.  Read more from the book, see video of the author and test your wealth knowledge at in the online Journal at



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