The Twilight of Sovereignty: How the Information Revolution is Transforming Our World

Wriston, Walter B.

Chapter Three

The Global Conversation

Chapter Three

The Global Conversation



In the early years after the Russian Revolution, Leon Trotsky reportedly proposed to Stalin that a modern telephone system be built in the new Soviet state. Stalin brushed off the idea, saying, "I can imagine no greater instrument of counterrevolution in our time."

Wilson P. Dizard and S. Blake Swensrud in

THE PHILIPPINES HAS MANY COLLEGE GRADUATES AND NOT always enough jobs for them. Until recently they faced a hard choice: emigrate to a place where they can profit from their skills or stay home in a relatively menial, low paying jobs. Today they enjoy a new option. Stay at home and export the products of their minds over the electronic infrastructure of the global economy. Several U.S.-based Big Six accounting firms, for instance, now perform computer-assisted audits for American clients using customized software programs written by Filipino programmers and shipped via satellite back to the States. For some jobs the raw financial data is put online and shipped to the Philippines, where the books are audited half a world away from the company headquarters.

The Philippines is not unique. Indian programmers write millions of lines of code for such companies as American Express for use in data centers. Meanwhile, construction and engineering firms are using computer-assisted designs made in Taiwan to build structures anywhere in the world. All of


this work is done by skilled labor that has no occasion to apply for an immigration visa or a green card.

Geography and local conditions no longer condemn the intellectual resources of the provinces to chronic underemployment. Immigration quotas that bar physical travel have no effect on intellectual capital, since virtually the entire globe is bound together by an electronic delivery system -- including not only a revolutionized telecom system but a global network of satellite and broadcasting technologies, electronic markets and VCRs -- through which information, news, and money move from place to place with astonishing ease and speed.

This new electronic superhighway can transform the livelihood of a farmer in a small village on a faraway island nation or handle in a single day an exchange of financial assets that exceeds the gross national product (GNP) of most of the countries in the world. Telephones were only recently installed in several Sri Lanka villages. Until then, farmers had sold their produce to wholesalers for but a fraction of its market value in the capital city of Colombo. After the telephone came, the farmers always knew the prices in the city market and increased their income by 50 percent.[13]  Even such a simple manifestation of the power of a telecom network can change economic destinies and may start a train of political events of immense consequence.

The very same network in the past few years has revolutionized the way the world's money is traded. As late as 1973 the world money market, such as it was, resembled a giant telephone bee. Groups of traders sitting around banks of black telephones would dial up other traders or brokers with their bids and offers, laboriously shopping for the best deal. No matter how industrious the traders were, they saw only a small part of the market. In 1973 this all changed when Reuters replaced those black telephones with a video terminal, called Monitor, that assembled bids and offers from banks


and trading rooms all over the globe, displaying them on request for everyone on the system to see, thereby creating the first true global money market. Reuters and similar services provided by other companies have wrought a greater transformation in world financial markets in fifteen years than those markets had undergone in the previous centuries. As recently as 1980, the daily volume of trading in the foreign exchange market in the United States was estimated at only $10.3 billion. By 1989, this total had grown to an average of $183.2 billion per day.[14]  And the U.S. market is but one part of a global market, albeit a substantial one.

The telephone has been around for more than a century, and radio and television for several generations, so it is easy to imagine that the new network is not new at all and represents nothing more than a marginal, if significant, enhancement of an institution long assimilated to the economic and political structures of the world. Nothing could be further from the truth. The new global network is a radical innovation, fundamentally changed not only in quantity but quality from the system of but twenty years ago. Since our legal system is based on the written word, the telephone was viewed with some skepticism by governments and courts. The question of whether or not an oral contract, if made by telephone, was valid took years to adjudicate. Today foreign exchange contracts of up to one year -- absent fraud -- are routinely binding. To guard against fraud, every trading room keeps a record on tape of all conversations over the network so that there can be no dispute about what was said.

Practically speaking, even ordinary international telephone service -- regular voice lines, nothing fancy -- is barely more than a generation old. The first transatlantic cable capable of carrying telephone voice transmissions was not laid until 1956. It could carry a grand total of thirty-six very expensive conversations at one time. Quality was frequently poor, too poor for transmission of complex nonvoice messages, such as the computerized data used by electronic markets.


Moreover, data transmission uses much more cable capacity than does voice; in 1956, any attempt to move data on transatlantic cable would have quickly clogged every available line.[15] 

In the 1950s and 1960s the difficulty of getting a telephone connection from Citibank headquarters in Brazil to world headquarters in New York was monumental. There were so few international lines available that it could take a day or more to get a circuit. Once the connection was made, people in the branch would stay on the phone reading books and newspapers aloud all day just to keep the line open until it was needed. The local situation was hardly better. Citibank had to hire squads of Brazilian youths, whom we called dialers, who did nothing but dial phones all day in hope of getting through.

It was not possible to build a truly global economy under such conditions. The global information economy lives on the phone: In all the leading industrialized economies telephone density now approaches one telephone per person. Yet as recently as the mid-1960s, France, West Germany, Italy, and Japan all had fewer than fifteen phones per hundred people. An American tourist might have been surprised to discover that his Naples hotel room lacked a phone or that a French acquaintance's only home telephone was the public one on the street corner. Today over 100 million telephone calls, utilizing some 300 million access lines, are completed worldwide every hour. It is estimated that the volume of phone transactions will triple by the year 2000.[16]  As late as 1966, the transatlantic cable could still handle only 138 conversations between all of Europe and all of North American at any one time.

Then came a dramatic series of technological developments. In 1966 a new and vital satellite link in the global net was positioned in a geosynchronous orbit over the Atlantic. At an altitude of 22,000 miles above the equator, satellites take exactly one day to complete a revolution and so remained


fixed over the same spot on earth. As both governments and private companies developed better use of the electromagnetic spectrum, the capacity of satellites has increased by a factor of about forty-five and counting. Meanwhile, back on earth we were still practicing a nineteenth-century concept of sovereignty expressed in a statute passed by Congress on May 27, 1921, mandating "that no person shall land or operate in the United States any submarine cable directly or indirectly connecting the United States with any foreign country...unless a written license to land or operate such cable has been issued by the President of the United States..."

While the president contemplates the wisdom of issuing a license, his country is "connected" to every "foreign country" by myriad channels over which he has little, if any, control.

In 1976, the sixth transatlantic cable was laid. Using new technologies, it could carry four thousand conversations at once, a real breakthrough in capacity. The first fiber-optic transatlantic cable, laid in 1988, could carry forty thousand conversations at once.[17]  In the early 1990s the world will have almost a million and a half voice-capable intercontinental circuits at its disposal.[18] 

A hefty portion of those circuits travel via geosynchronous communications satellites, which in the past twenty years have become an essential part of the world communications infrastructure. Other crucial technological advances include dramatic increases in cable capacity and switching efficiency and sophistication. Fiber-optic cable, which bears light impulses over "glass" fibers can carry far more information than copper wires bearing streams of electrons. Electronic switches -- essentially specialized computers -- replaced the old mechanical arrays, cutting costs, increasing capacity, and facilitating "multiplex" switching, the practice of sending several conversations over the same circuit simultaneously.[19] 

This completely new telecom system has already made a global market in such easily digitized phenomena as money


and securities, computer programs and engineering designs. But the combination of the new global telecom system with advances in other communications media is creating a world market not only in every other sort of economic product and service but in culture and entertainment, fashion, and even government. It has made a reality of Marshall McLuhan's global village by drawing nearly all the world into a single global conversation, one that now assesses, approves, and disapproves globally products and services, institutions and ideas, that once were evaluated primarily on local markets.

Markets are voting machines; they function by taking referenda. In the new world money market, for example, currency values are now decided by a constant referendum of thousands of currency traders in hundreds of trading rooms around the globe, all connected to each other by a vast electronic network giving each trader instant access to information about any factor that might affect values. That constant referendum makes it much harder for central banks and governments to manipulate currency values.

In the same way, modern communications technologies, including the vast expansion of the telecom network, VCRs, electronic data bases, ever cheaper and simpler techniques for collecting and broadcasting the news, and the fax machine, are creating a global market that takes constant referenda on what in many ways is beginning to look like a global culture. While hundreds of thousands of financial specialists now have instant access to economic and financial news, hundreds of millions of people around the world are plugged into a single network -- albeit with local interests and subdivisions -- of popular communication. All of a sudden, everyone has access to everything. CNN news is available to a huge portion of the world's population. Tens of millions of Chinese and Indians, Frenchmen and Malays, are watching "Dallas" and the "Honeymooners," which in their way may be more subversive of sovereign authority than CNN. The people plugged into this global conversation are voting -- for Madonna and Benetton,


Pepsi and Prince -- but also democracy, free expression, free markets, and free movement of people and money. Indira Gandhi is said to have remarked that in the Third World a revolution could be started when a peasant glimpsed a modern refrigerator in a TV sitcom, a remark that almost perfectly sums up the power of the global culture market.

This market, of billions of plugged-in "culture traders," is now the most powerful social and political force in the world. It is at the heart of the breakup of communism and the unification of Europe. The fear of global culture market is one of the powerful motive behind the emergence of the Islamic republics and their desperate drive to cut their people off from modernity.

Not everyone is fully plugged in to the global conversation or equipped to take full advantage of it. Those who fully participate in the information economy benefit most from it. The global network is the essential infrastructure of that economy, and its use promises to make its users into a single worldwide community sharing many tastes and opinions, styles of dress, forms of government, and modes of thought. These people, on the whole, will be internationalists in their outlook and will approve and encourage the worldwide erosion of traditional sovereignty. They will feel more affinity to their fellow global conversationalists than to those of their countrymen who are not part of the global conversation. These latter will have little at stake in the global conversation and may come to hate it and those who participate in it as they realize that in all this talk they are rarely mentioned and then only as a social problem. All technological progress has created social problems, and the information revolution moving over the global network is no exception. New skills and new insights will be required to survive and prosper, and those who do not or cannot adapt will be left behind with all the social trauma that entails.

The global network is often viewed as a mixed blessing by governments. Yet it is the one path to prosperity in the


global information economy. Now that there are global markets in money, in information capital, in a steadily growing portion of the world's products and services, and even in human intellect -- all utterly dependent on the new world communications network -- no nation can hope to prosper in the future unless it is fully hooked up to the network and its citizens are free to use it.

A nation can walk this path to prosperity only if its government surrenders control over the flow of information. In the world we are building today it is almost impossible to assert sovereignty over information because information and the pathways over which it travels, including the heavens themselves, are shared in common. The sovereign can, at enormous cost, cut his nation off from some of those shared pathways by shutting down the international phone circuits or shooting anyone caught with a fax machine, a radio, or a tiny satellite dish. Even then he cannot succeed entirely. When he is finished, he will be ruler of Albania.

Fax machines and computer-driven telephone switches came to China because the Chinese rulers wanted a modern economy; within months they became an infrastructure of revolution. That revolution was brutally suppressed, but the leadership has not found -- and never can find -- a way to build an information economy in a closed society.

In the West we are well used to a free market in public attention: Publishers, producers, and politicians all know that they must persuade the audience to lend its ears and eyes, which means giving the audience what it wants. This may not always be good for high culture, but the competition of ideas makes a propagandist's life difficult.

Recently a young Chinese filmmaker made a documentary about the Chinese army which found its way onto cable TV. The film shows exhilarating and terrifying scenes of a tank division training in Mongolia -- impressively uniformed and disciplined troops responding to the call to battle, mounting their tanks and getting a division on the roll, it seemed, in a


matter of minutes. But the very next scene the same troops, now stripped down to T-shirts and fatigues, their change in costume revealing them for teenage boys, break dancing to American music blasting from a boom box. How well can patriotic indoctrination work when it faces such an open competition from competing entertainments? It has been said that the sixties generation sung America out of Vietnam. Will Chinese soldiers dance their way out of the next Tiananmen Square?

Satellites have been perhaps the principal force in altering the "balance of information power," tipping it away from the state and toward the individual. Until 1986, Landsat, with its thirty-meter resolution, offered the only commercially available photographs from space. Then there was the launching in February 1986 of the privately owned French satellite SPOT, with a ten-meter resolution. The Russians then entered the fray by offering to sell to anyone with the cash their best-quality imagery with a five-meter resolution. The U.S. government was forced to reverse its policy and permit American private companies to own high-resolution satellites. This in effect removed the de facto censorship of the photos taken by Land stat and loosened one more sovereign prerogative. It is not beyond the realm of possibility for American or other new agencies to purchase their own high-resolution satellites; indeed, it would be a good deal less expensive than covering the Olympics.

Satellite communications, combined with innovations in video recording technology, are turning the entire world into a local news beat. Until the mid-1970s no one had ever heard of "minicams," the relatively inexpensive portable video cameras that record sound and picture on a tape cassette. Minicams can and do go anywhere and have eliminated cumbersome cables, thousands of pounds of equipment, and the time needed to process film and transfer it to tape. Equally important has been the advent of the mobile satellite hookup, by which a portable camera, linked by but one cable to a


mobile video truck, can send sound and picture first to a local TV station and from thence to a satellite and around the world.[20] 

These two technologies have dramatically speeded and expanded television reportage. In the 1970s fewer than half of all television news stories were shown on the day they happened. Today, except for in-depth "magazine" features, nearly all news is broadcast the day it is taped. In the early 1970s it cost $4,000 to get a line to send television material from Seattle to New York. Today, by satellite, it costs about a tenth as much. Governments could once count on knowing more about sensitive international events than their citizens. Now they often find themselves following those events on television. A CNN monitor sits in the corner of all government crisis-management centers of the U.S. Government.

Satellites have also vastly increased the reach of television broadcasts and made it so difficult for governments to interdict suspect programming that many of them have stopped trying. CNN is now carried to one-third of the earth's surface by Soviet-built and controlled satellite.[21]  It was available, relatively freely, in the Soviet bloc even before the revolutions of 1989.

In fact, incoming Western broadcasts reassured the dissidents in Eastern Europe that the world was following their struggles and helped them focus and amplify their message. Even state-controlled news broadcasts, in an attempt to retain their credibility and their audience, became steadily more candid. All these factors were crucial to the events of 1989. As Timothy Garton Ash, a prominent English journalist who recorded the Eastern European revolutions of the 1980s, has written: "Both externally and internally, the crucial medium [of the revolution] was television. In Europe at the end of the twentieth century all revolutions are telerevolutions."[22] 

Despite the over-the-air broadcasts, the Ministry of Truth's toughest competitor in the global culture market may be the VCR. These machines and the tapes that play in them have been licensed, restricted, regulated, taxed, censored and even


banned by so many countries so vigorously that the campaign against them makes the history of print censorship seem like an ACLU (American Civil Liberties Union) workshop. Nevertheless, in almost every country in the world, including the Soviet Union and the Islamic republics, people have easy access to machines and tapes and can watch almost whatever they choose.[23]  Vigorous competition from VCRs is clearly weakening state control of broadcast television. Western movies or TV series get better audience share than endless speeches from the leader or hygienic dramas. In the early 1980s, East Germany began to show Western films so as to compete with both VCRs and West German TV. In Tanzania, which has long suffered under a particularly draconian form of socialism administered by Julius Nyerere, television was banned altogether for years, though people did tune in to foreign broadcasts on illegal sets. When VCRs came on the scene, illegally, they proved too popular for the government to control. Within a few years the government relented, lifting the ban on VCRs and permitting people to receive foreign broadcasts on their TVs.

These machines can also have more direct and explosive political effects. Within days of the 1983 murder of Benigno Aquino, the long-outlawed and exiled political rival of Ferdinand Marcos, the Philippines were flooded with smuggled videotapes of the assassination at Manila International Airport. At least one of the original tapes was smuggled in camouflaged as a pornographic film. Philippine TV and press coverage of the assassination had omitted video footage implicating Filipino security forces in the murder. The smuggled tapes carried that footage as well as investigative reportage from news organizations around the world linking the Marcos government to the murder. The tapes did much to arouse the Filipino middle class, until then fairly complacent, against the Marcos regime, demonstrating that apparent control of the nation's broadcast system no long protects governments from the power of the video image.

Once a nation is linked to the network, it is very difficult for its rulers to control how the network is used. Stories of electronic surveillance in the now dismantled Soviet bloc are common enough. But in reality the Soviet government suppressed the flow of information not by tapping everyone's phones but by keeping most people from having them. The Soviet phone system is dismal. Even in the cities only 23 percent of Soviet homes had telephones in 1985, in rural areas the figure was 7 percent. Even many state-operated facilities such as collective farms and rural hospitals had not a single phone. It can take hours or days to make a domestic long distance call; international circuits are scarce, expensive, and restricted, with only fifty lines to the United States as late as 1987.[24] 

There is no greater proof of the tremendous economic importance of plugging into the global network -- and of building an adequate version thereof at home -- than the risks the Russians now seem willing to take to rectify this situation, thereby surrendering what has been a linchpin of Soviet power for three generations. According to official figures, Russian telecom expenditures are increasing by double-digit percentages. The government has established a goal of having 90 million phones, or one for every three people in the nation, by the end of this century. In part this growth is required by the decision to move in the direction of the market economy. As centralized planning is replaced with networks of market relationships, factories, suppliers, distributors, and retailers, and their computers will have to be able to talk to each other.

When everyone in the nation, at least potentially, can join in a single national conversation, there are only two ways in which a government can maintain its power: It can allow its policies to be guided by that national conversation and so keep the confidence not only of "the people" but also of the bureaucrats and the army. But a government that consents to be so guided has become in some sense, however attenuated, democratic and is likely to keep moving in that direction.


The other way to keep power is to revert to a level of repression that even totalitarian regimes find inconvenient, that in an age of instant information brings world opprobrium, and that over time will guarantee economic, technical, and -- finally -- military decline.

The control of information is the bedrock of both totalitarian regimes. The Soviets for decades devoted enormous resources to control radio and television, printing presses, photostat machines, and even mimeograph machines. Certainly some information -- political ideas, news about life outside the Iron Curtain, et cetera -- always circulated within the USSR. But neither the volume of the information nor the freedom of its circulation was great enough to support any coherent resistance -- even peaceful resistance within the Party -- to Communist dogma. As a Russian émigré friend once strikingly told me: "It is quite possible for an entire country to know it is being lied to and yet not have any clear or useful idea of what the truth might be."

Now it is much more difficult to sustain the lie. That is the key to the events of 1989. Though Communist ideology had long lost its moral and intellectual power, as late as the 1980s people were required to pay public obeisance to it, with the result that nearly everyone was leading a double life, saying one thing in public and another in private. However the people of Eastern Europe might have despised the public lie and their own complicity in it, that lie still blocked a candid national conversation, "the public articulation of shared aspirations and common truths," as Garton Ash puts it. That is why public witness to the truth was so critical to the revolution, why words defeated tanks: The implications of the global conversation are about the same as the implications of a village conversation, which is to say they are enormous. In a village there is if not exactly a free and efficient marketplace of ideas, then a rough-and-ready sorting of ideas, customs, and practices over time. Certainly a village will quickly share news of any advantageous innovation; and if anyone gets a raise or a favorable adjustment of his rights, everyone similarly situated will soon be pressing for the same. And why not? These people are just like you and me, the villagers say. I can see them and hear them every day. Why should I not have what they have?

The global conversation prompts people to ask the same question on a global scale. In the past the educated elites could read about democracy or capitalist prosperity. But hearing or reading of such things is not at all like having them happen in your village, happen to people you can see and hear, people just a few streets or broadcast frequencies away. A global village will have global customs. In a global village, to deny people human rights or democratic freedoms is not to deny them an abstraction they have never experienced but the established customs of the village. It hardly matters that only a minority of the world's people enjoy such freedoms or the prosperity that goes with them. Once people are convinced that these things are possible in the village, an enormous burden of proof falls on those who would deny them.

Though the global conversation generally advances both the world economy and civil and democratic rights, all will not participate equally. Vast regions of the earth, mostly within the Third World, have been cut off from the information economy not only by political repression but also by lack of the cultural and political infrastructure of a modern


society. Building these skills and structures is no easy task, but no more so than the transformation from an agrarian to an industrial society.

No one has to tell people in the favelas of Latin America or the huts of Africa that their authoritarian "command and control" economies have failed to give them even the hope of escaping from grinding poverty. The TV antennas that sprout from even the poorest settlement capture images from the global network of another way of life, one that promises to mitigate but not eliminate disparities of wealth and power. These people are ill equipped to participate in the miraculously powerful engine of wealth creation that is the information economy. Those who are without the education to participate in the knowledge society are not limited to the Third World. In the United States only one-fourth of the work force under forty have finished college, with another quarter having technical training. The half of the population that is not equipped to join the information society can nevertheless find jobs produced by the economy. Peter Drucker has pointed out:

There is thus a real need to make non-knowledge jobs, many often requiring little skill, as productive and as self-respecting as possible. What is needed, above all, is to apply knowledge to such jobs as cleaning floors, making beds, or helping old, incapacitated people take care of themselves.[26] )

The information economy thus poses social and economic problems for both the developed and developing nations at least equal to those faced in the last century.


[13] Robert J. Saunders, Jeremy J. Warford, and Bjorn Wellenius, Telecommunications and Economic Development (Baltimore: Johns Hopkins University Press for the World Bank, 1983), p. 19.

[14] Federal Reserve Bank of New York, Summary of Results of U.S. Foreign Exchange Market Survey Conducted in April 1989, Released September 13, l989.

[15] E.T. Mottram, "First Transatlantic Telephone Cable," Bell Laboratories Record, February l957, pp.41-47.

[16] Bruce Dougherty, Presentation to Tandem Computers board of directors, l990.

[17] Kenneth Dam, "The Global Electronic Market," Paper presented at the IIC Conference, Washington D.C., 1988.

[18] Ibid.

[19] Industry Basics (Washington, D.C.: North American Telecommunications Association, 1986), pp. 17-19.

[20] Oswald H. and Gladys D. Galley, Inform or Control, 2nd ed. (Norwood, N.J.: Ablex Publishing Corp., 1989), p. 59.

[21] Stuart H. Loory, "News from the Global Village," Gannett Center Journal, Fall 1989, p. 167.

[22] Timothy Garton Ash, The Magic Lantern (New York: Random House, 1990), p. 94.

[23] For an excellent discussion of the worldwide spread of VCRs and the political implications thereof, see Gladys and Oswald Ganley, Global Political Fallout, The VCR's First Decade (Norwood, NJ: Ablex, 1987), p. 4.

[24] For an informative study of the current state of Soviet communications and the implications of the former Soviet government's commitment to change, see Wilson P. Dizard and S. Blake Swensrud, Gorbachev's Information Revolution, Center for Strategic and International Studies (Boulder, Colo.: Westview Press, 1987).

[26] Peter Drucker, The New Realities (New York: Harper & Row, 1989), p. 190.