Cyberspace vs. the State


The information superhighway is a revolution that in years to come will transcend newspapers, radio, and television as an information source. Therefore, I think this is the time to put some restrictions on it.

— Sen. James Exon (D-Neb.)

My partner Jane Metcalfe and I started Wired magazine because we believed that a revolution was occurring, one that was more profound than any that had preceded it, one that made the Russian Revolution look like schoolyard games. But this revolution wasn't being driven by the politicians and the generals, the priests or the pundits; it was being made by the people who create and use digital technology.

Wired is inherently future-friendly, not because technology itself makes for a better future, but because, as Stewart Brand has put it, people who feel the future is malleable are more likely to take responsibility for it, to think about their choices more.

We launched Wired — a garage start-up, without the backing of any media company — in early January 1993. At the time, its future was anything but clear. There was no Web. There were hardly any CD-ROMs. In the month we began publication, Al Gore's "information superhighway" was so unheard of that there were only 13 mentions of it in the entire national press.

At the beginning, there were skeptics. From Folio, the magazine of the magazine industry, on 1 March 1993, just after our launch:

"The definition of a good magazine is not how beautiful the graphics are or how literate the writing is," says Peter Craig, president of the Los Angeles-based Magazine Consulting Group. "The definition of a good magazine is a magazine that makes money. My impression is that people want service and information — they are not interested in the lifestyles of computer nerds."

Dan Orlow, president of Periodical Studies Service in New York, is even blunter in his assessment: "I don't see it as a wave of the future; it's more of a trial balloon. Frankly, I don't think they have a prayer."

When we launched in the United Kingdom, our demise was predicted because, as a columnist for the Independent newspaper put it, Wired is "meritocratic, free market, libertarian, and hyperdemocratic."

I guess none of the skeptics could have known that those 13 mentions of the information superhighway would grow to 465 by the end of that year. Or that telecommunications would be deregulated by the third year of our existence. Or that a little company by the name of Netscape could grow in 16 months to a valuation of over $2 billion — by giving its software away. Or that

• according to a Nielsen study, 24 million people are online — fully 11 percent of the population over 16;
• 5,000 Web Sites could grow to 500,000 in 18 months;
• consumer spending on interactive digital media is projected to grow at a compound rate of 19.9 percent through 1999;
• the installed base of modem-equipped homes reached 12 million by the end of 1995 and is projected to be 25 million by the end of this century;
• all banks will be on Internet by the year 2000;
• the vast majority of Americans — 76 percent — view online as the "wave of the future."

Or, more ominously, that this digital revolution could engender such a backlash that a political Neanderthal could win the Republican primary in New Hampshire running on a platform of cultural and economic reaction (I'll come back to that in a moment).

Today, Wired's guaranteed rate base stands at 300,000, its Web Site, HotWired, has over 340,000 members, and both are widely recognized as the touchstone for news about and analysis of the digital revolution, the new economy, and the arriving digital civilization.

Perhaps that's why Jane and I were invited to speak at the World Economic Forum this year at Davos, where the global political and business elite-Äprime ministers, CEOs, media executives, in other words, everyone from Bill Gates to William Safire to the head of the Russian Communist Party-Ägathers each year to conduct what can only be called a conspiracy in plain sight.

Even among that elite, however, there is a certain awareness that there's a revolution in progress. The first session of the conference was on whether the nation-state was obsolete, and Nicholas Negroponte, John Barlow, and Mike Nelson from the White House were on the panel. At the end of session, they ran an electronic poll of the audience.

Remember, we're talking about the political and economic elite. These were the questions and answers:

• To what extent is the new "digital world" eroding the power of the nation-state?

1. Not at all - 3%
2. A little - 34%
3. Quite a lot - 43%
4. To a great extent - 18%

• In 15 years (in the year 2010) to what extent will the power of the nation-state have been eroded?

1. Not at all - 2%
2. A little - 20%
3. Quite a lot - 52%
4. To a great extent - 25%

• Should governments or institutional authorities attempt to regulate digital networks?

Yes 59%
No 40%

The Telecommunications Reform Act

We can see that kind of bifurcated thinking manifested here in the United States among the political leaders of the last unwired generation, who recently passed the Telecommunications Reform Act. That act deregulated telecommunications yet at the same time imposed egregious and stupid regulations on the Internet — mandating prison time and $250,000 fines for disseminating, not pornography, but entirely nebulous "indecent" material.

H. L. Mencken called the proponents of that kind of legislation the booboisie. He defined a puritan as someone who was upset that someone, somewhere out there, was having fun. Those self-proclaimed protectors of public morality claim to be protecting children, but what they really want to do is control the behavior of adults. They rose up during another cultural revolution — they burned rock 'n' roll records in the 1950s.

The present situation is a lot more serious than that. What's going on is a war, not between generations, but between epochs. Pat Buchanan talked about culture war at the last Republican convention. Today he is on the stump, talking about lock and load, pitchforks, and running toward the sound of firing. In 1992 I thought he was referring to fundamentalist Christians vs. secular America. Now I have a feeling that what he is really talking about is industrial age America vs. the arriving Third Wave, the digital revolution.

What just happened with the Communications Decency Act part of the Telecom Reform Act is reminiscent of the arrival of Prohibition. Prohibition marked a turning point in U.S. history — it was the political marker between nativist rural America and the rise of urban, immigrant America. The 1920 census indicated that, for the first time, a majority of U.S. citizens lived in urban areas.

Intel's Andy Grove has said that Congress should pass a law restricting public comment on the Internet to individuals who have spent a minimum of one hour actually accomplishing a specific task while online. Unfortunately, people aren't passing just comments; they are passing laws.

At that session on the decline of the nation-state in Davos, a French legislator stood up and proudly announced that he knew nothing of the Internet, and didn't need to, because that was the very nature of democracy — nonexpert representatives making laws. In this case, however, what legislators don't realize is that they are like illiterates trying to tell the literate what to read. John Barlow's answer to the legislator was to the point: if you don't understand this community that you are trying to regulate, then you shouldn't be surprised to discover that the community feels that you are not only wrong but illegitimate.

The practical problem for legislators who don't understand what's going on is that basically you can't control the Net like you can other media or distribution channels. Remember that news item about Bavarian prosecutors forcing Compuserve to deny its members access to 200 news groups that the prosecutors thought were pornographic?

The very nature of the Internet makes control extremely difficult. The Internet was born of the military's Cold War need to establish fail-safe communication. Instead of opening a single line between two points, to send a message the Internet breaks the message into small parts — packets — and sends them out individually to find their way over what could be many different lines to their final destination, where they are recombined. Take out a node — or multiple nodes — along the way, and the message still gets through. The same with censorship. We published the solution to the problem of reaching those 200 addresses in the March issue of Wired.

Prohibition was a doomed reaction, as is the current effort to censor the Internet. And even though the law was a failure at what it attempted to accomplish — consumption of alcohol actually increased during Prohibition — it produced real casualties. My family was one of them.

My mother's parents owned a wine business in Greenwich Village in New York City, selling to major hotels and restaurants. Not only did the Prohibitionists force my grandparents to shut their doors and liquidate a generation of hard work, they actually made them remove the mosaic in the sidewalk outside their store that spelled the name of their company, Italia Wines.

Jane and I and Wired are fighting to ensure that the business we have just built is not going to be a casualty in this era's culture war. On Monday, Wired and HotWired will be joining other major online telecommunications and technology companies in filing suit to overturn the censorship provisions of the Communications Decency Act, because, as Benjamin Franklin pointed out, "Without Freedom of Thought, there can be no such Thing as Wisdom; and no such thing as public Liberty, without Freedom of Speech."

The New Economy

The digital revolution affects state power on other points than censorship. It is also helping to create a new economy. This is an economy — based on networking individuals and companies together and thus adding intelligence to process — that is radically different from the economy of the past, one that turns some of the established laws of economics on their head.

For example, the new economy is an economy, not of scarcity, but of ubiquity. Netscape became worth billions of dollars because it gave away its browser. Worth here is determined, not by how little of a particular good is available, but by how much.

My colleague Kevin Kelly refers to it as the fax effect. If you have one fax, you have something that is basically worthless. If you have two, you start to have something with utility. Ten, and you start to have a sort of religion, with users proselytizing nonusers to buy faxes, so their faxes become even more valuable.

That's why this whole discussion about the information haves and have-nots is such rubbish. It's as if in 1953 social critics had talked about TV haves and have-nots.

The overriding impulse of everyone engaged in the new economy is to include, not exclude. Better to think of the haves and the have-laters. (And the haves may be the ones who are really disadvantaged, since they are the guinea pigs for new technology, paying an arm and a leg for stuff that in a couple of years will be widely available for a fraction of its original price.) In the end, the choice resides with individual consumers. Morgan Stanley's chief economist, Steve Roach, posits that people are already buying PCs instead of cars.

With the arrival of secure transaction mechanisms and digital cash, the new economy is about to take off. Estimates are that transactions over the Net will grow from approximately $4 billion last year to $150 billion in the year 2000. Secure transaction mechanisms mean encrypted communications that cannot be hacked by criminals. Digital cash means electronic money that is as anonymous as cash. Both of those carry serious consequences for the state.

Over the past couple of years, you might have noticed that the government has been waging a war against cryptography. Cryptography is still classified as a munition by the government, and its export — even its discussion — is controlled. The reasons put forward by the government rest on the need to control the Three Horsemen of the Apocalypse: drug lords, nuclear terrorists, and child pornographers. To that end, it attempted to force a chip into every telecommunication device that would let it eavesdrop at will, the so-called Clipper Chip. And in 1994 Congress passed a law to force telecommunications companies to facilitate wiretapping by government law enforcement and security agencies. Federal Bureau of Investigation director Louis J. Freeh let slip last year that the bureau would like to be able to intercept 1 of 100 calls — and reserved the right to lobby Congress to pass a law outlawing effective cryptography.

What the government is really scared about is not nuclear terrorism or child pornography, however. It's that cryptography will spread to business and personal communications and, combined with digital cash and the globalization of commerce, make the collection of income taxes impossible.

One of the White House's technology counselors, Mike Nelson, the same person who sat on the panel in Davos, has on other occasions admitted as much. Not surprisingly, Russia and France have already made effective cryptography illegal.

Finally, the digital revolution is engaged in redefining the very nature of politics. Two hundred years ago, it may have made sense to elect representatives to go to the far-away capital and participate in the voting that builds consensus and establishes the rules of society. That was then, however, and this is now.

Today in the digital nation, consensus making occurs in thousands of overlapping and interconnected communities everywhere on the network simultaneously, and everyone can be engaged. No one voice is more powerful than any other. Consensus evolves out of the hive mind of fervent discourse instead of from formal votes.

Much has been made of the Net as a dissonance amplifier. Discussion is often direct and emotional. But my biggest surprise is that the Net is also driving the discussion toward reality — because in the end, the ultimate trump is the truth. No wonder countries like Singapore and China want to control this medium.

The realization at Davos, that the power of the nation-state is in decline, is due as much to the development of this hive mind — which disintermediates politics — as it is to the arrival of the new economy.

Fifty years ago a Jesuit philosopher by the name of Teilhard de Chardin spoke prophetically about changes to come. He talked about the spread of telecommunications as an integrated part of the evolution of the planet itself — about "a globe, clothing itself with a brain."

We are at the birth of a new medium and a new era. You can approach the change we are going through as a problem or as an opportunity. At Wired, we say it's time to be future-friendly and seize the opportunity to shape not only a new medium — which is intimately connected with helping this globe clothe itself with a brain — but a new economy and, ultimately, a new civilization.

Louis Rossetto

Louis Rossetto is editor and publisher of Wired magazine. He gave this speech on February 23 at the 1996 Cato Benefactor Summit in Puerto Rico.