Niall Ferguson: "Mark Zuckerberg's business model is much more solvent than Gutenberg's"

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One of the great virtues of the historian Niall Ferguson (Glasgow, 1964) is his great expository clarity. His history books, always well-structured, have the great virtue of always appealing to the present. The author embraces Churchill's maxim that the better we know the past, the better we can project the future.

For years, Ferguson has been engrossed in the ambitious undertaking of writing a biography of the complex figure of Henry Kissinger. It is an authorized biography with access to Kissinger's private papers, of which the first volume has already been released.

His latest book, The Square and The Tower (The Square and the Tower, Debate, 2018), deals with the interaction of the horizontal power of networks, the square, with the vertical power of hierarchies, the tower, throughout history. It is part of his research process to competently tackle the second volume of his biography where, as the author himself emphasizes, network theory and how these interact with vertical powers is key to explaining the success and development of the political Kissinger.

Why are networks important in the study of History?

I had already reviewed some works by young historians where social network analysis was used to improve the understanding of a wide variety of topics, from the Reformation, for example, to the Enlightenment. My impression is that these methods were not fully adopted and used in a more general way for the study, basically, of almost any topic from the past worthy of attention.

I myself wondered: how can Network Theory help us improve our analysis of the Bolshevik revolution or the rise of Hitler?, to give just two examples. In this sense, the book [The Square and The Tower] had two main objectives: on the one hand, to highlight the importance that a rigorous approach to network theory has for History, and, at the same time, to show the people of Silicon Valley, for whom in some cases history begins with Google's IPO, that History also involves them.

Kissinger's success after 1968, when he began his political career, rested on his ability to build a very effective and dense network of contacts and complicities.

Writing this book, I realized that I had been writing about networks throughout my career, even if it wasn't following a very formal approach. When I was finishing the first volume of Kissinger's biography, an idea came to my mind: this was the idea that Kissinger's success after 1968, when he began his political career, rested on his ability to build a very effective and dense network of contacts and complicities.

This made me realize that I did not have enough knowledge about how networked systems work to rigorously address this issue. The Square and The Tower, in part, is a book written as part of this preliminary search and collection of certain theoretical tools that I needed to acquire as a prerequisite to the exercise of writing the second volume of Kissinger. That is why the book includes network analyses around the key figure of Kissinger or some of the key elements that help to understand the crisis that powerful nation-states faced in the 60s and 70s and that constitute the backdrop where Kissinger would have to develop the bulk of his political career.

In many aspects, the concept of network is closely related to the concept of market, but the book makes it clear that this is not entirely the case. How do networks and markets differ?

For many economists, there is a temptation to think that the market is a social network, so one can speak interchangeably between networks and what we associate with the idea of a free market. However, this is not exactly so. For example, it has absolutely nothing to do with free markets when we talk about the Illuminati or the Masons. The Islamic State is another perfect example of a network in which the economy plays a very subordinate role. Networks can be for exchanging information, ideas, or even designed to distort market mechanisms. The market is a particular type of network, probably one of the most sophisticated, but there are many other types of networks whose dynamics do not depend on prices. Confusing networks with markets is a fundamental error, and means not understanding the bulk of messages the book conveys. Adam Smith realized how what we call networks today transcend the market mechanism when in The Wealth of Nations he states: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

The Square and The Tower is a very multidisciplinary book. Among the many references, Antifragile by Nassim Taleb is cited. How does this idea of antifragility relate to hierarchical power and networks?

I have deeply studied the works of Nassim, a good friend, and, although we have a very different academic background, we have both been pointing out similar arguments in different fields. One of the important things Nassim's books have taught me is that a large part of what happens in the world has to do with complexity and the human tendency to create planned, fragile orders. In short, human-created social institutions seem optimal in 99% of cases, but when we are in that remaining 1%, they collapse irremediably. To a certain extent, both books [Antifragile and The Square and The Tower] can be read complementarily: my book offers a historical perspective on how humans, from time to time, have succeeded in building robust and resilient structures throughout history. In fact, history, the passage of time, is the great judge with respect to what is fragile and what is not.

Without Twitter or Facebook, Trump's election as president is unthinkable. Social media allowed Trump a very effective communication tool without needing the large resources that a traditional electoral campaign used to require

Eric Schmidt hits the nail on the head when speaking about the book, he points out: "Silicon Valley needed a history lesson and Ferguson has given it to them." Although there is this continuum between yesterday and today, what are the most important differences between Gutenberg's world and Zuckerberg's?

In the book, I explain the story of Johannes Gutenberg, probably the inventor of the most important artifact to explain the modern world and who, however, had rather little success as an entrepreneur. In fact, he ended his days in bankruptcy. So one thing we can state with certainty, Mark Zuckerberg's business model is much more solvent than Gutenberg's. The difference, I believe, is that in Gutenberg's case we are facing a true decentralized revolution, a true network. Shortly after the invention of the printing press, it spread throughout Europe – including cities like Barcelona – not through the Ottoman Empire, where each press was operated by an independent publisher, and therefore without any central control. This process transformed religious life, culture in general, and became the basis of the Scientific Revolution and the Enlightenment.

In our time, the story is different. Although we all own our personal computer and can freely connect to the Internet, a true decentralized network, we cannot say the same about the bulk of platforms through which we navigate the web: we do not interact in the same way on Facebook as when someone read a pamphlet written in the 1600s. Centuries passed before the publishing business began to make money from advertising, while it only took a short period of time for this to happen on modern social networks.

We are seeing how initially horizontal movements like Facebook quickly become hierarchical…

The book is not only about the Plaza and the Tower, but above all how both dynamics interact throughout history. This relationship between networks and hierarchical powers is not a dichotomy, but rather a continuum. Networks, as complex systems, can vary very rapidly through a transition phase to the point of becoming hierarchical structures. This is the case with social networks: the image of a horizontal, flat world that social networks generated in their beginnings was an illusion that has faded over time. Lászó Barabási emphasizes how social networks are not scale-free, meaning not all nodes in the network are equal to each other. When we open a Twitter account, for example, we don't follow random nodes, we follow those accounts that have more followers. We join the most connected node, we all end up following Donald Trump, which favors the replication of hierarchical structures within the network.

To what extent were social networks key to Donald Trump's triumph in the 2016 election campaign?

Let me put it this way: without Twitter and Facebook, Trump's election as President is unthinkable. Social networks provided Trump with a very effective communication tool without needing the large resources that a traditional election campaign usually required. Before 2008, the key element in the election was television, a very expensive channel, and the strength of the party apparatus. If you look at the numbers, Hillary Clinton's campaign budget was double Trump's. Without Twitter and Facebook, Trump would never have won in the key states that ultimately determined his election. In addition, the election had interactions from other networks from which Trump was able to gain greater advantage. The Islamic State got involved by increasing violence during the months leading up to the elections, which helped polarize voters on the issue of Islam and immigration; and the Russians also got involved with their intelligence network by hacking the servers of the Democratic and Republican parties. We can say that it was an election in which the power of networks was key. Let's imagine the same two candidates, for example, in the 2004 election, and it's easy to conclude that Trump would not even have passed the filter of the Republican nomination over which the hierarchical powers of the party would have had a key influence.