Chapter 4
The Information Wars: Battles for Knowledge Control
As the economy becomes increasingly super-symbolic, struggles for control of knowledge are breaking out everywhere. With knowledge reducing the need for raw materials, labor, time, space, and capital, its value soars, making information the central battleground of the advanced economy.
This battle plays out daily in supermarkets, where retailers and manufacturers fight for control of customer data. Bar codes initially developed to address checkout lines and accounting errors have transferred power by giving retailers unprecedented information about product performance. "Now," says Pat Collins of Ralph's supermarkets, "we know as much as, if not more than, the manufacturer about his product." With sophisticated software tools analyzing sales, profitability, timing, costs, and traffic flow, retailers now compel manufacturers to pay for shelf space.
Consumers now pay twice for every purchase: once with money and again by providing valuable information that retailers, manufacturers, banks, and credit card companies fight to control. When a shopper buys even simple items like margarine, they reveal product preferences, timing, brand loyalty, and when paying by credit card, their identity, address, income level, and lifestyle patterns.
The battle extends to telecommunications networks - the key infrastructure of the 21st century. Companies worldwide now depend on electronic networks connecting everything from McDonald's 9,400 restaurants across 46 countries to Citibank's worldwide operations. Once seen as merely administrative tools, these networked systems are now strategic weapons helping companies protect established markets and attack new ones.
As networks become more sophisticated, they're evolving from merely transmitting messages to actively analyzing and transforming them. These "extra-intelligent" networks deliver output different from what was input, raising profound questions about bias, ethics, and responsibility. By creating a self-aware electronic neural system, we're changing cultural and business rules, raising issues about privacy, fairness, and redress.
The battle over information control extends beyond individual networks to the standards that govern how products interact. Today, global "wars over standards" are erupting across industries, with the most explosive conflicts directly related to how information, knowledge and entertainment are created and distributed. These battles will shift power among industrial giants and affect national economies.
Chapter 5
The Flex-Firm: Organizational Revolution
The global economic war of the 21st century has already begun, with knowledge-based weapons proving most strategic. Beyond currency manipulation and trade policies, what truly matters are the products of mind-work: scientific research, education, software, management expertise, communications, and electronic finance. Among these power sources, superior organization - particularly of knowledge itself - may be most crucial.
Traditional bureaucracies are crumbling as their rigid compartmentalization fails to handle the complexity and speed of modern information flows. The "cubbyhole" mentality that divides work into isolated units creates bottlenecks that choke knowledge transfer. New organizational forms are emerging that prioritize free-flowing information over rigid departmental boundaries.
The standardized corporation is giving way to highly customized, adaptable business models. These "flex-firms" reject cookie-cutter approaches in favor of diverse organizational structures tailored to specific markets and conditions. This shift represents a kind of corporate decolonization, with family businesses and other non-traditional models gaining new relevance in the knowledge economy.
Organizations are evolving into diverse power structures beyond traditional hierarchies. Toffler identifies multiple emerging models: pulsating organizations that expand and contract; two-faced organizations balancing contradictory needs; checkerboard organizations with mixed authority patterns; commissar organizations with parallel power structures; buro-baronial organizations combining bureaucracy with feudal elements; skunkworks organizations fostering innovation outside normal channels; and self-start teams with distributed leadership.
The knowledge worker demands unprecedented autonomy, transforming the employer-employee relationship. Unlike interchangeable factory workers, knowledge workers possess unique skills that give them leverage and mobility. This shift creates new tensions as employees demand not just better compensation but greater control over their work. Two imperatives emerge: organizations must unblock minds to maximize productivity while workers increasingly demand access to information previously hoarded by management.
Corporate power is fragmenting from monolithic structures into complex mosaics. Attempts at "meat-cleaver management" that slash organizations often fail to recognize the intricate power relationships that actually drive business. Even within giant corporations, internal monopolies and fiefdoms create their own power dynamics. The concept of "relational wealth" - the value of connections between business units - becomes crucial as power disperses throughout these organizational mosaics.
Chapter 6
Powershift Politics: Democracy's Transformation
The knowledge revolution is radically transforming political power structures, creating new forms of governance and resistance. As information becomes the primary currency of power, traditional political institutions struggle to adapt while new players emerge with surprising influence.
We're entering a period of profound political transformation where traditional power structures - from dynasties to democracies - are being fundamentally reshaped. Political authority is shifting across multiple levels simultaneously: upward to transnational bodies, downward to local communities, and outward to non-governmental entities. This creates a mosaic democracy where ethnic identities gain new significance and pivotal minorities wield outsized influence through their strategic positioning in information networks.
The mass democracy era concentrated power at the national level, reflecting mass-production technology and national markets. Today's technologies simultaneously push production both downward (local bakeries returning to supermarkets, neighborhood photo processing) and upward to global levels (cars and computers assembled across multiple nations). This economic shift creates parallel political pressures - decentralization movements alongside attempts to shift power to supranational bodies like the European Community.
As bureaucracy dominates all smokestack states, an Invisible Party always wins elections regardless of who gets votes. Even the most popular leaders remain captives of this system, with bureaucrats - not elected officials - running governments and making most decisions credited to Presidents and Prime Ministers. This reality explains why political leaders consistently struggle to implement their agendas through resistant bureaucracies.
The revolutionary new economy is transforming government by reshaping relationships between politicians and bureaucrats while restructuring bureaucracy itself. Power shifts are already occurring among agencies, with power increasingly gravitating toward agencies regulating information and expanding functions like education, research, and environmental protection.
After decades of government expansion, a remarkable reversal has occurred in advanced economies. Leaders as ideologically diverse as Republican Reagan and Socialist Mitterand began systematically stripping away governmental operations. This privatization trend has spread globally from Mexico to Iraq and throughout Eastern Europe. This movement parallels business restructuring in the private sector - creating a necessary organizational alignment between government and business.
Chapter 7
The Media Revolution: Subversive Technology
The new communication technologies are becoming powerful tools for challenging and overthrowing state power worldwide. From Mexican men in California videotaping police brutality to Czech revolutionaries showing government violence on street corner monitors, media is weaponized against authorities. The 1989 Eastern European revolutions resulted from economic failure, Soviet withdrawal, and information flooding through borders despite censorship efforts.
Communication has evolved through three distinct historical modes. In First Wave agrarian societies, communication was primarily mouth-to-ear within small groups, with crowds serving as the first mass medium. The Catholic Church became the first durable cross-border mass medium, giving it immense power against feudal rulers. Second Wave industrial societies required homogenization, creating newspapers, magazines, movies, radio and television to deliver identical messages to millions simultaneously. The emerging Third Wave system now customizes messages for specific population segments, reflecting the needs of the post-mass-production economy that requires a heterogeneous workforce.
Unlike Second Wave media that operated independently, today's media are densely interconnected, feeding data, images and symbols back and forth. Radio call-in shows become movies that air on television; movies about TV news appear in theaters before showing on television; newspapers monitor TV for breaking news while television producers get ideas from print. This interpenetration transforms individual media into a system, reducing the power of any single channel while dramatically enhancing the power of the media system as a whole.
Despite tight censorship, information now penetrates even the most guarded borders. Romanians watched Bulgarian television despite Ceausescu's restrictions, learning about dissidents through foreign broadcasts. Most East Germans accessed West German television that reported on demonstrations and border openings. During China's Tiananmen Square protests, Voice of America broadcast 11.5 hours daily, reaching an estimated 100 million Chinese listeners and even providing instructions to avoid government jamming.
Modern revolutionaries strategically combine First Wave, Second Wave, and Third Wave communications to challenge regimes. When totalitarian governments control conventional media, religious organizations become crucial vehicles for dissent, transforming economic and social grievances into religious movements. In Iran, Ayatollah Khomeini brilliantly fused class resentment and nationalist rage with religious fervor while combining First Wave face-to-face exhortation with Third Wave technology - smuggled audio tapes played and duplicated in mosques - to counter the Shah's control of Second Wave media.
Chapter 8
Global Powershift: Fast Versus Slow Economies
A fundamental split is emerging between fast and slow economies based on their knowledge-processing capabilities. Traditional advantages like strategic location, raw materials, and cheap labor are diminishing in value compared to knowledge infrastructure. Economic development now operates at hyper-speeds that create widening gaps between knowledge-rich and knowledge-poor regions.
The greatest power imbalance on earth today divides rich countries from poor, but this distribution will soon transform as the new wealth-creation system spreads. As old divisions between capitalist/communist and North/South fade, a new division emerges between the fast and the slow.
This isn't merely metaphorical - entire economies operate at different speeds. Just as advanced organisms process neural signals faster than primitive ones, advanced economies process transactions, decisions, ideas, and knowledge more rapidly. Fast economies generate wealth and power at accelerated rates compared to slow ones.
In traditional peasant societies, economic processes move glacially, limited by tradition and poor communications. Innovation was dangerous when most lived at subsistence levels, and technological advances were barely perceptible across generations. The industrial revolution increased economic metabolism, but today's symbolic economy operates at unprecedented speeds with bar codes, computers, scanners, and global data networks moving toward real-time operations.
The new wealth system consists of a global network of markets, banks, production centers, and laboratories in constant communication, exchanging ever-increasing flows of data and knowledge. This "fast economy" drives economic advancement and power, while being decoupled from it means exclusion from the future - the fate facing many less developed countries.
As the world's wealth-production system accelerates, slow economies must speed up or drop out. Early signs show this happening already. The United States spent $125 billion annually on clothing in the 1980s, half from overseas cheap-labor factories. Now much of this work is returning to America because of speed requirements. Companies like Tandy Corporation have brought production back from South Korea to Texas, using automated plants with more sophisticated equipment.
These shifts reflect time's rising importance in economics. Retailers facing rapid fashion changes need quick response and low inventories, requiring fast turnaround on smaller lots - something Asian suppliers requiring three-month advance orders cannot provide. By contrast, Italy's Benetton delivers midseason reorders within weeks, and Haggar Apparel restocks customers every three days instead of seven weeks.
Chapter 9
The Power of Balance: A New Global Order
The Powershift Era has just begun, with the future up for grabs. As the "East" undergoes upheaval, the "South" divides, and the leading Western powers collide, diplomats frantically work to construct a new global order. But beyond their words and treaties, the new architecture of world power will depend on the quantity and quality of power each nation brings to the table.
Nations can be categorized by whether their power rests on one, two, or all three legs of the violence-wealth-knowledge triad. Throughout the Cold War, America maintained balanced power with military might, economic clout, and superior knowledge resources from science to popular culture. The Soviet Union, by contrast, was a "one-legged" power, deriving superpower status exclusively from military strength while its economy remained "a shambling wreck" and its knowledge base was crippled by paranoid secrecy, poor telecommunications, mediocre education, and censored media.
Socialism didn't collapse because of CIA plots or capitalist encirclement, but because it collided with the future. Just as Gutenberg's printing press loosened the Catholic Church's grip on knowledge and ignited the Protestant Reformation, computers and new communications media shattered Moscow's control of the mind in countries under its influence.
State socialism's approach to knowledge was based on pre-cybernetic machine thinking. While Marx and Lenin criticized "mechanical materialism," their own thinking remained steeped in analogies from pre-intelligent machinery. Society was seen as a machine to be engineered, with the "state machine" to be captured and the class struggle as the "locomotive of history."
Socialism's founding belief was that private ownership of production means caused poverty and economic ills, and state ownership would solve these problems. Despite claiming to be "scientific socialism," this approach failed spectacularly. After decades of excuses for shortages, even the USSR under Gorbachev had to import basic items like razor blades.
What neither socialists nor capitalists imagined was that the most important property would become intangible knowledge - inexhaustible and simultaneously usable by many to create wealth. This revolutionary fact made their century-long property battles largely obsolete.
The great irony is that the new wealth creation system has inverted Marx's inversion of Hegel - knowledge now drives the economy, not the reverse. The computer revolution teaches that software is more important than hardware. Socialist economies, unprepared for an economy based on intangible resources, suffered a fatal collision with the future.
Chapter 10
Freedom, Order, and Chance: The Future of Power
Power depends on a delicate balance between chance and necessity in the universe. In a completely deterministic world, no one would have power over anything - it would be mere illusion. Yet power cannot function in a purely random universe either, as we would be prisoners of fortune. True power requires both chaos and order.
This fundamental relationship connects to human biology and governance. We all crave both order and novelty - the need for order providing the primary justification for government's existence. Since Rousseau's Social Contract, the state has been seen as guaranteeing necessary social order. Without this vertical power, society quickly collapses into horror, as in war-torn Beirut.
But how much order is enough? When a state imposes iron control, silences criticism, censors news, and terrorizes citizens, it creates what might be called "surplus order" - excessive control imposed not for society's benefit but for those controlling the state. Such regimes lose moral legitimacy in an interdependent world.
As nations transition toward super-symbolic economies, they require more horizontal self-regulation and less top-down control. Totalitarian control ultimately chokes economic advancement - the state with the lightest touch may accomplish the most. Despite this, violence and wealth will continue as powerful forces. Nevertheless, we are witnessing a historic powershift as knowledge, the highest-quality power source, gains importance with every nanosecond.
The emerging global power system requires a delicate balance between freedom, order, and chance. Freedom enables innovation and knowledge creation, while order provides the stability needed for economic development. Chance - the unpredictable element - ensures adaptation to rapid change. Systems that overemphasize any one element at the expense of the others will fail to thrive in the new knowledge-based power structure.
The most successful societies will be those that maintain dynamic equilibrium among these three forces. The most important shift isn't from one party or nation to another, but in the relationships between violence, wealth, and knowledge as societies speed toward tomorrow. As Churchill presciently noted, "empires of the future are empires of the mind."
