Niall Ferguson

Globalization is in crisis. Populism is on the march. Authoritarian states are ascendant. Technology meanwhile marches inexorably ahead, threatening to render most human beings redundant or immortal or both. How do we make sense of all this?

Technologies come and go. The world remains a world of squares and towers.

The crucial question is how has it changed? The answer is that technology has enormously empowered networks of all kinds relative to traditional hierarchical power structures – but that the consequences of that change will be determined by the structures, emergent properties and interactions of these networks.

3 thoughts on “Niall Ferguson

  1. shinichi Post author

    The Square and Tower: Networks, Hierarchies and the Struggle for Global Power

    by Niall Ferguson

    Niall Ferguson explains how those at the top of the towers of power have been overstated and the influence of “the social networks down below, in the town squares” has been underestimated.

    Most history is hierarchical: it’s about emperors, presidents, prime ministers and field marshals. It’s about states, armies and corporations. It’s about orders from on high. Even history “from below” is often about trade unions and workers’ parties. But what if that’s simply because hierarchical institutions create the archives that historians rely on? What if we are missing the informal, less well documented social networks that are the true sources of power and drivers of change?

    The 21st century has been hailed as the Age of Networks. However, in The Square and the Tower, Niall Ferguson argues that networks have always been with us, from the structure of the brain to the food chain, from the family tree to freemasonry. Throughout history, hierarchies housed in high towers have claimed to rule, but often real power has resided in the networks in the town square below. For it is networks that tend to innovate. And it is through networks that revolutionary ideas can contagiously spread. Just because conspiracy theorists like to fantasize about such networks doesn’t mean they are not real.

    From the cults of ancient Rome to the dynasties of the Renaissance, from the founding fathers to Facebook, The Square and the Tower tells the story of the rise, fall and rise of networks, and shows how network theory–concepts such as clustering, degrees of separation, weak ties, contagions and phase transitions–can transform our understanding of both the past and the present.

    Just as The Ascent of Money put Wall Street into historical perspective, so The Square and the Tower does the same for Silicon Valley. And it offers a bold prediction about which hierarchies will withstand this latest wave of network disruption–and which will be toppled.

  2. shinichi Post author

    Preface: The Networked Historian

    We live in a networked world, or so we are constantly told. The word ‘network’, which was scarcely used before the late nineteenth century, is now overused as both a verb and a noun. To the ambitious young insider, it is always worth going to the next party, no matter how late it is, for the sake of networking. Sleep may be appealing, but the fear of missing out is appalling. To the disgruntled old outsider, on the other hand, the word network has a different connotation. The suspicion grows that the world is controlled by powerful and exclusive networks: the bankers, the Establishment, the System, the Jews, the Freemasons, the Illuminati. Nearly all that is written in this vein is rubbish. Yet it seems unlikely that conspiracy theories would be so persistent if such networks did not exist at all.

    The problem with conspiracy theorists is that, as aggrieved outsiders, they invariably misunderstand and misrepresent the way that networks operate. In particular, they tend to assume that elite networks covertly and easily control formal power structures. My research – as well as my own experience – suggests that this is not the case. On the contrary, informal networks usually have a highly ambivalent relationship to established institutions, and sometimes even a hostile one. Professional historians, by contrast, have until very recently tended to ignore, or at least to downplay, the role of networks. Even today, the majority of academic historians tend to study the kinds of institution that create and preserve archives, as if those that do not leave an orderly paper trail simply do not count. Again, my research and my experience have taught me to beware the tyranny of the archives. Often the biggest changes in history are the achievements of thinly documented, informally organized groups of people.

    This book is about the uneven ebb and flow of history. It distinguishes the long epochs in which hierarchical structures dominated human life from the rarer but more dynamic eras when networks had the advantage, thanks in part to changes in technology. To put it simply: when hierarchy is the order of the day, you are only as powerful as your rung on the organizational ladder of a state, corporation or similar vertically ordered institution. When networks gain an advantage, you can be as powerful as your position in one or more horizontally structured social groups. As we shall see, this dichotomy between hierarchy and network is an over-simplification. Nevertheless, some personal disclosures may illustrate its usefulness as a starting point.

    On the night in February 2016 when I wrote the first draft of this preface, I attended a book party. The host was the former mayor of New York. The author whose work we had gathered to celebrate was a Wall Street Journal columnist and former presidential speech-writer. I was there at the invitation of the editor-in-chief of Bloomberg News, whom I know because we attended the same Oxford college more than a quarter of a century ago. At the party, I greeted and briefly conversed with about ten other people, among them the president of the Council on Foreign Relations; the chief executive officer of Alcoa Inc., one of America’s largest industrial companies; the editor of the Journal’s comment pages; a presenter on Fox News; a member of New York’s Colony Club and her husband; and a young speech-writer who introduced himself by saying he had read one of my books (which is without fail the right way to strike up a conversation with a professor).

    At one level, it is obvious why I was at that party. The fact that I have worked at a succession of well-known universities – Oxford, Cambridge, New York, Harvard and Stanford – automatically makes me part of multiple webs of college alumni. As a consequence of my work as a writer and professor, I have also joined a number of economic and political networks such as the World Economic Forum and the Bilderberg meetings. I am a member of three London clubs and one in New York. I presently belong to the boards of three corporate entities: one a global asset manager, one a British think tank, one a New York museum.

    And yet, despite being relatively well networked, I have almost no power. An interesting feature of the party was that the former mayor took the opportunity, in his short speech of welcome, to hint (not very enthusiastically) that he was considering entering, as an independent candidate, the contest to choose the next US president. But as a British citizen I could not even vote in that election. Nor would an endorsement from me in any way have helped his or any other candidate’s chances. For, as an academic, I am assumed by the overwhelming majority of Americans to be wholly detached from the real lives of ordinary people. Unlike my former colleagues at Oxford, I do not control undergraduate admissions. When I taught at Harvard, I could award good or mediocre grades to my students, but I had essentially no power to prevent even the weakest of them from graduating. I had just one among many senior faculty votes when it came to Ph.D. admissions; again, no power. I have a measure of power over the people who work for my advisory firm, but in the space of five years I have fired a grand total of one employee. I am a father of four, but my influence – never mind power – over three of these children is minimal. Even the youngest, who is five, is already learning how to defy my authority.

    In short, I am just not a very hierarchical person. By choice, I am more of a networks guy. As an undergraduate, I enjoyed the lack of stratification in university life, particularly the multitude of haphazardly organized societies. I joined many and turned up, irregularly, to few. My two favourite experiences at Oxford were playing the double bass in a jazz quintet – an ensemble that to this day prides itself on not having a leader – and participating in the meetings of a small conservative discussion club called the Canning. I opted to become an academic because in my early twenties I strongly preferred freedom to money. Seeing my contemporaries and their fathers employed in traditional, vertical management structures, I shuddered. Observing the Oxford dons who taught me – fellows of a medieval corporate entity, citizens of an ancient republic of letters, sovereigns in their book-lined studies – I had an irresistible urge to follow in their leisurely, leathery footsteps. When academic life turned out to be rather less well remunerated than the women in my life seemed to expect, I strove to earn without submitting to the indignity of real employment. As a journalist, I preferred to be a freelance, at most a part-timer, preferably a columnist on a retainer. When I turned to broadcasting, I wrote and presented as an independent contractor, and later formed my own production company. Entrepreneurship has suited my love of freedom, though I would say that I have founded companies more to remain free than to become rich. The thing I enjoy most is writing books about subjects that interest me. The best projects – the history of the Rothschild banks, the career of Siegmund Warburg, the life of Henry Kissinger – have come to me through my network. Only very recently did I appreciate that they were also books about networks.

    Some among my contemporaries pursued wealth; few achieved it without at least a period of indentured servitude, usually working for a bank. Others pursued power; they too rose through the party ranks and must marvel today at the indignities they once endured. There are humiliations in the early years of academic life, no doubt, but nothing to compare with being an intern at Goldman Sachs or a lowly campaign volunteer for the losing candidate of a party in opposition. To enter the hierarchy is to abase oneself, at least at first. Today, however, a few of my Oxford classmates sit atop powerful institutions as ministers or chief executives. Their decisions can directly affect the allocation of millions, if not billions, of dollars and sometimes even the fates of nations. The wife of an Oxford contemporary who entered politics once complained to him about his long working hours, lack of privacy, low salary and rare holidays – as well as the job insecurity inherent in democracy. ‘But the fact that I would put up with all that,’ he replied, ‘just proves what a wonderful thing power is.’

    But is it? Is it better today to be in a network, which gives you influence, than in a hierarchy, which gives you power? Which better describes your own position? All of us are necessarily members of more than one hierarchical structure. We are nearly all citizens of at least one state. A very large proportion of us are employees of at least one corporation (and a surprisingly large number of the world’s corporations are still directly or indirectly state-controlled). Most people under the age of twenty in the developed world are now likely to be in one kind of educational institutional or another; whatever these institutions may claim, their structure is fundamentally hierarchical. (True, the president of Harvard has very limited power over a tenured professor; but she and the hierarchy of deans beneath her have a great deal of power over everyone else from the brightest junior professor to the lowliest freshman.) A significant proportion of young men and women around the world – albeit a much lower one than in most of the last forty centuries – are engaged in military service, traditionally the most hierarchical of activities. If you ‘report to’ someone, even if it is only to a board of directors, then you are in a hierarchy. The more people report to you, the further you are from the bottom of the heap.

    Yet most of us belong to more networks than hierarchies, and by that I do not just mean that we are on Facebook, Twitter or one of the other computer-based networks that have sprung up on the Internet in the past dozen years. We have networks of relatives (few families in the Western world today are hierarchical), of friends, of neighbours, of fellow enthusiasts. We are alumni of educational institutions. We are fans of football teams. We are members of clubs and societies, or supporters of charities. Even our participation in the activities of hierarchically structured institutions such as churches or political parties is more akin to networking than to working, because we are involved on a voluntary basis and not in the expectation of cash compensation.

    The worlds of hierarchies and networks meet and interact. Inside any large corporation there are networks quite distinct from the official ‘org. chart’. When a boss is accused by some employees of favouritism, the implication is that some informal relationships are taking precedence over the formal promotion process managed by ‘Human Resources’ on the fifth floor. When employees from different firms meet for alcoholic refreshments after work, they move from the vertical tower of the corporation to the horizontal square of the social network. Crucially, when a group of individuals meets, each one of whom has power in a different hierarchical structure, their networking can have profound consequences. In his Palliser novels, Anthony Trollope memorably captured the difference between formal power and informal influence when he depicted Victorian politicians publicly denouncing each other in the House of Commons and then privately exchanging confidences in the network of London clubs to which they all belonged. In this book, I want to show that such networks can be found in nearly all human history and that they are much more important than most history books lead their readers to believe.

    In the past, as I mentioned already, historians were not especially good at reconstructing past networks. The neglect of networks was partly because traditional historical research relied heavily for its source material on the documents produced by hierarchical institutions such as states. Networks do keep records, but they are not so easy to find. As a very green graduate student, I remember arriving at the Hamburg State Archives and being directed towards a bewildering room full of Findbücher – the huge leather-bound volumes, handwritten in scarcely legible old German script, that constituted the archive’s catalogue. These in turn led to the innumerable reports, minute books and correspondence produced by all the different ‘deputations’ of the Hanseatic city-state’s somewhat antiquated bureaucracy. I vividly recall leafing through the books that corresponded to the period I was interested in and, to my horror, finding not a single page that was of the slightest interest. Imagine my intense relief, after a few weeks of abject misery, to be shown into the small, oak-panelled room that housed the private papers of the banker Max Warburg, whose son Eric I had met by sheer good luck at a tea party at the British consulate. Within a few hours, I realized that Warburg’s correspondence with members of his own network offered more insight into the history of the German hyperinflation of the early 1920s (my chosen topic) than all the documents in the Staatsarchiv put together.

    Yet for many years, like most historians, I was casual in the way that I thought and wrote about networks. In my mind’s eye, there was a vague diagram that connected Warburg to other members of the German-Jewish business elite through various ties of kinship, business and ‘elective affinity’. But it did not occur to me to think in a rigorous way about that network. I was content to think, lazily, of his social ‘circles’, a very imperfect term of art. And I am afraid I was not much more systematic when I came, a few years later, to write the history of the interlocked Rothschild banks. I focused too much on the complex genealogy of the family, with its far from unusual system of cousin-marriage, and too little on the wider network of agents and affiliated banks that was just as important in making the family the wealthiest in the nineteenth-century world. With hindsight, I should have paid more attention to those historians of the mid-twentieth century, such as Lewis Namier or Ronald Syme, who had pioneered prosopography (collective biography), not least as a way of downplaying the role of ideology as an historical actor in its own right. Yet their efforts had fallen short of formal network analysis. Moreover, they had been superseded by a generation of social(ist) historians who were intent on revealing rising and falling classes as the propellants of historical change. I had learned that Vilfredo Pareto’s elites – from the ‘notables’ of revolutionary France to the Honoratioren of Wilhelmine Germany – generally mattered more than Karl Marx’s classes in the historical process, but I had not learned how to analyse elite structures.

    This book is an attempt to atone for those sins of omission. It tells the story of the interaction between networks and hierarchies from ancient times until the very recent past. It brings together theoretical insights from myriad disciplines, ranging from economics to sociology, from neuroscience to organizational behaviour. Its central thesis is that social networks have always been much more important in history than most historians, fixated as they have been on hierarchical organizations such as states, have allowed – but never more so than in two periods. The first ‘networked era’ followed the introduction of the printing press to Europe in the late fifteenth century and lasted until the end of the eighteenth century. The second – our own time – dates from the 1970s, though I argue that the technological revolution we associate with Silicon Valley was more a consequence than a cause of a crisis of hierarchical institutions. The intervening period, from the late 1790s until the late 1960s, saw the opposite trend: hierarchical institutions re-established their control and successfully shut down or co-opted networks. The zenith of hierarchically organized power was in fact the mid-twentieth century – the era of totalitarian regimes and total war.

  3. shinichi Post author






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