Imagine gazing at the web from far in space. To you, peering through your spectroscope, mapping the mazes of electromagnetism in its path, the Web appears as a global efflorescence, a resonant sphere of light. It is the physical phase space of the telecosm, the radiant chrysalis from which will spring a new global economy.
The luminous ball reflects Maxwell’s rainbow, with each arc of light bearing a signatory wavelength. As the mass of the traffic flows through fiber-optic trunks, it glows infrared, with the network backbones looming as focused beams of 1550-nanometer radiance running across continents and under the seas. As more and more people use wireless means to access the Net, this infrared ball grows a penumbra of microwaves, suffused with billions of moving sparks from multimegahertz teleputers or digital cellular phones. Piercing through the penumbra are rich spikes of radio frequencies confined in the coaxial cables circling through neighborhoods and hooking to each household. Spangling the Net are more than 100 million nodes of concentrated standing waves, each an Internet host, a computer with a microprocessor running at a microwave frequency from the hundreds of megahertz to the gigahertz. The radiance reaches upward between 400 and 800 miles to thousands of low-orbit satellites, each sending forth cords of “light” between Earth and sky in the Ku band between 12 and 18 gigahertz.
Now imagine that every 100 days the total brightness doubles. Not only does the total number of screens rise by more than one-third but also the traffic on each of the links rises by 50%. Federal Express ignites a flare in Memphis, and its glow swells into the millennium. AOL customers leave behind their 28-kilobit links and move to 56-kilobit and Ethernet modems: A larger surge ripples across the ball of light. Corporate Ethernets leap up from 10 megabits a second to 100 megabits and then to a gigabit. All pump up the lumens of the encircling radiance.
As the intensity of the light rises — as more and more photons of traffic flash through the webs of glass and air — the change pushes up the overall frequency or average color of the light. So, as the brightness increases, its average color also inches up the spectrum. The global iridescence changes its dominant hues. If it were a rainbow, the center of intensity would move from red through green toward violet. If it were a meteor, the Doppler blueshift of the Internet would suggest it is approaching you.
Ultimately, through this radiant light will run most of the commerce of the world. In fact, more value will move by resonant light than by all the world’s supertankers, pipelines, 18-wheeler trucks, and C5A airships put together. Yet all these frequencies, visible on the spectroscope in space, are invisible to you. The Internet is a cloak of many colors for the communications of the world, but human senses can grasp none of its tints and spangles. The 400 terahertz of visible light are absent in the links. On the ball of light of Internet frequencies, visible light sparkles only in the billion phosphorescent spots where there is a screen.
Seeking clues to the meaning of this radiant transformation, I began by thrashing through haystacks of economic literature. I was looking for a needle of insight through which to march all the gaudy caravans of undulating camels, laden with Internet glow. In the end, I found a pin instead.
The pin was a unit of factory output in Adam Smith’s Wealth of Nations , exemplifying the power of mass production and the division of labor. Smith showed that a worker specializing in one part of the process of manufacturing pins could be hugely more productive than a worker attempting to produce pins entirely by himself.
Living in a time of transition resembling today’s, Smith was boldly explaining the passage from the age of guilds and crafts to the age of mass manufacturing. He showed that the factory workers of the industrial age were not 2 times or 10 times more productive than craftsmen were, but 5,000 times more productive. A key reason that specialized workers can produce so much more is their faster process of learning. Each worker has to master only one part of the process. Because he gets to apply his intelligence to that one component more frequently, he accelerates his learning.
In the time of Adam Smith, the workers could not gain the five thousandfold edge without coming together in a single factory at a single time. Capital and equipment were scarce and costly. Imagine, though, a global cornucopia of capital flowing readily across borders and through the ball of radiance. Imagine the cost of equipment, based on microchips and fiber threads, plummeting to less than a dollar for a million instructions per second or $19.95 for 30 days of access to Internet exabytes. Imagine that any worker could collaborate with any other worker at any time — that the factor of 104 could be harvested by any collation of workers in a virtual web anywhere on earth. That is one measure of the meaning of the light. The nodes of creative effort could summon their five thousandfold magic of learning at will in minutes rather than in years.
As an incandescent ball rising up with little overall planning or guidance, the Internet raises again the riddle faced by every sophomore physics student: the rise of civilization in the face of the law of rising entropy. (The second law of thermodynamics, the entropy law defines the tendency of all order and energy to deteriorate into disorder and waste.) Claude Shannon used the same word to designate information content in a communications channel. More entropy in Shannon’s code signifies more information. In Shannon’s terms, entropy is a measure of unexpected bits, the only part of a message that actually bears information. Otherwise, the signal is only telling you what you already know.
For the message to be high entropy (full of information), the carrier must be low entropy (empty of information). In the ideal system, the complexity is in the message rather than in the medium. By eliminating the entropy from networks, you can increase their ability to bear information. Another word for a low-entropy carrier is a dumb network. The dumber the network, the more intelligence it can carry.
Applying Shannon’s theory to an industrial process, an unexpected set of bits usually means something is going wrong. You set it right and you reduce the entropy. You change a series of unexpected bits (information about a breakdown or defect) into a set of predicted bits signifying a smoothly flowing process with no entropy content (no surprises). The process that removes the entropy from the communication is learning or experience.
These gains of learning were conceptualized about 35 years ago by Bruce Henderson in his concept of the learning curve: the approximately 20% increase of efficiency accruing to every doubling of the accumulated unit volume of a product. Henderson’s Boston Consulting Group demonstrated this learning effect for thousands of different items, from chicken eggs and tires to insurance policies and telephone calls; Bain & Company refined and extended it as the experience curve; Moore’s Law captures its effects in the production of microchips; Michael Rothschild presented evidence that it is a biological truth, applicable to everything from ants and bees to Amazonian slime molds; and Raymond Kurzweil deems it a law of time and chaos by which time — measured by the incidence of salient events — accelerates in every evolutionary process. Now time seems to be racing through the global radiance.
Imagine the mesh of lights as an efflorescence of learning curves as people around the world launch projects and experiments without requiring the physical plant and equipment and the regimented workers in Adam Smith’s factory. Without the overhead and geographical friction, entrepreneurial creativity takes off. As network guru David Isenberg puts it, “The Internet offers a near-zero impedance environment for innovation.” Imagine the 100-day doubling of the intensity of the light as the spectroscopic effect of the approximately 20% leap in efficiency achieved with every doubling of the accumulated volume of new products.
On the Net, the doubling of new products is manifested by the increase of traffic. On our spectroscope in space, rising traffic is signaled by a rise in the intensity and in the frequency of the light. On Earth, the network becomes dumber and more photonic. All the proliferating protocols and intricacies of electronic networks diminish to one, the Internet Protocol. Increasingly, IP packets run directly on the low-entropy light running down the dumb glass.
With one simple protocol, the network becomes increasingly predictable. It is a low-entropy carrier of ever more voluminous and high-entropy traffic. Swept up into an ever more photonic radiance, the traffic can soar a thousandfold every three to five years, more than a millionfold in a decade — a miracle for our time, dwarfing Adam Smith’s pins. As the traffic overflows the smart silicon passages of conventional networks — where it is compressed and coded and celled and queued and framed and corrected electronically — it soars up the spectrum. On the wideband boulevards of photonic glass, everything travels in IP on lambdas.
Answering the sophomore’s riddle, Henderson’s link of learning and cost is a curve of declining entropy. In yielding about 20% efficiency gains with every doubling of accumulated units produced, the curve affects both forms of entropy: energy entropy and information entropy. At the beginning of any manufacturing process, energy is wasted, materials are squandered, tolerances are large, physical entropy is high. Similarly high is information entropy in the form of unexpected outcomes, surprising effects, bugs, glitches, noise.
The move from Adam Smith’s pin factory and its like to the global radiance of the Net is a move from the physical entropy of heavy manufacturing to the nearly costless shuffle of photons. This move, too, effects a dramatic change in the industrial spectrogram. As more and more of the world’s commerce climbs ever higher in the spectrum, it leaves behind the huge power lines shaking with the weight of 60-hertz pulses of megawatts and climbs into worldwide Webs of 60-terahertz infrared. The power lines remain indispensable as low-entropy carriers of power, but their contribution to total value shrinks. In the process, the economy becomes physically more efficient and informationally more complex. The central engines of new value are the high-entropy information industries on the fringes of the Net.
As the economy moves from its basis in heavy lifting to its bonanza of learning, its physical entropy tends to disappear into the ball of radiance. The physical costs of new knowledge drop to nearly nothing. The processes of economic growth begin to revolve around the paradox of information entropy. Learning occurs only when information entropy is high — when the surprises multiply. Yet the purpose of the process is to eliminate the entropy, end the learning, in the familiar hum of the perfect machine.
The spectrograms in space thus bear a further lesson of economics. They tell the story of the rise and fall of market power, the oscillating cycles of monopoly and oligopoly. Once a product rises to its point of perfect resonance, it can no longer improve. Once it has found and exhausted its market, it reaches a learning impasse.
Every new product begins as a monopoly. But when products achieve a large global market, they can no longer rapidly double their unit sales and slalom down these steep slopes of learning. They are nearing the bottom of the entropy curve. They mature and no longer contribute substantially to new economic growth and edification. Even when they are heroically advancing their technology, like Intel and Microsoft today, they normally follow a predictable path. Rather than launching new items — new surprises — they are wringing out the last gouts of entropy in their existing products. They are sustainers. Their rate of learning has declined to the reassuring burble of predictable bits, nearly all entropy gone. These companies are then vulnerable to entropic disruption from fast learners below.
This is the tragic rhythm of capitalism, the fatal triumph of enterprise, the vicious circle of learning. But it is also the guarantor of freedom. The radiance does not migrate to one place and stay there, whether Redmond, Washington, or Santa Clara, California. It reaches its point of resonance and then gives way to new flares of learning and creativity.
At the bottom of the entropy curve is the hum of resonance. The goal of every enterprise is the resonant point that defines the end of learning — the sweet spot when the natural frequency, color, or spectrum of a product is in perfect interplay with its customers. The technology, the market, the system of distribution, the feedback loops, are all in sync and in phase. There are no surprises. Most improvements at this point represent overshoot.
A Stupid Network
As the Net moves up the spectrum and becomes dumber and wider, imagine now that the learning accelerates on both ends of the arcs of radiance. Without a high-entropy medium of noise-forming barriers in the middle, the distinctions and categories of conventional commerce break down. Buyers, sellers, producers, consumers, financiers, insurers, and savers merge across the radiant ball, and both the words and the roles lose their edges.
I log on to Amazon.com and a “cookie” on my computer informs the system of my presence. I play a game of literary preferences. It is a service of Amazon. But it allows the company to alert me to new products that I might like. If they are not just right, I correct them. From my purchases and preferences, Amazon learns how to serve other similar customers. I review a book that I have read. Amazon prints the review. From my purchases and the purchases of others, it contrives a best-seller list that is updated every hour. It informs me of the exact performance of all my books. I sell my books from my own Web page, collecting a profit, and Amazon fulfills the orders. I am an Amazon customer, supplier, investor, client, author, audience.
The buyers of Web services supply their own capital in the form of their linked computers. They provide infinite shelf space on their disks. They give or sell their names, their time, their knowledge. They learn how to improve the product. The sellers of Web services use the equipment of their customers and gain knowledge and time from the buyers. Each population learns from the other — is the other. The customers are the product and the product is the customer and both serve each other, in a rhythm of creativity between producers and users, a resonance of buyers and sellers in which the buyers also sell and the sellers also buy in widening webs of commerce. The resonance is the wealth and the light, and there is no impedance in the middle.
Markets grow from the outside in or from the bottom up. One man may contrive an attractive item, such as a wheel or a hammer, an anticancer diet or an interactive Web page format, a butterfly museum or a virtual auction block. Many may go to work to provide an item to trade for it or improve upon it. Many others may use it. A single attractive invention that resonates with the needs of others can unleash a cascade of creativity.
Governing the light is this law of resonance. Supply creates its own demand, and the supplies and demands in themselves create a market. That is the source of Metcalfe’s Law. The exponential value of networks is not in the links; it is in the light at the end of the links, suffusing the edges of the Web. The Internet is not merely a radiance of connections; it is a mesh of constant invention. It is not a Web of ever proliferating desires or demands; desires can well proliferate without it. The Net is a seine of collaborative production. It is the capitalist means of production, and it has fallen into the hands of a billion learners and value creators.
Through an endless tâtonnement of trial and error, capitalism teaches every venturer the rules of resonance, the laws of right and light. It reveals what efforts reverberate in the minds and hearts and hands of other producers — what ventures enlighten and enrich them. It ruthlessly filters out the ego trips and feckless tries and self-indulgences and investments of disguised consumption, and products that exploit and diminish their customers. They may burn ardently like a short circuit, but they don’t resonate. The radiance of the Net rides on trust: predictable waves of unsurprise that can carry the entropic ideas of enterprise. The Net promotes the ideas that yield more than they cost — the ones that are worth more to others than to the producer, the ones that teach more than they lose. Only products that enrich their customers ultimately create the kind of market that compounds its gains.
(People who focus on porn as the propeller of the Net miss its meaning. Porn does not enrich and edify its users; it distracts and impoverishes them and ultimately reduces their buying power. It sucks and sours the saps of love, the source of creativity and new life. Within the glowing radiance, it represents the shadow, not the glow.)
All economic growth depends upon the expansion of learning and information. This economy is uniquely fertile because the products that are plunging most rapidly down the curves of learning are themselves learning machines, information processors in all their forms. The Internet is a network of networks of learning curves and melodies seeking their points of harmonic resonance. It triumphs by proliferating the slopes of learning, the songs of searching, the quests of curiosity that are at the heart of wealth creation.
On the map of incandescence, the light is not evenly distributed. One looks in vain for a “level playing field.” The glow radiates most ardently and at highest frequencies in domains of freedom and technological creativity. In countries that have climbed highest on the spectronic ladders toward visible light, the warps and woofs of incandescence can almost be seen. Through most of the 1990s, the center of the radiance was overwhelmingly in the United States. The United States commanded four times as much computer power per capita as the rest of the industrial world, 75% of the computer networks, and 80% of Internet hosts. The radiance is a reflection of political and economic freedom, immigration, and the spirit of enterprise. Nearly half the luminosity remains in the United States, and within the United States, perhaps half is in California, and in California half is in the region of Silicon Valley. But the radiance is now on the move.
At the millennium, the incandescence is diffusing around the world, offering a promise of new freedom and prosperity from Santiago, Chile, to Shanghai, China. Encircling the globe under oceans and beaming from satellites, the radiance is increasingly eroding the powers of despots and bureaucracies, powers and principalities. The crystal cathedrals of light and air are increasingly reachable anywhere on the face of the earth. To stifle links to the global communities of mind and liberty entails increasingly brutal and obvious repression and incurs rising costs of economic stagnation and retardation. Within the market space of the Net, anyone anywhere can issue a petition or publication, utter a cry for help, broadcast a work of art. Anyone can create a product, launch a company, finance its growth, and spin it off into the Web of trust.
Turn off your spectroscope, though, and the Web disappears. It is as invisible as the life of the mind and the laws of liberty that sustain it and that it sustains. Although the sphere of light spans the globe and reaches up as far as 23,000 miles, it appears to humans at their screens as a single point of concentrated light. At any instant, that is all that is present on a cathode-ray tube: a single spot rastering back and forth 60 times a second. It tricks your eye into seeing a full image.
Turn off your spectroscope and if you are in the wrong markets, the Web may seem inconsequential. You decry “the myth of Internet traffic,” as did a January 1999 issue of the estimable Business Communications Journal. You may call it an “American fad,” as have several French executives in my presence. You may compare it to tulipmania. For the colors of visible light are absent. Without your Maxwellian prism, all the frequencies dissolve and, except for an infinitesimal spot of phosphorescence on your screen, disappear from sight.
This trompe l’oeil point of light both symbolizes and embodies the global efflorescence: a light of infinite dimensions concentrated into a single point racing across the screen. Moving up the spectrum toward the visible domain, becoming ever dumber and more capacious, the Internet transcends geography and reduces to a single spot in time and space. As the commerce of the world flows into this global radiance and is distilled into this single point, it resonates with the creative work of the world. Accommodating real-time transactions, it is a market space that can absorb all the business of the new global economy. The smaller the point, the more the room.
As activities move from the surface of the world into this virtual pinpoint of radiance, they accelerate toward a universal resonance — the velocity of light — and converge to a universal medium. The light is both the abundance and the scarcity of the new world economy, the creative interplay of limit and infinite, the flesh and the divine.
George Gilder is a contributing editor of Forbes ASAP. This is an excerpt from a chapter in his forthcoming book, Telecosm. His other books include Wealth and Poverty, Life After Television, and Microcosm.