May 26 2009

Fair and Balanced, the Global Network Is Not.

by at 4:42 pm under Uncategorized

Someone once said to me, “There are only three kinds of ‘fairs’ in the world:  the County fair, the State fair and the World’s Fair.” 

As a person who has always things to be “fair,” this statement bothered me then as much as it does now.  Yet, the older I get the more I realize the sad reality of the anomaly between the way things appear or should be and the way things are in actuality.  For example, I felt betrayed when John Edwards – a politician I knew, worked for and admired for years – was uncovered as having an affair and allegedly misusing funds.  It just did not seem fair; he had billed himself as one person but all the while lived a life like those he claimed to challenge.  Such political anomalies, among others in life, come to mind in reading about the global network thus far. I am particularly fixated on the disconnect between what I want the structure to look like (a functioning distributed, interdependent system with fair checks and balances) and how it actually exists (a hierarchical decentralized network with power distributed in a way that leads to negative externalities).  Not unlike my disappointment with power-drunk politicians, I find myself disheartened by some of the anecdotes we have read thus far in class.   Pessimistic as it may sound, I would characterize the global network as dominated by the financial institutions – but in a system that should have cooperation with checks and balances to keep the power of one node from getting to strong. 

Mark Buchanan describes a “hierarchical network” as one in which there are “a few elements … [with] especially important roles in trying the network together.”[i]  I would argue that the “financial institutions” node has amassed an artificial amount of power and an inflated role within the global structure – making itself the “especially important” node in relation to states and NGO’s.  In doing so, the ability of the other nodes becomes limited in regard to keeping the financial sector and its special interests in check.  For example, in “The Overselling of Globalization,” Joseph Stiglitz points out that “countries have been told to cede the most important economic decisions, those concerning monetary policy to independent central banks.”[ii] Such a move undermines the role of states as a node in the system for the interests of the financial side.  Yet, conventional wisdom dictates that if nations want to develop, they must remain connected to the global network.  And, there, it is the financial institutions that run the show – not the states themselves.

Ideally, the financial system would exist in a more fair and balanced network with NGO’s and the state to work toward a global structure.  Instead, as Stiglitz suggested, the threat of cutting the critical link between nations and financial institutions ties nations to the demands of those entities.  While I would hope NGOs and “do-good-er” organizations could exist external of those financial institutions, it seems the reality is that certain money-oriented entities hold a crippling degree of power.  Money as controlled by the financial institutions (both in terms of direct assistance and money for aid organizations to function) has been solidified as the ladder to development – a dangerous connection that is difficult to undo.  It is the creation of such critical links and power dynamics between the nodes as dictated by the financial sector that is so worrisome to me. 

The impact of a structure in which one node becomes super-powerful is the advent of a hyper-connectedness.  Buchanan uses the Internet as an example countering the idea that a hierarchical decentralized network is vulnerable to attack,[iii] but I think that the recent financial meltdown shows that may be just the case.  Because the global network had grown so deeply intertwined and depended upon the financial sector node, damage to this “hub” did just what the structure would suggest:  harmed all other nodes in a devastating way.  Stiglitz touches on this in saying that “there is … a need for global collective action to overcome financial crises.”[iv]

While the concept of a “fair” international network may be idealistic, I do not think we should stop striving for a more balanced global system.  The ebb and flow of nodes may be a natural occurrence, but allowing one (the financial sector) to become too influential can be dangerous and, in many ways, irreversible.

[i] Buchanan, Mark.  Small Worlds and the Groundbreaking Science of Networks.  W.W. Norton & Co.:          New York (2002).  P 80. 

[ii] Stiglitz, Joseph.  The Overselling of Globalization.  P 232

[iii] Buchanan, Mark.  P 80.

[iv] Stiglitz, Joseph.  p 233. 

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