Life After Google

by George Gilder

  Meanwhile, it was obvious that security on the Internet had collapsed. Google dispatched “swat teams” of nerds to react to security breakdowns, which were taken for granted. And as Greylock Ventures’ security guru Asheem Chandna confided to Fortune, it is ultimately all your fault. Human beings readily fall for malware messages. So, says Fortune, the “fight against hacking promises to be a never-ending battle.”3

  In the dystopian sci-fi series Battlestar Galactica, the key rule shielding civilization from cyborg invaders is “never link the computers.” Back in our galaxy, how many more breaches and false promises of repair will it take before the very idea of the network will become suspect? Many industries, such as finance and insurance, have already essentially moved off-line. Healthcare is deep in this digital morass. Corporate assurances of safety behind firewalls and 256-bit security codes have given way to a single commandment: nothing critical goes on the Net.

  Except for the video game virtuosi on industry swat teams and hacker squads, Silicon Valley has pretty much given up. Time to hire another vice president of diversity and calculate carbon footprints.

  The security system has broken down just as the computer elite have begun indulging the most fevered fantasies about the capabilities of their machines and issuing arrogant inanities about the comparative limits of their human customers. Meanwhile, these delusions of omnipotence have not prevented the eclipse of its initial public offering market, the antitrust tribulations of its champion companies led by Google, and the profitless prosperity of its hungry herds of “unicorns,” as they call private companies worth more than one billion dollars. Capping these setbacks is Silicon Valley’s loss of entrepreneurial edge in IPOs and increasingly in venture capital to nominal communists in China.

  In defense, Silicon Valley seems to have adopted what can best be described as a neo-Marxist political ideology and technological vision. You may wonder how I can depict as “neo-Marxists” those who on the surface seem to be the most avid and successful capitalists on the planet.

  Marxism is much discussed as a vessel of revolutionary grievances, workers’ uprisings, divestiture of chains, critiques of capital, catalogs of classes, and usurpation of the means of production. At its heart, however, the first Marxism espoused a belief that the industrial revolution of the nineteenth century solved for all time the fundamental problem of production.

  The first industrial revolution, comprising steam engines, railways, electric grids, and turbines—all those “dark satanic mills”—was, according to Marx, the climactic industrial breakthrough of all time. Marx’s essential tenet was that in the future, the key problem of economics would become not production amid scarcity but redistribution of abundance.

  In The German Ideology (1845), Marx fantasized that communism would open to all the dilettante life of a country squire: “Society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, to fish in the afternoon, rear cattle in the evening, criticize after dinner, just as I have in mind, without ever becoming hunter, fisherman, shepherd or critic.”4

  Marx was typical of intellectuals in imagining that his own epoch was the final stage of human history. William F. Buckley used to call it an immanentized eschaton, a belief the “last things” were taking place in one’s own time.5 The neo-Marxism of today’s Silicon Valley titans repeats the error of the old Marxists in its belief that today’s technology—not steam and electricity, but silicon microchips, artificial intelligence, machine learning, cloud computing, algorithmic biology, and robotics—is the definitive human achievement. The algorithmic eschaton renders obsolete not only human labor but the human mind as well.

  All this is temporal provincialism and myopia, exaggerating the significance of the attainments of their own era, of their own companies, of their own special philosophies and chimeras—of themselves, really. Assuming that in some way their “Go” machine and climate theories are the consummation of history, they imagine that it’s “winner take all for all time.” Strangely enough, this delusion is shared by Silicon Valley’s critics. The dystopians join the utopians in imagining a supremely competent and visionary Silicon Valley, led by Google with its monopoly of information and intelligence.

  AI is believed to be redefining what it means to be human, much as Darwin’s On the Origin of Species did in its time. While Darwin made man just another animal, a precariously risen ape, Google-Marxism sees men as inferior intellectually to the company’s own algorithmic machines.

  Life after Google makes the opposing case that what the hyperventilating haruspices Yuval Harari, Nick Bostrom, Larry Page, Sergey Brin, Tim Urban, and Elon Musk see as a world-changing AI juggernaut is in fact an industrial regime at the end of its rope. The crisis of the current order in security, privacy, intellectual property, business strategy, and technology is fundamental and cannot be solved within the current computer and network architecture.

  Security is not a benefit or upgrade that can be supplied by adding new layers of passwords, pony-tailed “swat teams,” intrusion detection schemes, anti-virus patches, malware prophylactics, and software retro-fixes. Security is the foundation of all other services and crucial to all financial transactions. It is the most basic and indispensable component of any information technology.

  In business, the ability to conduct transactions is not optional. It is the way all economic learning and growth occur. If your product is “free,” it is not a product, and you are not in business, even if you can extort money from so-called advertisers to fund it.

  If you do not charge for your software services—if they are “open source”—you can avoid liability for buggy “betas.” You can happily evade the overreach of the Patent Office’s ridiculous seventeen-year protection for minor software advances or “business processes,” like one-click shopping. But don’t pretend that you have customers.

  Security is the most crucial part of any system. It enables the machine to possess an initial “state” or ground position and gain economic traction. If security is not integral to an information technology architecture, that architecture must be replaced.

  The original distributed Internet architecture sufficed when everything was “free,” as the Internet was not a vehicle for transactions. When all it was doing was displaying Web pages, transmitting emails, running discussion forums and news groups, and hyperlinking academic sites, the Net did not absolutely need a foundation of security. But when the Internet became a forum for monetary transactions, new security regimes became indispensable. EBay led the way by purchasing PayPal, which was not actually an Internet service but an outside party that increased the efficiency of online transactions. Outside parties require customer information to be transmitted across the Web to consummate transactions. Credit card numbers, security codes, expiration dates, and passwords began to flood the Net.

  With the ascendancy of Amazon, Apple, and other online emporia early in the twenty-first century, much of the Internet was occupied with transactions, and the industry retreated to the “cloud.” Abandoning the distributed Internet architecture, the leading Silicon Valley entrepreneurs replaced it with centralized and segmented subscription systems, such as Paypal, Amazon, Apple’s iTunes, Facebook, and Google cloud. Uber, Airbnb, and other sequestered “unicorns” followed.

  These so-called “walled gardens” might have sufficed if they could have actually been walled off from the rest of the Internet. At Apple, Steve Jobs originally attempted to accomplish such a separation by barring third-party software applications (or “apps”). Amazon has largely succeeded in isolating its own domains and linking to outside third parties such as credit card companies. But these centralized fortresses violated the Coase Theorem of corporate reach. In a famous paper, the Nobel-laureate economist Ronald Coase calculated that a business should internalize transactions only to the point that the costs of finding and contracting with outside parties exceed the inefficiencies incurred by the absen
ce of real prices, internal markets, and economies of scale.6 The concentration of data in walled gardens increases the cost of security. The industry sought safety in centralization. But centralization is not safe.

  The company store was not a great advance of capitalism during the era of so-called “robber barons,” and it is no better today when it is dispersed through the cloud, funded through advertising, and combined with a spurious sharing of free goods. Marxism was historically hyperbolic the first time round, and the new Marxism is delusional today. It is time for a new information architecture for a globally distributed economy.

  Fortunately, it is on its way.

  CHAPTER 2

  Google’s System of the World

  Alphabet, Google’s holding company, is now the second-largest company in the world. Measured by market capitalization, Apple is first. Joined by Amazon, and Microsoft, followed avidly by Facebook in seventh, the four form an increasingly feared global oligopoly.

  This increasing global dominance of U.S. information companies is unexpected. Just a decade ago leading the list of the companies with the largest market caps were Exxon, Walmart, China National Petroleum, and the Industrial and Commercial Bank of China. No Internet company made the top five. Today four of the top five are American vessels of information technology.

  Why then is this book not called Upending the Apple Cart? Or Facebook and the Four Horsemen?

  Because Google, alone among the five, is the protagonist of a new and apparently successful “system of the world.” Represented in all the most prestigious U.S. universities and media centers, it is rapidly spreading through the world’s intelligentsia, from Mountain View to Tel Aviv to Beijing.

  That phrase, “system of the world,” which I borrow from Neal Stephenson’s Baroque Cycle novel about Isaac Newton and Gottfried Wilhelm Leibniz, denotes a set of ideas that pervade a society’s technology and institutions and inform its civilization.1

  In his eighteenth-century system of the world, Newton brought together two themes. Embodied in his calculus and physics, one Newtonian revelation rendered the physical world predictable and measurable. Another, less celebrated, was his key role in establishing a trustworthy gold standard, which made economic valuations as calculable and reliable as the physical dimensions of items in trade.

  Since Claude Shannon in 1948 and Peter Drucker in the 1950s, we have all spoken of the information economy as if it were a new idea. But both Newton’s physics and his gold standard were information systems. More specifically, the Newtonian system is what we call today an information theory.

  Newton’s biographers typically underestimate his achievement in establishing the information theory of money on a firm foundation. As one writes,

  Watching over the minting of a nation’s coin, catching a few counterfeiters, increasing an already respectably sized personal fortune, being a political figure, even dictating to one’s fellow scientists [as president of the Royal Society]; it should all seem a crass and empty ambition once you have written a Principia.2

  But build a better money ratchet and the world will beat a path to your door. You can traverse the globe trading for what you want and transmitting the values for which you trade. The little island of Britain governed an empire larger and incomparably richer than Rome’s.

  Many have derided Newton’s preoccupation with alchemy, the attempt to reverse-engineer gold so that it could be made from base metals such as lead and mercury. “Everyone knows Newton as the great scientist. Few remember that he spent half his life muddling with alchemy, looking for the Philosopher’s Stone. That was the pebble he really wanted to find.”3 Newton’s modern critics fail to appreciate how his alchemical endeavors yielded crucial knowledge for his defense of the gold-based pound.

  All wealth is the product of knowledge. Matter is conserved; progress consists of learning how to use it.4 Newton’s knowledge, embodied in his system of the world, was what most critically differentiated the long millennia of economic doldrums that preceded him from the three hundred years of miraculous growth since his death. The failure of his alchemy gave him—and the world—precious knowledge that no rival state or private bank, wielding whatever philosopher’s stone, would succeed in making a better money. For two hundred years, beginning with Newton’s appointment to the Royal Mint in 1696, the pound, based on the chemical irreversibility of gold, was a stable and reliable monetary Polaris.5

  With the pound note riveted to gold at a fixed price, traders gained assurance that the currency they received for their goods and services would always be worth its designated value. They could undertake long-term commitments—bonds, loans, investments, mortgages, insurance policies, contracts, ocean voyages, infrastructural projects, new technologies—without fearing that inflation fueled by counterfeit or fiat money would erode the value of future payments. For centuries, all countries on a gold standard could issue bonds bearing interest near 3 percent.6 Newton’s regime rendered money essentially as irreversible as gold, as irreversible as time itself.

  Under Newton’s gold standard, the horizons of economic activity expanded. Scores of thousands of miles of railway lines spread across Britain and the empire, and the sun never set on the expanding circles of trust that underlay British finance and commerce. Perhaps the most important result of free commerce was the end of slavery. Reliable money and free and efficient labor markets made ownership of human laborers unprofitable. Commerce eclipsed physical power.

  In the Google era, Newton’s system of the world—one universe, one money, one God—is now in eclipse. His unitary foundation of irreversible physics and his irrefragable golden money have given way to infinite parallel universes and multiple paper moneys manipulated by fiat. Money, like the cosmos, has become relativistic and reversible at will. The three hundred years of Newtonian prosperity having come to an end, the new multiverse seems unable to repeat the miracle of a golden age of capitalism. It is now widely held that citizens are essentially owned by the state on which they depend. Slavery, in the form of servitude to governments, is making a comeback as money transactions become less trustworthy.

  Fortunately the lineaments of a new system of the world have emerged. It could be said to have been born in early September 1930, when a gold-based Reichsmark was beginning to subdue the gales of hyperinflation that had ravaged Germany since the mid-1920s.

  The site of the unnoticed birth was Königsberg, the historic seven-bridged Gothic city on the Baltic. The great mathematician Leonhard Euler had proved in the early eighteenth century that all seven bridges could not be traversed without crossing at least one of them twice. Euler was on to something: Mathematics in all its forms, including all its quintessential manifestations in computer software, is more treacherous than it looks.

  Mathematicians gathered in Königsberg that September for a conference of the Society of German Scientists and Physicians to be addressed by one of the giants of their field, David Hilbert. Himself a son of Königsberg and about to retire from the University of Göttingen, Hilbert was the renowned champion of the cause of establishing mathematics at the summit of human thought.

  Hilbert had defined the challenge in 1900: to reduce all science to mathematical logic, based on deterministic mechanical principles. As he explained to the society, “The instrument that mediates between theory and practice, between thought and observation, is mathematics; it builds the connecting bridge and makes it stronger and stronger. Thus it happens that our entire present-day culture, insofar as it rests on intellectual insight into and harnessing of nature, is founded on mathematics.”

  And what was mathematics founded on? Responding to the Latin maxim ignoramus et ignorabimus (“we do not know and will not know”), Hilbert declared: “For us [mathematicians] there is no ignorabimus, and in my opinion none whatever in natural science. In opposition to the foolish ignorabimus our slogan shall be: ‘We must know, we will know’ ”—Wir müssen wissen, wir werden wissen—a declaration that was inscribed on his tombstone.7


  Preceding the conference was a smaller three-day meeting on the “Epistemology of the Exact Sciences” addressed by the rising mathematical stars Rudolf Carnap, a set theorist; Arend Heyting, a mathematical philosopher; and John von Neumann, a polymathic prodigy and Hilbert’s assistant. All were soldiers in Hilbert’s epistemological campaign, and all, like Hilbert, expected the pre-conference to be a warmup for the triumphalist celebration of the main conference.

  After the pre-conference ended, however, everyone might as well have gone home. A new system of the world, entirely incompatible with Hilbert’s determinist vision, had been launched. His triumphal parade across the bridges between mathematics and natural phenomena was over. The mathematicians and philosophers might talk on for decades, unaware that they had been decapitated. Their successors talk on even today. But the triumphs of information theory and technology had put an end to the idea of a determinist and complete mathematical system for the universe.

  At the time, the leading champion of Hilbert’s program was von Neumann. The twentieth-century counterpart of Euler and Gauss, von Neumann had written seven major papers in the cause. In 1932, he would complete work to extend “Hilbert space” into a coherent mathematical rendition of quantum theory. At the time, von Neumann’s career seemed assured as Hilbert’s protégé and successor.

  Closing out the pre-conference was a roundtable with Carnap, von Neumann, Heyting, and other luminaries. On the edge of the group was Kurt Gödel, a short, shy, owl-eyed twenty-four-year-old hypochondriac. Because his University of Vienna doctoral dissertation, written the year before, offered a proof of the consistency of the functional calculus, he seemed to be a loyal soldier in Hilbert’s army.