Networks aren’t only important to one’s career – they’re important to understanding history
A review of Niall Ferguson’s “The Square and the Tower.”
Cover of “The Square and the Tower: Networks and Power, from the Freemasons to Facebook” by Niall Ferguson.
Ferguson, N. (2018). The Square and the Tower: Networks and Power, from the Freemasons to Facebook. Penguin Press. 563 pages.
Introduction
The word network is both a verb and a noun. Self-help gurus, business consultants, and academics use it so frequently that it is infuriatingly nauseating. Yet, our conception of networks helps us understand biological systems like blood circulation, infrastructure systems like highways, and even social arrangements. Networks help transport ideas and create new ones. They are pervasive. Simply put, networks are essential. So what has been their importance throughout human history?
Niall Ferguson, an acclaimed historian, Senior Fellow at the Stanford University’s Hoover Institution and Managing Director at Greenmantle LLC, wrote a different kind of book on networks: “The Square and the Tower: Networks and Power, from the Freemasons to Facebook.” Ferguson argues 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” (p. xxv). The first period from the 1400s, with the advent of the printing press in Europe, to the 1700s, and the second from the 1970s, at the start of the Information Communications Technology Revolution, to our contemporary globalized age.
Gathering information on networks is difficult due to their secrecy, and investigating networks often attracts a bunch of cranks and conspiracy theorists, so historians often ignore their impact. Ferguson takes a unique approach worth commending by studying how networks and hierarchies have shaped our world throughout history. “The Square and the Tower” is a compelling case, and it should be on your bookshelf.
Definitions
Before diving into the arguments, it is critical to understand what Ferguson means by networks.
He thoroughly fleshes out all theories in the first part of the book – no previous knowledge on mapping mathematics required. It is easiest to think of networks as graphs. Each graph has nodes (vertices) and edges (links) that attach to the nodes. The nodes of these graphs can represent people, companies, governments, and departments and directorates within a company or government. These nodes and edges may form due to homophily, our tendency to assort ourselves with similar people (p. 26).
Ferguson outlines four types of networks.
The first type is a random network, where each node has roughly the same amount of links to other nodes, such as highway or air traffic control systems (p. 37).
The second is a crystal lattice or mesh network, which is highly deterministic and non-random, where each node has the same number of edges as others (p. 38).
The third is a modular network consisting of several clusters strung together with few edges (p. 38).
The fourth is a hierarchy, which is a non-random arrangement where the highest point has the highest betweenness and closeness centrality (p. 39).
What is centrality? In network theory, centrality allows us to determine a node’s importance within a network. Its degree centrality represents the number of edges coming from a specific node.
Betweenness centrality is “the extent to which information passes through a particular node” (p. 27-28). Closeness centrality refers to the number of steps for a node to reach every other node on average (p. 28). Understanding the types of centrality allows us to determine a network’s hub, the node with the highest degree and betweenness centrality. Clusters have a higher density between nodes (p. 34).
A quick note on hierarchies. Ferguson shares how the word hierarchy comes from Greek, meaning “rule of the high priest” (p. 19). Hierarchies help centralize and exercise power more efficiently (p. 21). Strict, command-control systems are valuable when there is a common goal, hence the hyper-specialization of tasks in factories, bureaucracies, and large organizations (p. 43).
Lastly, how do networks form? According to Ferguson, competing networks have holes (gaps between clusters) that entrepreneurs fill. The brokers are the people who bridge those holes, integrating work between networks. For this reason, open networks are more innovative than closed, homogenous ones (p. 32).
What are some critical lessons about networks throughout history?
This book brims with evidence proving that networks have played a significant role in shaping important events across time and place. But to fully appreciate the impact of networks, we must consider their relationships with other networks and hierarchies. Below I will share just six ways hierarchies and networks interact to understand better what makes societies great.
Hierarchies can successfully quell networks when threatened. Consider the Illuminati, a secretive, pseudo-religious group of free-minded folks intent on studying Enlightenment ideals. Their covert operations invited suspicion from French and German authorities, such as the belief that they caused the French Revolution. Many believed the Illuminati were engaged in counterfeiting, supporting suicide, and even practicing abortion (p. 54-55). Consequently, established hierarchies viewed the Illuminati as heretics and “were easily crushed” (p. 55), dissolving in the 1780s. Despite the group’s power and influence, conspiracy theorists today have managed to exaggerate their importance and falsify what is indeed known. It is why Ferguson attempts to “rescue the history of networks from the clutches of the conspiracy theorists” (p. 55) and illustrates the importance of network challenges to hierarchy.
Networks can successfully oppose established hierarchies. Johannes Gutenberg’s printing press in 1440 fundamentally changed Europe for the better. His invention was not a weapon of war like a trebuchet, but it was widely adopted and used to spread ideas countering the church’s authority and its consolidated power over all forms of thought. Europeans may not have realized it then, but they lived in the first networked age, which ushered the Protestant Reformation, Scientific Revolution, and Enlightenment, according to Ferguson.
But did this network survive in the wake of the church’s attempt to squash these dissenting ideas? Protestantism, Ferguson explains, was quite resilient to the church’s intimidation techniques because they had established strong networks where the hubs were key martyrs (p. 84-85). Letter couriers and financial backers continued their causes against the church hierarchy despite their deaths. Free-thinking networks proliferated, scholars avoided religious schools and channelled their intellectual efforts on more worldly endeavours. Scientists also exchanged correspondence between cities (chapters 17 and 18). Indeed, cities with more printing presses were likelier to convert to Protestantism (p. 83). These case studies demonstrate the importance of free thought and expression for societal growth and why societies must permit various dialogue, or else turn backwards or stagnate.
Hierarchies can work together. Though the church’s significance dwindled, other types of hierarchies, such as states, were able to form power networks between themselves to solidify their control within their respective realms. The Congress of Vienna from 1814 to 1815 is a clear case. Austria, Britain, France, Prussia, and Russia formed a pentarchy to establish peace and balance power between nations in limited ways (p. 122-123). This decision was a response to the Napoleonic and French Revolutionary Wars. Despite the hierarchies’ attempt to reassert themselves in the early nineteenth century, the probability of conflict increased significantly after 1890 when Germany and Austria-Hungary forged alliances against France and Russia. The pentarchy was no longer a buffer. Initially designed to reign in neighbourly hostilities, the system lost its flexibility (p. 194) and was one of the first steps towards the First World War in 1914.
A key lesson is that even the most sophisticated alliances between large hierarchies can always crumble. The agreements on paper do not necessarily reflect the true and permanent intentions and actions of a network’s members.
Hierarchies can collaborate with networks for mutual benefit. During the First World War, Germany devised a plan to cause a revolt among Muslims living in the British and French empires. Their plan failed. Despite German dispatches and leaflets to the Middle East and North Africa (p. 208), the British had a more appealing alternative. Britain sponsored Arab nationalism and a call for jihad against the Ottoman Empire, an ally with Germany. The British gave its Muslim subjects a great reason to unify against Germany (p. 209). Consequently, the British approach quelled a German effort to activate an otherwise dormant network.
Despite the best intentions, societies and alliances can break apart quite easily. Nothing is ever permanent, and double-handled dealings remain a threat, creating more instability. It is unwise to assume people will support a specific cause, especially when there may be better alternatives.
Hierarchies can rule over networks. Britain governed more than half the world’s land surface and population due to its lax, decentralized colonial approach (p. 163). They planted British subjects in every colony they established but collaborated with existing local elites to ensure their success at subjugating populations. The British government provided locals considerable control over how they governed their subjects. British colonials, meanwhile, served as overseers, maintaining the outposts and controlling the purse-strings, discouraging their subjects from “going native.” Comparing the stability of the British Empire to Napoleon’s (a micro-manager who assumed he knew what best was), the British hierarchy’s arms-length approach to governance over local networks proved superior. The case shows how societies do not have to concentrate so much power at the top. It may prove beneficial for more de-centralization because it gives subjects a greater sense of autonomy and, paradoxically, maybe even more loyalty.
Networks may also work against other networks. Military operations are traditionally highly organized undertakings. But what happens when traditional approaches are unsuccessful against non-traditional threats? Ferguson details the fascinating example of how Sir Walter Walker oversaw counter-insurgency measures in Borneo during the Indonesia-Malaysia Confrontation from 1963 to 1966. The Indonesian communist president Sukarno opposed the creation of Malaysia. Walker’s handling of the communist threat is essentially the art of networked warfare, the antithesis of rigid, hierarchical war practices. Techniques involved: repeatedly ambushing enemies; living amongst indigenous populations to build trust and gather intelligence; attacking the enemy and not retreating to home-base to maintain the element of surprise; carrying sufficient supplies to care for oneself (a sock full of rice, a pocket full of bullets); abandoning rifles, if necessary, to blend in as fisherman, traders, farmers, or woodcutters, and so much more (p. 274-275). Walker’s efforts were successful. A network, not a hierarchy, was the only solution to countering a hostile network to avoid a conflict from boiling over and becoming another Vietnam.
A key lesson here is to adopt new approaches for new threats since the old ways of doing things may not work. Sometimes, these new methods may mean mimicking the opponent to throw them off their game, diligently making an effort to think two steps ahead and change plans spontaneously and accordingly. On a more serious note, developed or developing societies can glean valuable lessons from Walker’s counter-insurgency success, especially in response to insurgents who may threaten to upend everyone’s way of life.
Networks can work with other networks. Silicon Valley insiders are the perfect example. According to Ferguson, they are an exclusive network, not necessarily meritocratic, who have forged strong business bonds, invested in each others’ companies, and accumulated vast fortunes (p. 357). Supposedly open social networks borne from big tech have dramatic social consequences. For example, they increase inequality and asphyxiate the competition with their duopolies (Microsoft and Apple) or monopolies (Facebook, Amazon, and Google) because they can buy out nearly every potential competitor. Their returns do not diminish because they are scale-free. The current economic arrangement, to be blunt, is nothing short of a few highly connected people that profit immensely (p. 358). No matter how this might offend people, Silicon Valley demonstrates the importance of networks. When powerful networks collaborate with others of common interests, they can exert immense power with limited accountability.
Minor matters
The only unpersuasive case Ferguson makes is in chapter 52, decrying what he calls the “administrative state,” an overbearing hierarchy. The administrative state’s characteristics include excessive and complicated regulation that achieves the opposite effects of the regulation’s purposes (p. 347). Its origins are in the 1970s, and Ferguson cites the Environmental Protection Agency, Consumer Product Safety Commission, and the US Code for Federal Regulations as examples.
The administrative state’s causes include deteriorating standards in governance and legislation, though they are not defined explicitly. Examples include professional politicians more focussed on “spin than substance” (p. 349); the media condemning every issue and demanding immediate action; self-interested lobbyists at the expense of society at large; and lawyers who profit from ascertaining and interpreting the legalese. The consequences of the administrative state, according to Ferguson, are severalfold. Large corporations find themselves with an advantage because they can pay for lawyers. The complexity breeds instability because it is harder for authorities to govern. Interest groups resort to buying politicians, resulting in dismissing other people’s needs. Finally, the private sector cannot innovate efficiently due to increased burdens, and social cohesion worsens.
Ferguson is correct that excessive regulation and bureaucratization make everything more complicated, resulting in increased deadweight time and capital loss. He is also correct that the consequences listed above are clearly, and painfully visible in today’s American politics and other liberal democracies. But some of the issues he mentions are not entirely convincing. The media certainly stunts politicians into taking bold action due to fear of criticism. However, the media’s critiques, poking, and prodding come with the job of holding public officials and government accountable, despite its intensification in the social media age.
Additionally, increased regulation through legislation or government entities may arise due to citizens’ needs over public matters, such as the climate, labour, safety,y and health. These institutions indeed complicate matters for producers, consumers, and authorities with the added regulatory burden. For instance, forbidding the use of specific ingredients in food products for medical and health reasons is an additional burden on private companies, forcing them to innovate and incur legal and production costs. Nevertheless, these institutions may have resulted from a concerned public’s demands and, therefore, wholly justified. As the world grows more complex, it is difficult to imagine bureaucracy, regulation, and legislation becoming simpler.
How is this book relevant?
Studying history is always relevant—knowledge compounds. Everyone can gain new insights from studying past events and using them to understand the present and ponder the future. Ferguson draws several relevant observations and judgements from the past, present, and future. Here are just a few.
In an age of mega-millionaires and billionaires ardently using their funds and connections to influence politics and the public sphere, Ferguson draws a hilarious comparison between Donald Trump and Benedetto Cotrugli, a fifteenth-century merchant who wrote the “Book of the Art of Trade,” a superior, earlier version of Trump’s “The Art of the Deal.” In it, “Cotrugli warns merchants against involving themselves in politics,” writes Ferguson (p. 68). Among other parcels of sage advice, Cotrugli understood that business people are negatively viewed and felt that a proper business person should be well-rounded. He thought they should have a breadth of knowledge on everything from “cosmography, geography, philosophy, astrology, theology and law” (p. 70). Additionally, he felt it was essential to display forgiveness and understanding for downtrodden borrowers, a sharp contrast to what the world witnessed during Trump’s presidency. In other words, Cotrugli understood that merchants had to have a heart and a soul, something that today’s MBA students, professionals and, yes, presidents should think about.
Another helpful insight from Ferguson is on migration. He writes: “Poverty alone is seldom enough to drive mass emigrations. What is needed is political upheaval at home and the prospect of a more stable habitat within affordable reach” (p. 173). He refers to the Chinese migrations to the United States’ west coast in the late nineteenth century and details how these new migrants were paradoxically disparaged as unfit settlers and simultaneously held responsible for manipulating power and finance (p. 176). Their treatment was similar to what Jews experienced in New York. These accusations were, of course, untrue, but one can see parallels in our current age of extreme political upheaval and consequent mass migration to places like Europe and North America. Instead of scapegoating, we should remind ourselves to be grateful for what we have and feel humbled by those capable of more. More importantly, I would add that we need to catch ourselves when we fall into this limited way of thinking, relying on poorly framed caricatures that obscure the true qualities of others.
In a similar vein, the rise of extremism, in part tied to the rising influx of refugees, immigrants, and economic competition from abroad, seems to have captured the daily headlines. Whether they are white nationalists or Islamists, extremists of anti-social networks pose a serious threat to liberal democracy’s fundamental values. But as Ferguson argues, their zealotry may prevent them from gaining the necessary momentum and broad appeal to fulfill their agendas, rendering them weak and unable to recruit or spread their message (p. 335). Yes, these networks remain a threat, but we should stay confident in their demise and insignificance. They will likely thrive during economic downturns when large swaths of a nation’s population suffer, so those in public office and administration should help everyone help themselves and not slide backward.
Finally, Ferguson reminds us not to be fooled by Silicon Valley’s technological and financial power because hierarchies, like the nation-state, are still relevant. The young, ‘libertarian,’ geeky coders and engineers of the Bay Area may wish to have us believe that we live an open-network age with unrestricted expression and consciousness. The reality is that the IT infrastructure that makes online networks possible is maintained and entirely dependent on hierarchies such as government security departments and large corporations. Fibre optic cables, data centres, servers, and satellites are all controlled by oligopolies, and tech companies must cede their data and information to public authorities for the public’s security (p. 422). And that, probably, is a good thing, considering the rise of cyber warfare from within a country and from foreign entities. Societies will collapse if governments fail to monopolize the use of violence.
Overall impression
Ferguson produced a masterpiece. Meticulously researched, he does not rely solely on the works of other historians or academics. He weaves examples from the arts and literature in every chapter to convey his main arguments, such as Dickens, Shakespeare, silent films, written correspondence between researchers, or business best practices). Readers are guaranteed to find hidden historical gems throughout the book. His insights force us to reflect on our current place in the networks we belong to. It is hard to appreciate his brilliance fully.
Key takeaways from his book include issues like rising social inequality. “Unlike in the past,” writes Ferguson, “there are now two kinds of people in the world: those who own and run the networks, and those who merely use them” (p. 403). Owning intellectual property rights, shares, stocks, or property of large companies is becoming ever more important, and not being part of such networks may prove disastrous for one’s life’s outcomes.
But we must remember that being part of a network is not necessarily a golden ticket to success and stability if we, as individuals representing nodes, do not possess the appropriate betweenness and closeness centrality. Moreover, a network’s success may depend on evading the public’s attention since notoriety may attract suspicion and resentment (p. 184).
Similarly, hierarchies remain relevant for the global governance’s future. They are still necessary to help reign in, monitor and quell hostile networks that, left unchecked, may cause serious harm to others.
Who is this book best for?
It might sound strange, but this book is an asset for business majors and professionals. Instead of reading pop-psychology self-help books with regurgitated tips on networking or navigating office politics, why not pick up “The Square and the Tower”? You will learn about the methods and challenges faced by history’s most exciting networks and hierarchies. It is a no-brainer that history buffs will enjoy this read. Anyone interested in organizational theory and group dynamics should leaf through these pages and absorb as much content as possible. Those who study politics will find this book provides a refreshing perspective on power structures and institutions. Ultimately, Ferguson created a valuable resource to have on hand.