The Century of Networking (by Rupert Murdoch)

Excerpt from

The Century of Networking

by Rupert Murdoch, Chairman and Chief Executive of News Corporation

The Eleventh Annual John Bonython Lecture
The Centre for Independent Studies

October 20, 1994, Melbourne, Australia

Centre for Independent Studies
38 Oxley Street
St Leonards, NSW 2065 AUSTRALIA
Phone (02) 94384377, Fax (02) 94397310 and

PO Box 5529, Lambton Quay 3785,
Wellington NEW ZEALAND
Phone (04) 4995861, Fax (04) 4995940
email: cis@cis.org.au

....Now, George Orwell was a writer of genius, and Nineteen Eighty Four is a work of inspiration. In recent years, for example, it has become a great favorite in the former Iron Curtain countries because of its uncanny insight into the psychology of corrupt totalitarian bureaucracies. Orwell of course had no direct experience of this, but he was apparently able to figure it out intuitively -- based on his wartime stint working for the BBC.

We would not have had a very different view if he had worked for the ABC.

Nevertheless, the plain fact is that Orwell was wrong in his central prediction. Technology has not led to centralization and tyranny -- rather the reverse.

I've been musing about this recently because I've been reading the galleys of a very impressive new book on exactly this theme by Peter Huber, an American lawyer and scientist and, indeed, a fellow of another think-tank in the same constellation as CIS: the Manhattan Institute in New York. It's an essay on why Orwell went wrong, combined with a rewriting of Nineteen Eighty-Four to illustrate what might actually have happened.

Huber rewrote Nineteen Eighty-Four by a particularly ingenious method: he scanned Orwell's collected works into his computer, and then picked and chose and reorganized pieces of Orwell's prose. I think this is the closest that anyone has yet come to fulfilling the long-standing dream of all editors: to be able to put newspapers together without having to deal with journalists!

Huber's book is being published this month by Simon & Schuster in New York -- one of our competitors. It's called Orwell's Revenge: the 1984 Palimpsest.

What's a "palimpsest"? I had to look it up too. It's a writing surface, like a tablet or parchment, that can be scraped clean and written on again. Orwell used the word to describe history in his nightmare world -- constantly rewritten, with newspaper files and reference books retrospectively altered to suit the ruling party's current line. And, indeed, this was exactly what Stalin was beginning to do in the Soviet Union. We've even seen an odd attempt or two around here recently!

This destruction of the collective memory -- something Alexander Solzhenitsyn defined in his 1970 Nobel Prize speech as the essence of totalitarianism -- was a spectre that haunted Orwell. He had written with horrified fascination, in a 1944 essay, of the Caliph Omar's destruction of the libraries of Alexandria. Burning manuscripts kept the public baths warm for eighteen days. Great numbers of tragedies by Euripides and others were lost forever, not to mention great works by Aristotle, Plato and others.

Right away, we can see the difference that technology has made. The Xerox machine -- which of course did not exist in Orwell's day -- has made keeping track of original documents, so they can be rounded up and destroyed, an impossible dream. Xerox machines have also made the copying of subversive or sensitive documents for publication or leaking quite unstoppable, which is why Xerox machines in the Soviet Union were kept under lock and key as late as the mid-1980s.

But we should also note the next step: the collective memory will hardly have a physical existence at all. It will escape into cyberspace, transmitted back and forth by modem and even satellite between scores of millions of computer network users. Solzhenitsyn took the title of his Nobel Prize speech from the Russian proverb "one word of truth outweighs the whole world." In the future, we will have many words of truth, ever-present in the ether.

Why was Orwell wrong? Peter Huber argues that it was for two basic reasons. Firstly, Orwell was wrong to suppose, in the words of one of the slogans of his totalitarian party in Nineteen Eighty-Four, that "ignorance is strength." In a system based on science ignorance is not strength; it is weakness.

In Huber's scenario, a situation arises in which the party is simply unable to maintain its two-way telescreens because of a shortage of technical personnel. The screens are co-opted by enterprising "proles." The proles, you will remember, are the underclass outside the party circle who exploit the screens' interactivity to communicate with each other. Far from being a centralizing device, the telescreen network decentralizes and diffuses power.

What makes Huber's scenario the more convincing is that this sort of scientific and technological atrophy was exactly what destroyed the Soviet Union. Without freedom of inquiry, scientific inquiry just could not proceed.

By the mid-1980's there were extraordinary reports of Western scientists going to the Soviet Union on some joint venture, finding that two separate groups of Soviet scientists were working on the same problem in ignorance of each other, sometimes even in the same city, and putting them in touch with each other. Science being strangled by the security needs of the Soviet state.

When President Reagan launched his Star Wars program, it was the last straw. The Soviets knew they could never match it, and their will broke.

The second reason that Orwell was wrong, Huber argues, is in effect contained in another of his totalitarian party's slogans: "Freedom is slavery." But freedom is not slavery. Specifically, free markets are not monopolies.

Orwell believed that free markets must lead to private monopoly and hence to the driving-down of living standards. He believed this because, like a lot of intellectuals who are accustomed to thinking about literature and politics, he had no real concept of the price mechanism. He thought that profits must be extorted by power.

For example, he assumed that capitalists would always deliberately suppress innovation to keep profits high. He believed that this had actually happened to a type of "flexible glass" that had been mentioned in antiquity by the Roman writer Petronius, but was now irretrievably lost.

In fact, however, capitalists are slaveringly eager to innovate, to cut into each other's market share. Perhaps when Orwell was growing up it was possible to argue hypothetically that the Soviet Union would innovate faster. But as it turned out, it was precisely at innovation that capitalism beat communism most decisively.

Because capitalists are always trying to stab each other in the back, free markets do not lead to monopolies. Essentially, monopolies can only exist when governments support them. For example, the media business in this country is relatively concentrated, at least in part because of Canberra's restrictions against foreign ownership (and monopolies are also mirages -- people just haven't thought carefully enough about what constitutes the relevant market. For example, both advertisers and audiences in fact do have alternatives to newspapers -- radio, television, eventually quite possibly the telephone system -- throughout Australia). The fact that Orwell did not understand markets leads to one of the most pointed and indeed poignant differences between Orwell's Nineteen Eighty-Four and Peter Huber's rewriting of it in Orwell's Revenge. In Nineteen Eighty-Four, the street markets, run by the proles and technically illegal, are drab and depressing places. But in Huber's scenario, they are lively, bustling -- indeed, they provide better goods and services than the party's official outlet. You get the impression that the proles have implicitly declared independence from the party state. It withers away, although not at all in the way Marx expected.

Again, we know from the collapse of communism that this is entirely realistic. In the Soviet bloc, the black market rapidly became the only effective way to get anything of value. And grey markets: in the Soviet Union itself, towards the end, some vast proportion of all produce sold came from the minute fraction of agricultural land that peasants were allowed to cultivate themselves.

As Huber points out in his scenario, it is the hijacked telescreen system itself that has really unleashed the elemental power of these private street markets. The proles are able to use it to trade goods. In economists' jargon, it makes possible the more efficient allocation of resources.

The poignant aspect of all this is that Orwell did have some dim inkling of what street markets could mean. In one of his earlier novels, he provided a lyrical description of one (which Peter Huber promptly appropriated for his rewritten book). And in that novel, Orwell had his hero reflect on the scene as follows: "Whenever you see a street-market you know that there's hope for England yet."

That's a moment of true artistic insight -- albeit unsupported (as sometimes happens with artists) with any rational or scientific follow-through. The freedom, the unforced exchange of the street market, its pragmatic acceptance of human self- interest and its transformation of self-interest into something mutually, peacefully beneficial -- it does mean there's hope for England. And, indeed, for all of us in the Western world.

It's not an accident that Napoleon called England a nation of shop-keepers. What Orwell and Napoleon together saw, however confused or critical they felt about it, was the extent to which markets, or what I referred to earlier and more grandly as the principles of classical liberalism, are fundamental to our civilization.

I said earlier that we suffer from a congerie of attitudes that cause us to be surprised by the idea that technology might be beneficial -- and perhaps by the underlying principle that free markets are fundamental to our civilization.

A part of that congerie is the eclipse into which the idea of markets passed for a considerable part of this century. For a variety of reasons, it was assumed by left and right alike, and indeed is still too often assumed, that markets do not work properly and that governments have to step in. I'm not talking about communism here or even socialism but about all pervasive regulation and control.

And that assumption still underlies many of our Australian institutions -- notably our labor market, the bone in Australia's throat, something which I know the Center for Independent Studies has examined recently -- with appropriate distaste!

When you rethink this assumption about markets, you see the world through different eyes. It wasn't just the Soviets who thought that street markets were the work of speculators and assorted anti-social elements. The entire establishment of western development economics viewed them as trivial at best, unproductive middlemen at worst.

Well at News Corporation, we are enlightened. For example, in India we have discovered that tens of thousands of pirates have invested in reception dishes and are selling Star programming to a few hundred, sometimes just a few score, households in their immediate neighborhood.

Some cynics have said this will be fatal for our Asian television company, Star. We disagree, and so we look forward to a long partnership with these splendid entrepreneurs. They are pioneering the market -- a market that Orwell himself, who worked in the BBC's Indian service, said was fatally flawed because it did not yet embrace the masses.

The case of India, by the way, illustrates another important point: although technology does not lead to tyranny, neither need it lead to chaos. The new markets it creates don't just make Northcliffes rich: they may also solve age-old political problems.

Indian leaders have long been desperately worried about disunity in their vast, teeming, multilingual country. This is something we can hardly understand in the English-speaking world, where we achieved political stability so long ago. To try to achieve it in India there has been an effort ever since independence to promote Hindi as the lingua franca, what in India is called the "link language." But the effort has failed for a variety of reasons.

Until now. With the coming of the electronic mass media, Hindi is spreading, because everyone wants to watch the best television programming. And I suspect we will see this story repeated throughout the developing world, not least in China with Mandarin.

In which case it will be not only prosperity that we will catch in our networks, but also order -- and ultimately, peace.

And peace, remember, has been in short supply in the twentieth century. The optimism of Northcliffe's 1890's give way to the catastrophe of the First World War, and the First World War looms over this entire century, really only ending with the fall of the Soviet Union. In its dark shadow we dreamed the Orwellian totalitarian nightmare.

In Nineteen Eighty-Four George Orwell was a pessimist. But he was also an optimist -- as I've said, you don't expect artists to be consistent! Earlier, he had written a poem about a young volunteer militia he saw in the Spanish Civil War:

No power can disinherit.
No bomb that ever burst
Shatters the crystal spirit.

Ladies and gentlemen, in this century of bursting bombs, I like to think we are doing our part, however humble and mundane, to free that crystal spirit.

Thank you very much.