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The Paradox of American Power: Why the World’s
Only Superpower Can’t Go It Alone
Joseph S. Nye

Print publication date: 2003
Print ISBN-13: 9780195161106
Published to Oxford Scholarship Online: November 2003
DOI: 10.1093/0195161106.001.0001

The Information Revolution
Joseph S. Nye (Contributor Webpage)

DOI:10.1093/0195161106.003.0002

Abstract and Keywords
The information revolution, which is now transforming societies around the
world, is also changing the nature of governments and sovereignty, increasing
the role of non‐state actors, and enhancing the importance of “soft” power in
foreign policy. The U.S. foreign policy needs to anticipate its effects in shaping
interstate relations at three levels that affect the utility of “soft” power: first, in
terms of the distribution of information management skills; second, in terms of
competitive economic advantage; third, in terms of strategic intelligence‐
gathering. These levels do not lie in the narrow domain of government action,
but reflect broad arenas of societal capability in which “hard” power is merely
tangential.

Keywords:   foreign policy, hard power, information revolution, soft power, U.S.A

In 1997, Jodie Williams, then a Vermont‐based grassroots activist, won the Nobel
peace prize for helping to create a treaty banning antipersonnel land mines
despite the opposition of the Pentagon, the strongest bureaucracy in the
strongest country in the world. She organized her campaign largely on the
Internet. In 1999, fifteen hundred groups and individuals met in Seattle and
disrupted an important meeting of the World Trade Organization. Again, much of
their campaign was planned on the Internet. The next year, a young hacker in
the Philippines launched a virus that spread round the world and may have
caused $4 billion to $15 billion in damage in the United States alone. Unknown
hackers have stolen information from the Pentagon, NASA, and major
corporations such as Microsoft. The hard drives of computers seized from
terrorists have revealed sophisticated networks of communication. On the other

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hand, young Iranians and Chinese use the Internet surreptitiously to plug into
Western web sites and to discuss democracy. An information revolution is
dramatically altering the world of American foreign policy, making it harder for
officials to manage policy. At the same time, by promoting decentralization and
democracy, the information revolution is creating conditions that are consistent
with American values (p.42) and serve our long‐term interests—if we learn how
to take advantage of them.

Four centuries ago, the English statesman‐philosopher Francis Bacon wrote that
information is power. At the start of the twenty‐first century, a much larger part
of the population both within and among countries has access to this power.
Governments have always worried about the flow and control of information, and
the current period is not the first to be strongly affected by changes in
information technology. Gutenberg’s invention of movable type, which allowed
printing of the Bible and its accessibility to large portions of the European
population, is often credited with playing a major role in the onset of the
Reformation. Pamphlets and committees of correspondence paved the way for
the American Revolution. In the tightly censored world of eighteenth‐century
France, news that circulated through several media and modes outside the law—
oral, manuscript, and print—helped lay the foundation for the French
Revolution. As Princeton historian Robert Darnton argues, “Every age was an
information age, each in its own way.”1 But not even Bacon could have imagined
the present‐day information revolution.

The current information revolution is based on rapid technological advances in
computers, communications, and software that in turn have led to dramatic
decreases in the cost of processing and transmitting information. The price of a
new computer has dropped by nearly a fifth every year since 1954. Information
technologies have risen from 7 percent to nearly 50 percent of new investment
in the United States. Computing power has doubled every eighteen months for
the last thirty years and even more rapidly in recent times, and it now costs less
than 1 percent of what it did in the early 1970s. If the price of automobiles had
fallen as quickly as the price of semiconductors, a car today would cost $5.

Traffic on the Internet has been doubling every hundred days for the past few
years. In 1993, there were about fifty web sites in the world; by the end of
decade, that number had surpassed five million.2 Communications bandwidths
are expanding rapidly, and communications costs continue to fall even more
rapidly than computing power. As late as 1980, phone calls over copper wire
could (p.43) carry only one page of information per second; today a thin strand
of optical fiber can transmit ninety thousand volumes in a second.3 In terms of
1990 dollars, the cost of a three‐minute transatlantic phone call has fallen from
$250 in 1930 to considerably less than $1 at the end of the century.4 In 1980, a

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gigabyte of storage occupied a room’s worth of space; now it can fit on a credit‐
card‐sized device in your pocket.5

The key characteristic of the information revolution is not the speed of
communications between the wealthy and powerful—for more than 130 years,
virtually instantaneous communication has been possible between Europe and
North America. The crucial change is the enormous reduction in the cost of
transmitting information. For all practical purposes, the actual transmission
costs have become negligible; hence the amount of information that can be
transmitted worldwide is effectively infinite. The result is an explosion of
information, of which documents are a tiny fraction. By one estimate, there are
1.5 billion gigabytes of magnetically stored digital information (or 250
megabytes for each inhabitant of the earth), and shipments of such information
are doubling each year. At the turn of the twenty‐first century, there were 610
billion e‐mail messages and 2.1 billion static pages on the World Wide Web, with
the number of pages growing at a rate of 100 percent annually.6 This dramatic
change in the linked technologies of computing and communications, sometimes
called the third industrial revolution, is changing the nature of governments and
sovereignty, increasing the role of non‐state actors, and enhancing the
importance of soft power in foreign policy.7

Lessons from The Past
We can get some idea of where we are heading by looking back at the past. In
the first industrial revolution, around the turn of the nineteenth century, the
application of steam to mills and transportation had a powerful effect on the
economy, society, and government. Patterns of production, work, living
conditions, social class, and political power were transformed. Public education
arose to satisfy the need for literate, trained workers to work in increasingly
complex (p.44) and potentially dangerous factories. Police forces such as
London’s bobbies were created to deal with urbanization. Subsidies were
provided for the necessary infrastructure of canals and railroads.8

The second industrial revolution, around the turn of the twentieth century,
introduced electricity, synthetics, and the internal combustion engine and
brought similar economic and social changes. The United States went from a
predominantly agrarian nation to a primarily industrial and urban one. In the
1890s, most Americans still worked on farms or as servants. A few decades later,
the majority lived in cities and worked in factories.9 Social class and political
cleavages were altered as urban labor and trade unions become more important.
And again, with lags, the role of government changed. The bipartisan
Progressive movement ushered in antitrust legislation; early consumer
protection regulation was implemented by the forerunner of the Food and Drug
Administration, and economic stabilization measures by the Federal Reserve
Board.10 The United States rose to the status of a great power in world politics.

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Some expect the third industrial revolution to produce analogous
transformations in economy, society, government, and world politics.11

These historical analogies help us understand some of the forces that will shape
world politics in the twenty‐first century. Economies and information networks
have changed more rapidly than governments have, with their scale having
grown much faster than that of sovereignty and authority. “If there is a single
overriding sociological problem in post‐industrial society—particularly in the
management of transition—it is the management of scale.”12 Put more simply,
the building blocks of world politics are being transformed by the new
technology, and our policies will have to adjust accordingly. If we focus solely on
the hard power of nation‐states, we will miss the new reality and fail to advance
our interests and our values.

Centralization or Diffusion?
Six decades ago, the eminent sociologist William Ogburn predicted that new
technologies would result in greater political centralization (p.45) and
strengthening of states in the twentieth century. In 1937, Ogburn argued that
“government in the United States will probably tend toward greater
centralization because of the airplane, the bus, the truck, the Diesel engine, the
radio, the telephone, and the various uses to which the wire and wireless may be
placed. The same inventions operate to influence industries to spread across
state lines. . . . The centralizing tendency of government seems to be world‐wide,
wherever modern transportation and communication exist.”13 By and large, he
was right about the twentieth century, but this trend is likely to be reversed in
the twenty‐first century.

Questions of appropriate degrees of centralization of government are not new.
As the economist Charles Kindleberger pointed out, “how the line should be
altered at a given time—toward or away from the center—can stay unresolved
for long periods, typically fraught with tension.”14 If the nation‐state has
“become too small for the big problems of life and too big for the small
problems,”15 we may find not centralization or decentralization but a diffusion of
governance activities in several directions at the same time. The following table
illustrates the possible diffusion of activities away from central governments—
vertically to other levels of government and horizontally to market and private
nonmarket actors, the so‐called third sector. Nonprofit institutions have grown
rapidly in the United States, now accounting for 7 percent of paid employment
(more than the number of federal and state government employees) and United
States–based international nongovernmental organizations expanded tenfold
between 1970 and the early 1990s.16 If the twentieth century saw a
predominance of the centripetal forces predicted by Ogburn, the twenty‐first
may see a greater role of centrifugal forces.

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The height of twentieth‐century centralization was the totalitarian state
perfected by Josef Stalin in the Soviet Union.17 It aptly fit—indeed, was made
possible by—industrial society, and it was ultimately undermined by the
information revolution. Stalin’s economic model was based on central planning,
which made quantity rather than profits the main criterion of a manager’s
success. Prices were set by planners rather than by markets. Consumers as
customers played little role. The Stalinist economy was successful in mastering
relatively (p.46)

Table 2.1 The Diffusion of Governance in the Twenty‐first Century

unsophisticated technologies and producing basic goods such as steel and electricity
on a massive scale. It was effective in extracting capital from the agricultural sector in
the 1930s and using it to build heavy industry. It was also effective in postwar
reconstruction, when labor was plentiful. However, with a diminishing birthrate and
scarce capital, Stalin’s model of central planning ran out of steam.18

In addition, Soviet central planners lacked the flexibility to keep up with the
quickened pace of technological change in the increasingly information‐based
global economy; they did not come to terms with the third industrial revolution.
As Russian specialist Marshall Goldman once put it, “Stalin’s growth model
eventually became a fetter rather than a facilitator.”19 As computers and
microchips became not merely tools of production but imbedded in products, the
life cycles of products shortened, sometimes dramatically. Many products were
now becoming obsolete in only a few years or even (p.47) sooner, even though
a rigid planning system might take much longer to react or simply continue
toward obsolete goals. The Soviet bureaucracy was far less flexible than markets
in responding to rapid change, and for years the very word market was
practically forbidden.20

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Stalin’s political legacy was yet another hindrance to the Soviet Union. An
information‐based society required broadly shared and freely flowing
information to reap maximum gains. Horizontal communication among
computers became more important than top‐down vertical communication. But
horizontal communication involved political risks, in that computers could
become the equivalent of printing presses. Moreover, telephones multiplied
these risks by providing instant communication among computers. For political
reasons, Soviet leaders were reluctant to foster the widespread and free use of
computers. Two simple statistics demonstrate the Soviet disadvantage in the
expanding information economy of the 1980s: by the middle of the decade, there
were only fifty thousand personal computers in the USSR (compared to thirty
million in the United States), and only 23 percent of urban homes and 7 percent
of rural homes had telephones.21 Although this situation made political control
easier, it had disastrous economic effects. In the mid‐1980s, the Soviets failed to
produce personal computers on a large scale. At the end of the decade, Soviet
officials reluctantly admitted that their computer technology lagged seven to ten
years behind that of the West. Further, lack of freedom for hackers and other
informal innovators severely handicapped the development of software. The
Soviets paid a heavy price for central control.22

Governments of all kinds will find their control slipping during the twenty‐first
century as information technology gradually spreads to the large majority of the
world that still lacks phones, computers, and electricity. Even the U.S.
government will find some taxes harder to collect and some regulations (for
example, concerning gambling or prescription drugs) harder to enforce. Many
governments today control the access of their citizens to the Internet by
controlling Internet service providers. It is possible, but costly, for skilled
individuals to route around such restrictions, and control does not have to be
complete to be effective for political purposes. But as societies develop, (p.48)
they face dilemmas in trying to protect their sovereign control over information.
When they reach levels of development where their knowledge workers want
free access to the Internet, they run the risk of losing their scarcest resource for
competing in the information economy. Thus Singapore today is wrestling with
the dilemma of reshaping its educational system to encourage the individual
creativity that the information economy demands, and at the same time maintain
some existing social controls over the flow of information. In the words of
Singapore’s prime minister, Goh Chok Tong, “We have to reinvent ourselves. We
have to go beyond being efficient and productive to create and attract new
enterprise.”23 When asked how Singapore could control the Internet after its
schools educated a new generation in how to work around the controls, the
senior minister, Lee Kuan Yew, replied that at that stage it would not matter
anymore.24 Closed systems become more costly, and openness becomes worth
the price.

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China is a more complicated case than Singapore because of its size and lower
level of economic development. The Chinese government has traditionally doled
out information depending on bureaucratic rank and discouraged the flow of
information among individuals. As Sinologist Tony Saich has described, “Under
such a system the real basis of exchange is secrets and privileged access to
information.”25 Now the Chinese government is trying to profit from the
economic benefits of the Internet without letting it unravel their system of
political control. They do this by authorizing only four networks for international
access, blocking web sites, and forbidding Chinese web sites to use news from
web sites outside the country. The Internet is censored via the service providers
and the portals that host bulletin boards.

Use of the Internet in China has grown dramatically, from a million users in 1998
to about twenty million two years later. Nonetheless, those users represent only
about 1.3 percent of the population and are mostly relatively well‐off city
dwellers, not the majority rural population. Some sites and topics are quickly
suppressed, but general critiques of communist leaders and the party’s
monopoly on power are common, as are debates about the growing divide
between rich (p.49) and poor in China.26 Underground dissident journals are
sent to hundreds of thousands of Chinese e‐mail accounts from the safety of
overseas. The New York Times reported recently that the influence of “shadow
media is growing exponentially, along with China’s Internet, as articles from
even the most obscure newspapers quickly find their way onto web sites and into
chat rooms.”27

Some of the articles are radical and chauvinistic rather than liberal and
democratic. During the crisis following the spring 2001 midair collision between
a U.S. surveillance aircraft and a Chinese fighter plane, the Chinese government
toughened its public position after monitoring the nationalistic responses on the
Internet.28 The Internet is not necessarily a fast path to liberal democracy. The
Chinese leadership is aware that it cannot control completely the flow of
information or access to foreign sites by its citizens. Its intention is to lay down
warnings about limits.29 In a sense, Chinese leaders are betting that they can
have the Internet à la carte, picking out the economic plums and avoiding the
political costs that come with the whole menu. In the near term, they are
probably correct in their bet, but the long run remains more doubtful. In the
opinion of Singapore’s Lee Kuan Yew, “Over the next 30 to 40 years there is
going to be a drift into all the cities and the small towns will become big ones, all
with access to the Internet, access to information. There is no way you can
govern a well informed, large managerial/professional class without taking their
views into account.”30

One political effect of increased information flows through new media is already
clear: governments have lost some of their traditional control over information
about their own societies. In 2001, for example, the Indian government lost

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several ministers and nearly collapsed after reports of corruption appeared on
an Internet news site. Scandals that were once more easily contained in New
Delhi proved impossible to control. “Not only did Tehelka.com reveal the corrupt
underbelly of the Indian military: it also helped fan the controversy by serving as
a bulletin board for readers and politicians to air their views.”31 In the
Philippines, hundreds of thousands of protesters working successfully to oust
President Joseph Estrada “were able to call meetings at short notice by sending
text messages on their (p.50) mobile phones.”32 Corruption remains a problem
in many countries, but it is no longer solely a domestic affair, as
nongovernmental organizations now publicize corruption rankings of countries
on the Internet. Countries that seek to develop need foreign capital and the
technology and organization that go with it. Increasingly, foreign capital
demands transparency. Governments that are not transparent are less credible,
since the information they offer is seen as biased and selective. Moreover, as
economic development progresses and middle‐class societies develop, repressive
measures become more expensive not merely at home but also in terms of
international reputation. Both Taiwan and South Korea discovered in the late
1980s that repression of rising demands for democracy would be too expensive
in terms of their reputation and soft power.

Countries will vary in how far and how fast the information revolution will push
decentralization. Some states are weaker than the private forces within them,
others not. Private armies have played a key role in Sierra Leone; drug cartels
are a major force in Colombia. Ecuador and Haiti have far weaker bureaucracies
than South Africa and Singapore. Even in the postindustrial world, most
European countries have a tradition of stronger central government than the
United States does. Total government spending is about half of gross national
product in Europe, while it has held steady at around a third of the economy in
the United States and Japan and declined in New Zealand.33

Two other trends are closely related to the information revolution and reinforce
the prospect that this century will see a shift in the locus of collective activities
away from central governments. As we shall see in the next chapter,
globalization preceded the information revolution but has been greatly enhanced
by it, opening up opportunities for private transnational actors such as
corporations and nonprofits to establish standards and strategies that strongly
affect public policies that were once the domain of central governments.
Similarly, the information revolution has enhanced the role of markets. The
balance between states and markets shifted after the 1970s in a way that made
the state just one source of authority among several.34 Even in Sweden and
France, not to mention Eastern Europe and the less economically developed
countries, significant privatizations have (p.51) expanded market forces in the
past two decades. The causes of marketization involved more than just the
information revolution. They include the failure of planned economies to adapt
to the information revolution, the inflation that followed the oil crises of the

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1970s, the early success of the East Asian economies, and changes in political
and ideological coalitions (the Thatcher‐Reagan revolution) inside wealthy
democracies. The net effect, however, is to accelerate the diffusion of power
away from governments to private actors, and that, in turn, presents new
challenges and opportunities for American foreign policy.

As the Revolution Progresses
We are still at an early stage of the current information revolution, and its
effects on economics and politics are uneven. As with steam in the late
eighteenth century and electricity in the late nineteenth, productivity growth
lagged as society had to learn to fully utilize the new technologies.35 Social
institutions change more slowly than technology. For example, the electric motor
was invented in 1881, but it was nearly four decades before Henry Ford
pioneered the reorganization of factories to take full advantage of electric
power. Computers today account for 2 percent of America’s total capital stock,
but “add in all the equipment used for gathering, processing and transmitting
information, and the total accounts for 12% of America’s capital stock, exactly
the same as the railways at the peak of their development in the late nineteenth
century. . . . Three‐quarters of all computers are used in the service sector such
as finance and health where output is notoriously hard to measure.”36 As we will
see in chapter 4, the increase in productivity of the American economy began to
show up only as recently as the mid‐1990s.37

The advent of truly mass communications and broadcasting a century ago, which
was facilitated by newly cheap electricity, provides some lessons about possible
social and political effects today. It ushered in the age of mass popular culture.38

The effects of mass communication and broadcasting, though not the telephone,
tended to have a centralizing political effect. While information was more (p.52)
widespread, it was more centrally influenced even in democratic countries than
in the age of the local press. Roosevelt’s use of radio in the 1930s worked a
dramatic shift in American politics. These effects were particularly pronounced
in countries where they were combined with the rise of totalitarian
governments, which were able to suppress competing sources of information.
Indeed, some scholars believe that totalitarianism could not have been possible
without the mass communications that accompanied the second industrial
revolution.39

In the middle of the twentieth century, people feared that the computers and
communications of the current information revolution would create the central
governmental control dramatized in George …