Lecture Series: Cyberpolitik, The Information Revolution and U.S. Foreign Policy

Cyberpolitik: The Information Revolution and U.S. Foreign Policy

March 22, 2000

Rapporteur's Report

"Only in Washington, D.C.," argued David Rothkopf, "could one actually have a discussion about whether the information revolution is relevant or whether it’s a big deal." Far from being a trivial fad or marking the advent of technologies that simply make life easier, the information revolution is a fundamental change in the nature of power in the world, the ways in which people and governments interact, the ways in which resources are valued and economies function, and the drivers that will produce crises, threats, opportunities, and hope in the future. Despite the revolutionary nature of these changes, Rothkopf argued, there has been little effort within the U.S. government to understand and adapt to their large-scale implications. "I think you can come very quickly to the conclusion," he claimed, "that you have an information revolution that is transforming world order and that it's not yet transforming U.S. foreign policy."

Breaking this meta-transformation down into its constituent parts, Rothkopf identified eight separate changes in character that are fundamental to the information revolution:

As central components of a pervasive transformation, these dynamics can be been seen in a wide array of economic, political, and social spheres. Investment banks such as J. P. Morgan are spending billions to reinvent themselves in the era of e-commerce because their traditional functions as intermediaries are disappearing. Individuals are investing more money in stock markets and are replacing institutions as the major sources of capital, producing volatility and enabling huge swings and contagion in global markets. New actors, such as the coalition of non-governmental organizations (NGOs) and activists that protested the World Trade Organization summit in Seattle, are using the Internet to organize a movement that is changing the nature of the global debate on trade policy. The information revolution facilitates globalization, and also popular backlashes to it--witness the recent electoral successes of demagogues like Hugo Chávez and Jörg Haider's Freedom Party.

These fundamental changes, Rothfopf stressed, have significant implications for U.S. foreign policy--implications that the government has been slow to recognize and act upon. Information-age foreign policy suffers from inefficiency in government operation, vulnerability of critical infrastructures to cyberterrorist threats, and a lack of guiding vision for information leadership. Many corporations have prepared themselves well for rapid change, even establishing their own universities for constant employee training, but the government remains behind in educating its personnel and adopting new technology. Intelligence services, steeped in a culture of secrecy and restricted information, often do not train their operatives to gather data from open sources on the Internet. "No company would operate this way," argued Rothkopf. "The CIA is going to put itself out of business, because the private sector can do this better."

Beyond mere inefficiencies, the United States faces overt threats from cyberterrorists exploiting the vulnerabilities of interconnected infrastructure, from military command-and-control systems to civilian power grids. In one recent experiment, he noted, a group of hackers accessed 3000 computers at the Pentagon, 200 of which were mission-critical, using software readily available on the Internet. The Pentagon is the best prepared of government agencies, Rothkopf argued, and such holes in its defenses suggest that much more work is needed all around. On a broader level, the United States suffers from uncertainty as to its role as an information leader. "We are the leaders, we can be the information hegemon," argued Rothkopf. "Do we want to be? Do we want everybody to speak English?…. Do we want everybody to buy US-made software? This a fundamental set of questions that we have to deal with…but we're not."

In addition these political and security implications, Rothkopf claimed, the information revolution transforms the global economic environment in which the United States conducts much of its foreign policy. Technological change facilitates greater and greater interconnection of national markets, increasing the risk of global systemic shock and challenging the ability of international financial institutions to respond to crises. Government leaders around the world, ever dependent on foreign investment for their economic health, are faced with a "dual constituency conundrum"--they report to both Wall Street and their citizens, and the interests of both may not coincide. Governments fight to create the most inviting conditions for multinational corporations, which have no allegiance and can easily move production to other locales. The information revolution complicates the regulation of global stock markets as it facilitates mergers of national markets. The United States faces new challenges in the conduct of monetary policy as more and more countries around the world adopt the dollar as their currency--de facto, and increasingly de jure.

In a global economy transformed by the information revolution, development efforts by the United States--a traditional component of foreign policy--are shaped by new dynamics. Ten years ago, argued Rothkopf, eighty percent of all money flowing to the developing world came from the public sector, and twenty percent from the private sector; now the numbers are reversed. In such an environment, there is less that the government can do alone, and more that it must do in partnership with private development efforts. In the new economy, education is becoming an increasingly important component of development, raising the question of what type of education the United States should promote in the developing world--practical knowledge skills that will help the poor to make money, or the traditional, classical education of the past. Within developing countries themselves, Rothkopf claimed, the growing digital divide between those that participate in the information revolution and those left out may cause massive backlashes against globalization. "If we allow the acceleration of this divide to continue," he argued, "the digital divide stuff we talk about in the United States…is going to pale by comparison. Countries are going to come apart at the seams."

In conclusion, Rothkopf claimed, the information revolution is fundamentally transforming the world in which the United States conducts foreign policy, and the government risks getting left behind. "This is not just a sea change," he argued, "but it's one that requires the urgent attention of every agency of the United States government, and every policy formation group, and its not getting it. What does it mean?…. Governments are making themselves irrelevant, and we have to ask ourselves whether that's a good thing."

In the question-and-answer session that followed the presentation, attendees responded to Rothkopf's comments on development and the role of government in the information age. Several reaffirmed the importance of education and the creation of knowledge workers in equipping developing countries to prosper in the information age. One claimed that, perhaps unlike the U.S. government, developing countries do understand the implications of the information revolution and are desperate to get on board, seeing it as "the last ticket on the development train." She emphasized that government did have a role to play in bridging the digital divide, and that local knowledge workers must be equipped to provide local content if developing countries are concerned about countering the domination of English language and American culture on the Internet. Several were more skeptical of the role of the state in the information age, however. One argued that business has delivered on its historical role as the creator of wealth, but that governments, tasked with providing justice and equitable distribution of resources, have failed in many instances. In light of this experience, he asked why we should be concerned that government has become less relevant and suggested that we question our assumptions about models of government.

In response to these questions, Rothkopf argued strongly that the state, albeit slow to respond to the information revolution, still has an essential role to play. Markets don't provide justice and social equity, and governments still play an important role in any market economy. In an age of a global economy, national governments may need to transfer some regulatory authority to supranational entities, but that does not mean that regulation is a thing of the past. "There's one fallacy out there," claimed Rothkopf, "that somehow the technology and telecommunication sectors…are going to be the only sectors in the history of the world that are going to be successfully self-regulating…. That's a scam to serve big business." Governments may have failed in many of their objectives, he admitted, "but that doesn't mean we give up on having systems where justice rather than wealth is the objective. We don't have societies merely to create wealth; we have societies to create better lives."

Several attendees asked Rothkopf to be prescriptive, describing what specific policies he advocated for both developing countries and the US government to adapt to the information age. For developing countries, Rothkopf responded, the reality is that they must learn to take care of themselves, with some help from foreign aid but most of it from the private sector. This means creating attractive conditions for foreign investment, providing a good regulatory environment that stimulates competition, changing ownership structures to create local stakeholders in globalization, and seeking public-private partnerships. He lifted up the Chilean telecommunications market, one of the most liberal in the world, as a developing country example.

For the U.S. Department of State and foreign policy apparatus in general, Rothkopf recommended moving toward a flatter organizational structure, transferring resources to regional bureaus that can administer policy more quickly, eliminating the barriers that separate various intelligence services, and developing a knowledge system that would plug into the world in real time. An information-age State Department, he claimed, "would address these issues in a systematic way and try to come up with some beyond-the-horizon policy framework to take [itself] out of the mode of being reactive and…out of the current situation where the most important assistant secretary's bureau is the one for public relations."

Report prepared by Taylor Boas