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In markets like computers or cars or motorcycles, where at least some customers become partisans of their products and come to identify with them, this shakeout can seem like some sort of plot or tragedy. It isn't, though; it's simply the normal life cycle of a market. The early diverse experimental stage is unstable. People can come to love that and feel nostalgic about it, but it can't persist. It never has. This is particularly true for products which are susceptible to the "network effect" (which doesn't mean they're networked together). The value of such products increase as a function of the number of people who use them. Sometimes this is because they are literally networked together (such as telephones) and in some cases it's because it improves the support structure. In many cases it is aided by economy of scale. A car is more valuable to me with more than a hundred million of them in the country than it would be if there were only a thousand, because a hundred million can economically support a large number of gas stations and a mature road system. The network effect promotes concentration and shakeout, because the value it adds isn't represented in the product price. The classic example of this in recent years was the video-tape format wars. Betamax partisans will claim up and down that it was always superior to VHS, but videotapes are very subject to network effect and VHS crushed Betamax through simple numbers. Betamax is now dead and there is only a single standard. There is an advantage in buying the most popular choice irrespective of any other merits it or its competitors may have, and at a certain point that merit may outweigh all other criteria, at which point all the other choices are doomed. That's what happened to Betamax; when VHS achieved 75% marketshare, the only way for Betamax to go was down. But minority platforms can start nearly at parity and watch their support decline as they lose ground to another competitor as it grows, and if the other competitor is viewed as being inferior then this can be an ego-bruising experience. That is what Betamax partisans observed. This explains the "computer wars"; Windows has won because quantity has a quality all its own, and that quality happens to be more important than any other: broad support by third party hardware and software vendors. At this point in the state of the market, that factor is more important than any other, so the Amiga and Atari ST vanished, OS/2 is nearly gone, and the Mac is on the critical list but hanging on, just barely. And the cry goes up: "But it just isn't fair!" True, it may not seem to be. But that is how markets work, and they don't really have anything to do with "fair". And that same thing happens in the marketplace of ideas. Memes and philosophies compete in exactly the same way. Successful ones spread, unsuccessful ones fall by the wayside and die or are absorbed by more successful ones. Many of them are subject to network effect, which strengthens the winners and weakens the losers. Take languages, for instance: once there were thousands in common use, but as the centuries have gone by, a few large ones have spread and become more and more common. The value of a language is extremely enhanced by network effect: the more people who speak it, the more useful it is to each person who is fluent in it. While it's possible to be multilingual, as time goes on less popular languages will decline and vanish because there becomes less and less reason for new speakers to pick them up and older speakers die. Gaelic as a language probably won't survive another century, for example. Many languages are already gone. And a few languages now dominate the world: English, Russian, Spanish, French, Chinese, Japanese. One sign that a language is endangered is when the majority of its speakers are multilingual. At that point, its days as a useful language are numbered. Eventually one language will dominate because its value through network effect will overwhelm all others. That doesn't mean no other language will be spoken, but nearly everyone will speak it either as a first or second language. Right now the odds-on bet for that language is English; it already dominates certain important areas such as science and engineering. English is the most common second-language on Earth. It doesn't matter how this happened; the point is that the direction of the future is clear. There is now a very strong incentive for people all over the world to learn English because there is so much important information available in it. Many smaller languages may be preserved essentially by putting them in zoos; there is an active effort, for example, by some American Indian tribes to work to preserve their languages. But while that may work, there will exist no mono-lingual speakers of those languages; they'll be museum pieces, not living languages. The same thing happens with cultures and economic systems. There is a network affect for those, though some gain more advantage from that than others do. Capitalism gains more from network effect than does any other economic system, because of the gains possible through trade and because of economy of scale. The more people there are in capitalist systems, the more opportunity there is to take advantage of economy of scale to produce more goods at a lower price per unit, because the markets exist to absorb them. As a result, overall more goods are created per participant and the standard of living rises, to the benefit of most of the people in the capitalist cultures. And political systems also compete in this way. If you study the history of Europe beginning shortly after the death of Charlemagne, what you find is thousands of petty tribes and city states all of which were independent. For much of Europe the only uniting factor was the Church and its control was limited (though it darned well tried). As time goes on you find more and more of them banding together or being conquered by others, and larger and larger nations being created. There was a time when Normandy and Burgundy were separate nations, for example; now they're part of France. There was a time when Venice and Genoa fought wars. The most recent examples of this were the combination of the German city states into a single nation, and the creation of the USSR. The latter didn't hold together, but Germany is united (after a temporary setback during the Cold War). Europe is in the process of making another step in that direction with the creation of the EU. It's going to be a difficult road but the end result is certain -- and it's also necessary. The adoption of a unified currency is one example of where this will create great benefit, because currencies are also subject to network effect. The Euro will ultimately be stronger than any other currency on the planet except the US Dollar. Fundamental political philosophies go through this, too, and unsuccessful ones also fall by the wayside and die. Monarchy is now essentially dead. There do still exist kings but most of those are symbolic; the few hereditary rulers remaining control second-rate nations or worse and are only peripherally important in the world. The only monarchies in the world which remain even somewhat important are those of Kuwait and Saudi Arabia, and that is only due to an accident of natural resources. Ralph Peters makes a good case that the most profound cultural change in history was the invention of the information society. It begins with the development of movable type printing, goes into high gear with the telegraph and matured with the creation of the Internet; it is exceedingly subject to network effect, and it is taking over the world. This quote is particularly apropos: Today, collisions between cultures infect weaker cultures with self-doubt (loud assertions of superiority are the symptom indicating that the disease has entered a critical phase). We live in a world where the success stories are | |||
