Network’s value is the square of its connections

This is really an amazing piece from the science community that relates to community development, networking, and building, in effect, our social capital. This piece involves Scott Burns' reflections of Obama's speech and it can be viewed online at hhttp://amps-web.mit.edu/public/amps/webcast/2009/obama-2009oct23/. Bottom line: energy IS renewable but it must be exercised and avail itself of all the technological capabilities at hand.

-Angela

Scott Burns: Network’s value is the square of its connections
11:38 PM CDT on Saturday, October 31, 2009

Scott Burns
President Obama spoke at MIT’s Kresge Auditorium last week. Imagining him speaking there took me back 50 years.

The auditorium, a low dome with just three points of support, is set next to an expanse of athletic fields and student dormitories. Designed by architect Eero Saarinen, the auditorium is a huge building that begs to be climbed.

Two of its early climbers were Claude Shannon (better known as the father of information theory) and Texan John L. Kelly, a Bell Labs mathematician from Corsicana best known for trying to put Shannon’s information theory to work as a gambling or investing tool. Kelly’s work was important for another MIT staffer, Edward O. Thorpe. He programmed an IBM mainframe to find ways to “beat the dealer” at blackjack.

If, as economist John Maynard Keynes famously said, “Practical men ... are usually the slaves of some defunct economist,” then economists, in any condition, are deeply in debt to ideas from theorists like Shannon or mathematicians like the late Paul Erdos.

Ideas are important. They are the seed corn of our future.

I never climbed Kresge, but I did hear the most exciting lecture of my life in that building.

While the topic may seem obscure, it is entirely relevant to the wave of change all of us are now experiencing. More important, it tells us our future may be a whole lot brighter than most of us dare to think.

How could that possibly be?

Read on.

Rooted in physics and mathematics, the lecture explained the force that has driven our economy and changed our lives over the last 50 years. It also foreshadowed social networking phenomena like Facebook, YouTube and LinkedIn that we are trying to understand today.

The lecture was not given by someone you might expect — Shannon, Norbert Weiner (cybernetics) or Marvin Minsky (artificial intelligence) — all at MIT at the time. No, it was given by biologist Julian Huxley, a visiting lecturer and the brother of novelist Aldous (Brave New World) Huxley.

But Huxley started with one of the more depressing ideas of physics: entropy. That’s the idea that all things run down, that order is inevitably lost. In one interpretation, it’s an idea that tells us we are likely to be buried in our own garbage.

Another example is the energy issue that Obama spoke about at MIT. Once we have burned the limited supply of hydrocarbons on the planet, all the energy stored in those neatly ordered long chains of carbon atoms will have been reduced to molecules of a lower and less useful form. Human life, some fear, will get much harder.

But Huxley said that if entropy exists, so does its opposite. It is possible to create order. He called it negative entropy. It is possible to take things to a higher state. As an example, he worked through a series of equations to show the order implied by the connectivity potential of a telephone network. Building transferable knowledge and connectivity — negative entropy — is what human beings are doing, he told us. And the information potential of a network grows faster than the number of connections. It grows exponentially with the number of combinations.

Listening, I knew I was hearing something very important. I just didn’t know where to put it. Back then, the law of diminishing returns ruled economics because it accurately described human experience.

But over the last 50 years we have built the tools that are making Huxley’s hopeful message deliver. Remember, Arpanet, the first version of the Internet, didn’t exist until 1969.

The notion of a law of increasing returns in the daily world didn’t appear until Robert Metcalfe, the inventor of the Ethernet, suggested that the value of a network was the square of the number of connections. It would make a large network staggeringly valuable.

That was in 1980, well before Gutenberg’s movable type went binary with the creation of hypertext markup language by Tim Berners-Lee in 1990.

Today, as Tom Hayes points out in Jump Point: How Network Culture Is Revolutionizing Business, we are only two years away from having 3 billion human beings connected to the Internet.

Square 3 billion. It’s a big, big number.

SCOTT BURNS is a principal of the Plano-based investment firm AssetBuilder Inc. Questions about personal finance and investments may be sent by e-mail to scott@scottburns.com or by fax to 505-424-0938. Visit www.scottburns.com. Questions of general interest will be answered in future columns.

— Universal Press Syndicate