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The Power of Social Networks

Carole Hofmann, March 2011

Or, why established structures fail to survive in the emerging Networked Information Economy.

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Contents

Social OrganizationStructural PowerIndustrial AgeInformation AgeStructure FormationThe Nature of InformationNetwork Economy

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Social Organization

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„What we are seeing suggests there may be a social connectivity constant for humanity“

Eric Horovitz, Microsoft Research, commenting on the finding, revealed by analysis of 180 million people‘s emails, that we are all connected to each other by six degrees of separation.

Social Organization

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The Role of Social Organization

* Societies can be viewed as complex systems, composed of the individuals as actors, and their relations among each other (= social organization, or social networks, or social structure).

* Complexity theory states that complex systems evolve constantly through interaction with their environment – balancing between chaos (flexibility) and order (stability).

* Systems move through unstable periods (phase transitions), where they re-structure their internal organization to reach optimal complexity, in order to adapt to changes in the environment and retain their stability (law of requisite variety1).

* The level2 and the rate3 of communication within a system is crucial for its stability4 towards external perturbations (=fitness).

Social Organization

1 Ashby, 1956 | 2 Merry, 1995 | 3 Prigogine & Stengers, 1981 | 4 Prigogine & Stengers, 1984

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Social Organization

The Role of Social Organization

Organization

Coordination

Communication

Better communication leads to better coordination of the individuals (labor division, market exchanges)

Better coordination leads to higher social organization(new, optimized, and larger structures)

Better organization allows for better information flow through the existing social relations.

Structure

InformationAction

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The Role of Social Organization

In other words:

* Social structure determines the possible paths of information flows.

* These information flows determine the efficiency and effectiveness of collaborating, and via collaboration the evolution of new structures.

* The structure of social groups or societies as the means for information sharing and collaboration therefore determines their fitness and success.

Social Organization

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Social Organization

Information Sharing and Human EvolutionAdvances in the practices of and technologies for communication & information sharing have been the inflection points (game changers) throughout the history of humanity causing evolution of the structure of social organization and societies.

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Social Organization

Evolution of Social Organization

Stone Age Agricultural Age Industrial Age Information Age

Time 2.5 million to 6000 years ago

4000 B.C. to 1750 A.D.

1750 to 1970 1970 onwards

Revolutions

Tool making 2.5 million years ago

Agricultural revolution 10'000 to 5000 years ago

Industrial revolutionAbout 250 years ago

Information revolutionSince 40 years

Features No written languageDispersed isolated groupsLow individual specialization: hunting, gathering

Written languageLoosely connected cultures / statesLabor division: slavery, feudal system, agriculture

Telegraph, telephony, mass broadcasting, communication over space and timeSpecialized individualsIndustrialization, Urbanization, Democratization

Computers, mobile phones, InternetHighly specialized individualsInformatization, Globalization, De-Industrialization, Service-Sector growth

Adapted from He, 1999

Low Social Organization

High

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Structural Power

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Structural Power

Power in Social Organization

* Social networks are commonly modeled in the form of nodes (= actors) and edges (= relations) indicating the connections between the nodes.

* Power in a social network is the result of occupying a “central” position.

* Social Network Analysis offers a set of measures to analyze this “structural power” in social organization. Two “hubness” measures will be used here:

* Degree Centrality (DC) = Nodes having many relations have high DC.Many relations allow them to be more independent from a single relation, and find alternative paths to access resources.

* Betweenness Centrality (BC) = Nodes connecting otherwise isolated networks have high BC. Actors in the separated networks depend on the node to connect with each other and conduct exchanges.

See http://www.faculty.ucr.edu/~hanneman/nettext/C10_Centrality.html for more information.

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Structural Power

Power in Social Organization

Degree Centrality (DC)

In the same network structure, different nodes display a different type of hubness depending on their position (here, the darker and the larger the node, the higher the respective hubness).

Betweenness Centrality (BC)

Three nodes display high Degree Centrality hubness. The node in the center being the most important node.

Only one node owns high Betweenness Centrality hubness, as it connects otherwise separate networks.

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Industrial Age

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Industrial Age

Social Organization in the Industrial Age

Trans-Regional Hubs

* Communication and information sharing in the industrial age is expensive.

* Limited ability to coordinate and collaborate across space and time.

* Hierarchical structure is the best solution for social organization.

* Hubs strongly control information flow (example marked in red).

Regional Hubs

Local Hubs

Individuals

Simplified view displaying nodes (=actors) and edges (= relations).

Arrows indicate examplary information flow.

Hubs occupy positions of higher Betweenness Centrality.

Low

Hig

hB

etw

een

ness

Cen

trality

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Industrial Age

Hubs in the Industrial Age

Effects of hierarchical organization* Hubs have “structural power” based on high Betweenness

Centrality. They may not have the most connections (= Degree centrality), but they are connected among similar hubs and so form the social elite.

* Hubs control the flow of information and thereby the ability of isolated groups further down in the hierarchy to connect for exchanges.

* Hubs have the ability to create and maintain information asymmetries, and use them to their sole benefit (e.g. secure their position, accumulate resources) – this means, not the best possible solution wins, but the one that secures the position of the hub.

* Hubness is mostly based on existing hubness (= existing structures) , e.g. inherited position, inherited wealth, born into a notable family.

* Social mobility (= new hubs based on ability, or luck) is low.

Hubs are typically: Aristocrats, politicians, economic leaders, celebrities etc.

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Industrial Age

The Role of Mass Media

* The establishment of mass media as of late 19th and during the 20th century was based on technological advancements such as mechanical press, telegraph, radio and television transmitters, cable, satellite, mainframe computers.

* Information production and distribution was expensive and led to centralized and specialized production hubs, broadcasting to large audiences in a one-way fashion.

* Mass media as the primary sources for non-local information, create information asymmetries:

* a) In order to capture the largest possible audience, content is averaged to the lowest common denominator, and does not reflect the real diversity of the audiences’ preferences1.

* b) Through selection of contents, mass media shapes the views of the audience, their perception of what they can and cannot do.

1 Advertiser-supported media are sensitive only to the number of viewers not the intensity of their satisfaction (Steiner, 1952).

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Information Age

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Information Age

Social Organization in the Information Age* A networked computer-mediated communications

environment renders information production and communications fast and cheap.

* This results in better collaboration and in the establishment of more relations among individuals – they (massively) gain in Degree Centrality.

* And this finally changes the structure of social organization:

The power of former hubs, based on Betweenness Centrality, is rendered ineffective by the increasing decentralization of social organization. New hubs form, based on Degree Centrality.

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Information Age

Social Organization in the Information AgeEffects of a more decentralized social organization

* Established hierarchies loose their power, as they are no longer needed for effective organization.

* Former hubs loose power as there are alternative paths ,bypassing them, for accessing information and resources.

* Information asymmetries cannot be retained, specifically mass media loose their audiences, as alternatives that satisfy the diverse individual informational demands become available.

* Furthermore, individuals gain autonomy. They are no longer passive recipients, they can actively produce and share information, and freely associate with each other for collaboration and exchange.

New social structures form, that allow for coordinated social, economic or political action, resulting in a networked society

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Information Age

Excursus: Survival in the Information AgeThere are 3 common strategies applied by former hubs to deal with the changes induced by the network society:

* Ignorance – Old boys’ networks still work – but only among themselves. Not evolutionary stable.

* Opposition– Attempt to cement old ways with technology (e.g. DRM)1 and/or law (e.g. DMCA).Not evolutionary stable.

* Collaboration – Adaptation to new realities, change of business models.Evolutionary stable.

1 Whereby code can also be seen as a form of law (Lessig, 1999).

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Information Age

Hubs in the Information Age

There are new rules for hubness in a networked society:

* Effective hubness is now based on Degree Centrality .

* The capability to reach a central position shifts from nurture = inherited position, inherited wealth, born into a notable family, to nature = individual abilities such as intelligence, personal skills.

* Individuals have potential access toa) a means for information production (computers)b) a global transactional framework = a market (Internet)

* Based on their intrinsic qualities ,individuals havet he potential to become hubs, as effects of resource inequality are decreased 1.

1 The basic prerequisites for participating in a market economy are access to a transactional framework, to basic information, and to adequate educational endowment (Ackerman, 1980).

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Structure Formation

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Structure Formation

Formation of Social Organization

* The process of structure formation is generally called “self-organization”.

* Self-organization takes place, when a large amount of autonomous actors locally1 interact with each other, and the sum of their interactions produces global structures, that did not exist beforehand.

* As the number of actors is large, and interactions cause changes in the actors, and changes in the actors again cause for new changes, this process is highly dynamic and non-linear – but it is not random.

* Self-organization s influenced by two mechanisms:

* Preferential Attachment – a positive feedback process (a self-reinforcing process)

* Social Control – a negative feedback process (a self-regulating process)

1 Local as in individually, not as in geographically.

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Structure Formation

Preferential Attachment (1/2)

* Preferential attachment1 describes the fact that resources tend to get allocated based on the pre-existing allocation of these resources.

* This results in a power-law distribution (entities are not equal - few have a lot and a lot have few), for example as observed in the - distribution of sizes of cities- distribution of wealth in a society- distribution of hubness in a social network

* The effect of preferential attachment is in some ways similar to gravity: a mass acts as a center of gravity and attracts other mass. The larger the mass gets, the larger the effect becomes.

1 Also called Matthew effect, rich get richer effect, cumulative advantage.

Example of a power law distribution

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Structure Formation

Preferential Attachment (2/2)

* Preferential attachment regulates the coordination of individuals.

* Qualitative – Topic-based: Individuals preferentially affiliate with similar others (similar preferences, interests, abilities, capabilities, resources), and thereby create new social structures.

* Similarities attract each other based on self-reinforcement – on one hand similar things are familiar and therefore safe, on the other hand more of the same strengthens its effectiveness and powerfulness.

* Quantitative – Hubness-based: Individuals preferentially affiliate with existing social structures, thereby reinforcing them into hubs.

* Existing structures and hubs signal, that others have trusted them. What has been trusted by many others (and especially many similar others) is more trustworthy, because a networked mass of individuals cannot easily be manipulated.

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Structure Formation

Social Control (1/2)

* Social Control regulates the collaboration of individuals.

* Actors participating in collaboration or exchanges strive to maximize self-interest – which is it is a natural and necessary trait for human survival, and appears normally distributed in society.

* Social control limits the range of potential behavior of an individual actor within a social group. Social control pressures the actor to adopt a socially optimum strategy – to maximize self-interest, but not at the expense of others in the group.

* Social control in this sense leads to optimized collaboration, and thus to increased fitness and success of the social group.

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Structure Formation

Social Control (2/2)

* Social Control is exerted through the possibility for sanctioning deviant individuals:- exclusion from the social group (structural sanction affecting access)- public denunciation (informational sanction affecting reputation)

* Actors could (would) always defect, if- not a social group important to them- no repeated exchanges or collaborations- effects of defecting local only(- pathogenic personality)

* In a networked economy, defecting becomes increasingly difficult, as information travels everywhere fast. In other words, the social group important to (=able to sanction) an individual actor becomes larger.

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Structure Formation

Network Structure

* Preferential attachment operates at the level of the individual agent, whereas social control operates at the level of the social system. Together they keep the system as a whole at equilibrium.

* 1) Preferential attachment acts as a filter and allows to make the diversity (of information, individuals, resources, etc.) manageable.

a) It counteracts information overload, because similar things become linked.

b) It increases organizational efficiency, as resource allocation is optimized.

c) It increases effectivity and powerfulness, as similar things are grouped and so gain in mass, importance, “hubness” etc.

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Structure Formation

Network Structure

* 2) Social control acts as a cohesion factor and limits non-collaborative behavior that threatens the stability of the system.

a) It preserves diversity of what is socially acceptable (assuming preferences are normally distributed), but neutralizes extremist positions at both ends, because they are not tolerable by the mass of individuals, and because they do not have enough mass themselves to prevail.

b) It controls (extremist) preferences by evoking counter-action, as positions and groups become visible. Formation of groups leads to formation of counter groups.

c) It creates dialogue across divergent positions, as connectivity is increased.

TolerableNot tolerable

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Structure Formation

Network Structure

* The resulting equilibrium is mediated by increased information access:

a) visibility of intrinsic qualities of nodes (who they are)

b) visibility of structural embeddedness of nodes (how they are connected and to whom)

* In this sense, the possibility for online social networking has allowed for the structural change in the social organization of our society:* new hubs based on interest and liking, not resources* more connectedness, as also strangers are seen as

potential collaboration partners* production outside of established firms, as they loose

their organizational advantage* more difficult to buy attention * more difficult to oppress opposing views or manipulate

masses

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Information

If a thought once has come to life, it can be replicated at no cost.

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Information

From Exabyte to Zettabyte Age

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Information

The Nature of Information

* Information is virtual in nature (it has no physical mass), and it is something that exists in the form of qualia within our minds only.

* In order to coordinate action, information must be de-virtualized1:- it must be “materialized” e.g. coded into language, speech or writing- it must be transmitted or transported to the recipient- it must be processed and understood by the recipient

* In this view, spoken or written information is, in the absence of a processing mind, not existent as information – it is just code2.

* The invention of the computer enables us to re-virtualize information to a certain extent, and make it transportable, across space and time.

1 It is (at least practically) impossible to transport qualia directly from one mind to the other.2 This is similar to the fact, that for a Non-Chinese speaker, Chinese characters transport no information, though it is still possible to manipulate the characters correctly, given respective rules (see Searle, 1980) – which is exactly what computers do.

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Information

The Nature of Information

Information as a virtual good portrays the properties:

* Its replication and transport is fast and cheap.

* It is a non-rival good – information can be consumed by an individual, without making it less available for consumption by another individual.

* Information consumption produces even more information, because information consumption changes the individual. As a result new information is produced (information being “a difference that makes a difference”1).

* The structure of social organization can also be seen as information2.1 Bateson (1972)

2 Structure can be viewed as crystallized information (Shannon, 1948), information is equivalent to negentropy, as a measure for order/organization (Wiener, 1961).

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Network Economy

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Network Economy

Networked Information Economy

* The main resources and products of the networked economy are virtual goods – information and (tacit) interactions.

* Production in the networked economy is independent of location, but it is highly dependent on humans – it cannot (yet) be automated or delegated to “intelligent” machines.

* Through the increased speed of interaction and the resulting ever faster changes in the economic environment (also in the preceding sectors), information must be constantly updated or generated anew by information workers.

* Talented humans are becoming the scarce resource and means of location-independent productive interaction are needed.

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Network Economy

Networked Information Economy

* For the time being, the Networked Economy largely depends on new intermediaries for information sharing and interaction, such as Facebook, having replaced the old mass media, but replicating their business models – maximize the use for advertisers, not for the user.

* There are no sufficiently integrated tools for online collaboration (suitable for business purposes), but a large amount of social network websites, providing no additional value.

* The most promising and most needed allocation of resources in the Networked Economy is in the field of education and social software, to enable us to better collaborate, thereby successfully manage the global challenges ahead and create for more overall welfare – and secure our long-term survival.

* More information and further slides available on request.

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References

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References

Ackerman, Bruce (1980). Social Justice in the Liberal State. Yale: University Press.

Ashby, W.R. (1956). An Introduction to Cybernetics. London: Chapman & Hall.

Bateson, Gregory (1972). Form, Substance, and Difference, in: Steps to an Ecology of Mind: 448-466. New York: Chandler.

He, Chuanqi (1999). Second Modernization. Beijing: High Education Press.

Lessig, Lawrence (1999. Code and Other Laws of Cyberspace. Basic Books.

Merry, U. (1995). Coping with uncertainty: Insights from the new sciences of chaos, self-organization, and complexity. Westport: Praeger.

Prigogine, I. & Stengers, I. (1981). Dialog mit der Natur. Neue Wege naturwissenschaftlichen Denkens. München: Piper.

Prigogine, I. & Stengers, I. (1984). Order out of Chaos. New York: Bantam.

Searle, John (1980). Minds, Brains and Programs. In: Behavioral and Brain Sciences 3 (3): 417–457. Cambridge: University Press.

Shannon, Claude. E. (1948). A Mathematical Theory of Communication. In: Bell System Technical Journal, Vol. 27, pp. 379–423, 623-656.

Steiner, Peter O. (1952). Program Patterns and Preferences, and the Workability of Competition in Radio Broadcasting. In: The Quarterly Journal of Economics 66: 194. Harvard: MIT Press.

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Author

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Author

Background & ContactPsychology, Social

Psychology, Complexity

TechnologyDesign

Management & Business Strategy

Marketing, Communicati

ons

User Experience, Information Design

EducationOccupation

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Author

Background & Contact

Carole Hofmann

* Mobile +41 78 714 14 33* Email ch@carolehofmann.net* www.carolehofmann.net