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Game Changer

Why Wikileaks will be the death of big business and big government.

I confess that I’m torn. I had the same cranky reaction to Time’s Person of the Year choice as pretty much the entire Internet: It’s hard to see the calculation that makes Mark Zuckerberg more influential than Julian Assange in 2010. Still, there’s something about this conventional wisdom that’s annoying in its own right.

When people riff about the impact of Wikileaks, you typically hear how it’s forever changed diplomacy or intelligence-gathering. The more ambitious accounts will mention the implications for journalism, too. All of that’s true and vaguely relevant. But it also misses the deeper point. The Wikileaks revolution isn’t only about airing secrets and transacting information. It’s about dismantling large organizations—from corporations to government bureaucracies. It may well lead to their extinction.

At the most basic level, organizations have two functions: They make stuff (loosely defined) and they coordinate the activities of makers of stuff. The efficiency with which they do these things helps determine the organization’s size. So, for example, IBM can produce its own keyboards, or it can outsource its keyboard-making. Which option it chooses depends on whether IBM can produce keyboards more cheaply than a supplier can; and on whether it’s harder for IBM to coordinate with the supplier—getting the keyboards built correctly and on time—than to sort out those details internally. Even if the supplier can build keyboards more cheaply, IBM might decide against outsourcing because dealing with its in-house keyboard-maker is easier than dealing with outsiders.

A government agency faces a roughly analogous choice. The State Department, say, can focus entirely on managing relationships with foreign governments. Or it can perform other tasks on top of that, like providing development aid. Because it’s generally easier to work with people who operate from similar assumptions, rely on the same data, and share a common set of goals and values—which is to say, it’s easier to coordinate with co-workers than with outsiders—organizations often perform these functions in-house. Indeed, that’s one reason they’ve historically grown so large. This has even been true over the last generation, when many business gurus predicted that information technology would make outsourcing nearly frictionless.

Now consider what happens when you plug Wikileaks into this equation. All of a sudden, the very same things that made it more efficient to work with your colleagues—the fact that everyone had a detailed understanding of the mission and methodology—become enormous liabilities. In a Wikileaks world, the greater the number of people who intimately understand your organization,* the more candidates there are for revealing that information to millions of voyeurs.

Wikileaks is, in effect, a huge tax on internal coordination. And, as any economist will tell you, the way to get less of something is to tax it. As a practical matter, that means the days of bureaucracies in the tens of thousands of employees are probably numbered. In a decade or two, we may not only see USAID spun off from the State Department. We may see dozens of mini-State Departments servicing separate regions of the world. Or hundreds of micro-State Departments—one for every country on the planet. Don’t like the stranglehold that a handful of megabanks have on the financial sector? Don’t worry! Twenty years from now there won’t be such a thing as megabanks, because the cost of employing 100,000 potential leakers will be prohibitive.

Granted, there are a few key assumptions built into this prediction. The first is that Wikileaks is here to stay. Alas, this one’s a no-brainer. Daniel Ellsberg spent the better part of a year photocopying the 7,000 pages that became the Pentagon papers. Thanks to the IT revolution, copying and transferring data on that scale takes all of 15 seconds today.

Perhaps more importantly, Wikileaks is a self-perpetuating phenomenon. Pre-Wikileaks, a would-be leaker’s only shot at wide-scale circulation was a newspaper or magazine. The problem with such outlets is that they tend to have their own views on how a story should be told. They interview corporate spokespeople and government officials to get their side of the story. They may bow to a censor’s request to suppress information. Wikileaks, on the other hand, promises mass distribution without the filter. And the more the organization proves it can get leaked information in front of tens of millions of readers, the more leakers will flock to it.

Which is why Assange is clearly telling the truth when he says he’s sitting on more leaked documents than he knows what to do with—certainly in the millions of pages. “Our pipeline of leaks has been increasing exponentially as our profile rises,” he recently told Forbes. “Our ability to publish is increasing linearly.” And, even if Wikileaks were to disappear tomorrow—no doubt there are powerful people around the world rooting for that outcome—there are dozens of imitators waiting to replace it.

Granted, Assange himself doesn’t purport to want to destroy large organizations, at least not most of the time. (There is stuff like this…) In his public statements, he says he simply wants to create powerful incentives for them to behave ethically. “It just means that it’s easier for honest CEOs to run an honest business, if the dishonest businesses are more affected negatively by leaks than honest businesses,” he told Forbes. He illustrates with the example of Chinese baby formula companies. Pre-Wikileaks, the entire industry had to follow suit when one manufacturer started skimping on protein, or risk being undercut by the lower-cost competitor. Thanks to Wikileaks, there’s a huge risk of being exposed, which discourages the skimper from cheating in the first place. 

I hope this happens. More likely, companies and governments will begin to fear the leaking of sensitive proprietary information whether they’re behaving ethically or not, because Wikileaks can’t ensure that only the unethical get exposed. Its definition of unethical clearly extends to organizations—like the U.S. State and Defense Departments—that see themselves as behaving ethically. In fact, there’s probably a greater incentive to expose generally ethical organizations, since the shock-value, and therefore the readership, will be much higher. It would be much bigger news if Google were bilking old ladies than if, say, Goldman Sachs were.

That leaves these organizations with two options. The first is to tighten their security so as to disrupt or deter leaking. As it happens, some of the most brilliant minds in computer programming are hard at work on this problem. Unfortunately, as no less an authority than Zuckerberg has pointed out, these efforts are doomed to fail. “Technology”—which is to say, the technology that moves information rather than blocks it—“usually wins with these things,” he told Time’s Lev Grossman (inadvertently advancing the case for Assange as Person of the Year).

The second option is to shrink. I have no idea what size organization is optimal for preventing leaks, but, presumably, it should be small enough to avoid wide-scale alienation, which clearly excludes big bureaucracies. Ideally, you’d want to stay small enough to preserve a sense of community, so that people’s ties to one another and the leadership act as a powerful check against leaking. My gut says it’s next to impossible to accomplish this with more than a few hundred people. The Obama campaign more or less managed it with a staff of 500. But the record of presidential campaigns (one industry where the pressure to leak has been intense for years) suggests that’s about the upper limit of what’s possible.

I’d guess that most organizations a generation from now will be pretty small by contemporary standards, with highly convoluted cell-like structures. Large numbers of people within the organization may not even know one another’s name, much less what colleagues spend their days doing, or the information they see on a regular basis. There will be redundant layers of security and activity, so that the loss of any one node can’t disable the whole network. Which is to say, thanks to Wikileaks, the organizations of the future will look a lot like …  Wikileaks.

It’s your world, Julian Assange. Mark Zuckerberg and the rest of us are just living in it.

Noam Scheiber is a senior editor for The New Republic and a Schwartz Fellow at The New America Foundation. 

*I’m obviously simplifying a bit here. For example, there are some contractors who have better access to information than salaried employees—Daniel Ellsberg, though a former Pentagon official, was at RAND when he leaked the Pentagon papers. For the sake of precision, we can probably assume an organization includes everyone who shares its most sensitive information, even if they don’t officially work there. But, as a general rule, it probably suffices to draw the line at employees.