4 Revolutions and the Rise of the Individual Over the Institution

A pattern of revolutions has brought us out of the Dark Ages and into the modern world. This pattern has been repeated three times. During your lifetime, it will repeat for a fourth time. This will be the next great revolution.

If I were to ask you to name some technological inventions that helped us to become modern, you could probably name quite a few – things like the printing press, the steam engine, the automobile and the computer. But if I were to ask you what social inventions helped us to become modern, you might pause. We are less inclined to think of things like schools and universities, banks and corporations as inventions and yet they are. Our social institutions and customs are at least as different from what they had in medieval times as is our technology.

When a technology inventor comes up with a radically new product, they call it an innovation. When a social inventor like Martin Luther or Thomas Jefferson comes up with a radically new institution, they call it revolution. Such revolutions have created our modern world. A fourth is about to transform it once again.

The First Revolution - the Church
In 1300, you could be burned at the stake for a number of offenses. If your neighbor's donkey had died or crop had failed, he might bring an accusation against you for being a witch. If you spoke out against the church, questioning its doctrine. Or if you simply owned a copy of the Bible in your own language. All of these, and more, were capital offenses.

In the early 1500s, Martin Luther became the most visible agitator for a change to the church. He didn’t like the idea of church authorities substituting for his conscience or interpretation of the Bible. He may have articulated the first revolution when he said, “We are all priests.”

It took quite some time, and a tragic amount of bloodshed, but the individual in the West finally gained the freedom to choose how – or even whether – to worship. The power that once was held by the church – by the elites within the church – was now held by the individual. This church revolution was the first great transformation of the West. To appreciate how different this made us, consider the fact that in many Muslim countries today it is a capital offense to renounce one’s Muslim faith. Think about how different life is here in the West for this reason alone.

The Second Revolution - the State
The second great transformation involved the revolution of the state. We learn about this great and amazing story in our American history classes. Jefferson penned the words, “All men are created equal.” Again, the revolution was not immediate. After we won our independence from the British, for example, only white, landowning men could vote. But the idea of power to define policy – to define the laws and budgets that so influence our quality of life – the idea that this should be power ultimately held by the people is an idea that has spread. In just the last century, the number of democracies has increased from about 13 to 67.

It is not, ultimately, the aristocrats who decide on the politicians and policy that defines our society. Rather, it is the polity. As with the Protestant Revolution, Democratic Revolution dispersed power outwards from elites to the common person.

The Third Revolution - the Bank
The third great transformation involved a revolution of the bank – a transformation of capitalism.

Before this, the third transformation, it was common for a 9 year-old child to work 12 hour days in factories and for young women to not only work 12 hour days but to be, effectively, prisoners on a factory compound, able to leave only on Sunday’s. The power over lives that had earlier been held by popes and kings was now wielded by robber barons. Money and credit was scarce – to get a loan you would be subject to great scrutiny and bankers would decide whether or not the purchase you wanted was appropriate.

By 2000, capitalism had transformed in so many ways. As with the church and state before it, the power of the bank had been dispersed outwards to common people. The great management guru Peter Drucker was one of the few to note that by the end of the 20th century it was labor - people like us – who through their 401(k) plans and pension plans now owned the majority of the country’s equity.

The battle between capital and labor that played out through the actions of robber barons, unions, and in more dramatic relief through the policies of communists and fascists, was over. The battle had not been won. It had been dissolved. Labor had become the capitalist. Not only did workers have rights, but the average person with a credit card could now decide for himself whether or not to take a loan. Bankers did not decide whether you should buy the new refrigerator. You made that decision. Freedom of religion and the right to vote were followed by access to credit upon our choosing – not the banks. What would the banker of 1900 think about our literally tearing up requests for us to TAKE OUT loans? What would he think about us throwing away advertisements that guaranteed us credit?

Three revolutions have brought us into the modern world. But the church, state, and bank are no longer the dominant institution. In today's world, it is the corporation that has that role. My prediction is that the elites within corporations are going to find their power dispersed out, just as happened to the elites in the church, state, and bank before them. The CEO now making hundreds of times what the average worker makes is following in the footsteps of the Renaissance popes, the Enlightenment-era monarchs, and the powerful capitalist whose world was depicted in Dickens’s novels.

You live in a remarkable time. For one thing, all three past revolutions played out over a century or more. This next revolution will take place within decades. I will go into more detail in later posts, but the fourth revolution has already begun. For now, I will simply say that the Internet has dispersed information outwards to average employees. Increasingly, power, decision-making, and autonomy will be dispersed with it.

We know that a country is poorly developed if its head ruler makes more money than anyone else within the country. When the top salary goes to the top political leader, we rightly suspect a dictatorship or political abuse. it is different in developed nations. Within the U.S., for instance, President Bush’s’ $400,000 annual salary might put him among the top 1 million for income. People in the United States are free to make as much as they can, and many make more than our political leader. By contrast, it is the rare company where any employee makes more than the CEO. Imagine how incensed CEOs would be if the government was to define their annual goals and their maximum salaries – and yet that is just what these CEOs typically do to their employees.

This will change. Power will be dispersed outwards to employees from the corporate elites. Senior management will increasingly play a role that looks more like that of a venture capitalist, and employees will take on a role more like that of entrepreneurs, effectively using the corporation as an incubator for starting new ventures that translate into shared equity. As with the past revolutions, this transformation of the dominant institution will involve sweeping changes and myriad smaller social inventions. And like the past revolutions, it will be defined by the rise of the individual over the institution - an increase in individual autonomy that has repeatedly defined the West.

Martin Luther said, “We are all priests.” Perhaps the cry of this century will be, “We are all entrepreneurs.”