The Global Power Of Decentralization

Humankind operated in small, dispersed communities before the invention of agriculture created an impetus for scale and centralization 10,000 years ago. A decentralization process started only 500 years ago with the advent of the printing press, a ground-breaking technology.

Reflecting upon the common thread of recent themes in these notes and beyond, the world’s decentralization process is gaining further momentum:

  • The trend toward reshoring in supply chain management has become a driver of sustainable performance;

  • In organization strategy, decentralization has emerged as the prevailing business model to foster ownership, accountability, and agility;

  • Working from home is a recent trend, with central offices losing some of their prominence;

  • Power generation is subject to decentralization through the rise of renewable power generation supported by distributed gas power generation and energy storage;

  • Innovation is increasingly conducted on a decentralized basis with a myriad of new startups driving a re-fragmentation of many industries, including in automotive and energy;

  • The web architecture itself is being decentralized with the rapid emergence of Web3.0, decentralized autonomous organizations (DAOs), and the metaverse;

  • Leveraging the same underlying distributed ledgers technology, decentralized finance (DeFi) has emerged as an alternative to traditional, centralized financial services;

  • Meanwhile, political and administrative decentralization through devolution is unabatedly pursuing a trend engaged during the second half of the 20th century;

  • Finally, even truth is being decentralized, if not atomized, with each individual now able to promote its own.

Does decentralization signal the end of globalization? The ambition to connect every nation with one another through trade under a ‘One World’ motto to achieve global peace is dead – a conclusion reached by Mr. Fink in his 2022 letter to shareholders last week.

The globalization project failed due to one critical design flaw, in my view: It was implemented by relying on nation-states, an artificial concept destined to cause geopolitical tension and engineer wars.

As nation-states are overtaken by local, subnational communities (including virtual ones) spurred by tech-enabled decentralization trends, the world will build a new, robust platform for global, interest-based networks.

Alexis de Tocqueville, a 19th century pollical scientist, noted that ‘decentralization has not only an administrative value but also a civic dimension since it increases the opportunities for citizens to take interest in public affairs; it makes them get accustomed to using freedom.’

Decentralization is synonymous with empowerment, self-determinism, participation, equality, and diversity. It will support the emergence of a sustainable form of globalization.

It will also give a new chance to world peace.

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