Increased connectivity allows for the spread of liberal, open values but also poses a number of dangers. To foster the free flow of information and challenge authoritarian regimes, democratic states will have to learn to create alliances with people and companies at the forefront of the information revolution.
ERIC SCHMIDT is Chair and CEO of Google. He is a Member of the President's Council of Advisers on Science and Technology and Chair of the New America Foundation. JARED COHEN is Director of Google Ideas. He is an Adjunct Fellow at the Council on Foreign Relations and the author of Children of Jihad and One Hundred Days of Silence: America and the Rwanda Genocide.
Eric Schmidt and Jared Cohen discuss their article, "The Digital Disruption," from the November/December issue of Foreign Affairs.
Stephen Cook and Jared Cohen answer questions about the protests in Tunisia.
The advent and power of connection technologies -- tools that connect people to vast amounts of information and to one another -- will make the twenty-first century all about surprises. Governments will be caught off-guard when large numbers of their citizens, armed with virtually nothing but cell phones, take part in mini-rebellions that challenge their authority. For the media, reporting will increasingly become a collaborative enterprise between traditional news organizations and the quickly growing number of citizen journalists. And technology companies will find themselves outsmarted by their competition and surprised by consumers who have little loyalty and no patience.
Today, more than 50 percent of the world's population has access to some combination of cell phones (five billion users) and the Internet (two billion). These people communicate within and across borders, forming virtual communities that empower citizens at the expense of governments. New intermediaries make it possible to develop and distribute content across old boundaries, lowering barriers to entry. Whereas the traditional press is called the fourth estate, this space might be called the "interconnected estate" -- a place where any person with access to the Internet, regardless of living standard or nationality, is given a voice and the power to effect change.
For the world's most powerful states, the rise of the interconnected estate will create new opportunities for growth and development, as well as huge challenges to established ways of governing. Connection technologies will carve out spaces for democracy as well as autocracy and empower individuals for both good and ill. States will vie to control the impact of technologies on their political and economic power.
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History's third technological revolution is transforming national sovereignty, the world economy, and the military. The abundance of information challenges state power as more people demand the freedoms they see enjoyed in other parts of the world. Information increasingly replaces territory and material goods as the source of wealth and power. Computers allow simulation of battles and information warfare. The ability to adapt to these advances will determine which institutions and nations survive the coming decades.
The nation-state may be obsolete in an internetted world. Increasingly, the resources and threats that matter disregard governments and borders. States are sharing powers that defined their sovereignty with corporations, international bodies, and a proliferating universe of citizens groups. The bond markets must be satisfied or capital will go elsewhere. International involvement in domestic crises is a growth industry. Activists fight battles in cyberspace for every imaginable cause-and the nation-state gives in. The ramifications of this power shift will be seismic.
All have heard about the virtual corporation. What the world is witnessing now is the rise of the virtual state. After World War II, led by Japan and Germany, the most advanced nations gave up territorial conquest to compete instead for world trade. As more corporations farm out production and land becomes less valuable than technology, knowledge, and portfolio investment, the state will further shift its efforts from amassing productive capacity to choosing industries and investing in people. War over territory is becoming quaint, but so is the welfare state.

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