What Venice Teaches Us About the Safety Net

European Straits #92

Nicolas Colin

Dear all,

I’m spending a few days in Venice with my family (it’s the mid-term holidays in the UK). This is my third time here: the first was in 2013 for a conference talk with executives in the chemical industry, then I spent a few days in 2016 with my daughter Béatrice.

Venice is certainly worth many visits as I certainly haven’t gotten bored with the incredible sights around every corner. It’s also interesting to be back here just three months after releasing Hedge, as an entire section of the book is dedicated to the Venetian Republic.

What Venice teaches us about the Safety Net

Why is Venice relevant in a book about the Safety Net? It’s because it provides insights on how nations can best position themselves in the Entrepreneurial Age. Indeed the Venetian Republic is an illustration of a rare model of power: the thalassocracy, or a state with primarily maritime realms and the means to defend and expand them. There are three reasons why those are particularly relevant today.

A first trait of thalassocracy is that it’s not about the resources you own, but about the resources you exploit through superior maritime power. Old thalassocracies didn’t own the sea as much as they used it as a means of communication and exchange. Likewise in today’s Entrepreneurial Age, tech companies don’t own their users, yet they can exploit them as a strategic resource thanks to the superior design of their applications, the regular and systematic monitoring of those users’ activity, and the increasing returns to scale they derive from networks. The game isn’t about mastering the sea but rather about mastering the multitude by way of trust inspired in billions of individuals all around the world.

Another trait of a thalassocracy is that, as always with strategic positioning, trade-offs are essential. Most old thalassocracies, like Venice, mastered the sea because they didn’t have much land to defend. Conversely, most countries with vast swaths of land had a hard time competing on the sea. Likewise, in the Entrepreneurial Age, it takes focus and clear strategic positioning for certain countries such as the US, China, and Israel to prosper in an economy driven by the multitude. Meanwhile other countries are still competing in a lesser league because they remain trapped in their focus on legacy industries such as tourism and agriculture in France, finance in the UK, and manufacturing in .

A third trait of a thalassocracy is that the state cannot succeed alone. Mastering a resource as unruly as the sea eventually requires the assistance of a thriving ecosystem of entrepreneurs and financiers with whom the state must share the profits of trade. Likewise in the Entrepreneurial Age, the state plays a key role in building up the infrastructures and core technologies that entrepreneurs need to succeed, and then it should stay involved with its unique capacity to shape markets and impose a direction for innovation. It’s a lesson that entrepreneurs and venture capitalists too often forget, but one that is perfectly illustrated by the history of Venice’s stato da màr.

All in all, today’s nations would be well served by following the Venetian model: exploiting the global resources necessary to grow in power and prosperity while building and maintaining strong, inclusive institutions at home—including, in our age, a broad and strong Safety Net that hedges households and domestic businesses against the instability of a network-driven economy.

There’s much more about the parallel with thalassocracies in Chapter 7 of Hedge. If you don’t have your own copy yet, you can purchase it from the relevant Amazon website depending on where you are: 🇺🇸US, 🇬🇧UK, 🇫🇷FR, 🇩🇪DE, 🇮🇹IT, 🇪🇸ES.

By the way, might I suggest that you read Roger Crowley’s book City of Fortune about the history of the Venetian Republic. I really can’t recommend it enough, it’s absolutely breathtaking—a real page-turner!

What I’ll be doing next week

Next week I’ll be back in London and will mostly stay there. That will include participating in two events:

  • 🌄On Tuesday morning I’ll be part of a workshop on the “European Model of Innovation” as a board member of the World Economic Forum’s Digital Leaders of Europe initiative. This is all in preparation for a report to be released at Davos in January 2019. My role is to lead a subgroup working on the “Switch from a local to Pan-European approach, along with EU Commissioner Carlos Moedas and Bas Beekman of the Government of Amsterdam. Obviously I’ll share more about this topic in the coming weeks and months—and as you can guess, it’s very much in line with my firm of expanding operations at the pan-European level.

  • 🏭 Then the following Friday I’ll be attending a summit by the Royal Society of Arts (RSA) to discuss what they call the “Four Futures of Work”. I already discussed the RSA’s forward-looking reflections on the future of work in a . This time, the idea is to gather theorists and practitioners to reflect on different scenarios that will decide the future of workers in developed countries. I’m glad to participate in that summit, all the more so because I am now a Fellow of the RSA (thanks to Miranda Bertram for sponsoring me!).

I’ll then head to the Bay Area on November 3. I’ll share more about my calendar there in next week’s issue. The schedule is full now so it’s difficult for me to set up more meetings, but as I’ll visit again in Q1 2019 I’m still interested in relevant intros!

One recent publication

My latest article in Forbes is about the importance of building a new Safety Net to counter the rise of fascism in countries as diverse as Hungary, Poland, Italy, Brazil, and even the US. It reminds the reader of the singular history of the New Deal and the critical role played by President Franklin D. Roosevelt and his entourage in making it happen. Indeed, the US is the only advanced country that went from the age of steel to the age of the automobile without succumbing to fascism (like Italy and Germany) or seeing a destructive war happen on its soil. And the reason is that a strong Democratic administration decided to remedy the Great Depression with a bold political achievement: a that was aligned with the techno-economic paradigm of the day. You can read the article here: Technological Revolutions Bring About Fascism. Who Will Save Us This Time?

Essential readings on the rise of fascism

Warm regard (from Venice, Italy),

Nicolas