The Age of Leverage

Citation: David M. Anderson (Nov 2010) The Age of Leverage. Brookings Issues in Governance Studies (RSS)
Internet Archive Scholar (search for fulltext): The Age of Leverage
Download: http://www.brookings.edu/research/papers/2010/11/leverage-anderson
Tagged: Sociology (RSS) NatematiasGenerals (RSS), leverage (RSS), participation (RSS), information technology (RSS), political theory (RSS), governance (RSS), thoughtleadership (RSS)

Summary

When people and organizations creatively direct resources towards effects and impacts in the world, what do we call that? In this paper, Anderson calls this strategy leverage, especially in cases where "the effects that are sought are... greater than the resources employed... magnifying the effects from the causes." Leverage is the strategy of directing a modest allocation of resources in such a way to maximize their effect. As power becomes more dispersed in society, Anderson claims, Leveraging "has become the dominant theme of our time." To illustrate this claim, he offers a wide range of examples, including:

• Someone using Facebook to ask friends for help finding a job
• "A step-son who is asked by his step-father to mow the lawn talks to his mother about his need to use her car and she agrees to let him use her car if he agrees to mow the lawn."
• Soft power versus military force
• Using the Internet to research terrorism
• "A husband and wife buy a house by putting $40,000 down (which is the only money they have) and neither of them has a good job and take on an interest only loan that has a 4 percent 3 year ARM."
• Products like the Walkman created by merging existing products
• Keynesian fiscal policies aimed at stimulating consumer demand
• "In their divorce negotiations, the wife wants to get divorced and the husband does not. The husband after considerable talk agrees to the divorce, but obtains some economic resources he might otherwise not have obtained."
• Economic sanctions between nations

Anderson claims that in each case, "specific resources are strategically employed" and the goal is to magnify the effect, creating the "most from least." The job-seeker leverages relationships to find work. The step-father and step-son leverage their relationship with the person they share to get what they want out of the exchange. In the divorce negotiation, the husband "is using his desire to delay a divorce as a resource in his negotiations." Sony leverages its resources for maximum impact by combining two things to create something new that is greater than the sum of its parts. Keynesian fiscal policies "use targeted government investments as leverage in order to grow the economy." Anderson argues that soft power is a strategy in which countries leverage their existing "music, literature, movies, hamburgers, and public diplomacy" towards their international goals.

Leverage a Main Current of our Age

Especially in the U.S., argues Anderson, "economic, political, and family progress in the twenty first century seems to rely more on soft power and leveraging strategies than traditional hard power." Anderson points to recent developments that he thinks explain this:

• The Internet, where knowledge and social capital are leveraged
• New Family Networks, where "parents and children alike find that they must operate in complex networks that require collaboration, negotiation, dialogue, and deal-making"
• Geopolitics, where the structure of superpowers has given way to a "world theatre... of multiple problem areas with different sources but many overlapping issues."

In a world where big players and hard power are less prominent and "power is dispersed," argues Anderson, "leverage becomes the dominant strategy to get things done."

The Ethics of Leverage

Although Anderson argues that "leverage itself... is morally neutral," he does identify ethical issues particular to leverage. Problems occur, for example, when "someone or some institution is overleveraged." In 2008, financial institutions were overleveraged, leading to the financial crisis. Institutions can also be underleveraged however, failing to use their resources effectively to maximize the effects that matter to them. To balance this, Anderson proposes that a normative constraint on leverage could ask the effect of any leverage-related decision on "other... concerns where leverage is probably a factor."

Drawing from Max Weber, Anderson claims that "the belief and motivation system centered around the recognition of the need to leverage resources and relationships is playing a broadly similar role to the belief and motivation system of the Protestant Reformation."

Applications of a Normative Principle of Leverage

Anderson identifies several cases where this normative principle might be applied:

• in foreign policy, "treat others with respect and dignity even as you leverage your relationships with them in order to achieve... goals" (drawing from Kant's Ends Principle in the Categorical Imperative)
• in domestic policy, reframe social problems of working families as "problems of overleveraged working mothers and working fathers" and apply leverage

Theoretical and Practical Relevance

Anderson is a thought-leader and fundraiser in Washington DC circles, with a strong background in digital democracy initiatives and youth digital engagement. At the time of writing, he is Senior Vice President, Government and Strategic Initiatives, The Washington Center for Internships and Academic Seminars, which coordinates for-credit internships for thousands of students in Washington D.C.

I see this paper as an example of the kind of thought leadership that is effective at inspiring organizations and funders to take on a meaningful vision. I also see it as a fascinating example of someone attempting to find an intellectual ground and write a book that strategically moves them out of a digital organizing or civic space into a broader circles of influence. Four years after this article, Anderson published Leveraging, A Political, Economic and Societal Framework. I'm also fascinated by the parallels to Buckminster Fuller's Trimtab analogy --Natematias (talk) 15:49, 13 February 2015 (UTC)