[This post is distributed with the permission of the author. Professor Noll’s discussion of centralisation versus Decentralisation illuminates how this issue has endured overtime and across information and communication infrastructures.]
CENTRALIZATION vs DECENTRALIZATION
A. Michael Noll
December 21, 2025
© Copyright 2025 AMN
Centralization versus decentralization has always been controversial – in politics, in economics, in technology, and in today’s digital world. I admit that I favor decentralization and fear the largesse of centralization. In the end, it is whether a “lot of little” is safer and better than a single giant.
The Internet with its packet switching and the World Wide Web with distributed information all over the planet are a decentralized world. Personal computers and local storage are a decentralized world – the Cloud and large data centers are a centralized world.
The original telephone network, with its central offices, took a centralized approach to switching. This centralized approach so dominated the philosophy of the Bell System that it failed to recognize the advantages of the decentralized packet switching of the ARPANET, even when offered it by the government in the early 1970s. The ARPANET was the precursor of today’s Internet.
Edison’s direct current approach to electric power had many distributed generating plants serving a large city. Tesla’s AC approach allowed a single large generating plant to serve a large city. Centralized won out over decentralized, and that approach is still used today, except that local solar power and wind power are more decentralized. The windmills of Holland are decentralized – large dams are centralized.
The concept of a single, centrally located digital computer to perform computing for many decentralized terminals was know as time-shared computing, and was conceived in the 1950s and 1960s. Its early implementations failed since there was not sufficient computing power to serve adequately all the distributed terminals when the power of a single larger computer was shared. Ultimately, millions of digital computers emerged each with its own microchip computing power. Decentralization won over centralization.
Today, the Cloud” has emerged as a centralized way to store information. It seems we are forced to store our information in the Cloud, sometimes even without knowing it. All our most personal information is now stored centrally, although we are assured it is encrypted and safe. Yes, there are advantages to such centralized storage when we have many smart phones and laptops that all need to have the same information – synchronization is easy and automatic. But the risks to privacy and fears that all this information could disappear in a flash are of concern.
The intelligence community loves centralized databases and storage of all information. This makes its spying business easier with just one large target to be penetrated versus many millions of decentralized computers all with their own storage.
In the navy, giant battleships became easy targets, versus many small aircraft and attack ships. Now fleets of small drones have made tanks obsolete and threaten navies.
In government, is the large central state and Federal government preferable to many small local municipalities? It seems that the closer the service it to users and citizens, the more responsive and better the service. But from an economic perspective, it might seem that centralization is more efficient in sharing resources among many users.
The United States was founded on the principle of many separate and independent states, with a only central government for a few very common needs, such as defense and currency. The battle between the centralized Federal government and the decentralized independence of the states and local communities continues today. Europeans seem to flock to a centralized approach of big government, perhaps because of a history of monarchies and royalty.
It sounds reasonable that large centralization is more efficient. There is a ying-yang relationship regarding centralization-decentralization, and large-scale centralization is today’s “in thing.” But ultimately, centralized bigness might not always be better in everything for all time.
