Metcalfe's Law implies that the value of a communications network scales with the square of the number of peers that it connects (N*(N-1)) where N is the number of network access points. Reed's Law states that communications networks that connect groups (as opposed to peers) create value that scales exponentially with network size (based on the number (2^N-N-1) of non-trivial subsets that can be formed from N*(N-1) connected groups. Reed calls these networks Group-Forming Networks or GFNs.

Reed poses the question of what exactly is value in this setting? Value in a network that provides a service to users (e.g., broadcast networks, amazon.com, content providers) is the value of that service to the customer. A communications network connects peers and value is the "value of potential connectivity for transactions". For example, customers in a telecommunications network find value in the possibility of connecting with 911. Thus, potential connectivity provides the option of transacting. GFN's provide the ability to create and join groups and the value that is provided is the ability to affiliate groups. For example, a business with a supply network has the potential of affiliating with other supply networks. Reed concludes that using Sarnoff, Metcalfe, and Reed's law, there are three categories of value that networks can provide: (1) broadcast transactions which are linear value aimed at individual users (i.e., services), (2) peer transactions which is square value from the facilitation of peer transactions, and (3) GFN transactions which are the exponential value from facilitating group affiliation. As the Internet has developed, there has been a scale-driven value shift of value based on content, followed by value based on size of membership, to value based on the best facilitation of group affiliation. Reed does not imply that any of these values replaces another, rather than all are a part of Internet value.

Reed makes a very important point from this analysis. First, in real networks, the total price that is paid for transactions can only grow linearly because it is typically the case that consumers of value have money and attention that scale linearly with N. Reed calls this a saturation process and notes that if affects all types of value which implies that all three types value compete for the same resources. Once N grows sufficiently large, peer transactions will create more value for unit of network than broadcast transactions, and that GFN transactions will create more value per unit of network than either broadcast or peer transactions. Reed concludes that GFN transactions will out-compete the other categories in attention and return on investment.

Insect studies on emergent intelligence in swarms of unintelligent actors has practical relevance to distributed computing, robotics, and other applications; for example, foraging insects use pheromone trails to select the shortest paths to food, a strategy that has been used to solve the famous "traveling salesman problem" in computer science. Systems with distributed collective intelligence are more robust because they can adapt quickly to a variety of situations.

Foraging ants select the shortest paths to food. They are so efficient that ant models have been used to solve the famous “traveling salesmen problem,” a classic in computer science, which concerns finding the shortest route that will take a salesman through a group of cities. Successive iterations over path networks (paths that have been discovered) results in the shortest routes getting reinforced and the longest ones getting abandoned. The outcome is an optimal path length for ant foraging.

Also, artificial ants provide the best solution to the classic quadratic assignment problem, in which the manufacture of a number of goods must be assigned to different factories so as to minimize the total distance over which the items need to be transported between facilities. There exist many such “optimization problems”, such as telephone routing. Also, individual robots have been programmed to push a box to a destination without communicating.

In another project, a model that was initially introduced to explain how ants cluster their dead and sort their larvae has become the basis of a new approach for analyzing financial data. “The ant-based approach enables the data to be visualized easily, and it boasts one intriguing feature: the number of clusters emerges automatically from the data, whereas conventional methods usually assume a predefined number of groups into which the data are then fit. Thus, antlike sorting has been effective in discovering interesting commonalties that might otherwise have remained hidden.”

Again using a biological system as a model, scientists have devised a technique for scheduling paint booths in a truck factory. The method optimizes variables like paint usage and time spent, as well as implementing load-sharing between paint booths in the case of breakdowns.

“Indeed, the potential of swarm intelligence is enormous. It offers an alternative way of designing systems that have traditionally required centralized control and extensive preprogramming. It instead boasts autonomy and self-sufficiency, relying on direct or indirect interactions among simple individual agents. Such operations could lead to systems that can adapt quickly to rapidly fluctuating conditions.”

Technology, history, and social impacts of technology are most often framed in terms of hardware, software, and finance, but communication technologies have the potential to change the way people think, communicate, and organize social groups. These impacts are sometimes framed by Moore's law (microprocessors and chips grow more powerful and less expensive over time), Metcalfe's law (the value of a technical network grows as the square of the number of nodes grows) and Reed's Law (when technical networks enable people to form social groups, the value of the network grows as two raised to the power of the number of nodes - much faster than just the rate of growth of technical networks). The group-formation enabled by the Internet makes it possible for people who don't know each other and who are located in different parts of the world to connect with each other in regard to shared interests - economic, social, cultural, and political. When communication technology enables people to organize collective action in these spheres, civilizations change. Now that the power of computing and communication has untethered from the desktop and leaped into billions of pockets, the forms of collective action are erupting in places and spheres of life where computation and communication had never reached before.

At the point where billions of people have access to personal communications and the instant information that the Internet provides, the aspects of cooperation and collective action discussed by Axelrod, Ostrom, and others comes into play - the capabilities of the emerging mobile mediasphere enable forms of collective action that were not possible before.

Moore's law means that the quantitative capabilities of chip-based devices grow so quickly that they translate into qualitative changes over periods of decades; today, billions of people carry devices that are thousands of times more powerful than the first personal computers, and cost a fraction of the price. At the same time, the users of these devices discover and exploit communication capabilities, social potential, political leverage, economic opportunities that were not dreamed of by those who designed, manufactured and sold the technologies. The technologies that make smart mobs possible are in the earliest stages of development, similar to the state of the personal computer in 1980 and the Internet in 1990. Yet the political demonstrations and electoral leverage that manifested in the Philippines, Korea, Spain, the USA and elsewhere - deposing governments and electing others - show the potentially disruptive power of smart mobs, even in their earliest stages.

At the same time, primitive ad-hoc computation collectives such as SETI@home and folding@home indicate new forms of computing emerging from the collective, voluntary efforts of millions of computer users. And GPS chips add the power of location-based services to the mix: people are mobilizing social networks and information in the immediate time and space.

Economically, the ability to gain profit by sharing with others, rather than only by competing - as manifested by Amazon, Google, eBay, open source software and other enterprises - is making a new kind of economic enterprise possible. Commerce is ancient, markets are as old as the crossroads, but capitalism is only about 500 years old, enabled by technologies such as joint stock ownership companies, shared liability insurance organizations, double entry bookkeeping. Now, the peer production methods exhibited by open source communities and other enterprises hint that humans have not stopped inventing new forms of economic collective action.

Six Degrees begins in the beginning. Stanley Milgram's initial small world studies are analyzed. His findings in seeing if a group of people in Nebraska can get a letter to someone in Massachusetts are scrutinized. Milgram left a puzzle. Mathematically, six degrees of separation can be shown and intuitively it is appealing. But do social networks actually work that way?

Initially, Watts steps into the world of pure mathematic theory. Graph theory and random graphs are employed to build potential worlds in which connections can be made. These tools are detailed and their histories explained.

Watts and his colleagues then take the science to new levels, by introducing sociology, epidemiology, economics, and business models into this new multi-disciplinary science. Immediately, each new field of study brings with it new insights into network dynamics.

This convergence of disciplines reveals the social, transportation and technological networks that make up our world. These networks are, ultimately, made up of individuals. Individuals in turn relate back to the networks and define how they operate.

Socially, people relate to their network by clustering. Clusters are logical organizations of network elements. In a social context, we might cluster in terms of a religion, a favorite author, a school we are attending or an affinity for a type of food. Some of these have very close physical distance, while others have a social distance with members spread out over a large area.

Networks of this type are, to various extents, “scale-free” networks. If graphed these networks roughly follow a classic power law trend where the level of connectivity between two nodes in a network increases dramatically as more nodes are connected. Real-world scale-free networks tend to have highly connected hubs which rapidly, purposely, and efficiently transmit pertinent or pervasive content from one location to another. In social circles, these are networkers. In the airline network these are hub airports. In traffic they would be freeway interchanges.

Due to this architecture, the Internet and modern air transport have combined to greatly decrease the role of proximity in our social networks. This has had great impacts on commerce, tourism, cultural sensitivity and other social factors. However, it has also led to great risks in the transmission of diseases, sensitivity to distant economic fluctuations, and rapid spread of misinformation.

These dynamics create a type of network that Duncan calls simultaneously robust and vulnerable. Their strength and weakness is that, with rapid transmission from cluster to cluster, anything can move quickly from one location or group to another. He uses the example of Toyota, whose network of suppliers was organized in such a way as to quickly compensate for and recover from a potential economic catastrophe.

Stable scale-free networks do not rely on a rigid hierarchy to provide direction in times of crisis. Rather, the structure of the network itself can rapidly respond to an unforeseen situation.

Their network was arranged in such a way as to foster and reward communication. This communication helped cope with ambiguous or unplanned situations. Rather than paralyzing Toyota while people waited for a decision from a rigid hierarchy, the contractors in the network were able to analyze the calamity and provide a rapid response to it.

As mentioned above, this robustness also rapidly transmits malicious content as well. The Melissa Virus, SARS and Ebola are analyzed to show why the network did or did not transmit them and, when it did, how they eventually died out.

Watts ends this book by summarizing that the multidimensional nature of social distance is sometimes counterintuitive and subjective. People can feel close in a network sense to people they are physically distant from and, conversely, socially distant from people physically nearby.

He continues by warning that social and physical distances have shrunk. People can quickly travel from place to place and economies are highly interdependent. The sheer number of dependencies in the modern world may yield surprising results from seemingly insignificant actions.

He finishes by showing the stability of our networks with the example of how New York adapted to the 9-11 attacks. The City bounced back to semi-normal operations within a week. During the disaster, the best laid plans of emergency operations staff were scuttled by the utter unavailability of facilities and services designed to copy with disasters. The network will provide.

"This chapter examines the problem of financing public goods in three settings. Two efforts combine a degree of state coercion in mandating funding, with a decentralized and competitive private sector model for allocating funds. The first is the problem of compensating artists in a world where the most efficient distribution systems are peer-to-peer file-sharing networks. The second concerns the problems of funding the development of new drugs and other medical inventions. Finally, a proposal for new intermediators to facilitate voluntary collective action to finance public goods is considered."

Making DNA sequences centrally and freely available resulted in valuable innovations, such as the software tool BLAST that performs 500 trillion sequence comparisons annually.

"In a series of workshops at New York and Banff, Canada, a group of artists, lawyers, and economists looked at practical issues of how a compulsory license might work, and like most such inquires, discussed how one might set or collect fees, with alternatives such as levies on purchases of computer equipment or bandwidth, or various systems for subscription services, based either upon a flat rate or the amount of downloaded music. Some thought the fees should be paid directly from general tax revenue. There was no group consensus about these issues, but there was an appreciation that it would be good to structure the fee so that it was in some sense free on the margin (similar to how one now pays for cable television or subscriber-based radio services), and that it would be a positive feature if listeners could freely experiment with unknown artists or music types, thus contributing to discovery, growth, and opportunities for new artists."

How to allocate funds was not settled. Would some money be available to finance public goods that are not supported by the marketplace, such as experimental music or recording/archiving folk music? Should artists and studio musicians have a say? The workshops proposed that for part of artist compensation, intermediators would compete against each other and listeners could decide where to put their money. It was suggested that several experiments should be conducted and evaluated: "The Blur/Banff discussions were seeking to find a way that the listeners and artists could build a new social contract that would compete with and possibly replace t he current system of distributing and marketing music. It would seek to liberate the art from the consequences of marketing the art as a commodity. If the P2P model was successful, the expenditures on marketing would fall, and the greater share of resources would be available to artists themselves."

Health care R&D, especially research into new drugs, poses another problem. Although government grants to scientific research through academic institutions supports fundamental research, drug development is carried out by pharmaceutical companies, whose patents enable them to repay the considerable development costs — but the prices bear no relation to the cost of manufacture. The social dilemma balances the self-interest of the pharmaceutical companies who seek rents to justify lengthy and expensive development, and the needs of nations faced by epidemics such as AIDS whose citizens cannot afford access to commercially available drugs. WTO agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) requires all but least-developed economies to issue patens on medicines. "This suggests a potential modification to the TRIPS agreement to allow countries an alternative way to contribute to global health-care R&D by ensuring that a fixed fraction of their GDP is being spent on supporting health care R&D," releasing such countries from their obligation to allow patents that block generic drug manufacture. Systems for efficiently collecting funds, and how to use them to fund innovation without marketing monopolies are outstanding problems to be solved.

Authors suggest competitive intermediators to "control the allocation of resources to companies and academics carrying out R&D, but not carry it out temselves (as this would be a conflict of interest). Instead each intermediator would concentrate on embracing the business model for resource allocation that it believed was the most efficient for drug development.." Prizes for R&D outputs, small grants, peer-reviewed open research projects are suggested. "Intermediates could also adopt "open" research agendas, since the ability to raise money would not be linked directly to product sales. If employers or individuals believed open research was more productive than proprietary R&D, more money would flow to open R&D projects." Consumers could possibly enjoy savings from reduction in marketing spending, which is a far larger component than R&D in pharmaceutical sales.

Another model, developed in a 2002 Rockefeller dialogue on collective management of intellectual property goods, focuses on lowering transaction costs for voluntary financing for a wide range of public goods by creating a kind of eBay marketplace, matching seekers with philanthropies, individuals, and corporate entitites. "The Matching Funds proposal is to create a new institutional framework that would make it easier to match willing funders and willing suppliers of public goods. The institutional framework would be an intermediator called Matching Funds (MF). The role of MF would be to provide due diligence on proposals for new public goods, and if the review was positive, to list the projects for subscribers." The public could critique the proposal and suggest modifications. "Subscriptions would be binding commitments to fund the project if sufficient support for the project was forthcoming from the community of persons who wanted the project done."

Humans have taken the cooperative arrangements that benefited organisms and species at the biological level to the cognitive and social levels: the capacity to play cooperative social games that benefit all was a driver of the evolution of human intellectual capacity; increased intellectual capacity manifested in both the concrete sphere of tool-making and the abstract sphere of social relationships. Once enhanced cognitive capabilities made complex social arrangements like status, reputation, gossip, persuasion, punishment, alliance possible, human social capacities became a tool for ratcheting up cooperative game-playing capacity.

Certain technologies push human societies to reorganize at a higher level of cooperation. As an example, Wright offered the Shoshone, a Native American tribe that lived in a territory with no big game to hunt but an abundance of jackrabbits at certain times of year. Because of their stark environment, the Shoshone normally existed at a simple level of social organization, with every extended family foraging for itself. When the rabbits were running, however, the families banded together into a larger, closely coordinated group, to wield a tool too large for any one family to handle or maintain — a huge net. Working together with the net, the entire Shoshone hunting group can capture more protein per person than they could working apart. Wright declared that "The invention of such technologies — technologies that facilitate or encourage non-zero-sum interaction — is a reliable feature of cultural evolution everywhere. New technologies create new chances for positive sums, And people maneuver to seize those sums, and social structure changes as a result."

Wright noted that people who interact with each other in mutually profitable ways are not always aware that they are cooperating; he cited evolutionary psychologists to assert that unconscious underpinnings of cooperation — like affection and indignation — are rooted in genetic traits:

"… natural selection, via the evolution of 'reciprocal altruism' has built into us various impulses which, however warm and mushy they may feel, are designed for the cool, practical purpose of bringing beneficial exchange."

"Among these impulses: generosity (if selective and sometimes wary); gratitude, and an attendant sense of obligation; a growing empathy for, and trust of, those who prove reliable reciprocators (also known as "friends"). These feelings, and the behaviors they fruitfully sponsor, are found in all cultures. And the reason, it appears, is that natural selection "recognized" non-zero-sum logic before people recognized it…Some degree of social structure is thus built into our genes."

"In the intimate context of hunter-gatherer life, moral indignation works well as an anti-cheating technology. It leads you to withhold generosity from past nonreciprocators, thus insulating yourself from future exploitation; and all the grumbling you and others do about these cheaters leads people in general to give them the cold shoulder, so chronic cheating becomes a tough way to make a living. But as societies grow more complex, so that people exchange goods and services with people they don't see on a regular basis (if at all), this sort of mano-a-mano indignation won't suffice; new anti-cheating technologies are needed. And, as we'll see, they have materialized again and again — via cultural, not genetic, evolution."

The cultural innovations that reorganize social interaction in light of new technologies are "social algorithms governing the uses of technology." Wright called these social methodologies "metatechnologies.". In the Middle Ages, the metatechnologies of capitalism — currency, banking, finance, insurance — pushed the hierarchical machinery of feudal society to transform into a new way of organizing social activity, the market. "The metatechnology of capitalism then combined currency and writing to unleash unprecedented social power." Wright claimed that the emerging merchant class pushed for democratic means of governance, not out of pure altruism, but in order to be free to buy and sell and make contracts. Throughout this process, powerful people always seek to protect and extend their power, but new technologies always create opportunities for power shifts, and at each stage from writing to Internet, more and more power decentralizes: "I mean that new information technologies in general — not just money and writing — very often decentralize power, and this fact is not graciously conceded by the powers that be. Hence a certain amount of history's turbulence, including some in the current era."