Captivity of the Commons

This post is part two of the series, “The Question Concerning Social Technology”. Part one is here. These posts will be opened to live discussion in an upcoming webcast on May 27.

In January 2002 DARPA launched the Information Awareness Office. The mission was to, “ imagine, develop, apply, integrate, demonstrate and transition information technologies, components and prototype, closed-loop, information systems that will counter asymmetric threats by achieving total information awareness (emphasis added)” The notion of a government agency achieving total information awareness was too Orwellian to ignore. Under criticism that this “awareness” could quickly migrate to a mass surveillance system the program was defunded.

Fast-forward to last week and my near-purchase of Libbey Duratuff Gibralter Glasses (the perfect bourbon glass one might speculate). Over the course of the next few days I was peppered with exact-match ads for Libbey Duratuff glassware on several other websites; A small example of information awareness at work.

Personal data is the currency of Web 2.0. Knowing what we watch, buy, click, own, what we think, intend and ultimately do confers competitive advantage. Facebook possesses your social graph, your personal interests and your full profile (age, location, relationship status etc.) not to mention your daily (or hourly) answer to their persistent question, “what’s on your mind?”. Reviewing the “25 Surprising Things Google Knows About You” should give anyone pause. And it’s not just the Web 2.0 set. Credit Card Companies, Telcos, Insurance , Pharma… all are collecting vast stores of personal data. If you watch the trendline it is moving toward more data and more analytic capability – not less.

So why is it that we seem to have more comfort when the capacity for total information awareness lies with corporations as opposed to government? Experience shows that there is a very thin barrier between the two. To wit, the release of thousands of phone records to the U.S. government - and, conveniently, government immunity for those same corporations after the breach. Google and Yahoo! and Microsoft have all been accused of cooperating with the Chinese government to aid censorship and repression of free speech. What happens if/when we encounter the next version of the Bush administration that sees no problem abrogating civil rights in pursuit of “evildoers”?

What’s more, when we deliver our personal information over to corporations we are giving this data over to an institution that is amoral. Companies are not yet structured to deliver moral or ethical results – they are encouraged to grow and deliver “shareholder value” (read money) which is a numb and narrow measure of value. Do I want my data to be managed by an amoral institution?

To be clear – I want the convenience and miracles that modern technology brings. I love the Internet and I am willing to give over lots of data in the trade. But I want two fundamental protections:

First, change the corporation. The structure of the corporation continues to be driven by 20th century hard goals of efficiency and scale – not by more complex measures of environmental sustainability, value creation and the commonweal. These are simply not adequately factored into any structural, organizational, incentive or taxation systems of business today. Profit and profit motive are fine – but hiding social and environmental costs is no longer acceptable. I want to deal with institutions capable of morality. This is no small task – but if we can build the Internet….

Second. We need a right to privacy that matches the 21st century reality. As a friend of mine likes to say, “privacy is now a responsibility – not a right.” While it is pithy (and perhaps true), the reason we grant rights – and laws to enforce those rights in society is the simple fact that people do not generally have the wherewithal to protect themselves from large, institutional interests. In the same way that regulatory structures are needed to keep a financial system in balance (alas even the Ayn Rand acolyte Greenspan finally agrees with this truism), we need new rights and regulations governing the use of our personal data – and simple sets of controls over who has access to it.

The true work of the 21st century lies not in refining our technology – this we will achieve without any political will. The work lies in re-imagining our institutions.

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  • http://tim.oreilly.com Tim O'Reilly

    Great post, Josh. I’d love to see you elaborate on what that 21st century right of privacy ought to look like. Seems like a working group on that to deliver recommendations for Gov 2.0 Summit could be very worth having.

    Who should be at such a summit?

  • http://www.stapleton-gray.com Ross Stapleton-Gray

    To some extent our need for privacy has evolved, along with the technologies. What would have been shameful, or “just not talked about,” has become commonplace in social discussion. There’s far less stigma, say, to being a “bastard” (in the parental sense… then again, some CEOs have always been proud of it in the other sense). And in some cases, it’ll be better to change how information can be applied, than to try to ensure its privacy: single-payer health care would do far more to protect people with genetic predispositions, than to have them have to hide any evidence that they might be more susceptible to some disease (especially where any blood relative can be paid to fork over the information).

  • http://twitter.com/kmcurry Kevin Curry

    Joshua, Tim:

    Re: “Seems like a working group on that to deliver recommendations for Gov 2.0 Summit could be very worth having.”

    Privacy Camp might be the forum you seek to explore that:

    http://privacycampdc09-fbevent.eventbrite.com/

    Cheers,
    Kevin

  • http://sustainableteams.org Stephan

    Love the conclusion.

    We really need to start working on getting our institutions right: not just regarding property rights, but also what is acceptable/ desirable behavior when communicating with one another or collaborating to get at your notion of privacy as a responsibility.

  • http://radar.oreilly.com Joshua-Michéle Ross

    Ross –
    Such a great observation and example. This notion was part of my intent in talking about creating ethical institutions – much of our desire for privacy stems from real concerns about abuse. User control over data is one approach – but, as you point out, the other side of the coin is to change the negative consequences of disclosure.
    Tim – I intend to bring that up during the webcast
    Kevin – I would love to get to privacy camp. We need a west coast version focused on how Web 2.0 companies play a role.

  • bowerbird

    > The work lies in re-imagining our institutions.

    um, good luck with that.

    but the greed is pretty deep in their d.n.a.

    we’ve lost our privacy. i’ve gotten over that.

    but what i would like to see, in response, is
    a commitment to protect the whistle-blowers
    who inform us of the abuses of our privacy
    that are perpetrated by greedy corporations
    and by evil and corrupt government officials.

    -bowerbird

  • http://basiscraft.com Thomas Lord

    Marx and Lennon come to mind.

    Lennon: “You tell me it’s the institution, well you know: you better free your mind instead.”

    Marx: “Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.”

    You put forward a two step program. Let’s look at these through Foucaut-ian eyes:

    You say: First let’s change “the corporation” by structurally factoring in “costs” such as sustainability and social responsibility. Second, let’s impose greater regulation over the handling of “private” data.

    Each of those programs calls for a collective debate.

    For example, you say that corporations as they stand are “amoral”. Popular reading of some of Mr. Greenspan’s comments notwithstanding, many would beg to differ: we don’t collectively know that corporations are amoral. If we have that debate, let’s suppose your side prevails then what is the effect: now we will have knew societal knowledge of what a “moral corporation” looks like. We’ll consider ourselves to be a society in possession of a theory of morality that is so complete we can define what a “moral corporation” is.

    And that would be a disaster.

    It would be a disaster because thereafter any corporation coming under criticism could defend itself by pointing to the new code and saying “See? We follow this definition completely. We are moral! Our actions are good.” What then?

    Similarly, regulating privacy. I don’t see how a debate about privacy regulations in general and per se can do anything either than fail and wither away or else conclude with a new commonly accepted definition of privacy. And again, the definition cuts both ways in that a firm challenged on its practices then gets to say “we followed the rules”.

    We already have a little bit of this on a smaller scale. I don’t have a cite handy but surely someone at O’Reilly will recall the study in which researchers were given “scrubbed” logs of a web site and then proceeded to reconstruct from those much of the information that was allegedly scrubbed. The scrubbing algorithm represented our best social knowledge of what it meant to protect privacy and the researchers demonstrated that that knowledge was pure fantasy. Now you want to codify it in law?

    This is not to say I’m against either corporate reform or enhanced regulation of data handling. I’m all for both, in the abstract. But I don’t mistake these things for creating moral corporations or protecting privacy. Rather, they are just resistance to certain bad practices.

    Here is the thing: if you want corporations that operate differently, we have to build them not define and demand them. If you want users better protected from these privacy concerns, then we’d better start building the technology that does that.

    It’s very much worth debating the role of morality in a firm we ourselves are building – quite another to seek a broad change to the social contract that implicates all firms. Similarly for privacy.

    We don’t need – and as Foucault shows shouldn’t expect to ever have – any grand, overarching theories of morality and privacy that are anything other than a kind of knowledge constructed in support of power. If we want a shift in power – we have to build it ourselves.

    Creating contexts in which we are empowered to take action controlled by discourse outside the prevailing discourse of power is essential – not trying to enter into the prevailing discourse and reason with it. The “sudden shifts” – the breaks, the fissures, the historic non-linearities of social knowledge don’t come from within the prevailing discourse. The opportunities to create those shifts does, of necessity, come from within the prevailing discourse.

    -t

  • bruce

    Josh….

    This really hits home to me (sr. IT exec) so are you looking for someting akin to a “Leed Certification” to govern our web social interactions? When we utilize web services we will then know which sites/firms been “pre-certified” by a governing body and that we can trust our information to be both privately held and secure?

    If we don’t have a system then all we have left is hope and as you know “hope is not an effective strategy”.

  • http://basiscraft.com Thomas Lord

    Tim,

    I hope you get something out of my other comments but a simpler matter concerning your notion of taking corporate reform and legislating privacy to the Open Gov community:

    Are you kidding?

    Look for instance at the recent “major” breakthrough of getting (a stated intention to provide) XML forms of senatorial roll call votes. This incredibly banal change in government behavior came at the cost of a surprising number of hours of staffer and senatorial time and was accompanied by plenty of show-boating. The net effect is mainly to throw a low-value bone to the wantrepreneurs of the opengov movement and to signal them to lower their ambitions. (A signal they seem to have dutifully taken to heart.)

    Reforms as ambitious as Joshua-Michéle is suggesting? You are not being realistic and have the wrong forum. The danger is that you’ll achieve results that pass off as such reforms falsely at great expense and with great negative consequence.

    What might work instead is boringly conventional and old-school. Organize to resist the firms exhibiting misconduct: lawsuits, anti-trust actions, and so forth. Organize to educate people about the issues – the kids these days don’t get it, they think fascist corporate totalitarianism is just normal and that an ironic and opportunistic pose in response is as good as it gets. Build the alternatives: out-compete them in the market with better substitutes. And, yeah, if your elite friends are capable of shame and of taking positive steps to get out from under it – have some quiet conversations on that front.

    -t

  • http://radar.oreilly.com Joshua-Michéle Ross

    Bowerbird,

    Humans are acquisitive by nature –
    “Greed” is a definition applied to those appetites when they do harm to us as individuals or society – when they reach excess. Social constraints on greed come in the form of social sanction (shunning, shame etc.). Institutional constraints on greed are what was missing in the recent financial meltdown. In short, Structure drives behavior. A lack of institutional structure (regulation, incentives etc.) allows our aquisitive nature to turn to “greed” that cause profound damage.

    It is self-satisfying but profoundly wrong to chalk it all up to “greedy individuals and corrupt politicians” This is Not to say that there aren’t corrupt politicians or greedy corporations in the world. It IS to say that if the world was populated by 6 billion Bowerbirds you would still have greedy corporations and corrupt politicians.
    If the problem is, as you say, in the D.N.A. (and I agree) then is your conclusion that the situation is unsolvable? If so, I disagree. Our institutional structures represent a few hundred years of management theory – the best we could do. I hold out some hope that institutions can do better by being held to a newer standard that accounts for more complexity that generation of financial wealth for shareholders.

    Thomas,
    I think Manson had a similar quote about freeing the mind as the best strategy. He is still behind bars. And to use Foucault against me is like turning my own mother against me — it cuts deep :-)
    To your point — I believe that corporations (and governments) are living entities in their own right. Their rules and structures create rule-following subjects. In this way corporations are not a collection of individuals with rational and ethical concerns – but an entity unto themselves – a kind of superorganism. As with most superorganisms there are a basic set of operating rules. Currently those rules do not factor in morality or ethics. I am suggesting changing the operating rules to include measures of the wider environment (not just shareholder value) – things we associate with acting within a moral sphere.

  • http://basiscraft.com Thomas Lord

    Joshua-Michéle,

    I’m not using Foucault against you, I hope.

    As for Manson, well, what can one say. One thing to note about him is that his main key to personal success was to be a cheerleader. One of his big tricks was to cheerlead for his followers to take psychotomimetic drugs in huge quantities while he himself feigned the dedication to those drugs he asked of others but generally took far less. Having stupified and rendered everyone in the room temporarily psychotic, his own little narcissistic sociopathic self had quite a collection of toys. I’m sure he quoted a lot of great lines, not just “free your mind”. He wanted his pliable subjects to work on the important issues of the day – things that mattered. In his mind, that meant trying to incite a race war through an act of violence.

    Of course, he had counter-parties in this transaction. The potential opposing army in such a race war had its own set of charismatic charmers hyping up their own followers.

    In some sense, Manson was a grotesquely distorted mirror of our culture but a mirror nonetheless.

    Enough about them:

    Your parsing of corporations as entities unto themselves that create rule-following subjects is the kind of thing that rocks my world. I mean: “yes!”. That’s right.

    I’ve lost jobs in part by making statements along those lines.

    If you want to start to form predictive theories of how a corporation will behave in the future – looking at the form and function of those rules with an instinct for game theory is spot on. (Not directly but closely related, if you’ve not seen it, check out Bruce Bueno de Mesquita

    speaking at Ted.)

    So, I totally agree with you that we need structurally different forms of collective action to overcome the problems that publicly traded corporations reliably create and that large privately held firms these days also often exhibit.

    I agree with all that.

    What I disagree with is trying to formulate the action – the progress movement – as corporate reform.

    The premise of a debate about corporate reform is that at the far end of it we all wind up with some replacement theory of what a corporation is supposed to be. I don’t believe in that. I don’t believe in such over-arching theories other than in the most boringly plainly obvious ways.

    I believe in specific real trades. Period.

    How to actually change the prevailing practices? Entering into a debate about the corporate form as a “public concern” is just about certainly not the way to do it. The logic of the existing debate, before you ever spoke, already supported a call for these changes. You aren’t adding anything that wasn’t already there. You aren’t discrediting any theory of corporations by that route. All you can wind up doing is better securing the current mess by giving it a more baroque hermeneutic. Whatever your intentions, if you frame it as a public debate about “the corporation” the net effect will be to double down on the oppressive abuses that “the corporation” represents.

    Foucault wasn’t all about just parsing out how discourse and power inter-relate. He was also interested in the question of the non-linearities in discourse — the sudden shifts, the breaks from the past. Kuhn was another one with similar concerns. How do institutions change?

    They don’t change from within.

    Start *building* moral corporations. That’s the only way. Sure, it is worth fighting regulatory fights and reform fights to burden the enemy (the existing order) but progress comes from building.

    I sound dangerously close to Tim’s call to work on “things that matter” so I better stop… :-)

    -t

  • bowerbird

    > It IS to say that if the world was populated by 6 billion Bowerbirds
    > you would still have greedy corporations and corrupt politicians.

    yeah, you’re right, and they’d be the worst kind of all –
    you know, the smug, superior, trolling assholes… ;+)

    -bowerbird

  • http://www.paulslibrary.net Paul Hays

    Joshua,

    I agree with the comments above that the idea of creating ethical or moral corporations by government fiat is a non-starter. They are what they are and some of them are ethical and some of them are despicable, just the same as any collection of humans. However, it is up to governments to set the ground rules for the playing field in which these corporations act.

    You say that “complex measures of environmental sustainability, value creation and the commonweal … are simply not adequately factored into any structural, organizational, incentive or taxation systems of business today.” I agree.

    But – this leads not to a re-invention of the corporation, but a re-invention of the accounting principles by which corporations operate. One of the tasks of the corporation is to increase value and this is done by reducing costs. One area where corporations excel at this is shifting or hiding the true costs. The shifting of jobs overseas is often to hide the environmental or other costs of doing business. This was a major problem in the derivatives market melt down. People bought this stuff because they didn’t know what it was. Things were sliced and diced to hide the real costs/risks. And when we are asked to clean it all up, we still don’t know what the real value of this stuff is and we are afraid to admit that it might actually be close to $0. It wasn’t greed that sent these guys out of control, it was the lack of control that allowed these guys to pretend that there was an increase in value and that they deserved a commission on it.

    So, rethinking the accounting for these costs, the costs of being unsustainable or polluting or highly risky or whatever, and including them in the price we pay for goods and services will go a long way to providing us the tools to make our corporations more “ethical.” This is where the regulatory power of government can make a contribution. If we set standards for transparency and accounting/accountability as the ground rules for corporations to operate, then we as citizens and share holders have a better chance of eliciting ethical behaviors from our businesses.

  • http://www.paulslibrary.net Paul Hays

    Tim, and others,

    In thinking about how to find a true valuation of goods and services, resources and materials, the use of money as the only measure of value has failed. Kim Stanley Robinson speaks of economics and the deformed, stunted child of ecology. Hazel Henderson has written a lot about trying to have a broader range of values, not just money. I know that researchers in econometrics are trying to expand the valuation of things.

    My question is isn’t this where social media can play a big role. In one sense, costs have fallen off in the gathering of data on what people value, but in another sense, there is a rich source of data here. Shouldn’t we be having a discussion how we can have public use of this data for protecting the commons before private companies use it to take the commons away?

    The old problem was that a tree in a park only had value if we chopped it down, cut it up and sold it. What are the ways social media could be used to give the tree a richer value it terms of shade, aesthetics, etc.? Can it scale up to national size? Or is it, as someone once said that “all democracy is local?”

    I hope these are questions you are going to be asking at Gov 2.0.

  • A Patrick Jonas, MD

    A great discussion of important forces in our lives. As a family physician, I cringe at the implications of total information awareness. After about 130,000 personal encounters with people (aka patients), many of whom revealed intimate life details, I’m impressed by the power of the human spirit and the uniqueness of individuals. In their quest for validation as humans (an understood responsibility of family physicians is to reaffirm that each person matters) and their desire to better align with a more meaningful future for themselves and/or their families, people are willing to share secrets that might publicly cause embarrassment. These secrets may not seem intimate to all observers, but each deserves human freedoms that preserve their humanity. The well intended electronic medical (health) record combined with entities that seek other aspects of total information awareness may become a serious threat to humanness. I worry about those in medicine, government and corporations who believe that people are just parts and therefore totally amenable to “datafying” those parts for sharing, to save or make money for shareholders or governments. The wholeness of each of us is threatened by these wonderful technologies that often help us to better enjoy our wholeness.
    I’m heartened by these great exchanges of ideas. Thanks.

  • Han Xu

    It is interesting to think about where the actual threat to individuals in your analysis comes from. From what I understand, it is not that corporations have all of that data that is problem, but is when governments can easily coerce corporations to turn over that data when the arrangement becomes problematic. If this is the case, then I don’t think the question has anything at all to do with companies. They are simply the ones that have pioneered the tools to collect that kind of data. Even if you got rid of these companies, a government that would be willing and able to coerce corporations to turn this data over would be able to collect it on their own.

    Therefore, the problem as you state it comes back to the classic problem of how to restrain governments.

    There is, however, an entirely different question that might similarly be worth some thought. Do we care that corporations themselves have this data about us, regardless of the threat from governments? It might be that the worries from this problem are completely different from the worries that are a result of the government. Governments seek to control, whereas corporations seek to sell you stuff. This is why I am (at least right now) not so worried about having this data out there. It is exactly the amoral nature of corporations that make it less dangerous for them to have the data.

    I also think Ross’ comment about our perceived need for privacy very interesting. If you look at other cultures (e.g. China), where there are very different demographics, you might find that privacy is an entirely artificial construct. For example, I remember reading an observation that privacy was an individual state of mind because people lived in such high densities in China). I also recall some books or papers from last year that talked about this exact topic, but can’t remember what it was.

  • http://www.hastingshart.com/ Hastings Hart

    Han Xu: I like your perspective, but I want to question your relative lack of concern about what corporations are doing with our data. In a democracy, the people in essence give a charter to the government, and the government literally gives a charter to the corporation in order for it to exist. So the chain of power is from the people, to government, to corporation. And since the power of government comes from the people, and the power of corporations comes from the government, then the corporations should serve the interests of the people, not themselves or the government. There are always exceptions to any rule, but this is how it should work in general.

    But in our society, corporations have managed to acquire power at the expense of government and of the people, and that is immoral. I believe that the reasons this has happened are numerous and complex, but one factor that impacts this discussion is the nature of individuals to buy in to government propaganda or corporate propaganda (a.k.a. “marketing”) implying that they should be trusted, or that they can be trusted. For you to say that corporations “simply” — by which I think you mean benignly — pioneer tools to collect data seems to indicate that you trust corporate executives farther than you can throw them.

    For the last several years, we have given our very personal information in the form of voice packets to phone companies that illegally passed it to the government under the Bush administration’s domestic spying program. The argument that it’s the government, not the corporation, that wants to control us would provide you little consolation if you found yourself in a prison because of something you said over the phone that implicated you in a terrorist plot you didn’t actually participate in and you never got a chance to go to trial to prove your innocence.

    You’re right that obviously the government is the greater danger, but the lines between government and corporation have been blurring greatly ever since the Reagan administration. This is where corporate reform is needed. A corporation comes into existence when some government gives it a charter — the authority or the right to do specific activities in a specific geographic area. We the people must constantly pressure government and corporations to serve our interests above theirs. We have the power; it starts with us. The corporate charter is the point at which government and corporation come together, so that is one important place among many where we need to focus.

    But we also need to focus on ourselves. We must constantly resist corporate propaganda, and in the realm of social media, that means we must assume that although corporations may not be thinking about controlling us as they are collecting our status updates and forum posts and blog comments, they may end up working in tandem with government to do so, and at that point there is no meaningful distinction. We will be living in a fascist state.

    I think I’ve been writing long enough for them to trace this comment, so I need to end now. Bye.

  • Han Xu

    @Hastings Hart: I am not sure I agree with your opening statement that corporations should serve the people by nature of their existence being made possible by the government (which in turn serves the people). I believe that the capitalistic system exists on the basis of mutual antagonism: corporations seek to serve themselves (through profits) and people seek to serve themselves (through purchasing goods). It is only through the market dynamic and rational self interest that our competing interests resolve themselves into benefit for all. Or so the theory goes. Obviously there are breakdowns in the system that are well known and breakdowns that we are only now beginning to discover.

    That being said, it’s not that I disagree with the original article’s premise that we should see the rise of a new kind of corporation that is morally conscious. However, I believe that that would entail a fundamental change to the idea of the corporation. I also believe that it opens the door for different kinds of coercion. After all, what the author is calling for is not just a corporation with a moral agenda, but a corporation with the specific moral agenda that he believes to be correct (which I believe I agree with). Not everyone agrees with that, however, just like how not everyone agrees with the government.

    But the process that you describe where consumers can help guide the development of better corporations is built into the market, I think. It seems that you are simply calling for smarter consumers who “vote with their dollars.” That seems to be the reason why we chose companies like Google in the first place: not only because they provided a better product but because they would “do no evil.” Things clearly change, so your call for constant vigilance is correct.

    But where does this leave us in the discussion? Either the original author’s point is moot (since everything already happens through market mechanisms), or we would need to enact a major fundamental change in our system that may open the door to much more authoritarian corporations.

  • http://www.hastingshart.com/ Hastings Hart

    @Han Xu: “… opens the door for different kinds of coercion.” Exactly! Though I am talking about the people coercing government and corporations, not about opening “the door to much more authoritarian corporations.”

    I strongly disagree that we can leave privacy issues to the market and simply choose companies with the best privacy policies as though that will drive mean companies out of business. There is no such thing as a free market. Government charters corporations, passes laws, enacts tariffs, enforces regulations, creates tax breaks, and takes hundreds of other to artificially influence the market. And now it can direct them to illegally spy on us, and they’ll do it.

    “Rational self-interest” is a part of the religious theology preached by devotees of Ayn Rand. Saying that everybody should be rational is like saying everybody should be moral. Great, preach that in church, but I’m still going to put locks on my doors. And I’m still going to advocate unbreakable legal structures in place to control government and corporations.

    Google’s pledge to “do no evil” is just the kind of corporate propaganda I am talking about. Please don’t buy into it. They lobby the government to structure the market to their advantage. Because they depend on government, they aren’t going to antagonize the government just to protect your privacy. If the government screams, “Han Xu is a terrorist!” then Google will turn over everything you’ve ever typed into their search engine, and every private document you’ve stored in Google Docs, even if it’s against the law.

    When the government directs corporations to break the law, then there is little use talking about some correction that’s built into the market. I don’t know whether we need a big course correction, or whether we’re dealing with a structure that’s rotten to the core. But changing corporate structures and government regulations must be on the table for discussion.

  • http://radar.oreilly.com Joshua-Michéle Ross

    Han Xu and Hastings –
    I love these discussions. I believe that we make a big mistake when we confuse capitalism as practiced in the US for “free markets” – Yes there are free market systems at work but there are also economies of scale – large institutions or olgopolies that abide by a totally different logic than the free market. Hastings gets it right when he notes that these large institutions have a variety of means at their disposal for manipulating the market (lobbying, threat of relocation, interlocking board directorates to achieve price fixing and on and on…) If we look to fre markets to solve our problems (and I am a believer in many ways) then lets be sure we understand where free markets are in operation and where they are just being used as a cover for oligopoly…

  • Han Xu

    Actually, Ayn Rand rather scares me, and I never could wrap my head around the assumptions about human rationality that introductory macroeconomics teaches.

    Hastings and Joshua-Michéle: I believe that our ideas about what would be a better system are more or less the same, or at least in the same spirit. What I tried to point out in my last post wasn’t that I believe in the market. Rather, I am trying to say that if you are worried about totalitarian corporations, then you must be equally, if not more, worried about totalitarian governments (and therefore cannot rely on technocratic legalism to solve the problems — no legal structure is ironclad).

    I bring up the market because it seems to me to have fared better than non-market solutions, despite all of the inefficiencies that can result from things like oligopolies and other sorts of manipulation. But I also believe that the market is inherently repugnant because it utilizes base motives (self-interest) to achieve supposedly better results for everyone. Other systems where self-interest has not been the central component exist, but few have been as reliable. In fact, a sort of communitarian alternative is exactly what is being advocated in this article — corporations should genuinely care about things besides this quarter’s profits. I am somewhat pessimistic about the possibility of this happening.

    I also think that this assumption that somehow the government can collect so much more data about me is a bit strange. The government is this extremely powerful mechanism, and I wouldn’t be surprised if they could very easily find just as much *meaningful* information about what I do to label me whatever they would want before the information age. Even if they couldn’t such power would allow that kind of “evidence” to be fabricated. Just look at the McCarthy era, or the Cultural Revolution in China, or the Salem Witch Trails. You don’t need the internet to be extremely oppressive. If anything, I think that our worries come from the threat of mass hysteria and paranoia — not excessive information gathering in this day and age.

  • http://nothing.com Brian Kariger

    Let’s agree now that we need both legislative action and entrepreneurial innovation. This is not an either/or dialectic. The question is what direction these parallel paths take.

    Example: are publicly traded corporations myopic because of their requirement to report quarterly financial results? I suggest that deregulation here is not a viable option. A new, well-thought through regulatory scheme can improve the situation. Please tell us what are our alternatives. Monthy reporting? Including triple bottom line accounting reports in the requirements? Who in the marketplace can we hold up as models?

  • http://twitter.com/eklawer eytan klawer

    The predictability of the behavior of corporations stems directly from the purity and transparency of their motives. The indirect goals of increased market share, revenues, profits etc… these goals which ultimately belie an unaltering drive for increased monetary value of the corporation, as an asset for its owners,…these are true, trustworthy, dare I say “natural” motives. Self-interest, the guiding force of the invisible hand, makes markets stable and predictable.

    So, lets not mess with corporations end-goals (not that we could anyway, self-interest is pretty damned hard to beat as an end-goal.) What we do need a is well reasoned regulation and strict enforcement.

    Let democracy determine what corporations should NOT be allowed to do, and the government vigorously enforce the will of the people so stated.

    As to the idea that corporations can compete by being nice (pro-social), I see nothing wrong with it as a strategy. In fact, I see a lot right with it as a strategy, sometimes. In the never ending struggle between the hawks and the doves, sometimes its good to be the one, and other times its good to be the other, keeping in mind that the end-goal is, and has always been good old self-interest.

  • Anirvan

    Johshua,

    Great set of posts. While I share your concern about the endgame we are heading towards, I am sceptical about any attempt to engineer corporations.

    The thing about maximising share holder value is that it provides unambiguous guidance to a manager in the face of a hetrogeneous investor group with vastly different moral perspectives or investment horizons. Consider a corporation trying to improve total stakeholder returns as its primary objective. What manager would be able to work with that – do you manage the business to optimise returns for customers, or the community or government or investors? I doubt if even a genetic mash up of Gandhi and Jack Welch could pull that one off. So yes, I do believe profit maximisation should be the primary objective for a corporation.

    Where does that leave me with respect to environmental polluters or sweatshop exploiters? Well, I believe it is incumbent on government and society to attach a tangible cost to such malpractices. In other words, don’t count on the moral discretion of individual managers to do the right thing at the cost of maximising profits. Rather focus on regulation and public opinion-shaping to make doing the right thing profitable and doing the wrong things loss making.

    There is of course a danger of stalinist overreach here – trigger happy regulation would be a disaster. The trick is to pull the trigger only where there is a market externality, which is deterring responsible corporate behaviour and to calibrate the scope of any regulatory intervention to imposing just enough cost on the corporation to make the targeted socially irresponsible practice profit-destroying.

    Of course, real life is more complicated than this, not least because competition is global while regulatory juridictions are local. But that is another discussion.

  • http://filter--blog.blogspot.com/ michael holloway

    “Companies.. ..are collecting vast stores of personal data. If you watch the trendline it is moving toward more data and more analytic capability – not less.

    “Experience shows that there is a very thin barrier between the two.”

    And that ‘thin barrier’ is trendlining also. (A cloud over civilisation by JK Galbraith – the guardian.co.uk)

    On ‘re-imagining our institutions’ I’ve always thought that to borrow from the recent past would be of value in this.

    The laws passed in the wake of the 1972 election fraud known as Watergate, particularly telecommunications related wire tap laws and the FISA court are quite relevant.

    The institution of the judiciary in the arena of what the state is able to bring to court through the warrants process in communications AND search and seizure seem very relevant to me.

    Corporations can change – and do; but they always slip back into a myopic profit-at-all-cost rut. Regulation fixes that. I think they will follow when the culture leads – because yes, corporations are amoral. (I like to break down words, ‘corpus’ comes to mind, dead – without spirit.) The culture has an obligation to lead.

    Finally, I’ve always thought that in the most democratic nation so far, PC’s and now always-on devices were missing a yes-no ‘button’. We are trending towards greater direct democracy, it’s time the hardware reflected that.

    mh

  • brandon

    awsome

  • http://www.regisdegrees.com Kevin

    I’ve actually seen the “25 Surprising Things Google Knows About You” article all over the place. It’s a very informative read. It is interesting to think that so many companies out there are just collecting our personal information and we may not even know about it. As time goes on though, I feel that people are going to become more aware of this and be more careful about participating in certain things.