Date: Sat, 06 Feb 93 16:00:23 EST
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From: Computer Privacy Digest Moderator <comp-privacy@PICA.ARMY.MIL>
To: Comp-privacy@PICA.ARMY.MIL
Subject: Computer Privacy Digest V2#014
Computer Privacy Digest Sat, 06 Feb 93 Volume 2 : Issue: 014
Today's Topics: Moderator: Dennis G. Rears
How to understand social trends re. computerization & surveillance
Re: SSN as a red herring
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----------------------------------------------------------------------
From: Rob Kling <kling@ics.uci.edu>
Subject: How to understand social trends re. computerization & surveillance
Date: 28 Jan 93 22:20:38 GMT
MMDF-Warning: Parse error in original version of preceding line at COR3.PICA.ARMY.MIL
This is a long paper [1045 lines] whihc examines shifts in organizational
surveillance practices as part of larger social trends ... I'd appreciate
your comments ...
Best wishes,
Rob Kling
-------------
Information Capitalism, Computerization,
and the Surveillance of Indirect Social Relationships
Rob Kling and Jonathan P. Allen
Department of Information & Computer Science
and
Center for Research on Information Technology and Organizations
University of California at Irvine,
Irvine, CA 92717, USA
kling@ics.uci.edu (714-856-5955)
1/28/93 F:\pubs\ICSUR3B.WPP
Draft 3B
Abstract
We link the adoption and use of new computer technologies for
large-scale record keeping to a set of social practices we refer
to as information capitalism. Information capitalist
explanations focus on the active attempts of coalitions within
organizations to organize corporate production in such a way as
to take advantage of changes in society and information
technology. Environmental factors such as social mobility and
computer improvements cannot completely explain the diversity of
surveillance technology uses across industries, and even between
organizations. The internal structure of organizations has been
transformed by the rise of professional management, trained and
rewarded to pursue managerial strategies that depend upon data-
intensive analysis techniques. This internal structure is an
important institutional explanation of modern society's push to
increase the surveillance of indirect social relationships. These
information capitalist practices are tied to key policy debates
about computerization and privacy, with examples of commercial
uses of surveillance technology that illustrate the ramifications
of information capitalism for changes in public surveillance.
Introduction
In the early 1990s Lotus Development Corporation announced plans
to market a CD-based database of household marketing data,
Marketplace:Household. Lotus Marketplace:Household would have
given anyone with a relatively inexpensive Apple Macintosh access
to personal data on more than 120 million Americans.
Lotus Marketplace:Household was withdrawn from the market in 1991
after receiving over 30,000 complaints from consumers about the
privacy implications of the product. This interesting story of a
victorious consumer revolt has been told many times, but how are
we to understand why this kind of technology with substantial
surveillance potential was developed in the first place? Was this
product a strange, one-time attempt to introduce a piece of
technology that could change corporate surveillance and social
control practices in our society, or was it merely a highly
visible example of a larger societal trend? And how do we
explain why some modern organizations might find it attractive to
develop and use this kind of technology?
Most studies of computers and privacy focus on the problems
surrounding a particular law, kind of system (e.g., credit
reporting) or kind of practice (e.g., computer matching)(Laudon,
1986; Lyon, 1991). Even broad ranging studies, like The
Politics of Privacy (Rule, et. al. 1984). Protecting Privacy in
Surveillance Societies (Flaherty, 1989), or The Rise of the
Computer State (Burnham, 198X), focus on describing the rise of
elaborate social surveillance systems and their legal and
administrative frameworks. When authors explain the link between
new technologies and changes in surveillance at the broader
societal level, they tend to focus upon the needs of
bureaucracies, public and private, to better control their
clientele. Classic works such as Rule's Private Lives and Public
Surveillance (Rule, 1974: Rule, McAdam, Stearns & Uglow, 1980),
stress the mandates of various organizations to enforce norms of
behavior -- to make their clients' behavior more predictable and
more acceptable. We argue that explaining the development and
adoption of commercial surveillance technologies such as the ill-
fated Lotus Marketplace:Household database will require more than
a generic "need" to enforce norms of client behavior, or to
improve bureaucratic efficiency.
Laudon makes a valuable distinction between "environmental" and
"institutional" explanations of the adoption of computer
technologies by organizations (Laudon, 1986). Environmental
explanations portray organizations as responding rationally to
objective uncertainties created by their environments, such as
having a large number of clients or facing severe financial
losses from doing business with specific people who are not well
known to their staffs. Institutional explanations, however,
suggest that technology adoption strategies may operate
independently of environmental pressures to be efficient.
Institutional explanations focus on the ways that organizations
computerize seeking to maintain legitimacy and external support,
or the way that computerization reflects the values and interests
of specific organizational actors. In his study of the adoption
of a nationwide criminal records database, Laudon found that
although the initial adoption of the technology was well
explained by environmental models, institutional explanations
provided a better understanding of how that surveillance
technology was ultimately implemented, routinized, and used.
Explaining the expanding use of surveillance technologies in
commercial organizations more generally, we argue, will require
an institutional explanation as well.
We link the expansion and use of new computer technologies for
large-scale record keeping to a set of social practices we refer
to as information capitalism. Information capitalist
explanations focus on the active attempts of coalitions within
organizations to organize corporate production in such a way as
to take advantage of changes in society and information
technology. Information capitalist practices are made efficacious
by some of the major social transformations in industrialized
society over the past century: the increasing mobility of
populations, the growth of nationwide organizations, and the
increasing importance of indirect social relationships.
Information capitalist practices are also encouraged by the
development of more cost-effective technologies for managing
large-scale databases. But environmental factors such as social
mobility and computer improvements cannot completely explain the
diversity of surveillance technology uses across industries, and
even between organizations. The internal structure of
organizations has been affected tremendously by the rise of
professional management, trained and rewarded to pursue
managerial strategies that depend upon data-intensive analysis
techniques. Organizations selectively adopt technologies which
serve the interests of coalitions that can afford them, and are
considered legitimate. The internal configuration of symbolic
analysts inside of organizations, dynamically and
opportunistically pursuing information capitalist practices, is
an important institutional explanation of modern society's push
to increase the surveillance of indirect social relationships.
We examine the link between information capitalism,
computerization, and the surveillance of indirect social
relationships in the rest of this essay. The first section
elaborates on information capitalism as an institutional
explanation of computer and privacy practice in the commercial
world. The second section discusses some of the major social
transformations that enable information capitalist practices to
be rewarding for participants, combined with the important role
of quantitatively-oriented professional management in
disseminating information capitalist strategies. In the final
section, information capitalism is tied to key policy debates
about computerization and privacy, using Lotus
Marketplace:Household, supercomputer purchasing pattern analysis
by American Express, and the rise of "data brokers" as examples
of the link between surveillance technology use and information
capitalism.
The Engine of Information Capitalism
In the next 20 years, we expect computer technologies designed to
support large-scale personal databases to be absorbed into and
then accelerate an interesting social trend -- the expansion of
information capitalism. Information capitalism refers to forms of
organization in which data-intensive techniques (including
computerization) are key strategic resources for corporate
production (Luke & White, 1985: Kling, Olin & Poster, 1991;
Kling, Scherson and Allen, 1992). The owners and managers of
agricultural, manufacturing, and service firms increasingly rely
upon imaginative strategies to "informationalize" production.
Computerized information systems have joined factory smokestacks
as major symbols of economic power.
As an organization shifts its managerial style to be more
information capitalist, analysts organize, implement, and utilize
information systems to improve marketing, production, and
operations. Information systems multiply, as cost accounting,
production monitoring, and market surveys becomes a key resource
in advancing the organizations' competitive edge. Capitalism is a
dynamic system, and the information capitalism metaphor joins
both information and the traditional dynamism of capitalist
enterprise. The information capitalist metaphor is expansive
because this style of management and organization is also used by
non-profit organizations such as public agencies, special
interest groups, and political campaigns.
Information capitalism is a useful metaphor because it marries
information with capitalism's dynamic and aggressive edge.
Capitalism, as an institutional system depends upon structures
that facilitate reinvesting profit into a developing
organization. Capitalism is nourished by the hunger of
entrepreneurs, their agents, and their customers. Capitalism is
stimulated when consumers lust after lifestyles of the rich and
famous rather than when they rest content by emulating the
lifestyles of the happy and innocent poor. Capitalism can reward
the kind of entrepreneurial angst that stimulates some players to
develop a new product, or a more effective way to market it or
sell an older one. While there are numerous complacent managers
and professionals in capitalist economies, there are often the
prospects of good rewards for their competitors who can develop a
more clever angle on making a business work. This underlying edge
to capitalism comes from the possibility of good rewards for
innovation and the risk of destruction or displacement when the
complacent are blindsided by their competitors. A byproduct of
the way that capitalism civilizes and rewards greed is a system
in which some participants opportunistically innovate in the
"search for more."
Information capitalists innovate in numerous ways, including the
development of more refined financial management, market
analyses, customer service, and the sales of information-based
products. Only a small fraction of these diverse innovations
enhance the surveillance capacity of organizations. But this is
an important fraction.
The concrete forms of capitalist enterprises have changed
dramatically in industrialized countries in the last 200 years.
Until the late 1840s, capitalist enterprises were usually managed
by their owners. While some firms, such as plantations, hired
salaried supervisors, managerial hierarchies in businesses were
small and numbered in the dozens at their largest. In contrast,
some of the largest US firms today can have over a dozen levels
separating the salaried Chief Executive Officer from the lowest
level employee, and they can be managed by tens of thousands of
specialized managers. Alfred D. Chandler, the business historian,
characterizes this newer form of capitalism as "managerial
2capitalism," in contrast with the older and simpler "personal
capitalism." (Chandler, 1984). Managerial capitalist enterprises
were large enough producers to give countries such as the United
States, Germany and Japan strong presence on world markets. A
more recent shift in the organization of US industrial firms to
manufacture most or all of their products overseas, often in Asia
and Mexico. Robert Reich refers to this emerging shift in
capitalist organization as "global capitalism" 28
(Reich, 1992). Information capitalism refers to a different, but
contemporary, shift in the ways that managers exploit information
systematically.
Firms which are organized by these various forms of capitalism
co-exist in the same economy. There are numerous small businesses
which are managed only by their owners at the same time that the
US industrial economy is increasingly characterized by global
capitalism. Similarly, the shift to information capitalism is
most pronounced in certain organizations, especially those who
have thousands of customers or clients. But the larger
organizations that employ an information capitalist managerial
approach are most likely to effectively exploit the use of
sophisticated computer-based surveillance technologies, such as
database systems.
Computerization promises to provide more in the particular ways
that information can help inventive entrepreneurs, managers and
professionals can reach out in new ways, to offer new products
and service, to improve their marketing, and to tighten their
control over relations with their customers (McFarland, 1984:
Ives & Learmouth, 1984). But the key link between information
capitalism and technologies for large-scale databases is the
possibilities for enhanced information processing that it
provides to analysts whose managerial strategies profit from
significant advances in computational speed and or in managing
huge databases.
Point-of-sale terminals, automated teller machines, credit cards,
and the widespread appearance of "desktop computing" are some of
the visible byproducts of information capitalism. Platoons of
specialized information workers -- from clerks to professionals
-- are hidden behind these information technologies which have
become critical elements for many businesses and public agencies.
Chain fast-food restaurants provides one good kind of example of
information capitalism in action. Viewed as a service, fast-food
restaurants simply sell rapidly prepared food for relatively low
prices, and stimulate a high rate of customer turnover. They are
simply furnished, provide no table service, and are staffed by
low paid workers (often teenagers) to keep costs low. It is a
traditional service managed in traditional ways to act as a low
cost service provider. Fast-food chain restaurants differ from
other low cost restaurants by buying in immense volume,
advertising with standard menus, serving food through drive-up
windows and walk-up counters, and franchising their outlets in
special ways.
From the vantage point of information capitalism, fast-food
restaurant chains are especially competitive and successful when
they have an infrastructure of skilled information professionals
and technologies. The information component helps them to select
restaurant sites, to alter their menus to match the changing
tastes of their clienteles, to audit the services of each
establishment, and carefully to monitor costs, cash-flows,
inventory, and sales. Their operational efficiencies hinge on
information technologies as much as on economies of scale--from
the microphones and audio systems that make it easier for
drive-through customers to order food to the simplified
electronic cash registers that automatically calculate costs and
change so that less skilled, high speed, teenage workers can be
relied upon as labor. The skills of back-stage professional
analysts consuming bytes of data expedite the large scale sale of
bites of food. Fast-food restaurant chains have not shifted from
selling bites of food to selling bytes of information, but their
operations have become intensively informationalized. Information
capitalism gives certain organizations greater leverage than
their less technologically-sophisticated precursors.
An interesting concrete example is the Mrs. Fields Cookies chain.
It utilizes an expert system to guide store managers in several
areas of business (Ostrofsky & Cash, 1992). Its database of
historical sales for each store helps tailor advice about the
quantities of different kinds of cookies to bake at specific
times during the day. Other modules guide managers in sales
strategies when sales are slow, and prompts them with questions
to ask prospective employees in employment interviews. Mrs Fields
Cookies employs young managers who usually have no previous
experience in bakeries or in managing fast food outlets. While
they could send their novice managers to a special school,
similar to MacDonald's Hamburger U, the firm profited handily in
the first few years of its growth by substituting their expert
system for longer term managerial training.
The surveillance of client behavior in the Mrs. Fields system,
however, has the potential to work both ways. Data collected by
the system is capable of providing benchmarks for the
surveillance of managerial and employee performance as well. In
many sales monitoring systems of this kind, it would be difficult
to separate the surveillance of organizational performance from
the surveillance of customer behavior. An application designed
for one purpose could easily spill over to the other. The
appetite of information capitalist practices for data-intensive
analysis is not respectful of organizational boundaries.
The way that Mrs. Fields organizes work illustrates one trend
which we believe that advanced computing technologies may extend.
Behind their expert systems are a group of diverse and highly
skilled symbolic analysts at corporate headquarters who design,
refine, and maintain them. The stores are operated by a much less
sophisticated and less well paid cadre of workers who are very
unlikely to join the symbolic analysts at the corporate
headquarters in Utah. Mrs. Fields shares the same environmental
conditions as other franchised cookie stores; their institutional
configuration differs significantly, leading them to pursue
information capitalist strategies more intensively.
Institutional explanations of surveillance technology adoption
such as information capitalism place more weight on the internal
configuration of organizations, and the strategies and interests
pursued by coalitions within them, than on objective external
"needs" for surveillance.
The information capitalist model would predict, for instance,
that the number and kind of symbolic analysts would be a better
predictor of usage patterns in individual organizations than a
measure of their environmental uncertainty. It would also place
much greater importance on investigating how the values and
strategies of information capitalist practice are transferred to
commercial organizations through education, professional
associations, consultants, popular literature, and specific
production technologies such as computers.
Information capitalism, as a set of practices for organizing
corporate production, has evolved in the context of important
social transformations and technological advances that encourage
and reward, but do not determine, information capitalist
strategies under certain conditions. Some of these social
transformations are discussed in the next two sections, along
with the rise of quantitatively-oriented professional management
education that played a major role in bringing information
capitalism into organizations.
Large Organizations,
the Emergence of Information Capitalism,
and the Intensification of Computer-based Surveillance
One of the major social transformations of the last 100 years in
industrial societies is the growth of a mobile population, and
the commensurate growth of organizations with hordes of shifting
customers, clients, and other parties. Though these broader
"environmental" shifts provide a sense of context, we have argued
that linking these transformations to changes in social
surveillance requires an institutional explanation of the
organizational adoption and use of surveillance technologies. In
this section we will sketch the links between these changes on
one hand and the increasingly intensive use of data systems for
surveillance through the emergence of information capitalism in
the last few decades. Information capitalism has become more
prevalent, we argue, with the support of a massive institutional
matrix of analytic management education, job market, and career
paths.
The difference between a person's dealing with the small town
store and a store in a huge retail chain like Sears, is not in
the logic of retail store-based sales, but in the way in which
customers rarely deal with people who know them outside of these
specific narrow business transactions. The small town shopkeeper
also knew his clients from their going to school with his
children, from going to church together, and so on. Yet even in
small town societies, people sometimes find it necessary to deal
with large and distant organizations such as tax collectors and
the military.
During the last 100 years, there has been an astounding
transformation in the ways that life in industrial societies is
organized. New means of transportation DD trains, buses, cars,
and airplanes DD enabled people to become very mobile. In the
early 19th century, most people who were born in the United
States lived and died within 50 miles of their birthplaces.
Today, in a highly mobile society, a huge fraction of the urban
population moves from city to city, following better jobs and
better places to live. Adolescents often leave their home towns
to attend college, and may move even farther away for jobs.
Further, over 130 metropolitan areas in the United States number
over 250,000 in population. Even moving "across town" in one of
these cities can bring a person into a new network of friends,
employers, and service providers. This combination of mobility
and urban development means that many people seek jobs, goods,
and services from businesses whose proprietors and staff do not
have much firsthand knowledge about them.
In the last 100 years the scale of businesses and the number of
government agencies with huge clienteles have also increased. In
the 19th century few businesses had thousands of clients. And a
smaller fraction of the public interacted frequently with the
larger businesses of the day. Similarly, government agencies were
also smaller. Overall, most business was conducted through face
to face (direct) relations. And only very specific government
activities, such as taxing and drafting was carried out between
people who didn't know each other at all. Craig Calhoun (Calhoun,
1992), characterizes contemporary industrial societies as ones in
which a significant fraction of people's important activities are
carried out with the mediation of people whom they do not see and
may not even know exist. Today, banks can readily extend credit
to people who come from anywhere in the country. And they can do
so with relative safety because of large-scale credit record
systems that track the credit history of over 100,000,000 people.
The credit check brings together a credit-seeker and employees of
the credit bureau who are related indirectly.
Other private firms, such as insurance companies and mail order
companies, also extend services to tens of thousands of people
whom local agents do not -- and could not -- personally know. In
these transactions, judgments about insurability and credit
worthiness are made via indirect social relationships, and are
often mediated with computerized information systems.
Furthermore, many new government agencies, responsible for
accounting for the activities of millions of people, have been
created in the 20th century: the Federal Bureau of Investigation
(1908), the Internal Revenue Service (1913), the Social Security
Administration (1935), along with various state departments of
motor vehicles, etc. The sheer scale of these services creates
"environmental conditions" which incentivize organizations to use
computerized record systems to help routinize the maintenance of
indirect social relationships. However, organizations of a
similar kind and size, such as banks or police agencies, differ
in their aggressiveness in using new technologies and management
practices.
What explains the difference between the more and less
information-intensive organizations when many of their
environmental conditions are similar? We believe that
informational capitalist styles of management are an important
part of the answer. But information capitalism is a relatively
recent phenomenon, only developing after managerial capitalism.
In The Visible Hand, Alfred Chandler documents the way that
certain large enterprises in the late 19th century helped foster
professional management jobs. U.S. railroads were among the first
firms to organize enterprise on a such a huge scale that families
were too small to staff all of the key management positions. But
other larger industrial and commercial enterprises followed suit
by the first decades of the 20th Century. Schools of professional
management also developed to train young men for these new
positions. And by mid-century, the MBA was a popular degree.
After World War II, management schools began to shift from the
case study approach, identified with the Harvard Business School,
to more mathematical approaches to management. These curricula
emphasized more quantitative skills based on microeconomics,
managerial finance, and management science. By the 1970s, most
US schools of business had organized their curricula to emphasize
analytical techniques in most areas of instruction.
In the 1980s, business schools were caught up with "PC fever."
Some schools computerized their curricula with significant
support from computer firms like IBM and Hewlett Packard. But
once the leading schools set the style, many other schools
followed rapidly with ubiquitous computer labs. In addition,
business schools developed a new specialty in the 1970s,
"information systems." Today, a majority of business schools
offer both required courses and elective courses in information
systems. While information systems courses teach business
students diverse ways to computerize to help gain economic
advantage, they very rarely teach about privacy issues and the
problematic side of some information systems. The shift in the
education of MBAs from the traditional case-based approach to
grounding in quantitative analyses trained a cadre of MBAs who
were taught an approach which supports information capitalism.
By 1989, US colleges and universities conferred almost 250,000
Bachelors degrees in Business and almost 75,000 MBAs each year.
The popularity of business degrees rose rapidly in the US between
1970 and 1989. The number of BAs in business awarded annually
more than doubled in this 20 year period. And the number of MBA
degrees almost tripled. During the 1980s alone, US business hired
almost 2.5 million people with BS degrees in Business and almost
600,000 with MBAs.
In a parallel, but less intensive way, the public agencies were
increasingly staffed by people who also studied quantitative
methods and computing in their educations in public
administration, social science, law enforcement, and so on. These
numbers are crude indicators, rather than rigid parameters of a
mechanistic process of social change. For example, only a small
portion of graduates stimulate innovation in their organizations.
But a large fraction of the college educated management cadre
educated since the 1970s understand key aspects of information
capitalism, even when they follow rather than lead.
Schooling is, however, just the beginning for many of the
managers who seek to innovate. The business press publishes (and
exaggerates) stories of computerization efforts that promise
better markets and profits. In addition, professional
associations help managers learn diverse approaches to their
trades. But in some professions, such as marketing, finance, and
operations management, computerization strategies play an
important role. Professional associations in these fields offer
talks, workshops and publications for their members which also
help popularize key aspects of information capitalism.
In practice, it is difficult to separate institutional
explanations of surveillance technology use, such as the
professionalization of symbolic analysts within organizations,
from the larger environmental conditions that encourage these
strategies, such as increasingly large clienteles. In any era,
organizations use the available technologies for keeping records;
papyrus and paper were used for centuries. But in modern
societies, where computers and telecommunications are a common
medium for storing and accessing organizational records, the
opportunities for operating a enterprise that has millions of
customers or clients, the ability to tighten social control over
a dispersed and mobile population, and the nature of potential
problems, have changed a great deal.
There is significant payoff to organizations that can effectively
exploit the informational resources that this systematic record
keeping entails for identifying potential customers, for
assessing credit risks, etc. Further, third party data brokers,
like TRW Information Services, Trans Union, and Equifax, have
developed lively businesses by catering to these markets --
through custom search services, passing information to client
firms, and also devising new information products to facilitate
precision electronic marketing.
Database Technology, Information Capitalism,
and Changing Patterns of Social Control
Faster computing hardware platforms and interlocking
technologies, like computer networks, data base management
systems, and graphics can play key roles in increasing the scale
of data that firms can manage and analyze. The knowhow involved
is not primarily computer expertise. Rather it is deep expertise
in some domain, such as finance or marketing, and sufficient
computer expertise to bring computational power to bear on the
problem framed by the analyst. These organizations manage and
analyze data in three major domains:
1. Changes in production, with greater emphasis upon managing
data as a strategic resource resulting changes in the
structure of (information) labor markets.
2. Improving control over relationships with customers and
clients, especially the elaboration of indirect social
relationships.
3. The development of more information products.
We are most concerned in this essay with the second strategy, the
elaboration of indirect social relationships, but it is difficult
to separate these domains in practice. The drive for new
information products can lead to technologies that further enable
the surveillance of indirect social relationships, as can
reorganizations of production that place greater emphasis on
surveillance data.
The growth of technologies that support large-scale databases,
have some key ramifications for ways that organizations function,
the kinds of services that business sell, and changes in the
relationships between organizations and their clients.
In our introduction to information capitalism, we discussed the
rise of organizations with huge clienteles and the growing
prominence of indirect social relations when people interact with
organizations.
A society where social relationships are often indirect can give
people a greater sense of freedom. One can move from job to job,
from house to house and from loan to loan and selectively leave
some of one's past behind. Managers in organizations that provide
long-term services, such as banks, insurance companies, and
apartment houses, often want to reduce their business risks by
reconstructing what they believe are relevant parts of a person's
history.
These patterns have encouraged larger organizations, such as some
of the biggest banks, insurance companies, and public agencies to
take an early lead in adapting mainframe computing to support
their huge personal record systems in the 1950s and 1960s. In the
1970 and 1980s these organizations enhanced their computer
systems and developed networks to communicate data regionally,
nationally, and internationally more effectively. Many of those
organizations have massive appetites for "affordable" high speed
transaction processing and tools to help them manage gigabytes
and even terabytes of data. Some of these kinds of
organizations have been experimenting with exotic technologies
such as supercomputing, and they have cadres of professionals who
are eager to exploit new technologies to better track and manage
their customers and clients. Large-scale database technology
supports finer grained analyses of indirect social relationships,
such as precision marketing to improve their abilities to target
customers for a new product, or the ability of a taxing agency to
search multiple large databases prowling for tax cheaters.
Managers and professional in business organizations and public
agencies, characterize their searches for information about
people in limited and pragmatic terms that improve their
rationality in making specific decisions about whom to hire, to
whom to extend a loan, to whom to rent an apartment, and whom to
arrest (Kusserow, 1991). From the viewpoint of individuals, these
searchers for personal information is sometimes fair and
sometimes invasive of their privacy (Shattuck, 1991: Laudon,
1986). Information capitalists, like other entrepreneurs in a
capitalist economy, are sensitive to the costs of their services.
When there is no price on goods like clean air or personal
privacy, they are usually ignored, except when there are
protective regulations to compensate for market failures.
Some of the key policy debates about computerization and privacy
reveal conflicting values, not just conflicting interests. There
are at least five major value orientations which influence the
terms of key debates (Kling, 1978: Dunlop & Kling, 1991). These
values can also help us understand the social repercussions of
computer-based surveillance technologies:
Private enterprise model: The pre-eminent consideration is
profitability of financial systems, with the highest social
good being the profitability of both the firms providing and
the firms utilizing the systems. Other social goods such as
consumers' privacy or the desires of government agencies for
data are secondary concerns.
Statist model: The strength and efficiency of government
institutions is the highest goal--government needs for
access to personal data on citizens. The need for mechanisms
to enforce citizens' obligations to the state will always
prevail over other considerations.
Libertarian model: Civil liberties, such as those specified by
the US Bill of Rights, are to be maximized in any social
choice. Other social purposes such as profitability or
welfare of the state would be secondary when they conflict
with the prerogatives of the individual.
Neo-populist model: The practices of public agencies and private
enterprises should be easily intelligible to ordinary
citizens and be responsive to their needs. Societal
institutions should emphasize serving the "ordinary person."
Systems model: Financial systems must be technically well
organized, efficient, reliable, and aesthetically
pleasing.
In different instances, policies and developments may support,
conflict with, or be independent of these five value models. Each
of them, except the Systems model, has a large number of
supporters and a long tradition of support within the US. Thus,
computing developments that are congruent with any of these
positions might be argued to be in "the public interest."
Information capitalism is most directly aligned with the private
enterprise value model for guiding social action. But the
information capitalist approach can also support statist values
in cases where public agencies use computerized information
systems to model and explore alternative revenue-generating
programs, to assess the effectiveness of social programs, or to
track scofflaws through networks of records systems. It is
conceivable that information capitalism could support
neo-populist consumer control, by constructing databases that
report on the quality of commercial products and services, or by
enhancing access to government records systems. However, such
uses are extremely rare, and are not accessible to the majority
of people, who are not computer savvy. It is difficult to imagine
that many new computerized systems would, on balance, support
libertarian values. However enhanced privacy regulations reduce
the extent to which computerized systems which support statist or
private enterprise values further erode personal privacy in the
United States.
Computer-based information systems can be used in a myriad of
ways that help organizations with huge clienteles better manage
these relationships. For example, in 1991 American Express
announced the purchase of two CM-5 parallel supercomputers from
Thinking Machines, Inc. which it will probably use to analyze
cardholders' purchasing patterns (Markoff, 1991). American
Express' purchase of these two multimillion dollar computers
illustrates how the conjunction of large-scale database
technology and information capitalism tilts the social system to
emphasizing private enterprise values over libertarian values.
While American Express is an innovator in experimenting with
parallel supercomputing for market research, other firms which
manage huge numbers of indirect social relationships with their
customers will follow suite as the price/performance of these
computers, the quality of the systems software, and the technical
knowhow for using them all improve in the next decades. These
styles of computer use systematically advance private enterprise
values at the expense of libertarian values.
In order to help organizations manage their relationships with a
large population of clients with whom they often have indirect
social relationships, organizations increasingly rely upon formal
records systems. Today's computerized systems provide much finer
grained information about people's lifestyles and whereabouts
than was readily available in earlier record systems. While these
data system primarily serve the specific transaction for which
the customer provides information, it is increasingly common for
computerized systems with personal data to serve multiple
secondary uses, such as marketing and policing.
Organizations using information capitalist strategies are
increasingly seeking out entrepreneurs who are able to supply
personal data for secondary uses. The emergence of "data brokers"
is the most obvious example of this trend. Large HMO's seeking to
cut costs by obtaining fine-grained information about potential
clients turn to data brokers such as the Medical Information
Bureau to fill their data appetites. Many other organizations
that collect personal information as a by-product of their core
activities, such as phone companies or airlines, have the ability
to offer profitable data collection services for other
information capitalist enterprises.
During the last two decades, direct mail marketing and precision
marketing have gotten big boosts through new techniques for
identifying potential customers,(Culnan, 1992). In the early
1990s Lotus Development Corporation was planning to sell a
CD-based database, Marketplace:Households, which contained
household marketing data provided by an Equifax Marketing
Decision Systems Inc., which is affiliated with a large credit
agency, Equifax Inc. The data base would have given anyone with a
Macintosh access to data on more than 120 million Americans
obtained from Equifax. Lotus MarketPlace:Household provided
marketers with detailed portraits of households so would be
easier to ascertain where to send direct mail and what places are
the best for telemarketing. All names came encrypted on the disk,
and users were required to purchase an access code and use a
'metering' system to pay for new groups of addresses to search
(Levy, 1991). Lotus attempted to reduce privacy problems by
omitting phone numbers and credit ratings from
MarketPlace:Household and by selling the data only to those who
could prove they ran legitimate businesses. The street address
could be printed only on paper and not on a computer screen.
These measures did not adequately assure many people.
Lotus withdrew Marketplace:Household in 1991 after it received
over 30,000 complaints from consumers. Some industry observers
speculated that Lotus withdrew Marketplaces:Household because its
upper managers feared that bad publicity and consumer backlash
could harm its sales of other software. Lotus did, however,
release a companion product, Marketplace:Business, which
characterizes business purchasing patterns, through a licensing
arrangement.
Lotus MarketPlace is an interesting kind of information product
which illustrates another face of information capitalism, since
it would be sold to small business which could more readily
afford microcomputing. These users of Lotus MarketPlace:
Household would have a new resource to help expand their own use
of information capitalist marketing strategies. The particular
computer platform for a product like Lotus MarketPlace: Household
has some consequences for personal privacy. For example, it would
be much easier to rapidly and consistently remove records of
objecting consumers from a centralized database than from
hundreds of thousands of CDs of various vintage scattered
throughout thousands of offices around the country. Consequently,
another firm which provides a mainframe-based version of
Marketplace Household might face less resistance. Further, if the
firm didn't risk loss of business from consumer complaints, they
might tough out a wave of initial complaints. Thus, a credit
reporting firm like Equifax or TRW might offer a variant
mainframe-based version of Marketplace:Household.
Debates about whether certain computerized systems should be
implemented typically reveal major conflicts between Civil
Libertarians on the one hand, and those who value the preeminence
of Private Enterprise or Statist values on the other. Any
particular computerized system is likely to advance some of these
values at the expense of the others. Many socially complex
information systems are enmeshed in a matrix of competing social
values, and none is value free.
Problems for the people about whom records are kept arise under a
variety of circumstances, e.g., when the records about people are
inaccurate and they are unfairly denied a loan, a job, or
housing. Large-scale record systems (with millions of records)
there are bound to be inaccuracies. But people have few rights to
inspect or correct records about them -- except for credit
records. During the last 30 years, people have consistently lost
significant control over records about them. Increasingly, courts
have ruled that records about a person belong to the organization
which collects the data, and the person to whom they apply cannot
restrict their use. Consequently, inaccurate police records,
medical records, and employment histories can harm people without
their explicit knowledge about why they are having trouble
getting a job, a loan, or medical insurance.
New ways of doing business -- taken together with computer
systems -- have reduced people's control over their personal
affairs. On the other hand, representatives of those private
firms and government agencies that have an interest in expanding
their computerized information systems frequently argue hard
against legal limits, or substantial accountability to people
about whom records are kept. They deny that problems exist, or
they argue that the reported problems are exaggerated in
importance. And they argue that proposed regulations are either
too vague or too burdensome, and that new regulations about
information systems would do more harm than good. The proponents
of unregulated computerization have been wealthy, organized, and
aligned with the anti-regulatory sentiments that have dominated
U.S. Federal politics during the last 15 years. Consequently,
they have effectively blocked many attempts to preserve personal
privacy through regulation.
In this way many representatives of the computer industry and of
firms with massive personal record systems behave similarly to
the representatives of automobile firms when they first were
asked to face questions about smog. As smog became more visible
in major US cities in the 1940s and 1950s, the automobile
industry worked hard to argue that there was no link between cars
and smog (Krier & Ursin, 1977). First their spokesmen argued that
smog was not a systematic phenomenon, then they argued that it
was primarily caused by other sources, such as factories. After
increases in smog were unequivocally linked to the use of cars,
they spent a good deal of energy fighting any regulations which
would reduce the pollution emitted by cars. Overall, the
automobile industry slowly conceded to reducing smog in a foot
dragging pattern which Krier and Ursin, (Krier & Ursin, 1977)
characterize as "regulation by least steps." In a similar way the
organizations which develop or use personal record keeping
systems, behave like the automobile industry in systematically
fighting enhanced pubic protections.
The increasing importance of indirect social relationships which
we described earlier gives many organizations legitimate
interests in using computerized personal records systems to learn
about potential or actual clients. These organizations usually
act in ways to maintain the largest possible zone of free action
for themselves, while downplaying their clients' interests. The
spread of larger and more interlinked personal data systems will
not automatically provide people with corresponding protections
to reduce the risks of these systems in cases of error,
inappropriate disclosure, or other problems (Dunlop & Kling,
1991). Information capitalist practices are closely implicated in
these policy issues.
The history of Federal privacy protections in the US is likely to
be continued without a new level of political mobilization which
supports new protections. The Privacy Act of 1974 established a
Privacy Protection Study Commission, which in 1977 issued a
substantial report on its findings and made 155 recommendations
to develop "fair information practices". Many of these
recommendations gave people the right to know what records are
kept about them, to inspect records for accuracy, to correct (or
contest) inaccuracies, to be informed when records were
transferred from one organization to another, etc. Less than a
handful of these proposals were subsequently enacted into Federal
Law.
Leaders of the computing movements which enable large-scale
databases and its associated industry could help reduce the
possible reductions of privacy that their applications foster by
helping to initiate relevant and responsible privacy protections.
However, expecting them to take such initiatives would be futile,
since they work within social arrangements that do not reward
their reducing their own market opportunities. The commercial
firms and public agencies that will utilize surveillance
technologies in the next decades face their own contests with
their clients and data subjects, and they fight for legal and
technological help, rather than hindrance. As a consequence, we
expect privacy regulation in the next two decades to be similarly
lax to the previous two decades. While the public is becoming
sensitized to privacy as a mobilizing issue, it doesn't have the
salience and energizing quality of recent issues like tax
reduction, abortion, or even environmental pollution.
Conclusions
Information capitalism is our term for a set of social practices
that encourage the use of data-intensive techniques and
computerization as key strategic resources of corporate
production. The basis of these practices is to be found in some
of the major social transformations of the past 100 years in
industrialized society: the increasing mobility of populations,
the growth of nationwide organizations, and the increasing
importance of indirect social relationships. The key link
between information capitalism and the new technologies that
support large-scale databases lies in the possibilities for
enhanced information processing that it provides to analysts
whose managerial strategies profit from significant advances in
computational speed or in maintaining huge databases.
We find it especially important to elaborate on the institutional
aspects of using surveillance technologies. The information
capitalist model argues that coalitions within organizations
actively pursuing data-intensive strategies are a key driver of
our society's increasing surveillance of indirect social
relationships. Attempts to introduce products such as Lotus
Marketplace:Household are difficult to understand only as methods
of improve bureaucratic efficiency. Information capitalists
actively pursue organizational strategies that take advantage of
broader changes in society and surveillance technology. The
creation of strong institutional support for data-intensive
management techniques, education, professional mobilization, and
career paths is an important driver of information capitalism.
The growing importance of indirect social relationships in North
American society leads many organizations to seek data about
potential and actual clients. Some organizations collect their
own data, and some rely upon specialized data brokers to help
them construct specialized personal histories pertinent to their
specific concern, such as credit worthiness, insurability,
employability, criminal culpability, etc. The positive side of
these informational strategies are improved organizational
efficiencies, novel products, and interesting analytical jobs.
However, as a collection, these strategies reduce the privacy of
many citizens and can result in excruciating foulups when record
keeping errors are propagated from one computer system to
another, with little accountability to the person,
These social changes could be influenced by the policies and
practices of commercial firms and public agencies. They are not
inevitable social trends. For instance, the public might insist
upon stronger fair information practices to reduce the risks of
expanding records systems. The spread of information capitalist
practice is intimately bound to these policy issues.
We are not sanguine about any substantial shifts of these kinds
in the next two decades. Without changes like these which are
exogenous to the direct use of specific computer applications,
the trends which we have discussed are likely to continue.
However these trends are also very much subject to systematic
empirical inquiry. One can, for example, study organizations
which adopt large-scale database computing technology to better
understand the applications which they automate, and changes in
their relationships with their clients.
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ACKNOWLEDGEMENTS
This paper benefitted from discussions about information
capitalism that Rob Kling had with Vijay Gurbaxani, James Katz,
and Jeffrey Smith. Mary Culnan and Jeff Smith also provide
important insights into the importance of direct mail marketing
organizations.
ENDNOTES
------------------------------
From: Philip Hurley <p-hurley1@tamu.edu>
Subject: Re: SSN as a red herring
Date: Thu, 4 Feb 1993 17:14:05 GMT
Organization: Computer Technology Group, TAEX
In article <comp-privacy2.7.9@pica.army.mil> cme@ellisun.sw.stratus.com (
Carl Ellison) writes:
>
>To me, the SSN is just one of many IDs which would allow some record about
>me to be correlated with some other record. However, I assume that there
>are many such identifiers or characteristics -- either alone or in
>combination with others.
>
>Has anyone considered how to conduct one's life in order to avoid all such
>correlation of records? [This strikes me as possibly a cryptographic
>problem, thus the cross-post.]
I have considered the ramifications of writing a virus program (I don't know
how and never have) that will delete any reference it finds with my name in
it.
I figure, the worst that can happen is that my bank "forgets" who I am. I
might be willing to deal with the hassle of correcting such an error face-to-
face with my bank in exchange for knowing that other data bases will also "
forget" who I am.
Philip Hurley "It is absurd to say that you are
T.A.E.X. especially advancing freedom when you only
Computer Technology use free thought to destroy free will."
(409) 845-9689 -- Chesterton
p-hurley1@tamu.edu I, too, disclaim.
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End of Computer Privacy Digest V2 #014
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