Date: Wed, 27 Oct 93 17:13:48 EST
Errors-To: Comp-privacy Error Handler <comp-privacy-request@PICA.ARMY.MIL>
From: Computer Privacy Digest Moderator <comp-privacy@PICA.ARMY.MIL>
To: Comp-privacy@PICA.ARMY.MIL
Subject: Computer Privacy Digest V3#063
Computer Privacy Digest Wed, 27 Oct 93 Volume 3 : Issue: 063
Today's Topics: Moderator: Dennis G. Rears
(1 of 3)/Why Privacy Issues Arise More Frequently
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From: Rob Kling <kling@ics.uci.edu>
Subject: (1 of 3)/Why Privacy Issues Arise More Frequently
Newsgroups: alt.privacy,comp.society.privacy
Date: 27 Oct 93 05:27:58 GMT
[Moderator's Note: This was split into three parts by me. ._dennis ]
How the Marriage of Management and Computing
Intensifies the Struggle for Personal Privacy
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)
1/31/93
Draft 3C
Note: This is a working draft for review and comment.
Abstract
Why is the continuing development of information technologies
which seem to impinge on personal privacy a continuing struggle
in contemporary advanced industrial societies? One important line
of explanations focusses upon changing social conditions in which
many modern organizations deal with enormous clienteles.
Environmental factors such as social mobility and computer
improvements cannot completely explain the diversity of
surveillance technology uses across industries, and even between
organizations. 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. 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? Why is the continuing
development of information technologies which seem to impinge on
personal privacy a continuing struggle in contemporary advanced
industrial societies?
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, 1983), 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 improve the fairness of
their services, and to better control their clientele and
environments. Classic works such as Rule's (1974) Private Lives
and Public Surveillance, 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. It would be enticing to have one
overarching logic to explain the development of new surveillance
systems of all kinds. But we examine how the expansion of
existing information systems and the development of newer
commercial systems may be driven by a different social dynamic.
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
capitalism," 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 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 at various times during the day
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 fine grained monitoring of sales in the Mrs. Fields system,
however, has the potential to provide benchmarks for controlling
managerial and employee performance as well. Of course, Mrs.
Fields' does not keep records of the customers who buy and eat
their cookies. But many sales systems do track information about
customers, for differing reasons. Some organizations, such as
automobile dealerships, are legally required to track specific
sales. Others, such as home furnishing stores, want delivery
addresses. Some organizations, such as insurance companies,
maintain a continuing relationship with their customers. An
emerging technology, two-way interactive television, would enable
people to purchase numerous services, and the telecommunications
firms to collect rich data about home shopping (Kling, in press).
Many sales tracking systems, it would be difficult to separate
the surveillance of organizational performance from the potential
surveillance of customers. An application designed for one
purpose could easily spill over to the other. The appetite of
information capitalist practices for data-intensive marketing
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. But 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.
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End of Computer Privacy Digest V3 #063
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