Date: Wed, 27 Oct 93 17:17:52 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 V3#064
Computer Privacy Digest Wed, 27 Oct 93 Volume 3 : Issue: 064
Today's Topics: Moderator: Dennis G. Rears
(2 of 3)/Why Privacy Issues Arise More Frequently
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From: Rob Kling <kling@ics.uci.edu>
Subject: (2 of 3)/Why Privacy Issues Arise More Frequently
Newsgroups: alt.privacy,comp.society.privacy
Date: 27 Oct 93 05:27:58 GMT
Large Organizations,
the Emergence of Information Capitalism,
and the Intensification of Computer-based Surveillance
Mobile Societies and Indirect Social Relationships
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.
The Rise of Information Capitalism
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 in
the United States.
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.
It's instructive to see how two leading textbooks which teach MBA
students diverse approaches to information technology teach them
about privacy issues. Management Information Systems by Kenneth
Laudon and Jane Laudon devotes less than two pages of 940 pages
to privacy issues. The text lists eight core privacy principles
from a very influential Federal report. But the text doesn't
examine how these principles can apply to any specific case,
including any of the dozens of cases which the authors use to
illustrate many other practices of information management. And
the text doesn't provide any cases which examine privacy issues
directly. Corporate Information Systems Management by James Cash
Warren F. McFarland, James McKenney, and Linda. Applegate is more
generous in devoting five pages out of 702 pages to examining
privacy issues. Cash and his colleagues begin their short privacy
section with three brief illustrations of the practices of credit
bureaus and marketing managers can intrude on personal privacy.
And their text gives students several additional concrete
examples about ways that managers can compromise or protect their
customer's privacy while practicing information capitalism. Cash
and his colleagues make a serious effort to sensitize their
student readers to privacy issues. One could hope for analyses of
privacy issues in other sections of the book which advance the
development of new information systems with personal data. Their
account is probably the best in any of the popular information
systems texts for MBA students. And information systems texts
written before the late 1980s completely ignored privacy issues.
In a similar way, texts about marketing teach business students
to create more comprehensive information systems to better
identify potential customers, and to improve sales and service by
retaining and analyzing more data about customers' behavior.
Overall, business schools teach their students to be clever and
opportunistic information capitalists without much attention to
the ways that routine business practices can create problems in
public life, such as intruding on personal privacy.
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. About
11 million of 117 million people in the US workforce in 1991 were
managers. While majority of employed managers do not have MBA
degrees, we suspect that MBAs and professionals with similar
training disproportionately populate the most aggressively
information capitalist organizations. 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. Magazines like The Harvard Business
Review and Business Week publish stories about using information
technology, including data systems with privacy dimensions, for
competitive advantage. But they rarely highlight the privacy
issues in their enthusiasm to excite managerial readers about new
ways of conceiving of business opportunities. 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.
Society Within an Electronic Cage?
There is a risk of distortion in writing about information
technology and surveillance from the viewpoint of organizations.
Organizations seem to expand existing information systems, use
existing systems for new purposes and to invent new systems much
more rapidly than they remove old systems. Consequently, it's
easy to portray organizations as relentless in building their
element of a larger electronic cage in which to ensnare their
publics.
From the viewpoint of any particular organization, or managers
within them, only a few aspects of a persons' behavior are
readily known. An insurance company can use its own records or
the Medical Information Bureau to gather selected medical data
about a person. A bank has its own records and reports from
credit bureaus to assess the creditworthiness of a person seeking
a car loan. But it rarely seeks medical data. Police
organizations may have some criminal history information about
suspects for a robbery case, but they rarely seek detailed
financial or medical records. An when they seek hem for a
specific investigation, they are not routinely shared through the
police data networks. In short, the myriad of data systems are
highly segmented. Some data systems can be linked in practice. In
the US, it is very common for people to be requested to give the
Social Security Numbers for diverse services, including drivers
licenses, bank accounts, health insurance, and even library
cards. But many "matching systems" use more diverse information,
such as combinations of names and addresses (Kusserow, 1901;
Shattuck, 1991).
Unfortunately, we know very little about how ordinary people
perceive the information webs which divers organizations hold
about them. At the extremes, we know that many people seem
relatively indifferent, some are deeply worried and some work
hard to remain relatively unknown and unlinkable. in the US, some
surveys of public attitudes, such as those conducted by Harris
show increasing levels of concern about reductions of privacy.
But privacy issues are not politically explosive, in most cases,
as in contrast to issues like levels of taxation, abortion
rights, homelessness. There are specific technology families,
such as Caller ID, which mobilize many people. And the
announcement of Lotus Marketplace:Household lead to 30,000
protest letters. But these are exceptions, rather than the rule.
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.
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End of Computer Privacy Digest V3 #064
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