hayek | Digifesto

May 6, 2020

Considering “Neither Hayek nor Habermas”

I recently came upon an article from 2007, Cass Sunstein’s “Neither Hayek nor Habermas”, arguing that “the blogosphere” would have neither as an effective way of gathering knowledge or as a field for consensus-building. There is no price mechanism, so Hayekian principles do not apply. And there is polarization and what would later be called “echo chambers” to prevent real deliberation.

In an era where online “misinformation” is a household concern, this political analysis seems quite prescient. There never was much reason to expect free digital speech to amount to much besides a warped mirror of the public’s preexisting biases.

A problem with both Hayekian and Habermasian theory, when used this way, is the lack of institutional specificity. The free Web is a plurality of interconnected institutions, with content and traffic flowing constantly between differently designed sociotechnical properties. It is an naivete of all forms of liberal thought that useful social structure will arise spontaneously from the interaction between individuals as though through some magnetic force. Rather, social structures precede and condition the very possibility of personhood and discourse in the first place. “Anyone who says differently is selling something.”

Indeed, despite all the noise on the Internet, there are Hayekian accumulations of information wherever there is the institution of the market. One reason why Amazon has become such a compelling force is because of its effective harnessing of reviews on products. Free speech on the Internet has been just fine for the market.

What about for democracy?

If free digital speech has failed to result in valuable political deliberation, it is wrong to fault the social media platforms. Habermas expected that money and power will distort public discourse; a privately-owned social media platform is a manifestation of this distortion. The locus of valuable political deliberation, therefore, must be in specialized public institutions: most notably, those institutions dedicated to legislation and regulation. In other words, it is the legal system that is, at its best, the site of Habermasian discourse. Not Twitter.

If misinformation on the Internet is “a threat to our democracy”, the problem cannot be solved by changing the content moderation policies on commercial social media platforms. The problem can only be solved by fixing those institutions of public relevance where people’s speech acts matter for public policy.

The closest thing to such a Habermasian institution in the Internet today is perhaps the Request for Comments process on adminstrative regulations in the U.S. There, citizens can freely express their policy ideas and those ideas are, when the system is working, moderated and channeled into nuanced changes to policy.

This somewhat obscure and technocratic government function is overshadowed and sometimes overturned by electoral politics in the U.S., which are at this point anything but deliberative. For various reasons concerning the design of electoral and legislative institutions in the U.S., politics is only superficially discursive. It is in fact a power play, a competition over rents. Under such conditions, we would expect “misinformation” to thrive, because public opinion is mostly inconsequential. There is nothing, pragmatically, to incentivize and ground the hard work of deliberation.

It is perhaps interesting to imagine what kind of self-governing institution would deserve this kind of investment of deliberation.

References

Benthall, Sebastian. “Designing networked publics for communicative action.” Interface 1.1 (2015): 3.

Bruns, Axel. “It’s not the technology, stupid: How the ‘Echo Chamber’and ‘Filter Bubble’metaphors have failed us.” (2019).

Sunstein, Cass R. “Neither Hayek nor Habermas.” Public Choice 134.1-2 (2008): 87-95.

May 27, 2018

Notes on Pasquale, “Tech Platforms and the Knowledge Problem”, 2018

I’ve taken a close look at Frank Pasquale’s recent article, “Tech Platforms and the Knowledge Problem” in American Affairs. This is a topic that Pasquale has had his finger on the pulse of for a long time, and I think with this recent articulation he’s really on to something. It’s an area that’s a bit of an attractor state in tech policy thinking at the moment, and as I appear to be in that mix more than ever before, I wanted to take a minute to parse out Frank’s view of the state of the art.

Here’s the setup: In 1945, Hayek points out that the economy needs to be managed somehow, and that this is the main economic use of information/knowledge. Hayek sees the knowledge as distributed and coordination accomplished through the price mechanism. Today we have giant centralizing organizations like Google and Amazon mediating markets, and it’s possible that these have the kind of ‘central planning’ role that Hayek didn’t want. There is a status quo where these companies run things in an unregulated way. Pasquale, being a bit of a regulatory hawk, not unreasonably thinks this may be disappointing and traces out two different modes of regulatory action that could respond to the alleged tech company dominance.

He does this with a nice binary opposition between Jeffersonians, who want to break up the big companies into smaller ones, and Hamiltonians, who want to keep the companies big but regulate them as utilities. His choice of Proper Nouns is a little odd to me, since many of his Hamiltonians are socialists and that doesn’t sound very Hamiltonian to me, but whatever: what can you do, writing for Americans? This table sums up some of the contrasts. Where I’m introducing new components I’m putting in a question mark (?).

Jeffersonian	Hamiltonian
Classical competition	Schumpeterian competition
Open Markets Institute, Lina Khan	Big is Beautiful, Rob Atkinson, Evgeny Morozov
	Fully automated luxury communism
Regulatory capture (?)	Natural monopoly
Block mergers: unfair bargaining power	Encourage mergers: better service quality
Allow data flows to third parties to reduce market barriers	Security feudalism to prevent runaway data
	Regulate to increase market barriers
Absentee ownership reduces corporate responsibility	Many small companies, each unaccountable with little to lose, reduces corporate responsibility
Bargaining power of massive firms a problem	Lobbying power of massive firms a problem (?)
Exit	Voice
Monopoly reduces consumer choice	Centralized paternalistic AI is better than consumer choice
Monopoly abuses fixed by competition	Monopoly abuses fixed by regulation
Distrust complex, obscure corporate accountability	Distrust small companies and entrepreneurs
Platforms lower quality; killing competition	Platforms improve quality via data size, AI advances; economies of scale
Antitrust law	Public utility law
FTC	Federal Search Commission?
Libertarianism	Technocracy
Capitalism	Socialism
Smallholding entrepreneur is hero	Responsible regulator/executive is hero

There is a lot going on here, but I think the article does a good job of developing two sides of a dialectic about tech companies and their regulation that’s been emerging. These framings extend beyond the context of the article. A lot of blockchain proponents are Jeffersonian, and their opponents are Hamiltonian, in this schema.

I don’t have much to add at this point except for the observation that it’s very hard to judge the “natural” amount of industrial concentration in these areas in part because of the crudeness of the way we measure concentration. We easily pay attention to the top five or ten companies in a sector. But we do so by ignoring the hundred or thousand or more very small companies. It’s just incorrect to say that there is only one search engine or social network; it’s just that the size distribution for the many many search engines and social networks is very skewed, like a heavy tail or log normal distribution. There may be perfectly neutral, “complex systems” oriented explanations for this distribution that make it very robust even with a number of possible interventions.

If that’s true, there will always be many many small companies and a few market leaders in the tech sector. The small companies will benefit from Jeffersonian policies, and those invested in the market leaders will benefit (in some sense) from Hamiltonian policies. The question of which strategy to take then becomes a political matter: it depends on the self-interest of differently positioned people in the socio-economic matrix. Or, alternatively, there is no tension between pursuing both kinds of policy agenda, because they target different groups that will persist no matter hat regime is in place.

November 14, 2015

Is the opacity of governance natural? cf @FrankPasquale

I’ve begun reading Frank Pasquale’s The Black Box Society on the recommendation that it’s a good place to start if I’m looking to focus a defense of the role of algorithms in governance.

I’ve barely started and already found lots of juicy material. For example:

Gaps in knowledge, putative and real, have powerful implications, as do the uses that are made of them. Alan Greenspan, once the most powerful central banker in the world, claimed that today’s markets are driven by an “unredeemably opaque” version of Adam Smith’s “invisible hand,” and that no one (including regulators) can ever get “more than a glimpse at the internal workings of the simplest of modern financial systems.” If this is true, libertarian policy would seem to be the only reasonable response. Friedrich von Hayek, a preeminent theorist of laissez-faire, called the “knowledge problem” an insuperable barrier to benevolent government intervention in the economy.

But what if the “knowledge problem” is not an intrinsic aspect of the market, but rather is deliberately encouraged by certain businesses? What if financiers keep their doings opaque on purpose, precisely to avoid and confound regulation? That would imply something very different about the merits of deregulation.

The challenge of the “knowledge problem” is just one example of a general truth: What we do and don’t know about the social (as opposed to the natural) world is not inherent in its nature, but is itself a function of social constructs. Much of what we can find out about companies, governments, or even one another, is governed by law. Laws of privacy, trade secrecy, the so-called Freedom of Information Act–all set limits to inquiry. They rule certain investigations out of the question before they can even begin. We need to ask: To whose benefit?

There are a lot of ideas here. Trying to break them down:

Markets are opaque.
If markets are naturally opaque, that is a reason for libertarian policy.
If markets are not naturally opaque, then they are opaque on purpose, then that’s a reason to regulate in favor of transparency.
As a general social truth, the social world is not naturally opaque but rather opaque or transparent because of social constructs such as law.

We are meant to conclude that markets should be regulated for transparency.

The most interesting claim to me is what I’ve listed as the fourth one, as it conveys a worldview that is both disputable and which carries with it the professional biases we would expect of the author, a Professor of Law. While there are certainly many respects in which this claim is true, I don’t yet believe it has the force necessary to carry the whole logic of this argument. I will be particularly attentive to this point as I read on.

The danger I’m on the lookout for is one where the complexity of the integration of society, which following Beniger I believe to be a natural phenomenon, is treated as a politically motivated social construct and therefore something that should be changed. It is really only the part after the “and therefore” which I’m contesting. It is possible for politically motivated social constructs to be natural phenomena. All institutions have winners and losers relative to their power. Who would a change in policy towards transparency in the market benefit? If opacity is natural, it would shift the opacity to some other part of society, empowering a different group of people. (Possibly lawyers).

If opacity is necessary, then perhaps we could read The Black Box Society as an expression of the general problem of alienation. It is way premature for me to attribute this motivation to Pasquale, but it is a guiding hypothesis that I will bring with me as I read the book.

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