by 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 email@example.com (714-856-5955)
1/31/93 Draft 3C
from Computer Privacy Digest Wed, 27 Oct 93 Volume 3 : Issue: 063
Note: This is a working draft for review and comment.
From: Rob Kling
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 ]
Lotus Marketplace:Household was withdrawn from the market in 1991 after receiving over 30,000 complaints from consumers about the privacy implications of the product.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.
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.
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.
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 suit 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 and relatively weal legal protections -- taken together with computerized systems of personal records -- have reduced people's control over information about 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 public 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.
We find it especially important to examine the institutional aspects of developing 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, srvices such as Caller ID telephones, and media such as interactive television are difficult to understand only as methods of improve bureaucratic efficiency or managing environmental uncertainties. Information capitalists actively pursue strategies that take advantage of broader changes in society and surveillance technology. The creation of strong 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,
This paper expands the research agenda about the social dynamics of computerized surveillance systems by focussing the role of information capitalism. Research on the links between information capitalism and surveillance systems could focus upon the managerial practices which make such systems attractive to their promoters. But it also expands the research focus to include the professional worlds of information capitalists -- worldviews, skills, and practices -- that they learn in school and through their diverse professional associations. It expands the focus of research about the development of surveillance systems to study the social movements that help energize them (Kling and Iacono, 1988).
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This paper benefitted from discussions about information capitalism that Rob Kling had with Vijay Gurbaxani, James Katz, Mark Poster, Spencer Olin, and Jeffrey Smith. Mary Culnan and Jeff Smith also provide important insights into the importance of direct mail marketing organizations. My colleague John King has been a continual partner in provocative discussuons about technology and social change for twenty years.
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