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[RRE]Agre: the architecture of identity 2/2
``` //5 Economic evolution
Although many of the details of this evolution are specific to the institutions and practices of computing, nonetheless economics has traveled a remarkably analogous road. As Mirowski (1989) has observed, the neoclassical synthesis in economics that got its start with Cournot and that emerged full-blown at mid-century (Samuelson 1947) was, at its origin, explicitly modeled in both its methodology and its mathematics upon the notion of equilibrium in the classical theory of mechanics in physics. Thus, even though neoclassical economics is commonly described as an individualistic theory of human beings, it is equally important to understand the sense in which it is nothing of the sort. Central to Cournot's methods was the notion that everybody's utilities can be maximized at the same time as so many simultaneous equations. The famous idealizations of neoclassical economics - perfect information, zero transaction costs, and so on
It is only with subsequent developments that mainstream economics begins to constuct a nontrivial picture of the individual human person. Whereas economists of a collectivist orientation have labored to bring the supposedly atomized individual of neoclassical theory into some kind of social relationship with others, the actual development of neoclassical theory has been very close to the opposite of this: a gradual paring away, like a sculptor chipping at stone, of the many idealizations that merge the individual into one vast collective consciousness. These developments take place largely in the context of the economics of information. It has long been understood, for example, that information has a paradoxical place in neoclassical theory: markets only clear in a general way if market-relevant information is perfect and therefore free, but that information will only be produced and distributed in sufficient quantity and quality if it is a commodity like any other. Stigler (1961), for example, pioneered the analysis of search costs within a neoclassical framework, and Grossman and Stiglitz (1980) argued on formal grounds that the economy can at best alternate between information that is free and information that is adequate. Boyle (1996) has developed the point philosophically.
These difficulties, of course, do not invalidate the neoclassical model. As an analytical matter, the neoclassical idealizations provide a formally attractive starting point from which a multitude of divergences can be explored -- each with an attendant increase, often substantial, in the complexity of the model. (In this, too, the neoclassical model is analogous to artificial intelligence: both involve attempts to formalize rational behavior, and AI as well has its canonical model, the formally attractive but frequently impractical "Good Old-Fashioned AI" architecture of world models and planning from which numerous divergences have been explored.) Institutional changes, too, are viewed as leading the world toward ever-closer approximations to the neoclassical ideal (North 1990, Williamson 1995). In other work (Agre 1997b), I have developed the consequences of these ideas, and particularly the highly original information-centered model of Casson (1994), to an analysis of privacyproblems. Briefly put, the optimistic conclusion of the model is that markets with ever-lower information costs can become ever more efficient through the ever-greater pervasiveness of contractual monitoring, but only to the extent that individual consumers are willing to depart cheaply with their personal information. Whether that optimistic conclusion holds true to the reality is a crucial topic for research.
Rather than analyze these models any further, however, let us momentarily consider the even clearer emergence of a distinct human person in subsequent developments in mainstream economics. Although first invented fifty years ago, game theory (Von Neumann and Morgenstern 1947) has lately been developed into a general tool for the analysis of problems of asymmetric information among the participants in an institutionalized relationship (Hillier 1997, Rasmusen 1994). Phlips (1988: 8-9), for example, makes the useful distinction between imperfect information, which arises within an established framework of rules when participants are uncertain about one another's past and present behavior, and incomplete information, which arises when the participants do not know some of the elements (payoffs, available strategies, number of other players) that define the game itself. Game theory still employs a holistic form of analysis derived (by Nash) from Cournot, and, as Nermuth (1982) among others has remarked, the mathematics of strategic interaction can become extraordinarily complex. Nonetheless, with this kind of analysis of asymmetric information and the varieties of strategic behavior that asymmetric behavior permits, one finally begins to get a sense of the private realm of the individual (1988: 2-3). This sense of the private individual is also found in the study of incentives that govern the revelation of information and the economic institutions (prototypically the Vickrey auction) that encourage individuals to make accurate representations (see Campbell 1995).
//6 Institutions and identity
This history has, of course, been surveyed more extensively by others. My own purpose in recounting it has been to indicate the remarkable analogies between the intellectual development of both computer science and economics. Each has started from a transparent, God's-eye conception of human beings that subsumes them into a wholly rational universal system, and moved toward an increasing appreciation that human beings are in fact finite, located, and embodied. This progression is, one likes to think, science in action, the truth coming out. And it is a truth that challenges some fundamental assumptions of both technical design and public policy, both of whose public articulations remain very much rooted in the older, obsolescent conceptions of their respective fields.
In order to become practically useful, however, this emerging understanding must be embedded in an institutional context. This is an intellectual challenge, given that mainstream computer science and economics have also been similar in their foreshortened understandings of the institutional organization of technical and economic practice in the real world. Economics, for example, was long content to understand markets in terms of Walras' fictional auctioneer who could simply be assumed to bring buyers and sellers together at agreed prices. A "market" simply consisted of some buyers, some sellers, and some goods, and economic theory could proceed with astoundingly little curiosity about the actual material workings of marketplaces, stock exchanges, auto dealers, and the like. Of course, as Hodgson (1988) points out, an auction is itself an institution; the institutional organization of markets was always tacitly there. Now, however, it is emerging much more explicitly as a topic of research. Much of the recent economic concern with institutions, as I have already noted, has been driven by a teleology whereby technological advance progressively reduces friction in the marketplace (the term, now celebrated due to its use by Bill Gates (1995), appears to be due to Williamson (1985)) and thereby causes the economy to approximate the neoclassical ideal ever more closely. Institutions are, on this view, a passing phase, albeit an important one.
Another version of this telelogy is the now widespread notion of disintermediation, which holds that the principal effect of information technology on institutions of all types is the cutting-out of intermediaries. Although wildly oversimplified, not least because the same mechanisms that make it easier to cut out intermediaries can make the intermediaries more efficient as well, this notion has nonetheless led - at last, though better late than never - to principled and general analyses of the role of intermediaries in actual markets (Casson 1997; Spulber 1996, 1998).
The public prominence of information technology, then, has made it considerably harder to neglect the institutional organization of markets. Picot, Ripperger, and Wolff (1996), for example, following in the tradition of Coase's (1937) analysis of the effects of the telegraph and telephone on the boundaries of the firm, have argued that information and communication technologies cause the boundaries of the firm to fade altogether, as firms develop more complex linkages among themselves and begin to adopt market-like mechanisms within themselves. Much more work is needed, however, not least conceptual work that recovers a full awareness of the many aspects of market institutions to which mainstream economics has been oblivious.
Once the need for an analysis of institutions has been realized, it becomes possible to develop a sophisticated analysis of the nature and role of identity. Identity becomes an issue in markets, for example, when personal reputations serve as proxies for information about the quality of goods, or when contracts call for particular parties to perform their part despite having already obtained the consideration they wanted. In economic models of markets, however, the identities of the participants are almost invariably formalized in a primitive way. Buyers and sellers, for example, might be numbered from 1 to n, and all parties will be assumed to know the numbers and possess the ongoing ability to assign the right numbers to the right players. This formalization is often wrong and invariably incomplete. So long as the formalism is restricted to a single market - meaning, roughly, the market in a single class of goods - many privacy issues - especially those pertaining to the secondary use of information - do not arise. Even within attempts to model strategic behavior a single market, individual players' actions can reveal information that provides others with an advantage in subsequent exchanges, thereby leading to a space of trade-offs between short-term optimality and long-term strategy whose Nash equilibrium can be exquisitely complex to model. Already, however, it is assumed - unnecessarily from a technical perspective, at least in many settings - that players can identify one another from round to round.
Market institutions can become progressively more complex as they take into account the forms of identity that market participants can construct with the aid of privacy-enhancing technologies. Consider, for example, the potential roles for cryptographic protocols that produce "credentials" (Chaum 1990). Recall that the traditional method for establishing the various properties of a customer to a transaction has been to identify the customer and then look up the records associated with that identity. Although conceptually convenient, this two-step process fundamentally violates the principle of minimality. A more direct mechanism would employ indexical representations - not "this is John and John is 21 so John can enter the bar", but rather "this person is 21 so he can enter the bar". And this is what credentials provide - assuming, of course, that the necessary institutional framework is in operation.
More sophisticated institutional analyses of identity are possible. Poster (1990), for example, outlines a theory of databases as what Foucault calls "discourses". For Foucault, a discourse is not simply a linguistic phenomenon but includes the full ensemble of practical arrangements by which individuals are positioned in institutional roles - teacher and student, judge and jury, doctor and patient, and so on. These arrangements increasingly involve databases, of course, and Poster argues that we profoundly miscomprehend the nature of databases if we simply look at them as patterns of bits in a computer. Instead, he points out, databases derive their usefulness from their position in larger circuits of relationships and interactions among people. This is Poster's version of the proposition, introduced at the outset, that human beings and information technologies are coevolving through the mediation of institutions and the social roles that they define. Information technologists, on this view, are insufficiently aware of the institutional arrangements that actively reconfigure the world to make the necessary capture of data possible in practice (Agre 1994). And neoclassical economists themselves take an unreasonably narrow view of institutions, even market institutions, in their failure to analyze the elaborate connections between the allocative mechanisms of the market and the identity-sustaining mechanisms of other spheres of life. It is here that the two understandings of identity - the cultural and the technical - begin to converge into a single complex phenomenon.
Poster's analysis also draws attention to the roles of the body in constructing identity. One such role obviously pertains to the state: among the traditional reasons to identify the parties to a contract is to make it possible to hail them into court if they violate the contract. Identity, in other words, is employed as a means of access to a person's body, and many contracts require an individual to commit himself or herself to the practical arrangements that may one day make this access possible. With privacy-enhancing technologies, however, it is entirely feasible to gain access to an individual's identity, and thereby to their person, only upon a breach of the contract, and not before.
Once again, we should recognize that this kind of wrangling over the establishment of identity is not the natural way of things. An enormous variety of practical arrangements make it possible for people to conduct complex business anonymously by taking advantage of the properties of bodies. A supermarket checkout aisle, for example, provides physically for queueing and effectively traps each successive customer in a confined space while the transaction is being conducted. The point, of course, is not to imprison anybody in an extreme sense, but rather to provide for the continuity of the indexical relationship between this-customer and this-clerk while the various steps in the transaction are being executed. Slips of paper serve much the same purpose: sufficiently unforgeable for a given degree of risk, they provide continuity through the several steps of a transaction such as attending a movie. Even though words of computer memory were originally modeled on the entries in a paper form, many of the security problems with computers derive precisely from their unpaperlike ability to be modified without leaving any eraser marks. Here again cryptographic protocols have begun to recover some like the protections that were already a natural part of the pre-electronic world (Hettinga 1998).
//7 Shaping institutions
These remarks may provide some idea of the stakes in the coevolution between market institutions and the construction of identity. Even if we can speak reasonably about privacy as a commodity to be allocated in the market, we must first speak about privacy as an attribute of market institutions. And this, in turn, requires us to speak about the market in marketplaces. Where do market institutions come from, why do they embody the relationships and rules that they do, and how do they evolve from there? The issues become particularly acute as market institutions are increasingly mediated by information technology. Despite information technology's revolutionary reputation, many of its institutional dynamics are in fact obstinately conservative in character. Arrow (1984: 142) points out, for example, that "information creates economies of scale throughout the economy, and therefore, according to well-known principles, causes a departure from the competitive economy" -- a trend, in other words, toward increasing market power on the part of particular players.
As Mansell (1996) points out, market power can manifest itself not simply in excessive prices but also in the shaping of an unlevel playing field in electronic commerce. Market mechanisms are network technologies (Katz and Shapiro 1994) in that the benefit from adopting them depends heavily on the number of others who have also adopted them, and this dynamic may lead to the locking-in of mechanisms that institutionalize bias. Among the important biases of an electronic commerce technology are those that pertain to information extraction. A technology, for example the SET payment protocol (Phillips 1997), can become established through the coalition strategies of interested players, even though the technology inherently extracts and retains far more information about purchasers and their transactions than a rigorous application of the principle of minimality would allow. Callon (1991) understands these phenomena more broadly as the "irreversibilization" of a heterogeneous set of elements that become interlocked with one another as a new social practice settles into a pattern.
Even before electronic commerce technologies come into the picture, market institutions are already subject to biases from the unequal position of the players, and it would seem important to have a general theory of the process by which these biases are institutionalized. Such biases cannot exist on the neoclassical model, and so the phenomena in question must be sought in reality's departures from that model. One starting-place might be the distinction, observable in almost all real markets, between specialists -- those who spend much of their lives playing their particular role in a given transaction -- and generalists -- those who play their own role in that transaction only rarely. Someone who sells used cars for a living is a specialist in that topic, whereas almost everyone else is a generalist who purchases many different types of goods including the very occasional used car.
Specialists and generalists, obviously, occupy asymmetric locations in an institution, and this asymmetry pertains largely to informational differences. By playing the same role in a long series of substantially analogous interactions, a specialist can learn by degrees how to "work the angles" of the interaction. The specialist may choose the wording in a form contract, design those aspects of the physical environment that determine what a customer can see and when, choose the order in which various items of information are revealed during negotiation, identify phrases and other selling techniques that various types of customers find most persuasive, and so on. Consultants can make a living by moving from one specialist to the next, transferring expertise through a kind of information arbitrage (Bowker 1994). Specialists also have a much greater interest than generalists in associating and organizing among themselves, in building social networks, and in sharing experiences and generally engaging in collective cognition (Agre 1998c). Even in the context of ordinary contract negotiation, individualistic theories of unequal bargaining (Cartwright 1991, Trebilcock 1993) are woefully inadequate unless they comprehend these systematic sources of inequality.
Political scientists have understood these phenomena in terms of the collective action problems posed by organized interest groups in a democracy (Olson 1965), but that is only one surface manifestation of a much deeper problem. Something of the shape of the problem is conveyed by Commons' (1924) use of collective bargaining as a metaphor for the analysis of all social institutions. The point of Commons' analysis becomes visible in technological contexts through the dynamics of technical standards-setting. Conflicts over open standards, for example, can be well-understood as an attempt by information technology customers to engage in collective bargaining with vendors. The ideology of open standards, unclear and shifting as its meanings often were (Cargill 1994), has largely been an attempt by information technology customers to fashion a loose coalition and present a unified front to vendors. Lacking formal organization and established forums for bargaining, the two sides in this negotiation have engaged in immensely complicated strategic behavior that cannot be properly modeled without a full sense of each player's awareness of network effects and their consequences (Agre 1998a, Grindley 1995).
//8 Conclusions
Some of the consequences of this analysis for privacy policy should be clear enough from the discussion so far. The conditions that affect privacy are integral to the construction of market institutions, and should therefore not be regarded as mere products of natural market forces. The guiding principles of data protection, in particular, may provide guidance for institutional design. To the extent that market institutions are embodied in electronic commerce technologies, any intervention that hopes to influence the direction of those technologies needs to be timed correctly; once a standard is entrenched in market institutions, it may be for all practical purposes irreversible. And even though it is very well to promote the adoption of privacy-enhancing technologies (Information and Privacy Commissioner and Registratiekamer 1995), to be effective these technologies must not simply be adopted in isolated applications but incorporated into the design of institutions generally and market intermediaries in particular.
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