Date: Wed, 27 Oct 93 17:17:52 EST Errors-To: Comp-privacy Error Handler From: Computer Privacy Digest Moderator 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 The Computer Privacy Digest is a forum for discussion on the effect of technology on privacy. The digest is moderated and gatewayed into the USENET newsgroup comp.society.privacy (Moderated). Submissions should be sent to comp-privacy@pica.army.mil and administrative requests to comp-privacy-request@pica.army.mil. Back issues are available via anonymous ftp on ftp.pica.army.mil [129.139.160.133]. ---------------------------------------------------------------------- From: Rob Kling 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. ------------------------------ End of Computer Privacy Digest V3 #064 ******************************