The Role of Technology in Political Economy: Part 3

Yochai Benkler 

In the prior two posts in this set I described how the leading mainstream economic explanation of rising inequality and its primary critique treat technology.  The former takes technology as central, but offers too deterministic or naturalistic a conception of both technology and markets such that it functions, in effect, to legitimize the present pattern of rising inequality and to limit the institutional imagination of how to deal with it.  The latter focuses so exclusively on the institutional determinants of bargaining 46038488 - law concept: circuit board with  scales icon, 3d renderpower, that it largely ignores technology as a distraction.  Here, what I’ll try to do is synthesize out of the work of many of us in the field an understanding of a political economy of technology that gives technology a meaningful role in the dynamic, but integrates it with institutions and ideology such that it becomes an appropriate site of struggle over the pattern of social relations, rather than either a distraction or a source of legitimation.

Continue reading

The Role of Technology in Political Economy: Part 2

Yochai Benkler 

Yesterday I outlined the ways in which the dominant “skills-biased technical change” and “winner-take-all economics” explanations of inequality share an idealized view of both markets and technology as natural and necessary.  Today I’ll write about the most influential criticism of these dominant stories that have been developed by labor economists.  These focus on the central role that institutional choices played in shaping 46038488 - law concept: circuit board with  scales icon, 3d renderbargaining power, and through it, the ability of the managerial class and shareholders to cause stagnating wages for the median worker and the great extraction by the 1%.  Larry Mishel of the Economic Policy Institute, with various co-authors, played a central role for over twenty years in pushing back on the SBTC narrative. Richard Freeman early emphasized the central role of unions, work later extended and deepened by David Card and collaborators. The pro-labor economists’ story is that policy choices as diverse as minimum wage erosion (particularly for women), deregulation, monetary policy, trade, immigration, as well as legal and political attacks on unions and unionization combined to weaken labor’s negotiating power and enable managers and shareholders to extract an ever-growing share of productivity growth, leaving labor running as fast as it can just to stay in place, at best.

pic2

In this framework, widely used in left-leaning labor economics, technology is absent as an explanatory dimension.  Its role is, at most, to divert attention from the political origins of the shape of inequality in society.  If they are right, then those of us spending our lives thinking about how technology shapes social relations are spinning our wheels and wasting energy—at least insofar as we are trying to explain the future or work or the rise and response to inequality.

Continue reading

The Role of Technology in Political Economy: Part 1

Yochai Benkler 

What role does technology play in rising inequality?  Is it, as the dominant view among policymakers argues, the primary explanatory variable, operating in reasonably efficient markets to shape the value of different workers, and hence the pay they can command?  Is it, as labor economists critical of the mainstream imply, a side show, since inequality is overwhelmingly a consequence of political choices that shape bargaining power in markets pervaded by power? If we think that technology matters; that platforms and 46038488 - law concept: circuit board with  scales icon, 3d renderrobots, ubiquitous sensors and algorithms do exert a real influence on the pattern of social relations that make up the economy, but we doubt that technology causes inequality by a “natural” process driven by its own intrinsic affordances and constraints interacting with markets, then we owe ourselves a clearer story than we have given to this point.  While the past quarter century has seen a lot of work on technology and freedom, there has been substantially less critical work on economic inequality and technology.  In today’s post, I’ll describe the limits of the mainstream economists’ answer, which lies at the foundation of “the robots will take all the jobs” and the legitimation of winner-take-all markets.  Tomorrow’s post will outline the limits of the dominant left reaction, as well as the limits of Karl Polanyi’s approach, which has provided so much inspiration for the present resurgence of political economy.  Finally, in the third post I’ll outline a view of the political economy of technology.

I see technology as imposing real constraints, and providing meaningful affordances that are sufficiently significant, at least in the short to mid-term, to be a substantial locus of power over the practice of social relations.  And yet, technology is neither exogenous nor deterministic, in that it evolves in response to the interaction between the institutional ecosystem and the ideological zeitgeist of a society, such that different societies at the same technological frontier can and do experience significantly different economic and political arrangements.  In the short to mid-term, technology acts as a distinct dimension of power enabling some actors to extract more or less than their fair share of economic life; in the long term, technology is a site of struggle, whose shape and pattern are a function of power deployed over the institutional and ideological framework within which we live our lives.  The stakes are significant.  A left that ignores the implications of technology as a site of meaningful struggle risks falling into a nostalgia for the institutions of yesteryear.  But a left that continues to disdain the state and formal institutions, and to imagine that we can build purely technological solutions to inequality risks abandoning the field to the Silicon Valley techno-utopian babble that has legitimated the extractive practices of oligarchy’s most recent heroes.

Continue reading

Accountability for the Internet of Torts

Rebecca Crootof 

Tort law has always shaped political economy in the wake of technological developments. Sometimes it operates to protect the powerful; sometimes it intervenes in power relations to correct new imbalances. The history of tort law can be understood as a series of case studies in how new technologies enable new conduct and harms, and in how judges and legislatures changed the law to address the resulting power dynamics between industry and individuals. The concept of ultrahazardous activities, the creation of no-fault workers’ compensation and motor vehicle insurance, and the rise of mass tort46038488 - law concept: circuit board with  scales icon, 3d render litigation can all be partially traced to underlying technological changes and accompanying social shifts.

Today, we are at the inflection point of another such transformation. In an earlier post, Introducing the Internet of Torts, I discussed how Internet of Things (IoT) companies are able to create and impose their own contractual governance regimes. They use terms of service to displace the law of the state, and they employ technological self-help to enforce their rules. Furthermore, the physicality of IoT devices increases the likelihood of consumer property damage and physical harm when companies discontinue service or otherwise engage in digital repossession. In this post, I will use prior tort law revolutions as a springboard to discuss how new products liability law and fiduciary duties could be used to rectify this new power imbalance and ensure that IoT companies are held accountable for the harms they foreseeably cause.

Continue reading

Introducing the Internet of Torts

Rebecca Crootof 

Once upon a time, missing a payment on your leased car would be the first of a multi-step negotiation between you and a car dealership, bounded by contract law and consumer protection rules, mediated and ultimately enforced by the government. You 46038488 - law concept: circuit board with  scales icon, 3d rendermight have to pay a late fee, or negotiate a loan deferment, but usually a company would not repossess your car until after two or even three consecutive skipped payments. Today, however, car companies are using starter interrupt devices to remotely “boot” cars just days after a payment is missed. This digital repossession creates an obvious risk of injury when an otherwise operational car doesn’t start: as noted in a New York Times article, there have been reports of parents unable to take children to the emergency room, individuals marooned in dangerous neighborhoods, and cars that were disabled while idling in intersections.

This is but one of many examples of how the proliferating Internet of Things (IoT) enables companies to engage in practices that foreseeably cause consumer property damage and physical injury. But how is tort law relevant, given that these actions are authorized by terms of service and other contracts? In this post I’ll elaborate on how IoT devices empower companies at the expense of consumers and how extant law shields industry from liability. In a future post, Accountability for the Internet of Torts, I’ll discuss what we can learn from prior tort law revolutions about how the law might evolve to hold these companies accountable. Overarchingly, a political economy perspective highlights how technological developments like the development of the IoT are not neutral—they enable new conduct, new relationships, and new kinds of harm that disproportionately affect the poor—and how law can be used either to preserve or correct resulting power imbalances.

Continue reading

Worker Surveillance and Class Power

Brishen Rogers 

Companies around the world are dreaming up a new generation of technologies designed to monitor their workers—from Amazon’s new employee wristbands, to Uber’s recording whether its drivers are holding their phones rather than mounting them, to “Worksmart,” a new productivity tool that takes photos of workers every ten minutes via their webcams. Technologies like these can erode workplace privacy and encourage 46038488 - law concept: circuit board with  scales icon, 3d renderdiscrimination. Without disregarding the importance of those effects, I want to focus in this post on how employers can use new monitoring technologies to drive down wages or otherwise disempower workers as a class. I’ll use examples from Uber, not because Uber is exceptional in this regard — it most certainly is not — but rather because it is exemplary.

Continue reading

The Political Economy of Freedom of Speech in the Second Gilded Age.

Jack Balkin — 

We are now well into America’s Second Gilded Age. The First Gilded Age was the era of industrial capitalism that begins in the 1870s and 1880s and continued through the first years of the 20th century, ultimately giving way to the reforms of the Progressive Era. The First Gilded Age produced huge fortunes, political corruption and vast inequalities of wealth, so much so that people became concerned that they would endanger American democracy.

46038488 - law concept: circuit board with  scales icon, 3d render

The Second Gilded Age begins, more or less, with the beginning of the digital revolution in the mid-1980s, but it really takes off in the early years of the Internet Age in the mid to late 1990s, and it continues to the present day characterized by the rise of social media, and the development and implementation of algorithms, artificial intelligence, and robotics. For this reason I call our present era the Algorithmic Society.

If the First Gilded Age is the age of industrial capitalism, the Second Gilded Age is the age of digital or informational capitalism. It too has produced great fortunes and led to concerns that increasing concentrations of wealth and economic inequality are endangering American democracy.  Like the First Gilded Age, it is also a time of deep political corruption and despair about the future of American democracy. It has not yet produced a second Progressive Era, yet every day I see signs that this is where we are headed.

There is a large literature criticizing the judicial doctrines of the First Amendment, and how they are slanted toward the interests of corporations (and capital generally) in the Second Gilded Age. The most obvious examples are the federal courts’ recent decisions on commercial speech and campaign finance regulation. These are interesting and important topics, but they are not the subject of this blog post.

My focus here is on the political economy of free speech in the digital age.  The basic question is this: How does our political and economic system pay for a digital public sphere? It pays for it largely through digital surveillance and through finding ever new ways to make money out of personal data.  Digital capitalism in the Second Gilded Age features an implicit bargain: a seemingly unbounded freedom to speak in exchange for the right to surveil, govern,  and manipulate end-users.

Continue reading

Rule-Making as Structural Violence: From a Taxi to Uber Economy in San Francisco

Veena Dubal 

Between 2012 and 2014, California regulators made critical decisions that ultimately restructured political economies of mobility around the world. In municipal and then state regulatory bodies, policy-makers refused to enforce existing taxi laws and regulations against so-called “ridesharing” services, including industry leader UberX, as well as Lyft, and Sidecar. Regulators determined that the companies were not taxis but “transportation network companies” (“TNCs”), and created new rules to govern them. These California rules were the first of their kind anywhere in the world. The regulations and logics that they engendered were subsequently replicated nationally and internationally. The global regulatory response devastated worker livelihoods and transformed what had been a low-paid full time job to even lower-paid part time gigs.

46038488 - law concept: circuit board with  scales icon, 3d render

How did workers make sense of rapid change in their industry? What were their reactions when regulators refused to enforce existing taxi rules and to the rulemaking that ultimately devastated their livelihoods? And what can their narratives, experiences, and understandings tell us about the political economy of law amidst innovation?

Taxi workers in my ethnographic research challenged two fundamental aspects of the prevailing popular and academic narratives of “uberization” as a neoliberal political and economic re-ordering. First, workers argued that this legal transition and the social and political norms it propagated were embedded neither in technology nor in techno-utopian imaginaries. Instead, in making sense of their own precarity, taxi workers placed blame on the structural power of private actors and the instrumental power of regulators. Second, in telling the tale of how law and power worked together to facilitate the demise of their tenuously secure work, drivers were emphatic that this was not a story of deregulation or state withdrawal. Contrary to some traditional academic accounts, taxi workers argued that both the rule-making process and the rules themselves created and valorized a market in which the state had a strong, active, and even authoritarian hand.

Now a global phenomenon, Uber began as UberCab in San Francisco in 2010. Less than two years later, Lyft and Sidecar launched a different model: non-professional private drivers using their own cars and a suggested, non-mandatory price for the ride. Uber adopted this new model as UberX but with a mandatory fee set by the company. Shortly thereafter, the United Taxicab Workers—a twenty-five year old, worker-led taxi driver advocacy organization—alerted city officials to the growing number of unlicensed taxis competing for their work and roving the streets of San Francisco. They lobbied the city to enforce taxi regulations against the companies.

Mark, a UTW leader and long-time taxi driver, was frustrated at the city’s inaction. He told me in late 2012,

These are worse than illegal limos. They don’t even have licenses! People are using their own cars. Non-professional drivers. They are running afoul of every taxi regulation. They claim they’re innovative and new, but we already have this technology! This is what Cabulous [a taxi app] is. We’ve been using this for the past few years. This isn’t about technology. This is just a new exploitative business model—one step removed from the leasing model that the taxi companies have been using for years. They’re just bandit cabs. We’ve been pushing the MTA to issue another cease and desist but they won’t. They won’t enforce their own regulations. (my italics)

Mark argued that the Uber business model was not about technological innovation—but about the innovation of capital. He, like many other taxi drivers, emphasized that the technology itself pre-existed Uber. He understood Uber as an exploitative evolution from the precarious leasing model introduced in the San Francisco taxi industry in the late 1970s. Unlike taxi drivers who had to pay taxi companies for the lease and gas before they could venture out onto the road, Uber drivers also had to bear the costs of their vehicle maintenance and hybrid liability insurance (which did not exist until 2016). To make matters worse, the companies were operating without vehicle caps or fare regulations—the two key regulations that taxi workers had long used to maintain some semblance of wage stability.

Ruach—who, like Mark, had been driving in San Francisco since the late 1970s—argued that Uber’s innovation was to centralize dispatch, which UTW advocates had been pushing for years.

The media keeps selling this as innovative technology. This is not innovative or about technology. We have been trying to get the Board of Supervisors to pass an ordinance to mandate centralized dispatch for years. They won’t do it. The dispatch companies and the cab companies push back. And now, all of a sudden, these tech companies come in and everyone’s excited about centralized dispatch. HELLO! Have you been listening [to us] all these years? That’s all these companies are. (my italics)

When I asked worker advocates why they thought the city was unwilling to use their regulatory powers to stop these companies, especially since the SFMTA had just commodified and sold 900 medallions two years earlier, they blamed it on the structural power of capital.   Barry, another driver and advocate, described Uber’s massive lobbying efforts as “graft.” Although in most cases, the lobbying was technically not illegal, he understood it to be steeped in anti-democratic, corrupt practices. In a conversation we shared in 2013, he explained,

Ron Conway was an early funder of Mayor Ed Lee, and he is also an investor in Lyft and Uber. There are rumors [former] Mayor Willie Brown is getting his pockets lined as well. This is just graft. They are using the language of the tech economy. But they know that’s not what this is about. These are just taxi companies but with Wall Street money. Infinite amounts of money. We thought they [the taxi companies] were corrupt. (my italics)

In 2013, a rule-making process that began in late 2012, the California Public Utility Commission decided two critical things. As a matter of law, Uber offered pre-arranged rides and therefore, under the California Constitution, was to be regulated not by (more progressive) municipalities but exclusively by the state. And second, in the explicit name of “innovation,” the agency was to create a new regulatory category—Transportation Network Companies—and regulate them differently than limos and taxis—without car licenses, vehicle caps, or fare regulation.

Drivers like Mark, Ruach, and Barry directly related the structural power of venture capital to this regulatory outcome. They often felt their advocacy was misunderstood; they did not oppose technology. In fact, they laid claim to the technology themselves. But they protested the specific role of law, and in Barry’s words, the “greed and graft” through which those laws were achieved, in compelling the demise of their industry and livelihoods. They acknowledged that by producing two regulatory regimes, officials had eased the burden on TNCs at their expense. But they framed the character of the state as heavy-handed, not as laissez faire. This was not government facilitating a “free market” through deregulation, but preventing competition by maintaining fares at below market rates, and creating an overall unequal playing field.

Today, workers’ wages across the Uber-taxi divide are roughly 65% of what they were in 2010. They are often below the minimum wage. Told through the eyes of workers, the case study of how regulators responded to rule-breaking platforms and created the city’s contemporary Uber economy can neither be explained through innovation fanaticism nor fundamentally through a politics of efficiency and deregulation. Taxi workers understood innovation discourse as obscuring both their everyday hardships and corruptive, though legal, state practices. And they reframed the law in this process as playing an active role in undermining democratic principles, producing the myth of a free market, and exacerbating political and economic inequalities. As Mark wrote to me in a text following the fifth recent suicide of a taxi driver, “The invisible hand has shown its hand.”

Veena Dubal is Associate Professor of Law at U.C. Hastings College of the Law, San Francisco. 

Visit our Political Economy of Technology page to read all the posts in this series.

Data Nationalization in the Shadow of Social Credit Systems

Frank Pasquale –

The political economy of digitization is a fraught topic. Scholars and policymakers have disputed the relative merits of centralization and decentralization. Do we want to encourage massive firms to become even bigger, so they can accelerate AI via increasingly comprehensive data collection, analysis, and use? Or do we want to trust-bust the digital economy, encouraging competitors to develop algorithms that can “learn” more from less data? I recently wrote on this tension, exploring the pro’s and con’s of each approach.46038488 - law concept: circuit board with  scales icon, 3d render

However, there are some ways out of the dilemma. Imagine if we could require large firms to license data to potential competitors in both the public and private sectors. That may sound like a privacy nightmare. But anonymization could allay some of these concerns, as it has in the health care context. Moreover, the first areas opened up to such mandated sharing may not even be personal data. Sharing the world’s best mapping data beyond the Googleplex could unleash innovation in logistics, real estate, and transport. Some activists have pushed to characterize Google’s trove of digitized books as an essential facility, which it would be required to license at fair, reasonable, and non-discriminatory (FRAND) rates to other firms aspiring to categorize, sell, and learn from books. Fair use doctrine could provide another approach here, as Amanda Levendowski argues.

In a recent issue of Logic, Ben Tarnoff has gone beyond the essential facilities argument to make a case for nationalization. Tarnoff believes that nationalized data banks would allow companies (and nonprofits) to “continue to extract and refine data—under democratically determined rules—but with the crucial distinction that they are doing so on our behalf, and for our benefit.” He analogizes such data to natural resources, like minerals and oil. Just as the Norwegian sovereign wealth fund and Alaska Permanent Fund socialize the benefits of oil and gas, public ownership and provision of data could promote more equitable sharing of the plenitude that digitization ought to enable.

Many scholars have interrogated the data/oil comparison. They usually focus on the externalities of oil use, such as air and water pollution and climate change. There are also downsides to data’s concentration and subsequent dissemination. Democratic control will not guarantee privacy protections. Even when directly personally identifiable information is removed from databases, anonymization can sometimes be reversed. Both governments and corporations will be tempted to engage in “modulation”—what Cohen describes as a pervasive form of influence on the beliefs and behaviors of citizens. Such modulation is designed to “produce a particular kind of subject[:] tractable, predictable citizen-consumers whose preferred modes of self-determination play out along predictable and profit-generating trajectories.” Tarnoff acknowledges this dark possibility, and I’d like to dig a bit deeper to explore how it could be mitigated.

Continue reading

Artificial Sovereigns: A Quasi-Constitutional Moment for Tech?

K. Sabeel Rahman –

Consider the following developments:

  • In recent weeks, the explosive revelations about Cambridge Analytica and its systemic data-mining of Facebook profiles has cast into relief the way in which our contemporary digitized public sphere is not a neutral system of communication but rather a privately built and operated system of mass surveillance and content manipulation.46038488 - law concept: circuit board with  scales icon, 3d render
  • Meanwhile, Alphabet has announced that its subsidiary, Sidewalk Labs, will take over management of a major redevelopment of part of Toronto’s waterfront, in an effort to build from the ground up a modern “smart city.”
  • These developments come amidst the longer-term development of new forms of technological transformations of our political economy, from the rise of Amazon to its position as the modern infrastructure for the retail economy, to the ways in which technology is transforming the nature of work and the social safety net.

There has been a growing sense of concern about the twin crises of twenty-first-century democracy on the one hand and of the growing problems of inequality and insecurity on the other. Technological change is at the heart of both of these transformations. Technological change alters the distribution and dynamics of political and economic power, creating new forms of “functional sovereignty”—state-like powers concentrated in entities and systems that are not subject to the institutional and moral checks and balances that we associate with the exercise of public power. Such arbitrary power represents a kind of quasi-sovereignty that, left unchecked, poses a threat of domination.

The rich scholarly debate on law and technology has surfaced a range of approaches for addressing some of these concerns, from legal standards for privacy and data use to antitrust and public utility regulation, and more. These proposals and interventions can be reframed as part of a broader challenge of defusing the threat of domination created by these technological systems. Regulating and responding to new technologies and modern forms of economic and political power thus represent a variation on familiar questions of public law and constitutional design: how to structure the exercise of potentially arbitrary, state-like power, rendering it contestable, and therefore legitimate.

Continue reading