Capitalism vs. Privacy

Informational capitalism has turned the Internet into a means of social control.

ilyas teker / Flickr

In the popular discourse, authoritarianism typically stands as liberal capitalism’s dramatic antithesis. And nowhere are their purported differences more stark than in their attitudes toward individual privacy. While in the liberal capitalist world every person’s home is said to be their castle, in authoritarian regimes, it is just one more state-monitored cage.

Today, however, privacy is disappearing within the walls of advanced capitalist democracies. And multinational corporations, holding aloft the banner of total transparency, are the ones leading the charge.

In 1999, Scott McNealy, then-CEO of Sun Microsystems, famously declared, “You have zero privacy now anyway. Get over it.” Google CEO Eric Schmidt warned that “if you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.” Mark Zuckerberg, the world’s sixth richest man, decided that privacy was no longer a social norm, “and so we just went for it,” while Alexander Nix, of the data firm Cambridge Analytica — famously employed by both the Brexit and Trump campaigns — brags that his company “profiled the personality of every single adult in the United States of America.”

These days, the rhetoric of private capitalists seems indistinguishable from the rhetoric of state tyrants. Their scripts are all mixed up. Their differences have always been exaggerated, if not imagined, but we could once rely on them to at least speak differently. What’s changed?

The Evaporating Bond

As an economic system founded on the idea of a private sphere — consisting of private individuals who own private property and make private profit in private markets — capitalism is assumed to protect individual privacy. The sanctity of the private realm allegedly ensures maximum freedom for the individual, as producers and consumers are liberated from unwanted interference from the state and nosy neighbors.

Capitalism’s detractors have long decried its tendency to hollow out the commons and push everyone into their private bubbles, but its supporters celebrate this atomization. “Civilization,” wrote Ayn Rand in 1943, “is the progress toward a society of privacy. The savage’s whole existence is public, ruled by the laws of his tribe. Civilization is the process of setting man free from men.” From this perspective, capitalism’s emphasis on the private sphere and the resultant privacy made it the world’s great civilizer.

As early as the 1970s, however, the bond between capitalism and individual privacy was becoming unstuck. In 1977, the right-wing legal jurist Richard Posner put forward his “economic theory of privacy,” eventually publishing it in a paper in, aptly, 1984. There, he argued that individual privacy hindered capitalism by interrupting the free flow of information that markets need to be efficient. Posner concluded that “people should not — on economic grounds in any event — have a right to conceal material facts about themselves.”

Posner was writing for Chicago Unbound, the law journal at the University of Chicago, the epicenter of the neoliberal storm that was spreading across the world. Milton Friedman was one of Posner’s closest colleagues, and Posner himself is often included under the Chicago School umbrella. Posner’s capitalist roots — with their endless exaltation of the private individual — made his arguments against individual privacy all the more surprising. The love affair between privacy and capitalism, long taken for granted by dove-eyed liberals, was revealed to be the shallowest of relationships: a marriage of convenience that was no longer convenient.

In the digital age, this relationship has become all the more fractious. A new form of capitalism has emerged on the Internet, variously referred to as informational capitalism, digital capitalism, or surveillance capitalism. Personal information is the lifeblood of the new economy: companies collect their users’ data to sell it to advertisers and generate revenue. The more companies know about individuals, the better they can target their advertisements, boost their “conversion rates,” and rake in profits.

And make no mistake, there’s a lot of money to be made. In the third quarter of 2016, a total of $17.6 billion was spent on digital advertising, a 20 percent rise from the previous year.

Facebook and Google have become a duopoly in this new context, accounting for about half of the total; of the $2.9 billion in growth over the last year, the pair was responsible for a remarkable 99 percent of it. In the process, they have become the two fastest growing corporations in the history of capitalism, with an ability to collect, monitor, and sell data on users in ways other companies can only imagine. Their collective net worth is $800 billion, more than the total GDP of the Netherlands.

Both their business models show that, in informational capitalism, privacy no longer impedes profit: privacy prevents profit. The belief that individuals should be allowed to control their personal information now contradicts capitalism’s profit-making process. Far from sheltering private individuals from external interference, as Ayn Rand imagined, companies now want to know individuals as well as they know themselves. Corporations strive for perfect transparency, so that, in the words of Google’s chief economist, Hal Varian, the search engine will “know what you want and tell it to you before you ask the question.”

We might take solace in the fact that these companies don’t carry the force of the state — that if their intention is to target advertisements more effectively and sell data more profitably, it also might redound to the benefit of the user.

Many people enjoy using a service that knows them well and recognizes their personal habits, preferences, and interests. The quality of their experience increases with the amount of personal information they turn over — and who doesn’t want better services?

But dangers do exist. Although much of the data that tech firms collect is frivolous, we should be wary of the aggregation effect: taken individually, each piece seems innocuous; taken together, an intimate picture of our person is revealed.

Yet even this does not get at the heart of the problem. The greatest threat lies not so much in what corporations know as in how they use that knowledge. The services they offer are entrancing, replete with conveniences and new possibilities, tailored to our every need. But when we cede so much personal information to corporations, we grant them incredible power and responsibility. Knowledge may mean power, but information often means domination.

And since the first large-scale data collection efforts in the nineteenth century, companies have been using technology to exert massive social control.

The Hollerith Machine

In 1880, with a rising population, an expanding territory, and a deepening desire for statistics — combined with a complete lack of technological strategy — the data collected by the United States Census took most of a decade to process. By the time the next census rolled around, in 1890, the processing time had been reduced to three months.

A young American engineer, Herman Hollerith, invented the system that enabled this incredible speed-up. Inspired by train conductors, he used punch cards to automatically tabulate information on a set of standardized traits, from race and gender to literacy levels and religion, across the entire population. The Hollerith Machine, as it came to be known, is now recognized as the first information system that successfully replaced pen and paper. Countries all over the world used it to collect data on their citizens.

In 1911, Hollerith sold his company and the rights to his machine in a merger, forming what is now known as the International Business Machines Corporation (IBM). Under the leadership of Thomas J. Watson, a man revered as the “world’s greatest salesman,” IBM would own 90 percent of all tabulating machines in the United States. They sent them wherever the money called.

During the 1930s, it called from Adolf Hitler’s Third Reich. Under the direction of IBM’s German subsidiary, the Hollerith Machine located Jews and facilitated their “processing.” The infamous numbers tattooed on the arms of prisoners were IBM identification numbers, matched to their individual place in IBM’s punch-card system. The Nazis rewarded Watson for his services in 1937 with the prestigious Order of the Golden Eagle. Although he returned the award in 1940, his company continued to assist Germany throughout the war.

IBM didn’t support the Nazis; it simply didn’t care. In the same period, it completed a similar project for the United States: rounding up Japanese Americans — more than one hundred thousand of them — for the internment camps on the East Coast.

IBM’s nefarious collaborations during World War II may represent an extreme case, but it would be naïve to dismiss them as immaterial. In fact, the company’s actions embody a very banal truth: corporations and states regularly have shared interests and work together for mutual gain.

This happens regardless of moral principles. After all, capitalism coexists just as happily with dictatorships (Chile under Pinochet or today’s China) as it does with democracies. The capitalist, guided by the great entrepreneurial spirit, sees every new setting as a new set of opportunities. The only question that remains is who is ready to exploit it.

Big Brother’s New Clothes

Edward Snowden’s mass leak of NSA files in 2013 revealed the active role corporations play in state surveillance. He reported a complete “blurring of public and private boundaries in surveillance activities” with “collaborations and constructive interdependencies between state security authorities and high tech firms.”

Facebook, Google, and other websites had become the government’s new CCTV cameras but with one big difference: we had not only normalized ourselves to these new surveillance technologies, we actively enjoyed their company.

Behind a façade of user loyalty, tech companies make billions by promising the public one thing and the government the opposite. As Snowden revealed, Microsoft proclaims that they “believe it’s important that you have control over who can and cannot access your personal data in the cloud,” while working with the American government to provide easier access to that very same data.

This new incarnation of surveillance synthesizes Orwell’s dystopia with Aldous Huxley’s Brave New World. In Orwell’s creation, an authoritarian surveillance state maintains order; in Huxley’s, the self-medication of soma, an antidepressant drug that keeps everyone smiling, does the same work. Today, surveillance is carried out less by a Big Brother as by a set of Best Friends: these services remember our birthdays, answer our questions without casting judgment, and suggest films and books we might like. Far from being based on fear, the new surveillance system is fun, caring, and helpful. When Facebook crashed in some US cities during summer 2014, many Americans called 911.

The tech firms assure us that their products center on us, the customers. But this masks not only their own profit motives but also their perfect harmony of interests with the state. Governments allow corporations to systematically collect individual information — no matter what risks or consequences it may present for consumers — because governments receive access to that data in return. Corporations, for their part, hand data over to governments because they receive favorable legislation in return.

This harmony becomes all the more apparent when one examines the revolving door between the state and tech companies. The Center for Responsive Politics recently found that the five biggest tech firms — Apple, Amazon, Google, Facebook, and Microsoft — spent $49 million on lobbying in 2015 alone, more than double the $20 million the five largest banks spent and roughly $3 million more than the five largest oil companies.

During the Obama years, the tech industry embedded itself in Washington. Almost two hundred people who worked for Barack Obama’s administration in 2015 were working for Google by the end of 2016, while fifty-eight moved in the opposite direction. Under Obama, Google executives were reported to meet in the White House more than once a week on average.

While Silicon Valley leans Democratic, they’ve also found favor in the Trump White House. The Silicon Valley billionaire Peter Thiel now serves as one of Trump’s key advisers, and one of Trump’s first moves after the election was to hold a tech summit at Trump Tower, inviting leaders to a reception that no other industry received. “I’m here to help you folks do well,” he promised.

A Tool of Control

In the 1990s, the Internet seemed to promise an era of new freedom and expanded global connectivity. When Harvard law professor Lawrence Lessig expressed trepidation in 2000, he was widely dismissed. “Left to itself,” he warned, “cyberspace will become a perfect tool of control.” Few agreed: “Lessig doesn’t offer much proof that a Soviet-style loss of privacy and freedom is on its way,” sneered one skeptical reviewer.

Seventeen years have passed, and we now have a surveillance apparatus that exceeds anything past authoritarian states could’ve mustered.

But we should not reduce the dangers of informational capitalism to government surveillance. These tech companies’ underlying philosophy represents a threat to freedom in itself. Silicon Valley ideology has saturated cyberspace and is rebuilding the world in its image, likely surpassing anything Lessig could have foreseen.

Tech CEOs celebrate today as “the most measured age in history,” equating gathering information with the Enlightenment ideal of knowledge-discovery. Corporations promise us that so long as they have access to everyone’s information, they can right all of society’s wrongs. This encapsulates the Big Data mindset: solving human problems only requires collecting enough information. With full faith in this ideology, most informational capitalists agree with Google chief economist Varian: any resistance to the loss of privacy will dissipate because “the advantages, in terms of convenience, safety, and services, will be so great.”

But this data-driven understanding of progress constricts the individual. Privacy is meant to be a space of creative experimentation, free from judgment and beyond external control. A world without privacy, by contrast, risks a world of complete conformity. Ideally, the individual’s private experimentations challenge prevailing norms and ideologies; this friction, the argument goes, pushes society forward. Under informational capitalism, however, what once demanded respect for privacy — progress — now demands its rejection.

Under big-data capitalism, the privacy of the individual is subsumed within an ideology of profit-linked progress. Where liberalism held that restricting freedom of expression is a “peculiar evil, one that is robbing the human race,” informational capitalism updates this: the refusal to share personal information robs the human race. To keep some aspects of yourself private now stands in the way of progress.

That Silicon Valley’s concept of progress aligns so perfectly with its own profit interests is striking. Not only does this ideology promote technology as the solution to all problems — and who will supply the technology? — but it also makes profit and progress require the exact same resource: more and more personal information. The harmony between progress and profit is not perfect, however, and the seed of this contradiction reveals Silicon Valley’s authoritarian aspect most clearly.

While in terms of “progress” these tech companies present themselves as radical pioneers — they move fast and break things, as the mantra goes — when it comes to profit this “radicalness” masks a conflicting desire for complete conformity. As privacy scholar Julie Cohen notes, informational capitalism ultimately wishes to “produce tractable, predictable citizen-consumers whose preferred modes of self-determination play out along predictable and profit-generating trajectories.”

To do so, these tech firms establish a dense web of options — as in Spotify’s and Netflix’s curated recommendations — tailored to a particular version of an individual’s identity, “designed to promote consumptive and profit-maximising choices that will systematically disfavour innovations designed to promote other values.” As Google’s former design ethicist Tristan Harris puts it, “if you control the menu, you control the choices” — and if you control the choices, you control the actions.

Capitalism has always tried to align society’s ambitions with its own. With the Internet, its reach becomes almost inescapable. Few, if any, opposing forces still exist. Of the fifteen most visited websites in the world, only one, Wikipedia, does not operate under Silicon Valley’s logic. Coupled with the increasing importance of the Internet as a site for human development, its pervasive influence cannot be healthy for a diverse, democratic society. This dynamic only intensifies when two companies, Google and Facebook, virtually control the market.

As a place of self-formation, public discussion, and social organization, the Internet frames our thinking, our knowledge, and our behavior. Today, it is constructed almost exclusively in favor of maximizing profit.

In a mockery of its initial utopian promise, the Internet has become not only a tool of mass surveillance, but also an advanced advertising technology and a means of social control.

If we want to challenge this state of affairs, we should begin by having more meaningful conversations about the Internet we want. It matters too much to remain the sole preserve of corporations.

Data, if it must be collected, should be democratized, not filtered through secret algorithms for private gain. Until informational capitalism’s tyrannical control of the Internet is broken, the dangers will only deepen. As with all tyrannies, citizens’ lives will become more and more transparent, while the activities of the powerful become ever more opaque.