The Jeffersonian/Hamiltonian divide regulating 'platform capitalism'

May 24, 2018 6:19 AM

Tech Platforms and the Knowledge Problem by Frank Pasquale - "Though Jeffersonian trust-busters and Hamiltonian utility regulators have very different views of political economy, each counters the untrammeled aspirations (and disappointing quotidian reality) of the stalwarts of digital capitalism. They also help us understand when giant firms can help us solve the 'knowledge problem' Hayek identified, and when they exacerbate it via obscurity and obfuscation. If conglomeration and vertical mergers actually help solve real-world problems—of faster transport, better food, higher-quality health care, and more—then authorities should let them proceed. Such industrial bigness helps us understand and control the natural world better. But states should block the mere accumulation of bargaining power and leverage. Such moves are exercises in controlling persons—a much less salubrious aim of industrial organization. Economic policy focused on productivity and inclusive prosperity will balance and do justice to important insights from both Jeffersonian and Hamiltonian critics of our increasingly sclerotic economy." (via)

Populist localizers want a new era of antitrust enforcement to break up giant firms. These Jeffersonian critics of big tech firms, megabanks, and health care behemoths are decentralizers. They believe that power is and ought to be distributed in a just society. They promote strong local authorities to counterbalance the centripetal accumulation of wealth and power in multinational firms.

Others have promoted gigantism as inevitable or desirable, and argue that we simply need better rules to cabin abuses of corporate power. Today’s Hamiltonians argue that massive stores of data are critical to the future of artificial intelligence—and thus to the productive dynamism of the economy. They focus on improving the regulation of leading firms rather than on breaking them up.

Brokers, dealers and the regulation of markets: Applying finreg to the giant tech platforms: 'information fiduciaries' "whose loyalties and incentives are regulated to remain unconflictedly aligned with the humans whose data they manage"

posted by kliuless (14 comments total)

Isn't this an easy one?

In one case the monopolist continues to grow and will warp the regulatory process, in the other it doesn't.
posted by Reasonably Everything Happens at 6:39 AM on May 24, 2018 [4 favorites]

The counterpoint is that breaking up these centralized organizations will necessarily introduce inefficiencies by virtue of creating separate businesses artificially, whereas regulation has the potential to be less inefficient.
posted by NoxAeternum at 7:15 AM on May 24, 2018

regulation has the potential to be less inefficient

The thing about efficiency is that it needs a unit! In practice the unit is almost always about profitability. SO THEN, the question is that what are we trading for this profit? What are these profits in tension with?

Well, the results are in and we should really start thinking about the efficiency of units for pollutants, labor power, personal information and civility.
posted by Reasonably Everything Happens at 8:00 AM on May 24, 2018 [2 favorites]

Thank you kliuless. Will read along with dinner and then return.
posted by infini at 8:37 AM on May 24, 2018

Others have promoted gigantism as inevitable or desirable

Didn't work out so well for the dinosaurs. They were replaced by flocks or packs of smaller, more resilient systems. Perhaps a flock is less "efficient" (whatever that means) than a monster, but a flock will survive a sudden shift in the environment, whereas the monster will just die.
posted by SPrintF at 8:44 AM on May 24, 2018

Today’s Hamiltonians argue that massive stores of data are critical to the future of artificial intelligence

Do they? With a straight face? That has to be the dumbest excuse they've come up with yet.

^F "co-op" ... not found. As usually happens in real life as well.
posted by sfenders at 9:36 AM on May 24, 2018 [1 favorite]

So, update, I read the article, and the author followed me on Twitter. All I'll say is taht I agree with his subtexted snark on Thiel.
posted by infini at 9:55 AM on May 24, 2018

If conglomeration and vertical mergers actually help solve real-world problems—of faster transport, better food, higher-quality health care, and more—then authorities should let them proceed

That's the big If, though, and the article would look different if it tried to actually answer that question. It's interesting to find out at the end of the piece the author is a law person not an economist.
posted by polymodus at 11:15 AM on May 24, 2018

Law can help resolve these tensions. Competition laws take aim at the functional sovereignty of large tech platforms, and antitrust authorities should have blocked Facebook’s purchases of Instagram and WhatsApp, instead of letting its juggernaut of domination over communication roll up entities capable of providing alternative modes of association online. Ten, twenty, or one hundred social networks could eventually emerge, if competition law were properly enforced, and interoperability standards could assure smooth connections among confederations of social networks, just as AT&T, T-Mobile, and Verizon customers can all talk to one another seamlessly.

Pretty much. I'd be totally ok with it if this was a thing we did.
posted by saysthis at 3:33 PM on May 24, 2018 [1 favorite]

just as AT&T, T-Mobile, and Verizon customers can all talk to one another seamlessly

I'm not sure the telecoms are a great example of a healthy competitive landscape...
posted by RobotVoodooPower at 8:27 PM on May 24, 2018

Please do not disrupt the disrupters!
posted by Chitownfats at 2:13 AM on May 25, 2018

Quis disrumpentes ipsos disrumpet?
posted by gauche at 6:46 AM on May 25, 2018

The analysis of good (enhancing innovation) vs. bad (enhancing negotiating power and rent-seeking) is interesting, but it does not help finding solutions. Because you will seldom find a clear either positive or negative case. Some type of innovation by concentration always goes hand in hand with rent-seeking. See web search / advertising. So the solution cannot be to differntiate between rather good or rather bad concentration. A different solution would be to separate and regulate infrastructure aspects in areas like social networking or web search from the services on that infrastructure. Today both are provided by the same companies and you cannot choose which services to run (for example what news sorting system on your social graph).
posted by klischka at 11:52 PM on May 26, 2018

-Why Financial Statements Don't Work for Digital Companies
-Why We Need to Update Financial Reporting for the Digital Era
-Googlenomics: A long-read Q&A with chief economist Hal Varian

also btw...
-Why Do We Care So Much About Privacy?
-The G.D.P.R., Europe's New Privacy Law, and the Future of the Global Data Economy
-Aldous Huxley on the dangers of being 'caught by surprise by our own advancing technology'
posted by kliuless at 10:52 PM on June 15, 2018