Technocracy

The Devil’s Advocate™ →This page on the premium JC Gimme a TEAC C-90 CrO2 mixtape and I’m good to go. In which the curmudgeonly old sod puts the world to rights. Index — Click ᐅ to expand: The Devil’s Advocate Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

For those of JC’s generation — we came of age in the Eighties, and are running sniper’s alley now — our radical departure with the gammon and boomers of our age was to reject centralisation. Ever the practical ones, we latchkey kids took our parents’ general suspicion of the Man and formalised it. Our movement’s leaders were not all of Generation X, but they spoke to us. They grokked our aspirational, optimistic, hopeful, individualistic ethic.

Ronald Reagan captured the vibe:

Government is not the solution to the problem: government is the problem.

And the Walkman symbolised it: Individualistic, technophiliac, selfish.

Results were good. The Iron Curtain fell. The markets boomed. Pits closed. Shipyards shuttered. [Where are you going with this? — Ed]] Sure there were some ugly skirmishes, but the ideological war was won. Call it what you will: Reaganomics, Rogernomics, Thatcherism, Perestroika, laissez-faire, deregulation, monetarism, around the world, the Man got out of the people's hair and left everything to the market.

Of course there were losers, as there are in any radical rearrangement of the social order, but it wasn’t us. We were on the right side of history, which had finished anyway.

Laissez faire, the basic gist: bottom-up beats top-down.

In a free society individuals are best placed and best incentivised to make their own decisions. Abrogate that principle only where those criteria do not apply.

Those criteria:

Formal: there is better, fresher information at the edges of the network than in the middle. Communication channels were clogged, centralised machinery slow, lossy and costly: informed decisions were best made at the point of sale, by those doing the buying.

Substantive: those buyers at the edge of the network — individuals like you and me — have the most skin in the game. It is their life, their school, their community, their personal mobile stereo. They have strong incentives to make good, efficient decisions because they will be most directly disadvantaged if they don’t.

As it always does, to we of the revolting masses, the conversation seemed over. The riddle of sociopolitics was solved.

As it always does, History had other ideas. History was not quite dead.

Now we are the boomers, our kids sing different songs. (Enjoy it, kids: the next generation is on your tail.)

Along the way the laissez-faire ideal was lost.

But the shift away from laissez-faire was no theoretical rejection of its central substantive ideal. There was no new Lenin, Trotsky or Marx pamphleteering and making a cogent case for a return to collective governance. At first, quite the opposite: the overpowering ideas of the 1990s and 2000s were more libertarian and more anarchic: the internet could set us free. (Some Burmese junglers out there still believe it: their saviour of choice is crypto. Their time is nigh).

But, without white paper or manifesto, the network’s liberating technology worked to re-centralise and control. It nullified the formal objection to centralisation: no longer was it slow, lossy or costly. The network was free, bandwidth was unlimited and information travelled, literally, at lightspeed. Lossless centralisation was now possible, and if offered massive economies of scale. Defacto centralisation was possible even as we systematically distributed our physical selves. The network facilitated outsourcing and rightshoring: offshore operations teams acted like thin-client terminals to a centralised CPU.

Technology facilitated the reassertion of central control. No one broached the substantive question of whether re-centralisation od command and control was such a good idea.

We could, so we did.

The tendency to centralisation is a predictable system effect in a modern corporation. The org chart rolls everyone up to a small band of executives at the centre who are both empowered to mandate central control and heavily incentivised to do so.

But, call to mind JC’s Malmsteen paradox:

Just because advances in electric guitar

Development in network technology — packet switching, routing, the end-to-end principle, substrate neutrality of data, and latterly machine learning, large language models and so on — made the information transmission needed for centralised decision-making feasible: infinite fidelity, infinite speed, minimal cost.

None of this addressed laissez-faire’s substantive objections to central control: that those at the edge of the machine, who are encountering situations, are disproportionately affected by those situations and generally best placed to react to them. That was increasingly assumed away: major moral and social questions had finally been resolved — liberal democracy had won! — meaning there weren’t any moral decisions to be made. There were only practical decisions, but these were in principle soluble by calculation.

The fashion became not discussing technology in human terms as much as evaluating humans against technology benchmarks and finding the meatware wanting: humans were, it transpired, irrational, illogical, inconstant, prone to bias, and they took up space, needed holidays and cost a lot of money.

In the name of efficiency, everything could be managed by algorithm was assigned to computers, and so it came to pass we were progressively relieved of the inconvenience of making our own decisions.

The moral maze

Progressively — if you’ll excuse the pun — the technical ability to micromanage by code made it's presence felt. Lawrence Lessig saw the opportunity for commercial technological regulation early: what need was there from practical enforcement of contracts in an online world where actions could be constrained or forced by by code?

The world was still largely in swoon to light-touch, principles-based regulation: congress was busily dismantling Glass-Steagall and throwing the economy into the arms, tooth and claw of nature, but that all changed in September 2008 when the ugly consequences of all this bacchanalian feasting nsfw their presence felt.

A two-decade draining of executive power to the market was quickly reversed and restored to the politicians and central bankers. The cost was detailed, technical, code-level regulation regulation of everything.

The regulators’ interest was at first technocratic, but social justice movements — notably Occupy Wall Street and the various Arab Spring movements began to exert influence and inject a moral dimension into debates, while at the same time the faces opening up in the burgeoning professional administrative class — call it the era of unfettered human capital management — meant that previously quite radical social justice agendas began to escape their traditional confines in liberal arts faculties and began accumulating in the bowels of corporate bureaucracy. .

The loss of the informal

Digitisating all communication dramatically reduced the lost, informal, impermanent nature of internal deliberation and decision-making.

Roll back to pre-computerised 1980: communications outside the firm were for the most part by way of meeting or clipped, highly formalised letter. Communications within a firm were mainly oral, sometimes telephonic, and where reduced to writing, the principal means of communication was the laboriously prepared memorandum. It required drafting, typing — by someone other than its lawyer, naturally: we don’t pay our principals to type, son — edited and checked.

This meant, firstly, that the amount of “discoverable information” in the organisation was limited and carefully edited. All drafts and preparatory matter was expunged. Secondly, getting that information was expensive and slow: there were telecopier costs, and operator costs, so the extent of a reasonable request was naturally limited. Thirdly, that information was rarely useful or interesting, being prepared for posterity as it was. The fundamental layer of internal candour in decision-making was inevitably oral, unrecorded and perfectly deniable.

The march of technology changed this. Screens appeared on principals’s desks. Young tyros like JC, who had been brought up with computers, began to ask for them. Means of creating digital written messages flourished. The relentless drive towards waste elimination saw unglamorous parts of the organisation hived off to unfashionable parts of town, then unfashionable parts of the country, then unfashionable parts of whole other countries altogether. Face-to-face meetings became impossible. Email was easy. Then came Slack. Then came Skype (as it then was).

The trend was well-and-truly established, but what nuclear powered it was COVID-19. Not only was the middle office nowhere near trading anymore: the people in the middle office were nowhere near each other. For a period easily long enough to form lasting habits, everyone was forced into physical isolation. All interactions were purely online, by now fully digital and that vital informal communication layer disappeared entirely.

That habit has lasted: almost two years since the WHO ended the COVID-19 Public Health Emergency of International Concern, and most white-collar workers —JC included — still go to the office about three days a week.

Therefore, every single impulse that passes between individuals in an organisation is recorded, tracked, logged, audited. It may be used for internal disciplinary procedures. It is externally discoverable by or disclosable to regulators, private individuals making data requests and litigious competitors.

The brain of the firm, as Stafford Beer would call it, its every deliberative function, every flashing synapse, every animal urge, has been laid open for all the world to see and judge.

Radical transparency has its consequences. Not all of them good.

We did not vote for this dramatic change in the state’s powers of intrusion. It was in no party’s manifesto. There is no Ayn Rand novel, Milton Friedman monograph or Troskyite tract that advocates for it. It is not the delivery of any promise. It was not signalled by any legislative programme: it just happened, leading to many counterintuitive behaviours and systems effects.

People contrived to have important conversations away from formal channels wherever possible, such that organisational forums for formal decision became green-lighting, rubber stamping exercises where no dissent or disagreement was logged or recorded or, tacitly, even allowed. The traffic lights on every dashboard must always be green.

Organisations became highly neurotic: hostile towards internal challenge or overt criticism of strategy or decision (precisely because these criticisms were discoverable and could result in regulatory censure). In many case organisations just did not have any processes that delivered effective challenge.

This was all notwithstanding an overt but entirely performative commitment to encouraging challenge, disagreement and diversity of opinion (and protected characteristics, of course).

Crypto technocracy

The crypto-libertarian take: crypto promises to fix the technocratic problem of regulation by substituting it with code. Code is law.

But the problem of regulation is not technological but human. Indeed mistaking it for a technological problem is what got us here in the first place. Libertarians, of all people, should understand regulations not as abstract technical artefacts that create bad incentives — though, sure, they do this — but as a by-product of hard-wired human, self-interested behaviour.

Regulations make and get made by inevitable, self-interested human behaviour: acquiring social influence (and therefore political power); establishing market dominance and then extracting rent. The behaviour is reflexive, and there are feedback loops here. The regulatory ecosystem is as organic a market and complex a system as the market itself. It is part of the market.

Crypto does not — cannot — stop or fix hard-wired human behaviour. This is the the JC’s main objection to crypto maximalism: it is so glib. God knows the current state of trad-fi isn’t optimal, but it got that way because these are hard, deep, ancient, shape-shifting problems of human social organisation. They cannot just magically solved by code.

See also

• Audit paradox
• Buttocractics