Technocracy

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For those of JC’s generation — we came of age in the Eighties, and run sniper’s alley now — our radical departure from the wisdom of our elders was to reject centralisation. Ever the practical ones, we latchkey kids took our parents’ hippy 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.

We were wired for sound.

Wired for sound

Results were good. The Iron Curtain fell. Markets boomed. Pits closed. Shipyards shuttered. [Where are you going with this? — Ed]

Sure, there were 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. The market ruled.

Of course there were losers, as there whenever the social order radically rearranges, but it wasn’t us.

We were on the right side of history, which had finished, anyway.

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 there is in the middle. Communication channels are slow and clogged. Audio degrades. Central machines are heavy, slow, lossy and costly. Informed decisions were best made at the point of sale, by those doing the buying.

Substantive: buyers at the edge of the network — like you and me — have the most skin in the game. It is their life, their school, their community, their personal stereo. As long as they have enough information and enough choice their strong incentives mean they will make good, efficient decisions because they have the most to lose if they don’t.

As it always does, to the revolting masses the conversation felt over. The riddle of socio-politics was solved.

The drift away from freedom

As it always does, history had other ideas. Now we are Generation X, our kids sing different songs. (Enjoy it, kids: the next generation is on your tail.) Along the way our laissez-faire ideal got lost.

Partly because the pristine ideological logic of the market did not always match the facts: the required information and choice were not as omnipresent as we expected. Privatising utilities didn’t work so well. We got raw sewerage in the UK, crappy railways in Germany an full-blown oligarchic kleptocracy in Russia.

But this was no theoretical rejection of a substantive ideal. There was no new Lenin, Trotsky or Marx. No pamphleteers whipped up a modern socialist synthesis. There was no firebrand manifesto calling for return to collective governance. It just kind of happened.

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).

We can, so —

But, sans white paper, our liberating technology worked to re-centralise and exert control. It nullified our formal objection: no longer was centralising slow, lossy or costly. The network was free, bandwidth unlimited and information travelled, literally, at lightspeed. Lossless centralisation promised massive economies of scale.

De facto centralisation was possible, even as we distributed our physical selves yet further away. The network facilitated outsourcing and right-shoring: offshore operations teams acted like thin-client terminals to a centralised CPU. The network threw out gossamer spurs and nodes to new markets, from Belfast to Bucharest to Bangalore.

Technology facilitated the reassertion of central control. No one broached the substantive question of whether re-centralisation of 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 new faces opened up on the burgeoning professional administrative class — call it the era of unfettered human capital management — allowing previously quite radical social justice agendas to escape their traditional confines in liberal arts faculties and accumulating in the engine rooms of corporate bureaucracy.

For the first time there were technological tools to enforce agendas. The irony was they were the same tools that the anarchists thought would finally set us free.

Communication being instant, effortless and free proved a boon and a bane. Screwing up a relationship by miscommunication was instant, effortless and free too. Who has not forwarded a sensitive communication to the wrong account, or sent a withering reply to the whole group by mistake. Communications became dangerous. They were immortal. They had a lie off their own.

The perils of free information were revealed to the world at once in December 2002 when a young British emailed her boyfriend, a solicitor at a city firm, recounting intimate details of their previous evening. Ungallantly, he forwarded the email to his mates for some private grandstanding.

It didn’t stay private for long. The email swept the globe reaching an estimated million people, and still features in listicles of the most catastrophic communications of all time. I was first forwarded it by a company administrator in Grand Cayman.

It slowly dawned that this was not just embarrassing for the solicitor and her boyfriend, but potentially a disciplinary matter for every other email account memorialised on the chain. There were thousands.

The solicitor went into hiding. Her boyfriend was disciplined (though not fired. These days he would likely have been jailed).

Firms scrambled to impose policies on email use. But the technological implications of a costless, instantaneous, irreversible and permanently recorded, audited record of our most unguarded thoughts became clear.

We were not free.

The loss of the informal

Digitising 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