Computing and the Current Crisis
* Article: Computing and the Current Crisis: The Significant Role of New Information Technologies in Our Socio-Economic Meltdown David Hakken, tripleC, Vol. 8. No. 2, pp 205-220
URL = http://www.triple-c.at/index.php/tripleC/article/view/161/193
Abstract
"There is good reason to be concerned about the long-term implications of the current crisis for the reproduction of contemporary social formations. Thus there is an urgent need to understand it character, especially its distinctive features. This article identifies profound ambiguities in valuing assets as new and key economic features of this crisis, ambiguities traceable to the dominant, “computationalist” computing used to develop new financial instruments. After some preliminaries, the article identifies four specific ways in which computerization of finance is generative of crisis. It then demonstrates how computationalist computing is linked to other efforts to extend commodification based on the ideology of so-called “intellectual property” (IP). Several other accounts for the crisis are considered and then demonstrated to have less explanatory value. After considering how some commons-oriented (e.g., Free/Libre and/or Opening Source Software development projects) forms of computing also undermine the IP project, the article concludes with a brief discussion of what research on Socially Robust and Enduring Computing might contribute to fostering alternative, non-crisis generative ways to compute."
Excerpts Part One: Analyzing the Problem
David Hakken:
"In my view, what is distinctive about the current crisis is new and significant ambiguities in valuation, the process by which particular cultural forms are assigned particular values, including but not only their values as commodities. Further, I think one kind of social practice – the way automated information and/or communication technologies have normally been used, or “computing” for short—is central to the creation of these ambiguities, that computing has played a key, insufficiently understood role in bringing them about. Thus, focusing on how we compute, and more generally, the role of technology in the crisis, provides a way to think more inclusively about it. Doing so broadens our focus, so we can attend to general changes in the dynamics of current social formation reproduction.
Thus, the articles’ central contentions are:
• That the co-occurrence of the crisis and a substantial increase in the degree to which human activity is computerized is indicative of a substantial (e.g., what used to be called a “causal” (Campbell, 2005)) connection between them; • That the substantial connection between crisis and computing is likely rooted in financial entities computerized in the dominant “computationalist” manner, which in turn are the primary source of the ambiguities in valuation that give the current crisis its special character; • That this unique feature of the current crisis is one facet of a more general intervention, several efforts to commodify a greater proportion of the reproductive dynamics of contemporary social formations (including the “invention” of “Intellectual Property” (IP)) rather than other facets of computing (e.g., web 2.0 or “playbor”) or of social formation reproduction (e.g., globalization) currently given much attention; and • That the contemporaneous, widespread development of alternative ways to compute, such as Free/Libre and/or Open Source Software (FLOSS), exacerbate the current crisis while also modeling forms of computing which, being less generative of crisis, are worthy of additional study.
I argue that calling it a “computing-induced crisis” is justifiable in the registers used by contemporary social theorists to talk about social causation, that understanding how we currently compute is necessary in order to specifying the alternative computing practices needed to avoid similar
crises in the future. The dynamics of social formation reproduction have changed, computing has much to do with the change, and the change is manifest in but not caused by new relationships among workers, managers, and consumers at the point of production. Rather, the new dynamic of crisis follows from implementation of a new way of conceptualizing the role of computing in the creation and sale of a range of new financial commodities. This new ideology of using computers to extend commodification fit with certain additional changes in, e.g., legal instrumentalities like “intellectual property.” While intended to aid the reproduction of capital, the new moves have (thus far) caused more problems that they have solved—i.e., have produced crisis.
Making this complex case definitively would require more than a single article. Here, I sketch out my argument, beginning with the reasons for seeing a connection between crisis and the dominant forms of computing as it was breaking. I then outline some alternative, non-computing-oriented accounts of the crisis and why I don’t find them as persuasive as a focus on computing. Next, I draw out the connection between computing’s dominant forms and attempts at a new property regime, showing how the failures of these forms and this regime are intimately connected to the crisis. I then explicate the paradoxical role of FLOSS, in both exposing flaws in the regime and furthering crisis. I conclude by discussing how to identify the different, more socially robust ways to compute that are required if we are not to experience this kind of crisis, or even more virulent varieties of it, repeatedly."
Ways in which Computing Bears Responsibility for the Current Crisis
Stated positively and in broad-brush terms, I see four ways in which computing, especially a particular form of it that I call “computationalist” has played a central, generative role in the current crisis. I see these four forms as being sufficiently prior to the crisis in both logical and temporal senses to speak of them in a loose but still meaningful register (see footnote #3) as causative of the crisis.
They are:
1. Perhaps the most obvious crisis-generative aspect of computing is the profoundly instrumental role it played in the creation and marketing of a broad range of new financial instruments; that is, in new forms of financialization. “Financialization” of an economy occurs when a substantial proportion of capital realization takes place through the creation and sale of abstract monetary instruments, rather than through the production and sale of “real” (material) goods and services. Following Baran and Sweezy (1966), Foster and Magdoff (2009) make a convincing case that financialization has long been the chief strategy of late capitalism for fighting against the tendencies toward stagnation. Financialization has been evident in many capitalist economies since the 1970s; thus, the current crisis cannot follow from financialization in general. However, crisis does follow from the spread of particular, highly computer mediated financial instruments upon which the realization of profit became very dependent just prior to the outbreak of the current crisis. Instruments typical of the current form of financialization include those that garnered most public attention, the sub-prime mortgage-based securities created largely in the United States and marketed worldwide. Equally important to the crisis, I believe, were other computered commodities, including those collateralized in new forms of debt obligation (engineered by mixing several financial components into complex and largely opaque new entities, and similarly sold via new (international; see below) markets in securities), and parallel, equally nontransparent credit default swaps (essentially a financialized form of insurance).
2. Computing is heavily implicated in the emergence and trade of all these new commodities.
Given their complexity, none of them, nor markets in them, could have existed without it. Nor was computing’s role merely one of creating the possibility of doing such things. Only a few of the forms of financialization that were possible to computerize were actually developed (Tett 2009b). Those financial commodities that were developed and marketed were given the properties they had via what computer people call “affordances”—inclinations that, given existing preexisting developments or “path dependencies,” are likely to follow, unless action is taken to prevent them. Indeed, many of the AICTs that made these new commodities possible were developed precisely in order to create things like them. This path dependency was a consequence of the particular mix of the entrepreneurial and technical built into contemporary education in and the practice of computing. In short, to the extent that computing was essential to these commodities’ creation, and that market failures in these new financial commodities were central to the crisis, computing caused the crisis.
These computered financial instruments strongly afforded the elaboration of national markets for capital into a virtually global single market. Just as a desire for new commodities to trade in, so that more money could be made, drove computing development and implementation, so the development of international computing networks strongly incentivized creation of an unboundried market in capital. Indeed, the two go together; prospects for profitable trading in the new financial instruments were directly related to the extent to which the reach of the capital market could be scaled up.
However, this up-scaled market was formed without a simultaneously up-scaling of a parallel set of governance tools with which to regulate the trade carried out on it.
...
3. Less publicized but equally central to the generation of crisis were the widely adopted, computered models of the risks to sellers and buyers associated with trade in the new financial instruments. As the instruments were new, there was no “track record” of actuarial data on which to base judgments regarding the risks involved in buying, holding, and selling them. One consequence was major difficulties in pricing them, the implications of which exacerbated by the absence of forms of international governance in up-scaled markets.
Indeed, were it not for the development of complex, algorithm-based (computerized) risk assessment tools, trade in the new commodities, especially international, might well have remained marginal to capital realization. Moreover, the tools that were developed were based on presumptions like the idea that sufficiently detailed models would capture all relevant risk factors, as well as the notion that risk would follow the normal statistical distribution. As Gillian Tett demonstrates (2009b), these computer-based risk models were applied far beyond the intended applications of their initial developers. Presumed to be reliable, they became essentially the basis of price-setting models in the new financial instruments.
The arrival of crisis demonstrated these risk models were faulty. Numerous scholars and commentators, following Nassim Nicholas Taleb (2007), critiqued the models’ for their failure to incorporate the risk of the kind of general “systemic” failure that actually did occur."
Asset Value Unknowability as the Core of the Current Crisis
"Asset value unknowability as the core of the current crisis:
In at least three additional important ways, the computerization of financial instruments led to a situation where assets’ values became ambiguous and increasingly unknowable."
After giving 3 reasons for this, Hakken concludes:
"In short, a unique, perhaps the unique, characteristics of the current crisis is precisely these huge, persisting socio-economic spaces of unknowability. Given that a huge proportion of economic activity (Tett estimates some 80%) was financialized, this unknowability is lodged at the center of the reproduction of contemporary capitalist social formations.
The consequences of the lack of fit between the particular forms of computer-mediation of financial assets, on the one hand, and the wide swathes of unknowability to which their use led, on the other, have been amplified by the substantial upping of the scale (e.g., the “globalization” of markets in capital) at which some aspects of social formations (but not all) are able to be reproduced, further increasing the difficulty of establishing what specific value any given asset has. Indeed, it seems to me that the crisis will continue as long as a substantial body of difficult to evaluate assets persists. In sum, by 2008, many large social formations were in crisis. This crisis was a function of an economy highly mediated by a particular form of financialization (Tett, 2009a) which itself was afforded by a particular form of computing. The absence of any of the four ways outlined above in which computationalist computing afforded shaky financialization would have reduced the salience of the other two; all four seem central to a specific computing regime, a computing sociotechnological system in the sense of Thomas Hughes (2004), or a computing technology actor network in the Science, Technology, and Society language of Callon and Latour (1992). In the absence of such a computing regime, there may have been a crisis, but it would likely have taken a different, possibly less virulent form."
How unknownability is linked to Intellectual Property
"At base, the unknowability of the new financial commodities is a consequence of the at base oxymoronic character of Intellectual Property. IP is an oxymoron in that, in order for the intellectual merit of, say, an idea, to be acknowledged and then valued on some quantitative scale of relative merit, it must first be communicated. However valuable I might consider my own ideas, there can be no compelling reason for another to share my evaluation without her first understanding them. For her to do this, I can’t keep them private; I have to say what they are. I can’t even get away with just saying what they are “like.” However, once communicated, it is difficult to control the understander’s use of the idea. Thus, any effort to turn ideas into private property faces a fiendish difficulty: how to keep control over things, like ideas or notions, that by their nature must be shared if they are to be evaluated. This problem is exacerbated by digitalization: once created, digital representations of ideas and notions are reproducible at extremely low cost (think of the cost to the writer of an email)."
Excerpts Part Two: The Solution
David Hakken:
"New, more socially robust forms of computing – deriving from, inter alia, what I call the strong program in social computing – not only must but can be developed and should be implemented as part of a crisis recovery/avoidance strategy. Fortunately, some computer practitioners – whom I like to call informists – have some good ideas about how to pursue socially robust and therefore enduring computing (SREC; Hakken, 2010), ideas incubated within the non-dominant forms of computing that have refused to reduce themselves to formalisms alone. The alternative practices are central to the Social Informatics within which I frame my research and that I teach at the new School of Informatics and Computing at Indiana University in the USA and at Trento University in Italy. Their ability to thrive, however, depends upon reinforcement of property regimes very different from IP and much more like the “commons” oriented regimes of FLOSS. Let us hope that commonsilluminative views, like those resulting in a Nobel Economics Prize for my Indiana University colleague Elinor Ostrom (e.g., 1990), come to provide a clear alternative orientation for professional computing."
Source
tripleC (cognition, communication, co-operation): Open Access Journal for a Global Sustainable Information Society. Vol. 8. No. 2: Special Issue on Capitalist Crisis, Communication & Culture Edited by Christian Fuchs, Matthias Schafranek, David Hakken, Marcus Breen
URL = http://www.triple-c.at/index.php/tripleC/issue/current