State Power, Private Power, Data Power

Discussion

Katharina Pistor:

"Power is an elusive concept. In the book, I reduce it to a single dimension: the prospect of enforceability, which stands for the ability to invoke a state’s means of coercion for vindicating and enforcing claims against others. The threat of coercion, I argue, gives capital its comparative advantage over other objects, promises or ideas. In the absence of legal coding, these assets might be respected or admired by others, and in relatively small social settings this is usually enough. However, little will stop actors who do not respond to social sanctions from breaching these norms. Relying on the coercive power of one or more states ensures that economic and social relations become scalable.

In focusing on coercion, I am subscribing to a Weberian conception of the state as the monopolization of the means of coercion. I do not further differentiate state power and how it affects different aspects of law or social life, most importantly private vs. public law, as several contributors have noted with respect to antitrust law or financial regulation as an antidote to the abuse of contract law, as suggested by Matthias Thiemann and Dan Awrey respectively. In effect, Thiemann and Awrey are arguing that there is a state that has the capacity to regulate private activities, including legal coding strategies found in private contracts and assets. The task is to explain when the state chooses to invoke public law to curtail private activities, or not.

I do not dispute the evidence of regulatory activities, or more generally of “the rise of the regulatory state” (Moran, 2001). However, I would depict this as part of a further differentiation of state power. Public and private law are different strategies for accessing and employing the means of coercion as a collective resource. This resource has been institutionalized differently, and critically, without adding up to a complete or coherent system. State power can be institutionalized in a more or less centralized fashion (unitary vs. federal states), and it can afford greater access to different agents, including attorneys, courts, regulators, etc. Power is not a zero-sum game. By strengthening central power, the forces that used to rely on decentralized access to power are not necessarily weakened, but instead might find different access points or channels through which to contest and exert new forms of power. In a similar vein, public law or regulatory constraints do not necessarily curtail private power and its use of private law; often it only channels it into different directions – with the result of an ever more complex, perhaps even ungovernable system. In short, as many political theorists have pointed out, power is a relational concept (a feature it shares not only with capital but with every social institution). It is never unilaterally invoked, but constantly contested and reconstituted, domestically as well as globally. Constitutions seek to constrain public power by elevating individual and collective aspirations to constitutional rights, or by dividing power amongst different branches of government or between a federation’s center and its constituent parts. Further, international law holds that the lawful exercise of this public power is confined to the territorial boundaries of nation states (notwithstanding the extra-territorial character of some domestic law). In contrast, private law is border-less in the sense that private parties can carry it with them and seek to convince agents of other countries, such as courts, to recognize and enforce rules that are foreign to them. This has made private power, and indeed capital, more akin to “roving” than to “stationary” bandits, to invoke Mancur Olson’s metaphor (Olson, 1993).

This relative autonomy from a single source of power has given private power wielders a central role in forging legal rights and privileges that benefit them. In the evolution of property rights it is difficult to find a case where the dispossessed were the primary beneficiaries of zoning and titling programs (the land reforms in Taiwan and Japan after World War II being one of a few examples); in the majority of cases, legal title is instead granted to the de facto controllers (Upham, 2018). For every enclosure movement, of land, knowhow and most recently of data, we find the same pattern: First movers with the goal of monetizing assets secure de facto control rights and then the power of legal ordering for themselves, and in so doing they curtail the possibility of a different order for one simple reason. Any alternative would have to wrestle control rights away from them before starting from scratch. Once private legal rights are recognized, this restricts the scope of private law to modifying and restricting, but leaves little room for re-ordering.

Even data fits this bill, contrary to Shoshana Zuboff, whom Lisa Herzog references when suggesting that “the appropriation of data often does not even seem to require the kind of legal codification as capital that Pistor describes: data are often not held as property, even though the control rights of companies are comparable” (p. 5). Yet, in all of these cases, denying property rights to the obvious contenders, to the commoners, indigenous peoples or the data producers, has been critical for granting secure legal title for the landlords, the settlors, as well as for Big Tech. Data producers who sued tech companies in the US for violating their property rights or tort were denied protection, because they could not show that these data were of any economic value to them. Once they had grabbed and aggregated the data from thousands if not millions of producers, Big Tech companies received legal protection against hackers and copycats with the help of specific legislation (Pistor, 2020). Zuboff misses this point by describing surveillance capitalism as a lawless zone (Zuboff, 2019), when in fact it would have been entirely possible to grant data producers a property right in their own data, just as it was eventually possible to protect the collective use rights of land of the Maya in Belize through property rights protection (as I discuss in the book); not to monetize their data, but to prevent others from doing so. The fact that this was not done at the outset and has been only partly rectified after the fact1 speaks volumes about the power of private agents. It also means that prospects of a data commons, or public trust in data, have vanished. Legally protected private power is difficult to dislodge, because it is protected against state intervention (expropriation remedies!), it can rove, and it can morph. The deeper point is that there is no entity that designs a social order and freely chooses between public and private law. Access to the centralized means of coercion is and has always been diffused, although today it is possibly more so than it has ever been. Not all power is centralized and vested with public agents. In fact, the differentiation between public and private law may be less important than trying to understand the access points that different constituencies have to either. The masters of the code of capital, that is, the private attorneys who fashion different assets as capital mostly in private law also tend to have privileged access to regulators and tax authorities and often vet their coding strategies with them before applying them. Their ability to do so depends in no small measure on the economic power of the clients they represent, which in turn results from the success of earlier coding strategies." (https://www.degruyter.com/document/doi/10.1515/ael-2020-0102/pdf) [1]