Being Watched
Shoshana Zuboff has to have been one of the more interesting professors at the Harvard Business School. Now retired, she was appointed the Charles Edward Wilson professor of business administration in 1981, one of the first tenured women at the business school. In 1988 she published In the Age of the Smart Machine, an analysis of the increasing importance of the digitisation of information, and its impact on the future of work and power. [i] While occasionally frustrating (she is a dab hand at opaque and confusing neologisms), it was prescient, detailed, argumentative, and thought provoking.
The underlying thesis was simple. Computer based technologies are not socially neutral. Technology both imposes and produces new patterns of information and new potentialities in social and work relationships. On the one hand, she saw digital technologies increasing the potential for automation, reducing many craft and skilled activities to routine work, and offering new ways to control production and monitor performance. On the other hand, information technology had the capability to create more stimulating and challenging jobs, and offer greater work satisfaction. Looking back, just over thirty years later, it doesn’t seem a particularly remarkable insight, but at the time it was, and what made the book relevant was the way Zuboff examined the impact of these emerging technologies on power relationships in the organisation.
Thirty years later, Shoshana Zuboff has published a second major book, The Age of Surveillance Capitalism. [ii] Once more it is a densely worded, complicated and challenging text: it reads like an unedited PhD thesis, off-putting to the average reader, which matters because it is important.
She starts her analysis with some scene setting, charting changes that have taken place over the past 120 years. The first of these, what she calls the ‘first modernity’, flowed from the manufacturing revolution at the beginning of the 20th Century. This enabled people to be escape from the structures of feudal society, freer to construct their own lives, freer to make choices. But those choices were free in the sense that individuals were able to decide what they might want to do, buy and become, although the scope of choice was shaped by the systems of mass production, together with the need to conform to the way society operated within the new world of corporations. This was meant to be the apotheosis of the free market, but, as Henry Ford so aptly made clear, you could choose the car you wanted, and any colour you liked, as long as it was black! Not only did the market constrain choices, but to be able to buy you had to work, and work imposed new kinds of restriction. This was the era of the ‘organisation man’, companies suppressing individuality, leaving it to be something only expressed behind the closed doors of the home. The growth of self was constrained by business processes and solutions.
Inevitably, mass production capitalism created wealth, and alongside that wealth democratic institutions were enabling access to education, health care and a strong civil society. It was a heady mix, Zuboff argues, and by the second half of the twentieth century, communication, education, travel and consumption encouraged the growth of self and individualism, putting the organisation man under pressure. In doing that, much of what had underpinned society before (and subordinated the individual) had to be renegotiated, reviewed and renewed, reconstructing the nature of family, gender, religion, and morality, empowering new ways to live and connect, and, inevitably, pushing individualism up against the demands of capitalism.
Zuboff illustrates the new technologies of the twenty-first century and their consequences with Apple and the iPod. Here was a technology which gave each consumer the ability to choose and listen to the music they preferred, each user a unique customer: ‘this is my music’. She could have told the story of Amazon in its early days. It, too, offered a digital interface that was personal and shaped by individual preferences. I remember it well. I could find the books I wanted in a huge digital store, I am not talking about the Kindle, which came later, but about the extraordinary opportunity of having access to literally millions of books titles. It was exhilarating, realising the promise of the Internet, free information available to everyone (well, I did have to pay for the books I ordered!). She calls this stage the ‘second modernity’.
That’s not all that happened, of course. When I talk with my students about that time, I explain how quickly Amazon and Apple learned. The example of books is easy to see. Amazon gave digital access, but it had to deliver physical products, requiring warehouses, logistics, products packed and shipped, and systems to make the process economically sustainable (which it wasn’t for several years). To do all that the company needed to know what books people were going to order. To summarise a complex story, Amazon saw it needed to ‘profile’ the book preferences of its customers. If one customer sought to buy a particular book, how many others would do the same? Were choices indicative of underlying patterns? From this, customer relationship management was born, and from there it was a short step to anticipating what a customer might want to buy next, offer recommendations, and slowly surveillance capitalism was established.
Zuboff’s book commences with what looks like a page from a dictionary: [iii]
“Sur-veil-lance Cap-i-tal-ism. n.
- A new economic order that claims human experience as free raw material for hidden commercial practices of extraction, prediction, and sales; … 3. A rogue modification of capitalism marked by concentrations of wealth, knowledge and power unprecedented in human history; 4. The foundational framework of a surveillance economy; 5. As significant a threat to human nature as in the twenty-first century as industrial capitalism was to the natural world in the nineteenth and twentieth; 6. The original of a new instrumentation power that asserts dominance over society and presents startling challenges to market democracy; … 8. An expropriation of critical human rights that is best understood as a coup from above: an overthrow of people’s sovereignty.
The core of this is quite simple. Profiling customers has a long history, of course, long before Amazon and customer relationship management. Stores studied shoppers, and sought to offer products and services their observations suggest would attract them. Looking at the layout of aisles and displays, and the range and variety of items on the shelves in a store, you can quickly determine the socio-economic character of the customers. Bricks and mortar bookstores offer a selection of titles (they have to, as none can display the four million or so different titles in existence): if you look carefully, it is easy to discern the target group for each. The same is true for department stores, dress shops and companies selling cooking, crockery and cutlery items.
What Amazon and Apple did was to use these insights more systematically, using the power of data analytics to discern the shopping preferences of thousands and eventually millions of customers. There was a time when I didn’t mind checking the suggested titles on my Amazon page: they made some good choices (and quite a few mistakes, too). By curating books for me, I was slowly allowing Amazon to guide me in what I might want to read. Then I stopped looking. I don’t do a lot of shopping on Amazon now (an item a month at the most), and the range of suggestions are pretty mundane (mainly reminders of things I may have forgotten to buy again, like the capsules for my electric razor cleaning system). I haven’t looked at any of the recommendations for a long time.
This took a step forward with Google (and other online marketers). Google has extraordinary access to preferences and interests. A few years ago I was looking at hotels for a brief visit to Frankfurt and Stuttgart. For the next three years, google searches would always be accompanied by side advertisements for hotels in those two towns, even though I was no longer interested. At the time, I was annoyed, but not much. I should have been more curious. How did those hotel companies know about me? Duh, Google is a marketing company, selling data on potential customers to specific companies. It could prepare a profile on me that would be (alarmingly?) predictive. I think my searches mainly academic, my purchasing notable for its paucity. Online, I tend to buy the same items, but Google can reveal preferences I scarcely notice. All this was exposed recently, with Google fined for selling data on children, garnered through YouTube. [iv]
Suppose I had a Target card (I am sure there is such a thing), which gives me a discount on purchases, and that this was my go-to store (it could have been Wal-Mart: any such outlet will do). Further, suppose I used my smart phone (if I had one in the US) to check the codes and comparative prices of items I consider as I wander around. Finally, suppose my Target card was also a charge card, with my image for security, and a smart chip embedded to use on the checkout machines. Now I am ripe for observation: store cameras can watch where I go in the store, the items over which I linger, and the choices I make. Soon, on entering the store, the surveillance system predicts where I will go, and any changes will be added to my digital file.
Well observed, I get regular offers, on my smartphone and maybe on my computer. Did I say regular offers? What I meant to say was very carefully considered offers, knowing what I liked, how often I shopped for various items, and what might appeal to me. The key is predictive marketing. Now the complex analytics no longer profile, they anticipate. Slowly, my shopping is being guided. Not quite yet, but soon, (shades of Minority Report), video screens in the store will talk to me, yes, to me, about an offer I would like, a new product that would suit me.
I used Target to describe this, but the store, physical and online, is merely an intermediary. It makes a little money from every transaction, but the real profits go to the manufacturers or the service deliverers. The company that makes soap, coffee, shirts or watch bands, they are vacuuming up money from me and every other consumer, using highly sophisticated data analytics and marketing strategies to identify what I might want, nudging me to make the right purchases, and constantly reviewing my behaviour. With millions, billions of data points, they really do know me well. At the same time, they consolidate data from thousands of others stores, millions of other consumers, tweaking and adjusting what they sell, the marketing methods used.
What did the Bible say: “We all like sheep have gone astray, each one has turned to his own way” (Isaiah 53:6)? Lost, we needed to be saved. Today, there’s no need to save us! A small number of very rich people control companies that shape and manage the behaviour of the rest of us (the 98%); herded by digital sheepdogs, we never go astray.
It wasn’t always like that. As Shoshana Zuboff explained it, in the beginning (I had to say that), the free market capitalism system offered so much promise. As arch spokesperson Milton Friedman explained it:
“[T] he central feature of the market organization of economic activity is that it prevents one person from interfering with another in respect of most of his activities. The consumer is protected from coercion by the seller because of the presence of other sellers with whom he can deal. The seller is protected from coercion by the consumer because of other consumers to whom he can sell. The employee is protected from coercion by the employer because of other employers for whom he can work, and so on. And the market does this impersonally and without centralized authority. Indeed, a major source of objection to a free economy is precisely that it does this task so well. It gives people what they want instead of what a particular group thinks they ought to want.” [v]
Sadly, none of this is turned out to be true. Effective monopolies, cartels (whether admitted or hidden) and restrictions on trade, together with amazing insights into customer behaviour, expectations and preferences offered by digital surveillance ensure the free market is no longer free, and consumers are largely unprotected from predictive marketing. Any protections that remain, in the USA and Australia, are being whittled away by governments. Some European countries are trying to hold out, but subversive surveillance is hard to see, document and control. In effect, most of us are making a few very rich people even more wealthy.
How did we end up in this mess? It goes back to ‘shareholder theory’, the view the purpose of a company is to maximise profits for its shareholders. This distorted idea was furthered by two Harvard economists arguing shareholders were owners, and management’s task was to generate profits for them, a form of agency theory. [vi] Today, well paid senior executives are focussed on generating wealth for rich shareholders. So much for encouraging economists to comment on matters to do with the law and the role of companies. Surveillance capitalism is their latest and most pernicious tactic. Before, an organisation’s purpose, set out in its articles of incorporation, was to make things or provide services to meet customers’ needs (and monitor finances, pay taxes, avoid bankruptcy, employ and remunerate staff, and so on). In those days, shareholders were there to invest in the ride, just one among the many stakeholders in a business.
Is it too late to bring back a stakeholder approach? The idea keeps returning, and I am one among the many who keep arguing the case. Recently I saw a gaggle of major CEOs agreed, calling for change. [vii] They’re right, and we do need to restore good sense to business, but based on a succession of failed attempts over forty years, I’m not holding my breath. I wish I was.
[i] Published by Basic Books
[ii] Published by Public Affairs, part of Hachette, in 2019.
[iii] In one page, Zuboff lays out the key elements of her critique: it was my choice to highlight six of the eight.
[iv] https://www.nytimes.com/2019/09/04/technology/google-youtube-fine-ftc.html
[v] Milton Friedman, Capitalism and Freedom, University of Chicago Press, 2002 Edn., page3 14-15
[vi] Michael C Jensen and William H Meckling, “Theory of the firm: Managerial behavior, agency costs and ownership structure.” Journal of financial economics 3.4 (1976): 305-360.
[vii] https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans
