Monday, December 23, 2024

Regulatory Capture

Cory Doctorow’s Vision for a Just Tech Revolution (Jacobin)

[ed. Covers a lot of territory, so here's just one example - regulatory capture. Obviously, many industries favor regulations if they can benefit from them, as most big players/monopolies do, especially if they're barriers to competition. Well worth a read for an overview of some technological issues we're facing today, not necessarily about what might be coming in the future (eg. AI). Also, to keep this from turning into another tech blog (yuk!), hopefully this'll be the last post of this type for awhile. Lots of things churning at the moment.]

Regulatory Capture

I think the first thing we need to understand is the relationship between market concentration and regulatory capture. The term regulatory capture has got a funny history. It comes out of some of the most unhinged elements of neoliberal economics. It was coined by public choice theorists who operate in a world of perfectly uniform cows that are perfectly spherical and have uniform density and move around on frictionless surfaces that never make any contact with the world.

According to public choice theory, because the state is the most powerful actor in most polities, successful firms will be those that are the most determined actors in seeking to usurp that power. They will go to incredible lengths to seize and harness that power, which other market participants won’t be able to match in terms of force and motivation. And so they’ll always win. And then they’ll use the power of the state to exclude new market entrants who would otherwise offer consumers a better deal. And so, we should just get rid of the state, right? The only way to prevent regulatory capture is to have no regulation. That’s the conclusion that the public choice people come to. But very clearly, this is not true.

When dining at a restaurant, we can reasonably expect not to fall victim to food poisoning, and the structural components supporting the roof above us usually remain intact. This suggests that we possess the knowledge and expertise to determine the appropriate types of steel, alloys, and construction methods for constructing a structurally sound building. Similarly, our antilock braking systems don’t routinely experience catastrophic failures when we apply the brakes, ensuring our safety while driving. In other words, we know how to make good regulation. It’s not some lost art like embalming pharaohs.

Regulatory capture primarily occurs in concentrated markets characterized by a small number of firms that, instead of competing, become very cozy with each other. And that means that they can extract lots of money. They have giant margins, and so they have lots of excess capital that they can spend on lobbying. And then — this is very crucial –—because they’re few in number, they can agree on what those regulations should be. So, they don’t sabotage each other. They have class solidarity. They solve the collective action problem that they would otherwise be plagued by.

As the tech sector has become increasingly concentrated — largely due to the abandonment of antitrust enforcement four decades ago— its tendency to monopoly has become more and more pronounced. At the same time, every presidential administration has become more lenient about the tech sector’s monopoly (until the current one, which has made a sharp reversal of it, which is very important). So, because we let them become very concentrated, they captured the regulators, and they were able to make policies that do two things.

The first is they were able to forestall policy that prevents them from exploiting the wonderful flexibility of digital technologies to do bad things to us. They’ve effectively exempted themselves from labor, consumer protection, and privacy law. And we’re all familiar with this, right? “It’s not a labor violation if you do it with an app.” On the other hand, they have managed to stop any of us or any new market entrant — whether that’s workers or co-ops or nonprofits or startups or large firms — from using that same digital flexibility. They have managed to protect themselves from all the gimmicks that the tech sector is able to use to abuse us as consumers, as workers, and as citizens.

It’s a perfect storm: an intensely concentrated tech sector and regulatory capture. Because the tech sector captures its regulators, it is able to enjoy wide latitude in using the flexibility of digital tools to do us harm. And because it’s captured those regulators, it’s able to prevent anyone, be they fellow members of the ruling class, capitalists or would be feudalist, but also workers, consumers, and activists, from using those same flexibilities to resist them. That’s the airtight bubble they’ve built. (...)

Deb Chachra is a leftist material scientist. She has a book coming out in mid-November called How Infrastructure Works. And it’s a very good book about what infrastructure means, because infrastructure never amortizes over the life of the people who build it. That’s kind of one of the defining characteristics of infrastructure. Infrastructure is always an act of solidarity with people who aren’t born yet, and infrastructure always requires planning that goes beyond what markets can accomplish. 

by David Moscrop and Cory Doctorow, Jacobin |  Read more:
Image: Peter Dazeley/Getty Images